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Exhibit 10.17
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is made and entered
into as of October 20, 1999 by and among (i) Xxxxxxxx.xxx Incorporated, a New
York corporation ("Parent"), (ii) XxxxxxxXxxx.xxx Incorporated, a Delaware
corporation and a direct, wholly-owned subsidiary of Parent ("Merger Sub"),
(iii) Student Success, Inc., a Wisconsin corporation (the "Company"), and (iv)
Xxxxxxxx X. Xxxxx ("Xxxx Xxxxx"), Xxxxxxx X. X'Xxxxx ("Xxx X'Xxxxx) and the
Xxxxxxx X. X'Xxxxx Stock Trust (the "O'Brien Trust"; together with Xxxx Xxxxx
and Xxx X'Xxxxx, the "Shareholders").
RECITALS
A. The Boards of Directors of each of the Company, Parent and Merger
Sub, believe it is in the best interests of each company and their respective
shareholders that the Company and Merger Sub combine into a single company
through the statutory merger of the Company with and into the Merger Sub (the
"Merger") and, in furtherance thereof, have approved the Merger.
B. Pursuant to the Merger, among other things, the outstanding shares
of Common Stock of the Company ("Company Common Stock") shall be converted into
the right to receive cash and shares of Common Stock of Parent ("Parent Common
Stock") at the rate determined herein.
C. The Company, Parent and Merger Sub desire to make certain
representations and warranties and other agreements in connection with the
Merger.
D. Concurrent with the execution of this Agreement, as a material
inducement to Parent to enter into this Agreement, (i) Xxxx Xxxxx and Xxx
X'Xxxxx each are entering into employment agreements with Parent ("Employment
Agreements") substantially in the form attached hereto as Exhibit A and (ii) the
Shareholders each are entering into support agreements with Parent ("Support
Agreements") substantially in the form attached hereto as Exhibit B.
E. The parties intend, by executing this Agreement, to adopt a plan of
merger within the meaning of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the parties agree as follows:
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ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2), and
subject to and upon the terms and conditions of this Agreement, the applicable
provisions of the General Corporation Law of the State of Delaware ("Delaware
Law") and the applicable provisions of the Wisconsin Business Corporation Law
("Wisconsin Law"), the Company shall be merged with and into the Merger Sub, the
separate corporate existence of the Company shall cease and the Merger Sub shall
continue as the surviving corporation. The Merger Sub as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation." The name of the Surviving Corporation shall be
XxxxxxxXxxx.xxx Incorporated.
1.2 Effective Time. As promptly as practicable after the satisfaction
or waiver of the conditions set forth in Article VI, the parties hereto shall
cause the Merger to be consummated by (i) filing a Certificate of Merger,
substantially in the form attached hereto as Exhibit C (the "Delaware Filing"),
with the Secretary of State of the State of Delaware, in accordance with the
relevant provisions of Delaware Law, and (ii) filing Articles of Merger,
substantially in the form attached hereto as Exhibit D (the "Wisconsin Filing"),
with the Department of Financial Institutions of the State of Wisconsin, in
accordance with the relevant provision of Wisconsin Law. The later to occur of
(i) the filing of the Delaware Filing and (ii) the Wisconsin Filing is
hereinafter sometimes referred to as (the "Effective Time"). The Closing of the
transaction contemplated hereby ("Closing") shall take place on or about the
Effective Time at the offices of Xxxxx, Xxxx & Xxxxx LLP, or at such other time,
date and location as the parties hereto agree ("Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law and Wisconsin Law. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) Unless otherwise determined by Parent prior to the
Effective Time, at the Effective Time the Certificate of Incorporation of the
Merger Sub, as in effect at the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation.
(b) The Bylaws of the Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended.
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1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be Xxxxxxx X. Xxxxxx and Xxxxx X. High, each to hold office in
accordance with the Certificate of Incorporation and Bylaws of the Surviving
Corporation. The initial officers of the Surviving Corporation, in each case
until their respective successors are duly elected or appointed and qualified,
shall be:
Xxxxxx X. Xxxxxxx President
Xxxxxxx Xxxxxxx Vice President - Operations
Xxxxx Xxxxxxx Vice President - College Relations
Xxxxx Xxxxxxx Vice President - High School Relations
Xxxxxxxx X. Xxxxx Vice President - Sales
Xxxxxxx X. X'Xxxxx Vice President - Marketing
Xxxxxxx Xxxx Vice President - Network Operations
Xxxxxxx Xxxx Vice President - Business Development
Xxxxxxx X. Xxxxxxx Vice President
Xxxxxx X. Xxxxx Treasurer
Xxxxxxx X. Xxxxxx Secretary
Xxxxxx X. Xxxxxxx Assistant Secretary
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, the Company or the
holders of any of the following securities:
(a) Merger Consideration. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time except as
provided in Sections 1.6(c) and 1.6(d) and any Dissenting Shares (as defined and
to the extent provided in Section 1.7(a)) will be canceled and extinguished and
be converted automatically into the right to receive:
(i) a cash payment ("Cash Payment"); and
(ii) that number of shares of Parent Common Stock
equal to the Exchange Ratio.
Such consideration is hereinafter sometimes collectively referred to as the
"Merger Consideration."
The Exchange Ratio shall equal (i) (A) $4,500,000 divided by (B) the
per share public offering price of the Parent Common Stock in the Secondary
Offering (as defined in Section 6.3(h)) before underwriters' discounts and
expenses (rounded up to the nearest whole share)("Offering Price"), divided by
(ii) the number of shares of Company Common Stock outstanding as of the
Effective Time.
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The Cash Payment shall equal (i) $3,500,000, less (A) all expenses
including, without limitation, all legal and accounting fees and expenses, of
the Company and of the Shareholders relating to the transactions contemplated
hereby (other than the payment of the reasonable expenses incurred by the
Company for audit of its financial statements to be included in the Parent's
pending registration statement (SEC File No. 333-85079) and up to $25,000 for
the Company's reasonable legal expenses) and (B) any payments made by the Parent
pursuant to Section 5.12 if the Closing occurs on or before January 15, 2000
divided by (ii) the number of shares of Company Common Stock outstanding as of
the Effective Time.
(b) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
(c) Fractional Shares. No fraction of a share of Parent Common
Stock will be issued, but in lieu thereof each holder of shares of Company
Common Stock who would otherwise be entitled to a fraction of a share of Parent
Common Stock (after aggregating all fractional shares of Parent Common Stock to
be received by such holder) shall receive from Parent an amount of cash (rounded
to the nearest whole cent) equal to the product of (i) such fraction, multiplied
by (ii) the Offering Price.
(d) Treasury Stock. Each outstanding share of Company Common
Stock held by the Company as treasury stock immediately prior to the Effective
time shall be canceled without payment.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of capital stock of the Company held by a holder who has
exercised dissenters' rights for such shares in accordance with Wisconsin Law
and who, as of the Effective Time, has not effectively withdrawn or lost such
dissenters rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive the Merger Consideration pursuant to Section 1.6,
but the holder thereof shall only be entitled to such rights as are granted by
Wisconsin Law.
(b) Notwithstanding the provisions of subsection (a), if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) his or her dissenters' rights, then, as of the later of
the Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration and payment for fractional shares as provided in Section
1.6, without interest thereon, upon surrender of the certificate representing
such shares.
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(c) The Company shall give Parent (i) prompt notice of any
written demand received by the Company to require the Company to purchase shares
of the Company's Common Stock pursuant to the applicable provisions of Wisconsin
Law and (ii) the opportunity to participate in all negotiations and proceedings
with respect to such demands. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to any such
demands or offer to settle or settle any such demands.
1.8 Surrender of Certificates.
(a) Exchange Agent. Xxxxx, Xxxx & Xxxxx LLP shall act as
exchange agent ("Exchange Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the
Effective Time, Parent shall make available to the Exchange Agent for exchange
in accordance with this Article I, through such reasonable procedures as Parent
may adopt, the shares of the Merger Consideration issuable pursuant to Section
1.6 in exchange for outstanding shares of Company Common Stock.
(c) Exchange Procedures. At or before the Effective Time, each
holder of a certificate or certificates ("Certificates") which immediately prior
to the Effective Time represented outstanding shares of Company Common Stock
shall surrender to the Exchange Agent for cancellation the Certificates, duly
endorsed to Parent or accompanied by duly executed stock powers and assignments
separate from certificate transferring title to such shares to Parent. Promptly
after the Effective Time, and against receipt of such Certificates, the Exchange
Agent shall issue to each tendering holder of a Certificate a certificate for
the number of shares of Parent Common Stock to which such holder is entitled and
payment in lieu of fractional shares pursuant to Section 1.6 hereof and the
Certificate so surrendered shall forthwith be canceled. To the extent that any
holder of a Certificate does not so surrender such Certificate at or before the
Effective Time, then promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each holder of record of Certificates,
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent after the Effective Time, or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing the number of whole
shares of Parent Common Stock, the Cash Payment, and payment in lieu of
fractional shares which such holder has the right to receive pursuant to Section
1.6, and the Certificate so surrendered shall forthwith be canceled. Until so
surrendered, each outstanding Certificate that, prior to the Effective Time,
represented shares of Company Common Stock will be deemed from and after the
Effective Time, for all corporate purposes,
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other than the payment of dividends, to evidence the right to receive the Cash
Payment and the ownership of the number of full shares of Parent Common Stock
into which such shares of Company Common Stock shall have been so converted and
the right to receive an amount in cash in lieu of the issuance of any fractional
shares in accordance with Section 1.6.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the date of this
Agreement with respect to Parent Common Stock with a record date after the
Effective Time will be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby until the
holder of record of such Certificate shall surrender such Certificate. Subject
to applicable law, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing whole shares of
Parent Common Stock issued in exchange therefor, without interest, at the time
of such surrender, the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole shares
of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefore is registered, it will be a
condition of the issuance thereof that the certificate so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the person
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of a certificate
for shares of Parent Common Stock in any name other than that of the registered
holder of the certificate surrendered, or established to the satisfaction of
Parent or any agent designated by it that such tax has been paid or is not
payable.
(f) No Liability. Notwithstanding anything to the contrary in
this Section 1.8, none of the Exchange Agent, the Surviving Corporation or any
party hereto shall be liable to a holder of shares of Company Common Stock for
any amount properly paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
1.9 No Further Ownership Rights in Company Common Stock. The Cash
Payment and the shares of Parent Common Stock issued upon the surrender for
exchange of shares of Company Common Stock in accordance with the terms hereof
(including any cash paid in respect thereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such shares of Company Common
Stock, and there shall be no further registration of transfers on the records of
the Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any
certificates evidencing shares of Company Common Stock shall have been lost,
stolen or destroyed, the Exchange
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Agent shall issue in exchange for such lost, stolen or destroyed certificates,
upon the making of an affidavit of that fact by the holder thereof, such shares
of Parent Common Stock and cash for fractional shares, if any, as may be
required pursuant to Section 1.6; provided, however, that Parent may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver a bond in such
sum as it may reasonably direct as indemnity against any claim that may be made
against Parent or the Exchange Agent with respect to the certificates alleged to
have been lost, stolen or destroyed.
1.11 Tax and Accounting Consequences. It is intended by the parties
hereto that the Merger shall constitute a reorganization within the meaning of
Section 368 of the Internal Revenue Code of 1986. The parties shall not take a
position on any tax returns inconsistent with this Section 1.11.
1.12 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action, so long as such action is consistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company and the Shareholders represent and warrant to Parent and
Merger Sub, subject to the exceptions set forth in the Disclosure Schedule
attached hereto as Exhibit E ("Company Disclosure Schedule") as follows:
2.1 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wisconsin. The Company has the corporate power to own its property and to carry
on its business as now being conducted and as proposed to be conducted by the
Company. Except as set forth in Section 2.1 of the Company Disclosure Schedule,
the Company is duly qualified to do business and in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, assets (including intangible
assets), financial condition, results of operations or prospects ("Material
Adverse Effect") of the Company. The Company has delivered a true and correct
copy of its Certificate of Incorporation and Bylaws, each as amended to date, to
counsel for Parent.
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2.2 Company Capital Structure. Immediately prior to the Effective Time,
the authorized capital stock of the Company consists of 9,000 shares of Common
Stock, without par value. There are 1,000 shares of the Company Common Stock
issued and outstanding held by the persons, and in the amounts, set forth on
Exhibit F. At the time of the Closing, such list shall have been appropriately
adjusted to reflect any option exercises and stock repurchases since the date
hereof. No shares of any holder were subject to repurchase upon termination of
employment as of the Effective Time. All outstanding shares of Company Common
Stock are duly authorized, validly issued, fully paid and non-assessable and not
subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of the Company or any agreement to which the Company is
a party or by which it is bound. There are no other options, warrants, calls,
rights, commitments or agreements of any character to which the Company is a
party or by which it is bound obligating the Company to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of the Company or obligating the
Company to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment
or agreement.
2.3 Subsidiaries. The Company does not have and has never had any
subsidiaries or affiliated companies and does not otherwise own and has never
otherwise owned any shares of stock or any interest in, or control, directly or
indirectly, any other corporation, partnership, association, joint venture or
business entity.
2.4 Authority.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval of the Merger by the Company's shareholders as contemplated by
Section 6.1(a). This Agreement has been duly executed and delivered by the
Company and constitutes the valid and binding obligation of the Company. Except
as set forth in Section 2.4 of the Company Disclosure Schedule, the execution
and delivery of this Agreement by the Company does not, and the consummation of
the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or
both), or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any benefit under (i) any provision of the Certificate
of Incorporation, as amended, or Bylaws of the Company or (ii) any other
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company or its properties or
assets. No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity"), is
required by or with respect to the Company in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for (i) the filing
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of the Delaware Filing with the Secretary of State of the State of Delaware,
(ii) the Wisconsin Filing with the Department of Financial Institutions of the
State of Wisconsin, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not have a Material Adverse Effect on the
Company.
(b) Each of the Shareholders has all requisite power and
authority to enter into this Agreement and any Related Agreements (as defined in
Section 6.1(e)) to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and any Related Agreements to which each Shareholder is a party and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of such Shareholder, and no
further action is required on the part of such Shareholder to authorize the
Agreement, any Related Agreement to which it is a party and the transactions
contemplated hereby and thereby. This Agreement and any Related Agreements to
which such Shareholder is a party have been duly executed and delivered by such
Shareholder, and, assuming the due authorization, execution and delivery by the
other parties hereto and thereto, constitute the valid and binding obligation of
such Shareholder, enforceable in accordance with their respective terms, subject
to the laws of general application relating to bankruptcy insolvency and the
relief of debtors and to rules of law governing specific performance, injunctive
relief or other equitable remedies.
2.5 Company Financial Statements. Section 2.5 of the Company Disclosure
Schedule sets forth the Company's unaudited financial statement for the fiscal
years ending December 31, 1997 and 1998 and the Company's unaudited financial
statements for the 8 months ended August 31, 1999 (collectively, the "Financial
Statements"). The Financial Statements are complete and correct in all material
respects and have been prepared in accordance with the books and records of the
Company using accounting principles applied on a basis consistent throughout the
periods indicated and consistent with each other. The Financial Statements
present fairly the financial condition and operating results of the Company as
of the dates and during the periods indicated therein. The unaudited balance
sheet of the Company as of August 31, 1999 is hereinafter referred to as the
"Company Balance Sheet."
2.6 No Undisclosed Liabilities. The Company does not have any
liabilities, either accrued or contingent (whether or not required to be
reflected in financial statements), and whether due or to become due, which
individually or in the aggregate, (i) have not been reflected in the Company
Balance Sheet, (ii) have not been specifically described in this Agreement or in
Section 2.6 of the Company Disclosure Schedule, or (iii) are not normal or
recurring liabilities incurred since August 31, 1999 in the ordinary course of
business consistent with past practices.
2.7 No Changes. Since the date of the Company Balance Sheet there has
not been, occurred or arisen any:
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(a) material adverse change in the financial condition,
liabilities, assets, business, or prospects of the Company;
(b) amendments or changes in the Certificate of Incorporation
or Bylaws of the Company;
(c) capital expenditure by the Company, either individually or
in the aggregate, exceeding $50,000;
(d) destruction, damage to, or loss of any assets of the
Company (whether or not covered by insurance) that constitutes a Material
Adverse Effect on the Company;
(e) labor trouble or claim of wrongful discharge of which the
Company has received written notice or of which the Company is aware, or other
unlawful labor practice or action;
(f) change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company;
(g) revaluation by the Company of any of its assets;
(h) declaration, setting aside, or payment of a dividend or
other distribution with respect to the shares of the Company, or any direct or
indirect redemption, purchase or other acquisition by the Company of any of its
shares;
(i) increase in the salary or other compensation payable or to
become payable by the Company to any of its officers, directors or employees, or
the declaration, payment, or commitment or obligation of any kind for the
payment, by the Company, of a bonus or other additional salary or compensation
to any such person;
(j) acquisition, sale or transfer of any material asset of the
Company other than in the ordinary course of business;
(k) amendment or termination of any material contract,
agreement or license to which the Company is a party;
(l) loan by the Company to any person or entity, or guaranty
by the Company of any loan;
(m) waiver or release of any right or claim of the Company,
including any write-off or other compromise of any account receivable of the
Company;
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(n) the commencement or notice or threat of commencement of
any governmental proceeding against or investigation of the Company or its
affairs;
(o) other event or condition of any character that has or
might reasonably be expected to have a Material Adverse Effect on the Company;
(p) issuance or sale by the Company of any of its shares or of
any other of its securities except for issuances or sales as a result of
exercises of stock options granted under the Company Stock Option Plan or rights
previously granted to purchase shares of the Company's capital stock;
(q) change in pricing or royalties set or charged by the
Company; or
(r) negotiation or agreement by the Company to do any of the
things described in the preceding clauses (a) through (q), other than
negotiations with Parent and its representatives regarding the transactions
contemplated by this Agreement.
2.8 Tax and Other Returns and Reports.
(a) For the purposes of this Agreement, "Tax" or "Taxes"
refers to any and all federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities relating to
taxes, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer,
franchise, withholding, payroll, recapture, employment, exercise and property
taxes, together with all interest, penalties and additions imposed with respect
to such amounts and any obligations under agreement or arrangements with any
other person with respect to such amounts and including any liability for taxes
of a predecessor entity.
(b) The Company has timely filed (taking into account
applicable extensions) all federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to Taxes required to
have been filed by the Company and each of its subsidiaries with any Tax
authority, except such Returns which are not material to the Company, and have
paid all Taxes shown to be due on such Returns.
(c) The Company as of the Effective Time will have withheld
with respect to its employees all federal and state income taxes, Taxes pursuant
to the Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the
Federal Unemployment Tax Act ("FUTA") and any other Taxes required to have been
withheld, in all cases to the extent such amounts are materially individually or
in the aggregate.
(d) The Company has not been delinquent in the payment of any
material Tax nor is there any material Tax deficiency outstanding, proposed or
assessed against the Company
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nor has the Company executed any unexpired waiver of any statute of limitations
on or extending the period for the assessment or collection of any Tax.
(e) To the Company's knowledge, no audit or other examination
of any Return of the Company by any Tax authority is presently in progress, nor
has the Company been notified of any request for such an audit or other
examination.
(f) No adjustment relating to any Returns filed by the Company
or any of its subsidiaries has been proposed in writing formally or informally
by any Tax authority to the Company or any representative thereof.
(g) The Company does not have any material liability for
unpaid Taxes which has not been accrued for or reserved on the Company Balance
Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to the Company, other than any liability for unpaid Taxes that may have
accrued since the date of the Company Balance Sheet in connection with the
operation of the business of the Company in the ordinary course.
(h) There is no contract, agreement, plan or arrangement to
which the Company is a party to this Agreement, including, but not limited to,
the provisions of this Agreement, covering any employee or former employee of
the Company that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Sections 280G, 404 or
162(m) of the Internal Revenue Code of 1986, as amended ("Code").
(i) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(j) The Company is not a party to and has no obligation under
any tax-sharing, tax indemnity or tax allocation agreement or arrangement.
(k) Except as may be required as a result of the Merger, the
Company has not been and will not be required to include any material adjustment
in Taxable income for any Tax period (or portion thereof) pursuant to Section
481 or Section 263A of the Code or any comparable provision under state or
foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Closing.
(l) None of the Company's assets are tax exempt use property
within the meaning of Section 168(h) of the Code.
(m) The Company Disclosure Schedule lists (i) any foreign Tax
holidays, (ii) any intercompany transfer pricing agreements, or other
arrangements that have been established by the Company with any Tax authority,
and (iii) any expatriate programs or policies affecting the Company.
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(n) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(o) The Company has been a qualifying S corporation within the
meaning of Section 1361 of the Code (and any similar relevant state or local
statute) at all times since its inception.
(p) The Company has reviewed with the Company's own tax
advisors the federal, state and local tax consequences of the Merger and the
transactions contemplated by this Agreement. The Company is relying solely on
such advisors and not on any statements or representations of the Parent or any
of its agents, and understands that the Company (and not the Parent) shall be
responsible for the Company's own tax liability that may arise as a result of
the transactions contemplated by this Agreement.
2.9 Restrictions on Business Activities. There is no material
agreement, judgment, injunction, order or decree binding upon the Company which
has or could reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company, any acquisition of
property by the Company or the conduct of business by the Company as currently
conducted or as currently proposed to be conducted.
2.10 Title of Properties, Absence of Liens and Encumbrances; Condition
of Equipment.
(a) The Company owns no real property. Section 2.10(a) of the
Company Disclosure Schedule sets forth a true and complete list of all real
property leased by the Company, the name of the lessor, the date of the lease
and each amendment thereto and the aggregate annual rental or other fee payable
under any such lease. All such leases are in good standing, valid and effective
in accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or event which with
notice or lapse of time, or both, would constitute a material default and in
respect of which the Company has not taken adequate steps to prevent such
default from occurring), except where the lack of such good standing, validity
and effectiveness or the existence of such default or event of default would not
have a Material Adverse Effect on the Company.
(b) The Company has good and valid title to, or, in the case
of leased properties and assets, valid leasehold interests in, all of its
material tangible properties and assets, real, personal and mixed, used in its
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in Section 2.10(b) of the Company
Disclosure Schedule and except for such imperfections of title and encumbrances,
if any, which are not substantial in character, amount or extent, and which do
not materially detract from the value, or interfere with the present use, of the
property subject thereto or affected thereby.
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(c) Section 2.10(c) of the Company Disclosure Schedule sets
forth all equipment ("Equipment") owned or leased by the Company except
equipment with an aggregate value of less than $10,000. The Equipment is, taken
as a whole, (i) adequate for the conduct of the business of the Company
consistent with its past practice, (ii) suitable for the uses to which it is
currently employed, (iii) in good operating condition, normal wear and tear
excepted, (iv) regularly and properly maintained, and (v) not obsolete,
dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business.
2.11 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the
following, in any form and embodied in any media: (i) works of authorship
including, without limitation, computer programs, source code and executable
code, whether embodied in software, firmware or otherwise, documentation,
designs, files, records, data and mask works, (ii) inventions (whether or not
patentable), improvements, and technology, (iii) proprietary and confidential
information, trade secrets and know how, (iv) databases, data compilations and
collections and technical data, (v) logos, trade names, trade dress, trademarks
and service marks, (vi) domain names, web addresses and sites, and (vii) tools,
methods and processes.
"Intellectual Property Rights" shall mean worldwide common law
and statutory rights associated with (i) patents and patent applications, (ii)
copyrights, copyright registrations and copyright applications and "moral"
rights, (iii) the protection of trade and industrial secrets and confidential
information, (iv) other proprietary rights relating to intangible intellectual
property, (y) trademarks, trade names and service marks, (vi) analogous rights
to those set forth above, and (vii) divisions, continuations, renewals,
reissuances and extensions of the foregoing (as applicable) now existing or
hereafter filed, issued or acquired.
"Company Intellectual Property" shall mean any Intellectual
Property and Intellectual Property Rights that are owned by or exclusively
licensed to the Company.
"Registered Intellectual Property Rights" shall mean
Intellectual Property Rights that have been registered, filed, certified or
otherwise perfected by recordation with any state, government or other public
legal authority.
(a) Section 2.11(a) of the Company Disclosure Schedule
lists-all Registered Intellectual property owned by, or filed in the name of,
the Company ("Company Registered Intellectual Property") and lists any
proceedings or actions before any court, tribunal (including the United States
Patent and Trademark Office ("PTO") or equivalent authority anywhere in the
world) related to any of the Company Registered Intellectual Property. Section
2.11(a) of the Company Disclosure Schedule also lists and identifies all
computer software that is owned by the Company (collectively, "Owned Software")
and all computer software (other than Owned
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Software) that is used by the Company for any purpose whatsoever in its business
as presently conducted (collectively, the "Licensed Software"). The Owned
Software and the Licensed Software are collectively referred to as the
"Software".
(b) Each item of the Company Intellectual Property and all
Intellectual Property licensed to the Company, is free and clear of any liens,
pledges, charges, claims, restrictions on transfer, mortgages, security
interests or other encumbrances of any sort (collectively, "Liens") except, in
the case of licensed Intellectual Property, the restrictions set forth in
Section 2.11(b) of the Company Disclosure Schedule. The Company is the exclusive
owner of all Company Intellectual Property.
(c) To the extent that any Intellectual Property has been
developed or created independently or jointly by any person other than the
Company for which the Company has, directly or indirectly, paid, the Company has
a written agreement with such person with respect thereto, and the Company
thereby has obtained ownership of, and is the exclusive owner of, all such
Intellectual Property and associated Intellectual Property Rights by operation
of law or by valid assignment.
(d) The Company has not transferred ownership of or granted
any license of or right to use or authorized the retention of any rights to use
any Intellectual Property or Intellectual Property Rights that is or was Company
Intellectual Property, to any other person, except as provided in Section
2.11(f) below.
(e) The Company Intellectual Property and the Licensed
Software constitutes all the Intellectual Property and Intellectual Property
Rights used in and/or necessary to the conduct of the business of the Company as
it currently is conducted, or is reasonably contemplated by the Company on the
date hereof to be conducted by the Company in the foreseeable future, including,
without limitation, the design, development, manufacture, use, import and sale
of products, technology and services (including products, technology or services
currently under development). The Company has valid licenses to all software
owned by third parties that is used in and/or necessary to the operation of the
Company's products as they are currently used, and the Company is not in default
with respect to any such license.
(f) Other than "shrink-wrap" and similar widely available
third-party, commercial end-user licenses, the contracts, licensees and
agreements listed in Section 2.11(f) of the Company Disclosure Schedule include
all contracts, licenses and agreements to which the Company is a party with
respect to any Intellectual Property and Intellectual Property Rights. No person
who has licensed Intellectual Property or Intellectual Property Rights to the
Company has ownership rights or license rights to improvements made by the
Company in such Intellectual Property which has been licensed to the Company.
(g) Section 2.11(g) of the Company Disclosure Schedule lists
all contracts, licenses and agreements between the Company and any other person
wherein or whereby the
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Company has agreed to, or assumed, any obligation or duty to warrant, indemnify,
reimburse, hold harmless, guaranty or otherwise assume or incur any obligation
or liability or provide a right of rescission with respect to the infringement
or misappropriation by the Company or such other person of the Intellectual
Property Rights of any person other than the Company.
(h) The operation of the business of the Company as it
currently is conducted or is reasonably contemplated to be conducted by the
Company in the foreseeable future, including, but not limited to, the design,
development, use, import, manufacture and sale of the products, technology or
services (including products, technology or services currently under
development) of the Company does not, to the knowledge of the Company and the
Shareholders, infringe or misappropriate the Intellectual Property Rights of any
person, violate the rights of any person (including rights to privacy or
publicity), or constitute unfair competition or trade practices under the laws
of any jurisdiction, and the Company has not received notice from any person
claiming that such operation or any act, product, technology or service
(including products, technology or services currently under development) of the
Company infringes or misappropriates the Intellectual Property Rights of any
person or constitutes unfair competition or trade practices under the laws of
any jurisdiction nor, to the knowledge of the Company and the Shareholders, is
there any reasonable basis therefor.
(i) The Company has no Registered Intellectual Property. In
each case in which the Company has acquired any Intellectual Property rights
from any person, the Company has obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights in such Intellectual Property and
the associated Intellectual Property Rights (including the right to seek past
and future damages with respect thereto) to the Company.
(j) There are no contracts, licenses or agreements between the
Company and any other person with respect to Company Intellectual Property under
which there is any dispute known to the Company or the Shareholders regarding
the scope of such agreement, or performance under such agreement including with
respect to any payments to be made or received by the Company thereunder.
(k) To the knowledge of the Company and the Shareholders, no
person is infringing or misappropriating any Company Intellectual Property.
(l) The Company has taken all commercially reasonable steps in
order to protect the Company's rights in confidential information and trade
secrets of the Company or provided by any other person to the Company. Except as
set forth in Section 2.11(l) of the Company Disclosure Schedule, all current and
former employees, consultants and contractors of the Company who have or have
had access to confidential, proprietary or trade secret information of the
Company ("Recipients") have entered proprietary information, confidentiality and
assignment of inventions agreements with the Company. Section 2.11(l) of the
Company Disclosure Schedule contains a list of all Recipients indicating those
who have signed the
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agreements and those who have not entered into such agreements and the form of
each such agreement.
(m) No Company Intellectual Property, Intellectual Property
Rights or service of the Company is subject to any proceeding or outstanding
decree, order, judgment, agreement or stipulation that restricts in any manner
the use, transfer or licensing thereof by the Company or may affect the
validity, use or enforceability of such Company Intellectual Property.
(n) No (i) product, technology, service or publication of the
Company, (ii) material published or distributed by the Company or (iii) conduct
or statement of Company constitutes obscene material, a defamatory statement or
material, false advertising or, to the knowledge of the Company and the
Shareholders, otherwise violates any law or regulation.
(o) All of the Company's products and services (including
products and services currently under development) will record, store, process,
calculate and present calendar dates falling on and after (and, if applicable,
spans of time including) January 1, 2000, and will calculate any information
dependent on or relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as the products record, store,
process, calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates (collectively,
"Year 2000 Compliant"). All of the Company's products and services (i) will lose
no functionality with respect to the introduction of records containing dates
falling on or after January 1, 2000 and (ii) will be interoperable with other
products and services used and distributed by the Company that may deliver
records to the Company's products or receive records from the Company's
products, or interact with the Company's products, including, but not limited
to, backup and archived data. The Company has described its Year 2000 testing
and compliance programs in Section 2.11(o) of the Company Disclosure Schedule.
All of the Company's internal computer and technology products and systems are
Year 2000 Compliant.
2.12 Agreements, Contracts and Commitments. Except as disclosed in
Section 2.12 of the Company Disclosure Schedule, the Company does not have and
is not a party to:
(a) any collective bargaining agreements,
(b) any agreements that contain any unpaid severance
liabilities or obligations,
(c) any bonus, deferred compensation, incentive compensation,
pension, profit-sharing or retirement plans, or any other employee benefit plans
or arrangements,
(d) any employment or consulting agreement, contract or
commitment with an employee or individual consultant or salesperson or
consulting or sales agreement, contract or commitment with a firm or other
organization, not terminable by the Company on thirty days
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notice without liability, except to the extent general principles of wrongful
termination law may limit the Company's ability to terminate employees at will,
(e) agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement,
(f) any fidelity or surety bond or completion bond,
(g) any lease of personal property except for leases of
equipment with an aggregate value of less than $10,000,
(h) any agreement of indemnification or guaranty not entered
into in the ordinary course of business,
(i) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company to engage in any line of business
or compete with any person,
(j) any agreement, contract or commitment relating to capital
expenditures and involving future obligations in excess of $10,000,
(k) any agreement, contract or commitment relating to the
disposition or acquisition of assets not in the ordinary course of business or
any ownership interest in any corporation, partnership, joint venture or other
business enterprise,
(l) any mortgages, indentures, loans or credit agreements,
security agreements or other agreements or instruments relating to the borrowing
of money or extension of credit, including guaranties referred to in clause (h)
hereof,
(m) any purchase order or contract for the purchase of raw
materials or acquisition of assets involving $10,000 or more,
(n) any construction contracts,
(o) any distribution, joint marketing or development
agreement,
(p) any other agreement, contract or commitment which involves
$10,000 or more and is not cancelable without penalty within thirty (30) days,
or
(q) any agreement which is otherwise material to the Company's
business.
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The Company has not breached, or received in writing any claim or threat
that it has breached, any of the terms or conditions of any agreement, contract
or commitment to which it is bound (including those set forth in any of the
lists separately certified by the Company) in such manner as would permit any
other party to cancel or terminate the same.
2.13 Interested Party Transactions. Except as disclosed in Section 2.13
of the Company Disclosure Schedule, no officer or director of the Company or
person who owns at least ten percent (10%) of the outstanding stock of the
Company (nor any parent, child or spouse of any of such persons, or any trust,
partnership or corporation in which any of such persons has or has had an
interest), has or has had, directly or indirectly, (i) an interest in any entity
which furnished or sold, or furnishes or sells, services or products which the
Company furnishes or sells, or proposes to furnish or sell, or (ii) any interest
in any entity which purchases from or sells or furnish to, the Company, any
goods or services, or (iii) a beneficial interest in any contract or agreement
described in Section 2.12; provided, that ownership of no more than one percent
(1%) of the outstanding voting stock of a publicly traded corporation shall not
be deemed an "interest in any entity" for purposes of this Section 2.13.
2.14 Governmental Authorization. Section 2.14 of the Company Disclosure
Schedule accurately lists each material federal, state, county, local or foreign
governmental consent, license, permit, grant, or other authorization issued to
the Company (i) pursuant to which the Company currently operates or holds any
interest in any of its properties or (ii) which is required for the operation of
its business or the holding of any such interest (herein collectively called
"Company Authorizations"), which Company Authorizations are in full force and
effect and constitute all Company Authorizations required to permit the Company
to operate or conduct its business or hold any interest in its properties.
2.15 Litigation. There is no action, suit, claim or proceeding of any
nature pending, or to the Company's knowledge, threatened against the Company,
its properties or any of its officers or directors, in their capacities as
agents of the Company. There is no investigation pending or, to the Company's
knowledge, threatened against the Company, its properties or any of its officers
or directors, in their capacities as agents of the Company by or before any
governmental entity. No governmental entity has at any time challenged or
questioned the legal right of the Company to manufacture, offer or sell any of
its products in the present manner or style thereof.
2.16 Minute Books. The minute books of the Company made available to
counsel for Parent contain complete and accurate minutes of all meetings of
directors and shareholders or actions by written consent since the time of
incorporation of the Company.
2.17 Brokers' and Finders' Fees. The Company has not incurred, nor will
it incur, directly or indirectly, any liability for brokerage or finders' fees
or agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
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2.18 Insurance. Section 2.18 of the Company Disclosure Schedule lists
all insurance policies and fidelity bonds covering the assets, business,
equipment, properties, operations, employees, officers and directors of the
Company. There is no claim by the Company pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds. All premiums due and payable under all
such policies and bonds have been paid and the Company is otherwise in material
compliance with the terms of such policies and bonds. The Company has no
knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
2.19 Compliance With Laws. Except as to matters of which the Company is
not aware and which do not either individually or in the aggregate result in a
Material Adverse Effect with respect to the Company, the Company has complied
with, is not in violation of, and has not received any notices of violation with
respect to, any federal, state or local statute, law or regulation with respect
to the conduct of its business, or the ownership or operation of its business.
2.20 Complete Copies of Materials. The Company has delivered or made
available true and complete copies of each document (or summaries of same) which
has been requested by Parent or its counsel.
2.21 Binding Agreements; No Default. Except as set forth in Section
2.21 of the Company Disclosure Schedule, each of the contracts, agreements and
other instruments shown on the Exhibits or on any lists or statements set forth
in the Company Disclosure Schedule to which the Company is a party is a legal,
binding, and enforceable obligation by or against the Company (assuming such
contract, agreement or instrument has been duly authorized, executed and
delivered by the other party(ies) thereto), and no party with whom the Company
has an agreement or contract is, to the Company's knowledge, in material default
thereunder or has breached any material terms or provisions thereof (subject to
all applicable bankruptcy, insolvency, reorganization and other laws applicable
to creditors' rights and remedies and to the exercise of judicial discretion in
accordance with general principles of equity).
2.22 Representations Complete. None of the representations or
warranties made by the Company, nor any statement made in any list or other
statement separately certified by the Company, Exhibits or certificates
furnished by the Company pursuant to this Agreement, when all such documents are
read together in their entirety, contains or will contain any untrue statement
of a material fact at the Effective Time, or omits or will omit to state any
material fact necessary in order to make the statements contained herein or
therein, in the light of the circumstances under which made, not misleading.
2.23 Third Party Consents. Except as set forth on Section 2.23 of the
Company Disclosure Schedule, no consent or approval is needed from any third
party in order to effect the Merger, this Agreement or any of the transactions
contemplated hereby.
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2.24 Accounts Receivable Inventory.
(a) The Company has made available to Parent a list of all
accounts receivable of the Company as of August 31, 1999, along with a range of
days elapsed since invoice.
(b) All of the accounts receivable of the Company arose in the
ordinary course or business, are carried at values determined consistent with
the Company's past accounting practices and, to the best of the Shareholders'
knowledge, are collectible except to the extent of reserves therefor set forth
in the Company Balance Sheet. No person has any Lien on any of such accounts
receivable and no request or agreement for deduction or discount has been made
with respect to any of such accounts receivable.
(c) The Company has no inventory to be reflected on the
Company Balance Sheet or on the Company's books and records.
2.25 Environmental Matters.
(a) Hazardous Material. The Company has not: (i) operated any
underground storage tanks at any property that the Company has at any time
owned, operated, occupied or leased; or (ii) illegally released any material
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, and urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws (a
"Hazardous Material"), but excluding office and janitorial supplies properly and
safely maintained. No Hazardous Materials are present as a result of the
deliberate actions of the Company or, to the Company's or the Shareholders'
knowledge, as a result of any actions of any other person or otherwise, in, on
or under any property, including the land and the improvements, ground water and
surface water thereof, that the Company has at any time owned, operated,
occupied or leased.
(b) Hazardous Materials Activities. The Company has not
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing, nor has it disposed of, transported, sold or manufactured
any product containing a Hazardous Material (any or all of the foregoing being
collectively referred to as "Hazardous Materials Activities") in violation of
any rule, regulation, treaty or statute promulgated by any Governmental Entity
in effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
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(c) Permits. The Company currently holds all environmental
approvals, permit, licenses, clearances and consents (the "Environmental
Permits") necessary for the conduct of the Company's Hazardous Material
Activities and other businesses of the Company as such activities and businesses
are currently being conducted.
(d) Environmental Liabilities. No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is pending
or threatened concerning any Environmental permit, Hazardous Material or any
Hazardous Materials Activity of the Company. To the knowledge of the Company and
the Shareholders, there is no fact or circumstance which is reasonably likely to
involve the Company in any environmental litigation or impose upon the Company
any environmental liability.
2.26 Employee Benefit Plans and Compensation.
(a) The following terms shall have the meanings set forth
below:
(i) "Affiliate" shall mean any other person or entity
under common control with the Company within the meaning of Section 414(b), (c),
(m) or (o) of the Code and the regulations issued thereunder;
(ii) "Employee Plan" shall mean any plan, program,
policy, practice, contract, agreement or other arrangement providing for
compensation, severance, termination pay, deferred compensation, performance
awards, stock or stock-related awards, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including, without limitation, each "employee benefit plan,"
within the meaning of Section 3(3) of ERISA which is or has been maintained,
contributed to, or required to be contributed to, by the Company or any
Affiliate for the benefit of any Employee, or with respect to which the Company
or any Affiliate has or may have any liability or obligation;
(iii) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;
(iv) "DOL" shall mean the Department of Labor;
(v) "Employee" shall mean any current or former
employee, consultant or director of the Company or any Affiliate;
(vi) "Employee Agreement" shall mean each management,
employment, severance, consulting, relocation or similar agreement contract or
understanding between the Company or any Affiliate and any Employee;
(vii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;
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(viii) "FMLA" shall mean the Family Medical Leave Act
of 1993, as amended;
(ix) "IRS" shall mean the Internal Revenue Service;
(x) "PBGC" shall mean the Pension Benefit Guaranty
Corporation; and
(xi) "Pension Plan" shall mean each Employee Plan
which is an "employee pension benefit plan," within the meaning of Section 3(2)
of ERISA.
(b) Schedule. Schedule 2.26(b) contains an accurate and
complete list of each Employee Plan and each Employee Agreement. The Company has
no plan or commitment to establish any new Employee Plan or Employee Agreement,
to modify any Employee Plan or Employee Agreement (except to the extent required
by law Agreement), or to enter into any Employee Plan or Employee Agreement.
(c) Documents. The Company has provided to Parent: (i) correct
and complete copies of all documents embodying each Employee Plan and each
Employee Agreement, including (without limitation) all amendments thereto and
all related trust documents; (ii) the three (3) most recent annual reports (form
Series 5500 and all schedules and financial statements attached thereto), if
any, required under ERISA or the Code in connection with each Employee Plan;
(iii) if the Employee Plan is funded, the most recent annual and periodic
accounting of Employee Plan assets; (iv) the most recent summary plan
description together with the summary(ies) of material modifications thereto, if
any, required under ERISA with respect to each Employee Plan; (v) all material
written agreements and contracts relating to each Employee Plan, including, but
not limited to, administrative service agreements and group insurance contracts;
(vi) all communications material to any Employee or Employees relating to any
Employee Plan and any proposed Employee Plans, in each case, relating to any
amendments, terminations, establishments, increases or decreases in benefits,
acceleration of payments or vesting schedules or other events which would result
in any liability to the Company; (vii) all correspondence to or from any
governmental agency relating to any Employee Plan; (vii) all COBRA forms and
related notices; (ix) all policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Employee Plan; and (x) all discrimination
tests for each Employee Plan for the most recent plan year.
(d) Employee Plan Compliance. (i) The Company has performed in
all material respects all obligations required to be performed by it under, is
not in default or violation of, and the Company and Shareholders have no
knowledge of any default or violation by any other party to each Employee Plan,
and each Employee Plan has been established and maintained in accordance with
its terms and in substantial compliance with all applicable laws, statutes,
orders, rules and regulations, including, but not limited to, ERISA and the
Code; (ii) no
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"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Employee Plan; (iii) there are no
actions, suits or claims pending or threatened nor is there any basis therefor
(other than routine claims for benefits) against any Employee Plan or against
the assets of any Employee Plan; (iv) each Employee Plan can be amended,
terminated or otherwise discontinued after the Closing in accordance with its
terms, without liability to Parent, the Company or any Affiliate (other than
ordinary administration expenses); (v) there are no audits, inquiries or
proceedings pending or threatened by the IRS or DOL with respect to any Employee
Plan; and (vi) neither the Company nor any Affiliate is subject to any penalty
or tax with respect to any Employee Plan under Section 502(i) of ERISA or
Sections 4975 through 4980 of the Code.
(e) No Pension Plans. Neither the Company nor any Affiliate
has ever maintained, established, sponsored, participated in, or contributed to,
any Pension Plan subject to Title IV of ERISA.
(f) No Post-Employment Obligations. No Employee Plan provides,
or reflects or represents any liability to provide, retiree life insurance,
retiree health or other retiree employee welfare benefits to any person for any
reason, except as may be required by COBRA or other applicable statute, and the
Company has never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees as a group)
or any other person that such Employee(s) or other person would be provided with
retiree life insurance, retiree health or other retiree employee welfare
benefit, except to the extent required by statute.
(g) COBRA. Neither the Company nor any Affiliate has, prior to
the Closing, violated any of the health care continuation requirements of COBRA,
the requirements of FMLA or any similar provisions of state law applicable to
its Employees.
(h) Effect of Transaction. The execution of this Agreement and
the consummation of the transactions contemplated hereby will not (either alone
or upon the occurrence of any additional or subsequent events) constitute an
event under any Employee Plan, Employee Agreement, trust or loan that will or
may result in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any Employee.
(i) Employment Matters. The Company: (i) is in compliance in
all material respects with all applicable foreign, federal, state and local
laws, rules and regulations respecting employment, employment practices, terms
and conditions of employment and wages and hours, in each case, with respect to
Employees; (ii) has withheld and reported all amounts required by law or by
agreement to be withheld and reported with respect to wages, salaries and other
payments to Employees; (iii) is not liable for any arrears of wages or any taxes
or any penalty for failure to comply with any of the foregoing; and (iv) is not
liable for any payment to any trust or
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other fund governed by or maintained by or on behalf of any governmental
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for Employees (other than routine payments to
be made in the normal course of business and consistent with past practice). To
the knowledge of the Company and the Shareholders, there are no pending,
threatened or reasonably anticipated claims or actions against the Company under
any worker's compensation policy or long-term disability policy, nor is there
any reasonable basis therefor.
(j) Labor. No work stoppage or labor strike against the
Company is pending or threatened, nor is there any reasonable basis therefor.
The Company does not know of any activities or proceedings of any labor union to
organize any Employees. There are no actions, suits, claims, labor disputes or
grievances pending or reasonably anticipated relating to any labor, safety or
discrimination matters involving any Employee, including, without limitation,
charges of unfair labor practices or discrimination complaints. Since inception,
the Company has not engaged in any unfair labor practices within the meaning of
the National Labor Relations Act. The Company is not presently, nor has it been
in the past, a party to, or bound by, any collective bargaining agreement or
union contract with respect to Employees and no collective bargaining agreement
is being negotiated by the Company.
(k) No Interference or Conflict. No shareholder, officer,
employee or consultant of the Company is obligated under any contract or
agreement or is subject to any judgment, decree or order of any court of
administrative agency that would interfere with such person's efforts to promote
the interests of the Company or that would interfere with the Company's
business. Neither the execution nor delivery of this Agreement, nor the carrying
on of the Company's business as presently conducted or presently proposed to be
conducted, nor any activity of such officers, directors, employees or
consultants in connection with the carrying on of the Company's business as
presently conducted or currently proposed to be conducted, will conflict with or
result in a breach of the terms, conditions or provisions of, or constitute a
default under, any contract or agreement under which any of such officers,
directors, employees or, to the knowledge of the Company and the Shareholders,
consultants is now bound.
2.27 Warranties, Indemnities. Except for the warranties and indemnities
contained in (i) those contracts and agreements set forth in Section 2.12 of the
Company Disclosure Schedule and (ii) the Company's standard product warranty
agreements substantially in the form set forth in Section 2.12 of the Company
Disclosure Schedule, the Company has not given any warranties or indemnities
relating to products or technology sold or licensed or services rendered by the
Company. Section 2.27 of the Company Disclosure Schedule contains a complete and
accurate summary of all warranty claims on the Company's products occurring
since the Company's inception.
2.28 Adequacy and Functionality of Company Products. The assets of the
Company, including, without limitation, the source code and products of the
Company, are now and following the Effective Time will be sufficient for the
conduct of the business of the Company in
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the same manner as the business is now conducted. The Owned Software now
performs, and following the Closing will perform, substantially in accordance
with applicable user documentation provided by the Company to the customers
using such Owned Software, and does not contain and is not subject to any
operational defect or limitation which is reasonably likely to substantially
impair the capability or effectiveness of the Owned Software to achieve its
functions described in such user documentation. The Owned Software contains all
current revisions of such software in the Company's possession, and includes all
source code, object code, forms of such software and all computer programs,
materials processes, tapes, and know-how related to such Owned Software. The
Company has delivered to the Parent complete and correct copies of the current
version of all user documentation in the Company's possession related to the
Owned Software.
2.29 Investment Representations. Each Shareholder represents that it is
acquiring the shares of Parent Common Stock to be received by such Shareholder
in the Merger for its own account for investment and not for, with a view to or
in connection with any resale or distribution thereof. Each Shareholder further
represents that (a) such Shareholder has full power and authority to enter into
and to perform this Agreement in accordance with its terms and, with respect to
the O'Brien Trust only, that such Shareholder has not been organized,
reorganized or recapitalized specifically for the purpose of investing in the
Parent, (b) such Shareholder has reviewed the representations concerning the
Parent contained in this Agreement, and has made such inquiry concerning the
Parent, its business and its personnel, as such Shareholder deems appropriate in
connection with its investment in the Parent, (c) the officers of the Parent
have made available to such Shareholder any and all written information which it
has requested and has answered to such Shareholder's satisfaction all inquiries
made by such Shareholder, (d) such Shareholder has sufficient knowledge and
experience in investing in companies similar to the Company so as to be able to
evaluate the risks and merits of such Shareholder's investment in the Parent and
such Shareholder is able financially to bear the risks thereof, and (e) such
Shareholder is an "accredited investor" within the meaning of Regulation D under
the Securities Act.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company and the
Shareholders, subject to the exceptions previously certified in writing by
Parent or Merger Sub, as follows:
3.1 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Each of Parent and Merger
Sub has the corporate power to own its properties and to carry on its business
as now being conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified would have
a Material Adverse Effect on Parent and Merger Sub taken as a whole. Parent has
delivered a true and
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correct copy of the Certificate or Articles of Organization and Bylaws of each
of Parent and Merger Sub, as amended to date, to counsel for the Company.
3.2 Capital Structure.
(a) The authorized stock of Parent consists of 100,000,000
shares of Common Stock, $0.001 par value per share, of which 9,846,340 shares
were issued and outstanding as of September 30, 1999, and 10,000,000 shares of
Preferred Stock, $0.01 par value per share, of which 2,169,771 were issued and
outstanding as of September 30, 1999. The authorized capital stock of Merger Sub
consists of 1,000 shares of Common Stock, $0.01 par value, all of which, as of
the date hereof, are issued and outstanding and are held by Parent. All such
shares have been duly authorized, and all such issued and outstanding shares
have been validly issued, are fully paid and nonassessable and are free of any
liens or encumbrances other than any liens or encumbrances created by or imposed
upon the holders thereof.
(b) The shares of Parent Common Stock to be issued pursuant to
the Merger will be duly authorized, validly issued, fully paid, non-assessable.
3.3 Authority. Parent and Merger Sub have all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent and Merger Sub. The
shareholders of Parent are not required to approve the Merger, the Agreement or
the transactions contemplated hereby under applicable law or NASD rules or
regulations. This Agreement has been duly executed and delivered by Parent and
Merger Sub and constitutes the valid and binding obligations of Parent and
Merger Sub. The execution and delivery of this Agreement do not, and the
consummation of the transactions contemplated hereby will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or to loss of a benefit under (i) any provision of the
Certificates of Incorporation or Bylaws of Parent or the Articles of
Organization or Bylaws of Merger Sub or (ii) any mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or its properties or assets. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity, is required by or with respect to Parent and Merger Sub in connection
with the execution and delivery of this Agreement by Parent and Merger Sub or
the consummation by Parent and Merger Sub of the transactions contemplated
hereby, except for (i) the filing of the Delaware Filing with the Secretary of
State of the State of Delaware, (ii) the filing of the Wisconsin Filing with the
Department of Financial Institutions of the State of Wisconsin, (iii) the filing
of a Form 8-K with the Securities and Exchange Commission (the "SEC") within 15
days after the Closing Date, and any filings as may be required under applicable
state and federal securities laws and the laws of any foreign country,
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and (iv) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not have a Material Adverse
Effect on Parent.
3.4 SEC Documents, Parent Financial Statements. Parent has furnished or
made available to the Company true and complete copies of the following
documents (collectively, the "SEC Documents"): (i) Annual Report on Form 10-KSB,
filed with the SEC on September 28, 1999 (the "10-K") and (ii) the October 15
draft of the Registration Statement on Form S-1, to be filed with the SEC on or
about the date of this Agreement (the "Draft S-1"). The 10-K complied in all
material respects with the requirements of the Exchange Act of 1934, as amended
or the Securities Act of 1933, as amended (the "Act") when filed. The Draft S-1
contains no untrue statement of a material fact and does not omit to state a
material fact necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. The financial statements
of Parent, including the notes thereto, included in the 10-K (the "Parent
Financial Statements") are complete and correct in all material respects, comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, and
have been prepared in accordance with U.S. generally accepted accounting
principles applied on a basis consistent throughout the periods indicated and
consistent with previous SEC filings of the Company (except as may be indicated
in the notes thereto or, in the case of unaudited statements, as permitted by
Form 10-Q of the SEC). The Parent Financial Statements fairly present the
consolidated financial condition and operating results of Parent at the dates
and during the periods indicated therein (subject, in the case of unaudited
statements, to normal, year-end adjustments, which will not be material in the
aggregate). There has been no change in Parent accounting policies except as
described in the notes to the Parent Financial Statements.
3.5 No Material Adverse Change. Since October 15, 1999 there has not
occurred: (a) any amendments or changes in the Certificate of Incorporation or
Bylaws of Parent; (b) any sale of a material amount of property of Parent,
except in the ordinary course of business or (c) any other event or condition of
any character that has or might reasonably be expected to have a Material
Adverse Effect on the Parent that would require the Parent to file a report on
Form 8-K.
3.6 Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which Parent has received any
notice of assertion or as to which Parent has a reasonable basis to expect such
notice of assertion, against Parent which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay any of the transactions contemplated
by this Agreement or which could reasonably be anticipated to have a Material
Adverse Effect on Parent.
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ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business of the Company. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, the Company agrees (except to the extent that
Parent shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted, to pay its debts and taxes when due subject (i) to good
faith disputes over such debts or taxes and (ii) in the case of taxes, to
Parent's consent to the filing of material Returns if applicable, to pay or
perform other obligations when due, and, to the extent consistent with such
business, use all reasonable efforts consistent with past practice and policies
to preserve intact the Company's present business organizations, keep available
the services of its present officers . and key employees and preserve their
relationships with customers, suppliers, distributors, licensors, licensees, and
others having business dealings with it, to the end that the Company's goodwill
and ongoing businesses shall be unimpaired at the Effective Time. The Company
shall promptly notify Parent of any event or occurrence not in the ordinary
course of business of the Company which could have a Material Adverse Effect on
the Company. Except as expressly contemplated by this Agreement, the Company
shall not, without the prior written consent of Parent:
(a) Enter into any commitment or transaction (i) which
requires performance over a period longer than six months in duration except
transactions in the ordinary course of business, or (ii) to purchase fixed
assets for a purchase price in excess of $5,000; except as mutually agreed in
writing by Parent and the Company;
(b) Grant any severance or termination pay (i) to any director
or officer or (ii) to any other employee except (x) payments made pursuant to
standard written agreements outstanding on the date hereof and as disclosed on
Schedule 2.12 or (y) in the case of employees who do not have standard written
agreements, payments of up to two months salary;
(c) Transfer to any person or entity any rights to the
Company's Intellectual Property-other than nonexclusive object code licenses
except as mutually agreed in writing by Parent and the Company;
(d) Enter into or amend any agreements pursuant to which any
other party is. granted marketing or other rights of any type or scope with
respect to any products or technology of the Company, except as mutually agreed
in writing by Parent and the Company;
(e) Violate, amend or otherwise modify the terms of any of the
contracts set forth in the Company Disclosure Schedule;
(f) Commence any litigation;
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(g) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of capital stock of the Company, or repurchase or
otherwise acquire, directly or indirectly, any shares of its capital stock
except from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service to the Company;
(h) Issue, deliver or sell or authorize or propose the
issuance, delivery or sale of, or purchase or propose the purchase of, any
shares of its capital stock or securities convertible into, or subscriptions,
rights, warrants or options to acquire, or other agreements or commitments of
any character obligating it to issue any such shares or other convertible
securities;
(i) Cause or permit any amendments to its Certificate of
Incorporation or Bylaws;
(j) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the assets of, or by any other
manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets which are material, individually or in the aggregate, to the
business of the Company;
(k) Sell, lease, license or otherwise dispose of any of its
properties or assets which are material, individually or in the aggregate, to
the business of the Company, except in the ordinary course of business, except
as mutually agreed in writing by Parent and the Company;
(l) Incur any indebtedness for borrowed money in excess of
$175,000 or guarantee any such indebtedness or issue or sell any debt securities
of the Company or guarantee any debt securities of others;
(m) Adopt or amend any employee benefit plan, or enter into
any, employment contract except for offer letters in the Company's standard form
for newly hired employees, pay any special bonus or special remuneration to any
director or employee, or increase the salaries or wage rates of its employees;
(n) Revalue any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business;
(o) Pay, discharge or satisfy in an amount in excess of $5,000
in any one case any claim, liability or obligation (absolute, accrued, asserted
or unasserted, contingent or
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otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected or reserved against in the Company
Financial Statements (or the notes thereto);
(p) Make or change any material election in respect of Taxes,
adopt or change any accounting method in respect of Taxes, file any material
Return or any amendment to a material Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes, or consent to any extension
or waiver of the limitation period applicable to any claim or assessment in
respect of Taxes; or
(q) Take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1 (a) through (q) above, or any action which
would make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing or
cause the Company not to perform its covenants hereunder.
4.2 No Solicitation. After the date of this Agreement and prior to the
Effective Time, the Company will not (nor will the Company permit any of the
Company's officers, directors, agents, representatives or affiliates to)
directly or indirectly, take any of the following actions with any party other
than Parent and its designees:
(a) solicit, encourage, initiate or participate in any
negotiations or discussions with respect to, any offer or proposal to acquire
all or substantially all of the Company's business and properties or to purchase
or acquire capital stock of the Company whether by merger, purchase of assets,
tender offer or otherwise (an "Acquisition"),
(b) disclose any information not customarily disclosed to any
person other than its attorneys or financial advisors concerning the Company's
business and properties or afford to any person or entity access to its
properties, books or records, or
(c) assist or cooperate with any person to make any proposal
to purchase all or any part of the Company's capital stock or assets, other than
licensing of software in the ordinary course of business (a "Purchase"),
provided, however, that the Company may participate in negotiations with, or
furnish information to, a party other than Parent or its designees who has made
a written Acquisition or Purchase offer or proposal if the Company's Board of
Directors, upon receipt of a written opinion from its outside counsel,
determines that failure to do so would constitute a breach of the Board's
fiduciary duty under applicable law.
In the event the Company shall receive any such written offer or
proposal, directly or indirectly, of the type referred to in clause (a) or (c)
above, or any request for disclosure or access pursuant to clause (b) above, the
Company party shall immediately inform Parent as to all material facts relating
to any such offer or proposal (including the identity of the party making
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such offer or proposal and the specific terms thereof) and will cooperate with
Parent by furnishing any information it may reasonably request.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Meeting of Company Shareholders. The Company shall promptly take
all action necessary in accordance with Wisconsin law, and the Company's
Certificate of Incorporation and Bylaws to prepare and solicit an Action By
Written Consent of the Company Shareholders. The Company shall use its best
efforts to obtain the approval of the shareholders of the Company for the Merger
and shall take all other action necessary or advisable to secure the vote or
consent of its shareholders required by Wisconsin Law to effect the Merger.
5.2 Access to Information. The Company shall afford Parent and its
accountants, counsel and other representatives, reasonable access during normal
business hours during the period prior to the Effective Time to (a) all of the
Company's properties, books, contracts, commitments and records, and (b) all
other information concerning the business, properties and personnel of the
Company as Parent may reasonably request. The Company agrees to provide to
Parent and its accountants, counsel and other representatives copies of internal
financial statements promptly upon request. Parent shall provide the Company
with copies of such publicly available information about Parent as the Company
may request and shall provide the Company with reasonable access to its
executive officers in this connection. No information or knowledge obtained in
any investigation pursuant to this Section 5.2 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
5.3 Confidentiality. The parties acknowledge that Parent and the
Company have previously executed a Nondisclosure Agreement dated September 3,
1999, which agreement shall continue in effect in accordance with its terms.
5.4 Expenses. All expenses incurred in connection with the Merger and
this Agreement shall be the obligation of the party incurring such expenses (and
the Shareholders in the case of the Company's expenses; provided, that, the
Shareholders may cause the Company to pay legal fees and disbursements in
connection with the Merger and this Agreement not to exceed $25,000).
5.5 Public Disclosure. Unless otherwise required by law, prior to the
Effective Time no disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby
shall be made by any party hereto unless approved by Parent and the Company
prior to release, provided that such approval shall not be unreasonably
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withheld, subject, in the case of Parent, to Parent's obligation to comply with
applicable securities laws.
5.6 Consents. Each of Parent and the Company shall promptly apply for
or otherwise seek, and use its best efforts to obtain, all consents and
approvals required to be obtained by it for the consummation of the Merger, and
the Company shall use its best efforts to obtain all necessary consents, waivers
and approvals under any of the Company's material agreements, contracts,
licenses or leases in connection with the Merger. All such necessary consents
are set forth in Section 5.6 of the Company Disclosure Schedule.
5.7 Legal Requirements. Each of Parent, Merger Sub and the Company will
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement and will promptly cooperate with
and furnish information to any party hereto necessary in connection with any
such requirements imposed upon such other party in connection with the
consummation of the transactions contemplated by this Agreement and will take
all reasonable actions necessary to obtain (and will cooperate with the other
parties hereto in obtaining) any consent, approval, order or authorization of,
or any registration, declaration or filing with, any Governmental Entity or
other person, required to be obtained or made in connection with the taking of
any action contemplated by this Agreement.
5.8 Blue Sky Laws. Parent shall take such steps as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of the Parent Common Stock pursuant hereto. The
Company shall use its best efforts to assist Parent as may be necessary to
comply with the securities and blue sky laws of all jurisdictions which are
applicable in connection with the issuance of Parent Common Stock pursuant
hereto.
5.9 Best Efforts; Additional Documents and Further Assurances. Each of
the parties to this Agreement shall each use its best efforts to effectuate the
transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby. Parent will use commercially reasonable best
efforts to have Secondary Offering completed as soon as possible.
5.10 Employment Agreements. Concurrently herewith, Xxxx Xxxxx and Xxx
X'Xxxxx each are entering into Employment Agreements with Parent substantially
in the form attached hereto as Exhibit A, to become effective at the Effective
Time.
5.11 Support Agreement. Concurrently herewith, the Shareholders each
are entering in Support Agreements with Parent substantially in the form
attached hereto as Exhibit B, providing that they will vote for, and use their
best efforts to cause to occur, the Merger.
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5.12 Payments before Merger. Parent paid the Shareholders $100,000 on
or about October 1, 1999. If the Closing has not occurred on or before November
16, 1999 the Parent shall make a second payment of $100,000 to the Shareholders.
If the Closing has not occurred on or before December 16, 1999, the Company
shall make a third payment of $100,000 to the Shareholders. No such payment
shall be made after termination of this Agreement pursuant to Article IX or if
either Shareholder or the Company has materially breached his or its duties
under this Agreement and such breach has not been cured to the reasonable
satisfaction of the Parent. The foregoing payments shall be retained by the
Shareholders whether or not the Merger is consummated, but, if the Merger is
consummated, the payments shall be credited as provided in Section 1.6(a).
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the shareholders of the
Company.
(b) Board Approval. This Agreement and the Merger shall have
been approved and adopted by the requisite vote of the Board of Directors of the
Company, Parent and Merger Sub.
(c) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or limiting or restricting the
operation of the business of the Company following the Merger shall be in
effect, nor shall any proceeding brought by an administrative agency or
commission or other governmental authority or instrumentality, domestic or
foreign, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Merger, which makes the consummation of the Merger
illegal.
(d) Approval. Parent, Company and Merger Sub shall have timely
obtained all necessary approvals from Governmental Entities.
(e) Related Agreements. The related agreements referred to in
Sections 5.10 and 5.11 shall be in full force and effect. Such agreements are
collectively referred to herein as the "Related Agreements.")
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6.2 Additional Conditions to Obligations of Company. The obligations of
the Company to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, exclusively by the Company:
(a) Representations, Warranties and Covenants. The
representations and warranties of Parent and Merger Sub in this Agreement shall
be true and correct in all material respects on and as of the Effective Time as
though such representations and warranties were made on and as of such time and
each of Parent and Merger Sub shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied. with by it as of the Effective Time.
(b) Certificate of Parent. The Company shall have been
provided with a certificate executed on behalf of Parent by its President and
its Chief Financial Officer or Treasurer to the effect that, as of the Effective
Time:
(i) all representations and warranties made by Parent
and Merger Sub under this Agreement are true and complete in all material
respects; and
(ii) all covenants, obligations and conditions of
this Agreement to be performed by Parent and Merger Sub on or before such date
have been so performed in all material respects.
(c) Legal Opinion. The Company shall have received a legal
opinion from Xxxxx, Xxxx & Xxxxx LLP, counsel to Parent, substantially in the
form of Exhibit G hereto.
(d) No Material Adverse Changes. There shall not have occurred
any event or change in the business, properties, results of operations or
financial condition of Parent since the date hereof that would constitute a
Material Adverse Effect.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, exclusively by Parent:
(a) Representations, Warranties and Covenants. The
representations and warranties of the Company in this Agreement shall be true
and correct in all material respects on and as of the Effective Time as though
such representations and warranties were made on and as of such time and the
Company shall have performed and complied in all material respects with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Effective Time.
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(b) Certificate of the Company. Parent shall have been
provided with a certificate executed on behalf of the Company by its Chief
Executive Officer to the effect that, as of the Effective Time:
(i) all representations and warranties made by the
Company under this Agreement are true and complete in all material respects;
(ii) all covenants, obligations and conditions of
this Agreement to be performed by the Company on or before such date have been
so performed in all material respects; and
(iii) attached to such certificate are true and
correct copies of the Company's Certificate of Incorporation, as certified by
the Secretary of the State of the State of Wisconsin, Bylaws and resolutions of
the Company's Board of Directors and Shareholders approving the transactions
contemplated by this Agreement.
(c) Third Party Consents. Parent shall have been furnished
with evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in order to assign the agreements
listed pursuant to Section 5.7.
(d) Legal Opinion. Parent shall have received a legal opinion
from Xxxxxxx, Muething & Xxxxxxx, P.L.L., legal counsel to the Company, in
substantially the form of Exhibit H.
(e) No Material Adverse Changes. There shall not have occurred
any event or change in the business, properties, results of operations or
financial condition of the Company that would constitute a Material Adverse
Effect.
(f) Dissenters. No holders of the outstanding Company Common
Stock shall have exercised, or shall continue to have the right to exercise,
dissenters' rights with respect to the transactions contemplated by this
Agreement.
(g) Resignation of Current Directors and Officers of the
Company. Parent shall have received letters of resignation of all of the
directors and officers of the Company effective as of the Effective Time.
(h) Parent Registration Statement. The pending registration
statement (SEC File No. 333-85079) of the Parent shall have been declared
effective by the SEC and the Parent and the underwriters named therein shall
have closed the purchase and sale of the stock of the Parent registered thereby.
(Such transaction is referred to herein as the "Secondary Offering.")
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ARTICLE VII
TAX MATTERS
7.1 Tax Periods Ending On Or Before the Closing Date. The Shareholders
shall prepare or cause to be prepared and file or cause to be filed all Returns
for the Company for all periods ending on or prior to the Closing Date that are
filed after the Closing Date. The Shareholders shall permit Parent to review and
comment on each such Return described in the preceding sentence prior to filing.
7.2 Cooperation on Tax Matters.
(a) Parent and the Company shall cooperate fully, as and to
the extent reasonably requested by the other party, in connection with the
filing of Returns pursuant to this Article VII and any audit, litigation or
other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information that are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Parent agrees to cause the Company (i) to retain all books and
records with respect to Tax matters pertinent to the Company relating to any
taxable period beginning before the Closing Date until the expiration of the
statute of limitations (and, to the extent notified by the Shareholders, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii)
prior to the expiration of the statue of limitations to give the Shareholders
reasonable written notice prior to transferring, destroying or discarding any
such books and records of the Shareholders so requested, to allow the
Shareholders to take possession of books and records.
(b) Parent and the Shareholders agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental. authority or any other person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including without limitation
in respect of the transactions contemplated by this Agreement).
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival of Representations, Warranties and Covenants. All
representations and warranties in this Agreement or in any other agreement or
instrument delivered pursuant to this Agreement shall survive until the date
Parent releases its annual independent audit of the consolidated financial
statements applicable to Parent for the period ending December 31, 2000, and
shall continue to survive as to damages (or a potential claim by an appropriate
party) asserted in good faith prior to such date.
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8.2 Indemnification.
(a) Subject to the terms and conditions of this Article VIII,
the Shareholders agree jointly and severally to indemnify and hold harmless
Parent and its officers, directors, agents, affiliates and representatives
(collectively, the "Indemnitees"), from and in respect of, and hold the
Indemnitees against, any and all damages, fines, penalties, losses, liabilities,
judgments, deficiencies, and expenses (including, without limitation, amounts
paid in settlement, interest, court costs, costs of investigators, reasonable
fees and expense of attorneys and accountants and other expenses of litigation),
offset or reduced by the amount of any insurance proceeds or tax benefits
actually received by Parent in respect of any of the foregoing, incurred or
suffered by any of the Indemnitees ("Damages") resulting from, relating to or in
connection with any misrepresentation, breach of representation or warranty or
failure to perform any covenant or agreement of the Company or the Shareholders
contained in this Agreement or any inaccuracy in any schedule or certificate
delivered by the Company or the Shareholders pursuant to this Agreement.
Notwithstanding the first sentence of this Section 8.2(a), each Shareholder
shall be severally and not jointly liable for claims based on such party's
representations and warranties contained in Section 2.4(b).
(b) Each Shareholder acknowledges that its indemnification
obligations hereunder are solely in his capacity as a former shareholder or
beneficial owner of shares of the Company, and, accordingly, the indemnification
obligations in this Article VIII shall not entitle any current or former
officer, director or employee of the Company to any indemnification from the
Company pursuant to the Certificate of Incorporation, or any agreement with the
Company (notwithstanding any insurance policy).
8.3 Indemnification Liability Limitations.
(a) The Shareholders shall not be liable under this Article
VIII unless Damages totaling in excess of $25,000 (the "Basket Amount") have
been determined in which case Parent shall be entitled to recover all Damages;
provided, however, Damages with respect to (i) claims based on fraud and (ii)
breaches of the representations and warranties contained in Sections 2.1, 2.2,
2.3, 2.4, 2.8, 2.11 and 2.28 shall be paid without regard to the Basket Amount.
(b) Nothing in this Article VIII shall limit, in any manner
(whether by time, amount, procedure or otherwise), any remedy at law or in
equity to which Parent may be entitled as a result of actual fraud or willful
misrepresentation or misconduct by the Company or Shareholders.
8.4 Shareholder Agent of the Shareholders. In the event that the Merger
is closed, Xxx X'Xxxxx shall be appointed as the Shareholder Agent for each
Shareholder.
8.5 Third-Party Claims. In the event Parent becomes aware of a
third-party claim which Parent believes may result in an indemnity claim
hereunder, Parent shall notify the
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Shareholder Agent of such claim, and the Shareholder Agent and the Shareholders
of the Company shall be entitled, at their expense, to participate in any
defense of such claim. Parent shall have the right in its sole discretion to
settle any such claim; provided, however, that except with the consent of the
Shareholder Agent, no settlement of any such claim with third-party claimants
shall be determinative of the amount or validity of any indemnity claim by
Parent hereunder. In the event that the Shareholder Agent has consented to any
such settlement, no Shareholder shall have power or authority to object under
any provision of this Article VIII to the amount of any indemnity claim by
Parent against the Shareholders with respect to such settlement.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:
(a) by mutual written consent of the Shareholders and Parent;
(b) by Parent if (i) it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of the Company or any of the Shareholders and such breach has not been
cured within five business days after written notice to the Company or to the
Shareholders, as the case may be, or (ii) there shall be any final action taken,
or any statute, rule, regulation or order enacted, promulgated or issued or
deemed applicable to the Merger by any Governmental Entity, which would prohibit
Parent's or the Company's ownership or operation of all or a material portion of
the business of the Company, or compel Parent or the Company to dispose of or
hold separate all or a material portion of the business or assets of the Company
or Parent as a result of the Merger.
(c) by the Company if it is not in material breach of its
obligations under this Agreement and there has been a material breach of any
representation, warranty, covenant or agreement contained in this Agreement on
the part of Parent or Merger Sub and such breach has not been cured within five
days after written notice to Parent;
(d) by any party hereto if: (i) the Effective Time has not
occurred by January 15, 2000; (ii) there shall be a final, non-appealable order
of a federal or state court in effect preventing consummation of the Merger;
(iii) there shall be any final action taken, or any statute, rule, regulation or
order enacted, promulgated or issued or deemed applicable to the Merger by any
Governmental Entity which would make consummation of the Merger illegal; or (iv)
if the Company's Shareholders do not approve the Merger.
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Where action is taken to terminate this Agreement pursuant to this
Section 9.1, it shall be sufficient for such action to be authorized by the
Board of Directors (as applicable) of the party taking such action.
9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Merger Sub,
the Company or the Shareholders or their respective officers, directors or
shareholders, except to the extent that such termination results from the breach
by a party hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
9.3 Amendment. This Agreement may be amended by the parties hereto at
any time by execution of an instrument in writing signed on behalf of each of
the parties hereto.
9.4 Extension; Waiver. At any time prior to the Effective Time any
party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
At the Parent's option, the date specified in Section 9.1(d)
may be extended to February 15, 2000 upon the Parent's payment of $50,000 to
each of the Shareholders on or before January 15, 2000 and if Parent shall elect
to make such payments, such payment shall not be applied to the Cash Payment.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via telecopy to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
Xxxxxxxx.xxx Incorporated
00 Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman of the Board of Directors
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with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
(b) if to the Company, to:
Student Success, Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Attn: Xxxx Xxxxx
Attn: Xxx X'Xxxxx
with a copy to:
Xxxxxxx, Xxxxxxxx & Xxxxxxx, P.L.L.
1400 Provident Tower
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
(c) if to a Shareholder, to the address of such Shareholder
listed on Exhibit F,
(d) if to the Shareholder Agent to the address of such
Shareholder listed on Exhibit F.
10.2 Interpretation. When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words "without
limitation." The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
10.4 Miscellaneous. This Agreement and the documents and instruments
and other agreements among the parties hereto including all lists and statements
separately certified in writing by the Company or Parent (a) constitute the
entire agreement among the parties with
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respect to the subject matter hereof and supersede all prior. agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, except for the Confidential Nondisclosure Agreement dated
September 3, 1999 which shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement; (b) are not
intended to confer upon any other person any rights or remedies hereunder; and
(c) shall not be assigned by operation of law or otherwise except as otherwise
specifically provided.
10.5 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of
Delaware. All parties hereto agree to submit to the jurisdiction of the federal
and state courts of the State of Delaware, and further agree that service of
documents commencing any suit therein may be made as provided in Section 10.1.
10.6 Resolution of Disputes; Stipulation Regarding Confidentiality.
Except as otherwise provided in Article VIII, the parties hereto each agree to
work together in good faith to resolve any disputes which may arise under this
Agreement. Such attempts at resolution will be made at the level of a person to
person meeting between the presidents of Parent and the Company, the
Shareholders and the Shareholder Agent. Each party agrees that it will not
initiate any litigation against any other party hereto regarding the subject
matter of this Agreement for at least sixty (60) days following such person to
person meeting between the presidents of Parent and the Company, the
Shareholders and the Shareholder Agent except for (i) motions for a temporary
restraining order or other preliminary equitable relief and (ii) circumstances
in which a delay for such period would result in such action being barred as a
result of the relevant statute of limitations expiring. In the event any
litigation is initiated in compliance with this Section, the parties agree
jointly to stipulate to the court that all proceedings in such action be kept
confidential.
10.7 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or Rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
[The remainder of this page is intentionally left blank.]
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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Shareholders
(as to Articles II and VIII only) have caused this Agreement and Plan of Merger
to be signed by themselves or their duly authorized respective officers, all as
of the date first written above.
XXXXXXXX.XXX INCORPORATED
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title:
XXXXXXXXXXX.XXX INCORPORATED
By: /s/ Xxxxxx Xxxxxxx
----------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
STUDENT SUCCESS, INC.
By: /s/ Xxxxxxx X. X'Xxxxx
----------------------------------
Name: Xxxxxxx X. X'Xxxxx
Title: President
SHAREHOLDERS:
/s/ Xxxxxxxx X. Xxxxx
---------------------------------------
Xxxxxxxx X. Xxxxx
/s/ Xxxxxxx X. X'Xxxxx
---------------------------------------
Xxxxxxx X. X'Xxxxx
XXXXXXX X. X'XXXXX STOCK TRUST
/s/ Xxxxxxx X. Xxxxxxx, Xx.
---------------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
Trustee
44
Exhibit A to
Agreement and Plan of Merger
XXXXXXXXXXX.XXX INCORPORATED
NONCOMPETITION AND EMPLOYMENT AGREEMENT
This Noncompetition and Employment Agreement (this "Agreement") is
entered into as of ________, 1999, among XxxxxxxXxxx.xxx Incorporated, a
Delaware corporation (the "Company"), Xxxxxxxx.xxx Incorporated, a New York
corporation and owner of all the issued and outstanding stock of the Company
("Cytation"), and _________________ ("Executive").
A. Executive is an officer, director and shareholder of Student Success
Inc., a Wisconsin corporation ("SSI"), and SSI, Cytation and the Company have
agreed to merge SSI with and into the Company (the "Merger") pursuant to an
Agreement and Plan of Merger dated as of October __, 1999 (the "Merger
Agreement").
B. It is a condition precedent to the closing of the Merger that
Executive continue as an employee of the Company after the date of the closing
of the Merger (the "Closing Date").
C. This Agreement will become effective, and the term of this Agreement
will commence, on the Closing Date.
The Company and Executive hereby agrees as follows:
1. EMPLOYMENT. The Company is employing Executive, and Executive
accepts employment upon the terms and conditions set forth in this Agreement.
(As used throughout this Agreement, "Company" shall mean and include any and all
of its present and future subsidiaries and any and all subsidiaries of a
subsidiary). Executive warrants that he is free to enter into and perform this
Agreement and is not subject to any employment, confidentiality, non-competition
or other agreement which would restrict his performance under this Agreement.
2. DUTIES. During the term of this Agreement, Executive's services
shall be exclusive to the Company, and he shall devote his entire business time,
attention and energies to the business of the Company and the duties to which
the President of the Company shall assign him from time to time, including the
transition of the operations and employees of SSI to the Company. Executive
agrees to perform his services faithfully and to the best of his ability and to
carry out the policies and directives of the Company. Notwithstanding the
foregoing, the Executive may participate in community boards and committees and
in activities generally considered to be in the public interest, so long as such
participation and activities do not materially interfere with his duties
hereunder.
45
3. TITLE. During his employment hereunder, the Executive shall have the
position of _____________ or such other executive position as the President of
the Company may determine.
4. TERM. The term of this Agreement shall commence on the Closing Date
and shall extend until the first anniversary thereof, unless terminated sooner
in accordance with Section 6 of this Agreement.
5. COMPENSATION & BENEFITS.
(a) SALARY. For all Executive's services and covenants under
this Agreement, the Company shall pay Executive an initial annual salary of
$125,000 payable in accordance with the Company's payroll policy in effect from
time to time.
(b) STOCK OPTIONS. The Company's parent, Cytation, will grant
Executive incentive stock options to purchase a total of 200,000 shares of
Cytation's common stock at a price equal to the price to the public of the
shares of Cytation common stock in the public offering thereof pursuant to the
pending registration statement of Cytation on Form S-1 (SEC File No. 333-85079),
such options to be substantially in the form of Exhibit A attached hereto.
(c) BENEFITS. Executive shall be entitled to all medical
insurance, vacation, sick leave, holidays and other fringe benefits in
accordance with Company policies made available from time to time to other
executives of the Company.
(d) MOVING EXPENSES. In the event that the Company requires
Executive to relocate, the Company shall reimburse Executive for all reasonable
and customary expenses incurred by Executive in connection with any such
relocation.
6. TERMINATION OF EMPLOYMENT. Notwithstanding any other provision of
this Agreement, the Executive's employment may be terminated:
(a) FOR CAUSE. By the Company for cause (as hereinafter
defined). For purposes of this Agreement cause shall mean: (i) failure or
refusal by the Executive (other than by reason of any disability, illness or
other incapacity) to perform his assigned duties for the Company, which failure
or breach continues for more than 10 days after written notice thereof is given
to the Executive; (ii) commission by the Executive of an act of dishonesty or
moral turpitude; or (iii) commission by the Executive of an act of fraud upon
the Company or an act materially evidencing bad faith toward the Company. In the
event of termination for cause, the Company will pay to the Executive accrued
but unpaid annual salary through the date of termination.
(b) FOR DISABILITY. By the Company, upon 20 days' notice to
the Executive if he should be prevented by illness, accident or other disability
from discharging any of his
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material duties hereunder for thirty (30) consecutive days or one or more
periods totaling thirty (30) days, provided that compliance with this paragraph
shall be subject to the "Americans with Disabilities Act" and the "Family and
Medical Leave Act", or such other laws as may be applicable to this Agreement.
In the event of such termination of Executive's employment, the Company's
obligation to pay further compensation hereunder shall cease forthwith, except
that the Executive shall be entitled to receive his accrued but unpaid annual
salary for the period up to the last day of the month in which such termination
of employment occurred.
(c) WITHOUT CAUSE. By the Company, without cause, provided,
however, that if the Executive's employment is terminated pursuant to this
Section, the Executive shall continue to receive his annual salary as provided
in Section 5(a) until the first anniversary of the date of termination and
continued coverage in all group health and medical plans.
(d) BY RESIGNATION. By the Executive upon providing thirty
(30) days written notice to the Company, provided, however, that, in the event
of termination by resignation, the Company will pay to Executive accrued but
unpaid annual salary through the date of termination.
(e) FOR GOOD REASON. By the Executive for "Good Reason", which
shall consist solely of the following: (i) failure of the Company to continue
the Executive during the term of this Agreement with executive duties and
responsibilities with respect to its business; or (ii) a material breach by the
Company of any provision of this Agreement which continues for more than 10 days
following written notice by the Executive to the Company specifying such breach.
In the event of termination under this Section, the Executive shall have no
further obligations to the Company except his obligations under Sections 7, 8, 9
and 10, and the Executive shall be entitled to the severance benefit set forth
in Section 6(c) above.
(f) BY DEATH. In the event of the Executive's death during the
term of his employment, the Company's obligation to pay further compensation
hereunder shall cease forthwith, except that the Executive's legal
representative shall be entitled to receive his annual salary for the period up
to the last day of the month in which such death shall have occurred.
(g) BY MUTUAL AGREEMENT. By the mutual, written agreement of
the Company and the Executive.
(h) RELEASE. The Company's obligation to make the severance
payments specified in Sections 6(c) or 6(e) are subject to the condition
precedent that the Executive execute and deliver to the Company a general
release, reasonably satisfactory in form to the Company's legal counsel, of all
claims that he may have against the Company or its officers, directory, agents,
employees, attorneys, accountants, or stockholders arising out of, or relating
to, this Agreement or his employment with the Company.
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7. ALL BUSINESS TO BE PROPERTY OF THE COMPANY; ASSIGNMENT OF
INTELLECTUAL PROPERTY.
(a) COMPANY PROPERTY. Executive agrees that any and all
presently existing business of the Company and all business developed by him or
any other executive of the Company, including, without limitation, all
contracts, fees, commissions, compensation, records, customer or client lists,
agreements and any other incident of any business developed, earned or carried
on by Executive for the Company is and shall be the exclusive property of the
Company, and (where applicable) shall be payable directly to the Company.
(b) ASSIGNMENT OF RIGHTS. Executive hereby grants to the
Company (without any separate remuneration or compensation other than that
received by him from time to time in the course of his employment) his entire
right, title and interest throughout the world in and to, all research,
information, procedures, developments, inventions and improvements whether
patentable or non-patentable, patents and applications therefor, trademarks and
applications therefor, copyrights and applications therefor, programs, trade
secrets, plans, methods, and all other data and know-how (herein sometimes
"Intellectual Property") made, conceived, developed and/or acquired by him
solely or jointly with others during the period of his employment with SSI or
the Company, whether or not made, conceived, developed or acquired during
regular business hours or on the premises of, or using properties of, SSI or the
Company or in the regular scope of Executive's employment by SSI or the Company.
Set forth on Schedule A attached to this Agreement are descriptions of
inventions and copyrightable materials that the Executive has developed and
reduced to practice prior to commencement of his employment with SSI and that
are, accordingly, exempted from the provisions of this Section 7(b).
8. CONFIDENTIALITY. Except as necessary in performance of services for
the Company, Executive shall not, either during the period of his employment
with the Company or thereafter, use for his own benefit or disclose to or use
for the benefit of any person outside the Company, any information concerning
any Intellectual Property, or other confidential or proprietary information of
the Company, including, without limitation, any of the materials listed in
Section 7(a) or 7(b), whether Executive has such information in his memory or
embodied in writing or other tangible form. All originals and copies of any of
the foregoing, however and whenever produced, shall be the sole property of the
Company, not to be removed from the premises or custody of the Company without
first obtaining authorization of the Company, which authorization may be revoked
by the Company at any time. Upon the termination of Executive's employment in
any manner or for any reason, Executive shall promptly surrender to the Company
all copies of any of the foregoing, together with any documents, materials,
data, information and equipment belonging to or relating to the Company's
business and in his possession, custody or control, and Executive shall not
thereafter retain or deliver to any other person any of the foregoing or any
summary or memorandum thereof.
9. NON-COMPETITION COVENANT. The Executive recognizes that the Company
provides its services and products throughout the world and would be
substantially injured by
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Executive competing with the Company as described below in any part of the world
and, therefore, Executive agrees and warrants that he will not, unless acting
with the Company's express prior written consent, directly or indirectly, while
an Executive of the Company and for a period of two (2) years following
termination of such employment, engage, anywhere in the world and in any
capacity, in any business or activity that competes with, or involves
preparation to compete with, that of the Company as it is at the time of
termination.
Executive and the Company are of the belief that the period of time and
the area herein specified are reasonable in view of the nature of the business
in which the Company is engaged and proposes to engage, the state of its
business development and Executive's knowledge of this business. However, if
such period or such area should be adjudged unreasonable in any judicial
proceeding, then the period of time shall be reduced by such number of months or
such area shall be reduced by elimination of such portion of such area, or both,
as are deemed unreasonable, so that this covenant may be enforced in such area
and during such period of time as is adjudged to be reasonable.
Executive acknowledges that his agreement to this non-competition
obligation is a material inducement to the Company to effect the Merger and that
Executive is to receive substantial value by reason of the Merger.
10. NON-SOLICITATION AGREEMENT. Executive agrees and covenants that he
will not, unless acting with the Company's express written consent, directly or
indirectly, during the term of this Agreement or for a period of two (2) years
thereafter (a) solicit, entice away or interfere with the Company's contractual
relationships with any customer, client, officer or Executive of the Company nor
(b) hire or assist another in the hiring of, or retain as a consultant or assist
another in such retention, any such employee or any person who has been such an
employee within the six (6) month period before such hiring or retention;
provided, however, it shall not be deemed to be a violation of this covenant or
the one contained in Section 9 hereof if, after termination of Executive's
employment with the Company, Executive shall solicit sponsors for, or seek to do
business with, existing customers or sponsors of the Company for or on behalf of
a business which is not in competition with the Company.
11. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been given upon the earlier of actual
receive or three days after having been mailed by first class mail, postage
prepaid, or twenty-four hours after having been sent by Federal Express or
similar overnight delivery services, as follows: (a) if to Executive, at
___________, or to such other person(s) or address(es) as Executive shall have
furnished to the Company in writing; and (b) if to the Company, at 00 Xxxxxxxxxx
Xxx, XX 00000, Attention: Xxxxxxx X. Xxxxxx, Chairman.
12. ASSIGNABILITY. In the event that the Company shall be merged with,
or consolidated into, any other corporation, or in the event that it shall sell
and transfer substantially all of its assets to another corporation or entity,
the terms of this Agreement shall inure to the
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benefit of, and be assumed by, the corporation resulting from such merger or
consolidation, or to which the Company's assets shall be sold and transferred.
This Agreement shall not be assignable by Executive.
13. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between the Company and Executive with respect to the subject matter hereof and
supersedes in all respects all prior agreements of any kind concerning the
subject matter hereof.
14. EQUITABLE RELIEF. Executive recognizes and agrees that the
Company's remedy at law for any breach of the provisions of Sections 7, 8, 9 or
10 hereof may be inadequate, and he agrees that for breach of such provisions,
the Company shall, in addition to such other remedies as may be available to it
at law or in equity or as provided in this Agreement, be entitled to injunctive
relief and to enforce its rights by an action for specific performance. Should
Executive engage in any activities prohibited by, and material to, this
Agreement, he agrees to pay over to the Company all compensation, remuneration
or monies or property of any sort received in connection with such activities;
such payment shall not impair the right of the Company to pursue any rights,
remedies, obligations or liabilities of Executive which such parties may have
under this Agreement or applicable law.
15. AMENDMENTS. This Agreement may not be amended, nor shall any
change, waiver, modification, consent or discharge be effected except by written
instrument executed by the Company and Executive.
16. SEVERABILITY. If any part of any term or provision of this
Agreement shall be held or deemed to be invalid, inoperative or unenforceable to
any extent by a court of competent jurisdiction, such circumstances shall in no
way affect any other term or provision of this Agreement, the application of
such term or provisions in any other circumstances, or the validity or
enforceability of this Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of The Commonwealth of Massachusetts.
18. CONFIDENTIALITY OF THIS AGREEMENT. The Executive shall not, either
during the period of his employment with the Company or at any time thereafter,
disclose to any person within or outside of the Company either the existence of
this Agreement or any of the terms and conditions contained within this
Agreement without first obtaining authorization of the Company, which
authorization may be withheld by the Company at any time and for any reason.
19. PARENT GUARANTY. Cytation hereby guarantees the obligations of the
Company under this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused
to be executed this Noncompetition and Employment Agreement as an instrument
under seal as of the date first above written.
XXXXXXXXXXX.XXX INCORPORATED
By:
--------------------------------
Name:
Title:
XXXXXXXX.XXX INCORPORATED
By:
--------------------------------
Name:
Title:
-----------------------------------
[Executive]
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Exhibit A to
Noncompetition and Employment Agreement
XXXXXXXX.XXX INCORPORATED
1999 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
This Agreement is by and between Xxxxxxxx.xxx Incorporated (the
"Company"), XxxxxxxXxxx.xxx Incorporated ("CollegeLink") and Xxxxxxx X. X'Xxxxx
(the "Optionee").
W I T N E S S E T H:
1. DEFINITIONS. Whenever used herein, the following terms shall have
the meanings provided below:
"ADMINISTRATOR" means the administrator of the Plan appointed pursuant
to Section 3 of the Plan.
"AGREEMENT" means this Stock Option Agreement.
"BOARD" means the Board of Directors of the Company.
"CHANGE IN CONTROL" means (i) a consolidation or merger of the Company
with or into any other corporation, or any other entity or person, other than a
wholly-owned subsidiary of the Company, excluding any transaction in which the
stockholders of the Company immediately prior to the transaction will maintain
voting control or own at least 50% (in each case, in substantially the same
proportion as before such event) of the resulting entity after the transaction;
(ii) any corporate reorganization, including an exchange offer, in which the
Company shall not be the continuing or surviving entity resulting from such
reorganization, excluding any transaction in which the stockholders of the
Company immediately prior to the transaction will maintain voting control or own
at least 50% (in each case, in substantially the same proportion as before such
event) of the resulting entity after the transaction; or (iii) the sale of a
substantial portion of the Company's assets, which shall be deemed to occur on
the date that any one person, or more than one person acting as a group,
acquires (or has acquired during the 12 month period ending on the date of the
most recent acquisition by such person or persons) assets from the Company that
have a total fair market value equal to more than 75% of the total fair market
value of all the assets of the Company.
"CLOSING DATE" shall have the meaning given such term in the Employment
Agreement.
52
"COMMON SHARES" means shares of the Company's common stock, $.001 par
value.
"EMPLOYMENT AGREEMENT" means that certain Non-Competition and
Employment Agreement between CollegeLink and the Optionee dated as of the
Closing Date.
"FAIR MARKET VALUE" has the meaning given such term in the Plan.
"GRANT DATE" means the Closing Date.
"PLAN" means the Xxxxxxxx.xxx Incorporated 1999 Key Executive Stock
Option Plan.
2. GRANT OF OPTION. Effective as of the Grant Date, the Company hereby
awards to the Optionee, subject to the terms and conditions of the Plan, and the
terms and conditions contained herein, the right and option to purchase from the
Company all or any part of an aggregate of 200,000 Common Shares, at a purchase
price equal to $[INSERT PUBLIC OFFERING PRICE (IN ACCORDANCE WITH EMPLOYMENT
AGREEMENT)] per share, such option to be exercised as hereinafter provided. It
is intended that the option evidenced hereby constitute an incentive stock
option within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") to the maximum extent permitted by law. To the extent
that any portion of this option exceeds the limitations of Code Section 422, or
otherwise fails to qualify as an incentive stock option within the meaning of
Code Section 422, such portion shall be considered a non-qualified stock option.
3. TERMS AND CONDITIONS. In addition to the terms and conditions
contained in the Plan, it is understood and agreed that the option evidenced
hereby is subject to the following additional terms and conditions:
(a) Expiration Date. The option shall expire on the tenth
anniversary of the Grant Date, unless sooner terminated as provided herein.
(b) Period of Exercise. Subject to the other terms of this
Agreement regarding the exercisability of this option, one-third of this option
shall vest and become exercisable upon the first anniversary of the Grant Date,
and, provided that Optionee remains employed by CollegeLink, the remaining
portion of such option shall vest and become exercisable ratably on a monthly
basis over the two-year period commencing on the first anniversary of the Grant
Date and ending on the third anniversary of the Grant Date.
(c) Acceleration of Vesting upon Change in Control.
Notwithstanding the foregoing, this option shall become exercisable in full
immediately prior to a Change in Control, subject to the provisions of
subparagraph (e) hereof.
(d) Termination of Option or Acceleration of Vesting by Reason
of Termination of Employment.
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53
(i) If Optionee's employment with CollegeLink is terminated by
CollegeLink during the term of the Employment Agreement or thereafter without
Cause (as defined in the Employment Agreement), this option shall become
immediately exercisable in full and shall terminate if not exercised within one
year of the date of termination, unless sooner terminated by reason of Paragraph
2(a) hereof.
(ii) If Optionee's employment with CollegeLink is terminated
by reason of death or Disability (as defined in the Employment Agreement) during
the term of the Employment Agreement or thereafter, any portion of this option
that is not vested and exercisable on the date of death or Disability by reason
of Paragraph 2(b) hereof shall immediately terminate, and any remaining portion
shall terminate if not exercised within one year of the date of death or
Disability, unless sooner terminated by reason of Paragraph 2(a) hereof.
(iii) If Optionee voluntarily terminates employment with
CollegeLink during the term of the Employment Agreement or thereafter without
Good Reason, any portion of this option that is not vested and exercisable on
the date of termination by reason of Paragraph 2(b) hereof shall immediately
terminate, and any remaining portion shall terminate if not exercised within
three months from the date of termination, unless sooner terminated by reason of
Paragraph 2(a) hereof.
(iv) In the event Optionee's employment is terminated by
CollegeLink for Cause during the term of the Employment Agreement or thereafter,
or subsequent to termination Optionee violates Sections 8, 9, or 10 of the
Employment Agreement as determined by a majority of the Board, any unexercised
portion of this option, whether exercisable pursuant to Paragraph 2(b) hereof or
not exercisable, shall become null and void upon action by the Administrator.
The Administrator's action shall be communicated in writing to the Optionee as
soon as practicable. In addition, the Administrator may, in its sole discretion,
by written notice demand that any or all stock certificates for Common Shares
acquired pursuant to the exercise of this option, or any profit realized from
the sale of such or transfer of such Common Shares, be returned to the Company
within five (5) days of receipt of such notice. Any exercise price paid by the
Optionee shall be returned to Optionee by the Company immediately thereafter,
without interest. The Company shall be entitled to reimbursement of reasonable
attorney fees and expenses incurred in seeking to enforce it rights under this
Paragraph 2(d)(iii).
(e) Change in Control. In the event of a Change in Control,
and except as otherwise provided herein, this option shall become immediately
exercisable for a period of fifteen days or such longer or shorter period as the
Board may prescribe (the "notice period") immediately prior to the scheduled
consummation of such Change in Control, provided, however, that the
exercisability of and any exercise of this option during the notice period shall
be (i) conditioned upon the consummation of the Change in Control, and (ii)
effective only immediately before the consummation of such Change in Control.
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54
Upon consummation of any such Change in Control, the Plan and any
unexercised portion of this option shall terminate. Notwithstanding the
foregoing, to the extent provision is made in writing in connection with such
Change in Control for the continuation of the Plan and the assumption of this
option, or for the substitution for this option of new options covering the
stock of a successor company, or a parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares or units and
exercise prices, then the Plan and this option shall continue in the manner and
under the terms contained herein, and the acceleration and termination
provisions set forth in the first two sentences of this subparagraph (e) shall
be of no effect. The Company shall send written notice of a Change in Control to
Optionee not later than the time at which the Company gives notice thereof to
its stockholders.
(f) Exercise of Option. This option shall be exercised by
submitting a written notice to the Administrator signed by the Optionee and
specifying the number of Common Shares as to which the option is being
exercised. Such notice shall be accompanied by the payment of the full option
price for the shares being purchased. Payment shall be made in (i) cash or by
check in a form satisfactory to the Company, (ii) subject to the approval of the
Administrator, already-owned Common Shares (to the extent permitted by law),
which shall be valued for this purpose at the Fair Market Value of the Common
Shares on the day immediately preceding the date of transfer, or (iii) any
combination of the above. A certificate or certificates for the Common Shares
purchased shall be issued by the Company after the exercise of the option and
payment therefor, including provision for any federal and state withholding
taxes, and other applicable taxes.
(g) Non-transferability. This option and all rights hereunder
shall be exercisable during the Optionee's lifetime only by the Optionee and
shall be non-assignable and non-transferable by the Optionee except, in the
event of the Optionee's death, by will or by the laws of descent and
distribution. In the event the death of the Optionee occurs, the representative
or representatives of the Optionee's estate, or the person or persons who
acquire (by bequest or inheritance) the rights to exercise this option in whole
or in part, may exercise this option prior to the expiration of the option as
specified in Paragraphs 3(a) and (d) above.
(h) Modification or cancellation of option. The Administrator
shall have the authority to effect, at any time and from time to time, with the
consent of the Optionee, the modification of the terms of this option agreement
(subject to the limitations contained in the Plan).
(i) No Rights as Stockholder. The Optionee shall have no
rights as a stockholder with respect to any Common Shares subject to this option
prior to the date of issuance to Optionee of a certificate or certificates for
such shares.
(j) Compliance with Law and Regulations. This option and the
obligation of the Company to sell and deliver shares hereunder shall be subject
to all applicable federal and state laws, rules and regulations and to such
approvals by any government or regulatory agency as
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55
may be required. The Company shall not be required to issue or deliver any
certificates for Common Shares prior to (i) the listing of such Common Shares on
any stock exchange on which the Common Shares may then be listed, and (ii) the
completion of any registration or qualification of such Common Shares under any
federal or state law, or any rule or regulation of any government body which the
Company shall, in its sole discretion, determine to be necessary or advisable.
Moreover, this option may not be exercised if its exercise, or the receipt of
Common Shares pursuant thereto, would be contrary to applicable law.
(k) No Right to Continued Employment. This option shall not
confer upon the Optionee any right with respect to continuance of employment by
CollegeLink or the Company, nor shall it interfere in any way with the right of
CollegeLink or the Company to terminate the Optionee's employment at any time.
(l) Non-Competition. Optionee acknowledges and agrees that the
award of this option is conditioned upon and granted in consideration of
Optionee's agreement to abide by the provisions of Sections 8, 9, and 10 of the
Employment Agreement. In the event that Optionee's employment with CollegeLink
continues after the expiration of the Employment Agreement pursuant to an
"at-will" employment relationship, any portion of this option that is not
exercisable by reason of Paragraph 2(b) hereof shall terminate upon the
expiration of the Employment Agreement, and any remaining portion will terminate
if not exercised within three months of such expiration (unless sooner
terminated by reason of Paragraph 2(a) hereof), unless Optionee enters into and
agrees that his "at-will" employment shall be bound and governed by a
non-competition agreement containing terms substantially similar to those
contained in Sections 8, 9 and 10 of the Employment Agreement.
4. DISQUALIFYING DISPOSITION OF COMMON SHARES. This Option shall not
qualify as an incentive stock option within the meaning of Code Section 422 if
the Common Shares acquired pursuant to the exercise of the option are sold or
transferred, other than by will or by the laws of descent and distribution,
within two years of the Grant Date or within one year after the issuance of the
Common Shares to the Optionee pursuant to such exercise.
5. OPTIONEE BOUND BY PLAN. The Optionee hereby agrees to be bound by
all of the terms and provisions of the Plan. In the event of any inconsistency
between this Agreement and the terms of the Plan, the terms of the Plan shall
govern.
6. WITHHOLDING TAXES. Optionee acknowledges and agrees that the Company
has the right to deduct from payments of any kind otherwise due to Optionee any
federal, state or local taxes of any kind required by law to be withheld with
respect to the exercise of this option hereunder.
7. NOTICES. Any notice hereunder to the Company shall be addressed to
it at its principal business office, 00 Xxxxxxxxxx Xxx, Xxxxxxx, XX 00000 and
any notice hereunder to
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56
the Optionee shall be sent to the address reflected on the records of
CollegeLink, subject to the right of either party to designate at any time
hereafter in writing some other address.
8. DELAWARE LAW TO GOVERN. This Agreement shall be construed and
administered in accordance with and governed by the laws of the State of
Delaware.
IN WITNESS WHEREOF, the Company and CollegeLink have caused this Stock
Option Agreement to be executed by their duly authorized officers and the
Optionee has executed this Agreement this ______ day of _______________, 199_.
XXXXXXXX.XXX INCORPORATED
By:
--------------------------------
Name:
Title:
XXXXXXXXXXX.XXX INCORPORATED
By:
--------------------------------
Name:
Title:
-----------------------------------
Xxxxxxx X. X'Xxxxx
-6-
57
Exhibit B to
Agreement and Plan of Merger
XXXXXXXX.XXX INCORPORATED
SUPPORT AGREEMENT
This Support Agreement (this "Agreement") is entered into as of October
___, 1999, by and between Xxxxxxxx.xxx Incorporated, a New York corporation
("Parent"), and _____________ ("Seller").
RECITALS
A. Concurrently with the execution and delivery of this Agreement,
Parent, XxxxxxxXxxx.xxx Incorporated, a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), Student Success, Inc., a Wisconsin
corporation ("Company"), Xxxxxxxx X. Xxxxx, Xxxxxxx X. X'Xxxxx and the Xxxxxxx
X. X'Xxxxx Stock Trust are entering into an Agreement and Plan of Reorganization
of even date herewith ("Merger Agreement"), pursuant to which Parent agrees to
acquire all outstanding shares of common stock, without par value, of the
Company ("Shares"), pursuant to a statutory merger of Company with and into the
Merger Sub (the "Merger"). Capitalized terms used but not defined herein shall
have the meanings set forth in the Merger Agreement.
B. As of the date hereof, Seller beneficially owns directly ________
Shares ("Owned Shares").
Now, therefore, in consideration of the covenants, promises and
representations herein and in the Merger Agreement, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. AGREEMENT TO VOTE.
1.1 Voting. Seller hereby agrees that, during the time this
Agreement is in effect, at any meeting of the shareholders of the Company,
however called, or any action by written consent of the shareholders of the
Company, Seller shall (a) vote the Owned Shares in favor of the Merger; (b) vote
the owned Shares against any action or agreement that would result in a breach
of any covenant, representation, or warranty or any other obligation or
agreement of the Company under the Merger Agreement; and (c) vote the Owned
Shares against any action or agreement (other than the Merger Agreement or the
transactions contemplated thereby) that would impede, interfere with, delay,
postpone or attempt to discourage the Merger, including, but not limited to: (i)
any extraordinary corporation transaction, such as a merger, consolidation or
other business combination involving the Company or any of its subsidiaries;
(ii) a sale or transfer of a material amount of assets of the Company or any of
its subsidiaries or a
58
reorganization, recapitalization or liquidation of the Company and its
subsidiaries; (iii) any change in the management or Board of Directors of the
Company, except as otherwise agreed to in writing by Parent; (iv) any material
change in the present capitalization or dividend policy of the Company; or (v)
any other material change in the Company's corporate structure or business.
1.2 Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Seller hereby irrevocably grants to, and appoints
Xxxxxxx X. Xxxxxx and Xxxxx X. High, or either of them, in their respective
capacities as officers of the Parent, and any individual who shall hereafter
succeed to any such office of Parent, and each of them individually, Seller's
proxy and attorney-in-fact (with full power of substitution), for and in the
name, place and stead of Seller, to vote the Owned Shares in favor of the Merger
and otherwise as contemplated by Section 1.1
(b) Seller represents that any proxies heretofore
given in respect of the Owned Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Seller understands and acknowledges that Parent
is entering into the Merger Agreement in reliance, among other things, upon
Seller's execution and delivery of this Agreement. Seller hereby affirms that
the irrevocable proxy set forth in this Section 1.2 is given in connections with
the execution of the Merger Agreement, and that such irrevocable proxy is given
to secure the performance of the duties of the Seller under this Agreement.
Seller hereby further affirms that the irrevocable proxy is coupled with an
interest and may under no circumstances be revoked. Seller hereby ratifies and
confirms all that such proxies and attorneys-in-fact may lawfully do or cause to
be done by virtue hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the applicable provisions of the Wisconsin
Business Corporation Law.
1.3 No Inconsistent Arrangements. Seller hereby covenants and
agrees that, except as contemplated by this Agreement and the Merger Agreement,
he shall not:
(a) transfer (which term shall include, without
limitation, any sale, gift, pledge or other disposition), or consent to any
transfer of, any or all of the Owned Shares or any interest therein; provided,
however, that Seller may transfer (i) the Owned Shares by will or intestacy, and
(ii) up to ten percent (10%) of the Owned Shares as a bona fide gift or gifts,
provided that prior to any such permitted transfer, each transferee shall agree
in writing (in a form satisfactory to the Parent) that such transferee will
receive and hold such Owned Shares subject to the provisions of this Agreement;
(b) enter into any contract, option or other
agreement or understanding with respect to any transfer of any or all of the
Owned Shares or any interest therein;
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59
(c) grant any proxy, power-of-attorney or other
authorization in or with respect to any or all of the Owned Shares;
(d) deposit the Owned Shares into a voting trust or
enter into a voting agreement or arrangement with respect to the Owned Shares;
or
(e) take any other action that would make any
representation or warranty of Seller hereunder untrue or incorrect.
1.4 Waiver of Appraisal Rights. Seller hereby waives any
rights of appraisal or rights to dissent from the Merger that he may have under
applicable law.
2. EXPIRATION. This Agreement and the proxy granted pursuant to Section
1 hereof shall terminate on the termination of the Merger Agreement in
accordance with its terms.
3. REPRESENTATIONS AND WARRANTIES. Seller hereby represents and
warrants to Parent as follows:
3.1 Title. Seller has good and valid title to the Owned
Shares, free and clear of any lien, pledge, charge, encumbrance or claim of
whatever nature and, upon consummation of the Merger, Seller will deliver good
and valid title to the Owned Shares, free and clear of any lien, charge,
encumbrance or claim of whatever nature.
3.2 Ownership of Shares. On the date hereof, the Owned Shares
are owned of record or beneficially by Seller and, on the date hereof, the Owned
Shares constitute all of the Shares owned of record or beneficially by Seller.
Seller has sole voting power and sole power of disposition with respect to all
of the Owned Shares, with no restrictions, subject to applicable federal
securities laws, on Seller's rights of disposition pertaining thereto.
3.3 Power; Binding Agreement. Seller has the legal capacity,
power and authority to enter into and perform all of his obligations under this
Agreement. The execution, delivery and performance of this Agreement by Seller
will not violate any other agreement to which Seller is a party including,
without limitation, any voting agreement, stockholders' agreement or voting
trust. This Agreement has been duly and validly executed and delivered by Seller
and constitutes a valid and binding agreement of Seller, enforceable against
Seller in accordance with its terms.
3.4 No Conflicts. No authorization, consent or approval of, or
filing with, any court or any public body or authority is necessary for the
consummation by Seller of the transactions contemplated by this Agreement. The
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby will not:
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60
(a) constitute a material breach, violation or
default (or any event which, with notice or lapse of time or both, would
constitute a default) under any material note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument to which Seller is a
party or by which his properties or assets are bound; or
(b) result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under any material note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument to which Seller is a party or by which his
properties or assets are bound; or
(c) result in the creation of any lien, encumbrance,
pledge, charge or claim upon any of the properties or assets of Seller under any
material note, bond, mortgage, indenture, deed of trust, license, lease,
agreement or other instrument to which Seller is a party or by which his
properties or assets are bound.
4. ADDITIONAL SHARES. Seller hereby agrees, while this Agreement is in
effect, to promptly notify Parent of the number of Shares acquired by the Seller
after the date hereof.
5. FURTHER ASSURANCES. From time to time, at Parent's request and
without further consideration, Seller shall execute and deliver such additional
documents and take all such further action as may be reasonably necessary or
desirable to consummate and make effective the transactions contemplated by
Section 1 of this Agreement.
6. MISCELLANEOUS.
6.1 Non-Survival. The representations and warranties made
herein shall terminate upon Seller's sale of the Owned Shares to Parent in the
Merger, other than Seller's representation and warranty in Section 3.1, which
shall survive the sale of the Owned Shares and the termination of this Agreement
following such sale.
6.2 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof
and (b) shall not be assigned by operation of law or otherwise, provided that
Parent may assign its rights and obligations hereunder to any direct or indirect
wholly-owned subsidiary of Parent, but no such assignment shall relieve Parent
of its obligations hereunder if such assignee does not perform such obligations.
6.3 Amendments. This Agreement may not be modified, amended,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereto.
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61
6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given by hand delivery
or telecopy or by other courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
if to Seller:
with a copy to:
if to Parent:
Xxxxxxxx.xxx Incorporated
00 Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman of the Board
with a copy to:
Xxxxx, Xxxx & Xxxxx LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
6.5 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
6.6 Specific Performance. Seller recognizes and acknowledges
that a breach by him of any covenants, promises or agreements contained in this
Agreement will cause the Parent to sustain damages for which it would not have
an adequate remedy at law for money damages, and therefore Seller agrees that in
the event of any such breach Parent shall be entitled to the remedy of specific
performance of such covenants and agreements and injunctive and other equitable
relief in addition to any other remedy to which it may be entitled, at law or in
equity.
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62
6.7 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but both of which
shall constitute one and the same Agreement.
6.8 Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
6.9 Severability. In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,
void or unenforceable, said provision shall survive to the extent it is not so
declared, and all of the other provisions of this Agreement shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Support
Agreement to be duly executed as an instrument under seal as of the date first
written above.
XXXXXXXX.XXX INCORPORATED
By:
--------------------------------
Name:
Title:
SELLER:
By:
--------------------------------
[name]
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63
Exhibit C to
Agreement and Plan of Merger
CERTIFICATE OF MERGER
Merging
STUDENT SUCCESS INC.,
a Wisconsin corporation
with and into
XXXXXXXXXXX.XXX INCORPORATED
a Delaware corporation
Pursuant to Section 252 of the General Corporation Law
of the State of Delaware
XxxxxxxXxxx.xxx Incorporated, a corporation duly organized and existing
under the laws of the State of Delaware ("Merger Sub"), does hereby certify as
follows:
FIRST: An Agreement and Plan of Merger (the "Merger Agreement") dated
October __, 1999, among Xxxxxxxx.xxx Incorporated, a New York corporation
("Parent"), Merger Sub, Student Success Inc., a Wisconsin corporation ("SSI"),
Xxxxxxxx X. Xxxxx, Xxxxxxx X. X'Xxxxx and the Xxxxxxx X. X'Xxxxx Stock Trust
setting forth the terms and conditions of the merger of SSI with and into Merger
Sub (the "Merger"), has been approved, adopted, certified, executed and
acknowledged by Merger Sub and SSI (collectively, the "Constituent
Corporations") in accordance with Section 252 of the Delaware General
Corporation Law.
SECOND: The name of the corporation surviving the Merger (the
"Surviving Corporation") shall be XxxxxxxXxxx.xxx Incorporated.
THIRD: The Certificate of Incorporation of the Surviving Corporation
shall be its Certificate of Incorporation.
FOURTH: An executed copy of the Merger Agreement is on file at the
principal place of business of the Surviving Corporation at the following
address:
XxxxxxxXxxx.xxx Incorporated
c/o Xxxxxxxx.xxx Incorporated
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
64
FIFTH: A copy of the Merger Agreement will be furnished by the
Surviving Corporation, on request and without cost, to any stockholder of either
Constituent Corporation.
SIXTH: The authorized capital stock of SSI, Inc. is 9,000 shares of
common stock, without par value per share.
SEVENTH: The Merger shall become effective upon the filing of this
Certificate of Merger with the Secretary of State of the State of Delaware.
IN WITNESS WHEREOF, XxxxxxxXxxx.xxx Incorporated has caused this
Certificate of Merger to be executed as of , 1999.
XXXXXXXXXXX.XXX INCORPORATED
By:
-------------------------------
Name:
Title:
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65
Exhibit D to Agreement
and Plan of Merger
ARTICLES OF MERGER
MERGING
STUDENT SUCCESS, INC.
a Wisconsin corporation
INTO
XXXXXXXXXXX.XXX INCORPORATED
a Delaware corporation
Pursuant to the provisions of the Wisconsin Business Corporation Law,
the undersigned corporations hereby certify the following:
1. STUDENT SUCCESS, INC., a Wisconsin corporation ("Student Success"),
shall merge with and into XXXXXXXXXXX.XXX INCORPORATED, a Delaware corporation
(CollegeLink"), and that CollegeLink shall be the surviving corporation (the
"Merger").
2. The Agreement and Plan of Merger (the "Merger Agreement") dated
October , 1999 among Student Success, Xxxxxxxx Xxxxx, Xxxxxxx X. X'Xxxxx, the
Xxxxxxx X. X'Xxxxx Stock Trust, Xxxxxxxx.xxx Incorporated and CollegeLink is
attached hereto as Exhibit A.
3. The Merger Agreement was adopted and approved by Student Success and
CollegeLink in accordance with Section 180.1103 of the Wisconsin Business
Corporation Law.
4. The Merger shall become effective upon the effective date of the
filing of these Articles of Merger with the Secretary of the State of the State
Of Wisconsin.
IN WITNESS WHEREOF, the parties hereto have caused these Articles of
Merger to be executed as of the day of , 1999 by their duly authorized
officers.
STUDENT SUCCESS, INC.
a Wisconsin corporation
By:
-------------------------------
Name:
Title:
XXXXXXXXXXX.XXX, INCORPORATED
a Delaware corporation
By:
-------------------------------
Name:
Title:
66
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EXHIBIT A
67
Exhibit E to
Agreement and Plan of Merger
DISCLOSURE SCHEDULES
TO THE
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
XXXXXXXX.XXX INCORPORATED,
XXXXXXXXXXX.XXX INCORPORATED,
STUDENT SUCCESS, INC.
and
XXXXXXXX X. XXXXX
XXXXXXX X. X'XXXXX
XXXXXXX X. X'XXXXX STOCK TRUST
Dated as of October , 1999
68
DISCLOSURE SCHEDULES
Schedule 2.1 Organization of the Company
Schedule 2.4 Authority
Schedule 2.5 Company Financial Statements
Schedule 2.6 No Undisclosed Liabilities
Schedule 2.7 No Changes
Schedule 2.10(a) Real Property Leases
Schedule 2.10(b) Title to Properties
Schedule 2.10(c) Equipment
Schedule 2.11(a) Company Registered Intellectual Property
Schedule 2.11(b) Intellectual Property Liens
Schedule 2.11(f) Intellectual Property Agreement
Schedule 2.11(g) Intellectual Property - Indemnification Obligations
Schedule 2.11(l) Recipient Confidentiality Agreement
Schedule 2.11(o) Year 2000 Compliance Program
Schedule 2.12 Agreements, Contracts and Commitments
Schedule 2.13 Interested Party Transactions
Schedule 2.14 Governmental Authorization
Schedule 2.18 Insurance
Schedule 2.21 Binding Agreements; No Default
Schedule 2.23 Third Party Consents
Schedule 2.26(b) Employee Plan and Employee Agreement
Schedule 2.27 Warranty Claims
69
Schedule 2.1
ORGANIZATION OF THE COMPANY
The Company is in the process of qualifying to do business in the State of Ohio.
70
Schedule 2.4
AUTHORITY
The Fifth Third Bank has a blanket lien on all of the assets of the
Company pursuant to a Security Agreement dated June 30, 1999 and Third Party
Collateral Agreement dated August 16, 1999.
71
Schedule 2.5
COMPANY FINANCIAL STATEMENTS
Attached hereto are the Company's unaudited financial statements for the
fiscal years ending December 31, 1997 and 1998 and the Company's unaudited
financial statements for the eight months ended August 31, 1999.
72
Schedule 2.6
NO UNDISCLOSED LIABILITIES
1. Unlimited Payment Guaranty dated August 16, 1999 between the Company
and The Fifth Third Bank.
2. The Company granted The Fifth Third Bank a security interest in all
of the Company's assets pursuant to a Security Agreement dated June 30, 1999.
3. Third Party Collateral Agreement between the Company and The Fifth
Third Bank dated August 16, 1999.
4. Revolving Promissory Notes from the Company to Xxx X'Xxxxx (up to a
maximum of $87,625) and Xxxx Xxxxx (up to a maximum of $87,325), of which
approximately $75,000, in the aggregate, is outstanding as of October 15, 1999.
5. The Company has a bonus program based upon goals and objectives as
outlined in the employment letters disclosed in Schedule 2.12.
6. The Company did not meet its performance criteria in its Making
College Count Program with PriceWaterhouseCoopers ("PWC") under the Agreement
for the Participation of PriceWaterhouseCoopers LLP in the Making College Count
Program 1998-1999 Keynote Address Series dated November 13, 1998+. Pursuant to a
letter dated October 14, 1999 (attached hereto), PWC agreed to accept, in full
settlement thereof, 20 single sponsored one hour speaking events.
7. The Company did not meet its performance criteria under the
In-School Presentation Program Agreement with Bose Corporation dated December 7,
1998. Pursuant to an e-mail (attached hereto), Bose agreed to accept, in
settlement thereof, $10,000 worth of banner advertising on the Making College
Count website.
8. The Company agreed to purchase $75,000 worth of audio equipment from
Bose. The Company has only purchased approximately $25,000 worth of audio
equipment and may be obligated to purchase an additional approximately $50,000
worth of audio equipment.
9. As part of J.R. Cifani's employment arrangement, the Company agreed
to pay for up to one year, not to exceed $12,000, housing allowance and a
monthly car allowance of $350/month.
10. The Company owes SAIC, a computer software developer, approximately
$15,000 for services rendered.
11. In the ordinary course of the Company's business, the Company has
incurred miscellaneous/relocation expenses of approximately $15,000, $7,500 of
which is disclosed in the Company's financial statements.
73
12. See Schedule 2.7.
13. See Schedule 2.12.
14. See Schedule 2.26(b)
74
Schedule 2.7
NO CHANGES
1. See response to Schedule 2.6.
2. The Company owes a computer software developer approximately
$15,000 for serviced rendered.
3. The Company paid a consultant $5,000 per month for two months
(September and October) to provide recruiting and marketing services for the
Company.
4. The Company entered into the following contracts:
a. Making College Count Program Agreement dated
September 27, 1999 between the Company and Van Melle,
Inc.
b. Making High School Count Program Agreement dated
September 27, 1999 between the Company and Van Melle,
Inc.
c. The Company has verbal agreements with P&G for Making
High School Count test markets for the following
brands: Cover Girl, Head & Shoulders and Old Spice.
The Company will receive $27,000 per brand.
d. See Schedule 2.12.
5. The Company intends to make a tax distribution to its Shareholders
to cover the tax liability associated with the profits of the Company for the
fiscal period through the Effective Date.
6. The Company pays signing bonuses of between $500 and $1,000 to new
hires, all in the ordinary course of its business.
7. The Company agreed to pay for an apartment in Cincinnati, Ohio for
J.R. Xxxxxx for up to one year (not to exceed $12,000).
8. The Company sold two pieces of Bose audio equipment for
approximately $1,000 each.
75
Schedule 2.10(a)
REAL PROPERTY LEASES
Lease dated June 21, 1999 between Redna Place Properties and the
Company relating to the lease of office space at 000-000 Xxxxx Xxxxxxx,
Xxxxxxxxxx, Xxxx 00000. The Lease has a three (3) year term with a one year
renewal period. Rent during the initial three year term is $25,800 per year. The
leased premises consists of 3,900 square feet (including finished and warehouse
space).
76
Schedulc 2.10(b)
TITLE TO PROPERTIES
The Fifth Third Bank has a blanket lien on the assets of the Company
(see responses to Schedule 2.6).
77
Schedule 2.10(c)
EQUIPMENT
See attached listing of equipment.
78
Schedule 2.11(a)
COMPANY REGISTERED INTELLECTUAL PROPERTY
1. See attached letter from Tori Xxxxx Xxxxxx dated June 30, 1999
summarizing the Company's intellectual property rights.
2. xxx.xxxxxxxxxxxxxxxxxx.xxx
3. www xxxxxxxxxxxxxxxxxxxxx.xxx
79
Schedule 2.11(b)
INTELLECTUAL PROPERTY LIENS
The Company receives royalty payments from Southwestern Publishing from
the sales of the book titled "Start Now, Succeed Later." Southwestern Publishing
owns the rights to this book.
80
Schedule 2.11(f)
INTELLECTUAL PROPERTY AGREEMENTS
1. See response to Schedule 2.11(b).
2. Agreement between the Company and Lycos regarding the utilization of
the Company's content on Lycos' web site and revenue sharing arrangement related
thereto (see response to Schedule 2.12). The co-branded site is still under
development.
81
Schedule 2.11(g)
INTELLECTUAL PROPERTY - INDEMNIFICATION OBLIGATIONS
None.
82
Schedule 2.11(l)
RECIPIENT CONFIDENTIALITY AGREEMENT
The Company does not maintain confidentiality agreements with its
employees, consultants and contractors except for independent contractor
agreements signed by most persons engaged by the Company to provide lecturing
services (a listing of all such person is set forth in Schedule 2.12).
83
Schedule 2.11(o)
YEAR 2000 COMPLIANCE PROGRAM
None.
84
Schedule 2.12
AGREEMENTS, CONTRACTS AND COMMITMENTS
1. See Schedule 2.6.
2. See Schedule 2.7.
3. See Schedule 2.10(a).
4. See Schedule 2.11(a).
5. See Schedule 2.11(b).
6. See Schedule 2.11(f).
7. See Schedule 2.11(g).
8. See Schedule 2.18.
9. See Schedule 2.26.
10. Xxxx of Sale between Graphic Management Corporation and the Company
dated January 4, 1999 (evidencing transfer of all rights in Graphic
Management Corporation's assets relating to Making College Count and
Making High School Count to the Company.)
11. Assignment and Assumption Agreement dated January 4, 1999 between
Graphic Management Corp. and the Company (evidencing assignment of all
of Graphic Management's rights in the contracts relating to Making
College Count and Making High School Count).
12. Independent Contractor Agreement between Graphic Management (dba Making
College Count) and Xxxxxxxx Xxxxxx dated March 2, 1998.
13. In-School Presentation Program Agreement between Graphic Management and
Bose Corporation dated December 7, 1998.
14. Agreement for Services between Graphic Management and Apple Computer
dated September 1, 1998.
15. Making College Count Program Agreement between Graphic Management and
KeyBank USA dated September 30, 1998.
16. Making College Count Program Agreement between Graphic Management and
Student Advantage dated October 28, 1998.
17. Agreement for Participation between Graphic Management and
PriceWaterhouseCoopers
85
LLP dated November 1998.
18. Postage Meter License Agreement.
19. Security Agreement dated June 30, 1999 between the Company and The
Fifth Third Bank.
20. Unlimited Payment Guaranty dated August 16, 1999 in favor of The Fifth
Third Bank.
21. Third Party Collateral Agreement dated August 16, 1999 between the
Company and The Fifth Third Bank.
22. Revolving Promissory Note from the Company to Xxxx Xxxxx up to a
maximum of $87,325.
23. Revolving Promissory Note from the Company to Xxx X'Xxxxx up to a
maximum of $87,625.
24. Independent Contractor Agreement dated March 18, 1998 between Graphic
Management Corp. and Xxxxxxxx Xxxxxx.
25. Independent Contractor Agreement dated March 4, 1998 between Graphic
Management Corp. and Xxxxxx Xxxxxxxxx.
26. Independent Contractor Agreement dated February 22, 1998 between
Graphic Management Corp. and Xxxxxxxxx Xxxxxxx.
27. Independent Contractor Agreement dated March 3, 1998 between Graphic
Management Corp. and Xxxxx Xxxxx.
28. Independent Contractor Agreement between Graphic Management Corp. and
Xxxxx Xxxxxxxx.
29. Independent Contractor Agreement dated March 8, 1998 between Graphic
Management Corp. and Xxxxx Xxxxx.
30. Independent Contractor Agreement between Graphic Management Corp. and
J.R. Xxxxxx.
31. Independent Contractor Agreement dated March 7, 1998 between Graphic
Management Corp. and Xxxxxx X. Xxxxxxx.
32. Independent Contractor Agreement dated February 20, 1998 between
Graphic Management Corp. and Xxxxxx Xxxxx.
-2-
86
33. Independent Contractor Agreement dated March 22, 1998 between
Graphic Management Corp. and Xxxxx Xxxxxx.
34. Independent Contractor Agreement dated February 23, 1998 between
Graphic Management Corp. and Xxxxx Xxxx.
35. Independent Contractor Agreement dated February 24, 1998 between
Graphic Management Corp. and Xxxxxx Xxxxxxxxx.
36. Independent Contractor Agreement dated January 16, 1999 between Graphic
Management Corp. and Xxxxxx Xxxxxx.
37. Independent Contractor Agreement dated January 24, 1999 between Graphic
Management Corp. and Xxxxx Xxxxx.
38. Independent Contractor Agreement dated January 17, 1999 between Graphic
Management Corp. and Xxx Xxxxx.
39. Independent Contractor Agreement dated January 17, 1999 between Graphic
Management Corp. and Xxxxx Xxxxxx.
40. Independent Contractor Agreement dated January 17, 1999 between
Graphic Management Corp. and Xxxxxxx Xxxxxxx.
41. Independent Contractor Agreement dated January 17, 1999 between Graphic
Management Corp. and Xxxxxxx XxXxxx.
42. Independent Contractor Agreement dated January 18, 1999 between Graphic
Management Corp. and Xxxxxxx X. Xxxxxx.
43. Independent Contractor Agreement dated January 17, 1999 between Graphic
Management Corp. and Xxxx Xxxxxxx.
44. Independent Contractor Agreement dated January 17, 1999 between Graphic
Management Corp. and Xxxxx Xxxxx.
45. Independent Contractor Agreement dated January 6, 1999 between Graphic
Management Corp. and Xxxxxx Xxxxxxxx.
46. Independent Contractor Agreement dated January 5, 1999 between Graphic
Management Corp. and Xxxxxxxx Xxxxxxxx.
47. Independent Contractor Agreement dated January 5, 1999 between Graphic
Management Corp. and Xxxx Xxxxxxx.
-3-
87
48. Independent Contractor Agreement dated January 18, 1999 between Graphic
Management Corp. and Jake Welahemer.
49. The Company has engaged Xxxxx Xxxxx as an independent contractor
commencing September 15, 1999. The Company paid Xx. Xxxxx a
commission/bonus of $1,730 for the period ending October 10, 1999. Xx.
Xxxxx'x future engagements by the Company will be limited to speaking
only.
50. Agreement between the Company and Lycos, Inc. dated April 19, 1999.
51. Employment arrangement with J.R. Xxxxxx.
52. Making College Count Program Agreement dated October 14, 1999 between
the Company and Student Advantage, Inc.
53. Employment letter for Xxxxxxx Xxxxxxx.
54. Consignment Wholesale Agreement between Graphic Management Corp. and
Partners Book Distributing.
55. Agreement between Xxxxxx Book Company and Graphic Management Corp.
56. Distribution Agreement between Graphic Management Corp. and Unique
Books Inc. dated January 8, 1998.
57. Agreement between Graphic Management Corp. and Xxxxxxx X. X'Xxxxx
(assigned to Student Success, Inc.) dated October 13, 1998.
58. Sampling and Distribution Agreement dated January 27, 1999 between
Sampling Corporation of America and Making College Count.
59. Making High School Count Joint Marketing Agreement dated September 13,
1999 between the Company and Xxxxxx.
60. The Company is in the process of finalizing the following oral
agreements regarding Making High School Count:
a. Key Bank
b. Chevrolet
c. Old Spice
d. Head & Shoulders
e. Cover Girl
61. The Company in the process of finalizing the following oral agreement
regarding Making College Count:
-4-
88
a. Key Bank
b. PriceWaterhouseCoopers
c. Folgers
x. Xxxxx
e. Head & Shoulders
62. The Company has employment arrangements with the following individuals
(as evidenced by the attached employment letters):
a. Xxxxx Xxxx
b. Xxxxx Xxxxx
c. Xxxxxxx Crohns
d. Xxxxx-Xxxxx Xxxxxx
e. Xxxxxx Xxxx
f. Xxxx Xxxx
g. Xxxxx Xxxxx Bieber
h. Xxxxx Xxxxx
i. Xxxxx Xxxxxxx
j. Xxxxxxx XxXxxxxx
k. Xxxxx Xxx
1. Xxxx Xxxxxx
m. Xxxx Xxxx
n. Xxxxxx Xxxxxx
63. Making College Count Sign-Up Bonus.
64. See Schedule 2.13.
65. Making High School Count Program Agreement dated October 11, 1999
between the Company and Multitude, Inc.
66. South-Western College Publishing Agreement dated October 12, 1998
between Graphic Management Corp and South-Western Publishing.
67. Letter from Graphic Management Corp. to South-Western College
Publishing dated September 14, 1999 regarding the assignment of all
royalties to the Company.
-5-
89
Schedule 2.13
INTERESTED PARTY TRANSACTIONS
1. Xxxx Xxxxx is engaged by the Company as a consultant.
2. Revolving Promissory Note from the Company to Xxxx Xxxxx up to a
maximum of $87,325.
3. Revolving Promissory Note from the Company to Xxx X'Xxxxx up to a
maximum of $87,675.
90
Schedule 2.14
GOVERNMENTAL AUTHORIZATION
None.
91
Schedule 2.18
INSURANCE
The following Company insurance policies are attached hereto:
1. Commercial Umbrella Liability Policy - The Cincinnati Insurance Company
2. Commercial Insurance Policy - The Cincinnati Insurance Company
3. Humana Employees Health Life and Dependent Life Benefits
92
Schedule 2.21
BINDING AGREEMENTS: NO DEFAULT
1. The Company failed to meet its performance criteria pursuant to an
agreement with PriceWaterhouseCoopers. Pursuant to a letter dated October 14,
1999, PWC agreed to accept, in full settlement thereof, 20 single sponsored
one-hour speaking events.
2. The Company failed to meet its performance criteria pursuant to an
agreement with Bose. Pursuant to an e-mail, Bose agreed to accept in Settlement
thereof, $10,000 worth of banner advertising on the Company's website.
3. The Company agreed to purchase $75,000 worth of audio equipment from
Bose. As of the date hereof, the Company has purchased approximately $25,000
worth of audio equipment. The Company may be obligated to purchase an additional
approximately $50,000 worth of audio equipment.
93
Schedule 2.23
THIRD PARTY CONSENTS
4. Security Agreement dated June 30, 1999 between the Company and The
Fifth Third Bank.
5. Third Party Collateral Agreement dated August 16, 1999 between the
Company and The Fifth Third Bank.
6. Unlimited Guaranty dated August 16, 1999 between the Company and The
Fifth Third Bank.
94
Schedule 2.26(b)
EMPLOYEE PLAN AND EMPLOYEE AGREEMENT
1. The Company's employees are eligible to participate in the Company's
bonus program.
2. The Company has proposed to provide a 401(k) plan for its employees
by January 1, 2000.
3. Area Managers of the Company are eligible to receive bonuses if they
achieve certain Company determined goals.
4. Employees who sign schools to participate in the Company's program
are eligible to receive $25 per week if they achieve certain Company determined
goals.
95
Schedule 2.27
WARRANTY CLAIMS
1. The Company offers a money back guarantee on the satisfaction of the
book "Start Now, Succeed Later." Only one person has made a claim under this
guaranty.
2. The Company offers a performance guaranty in each of its sponsor
agreements. As previously disclosed, the Company has settled the existing claims
with PriceWaterhouseCoopers and Bose (see Schedule 2.6).
96
Exhibit F to
Agreement and Plan of Merger
List of Company Stockholders
Name and Address of Shareholder Shares of Common Stock
------------------------------- ----------------------
Xxxxxxxx X. Xxxxx 499
Xxxxxxx X. X'Xxxxx 351
Xxxxxxx X. X'Xxxxx Stock Trust 150
97
Exhibit G to
Agreement and Plan of Merger
FORM OF OPINION OF COUNSEL
FOR PARENT AND MERGER SUB
__________, 1999
Student Success, Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000-0000
Ladies and Gentlemen:
We have acted as counsel for Xxxxxxxx.xxx Incorporated, a New York
corporation ("Parent"), and XxxxxxxXxxx.xxx Incorporated, a Delaware corporation
and wholly-owned subsidiary of Parent ("Merger Sub"), in connection with the
negotiation, execution and delivery of the Agreement and Plan of Merger dated as
of October __, 1999 (the "Merger Agreement") among Parent, Merger Sub, Student
Success, Inc., a Wisconsin corporation, Xxxxxxxx X. Xxxxx, Xxxxxxx X. X'Xxxxx
and the Xxxxxxx X. X'Xxxxx Stock Trust. Capitalized terms used, but not
otherwise defined, herein shall have the meanings given to them in the Merger
Agreement.
In arriving at the opinions expressed below, we have examined and relied
on:
(a) executed copies of the Merger Agreement, the Employment
Agreements and the Support Agreements (collectively, the
"Transaction Documents");
(b) the Certificate of Incorporation and By-Laws of Parent, each
as amended as of the date hereof;
(c) the Certificate of Incorporation and By-Laws of Merger Sub,
each as amended as of the date hereof;
(d) the resolutions adopted by the board of directors of Parent by
unanimous written consent dated October _, 1999;
(e) the resolutions adopted by the board of directors of Merger
Sub by unanimous written consent dated October __, 1999 and
the resolutions adopted by the sole shareholder of Merger Sub
by unanimous written consent dated _______ __, 1999;
98
_______ __, 1999
Page 2
(f) a certificate of the Secretary of State of the State of New
York, dated as of _______ __, 1999, as to the good standing of
Parent and other matters;
(g) a certificate of the Secretary of State of the State of
Delaware, dated as of _______ __, 1999, as to the good
standing of Merger Sub and other matters; and
(h) the other documents delivered at the Closing held pursuant to
the Merger Agreement on the date hereof.
[FH&E TO ADD USUAL AND CUSTOMARY QUALIFICATION LANGUAGE]
Based on the foregoing, it is our opinion that:
1. Parent is a corporation validly existing and in good standing under
the laws of the State of New York. Parent has the requisite corporate power to
own, operate and lease its properties and to conduct its business as now being
conducted.
2. The authorized capital stock of Parent consists of (a) 100,000,000
shares of Common Stock, $0.001 par value per share, of Parent ("Parent Common
Stock") and (b) 10,000,000 shares of Preferred Stock, $0.01 par value per share,
of Parent ("Parent Preferred Stock"). To our knowledge, (i) there were 9,846,340
shares of Parent Common Stock issued and outstanding on September 30, 1999 and
(ii) there were 2,169,771 shares of Parent Preferred Stock issued and
outstanding on September 30, 1999.
3. Parent has all requisite corporate power and authority to execute,
deliver and perform its obligations under the Transaction Documents to which it
is a party. The execution, delivery and performance of such Transaction
Documents have been duly and validly authorized by all requisite corporate
action on the part of Parent. Such Transaction Documents have been duly executed
and delivered by Parent, and constitute the legal, valid and binding obligations
of Parent, enforceable against it in accordance with their terms.
4. Merger Sub is a corporation validly existing and in good standing under
the laws of the State of Delaware. Merger Sub has all requisite corporate power
and authority to execute, deliver and perform its obligations under the
Transaction Documents to which it is a party. The execution, delivery and
performance of such Transaction Documents have been duly and validly authorized
by all requisite corporate action on the part of Merger Sub. Such Transaction
Documents have been duly executed and delivered by Merger Sub, and constitute
the legal, valid and binding obligations of Merger Sub, enforceable against it
in accordance with their terms.
99
_______ __, 1999
Page 3
5. Assuming the due execution and delivery of the Delaware Filing and the
Wisconsin Filing, the execution, delivery and performance by Parent and Merger
Sub of the Transaction Documents to be signed by Parent or Merger Sub and the
consummation by Parent or Merger Sub of the transactions contemplated thereby do
not and will not (a) conflict with or result in a violation of the Certificate
of Incorporation or By-Laws of Parent or the Certificate of Incorporation or
By-Laws of Merger Sub, each as amended to date, or (b) to our knowledge, with or
without the giving of notice or the lapse of time, or both, conflict with, or
result in any violation or breach of, or constitute a default under, or result
in any right to accelerate or result in the creation of any encumbrance pursuant
to, or right of termination under, any provision of any note, mortgage,
indenture, lease, instrument or other agreement, permit, concession, grant,
franchise, license, judgment, order or decree to which Parent or Merger Sub is a
party or by which either of them or any of their respective assets or properties
is bound or which is applicable to either of them or any of their assets or
properties, or (c) require any authorization, consent or approval of, or filing
with or notice to, any Delaware or federal Governmental Entity prior to the
Closing except for the filing of the Delaware Filing with the Secretary of State
of the State of Delaware and the Wisconsin Filing with the Department of
Financial Institutions of the State of Wisconsin.
6. To our knowledge, there is no claim, action, suit, arbitration or
proceeding that is pending or threatened against Parent or Merger Sub before any
Governmental Entity (a) that seeks to restrain, enjoin, prevent the consummation
of or otherwise challenge any of the transactions contemplated by the Merger
Agreement or which questions the validity or legality of any of such
transactions or seeks to recover damages or to obtain other relief in connection
with any of such transactions or (b) which if adversely determined, will result
in any material adverse change in or effect on the financial condition,
business, operations, assets, properties or results of operations of Parent.
7. The shares of Parent Stock to be issued in connection with the Merger
have been duly authorized and, when issued in connection with the Merger as
contemplated by the Merger Agreement, will be validly issued, fully paid and
nonassessable.
8. Based upon the representations and warranties of the Shareholders in
the Merger Agreement, the issuance of Parent Stock in the Merger to the
Shareholders is exempt from the registration requirements of the Securities Act
of 1933, as amended.
9. Upon the filing of the Delaware Filing with the Secretary of State of
the State of Delaware and filing of the Wisconsin Filing with the Department of
Financial Institutions of the State of Wisconsin, the Merger will be duly
consummated in accordance with the laws of the State of Delaware.
100
_______ __, 1999
Page 4
This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur. This opinion is solely for your benefit and may not be disclosed to, or
quoted or relied upon by, any person or entity without our prior written
consent, except that this opinion may be disclosed to your outside legal counsel
and accountants.
Very truly yours,
XXXXX, XXXX & XXXXX LLP
By:______________________
A Partner
101
Exhibit H to
Agreement and Plan of Merger
FORM OF OPINION OF COUNSEL FOR COMPANY AND THE SHAREHOLDERS
_______, 1999
Xxxxxxxx.xxx Incorporated
XxxxxxxXxxx.xxx Incorporated
00 Xxxxxxxxxx Xxx
Xxxxxxx, Xxxxx Xxxxxx 00000
Ladies and Gentlemen:
We have acted as counsel for Student Success, Inc., a Wisconsin
corporation (the "Company"), and Xxxxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx X. X'Xxxxx
("X'Xxxxx") and the Xxxxxxx X. X'Xxxxx Stock Trust (collectively, the
"Shareholders") in connection with the negotiation, execution and delivery of
the Agreement and Plan of Merger dated as of October ___, 1999 (the "Merger
Agreement") among Xxxxxxxx.xxx Incorporated, XxxxxxxXxxx.xxx Incorporated, the
Company and the Shareholders. Capitalized terms used, but not otherwise defined,
herein shall have the meanings given to them in the Merger Agreement.
In arriving at the opinions expressed below, we have examined and
relied on:
A. executed copies of the Merger Agreement, the Employment
Agreements, the Support Agreements and other agreements
contemplated thereby (collectively, the "Transaction
Documents");
B. the Articles of Incorporation and Bylaws of the Company, as
amended as of the date hereof;
C. the resolutions adopted by the board of directors of the
Company by [unanimous written consent] dated October ___, 1999
and the resolutions duly adopted by the shareholders of the
Company at a meeting held on November ___, 1999;
D. a certificate of the Secretary of the State of Wisconsin,
dated as of ___________, 1999 as to the good standing of the
Company and other matters; and
E. the other documents delivered at the Closing held pursuant to
the Merger Agreement on the date hereof.
102
______________, 1999
Page 2
In such examinations, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals and
the conformity to authentic original documents exhibit H to agreement and plan
of merger of all documents submitted to us as certified, conformed or
photostatic copies. Notwithstanding the foregoing, we have (with your
permission) limited our factual inquiries to conferences with representatives of
the Company and the Shareholders (at which conferences the business, affairs and
properties of the Company, the transactions contemplated by the Merger Agreement
and other related matters were discussed), a review of the resolutions of the
Board of Directors and Shareholders of the Company, the certificates of certain
public officials and of officers of the Parent and certain factual inquiries
that, in fact, were actually made by attorneys in this firm based on the matters
discussed in such resolutions and certificates or at such conferences. Any
opinion herein qualified by the modifier "to the best of our knowledge," or to
matters "known to us," or to any matter of which we "are aware" or coming "to
our attention" or any variation of any of the foregoing, shall mean the actual
knowledge of those attorneys of this firm who have rendered substantive
attention to the transaction to which the opinion relates of the existence or
absence of any facts which would contradict our opinions set forth below. We
have not undertaken, for purposes of this opinion, any independent investigation
to determine the existence or absence of facts and no inference as to our
knowledge of the existence or absence of such facts should be drawn from the
fact of our representation of the Company. Moreover, we have not, for purposes
of our opinions below, searched computerized or electronic databases or the
docket of any court, governmental agency or regulatory body or other filing
office in any jurisdiction.
We have also assumed that all parties to the Transaction Documents other
than the Company and the Shareholders have properly executed and delivered the
Transaction Documents, that such execution and delivery has been properly
authorized as to each of said parties and that such parties have the power fully
to perform their respective obligations under the Transaction Documents.
We express no opinion with respect to the laws of any jurisdiction other
than the laws of the States of Delaware, Ohio and Wisconsin and, the federal
laws of the United States of America. With respect to the Employment Agreements,
we have assumed, with your permission, that the law of the Commonwealth of
Massachusetts which governs such agreements is identical in all respects to the
law of the State of Ohio.
Based solely on the review described above and subject to the assumptions,
limitations and qualifications set forth herein, it is our opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin and, except as described
in the Company Disclosure Schedule, is duly qualified and in good standing as a
foreign corporation in each other
103
______________, 1999
Page 3
jurisdiction in which it owns or leases properties, conducts operations or
maintains a stock of goods, where failure to so qualify would have a material
adverse effect on the Company or its business or property.
2. To the best of our knowledge, the Company does not own, directly or
indirectly, any of the capital stock of any corporation, association, trust or
similar entity.
3. The authorized capital stock of the Company consists of 9,000 shares
of Company Common Stock, of which 1,000 shares are issued and outstanding.
Immediately prior to the delivery of this letter, (a) the outstanding shares of
Company Common Stock were held of record by the persons and in the respective
numbers set forth in Exhibit F to the Merger Agreement and (b) all of the
outstanding shares of Company Common Stock had been validly issued, were fully
paid and nonassessable, and, to the best of our knowledge, were free and clear
of all liens or encumbrances.
4. To the best of our knowledge, (i) there are no other rights,
agreements, or commitments obligating the Company, now or in the future, to
issue or sell any shares of its capital stock or any options, warrants or
convertible securities, (ii) no person holds any phantom stock or other
contractual rights the value of which is determined, in whole or in part, by
reference to the value of the capital stock of the Company or the financial
performance of the Company, (iii) there are no stock appreciation rights granted
by the Company, (iv) there are no shares of preferred stock or bonds,
debentures, notes or other indebtedness of the Company which have the right to
vote on any matters on which the stockholders of the Company have the right to
vote, and (v) there are no outstanding contractual obligations of the Company to
purchase, redeem or otherwise acquire any shares of its capital stock or any
other securities.
5. The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Merger Agreement and each
of the other Transaction Documents to which the Company is a party and to
consummate the transactions contemplated thereby. The execution, delivery and
performance of the Merger Agreement and each of the other Transaction Documents
to which the Company is a party have been duly and validly authorized by all
requisite corporate action on the part of the Company. The Merger Agreement, and
the other Transaction Documents to be signed by the Company at or before the
Effective Time have been duly executed and delivered by the Company, and
constitute the legal, valid and binding obligations of the Company, enforceable
in accordance with their respective terms.
6. Each Shareholder has all requisite power and authority to execute,
deliver and perform his obligations under the Merger Agreement and each of the
Transaction Documents
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to which such Shareholder is a party and to consummate the transactions
contemplated thereby. Each of the Merger Agreement and the Transaction Documents
have been duly executed and delivered by each Shareholder who is a party
thereto, and constitutes the legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms.
7. Except as described in the Company Disclosure Schedule, the
execution and delivery by the Company of the Merger Agreement and the other
Transaction Documents to which the Company is a party, and the performance of
the transactions contemplated thereby do not and will not (a) conflict with or
result in a violation of the Articles of Incorporation or Bylaws of the Company,
each as amended to date, (b) to the best of our knowledge, with or without the
giving of notice or the lapse of time, or both, conflict with, or result in any
violation or breach of, or constitute a default under, or result in any right to
accelerate or result in the creation of any lien or encumbrance pursuant to, or
right of termination under, any provision of any judgment, law or regulation, or
any agreement, instrument or understanding to which the Company is a party or by
which it is bound, or (c) require any authorization, consent or approval of, or
filing with or notice to, any Wisconsin, Ohio or other Governmental Entity prior
to the Closing, except for the filing of the Articles of Merger with the
Department of Financial Institutions of the State of Wisconsin and the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware.
8. The execution and delivery by each Shareholder of the Merger
Agreement and each Transaction Document to which such Shareholder is a party,
and the performance of the transactions contemplated thereby do not and will
not, to the best of our knowledge, with or without the giving of notice or the
lapse of time, or both, conflict with, or result in any violation or breach of,
or constitute a default under, or result in any right to accelerate or result in
the creation of any Encumbrance pursuant to, or right of termination under any
provision of any judgment, law or regulation, or any agreement, instrument or
understanding to which such Shareholder is a party or by which it is bound.
9. To the best of our knowledge, there is no claim, action, suit,
arbitration or proceeding that is pending or threatened against the Company
before any Governmental Entity.
10. The Company is not in default or violation of any provision of its
Articles of Incorporation or its Bylaws, each as amended to date. To the best of
our knowledge, the business of the Company is not being conducted in violation
of any applicable law, statute, ordinance, regulation, rule, judgment, decree,
order, permit, concession, grant or other authorization of any Wisconsin, Ohio
or other Governmental Entity. To the best of our knowledge, with or without the
giving of notice or the lapse of time, or both, the Company is not in violation,
breach or default of any provision of any provision of any judgment, law or
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regulation, or any agreement, instrument or understanding to which such
Shareholder is a party or by which it is bound.
11. Upon the filing of the Articles of Merger with the Department of
Financial Institutions of the State of Wisconsin and filing of the Certificate
of Merger with the Secretary of State of the State of Delaware, the Merger will
be duly consummated in accordance with the laws of the State of Wisconsin with
the effect provided therein and in the Articles of Merger, and the shares of
Company Common Stock will be converted as provided in Section 1.6 of the Merger
Agreement.
Each of the foregoing opinions is subject to the following
qualifications:
a. The legality, validity and enforceability of any rights and
remedies provided in the Transaction Documents and other documents are subject
to exceptions provided by bankruptcy, insolvency, reorganization, receivership,
moratorium, assignment for the benefit of creditors' laws or similar laws now or
hereafter in effect affecting the validity, legality and binding effect and
enforceability of creditors' rights generally, including, without limitation,
the effect of statutory or other laws regarding fraudulent conveyances or
preferential transfers.
b. Specific performance, injunctive relief or other traditional
equitable remedies may not be available as being subject to the discretion of
the court before which any proceeding therefor may be brought.
c. Rights to indemnity may be limited by federal or state securities
laws.
d. We express no opinion as to the enforceability of any provisions
in the Transaction Documents providing for the recovery of attorneys' fees or
other costs of collection.
e. We express no opinion with respect to any provisions for
submission to jurisdiction and the related waivers of defenses to such
jurisdiction.
f. No opinion is expressed as to the enforceability of (1)
provisions which purport to permit the alteration or termination of the rights
of third parties; (2) provisions which purport to establish evidentiary
standards; (3) provisions which purport to require the payment of attorneys'
fees and other costs of collection; or (4) provisions related to waiver of
remedies (or the delay or omission of enforcement thereof), disclaimers,
liability limitations with respect to third parties, releases or legal or
equitable rights, discharge of defenses, liquidated damages, or the creation of
rights or remedies not available under applicable law.
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This opinion is given as of the date hereof and we assume no obligation to
update or supplement this opinion to reflect any facts or circumstances which
may hereafter come to our attention or any changes in laws which may hereafter
occur. This opinion is solely for your benefit and may not be disclosed to, or
quoted or relied upon by, any person or entity without my prior written consent,
except that this opinion may be disclosed to your outside legal counsel and
accountants.
Yours truly,
XXXXXXX, XXXXXXXX & KLEKEMP, P.L.L.
By: ___________________________________