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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED JANUARY 19, 1998, BY AND BETWEEN
XXXXX X. XXXXX,
CAPRICORN CAPITAL GROUP, INC.,
XX XXXXXXXXXX PLACE 104, INC. AND
NATIONAL TECHTEAM, INC.
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TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS................................................1
1.1 "Affiliate" ...............................................1
1.2 "Business" ................................................1
1.3 "Business Day".............................................1
1.4 "Capricorn Balance Sheet" .................................1
1.5 "Capricorn Financial Statements" ..........................1
1.6 "Capricorn Shares" ........................................2
1.7 "Closing" .................................................2
1.8 "Closing Date" ............................................2
1.9 "Contingent Shares" .......................................2
1.10 "Disclosure Schedule" .....................................2
1.11 "Effective Time" ..........................................2
1.12 "Employee Benefit Plan" ...................................2
1.13 "Environmental Law" .......................................2
1.14 "ERISA" ...................................................3
1.15 "Form 10-Q Balance Sheet"..................................3
1.16 "GAAP" ....................................................3
1.17 "Knowledge" ...............................................3
1.18 "Material Adverse Effect" .................................3
1.19 "MBCA" ....................................................3
1.20 "Merger"...................................................3
1.21 "Merger Consideration" ....................................3
1.22 "Non-Registered Shares" ...................................3
1.23 "Ordinary Course"..........................................3
1.24 "Permitted Encumbrances" ..................................4
1.25 "Person" ..................................................4
1.26 "Registered Shares"........................................4
1.27 "Receivables" .............................................4
1.28 "Related Agreements" ......................................4
1.29 "SEC" .....................................................4
1.30 "Securities Act"...........................................4
1.31 "Sub Common Stock" ........................................4
1.32 "TechTeam Filings" ........................................4
1.33 "TechTeam Stock" ..........................................4
1.34 "Taxes" ...................................................4
1.35 "Transfer Agent" ..........................................4
ARTICLE 2 THE MERGER.................................................5
2.1 The Merger ...............................................5
2.1 Articles of Incorporation of Capricorn ....................5
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2.3 Bylaws of Capricorn .......................................5
2.4 Directors and Officers ....................................5
2.5 Conversion ................................................5
2.6 Surrender and Payment .....................................6
2.7 No Further Transfers ......................................6
2.8 Tax Consequences ..........................................6
ARTICLE 3 CONTINGENT SHARES; INVESTMENT
REPRESENTATIONS AND REDEMPTION RIGHT.......................6
3.1 Contingent Shares . .......................................6
3.2 Investment Intent; Information Disclosures.................7
3.3 Limited Redemption Right...................................
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF CAPRICORN AND SHAREHOLDER...............................8
4.1 Corporate Organization. ...................................8
4.2 Subsidiaries...............................................8
4.3 Capitalization. ...........................................9
4.4 Authority. ................................................9
4.5 Ownership of Capricorn Shares; Title. .....................9
4.6 Shareholder's Consents and Approvals; No Violations. ......9
4.7 Capricorn's Consents and Approvals; No Violations. .......10
4.8 Litigation. ..............................................10
4.9 Taxes. ...................................................10
4.10 Licenses, Permits and Approvals. .........................11
4.11 Compliance with Laws and Regulations. ....................11
4.12 Books and Records.........................................11
4.13 Financial Statements......................................12
4.14 Undisclosed Liabilities. .................................12
4.15 Adequacy of Assets........................................12
4.16 Title to Properties. .....................................12
4.17 Leases....................................................13
4.18 Receivables...............................................13
4.19 Inventory. ...............................................14
4.20 Intangible Assets.........................................14
4.21 Bank Accounts; Investments................................15
4.22 Material Contracts........................................15
4.23 Performance of Contracts, Etc. ..........................17
4.24 Customers and Commitments. ...............................17
4.25 Related Transactions......................................17
4.26 Questionable Payments. ...................................18
4.27 Burdensome Agreements and Unusual Matters.................18
4.28 Insurance. ...............................................19
4.29 Labor Matters.............................................19
4.30 Employee Benefit Plans....................................20
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4.31 Environmental Matters.....................................22
4.32 Absence of Changes........................................22
4.33 Disclosures. .............................................24
4.34 Brokers and Finders.......................................24
4.35 Certain Tax Matters.......................................24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES
OF TECHTEAM AND SUB.......................................25
5.1 Corporate Organization....................................25
5.2 Capitalization of TechTeam. ..............................25
5.3 Authority. ...............................................25
5.4 TechTeam's Consents and Approvals; No Violations..........25
5.5 Litigation. ..............................................26
5.6 Compliance with Laws. ....................................26
5.7 TechTeam Information. ....................................26
5.8 Undisclosed Liabilities. .................................26
5.9 No Material Adverse Change. ..............................26
5.10 Brokers and Finders. .....................................27
ARTICLE 6 FURTHER COVENANTS AND AGREEMENTS..........................27
6.1 Covenants of Shareholder Pending the Closing..............27
6.2 Covenants of TechTeam Pending the Closing. ...............28
6.3 Filings. .................................................29
6.4 Announcement. ............................................29
6.5 Costs and Expenses. ......................................29
6.6 Further Assurances. ......................................29
6.7 Certain Agreements. .....................................30
6.8 Covenant Not to Compete or Disclose Confidential
Information...............................................31
6.9 Release by Shareholder....................................32
6.10 Delivery of Disclosure Schedules..........................
ARTICLE 7 TERMINATION...............................................32
7.1 Termination...............................................32
7.2 Procedure and Effect of Termination. .....................33
ARTICLE 8 CONDITIONS TO TECHTEAM'S OBLIGATIONS......................34
8.1 Valuation of Capricorn. ..................................34
8.2 Audited Financial Statements of Capricorn.................34
8.3 Shareholder's Closing Deliveries..........................34
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8.4 Representations and Warranties. ..........................35
8.5 Performance. .............................................35
8.6 Legal Opinion. ...........................................35
8.7 Governmental Consents and Approvals. .....................35
8.8 No Injunction or Proceeding. .............................35
ARTICLE 9 CONDITIONS TO SHAREHOLDER'S OBLIGATIONS...................35
9.1 TechTeam's Closing Deliveries. ...........................36
9.2 Representations and Warranties True. .....................36
9.3 Performance. .............................................36
9.4 Legal Opinion. ...........................................36
9.5 Governmental Consents and Approvals. .....................36
9.6 No Injunction or Proceeding. .............................36
ARTICLE 10 INDEMNIFICATION...........................................37
10.1 Indemnification by Shareholder............................37
10.2 Indemnification by TechTeam. .............................37
10.3 Survival of Representations. .............................38
10.4 Indemnification Claims Procedures. .......................38
10.5 Right of Set-Off. ........................................39
10.6 Limitations on Liability. ................................40
ARTICLE 11 REGISTRATION RIGHTS.......................................40
11.1 Registration Obligation of TechTeam.......................40
11.2 Piggyback Registration Rights.............................40
11.3 Registration Procedures. .................................41
11.4 Indemnification and Contribution..........................42
ARTICLE 12 MISCELLANEOUS.............................................43
12.1 Dispute Resolution........................................43
12.2 Entire Understanding, Waiver, Etc. .......................44
12.3 Severability. ............................................45
12.4 Captions. ................................................45
12.5 Notices. .................................................45
12.6 Successors and Assigns. ..................................46
12.7 Parties in Interest. .....................................46
12.8 Counterparts. ............................................46
12.9 Construction of Terms. ...................................46
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12.10 Governing Law.............................................46
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of
January 19, 1998, by and between XXXXX X. XXXXX, (the "Shareholder"), CAPRICORN
CAPITAL GROUP, INC., a corporation organized and existing under the laws of
Michigan ("Capricorn"), NATIONAL TECHTEAM, INC., a corporation organized and
existing under the laws of Delaware ("TechTeam"), and XX XXXXXXXXXX PLACE 104,
INC., a Michigan corporation that is a wholly-owned subsidiary of TechTeam
("Sub").
RECITALS
WHEREAS, Shareholder owns all of the issued and outstanding shares of
common stock and preferred stock of Capricorn (collectively referred to herein
as the "Capricorn Shares"), and
WHEREAS, the parties hereto consider it advisable and in the best
interests of Capricorn, Sub and TechTeam, and in the best interests of the
Shareholder and of the stockholders of TechTeam, that the businesses of
Capricorn and TechTeam be combined through a merger (the "Merger") of Sub with
and into Capricorn on the terms and conditions set forth in this Agreement
(Capricorn, after the Merger, being the "Surviving Subsidiary");
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements hereinafter set forth and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby expressly acknowledged by Shareholder and TechTeam, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
The terms defined in this Article shall have the following respective
meanings for all purposes of this Agreement:
1.1 "AFFILIATE" means, with respect to any Person, any family member
and any other Person controlling, controlled by or under common control with
such Person.
1.2 "BUSINESS" means the business conducted as of the date of this
Agreement or as of the Closing Date, as the context permits or implies, by
Capricorn including, without limitation, the sale and leasing of computer
hardware.
1.3 "BUSINESS DAY" means any day on which banks are open for business
in Detroit, Michigan.
1.4 "CAPRICORN BALANCE SHEET" means the consolidated audited balance
sheet of Capricorn dated September 30, 1997 (and any related notes thereto), a
copy of which is included as part of the Capricorn Financial Statements.
1.5 "CAPRICORN FINANCIAL STATEMENTS" has the meaning set forth in
Section 4.13.
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1.6 "CAPRICORN SHARES" refers to all of the shares of Capricorn's
common stock and preferred stock that are owned by the Shareholder and being
exchanged for the Merger Consideration. Other than the Capricorn Shares, there
are no other outstanding shares of any class of capital stock of Capricorn.
1.7 "CLOSING" means the consummation and effectuation of the
transactions contemplated herein pursuant to the terms and conditions of this
Agreement. The Closing shall be held on January 30, 1998, at 10:00 AM in the
offices of Xxxxx Xxxxxxx P.C. in Detroit, Michigan or at such other time or
place as is mutually agreed by the parties hereto. Notwithstanding the Closing
Date, the Merger will be effective as of the Effective Time.
1.8 "CLOSING DATE" means the date on which the Closing actually occurs.
1.9 "CONTINGENT SHARES" means the shares of TechTeam Stock that may be
issued to Shareholder pursuant to Section 3.1.
1.10 "DISCLOSURE SCHEDULE" means the disclosure schedule executed by
the Shareholder and TechTeam as of the date hereof and previously delivered to
such parties, including any amendment thereto made after the date hereof and
delivered prior to the Closing.
1.11 "EFFECTIVE TIME" means the time when the filings required to be
made pursuant to Section 2.1 are filed with the Michigan Department of Commerce
or, if later, the time specified therein when the Merger shall become effective.
1.12 "EMPLOYEE BENEFIT PLAN" means any plan described in Section 3(3)
of ERISA and also shall mean any pension, retirement, profit sharing, savings,
thrift, stock bonus, stock option, stock purchase, restricted stock purchase,
stock ownership, stock appreciation right, phantom stock, deferred compensation,
supplemental retirement, deferred bonus, severance, change of control,
parachute, health, medical, dental, vision, prescription drugs, fitness,
dependent care, educational assistance, group legal services, life insurance,
accidental death, accidental dismemberment, sick pay, short-term or long-term
disability, Code Section 125 or other cafeteria plan, supplemental unemployment
income, training, apprenticeship, scholarship, tuition reimbursement, employee
assistance, employee discount, subsidized cafeteria, fringe benefit, vacation,
holiday, employer-sponsored recreational facility, or other employee or retiree
pension benefit or welfare benefit plan, policy, contract, or arrangement, or
other similar fringe or employee benefit plan, program, policy, contract, or
arrangement, written or oral, qualified or nonqualified, funded or unfunded,
foreign or domestic covering employees or former employees of Capricorn.
1.13 "ENVIRONMENTAL LAW" means any federal, state, county or local
statutes, laws, regulations, rules, ordinances, codes, licenses and permits or
any governmental authorities relating to environmental, health or safety
matters, including, without limitation, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, and applicable
regulations promulgated thereunder, the Clean Air Act, as amended, and
applicable regulations promulgated thereunder, the Federal Water Pollution
Control Act of 1972,
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as amended, and applicable regulations promulgated thereunder, the Hazardous
Materials Transportation Act, as amended, and applicable regulations promulgated
thereunder, and the Hazardous Materials Transportation Uniform Safety Act of
1990, as amended, and applicable regulations promulgated thereunder.
1.14 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.15 "FORM 10-Q BALANCE SHEET" means the unaudited balance sheet of
TechTeam dated September 30, 1997 (and any notes related thereto), found in Form
10-Q filed with the SEC for the quarterly period ended September 30, 1997 (or
any amendment thereto), a copy of which is included as part of the TechTeam
Filings.
1.16 "GAAP" means generally accepted accounting principles as in effect
in the United States on September 30, 1997.
1.17 "KNOWLEDGE". As used herein, any reference to the "knowledge" of
Capricorn and the Shareholder, or the like, shall include the knowledge of
management of Capricorn and of the Shareholder after making due inquiry and, if
Capricorn's management and the Shareholder fail to make such inquiry, shall
include constructive knowledge of such facts as would have been learned had such
due inquiry been made.
1.18 "MATERIAL ADVERSE EFFECT" means, with respect to any Person, a
material adverse effect on the financial condition, results of operations or
business prospects of such Person.
1.19 "MBCA" refers to the Michigan Business Corporation Act, as
amended.
1.20 "MERGER" refers to the merger of Sub with and into Capricorn of
which Capricorn will be the survivor and become a subsidiary of TechTeam.
1.21 "MERGER CONSIDERATION" means the 500,000 shares of TechTeam Stock
to be delivered to the Shareholder in exchange for the Capricorn Shares. The
Merger Consideration consists of the 350,000 Registered Shares and the 150,000
Non-Registered Shares.
1.22 "NON-REGISTERED SHARES" means the 150,000 Shares of TechTeam Stock
that are part of the Merger Consideration that TechTeam will have no obligation
to register for sale under the Securities Act.
1.23 "ORDINARY COURSE", for purposes of this Agreement, an activity is
deemed to be in "the ordinary course" of a Person's business if such activity is
in accordance with: (a) customary business practices and usages of trade
prevailing in the industry in which such Person operates; and (b) such Person's
historical and customary practice with respect to such activity.
1.24 "PERMITTED ENCUMBRANCES" means each of the following: (i) liens
for property taxes and special assessments with respect to the personal property
owned by Capricorn with
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respect to 1997 and subsequent years; and (ii) mechanic's and materialmen's
liens arising in the ordinary course of business.
1.25 "PERSON" means an individual, partnership, corporation, limited
liability company, trust, unincorporated organization, association, joint
venture, other entity or a government agency, political subdivision or
instrumentality thereof.
1.26 "REGISTERED SHARES" means the 350,000 Shares of TechTeam Stock
that are part of the Merger Consideration that will be registered by TechTeam
under the Securities Act in accordance with Section 11.1. The Registered Shares
will also be subject to the limited redemption rights set forth in Section 3.3.
1.27 "RECEIVABLES" means all loans, equipment leases, sale contracts,
credit or financing agreements or arrangements, portfolio servicing agreements,
account receivable invoices and other obligations or rights to payments owned by
Capricorn.
1.28 "RELATED AGREEMENTS" means the agreements described in Sections
3.2(f) and 6.7.
1.29 "SEC" means the United States Securities and Exchange Commission.
1.30 "SECURITIES ACT" means the Securities Act of 1933, as amended.
1.31 "SUB COMMON STOCK" refers to the common stock of Sub.
1.32 "TECHTEAM FILINGS" means TechTeam's Annual Report on Form 10-K for
the year ended December 31, 1996 and all proxy statements, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and all amendments thereto filed
subsequent to the filing of that original Form 10-K.
1.33 "TECHTEAM STOCK" means TechTeam's common stock, $.01 par value.
1.34 "TAXES" means all income, gross receipts, profits, franchise,
license, transfer, sales, use, ad valorem, customs, payroll, withholding, Social
Security, Federal Insurance Contributions Act (FICA), Old Age, Survivors and
Disability Insurance (OASDI), employment, unemployment, occupation, property
(real or personal), excise or other taxes, withholdings, fees, duties,
assessments, and charges imposed by any federal, state, local, or foreign taxing
authority, including without limitation taxes required to be withheld from
employees' and officers' compensation and paid over to taxing authorities. The
term "Taxes" shall include any interest, additions or penalties (including
without limitation the penalties for fraud and for substantial understatement of
tax liability).
1.35 "TRANSFER AGENT" means U.S. Stock Transfer Corporation, in its
capacity as transfer agent for TechTeam Stock.
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ARTICLE 2
THE MERGER
2.1 THE MERGER. At the Effective Time, upon the terms and subject to
the conditions of this Agreement and the MBCA, Sub shall be merged with and into
Capricorn. As soon as practicable after satisfaction or waiver of the conditions
set forth herein, Capricorn, Sub and TechTeam will effect the Merger by causing
to be filed a Certificate of Merger, prepared as prescribed in Section 707 of
the MBCA, with the Michigan Department of Commerce. The Merger shall become
effective at the Effective Time. Promptly following the Effective Time, the
parties will make all such other filings and recordings, if any, as may be
required by the MBCA in furtherance of the Merger. Capricorn shall be the
surviving corporation in the Merger, and the separate corporate existence of
Capricorn, with all its purposes, objects, rights, privileges, powers and
franchises, shall continue unaffected and unimpaired by the Merger.
2.2 ARTICLES OF INCORPORATION OF CAPRICORN. The Articles of
Incorporation of Capricorn as in effect immediately prior to the Effective Time
shall be the Articles of Incorporation of the Surviving Subsidiary unless and
until amended as provided by law and by such Articles of Incorporation.
2.3 BYLAWS OF CAPRICORN. The Bylaws of Capricorn as in effect
immediately prior to the Effective Date shall be the Bylaws of the Surviving
Subsidiary by virtue of the Merger unless and until amended or repealed as
provided by law, by the Articles of Incorporation of the Surviving Subsidiary
and by such Bylaws.
2.4 DIRECTORS AND OFFICERS. On the Closing Date, the existing directors
of Capricorn shall resign and the following persons will be elected as directors
of Capricorn: Xxxxx X. Xxxxx, Xxxxxx Xxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxxxxxxx,
and Xxxxx Xxxxx. On the Closing Date, the existing officers of Capricorn shall
resign and the following persons shall be appointed as officers of Capricorn:
Xxxxx X. Xxxxx - President, Xxxxxxx Xxxxx - Chairman, and Xx Xxxxxxx - Chief
Operating Officer. Those directors and officers of Capricorn shall continue as
directors and officers after the Effective Time until their successors shall
have been elected and shall qualify or until otherwise provided by law or by the
Articles of Incorporation or Bylaws of the Surviving Subsidiary.
2.5 CONVERSION. At the Effective Time, by virtue of the Merger and
without any action on the part of the holder of any of the Capricorn Shares or
the holder of any share of Sub Common Stock:
(a) All of the Capricorn Shares held by the Shareholder shall
be converted into the Merger Consideration and the right to receive the
Contingent Shares described in Section 3.1. From and after the
Effective Time, the Shareholder shall cease to have any rights with
respect to the Capricorn Shares (other than dissenter's rights, if
applicable); his sole right shall be to receive the Merger
Consideration.
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(b) Each share of Sub Common Stock held by TechTeam shall be converted
into one share of Common Stock of Capricorn, which shall constitute the
only issued and outstanding shares of capital stock of the Surviving
Subsidiary.
2.6 SURRENDER AND PAYMENT. As soon as practicable after the Effective
Time, the Shareholder, upon surrender, for cancellation, to TechTeam, of all of
the certificates previously representing the Capricorn Shares, will be entitled
to receive certificates representing the Merger Consideration, as provided in
Section 2.5(a).
2.7 NO FURTHER TRANSFERS. The stock transfer books of Capricorn shall
be closed on the Closing Date, and no transfer of any Capricorn Shares
theretofore outstanding shall thereafter be made.
2.8 TAX CONSEQUENCES. The parties hereto intend that the Merger shall
constitute a "reorganization" within the meaning of Section 368(a)(1)(A) of the
Code by reason of Section 368(a)(2)(D) of the Code and that this Agreement shall
constitute a "plan of reorganization" for the purposes of Section 368 of the
Code. Each party hereto agrees and covenants to report the Merger in accordance
with such intention that it may be treated as a reorganization for federal
income tax purposes, including filing such returns, reports, information
statements and declarations with applicable federal, state, local and other
taxing authorities and maintaining such records as are required by applicable
law in a manner consistent with such intention.
ARTICLE 3
CONTINGENT SHARES; INVESTMENT
REPRESENTATIONS; AND REDEMPTION RIGHT
3.1 CONTINGENT SHARES. Promptly after completion of the audited
financial statements of Capricorn for the year ended December 31, 2000,
TechTeam's auditors shall compute the average pre-tax earnings of Capricorn for
the three year period ended December 31, 2000 and the amount if any (the
"Contingent Earnings Amount"), by which those average annual pre-tax earnings
exceed $250,000 per year. In computing those average annual pre-tax earnings,
TechTeam's auditors will follow generally accepted accounting principles
appropriate for Capricorn's business except that transactions eliminated in
preparation of TechTeam's consolidated financial statements shall not enter into
average annual pre-tax earnings with the exception of hardware sold by Capricorn
to TechTeam for TechTeam's internal use (for which Capricorn shall be credited
with a fifteen percent (15%) profit margin). In addition, when computing those
average annual pre-tax earnings, whenever TechTeam and Capricorn jointly
generate income from a business transaction, Capricorn shall be credited with
all of those pre-tax earnings attributable to services performed and hardware
provided by Capricorn. TechTeam shall then issue Shareholder additional shares
(the "Contingent Shares") of TechTeam Stock in an amount equal to two hundred
percent (200%) of the Contingent Earnings Amount divided by $10.00. However, in
no event shall the number of Contingent Shares exceed 325,000 shares of TechTeam
Stock. The Contingent Shares will have certain "piggyback" registration rights
as set forth in Section 11.2.
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3.2 INVESTMENT INTENT; INFORMATION DISCLOSURES.
(a) Shareholder hereby acknowledges that the TechTeam Stock to
be received by Shareholder will be acquired for Shareholder's own
account and without any view to the distribution of any part thereof
without registration under applicable federal and state securities
laws. Shareholder represents that Shareholder does not have any
agreements or arrangements to sell, transfer or grant participations
with respect to the Non-Registered Shares or the Contingent Shares.
(b) Shareholder understands that the TechTeam Stock
constituting the Merger Consideration and the Contingent Shares will
not be registered prior to their issuance under the United States
federal or state securities laws on the ground that the issuance of
those shares will be exempt from registration under the Securities Act
pursuant to Section 4(2) thereof, and that TechTeam's reliance on such
exemption is predicated on Shareholder's representations set forth
herein. The Registered Shares will be registered after their issuance
as provided in Section 11.1.
(c) Shareholder represents that Shareholder has such knowledge
and experience in financial and business matters as to be capable of
evaluating the merits and risks of its investment in the Merger
Consideration and the Contingent Shares and has the ability to bear the
economic risks of such investment. Shareholder further represents that
Shareholder has had (i) access, prior to the Closing Date, to the
TechTeam Filings, (ii) the opportunity to ask questions of, and receive
answers from, TechTeam concerning TechTeam and the Merger Consideration
and (iii) the opportunity to obtain additional information (to the
extent TechTeam possessed such information or could acquire it without
unreasonable expense) necessary to verify the accuracy of any
information received or to which Shareholder had access.
(d) Shareholder understands and agrees that the Merger
Consideration and the Contingent Payment Shares may not be sold,
transferred or otherwise disposed of without registration under the
Securities Act and applicable state laws, unless exemptions from
registration requirements are available, and that in the absence of an
effective registration statement covering those shares or an available
exemption from applicable registration requirements, those shares must
be held indefinitely. In particular, the Merger Consideration and the
Contingent Shares may not be sold pursuant to Rule 144 promulgated
under the Securities Act unless all of the conditions of such rule are
met.
(e) Shareholder agrees that Shareholder will not offer, sell,
mortgage, pledge or otherwise dispose of any of the Merger
Consideration or Contingent Shares (other than pursuant to an effective
registration statement under the Securities Act) unless and until
Shareholder delivers an opinion of counsel satisfactory to TechTeam
that registration under applicable United States federal or state
securities laws is not required.
(f) Shareholder agrees that, notwithstanding the fact that
earlier sales may be possible under the Securities Act, Shareholder may
not sell or transfer any of the Restricted Shares during the period
ending one year after the Closing. Shareholder agrees
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to execute a separate lock-up agreement containing the restriction set
forth in this Section 3.2(f).
(g) Shareholder agrees that all certificates for Merger
Consideration and the Contingent Shares shall bear the following legend
(which legend will be removed from the Registered Shares when the
registration statement for those shares is declared effective by the
SEC):
These securities have not been registered, qualified,
recommended, approved or disapproved under United States
federal securities law or state securities laws. The shares
represented by this certificate may not be sold, transferred
or otherwise disposed of by an investor without (i)
registration under United States federal and state securities
laws, or (ii) delivery of an opinion of counsel satisfactory
to the corporation that neither the sale nor the proposed
transfer constitutes a violation of any United States federal
or state securities law.
(h) Shareholder agrees that all certificates for the
Restricted Shares will also bear the following legend:
The shares represented by this certificate are the
subject of a lock-up agreement between National TechTeam, Inc.
and Xxxxx X. Xxxxx and, unless earlier sales are permitted in
accordance with that agreement, these shares may not be sold
prior to January 31,1999, without the prior consent of
National TechTeam, Inc.
3.3 LIMITED REDEMPTION RIGHT. In the event TechTeam is unable
to have the Registered Shares registered for resale by the Shareholder under the
Securities Act on or before May 15, 1998, the Shareholder shall have the right,
by giving notice to TechTeam during the period commencing on May 15, 1998 and
ending at 5:00 P.M. Detroit time on the earlier of (i) November 30, 1998 or (ii)
the effective date of the registration statement for the Registered Shares, to
require TechTeam to redeem any or all of the Registered Shares. The number of
Registered Shares to be redeemed shall be set forth in that notice. All of the
Registered Shares that Shareholder has requested to be redeemed pursuant to this
Section shall be redeemed by TechTeam for a redemption price of $10.00 per
share. That redemption price will be paid in cash to Shareholder within ten (10)
days of receipt of that request for redemption in exchange for delivery to
TechTeam of the certificates for all of the Registered Shares to be redeemed.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF CAPRICORN AND SHAREHOLDER
Capricorn and Shareholder hereby jointly and severally represent and
warrant to TechTeam as follows:
4.1 CORPORATE ORGANIZATION. Capricorn is a corporation duly organized,
validly existing and in good standing under the laws of Michigan. Capricorn has
the full corporate right,
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power and authority to own, lease and operate all of its properties and assets
and to carry out its business as it is presently conducted, and is duly licensed
or qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership of property or the conduct of its
business requires such qualification or license.
4.2 SUBSIDIARIES 0 Section 4.2 of the Disclosure Schedule sets forth a
list (including the name and Capricorn's interest therein) of all corporations,
joint ventures, partnerships or other entities or arrangements in which
Capricorn directly or indirectly, owns any capital stock or any equity interest.
4.3 CAPITALIZATION. The authorized capital stock of Capricorn consists
solely of _________ shares of common stock and _______ shares of preferred
stock. The Capricorn Shares owned by Shareholder are the only shares of
Capricorn's capital stock that are issued and outstanding. No shares are held as
treasury shares. All issued and outstanding shares of capital stock of Capricorn
have been duly authorized and validly issued, are fully paid and nonassessable,
were issued without violation of any preemptive rights and are free of any
preemptive rights. Except for this Agreement and the security agreements
described in Section 4.4, as of the Closing Date there are no options, warrants
or other rights, nor any agreements, commitments or arrangements of any kind to
which Capricorn is a party or by which it is bound, relating to the subscription
for or the issuance, voting, acquisition, sale, repurchase, transfer or
disposition of (i) any capital stock of Capricorn or securities convertible into
or exchangeable for capital stock of Capricorn, or (ii) any options, warrants or
subscription rights relating to any such capital stock or securities of
Capricorn.
4.4 AUTHORITY. Except as set forth below, Capricorn and Shareholder
each have all requisite right, power and authority to execute, deliver and
perform this Agreement and the Related Agreements to which Capricorn or
Shareholder is a party. Except as set forth below and except for the filings
described in Section 2.1, all authorizations, approvals and consents of, or any
notices to, any person, and all filings and registrations with, and consents,
approvals and authorizations of, or any notices to, any domestic or foreign
governmental agency or body, necessary for the execution and delivery by
Capricorn or Shareholder of this Agreement, and/or the Merger hereunder have
been duly obtained, effected or given and are in full force and effect. This
Agreement and the Related Agreements to which Shareholder or Capricorn is a
party have been duly and validly executed and delivered by Shareholder or
Capricorn and constitute the legal, valid and binding obligations of Shareholder
or Capricorn, as the case may be, enforceable against Shareholder or Capricorn
in accordance with their respective terms. The Capricorn Shares are currently
subject to a security agreement in favor of Xxxxxxxxx Xxxxx to secure certain
payment obligations of Shareholder to her and are also currently subject to a
security agreement in favor of Sentry Financial Corporation ("Sentry Financial")
to secure payment of certain obligations of Capricorn to it. Section 4.4 of the
Disclosure Schedule contains a description of those security interests and
copies of the loan documents and security agreements between Shareholder,
Capricorn and Sentry Financial. Delivery of the Capricorn Shares to TechTeam is
contingent upon of a written discharge of those security interests of Xxxxxxxxx
Xxxxx and Sentry Financial. Provided Shareholder has satisfied all other
conditions in this Agreement that are to be satisfied by Shareholder as a
condition to TechTeam's obligations hereunder and Shareholder is not otherwise
able to get a release of the security interest of Sentry Financial in the
Capricorn
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Shares, then TechTeam shall loan funds to Capricorn in an amount necessary to
terminate the security interest of Sentry Financial in the Capricorn Shares.
That loan (the "Sentry Replacement Loan") will be made by TechTeam to Capricorn
at a rate of interest equal to Capricorn's alternative cost of borrowing
(currently 10% per annum).
4.5 OWNERSHIP OF CAPRICORN SHARES; TITLE. Shareholder owns of record
and beneficially the Capricorn Shares. Except for the security agreements
described in Section 4.4, Shareholder has, as of the Closing Date, good,
marketable and valid title to the Capricorn Shares, free and clear of all liens,
pledges, encumbrances, claims, security interests, charges, voting trusts,
voting agreements, buy sell agreements, other agreements, rights, options,
warrants or other restrictions of any kind, nature or description. The delivery
of the certificates for the Capricorn Shares by Shareholder to TechTeam, duly
endorsed for transfer, will convey to TechTeam good title to the Capricorn
Shares free and clear of all claims, liens, encumbrances, security interests,
charges or restrictions on transfer of any nature whatsoever, except as created
by TechTeam. Shareholder has not been involved in any proceedings by or against
Shareholder under any bankruptcy laws or under any other insolvency or debtor's
relief act since 1986.
4.6 SHAREHOLDER'S CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance by Shareholder of this Agreement and the Related
Agreements to which he is a party will not (with or without the giving of notice
or the passage of time, or both) (i) violate any applicable provision of law or
any rule or regulation of any federal, state or local administrative agency or
governmental authority applicable to Shareholder, or any order, writ,
injunction, judgment or decree of any court, administrative agency or
governmental authority applicable to Shareholder, (ii) except with respect to
the security agreement described in Section 4.4, require any consent under or
constitute a default under any material agreement, indenture, mortgage, deed of
trust, lease, license, or other instrument to which Shareholder is party or by
which he is bound, or any material license, permit or certificate held by him,
(iii) require any material consent or approval by, notice to or registration
with any governmental authority or (iv) result in the creation of any lien,
claim, encumbrance or charge upon any of the Capricorn Shares.
4.7 CAPRICORN'S CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance by Capricorn of this Agreement and the Related
Agreements to which it is a party will not (with or without the giving of notice
or the passage of time, or both) (i) violate any applicable provision of law or
any rule or regulation of any federal, state or local administrative agency or
governmental authority applicable to Capricorn, or any order, writ, injunction,
judgment or decree of any court, administrative agency or governmental authority
applicable to Capricorn, (ii) violate the Certificate or Articles of
Incorporation or Bylaws of Capricorn, (iii) require any consent, give rise to a
right of termination or constitute a default under any material agreement,
indenture, mortgage, deed of trust, lease, license, or other instrument to which
Capricorn is a party or by which it is bound, or any material license, permit or
certificate held by Capricorn; (iv) require any material consent or approval by
notice to or registration with any governmental authority; or (v) result in the
creation of any lien, claim, encumbrance or charge upon any property or assets
of Capricorn.
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4.8 LITIGATION. There is no action, suit, proceeding or investigation
pending, at law or in equity, or to the knowledge of Capricorn's management,
threatened, against or affecting Capricorn or any of its business, assets or
financial condition which, if decided adversely to Capricorn, will result in a
material adverse change in the business, assets or financial condition of
Capricorn. Capricorn is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local or foreign court, department,
agency or instrumentality. Capricorn is not presently engaged in any legal
action to recover monies due to Capricorn for damages sustained by Capricorn.
4.9 TAXES. Capricorn has timely filed all returns (or extensions
thereto), declarations, reports, estimates, information returns and statements
required to be filed by it, including without limitation Internal Revenue
Service forms 1120, W-2, W-3, 940 and 941 and equivalent state forms (the
"Returns") in respect of any Taxes and has timely paid all Taxes required to be
paid by it. The Returns accurately and completely reflect the facts regarding
the income, properties, operations and status of any entity required to be shown
thereon. No notice of any proposed deficiency, assessment or levy in respect of
Taxes has been received by Capricorn and Shareholder is not aware of any pending
investigations in respect of Taxes. Capricorn is not currently the subject of an
audit or in receipt of a notice that it is being or will be audited by a
relevant taxing authority. Capricorn has not agreed to any extension of time of
any applicable statute of limitations period. Capricorn has duly withheld from
each payment or expenditure the amount of all Taxes required to be withheld
therefrom and has timely paid the same together with the employer's share of the
same, if any, to the proper tax receiving officers. There is no, and will not be
any, agreement or consent made under Section 341(f) of the Internal Revenue Code
affecting Capricorn. Except for Permitted Encumbrances, there are no liens for
any Tax on the assets of Capricorn. There are no tax sharing agreements or
similar arrangements to which Capricorn is now or ever has been a party. The
charges, accruals, and reserves for Taxes due, or accrued but not yet due,
relating to the income, properties or operations of Capricorn for any period
prior to and including the Closing Date as reflected on the books of Capricorn
are adequate to cover such Taxes. All Tax deficiencies which have been proposed
or asserted against Capricorn have been fully paid or finally settled, and no
issue has been raised in any examination which, by application of similar
principles, can be expected to result in the proposal or assertion of a Tax
deficiency for any other year not so examined. All Returns with respect to
taxable years ending on or prior to September 30, 1993 have been examined and
closed, or are Returns with respect to which the applicable statute of
limitations, after giving effect to any extensions or waivers, has expired.
Shareholder is not a foreign person within the meaning of Section 1445(b)(2) of
the Internal Revenue Code.
4.10 LICENSES, PERMITS AND APPROVALS. Section 4.10 of the Disclosure
Schedule contains a true and complete list and description of all licenses,
permits, authorizations and approvals required by any federal, state or local
government's administrative or judicial authorities or any of Capricorn's
customers or suppliers in connection with the operation of Capricorn's
businesses. No approval of any of such organizations is required for the
consummation of the transactions contemplated by this Agreement or which would
materially adversely affect or impair the right or ability of Buyer following
the Closing Date to carry on any of Capricorn's operations substantially as
heretofore conducted.
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4.11 COMPLIANCE WITH LAWS AND REGULATIONS. To the best of its
knowledge, Capricorn has complied with all applicable statutes and regulations
of any federal, state or other applicable jurisdiction or agency thereof
(including, without limitation, any applicable licensing, building, zoning or
other law, ordinance or regulation) affecting Capricorn's properties or the
operation of Capricorn's business and has timely filed all reports and any other
documents required by it to be filed with any governmental agency, except (i) to
the extent that noncompliance would not materially and adversely affect the
business, operations, properties, assets or condition of Capricorn or (ii) to
the extent that noncompliance would not result in the incurrence of any material
liability.
4.12 BOOKS AND RECORDS. The books, accounts and records of Capricorn
(i) are located at Capricorn's headquarters at Farmington Hills, Michigan, (ii)
are correct and complete in all material respects, (iii) have been maintained in
accordance with good business practice and (iv) constitute all the books,
accounts and records necessary to carry on the Business in the manner in which
it is currently being conducted and has over the preceding twelve (12) months
been carried on. Copies of the Articles of Incorporation, including all
amendments thereto, the Bylaws and the minutes of all shareholder and director
meetings of Capricorn, hereto delivered by Shareholder to TechTeam, are complete
and correct.
4.13 FINANCIAL STATEMENTS.
(a) Section 4.13 of the Disclosure Schedule contains the
audited balance sheets of Capricorn as of September 30, 1997, 1996,
1995 and 1994 and related audited statements of operation and changes
in financial position for the years then ended, including the notes
thereto (collectively referred to as the "Capricorn Financial
Statements").
(b) All such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved. As of the date of any such
balance sheets, except as and to the extent reflected or reserved
against therein, Capricorn did not have any liabilities or obligations
(absolute or contingent) which should be reflected in a balance sheet
or the notes thereto prepared in accordance with generally accepted
accounting principles, and all assets reflected therein are properly
reported and present fairly the value of the assets of Capricorn in
accordance with generally accepted accounting principles. Such
statements of operations present fairly the results of operations of
Capricorn for the periods indicated. Such statements of changes in
financial position present fairly the information which should be
presented therein in accordance with generally accepted accounting
principles.
(c) The financial and other books and record of Capricorn are
in all material respects complete and correct and have been maintained
in accordance with good business and accounting practice.
4.14 UNDISCLOSED LIABILITIES. Except as set forth in Section 4.14 of
the Disclosure Schedule, Capricorn has no liabilities (absolute, accrued,
contingent or otherwise) required by GAAP to be reflected or reserved against in
the consolidated statement of assets and liabilities of
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Capricorn except (i) liabilities reflected or reserved against in the Capricorn
Balance Sheet, and (ii) liabilities incurred since September 30, 1997 in the
ordinary course of business, and which, in the aggregate, do not have a Material
Adverse Effect.
4.15 ADEQUACY OF ASSETS. The assets of Capricorn and the facilities,
assets and services to which Capricorn has a contractual right of use include
all rights, properties, assets, facilities and services necessary for the
carrying on of the Business in the manner in which it is currently being, and
has over the immediately preceding twelve (12) months been, carried on, and
Capricorn does not depend in any material respect upon the use of assets owned
by, or facilities or services provided by, Shareholder or any Affiliate of
Shareholder.
4.16 TITLE TO PROPERTIES. Except as set forth in Section 4.16(a) of the
Disclosure Schedule, Capricorn does not own any interest in real property.
Section 4.16(b) of the Disclosure Schedule contains a complete and accurate list
as of September 30, 1997 of all other material fixed assets owned by Capricorn.
Except for Permitted Encumbrances and as set forth in Section 4.16(c) of the
Disclosure Schedule, Capricorn has good and marketable title to all the real and
personal property and assets (tangible and intangible) reflected as owned by it
on the Capricorn Balance Sheet or acquired since September 30, 1997 (except for
properties and assets disposed of since such date in the ordinary course of
business and consistent with past practice), free and clear of all liens,
charges, security interests or other encumbrances of any nature whatsoever.
Except as stated in Section 4.17 with respect to leases or on Section 4.16(d) of
the Disclosure Schedule, none of the real or personal property used by Capricorn
in connection with its business is held under any lease, security agreement,
conditional sales contract, or other title retention or security agreement, or
is other than in the possession of and under the control of Capricorn. Section
4.16(e)of the Disclosure Schedule describes the terms of the sales of assets set
forth in Sections 4.16(a) or (b) of the Disclosure Schedule that are expected to
be made before the Closing Date other than in the ordinary course of business
and consistent with past practice.
4.17 LEASES.
(a) Section 4.17 of the Disclosure Schedule sets forth a list
and brief description (including in each case the names of the lessee
and lessor, the monthly rentals payable, the expiration date thereof,
the details of any options to renew and to purchase thereunder and the
property covered thereby, and whether any action, consent or notice is
required as a result of this Agreement) of every lease or agreement
under which Capricorn is a lessee of, or primarily or secondarily
liable under, or holds or operates, any property, real or personal,
owned by any third party and used in Capricorn's businesses (the
"Leases"). All of the Leases have been entered into in the ordinary
course of business, are in full force and effect, are valid and binding
obligations of the parties thereto, and there are no existing defaults
or events which, with the giving of notice or the lapse of time or
both, would constitute a default thereunder by Capricorn or, to the
best knowledge of Shareholder, any other party or parties thereto.
TechTeam has been furnished with true and complete copies of all of the
Leases.
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(b) Capricorn's rights under all real estate leasehold estates
(the "Leased Real Estate") are not subordinate to, or defeasible by,
any lien or any prior lease thereon. No governmental authority having
jurisdiction over such Leased Real Estate has given any notice of a
possible future imposition of assessments affecting the properties or
to exercise the power of eminent domain. The Leased Real Estate is
adequately serviced by utilities, including but not limited to, water,
sewage, gas, waste disposal, electricity and telephone.
4.18 RECEIVABLES. All of the Receivables of Capricorn reflected on the
Capricorn Balance Sheet, and all other Receivables arising from and after the
date of the Capricorn Balance Sheet through the Closing Date arose and will
arise solely from bona fide transactions in the ordinary course of business,
and, to the best of Shareholder's and Capricorn's knowledge, no portion of the
Receivables is or will be subject to counterclaim or set-off or is or will be
otherwise in dispute. To the best of Shareholder's and Capricorn's knowledge,
all of the Receivables are and as of the Closing Date will be good and
collectible in full (less only a $50,000 allowance for doubtful accounts
receivable) within ninety (90) days following their respective due dates. At the
request of TechTeam, Capricorn will deliver a true and correct aging list of
Receivables, specifying the date of each original invoice, the due date and
amount of each installment due thereon and the current payment status of all
Receivables.
4.19 INVENTORY. The inventories of raw materials, work in progress and
finished goods (collectively called "Inventories") shown on the Capricorn
Balance Sheet consisted, and all such Inventories as of the Closing Date will
consist, of items of a quality and quantity usable and saleable at normal profit
margins and within customary time periods in the ordinary course of business by
Capricorn, except for obsolete and slow-moving items and items below standard
quality, all of which have been written down on the books of Capricorn to net
realizable market value or have been provided for by adequate reserves. All
items in the Inventories which consist of work in process are being completed on
schedule and there are no forfeitures, chargebacks or penalties which have been
or will be incurred due to the failure of Capricorn to complete the work in
process in a timely manner. All items included in the Inventories are the
property of Capricorn, except for sales made in the ordinary course of business
since the date of the last balance sheet. For each of the sales of Inventories,
either the purchaser had made full payment or the purchaser's liability to make
payment is reflected on the books of Capricorn. Except as set forth in Section
4.19 of the Disclosure Schedule, no items included in the Inventories have been
pledged as collateral or are held by Capricorn on consignment from others. The
Inventories shown on the Capricorn Balance Sheet are based on quantities
determined by physical count or measurement, taken within the preceding 12
months, and are valued at the lower of cost or market value (with cost
determined on a first-in, first-out basis), all in accordance with generally
accepted accounting principles applied on a basis consistent with that of prior
years. The Inventories are sufficient and adequate for, but not in excess of the
level appropriate to, the customary conduct of Capricorn's business as it
previously has been conducted.
4.20 INTANGIBLE ASSETS. Section 4.20 of the Disclosure Schedule
contains a true and complete list of all patents and patent applications
(pending or in the process of preparation), domestic or foreign, patent rights,
trademarks, trade names and licenses under the patents of others, trade secrets,
secret processes and other proprietary rights of every kind and nature used
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or necessary for use by Capricorn in its business as presently conducted, or
controlled in whole or in part by Capricorn or directly or indirectly owned or
controlled in whole or in party by Capricorn or any of Capricorn's officers,
directors or key employees. To the best of Capricorn's and Shareholder's
knowledge, all such patents, patent applications, patent rights and licenses are
valid and effective in accordance with their terms, and all such trade names,
trade secrets, secret processes and other proprietary rights are valid and
effective. To the best of Capricorn's and Shareholder's knowledge, the conduct
of Capricorn's Business does not infringe upon the patents, trademarks, trade
secrets, or copyrights or other intellectual property rights, of any other
party. Neither Capricorn nor Shareholder have received any notice of any claim
of infringement. Except as disclosed in Section 4.20 of the Disclosure Schedule,
there are no agreements, contracts or obligations under which Capricorn is
obligated with respect to, or is using, any patents, patent applications, patent
rights, trademarks, trade names, licenses under the patents of others, trade
secrets, secret processes or other proprietary rights. The trade secrets and
"know-how" of Capricorn are in such form and of such quality that, following the
Closing, Capricorn will be able to continue to provide the services heretofore
provided by Capricorn so that such products and services meet applicable
specifications and conform with the quality standards acceptable to Capricorn's
standards.
4.21 BANK ACCOUNTS; INVESTMENTS.
(a) Section 4.21(a) of the Disclosure Schedule sets forth the
names and locations of all banks, trust companies, savings and loan
associations and other financial institutions at which Capricorn
maintains safe deposit boxes or accounts of any nature and the names
(and limits, if any) of all persons authorized to draw thereon, make
withdrawals therefrom or have access thereto.
(b) Section 4.21(b) of the Disclosure Schedule set forth a
description (including applicable interest rates) of all funds,
securities and other instruments in which Capricorn's excess cash was
invested as of September 30, 1997 (the "Investments"). All such
Investments are investment grade and can be liquidated within one
Business Day without being discounted. Neither Capricorn nor its
Affiliates beneficially own any shares of TechTeam Stock.
4.22 MATERIAL CONTRACTS.
(a) Section 4.22 of the Disclosure Schedule contains a true
and correct list of all material contracts, agreements or other
understandings or arrangements, written or oral, or commitments
therefor, relating to Capricorn, the Business or the assets or
liabilities of Capricorn (collectively, the "Contracts"). Except as set
forth in Section 4.22 of the Disclosure Schedule, Capricorn is not a
party to, or otherwise bound by, any material written or oral, formal
or informal:
(i) purchase orders and other contracts for the sale
of goods or services in excess of $25,000;
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(ii) contracts, agreements or commitments for the
purchase of materials or services which are not required in
the current operation of the Business in the ordinary course,
or any agreements or commitments for the sale of goods or
services which are inadequate to recover current costs;
(iii) contracts involving the expenditure of more
than $25,000 in any instance for the purchase of material,
supplies, equipment or services;
(iv) contracts involving the expenditure of more than
$25,000 which are not cancelable within thirty (30) days;
(v) contracts relating to the leasing (as lessor or
lessee) or the conditional purchase or sale by Capricorn of
more than $25,000 of property, whether real, personal or
mixed;
(vi) contracts to which Capricorn is a party or by
which any of its assets are bound that require consent by any
other Person in connection with the transaction contemplated
hereby, either to prevent a breach or continue the
effectiveness thereof;
(vii) contracts or arrangements with any governmental
body, agency or authority;
(viii) indentures, mortgages, promissory notes, loan
agreements, capital leases, security agreements or other
agreements or commitments for the borrowing of money, or the
deferred purchase price of assets, or which create a lien or
encumbrance on any assets of Capricorn;
(ix) guarantees of the obligations of third parties
or agreements to indemnify third parties (other than
indemnification provisions provided in the ordinary course to
or for the benefit of customers);
(x) agreements which restrict Capricorn from doing
business in any geographic location;
(xi) policies of insurance in force and effect with
respect to the Business or assets of Capricorn;
(xii) contracts or agreements with Shareholder or its
Affiliates;
(xiii) license agreements (as licensee or licensor)
with third parties other than licenses for computer software
that is sold to the general public;
(xiv) employment or consulting agreements;
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(xv) distributor, dealer, sales, advertising, agency,
manufacturer's representative, franchise or similar contracts
or any contract relating to the payment of a commission;
(xvi) agreements, arrangements or programs pursuant
to which Capricorn has promised or made available to its
customers any volume discount, rebate, credit or allowance;
(xvii) collective bargaining or other agreements with
labor unions; or
(xviii) any other contract outside the ordinary
course of the Business not otherwise described in this
Subsection.
(b) True and complete copies of each of the Contracts have
been made available to TechTeam by Shareholder. Except as set forth on
Section 4.22 of the Disclosure Schedule, each of the Contracts is in
full force and effect and there exists no default or event which, with
the giving of notice or lapse of time or both, would constitute a
default thereunder by Capricorn or, to the best knowledge of the
Shareholder, by any other party thereto. Except as set forth in Section
4.22 of the Disclosure Schedule, no written notice of termination or
nonrenewal has been given under any Contract. The dollar amounts set
forth in this Section 4.22 with respect to the Contracts shall not be
deemed to represent any standard of "materiality" with respect to the
Contracts or otherwise for any other purpose and shall have no
application to any other Section of this Agreement.
4.23 PERFORMANCE OF CONTRACTS, ETC. Capricorn is not in default under,
nor has it breached any provision of, any contract, agreement, instrument,
document, lease, license, permit, indenture, insurance policy or other
obligation of Capricorn relating to the Business, and there is no material oral
modification or past practice inconsistent with the written terms of any of the
foregoing. All of such contracts, agreements, instruments, documents, leases,
licenses, permits, indentures, policies and other obligations are currently in
full force and effect. To the knowledge of Capricorn and the Shareholder, the
other parties to such contracts, agreements, instruments, documents, leases,
licenses, permits, indentures, policies and other obligations have complied with
their obligations thereunder and are not in breach thereof. Capricorn fully has
performed each such term, condition and covenant of each such contract,
agreement, instrument, document, lease, license, permit, indenture, policy or
other obligation required to be performed on or prior to the date hereof.
Capricorn and the Shareholder know of no state or facts which, with the giving
of notice or the passing of time, or both, would give rise to any default in or
under any of the above.
4.24 CUSTOMERS AND COMMITMENTS. Section 4.24 of the Disclosure Schedule
lists (a) the ten (10) largest customers of, and the ten (10) largest suppliers
to, Capricorn during the twelve (12) month period ended September 30, 1997
(stating for each the dollar volume of the sales or purchases, as the case may
be), and (b) as of the date hereof all of the existing purchase orders,
executory contracts and commitments of Capricorn with its customers and trade
suppliers in excess of One Hundred Thousand ($100,000) Dollars of any kind or
nature whatsoever.
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Shareholder has delivered to TechTeam all copies of the written instruments, if
any, evidencing the items listed in Section 4.24 of the Disclosure Schedule. All
of the existing purchase orders, executory contracts and commitments of
Capricorn with its customers and trade suppliers have been entered into in the
ordinary course of business. Neither Capricorn nor Shareholder have any
knowledge that any supplier or customer of Capricorn intends to cease dealing
with Capricorn, or intends to decrease in any material respect the amount of
such person's dealings with Capricorn from the levels in effect during the past
twelve (12) months, or that any such person would decrease in any material
respect such dealings in the event of the consummation of the transactions
contemplated hereby. Capricorn is not generally required to provide bonding or
any other security arrangements in connection with any transactions with its
customers or suppliers.
4.25 RELATED TRANSACTIONS.
(a) Except as set forth in Section 4.25 of the Disclosure
Schedule or in the Capricorn Financial Statements, Capricorn has no
contractual relationship with, or any obligation or liability owed to
or by, Shareholder. All such contractual relationships are on terms
that are no less favorable to Capricorn than would be the case with a
non-affiliated party.
(b) All of the transactions of Capricorn during the past five
(5) years have been conducted on an arms-length basis. To the best
knowledge of the Shareholder and Capricorn, no employee of Capricorn
has violated the published business policies of any governmental agency
or customer or supplier with respect to gifts, services or corporate
business practices. To the best knowledge of the Shareholder and
Capricorn, Capricorn has not made any material payments outside the
ordinary course of business to any person or entity in respect of any
business with any customer or supplier of Capricorn.
(c) Except for the ownership of non-controlling interests in
securities of corporations the shares of which are publicly traded or
as otherwise set forth in Section 4.25 of the Disclosure Schedule,
neither the Shareholder nor Capricorn own, and to the best knowledge of
the Shareholder and Capricorn, none of Capricorn's officers, directors
or other key employees (including purchasing agents and departmental
managers) owns, directly or indirectly, any interest or has any
investment or profit participation in any Person which (i) is a
material competitor, customer, subcontractor or supplier of Capricorn
or (ii) has an existing material relationship with, or a material
interest in Capricorn, including but not limited to lessors of real or
personal property and Persons against which rights or options are
exercisable by Capricorn .
4.26 QUESTIONABLE PAYMENTS. To the best of the knowledge of the
officers of Capricorn: (a) neither Capricorn nor any of its current or former
directors, officers, or employees nor any third party acting on behalf of
Capricorn have, directly or indirectly, made any bribes, kickbacks or other
payments of a similar or comparable nature, whether lawful or not, to any person
or entity, public or private, regardless of form, whether in money, property, or
services, to obtain favorable treatment in securing business or to obtain
special concessions or to pay for favorable treatment for business secured or
for special concessions already obtained; (b)
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no funds or property of any kind of Capricorn was donated, loaned, or made
available, directly or indirectly, for the benefit of, or for the purpose of
opposing any government or subdivision thereof, political party, candidate or
committee, either domestic or foreign; (c) no officer, employee, contractor or
agent of Capricorn was compensated, directly or indirectly, by Capricorn for
time spent or expenses incurred in performing services for the benefit of, or
for the purpose of opposing any government or subdivision thereof, political
party, candidate or committee, either domestic or foreign; (d) Capricorn has not
made any loans, donations, or other disbursements, directly or indirectly, to
officers or employees of Capricorn or others for contributions made, or to be
made, directly or indirectly, for the benefit of, or for the purpose of opposing
any government or subdivision thereof, political party, candidate or committee,
either domestic or foreign; and (e) Capricorn has not, or any other person or
entity acting on behalf of Capricorn, maintained or maintains a bank account, or
other account of any kind whether domestic or foreign, which account was not
reflected in the corporate books and records or which account was not listed,
titled or identified in the name of Capricorn.
4.27 BURDENSOME AGREEMENTS AND UNUSUAL MATTERS.
(a) Capricorn is not a party to any contract, agreement, other
commitment or instrument or subject to any charter or other corporate
restriction or any judgment, order, writ, injunction, decree or award
which materially and adversely affects, or in the future may (as far as
Capricorn can now foresee), materially and adversely affect, the
business, operations, properties, assets or condition of Capricorn.
(b) Capricorn knows of no matter of an unusual nature which is
applicable specifically to Capricorn or the industry in which the
Business operates and which has or may have a Material Adverse Effect
upon Capricorn, its condition (financial or otherwise) or prospects.
4.28 INSURANCE. Section 4.28 of the Disclosure Schedule contains a true
and correct list and summary description of all material insurance coverage
(including, the types of coverage, amounts of coverage, name of the insurer,
expiration date and all claims made thereunder during the past three (3) years)
held by Capricorn with respect to its businesses, assets, and any property of
others under Capricorn's care, custody and/or control, including, but not
limited to all policies of fire, liability and other forms of casualty
insurance, product liability insurance, and group and worker's compensation
insurance and "keyman" life insurance. All such policies (true and complete
copies of which have been delivered to TechTeam) are in full force and effect,
Capricorn is not in default under any of such policies, and Capricorn has not
received any notices of cancellation, material amendments or material increases
in deductibles or premiums. Shareholder and Capricorn have not received during
the past two years any written notice or other written communication from any
insurance company declining to write insurance with respect to the Business or
canceling or materially amending any of Capricorn's insurance policies or
proposing to do so.
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4.29 LABOR MATTERS.
(a) Except to the extent set forth in Section 4.29(a) of the
Disclosure Schedule, (i) there is no unfair labor practice charge or
complaint against Capricorn pending before the National Labor Relations
Board or any other labor grievance board, authority or tribunal, nor,
to the best knowledge of Shareholder and management of Capricorn, has
any such charge or complaint been threatened against Capricorn; (ii)
there is no labor strike, dispute, slowdown, or stoppage pending
against or affecting Capricorn; (iii) Capricorn is not a party to any
collective bargaining agreement or contract with any labor union and,
to the knowledge of Shareholder, no union representation question
exists respecting the employees of Capricorn; (iv) no material
grievance nor any arbitration proceeding arising out of or under
collective bargaining agreements is pending; (v) no event has occurred,
and Capricorn will not take any action prior to the Closing, which
would require notification to employees under the Worker Adjustment and
Retraining Notification Act of 1988 and the regulations promulgated
thereunder; and (vi) there are no other controversies pending between
Capricorn and any of its employees, including, without limitation,
claims arising under any labor laws, which controversies have had or
may have a Material Adverse Effect.
(b) Section 4.29(b) of the Disclosure Schedule sets forth the
names of all employees, consultants, officers and directors of
Capricorn, their length of employment, compensation level and other
terms of employment. Shareholder has delivered to TechTeam copies of
all currently effective written employment or consulting agreements,
and written summaries of all verbal arrangements, to which Capricorn is
a party with any of its employees or consultants.
4.30 EMPLOYEE BENEFIT PLANS.
(a) Set forth in Section 4.30 of the Disclosure Schedule is an
accurate and complete list of all Employee Benefit Plans maintained or
contributed to by Capricorn (each a "Capricorn Employee Benefit Plan").
(b) Except as required by Chapter 6 of Title 1 of ERISA and
any applicable state continuation or conversion laws and no such
Capricorn Employee Benefit Plan that is a welfare plan provides any
health or life insurance coverage to any individual for events
occurring, or expenses incurred, after termination of employment and no
promise has been made nor any liability incurred by Capricorn for
post-retirement and/or post-termination health or life insurance or
other benefits.
(c) Each such Capricorn Employee Benefit Plan is with respect
to form, operation, and administration in material compliance with its
terms, ERISA, the Code and any other applicable laws and regulations,
and neither Capricorn nor any such Capricorn Employee Benefit Plan is
liable for any material fine, excise tax, or loss of income tax
deduction with respect to the operation of any such Capricorn Employee
Benefit Plan. Each such Capricorn Employee Benefit Plan that is
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to
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be so qualified and each trust maintained in connection with such
Capricorn Employee Benefit Plan has been determined by the Internal
Revenue Service to be tax-exempt under Section 501(a) of the Code, and
Shareholder and Capricorn have no knowledge of any circumstances which
would cause any Capricorn Employee Benefit Plan to be subject to
disqualification or a related trust to lose its tax-exempt status.
(d) There has occurred: (i) no prohibited transaction, as
defined in Sections 406 and 407 of ERISA or Section 4975 of the Code,
and no breach of any duty imposed by Title I of ERISA, by Capricorn,
any entity related to Capricorn (within the meaning of Sections 414(b),
(c), (m), or (o) of the Code) (the "Controlled Group"), or any
director, officer, or employee of Capricorn or any entity in the
Controlled Group, that could have a Material Adverse Effect.
(e) To the extent material, all amounts that Capricorn is
required to have contributed to any Capricorn Employee Benefit Plan
have been contributed within the time prescribed by applicable law and
all benefits, expenses, and other amounts due and payable and all
transfers or payments required to be made with respect to any Capricorn
Employee Benefit Plan have been paid within the time prescribed by the
applicable documents and governing law. No increase in benefits under
or other modifications or amendments to any Capricorn Employee Benefit
Plan have been made subsequent to the date as of when documents or
disclosures have been provided or made available to TechTeam.
(f) To the extent material, all required reports and
descriptions (including, but not limited to, Form 5500 annual reports,
summary annual reports, and summary plan descriptions) with respect to
each Capricorn Employee Benefit Plan have been properly filed with the
appropriate governmental authority and distributed to participants
substantially as required by law, and Capricorn has substantially
performed its obligations under Section 4980B of the Code and Part 6 of
Title I of ERISA ("COBRA"). As soon as practicable after the execution
of this Agreement, Shareholder shall provide to TechTeam, to the best
of its knowledge, a list of qualified beneficiaries receiving (or
eligible to elect to receive to the extent the plan administrator has
been informed) COBRA continuation coverage and the date and type of
their qualifying events; provided, however, that such list shall be
compiled on a blind basis, eliminating names and other clearly
identifying criteria. As soon as practicable after the Closing Date,
Shareholder shall provide to TechTeam an updated list of all qualified
beneficiaries receiving (or eligible to elect to receive) COBRA
continuation coverage and the date and type of their qualifying events
effective as of the Closing Date.
(g) Capricorn has not incurred nor expects to incur any
material liability to the PBGC (as defined under Title IV of ERISA),
the Internal Revenue Service, the Department of Labor of the United
States, or otherwise with respect to any Capricorn Employee Benefit
Plan currently or previously maintained or contributed to by Capricorn
or by members of the Controlled Group (as defined in paragraph (d)
above) that has not been satisfied in full, and no condition exists
that presents a material risk to Capricorn or
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the Controlled Group of incurring such a material liability, other than
liability for premiums due to the PBGC.
(h) To the knowledge of Shareholder and Capricorn, none of
Capricorn and the Controlled Group has withdrawn from or caused a
partial withdrawal to occur with respect to any Capricorn Employee
Benefit Plan that is a multiemployer plan (as defined in Section 3(37)
or 4001(a)(3) of ERISA) that presents a material risk to Capricorn of
incurring any unpaid withdrawal liability under Title IV of ERISA.
(i) There are no material claims (other than routine claims
for benefits) or lawsuits pending with respect to any Capricorn
Employee Benefit Plan.
(j) Except as set forth on Section 4.30 (j) of the Disclosure
Schedule, there are no leased employees within the meaning of Sections
414(n) or (o) of the Code, or the regulations thereunder, who perform
services for Capricorn.
(k) Shareholder has previously delivered or made available to
TechTeam true and complete copies of: (i) the plan documents for each
Capricorn Employee Benefit Plan identified in Section 4.30 of the
Disclosure Schedule together with all amendments thereto, including all
amendments to be effective at a later date, and (ii) to the extent
applicable for each such Capricorn Employee Benefit Plan, the most
recent Internal Revenue Service determination letters, summary plan
descriptions, annual reports (Form 5500 series) and accompanying
schedules (or such alternate reports in lieu thereof).
4.31 ENVIRONMENTAL MATTERS.
(a) The conduct of the Business complies with, and Capricorn
is not in violation of, in connection with the conduct of the Business,
any applicable Environmental Laws, except where the failure to be in
compliance would not have an effect that is materially adverse to the
conduct of the Business at the location where the failure occurs;
(b) Shareholder and Capricorn have not received written
notification from any governmental authority of any current, existing
violations of any Environmental Laws relating to the Business, nor, to
the best of Shareholder's knowledge, are there any judicial or
administrative writs, injunctions, decrees, orders or judgments
outstanding or any lawsuits, claims, proceedings or investigations
pending or threatened relating to the ownership, use, maintenance or
operation of the conduct of the Business;
(c) Without limiting the generality of the foregoing,
Capricorn has not (i) received written notification from the United
States Environmental Protection Agency, or any state or local agency
which serves a similar function, that it is a Potentially Responsible
Party under the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") or any analogous state or local law for
"removal" or "remedial" action at a waste site listed on the National
Priorities List or any database established pursuant to any state or
local law to which it sent or arranged for the
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transportation or disposal of any hazardous substance, or (ii) received
written notification that it is liable for contribution for costs
incurred by another person in taking "removal" or "remedial" action
under CERCLA or any analogous state or local law.
(d) Section 4.31 of the Disclosure Schedule sets forth all of
the licenses, permits and approvals held by Capricorn and required by
Environmental Laws for the conduct of the Business as now conducted
("Permits"), which constitute all material permits required of
Capricorn by the Environmental Laws for the conduct of the Business.
Capricorn is not presently in material violation of any Permit, and, to
the best of the Shareholders' and the management of Capricorn's
knowledge, there is no proceeding pending or threatened with respect to
the revocation or limitation of any Permit.
4.32 ABSENCE OF CHANGES. Except as set forth in Section 4.32 of the
Disclosure Schedule, since September 30, 1997 there has not been:
(a) any change or changes in the business, financial
condition, properties, results of operations or assets or liabilities
of Capricorn, or any development or event involving a prospective
change, other than changes in the ordinary course of the Business and
other changes which singularly or in the aggregate, have not had and
will not have a Material Adverse Effect;
(b) any property damage or destruction, loss or other
casualty, however arising and whether or not covered by insurance,
which, singularly or in the aggregate, have had or will have a Material
Adverse Effect;
(c) any labor dispute or any other event or condition of any
character which, singularly or in the aggregate, have had or will have
a Material Adverse Effect;
(d) any indebtedness incurred by Capricorn for borrowed money
(except by endorsement for collection or for deposit of negotiable
instruments received in the ordinary course of the Business), or any
agreement to incur any such indebtedness;
(e) any change in the accounting methods or material change in
the practices of Capricorn or any change in depreciation or
amortization policies or rates theretofore adopted;
(f) any amendment or termination of any material contract,
agreement, lease, franchise or license to which Capricorn is or was a
party;
(g) any amendment of the Articles of Incorporation or Bylaws
of Capricorn;
(h) except for Permitted Encumbrances, any mortgage, pledge or
other encumbering of any material property or assets of Capricorn;
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(i) any material liability or obligation incurred by
Capricorn, except current liabilities incurred in the ordinary course
of the Business, or any cancellation or compromise by Capricorn of any
material debt or claim, or any waiver or release by Capricorn of any
right of substantial value to the Business;
(j) any sale, transfer, lease, abandonment or other disposal
of any machinery, equipment or real property with a fair market value
in excess of $10,000 or, except in the ordinary course of the Business,
any sale, transfer, lease, abandonment or other disposal of any
material portion of any other properties or assets of Capricorn (real,
personal or mixed, tangible or intangible).
(k) any transfer, disposal or grant of any rights under any
patent, trademark, trade name, copyright, copyright registration,
service xxxx, invention or license owned by Capricorn, or any disposal
of or disclosure to any Person other than representatives of TechTeam
of any material trade secret, formula, process or know-how owned by
Capricorn not theretofore a matter of public knowledge; except, in each
case, in the ordinary course of the Business;
(l) any bonuses or other increases in the compensation of
Capricorn's officers, employees or directors; or any agreement by
Capricorn entered into with any officer, employee or director; or any
increase or change in benefits under any Capricorn Employee Benefit
Plan (as defined herein); except, in each case, in the ordinary course
of the Business and consistent with past practice;
(m) any single capital expenditure in excess of $10,000, made
or committed for by Capricorn for any tangible or intangible capital
assets, additions or improvements, except in the ordinary course of the
Business;
(n) any declaration, payment or reservation for payment of any
dividend or other distribution in respect of the capital stock or other
securities of Capricorn, or any redemption, purchase or other
acquisition, directly or indirectly, of any shares of capital stock or
other securities of Capricorn;
(o) except in the ordinary course of the Business and
consistent with past practice, any grant or extension of any
power-of-attorney or guaranty in respect of the obligation of any
Person;
(p) any payment by Capricorn of any personal expenses of
Shareholder or any Affiliate of Shareholder; or
(q) any entry by Capricorn into any binding agreement, whether
in writing or otherwise, to take any action described in this Section
4.32.
4.33 DISCLOSURES. None of the representations or warranties by
Shareholder herein and no statement contained in any certificate, Schedule or
other writing furnished by Shareholder to TechTeam in connection herewith
contains or will contain any untrue statement of a material fact
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or omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
4.34 BROKERS AND FINDERS. No agent, broker, investment banker, person
or firm acting on behalf of Capricorn, Shareholder or any firm or entity
affiliated with any of them is or will be entitled to any brokers' or finders'
fee or any other commission or similar fee directly or indirectly from any of
the parties hereto in connection with the transactions contemplated hereby.
4.35 CERTAIN TAX MATTERS.
(a) The assets of Capricorn at the Effective Time will
constitute at least 90 percent of the fair market value of the net
assets and at least 70 percent of the fair market value of the gross
assets held by Capricorn immediately before the Merger. For this
purpose, any amounts paid for expenses of Capricorn related to the
Merger, any distributions and redemption's (except for regular normal
dividends) made in anticipation of the Merger and any amounts paid to
dissenting shareholders will be included as assets of Capricorn held
immediately before the Merger.
(b) Except for any additional liabilities created pursuant to
this Agreement or otherwise incurred in respect of the Merger, the
liabilities of Capricorn were incurred by Capricorn in the ordinary
course of its business.
(c) Capricorn is not an "investment company" as defined in
Section 368(a)(2)(F) of the Code.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF TECHTEAM AND SUB
TechTeam and Sub hereby represent and warrant to Shareholder as
follows:
5.1 CORPORATE ORGANIZATION. TechTeam is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the full corporate right, power and authority to own, lease and operate
all of its properties and assets and to carry out its business as it is
presently conducted. Sub is a corporation duly organized, validly existing and
in good standing under the laws of the State of Michigan and has the full
corporate right, power and authority to own, lease and operate all of its
properties and assets and to carry out its business as it is presently
conducted.
5.2 CAPITALIZATION OF TECHTEAM. All issued and outstanding shares of
TechTeam Stock have been, and upon issuance the Merger Consideration will be,
duly authorized and validly issued, fully paid and nonassessable. The issuance
of the Merger Consideration is not subject to any preemptive right or right of
first refusal that has not been satisfied or waived.
5.3 AUTHORITY. TechTeam and Sub each has all requisite corporate right,
power and authority to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement and the Related Agreements
by TechTeam and Sub have been
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duly and validly authorized and approved by all necessary corporate action,
including approval of the Merger by the shareholder and directors of Sub. Except
for the filings described in Section 2.1, all authorizations, approvals and
consents of, or any notices to, any Person, and all filings and registrations
with, and consents, approvals and authorizations of, and any notices to, any
governmental agency or body, necessary for the execution and delivery by
TechTeam or Sub hereunder and the consummation of the Merger have been duly
obtained, effected or given and are in full force and effect. This Agreement and
the Related Agreements to which TechTeam or Sub is a party have been duly and
validly executed and delivered by TechTeam or Sub and constitute the legal,
valid and binding obligations of TechTeam or Sub, enforceable against TechTeam
or Sub in accordance with their respective terms. This Agreement has been duly
and validly executed and delivered by TechTeam and Sub and, assuming this
Agreement has been duly authorized, executed and delivered by Shareholder,
constitutes the legal, valid and binding obligation of TechTeam and Sub
enforceable against it in accordance with its terms.
5.4 TECHTEAM'S CONSENTS AND APPROVALS; NO VIOLATIONS. The execution,
delivery and performance of this Agreement by TechTeam and Sub will not (with or
without the giving of notice or the passage of time, or both), (i) violate any
applicable provision of law or any rule or regulation of any administrative
agency or governmental authority applicable to TechTeam or Sub, or any order,
writ, injunction, judgment or decree of any court, administrative agency or
governmental authority applicable to TechTeam or Sub, (ii) violate the
Certificate of Incorporation or Bylaws of TechTeam or Sub, (iii) require any
consent under or constitute a default under any material agreement, indenture,
mortgage, deed of trust, lease, license, or other instrument to which TechTeam
or Sub is a party or by which TechTeam or Sub is bound, or any material license,
permit or certificate held by TechTeam or Sub (other than any consents which
will have been obtained on or prior to the Closing Date), or (iv) require any
material consent or approval by, notice to or registration with any governmental
authority.
5.5 LITIGATION. Except as set forth in Section 5.5 of the Disclosure
Schedule, there are no claims, actions, suits, or proceedings pending or, to the
best knowledge of TechTeam or Sub, threatened, against TechTeam or Sub, relating
to this Agreement or the transactions contemplated hereby or to the business or
property of TechTeam or Sub, at law or in equity or before or by any federal,
state, local, or foreign court or other governmental department, commission,
board, agency, instrumentality or authority, or any arbitration proceeding, in
each case which are likely to have a Material Adverse Effect. Neither TechTeam
nor Sub are subject to any judgment, order, writ, injunction or decree of any
court or governmental body.
5.6 COMPLIANCE WITH LAWS. Except as set forth in Section 5.6 of the
Disclosure Schedule, TechTeam and Sub have each conducted its business so as to
comply with, and is not in violation of, nor has it received any written notice
claiming it is in violation of, any order, law, ordinance, statute, rule or
regulation applicable to it, or to its business or any of its property or
assets, except to the extent that such non-compliance would not have a Material
Adverse Effect. TechTeam and Sub have all material licenses, permits,
certificates of occupancy and authorizations necessary to conduct its business.
5.7 TECHTEAM INFORMATION. TechTeam has delivered to Shareholder true
and complete copies of the TechTeam Filings. TechTeam will deliver to
Shareholders true and
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complete copies of any and all other documents filed by TechTeam with the SEC on
or prior to the Closing Date (other than exhibits which TechTeam will make
available upon request). At the date hereof, the TechTeam Filings, taken as a
whole, do not contain any untrue statement of a material fact or omit any
material fact necessary to make the statements contained herein, in light of the
circumstances in which they were made, not misleading. At the date of filing
with the SEC of any such other filed document and at the Closing Date, such
document, taken as a whole and considered in the context of other TechTeam
Filings, will not contain any untrue statement of a material fact or omit any
material fact necessary to make the statements contained therein, in light of
the circumstances in which they were made, not misleading.
5.8 UNDISCLOSED LIABILITIES. Except as set forth in Section 5.8 of the
Disclosure Schedule, TechTeam and Sub have no liabilities (absolute, accrued,
contingent or otherwise) required by GAAP to be reflected or reserved against in
the consolidated statement of assets and liabilities of TechTeam except (i)
liabilities reflected or reserved against in the Form 10-Q Balance Sheet, and
(ii) liabilities incurred since September 30, 1997 in the ordinary course of
business and which, in the aggregate, do not have a Material Adverse Effect.
5.9 NO MATERIAL ADVERSE CHANGE. Since September 30, 1997, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change in the business, financial conditions or
results of operations and TechTeam and its subsidiaries, taken as a whole, that
has not been disclosed in the TechTeam Filings.
5.10 BROKERS AND FINDERS. No agent, broker, investment banker, Person
or firm acting on behalf of TechTeam or Sub or any entity affiliated with
TechTeam or Sub is or will be entitled to any brokers' or finders' fee or any
other commission or similar fee directly or indirectly from any of the parties
hereto in connection with the transactions contemplated hereby.
ARTICLE 6
FURTHER COVENANTS AND AGREEMENTS
6.1 COVENANTS OF SHAREHOLDER PENDING THE EFFECTIVE TIME. Shareholder
covenants and agrees that, pending the Effective Time and prior to the
termination of this Agreement, and except as otherwise agreed to herein or in
writing by TechTeam, Shareholder shall or, as appropriate, shall cause Capricorn
to:
(a) conduct the Business solely in the ordinary course and
consistent with past practices, which shall include incurrence of
reasonable fees and expenses to the extent necessary to effect the
consummation of the transaction contemplated hereby;
(b) not take or intentionally omit to take any action which
would result in a breach of any of Shareholder's representations and
warranties hereunder in any material respect;
(c) continue to maintain and service the physical assets used
by Capricorn in the conduct of the Business consistent with past
practices;
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(d) use its reasonable efforts to preserve the businesses and
organization of Capricorn, to keep available the services of
Capricorn's present employees and agents and to maintain the relations
and goodwill with the suppliers, customers (including the Customers),
distributors and any others having business relations in connection
with the Business;
(e) use its reasonable efforts to cause all of the conditions
to the obligations of TechTeam under this Agreement to be satisfied on
or prior to the Closing Date and to obtain, prior to the Closing, all
consents of all third parties and governmental authorities necessary
for the consummation by Shareholder and Capricorn of the transactions
contemplated hereby. All such consents will be in writing and executed
counterparts will be delivered to TechTeam at or prior to the Closing;
(f) promptly disclose to TechTeam any information relating to
Shareholder's and Capricorn's representations and warranties which,
because of an event occurring after the date hereof, is incomplete or
is no longer correct in any material respect;
(g) provide TechTeam's officers, employees, counsel,
accountants and other representatives with full access to, during
normal business hours, all of the books and records of Capricorn, make
knowledgeable employees of Capricorn available to representatives of
TechTeam for reasonable periods of time to answer inquiries of such
representatives with respect to TechTeam's investigation of Capricorn
and permit such representatives of TechTeam to consult with the
officers, employees, accountants and counsel of Shareholder and
Capricorn; provided that no such activities unreasonably interfere with
the operation of the Business;
(h) not grant to any Person a power of attorney or similar
authority to act for Capricorn;
(i) not enter into any guarantee of the obligations of any
Person to the extent such guarantee shall survive the Closing Date;
(j) not amend the Articles of Incorporation or Bylaws of
Capricorn;
(k) make no change in the amount of issued capital stock of
Capricorn or issue or create any option, warrant or any other security
of Capricorn;
(l) not increase the compensation payable or to become payable
to any officer, employee or agent of Capricorn other than in the
ordinary course of the Business, nor make any bonus payment or
arrangement to or with any officer, employee or agent of Capricorn
other than in the ordinary course of the Business nor increase the
benefits under nor make any amendment or modification to any Capricorn
Employee Benefit Plan;
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(m) not sell, transfer, lease, abandon or otherwise dispose of
(or commit to do so) or initiate or solicit any discussions concerning
the sale, lease or other disposal of, any assets of Capricorn or of the
Capricorn Shares; and
(n) not, without the consent of TechTeam, which consent shall
not unreasonably be withheld by TechTeam, enter into any contract or
commitment calling for payment to or by Capricorn of an aggregate
amount of more than $25,000 (excluding lease agreements entered into
consistently with past practice), which is not terminable by Capricorn
on less than thirty (30) days' notice without penalty.
6.2 COVENANTS OF TECHTEAM AND SUB PENDING THE EFFECTIVE TIME. TechTeam
and Sub each covenants and agrees that, pending the Effective Time and prior to
the termination of this Agreement, and except as otherwise agreed to in writing
by Shareholder:
(a) TechTeam and Sub shall not take or intentionally omit to
take any action which would result in a breach of any of TechTeam's or
Sub's representations and warranties hereunder in any material respect;
(b) TechTeam and Sub shall each use its reasonable efforts to
cause all of the conditions to the obligations of Shareholder under
this Agreement to be satisfied on or prior to the Closing Date and to
obtain prior to the Closing, all consents of all third parties and
governmental authorities necessary for the consummation by TechTeam or
Sub of the transactions contemplated hereby. All such consents will be
in writing and executed counterparts thereof will be delivered to
Shareholder at or prior to the Closing; and
(c) TechTeam and Sub shall promptly disclose to Shareholder
any information relating to TechTeam's or Sub's representations and
warranties hereunder which, because of an event occurring after the
date hereof, is incomplete or is no longer correct in any material
respect.
6.3 FILINGS. Promptly after the execution of this Agreement, each of
the parties hereto shall prepare and make or cause to be made any required
filings, submissions and notifications under the laws of any domestic or foreign
jurisdictions to the extent that such filings are necessary to consummate the
transactions contemplated hereby and will use its reasonable efforts to take all
other actions necessary to consummate the transactions contemplated hereby in a
manner consistent with applicable law. Each of the parties hereto will furnish
to the other party such necessary information and reasonable assistance as such
other party may reasonably request in connection with the foregoing. In
addition, the parties will cooperate in the preparation and filing of other
documents subsequent to Closing.
6.4 ANNOUNCEMENT. Except as expressly contemplated by this Agreement or
as may be required by law, the parties will mutually agree as to the time, form
and content before issuing any press releases or otherwise making any public
statements or statements to third parties with respect to transactions
contemplated hereby and shall not issue any press release or discuss the
transactions contemplated hereby with any third party prior to reaching mutual
agreement with
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respect thereto. Notwithstanding the foregoing, in the event any party hereto is
required by law or the rules of any stock exchange on which such party's
securities are traded to make a statement with respect to the transactions
contemplated herein, such party shall notify in writing the other party hereto
as to the time, form and content of such statement.
6.5 COSTS AND EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, each party hereto shall pay its own costs and
expenses (including legal fees and expenses) incurred in connection with due
diligence reviews, the preparation, negotiation and execution of this Agreement
and all other agreements, certificates, instruments and documents delivered
hereunder, and all other matters relating to the transactions contemplated
hereby. All transfer and intangible taxes, if any, in connection with the sale
and delivery of the Capricorn Shares hereunder shall be paid by Shareholder. All
transfer and intangibles taxes, if any, in connection with the sale and delivery
of the Merger Consideration hereunder shall be paid by TechTeam.
6.6 FURTHER ASSURANCES. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its 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.
If at any time after the Closing Date any further action is necessary or
desirable to carry out the purposes of this Agreement, the parties hereto shall
take or cause to be taken all necessary action, including, without limitation,
the execution and delivery of such further instruments and documents as may be
reasonably requested by the other party for such purposes or otherwise to
consummate and give effect to the transactions contemplated hereby. If any
consent or approval required for the consummation of the transactions
contemplated hereby is not obtained prior to Closing, Shareholder shall
cooperate with TechTeam, and attempt in good faith, to obtain such consent or
approval during the one year period immediately following the Effective Time.
6.7 CERTAIN AGREEMENTS.
(a) On or before the Closing Date the undersigned will
execute, or use their reasonable best efforts to cause to be executed,
the following employment agreements (each of which will include
covenants not to compete) to be effective upon the Closing Date:
(i) A three year Employment Agreement between
Capricorn and Xxxxx X. Xxxxx in the form attached hereto as
Exhibit 6.7(a)(i);
(ii) A one year Employment Agreement between
Capricorn and Xx Xxxxxxx in the form attached hereto as
Exhibit 6.7(a)(ii); and
(iii) A one year Employment Agreement between
Capricorn and Xxxxx X. Xxxxx in the form attached hereto as
Exhibit 6.7(a)(iii).
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(b) On or before the Closing Date, TechTeam shall issue to
Shareholder options to purchase, during the period ending five years
from the Closing Date, a total of 15.000 shares of TechTeam Stock at an
exercise price of $10.00 per share. The terms of those options will be
set forth in stock option agreements between TechTeam and Shareholder
in the form attached hereto as Exhibit 6(b). Those options will vest in
three equal annual increments beginning on the first anniversary of the
Closing Date. TechTeam agrees that, prior to the date when any of those
options are exercisable, TechTeam will file a registration statement on
Form S-8 under the Securities Act covering the TechTeam Stock that is
issuable upon exercise of those options.
(c) On or before the Closing Date, Shareholder and TechTeam
shall agree on a list of employees of Capricorn who shall be issued
options to acquire an aggregate of 60,000 Shares of TechTeam stock.
Those options shall be exercisable during the period ending five years
after the Closing Date at an exercise price of $10.00 per share. Those
terms of those options will be set forth in stock option agreements
between TechTeam and the optionees in the form attached hereto as
Exhibit 6.7(b). Those options will vest in three equal annual
increments beginning on the first anniversary of the Closing Date.
TechTeam agrees that, prior to the date when any of those options are
exercisable, TechTeam will file a registration statement on Form S-8
under the Securities Act covering the TechTeam Stock that is issuable
upon exercise of those options.
6.8 COVENANT NOT TO COMPETE OR DISCLOSE CONFIDENTIAL INFORMATION.
(a) Shareholder agrees that, unless acting with the prior
written consent of TechTeam, he will not, either alone or in
conjunction with any other Person, or directly or indirectly through
any entity that he now or in the future controls, for a period of four
(4) years from the Closing Date: (i) employ or solicit the employment
of any Person who within the month preceding the Closing Date had been
an employee of Capricorn, other than members of Shareholder's family
who have not entered into employment agreements with Capricorn or
TechTeam; (ii) directly or indirectly engage or participate, whether as
an officer, employee, director, agent, consultant, shareholder, partner
or otherwise, in the ownership, management, marketing or operation of
any aspect of the Business in the State of Michigan (other than solely
through the passive ownership of five percent (5%) or less of the
equity securities or equivalent interests of any entity whose shares
are traded on any nationally recognized securities exchange); or (iii)
conduct any business that is similar to any part of the Business with
any Person that is or was a customer of Capricorn during the year
preceding the Closing Date.
(b) The parties hereto acknowledge that (i) the covenants
contained in this Section 6.8 are a material inducement to the
consummation by TechTeam of the transactions contemplated by this
Agreement and (ii) TechTeam would not have entered into or performed
this Agreement but for the covenants herein contained.
(c) It is stipulated and agreed that Shareholder is acquainted
with confidential and privileged information of TechTeam and/or
Capricorn relating to customer files, customer lists, special customer
matters, sales methods and techniques, merchandising
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concepts and plans, business plans, sources of supply and vendors,
special business relationships with vendors, agents and brokers,
promotional materials and information, financial matters, mergers,
acquisitions, selective personnel matters and confidential processes,
ideas, plans, devices or materials, and other similar matters which are
confidential (any and all such information being referred to herein as
the "Confidential Information"); and that the use of the Confidential
Information against TechTeam and/or Capricorn would seriously damage
TechTeam and/or the Business. As a consequence of the above,
Shareholder agrees that, unless acting with the prior written consent
of TechTeam, he shall, whether acting alone, in conjunction with any
other Person, or directly or indirectly through any entity that he now
or in the future controls: not use, divulge, publish or otherwise
reveal or allow to be revealed any aspect of the Confidential
Information to any Person; refrain from any action or conduct which
might reasonably or foreseeably be expected to compromise the
confidentiality or proprietary nature of the Confidential Information;
and have no right to apply for or to obtain any patent, copyright, or
other form of intellectual property protection with regard to the
Confidential Information. Shareholder hereby assigns and releases to
Capricorn any and all claims to or rights in any of the Confidential
Information and agrees to execute and deliver such assignments,
releases and other instruments as TechTeam shall reasonably request to
evidence or confirm such assignments and releases.
(d) The parties hereto acknowledge and agree that any remedy
at law for any breach of the provisions of this Section 6.8 would be
inadequate and Shareholder hereby consents to the granting by any court
of competent jurisdiction of an injunction or other suitable relief and
without the posting of any bond or the necessity of actual monetary
loss being proved, in order that such breach may be effectively
restrained.
(e) In addition to the relief provided in subsection (d)
above, Shareholder agrees that, in the event of Shareholder's breach of
this Section 6.8, TechTeam shall have the right to recover monetary
damages from Shareholder.
(f) In the event that this Section 6.8 shall be determined by
any court of competent jurisdiction to be unenforceable by reason of it
being extended for too great a period of time, or as encompassing too
large a geographic area, or over to great a range of activities, or any
or a combination of these elements, the parties agree that these
covenants shall be interpreted to extend only over the maximum period
of time, geographic area, and range of activities as to which said
court of competent jurisdiction deem reasonable and enforceable.
(g) Shareholder acknowledges and agrees that he has or will
become acquainted with material inside information concerning TechTeam
in connection with the transactions contemplated by this Agreement.
Accordingly, Shareholder hereby agrees that Shareholder and its
affiliates shall not, for a period of six months following the Closing
Date, directly or indirectly acquire, agree to acquire or make any
proposal to acquire any securities of TechTeam without the prior
written consent of TechTeam.
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6.9 RELEASE BY SHAREHOLDER. Shareholder hereby waives, releases and
forever discharges Capricorn and its parent, subsidiaries, officers and
directors from any and all claims, causes of action, damages and liabilities of
whatever nature or description, known or unknown, actual or contingent, which
Shareholder or any party claiming through Shareholder might have or could claim
against any of them, and which relates to or arises out of any action or set of
facts occurring prior to the Closing.
6.10 DELIVERY OF DISCLOSURE SCHEDULES. On or before 5:00 P.M. on
January 26, 1998, each party will deliver to the other parties complete copies
of all Disclosure Schedules that are required to be delivered by that party
pursuant to this Agreement.
ARTICLE 7
TERMINATION
7.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written agreement executed by Shareholder and
TechTeam;
(b) by Shareholder or TechTeam if, through no fault of the
party seeking termination, the Closing shall not have occurred on or
before January 30, 1998;
(c) by Shareholder or TechTeam on or before 5:00 P.M. on
January 27, 1998 if (i) the other party has not delivered all
Disclosure Schedules required to be provided by it pursuant to this
Agreement or (ii) the Disclosure Schedules provided by the other party
disclose information not previously known to the recipient and which is
not acceptable to the recipient;
(d) by Shareholder or TechTeam, if any governmental or
regulatory authority, agency or commission, including courts of
competent jurisdiction, domestic or foreign, shall have issued an
order, decree, or ruling or taken other action, restraining, enjoining
or otherwise prohibiting the transactions contemplated hereby and such
order, decree, ruling or other action shall have become final and
nonappealable;
(e) by TechTeam, if there has been a material violation or
breach by Shareholder of any agreement or any representation or
warranty contained in this Agreement which (i) is not curable, (ii) has
rendered the satisfaction of any condition to the obligations of
TechTeam impossible, and (iii) has not been waived by TechTeam; or
(f) by Shareholder, if there has been a material violation or
breach by TechTeam of any agreement, representation or warranty
contained in this Agreement which (i) is not curable, (ii) has rendered
the satisfaction of any condition to the obligations of Shareholder
impossible, and (iii) has not been waived by Shareholder.
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7.2 PROCEDURE AND EFFECT OF TERMINATION. In the event of termination of
this Agreement pursuant to Section 7.1 hereof, written notice thereof shall
forthwith be given to the other parties hereto and this Agreement (other than
Sections 6.5 and 6.8(g) hereof and this Section 7.2, which shall survive
termination) shall terminate and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto. If this Agreement is
terminated as provided herein:
(a) all information with respect to the Business or Capricorn
received by and in the possession of TechTeam or any Person that
directly, or indirectly through one or more intermediaries, controls,
is controlled by, or is under common control with TechTeam shall be, at
Shareholder's option, returned to Shareholder or destroyed by TechTeam;
(b) all material, non-public information with respect to
TechTeam received by and in the possession of Shareholder or any Person
that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with Shareholder
shall be, at TechTeam's option, returned to TechTeam or destroyed by
Shareholder;
(c) TechTeam will pay Shareholder a break-up fee of $200,000
if this Agreement is terminated for any reason other than as a result
of (i) the default, breach, or failure to proceed in good faith by
Shareholder or (ii) legal impediments on the part of any party that
reasonably prevents consummation of the Merger. That break-up fee will
be paid as liquidated damages in full payment of any claims Shareholder
may have as a result of the termination of this Agreement;
(d) any termination pursuant to subparagraph (b) or (e) of
Section 7.1 shall not be deemed a waiver of any rights or remedies
otherwise available to TechTeam under this Agreement, by operation of
law or otherwise; and
(e) all filings, applications and other submissions made
pursuant to Section 6.3 hereof or prior to the execution of this
Agreement in contemplation thereof shall, to the extent practicable, be
withdrawn from the agency or other Person to which made.
ARTICLE 8
CONDITIONS TO TECHTEAM'S OBLIGATIONS
Each and every obligation of TechTeam to consummate the transactions
described in this Agreement shall be subject to the fulfillment, on or before
the Closing, of the following conditions:
8.1 VALUATION OF CAPRICORN. It is a condition to the obligations of
TechTeam hereunder that Shareholder provide to TechTeam, at TechTeam's cost, an
original copy of an appraisal performed by the accounting firm of Xxxxxx & Xxxxx
that, using normal and customary appraisal methods, values the Capricorn Shares
(or the business and assets of Capricorn that are
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represented by the Capricorn Shares) at not less than $5,000,000. A copy of that
appraisal must be delivered to TechTeam not later than two business days before
the Closing.
8.2 AUDITED FINANCIAL STATEMENTS OF CAPRICORN. A copy of Capricorn's
audited financial statements satisfying the requirements of Section 4.13 must be
delivered to TechTeam not later than two business days before the Closing.
8.3 SHAREHOLDER'S CLOSING DELIVERIES. Shareholder shall have delivered,
or caused to be delivered, to TechTeam at or prior to the Closing each of the
following:
(a) certificate(s) representing the Capricorn Shares, duly
endorsed in blank by Shareholder, or accompanied by a duly endorsed
stock transfer power, along with a discharge of the security interests
that are currently placed upon the Capricorn Shares as described in
Section 4.4;
(b) the lock-up agreements and stock option agreements
referenced in Sections 3.2(f) and 6.7(b) executed by Shareholder;
(c) the Employment Agreements and Stock Option Agreements
referenced in Section 6.7 executed by Capricorn and the other parties
to those agreements;
(d) with respect to Capricorn, a certified copy of Capricorn's
articles of incorporation and a certificate of good standing issued by
the state of Michigan, and a certificate of qualification or good
standing in each of the jurisdictions in which Capricorn is qualified
to transact business issued by the secretary of state or other
appropriate authority of each such jurisdiction, and in each case,
dated no more than thirty (30) days prior to the Closing Date;
(e) a copy of the bylaws of Capricorn which shall be certified
to be accurate, complete and as in effect as of the Closing Date by the
Secretary of such entity;
(f) the minute and stock books and corporate seal (if any) of
Capricorn;
(g) valid and binding consents of all Persons whose consent or
approval is required to be set forth in Sections 4.6 and 4.7 of the
Disclosure Schedule;
(h) a certified copy of the resolutions of the Board of
Directors of Capricorn authorizing the execution, delivery and
performance of this Agreement and the Related Agreements;
(i) the certificates referenced in Sections 8.4 and 8.5; and
(j) copies executed by Shareholder and Capricorn (as
appropriate) of all loan agreements, promissory notes, security
agreements and other documents needed to evidence the Sentry
Replacement Loan (as defined in Section 4.4) if TechTeam is required to
make the Sentry Replacement Loan to Capricorn.
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8.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Shareholder and Capricorn contained in this Agreement, as modified by the
Disclosure Schedule, shall have been true on the date hereof, and shall be true
on the Closing Date with the same effect as though such representations were
made as of such date and Shareholder shall have delivered to TechTeam on the
Closing Date a certificate, dated the date thereof, to such effect which
certificate shall be executed by Shareholder and by each of the President and
Chief Financial Officer of Capricorn who shall make such certification to the
best of his knowledge, solely in his capacity as an officer of Capricorn and not
as an individual.
8.5 PERFORMANCE. Shareholder and Capricorn shall have, in all material
respects, performed and complied with all covenants required by this Agreement
to be performed or complied with by them prior to or at the Closing and
Shareholder and Capricorn shall have delivered to TechTeam on the Closing Date a
certificate, dated the date thereof, to such effect.
8.6 LEGAL OPINION. Counsel for Shareholder shall have delivered to
TechTeam its opinion dated the Closing Date, in form and substance reasonably
satisfactory to TechTeam and addressing the matters covered in Sections 4.1,
4.2, 4.3, 4.4, 4.5, 4.6, 4.7 and 4.8 of this Agreement.
8.7 GOVERNMENTAL CONSENTS AND APPROVALS. All necessary and appropriate
governmental consents, approvals and filings shall have been obtained or made
and all applicable waiting periods (including any extensions thereof) relating
thereto shall have expired or otherwise terminated.
8.8 NO INJUNCTION OR PROCEEDING. No governmental or regulatory
authority, agency or commission, including courts of competent jurisdiction,
domestic or foreign, shall have issued an order, decree, or ruling or taken
other action, restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby, which order, decree, ruling or other action remains in
effect.
ARTICLE 9
CONDITIONS TO SHAREHOLDER'S OBLIGATIONS
Each and every obligation of Shareholder to consummate the transactions
described in this Agreement shall be subject to the fulfillment, on or before
the Closing, of the following conditions:
9.1 TECHTEAM'S CLOSING DELIVERIES. TechTeam shall deliver, or cause to
be delivered, to Shareholder at or before the Closing each of the following:
(a) The certificate(s) representing the Merger Consideration
or an irrevocable letter of instructions to the Transfer Agent for the
issuance of certificates representing the Merger Consideration in
accordance with Article 3 hereof;
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(b) the lock-up agreement referenced in Section 3.2(f)
executed by TechTeam;
(c) The employment agreements and stock option agreements
referenced in Section 6.7 executed by TechTeam;
(d) valid and binding consents of all Persons, if any, whose
consent or approval is required to be set forth in Section 5.4 of the
Disclosure Schedule;
(e) a certified copy of the resolutions of the Board of
Directors of TechTeam authorizing the execution, delivery and
performance of this Agreement and the Related Agreements and the
issuance of the Merger Consideration;
(f) the certificates referenced in Sections 9.2 and 9.3
hereof; and
(g) copies executed by TechTeam of all loan agreements,
security agreements and other documents needed to evidence the Sentry
Replacement Loan (as defined in Section 4.4) if TechTeam is required to
make the Sentry Replacement Loan to Capricorn, along with delivery of
the funds being loaned thereby.
9.2 REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of TechTeam and Sub contained in this Agreement, as modified by the
Disclosure Schedule, shall have been true on the date hereof and shall be true
on the Closing Date with the same effect as though such representations were
made as of such date, and TechTeam and Sub shall each have delivered to
Shareholder, on the Closing Date, a certificate, dated as of that date, to such
effect.
9.3 PERFORMANCE. TechTeam and Sub shall each have, in all material
respects, performed and complied with all covenants required by this Agreement
to be performed or complied with by it prior to or at the Closing and TechTeam
and Sub shall each have delivered to Shareholder, on the Closing Date, a
certificate, dated as of that date, to such effect.
9.4 LEGAL OPINION. Counsel for TechTeam shall have delivered to
Shareholder its opinion dated the Closing Date in form and substance reasonably
satisfactory to Shareholder and addressing the matters covered in Sections 5.1,
5.2, 5.3, 5.4 and 5.5 of this Agreement.
9.5 GOVERNMENTAL CONSENTS AND APPROVALS. All necessary and appropriate
governmental consents, approvals and filings shall have been obtained or made
and all applicable waiting periods (including any extensions thereof) relating
thereto shall have expired or otherwise terminated.
9.6 NO INJUNCTION OR PROCEEDING. No governmental or regulatory
authority, agency or commission, including courts of competent jurisdiction,
domestic or foreign, shall have issued an order, decree, or ruling or taken
other action, restraining, enjoining or otherwise prohibiting the transactions
contemplated hereby, which order, decree, ruling or other action remains in
effect.
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ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION BY SHAREHOLDER. In addition to the indemnification
set forth in Section 11.4, Shareholder shall reimburse, indemnify and hold
TechTeam, Capricorn and their respective officers, directors, shareholders,
employees and agents harmless from and against any and all demands, claims,
actions, suits, liabilities, damages, losses, judgments, costs and expenses
(including, without limitation, reasonable attorneys' fees) relating to,
resulting from or arising out of:
(a) any breach or failure of any representation or warranty of
the Shareholder contained in this Agreement or in any certificate,
instrument of transfer or other agreement executed by Shareholder,
Capricorn or Capricorn's officers in connection with this Agreement;
(b) any failure by Shareholder or Capricorn to perform or
observe, or to have performed or observed, in full any covenant,
agreement or condition to be performed or observed by Shareholder or
Capricorn under this Agreement;
(c) reliance by TechTeam on any books or records of Capricorn
or the reliance by TechTeam on any written information furnished by
Shareholder, Capricorn or any of Capricorn's officers, to TechTeam, to
the extent any of such information should prove to be false in any
material respect;
(d) any losses incurred by Capricorn prior to the Closing Date
which are of a nature customarily insured against by a business similar
to that of Capricorn, but which are not covered by any insurance plans
maintained by or on behalf of Capricorn; or
(e) any liability or claim by any third party resulting from
the conduct of the business of Capricorn through the Closing Date in
violation of any law, rule or regulation of any governmental authority
or agency.
10.2 INDEMNIFICATION BY TECHTEAM. In addition to the indemnification
set forth in Section 11.4, TechTeam shall reimburse, indemnify and hold
Shareholder harmless from and against any and all demands, claims, actions,
suits, liabilities, damages, losses, judgments, costs and expenses (including,
without limitation, reasonable attorneys' fees relating to, resulting from or
arising out of:
(a) any breach or failure of any representation or warranty of
TechTeam contained in this Agreement or in any certificate, instrument
of transfer or other agreement executed by TechTeam in connection with
this Agreement; or
(b) any failure by TechTeam to perform or observe, or to have
performed or observed, in full any covenant, agreement or condition to
be performed or observed by TechTeam under this Agreement.
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10.3 SURVIVAL OF REPRESENTATIONS. The representations and warranties
set forth in Sections 4.12, 4.13, 4.14, 4.18, 4.21 and 4.32 shall survive until
and through the first anniversary of the Closing Date, at which time such
representations and warranties shall expire. The representations and warranties
set forth in Sections 4.5, 4.9, 4.16 and 4.20 shall survive until and through
the sixth anniversary of the Closing Date at which time such representations and
warranties shall expire. All other representations and warranties made pursuant
to this Agreement including, without limitation, all representations and
warranties made in any exhibit or schedule or certificate delivered thereunder
shall survive until and through the third anniversary of the Closing Date, at
which time such representations and warranties shall expire.
10.4 INDEMNIFICATION CLAIMS PROCEDURES. All claims for indemnification
by any party seeking indemnification (the "Indemnified Party") from the other
party (the "Indemnifying Party") under Sections 10.1, 10.2, or 11.4 shall be
asserted and resolved as follows:
(a) In the event that any claim or demand for which the
Indemnifying Party would be liable to any Indemnified Party hereunder
is asserted against or sought to be collected from any Indemnified
Party by a third party, the Indemnified Party shall promptly notify the
Indemnifying Party (and any pertinent insurance carrier) in reasonable
detail of such claim or demand and the amount or the estimated amount
thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim and demand) (the "Claim
Notice"). The Indemnifying Party shall have thirty (30) days from the
personal delivery or mailing of the Claim Notice (the "Notice Period")
to notify the Indemnified Party whether or not the Indemnifying Party
desires to defend the Indemnified Party against such claim or demand.
All costs and expenses incurred by the Indemnifying Party in defending
such claim or demand shall be a liability of, and shall be paid by, the
Indemnifying Party. In the event that the Indemnifying Party notifies
Indemnified Party within the Notice Period that it desires to defend
the Indemnified Party against such claim or demand and except as
hereinafter provided, the Indemnifying Party shall have the right to
defend the Indemnified Party by counsel of the Indemnifying Party's own
choosing, either in the Indemnifying Party's name, or in the
Indemnified Party's name by appropriate proceedings. If any Indemnified
Party desires to participate in, but not control, any such defense or
settlement it may do so at its sole cost and expense and, in any event,
the Indemnified Party shall cooperate with the Indemnifying Party and
such counsel. To the extent the Indemnifying Party shall control or
participate in the defense or settlement of any third party claim or
demand, the Indemnified Party shall give to the Indemnifying Party and
its counsel access to, during normal business hours, the relevant
business records and other documents, and shall permit them to consult
with the employees and counsel of the Indemnified Party, to the extent
consistent with the application of relevant evidentiary privileges. The
Indemnifying Party shall keep the Indemnified Party reasonably apprised
of the course of any negotiations or proceedings and the Indemnifying
Party shall not settle any claim or demand without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld or
unduly delayed. As soon as reasonably practicable after the
Indemnifying Party has reached a final decision as to whether or not
all or any portion of the obligations related to such claim or demand
are the obligations for which the
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Indemnifying Party is required to indemnify such Indemnified Party
hereunder and, in any event, prior to entering into any such settlement
or other final resolution of any claim or demand, the Indemnifying
Party shall notify the Indemnified Party in writing of its position as
to whether or not all or any portion of the obligations related to such
claim or demand are the obligations for which the Indemnifying Party is
required to indemnify such Indemnified Party in accordance with this
Article 10 or Section 11.4.
(b) If the Indemnifying Party elects or is deemed to have
elected not to take over the defense of any such claim or demand, the
Indemnified Party shall have the right to defend, compromise and settle
such claim or demand on such terms as the Indemnified Party in its
discretion may determine, subject to the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or
unduly delayed, and the Indemnifying Party shall continue to be bound
to indemnify the Indemnified Party in accordance with and to the extent
provided under the terms of this Article 10 and Section 11.4. The
Indemnified Party shall or shall direct in writing its counsel to
deliver to the Indemnifying Party copies of all correspondence and
other matters relating to such claim or demand. Notwithstanding the
foregoing, to the extent that the claim or demand involves or could
result in claims against, or potential liability of, the Indemnifying
Party the extent or nature of which were not known by the Indemnifying
Party as of the date the Indemnifying Party elects or is deemed to have
elected not to take over the defense of such claim or demand, the
Indemnifying Party shall, by written notice to the Indemnified Party,
be entitled to take over the defense of such claim or demand.
(c) In the event an Indemnified Party should have a claim
against the Indemnifying Party hereunder which does not involve a claim
or demand being asserted against or sought to be collected from it by a
third party, the Indemnified Party shall promptly send a Claim Notice
with respect to such claim to the Indemnifying Party.
(d) No claim for indemnification hereunder arising from a
breach of a representation or warranty shall be valid unless notice of
such claim as provided herein is made prior to the expiration of such
representation or warranty under Section 10.3. Except as provided in
the preceding sentence, the Indemnified Party's failure to give
reasonably prompt notice to the Indemnifying Party of any actual,
threatened or possible claim or demand which may give rise to a right
of indemnification hereunder shall not relieve the Indemnifying Party
of any liability which it may have to an Indemnified Party except to
the extent the failure to give such notice prejudiced the Indemnifying
Party.
10.5 RIGHT OF SET-OFF. In addition to any other remedy available in
equity or at law, the Indemnified Party shall be entitled to set off the amount
of any obligation for which it is entitled to be indemnified under this Article
10 or Section 11.4 against any amounts payable to the Indemnifying Party
hereunder or under any other agreement contemplated hereby.
10.6 LIMITATIONS ON LIABILITY. The maximum aggregate liability of
TechTeam on one hand, and Shareholder on the other hand, under this Article 10
or Section 11.4 shall not exceed $5,000,000.
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ARTICLE 11
REGISTRATION RIGHTS.
11.1 REGISTRATION OBLIGATION OF TECHTEAM. TechTeam agrees to register,
on one occasion, the Registered Shares under the Securities Act, for resale by
Shareholder. TechTeam will file a Registration Statement covering the Registered
Shares as soon as reasonably practicable after the Closing but not later than
ninety (90) days from the Closing and use its best efforts to have such
Registration Statement declared effective promptly thereafter. TechTeam shall
cause any registration statement filed pursuant to this Section 11.1 to remain
effective for a period of at least two years from the Effective Time. TechTeam
shall have the right to include in that registration statement other securities
to be offered by TechTeam and/or other holders of TechTeam's securities.
11.2 PIGGYBACK REGISTRATION RIGHTS. If at any time on or after one year
from the Effective Time, TechTeam proposes, other than pursuant to its
obligation under Section 11.1, to register any TechTeam Stock under the
Securities Act on a form which would permit registration of the Merger
Consideration or the Contingent Shares for sale to the general public, TechTeam
shall each such time give written notice to the Shareholder of its intention to
do so, describing the securities to be registered and specifying the form and
manner and other relevant facts involved in such proposed registration. Upon the
written request of the Shareholder within 20 days after the giving of any such
notice (which request shall specify the TechTeam Stock intended to be disposed
of by Shareholder), TechTeam will use its best efforts as a part of its filing
of such form to effect the registration under the Securities Act of all Merger
Consideration or Contingent Shares which TechTeam has been so requested to
register by the Shareholder; provided, however, that in the event TechTeam
proposes to register any of its securities for the account of any holder of its
securities other than the Shareholder, Shareholder may not request TechTeam to
effect the registration of more than the number of shares of TechTeam Stock held
by Shareholder which bears the same ratio to the total number of Merger
Consideration or Contingent Shares held by Shareholder as the number of shares
of securities that TechTeam proposes to register for the account of all other
selling shareholders in that registration statement bears to the total number of
shares of securities held by all of the other selling shareholders. TechTeam
shall not be required to honor any such request if, in the opinion of counsel to
TechTeam, registration under the Securities Act is not required for the transfer
of the TechTeam Stock in the manner proposed by Shareholder or that the
registration is for a limited purpose or through a limited process such that,
without the Shareholder's shares, the regulatory oversight or registration
process would be more limited. If any such registration relates to a firmly
underwritten offering of TechTeam Stock for the account of TechTeam, and if the
manager or underwriter of such offering advises TechTeam in writing that, in its
opinion, inclusion of TechTeam Stock held by Shareholder would adversely affect
any such offering, then such shares shall, to such extent, be excluded from such
registration.
11.3 REGISTRATION PROCEDURES. If and whenever TechTeam is required to
use its best efforts to effect the registration of any TechTeam Stock under the
Securities Act as provided herein, TechTeam shall register or otherwise qualify
the sale of TechTeam Stock under the "blue sky" laws in up to 3 states, and the
following procedures shall apply:
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(a) Shareholder shall promptly furnish to TechTeam such
information regarding the Shareholder, the distribution of the TechTeam
Stock and such other matters as TechTeam may reasonably request in
writing.
(b) TechTeam will bear all expenses of the registration,
except for any underwriting spread and brokerage commission and
transfer taxes incurred in connection with sales of the TechTeam Stock
owned by the Shareholder and except for expenses of any legal counsel
selected by the Shareholder to represent him in connection with the
sale of the TechTeam Stock.
(c) TechTeam will furnish to the Shareholder at its expense
such number of prospectuses conforming to the requirements of the
Securities Act and the rules and regulations thereunder and relating to
the TechTeam Stock subject thereto as may, from time to time, be
requested by the Shareholder. Further, TechTeam shall (a) notify the
Shareholder, at any time when a prospectus relating to the TechTeam
Stock is required to be delivered under the Securities Act, of the
happening of any event which TechTeam, in its best judgment, believes
would make a supplement to, or an amendment of, such prospectus
necessary or appropriate, and (b) at the request of the Shareholder,
prepare and furnish thereto a reasonable number of copies of any
supplement to, or any amendment of, such prospectus that may be
necessary so that, thereafter delivered to the Shareholder, such
prospectus shall not include any untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances when made.
(d) If the Shareholder's TechTeam Stock is to be distributed
in any underwritten offering, the Shareholder shall be a party to the
underwriting agreement entered into by TechTeam in connection
therewith, and the representations and warranties by, and the other
agreements on the part of TechTeam, including any lock-up provisions,
to or for the benefit of the underwriter shall also be made to and for
the benefit of the Shareholder.
(e) Shareholder agrees (except to the extent that Shareholder
is prohibited by applicable law from agreeing to withhold TechTeam
Stock from sale), if requested in a timely notice from the managing
underwriters in an underwritten offering, not to effect any public sale
or distribution of TechTeam Stock, including a sale pursuant to Rule
144 under the Securities Act (except as part of such underwritten
offering), during the 30 day period prior to and during the 90-day
period beginning on the closing date of each underwritten offering made
pursuant to such registration statement.
(f) TechTeam shall not be required to maintain in effect any
registration statement as it relates to TechTeam Stock held by the
Shareholder beyond the period necessary to comply with the Securities
Act (otherwise than pursuant to Rule 415 or any similar regulation
permitting "shelf registration") with respect to the distribution of
the TechTeam Stock included therein. However, TechTeam will use its
reasonable best efforts to continue to file those documents which will
permit the Shareholder to qualify sales of TechTeam Stock pursuant to
Rule 144 under the Securities Act.
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11.4 INDEMNIFICATION AND CONTRIBUTION.
(a) Indemnification by TechTeam. In the case of each offering
of TechTeam Stock registered under the Securities Act pursuant hereto,
TechTeam agrees to indemnify and hold harmless each Shareholder in such
offering, each underwriter of such TechTeam Stock under such
registration and each other person, if any, who controls Shareholder or
that underwriter within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which any of them may become subject under the Securities
Act or otherwise, and to reimburse them for any legal or any other
expenses reasonably incurred by them in connection with investigating
any claim, or defending any action or proceeding, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained or
incorporated by reference in any registration statement under which
such TechTeam Stock was registered under the Securities Act, any
preliminary prospectus or final prospectus included therein, or any
related summary prospectus, or any amendment or supplement thereto, or
any document incorporated by reference therein, or (ii) any omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading;
provided, however, that TechTeam shall not be so liable to a person
otherwise indemnified to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
such registration statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement thereto or
document incorporated by reference therein to the extent that such
statements or alleged statements or omissions or alleged omission was
made in reliance upon and in conformity with written information
furnished to TechTeam by or on behalf of Shareholder expressly for use
in connection with any such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or
supplement thereto or document included by reference therein. The
indemnification agreement contained in this Section 11.4(a) shall
remain in full force and effect regardless of any investigation made by
or on behalf of Shareholder or any other person indemnified pursuant to
such agreement and shall survive the transfer of such securities by
Shareholder in the offering.
(b) Indemnification by Shareholder. In the case of each
offering of Shareholder's TechTeam Stock registered under the
Securities Act pursuant hereto, Shareholder agrees to indemnify and
hold harmless TechTeam, its officers and directors, each person who has
signed the registration statement, and each other person, if any, who
controls any of the foregoing within the meaning of Section 15 of the
Securities Act, each other selling shareholder in such offering, each
person, if any, who controls each other selling shareholder within the
meaning of Section 15 of the Securities Act, and the directors and
officers of each other selling shareholder, against any losses, claims,
damages or liabilities, joint or several, to which any of them may
become subject under the Securities Act or otherwise and to reimburse
them for any legal or other expenses reasonably incurred by them in
connection with investigating any claim, or defending any
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action or proceeding, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of
or are based upon (i) any untrue statement or alleged untrue statement
of material fact contained or incorporated by reference in any
registration statement under which such TechTeam Stock was registered
under the Securities Act, any preliminary prospectus or final
prospectus included therein, or any related summary prospectus, or any
amendment or supplement thereto, or any document incorporated by
reference therein, or (ii) any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, to the extent (and only to
the extent) that such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with
written information furnished to TechTeam by or on behalf of the
Shareholder expressly for use in connection with the preparation of any
such registration statement, preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement thereto or document
incorporated by reference therein. The indemnification agreement
contained in this Section 11.4(b) shall remain in full force and effect
regardless of any investigation made by or on behalf of TechTeam or any
other person indemnified pursuant to such agreement and shall survive
the transfer of TechTeam Stock by Shareholder in the offering.
(c) Other Indemnification or Contribution. Without by
implication limiting the scope of the other provisions of this Section
11.4, it is agreed that indemnification or, if appropriate,
contribution, similar to that specified in the preceding subsections of
this Section 11.4 (with appropriate modifications), shall be given by
TechTeam and each selling shareholder of TechTeam Stock with respect to
any required registration or other qualification of such TechTeam Stock
under any federal or state law or regulation of governmental authority
other than the Securities Act.
ARTICLE 12
MISCELLANEOUS
12.1 DISPUTE RESOLUTION.
(a) Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement or any Related Agreement to which
Shareholder and TechTeam are parties or any contract or agreement
entered into pursuant hereto, or arising out of or relating to the
performance by the parties of its or their terms, shall be settled by
binding arbitration held in the Metropolitan Detroit, Michigan area in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association then in effect, except as specifically
otherwise provided in this Section 12.1. Notwithstanding the foregoing,
TechTeam may, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened
violation of the covenants under Article 6 of this Agreement.
(b) Arbitration. The panel to be appointed shall consist of
three neutral arbitrators.
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(c) Procedures; No Appeal. The arbitrators shall allow such
discovery as the arbitrators determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the arbitrators. The arbitrators shall give the parties
written notice of the decision, with the reasons therefor set out, and
shall have 30 days thereafter to reconsider and modify such decision if
any party so requests within 10 days after the decision. Thereafter,
the decision of the arbitrators shall be final, binding, and
nonappealable with respect to all persons, including (without
limitation) persons who have failed or refused to participate in the
arbitration process.
(d) Authority. The arbitrators shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief. Unless the arbitrators find that exceptional
circumstances require otherwise, the arbitrators will include in the
award the prevailing party's costs of arbitration and reasonable
attorneys' fees.
(e) Entry of Judgment. Judgment upon the award rendered by the
arbitrators may be entered in any court having in personam and subject
matter jurisdiction. TechTeam and Shareholder hereby submit to the in
personam jurisdiction of the Federal and State courts in the State of
Michigan, for the purpose of confirming any such award and entering
judgment thereon.
(f) Confidentiality. All proceedings under this Section 12.1,
and all evidence given or discovered pursuant hereto, shall be
maintained in confidence by all parties.
(g) Continued Performance. The fact that the dispute
resolution procedures specified in this Section 12.1 shall have been or
may be invoked shall not excuse any party from performing its
obligations under this Agreement and during the pendency of any such
procedure all parties shall continue to perform their respective
obligations in good faith.
(h) Tolling. All applicable statutes of limitation shall be
tolled while the procedures specified in this Section 12.1 are pending.
The parties will take such action, if any, required to effectuate such
tolling.
12.2 ENTIRE UNDERSTANDING, WAIVER, ETC. This Agreement sets forth the
entire understanding of the parties and supersedes any and all prior or
contemporaneous agreements, arrangements and understandings relating to the
subject matter hereof, and the provisions hereof may not be changed, modified,
waived or altered except by an agreement in writing signed by the party entitled
to the benefit of the provision(s) to be waived hereto. A waiver by any party of
any of the terms or conditions of this Agreement, or of any breach thereof,
shall not be deemed a waiver of such term or condition for the future, or of any
other term or condition hereof, or of any subsequent breach thereof.
12.3 SEVERABILITY. If any provision of this Agreement or the
application of such provision shall be held by a court of competent jurisdiction
to be unenforceable, the remaining provisions of this Agreement shall remain in
full force and effect.
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12.4 CAPTIONS. The captions herein are for convenience only and shall
not be considered a part of this Agreement for any purpose, including, without
limitation, the construction or interpretation of any provision hereof.
12.5 NOTICES. All notices, requests, demands and other communications
(collectively, "Notices") that are required or may be given under this Agreement
shall be in writing. All Notices shall be deemed to have been duly given or
made: (a) if by hand, immediately upon delivery; (b) if by telecopier or similar
device, immediately upon sending, provided notice is sent on a Business Day
during the hours of 9:00 a.m. and 6:00 p.m. at the location of the party
receiving the Notice and confirmed by first class mail, but if not, then
immediately upon the beginning of the first Business Day after being sent; (c)
if by FedEx, Express Mail or any other reputable overnight delivery service, one
Business Day after being placed in the exclusive custody and control of said
courier; and (d) if mailed by certified mail, return receipt requested, five
Business Days after mailing. Notwithstanding the foregoing, with respect to any
Notice given or made by telecopier or similar device, such Notice shall not be
effective unless and until (i) the telecopier or similar advice being used
prints a written confirmation of the successful completion of such communication
by the party sending the Notice, and (ii) a copy of such Notice is deposited in
first class mail to the appropriate address for the party to whom the Notice is
sent. In addition, notwithstanding the foregoing, a notice of a change of
address by a party hereto shall not be effective until received by the party to
whom such notice of a change of address is sent. All notices are to be given or
made to the parties at the following addresses (or to such other address as
either party may designate by notice in accordance with the provisions of this
Section):
(a) If to Shareholder:
Xxxxx X. Xxxxx
c\o Capricorn Capital Group, Inc.
Fax Number: (000) 000-0000
(b) If to Capricorn:
Capricorn Capital Group, Inc.
00000 Xxxxxxxxxxxx Xxx., Xxxxx 000
Xxxxxxxxxx Xxxxx, XX 00000
Fax Number: (000) 000-0000
(c) If to TechTeam:
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Fax Number: (000) 000-0000
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(d) If to Sub
c/o National TechTeam, Inc.:
000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Fax Number: (000) 000-0000
12.6 SUCCESSORS AND ASSIGNS. Neither this Agreement nor any of the
rights or obligations arising hereunder shall be assignable without the prior
written consent of the parties hereto; provided, however, that notwithstanding
the foregoing, TechTeam may assign its rights and obligations under this
Agreement to any wholly owned subsidiary of TechTeam which agrees in writing to
be bound by and to perform fully all of TechTeam's obligations hereunder and,
provided that in the event of any such assignment by TechTeam, TechTeam shall
remain liable hereunder for the performance of TechTeam's obligations hereunder
notwithstanding such assignment.
12.7 PARTIES IN INTEREST. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and permitted assigns. Nothing in this Agreement, express or implied, shall
confer upon any Person, other than the parties hereto, and their successors and
permitted assigns, any rights or remedies under or by reason of this Agreement.
12.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
12.9 CONSTRUCTION OF TERMS. Any reference herein to the masculine or
neuter shall include the masculine, the feminine and the neuter, and any
reference herein to the singular or plural shall include the opposite thereof.
The parties to this Agreement acknowledge that each party and counsel to each
party has participated in the drafting of this Agreement and agree that this
Agreement shall not be interpreted against one party or the other based upon who
drafted it.
12.10 GOVERNING LAW. This Agreement shall be controlled, construed and
enforced in accordance with the laws of Michigan applicable to agreements made
and to be performed in that jurisdiction.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on
the day and year first above written.
SHAREHOLDER:
/s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
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CAPRICORN CAPITAL GROUP, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------
Its: President
-----------------------------
NATIONAL TECHTEAM, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx, Vice President
XX XXXXXXXXXX PLACE 104, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx, Vice President
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EMPLOYMENT AGREEMENT
THIS AGREEMENT dated as of January 31,1998, between CAPRICORN CAPITAL
GROUP, INC., a Michigan corporation (the "Company") and XXXXX X. XXXXX
("Executive").
WITNESSETH:
1. EMPLOYMENT AND DUTIES. The Company hereby employs and the Executive
hereby agrees to serve the Company as its President for the period
hereinafter defined. Executive agrees to perform such services as shall
from time to time be assigned to him by the Company's Board of Directors
and, in the absence of such assignment, such services as are reasonably
necessary to the successful operation of the Company and any subsidiaries
that it may from time to time own. In the performance of his duties,
Executive shall report to and be under the direction of the Board of
Directors. Without obtaining the prior written consent of the Board of
Directors, Executive shall not enter into any agreements or commitments
that would bind the Company for longer than one year or that would require
the Company to expend more than $3,000.000. Executive agrees to devote
substantially all his time and attention during the Company's normal
working hours and his best efforts and ability to the affairs of the
Company and any such subsidiaries and shall not engage in other activities
that interfere with the proper discharge of his duties or that compete with
the interests of the Company, provided that Executive may devote reasonable
time to serving as a director or member of charitable, religious or
business organizations so long as the same do not result in a conflict of
interest with the interests of the Company. During the term of this
Agreement, Executive shall conform to all of the Company's policies and
procedures and pledges to maintain all business activities of the Company
in complete confidence and to keep the Company informed, apprised and aware
of all material matters that come to his attention that could affect its
business interest.
2. ELECTION OF EXECUTIVE TO BOARD OF DIRECTORS. During the period of
Executive's employment, the Company shall use its best efforts to nominate
and secure the election of Executive to the Board of Directors of the
Company, provided that Executive may resign from such directorship or
refuse to stand for election at any time and from time to time. During the
period of employment of Executive, the Company, provided Executive is then
serving on the Board of Directors, shall confer on Executive such corporate
offices, directorships, executive powers and authority as shall reasonably
be required to enable him to discharge his duties hereunder.
3. COMPENSATION. As compensation for his services hereunder, the
Company shall initially pay Executive an annual salary of $200,000, payable
in appropriate installments to conform with regular payroll dates for
salaried personnel of the Company. Such salary may be increased (but not
decreased) by the Board of Directors at any time.
4. STOCK OPTIONS. Executive shall receive options to purchase up to
15,000 shares of the common stock of National TechTeam, Inc. ("TechTeam")
the Company's parent company. The exercise price, terms, limitations and
restrictions applicable to such options shall be as set forth in a separate
stock option agreement substantially in the form attached hereto as Exhibit
1, to be entered into between TechTeam and Executive.
5. EXPENSES. It is contemplated that, in connection with his
employment hereunder, Executive may be required to incur reasonable
business entertainment and travel expenses. The Company agrees to reimburse
Executive in full for all reasonable and necessary business entertainment
and other related expenses including, without limitation, travel expenses,
incurred or expended by him
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incident to the performance of his duties hereunder upon submission by
Executive to the Company of vouchers or expense statements reasonably
evidencing such expenses.
6. FRINGE BENEFITS. During the period of his employment with the
Company hereunder, Executive shall be entitled to participate in any and
all group health insurance, life insurance, accident insurance, medical,
pension, profit sharing or other employee benefit plans made available by
the Company to any other employee or group of employees of the Company. The
Company retains the night to increase or reduce such benefits, from time to
time, as it deems to be appropriate.
7. VACATIONS. It is understood and agreed by the parties that
Executive shall be entitled to vacations (taken consecutively or in
segments) in accordance with the normal policy of the Company in effect
from time to time.
8. TERM AND TERMINATION.
(a) Unless earlier terminated as provided herein, this Agreement
shall continue in effect for a period of three (3) years from the date
hereof and from month to month thereafter unless either party provides
the other with at least thirty (30) days written notice of its
Intention not to renew this Agreement.
(b) The Board of Directors of the Company may terminate the
employment of Executive at any time in the event Executive: (i) is
convicted of a felony or misdemeanor involving moral turpitude; (ii)
shall have materially breached any provision of this Agreement within
his control or failed to properly and diligently perform his duties
hereunder and shall not have remedied such violation within twenty (20)
days after notice from the Board of Directors or die Chairman of the
Company specifying such violation (Executive shall be deemed to have
diligently performed his duties hereunder if his performance is
generally consistent with his performance during 1997); or (iii)
commits any act or acts that constitute a breach of Executive's
fiduciary duties or duties of good faith and loyalty. In any
termination under this Subsection 8(b) (a "Cause Termination") all
rights to future compensation hereunder shall terminate as of the date
of termination.
(c) The Board of Directors of the Company may also terminate the
employment of Executive in the event Executive (i) dies or (ii) shall
become physically or mentally incapacitated or disabled or otherwise
unable fully to discharge his duties hereunder as determined by a
physician licensed in the State of Michigan selected by the Board of
Directors. In the event of a termination pursuant to this Subsection
8(c), Executive or his estate shall receive payments in accordance with
Section 9.
(d) The Board of Directors of the Company may also terminate
Executive's services for reasons other than a Cause Termination, in
which case Executive shall receive severance pay determined in
accordance with Subsection 8(f).
(e) Executive may terminate his employment under this Agreement
if the Company shall have violated any material provision of this
Agreement and shall not have remedied such violation within twenty (20)
days after notice from Executive specifying such violation, in which
case Executive shall receive severance pay determined in accordance
with Subsection 8(f).
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(f) Upon termination of this Agreement by the Company pursuant to
Subsection 8(d) or by Executive pursuant to Subsection 8(e), the
Company shall pay Executive his then base salary set forth in Section 3
for a period (the "Severance Pay Period") equal to the then remaining
term of this Agreement determined as if that termination had not
occurred. The parties agree that the payments to be made pursuant to
this Subsection 8(f) shall be Executive's sole and exclusive remedy
hereunder and Executive hereby waives any claims for any further
compensation, benefits or damages of any nature or description under
this Agreement. The parties agree that, because there can be no exact
measure of the damage that would occur to Executive as a result of a
breach of this Agreement by the Company, the payments and benefits to
be made pursuant to this subsection 8(f) shall be deemed to constitute
liquidated damages and not a penalty for the Company's breach, and the
Company agrees that Executive shall not be required to mitigate his
damages; provided, however, that should Executive receive compensation
for services rendered or consulting fees during the Severance Pay
Period, the amount of that compensation or those consulting fees shall
reduce, but not below zero, the amount payable by the Company to
Executive pursuant to this Agreement.
9. PAYMENTS ON DEATH OR DISABILITY.
(a) In the event of the termination of this Agreement as the result of
Executive's death, remuneration pursuant to Section 3 for the month in
which his death occurs shall be paid to Executive's beneficiary
designated in writing filed by him with the Company or, if none, to his
estate. Upon that payment, the Company thereafter shall be discharged
and released of and from any further obligations under do Agreement
except for its obligations to pay any accrued bonuses or deferred
compensation.
(b) In the event of the termination of this Agreement pursuant to
Section 8(c) as the result of Executive's disability, Executive shall
be entitled to receive the full compensation specified in Section 3
hereof for a period of ninety (90) days after the initial date of his
disability and fifty percent of that compensation for the next ninety
(90) day period thereafter and the Company shall thereafter be
discharged and released of and from any further obligations under this
Agreement except for its obligations to pay any accrued bonuses or
deferred compensation. Notwithstanding anything contained in this
Agreement to the contrary, in the event Executive is receiving payments
through a disability policy maintained by the Company, such payments
will not be deducted from any amounts payable by the Company to
Executive hereunder during the period such disability payments have
been made.
10. INDEMNIFICATION. Executive shall be entitled to be indemnified for
any loss suffered by him by reason of his acting as an officer, employee or
agent of the Company to the full extent provided by the Company's Bylaws.
11. NON-COMPETITION COVENANT.
(a) As used herein, the "Restriction Period" shall mean a period
equal to one (1) year after the later of (i) termination of the
Executive's employment with the Company, whether such termination is
voluntary or involuntary or (ii) termination of the period during which
Executive is receiving any severance pay pursuant to Section 8(f).
Executive covenants and agrees that during the Restriction Period he
shall not, either directly or indirectly, for his own account or as
agent, servant or employee, or as a shareholder of any corporation, or
as a member of any firm, engage or attempt to engage in the production,
development, sale, distribution,
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solicitation or promotion of the sale or distribution of the Services (as
hereinafter defined) in the United States or in any country where the
Company maintains an office (the "Restricted Area"). Executive further
covenants and agrees that he will not directly or indirectly solicit or
call on any Customer (as hereinafter defined) with respect to the Services
during the Restriction Period. The Executive will not assist any member of
his family, including his spouse, parents, brothers, sisters, children,
aunts, uncles, or cousins, in any business venture which engages in the
production, development, sale or distribution of the Services or which
calls on any Customer with respect to the Services. However, the Executive
may at any time own, as an inactive investor, or acquire securities of any
competitor corporation listed on a national securities exchange or the
over-the- counter market, so long as his/her holdings in any one such
corporation shall not constitute more than 5% of the voting stock or 5% of
the outstanding capital stock of such corporation.
(b) Executive further covenants and agrees that he shall not, either
directly or indirectly for his own account or as an agent, servant or
employee, or as a shareholder of any corporation, or member of any firm,
solicit or call on any Customer with respect to the Services during the
Restriction Period.
(c) Executive further covenants and agrees that he shall not, either
directly or indirectly, for his own account or either as an agent, servant
or employee, or as a shareholder of any corporation, or member of any firm,
engage, hire, employ or solicit the employment of any employee of, or
independent contractor working for, the Company, or any of its subsidiaries
or affiliates, if any, during the Restriction Period.
(d) As used in this Section 11, the term "Services" shall mean die
goods, merchandise, products, leasing and financing services, training
services and other services of the Company or its successors or assigns (or
any goods, products or services similar thereto), sold, distributed, or
rendered by the Company or its subsidiaries or affiliates at the time the
Executive's employment ceased or during any period six (6) months prior
thereto.
(e) As used in this Section 11, the term "Customer" shall mean all
persons, firms or corporations for whom the Company or its subsidiaries or
affiliates performed Services or to whom the Company or its subsidiaries or
affiliates sold its Services at the time the Executive's employment ceased
or during any period six (6) months prior thereto, notwithstanding die fact
that some or all of such persons, firms or corporations may have been
induced to give their patronage or business to the Company or its
subsidiaries or affiliates by the solicitation of the Executive or due to
Executive's employment by the Company.
(f) If any of the restrictions set forth above should, for any reason
whatsoever, be declared invalid by a court of competent jurisdiction, the
validity or enforceability of the remainder of such restrictions shall not
thereby be adversely affected.
(g) The Executive recognizes that the foregoing territorial and time
limitations are reasonable and property required for the adequate
protection of the business of the Company, and that in the event that any
such territorial or time limitation is found to be unreasonable by a court
of competent jurisdiction, then the Executive agrees and submits to the
reduction of either said territorial or time limitation to such an area or
period as the court shall find reasonable.
(h) In the event that the Executive shall be in violation of the
aforementioned
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restrictive covenants, then the time limitation thereof in respect of
the Executive shall be extended for a period of time equal to the
period of time during which such breach or breaches should occur, and,
in the event the Company should be required to seek relief from such
breach in any court, board of arbitration or other tribunal, then the
covenant shall be extended for a period of time equal to the pendency
or such proceedings, including all appeals.
(i) Both parties hereto recognize that the services to be
rendered under this Agreement by Executive are special, unique and of
extraordinary character, and that in the event Executive performs
services for any person, firm or corporation engaged in a competing
line of business with the Company in violation of the covenants of this
Section I I hereof, then the Company shall be entitled, if it so
elects, to institute and prosecute proceedings in any court or
competent jurisdiction, either in law or in equity, to obtain damages
for breach of this Agreement, or to enjoin Executive from performing
services for any such other person, firm or corporation.
12. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a) Executive understands and hereby acknowledges that, as a
result of his employment with the Company, he will necessarily become
informed of, and have access to, confidential information of the
Company including, without limitation, its computer programs and
software, inventions, discoveries, processes, trade secrets, technical
information, know-how, plans, specifications, identity of customers and
identity of suppliers, and that such information, even though it may be
developed or otherwise acquired by Executive, is the exclusive property
of the Company to be held by Executive in trust and solely for the
Company's benefit. Accordingly, Executive hereby agrees that he shall
not, at any time, either during or subsequent to his employment
hereunder, use, copy, reveal, report, publish, transfer or otherwise
disclose to any person, corporation or other entity, any of the
Company's confidential information without the prior written consent of
the Company, except for use on behalf of the Company in connection with
the Company's business. Notwithstanding the foregoing, the provisions
of this Section shall not apply to any information which (i) becomes
generally available to the public other than as a result of disclosure
by Executive; (ii) was available on a nonconfidential basis prior to
its disclosure to Executive by the Company or its representatives, or
(iii) becomes available to Executive on a nonconfidential basis from, a
source other than the Company or its representatives provided that such
source is not bound by a confidentiality agreement with the Company or
its representatives. For the purposes of this Section, the term "the
Company" shall also mean and include its parents, subsidiaries, joint
ventures and other affiliates. The obligations of this Section shall
also apply to proprietary or confidential information of another party
which the Company receives in the normal course of Executive's
employment with the Company.
(b) Because the Company does not have an adequate remedy at law
to protect its interests in its trade secrets, privileged, proprietary
or confidential information and similar commercial assets, the Company
shall be entitled to injunctive relief, in addition to such other
remedies and relief that would, in the event of a breach of the
provisions of this Agreement, be available to the Company. In the event
of such a breach, in addition to any other remedies, the Company shall
be entitled to receive from Executive payment of, or reimbursement for,
its reasonable attorneys' fees and disbursements incurred in enforcing
any such provision.
13. COPYRIGHTS, INVENTIONS, ETC. Any interest in patents, patent
applications, inventions, copyrights, developments, and processes that
Executive may develop during the term hereof relating to
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the fields in which the Company may then be engaged (the "Covered
Developments") shall belong to the Company; and forthwith upon request of
the Company, Executive shall execute all such assignments and other
documents and take all such other action as the Company may reasonably
request in order to vest in the Company all his right, title, and interest
in and to the Covered Developments free and clear of all liens, charges,
and encumbrances.
14. COMPANY PROPERTY. Executive acknowledges that all Company manuals,
hand-books, benefits information and other property provided for the use of
Executive are the property of the Company. Upon termination or whenever
requested, Executive shall immediately return any and all Company property
which is in the Executive's possession or control.
15. PRIOR COMMITMENTS. Executive hereby warrants and represents that
he is free to enter into the Company's employ and that there are no
employment contracts or restrictive covenants preventing full performance
of Executive's duties hereunder. Executive agrees that he will not disclose
to the Company or induce the Company to use any trade secrets or other
proprietary or confidential information that may have been gained by
Executive during any prior employment which he is under a written
obligation not to disclose.
16. CONFLICT OF INTEREST.
(a) Executive affirms that, except as explained fully in the
attached Exhibit A, Executive is not involved in any situation which
might create or appear to create a conflict of interest with the
Company, including but not limited to:
(i) Being connected directly or indirectly with any business
(as owner, officer, director, participant, licensee, consultant,
shareholder or as the recipient of wages, commissions, or other
compensation of value) that sells or provides materials,
equipment, or facilities to the Company, or that is a customer of
the Company. (Shares of stock in publicly held companies acquired
by Executive as a part of his normal investment program may be
excluded);
(ii) Acquiring directly or indirectly through ownership or
lease any property, real estate or facilities in which the
Company has an active or potential interest; or
(iii) Speculating or commercially dealing in the products
(e.g., new, used, obsolete, or scrap) sold by the Company or in
any used property (e.g., equipment, facilities and furniture) of
the Company.
(b) Executive agrees that during his employment with the
Company he will report immediately any gifts, entertainment, or
any other personal favors or preferments given to or received
from anyone with whom the Company has or is likely to have any
business dealings, including an employee, prospective employee,
customer, competitor, or vendor, which go beyond common
courtesies usually associated with accepted business practice.
(c) Executive further agrees to report immediately any
circumstances or situations arising in the future that might involve
him or appear to involve him in a conflict of interest.
17. BINDING EFFECT. Executive's rights and obligations under
this Agreement shall not be transferable by assignment or otherwise, such
rights shall not be subject to commutation, encumbrance,
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or the claims of Executive's creditors, and any attempt to do any of the
foregoing shall be void.
18. NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing and shall be mailed by certified
mail, return receipt requested, or delivered by hand or overnight courier
against receipt to the party to whom it is to be given at the address of
such party set forth below their signature hereto (or to such other address
as the party shall have furnished in writing in accordance with the
provisions of this Section 18) and in the case of the Company, with a copy
to Xxxxxx X. Xxxxxx, Esq., Xxxxx Xxxxxxx PC, 000 Xxxxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx 00000. Notice to the estate or beneficiaries of Executive shall be
sufficient if addressed to Executive as provided in this Section 18. Any
notice or other communication under this Agreement shall be deemed given
upon receipt, unless such notice or other communication was given by
certified mail, in which case it shall be deemed given three days after
mailing, except for a notice changing a party's address which shall be
deemed given at the time of receipt thereof.
19. WAIVER. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of
this Agreement. The failure of a party to insist upon strict adherence to
any term of this Agreement on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing, signed by the party giving such waiver.
20. ENTIRE AGREEMENT AND ChANGES. This Agreement constitutes and
expresses the entire agreement of the parties relevant to the employment of
the Executive by the Company and supersedes any prior agreement or
discussions. This Agreement may not be changed orally, but only by
agreement in writing signed by the party against whom enforcement of any
waiver, change, modification or discharge is sought.
21. SEVERABILITY OF PROVISIONS. If any of the provisions of this
Agreement shall be held invalid, the remainder of this Agreement shall not
be affected thereby.
22. GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Michigan without regard to its principles of conflicts of
laws.
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IN WITNESS WHEREOF, the Company has by its appropriated officer
executed this Agreement and Executive has executed this Agreement, on and
as of the day and year first above written.
CAPICORN CAPITAL GROUP, INC.
By:
---------------------------------
Xxxxxxx X. Xxxxx, Xx., Chairman
Address:
-----------------------------
EXECUTIVE:
---------------------------------
Xxxxx X. Xxxxx
Address:
-----------------------------
-----------------------------
The undersigned, although not a party to this Agreement, agrees to the
provisions contained in Section 4 as they apply to it.
NATIONAL TECHTEAM, INC.
By:
--------------------------------
Xxxxxxx X. Xxxxx, Xx., Chairman
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EXHIBIT A
CONFLICTS OF INTEREST
---------------------
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XXXXX X. XXXXX
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made and entered into as of this 31st day of January,
1998 by and between NATIONAL TECHTEAM, INC., a Delaware corporation (the
"Company"), and XXXXX X. XXXXX ("Optionee").
WITNESSETH:
-----------
WHEREAS, on January 16, 1998, the Board of Directors of the Company
granted certain stock options to Optionee which will become effective if
the Company acquires Capricorn Capital Group, Inc., a Michigan corporation
of which Optionee is an officer ("Capricorn"); and
WHEREAS, the Company has now had the closing for its acquisition of
Capricorn; and
WHEREAS, the parties wish to set forth the tam of those options in a
separate agreement
NOW THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties hereto agree as
follows.
1 Options Granted to Optionee. Company has granted Optionee options
(the "Options") to purchase up to 15,000 shares of the Company's Common
Stock at an exercise price of $10.00 per share.
2. Term of Options. Subject to the terms and conditions contained
herein, the Options shall be exercisable in whole or in part at any time
during the period beginning on their respective Initial Exercise Date (as
determined below), and ending January 31, 2003. The Initial Exercise Date
for the Options shall be determined as follows: Options for 5,000 Shares
will become exercisable on January 31, 1999, Options for 5,000 Shares will
become exercisable on January 31, 2000 and Options for the final 5,000
Shares will become exercisable on January 31, 2001. All of the Options will
remain exercisable for their remaining term even in the event of Optionee's
termination of employment, death or disability.
3. Exercise of Options
(a) No exercise of any Option hereunder may be made unless a
registration statement on an appropriate form to register the shares
underlying the Option under the Securities Act of 1933 and applicable state
securities laws is in effect or a valid exemption from such registration is
available. Prior to the issuance of the stock to Optionee upon the exercise
of the Options, Optionee shall execute and deliver to the Company any
investment letter or other instrument that is required by the Company in
order to ensure compliance with die Securities Act of 1933 and applicable
state securities laws.
(b) To exercise an Option, Optionee must give written notice to the
Company of the number of shares to be purchased, accompanied by cash or
check payable to die Company for the full exercise price of such shares.
The date of actual receipt by the Company of such notice shall be deemed
the date of exercise of the Options with respect to the shares being
purchased.
(c) The Company may also require Optionee to pay any withholding taxes
that are due upon Optionee's exercise of any Options.
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(d) During Optionee's lifetime, only Optionee may exercise the
Options. After Optionee's death, the Options may be exercised only by
persons to whom the Options had been transferred by will or by laws of
descent and distribution. The Options are not otherwise transferable.
4. Restrictions on Shares. The Company agrees that, before the Vesting
Date of any Options, it will use its best efforts to have the shares that
are then issuable upon the exercise of the Options included in a
registration statement on Form S-8 that is declared effective under the
Securities Act of 1933 so that those shares may be freely transferred by
Optionee. However, if Optionee's employment with the Company or any of its
subsidiaries terminates and Form S-8 is not available for use as a result
of that termination of employment, the Company will not be required to
register those shares on another form of registration statement. Optionee
acknowledges that, if the shares purchased pursuant to the exercise of the
Options are not registered under the Securities Act of 1933, as amended, or
the securities laws of any state, they may not be sold by Optionee unless
they are registered under those laws or exemptions from such registration
are available. Prior to the issuance of the stock to Optionee upon the
exercise of the Options, the Optionee shall execute and deliver to die
Company any investment letter or other instrument requested by the Company
in order to ensure compliance with the Securities Act of 1933 and
applicable state securities laws.
5. Change in Capitalization. In the event the Company effects a
division or combination of its outstanding shares of Common Stock or
declares and pays a dividend payable solely in shares of Common Stock, then
the amount of shares subject to the Options and the option price per share
shall be equitable and proportionately adjusted by the Board of Directors
so as to preserve, to the maximum extent possible, the economic terms
hereof before giving effect to such stock dividend, division or
combination.
6. Merger or consolidation. In the event the Company is proposed to
be merged or consolidated with any other corporation or legal entity, and
the Company is not the surviving legal entity of such merger or
consolidation, then the Chairman or any other officer appointed by the
Chairman shall give notice to the Optionee and the Optionee shall have the
opportunity to exercise this option prior to the effective date thereof.
If not so exercised, then this option shall terminate and expire
concurrently with the effective date of such merger or consolidation,
unless otherwise expressly agreed in writing by the other corporation(s) or
entities which are party to such merger or consolidation.
7. No Obligation to Exercise Option. The grant and acceptance
of the Options impose no obligation on the Optionee to exercise any or all
of them.
8. No Obligation to Continue Employment. By granting these Options,
the Company and any related corporation are not obligated to have the
Optionee continue as an employee of the Company and/or any related
corporation.
9. No Rights as Stockholder until Exercise. The Optionee shall have
no rights as a stockholder with respect to shares subject to this Agreement
until a stock certificate therefor has been issued to the Optionee and is
fully paid for.
10. Binding Effect. The rights and obligations of the Company under
this Agreement shall inure to the benefit of and shall be binding upon the
successors and assigns of the Company, and the Optionee, his estate, legal
representative, heirs and distributees but the Optionee's rights hereunder
are personal to him and shall not be subject to voluntary or involuntary
alienation, assignment or transfer.
11. Entire Agreement. This Agreement and the Plan contain all of
the terms of the stock options
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granted to Optionee.
12. Governing Law; Severability. This Agreement shall be governed by
the laws of the State of Michigan without reference to its principles of
conflicts of laws. If any terms hereof shall be determined to be null and
void, ineffectual, invalid or unenforceable by any competent tribunal, the
remaining terms hereof shall continue in full force and effect.
13. Multiple Copies. This Agreement is made in multiple copies,
each of which shall constitute an original.
14. Notices. Any notice required to be given or made to a party
hereunder must be in writing and personally delivered or sent by United
States first class mail to the address of each party appearing below its
signature hereto or to such other address as may be designated in writing
from time to time by a party to the other.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
OPTIONEE: NATIONAL TECHTEAM, INC.
By:
------------------ ------------------
Xxxxx X. Xxxxx Xxxxxxx Xxxxx, President
Address: 000 Xxxxx Xx., Xxxxx 000
------------------ Xxxxxxxx, XX 00000
------------------
------------------
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