PLAN OF REORGANIZATION, MERGER AND ACQUISITION AGREEMENT
DATED EFFECTIVE MARCH 21, 2000
BY AND AMONG
BILLING CONCEPTS CORP.,
LUBBOCK ACQUISITION CORP.,
OPERATOR SERVICE COMPANY
AND
ITS STOCKHOLDERS
TABLE OF CONTENTS
10 GENERAL DEFINITIONS 2
1.1 2
1.2 3
1.3 3
1.4 3
1.5 3
1.6 3
1.7 3
1.8 3
1.9 3
1.10 3
1.11 3
1.12 4
1.13 4
1.14 4
1.15 4
1.16 4
1.17 4
1.18 4
1.19 4
1.20 5
1.21 5
1.22 5
1.23 5
1.24 5
1.25 5
1.26 6
1.27 6
1.28 6
1.29 6
1.30 6
1.31 6
1.32 6
1.33 6
1.34 7
1.36 7
1.37 7
1.38 7
1.39 7
1.40 7
1.41 8
1.42 8
1.43 8
1.44 9
1.45 9
1.46 9
1.47 9
1.48 9
1.49 9
1.50 10
1.51 10
1.52 10
1.53 10
1.54 10
1.55 10
1.56 10
1.57 10
1.58 10
1.59 10
1.60 10
1.61 10
1.62 11
1.63 11
1.64 11
1.65 11
1.66 11
1.67 11
1.68 12
1.69 12
1.70 12
1.71 12
1.72 12
1.73 12
2. MERGER 12
2.1 The Merger 12
2.2 Surviving Corporation 13
2.3 Liabilities 13
2.4 Certificate of Incorporation and Bylaws 13
2.5 Directors and Officers 13
2.6 Conversion or Cancellation of Stock Upon Merger 13
2.7 Fractional Shares 14
2.8 Exchange Procedures 15
2.9 Interim Dividends 15
2.10 Further Assurances 16
2.11 Payments Into Escrow Funds 16
3. CLOSING; CLOSING DATE 16
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE ESCROW
STOCKHOLDERS 17
4.1 Incorporation 17
4.2 Share Capital 18
4.3 Financial Statements 19
4.4 Events Since the Balance Sheet Date 20
4.5 Competing Interests 21
4.6 Taxes 22
4.7 Employee Matters 24
4.8 Contracts and Agreements 24
4.9 Effect of Agreement 28
4.10 Properties, Assets and Leasehold Estates 29
4.11 Intellectual Property 31
4.12 Suits, Actions and Claims 34
4.13 Licenses and Permits; Compliance With Governmental
Requirements 35
4.14 Authorization 35
4.15 Records 36
4.16 Environmental Protection Laws 36
4.17 Accounts Receivable 38
4.18 Brokers and Finders 38
4.19 Deposits 38
4.20 Work Orders 38
4.21 Customer List; Supplier List 39
4.22 No Royalties 39
4.23 Bank Accounts 39
4.24 Insurance 40
4.25 Employee Benefit Matters 40
4.26 Warranties and Product Liability 43
4.27 Securities Laws Matters 44
4.28 No Untrue Statements 45
4.A REPRESENTATIONS AND WARRANTIES OF ESCROW STOCKHOLDERS AND OTHER
STOCKHOLDERS 46
4A.1 Authority 46
4A.2 Consents 46
4A.3 Litigation 47
4A.4 Stock Ownership 47
4A.5 Brokers and Finders 47
4A.6 Securities Laws Matters 47
5. REPRESENTATIONS AND WARRANTIES OF THE BCC PARTIES 48
5.1 Purchaser Incorporation 48
5.2 BCC Incorporation 49
5.3 Authorization 49
5.4 Brokers and Finders 49
5.5 Authorization of Stock Consideration 49
5.6 SEC Documents 49
5.7 No Violation 50
5.8 Consents 51
5.9 Certain Proceedings 51
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS,
GUARANTEES, REPRESENTATIONS AND WARRANTIES OF SELLER, THE
STOCKHOLDERS AND BCC PARTIES 51
7.. TAX TREATMENT 52
8.. PRE-CLOSING COVENANTS 52
8.1 General 52
8.2 Notices and Consents 52
8.3 Operation of Business 53
8.4 Full Access 55
8.5 Notice of Developments 55
8.6 Exclusivity 56
8.7 Disclosure Schedule 57
8.8 Voting of Seller Stock 57
8.9 Escrow Agreements 57
8.10 Termination of Contracts 58
8.11 Affiliate Letters 58
8.12 Registration Rights Agreement; No Transfers Before Closing
58
8.13 Release 59
9.. CONDITIONS TO OBLIGATION TO CLOSE 59
9.1 Conditions to Obligation of the BCC Parties 60
9.2 Conditions to Obligation of Seller and Xxxxxxxxxxxx 00
00. SPECIAL CLOSING AND POST-CLOSING COVENANTS 64
10.1 General 65
10.2 Litigation Support 65
10.3 Transition 65
10.4 Termination of Agreements 65
10.5 Intellectual Property Assignment 66
10.6 Use of Name of Seller 66
10.7 Employee Benefits Matter 66
10.8 Tax-Free Reorganization 66
10.9 S Corporation Earnings; 2000 Income Tax Returns 66
10.10Earnout Escrow 68
10.11Appointment of Successor Escrow Agent 68
10.12HSR 69
11. INDEMNITY 69
11.1 Indemnification by the Escrow Stockholders 69
11.2 Environmental Indemnification 70
11.3 Tax Indemnification 70
11.4 Products Liability and Warranty Indemnification 71
11.5 Indemnification by the BCC Parties 71
11.7 Indemnity Holdback 72
11.8 Indemnity Escrow 73
11.9 Procedure 73
11.10Payment 75
11.11Adjustment of Liability 75
11.12Failure to Pay Indemnification 75
11.13Cooperation 75
11.14Indemnification if Negligence of Indemnitee 76
12. NON-COMPETITION AGREEMENT 76
12.1 Non-Competition 76
12.2 Judicial Reformation 77
12.3 Customer Lists; Non-Solicitation 77
12.4 Covenants Independent 77
12.5 Remedies 78
13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION 78
14. NOTICES 79
15.. TERMINATION 80
15.1 Termination of Agreement 81
15.2 Effect of Termination 81
16. GUARANTEE 81
17. STOCKHOLDER REPRESENTATIVE 82
18. GENERAL PROVISIONS 83
18.1 Governing Law; Interpretation; Section Headings 83
18.2 Severability 84
18.3 Entire Agreement 84
18.4 Binding Effect 84
18.5 Assignment 85
18.6 Amendment; Waiver 85
18.7 Gender; Numbers 85
18.8 Counterparts 85
18.9 Telecopy Execution and Delivery 85
18.10Expenses 86
18.11Arbitration 86
18.12Damage to Assets 88
18.14Press Releases and Public Announcements 88
18.15No Third Party Beneficiaries 88
18.16Construction 88
18.17Incorporation of Exhibits, Annexes and
Disclosure Schedule 89
18.18Specific Performance 89
18.19Remedies Cumulative 89
EXHIBIT A.1 - FORM OF EARNOUT ESCROW AGREEMENT
EXHIBIT A.2 - FORM OF INDEMNITY ESCROW AGREEMENT
EXHIBIT B - FORM OF INTELLECTUAL PROPERTY ASSIGNMENTS
EXHIBIT C - FORM OF EMPLOYMENT AGREEMENTS
EXHIBIT D - FORM OF REGISTRATION RIGHTS AGREEMENT
EXHIBIT E - FORM OF AFFILIATE LETTER
PLAN OF REORGANIZATION, MERGER AND ACQUISITION AGREEMENT
THIS PLAN OF REORGANIZATION, MERGER AND ACQUISITION AGREEMENT (this
"Agreement") is this entered effective the 21st day of March, 2000, by and among
Operator Service Company, a Texas corporation ("Seller"), and the Persons
holding shares of Seller Stock and named on Schedule 4.2(a) of the Disclosure
Schedule (collectively, the "Stockholders"), Billing Concepts Corp., a Delaware
corporation ("BCC"), and Lubbock Acquisition Corp., a Delaware corporation
("Purchaser," and, together with BCC, the "BCC Parties").
W I T N E S S E T H :
WHEREAS, BCC is in the business of developing billing systems and providing
software development services; and
WHEREAS, in connection with the transactions contemplated by this
Agreement, BCC previously caused Purchaser to be organized and to issue to BCC
all of the issued and outstanding shares of capital stock of Purchaser; and
WHEREAS, Seller is a provider of customer management, customer care
(including e-care), interactive voice response, telesales, operator services,
directory assistance, billing inquiry, help desk and teleservices (the
"Business"); and
WHEREAS, the Stockholders own, free and clear of any liens or encumbrances,
all of the issued and outstanding shares of capital stock of Seller; and
WHEREAS, the respective boards of directors of Purchaser and Seller have
voted to approve the merger of Seller with and into Purchaser (the "Merger")
pursuant to the terms and subject to the conditions of this Agreement; and
WHEREAS, this Agreement is intended to qualify under Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree that Seller shall be merged with and into
Purchaser and that the terms and conditions of the Merger, the method of
carrying the Merger into effect and certain other provisions relating thereto
shall be as hereinafter set forth:
10 GENERAL DEFINITIONS. For purposes of this Agreement, the following
terms shall have the respective meanings set forth below:
1.1 "Accounts Receivable" shall have the meaning assigned to it in Section
4.17.
1.2 "Affiliate" of any Person shall mean any Person Controlling,
Controlled by or under common Control with such Person.
1.3 "Article" shall mean an Article of this Agreement unless otherwise
stated.
1.4 "Assets" shall mean the assets, properties and rights of Seller of
every nature, kind and description, wherever located, tangible and intangible,
real, personal and mixed, whether or not reflected in the books and records of
Seller, necessary or desirable to permit the Business to be carried on in the
manner as is presently conducted (except for certain art work, decorations and
similar personal property items of Xxxxx Xxxx Xxxxx and Xxxxxxx X. Xxxxx (which
are not included on the Financial Statements), located at Seller's headquarters
and which have been identified by them to Purchaser).
1.5 "Associate" shall have the meaning assigned to it in Section 4.5.
1.6 "Authorization" shall mean any consent, approval or authorization of,
expiration or termination of any waiting period requirement including pursuant
to the HSR Act by, or filing, registration, qualification, declaration or
designation with, any Governmental Authority.
1.7 "Balance Sheet Date" shall have the meaning assigned to it in Section
4.3.
1.8 "Best Knowledge" shall mean both what a Person knew or knows. When
used with respect to a Person other than a natural person, the term "Best
Knowledge" shall include the directors, officers, trustees, administrators and
managers of the Person.
1.9 "BCC Stock" shall mean the common stock, $.01 par value, of BCC.
1.10 "Business" shall have the meaning assigned in the recitals of this
Agreement.
1.11 "Business Combination" shall mean (i) any merger or consolidation
of, or share exchange involving, the Seller with or into any Person, (ii) any
sale, lease, exchange, transfer or other disposition (whether in one transaction
or a series of related transactions) of more than ten percent of the Seller's
consolidated assets, (iii) the adoption of any plan or proposal for the
liquidation or dissolution of the Seller, (iv) any issuance, sale, purchase or
redemption of equity securities, or any security, instrument or obligation that
is or may become convertible into or exchangeable for or into equity securities
(whether or not immediately exercisable) , of the Seller, any reclassification
of equity securities or recapitalization of the Seller, and (v) any transaction
having an effect similar to those described above.
1.12 "Business Day" shall mean any day other than Saturday, Sunday or other
day on which federally chartered commercial banks in San Antonio, Texas are
authorized or required by law to close.
1.13 "CERCLA" shall mean the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980, as amended.
1.14 "Certificate" shall mean each stock certificate representing shares of
Seller Stock.
1.15 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.16 "Contracts" shall have the meaning assigned to it in Section 4.8.
1.17 "Control" and all derivations thereof shall mean the ability to either
(a) vote (or direct the vote of) 50% or more of the voting interests in any
Person or (b) direct the affairs of another, whether through voting power,
contract or otherwise.
1.18 "Damages" shall mean any and all actual liabilities, losses, damages,
demands, assessments, refund obligations (including, without limitation,
interest and penalties thereon), claims of any and every kind whatsoever, costs
and expenses (including interest, awards, judgments, penalties, settlements,
fines, costs of remediation, diminutions in value, costs and expenses incurred
in connection with investigating, prosecuting and defending any claims or causes
of action (including, without limitation, reasonable attorneys' fees and
reasonable expenses and all reasonable fees and reasonable expenses of
consultants and other professionals)).
1.19 "Deposits" shall have the meaning assigned to it in Section 4.19.
1.20 "Disclosure Schedule" shall have the meaning assigned to it in Article
4.
1.21 "Earnout Holdback Shares" shall have the meaning assigned to it in
Section 2.6.
1.22 "Earnout Escrow Agreement" is attached hereto as Exhibit A.1.
1.23 "Effective Time" shall mean the time at which a properly executed
certificate of merger in substantially the form attached to this Agreement as
Part 1.23(a) of the Disclosure Schedule (together with other documents required
by law to effect the Merger) shall have been filed with the Secretary of State
of Delaware, properly executed articles of merger in substantially the form
attached to this Agreement as Part 1.23(b) of the Disclosure Schedule (together
with other documents required by law to effect the Merger) shall have been filed
with the Secretary of State of Texas and such other documents and instruments
shall have been filed in any other jurisdiction where such a certificate or
articles of merger is required.
1.24 "Encumbrance" shall mean any security interest, mortgage, pledge,
trust, claim, lien, charge, option, defect, restriction, encumbrance or other
right or interest of any third Person of any nature whatsoever.
1.25 "Environmental Laws" shall mean any and all applicable laws, statutes,
ordinances, rules, regulations, orders, or determinations of any Governmental
Authority pertaining to the environment heretofore or currently in effect in any
and all jurisdictions in which Seller is conducting or at any time has conducted
business, or where any of the Assets are located, or where any hazardous
substances generated by or disposed of by Seller are located. "Environmental
Laws" shall include, but not be limited to, the Clean Air Act, as amended,
CERCLA, the Federal Water Pollution Control Act, as amended, RCRA, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
and all other applicable laws, statutes, ordinances, rules, regulations, orders
and determinations of any Governmental Authority relating to (a) the control of
any potential pollutant or protection of the air, water or land, (b) solid,
gaseous or liquid waste generation, handling, treatment, storage, disposal or
transportation and (c) exposure to hazardous, toxic or other substances alleged
to be harmful. The terms "hazardous substance," "release" and "threatened
release" shall have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") have the meanings specified in RCRA.
1.26 "Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remediation, removal,
response, abatement, clean-up, investigative or monitoring costs and any other
related costs and reasonable expenses), other causes of action recognized now or
at any later time, damages, settlements, reasonable expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
reasonable attorneys' fees and other reasonable legal fees (a) pursuant to any
agreement, order, notice of responsibility, or directive embodied in
Environmental Laws or relating to environmental matters, injunction, judgment or
similar documents (including settlements) relating to environmental matters or
(b) pursuant to any claim by a Governmental Authority or other person for
personal injury, property damage, damage to natural resources, remediation or
similar costs or expenses incurred by such Governmental Authority or person
pursuant to common law or statute.
1.27 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.28 "Escrow Agent" shall have the meaning assigned to it in Section
2.8(c).
1.29 "Escrow Stockholders" shall mean Xxxxxxx X. Xxxxx and Xxxxx Xxxx
Xxxxx.
1.30 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1.31 "Financial Statements" shall have the meaning assigned to it in
Section 4.3.
1.32 "Former Seller Stockholder" shall mean each Person who was,
immediately before the Effective Time, a holder of issued and outstanding shares
of Seller Stock.
1.33 "Governmental Authority" shall mean any and all foreign, federal,
state or local governments, governmental institutions, public authorities and
governmental entities of any nature whatsoever, and any subdivisions or
instrumentalities thereof, including, but not limited to, departments, boards,
bureaus, commissions, agencies, courts, administrations and panels, and any
divisions or instrumentalities thereof, whether permanent or ad hoc and whether
now or hereafter constituted or existing.
1.34 "Governmental Requirement" shall mean any and all applicable laws
(including, but not limited to, applicable common law principles), statutes,
ordinances, codes, rules, regulations, interpretations, guidelines, directions,
orders, judgments, writs, injunctions, decrees, decisions or similar items or
pronouncements, promulgated, issued, passed or set forth by any Governmental
Authority in effect as of the Effective Time.
1.35 "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended.
1.36 "Indemnitee" shall mean the BCC Parties and the Surviving Corporation
and each of their respective Associates, Affiliates, officers, directors,
employees, agents, consultants, representatives and controlling Persons and
their respective successors and assigns, on the one hand, and the Stockholders
and their heirs, beneficiaries, successors and assigns, on the other hand,
whether indemnified, or entitled, or claiming to be entitled to be indemnified
or receive property, pursuant to the provisions of Article11 hereof.
1.37 "Indemnitor" shall mean the Person or Persons having the obligation to
indemnify or make payment pursuant to the provisions of Article 11 hereof.
1.38 "Indemnity Escrow Agreement" is attached hereto as Exhibit A.2.
1.39 "Indemnity Holdback Shares" shall have the meaning assigned to it in
Section 2.6.
1.40 "Intellectual Property" shall mean:
(a) the Software and the Software Trade Secrets; and
(b) all of Seller's patents and applications therefor, further
including, but not limited to, all divisions, reissues, substitutions,
reexaminations, continuations, continuations-in-part and extensions thereof; and
(c) all of Seller's inventions, whether or not patentable, further
including, but not limited to, all new developments and inventions, as well as
all improvements on prior inventions regardless of prior inventorship; and
(d) all of Seller's know-how and work product, regardless of form and
whether tangible or intangible, further including, but not limited to, invention
and laboratory notebooks, source code and object code, system design, system
specifications, flow charts, test data, records and journals; blueprints,
drawings and photographs; research and engineering reports, including any models
or other hardware; licensing, marketing or development analysis; and customer or
prospective customer lists; and
(e) all of Seller's copyright interests regardless of actual or
potential registrability, and including moral rights, rights of publication and
rights of attribution and integrity; and
(f) all of Seller's trademark or service xxxx interests, together
with all of the goodwill of the business associated therewith and represented
thereby; and
(g) all of Seller's trade secrets; and
(h) all other intellectual property and other proprietary interests
(including, without limitation patents, patent applications, inventions (whether
or not patentable), know-how, work product, copyright interests, trademark or
service xxxx interests, and trade secrets) , whether or not identifiable as of
the date of execution hereof, relating to, or used in connection with, the
Business or Assets now or at any time in the future.
1.41 "IRS" shall mean the Internal Revenue Service.
1.42 "Losses" shall mean General Losses, Environmental Losses, Tax Losses
and Product Losses (each as defined in Article 11 hereof), as the case may be.
1.43 "Material Adverse Effect" shall mean a material adverse effect on the
Business, Assets, properties, operations, condition (financial or otherwise) or
results of operations of Seller or BCC Parties, taken as a whole, as applicable.
In determining whether any individual event would result in a Material Adverse
Effect, notwithstanding that such event does not of itself have such effect, a
Material Adverse Effect shall be deemed to have occurred if the cumulative
effect of such event and all other then existing events would result in a
Material Adverse Effect.
1.44 "Merger Consideration" shall have the meaning assigned to it in
Section 2.6.
1.45 "Ordinary Course of Business" or "ordinary course of business"
of a Person shall mean action taken by that Person only if (a) such action is
consistent with past practices of such Person and is taken in the ordinary
course of normal day-to-day operations of such Person; (b) such action is not
required to be authorized by the Board of Directors (or group exercising similar
authority) of such Person; and (c) such action is similar in nature and
magnitude to actions customarily taken, without board authorization, in the
ordinary course of the normal day-to-day operations of other Persons that are in
the same line of business as such Person.
1.46 "Other Stockholders" shall mean all Stockholders of Seller other
than the Escrow Stockholders.
1.47 "Parties" or "parties" shall mean collectively the BCC Parties, the
Stockholders and Seller.
1.48 "PBGC" shall have the meaning assigned to it in Section 4.25.
1.49 "Permitted Encumbrances" shall mean (a) Encumbrances for current taxes
and assessments not yet past due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate reserves are
reflected in the Financial Statements, (b) mechanics and materialmen
Encumbrances for construction in progress to the extent not perfected by filing,
recording, giving of notice or other appropriate action in the relevant
jurisdiction, (c) workmen, repairmen, warehousemen, carriers, lessors and
operators Encumbrances arising in the Ordinary Course of Business to the extent
not perfected by filing, recording, giving of notice or other appropriate action
in the relevant jurisdiction and (d) easements, including agreements and deeds
of easement, and other minor imperfections of title which would not have a
Material Adverse Effect.
1.50 "Person" shall mean any natural person, any Governmental Authority and
any entity, the separate existence of which is recognized by any Governmental
Authority or Governmental Requirement, including, but not limited to,
corporations, partnerships, joint ventures, joint stock companies, trusts,
estates, companies and associations, whether organized for profit or otherwise.
1.51 "Purchaser Stock" shall mean the common stock, $.01 par value, of
Purchaser.
1.52 "RCRA" shall mean the Resource Conservation and Recovery Act of 1976,
as amended.
1.53 "Reference Balance Sheet" shall have the meaning assigned to it in
Section 4.3.
1.54 "Reorganization" shall have the meaning assigned to it in Article 7.
1.55 "Rights Against Seller Stock" shall have the meaning assigned to it in
Section 4.2(b).
1.56 "SEC" or "Commission" shall mean the United States Securities and
Exchange Commission.
1.57 "SEC Documents" shall have the meaning assigned to it in Section 4.27.
1.58 "Section" shall mean a Section of this Agreement unless otherwise
stated.
1.59 "Securities Act" shall mean the Securities Act of 1933, as amended.
1.60 "Seller Stock" shall mean the common stock, par value $0.001, of
Seller.
1.61 "Software" shall mean all of Seller's computer programs owned by
Seller (except off-the-shelf shrinkwrap and mass-market software) as of the date
of Closing, including (without limitation) those itemized on Part 1.61 of the
Disclosure Schedule, whether in source code or object code or other forms, and
regardless of the format or medium in which said code may be stored or embodied.
Software further includes (i) any and all improvements, corrections,
modifications, updates, enhancements or other changes made thereto as of the
Closing Date and owned by Seller, whether or not included in the most recent
version thereof; (ii) any separate media objects or files embedded therein; and
(iii) all System Documentation and User Documentation relating to the Software.
1.62 "Software Trade Secret" shall mean any non-public information, design,
process, procedure, formula or improvement included in or related to the
Software that is valuable, not generally known in the industry, and gives the
owner of the Software a competitive advantage over those competitors who do not
know or use such information.
1.63 "Subsidiary" shall mean, with respect to any Person (the "parent"),
(a) any corporation, association, joint venture, partnership or other business
entity of which securities or other ownership interests representing more than
50% of the ordinary voting power or beneficial interest are, at the time as of
which any determination is being made, owned or controlled by the parent or one
or more subsidiaries of the parent or by the parent and one or more subsidiaries
of the parent and (b) any joint venture or partnership of which the parent or
any Subsidiary of the parent is a general partner or has responsibility for its
management.
1.64 "Surviving Corporation" shall mean the Purchaser, existing at and
after the Effective Time as a result of the Merger.
1.65 "System Documentation" shall mean all documentation, whether in
tangible or electronic format, used in the development and updating of the
Software at any time, including, but not limited to, design or development
specifications, error reports, and related correspondence and memoranda.
1.66 "Taxes" shall mean any foreign, federal, state or local tax,
assessment, levy, impost, duty, withholding, estimated payment or other similar
governmental charge, together with any penalties, additions to tax, fines,
interest and similar charges thereon or related thereto.
1.67 "Tax Returns" shall mean all Tax returns and reports (including,
without limitation, income, franchise, sales and use, unemployment compensation,
excise, severance, property, gross receipts, profits, payroll and withholding
Tax returns and information returns).
1.68 "Third-Party Claims" shall have the meaning such term is given in
Section 11.9(b) hereof.
1.69 "Third-Party Software" shall mean computer software (except off-the-
shelf shrinkwrap and mass-market software) not owned by Seller but in which
Seller has rights and/or obligations, all of which is reflected on Part 1.69 of
the Disclosure Schedule.
1.70 "Third-Party Software Agreements" shall mean the agreements itemized
on Part 1.70 of the Disclosure Schedule.
1.71 "User Documentation" shall mean all end-user instruction manuals,
whether in tangible or electronic format, that have accompanied the Software
instructing end users in the use thereof.
1.72 "Waste Materials" shall mean any toxic or hazardous materials or
substances, or solid wastes, including asbestos, buried contaminants, chemicals,
flammable or explosive materials, radioactive materials, petroleum and petroleum
products, and any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Authority under any Environmental Law.
1.73 "Working Capital" shall mean all current assets less all current
liabilities, including all bank debt, each calculated according to generally
accepted accounting principles consistently applied.
2. MERGER.
2.1 The Merger. Subject to the terms and conditions of this Agreement,
Seller shall be merged with and into Purchaser in accordance with all applicable
laws, with Purchaser being the Surviving Corporation. Purchaser and Seller
shall cause a certificate of merger to be filed with the Secretary of State of
Delaware, articles of merger to be filed with the Secretary of State of Texas
and such other documents and instruments to be filed in any other jurisdiction
where such a certificate or articles of merger is required, within two business
days after the Closing Date (as hereinafter defined), unless legally prohibited
from doing so. The Merger shall be effective at the Effective Time.
2.2 Surviving Corporation. From and after the Effective Time, the
Surviving Corporation shall have the name "Operator Service Company" and shall
possess all assets and property of every description, and every interest in the
assets and property, wherever located, and the rights, privileges, immunities,
powers, franchises and authority, of a public as well as of a private nature, of
each of Seller and Purchaser, and all debts and all other things in action or
belonging or due to each of Seller and Purchaser, all of which shall be vested
in the Surviving Corporation without further act or deed, and title to any real
estate or any interest in the real estate vested in either Seller or Purchaser
shall not revert or in any way be impaired.
2.3 Liabilities. The Surviving Corporation shall be liable for all the
debts, liabilities and duties of each of Seller and Purchaser; any action or
proceeding pending, by or against either Seller or Purchaser, may be prosecuted
to judgment, with right of appeal, as if the Merger had not taken place, or the
Surviving Corporation may be substituted in its place, and all the rights of
creditors of each of Seller and Purchaser shall be preserved unimpaired, and all
liens upon the property of each of Seller and Purchaser shall be preserved
unimpaired, on only the property affected by the liens immediately prior to the
Effective Time.
2.4 Certificate of Incorporation and Bylaws. The certificate of
incorporation and bylaws of Purchaser in effect immediately prior to the
Effective Time shall be the certificate of incorporation and bylaws of the
Surviving Corporation following the Merger until otherwise amended or repealed.
2.5 Directors and Officers. The directors and officers of Purchaser
immediately prior to the Effective Time shall be the directors and officers of
the Surviving Corporation until their successors are duly elected or appointed
and qualified in the manner provided in the bylaws of the Surviving Corporation,
or as otherwise provided by law.
2.6 Conversion or Cancellation of Stock Upon Merger
(a In consideration for the Merger, the non-competition agreements
in Article 12 hereof and the non-disclosure agreement in Article 13 hereof, as
of the Effective Time, by virtue of the Merger and without any action on the
part of the holders of any shares of Seller Stock, or the holder of the shares
of Purchaser Stock, (i) subject to adjustment under Section 2.6(b), Seller Stock
outstanding immediately before the Effective Time shall be converted into the
right to receive, subject to the provisions of Section 2.8, 3,846,154 shares of
BCC Stock (the "Merger Consideration"); provided, however, that 461,573 shares
of the Merger Consideration (the "Indemnity Holdback Shares") shall be pledged
by the Escrow Stockholders to secure the indemnification obligations of the
Stockholders pursuant to Article 11 hereof and 769,000 shares of the Merger
Consideration (the "Earnout Holdback Shares") shall be pledged by the Escrow
Stockholders to secure the earnout requirements pursuant to Section 10.10
hereof, and (ii) each share of Purchaser Stock outstanding immediately before
the Effective Time shall be converted into one share of common stock of the
Surviving Corporation. At the Closing, BCC shall deliver to the Stockholders
the certificates representing the Merger Consideration, less the Indemnity
Holdback Shares and less the Earnout Holdback Shares.
(b The number of shares constituting the Merger Consideration will
be subject to reduction at the Closing to the extent the Seller's Working
Capital is not at least $500,000 as of the Effective Time, but BCC elects to
Close, in an amount equal to the deficit between the actual Working Capital as
of the Effective Time and $500,000, valuing the shares of BCC Stock at $6.50 per
share.
2.7 Fractional Shares. Notwithstanding Section 2.6, no certificates or
scrip representing fractional shares of BCC Stock shall be issued upon the
surrender for exchange of certificates that prior to the Effective Time
represented shares of Seller Stock, no dividend or distribution of BCC shall
relate to any fractional share interest and no fractional share interest shall
entitle the owner thereof to vote or to exercise any rights of a stockholder of
BCC. In the event that any Former Seller Stockholder shall be entitled to any
fractional share interest, then any fractional amount shall be rounded down to
the nearest whole share.
2.8 Exchange Procedures.
(a After the Effective Time, each outstanding Certificate shall,
until duly surrendered to Purchaser as contemplated by this Section 2.8, be
deemed to represent only the right to receive the applicable pro rata portion of
the Merger Consideration.
(b After the Effective Time, there shall be no further transfer on
the records of Seller of Certificates, and each share of Seller Stock presented
or surrendered to Purchaser shall be canceled in exchange for the applicable pro
rata portion of the Merger Consideration as contemplated by Section 2.6.
Purchaser shall not be obligated to deliver any part of the Merger Consideration
to any holder of a Certificate until such holder surrenders such Certificate as
provided herein.
(c The stock certificates representing the Indemnity Holdback Shares
shall be held in escrow by U.S. Trust Company of Texas, Inc., Dallas, Texas, or
another escrow agent selected by BCC (the "Escrow Agent"), which shall include
any successor escrow agent appointed pursuant to the provisions of Section
10.11, and the stock certificates representing the Earnout Holdback Shares shall
be held in escrow by U.S. Trust Company of Texas, Inc., Dallas, Texas, or
another escrow agent selected by BCC, which shall include any successor escrow
agent appointed pursuant to the provisions of Section 10.11.
2.9 Interim Dividends. No dividends or other distributions declared after
the Effective Time on BCC Stock issuable pursuant to the Merger and payable to
the Former Seller Stockholders after the Effective Time shall be paid to the
holder of any unsurrendered certificates formerly representing shares of Seller
Stock until the certificates shall be surrendered as provided herein, provided,
however, that (a) upon surrender there shall be paid to the Stockholder in whose
name the certificates representing the shares of BCC Stock shall be issued the
amount of unpaid dividends with respect to the holder's shares of BCC Stock and
(b) at the appropriate payment date, or as soon as practicable thereafter, there
shall be paid to the Stockholder the amount of dividends declared with respect
to whole shares of BCC Stock with a record date on or after the Effective Time
but before surrender and a payment date subsequent to surrender, subject in any
case to any applicable escheat laws. No interest shall be payable with respect
to the payment of dividends or other distributions on surrender of outstanding
certificates.
2.10 Further Assurances. If at any time after the Effective Time the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or otherwise are necessary or desirable to vest, perfect or
confirm, of record or otherwise, in the Surviving Corporation, all rights, title
and interests in all the Assets and all privileges, powers and franchises of
Seller and Purchaser, the Surviving Corporation and its proper officers and
directors, in the name and on behalf of Seller and Purchaser, shall execute and
deliver all such proper deeds, assignments and assurances in law and do all
things necessary and proper to vest, perfect or confirm title to such property
or rights in the Surviving Corporation and otherwise to carry out the purpose of
this Agreement, and the proper officers and directors of the Surviving
Corporation are fully authorized in the name of Seller or otherwise to take any
and all such action.
2.11 Payments Into Escrow Funds. When making the issuances required by
Section 2.8 above, and pursuant to the certificates of merger and
notwithstanding any provision therein to the contrary:
(a the BCC Parties shall withhold from each Escrow Stockholder on a
pro rata basis and Purchaser and Escrow Stockholders shall deliver to the Escrow
Agent under the Earnout Escrow Agreement, the Earnout Holdback Shares, to be
held and distributed by the Escrow Agent pursuant to the terms of this Agreement
and the Earnout Escrow Agreement; and
(b the BCC Parties shall withhold from each Escrow Stockholder on a
pro rata basis and Purchaser and Escrow Stockholders shall deliver to the
Escrow Agent under the Indemnity Escrow Agreement, the Indemnity Holdback
Shares, to be held and distributed by the Escrow Agent pursuant to the terms of
this Agreement and the Indemnity Escrow Agreement.
3. CLOSING; CLOSING DATE.
As soon as practicable after satisfaction or waiver of all conditions to
the Merger, including the expiration of any waiting period or extension thereof
applicable to the Merger under the HSR Act, but in no event later than May 31,
2000, the consummation of the transactions referenced above shall take place
(the "Closing") at 10:00 a.m., San Antonio time, at the offices of BCC, 0000
Xxxx Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx , or at such other time, date
and place as BCC and Seller shall in writing designate. The date of the Closing
is referred to herein as the "Closing Date".
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE ESCROW STOCKHOLDERS.
Seller and each Escrow Stockholder hereby, jointly and severally, represent
and warrant to the BCC Parties that the statements contained in this Agreement
made by Seller and each Escrow Stockholder are correct and complete as of the
date of this Agreement and will be correct and complete as of the Closing Date
(as though made then and as though the Closing Date were substituted for the
date of this Agreement throughout this Agreement), except as set forth in the
disclosure schedule delivered by Seller and each Escrow Stockholder to the BCC
Parties on the date hereof and initialed by the Parties, as the same may be
amended or supplemented from time to time as set forth in Section 8.7 hereof
(the "Disclosure Schedule"). The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Agreement. Seller and each Escrow Stockholder hereby, jointly and
severally, represent and warrant to the BCC Parties as follows:
4.1 Incorporation. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, and is duly
authorized, qualified and licensed under all applicable Governmental
Requirements to carry on its business in the places and in the manner as now
conducted and to own, operate and lease the Assets it now owns, operates or
holds under lease. There has not been any claim by any other jurisdiction to
the effect that Seller is required to qualify or otherwise be authorized to do
business as a foreign corporation therein in order to carry on any of its
businesses as now conducted or to own, lease or operate the Assets. Part 4.1 of
the Disclosure Schedule sets forth a complete list of all jurisdictions in which
Seller is qualified as a foreign corporation, and Seller is in good standing in
each of such jurisdictions. There has not been any claim by any other
jurisdiction to the effect that Seller is required to qualify or otherwise be
authorized to do business as a foreign corporation therein in order to carry on
any of its businesses as now conducted or to own, lease or operate the Assets.
Complete and correct copies of the Articles of Incorporation of Seller and all
amendments thereto, certified in each case by the Secretary of State of the
State of Texas, and of the Bylaws of Seller and all amendments thereto,
certified by the Secretary of Seller, heretofore have been made available to the
BCC Parties. Neither Seller nor any Stockholder has taken any action, or failed
to take any action which action or failure will preclude or prevent Seller's
Business from being conducted in substantially the same manner in which Seller
has heretofore conducted the same. Seller has no Subsidiaries. Seller is not
engaged in any business or operations other than the Business. Except as
completely and accurately set forth on Part 4.1 of the Disclosure Schedule,
Seller is not a party to any partnership or joint venture agreement or any
agreement of any nature to acquire, directly or indirectly, any shares in the
capital of, or other equity or proprietary interest in, any person, firm or
corporation, and Seller is not a party to any agreement to acquire or lease any
other business operations.
4.2 Share Capital.
(a The authorized capital stock of Seller consists of 15,000,000
shares of Seller Stock, of which 8,290,758 shares are outstanding as of the date
hereof and 296,342 shares, representing Rights Against Seller Stock, are
outstanding as of the date hereof. All of the outstanding Seller Stock is held
of record and beneficially by the Stockholders, in the respective amounts set
forth in Part 4.2(a) of the Disclosure Schedule, free and clear of all
Encumbrances and restrictive agreements, other than as disclosed on Part 4.2(b)
of the Disclosure Schedule. All outstanding Seller Stock is duly authorized and
issued in compliance with all federal, state and foreign securities laws.
(b Except as completely and accurately set forth on Part 4.2(b) of
the Disclosure Schedule, there are outstanding on the date hereof no rights of
first refusal, preemptive rights, conversion rights, options, convertible
securities, warrants or other rights to acquire, directly or indirectly, capital
stock from Seller or from any Stockholder (collectively, "Rights Against Seller
Stock"). With the exception of 274,509 shares of Seller Stock issued and
outstanding under Seller's Stock Compensation Plan dated effective as of January
1, 1996 as "restricted stock", all Rights Against Seller Stock will be either
extinguished or converted into Seller Stock on or before Closing. All
outstanding shares of capital stock of Seller are duly authorized, validly
issued, fully paid, and nonassessable. Except as completely and accurately set
forth in Part 4.2(b) of the Disclosure Schedule, there are no outstanding bonds,
debentures, notes or other indebtedness or other securities of Seller having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which Stockholders of Seller may vote.
(c Neither Seller nor any Stockholder is a party or subject to any
agreement or understanding, and there is no agreement or understanding between
any Persons, that affects or relates to the voting or giving of written consents
with respect to any securities of Seller or the voting by any director of
Seller. Except as set forth on Parts 4.8(a)(xiv) and 4.14(b) of the Disclosure
Schedule and as reflected on the Referenced Balance Sheet, neither any
Stockholder nor any Affiliate thereof is indebted to Seller. Seller is not
indebted to any Stockholder or any Affiliate thereof and Seller is not under any
contractual or other obligation to register any of its presently outstanding
securities or any of its securities which may hereafter be issued. Except as
completely and accurately set forth in Part 4.2(c) of the Disclosure Schedule,
there are no outstanding contractual obligations, commitments, understandings or
arrangements of Seller to repurchase, redeem or otherwise acquire or make any
payment in respect of any shares of capital stock of Seller and no payments,
dividends or redemption rights in respect of any shares of capital stock of
Seller are accrued, due or payable. Except as completely and accurately set
forth in Part 4.2(c) of the Disclosure Schedule, there are no agreements or
arrangements pursuant to which Seller is or could be required to register shares
of capital stock or options under the Securities Act, or other agreements or
arrangements with or among any security holders of Seller with respect to
securities of Seller.
4.3 Financial Statements. Seller has made available to the BCC Parties
copies of the following financial statements for Seller, all of which financial
statements are included in Part 4.3(a) of the Disclosure Schedule (collectively,
the "Financial Statements"):
(a Unaudited Balance Sheet of Seller (the "Reference Balance Sheet")
as of February 29, 2000 (the "Balance Sheet Date") and Unaudited Income
Statement of Seller for the two-month period ended on the Balance Sheet Date;
and
(b Audited Balance Sheets, Income Statements and Statements of Cash
Flows for each of Seller's three most recent fiscal years.
All financial statements made available to the BCC Parties by Seller, whether or
not included in Part 4.3(a) of the Disclosure Schedule, are true and accurate in
all material respects, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and present fairly,
in all material respects, the financial condition of Seller as of the dates and
for the periods indicated thereon (except for, in the case of interim period
financial information, normal year-end adjustments). The Reference Balance
Sheet reflects, as of the Balance Sheet Date, all liabilities, debts and
obligations of any nature, kind or manner of Seller, whether direct, accrued,
absolute, contingent or otherwise, and whether due, or to become due, whether or
not such items are required to be reflected on such balance sheet under
generally accepted accounting principles consistently applied. The Reference
Balance Sheet reflects a Working Capital no less than $500,000. Except as set
forth in Part 4.3(b) of the Disclosure Schedule attached hereto and made a part
hereof or on the Reference Balance Sheet, Seller does not have, and none of the
Assets, properties or Business of Seller is subject to, any liabilities or
obligations (accrued, absolute, contingent or otherwise), whether or not such
liabilities are normally shown or reflected on a balance sheet prepared in a
manner consistent with tax-basis or generally accepted accounting principles,
except for liabilities (i) incurred in the Ordinary Course of Business, or (ii)
fully covered by Seller's insurance policies, none of which have had a Material
Adverse Effect.
4.4 Events Since the Balance Sheet Date. Since the Balance Sheet Date,
there has not been:
(a any change in the condition (financial or otherwise) or in the
properties, Assets, liabilities, Business or prospects of the Business, except
normal and usual changes in the Ordinary Course of Business, none of which has
been adverse and all of which in the aggregate have not been adverse; (b) any
labor trouble, strike or any other occurrence, event or condition affecting the
employees of Seller that adversely affects the condition (financial or
otherwise) of the Assets or the Business; (c) any breach or default by Seller
or, to the Best Knowledge of Seller and each Escrow Stockholder, by any other
party, under any agreement or obligation included in the Assets or by which any
of the Assets are bound; (d) any damage, destruction or loss (whether or not
covered by insurance) adversely affecting the Assets or the Business; (e) any
change in the types, nature, composition or quality of the services of the
Business, any adverse change in the contributions of any of the service lines of
the Business to the revenues or net income of such Business, or any adverse
change in the sales, revenue or net income of the Business; (f) any transaction
related to or affecting the Assets or the Business other than transactions in
the Ordinary Course of Business of Seller; (g) any other occurrence, event or
condition that has adversely affected (or, to the Best Knowledge of the Seller
and each Escrow Stockholder, can reasonably be expected to adversely affect) the
Assets or the Business; (h) any declaration, setting aside or payment of any
dividend (whether in cash, stock or property) with respect to any of Seller's
capital stock; (i) (i0 any granting by Seller to any executive officer of Seller
of any increase in compensation, (ii) any granting by Seller to any executive
officer of any increase in severance or termination pay, or (iii) any entry by
Seller into any employment, severance or termination agreement with any
executive officer; (j) any change in accounting methods, principles or practices
by Seller materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in tax-basis or generally accepted
accounting principles, and except as required by the BCC Parties; (k) to the
Best Knowledge of the Seller and each Escrow Stockholder, any condition, event
or occurrence through the date hereof which, individually or in the aggregate,
could reasonably be expected to prevent, hinder or delay in any material respect
the ability of Seller to consummate the transactions contemplated by this
Agreement; (l) any leases or contracts entered into by Seller, whether
written or oral, outside the Ordinary Course of Business; (m) any strategic
relationships or alliances entered into by Seller, whether written or oral; or
(n) any agreement, in writing or otherwise, by Seller or any corporate action
by Seller with respect to the foregoing.
4.5 Competing Interests. Except as set forth on Part 4.5 of the
Disclosure Schedule, neither Seller nor the Escrow Stockholders, nor, to the
Best Knowledge of Seller and each Escrow Stockholder, any director or officer of
Seller or the Escrow Stockholders, and no Associate (as hereinafter defined) of
Seller or the Escrow Stockholders:
(a owns, directly or indirectly, any equity interests in, or is a
director, officer or employee of, or consultant to, any entity which is a
competitor, supplier or customer of the Business, or, to the Best Knowledge of
Seller and each Escrow Stockholder, a competitor, supplier or customer of
Purchaser or Seller or an Associate of Purchaser or Seller (except for
ownership, if any, of less than three percent of the outstanding capital stock
of any corporation the capital stock of which is traded on a nationally
recognized securities exchange or which has a class of securities registered
pursuant to the Exchange Act), or
(b owns, directly or indirectly, in whole or in part, any property,
asset or right which is associated with the Assets or the Business or which
Seller is presently operating or using in connection with or the use of which is
necessary for or material to the operation of the Business.
For purposes of this Agreement, the term "Associate" shall mean:
(y) with respect to an individual:
(i) the spouse of the individual;
(ii) any trust in which the individual or any person described in
(i) above has a pecuniary interest or any trustee of such a trust, and
(iii) any business entity which is directly or indirectly
Controlled by any of the foregoing; and
(z) with respect to a Person other than a natural person, any Person
Controlling, Controlled by or under common Control with such Person, and any
director, officer, administrator, beneficiary, executor, manager, or employee of
such Person and any Associate of any Person described in this clause (z).
4.6 Taxes. Except as set forth in Part 4.6 of the Disclosure Schedule:
(a all Tax Returns that are required to be filed on or before the
Effective Time, subject to any allowable extension periods, for, by, on behalf
of or with respect to Seller, including, but not limited to, those relating to
the income, business, operations or property of Seller (whether on a separate,
consolidated, affiliated, combined, unitary or any other basis), have been
timely filed with the appropriate foreign, federal, state and local authorities,
all such Tax Returns are true, correct and complete, and all Taxes shown to be
due and payable on such Tax Returns or related to such Tax Returns have been
paid in full on or before the Effective Time, except Taxes which have not yet
accrued or otherwise become due, all of which are reflected on the Reference
Balance Sheet;
(b all such Tax Returns and the information and data contained
therein have been properly and accurately compiled and completed in all material
respects, fairly present the information purported to be shown therein, and
reflect all liabilities for Taxes for the periods covered by such Tax Returns,
net of any applicable reserves;
(c none of such Tax Returns are under audit or examination by any
foreign, federal, state or local authority and there are no agreements, waivers
or other arrangements providing for an extension of time with respect to the
assessment or collection of any Tax or deficiency of any nature against Seller
or with respect to any such Tax Return, or any suits or other actions,
proceedings, investigations or claims now pending or, to the Best Knowledge of
Seller and each Escrow Stockholder, threatened against Seller with respect to
any Tax, or any matters under discussion with any foreign, federal, state or
local authority relating to any Tax, or any claims for any additional Tax
asserted by any such authority;
(d all Taxes assessed and due and owing from or against Seller on or
before the Effective Time (including, but not limited to, ad valorem taxes
relating to any property of Seller) have been timely paid in full on or before
the Effective Time;
(e all withholding Tax, Tax deposit and estimated Tax payment
requirements imposed on Seller for any and all periods ending on or before the
Effective Time, or through and including the Effective Time for periods that
have not ended on or before the Effective Time, have been satisfied in full on
or before the Effective Time or reserves adequate for the payment of such
withholding, deposit and estimated Taxes have been or will be established in the
financial statements of Seller on or before the Effective Time, a copy of which
has been or will be provided to BCC; and
(f the Financial Statements reflect and include adequate charges,
accruals, reserves and provisions for the payment in full of any and all Taxes
payable with respect to any and all periods ending on or before the respective
dates thereof.
4.7 Employee Matters. Part 4.7 of the Disclosure Schedule sets forth a
true and complete list of the names of, and current annual compensation paid by
Seller to, each employee of Seller utilized in connection with the operation of
the Business. Seller is not a party to or bound by any collective bargaining or
other union agreements. Seller has not, within the last five years, had or, to
Best Knowledge of Seller and Escrow Stockholders, been threatened with any union
activities, work stoppages or other labor trouble with respect to its employees,
temporary employees or consultants. As of the date hereof, there are no
disputes with employees in general to which Seller is a party. As of the date
hereof, there are no strikes, slowdowns or picketing against Seller pending or,
to the Best Knowledge of Seller and each Escrow Stockholder, threatened. As of
the date hereof, Seller has not received notice from any union, employees,
temporary employees or consultants setting forth demands for representation,
elections or for present or future changes in wages, terms of employment or
working conditions. Other than wage increases in the Ordinary Course of
Business, since the Balance Sheet Date, Seller has not made any commitment or
agreement to increase the wages or modify the conditions or terms of employment
of any of the employees of Seller used in connection with the Business.
4.8 Contracts and Agreements. (a) Except as set forth in Part 4.8(a) of
the Disclosure Schedule, Seller is not a party to or bound by:
(i0 any contract, agreement or commitment in respect of the sale of
products or services (including, without limitation, customer contracts for
services to be provided after the Effective Date) or the purchase of raw
materials, supplies or other products or utilities;
(ii0 any offer, tender or the like outstanding and capable of being
converted into an obligation of Seller by the passage of time or by an
acceptance or other act of some other person or entity or both, except for those
incurred in the Ordinary Course of Business, none of which have had a Material
Adverse Effect;
(iii0 any sale, agency, distributorship agreement, franchise
agreement or legally enforceable commitment or obligation with respect thereto,
including but not limited to, any contract or agreement that would require
Seller to pay commissions or share profits or sales proceeds with any third
party;
(iv0 any collective bargaining agreement, union agreement, employment
agreement, consulting agreement, management service agreement, agreement
providing for the services of an independent contractor or any other similar
type of contract or agreement;
(v0 any profit-sharing, pension, stock option, severance pay,
retirement, bonus, deferred compensation, group life and health insurance or
other employee benefit plan, agreement, arrangement or commitment of a similar
nature or any agreement with any present or former officer, director or
Stockholder of Seller, except as indicated in Part 4.25 of the Disclosure
Schedule;
(vi0 any loan or credit agreement, indenture, guarantee (other than
endorsements made for collection), mortgage, pledge, conditional sale or other
title retention agreement, any equipment financing obligation, lease and
lease-purchase agreement, except as indicated in Part 4.8(b) of the Disclosure
Schedule;
(vii0 any lease related to the Assets or the Business, and any
other contract, agreement or legally enforceable commitment relating to or
affecting the Assets or the Business;
(viii0 any performance bond, bid bond, surety bond and the like,
any contract and bid covered by such bond, and any letter of credit and
guaranty;
(ix0 any consent decree and other judgment, decree or order,
settlement agreement and agreement relating to competitive activities, requiring
or prohibiting any future action;
(x0 any contract, commitment or agreement of any nature with any
Stockholder, or any Associate (as defined in Section 4.5) of a Stockholder or
Affiliate of any Stockholder;
(xi0 any contracts, commitments and agreements entered into outside
the ordinary course of the operation of the Business;
(xii0 any agreement, indenture or other instrument which contains
restrictions with respect to the payment of dividends or any other distribution
in respect of its capital stock or the purchase, redemption or other acquisition
of capital stock;
(xiii0 other than expenditures regularly made in the Ordinary
Course of Business of Seller for items that are not property, plant or
equipment, any agreement, contract or commitment relating to any expenditure or
a series of related expenditures in excess of $10,000;
(xiv0 any outstanding loan or advance by Seller to, or investment
by Seller in, any Person, or any agreement, contract, commitment or
understanding relating to the making of any such loan, advance or investment
(excluding trade receivables);
(xv0 any contract, agreement, indenture, note or other instrument
relating to (A) the borrowing of money by Seller or the granting of any
Encumbrance or (B) any guarantee or other contingent liability (identifying the
primary contract or agreement to which such guarantee or contingent liability
relates or the agreement pursuant to which such guarantee was delivered) in
respect of any indebtedness, commitment, liability or obligation of any Person
(other than the endorsement of negotiable instruments for deposit or collection
in the Ordinary Course of Business);
(xvi0 any agreement, contract or commitment limiting the freedom
of Seller or any Affiliate of Seller to engage in any line of business, to own,
operate, sell, transfer, pledge or otherwise dispose of or encumber any Asset or
to compete with any Person or to engage in any business or activity in any
geographic area;
(xvii0 any agreement, lease, contract or commitment or series of
related agreements, leases, contracts or commitments not entered into in the
Ordinary Course of Business that is not cancelable under the terms of such
agreement, lease, contract or commitment without penalty to Seller within
30 days;
(xviii0 any agreement, contract or commitment requiring (A) the
payment for goods or services whether or not such goods or services are actually
provided or (B) the furnishing of goods or services at a price less than
Seller's cost of producing such goods or providing such services;
(xix0 any agreement or contract obligating Seller or, that would
materially obligate or require any subsequent owner of the business currently
conducted by Seller or any of the Assets to provide for indemnification or
contribution with respect to any matter (other than customary indemnification
provisions in leases of property leased by Seller);
(xx0 any license, royalty or similar agreement; or
(xxi0 any agreement, contract or commitment that Seller expects to
have a Material Adverse Effect on Seller, Surviving Corporation and/or Purchaser
subsequent to Closing.
Part 4.8(a) of the Disclosure Schedule sets forth with respect to each mortgage,
security agreement, letter of credit or guaranty, a cross-reference to the
principal agreement, instrument or document referred to in Part 4.8(a) of the
Disclosure Schedule pursuant to which such mortgage, security agreement, letter
of credit or guaranty was executed or to which such mortgage, security
agreement, letter of credit or guaranty relates.
(b Part 4.8(b) of the Disclosure Schedule sets forth (i) the
aggregate outstanding principal amount as of March 16, 2000, with respect to
each loan, credit or other agreement, instrument or document listed in
Part 4.8(b) of the Disclosure Schedule hereto relating to the borrowing of money
by Seller and (ii) the amount of available borrowings as of March 16, 2000, with
respect to each such loan, credit or other agreement, instrument or document.
(c All of such contracts, agreements, leases, licenses, plans,
arrangements, commitments and documents listed in Part 4.8(a) of the Disclosure
Schedule (collectively, the "Contracts") are valid, binding and in full force
and effect in accordance with their terms and conditions, other than as set
forth in Part 4.8(a) of the Disclosure Schedule, and there is no existing
default thereunder or breach thereof by Seller, or, to the Best Knowledge of
Seller and each Escrow Stockholder, by any other party to a Contract, or any
conditions which, with the passage of time or the giving of notice or both,
might reasonably constitute such a default by Seller, or, to the Best Knowledge
of Seller and each Escrow Stockholder, by any other party to a Contract, and to
the Best Knowledge of each Escrow Stockholder, none of the Contracts will be
breached by or give any other party a right of termination as a result of the
transactions contemplated by this Agreement. There are no pending or, to the
Best Knowledge of Seller and each Escrow Stockholder, threatened disputes with
respect to the Contracts. Seller is not obligated to pay any liquidated damages
under any of the Contracts and to the Best Knowledge of Seller and each Escrow
Stockholder, there are no facts or circumstances that could reasonably be
expected to result in an obligation of Seller to pay any such liquidated
damages. To the Best Knowledge of Seller and Escrow Stockholder, there is no
reason why any of the Contracts (i) will result in a loss to the Surviving
Corporation on completion by performance or (ii) cannot readily be fulfilled or
performed by the Surviving Corporation on time without undue or unusual
expenditure of money or effort. Copies of all of the documents (or in the case
of oral commitments, descriptions of the material terms thereof) relevant to the
Contracts have been made available by Seller to the BCC Parties, and such copies
and/or descriptions are true, substantially complete and accurate and include
all amendments, supplements or modifications thereto. All of the Contracts will
be fully vested in Purchaser as of the Effective Time of the Merger, without the
approval or consent of any Person, or, if such approval or consent is required,
by Seller and Escrow Stockholders will use their best efforts to obtain such on
or before the Closing Date or within a reasonable period of time after Closing
and deliver to the BCC Parties at or prior to the Closing.
4.9 Effect of Agreement. The execution and delivery of this Agreement by
each of Seller and each Stockholder and the consummation of the transactions
contemplated hereby will not (a violate any provision of the Articles of
Incorporation or other charter documents or bylaws of Seller; (b) result in any
violation of any Governmental Requirement applicable to any Stockholder, Seller,
the Assets or the Business; (c) conflict with, or result in any breach of, or
default or loss of any right under (or an event or circumstance that, with
notice or the lapse of time, or both, would result in a default), or the
creation of an Encumbrance pursuant to, or cause or permit the acceleration
prior to maturity or "put" right with respect to, any obligation under, any
contract, indenture, mortgage, deed of trust, lease, loan agreement or other
agreement or instrument to which Seller or any Stockholder is a party or to
which any of the Assets or Business are subject; (d) relieve any Person of any
obligation (whether contractual or otherwise) or enable any Person to accelerate
or terminate any such obligation or any right or benefit enjoyed by Seller or to
exercise any right under any agreement in respect of the Assets or the Business;
and (e) require notice to or the consent, authorization, approval, clearance,
waiver or order of any Person (except as may be contemplated by the last
sentence of Section 4.8). Except as set forth on Part 4.9 of the Disclosure
Schedule hereto, the execution, delivery and performance of this Agreement by
Seller and each Stockholder will not result in the loss of any governmental
license, franchise or permit possessed by Seller.
4.10 Properties, Assets and Leasehold Estates.
(a Set forth on Part 4.10(a) of the Disclosure Schedule is a
description of each item of personal property, excluding inventory, owned by
Seller that had a book value as of the Balance Sheet Date greater than $10,000.
For purposes of this Section 4.10, "personal property" excludes Intellectual
Property. Seller has good title to all of its personal property that is
material to Seller's business, results of operations, financial condition or
Assets (including, without limitation, those items of personal property set
forth on Part 4.10(a) of the Disclosure Schedule), free and clear of all
Encumbrances, except for Permitted Encumbrances and those Encumbrances set forth
on Part 4.10(a) of the Disclosure Schedule.
(b Set forth on Part 4.10(b) of the Disclosure Schedule is a
description of each item of personal property leased by Seller for which the
annual rent payable under the applicable lease or contract exceeds $10,000.
Seller has good title to all the leasehold estates pursuant to which the
personal property set forth on Part 4.10(b) of the Disclosure Schedule is
leased, free and clear of all Encumbrances, except for Permitted Encumbrances
and those Encumbrances set forth on Part 4.10(b) of the Disclosure Schedule.
Seller has not breached any provision of and is not in default (and no event or
circumstance exists that with notice, or the lapse of time or both, would
constitute a default by Seller) under the terms of any lease or other agreement
pursuant to which the personal property set forth on Part 4.10(b) of the
Disclosure Schedule is leased. To the Best Knowledge of Seller and each Escrow
Stockholder, all of such leases or other agreements are in full force and
effect. There are no pending or, to the Best Knowledge of Seller and each
Escrow Stockholder, threatened disputes with respect to any lease or other
agreement pursuant to which the personal property set forth on Part 4.10(b) of
the Disclosure Schedule is leased, which would have a Material Adverse Effect
and, to the Best Knowledge of Seller and each Escrow Stockholder, the lessor
thereunder has not breached any provision of and is not in default (and no event
or circumstance exists that with notice, or the lapse or time or both, would
constitute a default by the lessor) under the terms of any such lease or other
agreement.
(c Seller owns no real property.
(d Set forth on Part 4.10(d) of the Disclosure Schedule is a list of
all leases of Seller with respect to real property leased by Seller for which
the annual rent payable under the applicable lease or contract exceeds $10,000.
Seller has good and marketable title to all the leasehold estates pursuant to
which the real property set forth on Part 4.10(d) of the Disclosure Schedule is
leased, free and clear of all Encumbrances, except for Permitted Encumbrances.
Seller has not breached any provision of and is not in default (and no event or
circumstance exists that with notice, or the lapse of time or both, would
constitute a default by Seller) under the terms of any lease or other agreement
pursuant to which the real property set forth on Part 4.10(d) of the Disclosure
Schedule is leased. To the Best Knowledge of Seller and each Escrow
Stockholder, all of such leases or other agreements are in full force and
effect. There are no pending or, to the Best Knowledge of Seller and each
Escrow Stockholder, threatened disputes with respect to any lease or other
agreement pursuant to which the real property set forth on Part 4.10(d) of the
Disclosure Schedule is leased and, to the Best Knowledge of Seller and each
Escrow Stockholder, the lessor thereunder has not breached any provision of and
is not in default (and no event or circumstance exists that with notice, or the
lapse of time or both, would constitute a default by the lessor) under the terms
of any such lease or other agreement.
(e To the Best Knowledge of Seller and each Escrow Stockholder,
there is no (i0 change contemplated in any applicable law, statute, ordinance,
rule, regulation, order or determination of any Governmental Authority,
(ii) applicable law, statute, ordinance, rule, regulation, order or
determination of any Governmental Authority or any restrictive covenant or deed
restriction affecting the real property described in Section 4.10(c) and (d)
hereof, including without limitation any zoning ordinances, building codes,
flood disaster laws, wetlands regulations, health laws or environmental laws,
(iii) judicial or administrative action, (iv) action by adjacent landowners,
(v) administrative action, (vi) natural or artificial conditions on or about the
real property identified in Section 4.10(c) and (d) or (vii) significant adverse
fact or condition relating to such real property or its use that would, in each
case, have a Material Adverse Effect upon the Business or the operation or
maintenance of such real property compared to the cost as of the date hereof.
(f) Seller has good title to all personal property, including
equipment and other infrastructure, that will be required to execute and
implement Seller's business plan as presented to the BCC Parties.
4.11 Intellectual Property.
(a) Parts 1.61 and 1.69 of the Disclosure Schedule are a complete
list of Software in which Seller either has an ownership interest or
rights/obligations pursuant to an agreement with a third party. Part 1.70 of
the Disclosure Schedule is a complete list of agreements under which Seller has
rights/obligations in respect of Third-Party Software. Part 4.11(a) of the
Disclosure Schedule is a complete list of all Intellectual Property, except as
set forth on Parts 1.61 and 1.69 of the Disclosure Schedule, including but not
limited to (i) all trademarks, service marks and trade names owned or claimed or
used (pursuant to an agreement with a third party or otherwise) by Seller,
together with all U.S., state and foreign registrations thereof and/or
applications therefor, (ii) all U.S and foreign copyright registrations owned or
claimed or used (pursuant to an agreement with a third party or otherwise) by
Seller and/or applications therefor, and (iii) all U.S. and foreign patents and
applications therefor on inventions, discoveries, improvements, ideas or know-
how owned or claimed or used (pursuant to an agreement with a third party or
otherwise) by Seller. Seller has made available to BCC Parties correct and
complete copies of all patents, registrations, applications, licenses and
agreements and has made available correct and complete copies of all other
written documentation evidencing ownership and prosecution (if applicable) of
each item.
(b) All Software performs as intended in System Documentation and
User Documentation (subject to minor imperfections in the Software that are
standard in the software industry) and is free from defects, viruses or any
other impediment to Purchaser's quiet enjoyment in the operation thereof
(subject to minor imperfections in the Software that are standard in the
software industry).
(c) Seller has developed all Intellectual Property through its own
efforts for its own account and except as set forth in agreements itemized on
Part 4.11(c) of the Disclosure Schedule, owns all right, title and interest in
and to such Intellectual Property free and clear of any security interest,
contract obligation, license, lien, encumbrance, alleged infringement, dispute,
potential dispute, claim or other cloud of title concerning such Intellectual
Property whatsoever. Except as set forth on Part 4.11(c) of the Disclosure
Schedule, Seller has not interfered with, infringed upon, misappropriated or
otherwise come into conflict with any intellectual property rights of third
parties and neither Seller or its directors or officers (or employees
responsible for Intellectual Property matters) have ever received any charge,
complaint, claim, demand or notice alleging such interference, infringement,
misappropriation or violation (including any claims Seller must license or
refrain from using any intellectual property rights of any third party). To the
Best Knowledge of Seller and Escrow Stockholders, Seller will not interfere
with, infringe upon or otherwise come into conflict with any intellectual
property rights of third parties as a result of the operation of its Business as
currently conducted and as proposed to be conducted pursuant to the business
plan presented to the BCC Parties. The Intellectual Property neither infringes
nor is being infringed by any third party proprietary interest, including
(without limitation) any third party patent, copyright, trademark, or trade
secret interest. The Intellectual Property is fully eligible for protection
under applicable law and has not been forfeited, abandoned, lapsed or donated in
any way into the public domain. All of Seller's trade secrets, including source
code, system specifications and other Software Trade Secrets embodied in the
Intellectual Property have been maintained in confidence and, except as set
forth in agreements itemized on Part 4.11(c) of the Disclosure Schedule, are not
known to any third party. All personnel, including employees, agents,
consultants and contractors, who have contributed to or participated in the
conception and development of the Intellectual Property either (i) have been a
party to a work-for-hire relationship with Seller that has accorded Seller full,
effective and exclusive original ownership of all tangible and intangible
property arising with respect to the Intellectual Property or (ii) have executed
appropriate instruments of assignment in favor of Seller as assignee that have
conveyed to Seller full, effective and exclusive ownership of all tangible and
intangible property thereby arising with respect to the Intellectual Property.
Except for agreements itemized on Part 4.11(c) of the Disclosure Schedule, no
agreements or arrangements are in effect with respect to the development, non-
disclosure, marketing, distribution, licensing or promotion of the Intellectual
Property by any independent contractor, salesperson, distributor, sublicensor or
other remarketer or sales organization.
(d) All Third-Party Software Agreements are freely assignable to and
assumable by Purchaser as set forth herein so as to give Purchaser exactly the
same rights and/or obligations thereunder enjoyed by Seller, without the
requirement of obtaining any consent or approval, giving any prior or subsequent
notice, paying any further royalty or fee to any party thereto or to any other
third party, or performing any duty that has not already been fully performed by
Seller. Each Third-Party Software Agreement is in full force and effect in
accordance with its terms without modification or amendment and without default
by either party thereto, and without dispute by any party as to any term or
condition thereof. To the Best Knowledge of the Seller and each Escrow
Stockholder, there are no facts or documents rendering any Third-Party Software
Agreement unenforceable by Seller or otherwise invalid. To the Best Knowledge
of the Seller and each Escrow Stockholder, there are no obligations, including
payment of money, past due by any party to any Third-Party Software Agreement.
To the Best Knowledge of the Seller and each Escrow Stockholder, there are no
disclosed or undisclosed breaches of warranty, whether or not within a time
period to cure, pertaining to any Third-Party Software Agreement. To the Best
Knowledge of the Seller and each Escrow Stockholder, there is no condition
existing that has or will trigger a right to terminate any Third-Party Software
Agreement. To the Best Knowledge of the Seller and each Escrow Stockholder,
there is no requirement in any Third-Party Software Agreement requiring a third
party to be a signatory to this Agreement. The Third-Party Software neither
infringes nor is being infringed by any third party proprietary interest,
including (without limitation) any third party patent, copyright, trademark or
trade secret interest. Any usage by the Seller or in the Business of
off-the-shelf shrinkwrap and mass-market software is in compliance with the
terms thereof.
(e) The Intellectual Property identified in the Disclosure Schedule
constitutes all Intellectual Property used by Seller or necessary to conduct the
Business in the manner it is being conducted and as currently contemplated being
conducted pursuant to Seller's business plan presented to the BCC Parties. Each
item of Intellectual Property owned or used in the Business immediately prior to
the Effective Time will be owned or available for use by Purchaser as Surviving
Corporation on identical terms and conditions immediately after the Closing.
The Intellectual Property has not been licensed to any Person or pursuant to any
agreement which restricts the ability of Seller or any other Person to use or
license such.
(f) Without limitation of the foregoing, neither Seller nor any
Escrow Stockholder has infringed or is presently infringing either (i) United
States Patent Number 5,414,762, dated May 9, 1995 (the "Q.Sys International
Patent") or (ii) United States Patent Application Serial Number 09/158,399 filed
with the United States Patent and Trademark Office on September 22, 1998 (the
"National Telemanagement Corporation Patent Application").
4.12 Suits, Actions and Claims. Except as set forth in Part 4.12 of the
Disclosure Schedule, (a) there are no suits, actions, claims, inquiries or
investigations by any Person, or any legal, administrative or arbitration
proceedings in which Seller is engaged or which are pending or, to the Best
Knowledge of Seller and each Escrow Stockholder, threatened against or affecting
Seller or any of its properties, Assets or Business, or to which Seller is or
might become a party, or which question the validity or legality of the
transactions contemplated hereby, and (b) there is no outstanding order, writ,
injunction or decree of any Governmental Authority against or affecting Seller
or any of its properties, Assets or Business. Without limiting the foregoing, to
the Best Knowledge of Seller and each Escrow Stockholder, there is no state of
facts or the occurrence of any event forming the basis of any present or
potential claim against Seller.
4.13 Licenses and Permits; Compliance With Governmental Requirements.
Except as set forth in Part 4.13 of the Disclosure Schedule, Seller has all
federal, state, local and foreign governmental licenses and permits necessary to
the conduct of the operations of Seller's business as currently conducted, such
licenses and permits are in full force and effect, no material violations
currently exist in respect of any thereof and no proceeding is pending or, to
the Best Knowledge of Seller and each Escrow Stockholder, threatened to revoke
or limit any thereof. Part 4.13 of the Disclosure Schedule contains a true,
complete and accurate list of (a) all such governmental licenses and permits,
(b) all consents, orders, decrees and other compliance agreements under which
Seller is operating or bound, copies of all of which have been made available to
the BCC Parties, and (c) all material governmental licenses and permits applied
for but not yet received by Seller. Seller has not received and is not aware of
any reports of inspections under the United States Occupational Safety and
Health Act, or under any other applicable federal, state or local health and
safety laws and regulations relating to Seller, the Assets or the operation of
Seller's Business. There are no safety, health, anti-competitive or
discrimination claims that have been made or are pending or, to the Best
Knowledge of Seller and each Escrow Stockholder, that are threatened relating to
the Business or employment practices of Seller. Except as set forth on Part 4.20
of the Disclosure Schedule, Seller has complied with all Governmental
Requirements applicable to its business and all Governmental Requirements with
respect to the distribution and sale of products and services by it.
4.14 Authorization.
(a) Seller has full legal right, power and authority to enter into
and deliver this Agreement, to consummate the transactions set forth herein and
to perform all the terms and conditions hereof to be performed by it. The
execution and delivery of this Agreement by Seller and the performance by it of
the transactions contemplated herein have been duly and validly authorized by
all requisite corporate actions of Seller, and this Agreement has been duly and
validly executed and delivered by Seller and is the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with the terms of
the Agreement, except as limited by applicable bankruptcy, moratorium,
insolvency or other similar laws affecting generally the rights of creditors or
by principles of equity.
(b) Except as set forth in Part 4.14(b) of the Disclosure Schedule,
immediately subsequent to the Effective Time, no Former Seller Stockholder or
its Affiliate will have any indebtedness outstanding that is payable to the
Surviving Corporation, including such amounts as set forth in Part 4.14(b) of
the Disclosure Schedule as of the date of this Agreement. Immediately
subsequent to the Effective Time, except for this Agreement and any employment
agreements contemplated hereunder to be entered into between the Surviving
Corporation and any Stockholder, there will be no agreements, contracts, leases,
arrangements or other understandings (either written or oral) between such
Stockholder and the Surviving Corporation.
4.15 Records. The books, records and minutes kept by Seller with respect
to the Assets and the Business, including, but not limited to, all customer
files, service agreements, correspondence and historic revenue of Seller, have
been kept properly and contain records of substantially all matters required to
be included therein by any Governmental Requirement or by generally accepted
accounting principles, and such books, records and minutes are true, materially
accurate and substantially complete.
4.16 Environmental Protection Laws.
(a) Except as set forth in Part 4.16 of the Disclosure Schedule,
Seller has at all times operated in compliance with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
of Environmental Laws and related orders of any court or other Governmental
Authority.
(b) Except as set forth in Part 4.16 of the Disclosure Schedule,
there are no existing, pending or, to the Best Knowledge of Seller and each
Escrow Stockholder, threatened actions, suits, claims, investigations, inquiries
or proceedings by or before any court or any other Governmental Authority
directed against Seller or its Assets or the Business which pertain or relate to
(i) any remedial obligations under any applicable Environmental Law, (ii)
violations of any Environmental Law, (iii) personal injury or property damage
claims relating to the release of chemicals or Waste Materials or (iv) response,
removal or remedial costs under CERCLA or any similar state law.
(c) Except as set forth in Part 4.16 of the Disclosure Schedule, all
notices, permits, licenses or similar authorizations required to be obtained or
filed by Seller under all applicable Environmental Laws in connection with its
current and previous operation or use of the Assets, any other assets or
properties currently or previously leased or owned by Seller or the current and
previous conduct of its business have been duly obtained or filed and are in
full force and effect.
(d) Neither Seller nor any Escrow Stockholder has received notice
that any permit, license or similar authorization is to be revoked or suspended
by any Governmental Authority.
(e) Seller does not own or operate any underground storage tanks.
(f) No portion of the Assets or any other assets or properties
currently or previously leased or owned by Seller is part of a Superfund site
under CERCLA or any similar ranking or listing under any similar state law.
(g) All Waste Materials generated by Seller have been transported,
stored, treated and disposed of by carriers, storage, treatment and disposal
facilities authorized and maintaining valid permits under all applicable
Environmental Laws.
(h) No Person has disposed or released any Waste Materials on or
under the Assets or any other asset or property currently or previously leased
or owned by Seller and Seller has not disposed or released Waste Materials on or
under the Assets or any other asset or property currently or previously leased
or owned by Seller, except in compliance with all Environmental Laws.
(i) No facts or circumstances exist which could reasonably be
expected to result in any liability to any Person with respect to the current or
past business and operations of Seller, the Assets or any other assets or
properties currently or previously leased or owned by Seller in connection with
(i) any release, transportation or disposal of any Waste Materials, hazardous
substance or solid waste or (ii) action taken or omitted that was not in full
compliance with or was in violation of, any applicable Environmental Law.
4.17 Accounts Receivable. All notes and accounts receivable of Seller that
are reflected on the Reference Balance Sheet or that have arisen since the
Balance Sheet Date ("Accounts Receivable") have arisen in the Ordinary Course of
Business. All Accounts Receivable either (a) have been collected or (b) unless
otherwise noted on Part 4.17 of the Disclosure Schedule, are collectible on the
respective due dates thereof, or, if no due date is stated with respect thereto
are collectible in the Ordinary Course of Business, in each case in the
aggregate recorded amounts thereof, less the applicable reserves with respect
thereto reflected on the Reference Balance Sheet. Seller has not factored or
discounted or agreed to factor or discount any Account Receivable. The values
at which the Accounts Receivable are carried on the Reference Balance Sheet
reflect the accounts receivable valuation policy of Seller which is consistent
with Seller's past practice and in accordance with generally accepted accounting
principles consistently applied. Part 4.17 of the Disclosure Schedule sets
forth a true, correct and complete list of all Accounts Receivable written off
by Seller, in whole or in part, as uncollectible during the two years preceding
the date hereof. Part 4.17 of the Disclosure Schedule also sets forth a true,
correct and complete aging of the Accounts Receivable of Seller as of the most
recent practicable date.
4.18 Brokers and Finders. No broker or finder has acted for Seller in
connection with this Agreement or the transactions contemplated by this
Agreement and no broker or finder is entitled to any brokerage or finder's fee
or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of Seller.
4.19 Deposits. Except as set forth on Part 4.19 of the Disclosure
Schedule, Seller does not now hold any deposits or prepayments by third parties
with respect to any of the Assets or the Business ("Deposits").
4.20 Work Orders. Except as set forth on Part 4.20 of the Disclosure
Schedule, there are no outstanding work orders or contracts relating to any
portion of the Assets from or required by any policy of insurance, fire
department, sanitation department, health authority or other Governmental
Authority nor is there any matter under discussion with any such parties or
authorities relating to work orders or contracts.
4.21 Customer List; Supplier List.
(a) Part 4.21(a) of the Disclosure Schedule sets forth a true, correct and
complete list of all customers of the Business to which Seller has sold or
provided products or services during the two years immediately preceding March
16, 2000. This list provides an accurate statement of the gross revenues
received from each such customer by the Business during the twelve-month period
ended December 31, 1999. This list also indicates by special designation all
customers on the list with respect to which the Business has not sold or
provided products or services during the three-month period immediately
preceding March 1, 2000.
(b) Part 4.21(b) of the Disclosure Schedule sets forth a true, correct and
complete list of all suppliers of the Business from which Seller has purchased
or otherwise received more than $10,000 worth of products or services during the
two years immediately preceding March 16, 2000. This list provides an accurate
statement of the gross payments to each such supplier by the Business during the
twelve-month period ended December 31, 1999. This list also indicates by
special designation all suppliers on the list with respect to which the Business
has not purchased or otherwise received products or services during the
three-month period immediately preceding March 1, 2000.
4.22 No Royalties. No royalty or similar item or amount is being paid or
is owing by Seller, nor is any such item accruing, with respect to the
operation, ownership or use of the Business or the Assets.
4.23 Bank Accounts. Part 4.23 of the Disclosure Schedule sets forth a true
and complete list of all bank or financial accounts and safe deposit boxes of
Seller and of the credit and debit balances of such bank and financial accounts
as of the most recent practicable date. Except as set forth in Part 4.23 of the
Disclosure Schedule, since the date of the balances set forth on such list,
there have been no payments out of or drafts against any of the accounts
included therein other than routine payments and drafts in the Ordinary Course
of Business, and the balances in such accounts as of the date hereof are not
materially different from those reflected in such list. Part 4.23 of the
Disclosure Schedule also lists all persons having signatory authority over or
access to such bank and financial accounts and safe deposit boxes.
4.24 Insurance. Part 4.24 of the Disclosure Schedule sets forth all
existing insurance policies held by Seller relating to the Business, Assets,
employees or agents of Seller. Each such policy is in full force and effect and
is with insurance carriers. There is no dispute with respect to such policies,
and all claims arising from events or circumstances occurring prior to the date
hereof have been paid in full or adequate reserves therefor are recorded in the
Reference Balance Sheet. All retroactive premium adjustments for any period
ended on or before February 29, 2000, under any worker's compensation policy or
any other insurance policies of Seller have been recorded in accordance with
generally accepted accounting principles and are reflected in the Reference
Balance Sheet. To Best Knowledge of Seller and Escrow Stockholders, except for
the policies identified as such on Part 4.24 of the Disclosure Schedule, none of
the policies set forth on Part 4.24 of the Disclosure Schedule will terminate as
a result of the transactions contemplated by this Agreement.
4.25 Employee Benefit Matters. As used in this Section 4.25, "Seller"
shall include Seller and any member of a controlled group or affiliated service
group as defined in Sections 414(b), (c), (m) and (o) of the Code of which
Seller is a member.
(a) List of all Benefit Plans and Compensation Agreements. Part
4.25(a) of the Disclosure Schedule includes a complete and accurate list of all
employee welfare benefit and employee pension benefit plans as defined in
Sections 3(1), 3(2) and 3(3) of ERISA and all other employee benefit agreements
or arrangements, including, but not limited to, deferred compensation plans,
incentive plans, bonus plans or arrangements, stock option plans, stock purchase
plans, golden parachute agreements, severance pay plans, dependent care plans,
cafeteria plans, employee assistance programs, scholarship programs, employment
contracts and other similar plans, agreements and arrangements that are
currently in effect or were maintained within three years of the Closing Date,
or have been approved before this date but are not yet effective, for the
benefit of directors, officers, employees, or former employees (or their
beneficiaries) of Seller. Seller is not aware of any commitment to create any
new plan, agreement or arrangement or modify any now existing. Seller has made
available to the BCC Parties, as to each plan, agreement or arrangement listed
in Part 4.25(a) of the Disclosure Schedule, as applicable, a complete and
accurate copy of (i) each plan, agreement or arrangement listed, (ii) the trust,
group annuity contract or other document which provides the funding for the
plan, agreement or arrangement, (iii) the three most recent annual Form 5500,
990 and 1041 reports, (iv) the most recent actuarial report or valuation
statement, (v) the most current summary plan description, booklet, or other
descriptive written materials, and each summary of material modifications
prepared after the last summary plan description, (vi) the most recent IRS
determination letter and all rulings or determinations requested from the IRS
subsequent to the date of that exemption letter and (vii) all other
correspondence from the IRS or the Department of Labor received which relates to
one or more of the plans, agreements or arrangements. There are no pending or,
to the Best Knowledge of Seller and each Escrow Stockholder, threatened or
anticipated claims (other than routine claims for benefits) by, on behalf of or
against any of the plans disclosed on Part 4.25(a) of the Disclosure Schedule or
their related trusts.
(b) Representations Pertaining to all Employee Benefit Plans. Each
employee welfare benefit plan and every employee pension benefit plan as defined
in Sections 3(1), 3(2) and 3(3) of ERISA which has been or is sponsored by,
participated in by or contributed to by Seller: (i) is in compliance with the
Code and ERISA, including, but not limited to, all reporting and disclosure
requirements of Part 1 of Subtitle B of Title I of ERISA; (ii) has had the
appropriate Form 5500 filed timely for each year of its existence; (iii) has not
engaged in any transaction described in Sections 406 or 407 of ERISA or
Section 4975 of the Code unless exempt under Section 408 of ERISA or
Section 4975 of the Code, as applicable; (iv) has at all times complied with the
bonding requirements of Section 412 of ERISA; (v) has no issue pending (other
than the payment of benefits in the normal course) nor any issue resolved
adversely to Seller which may subject Seller to the payment of a penalty,
interest, tax or other amount and (vi) can be unilaterally terminated or amended
on no more than 90 days notice, and (vii) all contributions or other amounts
payable by Seller as of the Closing Date with respect to each employee welfare
benefit plan and each employee pension benefit plan, other than an employee
pension benefit plan which is subject to Section 412 of the Code, have either
been paid or accrued in the Reference Balance Sheet, a copy of which has been
furnished to the BCC Parties. No notice has been received by Seller of an
increase or proposed increase in the cost of any employee welfare benefit or
employee pension benefit plan or other employee benefit agreement or arrangement
listed in Part 4.25(a) of the Disclosure Schedule.
(c) Additional Representations Pertaining to Certain Employee Welfare
Benefit Plans. All voluntary employee benefit associations have been submitted
to and approved as exempt from federal income tax under Section 501(c)(9) of the
Code by the IRS or the applicable submission period will not have ended prior to
the Closing. No plan, arrangement or agreement with any one or more employees
will cause Seller to have liability for severance pay as a result of the Merger.
Except as listed in Part 4.25(a) of the Disclosure Schedule, Seller does not
provide employee benefits, including without limitation, death, post-retirement
medical or health coverage (whether or not insured) or contribute to or maintain
any employee benefit plan which provides for benefit coverage following
termination of employment, nor has it made any representations, agreements,
covenants or commitments to provide that coverage, except (i) as is required by
Section 4980B(f) of the Code or other applicable statute, (ii) death benefits or
retirement benefits under any employee pension benefit plan as defined in
Section 3(2) of ERISA, (iii) benefits the full cost of which is borne by the
current or former employee (or his beneficiary), or (iv) deferred compensation
benefits which have been accrued as liabilities on the books of Seller and
disclosed on its Financial Statements. All group health plans maintained by
Seller have been operated in compliance with Section 4980B(f) of the Code.
(d) Additional Representations Pertaining to Certain Employee Pension
Benefit Plans. All employee pension benefit plans as defined in Section 3(2) of
ERISA which are intended to qualify under Section 401(a) of the Code have been
submitted to and approved as qualifying under Section 401(a) of the Code by the
IRS or the applicable remedial amendment period will not have ended prior to the
Closing. No facts have occurred which if known by the IRS could cause
disqualification of those plans. All employee pension benefit plans to which
Section 412 of the Code is applicable have fully complied with the funding
requirements of that Section and there is no accumulated funding deficiency as
defined in Section 302(a)(2) of ERISA (whether or not waived) in any one or more
of those plans. Seller has paid all premiums (any interest, charges and
penalties for late payment, if any applicable) due the Pension Benefit Guaranty
Corporation (the "PBGC") with respect to each employee pension benefit plan for
which premiums are required. No facts are known by Seller which will materially
increase those premiums within three years of the Closing Date. Except as set
forth on Part 4.25(d) of the Disclosure Schedule, no employee pension benefit
plan maintained by Seller has been terminated under circumstances which would
result in liability to the PBGC. There has been no "reportable event" (as
defined in Section 4043(b) of ERISA and the regulations under that Section) with
respect to any employee pension benefit plan subject to Title IV of ERISA.
Seller has not ceased operations at a facility so as to become subject to the
provisions of Section 4062(e) of ERISA, withdrawn as a substantial employer so
as to become subject to the provisions of Section 4063 of ERISA or ceased making
contributions on or before the date of the Closing to any employee pension
benefit plan subject to Section 4064(a) of ERISA to which Seller made
contributions at any time during the six years prior to the date of Closing.
Seller has not made a complete or partial withdrawal from a multiemployer plan
(as defined in Section 3(37) of ERISA) so as to incur withdrawal liability as
defined in Section 4201 of ERISA. The aggregate withdrawal liability of Seller,
computed as if a complete withdrawal by Seller had occurred under each
multiemployer pension plan as of the date hereof, would not exceed $10,000.
(e) Except as disclosed in Part 4.25(e) of the Disclosure Schedule,
the transactions contemplated by this Agreement will not accelerate the time of
payment or vesting, or increase the amount, of compensation due any director,
officer or employee, consultant or former director, officer, consultant or
employee (including any beneficiary) from Seller. Except as disclosed in Part
4.25(e) of the Disclosure Schedule, Seller is not obligated to any employee,
officer, or consultant for any deferred salary, bonus or other compensation.
4.26 Warranties and Product Liability.
(a) Except for (i) warranties implied by law and (ii) warranties
disclosed on Part 4.26 of the Disclosure Schedule, Seller has not given or made
any warranties either express or implied in connection with the sale or rental
of goods or services, including, without limitation, warranties covering the
customer's consequential damages. To the Best Knowledge of Seller and each
Escrow Stockholder, and except as set forth in Part 4.26 of the Disclosure
Schedule, there is no state of facts or occurrence of any event forming the
basis of any present claim against Seller with respect to warranties relating to
products produced, manufactured, marketed, sold, transported or distributed by
Seller or services rendered or allegedly offered by or on behalf of Seller that
could reasonably be expected to materially exceed the reserves therefor.
4.27 Securities Laws Matters.
(a) The Escrow Stockholders represent and warrant that (i) such
Escrow Stockholder has business knowledge and experience, such experience being
based on actual participation therein, (ii) such Escrow Stockholder is capable
of evaluating the merits and risks of an investment in the Merger Consideration
and the suitability thereof as an investment therefor, (iii) the Merger
Consideration to be acquired by such Escrow Stockholder in connection with this
Agreement will be acquired solely for investment and not with a view toward
resale or redistribution in violation of the securities laws, (iv) in connection
with the transactions contemplated hereby, no assurances have been made
concerning the future results of the BCC Parties or either of them or as to the
value of the Stock Consideration, (v) each Escrow Stockholder is an "accredited
investor," as that term is defined in Regulation D promulgated by the SEC
pursuant to the Securities Act, as that term is defined in Regulation D
promulgated by the SEC pursuant to the Securities Act, and (vi) each Escrow
Stockholder represents and warrants that such Escrow Stockholder has such
knowledge and experience in financial and business matters that he is capable of
evaluating the merits and risks of the transactions contemplated and contained
herein. Each Escrow Stockholder understands that none of the BCC Parties is
under any obligation to file a registration statement or to take any other
action under the securities laws with respect to the Stock Consideration except
as contemplated by Section 8.12.
(b) Each Escrow Stockholder is fully aware (i) of the circumstances
under which such Escrow Stockholder is required to hold the securities, (ii) of
the limitations on the transfer or disposition of the securities, (iii) that the
securities must be held indefinitely unless the transfer thereof is registered
under the securities laws or an exemption from registration is available and
(iv) that no exemption from registration is likely to become available for at
least one year from the date of acquisition of the securities. Such Escrow
Stockholder has been advised as to the provisions of Rules 144 and 145 as
promulgated by the SEC under the Securities Act and has been advised of the
applicable limitations thereof. Such Escrow Stockholder acknowledges that the
BCC Parties are relying upon the truth and accuracy of the representations and
warranties in this Section 4.27 by such Escrow Stockholder in consummating the
transactions contemplated by this Agreement without registering the securities
under the securities laws.
(c) Each Escrow Stockholder has been furnished with BCC's Annual
Report on Form 10-K for the year ended September 30, 1999, BCC's Quarterly
Report on Form 10-Q for the quarter ended December 31, 1999, BCC's proxy
statement with respect to the Annual Meeting of Stockholders held on March 22,
2000, BCC's Current Reports on Form 8-K filed February 25, 2000, and BCC's
Registration Statement on Form S-3 dated January 28, 2000 (such documents
collectively referred to herein as the "SEC Documents"). Such Escrow
Stockholder has been furnished with the complete financial statements of BCC for
the fiscal years ended September 30, 1998 and 1999, and the three months ended
December 31, 1999. The BCC Parties have made available to such Escrow
Stockholder the opportunity to ask questions and receive answers concerning the
terms and conditions of the transactions contemplated by this Agreement and to
obtain any additional information which they possess or could reasonably acquire
for the purpose of verifying the accuracy of information furnished to such
Escrow Stockholder as set forth herein or for the purpose of considering the
transactions contemplated hereby. BCC has offered to make available to such
Escrow Stockholder upon request at any time all exhibits filed by BCC with the
Commission as part of any of the reports filed therewith.
4.28 No Untrue Statements. The statements, representations and warranties
of Seller and each Escrow Stockholder set forth in this Agreement and the
Disclosure Schedule and in all other documents and information made available to
the BCC Parties, or either of them, and their representatives in connection
herewith do not include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements, representations and
warranties made not misleading. To the Best Knowledge of Seller and each Escrow
Stockholder, there is no fact or matter that is not disclosed to the BCC Parties
in this Agreement or the Disclosure Schedule that would materially and adversely
affect or, so far as Seller or any Escrow Stockholder can now reasonably
foresee, could materially and adversely affect the condition (financial or
otherwise) of any of the Assets or the Business or the ability of Seller or any
Stockholder to perform their respective obligations under this Agreement.
4.A REPRESENTATIONS AND WARRANTIES OF ESCROW STOCKHOLDERS AND OTHER
STOCKHOLDERS. Each Other Stockholder and Escrow Stockholder represents and
warrants to BCC Parties as follows:
4A.1 Authority. (a) Individual. Each Stockholder that is an individual
(an "Individual Stockholder") has full legal right, power and authority to enter
into and deliver this Agreement, the Affiliate Letter (as defined herein) and
the other agreements contemplated hereby, to perform all the terms and
conditions to be performed by such Individual Stockholder under this Agreement
and each of the other agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. This Agreement, the Affiliate
Letter (as defined herein), and the other agreements contemplated hereby have
been duly and validly executed and delivered by such Individual Stockholder and
are the legal, valid and binding obligation of such Individual Stockholder,
enforceable against such Individual Stockholder in accordance with the terms of
this Agreement, the Affiliate Letter (as defined herein) and the other
agreements contemplated hereby, except as limited by applicable bankruptcy,
moratorium, insolvency or similar laws affecting generally the rights of
creditors or by principles of equity.
(b) Trusts, Estates. The trustee or executor of each Stockholder that is
a trust or estate has full legal right, power and authority to enter into and
deliver this Agreement and other agreements contemplated hereby and to perform
fully its obligations under this Agreement and the other agreements contemplated
hereby. The execution and delivery of this Agreement and the agreements
contemplated hereby and the consummation by the trust or estate, as the case may
be, of the transactions contemplated hereby have been duly authorized by all
necessary action. This Agreement and the other agreements contemplated hereby
are the legal, valid and binding obligation of each such Stockholder enforceable
against each in accordance with its terms, except as limited by applicable
bankruptcy, moratorium, insolvency or similar laws affecting generally the
rights of creditors or by principles of equity.
4A.2 Consents. Except for filings under the HSR Act, no consents,
approvals or authorizations of any Person (other than those which have been
obtained) are required on the part of such Stockholder in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
4A.3 Litigation. There is no legal, judicial, administrative,
governmental, arbitration or other action or proceeding pending or, to the Best
Knowledge of such Stockholder, threatened against such Stockholder that could
affect the ability of such Stockholder to perform such Stockholder's obligations
under this Agreement.
4A.4 Stock Ownership. Such Stockholder is the record and beneficial
owner of the shares of Seller Stock as described in Part 4.2(a) of the
Disclosure Schedule hereto, and has full authority to vote all of such shares as
contemplated by this Agreement and the shares of Seller Stock owned by such
Stockholder as set forth in Part 4.2(a) of the Disclosure Schedule hereto are
owned free and clear of all Encumbrances and restrictive agreements, including,
without limitation, voting trust or stockholders agreements. Such Stockholder
has full authority to transfer pursuant to the Merger all of the shares of
Seller Stock owned by such Stockholder free and clear of all Encumbrances and
restrictive agreements, including without limitation, voting trust or
stockholders agreements.
4A.5 Brokers and Finders. No broker or finder has acted for any Stockholder
in connection with this Agreement or the transactions contemplated by this
Agreement and no broker or finder is entitled to any brokerage or finder's fee
or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of such Stockholder.
4A.6 Securities Laws Matters.
(a) Except as contemplated by Section 8.12 hereof, each Stockholder
recognizes and understands that the Merger Consideration to be issued to each
Stockholder pursuant to this Agreement (the "securities") will not be registered
under the Securities Act, or under the securities laws of any state (the
"securities laws"). The securities are not being so registered in reliance upon
exemptions from the Securities Act and the securities laws which are predicated,
in part, on the representations, warranties and agreements of each Stockholder
contained herein and in investor questionnaires required hereunder. Each
Stockholders' residence and domicile, in the case of each natural person, is in
the State set forth opposite his or her name on Part 4A.6 of the Disclosure
Schedule, and the principal office of each Stockholder that is not a natural
person is in the State set forth opposite its name on Part 4A.6 of the
Disclosure Schedule. Each Stockholder understands that no BCC Party is under any
obligation to file a registration statement or take any other action under the
securities laws with respect to the Merger Consideration except as contemplated
in Section 8.12.
(b) Each Stockholder agrees that the stock certificates representing
such Stockholder's Merger Consideration to be acquired pursuant to this
Agreement will be imprinted with the following legend, the terms of which are
specifically agreed to:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR UNDER ANY APPLICABLE STATE SECURITIES LAWS AND ARE "RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT.
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED FOR
SALE, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND SUCH
STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT
AND SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH
COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COUNSEL FOR
THIS CORPORATION, IS AVAILABLE.
Each Stockholder understands and agrees that appropriate stop transfer notations
will be placed in the records of BCC and with its transfer agent in respect of
the securities which are to be issued to each Stockholder pursuant to this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF THE BCC PARTIES. The BCC Parties
jointly and severally represent and warrant to the Stockholders as follows:
5.1 Purchaser Incorporation. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power to own and operate its assets and to carry
on its business as presently conducted.
5.2 BCC Incorporation. BCC is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the requisite corporate power to own and operate its assets and to carry on its
business as presently conducted.
5.3 Authorization. The BCC Parties have full legal right, power and
authority, corporate and otherwise, to enter into this Agreement and to
consummate the transactions set forth herein and to perform all the terms and
conditions hereof to be performed by them. The execution and delivery of this
Agreement and the performance by the BCC Parties of the transactions
contemplated herein have been duly authorized by all requisite corporate action
of the BCC Parties and is the legal, valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms, except as
limited by applicable bankruptcy, moratorium, insolvency or similar laws
affecting generally the rights of creditors or by principles of equity.
5.4 Brokers and Finders. No broker or finder has acted for the BCC
Parties in connection with this Agreement or the transactions contemplated by
this Agreement and no broker or finder is entitled to any brokerage or finder's
fee or to any commission in respect thereof based in any way on agreements,
arrangements or understandings made by or on behalf of the BCC Parties.
5.5 Authorization of Stock Consideration. BCC has taken all necessary
action to permit it to issue the number of shares of Stock Consideration
required to be issued pursuant to the terms of this Agreement. The shares of
Stock Consideration issued pursuant to the terms of this Agreement will, when
issued, be validly issued, fully paid and nonassessable and not subject to
preemptive rights. The Stock Consideration issuable pursuant to this Agreement
will, when issued, be listed on the Nasdaq National Market.
5.6 SEC Documents. Since March 1, 1997, BCC has filed all reports,
registration statements and other filings, together with any amendment required
to be made, that it has been required to file with the SEC under the Securities
Act and Exchange Act. BCC has made available to Seller and each Escrow
Stockholder or will make available to each Other Stockholder its SEC Documents.
As of their respective dates, the SEC Documents complied in all material
respects with the requirements of the Exchange Act and the rules and regulations
of the Commission promulgated thereunder applicable to such SEC Documents, and
none of the SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The consolidated financial statements of BCC
included in the SEC Documents comply as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the Commission with respect thereto, have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis during
the periods involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of BCC and its consolidated
subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (except in the case of
interim period financial information for normal year-end adjustments).
5.7 No Violation. Neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger and the other transactions
contemplated hereby:
(a) violates any law, order, writ, judgment, injunction, award,
decree, rule, statute, ordinance or regulation applicable to any BCC Party;
(b) conflicts with, results in a breach or termination of any
provision of, causes the acceleration of the maturity of any debt or obligation
pursuant to, constitutes a default (or gives rise to any right of termination,
cancellation or acceleration) under, or results in the creation of any
Encumbrance upon any of the assets of any BCC Party pursuant to, any terms,
conditions or provisions of any note, license, instrument, indenture, mortgage,
deed of trust or other agreement or understanding or any other restriction of
any kind or character to which any BCC Party is a party or by which any of their
respective assets are subject or bound, except, in each case, those that would
not have a Material Adverse Effect on any BCC Party; or
(c) conflicts with or results in any breach of any provision of the
Certificate of Incorporation or Bylaws of any BCC Party.
5.8 Consents. Other than the filing of a certificate of merger with the
Secretary of State of Delaware and of articles of merger with the Secretary of
State of Texas and any filing required under HSR, no consent, approval or
authorization of, or designation, declaration or filing with, any Person on the
part of the BCC Parties is required in connection with the valid execution and
delivery of this Agreement or the Merger, or the consummation of any other
transaction contemplated by this Agreement.
5.9 Certain Proceedings. There is no pending litigation or other
proceeding that has been commenced against any BCC Party and that challenges, or
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, the Merger or other transactions contemplated hereby.
6. NATURE OF STATEMENTS AND SURVIVAL OF INDEMNIFICATIONS, GUARANTEES,
REPRESENTATIONS AND WARRANTIES OF SELLER, THE STOCKHOLDERS AND BCC PARTIES.
(a) All statements of fact contained in this Agreement or in any
written statement (including financial statements), certificate, schedule or
other document delivered by or on behalf of Seller or any Stockholder pursuant
to this Agreement or in connection with the transactions contemplated hereby
shall be deemed representations and warranties of Seller and the Stockholders
hereunder. All indemnifications, representations and warranties made by Seller
and/or any Stockholder hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall survive the Effective Time regardless of
any investigation at any time made by or on behalf of the BCC Parties. The
covenants and agreements made by Seller and/or any Stockholder hereunder or
pursuant hereto or in connection with the transactions contemplated hereby shall
continue until all obligations with respect thereto shall have been performed or
satisfied or shall have been terminated in accordance with their terms.
(b) All statements of fact contained in the Agreement or in any
written statement (including financial statements), certificate, schedule or
other document delivered by or on behalf of the BCC Parties pursuant to this
Agreement or in connection with the transactions contemplated hereby shall be
deemed representations and warranties of the BCC Parties hereunder. All
indemnifications, representations and warranties made by the BCC Parties
hereunder or pursuant hereto or in connection with the transactions contemplated
hereby shall survive the Effective Time regardless of any investigation at any
time made by or on behalf of the Stockholders. The covenants and agreements
made by the BCC Parties hereunder or pursuant hereto or in connection with the
transactions contemplated hereby shall continue until all obligations with
respect thereto shall have been performed or satisfied or shall have been
terminated in accordance with their terms.
7.. TAX TREATMENT.
Seller, the Stockholders and the BCC Parties intend that the transactions
contemplated hereunder constitute a tax-free reorganization (a "Reorganization")
for federal income tax purposes under Section 368 of the Code, and agree to
treat and report for federal income tax purposes the transactions hereunder as a
Reorganization. This Agreement shall be considered by the parties as a plan of
reorganization and shall be construed in a manner to result in treatment of the
transactions hereunder as a Reorganization for federal income tax purposes.
8.. PRE-CLOSING COVENANTS.
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
8.1 General. Each of the Parties will use his or its best efforts to take
all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 9).
8.2 Notices and Consents. Each of the Parties, as promptly as
practicable, (i) will make, or cause to be made, all filings and submissions
required under laws, rules and regulations applicable to it, or to its
Subsidiaries and Affiliates, as may be required for it to consummate the
transactions contemplated hereby; (ii) will use their best efforts to obtain,
or cause to be obtained, all authorizations, approvals, consents and waivers
from all Persons and Governmental Authorities necessary to be obtained by each
of them, or any of their respective Subsidiaries or Affiliates, in order for
each of them, respectively, so to consummate such transactions; and (iii) will
use their respective best efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order for each of them to fulfill
their respective obligations hereunder.
8.3 Operation of Business. Except as contemplated by this Agreement or as
set forth in the Disclosure Schedule, during the period from the date of this
Agreement to the Effective Time, (a) Seller will conduct its operations
according to its Ordinary Course of Business and consistent with past practice,
(b) Seller will not enter into any material transaction other than in the
Ordinary Course of Business and consistent with past practice, and (c) to the
extent consistent with the foregoing, with no less diligence and effort than
would be applied in the absence of this Agreement, Seller will seek to preserve
intact its current business organizations, keep available the services of its
current officers and employees and preserve its relationships with customers,
suppliers and others having business dealings with it with the objective that
their goodwill and ongoing businesses shall be unimpaired at the Effective Time.
Without limiting the generality of the foregoing, and except as otherwise
permitted in this Agreement, prior to the Effective Time, Seller will not,
without the prior written consent of BCC:
(a) Except for the issuance of shares of Seller Stock to these
parties listed and in the amounts listed on the attached Part 8.3(a) of the
Disclosure Schedule upon the exercise of certain Rights Against Seller
Stock, issue, deliver, sell, dispose of, pledge or otherwise encumber, or
authorize or propose the issuance, delivery, sale, disposition or pledge or
other Encumbrance of (i) any additional shares of its capital stock of any
class (including the Seller Stock), or any securities or rights convertible
into, exchangeable for or evidencing the right to subscribe for any shares
of its capital stock, or any rights, warrants, options, calls, commitments
or any other agreements of any character to purchase or acquire any shares
of its capital stock or any securities or rights convertible into,
exchangeable for or evidencing the right to subscribe for any shares of its
capital stock, or (ii) any other securities in respect of, in lieu of or in
substitution for Seller Stock outstanding on the date hereof;
(b) Except for the extinguishment or conversion of Rights Against
Seller Stock prior to Closing, redeem, purchase or otherwise acquire, or
propose to redeem, purchase or otherwise acquire, any of its outstanding
securities (including the Seller Stock);
(c) split, combine, subdivide or reclassify any shares of its capital
stock or declare, set aside for payment or pay any dividend, or make any
other actual, constructive or deemed distribution in respect of any shares
of its capital stock or otherwise make any payments to the Seller's
Stockholders in their capacity as such;
(d) (i) grant any increases in the compensation of any of its
directors, officers or key employees, (ii) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or contemplated
by any employee benefit plan as in effect on the date hereof to any such
director, officer or key employee, whether past or present, (iii) enter
into any new, or amend any existing, employment agreement with any such
director, officer or key employee, (iv) enter into any new, or amend any
existing, severance agreement with any such director, officer or key
employee, or (v) except as may be required to comply with applicable law,
amend any existing, or become obligated under any new, employee benefit
plan;
(e) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of Seller (other than the Merger);
(f) make any acquisition, by means of merger, consolidation or
otherwise, of (i) any direct or indirect ownership interest in or assets
comprising any business enterprise or operation or (ii) except in the
Ordinary Course of Business and consistent with past practice, any other
assets in excess of $10,000;
(g) adopt any amendments to its charter or Bylaws;
(h) incur any indebtedness for borrowed money or guarantee any such
indebtedness except for drawings not to exceed $100,000 in the aggregate
between execution of this Agreement and the Effective Time under Seller's
existing credit agreements in the Ordinary Course of Business consistent
with past practice or make any loans, advances or capital contributions to,
or investments in, any other Person;
(i) engage in the conduct of any business the nature of which is
different than the business Seller is currently engaged in;
(j) enter into any agreement providing for acceleration of payment or
performance or other consequence as a result of a change of control of
Seller or its Subsidiaries;
(k) enter into any contract, arrangement or understanding requiring
the purchase of equipment, materials, supplies or services over a period
greater than 12 months and for the expenditure of greater than $10,000 per
year which is not cancelable without penalty on 30 days' or less notice; or
(l) authorize or announce an intention to do any of the foregoing, or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing.
8.4 Full Access. The Seller and the Stockholders will, and each
Stockholder will cause the Seller to, permit representatives of the BCC Parties
and its financing parties to have full access at all reasonable times, and in a
manner so as not to interfere with the normal Business operations of the Seller,
to all premises, properties, personnel, books, records (including Tax records
and the workpapers of the independent accountants for the Seller), contracts and
documents of or pertaining to the Seller.
8.5 Notice of Developments. At all times prior to the Closing Date,
Seller and each Stockholder shall promptly give written notice to Purchaser of,
to the extent they have Knowledge of such events, (i) any fact or circumstances
or the occurrence of any event or the failure of any event to occur, which will
or may result in, (x) a Material Adverse Effect on the Stockholders', or
Seller's ability to consummate the transactions contemplated hereby or by the
agreements to be entered into in connection therewith or to satisfy its
obligations hereunder, or (y) a breach of any representation or warranty made by
any Stockholder or Seller in this Agreement or in any agreements to be entered
into in connection therewith, if such representation and warranty had been made
as of the time of the occurrence, existence or discovery of such fact,
circumstance or occurrence, or such fact or circumstance had occurred or arisen
or existed on or prior to the date of this Agreement, (ii) any failure by a
Stockholder or Seller to comply with any covenant, condition or agreement
contained in this Agreement, (iii) any complaints, investigations or hearings
(or communications indicating that the same may be contemplated) of any
Governmental Authority with respect to this Agreement, the business of the
Seller or the transactions contemplated hereby or by the agreements to be
entered into in connection therewith, (iv) the institution or the threat of
institution of any litigation or similar action with respect to this Agreement,
the business of the Seller, or the consummation of the transactions contemplated
hereby and (v) the occurrence of any event which will or may result in the
failure to satisfy any condition set forth in Article 9. During the period from
the date of this Agreement to the Closing Date, the Stockholders and Seller will
cause one or more representative to confer on a regular basis with
representatives of Purchaser to report on the general status of the ongoing
operations of the business of the Seller. No notification given to Purchaser
pursuant to this Section 8.5 shall limit or otherwise affect any of the
representations, warranties, covenants or obligations of Stockholders or Seller
contained in this Agreement.
8.6 Exclusivity.
(a) No Stockholder will, or cause or permit Seller to, (i) solicit,
initiate or encourage the submission, making or announcement of any proposal or
offer from any Person relating to a Business Combination or take any action
that could reasonably be expected to lead to a Business Combination or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek a Business
Combination. Each Stockholder will notify BCC immediately if any Person makes
any proposal, offer, inquiry or contact with respect to any of the foregoing.
Each Stockholder and Seller, as applicable, shall immediately cease and cause to
be terminated any existing discussions with any Person that relate to any
Business Combination. Without limiting the generality of the foregoing, each
Stockholder acknowledges and agrees that any violation of any of the
restrictions set forth in the preceding sentence by Seller or any Stockholder,
any Affiliate or representative of Seller or any Stockholder, whether or not
such Affiliate or representative purports to act on behalf of any Stockholder or
the Seller, shall be deemed to constitute a breach of this Section 8.6 by the
Stockholders.
(b) The Parties hereto recognize and acknowledge that a breach by any
Stockholder or Seller of this Section 8.6 will cause irreparable and material
loss and damage to BCC as to which it will not have an adequate remedy at law or
in damages. Accordingly, each Party acknowledges and agrees that the issuance
of an injunction or other equitable remedy is an appropriate remedy for any such
breach. In addition, in the event of any breach of the foregoing which results
in Business Combination with a Person other than BCC, Seller and the
Stockholders shall promptly reimburse BCC for the reasonable expenses incurred
by BCC in connection with the transactions contemplated by this Agreement.
8.7 Disclosure Schedule. From time to time prior to the Closing, Seller
and the Stockholders will promptly supplement or amend the Disclosure Schedule
hereto with respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Disclosure Schedule. No supplement or amendment of
the Disclosure Schedule made pursuant to this Section shall be deemed to cure
any breach of, affect or otherwise diminish any representation or warranty made
in this Agreement unless BCC specifically agrees thereto in writing.
8.8 Voting of Seller Stock. Until this Agreement has been terminated
under Article 15, each Stockholder agrees to vote all shares of Seller Stock
held by him or it in favor of the approval of this Agreement and the
transactions contemplated hereby and not to exercise any dissenters' rights he
or it may have under Texas law. Each Escrow Stockholder hereby grants to the
BCC Parties for a period commencing on the date hereof an continuing so long as
this Agreement is in effect, an irrevocable proxy, which is coupled with an
interest, to vote such shares of Seller Stock held by it to approve this
Agreement and the transaction contemplated hereby.
8.9 Escrow Agreements. The Escrow Stockholders shall execute and deliver
the Earnout Escrow Agreement (the "Earnout Escrow Agreement") in substantially
the form attached hereto as Exhibit A.1 and the Indemnity Escrow Agreement
substantially in the form attached hereto as Exhibit A.2.
8.10 Termination of Contracts. The contracts, agreements and other
instruments listed on Part 8.10 of the Disclosure Schedule shall have been duly
and validly terminated without any liability on the part of Seller, and Seller
and Escrow Stockholders shall have delivered to the BCC Parties at Closing a
certificate to such effect.
8.11 Affiliate Letters. Prior to the Closing Date, Seller shall identify
to the BCC Parties all persons who, at the time of the vote of the Seller's
Stockholders on the Merger, may be "affiliates" of the Seller within the meaning
of Rule 145 under the Securities Act. The Seller shall use best efforts to
provide the Purchaser with such information as the BCC Parties shall reasonably
request for purposes of making its own determination of persons who may be
deemed to be affiliates of the Seller. The Seller shall use best efforts to
deliver to the BCC Parties prior to the Closing Date a letter from each of the
affiliates specified by the BCC Parties in substantially the form attached
hereto as Exhibit E (an "Affiliate Letter"), and each Person who is identified
as an affiliate by the Seller and the BCC Parties has delivered, or agrees to
deliver to the BCC Parties prior to the Closing Date, an Affiliate Letter.
8.12 Registration Rights Agreement; No Transfers Before Closing.
(a) At the Closing, BCC and the Stockholders shall execute and
deliver a Registration Rights Agreement in substantially the form attached
hereto as Exhibit D pursuant to which BCC agrees to prepare and file a
registration statement on Form S-3 covering 20% of the BCC Stock issued to each
of the Stockholders as of the Effective Time as the Merger Consideration.
(b) Each Stockholder shall execute, acknowledge and deliver (or cause
to be executed, acknowledged and delivered), such agreements and other
instruments (including written consents) and shall take (or cause to be taken)
such other action as may be necessary or appropriate to cause the Seller to
comply with its covenants and agreements set forth in this Agreement and to
implement and carry into effect the transactions contemplated by this Agreement
prior to the earlier of the Effective Time or the termination of this Agreement
as provided for herein. Each of the Stockholders agrees that such Stockholder
will not contract to sell, sell, encumber or otherwise transfer or dispose of
any shares of Seller Stock or any interest therein, or grant any option or other
right in respect thereof, or grant any voting rights with respect thereto,
without the prior written consent of Seller and the BCC Parties.
8.13 Release.
(a) As of the Effective Time, each of the Stockholders does hereby
for itself and its Affiliates and for himself or his heirs, executors,
administrators and legal representatives remise, release, acquit and forever
discharge the Seller and its respective Affiliates, partners, officers,
directors, controlling Persons or entities, employees, attorneys and successors
and assigns of and from any and all claims demands, liabilities,
responsibilities, disputes, causes of action and obligations of every nature
whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured,
fixed or contingent, which each of such Stockholders now has, owns or holds or
has at any time previously had, owned or held against the Seller, including
without limitation all liabilities created as a result of the negligence, gross
negligence and willful acts of the Seller and its employees and agents, existing
as of the Effective Time or relating to any matter that occurred on or prior to
the Effective Time; provided, however, that any claims, liabilities, debts or
causes of action that may arise in the connection with the failure of any of the
parties hereto to perform any of their obligations hereunder or under any other
agreement relating to the transactions contemplated hereby or from any breaches
by any of them of any representations or warranties herein or in connection with
any of such other agreements shall not be released or discharged pursuant to
this Agreement.
(b) Each of the Stockholders represents and warrants that he has not
previously assigned or transferred, or purported to assign or transfer, to any
Person or entity whatsoever all or any part of the claims, demands, liabilities,
responsibilities, disputes, causes of action or obligations released herein.
Each of the Stockholders covenants and agrees that he will not assign or
transfer to any Person or entity whatsoever all or any part of the claims,
demands, liabilities, responsibilities, disputes, causes of action or
obligations to be released herein. Each of the Stockholders represents and
warrants that Stockholder has read and understands all of the provisions of this
Section 8.13.
9.. CONDITIONS TO OBLIGATION TO CLOSE.
9.1 Conditions to Obligation of the BCC Parties. The obligation of the
BCC Parties to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(a) all representations and warranties of the Stockholders and Seller
contained in this Agreement (including the Disclosure Schedule hereto), and all
written information made available to the BCC Parties by the Stockholders and
Seller on or prior to the Closing Date pursuant to this Agreement, (i) that are
qualified as to materiality shall be true in all respects on and as of the
Closing Date and (ii) that are not qualified as to materiality shall be true in
all material respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties were made, and such written
information was delivered, on and as of the Closing Date;
(b) the Stockholders and Seller shall have performed and complied
with all of its or his covenants hereunder in all material respects through the
Closing;
(c) there shall have been no material adverse change in the Seller
from February 29, 2000, to the Closing Date not consented to by BCC in writing;
(d) other than those third-party consents set forth on Party 4.9 of
the Disclosure Schedule which may or may not have been obtained on or before the
Closing Date, the Seller and the Stockholders shall have procured all of the
third party consents required in connection with the consummation of the
transactions contemplated hereby;
(e) no action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this Agreement,
(ii) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (iii) affect adversely the right of BCC to
control the Surviving Corporation, (iv) affect adversely the right of the Seller
to own its assets and to operate its businesses, (v) require or could reasonably
be expected to require any divestiture by the Seller of a portion of its
business that BCC in its reasonable judgment believes will have a Material
Adverse Effect on the Seller or (vi) imposes any condition upon the Seller that
in BCC's reasonable judgment (x) would be materially burdensome to the Seller or
(y) would materially increase the costs incurred or that will be incurred by BCC
as a result of consummating the Merger and the other transactions contemplated
hereby (and no such injunction, judgment, order, decree, ruling or charge shall
be in effect);
(f) the Working Capital of Seller on the Closing Date shall be at
least $500,000;
(g) Seller shall have delivered to BCC a certificate to the effect
that each of the conditions specified above in Section 9.1(a) through (f) is
satisfied in all respects;
(h) all applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated and the Parties
shall have received all other authorizations, consents, and approvals of any
Governmental Authority required in connection with the consummation of the
transactions contemplated hereby with the exception of those authorizations,
consents and approvals specified on Part 4.9 of the Disclosure Schedule;
(i) BCC shall have received from counsel to Seller an opinion in form
and substance reasonably acceptable to BCC, addressed to BCC, and dated as of
the Closing Date;
(j) all actions, proceedings, instruments and documents required or
incidental to carrying out this Agreement and all other related legal matters
shall have been approved by counsel to BCC;
(k) the Boards of Directors of each of the BCC Parties shall have
approved this Agreement and the consummation by the BCC Parties of the
transactions contemplated hereby;
(l) BCC is satisfied with the results of its continuing business,
legal and accounting due diligence regarding Seller;
(m) all actions to be taken by Seller and each Stockholder in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form and
substance to BCC;
(n) Seller and its employees shall have executed and delivered to
Purchaser the intellectual property assignments (the "Intellectual Property
Assignment") as contemplated by Section 10.5;
(o) Xxxxxxx X. Xxxxx and Xxxxx Xxxx Xxxxx shall have each entered
into an employment agreement substantially in the forms attached hereto as
Exhibits C.1 and C.2, respectively;
(p) The Persons indicated by Purchaser on Schedule 9.1(p) shall have
executed employment agreements with Surviving Corporation in form and substance
acceptable to BCC;
(q) BCC shall have received the Affiliate Letters;
(r) all of the employees designated by Purchaser with an asterisk on
Part 4.7 of the Disclosure Schedule hereto shall continue to be employees of
Seller, and none shall have communicated to Seller any intent to leave Seller's
employ before the Effective Time;
(s) as of the Closing Date, no Former Seller Stockholder shall have
demanded or otherwise purported to exercise dissenter's rights, if any, pursuant
to Texas law with respect to all or any portion of the Seller Stock;
(t) BCC shall have received completed securities investor
questionnaires from each Other Stockholder, in form and substance satisfying BCC
and its counsel that the Merger Consideration can be issued without registration
under the Securities Act;
(u) All Rights Against Seller Stock shall have been extinguished or
converted to Seller Stock;
(v) Seller shall have terminated any bonus or profit sharing plans
without further liability;
(w) Seller shall have delivered a certificate of termination of
contracts pursuant to Section 8.10;
(x) All Intellectual Property created or developed by Seller or any
employee of Seller that has been used by Seller or is currently being used by
Seller shall be 100% owned by Seller as of the Closing Date;
(y) Stockholders shall, and Seller shall have caused all Seller's
Stockholders, officers and directors and their affiliates to, repay all debts
and other obligations owed to Seller;
(z) Seller shall have provided BCC a non-infringement opinion
concerning the Qsys International Patent from outside counsel in form and
substance acceptable to BCC;
(aa) All Stockholders of Seller (including former stockholders who are
not Stockholders as of the Effective Time but are required to file such consents
under Regulation 1.1362-6(a)(5) of the Code) shall have delivered to Purchaser
consents pursuant to Regulation 1.1362-6(a)(5) of the Code, effective as of the
Effective Time; and
(bb) Seller will deliver to Purchaser true and correct copies of the
stock records of Seller showing all issuances and transfers of shares of capital
stock of Seller since inception, certified as true, complete and correct by
Seller and Escrow Stockholders.
BCC may waive any condition specified in this Section 9.1 if it executes a
writing so stating at or prior to the Closing.
9.2 Conditions to Obligation of Seller and Stockholders. The obligation
of Seller and the Stockholders to consummate the transactions to be performed by
it and them in connection with the Closing is subject to satisfaction of the
following conditions:
(a) all representations and warranties of BCC contained in this
Agreement, and all written information delivered to Seller and the Stockholders
by BCC on or prior to the Closing Date pursuant to this Agreement, (i) that are
qualified as to materiality shall be true in all respects on and as of the
Closing Date and (ii) that are not qualified as to materiality shall be true in
all material respects on and as of the Closing Date, with the same force and
effect as though such representations and warranties were made, and such written
information was delivered, on and as of the Closing Date;
(b) BCC shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(c) no action, suit or proceeding shall be pending or threatened
before any court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, ruling or charge would (A)
prevent consummation of any of the transactions contemplated by this Agreement
or (B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling or charge shall be in effect);
(d) BCC shall have delivered to Seller a certificate to the effect
that each of the conditions specified above in Section 9.2(a) through (c) is
satisfied in all respects;
(e) all applicable waiting periods (and any extensions thereof) under
the HSR Act shall have expired or otherwise been terminated and the Parties
shall have received all other authorizations, consents and approvals of any
Governmental Authority required in connection with the consummation of the
transactions contemplated hereby;
(f) all actions to be taken by BCC in connection with consummation of
the transactions contemplated hereby and all certificates, opinions, instruments
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to Seller; and
(g) Seller and Stockholder Representative shall have received from W.
Xxxxx Xxxx, counsel to BCC Parties, an opinion in form and substance reasonably
acceptable to Stockholder Representative and dated as of the Closing Date.
Seller may waive any condition specified in this Section 9.2 if it executes
a writing so stating at or prior to the Closing.
10. SPECIAL CLOSING AND POST-CLOSING COVENANTS.
The Parties agree as follows with respect to the period following the
Closing:
10.1 General. In case at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article 11
hereof). Seller and each Stockholder acknowledges and agrees that from and
after the Closing BCC will be entitled to possession of all documents, books,
records (including Tax records), agreements and financial data of any sort
relating to the Seller.
10.2 Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or transaction on or prior
to the Closing Date involving the Seller, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Article 11 hereof).
10.3 Transition. Neither Seller nor any Stockholder will take any action
that is designed or intended to have the effect of discouraging any lessor,
licensor, customer, supplier or other business associate of the Seller from
maintaining the same business relationships with the Surviving Corporation after
the Closing as it maintained with the Seller prior to the Closing. Seller and
each Stockholder will refer all customer inquiries relating to the businesses of
the Seller to BCC from and after the Closing.
10.4 Termination of Agreements. Seller and each Escrow Stockholder shall
take all necessary efforts to ensure that the Agreements listed on Part 8.10 of
the Disclosure Schedule are terminated prior to Closing.
10.5 Intellectual Property Assignment. Although acknowledged by all
parties as also fully enabled by the Merger memorialized by this Agreement,
Seller shall also execute a separate assignment to Purchaser of all of Seller's
right, title and interest in and to Intellectual Property, including the
Software itemized on Part 1.61 of the Disclosure Schedule. This separate
assignment shall be set forth as Exhibit B hereto, and recordation thereof shall
be at the sole discretion of Purchaser. In addition, any employee of the Seller,
including without limitation Xxxxxxx X. Xxxxx, will execute an assignment to
Seller and Purchaser of his right, title and interest in and to Intellectual
Property upon request of Purchaser.
10.6 Use of Name of Seller. Immediately upon the occurrence of the
Closing, Seller and each Stockholder shall cease using the name "Operator
Service Company" and all derivations thereof. Seller and each Stockholder
covenant and agree that after the Closing they will not, directly or indirectly,
use the name "Operator Service Company" or any derivation thereof in connection
with any business enterprise.
10.7 Employee Benefits Matter.
(a) Seller and BCC shall cooperate to ensure orderly transfer of
employees of the Seller to employee benefit plans of BCC.
(b) This Section 10.7 reflects the agreements of the parties but does
not create any rights or obligations except as among the parties to this
Agreement, and it is specifically agreed that no present or future employee of
the Seller will be treated as a third-party beneficiary of the provisions of
this Section 10.7. Nothing in this Section 10.7 or elsewhere in this Agreement
will preclude the Seller from terminating the employment of any employee of the
Seller, or preclude the Seller from amending or terminating in its discretion
any employee benefit plan maintained by the Seller.
10.8 Tax-Free Reorganization. Neither Seller, any Stockholder, Purchaser
or BCC shall take any action which would disqualify the transactions
contemplated by this Agreement from treatment as a tax-free reorganization of
the Seller, to the extent that such treatment is otherwise available to such
Stockholders.
10.9 S Corporation Earnings; 2000 Income Tax Returns.
(a) In order to apportion the Seller's 2000 earnings between the
Former Seller Stockholders and the Purchaser, the Actual Earnings (as defined
below) shall be allocated to the Former Seller Stockholders and the earnings for
the period beginning on the Closing Date and ending on the December 31, 2000
shall be allocated to the Purchaser. For tax and accounting purposes, such
apportionment of earnings shall be determined under the closing of the books
method consistent with Code Sections 1362(e)(3) and 1362(e)(6)(D) and the
regulations thereunder. The Former Seller Stockholders, the Seller and the
Purchaser shall take all action necessary to make the election to have the
closing of the books method apply and shall timely file such elections and
reports, including the election required under Regulation Section 1.1362-
6(a)(5), to effectuate the use of the closing of the books method. On or before
the Closing Date, Former Seller Stockholders and stockholders of the Surviving
Corporation shall deliver to Purchaser, with a copy to the Stockholder
Representative, consents pursuant to Regulation 1.1362-6(a)(5) of the Code,
effective as of the Effective Time.
(b) No later than 60 days after the Closing Date, the Purchaser shall
deliver to the Stockholder Representative a written calculation (the
"Calculation") of the Actual Earnings for Seller to but not including the
Closing Date to be reported on its tax return (the "Actual Earnings"). In the
event the Stockholder Representative does not accept the Calculation as
accurate, the Stockholder Representative shall notify the Purchaser of the non-
acceptance of the Calculation in writing within 10 days after receipt of the
Calculation (the failure of which notice within such 10 days shall be deemed of
the acceptance of Calculation), and the Stockholder Representative and the
Purchaser shall promptly attempt to reach agreement on the correct amount of the
Calculation. In the event the Stockholder Representative and the Purchaser
cannot reach an agreement on the calculation, an independent accounting firm to
be mutually agreed upon by the Purchaser and Stockholder Representative shall
determine the correct amount of the Calculation, which determination shall be
binding on the Former Seller Stockholders and the Purchaser.
(c) Based upon the calculation, Purchaser shall pay to Former Seller
Stockholders, within 3 Business Days, the lesser of Actual Earnings or $100,000,
whichever is lower; provided however, any payment required to be made by
Purchaser hereunder shall not be due and payable unless and until Former Seller
Stockholders shall have executed and delivered to Purchaser a release relating
to Purchaser's obligations under this Section 10.9 in form and substance
reasonably acceptable to Purchaser.
(d) The Surviving Corporation's accountants shall be responsible for
preparing and filing the Seller's 2000 federal and state income tax returns, and
the BCC Parties shall take any and all action required in order to file the
statement that is part of the election not to apply pro rata allocation as part
of the Surviving Corporation's federal income tax return for the period
beginning on the Closing Date and ending on December 31, 2000, all in accordance
with Regulation 1.1362-6(a)(5) of the Code.
Notwithstanding the foregoing, EBITDA as defined in the Earnout Escrow
Agreement for the entire year 2000 shall be used for purposes of calculations
under the Earnout Escrow Agreement.
10.10 Earnout Escrow. At Closing, Purchaser and Escrow Stockholders
shall deposit the Earnout Holdback Shares with the Escrow Agent pursuant to the
Earnout Escrow Agreement. The Earnout Escrow Agreement shall be executed and
delivered by the Escrow Stockholders and appropriate BCC Party at Closing.
Until such time as the Earnout Holdback Shares shall have been delivered
pursuant to the terms of the Earnout Escrow Agreement, each Escrow Stockholder
covenants and agrees not to sell, transfer, pledge, assign, hypothecate or
dispose of or enter any contract, option or pledge or understanding (written or
not) with respect to the sale, transfer, pledge, assignment, hypothecation or
other disposition of the Earnout Holdback Shares or any dividends or
distributions that may be declared or paid with respect thereof. Nothing in
this Agreement or the Earnout Escrow Agreement shall require Purchaser or BCC to
take any action after the Effective Time that it determines, in its sole
discretion, is not in the best interests of Purchaser or Surviving Corporation
or to conduct its business or the business of Surviving Corporation contrary to
its business plan or corporate governance.
10.11 Appointment of Successor Escrow Agent. In the event the Escrow
Agent resigns and is discharged from its duties or obligations under the
Indemnity Escrow Agreement or Earnout Escrow Agreement, BCC will designate a
successor Escrow Agent prior to the expiration of the ten-day period following
the notice date of the Escrow Agent's resignation, by giving written notice to
the Indemnity Escrow Agent or Earnout Escrow Agent, as the case may be, and the
Stockholder Representative. BCC may appoint a successor Escrow Agent without
the consent of the Escrow Stockholders so long as such successor is a bank with
assets of at least $500 million, and may appoint any other successor Escrow
Agent with the consent of the Stockholder Representative, which consent shall
not be unreasonably withheld.
10.12 HSR. To the extent required by HSR, BCC and Seller and any
requisite Stockholder shall, within 3 Business Days of the date hereof, file the
notification and report form required for the transactions contemplated
hereunder and promptly provide any supplemental information reasonably requested
in connection therewith pursuant to HSR. The Parties shall deliver to each
other copies of all filings, correspondence and orders to and from all
Governmental Authorities in connection with the transaction contemplated
hereunder.
11. INDEMNITY.
11.1 Indemnification by the Escrow Stockholders. Each Escrow Stockholder,
jointly and severally, agrees to indemnify, defend and hold harmless the BCC
Parties and the Surviving Corporation and each of their respective Associates,
Affiliates, officers, directors, employees, representatives, and controlling
Persons and their respective successors and assigns from and against and in
respect of any and all Damages which may now or in the future be paid, incurred
or suffered by or asserted against such party (collectively, "General Losses"),
arising out of or resulting from or relating to (a) any inaccuracy in or breach
of any representation, warranty, covenant, commitment or agreement made or
undertaken by Seller or any Stockholder in this Agreement, or any other
agreement, certificate, Schedule, Exhibit, or writing delivered to the BCC
Parties pursuant to this Agreement, (b) the legal proceedings listed in Part
4.12 of the Disclosure Schedule or the pending FCC U.S.F. review listed on Part
4.9 of the Disclosure Schedule, (c) any action taken or not taken in connection
with the sale contemplated hereby and by the documents contemplated hereby
related to (i) the termination of employment of any current, former or retired
employee by Seller prior to the Effective Time, or the termination by Seller of
any independent contractor or consulting agreement prior to the Effective Time;
or (ii) the employment or retirement status with Seller of any current, former
or retired employee, officer, consultant, independent contractor or director of
Seller; and (d) any Damages arising out of or relating to, the funding,
operation, administration, amendment, termination of, or withdrawal or partial
withdrawal from, any employee plan established, maintained or contributed to by
the Seller or ERISA Affiliate as of, or prior to, the Effective Time, whether
such liabilities, obligations or Damages arise out of or relate to, any event or
state of facts occurring or existing before the Effective Time. Any claim for
indemnification under this Section 11.1 must be made within one year after the
Effective Time (the "Indemnification Period").
11.2 Environmental Indemnification. Each Escrow Stockholder jointly and
severally agrees to indemnify, defend and hold harmless the BCC Parties and the
Surviving Corporation and each of their respective Associates, Affiliates,
officers, directors, employees, agents, consultants, representatives and
controlling Persons and their respective successors and assigns from and against
and in respect of any and all Environmental Liabilities which may now or in the
future be paid, incurred or suffered by or asserted against such party, arising
out of or resulting from or relating to or in connection with (a) the acts or
omissions of any Person prior to the Effective Time relating to Seller, any
business currently or previously conducted by Seller, the Assets, the operations
currently or previously conducted by Seller or any other assets or properties
currently or previously leased or owned by Seller, or (b) any inaccuracy or
breach by Seller or any Escrow Stockholder of a representation or warranty
contained in Section 4.16 hereof (collectively, "Environmental Losses"). Any
claim for indemnification under this Section 11.2 must be made within the
Indemnification Period.
11.3 Tax Indemnification Each Escrow Stockholder jointly and severally
agrees to indemnify, defend and hold harmless the BCC Parties and the Surviving
Corporation and each of their respective Associates, Affiliates, officers,
directors, employees, representatives, and controlling Persons and their
respective successors and assigns from and against and in respect of any and all
Damages which may now or in the future be paid, incurred or suffered by or
asserted against such party arising out of or resulting from or relating to any
Taxes or Tax Returns of Seller for any period, or portion thereof, up to and
including the Effective Time (collectively, "Tax Losses") including without
limitation any Taxes payable as a result of the pending Texas sales Tax audit
listed on Part ___ of the Disclosure Schedule. Any claim for indemnification
under this Section 11.3 must be made prior to the expiration of the applicable
statute of limitations.
11.4 Products Liability and Warranty Indemnification. Each Escrow
Stockholder jointly and severally agrees to indemnify, defend and hold harmless
the BCC Parties and the Surviving Corporation and each of their respective
Associates, Affiliates, officers, directors, employees, representatives and
controlling Persons and their respective successors and assigns from and against
and in respect of any and all Damages which may now or in the future be paid,
incurred or suffered by or asserted against such party arising out of or
resulting from or relating to any products manufactured, sold or distributed or
services provided by or on behalf of Seller on or prior to the Effective Time or
with respect to any claims made pursuant to warranties to third Persons in
connection with products manufactured, sold or distributed or services provided
by or on behalf of Seller on or prior to the Effective Time (collectively,
"Product Losses"). Any claim for indemnification under this Section 11.4 must
be made within the Indemnification Period.
11.5 Indemnification by the BCC Parties. The BCC Parties, jointly and
severally, agree to indemnify, defend and hold harmless Stockholders and their
respective heirs, successors and assigns from and against and in respect of any
and all Damages which may now or in the future be paid, incurred or suffered by
or asserted against any such party, arising out of or resulting from or relating
to any inaccuracy in or breach of any representation, warranty, covenant,
commitment or agreement made or undertaken by the BCC Parties in this Agreement.
Any claim for indemnification under this Section 11.5 must be made within the
Indemnification Period.
11.6 Limitation on Indemnification.
(a) The Indemnity Holdback Shares are the source from which any and
all potential claims for indemnification by the BCC Parties and any other
Indemnitee other than the Stockholders under this Article 11 shall be satisfied
and the Escrow Stockholders shall not have any liability for indemnity claims
hereunder other than the Indemnity Holdback Shares, except (i) to the extent
otherwise provided in Section 12.5 and Article 13 below, (ii) with respect to
claims for indemnification under Section 11.5 hereof, for which Damages shall be
paid in cash by the BCC Parties in an amount not to exceed the Merger
Consideration received by each Escrow Stockholder, (iii) any claim for
indemnification based on a breach of a representation, warranty or covenant
contained in Section 4.18 or Section 4.25 for which Damages shall be paid in
cash by the Escrow Stockholders (without regard to the Indemnity Holdback
Shares) in an amount not to exceed the aggregate Merger Consideration received
by Escrow Stockholders, and (iv) any claim involving the assertion of an
intentional fraud, fraud in the inducement or intentional misrepresentation or
breach, for which Damages shall be paid in cash by the Escrow Stockholders
(without regard to the Indemnity Holdback Shares) in an amount not to exceed the
aggregate Merger Consideration received by Escrow Stockholders. The
indemnification obligations of the Escrow Stockholders pursuant to Sections
11.1 through 11.4 above shall be satisfied through a reduction of the Merger
Consideration effected by cancellation or other disposition by BCC of Indemnity
Holdback Shares pursuant to Section 11.7 of this Agreement. For purposes of any
indemnification claim under this Article 11, the Indemnity Holdback Shares shall
be valued at $6.50 per share.
(b) No claim for indemnification under Sections 11.1, 11.2, 11.3,
11.4 and 11.5 may be brought after the expiration of the Indemnification Period
or the applicable statute of limitations with respect to Section 11.3, except
for claims made in accordance with Section 11.9 prior to such expiration
(whether or not any action, demand or proceeding is instituted with respect to
such claims prior to the expiration of the Indemnification Period), it being
understood, without limitation, that any Damages arising after the expiration
of the Indemnification Period shall be recoverable upon notice properly given
prior to the expiration of the Indemnification Period.
11.7 Indemnity Holdback. The Indemnity Holdback Shares (which shall
include for purposes of this Section 11.7 any distributions accrued or made
thereon after the date of this Agreement), the net proceeds of any sale of
Indemnity Holdback Shares and any other securities or property which may be
issued after the date hereof in exchange for such shares in any merger or
recapitalization or similar transaction involving BCC) shall be deemed as of the
Effective Time to be deposited by the Escrow Stockholders and Purchaser with
the Escrow Agent, and certificates representing the Indemnity Holdback Shares
shall be held by the Escrow Agent. The Escrow Stockholders shall deliver to
the Escrow Agent at the Closing the Indemnity Escrow Agreement, appropriate
stock powers endorsed in blank and such other documentation as the Escrow Agent
may reasonably prescribe to carry out the purposes of this Section 11.7 So long
as any Indemnity Holdback Shares are held by the Escrow Agent hereunder, BCC
shall have, and the Escrow Stockholders by execution and/or approval of this
Agreement hereby grant, effective as of the Effective Time, a perfected, first
priority security interest in such Indemnity Holdback Shares to secure payment
of amounts payable by the Escrow Stockholders in respect of claims under this
Article 11. In connection therewith, the Escrow Stockholders shall execute and
deliver such instruments as BCC or the Escrow Agent may from time to time
reasonably request for the purpose of evidencing and perfecting such security
interest.
11.8 Indemnity Escrow. At Closing, the Purchaser and Escrow Stockholders
shall deposit the Indemnity Holdback Shares with the Indemnity Escrow Agent
pursuant to the Indemnity Escrow Agreement. The Indemnity Escrow Agreement
shall be executed and delivered by the Escrow Stockholders and the appropriate
BCC Parties at Closing. Until such time as the Indemnity Holdback Shares shall
have been delivered to the Escrow Stockholders pursuant to the terms of the
Indemnity Escrow Agreement, each Escrow Stockholder covenants and agrees with
the BCC Parties that no Escrow Stockholder will sell, transfer, pledge, assign,
hypothecate or otherwise dispose of, or enter into any contract, option or other
pledge agreement or understanding (either written or oral) with respect to the
sale, transfer, pledge, assignment, hypothecation or other disposition of any
Indemnity Holdback Shares or any dividends or distributions that may be declared
or paid in respect thereof.
11.9 Procedure. All claims for indemnification or payment under this
Article 11 shall be asserted and resolved as follows:
(a) An Indemnitee shall promptly give the Indemnitor notice of any
matter which an Indemnitee has determined has given or could give rise to a
right of indemnification under this Agreement stating the amount of the Loss, if
known, and method of computation thereof, all with reasonable particularity, and
stating with particularity the nature of such matter. Subject to Section
11.6(b) hereof, failure to provide such notice shall not affect the right of the
Indemnitee to indemnification except to the extent such failure shall have
resulted in liability to the Indemnitor that could have been actually avoided
had such notice been provided within such required time period.
(b) The obligations and liabilities of an Indemnitor under this
Article 11 with respect to Losses arising from claims of any third party that
are subject to the indemnification provided for in this Article 11 ("Third-Party
Claims") shall be governed by and contingent upon the following additional terms
and conditions: if an Indemnitee shall receive notice of any Third-Party Claim,
the Indemnitee shall give the Indemnitor prompt notice of such Third-Party Claim
and the Indemnitor may, at its option, assume and control the defense of such
Third-Party Claim at the Indemnitor's expense and through counsel of the
Indemnitor's choice reasonably acceptable to Indemnitee. Subject to the
condition that notice be delivered prior to the expiration of one year after the
Effective Time, failure to provide such notice shall not affect the right of the
Indemnitee to indemnification except to the extent such failure shall have
resulted in liability to the Indemnitor that could have been actually avoided
had such notice been provided within such required time period. In the event
the Indemnitor assumes the defense against any such Third-Party Claim as
provided above, the Indemnitee shall have the right to participate at its own
expense in the defense of such asserted liability, shall cooperate with the
Indemnitor in such defense and will attempt to make available on a reasonable
basis to the Indemnitor all witnesses, pertinent records, materials and
information in its possession or under its control relating thereto as is
reasonably required by the Indemnitor. In the event the Indemnitor does not
elect to conduct the defense against any such Third-Party Claim, the Indemnitor
shall cooperate with the Indemnitee (and be entitled to participate) in such
defense and attempt to make available to it on a reasonable basis all such
witnesses, records, materials and information in its possession or under its
control relating thereto as is reasonably required by the Indemnitee. The
Indemnitor understands that if such Third-Party Claim results in an obligation
to indemnify hereunder, Damages shall include all reasonable costs and expenses
of such defense. No Third-Party Claim may be settled by Indemnitor without the
written consent of the Indemnitee. So long as the Indemnitor is vigorously
contesting any such Third-Party Claim in good faith, the Indemnitee shall not
pay or settle such claim without the Indemnitor's consent, which consent shall
not be unreasonably withheld. Written notice of any proposed settlement of any
such claim and the material terms thereof shall be delivered by Indemnitor to
Indemnitee at least ten Business Days prior to any settlement of any such claim.
(c) If a claim for indemnity is provided pursuant to this Article 11
by an Indemnitee and the Indemnitor does not pay such claim or object to such
claim within 15 Business Days after notice is received by the Indemnitor, such
claim shall be deemed agreed to by the Indemnitor. If the Indemnitor shall
object to such claim, a written notice of such objection setting forth in
reasonable detail the basis for such objection shall be provided to the
Indemnitee and such dispute shall be resolved in accordance with Section 18.11
hereof. In addition, if the claim shall have been determined to have been a
valid claim, Damages shall include interest at the prime rate as quoted from
time to time by Frost National Bank (San Antonio), N.A. (the "Prime Rate") from
the date the claim is first made until fully paid.
11.10 Payment. Payment of any amounts due pursuant to this Article 11
shall be made within three Business Days after resolution of the claim.
11.11 Adjustment of Liability. The amount which an Indemnitee shall be
entitled to receive from an Indemnitor with respect to a Loss under this
Article 11 shall be net of any insurance recovery by the Indemnitee on account
of such Loss. Any tax benefit actually realized by an Indemnitee on account of
a Loss that is fully indemnified by an Indemnitor shall be paid to the
Indemnitor when and if such benefit is actually recognized and then only to the
extent such benefit is attributable to the indemnified portion of the Loss. The
benefit actually recognized shall be based on the Federal Tax Returns of the
Indemnitee and any benefit shall not be considered actually recognized unless
and until the Tax Return reflecting such benefit is filed. To the extent such
benefit is disallowed or reduced in connection with any audit, the Indemnitor
shall promptly refund the amount of the benefit so disallowed or reduced.
11.12 Failure to Pay Indemnification. If Indemnitor fails or refuses
to pay any amount due under this Article 11, the Indemnitee shall proceed in
accordance with the arbitration provisions of Section 18.11 hereof; provided,
however, that in the case of indemnification for a Third-Party Claim, such
matter need not be resolved by arbitration until the underlying Third-Party
Claim is finally resolved.
11.13 Cooperation. The Indemnitor and the Indemnitee shall cooperate
with each other with regard to any indemnification obligation under this Article
11 and each shall attempt to make available to the other on a reasonable basis
all personnel records, materials and information in its possession or under its
control as is reasonably requested by the other.
11.14 Indemnification if Negligence of Indemnitee. THE INDEMNIFICATION
PROVIDED IN THIS ARTICLE 11 SHALL BE APPLICABLE WHETHER OR NOT THE SOLE OR
CONCURRENT NEGLIGENCE OR GROSS NEGLIGENCE OF THE PARTY SEEKING INDEMNIFICATION,
OR THE SOLE OR CONCURRENT STRICT LIABILITY IMPOSED ON THE PARTY SEEKING
INDEMNIFICATION, OR THE SOLE OR CONCURRENT LIABILITY IMPOSED VICARIOUSLY ON THE
PARTY SEEKING INDEMNIFICATION, IS ALLEGED OR PROVEN.
12. NON-COMPETITION AGREEMENT.
12.1 Non-Competition. In consideration of the benefits of this Agreement
to each Stockholder and as a material inducement to the BCC Parties to enter
into this Agreement and pay to the Stockholders at Closing the Merger
Consideration, each Escrow Stockholder hereby covenants and agrees that,
commencing on the Closing Date and ending (a) one year from the termination of
employment under the Employment Agreement to be executed at Closing, as to Xxxxx
Xxxx Xxxxx, or (b) two years from termination of employment under the Employment
Agreement to be executed at Closing, as to Xxxxxxx X. Xxxxx, such Escrow
Stockholder shall not, and such Escrow Stockholder shall cause his Associates,
Affiliates and representatives not to, directly or indirectly, as proprietor,
partner, stockholder, director, executive, officer, employee, consultant, joint
venturer, investor or in any other capacity, engage in, or own, manage, operate
or control, or participate in the ownership, management, operation or control,
of any entity which engages in any business activity which is similar to or in
competition with the business of Surviving Corporation, BCC Parties and their
Affiliates; provided, however, the foregoing shall not prohibit (a) an Escrow
Stockholder, his Associates, Affiliates and representatives from purchasing and
holding as an investment not more than 3% of any class of publicly traded
securities of any entity which conducts a business in competition with the
business of the BCC Parties, so long as such Escrow Stockholder, his Associates,
Affiliates and representatives do not participate in any way in the management,
operation or control of such entity, or (b) Xxxxxxx X. Xxxxx from accepting
employment during the period of non-competition as long as he obtains the
written permission and authorization of the Board of Directors of BCC.
12.2 Judicial Reformation. Each Escrow Stockholder acknowledges that,
given the nature of the BCC Parties' business, the covenants contained in
Section 12.1 establish reasonable limitations as to time, geographic area and
scope of activity to be restrained and do not impose a greater restraint than is
reasonably necessary to protect and preserve the goodwill of the BCC Parties'
business and to protect their legitimate business interests. If, however,
Section 12.1 is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of it being too extensive in any other
respect or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographic area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court.
12.3 Customer Lists; Non-Solicitation. Each Escrow Stockholder further
covenants and agrees that he shall not, and such Escrow Stockholder will cause
his Associates, Affiliates and representatives not to, directly or indirectly,
(a) use or make known to any person or entity the names or addresses of any
clients or customers of Seller or the BCC Parties or any other information
pertaining to them, provided, however, such limitation shall not apply to any
information which (i) is then generally known to the public, (ii) become or
becomes generally known to the public through no fault of such Escrow
Stockholder, his Associates, Affiliates and representatives, and (iii) is
disclosed in accordance with an order of a court of competent jurisdiction or
applicable law, (b) call on, solicit, take away or attempt to call on, solicit
or take away any clients or customers of Seller or the BCC Parties, nor (c)
solicit for employment, recruit, hire or attempt to recruit or hire any
employees of Seller or the BCC Parties.
12.4 Covenants Independent The covenants of each Escrow Stockholder
contained in Sections 12.1, 12.2 and 12.3 of this Agreement will be construed as
independent of any other provision in this Agreement, and the existence of any
claim or cause of action by any Escrow Stockholder against the BCC Parties will
not constitute a defense to the enforcement by the BCC Parties of said
provisions. Each Escrow Stockholder understands that the provisions contained in
Sections 12.1, 12.2 and 12.3 are essential elements of the transactions
contemplated by this Agreement and, but for the agreement of the Escrow
Stockholders to be bound by the provisions of Sections 12.1, 12.2 and 12.3, the
BCC Parties would not have agreed to enter into this Agreement and the
transactions contemplated herein. Each Escrow Stockholder has been advised to
consult with, and represents that he has consulted with, counsel in order to be
informed in all respects concerning the reasonableness and propriety of Sections
12.1, 12.2 and 12.3 with specific regard to the nature of the business conducted
by Seller and the BCC Parties and each Escrow Stockholder acknowledges that
Sections 12.1, 12.2 and 12.3 are reasonable in all respects.
12.5 Remedies Each Escrow Stockholder acknowledges that in the event of a
breach or a threatened breach by an Escrow Stockholder of any of the provisions
contained in Sections 12.1, 12.2 or 12.3 of this Agreement, the BCC Parties will
suffer irreparable damage or injury not fully compensable by money damages, or
the exact amount of which may be impossible to ascertain, and therefore, the BCC
Parties will not have an adequate remedy at law. Accordingly, the BCC Parties
shall be entitled to such injunctive relief or other equitable relief, without
the necessity of posting bond therefor, from any court of competent jurisdiction
as may be necessary or appropriate to prevent or curtail any such actual or
threatened breach. The foregoing shall be in addition to and without prejudice
to any other rights that the BCC Parties may have under this Agreement, at law
or in equity, including, without limitation, the right to xxx for and recover
money damages.
13. NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Each Stockholder
recognizes and acknowledges that he has and will have access to certain
confidential information of Seller that is included in the Assets (including,
but not limited to, lists of customers, software designs, system specifications,
trade secrets, Software source code, and costs and financial information) that
after the consummation of the transactions contemplated hereby will be valuable,
special and unique property of Purchaser. Each Stockholder agrees that he will,
and will cause his Associates, Affiliates and representatives, to keep
confidential and not disclose to any other Person or use for his own benefit or
for the benefit of any other Person, and he will use his best efforts to prevent
disclosure by any other Person of, any such confidential information to any
Person for any purpose or reason whatsoever, except to authorized
representatives of Purchaser; provided, however, such limitation shall not apply
to any information which (i) is then generally known to the public; (ii) become
or becomes generally known to the public through no fault of a Stockholder, his
Associates, Affiliates and representatives, and (iii) is disclosed in accordance
with an order of a court of competent jurisdiction or applicable law. Seller or
a Stockholder may have entered into certain confidentiality agreements with
third parties regarding the possible sale of Seller or its Business. Seller
and/or such Stockholder has previously requested that all such third parties
return to Seller all confidential information provided to such parties by or on
behalf of Seller or such Stockholder or that such information be destroyed. At
the Closing, Seller shall assign all of its rights in and to any such
confidentiality agreements to Purchaser. Each Stockholder acknowledges that in
the event of a breach or threatened breach by a Stockholder of any of the
provisions contained in this Article 13, the BCC Parties will suffer irreparable
damage or injury not fully compensable by money damages, or the exact amount of
which may be impossible to ascertain, and therefore, the BCC Parties will not
have an adequate remedy at law. Accordingly, the BCC Parties shall be entitled
to such injunctive relief or other equitable relief, without the necessity of
posting bond therefor, from any court of competent jurisdiction as may be
necessary or appropriate to prevent or curtail any such actual or threatened
breach. The foregoing shall be in addition to and without prejudice to any
other rights that the BCC Parties may have under this Agreement, at law or in
equity, including, without limitation, the right to xxx for and recover money
damages.
14. NOTICES. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
deemed to have been duly given if delivered personally, given by prepaid telex
or telegram or by facsimile or other similar instantaneous electronic
transmission device or mailed first class, postage prepaid, certified United
States mail, return receipt requested, as follows:
(a) If to Purchaser or BCC, at:
Billing Concepts Corp.
0000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: W. Xxxxx Xxxx
Facsimile No.: (000) 000-0000
With a copy to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile No.: (000) 000-0000
(b) If to Seller, at:
Operator Service Corporation
0000 Xxx. X
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx Xxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxxxxx & Xxxxx, P.C.
000 X. Xx. Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(c) If to the Stockholders, to Stockholder Representative at:
Operator Service Corporation
0000 Xxx. X
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx Xxxxx
Facsimile No.: (000) 000-0000
provided that any party may change its address for notice by giving to the other
party written notice of such change. Any notice given under this Article 14
shall be effective (x) when delivered, if delivered personally, (y) 24 hours
after sending, if sent by telex or telegram or by facsimile or other similar
instantaneous electronic transmission device with evidence of receipt, and (z) 5
business days after mailing, if mailed.
15.. TERMINATION.
15.1 Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(a) BCC and Seller may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(b) BCC may terminate this Agreement by giving written notice to
Seller on or before the Closing Date if BCC is not satisfied with the results of
its continuing business, legal and accounting due diligence regarding the
Seller;
(c) BCC may terminate this Agreement by giving written notice to
Seller at any time prior to the Closing (i) in the event the Seller or any
Stockholder has breached any representation, warranty or covenant contained in
this Agreement in any material respect, BCC has notified Seller of the breach,
and the breach has continued without cure for a period of 15 days after the
notice of breach or (ii) if the Closing shall not have occurred on or before May
31, 2000, by reason of the failure of any condition precedent under Section 9.1
hereof (unless the failure results primarily from BCC itself breaching any
representation, warranty or covenant contained in this Agreement); and
(d) Seller and the Stockholders may terminate this Agreement by
giving written notice to BCC at any time prior to the Closing (i) in the event
BCC has breached any representation, warranty or covenant contained in this
Agreement in any material respect, Seller has notified BCC of the breach, and
the breach has continued without cure for a period of 15 days after the notice
of breach or (ii) if the Closing shall not have occurred on or before May 31,
2000, by reason of the failure of any condition precedent under Section 9.2
hereof (unless the failure results primarily from any Stockholder or Seller
themselves breaching any representation, warranty or covenant contained in this
Agreement).
15.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Article 15, all rights and obligations of the Parties hereunder
shall terminate without any liability of any Party to any other Party (except
for any liability of any Party then in breach).
16. GUARANTEE. Each Escrow Stockholder hereby (a) unconditionally
guarantees the prompt performance of the obligations of Seller under this
Agreement, (b) waives any requirements of notice, protest, demand or grace with
respect thereto other than those contained in this Agreement and (c) agrees that
the BCC Parties shall not be required to exhaust their remedies against any
other person or party (including, but not limited to, Seller or any Stockholder)
before enforcing the provisions of this guarantee. Each Escrow Stockholder
recognizes and acknowledges that the BCC Parties are relying on this guarantee
in entering into and consummating the transactions contemplated by this
Agreement, and that but for this guarantee the BCC Parties would not enter into
this Agreement or consummate the transactions contemplated hereby. Any liability
resulting from the foregoing guarantee shall be limited to the Indemnity
Holdback Shares.
17. STOCKHOLDER REPRESENTATIVE.
(a) In order to administer efficiently the implementation of this
Agreement, the waiver of any conditions to the obligations to consummate the
transactions or the settlement of any dispute and notices under this Agreement
or actions, settlement or notices under the Earnout Escrow Agreement or
Indemnity Escrow Agreement, Stockholders hereby appoint Xxxxx Xxxx Xxxxx as
their representative ("Stockholder Representative") and authorize him to take
all action necessary in connection with implementation of the Agreement on
behalf of Stockholders, waive any condition to or obligation to consummate the
transactions, give and receive notices and take any and all action contemplated
to be taken by or on behalf of Stockholders under this Agreement, and of Escrow
Stockholders under the Earnout Escrow Agreement and the Indemnity Escrow
Agreement (collectively, "Escrow Agreements").
(b) In the event Stockholder Representative dies, becomes legally
incapacitated or resigns Xxxxxxx X. Xxxxx shall fill such vacancy and be deemed
Stockholder Representative for all purposes; however, no change of the
Stockholder Representative shall be effective until Purchaser is given notice of
it by the Stockholders.
(c) By mere execution of this Agreement, Stockholders agree that:
(i) Purchaser may rely conclusively on the instructions and
decisions of Stockholder Representative as to any actions required or
permitted to be taken by Stockholders or Stockholder Representative
hereunder and under the Escrow Agreements and no party shall have any
cause of action against Purchaser for action taken by Purchaser in
reliance upon actions, decisions or instructions of Stockholder
Representative.
(ii) all actions, decisions, and instructions of the
Stockholder Representative shall be conclusive and binding on
Stockholders; no Stockholder shall have a cause of action against
Purchaser or Surviving Corporation for any action taken or omitted,
decision made or omitted or any instruction as given or omitted by
Stockholder Representative hereunder.
(iii) Stockholder Representative shall be deemed to
fulfill any fiduciary obligation to Stockholders so long as no
Stockholder is adversely affected by any action or failure to act by
Stockholder Representative in a disproportionate measure compared to
any other Stockholder.
(d) Remedies at law for breach of this Section would be inadequate,
therefore Purchaser shall be entitled to injunctive relief, without the
necessity of proving damages in an action to enforce this Section.
(e) The provisions of this Section are independent and severable to
constitute an irrevocable power of attorney, coupled with an interest and
surviving death, granted by each Stockholder to the Stockholder Representative
and bind executors, heirs, successors, and legal representatives. All
reasonable fees and expenses incurred by Stockholder Representative shall be
paid by Stockholders pro rata in proportion to their percentage interest in
Seller immediately before the Effective Time. The provisions hereof shall
survive the Effective Time.
18. GENERAL PROVISIONS.
18.1 Governing Law; Interpretation; Section Headings. This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Texas without regard to conflict-of-laws rules as applied in Texas.
The section headings contained herein are for purposes of convenience only and
shall not be deemed to constitute a part of this Agreement or to affect the
meaning or interpretation of this Agreement in any way.
18.2 Severability. Should any provision of this Agreement be held
unenforceable or invalid under the laws of the United States of America or the
State of Texas, or under any other applicable laws of any other jurisdiction,
then the parties hereto agree that such provision shall be deemed modified for
purposes of performance of this Agreement in such jurisdiction to the extent
necessary to render it lawful and enforceable, or if such a modification is not
possible without materially altering the intention of the parties hereto, then
such provision shall be severed herefrom for purposes of performance of this
Agreement in such jurisdiction. The validity of the remaining provisions of
this Agreement shall not be affected by any such modification or severance,
except that if any severance materially alters the intentions of the parties
hereto as expressed herein (a modification being permitted only if there is no
material alteration), then the parties hereto shall use commercially reasonable
efforts to agree to appropriate equitable amendments to this Agreement in light
of such severance, and if no such agreement can be reached within a reasonable
time, any party hereto may initiate arbitration pursuant to the provisions of
Section 18.11 to determine and effect such appropriate equitable amendments.
18.3 Entire Agreement. This Agreement, the Disclosure Schedule and the
documents and agreements referenced herein set forth the entire agreement and
understanding of the parties hereto with respect to the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings related to the subject matter hereof. No representation,
promise, inducement or statement of intention has been made by any party hereto
which is not embodied or referenced in this Agreement, the Disclosure Schedule
or the documents or agreements referenced herein, and no party hereto shall be
bound by or liable for any alleged representation, promise, inducement or
statement of intention not so set forth.
18.4 Binding Effect. All the terms, provisions, covenants and conditions
of this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
18.5 Assignment. This Agreement and the rights and obligations of the
parties hereto shall not be assigned or delegated by any party hereto without
the prior written consent of the other parties hereto.
18.6 Amendment; Waiver. This Agreement may be amended, modified,
superseded or canceled, and subject to the authority of Stockholder
Representative under Article 17, any of the terms, provisions, representations,
warranties, covenants or conditions hereof may be waived, only by a written
instrument executed by all parties hereto, or, in the case of a waiver, by the
party waiving compliance. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
to enforce the same. No waiver by any party of any condition contained in this
Agreement, or of the breach of any term, provision, representation, warranty or
covenant contained in this Agreement, in any one or more instances, shall be
deemed to be or construed as a further or continuing waiver of any such
condition or breach, or as a waiver of any other condition or of the breach of
any other term, provision, representation, warranty or covenant.
18.7 Gender; Numbers. All references in this Agreement to the masculine,
feminine or neuter genders shall, where appropriate, be deemed to include all
other genders. All plurals used in this Agreement shall, where appropriate, be
deemed to be singular, and vice versa.
18.8 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement shall be
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of the parties reflected hereon as signatories.
18.9 Telecopy Execution and Delivery. A facsimile, telecopy or other
reproduction of this Agreement may be executed by one or more parties hereto,
and an executed copy of this Agreement may be delivered by one or more parties
hereto by facsimile or similar instantaneous electronic transmission device
pursuant to which the signature of or on behalf of such party can be seen, and
such execution and delivery shall be considered valid, binding and effective for
all purposes. At the request of any party hereto, all parties hereto agree to
execute an original of this Agreement as well as any facsimile, telecopy or
other reproduction hereof.
18.10 Expenses. Whether or not the transactions contemplated hereby
are consummated, each of the parties will pay all costs and expenses of its or
his performance of and compliance with this Agreement.
18.11 Arbitration.
(a) Exception Prior to Effective Time. The parties acknowledge that
money damages are not an adequate remedy for violations of this Agreement and
that, prior to the Effective Time, any party may, in its sole discretion, apply
to a court of competent jurisdiction for specific performance or injunctive or
such other relief as such court may deem just and proper to enforce this
Agreement or to prevent any violation hereof and, to the extent permitted by
applicable law, each party waives any objection to the imposition of such
relief.
(b) Exceptions to Enforce Articles 12 and 13. The Parties expressly
reserve the right to petition a court directly for injunctive and other relief
to enforce a breach of the restrictive covenants and non-disclosure provisions
of Articles 12 or 13 of this Agreement and may seek in conjunction with such
relief, damages caused by breach of Articles 12 or 13 of this Agreement.
(c) Disputes to be Arbitrated. Any controversy of any nature
whatsoever, including but not limited to tort claims or contract disputes,
between the parties to this Agreement or their respective heirs, executors,
administrators, legal representatives, successors and assigns, as applicable,
arising out of or related to this Agreement after the Effective Time, including
the implementation, applicability and interpretation thereof, shall, upon the
written request of one party served upon the other, be submitted to and settled
by arbitration in accordance with the provisions of the Federal Arbitration Act,
9 U.S.C. 1-15, as amended. The terms of the commercial arbitration rules of
the American Arbitration Association (the "AAA") shall apply except to the
extent they conflict with the provisions of this paragraph. If the amount in
controversy in the arbitration exceeds Two Hundred and Fifty Thousand Dollars
($250,000), exclusive of interest, attorneys' fees and costs, the arbitration
shall be conducted by a panel of three independent arbitrators. Otherwise, the
arbitration shall be conducted by a single independent arbitrator. The parties
shall endeavor to select independent arbitrators by mutual agreement. If such
agreement cannot be reached within 30 calendar days after a dispute has arisen
which is to be decided by arbitration, the selection of the arbitrator(s) shall
be made in accordance with Rule 13 of the Rules as presently in effect. If
three arbitrators are selected, the arbitrators shall elect a chairperson to
preside at all meetings and hearings. If a dispute is to be resolved by a sole
arbitrator in accordance with the terms hereof, or if the dispute is to be
resolved by a panel of three arbitrators as provided hereinabove, then each such
arbitrator shall be a member of a state bar engaged in the practice of law in
the United States or a retired member of a state or the federal judiciary in the
United States. The award of the arbitrator(s) shall require a majority of the
arbitrators in the case of a panel of arbitrators, shall be based on the
evidence admitted and the substantive law of the State of Texas and shall
contain an award for each issue and counterclaim. The award shall be made 30
days following the close of the final hearing and the filing of any post hearing
briefs authorized by the arbitrator(s). The award of the arbitrator(s) shall be
final and binding on the parties hereto. Each party shall be entitled to
inspect and obtain a copy of non-privileged relevant documents in the possession
or control of the other party. All such discovery shall be in accordance with
procedures approved by the arbitrator(s). Unless otherwise provided in the
award, each party shall bear its own costs of discovery.
(d) Discovery. Each party shall be entitled to take one deposition.
Each party shall be entitled to submit one set of interrogatories which require
no more than 30 answers. All discovery shall be expedited, consistent with the
nature and complexity of the claim or dispute and consistent with fairness and
justice. The arbitrator(s) shall have the power to compel any party to comply
with discovery requests of the other parties and to issue binding orders
relating to any discovery dispute which shall be enforceable in the same manner
as awards. The arbitrator(s) also shall have the power to impose sanctions for
abuse or frustration of the arbitration process, including without limitation,
the refusal to comply with orders of the arbitrator(s) relating to discovery and
compliance with subpoenas.
(e) Attorneys' Fees. The arbitrator(s) shall require the non-
prevailing party to pay the prevailing party's attorneys' fees and costs
incurred in connection with the arbitration. It is further agreed that any of
the parties hereto may petition the United States District Court for the Western
District of Texas, San Antonio Division, for a judgment to be entered upon any
award entered through such arbitration proceedings. All arbitration proceedings
shall be conducted in San Antonio, Texas.
18.12 Damage to Assets. If, on or before the Closing Date, the assets
or properties of the Seller are damaged or destroyed, Seller and the
Stockholders shall notify BCC of such damage or destruction. In the event of
any such damage or destruction, BCC shall have the right, in its sole
discretion, to either (i) reduce the Merger Consideration by an amount equal to
the value of the damaged or destroyed asset or assets, and complete the
purchase, or (ii) terminate this Agreement as provided by Section 15.1 hereof
and not complete the purchase.
18.13 Effect of Due Diligence. No investigation by or on behalf of the
BCC Parties into the business, operations, prospects, assets or condition
(financial or otherwise) of the Seller shall diminish in any way the effect of
any representations or warranties made by Seller or any Stockholder in this
Agreement or shall relieve Seller or any Stockholder of any of its or his
obligations under this Agreement.
18.14 Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement prior to the Closing without the prior written approval of BCC
and Seller; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
18.15 No Third Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
18.16 Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
18.17 Incorporation of Exhibits, Annexes and Disclosure Schedule. The
Exhibits, Annexes and Disclosure Schedule identified in this Agreement are
incorporated herein by reference and made a part hereof.
18.18 Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter, in addition to any other remedy to
which they may be entitled, at law or in equity.
18.19 Remedies Cumulative. All rights, powers and remedies provided
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise or beginning
of the exercise of any thereof by any party shall not preclude the simultaneous
or later exercise of any other such right, power or remedy by such party.
[The remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties have executed this Plan of Reorganization,
Merger and Acquisition Agreement as of the date first above written.
PURCHASER:
LUBBOCK ACQUISITION CORP.
By:_/s/ Xxxxxx X. Xxxxxx, Xx.___
Its: Chairman
BCC:
BILLING CONCEPTS CORP.
By:_/s/ Xxxxxx X. Xxxxxx, Xx.___
Its: Chairman
SELLER:
OPERATOR SERVICE COMPANY
By:_/s/ Xxxxxxx X. Smith_________
Name:__Michael X. Xxxxx
Title:___CEO__________________
STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxxx Xxxxx
Xxxxx Xxxx Xxxxx
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
/s/ Xxxxxxx Kai Xxxxxxxx
Xxxxxxx Xxx Xxxxxxxx
/s/ Xxxx Xxxxx
Xxxx Xxxxx, Custodian for Xxxxx Xxxxxxx Xxxxx
/s/ Xxxxx Xxxxxxx Xxxxx
Xxxxx Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
Xxxx Xxxxx, Custodian for Xxxx Xxxxxx Xxxxx
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxx Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxxxxx
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
/s/ Xxxxxxxx Xxx
Xxxxxxxx Xxx
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxx Xxxx Xxxxxx
Xxxxxxx Xxxx Xxxxxx
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx, Executor
Xxxxxx X. Xxxxxxxxx, Independent Executor of the
Estate of Xxxx Xxxx Xxxxxxxxx
AMENDMENT NO. 1
TO PLAN OF REORGANIZATION, MERGER
AND ACQUISITION AGREEMENT
WHEREAS, a Plan of Reorganization, Merger and Acquisition Agreement (the
"Plan") was executed on March 21, 2000 among Billing Concepts Corp. ("BCC"),
Lubbock Acquisition Corp. ("Purchaser") and Operator Service Company ("Seller")
and its Stockholders.
WHEREAS, capitalized terms not defined herein shall have the meanings
assigned in the Plan.
WHEREAS, the Parties have determined to effectuate the Merger contemplated
under the Plan by having the Seller, rather than the Purchaser, be the Surviving
Corporation.
WHEREAS, the Earnout Escrow is to be funded by all of the Stockholders
proportionally and not only the Escrow Stockholders.
NOW THEREFORE, it is agreed as follows:
1. The fifth recital of the Plan is amended to read:
"WHEREAS, the respective boards of directors of Purchaser and Seller
have voted to approve the merger of Purchaser with and into Seller
(the "Merger") pursuant to the terms and subject to the conditions of
this Agreement; and"
2. The last paragraph of the recitals is amended to read:
"NOW, THEREFORE, in consideration of the mutual covenants hereinafter
contained, the parties hereto agree that Purchaser shall be merged
with and into Seller and that the terms and conditions of the Merger,
the method of carrying the Merger into effect and certain other
provisions relating thereto shall be as hereinafter set forth:"
3. Section 1.64 of the Plan is amended to read:
"1.64 "Surviving Corporation" shall mean the Seller, existing at
and after the Effective Time as a result of the Merger."
4. The first sentence of Section 2.1 of the Plan is amended to read:
"Subject to the terms and conditions of this Agreement, Purchaser
shall be merged with and into Seller in accordance with all applicable
laws, with Seller being the Surviving Corporation."
5. Section 2.6 (a) is amended to read:
"(a) In consideration for the Merger, the non-competition agreements
in Article 12 hereof and the non-disclosure agreement in Article 13
hereof, as of the Effective Time, by virtue of the Merger and without
any action on the part of the holders of any shares of Seller Stock,
or the holder of the shares of Purchaser Stock, (i) subject to
adjustment under Section 2.6(b), Seller Stock outstanding immediately
before the Effective Time shall be converted into the right to
receive, subject to the provisions of Section 2.8, 3,846,154 shares of
BCC Stock (the "Merger Consideration"); provided, however, that
461,573 shares of the Merger Consideration (the "Indemnity Holdback
Shares") shall be pledged by the Escrow Stockholders to secure the
indemnification obligations of the Stockholders pursuant to Article 11
hereof and 769,000 shares of the Merger Consideration (the "Earnout
Holdback Shares") shall be pledged by the Stockholders to secure the
earnout requirements pursuant to Section 10.10 hereof, and (ii) each
share of Purchaser Stock outstanding immediately before the Effective
Time shall be converted into one share of common stock of the
Surviving Corporation. At the Closing, BCC shall deliver to the
Stockholders the certificates representing the Merger Consideration,
less the Indemnity Holdback Shares and less the Earnout Holdback
Shares."
6. Section 2.11 (a) is amended to read:
"(a) the BCC Parties shall withhold from each Stockholder on a pro
rata basis and Purchaser and Stockholders shall deliver to the Escrow
Agent under the Earnout Escrow Agreement, the Earnout Holdback Shares,
to be held and distributed by the Escrow Agent pursuant to the terms
of this Agreement and the Earnout Escrow Agreement; and"
7. The last sentence of Section 4.8(c) is amended to read:
"All of the Contracts will be fully vested in Surviving Corporation as
of the Effective Time of the Merger, without the approval or consent
of any Person, or, if such approval or consent is required, Escrow
Stockholders will use their best efforts to obtain such on or before
the Closing Date or within a reasonable period of time after Closing
and deliver such to the BCC Parties."
8. Section 4.11(b) is amended to read:
"(b) All Software performs as intended in System Documentation and
User Documentation (subject to minor imperfections in the Software
that are standard in the software industry) and is free from defects,
viruses or any other impediment to Surviving Corporation's quiet
enjoyment in the operation thereof (subject to minor imperfections in
the Software that are standard in the software industry)."
9. The first sentence of Section 4.11(d) is amended to read:
"All Third-Party Software Agreements give Surviving Corporation
exactly the same rights and/or obligations thereunder enjoyed by
Seller, without the requirement of obtaining any consent or approval,
giving any prior or subsequent notice, paying any further royalty or
fee to any party thereto or to any other third party, or performing
any duty that has not already been fully performed by Seller."
10. The second to the last sentence of Section 4.11(e) is amended to read:
"Each item of Intellectual Property owned or used in the Business
immediately prior to the Effective Time will be owned or available for
use by Surviving Corporation on identical terms and conditions
immediately after the Closing."
11. Section 8.9 is amended to read:
"8.9 Escrow Agreements. The Stockholders shall execute and deliver
the Earnout Escrow Agreement (the "Earnout Escrow Agreement") in
substantially the form attached hereto as Exhibit A.1 and the Escrow
Stockholders shall execute and deliver the Indemnity Escrow Agreement
substantially in the form attached hereto as Exhibit A.2."
12. Section 10.5 is amended to read:
"10.5 Intellectual Property Assignment. Any employee of the
Seller, including without limitation Xxxxxxx X. Xxxxx, will execute
an assignment to Seller and Surviving Corporation of his right, title
and interest in and to Intellectual Property upon request of BCC
Parties."
13. Section 10.6 is amended to read:
"10.6 Use of Name of Seller. Stockholders covenant and agree that
after the Closing they will not, directly or indirectly, use the name
"Operator Service Company" or "OSC" or any derivation thereof in
connection with any business enterprise."
14. In Section 10.9 all references to "Purchaser" shall be deemed to be "Seller
and Surviving Corporation."
15. Section 10.10 is amended to read:
"10.10 Earnout Escrow. At Closing, Purchaser and Stockholders
shall deposit the Earnout Holdback Shares with the Escrow Agent
pursuant to the Earnout Escrow Agreement. The Earnout Escrow
Agreement shall be executed and delivered by the Stockholders and
appropriate BCC Party at Closing. Until such time as the Earnout
Holdback Shares shall have been delivered pursuant to the terms of the
Earnout Escrow Agreement, each Stockholder covenants and agrees not to
sell, transfer, pledge, assign, hypothecate or dispose of or enter any
contract, option or pledge or understanding (written or not) with
respect to the sale, transfer, pledge, assignment, hypothecation or
other disposition of the Earnout Holdback Shares or any dividends or
distributions that may be declared or paid with respect thereof.
Nothing in this Agreement or the Earnout Escrow Agreement shall
require Surviving Corporation or BCC to take any action after the
Effective Time that BCC determines, in its sole discretion, is not in
the best interests of Surviving Corporation or to conduct its
business or the business of Surviving Corporation contrary to the
Surviving Corporation's business plan or corporate governance."
16. In Section 13 all references to "Purchaser" shall be changed to "Surviving
Corporation."
17. In Section 17(a) all references to "Escrow Stockholders" shall be changed
to "Stockholders" with relation to the Earnout Escrow.
18. In Section 17(c)(i) all references to "Purchaser" shall be changed to
"Purchaser, Surviving Corporation or BCC Parties."
19. Except as modified above and as otherwise necessary in context to reflect
the fact that Purchaser will be merging with and into Seller as the
Surviving Corporation and all Stockholders will be funding the Earnout
Escrow, all other terms and conditions of the Plan remain in full force and
effect.
[The remainder of this page intentionally left blank.]
Dated this 4th day of April, 2000.
BILLING CONCEPTS CORP.
By: /s/ Xxxxx Xxxx
Its: Senior Vice President and General Counsel
LUBBOCK ACQUISITION CORP.
By: /s/ Xxxxx Xxxx
Its: Senior Vice President and General Counsel
OPERATOR SERVICE COMPANY
By: /s/ Xxxx Xxxxx
Its: President
STOCKHOLDERS:
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
/s/ Xxxxx Xxxx Xxxxx
Xxxxx Xxxx Xxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx
/s/ Xxxx Xxxxxx
Xxxx Xxxxxx
/s/ Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxx
Xxxxxxx X. Xxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxxx Xxxx Xxxxxx
Xxxxxxx Xxxx Xxxxxx
/s/ Xxxx Xxxxx Xxxxxxx
Xxxx Xxxxx Xxxxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxxxxx Kai Xxxxxxxx
Xxxxxxx Xxx Xxxxxxxx
/s/ Xxxxxxx Kai Xxxxxxxx
Xxxxxxx Xxx Xxxxxxxx, Custodian for Xxxxx X.
Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxxxx
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxxxxxx Xxx
Xxxxxxxx Xxx
/s/ Xxxx Xxxxx
Xxxx Xxxxx, Custodian for Xxxxx Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
Xxxx Xxxxx, Custodian for Xxxx Xxxxxx Xxxxx
/s/ Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxxxxxx
Xxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxxx, Executor
Xxxxxx X. Xxxxxxxxx, Independent Executor of the
Estate of Xxxx Xxxx Xxxxxxxxx
