Exhibit 2.42
--------------------------
AMENDED AND RESTATED
MERGER AGREEMENT
by and among
CENTERPRISE ADVISORS, INC.,
GRACE MERGERSUB INC.,
and
GRACE & COMPANY, P.C.
September 24 , 1999
--------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I THE MERGER........................................................2
1.1 The Merger.......................................................2
1.2 Effects of the Merger............................................2
1.3 Directors and Officers of the Surviving Corporation..............3
ARTICLE II CONSIDERATION AND MANNER OF PAYMENT..............................3
2.1 Merger Consideration.............................................3
2.1.1 Basic Purchase Consideration..............................3
2.1.2 Treasury Stock............................................3
2.1.3 Dissenters................................................3
2.1.4 Conversion of Mergersub Stock.............................3
2.1.5 Exchange of Certificates..................................4
2.2 Post-Closing Adjustments to Basic Purchase Consideration.........4
2.3 Post-Closing Management of AR....................................5
2.4 Assignment of Uncollected AR.....................................6
2.5 Definitions......................................................6
ARTICLE III THE CLOSING AND CONSUMMATION DATE...............................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................7
4.1 Organization and Qualification...................................7
4.2 Company Subsidiaries.............................................7
4.3 Authority; Non-Contravention; Approvals..........................8
4.4 Capitalization...................................................10
4.5 Year 2000........................................................11
4.6 Financial Statements.............................................11
4.7 Absence of Undisclosed Liabilities...............................11
4.8 Unbilled Fees and Expenses.......................................11
4.9 Absence of Certain Changes or Events.............................12
4.10 Litigation.......................................................14
4.11 Compliance with Applicable Laws..................................15
4.12 Licenses.........................................................15
4.13 Material Contracts...............................................15
4.14 Properties.......................................................18
4.15 Intellectual Property............................................20
4.16 Taxes............................................................21
4.17 Employee Benefit Plans; ERISA....................................21
4.18 Labor Matters....................................................23
4.19 Environmental Matters............................................24
(i)
Page
----
4.20 Insurance.......................................................25
4.21 Interest in Customers and Suppliers; Affiliate Transactions.....25
4.22 Business Relationships..........................................25
4.23 Compensation....................................................26
4.24 Bank Accounts...................................................26
4.25 Professional Credentials........................................26
4.26 Disclosure; No Misrepresentation................................26
ARTICLE V [RESERVED].......................................................27
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF CENTERPRISE...................27
6.1 Organization And Qualification..................................27
6.2 Capitalization..................................................27
6.3 No Subsidiaries.................................................28
6.4 Authority; Non-Contravention; Approvals.........................28
6.5 Absence of Undisclosed Liabilities..............................29
6.6 Litigation......................................................30
6.7 Compliance with Applicable Laws.................................30
6.8 No Misrepresentation............................................30
ARTICLE VII CERTAIN COVENANTS AND OTHER TERMS..............................30
7.1 Conduct of Business by the Company Pending the Acquisition......30
7.2 No-Shop.........................................................33
7.3 Schedules.......................................................34
7.4 Company Stockholders Meeting....................................35
7.5 Conversion......................................................35
ARTICLE VIII ADDITIONAL AGREEMENTS.........................................35
8.1 Access to Information...........................................35
8.2 Registration Statements.........................................36
8.3 Expenses and Fees...............................................37
8.4 Agreement to Cooperate..........................................37
8.5 Public Statements...............................................38
8.6 [Reserved]......................................................38
8.7 Centerprise Covenants...........................................38
8.8 Release of Guarantees...........................................38
8.9 [Reserved]......................................................38
8.10 Preparation and Filing of Tax Returns...........................38
8.11 Maintenance of Insurance........................................39
8.12 Administration..................................................39
8.13 Payment of Special Bonus........................................39
(ii)
Page
----
8.14 Partner Representative.............................................39
ARTICLE IX [RESERVED].........................................................39
ARTICLE X CLOSING CONDITIONS..................................................40
10.1 Conditions to Each Party's Obligation to Effect the Acquisition....40
10.2 Conditions to Obligation of the Company to Effect the Acquisition..41
10.3 Conditions to Obligation of Centerprise to Effect the Acquisition..42
ARTICLE XI TERMINATION, AMENDMENT AND WAIVER..................................44
11.1 Termination........................................................44
11.2 Effect of Termination..............................................45
11.3 Amendment..........................................................45
11.4 Waiver.............................................................46
ARTICLE XII [RESERVED]........................................................46
ARTICLE XIII [RESERVED].......................................................46
ARTICLE XIV [RESERVED]........................................................46
ARTICLE XV GENERAL PROVISIONS.................................................46
15.1 Brokers............................................................46
15.2 Notices............................................................47
15.3 Interpretation.....................................................47
15.4 Certain Definitions................................................48
15.5 Entire Agreement; Assignment.......................................48
15.6 Applicable Law.....................................................48
15.7 Counterparts.......................................................48
15.8 Parties in Interest................................................48
(iii)
LIST OF SCHEDULES
-----------------
Schedule 2.1 Consideration
Schedule 2.6 Net Working Capital Adjustment Items
Schedule 4.2 Company Subsidiaries
Schedule 4.3.2 Required Consents
Schedule 4.4 Capitalization
Schedule 4.7 Liabilities
Schedule 4.9 Certain Changes and Events
Schedule 4.10 Litigation
Schedule 4.11 Noncompliance with Applicable Laws
Schedule 4.12 Licenses and Permits
Schedule 4.13 Material Contracts
Schedule 4.14.1-1 Real Property
Schedule 4.14.1-2(a) Exceptions Regarding Owned Property
Schedule 4.14.1-2(b) Exceptions Regarding Leased Property
Schedule 4.14.2 Tangible Personal Property; Liens
Schedule 4.15 Intellectual Property
Schedule 4.16.1-1 Taxes
Schedule 4.16.1-2 Tax Audits
Schedule 4.17.1 Employee Plans
Schedule 4.17.2 Unwritten Employee Plans
(iv)
Schedule 4.17.4 Multiple Employer Plans
Schedule 4.18 Labor Matters
Schedule 4.19 Environmental Matters
Schedule 4.20 Insurance
Schedule 4.21 Affiliate Transactions
Schedule 4.22 Business Relationships
Schedule 4.23 Compensation
Schedule 4.24 Bank Accounts
Schedule 6.2 Centerprise's Capitalization
Schedule 6.5 Liabilities
Schedule 7.1.4(i) Terminated Agreements
Schedule 7.1.4(i)-D Agreements Not To Be Terminated
Schedule 7.1.4(ii) Excluded Assets
Schedule 8.8 Partners' Guarantees
Schedule 15.1 Brokers
(v)
LIST OF EXHIBITS
----------------
Exhibit 10.2(c) Form of Opinion of Centerprise'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 Company
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 Partners' General Release
Exhibit 10.3(r) Form of Company Stockholder Agreement
(vi)
DEFINED TERMS
-------------
Acquisition................................................... Introduction
Accounting Licenses........................................... Section 4.12
Actions....................................................... Section 4.10.1
Affiliate..................................................... Section 15.4
Affiliate Transactions........................................ Section 4.21
Agreement..................................................... Introduction
AR............................................................ Section 2.5
Arbitrator.................................................... Section 2.2.5
Attest Entity................................................. Section 7.1.2
Attestation Practice.......................................... Introduction
Basic Purchase Consideration.................................. Section 2.1.1
BBM........................................................... Section 7.1.4
BBM Agreement................................................. Section 7.1.4
Business...................................................... Introduction
Cash Consideration............................................ Section 2.1.1
Centerprise................................................... Introduction
Centerprise Accountants....................................... Section 2.2.2
Centerprise Common Stock...................................... Section 2.1.1
Centerprise Material Adverse Effect........................... Section 6.4.3
Centerprise Representatives................................... Section 8.1.1
Centerprise Required Statutory Approvals...................... Section 6.4.3
Closing....................................................... Article III
Closing Balance Sheet......................................... Section 2.2.2
(vii)
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 2.1.1
Company Subsidiary(ies)................................... Section 4.2
Consummation Date......................................... Article III
Contracts................................................. Section 4.13
Conversion................................................ Introduction
Copyrights................................................ Section 4.15
DGCL...................................................... Section 1.1
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
(viii)
Form S-4.................................................... Section 4.3.3
Founding Companies.......................................... Introduction
GAAP........................................................ Section 4.6
GBCLM....................................................... Section 1.1
general increase............................................ Section 4.23
Governmental Authority...................................... Section 4.3.2
Hazardous Materials......................................... Section 4.19
herein...................................................... Section 15.3
hereof...................................................... Section 15.3
hereunder................................................... Section 15.3
Holdings.................................................... Section 10.1(k)
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
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
(ix)
Lien(s)..................................................... Section 4.3.2
Liquidated Damages Amount................................... Section 7.3
Marks....................................................... Section 4.15
Material Contracts.......................................... Section 4.13
Merger...................................................... Introduction
Merger Documents............................................ Section 1.1
Mergersub................................................... Introduction
Mergersub Stock............................................. Section 6.2.1
Net Working Capital......................................... Section 2.5
1933 Act.................................................... Section 4.3.3
Organizational Documents.................................... Section 4.1
Other Agreements............................................ Introduction
Other Acquisitions.......................................... Introduction
Other Founding Companies.................................... Section 9.1
Owned Property.............................................. Section 4.14.1
Partner Indemnified Party................................... Section 9.2
Partner Representative...................................... Section 8.14
Patents..................................................... Section 4.15
Person...................................................... Section 15.4
Plan Affiliate.............................................. Section 4.17.5(c)
Real Property............................................... Section 4.14.1
Registration Statements..................................... Section 4.3.3
Resolution Period........................................... Section 2.2.5
Restricted Shares........................................... Section 12.1
(x)
Returns.................................................... Section 4.16.1
Schedules.................................................. Section 7.3
SEC........................................................ Section 4.3.3
Securities Act............................................. Section 4.3.3
Special Bonus.............................................. Section 7.1.4(iii)
Stock Consideration........................................ Section 2.1.1
Stockholders Agreement..................................... Section 10.2(f)
Surviving Corporation...................................... Section 1.2
Target..................................................... Section 2.5
Taxes...................................................... Section 4.16.2
Trade Secrets.............................................. Section 4.15
Underwriters............................................... Section 8.1.1
(xi)
AMENDED AND RESTATED
MERGER AGREEMENT
THIS AMENDED AND RESTATED MERGER AGREEMENT (this "Agreement") is made as
of September 24, 1999, by and among Centerprise Advisors, Inc., a Delaware
corporation ("Centerprise"), Grace Mergersub, Inc. a Delaware corporation and
wholly owned subsidiary of Centerprise ("Mergersub"), and Grace & Company, P.C.,
a Missouri professional corporation (the "Company").
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 Company will be converted from a professional corporation
to a business corporation by amending the Company's Organizational Documents (as
defined in Section 4.1) such that it converts to a business corporation the
actions described in the foregoing (a) and (b), the "Conversion");
WHEREAS, the Boards of Directors of the Company, Centerprise and Mergersub
deem it advisable and in the best interests of their respective shareholders to
approve and consummate the business combination transaction provided for herein
in which Mergersub would merge with the Company, with the Company being the
surviving corporation in the merger (the "Acquisition" or "Merger");
WHEREAS, Centerprise is entering into other agreements (the "Other
Agreements") substantially similar to this Agreement with each of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇▇▇▇ ▇. Driver Company, Inc., ▇▇▇▇ Frankfort ▇▇▇▇▇ & ▇▇▇▇,
P.C., The ▇▇▇▇▇▇▇ Company, Inc., ▇▇▇▇▇▇▇ Administrators, LLC, Verasource Excess
Risk Ltd., Berry, Dunn, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, Chartered, ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇ PC,
Self Funded Benefits, Inc. d/b/a Insurance Design Administrators, Simione,
Scillia, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLC, and ▇▇▇▇▇▇▇ Rudzewicz & Co., P.C., (which
companies together with the Company are collectively referred to herein as the
"Founding Companies"), which agreements provide for the merger of a wholly
owned subsidiary of Centerprise with each such Founding Company (the "Other
Acquisitions") simultaneously with the Acquisition; Centerprise has provided a
side letter to each holder of equity interests of the Company to such effect;
WHEREAS, simultaneously with the consummation of the Acquisition,
Centerprise will close an initial public offering (the "IPO") of Centerprise
Common Stock (as defined in Section 2.1); and
WHEREAS, the parties intend the acquisition of Centerprise 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").
WHEREAS, the Voting Agreement, dated as of March 31, 1999, among
Centerprise and certain of the stockholders of the Company has been terminated
and is no longer in force and effect.
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 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement and in reliance upon the representations and warranties set
forth herein, Mergersub shall be merged with and into the Company, the result of
which will cause the separate corporate existence of Mergersub to cease and the
Company to continue under the laws of the State of Missouri. 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 Missouri, as
provided in the General and Business Corporation Law of Missouri, as amended
(the "GBCLM"), and with the Secretary of State of the State of Delaware, as
provided in the General Corporation Law of the State of Delaware (the "DGCL").
The Merger shall become effective (the "Effective Time") upon the filing of the
Merger Documents with the Secretary of State of the State of Missouri and the
Secretary of State of the State of Delaware or at such later time,
contemporaneously with the closing of the IPO, as agreed by Centerprise and the
Company and specified in the Merger Documents.
1.2 Effects of the Merger. At the Effective Time (i) the separate
existence of Mergersub shall cease and Mergersub shall be merged with and into
the Company, with the Company being the surviving corporation in the Merger (the
Company is sometimes referred to herein as the "Surviving Corporation"), (ii)
the Articles of Incorporation and By-laws of the Surviving Corporation shall be
amended in form and substance acceptable to Centerprise and as
2
specified in the Merger Documents, (iii) the Merger shall have all the effects
provided by applicable law, and (iv) the Company shall be a wholly-owned
subsidiary of Centerprise.
1.3 Directors and Officers of the Surviving Corporation. From and after
the Effective Time, the directors and officers of Mergersub shall be the
directors and officers of the Surviving Corporation until their successors are
duly elected and qualified.
ARTICLE II
CONSIDERATION AND MANNER OF PAYMENT
2.1 Merger Consideration.
2.1.1 Basic Purchase Consideration. At the Closing, by virtue of the
Merger and without any action on the part of the holder thereof, the
outstanding shares of capital stock, consisting of 15,000 shares of common
stock, no par value per share of the Company (the "Company Stock") shall be
converted into the right to receive: (a) that number of shares of
Centerprise common stock, par value $.01 per share (the "Centerprise Common
Stock") shown on line T of Schedule 2.1; provided, however, that if the
initial public offering price of the Centerprise Common Stock is below
$11.90 per share, the number of shares of Centerprise Common Stock received
at Closing shall be increased such that the value of the shares, using the
initial public offering price, equals the amounts shown on line U of
Schedule 2.1 (the "Stock Consideration") and (b) the amount of cash shown
on line S of Schedule 2.1 (the "Cash Consideration"). The sum of the Cash
Consideration and the Stock Consideration is herein referred to as "Basic
Purchase Consideration."
2.1.2 Treasury Stock. Each share of capital stock of the Company
held in treasury of the Company shall be canceled and retired and no
payment shall be made in respect thereof.
2.1.3 Dissenters. Each outstanding share of capital stock of the
Company the holder of which has perfected his right to dissent under
applicable law and has not effectively withdrawn or lost such right as of
the Effective Time (the "Dissenting Shares") shall not be converted into
the right to receive Basic Purchase Consideration, and the holder thereof
shall be entitled only to such rights as are granted by applicable law. The
Company shall give Centerprise prompt notice upon receipt by the Company of
any such written demands for payment of fair value of shares of capital
stock of the Company and any other instruments provided pursuant to
applicable law. Any payments made in respect of Dissenting Shares shall be
made by the Surviving Corporation.
3
2.1.4 Conversion of Mergersub Stock. At the Effective Time, each
share of Mergersub Stock issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and become one validly
issued, fully paid and non-assessable share of the Surviving Corporation.
Such newly issued shares shall thereafter constitute all of the issued and
outstanding capital stock of the Surviving Corporation.
2.1.5 Exchange of Certificates. At the Closing, Centerprise shall
receive the original Company Stock certificates, duly endorsed in blank by
the Company's stockholder(s) or accompanied by blank stock powers, in
exchange for the allocated share of (a) Centerprise 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 Company in a writing delivered to
Centerprise at least three (3) business days prior to the Closing Date. The
shares represented by the Company Stock certificates so delivered to
Centerprise shall be canceled. Until surrendered as contemplated by this
Section 2.1.5, each certificate representing shares of Company Stock
represents only the right to receive Basic Purchase Consideration, as
adjusted in accordance with this Article II.
2.2 Post-Closing Adjustments to Basic Purchase Consideration.
2.2.1 Adjustments for Net Working Capital Shortfall/Excess. The
Basic 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
Closing, the Company will prepare, and the firm PricewaterhouseCoopers LLP
(the "Centerprise 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
prepare and deliver to Centerprise a revised calculation of Net Working
Capital reflecting all collections of AR up to the date 90 days from the
Closing Date. Within 10 days of receipt of such calculation, Centerprise
will deliver to the Partner Representative a written report indicating the
amount and nature of any adjustment to the Basic Purchase Consideration
determined in accordance with Section 2.3.1 (the "Interim Adjustment").
4
2.2.4 Final Adjustment. As soon as practicable, the Company will
prepare and deliver to Centerprise a final calculation of Net Working
Capital revised to reflect all collections of AR up to the date 180 days
from the Closing Date. Centerprise will review such calculation and any
records, work papers and other documents related thereto. Within 10 days of
receipt of such calculation, Centerprise will deliver to the Partner
Representative a written report indicating the amount and nature of any
adjustment to the Basic Purchase Consideration determined in accordance
with Section 2.3.1 (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
Partner 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 Partner Representative and Centerprise are unable to resolve
any Disputed Item within 30 days after notice from the Partner
Representative that a dispute exists (the "Resolution Period"), then a
representative from the office of a nationally recognized accounting firm
(the "Arbitrator") selected jointly by Centerprise and the Partner
Representative will arbitrate the dispute. The Partner Representative and
Centerprise 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 Partner Representative and Centerprise 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 Company's stockholders shall pay the amount of
the shortfall to Centerprise. In the event Net Working Capital is greater
than the Target, Centerprise shall pay the amount of the excess to the
Company's stockholders. 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
5
receive credit for or return of any amount previously paid in connection
with the Interim Adjustment.
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 Company's stockholders. Notwithstanding the foregoing,
the Company will retain the sole right to service, administer and collect the
uncollected AR in accordance with Section 2.3.
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, and the items listed on Schedule 2.5,
the Tax Accrual, the Special Bonus (as defined in Section 7.1.4(iii)) and
the employer-paid FICA payable in connection with deferred compensation and
the Special Bonus.
(c) "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 Centerprise as a result of
any payments pursuant to the Special Bonus Plan times (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).
6
(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.
ARTICLE III
THE CLOSING AND CONSUMMATION DATE
The consummation of the Acquisition 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 Company represents and warrants to Centerprise, as of March 31, 1999
and, subject to Section 7.3, as of the date on which Centerprise and the lead
Underwriter (as defined in Section 8.1.1) execute and deliver the Underwriting
Agreement related to the IPO and as of the Closing Date, as follows:
4.1 Organization and Qualification. The Company is a professional
corporation duly organized, validly existing and in good standing under the laws
of the State of Missouri, 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 Missouri. Each Company Subsidiary (as defined in
Section 4.2) is duly organized, validly existing and in good standing under the
laws of the state of its organization set forth on Schedule 4.2. Each of the
Company and the Company Subsidiaries has the requisite power and authority 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. The Company has not qualified to do business in the states listed on
Schedule 4.2. True, accurate and complete copies of the Company's and each
Company Subsidiary's Organizational Documents, in each case as in effect on
March 31, 1999 have heretofore been delivered to Centerprise. "Organizational
Documents" means (a) the articles or certificate of incorporation and the bylaws
of a corporation (professional or otherwise), (b) the partnership agreement and
any statement of partnership of a general partnership, (c) the limited
partnership agreement and the certificate of limited partnership of any limited
partnership, (d) the operating or limited liability company agreement and
certificate of formation of any limited liability company, (e) any charter or
similar document adopted and filed in connection with the creation, formation,
organization or governance (as applicable) of any Person and (f) any amendment
to any of the foregoing.
7
4.2 Company Subsidiaries. Schedule 4.2 sets forth the name (including any
assumed names), jurisdiction of organization and ownership of the issued and
outstanding equity interests of each Person in which the Company owns, directly
or indirectly, securities or other interests having the power to elect a
majority of such Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of such Person
(each a "Company Subsidiary" 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 The Company has full right, power and authority to enter into
this Agreement and, subject to the approval of the Merger and the
transactions contemplated hereby by the Company's stockholders, to
consummate the transactions contemplated hereby. The execution, delivery
and performance of this Agreement by the Company have been duly authorized
by all necessary corporate action on the part of the Company, subject to
the approval of the Merger and the transactions contemplated hereby by the
Company's stockholders. This Agreement has been duly executed and delivered
by the Company, and, assuming the due authorization, execution and delivery
hereof by Centerprise, constitutes a valid and legally binding agreement of
the Company, enforceable against it in accordance with its terms, except
that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles.
4.3.2 The execution and delivery of this Agreement by the Company does
not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any claim,
lien, privilege, mortgage, charge, hypothecation, assessment, security
interest, pledge or other encumbrance, conditional sales contract, equity
charge, restriction, or adverse claim of interest of any kind or nature
whatsoever (each a "Lien" and collectively, the "Liens"), upon any of the
properties or assets of the Company or any Company Subsidiary under, any of
the terms, conditions or provisions of (i) the Organizational Documents of
the Company or any Company Subsidiary, (ii) 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
Company, any Company Subsidiary, or the Business, properties or assets of
the
8
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 Company
or any Company Subsidiary is a party or by which any of 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
Company of the transactions contemplated hereby will not result in a
violation, conflict, breach, right of termination, creation or acceleration
of Liens under the terms, conditions or provisions of the items described
in clauses (i) through (iii) of the immediately preceding sentence, subject
in the case of the terms, conditions or provisions of the items described
in 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 and any filing
which may be required under the HSR Act.
4.3.3 Except for (i) the declaration of effectiveness of a
registration statement on Form S-1 (the "Form S-1") and a post-effective
amendment to the registration statement on Form S-4 (the "Form S-4") (Form
S-1 and Form S-4 are collectively the "Registration Statements") with the
Securities and Exchange Commission (the "SEC") pursuant to the Securities
Act of 1933, as amended (the "Securities Act"or the "1933 Act"), and
filings, if required, with various state securities or "blue sky"
authorities, (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 Company or the consummation by the Company of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not
made or obtained, as the case may be, would not, individually or in the
aggregate, have a "Company Material Adverse Effect" which, for purposes
of this Agreement means a material adverse effect on the operations,
assets, condition (financial or other), operating results, employee or
client relations, or prospects of the Company or any Company Subsidiary.
4.4 Capitalization.
--------------
4.4.1 The authorized capital stock of the Company consists of 30,000
shares of Company Stock, of which 15,000 shares are issued and outstanding.
The Company has 1,500 shares in its treasury. 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
9
validly issued and are fully paid, nonassessable and free of preemptive
rights. The Company owns all shares of the Company's Subsidiaries as
indicated on Schedule 4.4, in each case free and clear of all Liens, and
the Company has good and marketable title to such shares of the Company
Subsidiaries. All of such issued and outstanding shares are validly issued
and are fully paid, nonassessable and free of preemptive rights.
4.4.2 Except as set forth on Schedule 4.4, there are no outstanding
subscriptions, options, calls, contracts, commitments, undertakings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of the capital stock of the Company or any Company
Subsidiary or obligating the Company or any Company Subsidiary to grant,
extend or enter into any such agreement or commitment or obligating the
Company or any Company Subsidiary to convey or transfer any Company Stock
or Company Subsidiary stock, as the case may be. As of the Closing Date,
there will be no voting trusts, proxies or other agreements or
understandings to which the Company or any Company Subsidiary is a party or
is bound with respect to the voting of any shares of capital stock or other
equity interests of the Company or any Company Subsidiary.
4.5 Year 2000. To the Knowledge of the Company, all of the computer
software, computer firmware, computer hardware (whether general or special
purpose), and other similar or related items of automated, computerized, and/or
software system(s) that are used or relied on by the Company or any Company
Subsidiary in the conduct of the Business will not malfunction, will not cease
to function, will not generate incorrect data, and will not produce incorrect
results when processing, providing, and/or receiving (i) date-related data into
and between the twentieth (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 Company Material Adverse Effect. Nothing in this Section 4.5 is
intended or shall be construed as a representation or warranty with respect to
embedded systems.
4.6 Financial Statements. The Company has previously furnished to
Centerprise copies of the audited consolidated balance sheet of the Company as
of December 31, 1998 (the "Latest Balance Sheet"), and the related audited
consolidated statement of income, stockholders' equity and cash flow for the one
(1) year period ended December 31, 1998, including all notes thereto,
(collectively, the "Financial Statements"). Each of the Financial Statements
is accurate and complete in all material respects, is consistent with the books
and records of the Company and the Company Subsidiaries (which, in turn, are
accurate and complete in all material respects), and fairly presents in all
material respects the financial condition, assets and liabilities of the Company
and the Company Subsidiaries as of its date and the results of operations and
cash flows for the periods related thereto, in each case in accordance with
generally accepted accounting principles, applied on a consistent basis
("GAAP").
10
4.7 Absence of Undisclosed Liabilities. Except as disclosed in Schedule
4.7, neither the Company nor any Company Subsidiary had, as of the date of the
Latest Balance Sheet, nor has it incurred since that date, any liabilities or
obligations of any nature (whether known or unknown, absolute, contingent,
accrued, direct, indirect, perfected, inchoate, unliquidated or otherwise),
except (i) to the extent clearly and accurately reflected or accrued or fully
reserved against in the Financial Statements or (ii) liabilities and obligations
which have arisen after the date of the Latest Balance Sheet in the ordinary
course of business and consistent with past custom and practices (none of which
is a liability resulting from a breach of contract, breach of warranty, tort,
infringement claim, legal violation or lawsuit).
4.8 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
Subsidiaries' 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
11
similar occurrence that is reasonably expected to adversely affect the
Company, a Company Subsidiary or the Business;
(e) loan or advance by the Company or any Company Subsidiary to any
Person, other than as a result of services performed for, or expenses
properly and reasonably advanced for the benefit of, customers in the
ordinary course of business consistent with past custom and practices;
(f) notice (formal or otherwise) of any liability, potential liability
or claimed liability relating to environmental matters;
(g) declaration, setting aside, or payment of any dividend or other
distribution in respect of the Company's capital stock or other equity
interests or any direct or indirect redemption, purchase, or other
acquisition of the Company's or any Company Subsidiary's capital stock or
other equity interests, or the payment of principal or interest on any
note, bond, debt instrument or debt to any Affiliate (as defined in Section
15.4) of the Company or any Company Subsidiary, except bonuses and
distributions to employees and stockholders of the Company disclosed to
Centerprise in writing that are consistent with the Company's past custom
and practices or as otherwise contemplated by this Agreement;
(h) incurrence by the Company or any Company Subsidiary of debts,
liabilities or obligations except 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;
12
(l) change in accounting principles, methods or practices (including,
without limitation, any change in depreciation or amortization policies or
rates) utilized by the Company or any Company Subsidiary;
(m) discharge or satisfaction by the Company or any Company Subsidiary
of any material liability or encumbrance or payment by the Company or any
Company Subsidiary of any material obligation or liability, other than
current liabilities paid in the ordinary course of its business consistent
with past custom and practices;
(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 Company has
Knowledge, is reasonably expected to result in a Company Material Adverse
Effect.
4.10 Litigation. Except as set forth on Schedule 4.10 (which shall
disclose the parties to, nature of and relief sought for each matter to be
disclosed on Schedule 4.10):
4.10.1 There is no suit, action, proceeding, investigation, claim or
order pending or, to the Knowledge of the Company, threatened against the
Company or any Company Subsidiary, or with respect to the Merger, or with
respect to any Employee Plan, or any fiduciary of any such plan (or pending
or, to the Knowledge of the Company, threatened against any of the
officers, directors, members, stockholders, partners or employees of the
13
Company or any Company Subsidiary with respect to its business or proposed
business activities), or to which the Company or any Company Subsidiary is
otherwise a party, or that is reasonably expected to have a Company
Material Adverse Effect, before any court, or before any Governmental
Authority (each an "Action" and collectively, the "Actions"); nor, to
the Knowledge of the Company, is there any basis for any such Action.
4.10.2 Neither the Company nor any Company Subsidiary is subject to
any unsatisfied or continuing judgment, order or decree of any court or
Governmental Authority. Neither the Company nor any Company Subsidiary, to
the Knowledge of the Company, is otherwise exposed, from a legal
standpoint, to any liability or disadvantage that is reasonably expected to
result in a Company Material Adverse Effect, and neither the Company nor
any Company Subsidiary is a party to any legal action to recover monies due
it or for damages sustained by it, other than collection of past due
charges for services rendered or expenses incurred by the Company.
4.10.3 Schedule 4.10 lists the insurer for each Action covered by
insurance or designates such Action, or a portion of such Action, as
uninsured and lists the individual and aggregate policy limits for the
insurance covering each insured Action and the applicable policy
deductibles for each insured Action.
4.10.4 Schedule 4.10 sets forth all material closed litigation matters
to which the Company or any Company Subsidiary was a party during the five
(5) year period preceding the Closing Date, the date such litigation was
commenced and concluded, and the nature of the resolution thereof
(including amounts paid in settlement or judgment).
4.11 Compliance with Applicable Laws. Except as set forth on Schedules
4.11 and 4.19, each of the Company and the Company Subsidiaries has complied in
all material respects with all laws, rules, regulations, writs, injunctions,
decrees, and orders (collectively, the "Laws") applicable to it or to the
operation of the Business, and neither 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 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
14
accountancy. 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 Company, the Company and the Company
Subsidiaries have taken all necessary action to maintain such Licenses. No loss
or expiration of any such License is pending or, to the Company's Knowledge,
threatened or reasonably foreseeable.
4.13 Material Contracts. Except as listed or described on Schedule 4.13
(such contracts, or those which should have been listed on Schedule 4.13, are
herein referred to as the "Material Contracts"), as of or on the date hereof,
neither the Company nor any Company Subsidiary is a party to or bound by, any
written or oral leases, agreements or other contracts or legally binding
contractual rights or contractual obligations or contractual commitments (each a
"1 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;
15
(f) any Contract for the cleanup, abatement or other actions in
connection with Hazardous Materials (as defined in Section 4.19), the
remediation of any existing environmental liabilities or relating to the
performance of any environmental audit or study;
(g) any Contract granting to any Person an option or a first refusal,
first-offer or similar preferential right to purchase or acquire any
material assets of the Company or any Company Subsidiary;
(h) any Contract with any agent, distributor or representative which
is not terminable by the Company or a Company Subsidiary upon ninety (90)
calendar days or less notice without penalty;
(i) any Contract under which the Company or any Company Subsidiary is
(A) a lessee or sublessee of any machinery, equipment, vehicle or other
tangible personal property, or (B) a lessor of any tangible personal
property owned by the Company or any Company Subsidiary, in either case
having an original purchase price or requiring aggregate lease payments in
excess of $50,000;
(j) any Contract under which the Company or any Company Subsidiary has
granted or received a license or sublicense or under which it is obligated
to pay or has the right to receive a royalty, license fee or similar
payment, in either case which provides for payments over the life of such
Contract in excess of $25,000;
(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;
16
(p) any lease, sublease or associated agreements relating to the
Leased Property (as defined in Section 4.14.1);
(q) any Contract requiring prior notice, consent or other approval
upon a change of control in the equity ownership of the Company or any
Company Subsidiary, which, if amended, modified or terminated as a result
of, relating to or in connection with a failure to provide prior notice, or
gain such consent or approval, would result in a Company Material Adverse
Effect; or
(r) any other Contract, whether or not made in the ordinary course of
business, which involves future payments by the Company or any Company
Subsidiary in excess of $25,000.
The Company has provided Centerprise with a true and complete copy of each
written Material Contract and a true and complete summary of each oral Material
Contract, in each case including all amendments or other modifications thereto.
Except as set forth on Schedule 4.13, each Material Contract is a valid and
binding obligation of, and enforceable in accordance with its terms against, the
Company or a Company Subsidiary, as applicable, and, to the Knowledge of the
Company, the other parties thereto, and is in full force and effect, subject
only to bankruptcy, reorganization, receivership and other laws affecting
creditors' rights generally and equitable principles. Except as set forth on
Schedule 4.13, the Company or one of the Company Subsidiaries, as applicable,
has performed in all material respects all obligations required to be performed
by it as of the date hereof and will have performed in all material respects all
obligations required to be performed by it as of the Closing Date under each
Material Contract and neither the Company or Company Subsidiary, as applicable,
nor, to the Knowledge of the Company, any other party to any Material Contract
is in breach or default thereunder, and, to the Knowledge of the Company, there
exists no condition which would, with or without the lapse of time or the giving
of notice, or both, constitute a breach or default thereunder. The Company has
not been notified that any party to any Material Contract intends to cancel,
terminate, not renew, or exercise an option under any Material Contract, whether
in connection with the transactions contemplated hereby or otherwise.
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.
17
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.
With respect to the Owned Property, except as reflected on Schedule
4.14.1-2(a):
(a) the Company or one of the Company Subsidiaries is in exclusive
possession thereof and no easements, licenses or rights are necessary to
conduct the Business thereon in addition to those which exist as of the
date hereof;
(b) no portion thereof is subject to any pending condemnation
proceeding or proceeding by any public or quasi-public authority materially
adverse to the Owned Property and, to the Knowledge of the Company, there
is no threatened condemnation or proceeding with respect thereto;
(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):
18
(i) the Company and/or one of the Company Subsidiaries is in
exclusive, peaceful and undisturbed possession thereof and, to the
Knowledge of the Company, no easements, licenses or rights are necessary to
conduct the Business thereon in addition to those which exist as of the
date hereof; and
(ii) to the Knowledge of the Company, no portion thereof is
subject to any pending condemnation proceeding or proceeding by any public
or quasi-public authority materially adverse to the Leased Property and
there is no threatened condemnation or proceeding with respect thereto.
4.14.2 The Latest Balance Sheet and/or Schedule 4.14.2 reflect all
material tangible personal property owned by the Company or any Company
Subsidiary, except as sold or otherwise disposed of or acquired in the
ordinary course of business. Except as set forth on Schedule 4.14.2, the
Company or one of the Company Subsidiaries has good and marketable title
to, or a valid leasehold interest in, or valid license of, such personal
property (including, without limitation, machinery, equipment and
computers), in each case free and clear of any 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 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 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 Company nor
any Company Subsidiary has received any written notice that it is or has
infringed on,
19
misappropriated or otherwise conflicted with, or otherwise has Knowledge that it
is infringing on, misappropriating, or otherwise conflicting with the
intellectual property rights of any third parties; (iii) there is no claim
pending or, to the Knowledge of the Company, threatened against the Company or
any Company Subsidiary with respect to the alleged infringement or
misappropriation by the Company or Company Subsidiary, or a conflict with, any
intellectual property rights of others; (iv) the operation of any aspect of the
Business in the manner in which it has heretofore been operated or is presently
operated does not give rise to any such infringement or misappropriation; and
(v) there is no infringement or misappropriation of the Intellectual Property by
a third party or claim, pending or, to the Knowledge 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 reserved, in each case in accordance with GAAP up to and including the
Closing Date. All such Returns are or will be true and correct in all
material respects. The Company has delivered to Centerprise true and
complete copies of all Returns referred to in the first sentence of this
Section 4.16.1 (including any amendments thereof) for the five (5) most
recent taxable years. Neither the Company nor any Company Subsidiary is
delinquent in the payment of any Tax, and no material deficiencies for any
Tax, assessment or governmental charge have been threatened, claimed,
proposed or assessed. No waiver or extension of time to assess any Taxes
has been given or requested. No written claim, or any other claim, by any
taxing authority in any jurisdiction where the Company or any Company
Subsidiary does not file Tax returns is pending pursuant to which the
Company or Company Subsidiary, as applicable, is or may be subject to
taxation by that jurisdiction. The Company's and the Company Subsidiaries'
Returns were last audited by the Internal Revenue Service or comparable
state, local or foreign agencies on the dates set forth on Schedule
4.16.1-2.
4.16.2 For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, withholdings, fees, levies, penalties, additions,
interest or other assessments, including, without limitation, income, gross
receipts, excise, property, sales, employment,
20
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.
4.17.2 A complete copy of each written Employee Plan (as defined in
Section 4.17.5(a)) as amended to the Closing, together with audited
financial statements, if any, for the three (3) most recent plan years; a
copy of each trust agreement or other funding vehicle with respect to each
such plan; a copy of any and all determination letters, rulings or notices
issued by a Governmental Authority with respect to such plan; a copy of the
Form 5500 Annual Report for the three (3) most recent plan years; and a
copy of each and any general explanation or communication which was
required to be distributed or otherwise provided to participants in such
plan and which describes all or any relevant aspect of each plan, including
summary plan descriptions and/or summary of material modifications, have
been delivered to Centerprise. A description of each unwritten Employee
Plan, including a description of eligibility, participation, benefits,
funding arrangements and assets or other relevant aspects of the
obligation, is set forth in Schedule 4.17.2.
4.17.3 Except as is not reasonably expected to give rise to any
liability (including contingent liability), whether direct or indirect, to
the Company or any Company
21
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 Except as set forth on Schedule 4.17.4, neither the Company
nor any Company Subsidiary or Plan Affiliate has ever sponsored,
maintained, contributed to or been required to contribute to, or has any
liability, whether direct or indirect, with respect to any Employee Plan
which is or has ever been (i) a "multiemployer plan" as defined in Section
4001 of ERISA, (ii) a "multiemployer plan" within the meaning of Section
3(37) of ERISA, (iii) a "multiple employer plan" within the meaning of Code
Section 413(c), (iv) a "multiple employer welfare arrangement" within the
meaning of Section 3(40) of ERISA, (v) subject to the funding requirements
of Section 412 of the Code or to Title IV of ERISA, or (vi) provides for
post-retirement medical, life insurance or other welfare-type benefits.
4.17.5 As used in this Agreement, the following terms shall have the
following respective meanings:
(a) the term "Employee Plan" shall mean any plan, policy,
program, arrangement or agreement described in Section 4.17.1, whether
or not scheduled;
(b) the term "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended; and
22
(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 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 the Company, is there any basis for any such
allegation, charge, or complaint. There is no request for representation pending
and, to the Knowledge the Company, no question concerning representation has
been raised. There is no grievance pending that is reasonably expected to result
in a Company Material Adverse Effect nor any arbitration proceeding arising out
of a union agreement. To the Knowledge of the Company, no 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 Board of Directors of the Company, without any duty to inquire
(notwithstanding the definition of "Knowledge" in Section 15.4), there are no
Hazardous Materials (as defined later in this Section) present at, on or under
any real property currently or formerly owned, leased or used by the Company or
Company Subsidiary (other than those present in office supplies and
cleaning/maintenance materials) for which the Company or a Company Subsidiary 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
23
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
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. None of Seller, 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 Grace Capital, LLP ("Holdings") the Company, any partner of
Holdings, any Affiliate of any such partner nor any Affiliate of Holdings, the
Company or any Company Subsidiary (i) possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or affiliate of, any
Person that is a client, supplier, customer, lessor, lessee or competitor of the
Company or any Company Subsidiary, (ii) owns, directly or indirectly, in whole
or in part, or has any interest in any tangible or intangible property used in
the conduct of the Business, or (iii) is a party to an agreement or
relationship, that involves the receipt by such Person of compensation or
property from the Company or any Company Subsidiary other than through a
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
24
(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 revenue for the twelve (12) months ended December 31,
1998. Except as set forth on Schedule 4.22, since December 31, 1998, none of
such clients has canceled or substantially reduced its business with the Company
or Company Subsidiary, as applicable, nor are any of such clients threatening to
do so. To the Knowledge of the Company, except as set forth on Schedule 4.22 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 Subsidiaries' ordinary
course of business, consistent with past custom and practices, nor since that
date has there been any oral or written promise to employees, partners, members
or owners of any bonus or increase in compensation, other than in the Company's
and Company Subsidiaries' ordinary course of business, consistent with past
custom and practices. The term "general increase" as used herein means any
increase generally applicable to a class or group, but does not include
increases granted to individuals for merit, length of service or change in
position or responsibility made on the basis of the custom and past practices of
the Company or any Company Subsidiary. Schedule 4.23 includes the date and
amount of the last bonus or similar distribution or increase in compensation for
each listed individual.
4.24 Bank Accounts. Schedule 4.24 is a true and complete list of each
bank in which the Company or any Company Subsidiary has an account or safe
deposit box, the number of each such account or box, and the names of all
Persons authorized to draw thereon or to have access thereto.
4.25 Professional Credentials. Each Partner 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
25
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
Partners 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 Company contained in this Agreement or in any of the certification,
schedules, lists, documents, exhibits, or other instruments delivered or to be
delivered to Centerprise as contemplated by any provision hereof contains any
untrue statement regarding a material fact or omits to state a material fact
necessary in order to make the statements made herein or therein not misleading.
To the Knowledge of the Company, there is no fact or circumstance that has not
been disclosed to Centerprise herein that has or is reasonably expected to have
a Company Material Adverse Effect.
ARTICLE V
[RESERVED]
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF CENTERPRISE
Centerprise represents and warrants to the Company as of March 31, 1999
and, subject to Section 7.3, as of the date on which Centerprise and the lead
Underwriter execute and deliver the Underwriting Agreement related to the IPO
and as of the Closing Date as follows:
6.1 Organization And Qualification. Each of Centerprise and Mergersub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its business as it
is now being conducted. True, accurate and complete copies of each of
Centerprise's and Mergersub's Certificate of Incorporation and By-laws, as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to Seller and the Company.
6.2 Capitalization.
6.2.1 The authorized capital stock of Centerprise consists of 20,000
shares of Centerprise Common Stock, of which 17,500 shares are outstanding
as of the date hereof. All of the issued and outstanding shares of
Centerprise Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights. Immediately prior to the
Closing Date, the authorized capital stock of Centerprise will consist of
50,000,000 shares of Centerprise Common Stock, of which the number of
shares set forth in the Form S-1 will be issued and outstanding, and
10,000,000 shares of Preferred Stock, par value $0.01
26
per share, none of which will be issued and outstanding. Other than (i)
shares of Centerprise Common Stock issued pursuant to a split of the shares
outstanding as of the date of this Agreement, (ii) shares of Centerprise
Common Stock issued in accordance with the Acquisition and the Other
Acquisitions, and (iii) shares of Centerprise Common Stock that may be
issued to new members of management in lieu of shares previously issued to
current members of management, but which will not increase the number of
shares of outstanding Centerprise Common Stock, no shares of Centerprise
Common Stock will be issued prior to the consummation of the IPO.
Mergersub's authorized capital stock consists solely of 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
Centerprise, and are fully paid, nonassessable and free 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 Centerprise
to issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of Centerprise or obligating
Centerprise to grant, extend or enter into any such agreement or
commitment. There are no voting trusts, proxies or other agreements or
understandings to which Centerprise is a party or is bound with respect to
the voting of any shares of capital stock of Centerprise. The shares of
Centerprise Common Stock issued to the Company's Stockholders in the
Acquisition 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 Centerprise'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) Centerprise has no subsidiaries and it does not own any
capital stock of any corporation or any equity or other interest of any nature
whatsoever in any Person.
6.4 Authority; Non-Contravention; Approvals.
6.4.1 Each of Centerprise and Mergersub has all requisite right,
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been approved by the
Boards of Directors of Centerprise and Mergersub, and no other corporate
proceedings on the part of Centerprise or Mergersub are necessary to
authorize the execution and delivery of this Agreement or the consummation
by Centerprise and Mergersub of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Centerprise and Mergersub
and,
27
assuming the due authorization, execution and delivery hereof by, the
Company constitutes a valid and legally binding agreement of Centerprise
and Mergersub, enforceable against each of them in accordance with its
terms, except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors' rights generally and (ii) general
equitable principles.
6.4.2 The execution and delivery of this Agreement by Centerprise and
Mergersub does not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a
right of termination or acceleration under, or result in the creation of
any Lien upon any of the properties or assets of Centerprise and Mergersub
under any of the terms, conditions or provisions of (i) the Certificate of
Incorporation or By-laws of Centerprise or Mergersub, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or Governmental Authority applicable
to Centerprise or Mergersub or any of their respective properties or
assets, or (iii) any note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which Centerprise or
Mergersub is now a party or by which Centerprise, Mergersub or any of their
respective properties or assets, may be bound or affected, except those
items described in clause (ii) relating to regulating, licensing or
permitting the practice of public accountancy. The consummation by
Centerprise 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) Centerprise 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 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 "Centerprise Required Statutory
Approvals") no declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or regulatory body
or authority is necessary for the execution and delivery of this Agreement
by Centerprise or Mergersub or the consummation by Centerprise or Mergersub
of the transactions contemplated hereby, other than such declarations,
filings, registrations, notices, authorizations, consents or approvals
which, if not made or obtained, as the case
28
may be, are not reasonably expected to, in the aggregate, have a material
adverse effect on the business operations, properties, assets, condition
(financial or other), results of operations or prospects of Centerprise and
its subsidiaries, taken as a whole (a "Centerprise Material Adverse
Effect").
6.5 Absence of Undisclosed Liabilities. Except as set forth on Schedule
6.5, neither Centerprise nor Mergersub has incurred any liabilities or
obligations (whether known or unknown, absolute, contingent, direct, indirect,
perfected, inchoate, unliquidated or otherwise) of any nature. Except as set
forth on Schedule 6.5, neither Centerprise nor Mergersub has engaged in any
business activities of any type or kind whatsoever, nor entered into any
agreements nor is it bound by any obligation or undertaking.
6.6 Litigation. There are no claims, suits, actions or proceedings
pending or, to the Knowledge of Centerprise, threatened against, relating to or
affecting Centerprise or Mergersub, before any court, Governmental Authority or
any arbitrator that seek to restrain or enjoin the consummation of the
Acquisition or the IPO or which could reasonably be expected, either alone or in
the aggregate with all such claims, actions or proceedings, to have a
Centerprise Material Adverse Effect. Centerprise is not subject to any
unsatisfied or continuing judgment, order or decree of any court or Governmental
Authority. Centerprise is not a party to any legal action to recover monies due
it or for damages sustained by it.
6.7 Compliance with Applicable Laws. Each of Centerprise and Mergersub
has complied in all material respects with all Laws applicable to it, and has
not received any notice of any alleged claim or threatened claim, violation of
or liability or potential responsibility under any such Law which has not
heretofore been cured and for which there is no remaining liability and, to the
Knowledge of Centerprise, no event has occurred or circumstances exist that
(with or without notice or lapse of time) may constitute or result in a
violation by Centerprise or Mergersub of any Law or may give rise to any
liability on the part of the Centerprise or Mergersub under any Law.
6.8 No Misrepresentation. None of the representations and warranties of
Centerprise 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 Company as contemplated by any provision
hereof contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading. To the Knowledge of Centerprise, there is no fact or circumstance
that has not been disclosed to the Company herein that has or is reasonably
expected to have a Company Material Adverse Effect.
29
ARTICLE VII
CERTAIN COVENANTS AND OTHER TERMS
7.1 Conduct of Business by the Company Pending the Acquisition.
7.1.1 Except as otherwise contemplated by this Agreement, after the
date hereof and prior to the Closing Date or earlier termination of this
Agreement, unless Centerprise shall otherwise agree in writing, the Company
shall, and shall cause each Company Subsidiary to:
(a) in all material respects conduct 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 and (B) do not result in a
Company Material Adverse Effect;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of (i) any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock or equity interests of any class, (ii) any debt with
voting rights or (iii) any debt or equity securities convertible into
or exchangeable for, or any rights, warrants, calls, subscriptions, or
options to acquire, any such capital stock, debt with voting rights or
convertible securities;
(d) not (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (A) borrowings in the
ordinary course of business in a manner consistent with past customs
and practices 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
30
and key employees, and (iii) preserve the goodwill and business
relationships with clients and others having business relationships
with it and not engage in any action, directly or indirectly, with the
intent to adversely impact the transactions contemplated by this
Agreement;
(f) confer on a regular and frequent basis with one or more
representatives of Centerprise to report operational matters of
materiality and the general status of ongoing operations;
(g) except as contemplated by Schedule 4.9, not (i) increase in
any manner the base compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of its employees,
partners, members or owners, except in the ordinary course of
business in a manner consistent with past customs and practices of the
Company or any Company Subsidiary, as applicable, (ii) pay or agree to
pay any additional pension, retirement allowance or other employee
benefit under any Employee Plan to any such Person, whether past or
present, (iii) enter into any new employment, severance, consulting,
or other compensation agreement with any of its existing employees,
partners, members or owners, (iv) amend or enter into a new Employee
Plan (except as required by Law) or amend or enter into a new
collective bargaining agreement, or (v) engage in any new Affiliate
Transaction;
(h) comply in all material respects with all applicable Laws;
(i) not make any material investment in, directly or indirectly,
acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of
the assets of, or by any other manner, any businesses or any Person or
division thereof or otherwise acquire or agree to acquire any assets
in each case which are material to it other than in the ordinary
course of business in a manner consistent with past customs and
practices;
(j) not sell, lease, license, encumber or otherwise dispose of,
or agree to sell, lease, license, encumber or otherwise dispose of,
any of its assets other than in the ordinary course of business,
consistent with past customs and practices;
(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.
31
7.1.2 [Reserved]
7.1.3 Notwithstanding the fact that such action might otherwise be
permitted pursuant to this Article, the Company shall not take, or permit
any Company Subsidiary to take, any action that would or is reasonably
likely to result in any of the representations or warranties of the Company
set forth in this Agreement being untrue or in any of the conditions to the
consummation of the transactions contemplated hereunder set forth in
Article X not being satisfied.
7.1.4 Prior to the Closing, (i) the Company shall terminate, without
any liability to the Company or the Company Subsidiaries, all agreements
relating to the voting of the Company's capital stock, and all agreements
and obligations of the Company and the Company Subsidiaries relating to
borrowed money and/or involving payments to or for the benefit of a present
or former stockholder of the Company, or an Affiliate or family member of a
Partner or present 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 Centerprise, (B) items
reflected on Schedule 2.5, (C) agreements and obligations to the extent
such agreements and obligations result in Indirect Costs under the
Incentive Compensation Agreement, (D) the agreements set forth on Schedule
7.1.4(i)-D and (E) items approved by Centerprise in writing, (ii) the
Company shall transfer or distribute to the Persons set forth on Schedule
7.1.4(ii), and such Persons shall assume, (A) all assets identified on
Schedule 7.1.4(ii) (collectively, the "Excluded Assets") and (B) any and
all liabilities and obligations of any nature (whether known or unknown,
accrued, absolute, contingent, direct, indirect, perfected, inchoate,
unliquidated or otherwise) relating to the Excluded Assets and the
Company's interest in Better Business Methods, L.L.C., a Missouri limited
liability company ("BBM"), which was transferred by the Company effective
as of January 1, 1999 (collectively, the "Excluded Liabilities"), and (iii)
the Company may declare a special bonus (the "Special Bonus") in an amount
(after adding all Taxes payable by the Company with respect thereto) not in
excess of that portion of the AR that is not necessary to meet the Target
or otherwise satisfy the obligations of the Company hereunder. Prior to
the Closing, the Company 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), including without limitation the obligation
to make loans to BBM, contained in Section 2.d.i. of that certain Operating
Agreement dated August 3, 1998, by and among the Company, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "BBM Agreement"), and the restriction on
competition, contained in Section 6.g. of the BBM Agreement and provide
copies thereof to Centerprise.
7.2 No-Shop.
(a) After the date hereof and prior to the Closing Date or earlier
termination of this Agreement, the Company shall (i) not, and the Company
shall use its diligent efforts
32
to cause the Company Subsidiaries and any officer, director or employee of,
or any attorney, accountant, investment banker, financial advisor or other
agent retained by the Company or any Company Subsidiary not to, initiate,
solicit, negotiate, encourage, or provide non-public or confidential
information to facilitate, any proposal or offer to acquire all or any
substantial part of the business and properties of the Company or any
Company Subsidiary, or any capital stock or other equity interest of the
Company or any Company Subsidiary, whether by merger, purchase of assets or
otherwise, whether for cash, securities or any other consideration or
combination thereof, or enter into any joint venture or partnership or
similar arrangement, and (ii) promptly advise Centerprise of the terms of
any communications the Company may receive or become aware of relating to
any bid for part or all of the Company or any Company Subsidiary.
Notwithstanding the foregoing, if the underwriters' internal sales force
presentation or "road show" for the IPO has not started by October 15,
1999, then from and after such date, the Company may (through its
authorized agents) conduct limited discussions with potential acquirers of
the Company for the sole purpose of assessing the potential terms and
conditions of an acquisition proposal involving the Company.
Notwithstanding the preceding sentence, the Company shall not (i) disclose
any non-public or confidential information regarding the Company to any
such third party or (ii) enter into any agreement (including a letter of
intent or term sheet) with such third party unless this Agreement has been
terminated pursuant to Article XI.
(b) The Company (i) acknowledge that a breach of any of its covenants
contained in this Section 7.2 will result in irreparable harm to
Centerprise which will not be compensable in money damages; and (ii) agrees
that such covenant shall be specifically enforceable and that specific
performance and injunctive relief shall be a remedy properly available to
the other party for a breach of such covenant.
7.3 Schedules. Each party hereto agrees that with respect to the
representations and warranties of such party contained in this Agreement, such
party shall have the continuing obligation until the Closing promptly to
supplement or amend and deliver to the other parties all the schedules to this
Agreement (the "Schedules") to correct any matter which would constitute a
breach of any such party's representations and warranties herein; provided,
however, that no amendment or supplement to a Schedule that constitutes or
reflects a Company Material Adverse Effect or affects Schedule 4.2, Schedule 4.4
or Schedule 8.8 may be made unless Centerprise and a majority of the Founding
Companies consent to such amendment or supplement. No amendment 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
33
Schedule 8.8 of such Other Agreement, and (iii) Centerprise and a majority of
the Founding Companies consent to such amendment or supplement, but the Company
does not, the Company may terminate this Agreement at any time prior to the
Closing Date. In the event that (i) the Company seeks to amend or supplement a
Schedule pursuant to this Section 7.3, (ii) such amendment or supplement
constitutes or reflects a Company Material Adverse Effect or affects Schedule
4.2, Schedule 4.4 or Schedule 8.8, and (iii) Centerprise and a majority of the
Founding Companies do not consent to such amendment or supplement, this
Agreement shall be deemed terminated.
No party to this Agreement shall be liable to any other party if this
Agreement shall be terminated pursuant to the provisions of this Section 7.3,
unless this Agreement is so terminated in connection with an amendment of or
supplement to a Schedule relating to the Company's breach of a representation or
warranty as of March 31, 1999 in which case the Company shall pay to
Centerprise, as Centerprise's exclusive remedy (notwithstanding anything to the
contrary) and as liquidated damages, and not as a penalty, an amount equal to
$2,000,000 (the "Liquidated Damages Amount"). The Company agrees that in the
case of such termination Centerprise and the Founding Companies (excluding the
Company) will sustain immediate and irreparable economic harm and loss of
goodwill and that actual losses suffered by such parties will be difficult, if
not impossible, to ascertain, but the Liquidated Damages Amount set forth herein
is reasonable and has been arrived at after a good faith effort to estimate such
losses. Payment of the Liquidated Damages Amount shall be made in cash to
Centerprise within thirty (30) days of a termination pursuant to 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 Stockholders Meeting. The Company shall take all action in
accordance with applicable Laws and its Organizational Documents necessary to
duly call, give notice of, convene and hold a meeting of the Company's
stockholders to be held on the earliest practicable date determined in
consultation with Centerprise to consider and vote upon approval of the Merger,
this Agreement and the transactions contemplated hereby. The Company shall
solicit the approval of the Merger, this Agreement and the transactions
contemplated hereby by the Company's stockholders and the Company's Board of
Directors shall recommend approval of the Merger, this Agreement and the
transactions contemplated hereby by the Company's stockholders. If the Merger,
this Agreement and the transactions contemplated hereby are approved by the
Company's stockholders, the Company shall not call, give notice of, convene or
hold any other meeting of its stockholders to rescind or modify such approval or
to consider any other transaction.
7.5 Conversion. Prior to the Closing but effective only if, as and when
the Closing occurs, the Company shall complete, the Conversion, pursuant to
applicable law and present such evidence of the Conversion at the Closing, as
Centerprise or its counsel may require.
34
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1 Access to Information.
---------------------
8.1.1 The Company shall and shall cause the Company Subsidiaries to
afford to Centerprise and its accountants, counsel, financial advisors and
other representatives, including without limitation the underwriters
engaged in connection with the IPO (each an "Underwriter" and collectively,
the "Underwriters") and their counsel (collectively, the "Centerprise
Representatives"), and to the other Founding Companies and their
accountants, counsel, financial advisors and other representatives, and
Centerprise shall afford to the Company and 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. Centerprise shall hold and shall
use its best efforts to cause the Centerprise Representatives to hold, and
the Company shall hold and shall use their best efforts to cause the
Company Representatives to hold, in strict confidence all non-public
information furnished to it in connection with the transactions
contemplated by this Agreement, except that each of Centerprise and the
Company may disclose any information that it is required by law or judicial
or administrative order to disclose. In addition, Centerprise will cause
each of the other Founding Companies and their members and stockholders to
enter into a provision similar to this Section 8.1 requiring each such
Founding Company to keep confidential any information obtained by such
Founding Company in connection with the transactions contemplated by this
Agreement.
8.1.2 In the event that this Agreement is terminated in accordance
with its terms, each party shall promptly return to the disclosing party
all non-public written material provided pursuant to this Section 8.1 or
pursuant to the Other Agreements and shall not retain any copies, extracts
or other reproductions of such written material. In the event of such
termination, all documents, memoranda, notes and other writings prepared by
Centerprise or the Company based on the information in such material shall
be destroyed (and Centerprise and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to
similarly destroy such documents, memoranda and notes), and such
destruction (and reasonable best efforts) shall be certified in writing by
an authorized officer supervising such destruction.
35
8.2 Registration Statements.
-----------------------
8.2.1 Centerprise has filed the Registration Statements with the SEC
and shall use all reasonable efforts to have the Registration Statements
declared effective by the SEC as promptly as practicable. Centerprise shall
also take any action required to be taken under applicable state "blue sky"
or securities laws in connection with the issuance of Centerprise Common
Stock. Centerprise and the Company shall promptly furnish to each other all
information, and take such other actions, as may reasonably be requested in
connection with making such filings. All information provided and to be
provided by Centerprise and the Company, respectively, for use in the
Registration Statements shall be true and correct in all material respects
without omission of any material fact which is required to make such
information not false or misleading as of the date thereof and in light of
the circumstances under which given or made. The Company agrees promptly to
advise Centerprise if at any time during the period in which a prospectus
relating to the offering or the Merger is required to be delivered under
the Securities Act, any information contained in the prospectus concerning
the Company or the Company Subsidiaries becomes incorrect or incomplete in
any material respect, and to provide the information needed to correct such
inaccuracy or remedy such incompletion.
8.2.2 Centerprise agrees that it will provide to the Company and its
counsel copies of drafts of the Registration Statements (and any amendments
thereto) containing material changes to the information therein as they are
prepared and will not (i) file with the SEC, (ii) request the acceleration
of the effectiveness of or (iii) circulate any prospectus forming a part
of, the Registration Statements (or any amendment thereto) unless the
Company and its counsel (x) have had at least two days to review the
revised information contained therein (which changes shall be highlighted
by computer generated marks indicating the additions and deletions made
from the prior draft reviewed by the Company's counsel) and (y) have not
objected to the substance of the information contained therein. Any
objections posed by the Company or its counsel shall be in writing and
state with specificity the material in question, the reason for the
objection, and the Company's proposed alternative. If the objection is
founded upon a rule promulgated under the Securities Act, the objection
shall cite the rule. Notwithstanding the foregoing, during the five (5)
business days immediately preceding the date scheduled for the filing of
the Registration Statements and any amendment thereto, the Company and its
counsel shall be obligated to respond to proposed changes electronically
transmitted to them within two (2) hours from the time the proposed changes
(in the case of the initial filing of the Registration Statements, from the
last circulated draft of the Registration Statements; and, in the case of
any subsequent filing of the Registration Statements or any amendment
thereof, from the most recently filed Registration Statements or amendment
thereof) are transmitted to the Company's counsel; provided, that,
Centerprise has provided to the Company or its counsel reasonable advance
notice of such proposed changes; provided, further, that such changes are
highlighted by
36
computer generated marks indicating the additions and deletions made from
the prior draft reviewed by the Company's counsel.
8.2.3 Centerprise will advise the Partner Representative of the
effectiveness of the Registration Statements, advise the Partner
Representative of the entry of any stop order suspending the effectiveness
of the Registration Statements or the initiation of any proceeding for that
purpose, and, if such stop order shall be entered, use its best efforts
promptly to obtain the lifting or removal thereof. Upon the written request
of the Company, Centerprise will furnish to the Company a reasonable number
of copies of the final prospectus associated with the IPO.
8.3 Expenses and Fees. Centerprise shall pay the fees and expenses of the
independent public accountants and legal counsel to Centerprise and all filing,
printing and other reasonable, documented fees and expenses associated with the
IPO and Form S-4. The Company and its stockholders will not be liable for any
portion of the above expenses in the event the IPO is not completed. Centerprise
shall also pay the underwriting discounts and commissions payable in connection
with the sale of Centerprise Common Stock in the IPO. All other costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses.
8.4 Agreement to Cooperate. Subject to the terms and conditions herein
provided, each of the parties hereto shall use all reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
8.5 Public Statements. Except as may be required by law, no party hereto
nor any Affiliate of any party hereto shall issue any press release or any
written public statement with respect to this Agreement or the transactions
contemplated by this Agreement or the Other Agreements without the prior written
consent of Centerprise and the Company.
8.6 [Reserved]
8.7 Centerprise Covenants. After the date hereof and prior to the Closing
Date or earlier termination of this Agreement in accordance with its terms,
Centerprise shall comply in all material respects with all applicable Laws.
Centerprise shall not take any action that would or is reasonably likely to
result in any of the representations or warranties of Centerprise set forth in
this Agreement being untrue or in any of the conditions to the consummation of
the transactions contemplated hereunder set forth in Article X not being
satisfied.
8.8 Release of Guarantees. Centerprise shall use all commercially
reasonable efforts and good faith to have the Company's former or present
stockholders released from any and all guarantees on any indebtedness and leases
that they personally guaranteed for the benefit of the Company as set forth on
Schedule 8.8, with all such guarantees on indebtedness and leases being
37
assumed by Centerprise, if necessary to achieve such releases. If any guaranteed
indebtedness is repaid in full with proceeds from the IPO and the Company's
stockholders guarantees thereafter shall have no further force or effect, then
Centerprise shall not be obligated to use any efforts to obtain a release of
such guarantee. In the event that Centerprise cannot obtain such releases from
the lenders of any such guaranteed indebtedness or lessors of any guaranteed
leases, Centerprise agrees to indemnify, defend and hold harmless the Company's
stockholders against any and all claims made by lenders or landlords under such
guarantees.
8.9 [Reserved]
8.10 Preparation and Filing of Tax Returns.
-------------------------------------
8.10.1 The Company shall be responsible for causing the timely filing
of the final pre-Closing Returns for the Company and the Company
Subsidiaries; provided, however, that Centerprise and its advisors shall
have the right to review and approve such returns prior to filing, which
approval shall not be unreasonably withheld. Centerprise shall, and shall
cause its Affiliates to, provide to the Company such cooperation and
information reasonably requested in filing any return, amended return or
claim for refund, determining a liability for Taxes or a right to refund of
Taxes or in conducting any audit or other proceeding in respect of Taxes.
The Company shall bear all costs of filing such returns.
8.10.2 Each of the Company and Centerprise shall comply with the tax
reporting requirements of Section 1.351-3 of the Treasury Regulations
promulgated under the Code, and shall treat the transaction as subject to
the provisions of Section 351 of the Code.
8.11 Maintenance of Insurance. The Company covenants and agrees that all
insurance policies listed, or required to be listed, on Schedule 4.20 will be
maintained in full force and effect through the Closing Date.
8.12 Administration. After the Closing, at the request of the Partner
Representative, Centerprise 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.
8.13 Payment of Special Bonus. After the Closing, Centerprise shall cause
the Company to make payments of the Special Bonus to the Persons and in the
amounts set forth on a schedule to be provided by the Partner Representative to
Centerprise as soon as practicable after the Closing (which schedule shall be
substantially similar to the bonus projection schedule previously provided by
the Company to Centerprise); provided, however, that (i) the Company shall make
such payments on a monthly basis (the first payment to be made one month after
the Closing Date), (ii) the aggregate payments to be made by the Company at the
end of each month shall be limited to the AR collected by the Company during
such month, (iii) one hundred eighty days after the Closing Date the Company
shall (A) make payments of AR collected through such date and not
38
yet paid out in accordance with this Section 8.13, and (B) distribute any then
remaining AR as final payment of the Special Bonus, and (iv) in no event shall
the liability of Centerprise and the Company under this Section 8.13 plus for
all Taxes payable by the Company on account of the Special Bonus exceed the
amount of the AR.
8.14 Partner Representative. The Company appoints ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(the "Partner Representative") as its agent and representative with full power
and authority to agree, contest or settle any claim or dispute affecting the
Company made under Article II and to otherwise act on behalf of the Company and
its stockholders in accordance with the terms of this Agreement.
ARTICLE IX
[RESERVED]
ARTICLE X
CLOSING CONDITIONS
10.1 Conditions to Each Party's Obligation to Effect the Acquisition. The
respective obligations of each party to effect the Acquisition shall be subject
to the fulfillment at or prior to the Closing of the following conditions:
(a) the Underwriting Agreement related to the IPO shall have been
executed and the closing of the sale of Centerprise Common Stock to the
Underwriters pursuant thereto shall have occurred simultaneously with the
Closing hereunder;
(b) the closings of the transactions contemplated under each of the
Other Agreements shall have occurred simultaneously with the Closing
hereunder, unless terminated in accordance with Section 7.3 of the
applicable Other Agreement;
(c) the Registration Statements shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
(d) no preliminary or permanent injunction or other order or decree
shall be pending before or issued by any federal or state court which seeks
to prevent or prevents the consummation of the IPO, the Acquisition or any
of the Other Acquisitions shall have been issued and remain in effect;
39
(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 Acquisition or any of the Other Acquisitions or make
the consummation of the Acquisition or any of the Other Acquisitions
illegal;
(g) all material governmental and third party waivers, consents and
approvals required for the consummation of the Acquisition or any of the
Other Acquisitions 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 Acquisition has
been filed or threatened by a third party and remains threatened or remains
pending before any court, Governmental Authority or regulatory Person;
(i) this Agreement, the Merger and the transactions contemplated
hereby shall have been approved and adopted by the Company's stockholders
in the manner required by any applicable Law and the Company's
Organizational Documents and such approval shall remain in full force and
effect;
(j) Centerprise shall have entered into one or more credit facilities
providing for aggregate commitments of not less than $75 million; and
(k) A separate entity shall have been formed to conduct the
Attestation Practice, and such entity shall have secured all licenses,
permits, approvals and authorizations necessary to conduct the Attestation
Practice in accordance with applicable laws and regulations.
10.2 Conditions to Obligation of the Company to Effect the Acquisition.
Unless waived by Company, the obligation of the Company to effect the
Acquisition shall be subject to the fulfillment at or prior to the Closing of
the following additional conditions:
(a) Centerprise, Mergersub and each of the Founding Companies other
than the Company shall have performed in all material respects their
respective 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 Centerprise contained in this Agreement
and each Other Agreement shall be true and correct in all material respects
on and as of the date made and on and as of the Closing Date as if made at
and as of such date, and the Company shall have received a certificate of
the Chief Executive Officer or President of Centerprise to that effect;
40
(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 Company of the Acquisition;
(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 Company;
(d) each of the partners of Holdings shall have been afforded the
opportunity to enter into an incentive compensation agreement (the
"Incentive Compensation Agreement") with Centerprise substantially in the
form attached hereto as Exhibit 10.2(d);
(e) Centerprise shall have delivered to the Company a certificate,
dated as of a date no later than ten days prior to the Closing Date, duly
issued by the Delaware Secretary of State, showing that Centerprise is in
good standing;
(f) each of the partners of Holdings, the partners, members and
stockholders of the other Founding Companies who are to receive shares of
Centerprise Common Stock pursuant to the Other Agreements, and the other
stockholders of Centerprise other than those acquiring stock in the IPO
shall have entered into an agreement (the "Stockholders Agreement")
substantially in the form attached hereto as Exhibit 10.2(f);
(g) all conditions to the Acquisitions of the other Founding
Companies, on substantially the same terms as provided herein, shall have
been satisfied or waived by the applicable party and the Company;
(h) the Company shall have been afforded the opportunity to
review the executed employment agreement by and between Centerprise 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 assumptions, that for federal income tax purposes there
will be no gain or loss recognized with respect to the Centerprise Common
Stock received in exchange for 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 Partners.
10.3 Conditions to Obligation of Centerprise to Effect the Acquisition.
Unless waived by Centerprise, the obligation of Centerprise and Mergersub to
effect the Acquisition shall be subject to the fulfillment at or prior to the
Closing of the additional following conditions:
41
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or prior
to the Closing Date and the representations and warranties the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the date made and on and as of the Closing Date as if
made at and as of such date, and Centerprise and the Underwriters shall
have received a Certificate of the Chief Executive Officer or President of
the Company to that effect;
(b) [Reserved];
(c) Centerprise and the Underwriters shall have received an opinion
from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq. counsel to the Company, 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 Centerprise;
(d) the Company and the parties thereto, as applicable, shall have
executed and delivered 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 partner of Holdings shall have executed and delivered the
Incentive Compensation Agreement substantially in the form attached hereto
as Exhibit 10.2(d);
(f) Centerprise and the Underwriters shall have received "Comfort"
letters in customary form from the Company's independent public
accountants, dated the effective date of the Form S-1 and the Closing Date
(or such other date reasonably acceptable to Centerprise), with respect to
certain financial statements and other financial information included in
the Form S-1 and any subsequent changes in specified balance sheet and
income statement items, including total assets, working capital, total
stockholders' equity, total revenues and the total and per share amounts of
net income;
(g) the Company shall have delivered to Centerprise and the
Underwriters a certificate, dated as of a date no later than ten days prior
to the Closing Date, duly issued by the appropriate Governmental Authority
in the state of organization of the Company and each Company Subsidiary
and, unless waived by Centerprise, in each state in which the Company or
any Company Subsidiary is authorized to do business, showing the Company or
Company Subsidiary (as applicable) is in good standing;
(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 Centerprise of the Acquisition;
42
(i) the partners of Holdings shall have executed the Stockholders
Agreement;
(j) the Company's stockholders and the partners of Holdings shall
have delivered to Centerprise an instrument in the form attached hereto as
Exhibit 10.3(j), dated the Closing Date, releasing the Company (and the
Company Subsidiaries) from any and all claims of such persons against the
Company (and the Company Subsidiaries) and obligations of the Company (and
the Company Subsidiaries) to such persons;
(k) the Company's interest in BBM and all Excluded Liabilities
related thereto, including without limitation under the BBM Agreement,
shall have been distributed, transferred, assigned and novated, as
applicable, in form and substance on terms and conditions acceptable to
Centerprise;
(l) the Company shall have presented evidence in form and substance
on terms and conditions satisfactory to Centerprise 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 Centerprise;
(m) the Company shall have terminated or have caused the termination
of any voting trusts, proxies or other agreements or understandings to
which the Company is a party or is bound with respect to any shares of
capital stock or other equity interests of the Company and the Company
Subsidiaries and shall have provided Centerprise evidence of such
termination that is acceptable to Centerprise's counsel;
(n) the Company shall have completed the Conversion and have
presented evidence of such conversion in accordance with Section 7.5;
(o) the Company shall have delivered payoff letters including a
statement of per diem interest amounts and other applicable release
documents from all institutional lenders and creditors of the Company and
the Company Subsidiaries regarding the payment in full of indebtedness at
Closing, in each case in form and substance satisfactory to Centerprise
(including, without limitation, applicable UCC-3 termination statements);
(p) the secretary of the Company shall have delivered certified
copies of the resolutions of the board of directors and shareholders of the
Company approving execution and delivery of this Agreement, the Conversion,
the Merger and the other actions, agreements and documents, necessary or
desirable to complete the transactions contemplated herein; and
(q) the Company's stockholders (including the partners of Holdings)
shall have executed and delivered the Company Stockholder Agreement in the
form of Exhibit 10.3(r) attached hereto.
43
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) the Company,
(i) if the Acquisition is not completed by November 15, 1999
other than on account of delay or default on the part of the Company
or any of its affiliates or associates;
(ii) if the Acquisition is enjoined by a final, unappealable
court order not entered at the request or with the support of the
Company or any of its affiliates or associates;
(iii) if Centerprise (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within thirty (30)
days after written notice of such default is given to Centerprise; or
(c) by Centerprise,
(i) if the Acquisition is not completed by November 15, 1999
other than on account of delay or default on the part of Centerprise
or any of its stockholders or any of their affiliates or associates;
(ii) if the Acquisition is enjoined by a final, unappealable
court order not entered at the request or with the support of
Centerprise or any of its stockholders or any of their affiliates or
associates;
(iii) if the Company (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B) does
not cure such default in all material respects within thirty (30)
days after written notice of such default is given the Company by
Centerprise; or
(d) by mutual consent of the Company and the Board of Directors of
Centerprise.
44
11.2 Effect of Termination. In the event of termination of this Agreement
by either Centerprise or the Company, as provided in Section 11.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of the Company, Centerprise or Mergersub or their respective
officers or directors (except the obligations set forth in this Section 11.2 and
in Sections 8.1, 8.3, and 8.5, all of which shall survive the termination).
Nothing in this Section 11.2 shall relieve any party from liability for any
breach of this Agreement.
11.3 Amendment. This Agreement may not be amended except by action taken
by the Boards of Directors of Centerprise and the Company or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law. Centerprise
covenants and agrees that it shall not amend, modify or supplement the material
terms of any Other Agreement following the Closing without the prior written
consent of at least two thirds (2/3rds) of the members of Centerprise's Board of
Directors; 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
Centerprise'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 delivered pursuant thereto
and (c) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE XII
[RESERVED]
ARTICLE XIII
[RESERVED]
ARTICLE XIV
[RESERVED]
45
ARTICLE XV
GENERAL PROVISIONS
15.1 Brokers. The Company represents and warrants that no broker, finder
or investment banker is entitled to any brokerage, finder's or other fee (except
for any fee described in Schedule 15.1) or commission in connection with the
Acquisition or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. Centerprise represents and
warrants that no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
Acquisition or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Centerprise or its stockholders (other than
underwriting discounts and commission to be paid in connection with the IPO).
15.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, sent by nationally
recognized overnight delivery service, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the parties at the following
addresses (or at such other address for a party as shall be specified by notice
given in accordance with this Section):
15.2.1 If to Centerprise or Mergersub, to:
Centerprise Advisors, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Zavis
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
c/o Grace & Company P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
46
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
15.2.3 If to the Partner Representative, to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Grace & Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
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
partner, member or 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.
47
15.5 Entire Agreement; Assignment. This Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof and
(b) shall not be assigned by operation of law or otherwise, except that
Centerprise may assign this Agreement to any wholly-owned subsidiary of
Centerprise.
15.6 Applicable Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Illinois applicable to contracts executed and to be performed wholly within such
state, without giving effect to its choice of law rules.
15.7 Counterparts. This Agreement may be executed via facsimile or
otherwise in two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
15.8 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and their respective successors,
permitted assigns, heirs, legal representatives and executors and except as
expressly set forth in herein, nothing in this Agreement, express or implied, is
intended to confer upon any other Person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
* * *
[remainder of page intentionally left blank]
48
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed as
of the date first written above.
CENTERPRISE ADVISORS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name:
----------------------------------------
Its:
-----------------------------------------
GRACE MERGERSUB, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
Name:
----------------------------------------
Its: President
-----------------------------------------
GRACE & COMPANY, P.C.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Its: President
-----------------------------------------
