EXHIBIT 2.3
__________________________
MERGER AGREEMENT
by and among
CENTERPOINT ADVISORS, INC.,
FRF HOLDING, LLC
FRC MERGERSUB INC.,
▇▇▇▇▇▇▇, RUDZEWICZ & CO., P.C.
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. AND ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
being all of the Stockholders of
▇▇▇▇▇▇▇, RUDZEWICZ & CO., P.C.
March 31, 1999
__________________________
TABLE OF CONTENTS
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ARTICLE I
THE MERGER............................................................ 2
1.1 Merger......................................................... 2
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1.2 Effects of the Merger.......................................... 3
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1.3 Directors and Officers of the Surviving Corporation............ 3
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ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT................................... 3
2.1 Merger Consideration........................................... 3
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2.1.1 Basic Purchase Consideration............................. 3
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2.1.2 Treasury Stock........................................... 3
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2.1.3 Dissenters............................................... 3
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2.1.4 Conversion of Mergersub Stock............................ 4
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2.1.5 Exchange of Certificates....................................... 4
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2.2 Post-Closing Adjustments to Basic Purchase Consideration....... 4
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2.2.1 Adjustments for Net Working Capital Shortfall/Excess..... 4
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2.2.2 Preliminary Balance Sheet and Adjustment................. 4
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2.2.3 Interim Adjustment....................................... 4
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2.2.4 Final Adjustment......................................... 4
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2.2.5 Disputes....................................................... 5
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2.2.6 Payment of Adjustments................................... 5
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2.3 Post-Closing Management of AR.................................. 6
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2.4 Assignment of Uncollected AR................................... 6
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2.5 Definitions.................................................... 6
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ARTICLE III
THE CLOSING AND CONSUMMATION DATE..................................... 7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY......................... 7
4.1 Organization and Qualification................................. 7
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4.2 Company Subsidiaries........................................... 7
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4.3 Authority; Non-Contravention; Approvals........................ 8
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4.4 Capitalization................................................. 9
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4.5 Year 2000...................................................... 10
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4.6 Financial Statements........................................... 10
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4.7 Absence of Undisclosed Liabilities............................. 10
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(i)
PAGE
4.8 Unbilled Fees and Expenses.............................................................. 11
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4.9 Absence of Certain Changes or Events.................................................... 11
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4.10 Litigation.............................................................................. 13
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4.11 Compliance with Applicable Laws......................................................... 14
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4.12 Licenses................................................................................ 14
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4.13 Material Contracts...................................................................... 15
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4.14 Properties.............................................................................. 17
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4.15 Intellectual Property................................................................... 19
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4.16 Taxes................................................................................... 19
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4.17 Employee Benefit Plans; ERISA........................................................... 20
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4.18 Labor Matters........................................................................... 22
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4.19 Environmental Matters................................................................... 22
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4.20 Insurance............................................................................... 23
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4.21 Interest in Customers and Suppliers; Affiliate Transactions............................. 23
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4.22 Business Relationships.................................................................. 24
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4.23 Compensation............................................................................ 24
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4.24 Bank Accounts........................................................................... 24
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4.25 Professional Credentials................................................................ 25
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4.26 Disclosure; No Misrepresentation........................................................ 25
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............................................. 25
5.1 Several Representations and Warranties.................................................. 25
5.1.1 Capitalization.................................................................... 25
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5.1.2 Authority......................................................................... 25
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5.1.3 Non-Contravention................................................................. 26
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5.1.4 Approvals......................................................................... 26
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5.1.5 Litigation........................................................................ 26
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5.1.6 No Transfer....................................................................... 26
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5.1.7 Disclosure........................................................................ 27
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5.1.8 Representations and Warranties of the Seller and the Company...................... 27
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5.2 Joint and Several Representations and Warranties........................................ 27
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPOINT.................................................. 27
6.1 Organization And Qualification.......................................................... 27
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6.2 Capitalization.......................................................................... 27
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6.3 No Subsidiaries......................................................................... 28
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6.4 Authority; Non-Contravention; Approvals................................................. 28
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6.5 Absence of Undisclosed Liabilities...................................................... 30
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6.6 Litigation.............................................................................. 30
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(ii)
PAGE
6.7 Compliance with Applicable Laws......................................................... 30
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6.8 No Misrepresentation.................................................................... 30
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ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS.............................................................. 30
7.1 Conduct of Business by the Company Prior to the Effective Time.......................... 30
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7.2 No-Shop................................................................................. 33
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7.3 Schedules............................................................................... 34
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7.4 Company Stockholder Meeting............................................................. 34
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7.5 Conversion.............................................................................. 35
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ARTICLE VIII
ADDITIONAL AGREEMENTS.......................................................................... 35
8.1 Access to Information................................................................... 35
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8.2 Registration Statements................................................................. 36
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8.3 Expenses and Fees....................................................................... 37
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8.4 Agreement to Cooperate.................................................................. 37
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8.5 Public Statements....................................................................... 37
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8.6 Registration Rights..................................................................... 37
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8.7 CenterPoint Covenants................................................................... 40
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8.8 Release of Guarantees................................................................... 40
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8.9 Lock-Up Agreement....................................................................... 40
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8.10 Preparation and Filing of Tax Returns................................................... 40
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8.11 Maintenance of Insurance................................................................ 40
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8.12 Administration.......................................................................... 41
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ARTICLE IX
INDEMNIFICATION................................................................................ 41
9.1 Indemnification by the Members.......................................................... 41
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9.2 Indemnification by CenterPoint.......................................................... 43
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9.3 Indemnification Procedure for Third Party Claims........................................ 44
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9.4 Direct Claims........................................................................... 45
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9.5 Failure to Give Timely Notice........................................................... 45
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9.6 Reduction of Loss....................................................................... 46
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9.7 Limitation on Indemnities............................................................... 46
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9.7.1 Threshold for the Stockholders.................................................... 46
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9.7.2 Threshold for CenterPoint......................................................... 46
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9.7.3 Limitations on Claims Against the Stockholders.................................... 47
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9.7.4 Limitation on Claims Against CenterPoint.......................................... 47
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9.8 Survival of Representations, Warranties and Covenants of the Stockholders and the
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Company; Time Limits on Indemnification Obligations..................................... 47
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(iii)
PAGE
9.9 Survival of Representations, Warranties and Covenants of CenterPoint; Time Limits
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on Indemnification Obligations................................................... 47
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9.10 Defense of Claims; Control of Proceedings........................................ 48
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9.11 Fraud; Exclusive Remedy.......................................................... 48
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9.12 Manner of Satisfying Indemnification Obligations................................. 48
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ARTICLE X
CLOSING CONDITIONS............................................................................. 48
10.1 Conditions to Each Party's Obligation to Effect the Merger....................... 48
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10.2 Conditions to Obligation of the Stockholders, the Company to Effect the Merger... 49
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10.3 Conditions to Obligation of CenterPoint to Effect the Merger..................... 51
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ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER.............................................................. 53
11.1 Termination...................................................................... 53
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11.2 Effect of Termination............................................................ 54
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11.3 Amendment........................................................................ 54
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11.4 Waiver........................................................................... 54
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ARTICLE XII
TRANSFER RESTRICTIONS.......................................................................... 55
12.1 Transfer Restrictions Generally.................................................. 55
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12.2 Release of Restrictions.......................................................... 55
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12.3 Legend........................................................................... 55
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ARTICLE XIII
NONCOMPETITION................................................................................. 56
13.1 Prohibited Activities............................................................ 56
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13.2 Damages.......................................................................... 57
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13.3 Reasonable Restraint............................................................. 57
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13.4 Severability; Reformation........................................................ 58
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13.5 Independent Covenant............................................................. 58
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13.6 Materiality...................................................................... 58
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ARTICLE XIV
[RESERVED].................................................................................... 58
(iv)
PAGE
ARTICLE XV
GENERAL PROVISIONS......................................................................... 58
15.1 Brokers...................................................................... 58
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15.2 Notices...................................................................... 59
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15.3 Interpretation............................................................... 60
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15.4 Certain Definitions.......................................................... 60
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15.5 Entire Agreement; Assignment................................................. 60
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15.6 Applicable Law............................................................... 60
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15.7 Counterparts................................................................. 60
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15.8 Parties in Interest.......................................................... 61
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(v)
LIST OF SCHEDULES
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Schedule 2.1 Consideration
Schedule 2.5 Net Working Capital Adjustment Items
Schedule 4.2 Company Subsidiaries
Schedule 4.3.2 Required Consents
Schedule 4.4 Capitalization
Schedule 4.5 Year 2000
Schedule 4.7 Liabilities
Schedule 4.9 Certain Changes and Events
Schedule 4.10 Litigation
Schedule 4.11 Noncompliance with Applicable Laws
Schedule 4.12 Licenses and Permits
Schedule 4.13 Material Contracts
Schedule 4.14.1-1 Real Property
Schedule 4.14.1-2(a) Exceptions Regarding Owned Property
Schedule 4.14.1-2(b) Exceptions Regarding Leased Property
Schedule 4.14.2 Tangible Personal Property; Liens
Schedule 4.15 Intellectual Property
Schedule 4.16.1-1 Taxes
Schedule 4.16.1-2 Tax Audits
Schedule 4.17.1 Employee Plans
Schedule 4.17.2 Unwritten Employee Plans
Schedule 4.18 Labor Matters
(vi)
Schedule 4.19 Environmental Matters
Schedule 4.20 Insurance
Schedule 4.21 Affiliate Transactions
Schedule 4.22 Business Relationships
Schedule 4.23 Compensation
Schedule 4.24 Bank Accounts
Schedule 6.2 CenterPoint's Capitalization
Schedule 6.5 Other Liabilities
Schedule 7.1.4(i) Terminated Agreements
Schedule 7.1.4(ii) Excluded Assets
Schedule 8.8 Members' Guarantees
Schedule 15.1 Brokers
Schedule 15.2.3 Members and Their Counsel
(vii)
LIST OF EXHIBITS
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Exhibit A Members of the Company
Exhibit 10.2(c) Form of Opinion of CenterPoint's Counsel
Exhibit 10.2(d) Form of Incentive Compensation Agreement
Exhibit 10.2(f) Form of Stockholders Agreement
Exhibit 10.3(c) Form of Opinion of Counsel to the Seller, the Company
and the Members
Exhibit 10.3(d)(A) Form of Separate Practice Agreement
Exhibit 10.3(d)(B) Form of Services Agreement
Exhibit 10.3(j) Form of Members' Release
CenterPoint agrees to furnish supplementally to the Securities Exchange
Commission, upon request, a copy of any omitted exhibit or schedule to this
Agreement.
(viii)
DEFINED TERMS
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Accounting Licenses...................................... Section 4.12
Actions.................................................. Section 4.10.1
Acquisition.............................................. Introduction
Acquisition Transaction.................................. Section 13.1
Affiliate................................................ Section 15.4
Affiliate Transactions................................... Section 4.21
Agreement................................................ Introduction
AR....................................................... Section 2.5(a)
Arbitrator............................................... Section 2.2.5
Attest Entity............................................ Section 7.1.2
Attestation Practice..................................... Introduction
Basic Purchase Consideration............................. Section 2.1.1
Business................................................. Introduction
Cash Consideration....................................... Section 2.1.1
CenterPoint.............................................. Introduction
CenterPoint Accountants.................................. Section 2.2.2
CenterPoint Common Stock................................. Section 2.1
CenterPoint Indemnified Party(ies)....................... Section 9.1
CenterPoint Material Adverse Effect...................... Section 6.4.3
CenterPoint Representatives.............................. Section 8.1.1
CenterPoint Required Statutory Approvals................. Section 6.4.3
Closing.................................................. Article III
Closing Balance Sheet.................................... Section 2.2.2
Closing Date............................................. Article III
Code..................................................... Introduction
Company.................................................. Introduction
Company Material Adverse Effect.......................... Section 4.3.3
Company Representatives.................................. Section 8.1.1
Company Stock............................................ Section 2.1
(ix)
Company Subsidiaries..................................... Section 4.2
Contracts................................................ Section 4.13
Conversion............................................... Introduction
Copyrights............................................... Section 4.15
Defense Notice........................................... Section 9.3.1
Direct Claim............................................. Section 9.4
Disputed Item............................................ Section 2.2.5
Dissenting Shares........................................ Section 2.1.3
Effective Time........................................... Section 1.1
Employee Plan............................................ Section 4.17.5(a)
Environmental and Safety Requirements.................... Section 4.19
ERISA.................................................... Section 4.17.5(b)
Excluded Assets.......................................... Section 7.1.4
Excluded Liabilities..................................... Section 7.1.4
Final Adjustment......................................... Section 2.2.4
Financial Statements..................................... Section 4.6
First Person............................................. Section 4.17.5(c)
Form S-1................................................. Section 4.3.3
Form S-4................................................. Section 4.3.3
Founding Companies....................................... Introduction
GAAP..................................................... Section 4.6
general increase......................................... Section 4.23
Governmental Authority................................... Section 4.3.2
Hazardous Materials...................................... Section 4.19
HSR Act.................................................. Section 4.3.3
Incentive Compensation Agreement......................... Section 10.2(d)
Indemnified Party........................................ Section 9.3.1
Indemnifying Party....................................... Section 9.3.1
Intellectual Property.................................... Section 4.15
Intellectual Property Licenses........................... Section 4.15
Interim Adjustment....................................... Section 2.2.3
(x)
IPO...................................................... Introduction
Knowledge................................................ Section 15.4
Latest Balance Sheet..................................... Section 4.6
Laws..................................................... Section 4.11
Leased Property.......................................... Section 4.14.1
Licenses................................................. Section 4.12
Liens.................................................... Section 4.3.2
Liquidated Damages Amount................................ Section 7.3
Losses................................................... Section 9.1
Market Price............................................. Section 9.12
Marks.................................................... Section 4.15
Material Contracts....................................... Section 4.13
Members.................................................. Introduction
Member Indemnified Party................................. Section 9.2
Member Representative.................................... Section 9.13
Merger................................................... Introduction
Merger Documents......................................... Section 1.1
Mergersub................................................ Introduction
Mergersub Stock.......................................... Section 6.2.1
MBCA..................................................... Section 1.1
Net Working Capital...................................... Section 2.5(b)
1933 Act................................................. Section 4.3.3
1934 Act................................................. Section 9.1(c)
Organizational Documents................................. Section 4.1
Other Agreements......................................... Introduction
Other Founding Companies................................. Section 9.1
Other Mergers............................................ Introduction
Owned Property........................................... Section 4.14.1
Patents.................................................. Section 4.15
Person................................................... Section 15.4
Plan Affiliate........................................... Section 4.17.5(c)
(xi)
Real Property............................................ Section 4.14.1
Registration Statements.................................. Section 4.3.3
Resolution Period........................................ Section 2.2.5
Restricted Shares........................................ Section 12.1
Returns.................................................. Section 4.16.1
Schedules................................................ Section 7.3
SEC...................................................... Section 4.3.3
Securities Act........................................... Section 4.3.3
Seller................................................... Introduction
Special Bonus Plan....................................... Section 2.5(c)
Stock Consideration...................................... Section 2.1
Stockholders Agreement................................... Section 10.2(f)
Surviving Corporation.................................... Section 1.2
Target................................................... Section 2.5(d)
Tax Accrual.............................................. Section 2.5(e)
Taxes.................................................... Section 4.16.2
Territory................................................ Section 13.1(a)
Third Party Claim........................................ Section 9.3.1
Trade Secrets............................................ Section 4.15
Underwriters............................................. Section 8.1.1
Voting Agreement......................................... Introduction
(xii)
MERGER AGREEMENT
THIS MERGER AGREEMENT (this "AGREEMENT") is made as of [MARCH __], 1999, by
and among CenterPoint Advisors, Inc., a Delaware corporation ("CENTERPOINT"),
FRC Mergersub Inc., a Michigan corporation and wholly owned subsidiary of
CenterPoint ("MERGERSUB") FRF Holding, LLC (the "SELLER"), ▇▇▇▇▇▇▇, Rudzewicz &
Co., P.C., a Michigan professional corporation (the "COMPANY"), and the members
of the Seller, who are also all of the stockholders of the Company identified on
Exhibit A to this Agreement (each such individual, in such individual's capacity
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as a member and stockholder, a "MEMBER" and, collectively, the "MEMBERS").
WITNESSETH:
WHEREAS, the Company engages directly, and indirectly through the Company
Subsidiaries, in the business of providing accounting, tax and other related
services (such business provided by the Company is referred to as the
"BUSINESS");
WHEREAS, prior to, and in anticipation of, completion of the transactions
contemplated hereby (a) the Company will cease to provide services related to
the practice of accounting that, pursuant to applicable laws and regulations,
may only be conducted by certified public accountants (the "ATTESTATION
PRACTICE") and (b) the Members, as stockholders of the Company, will cause the
conversion of the Company from a professional corporation to a business
corporation by (x) amending the Company's Organizational Documents (as defined
in Section 4.1) such that it converts to a business corporation, (y) adopting a
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plan of liquidation and reincorporating as a business corporation or (z) merging
with a foreign professional corporation, with the surviving professional
corporation amending its Organizational Documents such that it converts to a
business corporation, as applicable (the actions described in the foregoing (a)
and (b), collectively, the "CONVERSION");
WHEREAS, upon completion of the Conversion, and prior to and in
anticipation of the transactions contemplated hereby, the Seller will acquire
all of the issued and outstanding capital stock of the Company from the Members,
as stockholders of the Company, in exchange for issuing the Members proportional
membership interests in the Seller;
WHEREAS, the Operating Committee of the Seller and the Boards of Directors
of the Company, CenterPoint and Mergersub deem it advisable and in the best
interests of their respective shareholders to approve and consummate the
business combination transaction provided for herein in which Mergersub would
merge with the Company, with the Company being the surviving corporation in the
merger (the "ACQUISITION" or "MERGER");
WHEREAS, certain Members, as stockholders of the Company, have entered into
a Voting Agreement dated the date hereof (the "VOTING AGREEMENT") pursuant to
which, among other things, such Members have agreed to vote the shares of
capital stock of the Company that
such Members own or control, directly or indirectly, to approve the Merger and
the transactions contemplated by this Agreement;
WHEREAS, CenterPoint is entering into other agreements (the "OTHER
AGREEMENTS") substantially similar to this Agreement with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇ ▇. Driver Company, Inc., ▇▇▇▇ Frankfort ▇▇▇▇▇ & ▇▇▇▇,
P.C., Berry, Dunn, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Chartered, ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ PC, Self
Funded Benefits, Inc. d/b/a Insurance Design Administrators, Grace & Company,
P.C., Simione, Scillia, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Van Trigt LLP,
The ▇▇▇▇▇▇▇ Company, Inc., ▇▇▇▇▇▇▇ Administrators, LLC and Verasource Excess
Risk Ltd. (which companies together with the Company are collectively referred
to herein as the "FOUNDING COMPANIES"), which agreements provide for the
merger of a wholly owned subsidiary of CenterPoint with each such Founding
Company (the "OTHER MERGERS") simultaneously with the Merger; CenterPoint has
provided a side letter to each holder of equity interests of the Company to such
effect;
WHEREAS, simultaneously with the consummation of the Merger, CenterPoint
will close an initial public offering (the "IPO") of CenterPoint Common Stock
(as defined in Section 2.1); and
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WHEREAS, the parties intend the acquisition of CenterPoint Common Stock
pursuant to the terms hereof to be tax-free under the provisions of Section 351
of the Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, for and in consideration of the premises and of the mutual
representations, warranties, covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
THE MERGER
1.1 Merger. Upon the terms and subject to the conditions set forth in
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this Agreement and in reliance upon the representations and warranties set forth
herein, Mergersub shall be merged with and into the Company, the result of which
will cause the separate corporate existence of Mergersub to cease and the
Company to continue under the laws of the State of Michigan. As promptly as
possible on the Closing Date, the parties shall cause the Merger to be completed
by filing articles of merger and a certificate of merger, as applicable (the
"MERGER DOCUMENTS"), with the Secretary of State of the State of Michigan, as
provided in the Michigan Business Corporation Act, as amended (the "MBCA"). The
Merger shall become effective (the "EFFECTIVE TIME") upon the filing of the
Merger Documents with the Secretary of State of the State of Michigan or at such
later time, contemporaneously with the closing of the IPO, as agreed by
CenterPoint and the Company and specified in the Merger Documents.
2
1.2 Effects of the Merger. At the Effective Time (i) the separate
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existence of Mergersub shall cease and Mergersub shall be merged with and into
the Company, with the Company being the surviving corporation in the Merger (the
Company is sometimes referred to herein as the "SURVIVING CORPORATION"), (ii)
the Articles of Incorporation and By-laws of the Surviving Corporation shall be
amended in form and substance acceptable to CenterPoint and as specified in the
Merger Documents, (iii) the Merger shall have all the effects provided by
applicable law, and (iv) the Surviving Corporation shall be a wholly-owned
subsidiary of CenterPoint.
1.3 Directors and Officers of the Surviving Corporation. From and after
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the Effective Time, the directors and officers of Mergersub shall be the
directors and officers of the Surviving Corporation until their successors are
duly elected and qualified.
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Merger Consideration.
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2.1.1 Basic Purchase Consideration. At the Closing, by virtue of the
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Merger and without any action on the part of the holders thereof, the
outstanding shares of capital stock, consisting of 10,150 shares of Class A
common stock, par value $1.00 per share, and zero (0) shares of Class B common
stock, par value $1.00 per share, of the Company (collectively, the "COMPANY
STOCK") shall be converted into the right to receive: (a) that number of shares
of CenterPoint common stock, par value $.01 per share (the "CENTERPOINT COMMON
STOCK"), determined in accordance with the formula in Schedule 2.1 (the "STOCK
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CONSIDERATION") and (b) the amount of cash in Schedule 2.1 (the "CASH
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CONSIDERATION"). The sum of the Cash Consideration and the Stock Consideration
is herein referred to as "BASIC PURCHASE CONSIDERATION."
2.1.2 Treasury Stock. Each share of capital stock of the Company held
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in treasury of the Company shall be canceled and retired and no payment shall be
made in respect thereof.
2.1.3 Dissenters. Each outstanding share of capital stock of the
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Company the holder of which has perfected his right to dissent under applicable
law and has not effectively withdrawn or lost such right as of the Effective
Time (the "DISSENTING SHARES") shall not be converted into the right to receive
Basic Purchase Consideration, and the holder thereof shall be entitled only to
such rights as are granted by applicable law. The Company shall give
CenterPoint prompt notice upon receipt by the Company of any such written
demands for payment of fair value of shares of capital stock of the Company and
any other instruments provided pursuant to applicable law. Any payments made in
respect of Dissenting Shares shall be made by the Surviving Corporation.
3
2.1.4 Conversion of Mergersub Stock. At the Effective Time, each share
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of Mergersub Stock issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and become one validly issued, fully paid and
non-assessable share of the Surviving Corporation. Such newly issued shares
shall thereafter constitute all of the issued and outstanding capital stock of
the Surviving Corporation.
2.1.5 Exchange of Certificates. At the Closing, the Seller shall
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deliver to CenterPoint the original Company Stock certificates, duly endorsed in
blank by a duly authorized official of the Seller or accompanied by blank stock
powers, in exchange for the allocated share of (a) CenterPoint Common Stock
certificates representing the Stock Consideration and (b) payment of the Cash
Consideration by certified check, cashier's check or wire transfer of
immediately available funds to a bank account or bank accounts in the amounts
and manner specified by the Member Representative in a writing delivered to
CenterPoint at least three (3) business days prior to the Closing Date. The
shares represented by the Company Stock certificates so delivered shall be
canceled. Until surrendered as contemplated by this Section 2.1.5, each
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certificate representing shares of Company Stock represents only the right to
receive Basic Purchase Consideration, as adjusted in accordance with this
Article II.
2.2 Post-Closing Adjustments to Basic Purchase Consideration.
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2.2.1 Adjustments for Net Working Capital Shortfall/Excess. The Basic
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Purchase Consideration shall be (a) reduced dollar-for-dollar to the extent
Net Working Capital on the Closing Date is less than the Target or (b)
increased dollar-for-dollar to the extent Net Working Capital on the
Closing Date is greater than the Target.
2.2.2 Preliminary Balance Sheet and Adjustment. At or about the
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Closing, the Company will prepare, and the firm of PricewaterhouseCoopers
LLP (the "CENTERPOINT ACCOUNTANTS") will review, a balance sheet of the
Company, as of the Closing Date, in accordance with GAAP and consistent
with the accounting policies and practices used in connection with the
preparation of the Financial Statements (the "CLOSING BALANCE SHEET") along
with a preliminary calculation of any excess or shortfall of Net Working
Capital as compared to the Target.
2.2.3 Interim Adjustment. As soon as practicable, the Company will
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prepare and deliver to CenterPoint a revised calculation of Net Working
Capital reflecting all collections of AR up to the date 90 days from the
Closing Date. Within ten (10) days of receipt of such calculation,
CenterPoint will deliver to the Member Representative a written report
indicating the amount and nature of any adjustment to the Basic Purchase
Consideration determined in accordance with Section 2.2.1 (the "INTERIM
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ADJUSTMENT").
2.2.4 Final Adjustment. As soon as practicable, the Company will
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prepare and deliver to CenterPoint a final calculation of Net Working
Capital revised to reflect all collections of AR up to the date 180 days
from the Closing Date. CenterPoint will review such calculation and any
records, work papers and other documents related thereto. Within ten (10)
days of receipt of such calculation, CenterPoint will deliver to the Member
4
Representative a written report indicating the amount and nature of any
adjustment to the Basic Purchase Consideration determined in accordance
with Section 2.2.1 (the "FINAL ADJUSTMENT").
-------------
2.2.5 Disputes.
--------
The parties hereto shall not object to the Interim Adjustment
which shall be binding on the parties hereto, and shall withhold all
objections until delivery of the Final Adjustment report. If the
Member Representative does not object (or otherwise respond) in
writing to the Final Adjustment report within 30 days after its
delivery, the Final Adjustment shall automatically become final,
binding and conclusive on all parties hereto. Any objection to the
Final Adjustment report shall be in writing and shall specify the
item or items in dispute (each a "DISPUTED ITEM").
If the Member Representative and CenterPoint are unable to
resolve any Disputed Item within 30 days after notice from the Member
Representative that a dispute exists (the "RESOLUTION PERIOD"), then
a representative from the office of a nationally recognized
accounting firm chosen by the Member Representative and CenterPoint
(the "ARBITRATOR") selected jointly by CenterPoint and the Member
Representative will arbitrate the dispute. The Member Representative
and CenterPoint shall, within 20 days after expiration of the
Resolution Period, present their respective positions with respect to
any Disputed Item to the Arbitrator together with such materials as
the Arbitrator deems appropriate. To the extent any Disputed Item is
similar to a disputed item under the Other Agreements, the Arbitrator
shall arbitrate the Disputed Item based on the submitted materials
and without regard to the disputed item under the Other Agreements.
The Arbitrator shall, after the submission of the materials, submit a
written decision on each Disputed Item to the Member Representative
and CenterPoint and such determination shall be final and binding on
the parties hereto. The arbitration shall be conducted in Chicago,
Illinois. The parties hereto agree that the cost of the Arbitrator
shall be borne by the non-prevailing party or as determined by the
Arbitrator.
2.2.6 Payment of Adjustments. In the event Net Working Capital is
----------------------
less than the Target, the Seller and the Members shall pay the amount of
the shortfall to CenterPoint. In the event Net Working Capital is greater
than the Target, CenterPoint shall pay the amount of the excess to the
Seller. Any payment required to be made pursuant to this paragraph shall
be made, within ten days of delivery of the report indicating any
adjustment, by wire transfer of immediately available funds to an account
designated in writing by the party that is to receive payment of such
adjustment. In respect of the Final Adjustment, the party making a payment
required by such adjustment shall make such payment within ten days after
the Final Adjustment becomes final and shall receive credit for or return
of any amount previously paid in connection with the Interim Adjustment.
5
2.3 Post-Closing Management of AR. Following the Closing, the billing,
-----------------------------
servicing, administering and collection of the AR shall be conducted by the
Company. The Company shall take all such actions as may be necessary or
advisable to collect the AR in accordance with applicable laws, rules and
regulations, with reasonable care and diligence, and in accordance with the
Company's credit and collection policy in effect at Closing. The Company may
modify, adjust or write-off AR from time to time in accordance with the
Company's credit and collection policy in effect at Closing. Unless otherwise
required by contract or law, payments by an obligor in respect of services
rendered or expenses advanced by the Company shall be applied as follows: in the
event any such payment specifically references the invoice being paid or clearly
relates to an outstanding invoice, the payment will be applied to the
corresponding invoice; and, in any other case, the payment will be applied to
satisfy AR relating to such obligor in the order that such AR arose. Any
adjustment, modification or write-off affecting AR and fees and expenses
receivable and unbilled fees and expenses of the Company incurred after Closing
with respect to the same client engagement shall be allocated ratably to the
pre-Closing and post-Closing periods.
2.4 Assignment of Uncollected AR. If any AR remain uncollected by the
----------------------------
Company as of 180 days after the Closing Date, the Company will assign the
uncollected AR to the Seller. Notwithstanding the foregoing, the Company will
retain the sole right to service, administer and collect the uncollected AR in
accordance with Section 2.4.
-----------
2.5 Definitions. For purposes of this Agreement, the following terms
-----------
shall have the following meanings:
(a) "AR" means any fees and expenses receivable and unbilled fees and
expenses of the Company on the Closing Date.
(b) "NET WORKING CAPITAL" means an amount determined as of the Closing
Date, whenever calculated, equal to difference between: (i) the sum of any
AR, prepaid expenses and other current assets less (ii) the sum of accounts
----
payable, accrued current liabilities, the items listed on Schedule 2.5, the
-------------
Tax Accrual and the portion of employer-paid FICA attributable to Medicare,
payable in connection with deferred compensation and the Special Bonus
Plan. For purpose of this Section 2.5(b), the Special Bonus Plan accrual
--------------
shall not constitute a current liability.
(c) "SPECIAL BONUS PLAN" means the Company's Special Bonus Plan.
(d) "TARGET" means an amount equal to 1% of the Company's net revenues
for the four quarter period ending on the last day of the calendar quarter
prior to Closing.
(e) "TAX ACCRUAL" means an amount equal to the product of (i) Net
Working Capital (calculated before deduction of the Tax Accrual) less an
amount equal to any tax deductions realized by CenterPoint as a result of
any payments pursuant to the Special Bonus Plan and (ii) the sum of 34%
plus the effective state tax rate on the Company (net of any federal tax
benefit). A negative Tax Accrual shall be treated as a current asset for
purposes of Section 2.5(b)(i). The Tax Accrual shall be reduced by 34%
-----------------
of the present value of the SLRP liability as calculated by Centerpoint's
accountants.
6
ARTICLE III
THE CLOSING AND CONSUMMATION DATE
The consummation of the Merger and the other transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇, Chicago, Illinois, contemporaneously with the closing of the IPO, or at
such other time and date as the parties hereto may mutually agree (the "CLOSING
DATE").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Seller and the Company hereby jointly and severally represent and
warrant to CenterPoint, as of the date hereof and, subject to Section 7.3, as of
-----------
the date on which CenterPoint and the lead Underwriter (as defined in Section
-------
8.1.1) execute and deliver the Underwriting Agreement related to the IPO and as
-----
of the Closing Date, as follows:
4.1 Organization and Qualification. As of the date hereof and until
------------------------------
completion of the Conversion, the Company is a professional corporation duly
organized, validly existing and in good standing under the laws of the State of
Michigan and, following the Conversion, the Company will be a business
corporation duly organized, validly existing and in good standing under the laws
of the State of Michigan. The Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the state of
Michigan. Each Company Subsidiary (as defined in Section 4.2) is duly
-----------
organized, validly existing and in good standing under the laws of the state of
its organization set forth on Schedule 4.2. Each of the Seller, the Company and
------------
the Company Subsidiaries has the requisite power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted, and is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary.
True, accurate and complete copies of the Seller's, the Company's and each
Company Subsidiary's Organizational Documents, in each case as in effect on the
date hereof, have heretofore been delivered to CenterPoint. "ORGANIZATIONAL
DOCUMENTS" means (a) the articles or certificate of incorporation and the bylaws
of a corporation (professional or otherwise), (b) the partnership agreement and
any statement of partnership of a general partnership, (c) the limited
partnership agreement and the certificate of limited partnership of any limited
partnership, (d) the operating or limited liability company agreement and
certificate of formation of any limited liability company, (e) any charter or
similar document adopted and filed in connection with the creation, formation,
organization or governance (as applicable) of any Person and (f) any amendment
to any of the foregoing.
4.2 Company Subsidiaries. Schedule 4.2 sets forth the name (including any
-------------------- ------------
assumed names), jurisdiction of organization and ownership of the issued and
outstanding equity interests of each Person in which the Company owns, directly
or indirectly, securities or other interests having the power to elect a
majority of such Person's board of directors or similar governing
7
body, or otherwise having the power to direct the business and policies of such
Person (each a "COMPANY SUBSIDIARY" and collectively, the "COMPANY
SUBSIDIARIES"). Except as set forth on Schedule 4.2, the Company does not,
------------
directly or indirectly, own, of record or beneficially, or control any capital
stock, securities convertible into capital stock or any other equity interest in
any Person.
4.3 Authority; Non-Contravention; Approvals.
---------------------------------------
4.3.1 Each of the Seller and the Company has full right, power and
authority to enter into this Agreement and, subject to the approval of the
Merger and the transactions contemplated hereby by the Members, as
stockholders of the Company, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company has been duly authorized by all necessary corporate action on the
part of the Company, subject to the approval of the Merger and the
transactions contemplated hereby by the Members. This Agreement has been
duly executed and delivered by the Seller and the Company, and, assuming
the due authorization, execution and delivery hereof by CenterPoint,
constitutes a valid and legally binding agreement of the Seller and the
Company, enforceable against the Seller and the Company in accordance with
its terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
4.3.2 The execution and delivery of this Agreement by each of the
Seller and the Company does not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any claim, lien, privilege, mortgage, charge, hypothecation,
assessment, security interest, pledge or other encumbrance, conditional
sales contract, equity charge, restriction, or adverse claim of interest of
any kind or nature whatsoever (each a "LIEN" and collectively, the
"LIENS"), upon any of the properties or assets of the Company or any
Company Subsidiary under, any of the terms, conditions or provisions of (i)
the Organizational Documents of the Seller, the Company or any Company
Subsidiary, (ii) following completion of the Conversion, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any court or federal, state, provincial, local or
foreign government, or any subdivision, agency or authority of any thereof
("GOVERNMENTAL AUTHORITY") applicable to the Seller, the Company, any
Company Subsidiary, or the Business, properties or assets of the Seller,
the Company or any Company Subsidiary, except for those items discussed in
(ii) above relating to regulating, licensing or permitting the practice of
public accountancy or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which any of the Seller,
the Company or any Company Subsidiary is a party or by which any of the
Seller, the Company, any Company Subsidiary or any of the properties or
assets of the Company or any Company Subsidiary may be bound or affected.
The consummation by the Seller and the Company of the transactions
contemplated hereby will not result in a violation,
8
conflict, breach, right of termination, creation or acceleration of Liens
under the of the terms, conditions or provisions of the items described in
clauses (i) through (iii) of the immediately preceding sentence, subject in
the case of the terms, conditions or provisions of the items described in
clause (iii) above, to obtaining (prior to the Closing Date) such consents
required from third parties set forth on Schedule 4.3.2 and except for
--------------
those items described in (ii) and (iii) above relating to regulating,
licensing or permitting the practice of public accountancy.
4.3.3 Except for (i) the filing in connection with the IPO of a
registration statement on Form S-1 (the "FORM S-1") and the filing of a
registration statement on Form S-4 (the "FORM S-4") (Form S-1 and Form S-4
are collectively the "REGISTRATION STATEMENTS") with the Securities and
Exchange Commission (the "SEC") pursuant to the Securities Act of 1933, as
amended (the "SECURITIES ACT" or the "1933 ACT"), the declaration of the
effectiveness thereof by the SEC and filings, if required, with various
state securities or "blue sky" authorities, (ii) any filing which may be
required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as
amended (the "HSR ACT"), and (iii) any filing which may be required by any
Governmental Authority or self-regulatory organization regulating,
licensing or permitting the practice of public accountancy, no declaration,
filing or registration with, or notice to, or authorization, consent or
approval of, any Governmental Authority is necessary for the execution and
delivery of this Agreement by the Seller or the Company or the consummation
by the Seller or the Company of the transactions contemplated hereby, other
than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be,
would not, individually or in the aggregate, have a "COMPANY MATERIAL
ADVERSE EFFECT," which, for purposes of this Agreement means a material
adverse effect on the operations, assets, condition (financial or other),
operating results, employee or client relations, or prospects of the
Company or any Company Subsidiary.
4.4 Capitalization.
--------------
4.4.1 As of the date hereof, the authorized capital stock of the
Company consists of 50,000 shares of Class A Company Stock, of which 10,150
shares are issued and outstanding, and 50,000 shares of Class B Company
Stock, of which zero shares are issued and outstanding. The authorized
capital stock of each of the Company Subsidiaries, if any, and the number
of such shares issued and outstanding is completely and accurately set
forth in Schedule 4.4. All of such issued and outstanding shares are
------------
validly issued and are fully paid, nonassessable and free of preemptive
rights. The Members are all of the stockholders of the Company and own
beneficially and of record all of the issued and outstanding shares of the
Company Stock, which shares constitute all of the outstanding shares of
capital stock of the Company. Immediately prior to the Closing, the Seller
shall own all such shares of the Company. The Company owns all shares of
the Company's Subsidiaries as indicated on Schedule 4.4, in each case free
------------
and clear of all Liens, and the Company has good and marketable title to
such shares of the Company Subsidiaries. All of such issued and
outstanding shares are validly issued and are fully paid, nonassessable and
free of preemptive rights.
9
4.4.2 Except as set forth on Schedule 4.4 or in connection with the
------------
Conversion, there are no outstanding subscriptions, options, calls,
contracts, commitments, undertakings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the
capital stock of the Seller, the Company or any Company Subsidiary or
obligating the Seller, the Company or any Company Subsidiary to grant,
extend or enter into any such agreement or commitment or obligating the
Seller, the Company or any Company Subsidiary to convey or transfer any
Company Stock or Company Subsidiary stock, as the case may be. As of the
Closing Date, there will be no voting trusts, proxies or other agreements
or understandings to which the Seller, the Company or any Company
Subsidiary is a party or is bound with respect to the voting of any shares
of capital stock or other equity interests of the Company or any Company
Subsidiary.
4.5 Year 2000. Except as set forth in Schedule 4.5, to the Knowledge of
---------
the Seller or the Company, all of the computer software, computer firmware,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized, and/or software system(s) that are
used or relied on by the Company or any Company Subsidiary in the conduct of the
Business will not malfunction, will not cease to function, will not generate
incorrect data, and will not produce incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the twentieth
(20/th/) and twenty-first (21/st/) centuries and (ii) date-related data in
connection with any valid date in the twentieth (20/th/) and twenty-first
(21/st/) centuries, except for any malfunctions or generations of incorrect data
or results that would not individually or in the aggregate have a 1 Company
Material Adverse Effect. Nothing in this Section 4.5 is intended or shall be
-----------
construed as a representation or warranty with respect to embedded systems.
4.6 Financial Statements. The Seller and the Company have previously
--------------------
furnished to CenterPoint copies of the audited consolidated balance sheets of
the Company as of May 31 in each of the years 1997 and 1998 and unaudited
consolidated balance sheet of the Company for the six month period ending
November 30, 1998 (the "LATEST BALANCE SHEET"), and the related audited
consolidated statements of income, stockholders' equity and cash flow for each
of the years in the three (3) year period ended May 31, 1998, including all
notes thereto, and related unaudited consolidated statements of income,
stockholders' equity and cash flow for the six month period ending November 30,
1998, including all notes thereto (collectively, the "FINANCIAL STATEMENTS").
Each of the Financial Statements is accurate and complete in all material
respects, is consistent with the books and records of the Company and the
Company Subsidiaries (which, in turn, are accurate and complete in all material
respects), and fairly presents in all material respects the financial condition,
assets and liabilities of the Company and the Company Subsidiaries as of its
date and the results of operations and cash flows for the periods related
thereto, in each case in accordance with generally accepted accounting
principles, applied on a consistent basis ("GAAP").
4.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
---------------------------------- --------
4.7, neither the Company nor any Company Subsidiary had, as of the date of the
---
Latest Balance Sheet, nor has it incurred since that date, any liabilities or
obligations of any nature (whether known or
10
unknown, absolute, contingent, accrued, direct, indirect, perfected, inchoate,
unliquidated or otherwise), except (i) to the extent clearly and accurately
reflected or accrued or fully reserved against in the Financial Statements or
(ii) liabilities and obligations which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business and consistent with past custom
and practices (none of which is a liability resulting from a breach of contract,
breach of warranty, tort, infringement claim, legal violation or lawsuit).
4.8 Unbilled Fees and Expenses. At the Closing all unbilled fees and
--------------------------
expenses at net realizable value reflected in the records of the Company and the
Company Subsidiaries arose in the ordinary course of business and will be
billable in the ordinary course of business using normal billing practices and
adjustments employed as of the date of this Agreement by the Company and each
Company Subsidiary. Upon such billing any such amounts will be collectible in
the ordinary course of business using normal collection practices and policies
employed by the Company and each Company Subsidiary (net of any allowance for
doubtful accounts determined in accordance with the Company's and the Company
Subsidiary's past practice and custom).
4.9 Absence of Certain Changes or Events. Except as set forth on Schedule
------------------------------------ --------
4.9, since the date of the Latest Balance Sheet, each of the Company and the
---
Company Subsidiaries has conducted its business only in the ordinary course
consistent with past custom and practices. Except as set forth on Schedule 4.9
------------
since the date of the Latest Balance Sheet, there has not been any:
(a) material adverse change in the operations, condition (financial or
otherwise), operating results, assets, liabilities, employee or client
relations or prospects of the Company or any Company Subsidiary;
(b) damage, destruction or loss of any property owned by the Company
or any Company Subsidiary, or used in the operation of the Business,
whether or not covered by insurance, having a replacement cost or fair
market value in excess of five percent (5%) of the amount of net property,
plant and equipment shown on the Latest Balance Sheet, in the aggregate;
(c) voluntary or involuntary sale, transfer, surrender, cancellation,
abandonment, waiver, release or other disposition of any kind by the
Company or any Company Subsidiary of any right, power, claim or debt,
except the collection of accounts and billing of work-in-process, each in
the ordinary course of business consistent with past custom and practices;
(d) strike, picketing, boycott, work stoppage, union organizational
activity, allegation, charge or complaint of employment discrimination or
other labor dispute or similar occurrence that is reasonably expected to
adversely affect the Company, a Company Subsidiary or the Business;
(e) loan or advance by the Company or any Company Subsidiary to any
Person, other than as a result of services performed for, or expenses
properly and reasonably
11
advanced for the benefit of, customers in the ordinary course of business
consistent with past custom and practices;
(f) notice (formal or otherwise) of any liability, potential liability
or claimed liability relating to environmental matters;
(g) declaration, setting aside, or payment of any dividend or other
distribution in respect of the Company's capital stock or other equity
interests or any direct or indirect redemption, purchase, or other
acquisition of the Company's or any Company Subsidiary's capital stock or
other equity interests, or the payment of principal or interest on any
note, bond, debt instrument or debt to any Affiliate (as defined in Section
-------
15.4) of the Company or any Company Subsidiary, except bonuses and
----
distributions to employees and stockholders of the Company disclosed to
CenterPoint in writing that are consistent with the Company's past custom
and practices or as otherwise contemplated by this Agreement;
(h) incurrence by the Company or any Company Subsidiary of debts,
liabilities or obligations except current liabilities incurred in
connection with or for services rendered or goods supplied in the ordinary
course of business consistent with past custom and practices, liabilities
on account of taxes and governmental charges (but not penalties, interest
or fines in respect thereof), and obligations or liabilities incurred by
virtue of the execution of this Agreement;
(i) issuance by the Company or any Company Subsidiary of any notes,
bonds, or other debt securities or any equity securities or securities
convertible into or exchangeable for any equity securities;
(j) entry by the Company or any Company Subsidiary into, or amendment
or termination of, any material commitment, contract, agreement, or
transaction, other than in the ordinary course of business and other than
expiration of contracts in accordance with their terms;
(k) loss or threatened loss of, or any material reduction or
threatened material reduction in revenues from, any client of the Company
or any Company Subsidiary that accounted for revenues during the last
twelve months in excess of one percent (1%) of the consolidated net
revenues of the Company and the Company Subsidiaries, or change in the
relationship of the Company or any Company Subsidiary with any client or
Governmental Authority that is reasonably expected to adversely affect the
Company, any Company Subsidiary or the Business;
(l) change in accounting principles, methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) utilized by the Company or any Company Subsidiary;
(m) discharge or satisfaction by the Company or any Company Subsidiary
of any material liability or encumbrance or payment by the Company or any
Company
12
Subsidiary of any material obligation or liability, other than current
liabilities paid in the ordinary course of its business consistent with
past custom and practices;
(n) sale, lease or other disposition by the Company or any Company
Subsidiary of any tangible assets (having an aggregate replacement cost or
fair market value in excess of five percent (5%) of the amount of net
property, plant and equipment shown on the Latest Balance Sheet) other than
in the ordinary course of business, or the sale, assignment or transfer by
the Company or any Company Subsidiary of any trademarks, service marks,
trade names, corporate names, copyright registrations, trade secrets or
other intangible assets, or disclosure of any proprietary confidential
information of the Company or any Company Subsidiary to any Person other
than an employee, agent, attorney, accountant or other representative of
the Company that has agreed to maintain the confidentiality of any such
proprietary confidential information;
(o) capital expenditures or commitments therefor by the Company or any
Company Subsidiary in excess of $50,000 individually or $100,000 in the
aggregate;
(p) mortgage, pledge or other encumbrance of any asset of the Company
or any Company Subsidiary or creation of any easements, Liens or other
interests against or on any of the Real Property (as defined in Section
-------
4.14.1);
------
(q) adoption, amendment or termination of any Employee Plan (as
defined in Section 4.17.5(a)) or increase in the benefits provided under
-----------------
any Employee Plan, or promise or commitment to undertake any of the
foregoing in the future; or
(r) an occurrence or event not included in clauses (a) through (q)
that has resulted or, based on information of which the Seller or the
Company has Knowledge, is reasonably expected to result in a Company
Material Adverse Effect.
4.1 Litigation. Except as set forth on Schedule 4.10 (which shall
---------- -------------
disclose the parties to, nature of and relief sought for each matter to be
disclosed on Schedule 4.10):
--------------
4.10.1 There is no suit, action, proceeding, investigation, claim or
order pending or, to the Knowledge of the Seller or the Company, threatened
against the Company or any Company Subsidiary, or with respect to the
Merger, or with respect to any Employee Plan, or any fiduciary of any such
plan (or pending or, to the Knowledge of the Company, threatened against
any of the officers, directors, Stockholders, partners or employees of the
Company or any Company Subsidiary with respect to its business or proposed
business activities), or to which the Company or any Company Subsidiary is
otherwise a party, or that is reasonably expected to have a Company
Material Adverse Effect, before any court, or before any Governmental
Authority (each an "ACTION" and collectively, the "ACTIONS"); nor, to the
Knowledge of the Seller or the Company, is there any basis for any such
Action.
4.10.2 Neither the Company nor any Company Subsidiary is subject to
any unsatisfied or continuing judgment, order or decree of any court or
Governmental
13
Authority. Neither the Company nor any Company Subsidiary, to the Knowledge
of the Company, is otherwise exposed, from a legal standpoint, to any
liability or disadvantage that is reasonably expected to result in a
Company Material Adverse Effect, and neither the Company nor any Company
Subsidiary is a party to any legal action to recover monies due it or for
damages sustained by it, other than collection of past due charges for
services rendered or expenses incurred by the Company.
4.10.3 Schedule 4.10 lists the insurer for each Action covered by
-------------
insurance or designates such Action, or a portion of such Action, as
uninsured and lists the individual and aggregate policy limits for the
insurance covering each insured Action and the applicable policy
deductibles for each insured Action.
4.10.4 Schedule 4.10 sets forth all material closed litigation matters
-------------
to which the Company or any Company Subsidiary was a party during the five
(5) year period preceding the Closing Date, the date such litigation was
commenced and concluded, and the nature of the resolution thereof
(including amounts paid in settlement or judgment).
4.11 Compliance with Applicable Laws. Except as set forth on Schedules
------------------------------- ---------
4.11 and 4.19, each of the Company and the Company Subsidiaries has complied in
---- ----
all material respects with all laws, rules, regulations, writs, injunctions,
decrees, and orders (collectively, "LAWS") applicable to it or to the operation
of the Business, and neither the Seller, the Company nor any Company Subsidiary
has received any notice of any alleged claim or threatened claim, violation of
or liability or potential responsibility under any such Law which has not
heretofore been cured and for which there is no remaining liability and, to the
Knowledge of the Seller or the Company, no event has occurred or circumstances
exist that (with or without notice or lapse of time) is reasonably expected to
constitute or result in a violation by the Company or any Company Subsidiary of
any Law that gives rise to any liability on the part of the Company or any
Company Subsidiary under any Law.
4.12 Licenses. Schedule 4.12 lists all licenses used by the Company and
-------- -------------
the Company Subsidiaries that are material to the conduct of the Business.
"LICENSES" means all notifications, licenses, permits, franchises, certificates,
approvals, exemptions, classifications, registrations and other similar
documents and authorizations, and applications therefor, held by the Company or
any Company Subsidiary and issued by, or submitted by the Company or any Company
Subsidiary to, any Governmental Authority or other Person, other than those
relating to the practice of public accounting. Section B of Schedule 4.12 lists
all licenses, certificates, approvals, registrations and other similar documents
and authorizations, and applications therefor relating to the practice of public
accountancy (the "ACCOUNTING LICENSES") held by the Company or a Company
Subsidiary and issued by, or submitted by the Company or any Company Subsidiary
to any Governmental Authority or other Person. All such Licenses and Accounting
Licenses are valid, binding and in full force and effect. Except as described
on Schedule 4.12, the execution, delivery and performance of this Agreement and
-------------
the consummation of the transactions contemplated hereby will not adversely
affect any such Licenses. To the Knowledge of the Seller or the Company, the
Company and the Company Subsidiaries have taken all necessary action to maintain
such Licenses. No loss or expiration of any such License is pending or, to the
Seller's or the Company's Knowledge, threatened or reasonably foreseeable.
14
4.13 Material Contracts. Except as listed or described on Schedule 4.13
------------------ -------------
(such contracts, or those which should have been listed on Schedule 4.13, are
-------------
herein referred to as the "MATERIAL CONTRACTS"), as of or on the date hereof,
neither the Company nor any Company Subsidiary is a party to or bound by, any
written or oral leases, agreements or other contracts or legally binding
contractual rights or contractual obligations or contractual commitments (each a
"CONTRACT" and collectively, the "CONTRACTS") relating to or in any way
affecting the operation or ownership of the Business that are of a type
described below and no such agreements are currently in negotiation or proposed:
(a) any consulting agreement pursuant to which the Company or a
Company Subsidiary is to receive consulting services (other than consulting
agreements that may be terminated by the Company or a Company Subsidiary on
not more than 30 days notice without penalty), employment agreement,
change-in-control agreement, or collective bargaining arrangement with any
labor union;
(b) any Contract for capital expenditures or the acquisition or
construction of fixed assets in excess of $50,000;
(c) any Contract for the purchase, maintenance or acquisition, or the
sale or furnishing, of materials, supplies, merchandise, machinery,
equipment, parts or other property or services (except if such Contract is
made in the ordinary course of business and requires aggregate future
payments of less than $25,000);
(d) any Contract, other than trade payables in the ordinary course of
business, relating to the borrowing of money, or the guaranty of another
Person's borrowing of money, including, without limitation, any notes,
mortgages, indentures and other obligations, guarantees of performance,
agreements and instruments for or relating to any lending or borrowing,
including assumed indebtedness;
(e) any Contract granting any Person a Lien on all or any part of the
assets of the Company or any Company Subsidiary;
(f) any Contract for the cleanup, abatement or other actions in
connection with Hazardous Materials (as defined in Section 4.19), the
------------
remediation of any existing environmental liabilities or relating to the
performance of any environmental audit or study;
(g) any Contract granting to any Person an option or a first refusal,
first-offer or similar preferential right to purchase or acquire any
material assets of the Company or any Company Subsidiary;
(h) any Contract with any agent, distributor or representative which
is not terminable by the Company or a Company Subsidiary upon ninety (90)
calendar days or less notice without penalty;
15
(i) any Contract under which the Company or any Company Subsidiary is
(A) a lessee or sublessee of any machinery, equipment, vehicle or other
tangible personal property, or (B) a lessor of any tangible personal
property owned by the Company or any Company Subsidiary, in either case
having an original purchase price or requiring aggregate lease payments in
excess of $50,000;
(j) any Contract under which the Company or any Company Subsidiary has
granted or received a license or sublicense or under which it is obligated
to pay or has the right to receive a royalty, license fee or similar
payment, in either case which provides for payments over the life of such
Contract in excess of $25,000;
(k) any Contract concerning an Affiliate Transaction (as defined in
Section 4.21);
------------
(l) any Contract providing for the indemnification or holding harmless
of any officer, director, employee or other Person;
(m) any Contract (A) for purchase or sale by the Company or any
Company Subsidiary of any real property on which the Company or any Company
Subsidiary conducts any aspect of the Business, (B) granting any options to
lease or purchase all or any portion of the Real Property, or (C) providing
for labor, services or materials to the Real Property (including, without
limitation, brokerage or management services) involving aggregate future
payments of more than $25,000;
(n) any Contract limiting, restricting or prohibiting the Company or
any Company Subsidiary from conducting business anywhere in the United
States or elsewhere in the world;
(o) any joint venture or partnership Contract;
(p) any lease, sublease or associated agreements relating to the
Leased Property (as defined in Section 4.14.1);
--------------
(q) any Contract requiring prior notice, consent or other approval
upon a change of control in the equity ownership of the Company or any
Company Subsidiary, which, if amended, modified or terminated as a result
of, relating to or in connection with a failure to provide prior notice, or
gain such consent or approval, would result in a Company Material Adverse
Effect; or
(r) any other Contract, whether or not made in the ordinary course of
business, which involves future payments by the Company or any Company
Subsidiary in excess of $25,000.
The Seller and the Company have provided CenterPoint with a true and
complete copy of each written Material Contract and a true and complete summary
of each oral Material Contract, in each case including all amendments or other
modifications thereto. Except as set forth on
16
Schedule 4.13, each Material Contract is a valid and binding obligation of, and
-------------
enforceable in accordance with its terms against, the Company or a Company
Subsidiary, as applicable, and, to the Knowledge of the Seller or the Company,
the other parties thereto, and is in full force and effect, subject only to
bankruptcy, reorganization, receivership and other laws affecting creditors'
rights generally and equitable principles. Except as set forth on Schedule 4.13,
-------------
the Company or one of the Company Subsidiaries, as applicable, has performed in
all material respects all obligations required to be performed by it as of the
date hereof and will have performed in all material respects all obligations
required to be performed by it as of the Closing Date under each Material
Contract and neither the Company or Company Subsidiary, as applicable, nor, to
the Knowledge of the Seller or the Company, any other party to any Material
Contract is in breach or default thereunder, and, to the Knowledge of the Seller
or the Company, there exists no condition which would, with or without the lapse
of time or the giving of notice, or both, constitute a breach or default
thereunder. Neither the Seller nor the Company has been notified that any party
to any Material Contract intends to cancel, terminate, not renew, or exercise an
option under any Material Contract, whether in connection with the transactions
contemplated hereby or otherwise.
4.14 Properties.
----------
4.14.1 Schedule 4.14.1-1 is a correct and complete list, and a brief
-----------------
description of, all real estate in which the Company or any of the Company
Subsidiaries has an ownership interest (the "OWNED PROPERTY") and all real
property leased by the Company (the "LEASED PROPERTY"). Except as lessee of
Leased Property, neither the Company nor any Company Subsidiary is a lessee
under or otherwise a party to any lease, sublease, license, concession or
other agreement, whether written or oral, pursuant to which another Person
has granted to the Company or any Company Subsidiary the right to use or
occupy all or any portion of any real property.
The Company or one or more of the Company Subsidiaries has good and
marketable fee simple title to the Owned Property and, assuming good title
in the landlord, a valid leasehold interest in the Leased Property (the
Owned Property and the Leased Property being sometimes referred to herein
as "REAL PROPERTY"), in each case free and clear of all Liens,
assessments or restrictions (including, without limitation, inchoate liens
arising out of the provision of labor, services or materials to any such
real estate) other than (a) mortgages shown on the Financial Statements as
securing specified liabilities or obligations, with respect to which no
default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) Liens for current taxes not yet due, (c)
(i) minor imperfections of title, including utility and access easements
depicted on subdivision plats for platted lots that do not impair the
intended use of the property, if any, none of which materially impairs the
current operations of the Company, any Company Subsidiary or the Business,
and (ii) zoning laws and other land use restrictions or restrictive
covenants that do not materially impair the present use of the property
subject thereto and (d) Liens, assessments and restrictions pursuant to and
by virtue of the terms of the lease of the Leased Property. The Real
Property constitutes all real properties reflected on the Financial
Statements or used or occupied by the Company or any Company Subsidiary in
connection with the Business or otherwise.
17
With respect to the Owned Property, except as reflected on Schedule
--------
4.14.1-2(a):
-----------
(a) the Company or one of the Company Subsidiaries is in exclusive
possession thereof and no easements, licenses or rights are necessary to
conduct the Business thereon in addition to those which exist as of the
date hereof;
(b) no portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority materially
adverse to the Owned Property and, to the Knowledge of the Seller or the
Company, there is no threatened condemnation or proceeding with respect
thereto;
(c) there is no violation of any covenant, condition, restriction,
easement or agreement of any Governmental Authority that affects the Owned
Property or the ownership, operation, use or occupancy thereof;
(d) no portion of any parcel of the Owned Property is subject to any
roll-back tax, dual or exempt valuation tax, and no portion of any Owned
Property is omitted from the appropriate tax rolls; and
(e) all assessments and taxes currently due and payable on such Owned
Property have been paid.
With respect to the Leased Property, except as reflected on Schedule
--------
4.14.1-2(b):
-----------
(i) the Company and/or one of the Company Subsidiaries is in
exclusive, peaceful and undisturbed possession thereof and, to the
Knowledge of the Seller or the Company, no easements, licenses or rights
are necessary to conduct the Business thereon in addition to those which
exist as of the date hereof; and
(ii) to the Knowledge of the Seller or the Company, no portion
thereof is subject to any pending condemnation proceeding or proceeding by
any public or quasi-public authority materially adverse to the Leased
Property and there is no threatened condemnation or proceeding with respect
thereto.
4.14.2 The Latest Balance Sheet and/or Schedule 4.14.2 reflect all
---------------
material tangible personal property owned by the Company or any Company
Subsidiary, except as sold or otherwise disposed of or acquired in the
ordinary course of business. Except as set forth on Schedule 4.14.2, the
---------------
Company or one of the Company Subsidiaries has good and marketable title
to, or a valid leasehold interest in, or valid license of, such personal
property (including, without limitation, machinery, equipment and
computers), in each case free and clear of any 1 Liens (other than Liens
that are part of such leasehold or license), and each such asset is in
working order and has been maintained in a commercially reasonable manner
and does not contain, to the Knowledge of the Company, any material defect.
Except as set forth in Schedule 4.14.2, no personal property (including,
---------------
without limitation, software and databases maintained on off-premises
computers) used by the Company or any Company Subsidiary in connection with
the
18
Business is held under any lease, security agreement, conditional sales
contract or other title retention or security arrangement or is located
other than on the Real Property.
4.15 Intellectual Property. The (i) patents, patent applications,
---------------------
inventions and discoveries that may be patentable (collectively, the "PATENTS"),
(ii) registered and unregistered trademarks, trade names, company names, assumed
business names and service marks (collectively, the "MARKS"), (iii) copyrights
(the "COPYRIGHTS"), and (iv) know how, trade secrets, confidential information,
client lists, software, technical information, data, process technology, plans
and drawings (collectively, the "TRADE SECRETS") owned, used or licensed by the
Company or any Company Subsidiary (collectively, the "INTELLECTUAL PROPERTY")
are all those necessary to enable the Company and the Company Subsidiaries to
conduct and to continue to conduct the Business substantially as it is currently
conducted. Schedule 4.15 contains a complete and accurate list of all material
-------------
Patents, Marks and Copyrights and a brief description of all material Trade
Secrets owned, used by or directly licensed to the Company or any Company
Subsidiary, and a list of all material license agreements and arrangements with
respect to any of the Intellectual Property to which the Company or any Company
Subsidiary is a party, whether as licensee, licensor or otherwise (collectively,
the "INTELLECTUAL PROPERTY LICENSES"). Except as set forth on Schedule 4.15, (i)
-------------
all of the Intellectual Property is owned, or to the Knowledge of the Seller or
the Company used under a valid Intellectual Property License, by the Company or
one of the Company Subsidiaries, and is free and clear of all Liens and other
adverse claims; (ii) none of the Seller, the Company nor any Company Subsidiary
has received any written notice that it is or has infringed on, misappropriated
or otherwise conflicted with, or otherwise has Knowledge that it is infringing
on, misappropriating, or otherwise conflicting with the intellectual property
rights of any third parties; (iii) there is no claim pending or, to the
Knowledge of the Seller or the Company, threatened against the Company or any
Company Subsidiary with respect to the alleged infringement or misappropriation
by the Company or Company Subsidiary, or a conflict with, any intellectual
property rights of others; (iv) the operation of any aspect of the Business in
the manner in which it has heretofore been operated or is presently operated
does not give rise to any such infringement or misappropriation; and (v) there
is no infringement or misappropriation of the Intellectual Property by a third
party or claim, pending or, to the Knowledge of the Seller or the Company,
threatened, against any third party with respect to the alleged infringement or
misappropriation of the Intellectual Property.
4.16 Taxes.
-----
4.16.1 Except as set forth on Schedule 4.16.1-1, each of the Company
-----------------
and the Company Subsidiaries has timely and accurately prepared and filed
or been included in or will timely and accurately prepare and file or be
included in all federal, state, local and foreign returns, declarations and
reports, information returns and statements (collectively, the "RETURNS")
for Taxes (as defined in Section 4.16.2) required to be filed by or with
--------------
respect to the Company or the Company Subsidiaries before the Closing Date,
and has paid or caused to be paid, or has made adequate provision or set up
an adequate accrual or reserve for the payment of, all Taxes required to be
paid in respect of the periods for which Returns are due on or prior to the
Closing Date, and will establish an adequate accrual or reserve for the
payment of all Taxes payable in respect of the period, including portions
thereof, subsequent to the last of said periods required to be so accrued
or
19
reserved, in each case in accordance with GAAP up to and including the
Closing Date. All such Returns are or will be true and correct in all
material respects. The Seller and the Company have delivered to
CenterPoint true and complete copies of all Returns referred to in the
first sentence of this Section 4.16.1 (including any amendments thereof)
--------------
for the five (5) most recent taxable years. Neither the Company nor any
Company Subsidiary is delinquent in the payment of any Tax, and no material
deficiencies for any Tax, assessment or governmental charge have been
threatened, claimed, proposed or assessed. No waiver or extension of time
to assess any Taxes has been given or requested. No written claim, or any
other claim, by any taxing authority in any jurisdiction where the Company
or any Company Subsidiary does not file Tax returns is pending pursuant to
which the Company or Company Subsidiary, as applicable, is or may be
subject to taxation by that jurisdiction. The Company's and the Company
Subsidiaries' Returns were last audited by the Internal Revenue Service or
comparable state, local or foreign agencies on the dates set forth on
Schedule 4.16.1-2.
-----------------
4.16.2 For purposes of this Agreement, the term "TAXES" shall mean
all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments, including, without limitation, income, gross
receipts, excise, property, sales, employment, withholding, social
security, occupation, use, service, service use, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall
profits, severance, customs, import, export, employment or similar taxes,
charges, fees, levies or other assessments, imposed by the United States,
or any state, local, foreign or provincial government or subdivision or any
agency thereof, whether computed on a separate, consolidated, unitary,
combined or any other basis.
4.17 Employee Benefit Plans; ERISA.
-----------------------------
4.17.1 Except as described in Schedule 4.17.1, neither the Company
---------------
nor any Company Subsidiary has or is reasonably expected to have any
liability (including contingent liability) whether direct or indirect (and
regardless of whether it would be derived from a current or former Plan
Affiliate, as defined in Section 4.17.5(c)) with respect to any of the
-----------------
following (whether written, unwritten or terminated): (i) any employee
welfare benefit plan, as defined in Section 3(1) of "ERISA," including, but
not limited to, any medical plan, life insurance plan, short-term or long-
term disability plan or dental plan; (ii) any "employee pension benefit
plan," as defined in Section 3(2) of ERISA (as defined in Section
-------
4.17.5(b)), including, but not limited to, any excess benefit plan, top hat
----------
plan or deferred compensation plan or arrangement, nonqualified retirement
plan or arrangement, qualified defined contribution or defined benefit
arrangement; or (iii) any other benefit plan, policy, program, arrangement
or agreement, including, but not limited to, any material fringe benefit
plan or program, personnel policy, bonus or incentive plan, stock option,
restricted stock, stock bonus, holiday pay, vacation pay, sick pay, bonus
program, service award, moving expense, reimbursement program, tool
allowance, safety equipment allowance, deferred bonus plan, salary
reduction agreement, change-of-control agreement, employment agreement or
consulting agreement.
20
4.17.2 A complete copy of each written Employee Plan (as defined in
Section 4.17.5(a)) as amended to the Closing, together with audited
-----------------
financial statements, if any, for the three (3) most recent plan years; a
copy of each trust agreement or other funding vehicle with respect to each
such plan; a copy of any and all determination letters, rulings or notices
issued by a Governmental Authority with respect to such plan; a copy of the
Form 5500 Annual Report for the three (3) most recent plan years; and a
copy of each and any general explanation or communication which was
required to be distributed or otherwise provided to participants in such
plan and which describes all or any relevant aspect of each plan, including
summary plan descriptions and/or summary of material modifications, have
been delivered to CenterPoint. A description of each unwritten Employee
Plan, including a description of eligibility, participation, benefits,
funding arrangements and assets or other relevant aspects of the
obligation, is set forth in Schedule 4.17.2.
---------------
4.17.3 Except as is not reasonably expected to give rise to any
liability (including contingent liability), whether direct or indirect, to
the Company or any Company Subsidiary, each Employee Plan (i) has been and
is operated and administered in compliance with its terms; (ii) has been
and is operated, administered, maintained and funded in compliance with the
applicable requirements of the Code in such a manner as to qualify, where
appropriate and intended, for both Federal and state purposes, for income
tax exclusions, tax-exempt status, and the allowance of deductions and
credits with respect to contributions thereto; (iii) where appropriate, has
received a favorable determination letter from the Internal Revenue Service
upon which the sponsor of the plan may currently rely; (iv) has been and
currently complies in form and in operation in all respects with all
applicable requirements of ERISA and the Code and any applicable reporting
and disclosure requirements of Federal and state laws, including but not
limited to the requirement of Part 6 of subtitle B of Title I of ERISA and
Section 4980B of the Code. With respect to each Employee Plan, no Person
has: (i) entered into any nonexempt "prohibited transaction," as such
terms are defined in ERISA or the Code; (ii) breached a fiduciary
obligation or (iii) any liability for any failure to act or comply in
connection with the administration or investment of the assets of such
plan; and no Employee Plan has any liability and there is no liability in
connection with any Employee Plan, other than a liability (i) which is
expressly and adequately reflected in the Latest Balance Sheets, (ii) which
is discretionary or terminable at will by the Company or one of the Company
Subsidiaries without incurring any such liability, or (iii) which is
adequately funded under a funding arrangement separate from the assets of
the Company, any Company Subsidiary or a Plan Affiliate (and only to the
extent of such funding). Any contribution made or accrued with respect to
any Employee Plan is fully deductible by the Company, a Company Subsidiary
or a Plan Affiliate.
4.17.4 Neither the Company nor any Company Subsidiary nor any Plan
Affiliate has ever sponsored, maintained, contributed to or been required
to contribute to, or has any liability, whether direct or indirect, with
respect to any Employee Plan which is or has ever been (i) a "multiemployer
plan" as defined in Section 4001 of ERISA, (ii) a "multi employer plan"
within the meaning of Section 3(37) of ERISA, (iii) a "multiple employer
plan" within the meaning of Code Section 413(c), (iv) a "multiple employer
welfare
21
arrangement" within the meaning of Section 3(40) of ERISA, (v) subject to
the funding requirements of Section 412 of the Code or to Title IV of
ERISA, or (vi) provides for post-retirement medical, life insurance or
other welfare-type benefits.
4.17.5 As used in this Agreement, the following terms shall have the
following respective meanings:
(a) the term "EMPLOYEE PLAN" shall mean any plan, policy,
program, arrangement or agreement described in Section 4.17.1, whether
--------------
or not scheduled;
(b) the term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended; and
(c) with respect to any Person ("FIRST PERSON"), the term
"PLAN AFFILIATE" shall mean any other Person with whom the First
Person constitutes or has constituted all or part of a controlled
group, or which would be treated or have been treated with the First
Person as under common control or whose employees would be or have
been treated as employed by the First Person, under Section 414 of the
Code or Section 4001(b) of ERISA and any regulations, administrative
rulings and case law interpreting the foregoing.
4.18 Labor Matters. Except as set forth in Schedule 4.18, there is no, and
------------- -------------
within the last three (3) years neither the Company nor any Company Subsidiary
has experienced any, strike, picketing, boycott, work stoppage or slowdown or
other similar labor dispute, union organizational activity, allegation, charge
or complaint of unfair labor practice, employment discrimination or other
matters relating to the employment of labor pending or, to the Knowledge of the
Seller or the Company, threatened against the Company or any Company Subsidiary,
or that is reasonably expected to affect the Company or any Company Subsidiary;
nor, to the Knowledge of the Seller or the Company, is there any basis for any
such allegation, charge, or complaint. There is no request for representation
pending and, to the Knowledge of the Seller or the Company, no question
concerning representation has been raised. There is no grievance pending that
is reasonably expected to result in a Company Material Adverse Effect nor any
arbitration proceeding arising out of a union agreement. To the Knowledge of
the Seller or the Company, no employee who is key to the Business and no group
of employees has announced or otherwise indicated any plans to terminate
employment with the Company or any Company Subsidiary. Each of the Company and
any Company Subsidiary has complied with all applicable laws relating to the
employment of labor, including provisions thereof relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes. Neither the Company nor any Company Subsidiary is liable for any
arrears of wages or any taxes or penalties for failure to comply with any such
laws, ordinances or regulations.
4.19 Environmental Matters. Other than as disclosed on Schedule 4.19, (i)
--------------------- -------------
each of the Company and the Company Subsidiaries is operating and has operated
its business in compliance with all applicable Environmental and Safety
Requirements (as defined later in this Section); (ii) to the actual knowledge of
the Operating Committee of the Seller and the Officers of the Company, without
any duty to inquire (notwithstanding the definition of "Knowledge" in Section
-------
22
15.4), there are no Hazardous Materials (as defined later in this Section)
----
present at, on or under any real property currently or formerly owned, leased or
used by the Company or Company Subsidiary (other than those present in office
supplies and cleaning/maintenance materials) for which the Company or a Company
Subsidiary or is or is reasonably expected to be responsible, or otherwise have
any liability, for response costs under any Environmental and Safety
Requirements; (iii) each of the Company and the Company Subsidiaries has
disposed of all waste materials generated by the Company or such Company
Subsidiary at any real property currently or formerly owned, leased or used by
the Company or Company Subsidiary in compliance with applicable Environmental
and Safety Requirements; and (iv) there are and have been no facts, events,
occurrences or conditions at or related to any real property currently or
formerly owned, leased or used by the Company or Company Subsidiary that is
reasonably expected to cause or give rise to liabilities or response obligations
of the Company or any Company Subsidiary under any Environmental and Safety
Requirements. The term "ENVIRONMENTAL AND SAFETY REQUIREMENTS" means any
federal, state and local laws, statutes, regulations or other requirements
relating to the protection, preservation or conservation of the environment or
worker health and safety, all as amended or reauthorized. The term "HAZARDOUS
MATERIALS" means "hazardous substances," as defined by the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et
seq., "hazardous wastes," as defined by the Resource Conservation Recovery
Act, 42 U.S.C. (S) 6901 et seq., asbestos in any form or condition,
polychlorinated biphenyls and any other material, substance or waste to which
liability or standards of conduct may be imposed under any Environmental and
Safety Requirement.
4.20 Insurance. Each of the Company and the Company Subsidiaries has in
---------
full force and effect commercially reasonable amounts of insurance to protect
the Company's and Company Subsidiaries' ownership or interest in, and operation
of, its assets against the types of liabilities, including professional
malpractice, customarily insured against in connection with operations similar
to the Business, and all premiums due on such policies have been paid. To the
Seller's and the Company's Knowledge, each of the Company and the Company
Subsidiaries has complied with the provisions of all such policies and is not in
default under any of such policies. Schedule 4.20 contains a complete and
-------------
correct list of all such insurance policies. Neither the Company nor any
Company Subsidiary has received any notice of cancellation or intent to cancel
or increase premiums with respect to such insurance policies. Schedule 4.20
-------------
also contains a list of all claims or asserted claims reported to insurers under
such policies relating to the ownership or interest in the Company's and the
Company Subsidiaries' assets, or operation of the Business, including all
professional malpractice claims and similar types of claims, actions or
proceedings asserted against the Company or any Company Subsidiary arising out
of the Business at any time within the past three (3) years.
4.21 Interest in Customers and Suppliers; Affiliate Transactions. Except
-----------------------------------------------------------
as described on Schedule 4.21 and except for ownership as an investment of not
-------------
more than one percent (1%) of any class of capital stock of any publicly-traded
company, none of the Seller, the Company, any Member, any Affiliate of a Member
nor Affiliate of the Seller, the Company or any Company Subsidiary (i)
possesses, directly or indirectly, any financial interest in, or is a director,
officer, employee or affiliate of, any Person that is a client, supplier,
customer, lessor, lessee or competitor of the Company or any Company Subsidiary,
(ii) owns, directly or indirectly, in whole or in part, or has any interest in
any tangible or intangible property used in the conduct of the
23
Business, or (iii) is a party to an agreement or relationship, that involves the
receipt by such Person of compensation or property from the Company or any
Company Subsidiary other than through a customary employment relationship or
through distributions made with respect to the Company Stock or equity interests
in any Company Subsidiary (provided such distributions have been made consistent
with the Company's or any Company Subsidiary's, as the case may be, past custom
and practices). Schedule 4.21 sets forth the parties to and the date, nature and
-------------
amount of each transaction during the last five years involving the transfer of
any cash, property or rights to or from the Company or any Company Subsidiary
from, to or for the benefit of any Affiliates (other than customary employment
relationships, or distributions made with respect to the Company Stock)
("AFFILIATE TRANSACTIONS"), and any existing commitments of the Company or any
Company Subsidiary to engage in the future in any Affiliate Transactions. Except
as disclosed, each Affiliate Transaction and each transaction with former
Affiliates of the Company or any Company Subsidiary was effected on terms
equivalent to those that would have been established in an arm's-length
transaction.
4.22 Business Relationships. Schedule 4.22 lists all clients of the
---------------------- -------------
Company and each Company Subsidiary representing one percent (1%) or more of the
Company's consolidated net revenues for the twelve (12) months ended December
31, 1998. Except as set forth on Schedule 4.22, since December 31, 1998, none
-------------
of such clients has canceled or substantially reduced its business with the
Company or Company Subsidiary, as applicable, nor are any of such clients
threatening to do so. To the Knowledge of the Seller or the Company, no client
that accounts for one percent (1%) or more of the Company's consolidated net
revenue, or supplier of the Company or any Company Subsidiary, will cease to do
business with, or substantially reduce its business with, the Company or any
Company Subsidiary, as applicable, after the consummation of the transactions
contemplated hereby.
4.23 Compensation. Schedule 4.23 is a complete list setting forth the
------------ -------------
names and current total compensation, including, without limitation, salary and
bonuses paid to employees and draws or other distributions paid to partners,
members or owners of each Person who earned from the Company or a Company
Subsidiary in 1998 total compensation in excess of $100,000. Except as set
forth in Schedule 4.23, no Person listed thereon has received any bonus or
-------------
increase in compensation and there has been no "general increase" in the
compensation or rate of compensation payable to any employees, partners, members
or owners of the Company or any Company Subsidiary since the date of the Latest
Balance Sheet, other than in the Company's and Company Subsidiary's ordinary
course of business, consistent with past custom and practices, nor since that
date has there been any oral or written promise to employees, partners, members
or owners of any bonus or increase in compensation, other than in the Company's
ordinary course of business, consistent with past custom and practices. The term
"GENERAL INCREASE" as used herein means any increase generally applicable to a
class or group, but does not include increases granted to individuals for merit,
length of service or change in position or responsibility made on the basis of
the custom and past practices of the Company or any Company Subsidiary. Schedule
--------
4.23 includes the date and amount of the last bonus or similar distribution or
----
increase in compensation for each listed individual.
4.24 Bank Accounts. Schedule 4.24 is a true and complete list of each bank
------------- -------------
in which the Company or any Company Subsidiary has an account or safe deposit
box, the number of each
24
such account or box, and the names of all Persons authorized to draw thereon or
to have access thereto.
4.25 Professional Credentials. Each Member is a Certified Public
------------------------
Accountant in good standing in one of the States of the United States or the
District of Columbia, and entitled to practice in one of the jurisdictions in
which the Company or any Company Subsidiary maintains an office, and there are
no disciplinary proceedings pending or threatened against the Company, any
Company Subsidiary or any of the Members by any Governmental Authority or self-
regulatory organization regulating, licensing or permitting the practice of
public accountancy.
4.26 Disclosure; No Misrepresentation. No representation or warranty of
--------------------------------
the Seller, the Company contained in this Agreement or in any of the
certification, schedules, lists, documents, exhibits, or other instruments
delivered or to be delivered to CenterPoint as contemplated by any provision
hereof contains any untrue statement regarding a material fact or omits to state
a material fact necessary in order to make the statements made herein or therein
not misleading. To the Knowledge of the Seller or the Company, there is no fact
or circumstance that has not been disclosed to CenterPoint herein that has or is
reasonably expected to have a Company Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
5.1 Several Representations and Warranties. Each Member, severally and
--------------------------------------
not jointly, hereby represents and warrants to CenterPoint as of the date hereof
and, subject to Section 7.3, as of the date on which CenterPoint and the lead
-----------
Underwriter execute and deliver the Underwriting Agreement related to the IPO,
and as of the Closing Date, as follows:
5.1.1 Capitalization. Except as set forth on Schedule 4.4,
-------------- ------------
immediately prior to the contribution thereof by such Member to the capital
of the Seller, such Member shall own beneficially and of record, and has
good and marketable title to, all of the issued and outstanding shares of
the Company Stock as set forth opposite the name of such Member in
Schedule 4.4, free and clear of all Liens. At the Closing as provided in
------------
this Agreement, CenterPoint will acquire good and valid title to such
Company Stock, free and clear of any Lien other than any Lien created by
CenterPoint.
5.1.2 Authority. Such Member has full right, capacity, power and
---------
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered
by such Member, and, assuming the due authorization, execution and delivery
hereof by CenterPoint, constitutes a valid and legally binding agreement of
such Member, enforceable against such Member in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
25
5.1.3 Non-Contravention. The execution and delivery of this
-----------------
Agreement by such Member does not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration under, or result in the
creation of any Lien upon any of the properties or assets of the Seller,
the Company or any Company Subsidiary under, any of the terms, conditions
or provisions of (i) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
Governmental Authority applicable to such Member, except for those items
relating to regulating, licensing or permitting the practice of public
accountancy, or (ii) other than those licenses, franchises, permits,
concessions or instruments of any Governmental Authority, any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind to
which such Member is a party or by which such Member may be bound or
affected. The consummation by such Member of the transactions contemplated
hereby will not result in a violation, conflict, breach, right of
termination, creation or acceleration of Liens under the of the terms,
conditions or provisions of the items described in clauses (i) and (ii) of
the immediately preceding sentence subject to obtaining (prior to the
Closing Date) the consents set forth on Schedule 4.3.2, except for those
--------------
items described above relating to regulating, licensing or permitting the
practice of public accountancy.
5.1.4 Approvals. To the Knowledge of such Member, and except with
---------
respect to (i) the filing of the Registration Statements with the SEC
pursuant to the 1933 Act, the declaration of the effectiveness of the
Registration Statements by the SEC and filings, if required, with various
state securities or "blue sky" authorities, (ii) any filing which may be
required under the HSR Act, (iii) any filing which may be required by any
Governmental Authority or self-regulatory organization regulating,
licensing or permitting the practice of public accountancy, no declaration,
filing, or registration with, or notice to, or authorization, consent or
approval of, any Governmental Authority is necessary for the execution and
delivery of this Agreement by such Member or the consummation by such
Member of the transactions contemplated hereby.
5.1.5 Litigation. There is no action, claim, suit, proceeding
----------
(disciplinary or otherwise), arbitration or investigation pending, or to
the Knowledge of such Member, threatened against such Member relating to
(i) the transactions contemplated by this Agreement, (ii) any action taken
by such Member or contemplated by such Member in connection with the
consummation by such Member of the transactions contemplated hereby, or
(iii) the practice of public accountancy by such Member.
5.1.6 No Transfer. There are no outstanding subscriptions, options,
-----------
calls, contracts, commitments, undertakings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement to deliver or sell, or
cause to be delivered or sold, shares of Company Stock previously owned by
such Member or obligating such Member to grant, extend or enter into any
such agreement or commitment or obligating such Member to convey or
transfer any Company Stock. As of the Closing Date, there will be no
voting trusts,
26
proxies or other agreements or understandings to which such Member is a
party or is bound with respect to the voting of any shares of capital stock
or other equity interests of the Company other than the Voting Agreement.
5.1.7 Disclosure. No representation or warranty by or on behalf of
----------
such Stockholder contained in this Agreement or any of the written
statements or certificates furnished at or prior to the Closing by or on
behalf of such Member to CenterPoint or its representatives in connection
herewith or pursuant hereto, contains any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements contained herein or therein not misleading.
5.1.8 Representations and Warranties of the Seller and the Company.
------------------------------------------------------------
To such Member's actual knowledge, the representations and warranties of
the Seller and the Company set forth in Article IV of this Agreement are
----------
true and correct.
5.2 Joint and Several Representations and Warranties. The Members jointly
------------------------------------------------
and severally represent and warrant to CenterPoint that the authorized capital
stock of the Company consists of 50,000 shares of Class A Company Stock, of
which 10,150 shares are issued and outstanding, and 50,000 shares of Class B
Company Stock, of which zero (0) shares are issued and outstanding, all of which
are validly issued and are fully paid, nonassessable and free of preemptive
rights.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPOINT
CenterPoint represents and warrants to the Company and the Stockholders as
of the date hereof and, subject to Section 7.3, as of the date on which
CenterPoint and the lead Underwriter execute and deliver the Underwriting
Agreement related to the IPO, and as of the Closing Date, as follows:
6.1 Organization And Qualification. Each of CenterPoint and Mergersub is
------------------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. True, accurate and complete copies of each of
CenterPoint's and Mergersub's Certificate of Incorporation and By-laws, as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to the Company.
6.2 Capitalization.
--------------
6.2.1 The authorized capital stock of CenterPoint consists of 20,000
shares of CenterPoint Common Stock, of which 17,500 shares are outstanding
as of the date hereof. All of the issued and outstanding shares of
CenterPoint Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights. Immediately prior to the
27
Closing Date, the authorized capital stock of CenterPoint will consist of
50,000,000 shares of CenterPoint Common Stock, of which the number of
shares set forth in the Form S-1 will be issued and outstanding, and
10,000,000 shares of Preferred Stock, par value $0.01 per share, none of
which will be issued and outstanding. Other than (i) shares of CenterPoint
Common Stock issued pursuant to a split of the shares outstanding as of the
date of this Agreement, (ii) shares of CenterPoint Common Stock issued in
accordance with the Merger and the Other Mergers, and (iii) shares of
CenterPoint Common Stock that may be issued to new members of management in
lieu of shares previously issued to current members of management, but
which will not increase the number of shares of outstanding CenterPoint
Common Stock, no shares of CenterPoint Common Stock will be issued prior to
the consummation of the IPO. Mergersub's authorized capital stock consists
solely of 1,000 shares of common stock, par value $.01 per share (the
"MERGERSUB STOCK"), all of which are issued and outstanding, are owned free
and clear of any Liens by CenterPoint, and are fully paid, nonassessable
and free and clear of preemptive rights.
6.2.2 Except as set forth on Schedule 6.2, as of the date hereof,
------------
there are no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement obligating CenterPoint
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of CenterPoint or obligating
CenterPoint to grant, extend or enter into any such agreement or
commitment. There are no voting trusts, proxies or other agreements or
understandings to which CenterPoint is a party or is bound with respect to
the voting of any shares of capital stock of CenterPoint. The shares of
CenterPoint Common Stock issued to Stockholders in the Merger will at the
Closing Date be duly authorized, validly issued, fully paid and
nonassessable and free of preemptive rights and issued pursuant to a
registration statement as required by the 1933 Act or an exemption
therefrom.
6.3 No Subsidiaries. Except for CenterPoint's ownership of 100% of the
---------------
capital stock of Professional Service Group, Inc., a Delaware corporation and
Mergersub (and similar entities created for similar purposes with respect to the
Other Agreements), CenterPoint has no subsidiaries and it does not own any
capital stock of any corporation or any equity or other interest of any nature
whatsoever in any Person.
6.4 Authority; Non-Contravention; Approvals.
---------------------------------------
6.4.1 Each of CenterPoint and Mergersub has all requisite right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been approved by the
Board of Directors of CenterPoint and Mergersub, and no other corporate
proceedings on the part of CenterPoint or Mergersub are necessary to
authorize the execution and delivery of this Agreement or the consummation
by CenterPoint and Mergersub of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by CenterPoint and Mergersub
and, assuming the due authorization, execution and delivery hereof by the
Seller, the Company
28
and the Members, constitutes a valid and legally binding agreement of
CenterPoint and Mergersub, enforceable against each of them in accordance
with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and
(ii) general equitable principles.
6.4.2 The execution and delivery of this Agreement by CenterPoint and
Mergersub does not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of
any Lien upon any of the properties or assets of CenterPoint and Mergersub
under any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-laws of CenterPoint or Mergersub, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or Governmental Authority applicable
to CenterPoint or Mergersub or any of their respective properties or
assets, or (iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which CenterPoint or
Mergersub is now a party or by which CenterPoint, Mergersub or any of their
respective properties or assets, may be bound or affected, except those
items described in clause (ii) relating to regulating, licensing or
permitting the practice of public accountancy. The consummation by
CenterPoint and Mergersub of the transactions contemplated hereby will not
result in any violation, conflict, breach, right of termination or
acceleration or creation of Liens under any of the terms, conditions or
provisions of the items described in clauses (i) through (iii) of the
immediately preceding sentence, subject, in the case of the terms,
conditions or provisions of the items described in clause (ii) above, to
obtaining (prior to the Closing Date) CenterPoint Required Statutory
Approvals and except for those items described in (ii) above relating to
regulating, licensing or permitting the practice of public accountancy.
6.4.3 Except with respect to (i) the filing of the Registration
Statements with the SEC pursuant to the 1933 Act, the declaration of the
effectiveness of the Registration Statements by the SEC and filings, if
required, with various state securities or "blue sky" authorities, (ii)
any filing which may be required under the HSR Act, (iii) any filing which
may be required by any Governmental Authority or self-regulatory
organization regulating, licensing or permitting the practice of public
accountancy (the filings and approvals referred to in clauses (i) through
(iii) are collectively referred to as the "CENTERPOINT REQUIRED STATUTORY
APPROVALS") no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body
or authority is necessary for the execution and delivery of this Agreement
by CenterPoint or Mergersub or the consummation by CenterPoint or Mergersub
of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals
which, if not made or obtained, as the case may be, are not reasonably
expected to, in the aggregate, have a material adverse effect on the
business operations, properties, assets, condition (financial or other),
results of
29
operations or prospects of CenterPoint and its subsidiaries, taken as a
whole (a "CENTERPOINT MATERIAL ADVERSE EFFECT").
6.5 Absence of Undisclosed Liabilities. Except as set forth on Schedule
---------------------------------- --------
6.5, neither CenterPoint nor Mergersub has incurred any liabilities or
---
obligations (whether known or unknown, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise) of any nature. Except as set
forth on Schedule 6.5, neither CenterPoint nor Mergersub has not engaged in any
------------
business activities of any type or kind whatsoever, nor entered into any
agreements nor is it bound by any obligation or undertaking.
6.6 Litigation. There are no claims, suits, actions or proceedings
----------
pending or, to the Knowledge of CenterPoint, threatened against, relating to or
affecting CenterPoint or Mergersub, before any court, Governmental Authority or
any arbitrator that seek to restrain or enjoin the consummation of the Merger or
the IPO or which could reasonably be expected, either alone or in the aggregate
with all such claims, actions or proceedings, to have a CenterPoint Material
Adverse Effect. CenterPoint is not subject to any unsatisfied or continuing
judgment, order or decree of any court or Governmental Authority. CenterPoint
is not a party to any legal action to recover monies due it or for damages
sustained by it.
6.7 Compliance with Applicable Laws. Each of CenterPoint and Mergersub
-------------------------------
has complied in all material respects with all Laws applicable to it, and has
not received any notice of any alleged claim or threatened claim, violation of
or liability or potential responsibility under any such Law which has not
heretofore been cured and for which there is no remaining liability and, to the
Knowledge of CenterPoint, no event has occurred or circumstances exist that
(with or without notice or lapse of time) may constitute or result in a
violation by CenterPoint or Mergersub of any Law or may give rise to any
liability on the part of the CenterPoint or Mergersub under any Law.
6.8 No Misrepresentation. None of the representations and warranties of
--------------------
CenterPoint or Mergersub set forth in this Agreement or in any of the
certificates, schedules, lists, documents, exhibits, or other instruments
delivered or to be delivered to the Seller, the Company or the Members as
contemplated by any provision hereof contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein or therein not misleading. To the Knowledge of CenterPoint,
there is no fact or circumstance that has not been disclosed to the Company
herein that has or is reasonably expected to have a Company Material Adverse
Effect.
ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS
7.1 Conduct of Business by the Company Prior to the Effective Time.
--------------------------------------------------------------
7.1.1 Except as otherwise contemplated by this Agreement, after the
date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless CenterPoint
30
shall otherwise agree in writing, the Company shall, and shall cause each
Company Subsidiary to:
(a) in all material respects conduct the Business in the ordinary
and usual course and consistent with past customs and practices;
(b) not (i) amend its Organizational Documents except as
necessary to complete the Conversion, (ii) split, combine or
reclassify its outstanding capital stock or (iii) declare, set aside
or pay any dividend or distribution payable in cash, stock, property
or otherwise except dividends or distributions which (A) are
consistent with past customs and practices, (B) do not result in a
Company Material Adverse Effect, and (C) as set forth on Schedule
7.1.4(ii);
---------
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of (i) any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock or equity interests of any class, (ii) any debt with
voting rights or (iii) any debt or equity securities convertible into
or exchangeable for, or any rights, warrants, calls, subscriptions, or
options to acquire, any such capital stock, debt with voting rights or
convertible securities;
(d) not (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business in a manner consistent with past customs
and practices or (B) borrowings to refinance existing indebtedness on
commercially reasonable terms, (ii) redeem, purchase, acquire or offer
to purchase or acquire any shares of its capital stock or equity
interests or any options, warrants or rights to acquire any of its
capital stock or equity interests or any security convertible into or
exchangeable for its capital stock or equity interests, (iii) sell,
pledge, dispose of or encumber any assets or businesses other than
dispositions in the ordinary course of business in a manner consistent
with past customs and practices (iv) enter into any contract,
agreement, commitment or arrangement with respect to any of the
foregoing;
(e) use commercially reasonable efforts to (i) preserve intact
its business organizations and goodwill, (ii) keep available the
services of its present officers and key employees, and (iii) preserve
the goodwill and business relationships with clients and others having
business relationships with it and not engage in any action, directly
or indirectly, with the intent to adversely impact the transactions
contemplated by this Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of CenterPoint to report operational matters of
materiality and the general status of ongoing operations;
(g) except as contemplated on Schedule 4.9, not (i) increase in
------------
any manner the base compensation of, or enter into any new bonus or
incentive
31
agreement or arrangement with, any of its employees, partners, members
or owners, except in the ordinary course of business in a manner
consistent with past customs and practices of the Company or any
Company Subsidiary, as applicable, (ii) pay or agree to pay any
additional pension, retirement allowance or other employee benefit
under any Employee Plan to any such Person, whether past or present,
(iii) enter into any new employment, severance, consulting, or other
compensation agreement with any of its existing employees, partners,
members or owners, (iv) amend or enter into a new Employee Plan
(except as required by Law) or amend or enter into a new collective
bargaining agreement, or (v) engage in any new Affiliate Transaction;
(h) comply in all material respects with all applicable Laws;
(i) not make any material investment in, directly or indirectly,
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any businesses or any Person or
division thereof or otherwise acquire or agree to acquire any assets
in each case which are material to it other than in the ordinary
course of business in a manner consistent with past customs and
practices; and
(j) other than as set forth on Schedule 7.1.4 (ii), not sell,
------------------
lease, license, encumber or otherwise dispose of, or agree to sell,
lease, license, encumber or otherwise dispose of, any of its assets
other than in the ordinary course of business, consistent with past
customs and practices in all material respects;
(k) maintain with financially responsible insurance companies
insurance on its tangible assets and its businesses in such amounts
and against such risks and losses in a manner consistent with past
customs and practices in all material respects; and
(l) collect and ▇▇▇▇ receivables in the ordinary and usual course
and consistent with past custom and practices.
7.1 Prior to the Closing, the Members shall have (a) formed a
separate Person ("ATTEST ENTITY") pursuant to Organizational Documents
reasonably acceptable in form and substance to CenterPoint and (b) used its
diligent efforts to have secured, or have caused the Attest Entity to have
secured, all licenses, permits, approvals and authorizations necessary to
conduct the Attestation Practice in accordance with applicable laws and
regulations.
7.1 Notwithstanding the fact that such action might otherwise be
permitted pursuant to this Article, none of the Members, the Seller or the
Company shall take, or permit any Company Subsidiary to take, any action
that would or is reasonably likely to result in any of the representations
or warranties of the Members, the Seller or the Company set forth in this
Agreement being untrue or in any of the conditions to the
32
consummation of the transactions contemplated hereunder set forth in
Article X (other than Section 10.1(i)) not being satisfied.
7.1.4 Prior to the Closing, (i) the Company and/or the Members, as
applicable, shall terminate, without any liability to the Company or the
Company Subsidiaries, all agreements relating to the voting of the
Company's capital stock, and all agreements and obligations of the Company
and the Company Subsidiaries relating to borrowed money and/or involving
payments to or for the benefit of a current or former stockholder of the
Company, or an Affiliate or family member of a current or former
stockholder of the Company, including without limitation those set forth on
Schedule 7.1.4(i), but excluding (A) debt reflected on Schedule 2.1 as Debt
-----------------
Assumed By CenterPoint, (B) items reflected on Schedule 2.5, (C) to the
extent such agreements and obligations result in Indirect Costs under the
Incentive Compensation Agreement (D) the Supplemental Executive Retirement
Plan, and (E) items approved by CenterPoint in writing, and (ii)
notwithstanding anything contained in this Section 7.1 to the contrary, the
-----------
Company will transfer and distribute the assets listed on Schedule
--------
7.1.4(ii), including, without limitation, any fees and expenses receivable
---------
not necessary to meet the Target or otherwise satisfy the obligations of
the Company or the Members hereunder (the "EXCLUDED ASSETS") to the Persons
listed on Schedule 7.1.4(ii), subject to all liabilities and obligations of
------------------
any nature (whether known or unknown, accrued, absolute, contingent,
direct, indirect, perfected, unchoate, unliquidated or otherwise) relating
to the Excluded Assets (collectively, the "EXCLUDED LIABILITIES");
provided, however, that prior to the Closing, the Company and the Members
-------- -------
shall obtain novations or other releases or agreements discharging the
Company from all Excluded Liabilities (so that the respective Excluded
Liabilities will become direct liabilities and obligations of the
assignee), and provide copies thereof to CenterPoint.
7.2 No-Shop.
-------
(a) After the date hereof and prior to the Closing Date or earlier
termination of this Agreement, the Seller, the Company and the Members
shall (i) not, and each of the Seller and the Company shall use its
diligent efforts to cause the Company Subsidiaries and any officer,
director or employee of, or any attorney, accountant, investment banker,
financial advisor or other agent retained by the Seller, the Company or any
Company Subsidiary not to, initiate, solicit, negotiate, encourage, or
provide non-public or confidential information to facilitate, any proposal
or offer to acquire all or any substantial part of the business and
properties of the Company or any Company Subsidiary, or any capital stock
or other equity interest of the Seller, the Company or any Company
Subsidiary, whether by merger, purchase of assets or otherwise, whether for
cash, securities or any other consideration or combination thereof, or
enter into any joint venture or partnership or similar arrangement, and
(ii) promptly advise CenterPoint of the terms of any communications the
Seller, the Company or the Members may receive or become aware of relating
to any bid for part or all of the Company or any Company Subsidiary.
(b) The Seller, the Company and the Members (i) acknowledge that a
breach of any of their covenants contained in this Section 7.2 will result
-----------
in irreparable harm to CenterPoint which will not be compensable in money
damages; and (ii) agree that such covenant
33
shall be specifically enforceable and that specific performance and
injunctive relief shall be a remedy properly available to the other party
for a breach of such covenant.
7.3 Schedules. Each party hereto agrees that with respect to the
---------
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing promptly to
supplement or amend and deliver to the other parties all the schedules to this
Agreement (the " SCHEDULES") to correct any matter which would constitute a
breach of any such party's representations and warranties herein; provided,
--------
however, that no amendment or supplement to a Schedule that constitutes or
-------
reflects a Company Material Adverse Effect or affects Schedule 4.2, Schedule 4.4
------------ ------------
or Schedule 8.8 may be made unless CenterPoint and a majority of the Founding
------------
Companies consent to such amendment or supplement. No amendment of or
supplement to a Schedule shall be made later than three (3) business days prior
to the anticipated effectiveness of the Form S-1. For all purposes of this
Agreement, including, without limitation, for purposes of determining whether
the conditions set forth in Sections 10.2 and 10.3 have been fulfilled, the
------------- ----
Schedules hereto shall be deemed to be the Schedules as amended or supplemented
pursuant to this Section 7.3. In the event that (i) one of the other Founding
-----------
Companies seeks to amend or supplement a Schedule pursuant to Section 7.3 of one
-----------
of the Other Agreements, (ii) such amendment or supplement constitutes or
reflects a Company Material Adverse Effect (as defined in such Other Agreement)
or affects Schedule 4.2, Schedule 4.4 or Schedule 8.8 of such Other Agreement,
------------ ------------ ------------
and (iii) CenterPoint and a majority of the Founding Companies consent to such
amendment or supplement, but the Seller, the Company and the Members do not, the
Company and a majority of the Members may terminate this Agreement at any time
prior to the Closing Date. In the event that (i) the Seller, the Company or the
Members seek to amend or supplement a Schedule pursuant to this Section 7.3,
-----------
(ii) such amendment or supplement constitutes or reflects a Company Material
Adverse Effect or affects Schedule 4.2, Schedule 4.4 or Schedule 8.8, and (iii)
------------ ------------ ------------
CenterPoint and a majority of the Founding Companies do not consent to such
amendment or supplement, this Agreement shall be deemed terminated.
No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.3,
-----------
unless this Agreement is so terminated in connection with an amendment of or
supplement to a Schedule relating to the Seller's, the Company's or any Member's
breach of a representation or warranty as of the date of this Agreement in which
case the Company shall pay to CenterPoint, as CenterPoint's exclusive remedy
(notwithstanding anything to the contrary) and as liquidated damages, and not
as a penalty, an amount equal to $2,000,000 (the "LIQUIDATED DAMAGES AMOUNT").
The Company agrees that in the case of such termination CenterPoint and the
Founding Companies (excluding the Company) will sustain immediate and
irreparable economic harm and loss of goodwill and that actual losses suffered
by such parties will be difficult, if not impossible, to ascertain, but the
Liquidated Damages Amount set forth herein is reasonable and has been arrived at
after a good faith effort to estimate such losses. Payment of the Liquidated
Damages Amount shall be made in cash to CenterPoint within thirty (30) days of a
termination pursuant to this Section 7.3 in connection with an amendment of or
-----------
supplement to a Schedule relating to a breach of a representation or warranty as
of the date of this Agreement.
7.4 Company Stockholder Meeting. The Company shall take all action in
---------------------------
accordance with applicable Laws and its Organizational Documents necessary to
duly call, give notice of,
34
convene and hold a meeting of the Stockholders to be held on the earliest
practicable date determined in consultation with CenterPoint to consider and
vote upon approval of the Merger, this Agreement and the transactions
contemplated hereby. The Company shall solicit the approval of the Merger, this
Agreement and the transactions contemplated hereby by the Members, the operating
committee of the Seller and the Company's Board of Directors shall recommend
approval of the Conversion, the Merger, this Agreement and the transactions
contemplated hereby by the Members.
7.5 Conversion. Prior to the Closing, but effective only if as and when
----------
the Closing occurs, the Seller and the Members shall cause the Company to
complete, and the Company shall complete, the Conversion, pursuant to applicable
law and present such evidence of the Conversion at the Closing, as CenterPoint
or its counsel may require.
ARTICLE VII
ADDITIONAL AGREEMENTS
8.1 Access to Information.
---------------------
8.1 The Company shall and shall cause the Company Subsidiaries to
afford to CenterPoint and its accountants, counsel, financial advisors and
other representatives, including without limitation the underwriters
engaged in connection with the IPO (each an "UNDERWRITER" and collectively,
the "UNDERWRITERS") and their counsel (collectively, the "CENTERPOINT
REPRESENTATIVES"), and to the other Founding Companies and their
accountants, counsel, financial advisors and other representatives, and
CenterPoint shall afford to the Members and the Company and their
accountants, counsel, financial advisors and other representatives (the
"COMPANY REPRESENTATIVES"), upon reasonable notice, full access during
normal business hours throughout the period prior to the Closing Date to
all of its respective properties, books, contracts, commitments and records
(including, but not limited to, financial statements and Tax Returns) and,
during such period, shall furnish promptly to one another all due diligence
information requested by the other party. CenterPoint shall hold and shall
use its best efforts to cause the CenterPoint Representatives to hold, and
the Members, the Seller, and the Company shall hold and shall use their
best efforts to cause the Company Representatives to hold, in strict
confidence all non-public information furnished to it in connection with
the transactions contemplated by this Agreement, except that each of
CenterPoint, the Members and the Company may disclose any information that
it is required by law or judicial or administrative order to disclose. In
addition, CenterPoint will cause each of the other Founding Companies and
their members and stockholders to enter into a provision similar to this
Section 8.1 requiring each such Founding Company to keep confidential any
-----------
information obtained by such Founding Company in connection with the
transactions contemplated by this Agreement.
8.1.2 In the event that this Agreement is terminated in accordance
with its terms, each party shall promptly return to the disclosing party
all non-public written material provided pursuant to this Section 8.1 or
-----------
pursuant to the Other Agreements and shall not
35
retain any copies, extracts or other reproductions of such written
material. In the event of such termination, all documents, memoranda, notes
and other writings prepared by CenterPoint or the Company based on the
information in such material shall be destroyed (and CenterPoint and the
Company shall use their respective reasonable best efforts to cause their
advisors and representatives to similarly destroy such documents, memoranda
and notes), and such destruction (and reasonable best efforts) shall be
certified in writing by an authorized officer supervising such destruction.
8.2 Registration Statements.
-----------------------
8.2.1 Subject to the reasonable discretion of CenterPoint as advised
by the lead Underwriter, CenterPoint shall file with the SEC as soon as is
reasonably practicable after the date hereof the Registration Statements
and shall use all reasonable efforts to have the Registration Statements
declared effective by the SEC as promptly as practicable. CenterPoint shall
also take any action required to be taken under applicable state "blue sky"
or securities laws in connection with the issuance of CenterPoint Common
Stock. CenterPoint, the Seller, the Company and the Members shall promptly
furnish to each other all information, and take such other actions, as may
reasonably be requested in connection with making such filings. All
information provided and to be provided by CenterPoint, the Seller, the
Members and the Company, respectively, for use in the Registration
Statements shall be true and correct in all material respects without
omission of any material fact which is required to make such information
not false or misleading as of the date thereof and in light of the
circumstances under which given or made. The Seller, the Company and the
Members agree promptly to advise CenterPoint if at any time during the
period in which a prospectus relating to the offering or the Merger is
required to be delivered under the Securities Act, any information
contained in the prospectus concerning the Company, the Company
Subsidiaries, the Seller or the Members becomes incorrect or incomplete in
any material respect, and to provide the information needed to correct such
inaccuracy or remedy such incompletion.
8.2.2 CenterPoint agrees that it will provide to the Seller and its
counsel copies of drafts of the Registration Statements (and any amendments
thereto) containing material changes to the information therein as they are
prepared and will not (i) file with the SEC, (ii) request the acceleration
of the effectiveness of or (iii) circulate any prospectus forming a part
of, the Registration Statements (or any amendment thereto) unless the
Seller and its counsel (x) have had at least two days to review the revised
information contained therein (which changes shall be highlighted by
computer generated marks indicating the additions and deletions made from
the prior draft reviewed by the Seller's counsel) and (y) have not objected
to the substance of the information contained therein. Any objections posed
by the Seller and the Company or their counsel shall be in writing and
state with specificity the material in question, the reason for the
objection, and the Seller's proposed alternative. If the objection is
founded upon a rule promulgated under the Securities Act, the objection
shall cite the rule. Notwithstanding the foregoing, during the five (5)
business days immediately preceding the date scheduled for the filing of
the Registration Statements and any amendment thereto, the Seller and its
counsel shall be obligated to respond to proposed changes electronically
transmitted to them within two (2) hours from the time
36
the proposed changes (in the case of the initial filing of the Registration
Statements, from the last circulated draft of the Registration Statements;
and, in the case of any subsequent filing of the Registration Statements or
any amendment thereof, from the most recently filed Registration Statements
or amendment thereof) are transmitted to the Seller's counsel; provided,
--------
that, CenterPoint has provided to the Seller or its counsel reasonable
----
advance notice of such proposed changes; provided, further, that such
-------- -------
changes are highlighted by computer generated marks indicating the
additions and deletions made from the prior draft reviewed by the Seller's
counsel.
8.2.3 CenterPoint will advise such Member Representative of the
effectiveness of the Registration Statements, advise the Member
Representative of the entry of any stop order suspending the effectiveness
of the Registration Statements or the initiation of any proceeding for that
purpose, and, if such stop order shall be entered, use its best efforts
promptly to obtain the lifting or removal thereof. Upon the written
request of any Member, CenterPoint will furnish to such Member a reasonable
number of copies of the final prospectus associated with the IPO.
8.3 Expenses and Fees. CenterPoint shall pay the fees and expenses of the
-----------------
independent public accountants and legal counsel to CenterPoint and all filing,
printing and other reasonable, documented fees and expenses associated with the
IPO and Form S-4. Neither the Seller, the Company nor the Members will be
liable for any portion of the above expenses in the event the IPO is not
completed. CenterPoint shall also pay the underwriting discounts and
commissions payable in connection with the sale of CenterPoint Common Stock in
the IPO. All other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses.
8.4 Agreement to Cooperate. Subject to the terms and conditions herein
----------------------
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
8.5 Public Statements. Except as may be required by law, no party hereto
-----------------
nor any Affiliate of any party hereto shall issue any press release or any
written public statement with respect to this Agreement or the transactions
contemplated by this Agreement or the Other Agreements without the prior written
consent of CenterPoint, the Seller and the Company.
8.6 Registration Rights.
-------------------
8.6.1 At any time after the second anniversary but prior to the fourth
anniversary of the Closing Date, whenever CenterPoint proposes to register
any CenterPoint Common Stock for its own account or the account of others
under the Securities Act for a public offering for cash other than a
registration relating to employee benefit plans or acquisitions,
CenterPoint will give the Member Representative prompt written notice of
its intent to do so. Promptly after receipt of such notice, the Member
Representative shall provide written notice to CenterPoint of all Members
(and their respective current mailing address) that beneficially own shares
of CenterPoint Common Stock. Thereafter, upon the
37
written request of any of the Members given within thirty (30) days after
receipt of such notice, CenterPoint will use its best efforts to cause to
be included in such registration all of the CenterPoint Common Stock which
any such Member requests, provided that CenterPoint shall have the right to
reduce the number of shares included in such registration, if CenterPoint
is advised in writing in good faith by any managing underwriter of the
securities being offered pursuant to any registration statement under this
Section 8.6 that the number of shares to be sold by Persons other than
-----------
CenterPoint is greater than the number of such shares which can be offered
without adversely affecting the offering; in such case, CenterPoint may
reduce the number of shares offered for the accounts of such Persons to a
number deemed satisfactory by such managing underwriter. Any such reduction
shall occur first by eliminating from such registration any shares held by
Persons other than Persons holding CenterPoint Common Stock directly or
indirectly immediately following the Closing and then reducing pro rata
(based upon the number of shares requested to be registered) the number of
shares offered for the account of such Person. CenterPoint shall not be
obligated to register any shares of CenterPoint Common Stock held by any
Member at any time when such shares are not then transferable in accordance
with Section 12.2 hereof. Registration Rights under this Section 8.6 may
------------ -----------
transferred in whole or in part in connection with the transfer of
CenterPoint Common Stock received pursuant to this Agreement other than to
a transferee of the kind described in clause (x) of Section 12.2 hereof.
8.6.2 Except for underwriting commissions and discounts, all expenses
incurred in connection with the registrations under this Section 8.6
-----------
(including all registration, filing, qualification, legal, printer and
accounting fees) shall be paid by CenterPoint. In connection with
registrations under this Section 8.6, CenterPoint shall
-----------
(a) use its best efforts to prepare and file with the SEC as soon
as reasonably practicable, a registration statement with respect to the
CenterPoint Common Stock (and such amendments and supplements to such
registration statement and the prospectus used in connection therewith as
may be required by applicable law) and use its best efforts to cause such
registration to promptly become and remain effective for a period of at
least one hundred twenty (120) days (or such shorter period during which
holders shall have sold all CenterPoint Common Stock which they requested
to be registered);
(b) upon the written request of a Member whose CenterPoint Common
Stock is to be covered by any such registrations, furnish to such Member a
reasonable number of copies of the prospectus covering the offering and
sale by the Member of the shares to be covered thereby;
(c) use its best efforts to register and qualify the CenterPoint
Common Stock covered by such registration statement under applicable state
securities laws as the holders shall reasonably request for the
distribution for the CenterPoint Common Stock;
38
(d) take such other actions as are reasonable and necessary to
comply with the requirements of the 1933 Act and the regulations
thereunder;
(e) advise each Member whose CenterPoint Common Stock is to be
covered by such registration of the effectiveness of such registration
statement, advise each such Member of the entry of any stop order
suspending the effectiveness of such registration statement or of the
initiation of any proceeding for that purpose, and, if such stop order
shall be entered, use its best efforts promptly to obtain the lifting or
removal thereof; and
(f) at any time when a prospectus relating to any CenterPoint
Common Stock is required to be delivered under the 1933 Act, notify each
Member whose CenterPoint Common Stock is to be covered by such
registration, of the happening of any event as a result of which the
registration statement, the prospectus or any document incorporated therein
by reference includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make
the statements made therein not misleading and, at the request of such
Member, prepare and furnish to such Member a post-effective amendment or
supplement to the registration statement or the related prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of such shares,
such prospectus shall not include any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements made therein not misleading.
8.6.3 In connection with each registration pursuant to this Section
-------
8.6 covering an underwritten registration public offering, CenterPoint and
---
each participating holder agree to enter into a written agreement with the
managing underwriters in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
managing underwriters and companies of CenterPoint's size and investment
stature, including indemnification.
8.6.4 In consideration of the granting to the Members of the
registration rights under this Section 8.6, the Members agree, and agree to
-----------
enter into an agreement with the underwriters in connection with an
underwritten registration to the effect, that it/they will not sell,
transfer or otherwise dispose of, including, without limitation, through
put or short sale arrangements, shares of CenterPoint Common Stock in the
ten (10) days prior to the effectiveness of any registration of CenterPoint
Common Stock for sale to the public and for up to ninety (90) days
following the effectiveness of such registration, provided that all
directors, executive officers and holders of more than five percent (5%) of
the outstanding CenterPoint Common Stock agree to the same restrictions;
and further provided that, with respect to the first public offering of
shares of the CenterPoint Common Stock within three (3) years following the
IPO, the Stockholders shall have been afforded a meaningful opportunity to
include shares in such registration after any reduction by reason of
underwriters' written advice.
39
8.7 CenterPoint Covenants. After the date hereof and prior to the
---------------------
Closing Date or earlier termination of this Agreement, in accordance with its
terms, CenterPoint shall comply in all material respects with all applicable
Laws. CenterPoint shall not take any action that would or is reasonably likely
to result in any of the representations or warranties of CenterPoint set forth
in this Agreement being untrue or in any of the conditions to the consummation
of the transactions contemplated hereunder set forth in Article X not being
---------
satisfied.
8.8 Release of Guarantees. CenterPoint shall use all commercially
---------------------
reasonable efforts and good faith to have the Members released from any and all
guarantees on any indebtedness and leases that they personally guaranteed for
the benefit of the Company as set forth on Schedule 8.8, with all such
------------
guarantees on indebtedness and leases being assumed by CenterPoint, if necessary
to achieve such releases. If any guaranteed indebtedness is repaid in full with
proceeds from the IPO and the Members' guarantees thereafter shall have no
further force or effect, then CenterPoint shall not be obligated to use any
efforts to obtain a release of such guarantee. In the event that CenterPoint
cannot obtain such releases from the lenders of any such guaranteed indebtedness
or lessors of any guaranteed leases, CenterPoint agrees to indemnify, defend and
hold harmless the Stockholders against any and all claims made by lenders or
landlords under such guarantees.
8.9 Lock-Up Agreement. Each Member agrees, and agrees to enter into an
-----------------
agreement with the Underwriter on or prior to the date on which preliminary
Prospectuses are delivered to the effect that, the Members will not offer, sell,
contract to sell or otherwise dispose of any shares of CenterPoint Common Stock,
or any securities convertible into or exercisable or exchangeable for
CenterPoint Common Stock, for a period of 180 days after the date of the final
Prospectus of the IPO without the prior written consent of the Underwriter
except for shares of CenterPoint Common Stock disposed of as bona fide gifts,
subject to any remaining portion of the 180-day period applying to any shares so
disposed of.
8.10 Preparation and Filing of Tax Returns.
-------------------------------------
8.10.1 The Company shall be responsible for causing the timely filing
of the final pre-Closing Returns for the Company and the Company
Subsidiaries; provided, however, that CenterPoint and its advisors shall
-------- -------
have the right to review and approve such returns prior to filing, which
approval shall not be unreasonably withheld. CenterPoint shall, and shall
cause its Affiliates to, provide to the Company such cooperation and
information reasonably requested in filing any return, amended return or
claim for refund, determining a liability for Taxes or a right to refund of
Taxes or in conducting any audit or other proceeding in respect of Taxes.
The Company shall bear all costs of filing such returns.
8.10.2 Each of the Company, CenterPoint and the Stockholders shall
comply with the tax reporting requirements of Section 1.351-3 of the
Treasury Regulations promulgated under the Code, and shall treat the
transaction as subject to the provisions of Section 351 of the Code.
8.11 Maintenance of Insurance. The Company covenants and agrees that all
------------------------
insurance policies listed, or required to be listed, on Schedule 4.20 will be
-------------
maintained in full force and effect through the Closing Date.
40
8.12 Administration. After the Closing, at the request of the Members,
--------------
CenterPoint shall, directly or through one or more of its subsidiaries,
administer and manage the collection of amounts referred to on Schedule
--------
7.1.4(ii) using reasonable care and in accordance with the Company's policies in
---------
effect at Closing.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification by the Members. Subject to Sections 9.7 and 9.8, the
------------------------------ ------------ ---
Members jointly and severally agree to indemnify, defend and save the
CenterPoint Indemnified Parties (hereinafter defined), forever harmless from and
against, and to promptly pay to a CenterPoint Indemnified Party or reimburse a
CenterPoint Indemnified Party for, any and all Losses (hereinafter defined)
sustained or incurred by any CenterPoint Indemnified Party resulting from,
arising out of, in connection with or otherwise by virtue of:
(a) any misrepresentation or breach of a representation or warranty
made in Article V herein or in any certificate, schedule, document, exhibit
---------
or other instrument delivered hereunder by any Member or any action, demand
or claim by any third party against or affecting any CenterPoint
Indemnified Party which, if successful, would give rise to a breach of any
such representation or warranty, except that the obligation of the
Stockholders to indemnify, defend and save harmless for any
misrepresentation or breach of representation or warranty made in Section
-------
5.1 hereof or in any certificate, schedule, document, exhibit or other
---
instrument delivered in respect thereof shall not be joint and several, but
such obligation shall be several only limited to the several Member(s)
making such misrepresentation or breach;
(b) any failure by the Seller, the Company or any Member to observe or
perform any of their covenants and agreements set forth herein related to
the period prior to the Closing except that the obligation of the Members
to indemnify, defend and save harmless for any failure to observe or
perform any covenant or agreement shall not be joint and several, but such
obligation shall be several only and limited to the several Member(s)
failing to observe or perform such covenant or agreement, except that the
obligations of the Member(s) to indemnify, defend and save harmless for any
breach of a covenant or agreement by a Member shall not be joint and
several, but such obligation shall be several only and limited to the
several Members committing such breach;
(c) any liability under the 1933 Act, the Securities Exchange Act of
1934, as amended (the "1934 ACT") or other federal or state law or
regulation, at common law or otherwise, arising out of or based upon any
untrue statement or alleged untrue statement of a material fact relating to
the Seller or the Company contained in any preliminary prospectus relating
to the IPO, the Registration Statements or any proxy statement or
prospectus forming a part thereof, or any amendment thereof or supplement
thereto, or arising out of or based upon any omission to state therein a
material fact relating to the Seller or the Company required to be stated
therein or necessary to make the statements
41
therein not misleading, and not provided to CenterPoint or its counsel by
the Seller or the Company; provided, however, that such indemnity shall not
-------- -------
inure to the benefit of any CenterPoint Indemnified Party to the extent
that such untrue statement (or alleged untrue statement) was made in, or
omission (or alleged omission) occurred in, any preliminary prospectus and
(i) the Seller or the Company provided, in writing, corrected information
to CenterPoint or its counsel for inclusion in the final prospectus prior
to distributing such prospectus, and such information was not so included,
or (ii) CenterPoint did not provide the Seller, the Company and their
counsel with the information required to be provided pursuant to Section
-------
8.2.2, and such information is the basis for the untrue statement or
-----
omission (or alleged untrue statement or omission) giving rise to the
liability under this Section 9.1(c); or
--------------
(d) notwithstanding anything contained in this Agreement to the
contrary, (i) any arrangements made by or on behalf of the Members, the
Seller or the Company in connection with the Merger or the transactions
contemplated by this Agreement with respect to brokerage, finders and other
fees or commissions (ii) disallowance of any tax deduction to CenterPoint
or the Company with respect to any item listed on Schedule 2.5 and
------------
considered in determining Net Working Capital, (iii) any Loss relating to,
resulting from, arising out of or otherwise by virtue of any matter which
is or should be listed on Schedule 4.10 or 7.1.4 hereto, (iv) the Excluded
------------- -----
Assets, the Excluded Liabilities and the transactions contemplated under
Section 7.1.4, and (v) any payment with respect to Dissenting Shares.
-------------
As used in this Agreement, the "CENTERPOINT INDEMNIFIED PARTIES" shall
mean CenterPoint, its Subsidiaries and Affiliates, the Founding Companies other
than the Company (the "OTHER FOUNDING COMPANIES"), and their respective
officers, directors, employees, agents, employee plans and plan fiduciaries,
plan administrators or other Person dealing with any such plans; provided,
--------
however, that the Other Founding Companies, and each of their respective
-------
officers, directors, employees, agents, employee plans and plan fiduciaries,
plan administrators or other Persons dealing with any such plans, shall cease to
be a "CENTERPOINT INDEMNIFIED PARTY" for all purposes hereunder as of the
Closing, and thereafter such Persons shall have no further rights and remedies
under this Article IX (except to the extent a Person is an officer, director,
----------
employee or agent of CenterPoint as a result of the consummation of the
transactions contemplated under the Other Agreements); provided, further that
-------- -------
the Subsidiaries of CenterPoint shall include the Company, the Company
Subsidiaries and the other Founding Companies from and after the Closing.
Accordingly, for purposes of this Article IX and subject to the limitations set
----------
forth in this Article IX, the Other Founding Companies, and each of their
----------
respective officers, directors, employees, agents, employee plans and plan
fiduciaries, plan administrators or other Persons dealing with any such plans,
shall be deemed to be third party beneficiaries of this Agreement.
As used in this Agreement, " LOSSES" shall mean the following: (i) in the
event the Agreement is terminated pursuant to Section 11.1 and the Closing does
------------
not occur, any and all out-of-pocket costs and expenses (including reasonable
fees and expenses of the attorneys, accountants and other experts), or (ii)
subsequent to the Closing, any and all liabilities (whether contingent, fixed or
unfixed, liquidated or unliquidated, or otherwise), obligations, deficiencies,
demands,
42
claims, suits, actions, or causes of action, assessments, losses, costs,
expenses, interests, fines, penalties, actual or punitive damages or costs or
expenses of any and all investigations, proceedings, judgments, orders,
environmental analyses, remediations, settlements and compromises (including
reasonable fees and expenses of the attorneys, accountants and other experts).
9.2 Indemnification by CenterPoint. CenterPoint agrees to indemnify,
------------------------------
defend and save each of the Members and their respective Affiliates, and their
Affiliates' respective officers, directors, employees and agents (each, a "
MEMBER INDEMNIFIED PARTY") forever harmless from and against, and to promptly
pay to a Member Indemnified Party or reimburse a Member Indemnified Party for,
any and all Losses sustained or incurred by any Member Indemnified Party
relating to, resulting from, arising out of or otherwise by virtue of any of the
following:
(a) any misrepresentation or breach of a representation or warranty
made herein or in any document or other instrument delivered hereunder by
CenterPoint or any action, demand or claim by any third party against or
affecting any Member Indemnified Party which, if successful, would give
rise to a breach of any such representation or warranty;
(b) any failure by CenterPoint to observe or perform any of its
covenants and agreements set forth herein or in any document or other
instrument delivered hereunder;
(c) any liability under the 1933 Act, the 1934 Act or other Federal or
state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact relating to CenterPoint or any of the Other Founding Companies
contained in any preliminary prospectus relating to the IPO, the
Registration Statements or any proxy statement or prospectus forming a part
thereof, or any amendment thereof or supplement thereto, or arising out of
or based upon any omission or alleged omission to state therein a material
fact relating to CenterPoint or any of the Other Founding Companies
required to be stated therein or necessary to make the statements therein
not misleading; and
(d) any liability under the 1933 Act, the 1934 Act, or other federal
or state law or regulation, at common law or otherwise, arising out of or
based upon any untrue statement or alleged untrue statement of a material
fact relating to the Seller, the Company or the Members, contained in any
preliminary prospectus relating to the IPO, the Registration Statements or
any proxy statement or prospectus forming a part thereof, or any amendment
thereof or supplement thereto, or arising out of or based upon any omission
to state therein a material fact relating to the Seller, the Company or
the Members required to be stated therein or necessary to make the
statements therein not misleading, to the extent such untrue statement (or
alleged untrue statement) was made in, or omission (or alleged omission)
occurred in, any preliminary prospectus and (i) the Seller, the Company or
the Members provided, in writing, corrected information to CenterPoint or
its counsel for inclusion in the final prospectus prior to distributing
such prospectus, and such information was not so included, or (ii)
CenterPoint did not provide the Seller and its counsel with the information
required to be provided pursuant to Section
-------
43
8.2.2, and such information is the basis for the untrue statement or
-----
omission (or alleged untrue statement or omission) giving rise to the
liability under this Section 9.2(d).
-------------
9.3 Indemnification Procedure for Third Party Claims.
------------------------------------------------
9.3.1 In the event that subsequent to the Closing any Person entitled
to indemnification under this Agreement (an "INDEMNIFIED PARTY") receives
notice of the assertion of any claim, issuance of any order or the
commencement of any action or proceeding by any Person who is not a party
to this Agreement or an Affiliate of a party, including, without
limitation, any domestic or foreign court or Governmental Authority (a
"THIRD PARTY CLAIM"), against such Indemnified Party, against which a party
to this Agreement is required to provide indemnification under this
Agreement (an "INDEMNIFYING PARTY"), the Indemnified Party shall give
written notice thereof together with a statement of any available
information regarding such claim to the Indemnifying Party within thirty
(30) days after learning of such claim (or within such shorter time as may
be necessary, in the Indemnified Party's reasonable judgment, to give the
Indemnifying Party a reasonable opportunity to respond to and defend such
claim). The Indemnifying Party shall have the right, upon written notice to
the Indemnified Party (the "DEFENSE NOTICE") within ten days (10) after
receipt from the Indemnified Party of notice of such claim, to conduct at
its expense the defense against such claim in its own name, or if necessary
in the name of the Indemnified Party; provided, however, that the
-------- -------
Indemnified Party shall have the right to approve the defense counsel
selected by the Indemnifying Party, which approval shall not be
unreasonably withheld, and in the event the Indemnifying Party and the
Indemnified Party cannot agree upon such counsel within ten (10) days after
the Defense Notice is provided, then the Indemnifying Party shall propose
an alternate defense counsel, who shall be subject again to the Indemnified
Party's approval.
9.3.2 In the event that the Indemnifying Party shall fail to timely
give the Defense Notice, it shall be deemed to have elected not to conduct
the defense of the subject claim, and in such event the Indemnified Party
shall have the right to conduct such defense in good faith at the cost and
expense of the Indemnifying Party and the Indemnifying Party shall
reimburse the Indemnified Party for all costs, expenses and settlement
amounts actually paid in connection therewith; provided, however, that
-------- -------
under no circumstances shall the Indemnified Party compromise or settle any
Third Party Claim without the prior written consent of the Indemnifying
Party (which, in the case of the Members, may be granted by the Member
Representative (as defined in Section 9.13)), which consent shall not be
------------
unreasonably withheld or delayed.
9.3.3 In the event that the Indemnifying Party does elect to conduct
the defense of the subject claim, the Indemnified Party will cooperate with
and make available to the Indemnifying Party such assistance and materials
as may be reasonably requested by it, all at the expense of the
Indemnifying Party, and the Indemnified Party shall have the right at its
expense to participate in the defense assisted by counsel of its own
choosing, provided that the Indemnified Party shall have the right to
compromise and settle the claim only with the prior written consent of the
Indemnifying Party, which consent shall not be
44
unreasonably withheld or delayed. Without the prior written consent of the
Indemnified Party, the Indemnifying Party will not enter into any
settlement of any Third Party Claim or cease to defend against such claim,
if pursuant to or as a result of such settlement or cessation, (i)
injunctive or other equitable relief would be imposed against the
Indemnified Party, or (ii) such settlement or cessation would lead to
liability or create any financial or other obligation on the part of the
Indemnified Party for which the Indemnified Party is not entitled to
indemnification hereunder, or (iii) such settlement includes a written
admission of guilt. The Indemnifying Party shall not be entitled to
control, and the Indemnified Party shall be entitled to have sole control
over, the defense or settlement of any claim (A) to the extent that claim
seeks an order, injunction or other equitable relief against the
Indemnified Party which, if successful, could materially interfere with the
business, operations, assets, condition (financial or otherwise) or
prospects of the Indemnified Party or (B) in a proceeding to which the
Indemnifying Party is also a party and the Indemnified Party determines in
good faith that joint representation would be inappropriate (and in each
case the cost of such defense shall constitute an amount for which the
Indemnified Party is entitled to indemnification hereunder). If an offer is
made to settle a Third Party Claim which all parties to such Third Party
Claim (including the Indemnifying Party) are prepared to settle and which
offer the Indemnifying Party is permitted to settle under this Section
-------
9.3.3 only upon the prior written consent of the Indemnified Party, the
-----
Indemnifying Party will give prompt written notice to the Indemnified Party
to that effect. If the Indemnified Party fails to consent to such firm
offer within (30) calendar days after its receipt of such notice, the
Indemnified Party may continue to contest or defend such Third Party Claim
and, in such event, the maximum liability of the Indemnifying Party as to
such Third Party Claim will not exceed the amount of such settlement offer,
plus costs and expenses paid or incurred by the Indemnified Party through
the end of such (30) day period.
9.3.4 Any judgment entered, order issued or settlement agreed upon in
the manner provided herein shall be binding upon the Indemnifying Party,
and shall conclusively be deemed to be an obligation with respect to which
the Indemnified Party is entitled to prompt indemnification hereunder.
9.4 Direct Claims. It is the intent of the parties hereto that all direct
-------------
claims by an Indemnified Party against a party hereto not arising out of Third
Party Claims shall be subject to and benefit from the terms of this Article IX.
----------
Any claim under this Article IX by an Indemnified Party for indemnification
----------
other than indemnification against a Third Party Claim, (a "1 DIRECT CLAIM")
will be asserted by giving the Indemnifying Party reasonably prompt written
notice thereof, together with a statement of any available information regarding
such claim, and the Indemnifying Party will have a period of thirty (30)
calendar days within which to satisfy such Direct Claim. If the Indemnifying
Party does not so respond within such thirty (30) calendar day period, the
Indemnifying Party will be deemed to have rejected such claim, in which event
the Indemnified Party will be free to pursue such remedies as may be available
to the Indemnified Party under this Article IX.
----------
9.5 Failure to Give Timely Notice. A failure by an Indemnified Party to
-----------------------------
give timely, complete or accurate notice as provided in Section 9.3 or 9.4 will
----------- ---
not affect the rights
45
obligations of any party hereunder except and only to the extent that, as a
result of such failure, any party entitled to receive such notice was deprived
of its right to recover any payment under any applicable insurance coverage, or
deprived of its right to assert any claim because of expiration of the
applicable statute of limitations, or was otherwise directly and materially
damaged as a result of such failure to give timely notice.
9.6 Reduction of Loss. To the extent any Loss of an Indemnified Party is
-----------------
reduced by receipt of payment (i) under insurance policies (net of any
retroactive adjustment or other reimbursement to the insurer in respect of such
payment), (ii) from third parties not affiliated with the Indemnified Party, or
(iii) the amount of any tax benefit to the CenterPoint Indemnified Parties, such
payments and/or tax benefits (net of the expenses of the recovery thereof) shall
be credited against such Loss. The pendency of such payments shall not delay or
reduce the obligation of the Indemnifying Party to make payment to the
Indemnified Party in respect of such Loss, and the Indemnified Party shall not
have any obligation, hereunder or otherwise, to pursue payment under or from any
insurer or third party in respect of such Loss. The Indemnified Party shall
cooperate, at no expense to the Indemnified Party, in any reasonable efforts of
the Indemnifying Party in pursuing such payments, including expressly
acknowledging the Indemnifying Party's right and standing to pursue such
payments, and the Indemnified Party will use its customary efforts short of
litigating with an insurer or third party to collect amounts due from such
insurer or third party. If any insurance or third party reimbursement is
obtained subsequent to payment by an Indemnifying Party in respect of a Loss,
such reimbursement (to the extent of amounts theretofore paid by the
Indemnifying Party on account of such Loss) shall be promptly paid over to the
Indemnifying Party.
9.7 Limitation on Indemnities.
-------------------------
9.7.1 Threshold for the Stockholders. With respect to
------------------------------
representations and warranties, the Members shall not have any liability
pursuant to Section 9.1(a) hereof unless and until and only to the extent
--------------
that the aggregate amount of Losses accrued pursuant to Section 9.1(a)
--------------
exceeds 1% of aggregate Basic Purchase Consideration; provided, however,
-------- -------
that this threshold shall not apply to Losses arising out of breaches of
representations or warranties contained in Sections 5.1.1, 5.1.2, 5.2 and
-------------- ----- ---
5.1.8 as it relates to the representations and warranties of the Seller and
-----
the Company set forth in Section 4.16, and the Members shall indemnify the
------------
CenterPoint Indemnified Parties for any Losses accruing thereunder in
accordance with this Article IX without regard to such threshold.
----------
9.7.2 Threshold for CenterPoint. With respect to representations and
-------------------------
warranties, CenterPoint shall not have any liability pursuant to Section
-------
9.2(a) hereof unless and until and only to the extent that the aggregate
------
amount of the Losses accrued pursuant to Section 9.2(a) exceeds 1% of
-------------
aggregate Basic Purchase Consideration; provided, however, that this
-------- -------
threshold shall not apply to Losses arising out of the breach of
representations or warranties contained in Section 6.2 and CenterPoint
-----------
shall indemnify the Member Indemnified Parties from any Losses occurring
thereunder in accordance with this Article IX without regard to such
----------
threshold.
46
9.7.3 Limitations on Claims Against the Stockholders. The liability
----------------------------------------------
of all Members for misrepresentations and breaches of representations and
warranties under Section 9.1(a) shall be limited to 100% of aggregate
-------------
Basic Purchase Consideration in the aggregate; provided, however, that such
-------- -------
liability for a Member shall be limited to three times the aggregate Basic
Purchase Consideration received, directly or indirectly, by such Member;
provided further, however, that such limitations shall not apply to Losses
-------- ------- -------
arising out of breaches of representations or warranties contained in
Sections 5.1.1, 5.1.2, 5.2, and 5.1.8 as it relates to the representation
-------------- ----- --- -----
and warranty of the Company set forth in Section 4.16, and any Losses
------------
accruing thereunder shall not count towards such limitations.
9.7.4 Limitation on Claims Against CenterPoint. The liability of
----------------------------------------
CenterPoint under Section 9.2(a) shall be limited to 100% of aggregate
--------------
Basic Purchase Consideration in the aggregate; provided, however, that this
-------- -------
limitation shall not apply to Losses arising out of breaches of
representations or warranties in Section 6.2 and any Losses accruing
-----------
thereunder shall not count towards such limitation.
9.8 Survival of Representations, Warranties and Covenants of the
------------------------------------------------------------
Stockholders and the Company; Time Limits on Indemnification Obligations.
------------------------------------------------------------------------
Notwithstanding any right of CenterPoint to fully investigate the affairs of the
Seller, the Company, the Company Subsidiaries and the Business, and
notwithstanding any Knowledge of facts determined or determinable by CenterPoint
pursuant to such investigation or right of investigation, CenterPoint has the
right to rely fully upon the representations, warranties, covenants and
agreements of the Members, the Seller and the Company contained in this
Agreement or in any certificate delivered pursuant to any of the foregoing. All
such representations, warranties, covenants and agreements of the Members, the
Seller and the Company shall survive the execution and delivery of this
Agreement and the Closing hereunder; provided, however, (i) that the Members'
-------- -------
obligations pursuant to Section 9.1, other than those relating to covenants and
-----------
agreements to be performed by the Members after the Closing, shall expire one
(1) year after the Closing, except with respect to obligations arising under or
relating to Section 4.16 hereof as it relates to federal, state, local and
------------
foreign income taxation, which shall survive until the earlier of (A) the
expiration of the applicable periods (including any extensions) of the
respective statutes of limitation applicable to the payment of the Taxes or (B)
the completion of the final audit and determinations by the applicable taxing
authority and final disposition of any deficiency resulting therefrom; and (ii)
solely to the extent that CenterPoint actually incurs liability under the 1933
Act or the 1934 Act, the obligations under Sections 9.1(c) or (d) above shall
-------------- ---
survive until the expiration of any applicable statute of limitations with
respect to such claims.
9.9 Survival of Representations, Warranties and Covenants of CenterPoint;
---------------------------------------------------------------------
Time Limits on Indemnification Obligations. All representations, warranties,
------------------------------------------
covenants and agreements of CenterPoint shall survive the execution and delivery
of this Agreement and the Closing hereunder; provided, however, that
-------- -------
CenterPoint's obligations under Section 9.2, other than those relating to
-----------
covenants and agreements to be performed by CenterPoint after the Closing, shall
expire one year after Closing, except that, solely to the extent that the
Members actually incur liability under the 1933 Act or the 1934 Act, the
obligations under Sections 9.2(c) or (d) above shall survive until the
---------------------
expiration of any applicable statute of limitations with respect to such claims.
47
9.10 Defense of Claims; Control of Proceedings. Notwithstanding anything
-----------------------------------------
in this Agreement to the contrary, to the extent any Loss subject to
indemnification hereunder would exceed the Indemnifying Party's indemnity
obligations under this Agreement, the Indemnified Party shall be entitled to
control the defense of such claim or management of such proceeding with respect
to such excess Loss.
9.11 Fraud; Exclusive Remedy. The limitations set forth in this Article
----------------------- -------
IX shall not apply to fraud by any party. In the absence of fraud and
--
notwithstanding any Law to the contrary and any rights that would otherwise be
available thereunder, the indemnification provisions of this Article IX set
forth the sole and exclusive remedy of the CenterPoint Indemnified Parties
following the Closing against the Members and of the Member Indemnified Parties
following the Closing against CenterPoint and its affiliates with respect to any
claim for relief resulting from, arising out of or otherwise by virtue of this
Agreement and the transactions contemplated hereby.
9.12 Manner of Satisfying Indemnification Obligations. Subsequent to the
------------------------------------------------
Closing, the Stockholders may satisfy their respective obligations, if any,
under this Article IX by tendering to the CenterPoint Indemnified Parties cash
-----------
or shares of CenterPoint Common Stock that are then transferable in accordance
with Section 12.2, such shares to be valued at the Market Price. "MARKET PRICE"
------------
shall mean the average closing (last) price for a share of CenterPoint Common
Stock (as reported on the exchange or market on which such shares are then
listed or traded) for the most recent twenty (20) days that such shares have
traded ending on the date two (2) days prior to the date tendered pursuant to
clause (i) of the preceding sentence, or, if such shares are not then listed or
traded on an exchange or other market, the fair market value of such shares as
determined by an appraiser reasonably agreed to by the parties.
9.13 Member Representative. The Seller and each Member appoints ▇▇▇▇▇▇▇
---------------------
▇. ▇▇▇▇▇▇▇▇ (the "MEMBER REPRESENTATIVE") as its agent and representative with
full power and authority to agree, contest or settle any claim or dispute
affecting any Member made under Articles II or IX and to otherwise act on behalf
of the Members in accordance with the terms of this Agreement including, without
limitation, to direct the amount and manner of the payment of aggregate Basic
Purchase Consideration; provided, that the Member Representative may be removed
-------- ----
and a successor to the Person originally serving as the Member Representative
may be designated in a writing signed by a majority in interest of the Members
and delivered to CenterPoint in accordance with Section 15.2.
------------
ARTICLE X
CLOSING CONDITIONS
10.1 Conditions to Each Party's Obligation to Effect the Merger. The
----------------------------------------------------------
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Closing of the following conditions:
48
(a) the Underwriting Agreement related to the IPO shall have been
executed and the closing of the sale of CenterPoint Common Stock to the
Underwriters pursuant thereto shall have occurred simultaneously with the
Closing hereunder;
(b) the closings of the transactions contemplated under each of the
Other Agreements shall have occurred simultaneously with the Closing
hereunder, unless terminated in accordance with Section 7.3 of the
-----------
applicable Other Agreement;
(c) the Registration Statements shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
(d) no preliminary or permanent injunction or other order or decree
shall be pending before or issued by any federal or state court which seeks
to prevent or prevents the consummation of the IPO, the Merger or any of
the Other Mergers shall have been issued and remain in effect;
(e) the minimum price condition set forth on Schedule 2.1 shall have
been satisfied;
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government or
governmental agency in the United States which would prevent the
consummation of the Merger or any of the Other Mergers or make the
consummation of the Merger or any of the Other Mergers illegal;
(g) all material governmental and third party waivers, consents and
approvals required for the consummation of the Merger or any of the Other
Mergers and the transactions contemplated hereby and by the Other
Agreements (including, without limitation, any consents listed on Schedules
---------
4.3.2 or 4.12) shall have been obtained and be in effect;
----- ----
(h) No action, suit or proceeding with respect to the Merger has
been filed or threatened by a third party and remains threatened or remains
pending before any court, Governmental Authority or regulatory Person;
(i) This Agreement, the Merger and the transactions contemplated
hereby shall have been approved and adopted by the Members in the manner
required by any applicable Law and the Company's Organizational Documents;
and
(j) CenterPoint shall have entered into one or more credit
facilities providing for aggregate commitments of not less than $75
million.
10.2 Conditions to Obligation of the Stockholders, the Company to Effect
-------------------------------------------------------------------
the Merger. Unless waived by the Company, the obligation of the Members, the
----------
Seller and the Company to
49
effect the Merger shall be subject to the fulfillment at or prior to the Closing
of the following additional conditions:
(a) CenterPoint, Mergersub and each of the Other Founding Companies
shall have performed in all material respects their agreements contained in
this Agreement and each Other Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of
CenterPoint contained in this Agreement and each Other Agreement shall be
true and correct in all material respects on and as of the date made and on
and as of the Closing Date as if made at and as of such date, and the
Seller and the Company shall have received a certificate of the Chief
Executive Officer or President of CenterPoint to that effect;
(b) no Governmental Authority or self-regulatory organization
regulating, licensing or permitting the practice of public accountancy
shall have promulgated or formally proposed any statute, rule or regulation
which, when taken together with all such promulgations, would materially
impair the value to the Seller of the Merger;
(c) the Company shall have received an opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Zavis, dated as of the Closing Date, containing the substantive opinions
set forth in Exhibit 10.2(c), the final form of such opinion to be in form
---------------
and substance reasonably acceptable to the Seller, the Company and the
Members;
(d) each of the Members shall have been afforded the opportunity to
enter into a incentive compensation agreement (the "INCENTIVE COMPENSATION
AGREEMENT") with CenterPoint substantially in the form attached hereto as
Exhibit 10.2(d);
--------------
(e) CenterPoint shall have delivered to the Company and the Members
a certificate, dated as of a date no later than ten days prior to the
Closing Date, duly issued by the Delaware Secretary of State, showing that
CenterPoint is in good standing;
(f) each of the Members, the partners, members and stockholders of
the other Founding Companies who are to receive shares of CenterPoint
Common Stock pursuant to the Other Agreements, and the other stockholders
of CenterPoint other than those acquiring stock in the IPO shall have
entered into an agreement (the "STOCKHOLDERS AGREEMENT") substantially in
the form attached hereto as Exhibit 10.2(f);
---------------
(g) all conditions to the Other Mergers, on substantially the same
terms as provided herein, shall have been satisfied or waived by the
applicable party and the Company;
(h) each of the Seller and the Members shall have been afforded the
opportunity to review the executed employment agreement by and between
CenterPoint and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
(i) the Company shall have received an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ &
Zavis, dated as of the Closing Date and based upon certain factual
representations and
50
assumptions that for federal income tax purposes there will be no gain or
loss recognized with respect to the CenterPoint Common Stock received for
their Company Stock in the Merger pursuant to Section 351 of the Code, the
final form of such opinion to be in form and substance reasonably
acceptable to the Company and the Stockholders.
10.3 Conditions to Obligation of CenterPoint to Effect the Merger. Unless
------------------------------------------------------------
waived by CenterPoint, the obligation of CenterPoint and Mergersub to effect the
Merger shall be subject to the fulfillment at or prior to the Closing of the
additional following conditions:
(a) the Seller and the Company shall have performed in all material
respects their respective agreements contained in this Agreement required
to be performed on or prior to the Closing Date and the representations and
warranties of the Seller and the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date made and
on and as of the Closing Date as if made at and as of such date, and
CenterPoint and the Underwriters shall have received a Certificate of the
Chief Executive Officer or President of the Company to that effect;
(b) the Members shall have performed in all material respects their
agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties of the Members
contained in this Agreement shall be true and correct in all material
respects on and as of the date made and on and as of the Closing Date as if
made at and as of such date, and CenterPoint and the Underwriters shall
have received a Certificate of each Member to that effect;
(c) CenterPoint and the Underwriters shall have received an opinion
from Young & Associates, counsel to the Seller, the Company, and the
Members, dated the Closing Date, in the form attached hereto as Exhibit
-------
10.3(c), the final form of such opinion to be in form and substance
-------
reasonably acceptable to the Underwriters and CenterPoint;
(d) the Company shall, and the Members shall have caused Attest
Entity to, execute and deliver the Separate Practice Agreement
substantially in the form attached hereto as Exhibit 10.3(d)(A) and the
------------------
Services Agreement substantially in the form attached hereto as Exhibit
-------
10.3(d)(B);
----------
(e) each Member shall have executed and delivered the Incentive
Compensation Agreement substantially in the form attached as Exhibit
-------
10.2(d);
-------
(f) CenterPoint and the Underwriters shall have received "Comfort"
letters in customary form from the Company's independent public
accountants, dated the effective date of the Form S-1 and the Closing Date
(or such other date reasonably acceptable to CenterPoint), with respect to
certain financial statements and other financial information included in
the Form S-1 and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of
net income;
51
(g) Each of the Seller and the Company shall have delivered to
CenterPoint and the Underwriters a certificate, dated as of a date no later
than ten days prior to the Closing Date, duly issued by the appropriate
Governmental Authority in the state of organization of the Seller, the
Company and each Company Subsidiary and, unless waived by CenterPoint, in
each state in which the Company or any Company Subsidiary is authorized to
do business, showing each of the Seller, the Company and Company Subsidiary
(as applicable) is in good standing;
(h) no Governmental Authority or self-regulatory organization
regulating, licensing or permitting the practice of public accountancy
shall have promulgated or formally proposed any statute, rule or regulation
which, when taken together with all such promulgations, would materially
impair the value to CenterPoint of the Merger;
(i) the Members shall have executed the Stockholders Agreement;
(j) the Seller and the Members shall have delivered to CenterPoint
an instrument in the form attached hereto as Exhibit 10.3(j), dated the
---------------
Closing Date, releasing the Company and the Company Subsidiaries from any
and all claims of the Seller and the Members against the Company and the
Company Subsidiaries and obligations of the Company and the Company
Subsidiaries to the Seller and the Members;
(k) the Company shall have presented evidence satisfactory to
CenterPoint of its compliance with the provisions of Section 7.1.4 hereof;
-------------
including, without limitation, that as of the Closing the amount of debt of
the Company and the Company Subsidiaries shall not exceed the amount
reflected on Schedule 2.1 as Debt Assumed by CenterPoint;
(l) the Seller, the Company and the Members, as applicable, shall
have terminated or have caused the termination of any voting trusts,
proxies or other agreements or understandings to which the Seller, the
Company or any Member is a party or is bound with respect to any shares of
capital stock or other equity interests of the Company and shall have
provided CenterPoint evidence of such termination that is acceptable to
CenterPoint's counsel;
(m) the Seller, the Company and the Stockholders shall have
completed the Conversion of the Company and have presented evidence of such
conversion in accordance with Section 7.5;
-----------
(n) a payoff letter including a statement of per diem interest
amounts and other applicable release documents from all institutional
lenders or creditors regarding the payment in full of indebtedness at
Closing, in each case in form and substance satisfactory to CenterPoint
(including, without limitation, applicable UCC-3 termination statements);
(o) the Company shall have paid in full any indebtedness owed by the
Company to any current or former shareholders of the Company, and shall
have provided evidence of same reasonably satisfactory to CenterPoint;
52
(p) the Company shall have caused all automobile leases to which the
Company is a party (together with all vehicle insurance policies and
maintenance agreements, if any) to be assigned in full to the individual
beneficiary of such lease or terminated, and shall have provided evidence
of same reasonably satisfactory to CenterPoint;
(q) the real property lease relating to the Southfield property
shall have been amended in form and substance satisfactory to CenterPoint;
(r) ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ shall have paid in full their
indebtedness to the Company and the Members shall have provided evidence
of same reasonably acceptable to CenterPoint; and
(s) the Secretary of each of the Company and the Seller shall have
delivered certified copies of the resolutions of the Board of Directors and
stockholders of the Company and consents of the managers and Members of the
Seller, respectively, approving execution and delivery of this Agreement,
the Conversion, the Merger, and the other actions, agreements and documents
necessary or desirable to complete the transactions contemplated herein.
ARTICLE XI
TERMINATION, AMENDMENT AND WAIVER
11.1 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing Date:
(a) pursuant to Section 7.3;
-----------
(b) by the Company,
(i) if the Merger is not completed by August 31, 1999 other
than on account of delay or default on the part of the Company or any
Member or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of the Seller,
the Company or any Member or any of their affiliates or associates;
(iii) if CenterPoint (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to CenterPoint; or
53
(c) by CenterPoint,
(i) if the Merger is not completed by August 31, 1999 other
than on account of delay or default on the part of CenterPoint or any
of its stockholders or any of their affiliates or associates;
(ii) if the Merger is enjoined by a final, unappealable court
order not entered at the request or with the support of CenterPoint
or any of its stockholders or any of their affiliates or associates;
(iii) if either the Seller or the Company (A) fails to perform
in any material respect any of its material covenants in this
Agreement and (B) does not cure such default in all material respects
within thirty (30) days after written notice of such default is given
to or the Company by CenterPoint;
(iv) if a Member (A) fails to perform in any material respect
any of such Member's material covenants in this Agreement and (B) do
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to the Member
Representative by CenterPoint; or
(d) by mutual consent of the Operating Committee of the Seller and
the Boards of Directors of CenterPoint and the Company.
11.2 Effect of Termination. In the event of termination of this Agreement
---------------------
by either CenterPoint, the Seller or the Company, as provided in Section 11.1,
------------
this Agreement shall forthwith become void and there shall be no further
obligation on the part of the Seller, the Company, the Members, CenterPoint,
Mergersub or their respective officers or directors (except the obligations set
forth in this Section 11.2 and in Sections 8.1, 8.3, 8.5 and Article IX, all of
------------ --- --- --- ----------
which shall survive the termination). Nothing in this Section 11.2 shall
------------
relieve any party from liability for any breach of this Agreement.
11.3 Amendment. This Agreement may not be amended except by action taken
---------
by the Operating Committee of the Seller and Boards of Directors of CenterPoint
and the Company or duly authorized committees thereof and then only by an
instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law. CenterPoint covenants and agrees that it shall
not amend, modify or supplement the material terms of any Other Agreement
following the Closing without the prior written consent of at least two thirds
(2/3rds) of the members of CenterPoint's Board of Directors; provided that no
waiver of any restriction set forth in Article XII shall be of any effect unless
-----------
consented to by a majority of the members of CenterPoint's Board of Directors
who do not at the time of such proposed waiver hold Restricted Shares within the
meaning of this Agreement, any Other Agreement or the Stockholders Agreement.
11.4 Waiver. At any time prior to the Closing Date, the parties hereto
------
may (a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document
54
delivered pursuant thereto and (c) waive compliance with any of the agreements
or conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
ARTICLE XII
TRANSFER RESTRICTIONS
12.1 Transfer Restrictions Generally. Except as provided in Section 12.2,
-------------------------------
for a period of forty-two (42) months from the Closing, neither the Seller nor
any of the Members shall (a) sell, assign, exchange, transfer, distribute or
otherwise dispose of, in whole or in part, (i) any shares of CenterPoint Common
Stock received by the Seller in the Merger and/or subsequently distributed by
the Seller to the Members (the "RESTRICTED SHARES"), or (ii) any interest
(including, without limitation, an option to buy or sell) in any Restricted
Shares; or (b) engage in any transaction, whether or not with respect to any
Restricted Shares or any interest therein, the intent or effect of which is to
reduce the risk of owning the Restricted Shares (including, without limitation,
engaging in put, call, short-sale, derivative, straddle or similar market
transactions).
12.2 Release of Restrictions. Effective eighteen (18) months following the
-----------------------
Closing, and every six (6) months thereafter, until all Restricted Shares shall
have been released from such restrictions, twenty percent (20%) of the original
number of Restricted Shares then held by Holding for each Member shall no longer
be subject to the restrictions set forth in Section 12.1 and shall no longer be
------------
deemed "Restricted Shares" for any purposes of this Agreement; provided, that,
-------- ----
if a Member's employment with CenterPoint or its subsidiary is terminated within
thirty (30) months of the Closing other than through death, disability,
retirement or circumstances approved by the Company's management and reasonably
approved by CenterPoint's chief executive officer, the Restricted Shares held
by such Member shall remain subject to the restrictions set forth in Section
-------
12.1 until the fifth anniversary of the Closing Date. Notwithstanding the
----
foregoing and Section 12.1, the Seller or a Member may (x) at any time pledge or
------------
encumber all or part of the Seller's or such Member's Restricted Shares, as
applicable, provided that the pledgee or secured party agrees in writing to be
bound by the provisions contained in Article XII, (y) at any time transfer all
-----------
or part of such Member's Restricted Shares to another Member or to an immediate
family member (or trust or other estate planning Person), provided, that any
-------- ----
such Member, family member or other Person agrees in writing to be bound by the
provisions contained in Article XII, and (z) transfer or cause to be transferred
-----------
such Member's Restricted Shares upon such Member's disability or death. As used
in this Section 12.2, the terms "disability" and "retirement" shall have the
------------
meaning ascribed to them in CenterPoint's Employee Incentive Compensation Plan.
No attempted transfer of any nature whatsoever that is in violation of this
Section shall be treated as effective for any purpose.
12.3 Legend. The certificates evidencing the CenterPoint Common Stock
------
delivered to the Seller pursuant to this Agreement and/or subsequently
distributed by the Seller to the Members shall bear a legend substantially in
the form set forth below and containing such other information as CenterPoint
may deem necessary or appropriate:
55
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE
DISPOSITION THEREOF ARE SUBJECT TO THE TERMS OF A MERGER
AGREEMENT DATED MARCH __, 1999. A COPY OF SUCH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF THE CORPORATION AND MAY
BE INSPECTED BY THE REGISTERED OWNER OF THIS CERTIFICATE OR
A DULY AUTHORIZED REPRESENTATIVE OF SUCH OWNER UPON REQUEST
DURING NORMAL BUSINESS HOURS.
Upon request from any Member (or a permitted transferee) following the
expiration of either all or a part of the restrictions on the transfer of
CenterPoint Common Stock set forth in this Article XII, CenterPoint shall
-----------
immediately notify its transfer agent that the applicable shares of CenterPoint
Common Stock are no longer restricted shares and shall direct the transfer agent
that the applicable shares of CenterPoint Common Stock are no longer restricted
shares and shall direct the transfer agent to reissue certificates of
CenterPoint Common Stock which do not contain a restrictive legend in place of
the applicable restricted shares. In the event a Member's request to remove the
restrictive legend coincides with his request to sell the CenterPoint Common
Stock, CenterPoint shall take such actions as are required by its transfer agent
to allow the transfer agent to transfer the unrestricted CenterPoint Common
Stock free of any restrictive legend.
ARTICLE XII
NONCOMPETITION
13.1 Prohibited Activities. Each Member agrees severally, and not
---------------------
jointly, that such Member will not, for a period of three (3) years following
the Closing Date, for any reason whatsoever, directly or indirectly, for
themselves or on behalf of or in conjunction with any other Person:
(a) engage, as an officer, director, shareholder, owner, partner,
joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or advisor, or as a sales
representative, in any business selling or providing accounting, tax,
consulting or other related services of a type or nature similar to those
sold or provided by the Company at or within one year prior to the date
that such Member commences competition within a fifty (50) mile radius of
any office location of the Company or any Company Subsidiary (the
"TERRITORY");
(b) sell or provide any accounting, tax, consulting or other related
services of a type or nature similar to those sold or provided by the
Company to, or solicit for the purpose of selling or providing any such
services to, any Person that was a customer of the Company or any Company
Subsidiary at any time during the preceding one-year period or that was
known by the Member to have been actively being solicited by the Company
or any Company Subsidiary to become a customer at any time during such
period;
56
(c) call upon any Person who is, at that time, within the Territory,
an employee of CenterPoint (including the subsidiaries and affiliates
thereof) for the purpose or with the intent of enticing such employee away
from or out of the employ of CenterPoint (including the subsidiaries and
affiliates thereof), or hire such Person; or
(d) enter into, or call upon or request non-public information for
the purpose of entering into, an Acquisition Transaction (as hereinafter
defined) with any Person with respect to which CenterPoint or any
subsidiary or affiliate thereof has made an offer or proposal for, or
entered into discussions or negotiations for, or evaluated with the intent
of making a proposal for, an Acquisition Transaction, within the preceding
one-year period.
Notwithstanding the foregoing, a Member may be employed by a customer of
the Company or any other Person for the purpose of providing accounting, tax,
consulting or other related services of a type or nature similar to those sold
or provided by the Company to such customer or Person, so long as in connection
therewith the Member does not directly or indirectly provide such services to
another third party for hire.
For purposes of this Agreement, an "ACQUISITION TRANSACTION" means a
merger, consolidation, purchase of material assets, purchase of a material
equity interest, tender offer, recapitalization, accumulation of shares, proxy
solicitation or other business combination. Notwithstanding the above, the
foregoing covenant shall not be deemed to prohibit any Member from (a) acquiring
as an investment not more than one percent (1%) of the capital stock of a
competing business whose stock is traded on a national securities exchange or
over-the-counter so long as the Stockholder does not consult with or is not
employed by such competitor and (b) owning equity interests in the Seller or
Attest Entity.
13.2 Damages. Because of the difficulty of measuring economic losses to
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CenterPoint as a result of a breach of the foregoing covenant, and because of
the immediate and irreparable damage that could be caused to CenterPoint for
which it would have no other adequate remedy, each Stockholder agrees that the
foregoing covenant may be enforced by CenterPoint in the event of breach by such
Stockholder, by injunctions and restraining orders.
13.3 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants in this Article XIII impose a reasonable restraint on the
------------
Members in light of the activities and business of CenterPoint (including the
subsidiaries thereof) on the date of the execution of this Agreement and the
current plans of CenterPoint; but it is also the intent of CenterPoint and the
Member that such covenants be construed and enforced in accordance with the
changing activities and business of CenterPoint (including the subsidiaries
thereof) throughout the term of this covenant.
It is further agreed by the parties hereto that, in the event that any
Member who has entered into an employment agreement, incentive compensation
agreement or other similar agreement with CenterPoint and/or any subsidiary
thereof as set forth herein shall thereafter cease to be employed thereunder,
and such Stockholder shall enter into a business or pursue other activities not
in competition with CenterPoint and/or any subsidiary thereof, or similar
activities
57
or business in locations the operations of which, under such circumstances, does
not violate this Article XIII and in any event such new business, activities or
------------
location are not in violation of this Article XIII or of such Member's
------------
obligations under this Article XIII, such Member shall not be chargeable with a
------------
violation of this Article XIII if CenterPoint and/or any subsidiary thereof
------------
shall thereafter enter the same, similar or a competitive (i) business, (ii)
course of activities or (iii) location, as applicable.
13.4 Severability; Reformation. The covenants in this Article XIII are
------------------------- ------------
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
13.5 Independent Covenant. All of the covenants in this Article XIII
-------------------- ------------
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Member
against CenterPoint (including the subsidiaries thereof), whether predicated on
this Agreement or otherwise, shall not constitute a defense to the enforcement
by CenterPoint of such covenants. It is specifically agreed that the period of
three (3) years stated at the beginning of this Article XIII, during which the
------------
agreements and covenants of each Member made in this Article XIII shall be
------------
effective, shall be computed by excluding from such computation any time during
which such Member is in violation of any provision of this Article XIII;
------------
provided, however, in all events CenterPoint shall initiate proceedings to
-------- -------
enforce this Article XIII within four (4) years of the Closing Date. The
------------
covenants contained in this Article XIII shall not be affected by any breach of
------------
any other provision hereof by any party hereto and shall have no effect if the
transactions contemplated by this Agreement are not consummated.
13.6 Materiality. The Company and each of the Members hereby agree that
-----------
this covenant is a material and substantial part of this transaction.
ARTICLE XIV
[RESERVED]
ARTICLE XV
GENERAL PROVISIONS
15.1 Brokers. Each of the Seller, the Company and the Members represents
-------
and warrants that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee (except for any fee described in Schedule 15.1)
-------------
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on
58
behalf of the Company. CenterPoint represents and warrants that no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of CenterPoint or
its stockholders (other than underwriting discounts and commission to be paid in
connection with the IPO).
15.2 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed given if delivered personally, sent by nationally
recognized overnight delivery service, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section):
15.2.1 If to CenterPoint or Mergersub, to:
CenterPoint Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
15.2.2 If to the Seller or the Company, to:
▇▇▇▇▇▇▇ Rudzewicz & Co., P.C.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Young & Associates
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
59
15.2.3 If to the Member Representative or the Members, as applicable,
addressed to the addresses set forth on Schedule 15.2.3, with copies to
---------------
such counsel as set forth with respect to each Stockholder on such Schedule
--------
15.2.3, as applicable.
------
15.3 Interpretation. The table of contents and headings contained in this
--------------
Agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "HEREIN," "HEREOF" and "HEREUNDER" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
15.4 Certain Definitions. As used in this Agreement, (i) the term
-------------------
"PERSON" shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated association, corporation, entity, firm,
association, organization or other business in any form whatsoever or government
(whether Federal, state, county, city or otherwise, including, without
limitation, any instrumentality, division, agency or department thereof), (ii)
the term "AFFILIATE" shall have the meaning given for that term in Rule 405
under the Securities Act, and shall include each past and present Affiliate of a
Person and the members of such Affiliate's immediate family or their spouses or
children and any trust the beneficiaries of which are such individuals or
relatives, and (iii) an individual will be deemed to have "KNOWLEDGE" of a
particular fact or other matter if: (a) such individual is actually aware of
such fact or matter, or (b) a prudent individual could be expected to discover
or otherwise become aware of such fact or other matter in the course of
conducting a reasonably comprehensive investigation concerning the existence of
such fact or other matter and a prudent individual would conduct such
investigation; a Person, other than an individual, will be deemed to have
"KNOWLEDGE" of a particular fact or other matter if any individual who is a
shareholder of such Person or who is otherwise serving, or who has served, as a
director, officer, or trustee (or any capacity) of such Person has, or at any
time had, knowledge of such fact or other matter.
15.5 Entire Agreement; Assignment. This Agreement (including the documents
----------------------------
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof and
(b) shall not be assigned by operation of law or otherwise, except that
CenterPoint may assign this Agreement to any wholly-owned subsidiary of
CenterPoint.
15.6 Applicable Law. This Agreement shall be governed in all respects,
--------------
including validity, interpretation and effect, by the laws of the State of
Illinois applicable to contracts executed and to be performed wholly within such
state, without giving effect to its choice of law rules.
15.7 Counterparts. This Agreement may be executed via facsimile or
------------
otherwise in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
60
15.8 Parties in Interest. This Agreement shall be binding upon and inure
-------------------
solely to the benefit of each party hereto, and their respective successors,
permitted assigns, heirs, legal representatives and executors and except as
expressly set forth in herein, nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the date first written above.
CENTERPOINT ADVISORS, INC.
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Its: President and Chief Executive Officer
--------------------------------------
FRC MERGERSUB INC.
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Its: President
--------------------------------------
FRF HOLDING, LLC
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Its: Member
--------------------------------------
▇▇▇▇▇▇▇ RUDZEWICZ & CO., P.C.
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Its:______________________________________
62
MEMBERS:
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually and as Trustee UTA 4/10/72
for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Individually and as Trustee UTA 1/24/74
for ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually and as Trustee UTA
2/16/80 for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Individually and as Trustee of the
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Trust
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Individually and as Trustee UTA
1/20/83 for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
----------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III, Individually and as Trustee UTA
11/15/80 for ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
63
/S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually and as Trustee UTA
11/28/85 for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Individually and as Trustee UTA 4/16/86
for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Individually and as Trustee UTA 7/30/90
for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/S/ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
----------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇., Individually and as Trustee of the
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. Amended and Restated Revocable Trust
dated 4/16/97
/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually and as Trustee Under a
Certain Trust Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated 2/5/88
64