Exhibit 10.4
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MERGER AGREEMENT
by and among
APPNET SYSTEMS, INC.,
(Buyer)
NMP ACQUISITION SUB #1, INC.,
(Newco)
NEW MEDIA PUBLISHING, INC.,
(NMP)
and
THE SHAREHOLDERS OF NMP
(collectively, Sellers)
Dated as of October 2, 1998
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TABLE OF CONTENTS
Page
1. Definitions................................................................1
2. The Merger.................................................................8
(a) The Merger............................................................8
(b) Effective Time of the Merger..........................................8
(c) Certificate of Incorporation..........................................9
(d) Bylaws................................................................9
(e) Directors and Officers of Surviving Corporation.......................9
(f) Effect of the Merger..................................................9
(g) Conversion of Shares.................................................10
(h) Purchase Price.......................................................10
(i) Earned Payout Amount.................................................10
(j) Net Worth Adjustment.................................................13
(k) Dissenting Shares....................................................13
(l) The Closing..........................................................13
(m) Deliveries at the Closing............................................13
(n) Shareholders' Representative.........................................14
(o) Escrow Arrangements..................................................15
3. Representations and Warranties Concerning the Transaction.................16
(a) Representations and Warranties of each Seller........................16
(i) Authorization of Transaction....................................16
(ii) Noncontravention...............................................16
(iii) Broker's Fees.................................................16
(iv) Investment.....................................................17
(v) NMP Shares......................................................17
(b) Representations and Warranties of the Buyer and Newco................17
(i) Organization of the Buyer and Newco.............................17
(ii) Authorization of Transaction...................................18
(iii) Noncontravention..............................................18
(iv) Brokers' Fees..................................................18
(v) Investment......................................................18
(vi) Buyer's and Newco's Capitalization.............................18
(vii) Financial Statements..........................................19
(viii) Tangible Assets..............................................19
(ix) Certain Business Relationships with Buyer........................
4. Representations and Warranties Concerning Selling Corporation.............19
(a) Organization, Qualification, and Corporate Power.....................20
(b) Capitalization.......................................................20
(c) Noncontravention.....................................................21
(d) Subsidiaries.........................................................21
(e) Financial Statements.................................................21
(f) Events Subsequent to the Stub Period End.............................22
(g) Undisclosed Liabilities..............................................24
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(h) Tax Matters..........................................................25
(i) Tangible Assets......................................................26
(j) Owned Real Property..................................................26
(k) Intellectual Property................................................26
(l) Real Property Leases.................................................28
(m) Contracts............................................................28
(n) Notes and Accounts Receivable........................................30
(o) Powers of Attorney...................................................30
(p) Insurance............................................................30
(q) Litigation...........................................................31
(r) Employees............................................................31
(s) Employee Benefits....................................................31
(t) Guaranties...........................................................33
(u) Environment, Health, and Safety......................................33
(v) Legal Compliance.....................................................34
(w) Certain Business Relationships with NMP..............................35
(x) Brokers' Fees........................................................35
(y) Disclosure...........................................................35
5. Pre-Closing Covenants.....................................................35
(a) General..............................................................35
(b) Notices and Consents.................................................35
(c) Operation of Business................................................35
(d) Preservation of Business.............................................36
(e) Access...............................................................36
(f) Notice of Developments; Delivery of Disclosure Schedules.............36
(g) Exclusivity..........................................................36
(h) Cancellation of Options, Bonus Programs and Phantom Stock Plans......36
6. Additional Covenants......................................................37
(a) General..............................................................37
(b) Litigation Support...................................................37
(c) Transition...........................................................37
(d) Confidentiality......................................................38
(e) Termination of Bank Facilities; Release of Guaranties................38
(f) Monitoring Information...............................................38
(g) Landlords' Consents..................................................38
(h) Additional Tax Matters...............................................39
(i) Covenant Not to Compete..............................................39
(j) Reorganization Intent................................................39
(k) Conduct During Earned Payout Periods.................................39
7. Conditions to Obligations to Close........................................40
(a) Conditions to Obligation of the Buyer................................40
(b) Conditions to Obligations of the Sellers.............................43
8. Remedies for Breaches of This Agreement...................................45
(a) Survival.............................................................45
(b) Indemnification Provisions for Benefit of the Buyer..................45
(c) Indemnification Provisions for Benefit of the Sellers................46
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(d) Matters Involving Third Parties......................................47
(e) Exclusive Remedy.....................................................47
(f) Payment; General Right of Offset.....................................48
(g) Other Indemnification Provisions.....................................48
(h) Arbitration with Respect to Certain Indemnification Matters..........48
9. Termination...............................................................49
(a) Termination of Agreement.............................................49
(b) Effect of Termination................................................50
10. Miscellaneous............................................................50
(a) [Reserved]...........................................................50
(b) Press Releases and Announcements.....................................50
(c) No Third-Party Beneficiaries.........................................50
(d) Entire Agreement.....................................................50
(e) Succession and Assignment............................................50
(f) Facsimile/Counterparts...............................................50
(g) Descriptive Headings.................................................51
(h) Notices..............................................................51
(i) Governing Law........................................................52
(j) Amendments and Waivers...............................................53
(k) Severability.........................................................53
(l) Expenses.............................................................53
(m) Construction.........................................................53
(n) Incorporation of Exhibits, Annexes, and Schedules....................53
(o) Specific Performance.................................................54
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LIST OF EXHIBITS, ANNEXES AND SCHEDULES
EXHIBITS
Exhibit A Form of Escrow Agreement
Exhibit B Financial Statements
Exhibit C Joinder to Stockholders Agreement
Exhibit D Form of Equity Subscription Agreement
Exhibit E Form of Employment Agreement
Exhibit F Joinder to the Registration Agreement
Exhibit G Form of Opinion of Sellers' Legal Counsel
Exhibit H Form of Opinion of Buyer's Legal Counsel
Exhibit I Form of Option Cancellation Agreement
Exhibit J Form of Buyer Option Agreement
Exhibit K Form of Earnout Note
ANNEXES AND TABLES
Annex I Determination of Earned Payout Amount
Annex II Buyer's Capitalization Schedule and Charter
Annex III Exceptions to Representations and Warranties of Sellers
Annex IV Exceptions to Representations and Warranties of Buyer
Annex V List of Optionholders and Conversion Schedule
SCHEDULES
Allocation Schedule
Sellers' and NMP's Disclosure Schedule
Buyer's Disclosure Schedule
Adjustments to EBIT Schedule
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MERGER AGREEMENT
This MERGER AGREEMENT ("Agreement") is entered into as of the 2nd
day of October, 1998, by and among APPNET SYSTEMS, INC., a Delaware corporation
(the "Buyer"), NMP ACQUISITION SUB #1, INC., a Delaware corporation and wholly
owned subsidiary of Buyer ("Newco"), NEW MEDIA PUBLISHING, INC., a Virginia
corporation ("NMP"), and THE SHAREHOLDERS OF NMP LISTED ON THE SIGNATURE PAGE
HEREOF (collectively, the "Sellers"). The Buyer, Newco and the Sellers are
referred to herein individually as a "Party" and collectively as the "Parties."
NMP and Newco are sometimes referred to herein as the "Constituent
Corporations." If the context so requires, references herein to NMP shall mean
the Surviving Corporation (as hereinafter defined) for periods after the Closing
Date.
The Sellers in the aggregate own all of the outstanding capital
stock of NMP.
This Agreement contemplates a transaction in which NMP will merge
with and into Newco, with Newco being the surviving corporation, and the shares
of capital stock of NMP being converted into the right to receive the Purchase
Price (as hereinafter identified), and the Parties intend such merger
transaction to be a tax-free reorganization under Section 368 of the Code (as
defined) and intend this Agreement to be a "plan of reorganization" within the
meaning of the regulations promulgated under such section of the Code.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. Definitions.
"AA" shall mean Xxxxxx Xxxxxxxx, L.L.P.
"AA Determination" shall have the meaning set forth in Section
2(j) below.
"Adjusted EBITDA of NMP during Earned Payout Period" shall
mean the adjusted earnings before interest, taxes and depreciation and
amortization of NMP as determined in accordance with GAAP on the accrual basis
of accounting during the Earned Payout Period as determined by Annex I attached
hereto.
"Adjusted EBIT of NMP" shall mean NMP's earnings before
interest and taxes in accordance with GAAP on the accrual basis of accounting,
as adjusted for certain non-recurring costs listed on the Adjustments to EBIT
Schedule attached hereto.
"Adverse Consequences" means all damages from complaints,
actions, suits, proceedings, hearings, investigations, claims, demands,
judgments, orders, decrees, stipulations, injunctions, damages, dues, penalties,
fines, costs, amounts paid in settlement,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
all reasonable attorneys' fees and court costs.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act of 1934, as amended.
"Affiliated Group" means any affiliated group within the
meaning of Code Sec. 1504 (or any similar group defined under a similar
provision of state, local or foreign law).
"Applicable Percentage" has the meaning set forth in Section
2(i) below.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction that forms the reasonable basis
for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Common Stock" means the Buyer's Common Stock, par value
$.0005 per share.
"Buyer's Shares" means the shares of Buyer Common Stock which
are issued to the Sellers pursuant to this Agreement.
"Buyer Options" means the options for the purchase of the
shares of Buyer Common Stock which are issued to the NMP Optionholders in
exchange for all outstanding NMP Options pursuant to this Agreement. A form of
option agreement for the issuance of Buyer Options is attached as Exhibit J to
this Agreement.
"Cash Portion of the Purchase Price" has the meaning set forth
in Section 2(h) below.
"Cash Portion of the Earnout" has the meaning set forth in
Section 2(i)(i) below.
"Closing" has the meaning set forth in Section 2(l) below.
"Closing Date" has the meaning set forth in Section 2(l)
below.
"Closing Determination" has the meaning set forth in Section
2(j) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means all confidential information
and trade secrets of NMP including, without limitation, the identity, lists or
descriptions of any customers, referral sources or organizations; financial
statements, cost reports or other financial information; contract proposals, or
bidding information; business plans and training and operations methods and
manuals; personnel records; fee structure; and management systems, policies or
procedures,
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including related forms and manuals; provided, that the Confidential Information
shall not include information which (i) was or becomes generally available to
the public other than as a result of a its disclosure by the receiving party,
(ii) was or becomes available to the receiving party on a non-confidential basis
from a source other than the Buyer or its advisors without breach of this
Agreement provided that such source is not known to such receiving party to be
bound by a confidentiality agreement or otherwise prohibited from transmitting
the information to receiving party by a contractual, legal or fiduciary
obligation known to such receiving party, (iii) was within receiving party's
possession prior to its being furnished to such receiving party by or on behalf
of Buyer without breach of this Agreement, provided that the source of such
information was not bound by a confidentiality agreement with Buyer or NMP or
otherwise prohibited from transmitting the information to the receiving party by
a contractual, legal or fiduciary obligation, or (iv) which is required to be
and actually is disclosed by operation of law.
"Constituent Corporations" has the meaning set forth in the
preface above.
"Contingent Cash Payment" has the meaning set forth in Section
2(h) below.
"Controlled Group of Corporations" has the meaning set forth
in Code Sec. 1563.
"Conversion Value" means the difference between (i) the
product of (a) the number of outstanding Buyer Options issued pursuant to
Section 5(h) of this Agreement and (b) $3.00, and (ii) the aggregate price
payable upon exercise of all outstanding Buyer Options issued pursuant to this
Agreement.
"Customer Contract or Agreement" means any agreement whereby
NMP provides marketing, strategy, hosting, programming, creative or project
management services and/or related consulting services in NMP's Business to a
third party during the 1998 fiscal year of NMP.
"Deferred Intercompany Transaction" has the meaning set forth
in Treas. Reg. ss.1.1502-13.
"DGCL" has the meaning set forth in Section 2(a) below.
"Disclosure Schedule" has the meaning set forth in Section 4
below.
"Dissenting Shares" has the meaning set forth in Section 2(k)
below.
"Earned Payout Amount" has the meaning set forth in Section
2(i) below.
"Earned Payout Period" means the period from October 1, 1998
through September 30, 1999.
"Earnout Notes" has the meaning set forth in Section 2(i).
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"Earnout Shares" has the meaning set forth in Section 2(i).
"EBITDA to Revenue Percentage" has the meaning set forth in
Section 2(i) below.
"Effective Time" has the meaning set forth in Section 2(a)
below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
Material fringe benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Equitable Exceptions" shall have the meaning set forth in
Section 3(a)(i) below.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" means Crestar Bank, N.A.
"Escrow Agreement" means the Escrow Agreement to be executed
by and among the Sellers, Buyer and the Escrow Agent in the form of Exhibit A.
"Escrow Period" has the meaning specified in Section 2(o).
"Escrow Sum" has the meaning specified in Section 2(o).
"Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community Right-to-Know Act of 1986, as
amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in Section
4(e) below.
"Founders" means collectively Xxxxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxxx and Xxxxxxxx X. Xxxxxxx, Xx.
"Funded Indebtedness" means all (i) indebtedness of NMP for
borrowed money or other interest-bearing indebtedness; (ii) capital lease
obligations of NMP (other than
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those payable to Capital Bank (formerly Knight Financial Corp.) as reflected on
the Most Recent Financial Statements); (iii) obligations of NMP to pay the
deferred purchase or acquisition price for goods or services, other than trade
accounts payable or accrued expenses in the ordinary course of business on no
more than 90 day payment terms; (iv) indebtedness of others guaranteed by NMP or
secured by an Encumbrance on NMP's property; (v) indebtedness of NMP under
extended credit terms of more than 60 days from vendors provided to NMP
(excluding any operating leases); and (vi) transaction costs of NMP and/or
Sellers associated with this Agreement or the transactions contemplated hereby
that are paid by NMP.
"GAAP" means United States generally accepted accounting
principles, consistently applied, as in effect from time to time.
"Gross Revenues" means the gross revenue of NMP as normally
calculated on the Financial Statements as calculated in accordance with GAAP on
the accrual basis of accounting.
"Indemnified Party" has the meaning set forth in Section 8(d)
below.
"Indemnifying Party" has the meaning set forth in Section 8(d)
below.
"Intellectual Property" means all (a) trademarks, service
marks, trade dress, logos, trade names, and corporate names and registrations
and applications for registration thereof, (b) copyrights and registrations and
applications for registration thereof, (c) computer software, data, and
documentation, (d) trade secrets and confidential business information
(including formulas, compositions, inventions (whether patentable or
unpatentable and whether or not reduced to practice), know-how, manufacturing
and production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, technical data,
copyrightable works, financial, marketing, and business data, pricing and cost
information, business and marketing plans, and customer and supplier lists and
information, (e) other proprietary rights, and (f) copies and tangible
embodiments thereof (in whatever form or medium).
"Knowledge" means, (a) with respect to each Seller,
information which is actually known by such Seller and (b) with respect to
Newco, Buyer or NMP, actual knowledge after due inquiry of the officers of such
Party and the employees of such party with responsibility for the matters in
question.
"Liability" means any liability, debt, obligation, amount or
sum due (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated, and whether due or to become due) including any
liability for Taxes.
"Material" has the meaning set forth in Section 4 below.
"Merger" has the meaning set forth in Section 2(a) below.
"Merger Documents" has the meaning set forth in Section 2(b)
below.
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"Minimum Net Worth" has the meaning set forth in Section 2(j)
below.
"Most Recent Balance Sheet" means the balance sheet contained
within the Most Recent Financial Statements.
"Most Recent Financial Statements" means the Financial
Statements for and as of the Most Recent Fiscal Year End.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 4(e) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Net Worth of NMP" means the total assets of NMP less the
total liabilities of NMP (other than Funded Indebtedness) including any costs of
conversion from a cash basis to an accrual method of accounting, determined in
accordance with GAAP and on the accrual method of accounting. In calculating the
total assets of NMP, no material increase in the intangible assets of NMP since
December 31, 1997 shall be included in calculating the Net Worth of NMP without
the mutual consent of Buyer and NMP.
"Net Service Revenues" means the Gross Revenues of NMP for any
period less (i) all bad debt expense for such period; and (ii) any revenues from
the sale of any assets of NMP during such period outside the Ordinary Course of
Business.
"Newco" has the meaning set forth in the preface above.
"NMP" has the meaning set forth in the preface above.
"NMP's Business" means the business of providing computer
network and internet or intranet related integration and design support or
project services to, writing custom software for, and implementing related
consulting services for, business customers.
"NMP Common Shares" means all outstanding shares of the common
stock, no par value per share, of NMP.
"NMP Optionholders" means the holders of options for the
purchase of NMP Common Shares listed on the Allocation Schedule hereto.
"NMP Options" means all the agreements between NMP and those
persons listed on the Allocation Schedule hereto related to the issuance of NMP
Common Shares.
"NMP Preferred Shares" means all outstanding shares of the
preferred stock, no par value per share, of NMP.
"NMP Shares" means collectively, the NMP Common Shares and NMP
Preferred Shares.
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"Outside Investor" means Columbia NMP Investors, L.L.C.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity and frequency).
"Option Cancellation Agreement" has the meaning set forth in
Section 7(a) herein.
"Other Sellers" means the Founders and Xxxxx X. Xxxxxx.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Prohibited Transaction" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"Purchase Price" has the meaning set forth in Section 2(b)
below.
"Registration Agreement" means that certain Registration
Agreement dated June 29, 1998 by and among Buyer and the stockholders of Buyer.
"Reportable Event" has the meaning set forth in ERISA Sec.
4043.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, security
interest, encumbrance, charge, or other lien, other than (a) mechanic's,
materialmen's and similar liens, (b) liens for Taxes not yet due and payable (or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings), (c) liens arising under workers' compensation, unemployment
insurance, social security, retirement, and similar legislation, (d) liens
arising in connection with sales of foreign receivables, (e) liens on goods in
transit incurred pursuant to documentary letters of credit, (f) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(g) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Sellers" has the meaning set forth in the preface above.
"Sellers' Representatives" has the meaning set forth in the
Section 2(n) below.
"Stock Portion of the Earnout" has the meaning set forth in
Section 2(i) below.
"Stock Portion of the Purchase Price" has the meaning set
forth in Section 2(h) below.
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"Stockholders Agreement" means that certain Stockholders
Agreement dated June 29, 1998 by and among Buyer and the stockholders of Buyer.
"Stub Period Financial Statements" means the Financial
Statements for and as of the Stub Period End.
"Stub Period Balance Sheet" means the balance sheet included
in the Stub Period Financial Statements.
"Stub Period End" has the meaning set forth in Section 4(e)
below.
"Surviving Corporation" has the meaning set forth in Section
2(a) below.
"Subsidiary" means any corporation with respect to which
another specified corporation has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty or addition
thereto.
"Tax Return" means any federal, foreign, state and local
governmental tax return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
"VSCA" has the meaning set forth in Section 2(a) below.
2. The Merger.
(a) The Merger. At the Effective Time (as defined below), NMP
shall be merged with and into Newco (the "Merger") and the separate existence of
NMP shall thereupon cease, and the name of Newco, as the surviving corporation
in the Merger (the "Surviving Corporation"), shall by virtue of the Merger be
changed to "NMP, Inc."; provided, that such name is available in Delaware, and
the Surviving Corporation shall operate as "NMP, Inc." in the Commonwealth of
Virginia. The Merger shall have the effects set forth in the Virginia Stock
Corporation Act (the "VSCA") and the General Corporation Law of the State of
Delaware ("DGCL").
(b) Effective Time of the Merger. As soon as practicable after
the satisfaction or waiver of the conditions hereinafter set forth, the parties
hereto will file with the State Corporation Commission of the Commonwealth of
Virginia and the Secretary of State of the State of Delaware a certificate or
articles of merger or ownership and other documents (the "Merger Documents"), in
such respective forms as required by, and executed in accordance with,
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the relevant provisions of the VSCA and DGCL in order to effect the Merger. The
Merger shall become effective at such time as the Merger Documents shall have
been accepted for filing with the Stock Corporation Commission of the
Commonwealth of Virginia and the Secretary of State of the State of Delaware or
such other times and dates as the parties shall agree should be specified in the
Merger Documents (the "Effective Time").
(c) Certificate of Incorporation. The Certificate of
Incorporation of Newco in effect at the time of the Merger shall be the
Certificate of Incorporation of the Surviving Corporation, until thereafter
amended as provided thereunder and in the DGCL.
(d) Bylaws. The Bylaws of Newco in effect at the time of the
Merger shall be the Bylaws of the Surviving Corporation until altered, amended
or repealed, as provided thereunder and in the Certificate of Incorporation and
the DGCL.
(e) Directors and Officers of Surviving Corporation.
(i) The directors of Newco at the Effective Time, which
shall be Xxx Xxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxxxxx Xxxxxxxx
and Xxxx Xxxxx, shall be the directors of the Surviving Corporation
and shall hold office from the Effective Time until their respective
successors are duly elected or appointed and qualify in the manner
provided in the Certificate of Incorporation and Bylaws of the
Surviving Corporation, or as otherwise provided by law.
(ii) The officers of Newco at the Effective Time shall
be the officers of the Surviving Corporation and shall hold office
from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving
Corporation, or as otherwise provided by law.
(f) Effect of the Merger. The Merger shall have the effects
set forth in the VSCA and DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, all the properties,
rights, privileges, powers and franchise of the Constituent Corporations shall
vest in the Surviving Corporation, and all debts, liabilities and duties of the
Constituent Corporations shall become the debts, liabilities and duties of the
Surviving Corporation. The purpose of the Surviving Corporation shall be the
purposes of NMP immediately prior to the Merger. The total number of shares
which the Surviving Corporation is authorized to issue shall be 1,000 shares of
Common Stock, $.01 par value per share.
(g) Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the Sellers:
(i) Each NMP Share issued and outstanding immediately
prior to the Effective Time (other than NMP Shares as to which the
holders thereof shall have properly exercised appraisal rights under
the VSCA, if any) shall be converted
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into the right to receive in cash and Buyer's Shares its portion of
the Purchase Price (as hereinafter defined) for NMP Common Shares
and NMP Preferred Shares (as applicable).
(ii) Each NMP Share held in the treasury of NMP
immediately prior to the Effective Time shall be canceled and
retired and cease to exist.
(iii) No interest, dividends or other distributions
shall be payable upon the surrender of certificates that represented
NMP Shares at the Effective Time.
(h) Purchase Price. The purchase price for NMP Shares shall be
composed of (i) the Cash Portion of the Purchase Price; (ii) the Stock Portion
of the Purchase Price; (iii) the Contingent Cash Payment (as defined below); and
(iv) the Earned Payout Amount. The Buyer agrees to pay to the Sellers in the
aggregate the sum of (i) $9,000,000 (to be reduced dollar for dollar by the sum
of (A) 75% of the Conversion Value of the NMP Options described in Section 5(h);
(B) the amount of any outstanding Funded Indebtedness; and (C) the Net Worth
adjustment, if any, made pursuant to Section 2(j) below) in cash (the "Cash
Portion of the Purchase Price"); (ii) $9,500,000 in Buyer's Shares, consisting
of an aggregate of 3,166,667 shares of Buyer Common Stock as set forth in the
Allocation Schedule attached hereto (the "Stock Portion of the Purchase Price");
(iii) a contingent cash payment of up to $500,000 to be paid to Sellers as
provided in Section 2(o) below (the "Contingent Cash Payment"); and (iv) the
Earned Payout Amount as determined pursuant to Section 2(i) below, in exchange
for the NMP Shares to be purchased by Buyer pursuant to the terms hereof. The
Cash Portion of the Purchase Price shall be paid by Buyer to Sellers at the
Closing by delivery of cash by wire transfer of funds to Sellers' accounts in
the amounts set forth on the Allocation Schedule. The Stock Portion of the
Purchase Price shall be issued by Buyer to Sellers at the Closing by the
delivery of Buyer's Shares in the amounts set forth on the Allocation Schedule
next to such Seller's name. Each acquirer of Buyer's Shares shall enter into an
equity subscription agreement in the form attached hereto as Exhibit D. The sum
of the Cash Portion of the Purchase Price, the Contingent Cash Payment, the
Stock Portion of the Purchase Price and the Earned Payout Amount shall be
referred to as the "Purchase Price." Each of (i) the Cash Portion of the
Purchase Price and (ii) the Stock Portion of the Purchase Price shall be
allocated among Sellers in dollar amounts set forth on the Allocation Schedule;
provided, however, that the number of Buyer Shares allocable to each Seller
shall be rounded down to the nearest whole number.
(i) Earned Payout Amount.
(i) In addition to the Cash Portion of the Purchase
Price and the Stock Portion of the Purchase Price, the Buyer agrees
to pay to the Sellers, if earned, an earned payout amount (the
"Earned Payout Amount") equal to the present value (discounted from
January 15, 2000 to the Effective Time at the rate of 5.41% per
annum compounded semi-annually) of (i) the product of (A)
$14,000,000 and (B) the applicable percentage determined on the
chart attached to Annex I hereto (the "Applicable Percentage") based
on the amount,
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if any, by which (1) the Adjusted EBITDA of NMP for the Earned
Payout Period as a percentage of Gross Revenues (the "EBITDA to
Revenues Percentage") meets or exceeds 10% and (2) the Gross
Revenues of NMP for the Earned Payout Period meets or exceeds
$7,000,000; provided, however, that in no event will the Earned
Payout Amount exceed $14,000,000. The Applicable Percentage on Annex
I hereto shall be determined by rounding the actual Gross Revenues
of NMP for the Earned Payout Period and the actual EBITDA to
Revenues Percentage for the Earned Payout Period down to the nearest
percentage or number on the chart attached to Annex I; provided,
however, that (A) to the extent that actual Gross Revenues of NMP
exceed the threshold amount for the Applicable Percentage, then the
Applicable Percentage shall be increased by an amount equal to the
product of (x) the quotient obtained by dividing (1) the total
amount by which Gross Revenues exceed the minimum for such
Applicable Percentage by (2) $425,000 and (y) the percentage
increase in the Applicable Percentage if NMP had achieved the next
highest level of Gross Revenues of NMP from the Gross Revenues of
NMP determined above and (B) to the extent that actual EBITDA to
Revenues Percentage exceeds the threshold percentage for the
Applicable Percentage, then the Applicable Percentage shall be
increased by an amount equal to the product of (x) the quotient
obtained by dividing (1) the total percentage amount by which EBITDA
to Revenues Percentage exceeds the minimum for such Applicable
Percentage (expressed as a decimal) by (2) two (2) percent and (y)
the percentage increase in the Applicable Percentage if NMP had
achieved the next highest level of EBITDA to Revenues Percentage
from the EBITDA to Revenues Percentage amount determined above. An
example of this calculation is attached to Annex I hereto.
(ii) The Buyer shall pay interest on the Earned Payout
Amount equal to the difference between (A) the Earned Payout Amount
determined in accordance with the preceding paragraph but without
discounting from January 15, 2000 to the Effective Time (the "Gross
Payout Amount") and (B) the Earned Payout Amount. Such interest
shall be payable in cash at the same time as the Earned Payout
Amount is paid.
(iii) The Earned Payout Amount shall be payable in a
combination of (A) cash (the "Cash Portion of the Earnout") and (B)
Buyer's Shares (the "Stock Portion of the Earnout"). The Cash
Portion of the Earnout shall be equal to 60% of the Earned Payout
Amount and the Stock Portion of the Earnout shall be 40% of the
Earned Payout Amount. The aggregate number of Buyer's Shares, if
any, (the "Earnout Shares") to be issued as the Stock Portion of the
Earnout shall be equal to (A) the aggregate value in dollars of the
Stock Portion of the Earnout divided by (B) $3.00.
(iv) The Cash Portion of the Earned Payout Amount, if
any, shall be payable by Buyer (A) in cash to the Outside Investor
by wire transfer or other delivery of immediately available funds to
an account or accounts designated
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by the Outside Investor and (B) in a combination of (1) 50% in cash
to the Other Sellers by wire transfer or other delivery of
immediately available funds to an account or accounts designated by
the Other Sellers and (2) 50% by delivery of the Earnout Notes (as
hereinafter defined) to the Other Sellers, in each case on or prior
to January 15, 2000 (but not prior to January 1, 2000). The Earnout
Shares, if any, shall be payable on or prior to January 15, 2000
(but not prior to January 1, 2000) (A) to the Outside Investor by
the delivery of the certificates representing such shares and (B) to
the Other Sellers in a combination of (1) 50% in Earnout Shares by
the delivery of the certificates representing such shares to the
Other Sellers and (2) 50% in Earnout Notes deliverable to the Other
Sellers payable in Earnout Shares.
(v) The Earned Payout Amount shall be determined by AA
in accordance with the terms of this Agreement and Annex I hereto.
(vi) The Cash Portion of the Earned Payout Amount
payable to the Other Sellers shall be paid on or prior to January
15, 2000 (but not prior to January 1, 2000) as follows: (A) 50% in
cash and (B) 50% in the form of one-year promissory notes which bear
interest at the rate of 9% per annum in the form of Exhibit K hereto
(the "Earnout Notes").
(vii) The Earnout Shares payable to the Other Sellers
shall be payable as follows: (A) 50% by delivery of certificates on
or prior to January 15, 2000 (but not prior to January 1, 2000) and
(B) 50% on the first anniversary thereof upon payment of the Earnout
Notes by delivery of the Earnout Shares to the Sellers.
(viii) The payment of the Earned Payout Amount (in both
cash and in Earnout Notes) to (A) a Founder shall be contingent on
such Founder's not resigning from employment with the Surviving
Corporation without Good Reason (as defined in the applicable
Employment Agreement) or such Founder not being terminated by the
Surviving Corporation or Buyer for Cause (as defined in the
applicable Employment Agreement) prior to October 2, 1999 and (B)
Xxxxx Xxxxxx shall be contingent on his not willfully failing to
abide by the material terms of his consulting and noncompete
agreement with the Surviving Corporation prior to October 2, 1999.
In addition, the final payment of the Earnout Notes (in both cash
and in Earnout Notes) in January 2001 to an Other Seller shall also
be subject to the same contingencies described in the preceding
sentence through October 1, 2000 as specified in the Earnout Notes.
Notwithstanding anything to the contrary contained in this Section
2(i)(viii), the parties hereto agree that the payment of the Earned
Payout Amount shall be treated as a contingent payment of purchase
price for tax purposes.
(j) Net Worth Adjustment. The Cash Portion of the Purchase
Price shall be adjusted downward on a dollar-for-dollar basis by the amount by
which the Net
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Worth of NMP is less than $1,300,000 (the "Minimum Net Worth") as of the Closing
Date. The Net Worth of NMP as of the Closing Date shall initially be determined
prior to the Closing Date by NMP in good faith within two business days prior to
the Closing Date (the "Closing Determination"). Following the Closing Date, the
Net Worth of NMP as of the Closing Date shall be determined by AA in accordance
with the terms of this Agreement (at the expense of the Buyer), which
determination (the "AA Determination") shall be submitted in writing to the
Buyer and the Sellers not later than sixty (60) days after the Closing. Unless
the Sellers' Representatives on behalf of all Sellers objects in writing to the
AA Determination within ten business days of the receipt of such determination,
the AA Determination shall be final, conclusive and binding on the Parties. If
no objection is made, Sellers shall pay to Buyer by wire transfer the amount, if
any, by which the amount of the AA Determination is less than the Minimum Net
Worth (less any deduction against the Cash Portion of the Purchase Price as a
result of the Closing Determination) within ten (10) days after the AA
Determination. Up to $50,000 of such payment may be effected as a reduction in
the Contingent Cash Payment at the election of the Sellers' Representatives.
(k) Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, NMP Shares which are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have not voted such NMP Shares in favor of the Merger and who shall have
delivered a written demand for appraisal of such Shares in the manner provided
in the VSCA (the "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the consideration provided above, unless
and until such holder shall have failed to perfect or shall have effectively
withdrawn or lost his right to appraisal and payment under the VSCA. If such
holder shall have so failed to perfect or shall have effectively withdrawn or
lost such right, his NMP Shares shall thereupon be deemed to have been converted
into and to have become exchangeable for, at the Effective Time, the right to
receive the consideration provided herein.
(l) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxx &
Xxxxxxx, LLP in Washington, D.C. commencing at 9:00 a.m. local time on the first
business day following the satisfaction or waiver of all conditions to the
obligations of the Parties to consummate the transactions contemplated hereby,
or such other date as the Buyer and the Sellers may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no later than
October 16, 1998.
(m) Deliveries at the Closing. At the Closing, (i) the Sellers
will deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below, (ii) the Buyer will deliver to the Sellers
(as applicable) the various certificates, instruments, and documents referred to
in Section 7(b) below, (iii) each of the Sellers will deliver to the Buyer stock
certificates representing all of its NMP Shares, endorsed in blank or
accompanied by duly executed assignment documents, (iv) the Buyer will deliver
to the Sellers and the NMP Optionholders the consideration specified in Section
2(h) above as may be adjusted after the Closing pursuant to Sections 2(j) above
and Section 2(o) below, (v) the NMP Optionholders shall each deliver to the
Buyer the Option Cancellation Agreements required by Section 7(a)(xviii) below,
if applicable, and
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(vi) the Buyer will deliver to each of the NMP Optionholders an executed option
agreement at the vesting schedule, grant amount and exercise price set forth on
Annex VI attached hereto.
(n) Sellers' Representatives.
(i) In order to administer efficiently (A) the
implementation of the Agreement by the Sellers, (B) the waiver of
any condition to the obligations of the Sellers to consummate the
transactions contemplated hereby, and (C) the settlement of any
dispute with respect to the Agreement, the Sellers hereby designate
Xxxxxxxx X. Xxxxxxx and Xxxx Xxxxxx as their representatives (the
"Sellers' Representatives").
(ii) The Sellers hereby authorize the Sellers'
Representatives (A) to take all action necessary in connection with
the implementation of the Agreement on behalf of the Sellers, the
waiver of any condition to the obligations of the Sellers to
consummate the transactions contemplated hereby, or the settlement
of any dispute, (B) to give and receive all notices required to be
given under the Agreement and (C) to take any and all additional
action as is contemplated to be taken by or on behalf of the Sellers
by the terms of this Agreement.
(iii) In the event that either of the Sellers'
Representatives dies, becomes legally incapacitated or resigns from
such position, Xxxxxx Xxxxxx, in the case of Xxxx Xxxxxx, and
Xxxxxxx Xxxxxxx, in the case of Xxxxxxxx X. Xxxxxxx, shall fill any
vacancy and shall be deemed to be the Sellers' Representatives for
all purposes of this Agreement; however, no change in the Sellers'
Representatives shall be effective until Buyer is given notice of
such change by the Sellers.
(iv) All decisions and actions by the Sellers'
Representatives shall be binding upon all of the Sellers, and no
Seller shall have the right to object, dissent, protest or otherwise
contest the same, in the absence of fraud, gross negligence or
willful misconduct of the Sellers' Representatives.
(v) By their execution of this Agreement, the Sellers
agree that: (A) Buyer shall be able to rely conclusively on the
instructions and decisions of the Sellers' Representatives as to any
actions required or permitted to be taken by the Sellers or the
Sellers' Representatives hereunder, and no party hereunder shall
have any cause of action against Buyer for action taken by Buyer in
reliance upon the instructions or decisions of the Sellers'
Representatives; (B) all actions, decisions and instructions of the
Sellers' Representatives shall be conclusive and binding upon all of
the Sellers; no Seller shall have any cause of action against Buyer
or NMP for any action taken or omitted to be taken, decision made or
omitted to be made or any instruction given or omitted to be given
by the Sellers' Representatives; and no Seller shall have any cause
of action against the Sellers' Representatives for any action taken,
decision made or instruction given by the Sellers' Representatives
under this Agreement, except for fraud, gross negligence or willful
breach of this Agreement by the Sellers' Representatives; (C) the
Sellers'
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Representatives shall be deemed to fulfill any fiduciary obligation
to the Sellers so long as no Seller is adversely affected by any
action or failure to act of the Sellers' Representatives in a
disproportionate measure compared to any other Seller; (D) remedies
available at law for any breach of the provisions of this Section
2(n) are inadequate; therefore, Buyer shall be entitled to temporary
and permanent injunctive relief without the necessity of proving
damages if Buyer brings an action to enforce the provisions of this
Section 2(n); (E) the provisions of this Section 2(n) are
independent and severable, shall constitute an irrevocable power of
attorney, coupled with an interest and surviving death, granted by
the Sellers to the Sellers' Representatives and shall be binding
upon the executors, heirs, legal representatives and successors of
each Seller; and (F) all reasonable fees and expenses incurred by
the Sellers' Representatives shall be paid by the Sellers pro rata
in proportion to their percentage interest in NMP at Closing.
(o) Escrow Arrangements. Pursuant to the terms and conditions
of the Escrow Agreement to be entered into among the Sellers' Representatives,
Buyer and the Escrow Agent, the Buyer shall deposit $500,000 in cash in an
escrow account with the Escrow Agent at Closing in immediately available funds.
Such monies (which is hereinafter referred to as the "Escrow Sum") shall be held
pursuant to the terms of the Escrow Agreement to satisfy the amounts to be
retained by Buyer pursuant to the indemnification provisions of Article VIII
below as well as to secure Buyer's obligation to make the Contingent Cash
Payment to Sellers. At the conclusion of the period ending on the first
anniversary of the Closing Date (such period being referred to herein as the
"Escrow Period"), any remaining portion of the Escrow Sum not theretofore paid
to Buyer in accordance with the terms of the Escrow Agreement or subject to a
pending claim under the Escrow Agreement and this Agreement shall be disbursed
to the Sellers as the Contingent Cash Payment. In addition, when and as the
Contingent Cash Payment is paid to the Sellers, Buyer shall also pay Sellers
interest on the amount of such payment, calculated at the rate of 5.41% per
annum, compounded semi-annually, for the period from the Effective Time to the
date of payment. The Contingent Cash Payment (plus interest thereon as provided
in this subsection) shall be allocated among the Sellers as provided in the
Allocation Schedule. All interest generated by the Escrow Sum with the Escrow
Agent shall be paid to Buyer or utilized to satisfy the interest payable by
Buyer on the Contingent Cash Payment. The Sellers and Buyer agree that each will
execute and deliver such reasonable instruments and documents as are furnished
by any other party to enable such furnishing party to receive those portions of
the Escrow Sum to which the furnishing party is entitled under the provisions of
the Escrow Agreement and this Agreement.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of each Seller. Each Seller
individually represents and warrants to the Buyer as follows as of the date of
this Agreement and 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
Section 3(a)):
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(i) Authorization of Transaction. The Seller has full
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and this Agreement has been duly
executed and delivered by the Seller. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable in
accordance with its terms and conditions, except that (A) such
enforceability may be subject to bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws,
decisions or equitable principles now or hereafter in effect
relating to or affecting the enforcement of creditors' rights or
debtors' obligations generally or non-competition arrangements, and
to general equity principles, and (B) the remedy of specific
performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought (the terms of
clause (A) and (B) are sometimes collectively referred to as the
"Equitable Exceptions"). The Seller need not give any notice to,
make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement (other
than as provided for in Article 2 of this Agreement).
(ii) Noncontravention. Neither the execution and the
delivery of this Agreement by the Seller, nor the consummation of
the transactions contemplated hereby by the Seller, will (A) violate
any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or (B)
except as set forth in Section 3(a) of the Disclosure Schedule,
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any part the right to
accelerate, terminate, modify, or cancel, or require any notice
under any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other arrangement
to which the Seller is a party or by which it is bound or to which
any of its assets is subject.
(iii) Broker's Fees. Seller has no Liability or
obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this
Agreement for which the Buyer could become liable or obligated.
(iv) Investment. The Seller is not acquiring Buyer's
Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
(v) NMP Shares. The Seller holds of record and owns
beneficially the number of NMP Common Shares and/or NMP Preferred
Shares set forth next to its name in Section 4(b) of the Disclosure
Schedule, and except as set forth in Section 4(b) of the Disclosure
Schedule, such NMP Shares are free and clear of any restrictions on
transfer (other than any restrictions under the Securities
-16-
Act and state securities laws), claims, Taxes, Security Interests,
options, warrants, rights, contracts, calls, commitments, equities,
and demands. Except as set forth in Section 4(b) of the Disclosure
Schedule, the Seller is not a party to (or has otherwise waived all
rights under) any option, warrant, right, contract, call, put, or
other agreement or commitment providing for the disposition or
acquisition of any capital stock of NMP (other than this Agreement).
The Seller is not a party to (or has otherwise terminated) any
voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of NMP.
(b) Representations and Warranties of the Buyer and Newco. The
Buyer and Newco represent and warrant to the Sellers that the statements
contained in this Section 3(b) 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 Section 3(b)), except as set forth in Annex IV
attached hereto. Annex IV may be updated one or more times prior to the Closing
Date. Any updated Disclosure Schedule shall be delivered at or before the
Closing. In the event any such updated Annex IV indicates a material adverse
change from information previously provided to the Sellers, Sellers shall be
entitled to terminate this Agreement (without any liability whatsoever to NMP or
Sellers) by written notice delivered to Buyer following receipt of such updated
Annex IV. Nothing in Annex IV shall be deemed adequate to disclose an exception
to a representation or warranty made herein, however, unless Annex IV identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail as the context requires. For purposes hereof, the definition
of "Material" in Section 4 shall be utilized with respect to the use of Material
in this Section 3 (but with all references to NMP deemed to be references to the
Buyer).
(i) Organization of the Buyer and Newco. Each of the
Buyer and Newco is a corporation duly organized, validly existing,
and in good standing under the laws of the jurisdiction of its
incorporation. The Buyer has delivered to Sellers correct and
complete copies of the charter and bylaws of Buyer and Newco (as
amended to date). Neither Buyer nor Newco is in default under or in
violation of its charter or bylaws.
(ii) Authorization of Transaction. Each of the Buyer and
Newco has full power and authority (including full corporate power
and authority) to execute and deliver this Agreement and to perform
its obligations hereunder and this Agreement has been duly executed
and delivered by the Buyer and Newco. This Agreement constitutes the
valid and legally binding obligation of the Buyer and Newco,
enforceable in accordance with its terms and conditions except for
the Equitable Exceptions. Neither the Buyer nor Newco needs to give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement
(other than as provided for in Article 2 of this Agreement).
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(iii) Noncontravention. Neither the execution and the
delivery of this Agreement by the Buyer or Newco, nor the
consummation of the transactions contemplated hereby by the Buyer or
Newco, will (A) violate any statute, regulation, rule, judgment,
order, decree, stipulation, injunction, charge, or other restriction
of any government, governmental agency, or court to which the Buyer
is subject or any provision of its charter or bylaws or (B) conflict
with, result in a breach of, constitute a default under, result in
the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest, or other arrangement to which the
Buyer or Newco is a party or by which it is bound or to which any of
its assets is subject and which has a Material adverse effect on
Buyer.
(iv) Brokers' Fees. Neither Newco nor the Buyer has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Sellers could become
liable or obligated.
(v) Investment. Neither Newco nor the Buyer is acquiring
NMP Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities Act.
(vi) Buyer's and Newco's Capitalization. The authorized
capital stock of Buyer consists of (a) 75,000,000 shares of common
stock, (b) 96,621 shares of Class A preferred stock, and (c) 20,000
shares of the Class B preferred stock. The issued and outstanding
shares of and the holders of record of the Common Stock and of the
Class A Preferred Stock are as set forth in Annex II, and as of the
date hereof, there are no issued and outstanding shares of Class B
Preferred Stock. All of the Buyer's issued and outstanding Buyer
Shares have been duly authorized, are validly issued, fully paid,
and nonassessable. The authorized capital stock of Newco consists of
1,000 shares of common stock, of which 1,000 are issued and
outstanding. All of the issued and outstanding shares of Newco
capital stock have been authorized, are validly issued, fully paid
and nonassessable, and are held beneficially and of record by Buyer.
(vii) Financial Statements. Attached hereto as Exhibit B
are the following Buyer financial statements (collectively the
"Financial Statements"): unaudited consolidated balance sheet and
statement of income and changes in stockholder's equity as of and
for the six month period ended June 30, 1998 for Buyer. The
Financial Statements have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered
thereby, are correct and complete, fairly present the financial
condition of Buyer as of such dates, and are consistent with the
books and records of Buyer (which books and records are correct
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and complete), subject to normal adjustments upon audit and the
absence of footnotes.
(viii) Tangible Assets. Buyer owns or leases
substantially all tangible assets necessary for the conduct of its
businesses as presently conducted and as presently proposed to be
conducted. To the Knowledge of the Buyer, each such tangible asset
is free from Material defects (patent and latent), has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear),
and is suitable for the purposes for which it presently is used.
(ix) Certain Business Relationships with Buyer. Except
as set forth in Annex IV attached hereto, neither GTCR Fund VI, L.P.
nor its related funds has been involved in any business arrangement
or relationship with Buyer within the past twelve (12) months other
than service relationships in the Ordinary Course of Business and
venture capital investments, and neither GTCR Fund VI, L.P. nor its
related funds owns any material property or right, tangible or
intangible, which is used in the business of the Buyer.
4. Representations and Warranties Concerning NMP. NMP represents and
warrants to the Buyer that, subject to the specific qualifications and
limitations set forth herein, the statements contained in this Section 4 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 Section 4),
except as set forth in the Disclosure Schedule delivered by the Sellers to the
Buyer on the date hereof and initialed by the Parties (the "Disclosure
Schedule"). The Disclosure Schedule may be updated one or more times prior to
the Closing Date. Any updated Disclosure Schedule shall be delivered at or
before the Closing. In the event any such updated Disclosure Schedule indicates
an adverse change from information previously provided to the Buyer, Buyer shall
be entitled to terminate this Agreement (without any liability whatsoever to
NMP) by written notice delivered to NMP following receipt of such updated
Disclosure Schedule. An event or matter that causes any representation or
warranty contained in this Section to be inaccurate, incorrect or false will not
be deemed to be "Material," to have a "Material" change in or in respect of, to
have a "Material" adverse effect or to be "Materially" affected unless the loss
that may reasonably be expected to occur to NMP with respect to such event or
matter, when taken together with all other related losses that may reasonably be
expected to occur to NMP as a result of any such events or matters, would exceed
$75,000 in the aggregate or unless such event or matter constitutes a criminal
violation of law. For purposes of this paragraph, the word "loss" shall mean any
and all direct or indirect payments, obligations, assessments, losses, losses of
income, liabilities, costs and expenses paid or incurred, or reasonably likely
to be paid or incurred, or diminution's in value or reduction in benefits or
rights of any kind or character (whether or not known or asserted before the
date of this Agreement, fixed or unfixed, conditional or unconditional, xxxxxx
or inchoate, liquidated or unliquidated, secured or unsecured, accrued,
absolute, contingent or otherwise) that are reasonably likely to occur,
including without limitation, penalties, interest on any amount payable to a
third party as a result of the foregoing, and any reasonable legal or other
expenses reasonably expected to be
-19-
incurred in connection with defending any demands, claims, actions or causes of
action that, if adversely determined, could reasonably be expected to result in
losses, and all amounts paid in settlement of claims or actions; provided,
however, that losses shall be net of any insurance proceeds entitled to be
received from a nonaffiliated insurance company on account of such loss (after
taking into account any cost incurred in obtaining such proceeds or any
increases in insurance premiums as a direct result thereof). A Customer Contract
or Agreement is "Material" if during either calendar year 1998 such Customer
Contract or Agreement produced or is expected to produce $150,000 of Gross
Revenues. Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail as the
context requires. The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
4.
(a) Organization, Qualification, and Corporate Power. NMP is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Except as disclosed in Section
4(a) of the Disclosure Schedule, NMP is duly authorized to conduct business and
is in good standing under the laws of the Commonwealth of Virginia, which is the
only jurisdiction in which the nature of its businesses or the ownership or
leasing of its properties requires such qualification. NMP has full corporate
power and authority to carry on the businesses in which it is engaged and to own
and use the properties owned and used by it. Section 4(a) of the Disclosure
Schedule lists the directors and officers of NMP. NMP has delivered to the Buyer
correct and complete copies of the charter and bylaws of NMP (as amended to
date). The minute books containing the records of meetings and/or resolutions of
the stockholders, the board of directors, and any committees of the board of
directors, the stock certificate books and the stock record books of NMP are
correct and complete in all Material respects. NMP is not in default under or in
violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of NMP
consists of (i) 8,550,000 shares of common stock, no par value, of which
5,000,000 are issued and outstanding, 13,860 are subject to issuance pursuant to
vested options, 407,093 are subject to issuance pursuant to unvested options and
714,290 are reserved for issuance pursuant to future option grants and (ii)
1,450,000 shares of preferred stock, no par value, of which 1,428,570 are issued
and outstanding. All of the issued and outstanding NMP Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the Sellers except as set forth in Section 4(b)-1 of the Disclosure
Schedule. Except as set forth in Section 4(b)-2 of the Disclosure Schedule,
there are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which NMP is a party or which are binding upon NMP providing for
the issuance, disposition, or acquisition of any of its capital stock. Except as
set forth in Section 4(b)-3 of the Disclosure Schedule, there are no outstanding
or authorized stock appreciation, phantom stock, or similar rights with respect
to NMP. Except as provided in the Stock Purchase Agreement dated March 5, 1998
between NMP and Columbia NMP Investors, LLC, the Investor Rights Agreement dated
March 5, 1998 or the Amended and Restated Articles of Incorporation of NMP,
there are no voting trusts, proxies, or any other agreements or understandings
with respect to the voting of the capital stock of NMP.
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(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which NMP is subject or any provision of the
charter or bylaws of NMP, except to the extent any such violation does not or
could not result in a Material adverse effect on NMP, or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed money,
instrument of indebtedness, Security Interest, or other arrangement to which NMP
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets). NMP
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(d) Subsidiaries. NMP has no Subsidiaries.
(e) Financial Statements. Attached hereto as Exhibit B are the
following NMP financial statements (collectively the "Financial Statements"):
audited balance sheet and statement of income, changes in stockholder's equity,
and cash flow as of and for the fiscal years ended December 31, 1995 and 1996
and audited balance sheet and statement of income, changes in stockholder's
equity, and cash flow as of and for the fiscal year ended December 31, 1997 (the
"Most Recent Fiscal Year End") and an unaudited consolidated balance sheet and
statement of income, changes in stockholder's equity, and cash flow as of and
for the six month period ended June 30, 1998 for NMP (the "Stub Period End").
The Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, are correct and
complete, fairly present the financial condition of NMP as of such dates, and
are consistent with the books and records of NMP (which books and records are
correct and complete), subject, in the case of the Stub Period Financial
Statements, to normal adjustments upon audit.
(f) Events Subsequent to the Stub Period End. Since June 30,
1998, except as set forth on the Disclosure Schedule, there has not been any
Material adverse change in the assets, Liabilities, business, financial
condition, operations, or results of operations of NMP. Without limiting the
generality of the foregoing since June 30, 1998 except as set forth on the
Disclosure Schedule:
(i) NMP has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) NMP has not entered into any contract, lease,
sublease, license or sublicense (or series or related contracts,
leases, subleases, licenses and sublicenses) outside the Ordinary
Course of Business;
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(iii) NMP has not accelerated, terminated, modified, or
canceled any contract, lease, sublease, license or sublicense (or
series of related contracts, leases, subleases, licenses and
sublicenses) to which NMP is a party or by which it is bound other
than in the Ordinary Course of Business;
(iv) no party has notified NMP of any acceleration,
termination modification or cancellation of any outstanding Customer
Contract or any other contract, agreement, lease, sublease, license
or sublicense (or series of related contracts, leases, subleases,
licenses and sublicenses), other than in the Ordinary Course of
Business;
(v) NMP has not imposed any Security Interest upon any
of its Material assets, tangible or intangible;
(vi) Except as set forth in Section 4(f) - (vi) of the
Disclosure Schedule, NMP has not made any capital expenditure (or
series of related capital expenditures) involving more than $50,000
in the aggregate, or outside the Ordinary Course of Business;
(vii) NMP has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of any other
person (or series of related capital investments, loans, and
acquisitions) involving more than $35,000 in the aggregate;
(viii) NMP has not created, incurred, assumed, or
guaranteed any indebtedness (including capitalized lease
obligations) involving more than $30,000 individually or in the
aggregate or outside the Ordinary Course of Business;
(ix) NMP has not delayed or postponed (beyond its normal
practice) the payment of any accounts payable and other Liabilities
or made any changes in any accounting methods or procedures not
required by GAAP;
(x) NMP has not canceled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $25,000 or outside the Ordinary Course of
Business;
(xi) NMP has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property except
any such license or sublicense as was granted in the Ordinary Course
of Business as "work for hire" under Customer Contracts and
Agreements;
(xii) there has been no change made or authorized in the
charter or bylaws of NMP, other than in connection with this
Agreement and the transactions contemplated hereby;
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(xiii) except as set forth in Section 4(f) - (xiii) of
the Disclosure Schedule, NMP has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon
conversion or exercise) any of its capital stock;
(xiv) except as set forth in Section 4(f) - (xiv) of the
Disclosure Schedule, NMP has not declared, set aside, or paid any
dividend or distribution with respect to its capital stock nor
redeemed, purchased, or otherwise acquired any of its capital stock;
(xv) NMP has not made any consulting or other payment to
the Sellers other than in the Ordinary Course of Business;
(xvi) NMP has not experienced any damage, destruction or
loss involving more than $35,000 (whether or not covered by
insurance) to its property;
(xvii) NMP has not made any loan to, or entered into any
other transaction with, any of its officers, directors or employees
(who are not Sellers) outside the Ordinary Course of Business giving
rise to any claim or right on its part against the person or on the
part of the person against it;
(xviii) NMP has not made any loan to, or entered into
any other transaction with, any of the Sellers other than in the
Ordinary Course of Business giving rise to any claim or right on its
part against the person or on the part of such person against it;
(xix) NMP has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified in
any material respect the terms of any existing such contract or
agreement with any of its full-time staff employees other than in
the Ordinary Course of Business;
(xx) NMP has not granted an increase outside the
Ordinary Course of Business in the base compensation of any of its
directors, officers, and employees (other than the Sellers);
(xxi) NMP has not granted an increase in the base
compensation, nor has NMP made any payments or promises or
commitments to pay to any of the Sellers to make any other payments
(other than salary and reimbursement of customary expenses) to any
of the Sellers, including without limitation bonuses other than in
the Ordinary Course of Business;
(xxii) NMP has not adopted any (A) bonus, (B)
profit-sharing, (C) incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization, life, or other insurance,
(G) severance, or (H) other plan, contract or commitment for any of
its directors, officers, and employees, or modified or terminated
any existing such plan, contract or commitment;
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(xxiii) NMP has not made any other change in employment
terms for any of its directors, officers, and full-time staff
employees other than in the Ordinary Course of Business;
(xxiv) NMP has not made or pledged to make any Material
charitable or other capital contribution outside the Ordinary Course
of Business;
(xxv) there has not been any other occurrence, event,
incident, action, failure to act, or transaction outside the
Ordinary Course of Business involving NMP; and
(xxvi) NMP has not entered into any agreement committing
to any of the foregoing.
(g) Undisclosed Liabilities. Except as set forth on Section
4(g) of the Disclosure Schedule hereto, NMP does not have any Liability (and
there is no Basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against NMP giving rise to
any Liability, including, without limitation, Liability under the Fair Labor
Standards Act of 1938, as amended and the rules and regulations promulgated
thereunder) which is individually in excess of $5,000, except for (i)
Liabilities set forth on the face of the Stub Period End Balance Sheet, (ii)
Liabilities described on Schedule 4(g) of the Disclosure Schedule and (iii)
Liabilities which have arisen after the Stub Period End in the Ordinary Course
of Business (none of which relates to any breach of contract, breach of
warranty, tort, infringement, or violation of law or arose out of any charge,
complaint, action, suit, proceedings, hearing, investigation, claim, or demand).
(h) Tax Matters. Except as set forth on Exhibit 4(h) of the
Disclosure Schedule,
(i) NMP has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by NMP (whether or not shown on any Tax
Return) based on operations through the Stub Period End have been
paid or accrued on the Stub Period End Balance Sheet. NMP currently
is not the beneficiary of any extension of time within which to file
any Tax Return except for an extension of time to file Form 1120 for
the year ended December 31, 1997 (an adequate reserve for which has
been reflected on the Stub Period End Balance Sheet). No claim has
ever been made by any taxing authority in a jurisdiction where NMP
does not file Tax Returns that it is or may be subject to taxation
by that jurisdiction. There are no Security Interests on any of the
assets of NMP that arose in connection with any failure (or alleged
failure) to pay any Tax, other than for Taxes that are not yet due
which have accrued since the Most Recent Fiscal Year End.
(ii) NMP has withheld and paid all Taxes required to
have been withheld and paid in connection with amounts paid or owing
to any employee, creditor, independent contractor, or other third
party and NMP has properly
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reflected the status of all employees and independent contractors in
connection therewith as required by applicable Tax law.
(iii) Neither Sellers nor any of the officers of NMP
have received, nor do any of them expect to receive, any notice that
any taxing authority intends to assess any additional Taxes for any
period for which Tax Returns have been filed. There is no dispute or
claim concerning any Tax Liability of NMP either (A) claimed or
raised by any authority in writing or (B) as to which the Sellers or
the officers of NMP or employees responsible for Tax matters of NMP
have Knowledge based upon personal contact with any agent of such
authority. Section 4(h) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with
respect to NMP for taxable periods ended on or after December 31,
1990, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
NMP has delivered to the Buyer correct and complete copies of all
federal income Tax Returns filed, examination reports received, and
statements of deficiencies assessed against or agreed to, by NMP
since December 31, 1990.
(iv) NMP has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to
a Tax assessment or deficiency.
(v) NMP has not filed a consent under Code Sec. 341(f)
concerning collapsible corporations. NMP has not made any payments,
is not obligated to make any payments, nor is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible to NMP under Code Sec.
280G. NMP has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). For all
positions for which disclosure is necessary to avoid a substantial
understatement of federal income Tax within the meaning of Code Sec.
6662, NMP has disclosed such positions on its federal income Tax
Returns. NMP is not a party to any Tax allocation or sharing
agreement. NMP has never been (nor has any Liability for unpaid
Taxes because it once was) a member of an Affiliated Group filing a
consolidated federal income Tax Return and has never incurred any
Liability for the Taxes of any Person under Treas. Reg.ss.1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) Section 4(h) of the Disclosure Schedule sets forth
the following information with respect to NMP as of the most recent
practicable date (as well as on an estimated pro forma basis as of
the Closing giving effect to the consummation of the transactions
contemplated hereby): the amount of any net operating loss, net
capital loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to NMP.
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(vii) The unpaid Taxes of NMP through the Stub Period
End do not exceed the reserve for Tax Liability set forth on the
face of the Stub Period Balance Sheet.
(i) Tangible Assets. NMP owns or leases substantially all
tangible assets necessary for the conduct of NMP's Business as presently
conducted and as presently proposed to be conducted. To the Knowledge of NMP,
each such tangible asset is free from Material defects (patent and latent), has
been maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used.
(j) Owned Real Property. NMP does not own nor does it have any
interest in any real property or improvements thereon (other than the leases
disclosed in Section 4(j) of the Disclosure Schedule, and the leasehold
improvements relating to the same) nor does NMP have any options, agreements or
contracts under which it has the right or obligation to acquire any interest in
any real property or improvements (other than as disclosed in Section 4(j) of
the Disclosure Schedule)
(k) Intellectual Property.
(i) Attached hereto as Section 4(k) of the Disclosure
Schedule is a list and brief description of all Intellectual
Property owned or utilized by NMP. NMP has furnished Buyer with
copies of all license agreements to which NMP is a party, either as
licenser or licensee, with respect to any Intellectual Property. NMP
has good title to or the right to use all the Intellectual Property
and all inventions, processes, designs, formulae, trade secrets and
know-how necessary for the conduct of the NMP's Business, in its
business as presently conducted or currently proposed to be
conducted without the payment of any royalty or similar payment
(other than as provided in the license agreements furnished to Buyer
and listed on Section 4(k) of the Disclosure Schedule), and NMP is
not infringing on any Intellectual Property right of others, and NMP
has no Knowledge of any infringement by others of any such rights
owned by NMP.
(ii) All licenses set forth on Section 4(k) of the
Disclosure Schedule are valid and binding obligations of NMP, and to
the Knowledge of NMP, of the other parties thereto, and enforceable
against NMP, and to the Knowledge of NMP, the other parties thereto
in accordance with their respective terms, except for the Equitable
Exceptions. NMP owns and possesses all right, title and interest in
and to, or has the right to use pursuant to a valid license, all
Intellectual Property necessary for the operation of the business of
NMP as presently conducted.
(iii) All personnel, including employees, agents,
consultants, and contractors, who have contributed to or
participated in the conception and development of any Intellectual
Property have executed the nondisclosure agreements listed on
Section 4(k) of the Disclosure Schedule, which agreement
-26-
provides that such persons have accorded NMP full, effective,
exclusive and original ownership of all material Intellectual
Property and have conveyed to NMP full, effective, and exclusive
ownership of all material Intellectual Property.
(iv) NMP has have also delivered to the Buyer correct
and complete samples or copies of all trademarks, service marks,
trade names, copyrights, patents, registrations and, as relate to
the foregoing, applications, licenses, agreements, and permissions
(as amended to date) held by NMP, and have made available to the
Buyer correct and complete copies of all other written documentation
evidencing ownership and prosecution (if applicable) of each such
item. With respect to each item of Intellectual Property used in, or
otherwise necessary for the conduct of, the business of NMP as
heretofore conducted which is owned by, or to the Knowledge of NMP,
by a third party: (A) the identified owner possesses all right,
title, and interest in and to the item; (B) the item is not subject
to any outstanding judgment, order, decree, stipulation, injunction,
or charge; (C) no charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand is pending or, to the
Knowledge of NMP, is threatened which challenges the legality,
validity, enforceability, use, or ownership of the item; and (D) NMP
has not agreed to indemnify any person or entity for or against any
interference, infringement, misappropriation, or other conflict with
respect to the item.
(v) None of the Material computer software, computer
firmware, computer hardware (whether general or special purpose),
and other similar or related items of automated, computerized,
and/or software system(s) that are used or relied on by NMP in the
conduct of NMP's Business will in any Material respect malfunction,
cease to function, generate incorrect data, or produce incorrect
results when processing, providing, and/or receiving (i)
date-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid
date in the twentieth and twenty-first centuries.
(l) Real Property Leases. Section 4(l) of the Disclosure
Schedule lists and describes briefly all real property leased or subleased to
NMP. NMP has delivered to the Buyer correct and complete copies of the leases
and subleases listed in Section 4(l) of the Disclosure Schedule (as amended to
date). With respect to each lease and sublease listed in Section 4(l) of the
Disclosure Schedule, assuming NMP obtains receipt of any consents necessary for
the transactions contemplated hereby:
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect, subject to the Equitable
Exceptions;
(ii) the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms immediately following the Closing;
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(iii) NMP is not and, to the Knowledge of NMP, no other
party to the lease or sublease is in breach or default, and no event
has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(iv) NMP has not, and to the Knowledge of NMP no other
party to the lease or sublease has, repudiated any provision
thereof;
(v) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(vi) NMP has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold; and
(vii) all facilities leased or subleased thereunder have
received all approvals of governmental authorities (including
licenses and permits) required in connection with the operation
thereof and have been operated and maintained in accordance with
applicable laws, rules, and regulations.
(m) Contracts. Section 4(m) of the Disclosure Schedule lists
the following contracts, agreements, Customer Contracts or Agreements and other
written arrangements to which NMP is a party:
(i) any written agreement (or group of related written
agreements) for the lease of personal property from or to third
parties providing for lease payments in excess of $35,000 per annum;
(ii) any written agreement (or group of related written
agreements) for the furnishing or receipt of services which NMP
reasonably projects will involve more than the sum of $150,000 per
annum or $250,000 over the life of such agreement;
(iii) any written agreement concerning a partnership or
joint venture;
(iv) any written agreement (or group of related written
agreement) under which it has created, incurred, assumed, or
guaranteed (or may create, incur, assume, or guarantee) indebtedness
(including capitalized lease obligations) involving more than
$35,000 or under which it has imposed (or may impose) a Security
Interest on any of its assets, tangible or intangible;
(v) any written arrangement requiring confidentiality or
noncompetition other than agreements with customers, employees or
subcontractors in the Ordinary Course of Business;
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(vi) any written arrangement with any of its directors,
officers, or employees, or any of its Affiliates other than standard
contracts for service as employees or subcontractors in the Ordinary
Course of Business; and
(vii) any other written arrangement (or group of related
written arrangements) either involving more than $150,000 per annum
or not entered into in the Ordinary Course of Business.
NMP has delivered to the Buyer a correct and complete copy of each
written arrangement listed in Section 4(m) of the Disclosure Schedule (as
amended to date). With respect to each written arrangement so listed: (A) the
written arrangement is legal, valid, binding, enforceable, and in full force and
effect, subject to the Equitable Exceptions; (B) except as set forth in Section
4(m) of the Disclosure Schedule, the written arrangement will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms immediately following the Closing, subject to the Equitable Exceptions and
assuming NMP obtains receipt of any consents necessary for the transactions
contemplated hereby, (C) NMP is not, nor to the Knowledge of NMP is any other
party, in breach or default, and no event has occurred which to the Knowledge of
NMP with notice or lapse of time would constitute a breach or default or permit
termination, modification, or acceleration, under the written arrangement; and
(D) NMP has not, nor to the Knowledge of NMP has any other party, repudiated any
provision of the written arrangement. NMP is not a party to any oral contract,
agreement, or other arrangement which, if reduced to written form, would be
required to be listed in Section 4(m) of the Disclosure Schedule under the terms
of this Section 4(m). No unfilled Customer Contract or Agreement obligating NMP
to perform services will result in a loss to NMP upon completion of performance.
Except as set forth in Section 4(m) of the Disclosure Schedule, NMP has not been
notified that any of its customers intends either to dispute charges under or to
terminate early a Material Customer Contract or Agreement.
(n) Notes and Accounts Receivable. All notes and accounts
receivable of NMP are reflected properly on its books and records, are valid
receivables and to the Knowledge of NMP are subject to no setoffs or
counterclaims, are presently current and collectible, and will be collected in
accordance with their terms at their recorded amounts, subject only to the
reserve for bad debts set forth on the face of the Stub Period Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of NMP.
(o) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of NMP.
(p) Insurance. Section 4(p) of the Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which NMP has been a party, a
named insured, or otherwise the beneficiary of coverage at any time within the
past two (2) years:
(i) the name address and telephone number of the agent;
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(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope and amount (including a description of
how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any material retroactive premium
adjustments or other loss sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, and enforceable and in full force and effect; (B) the policy
will continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms immediately following the Closing Date; (C) NMP is not
in breach or default (including with respect to the payment of premiums or the
giving of notices), and no event has occurred which, with notice or the lapse of
time, would constitute such a breach or default or permit termination,
modification, or acceleration under the policy; and (D) NMP has not and to the
Knowledge of NMP, no other party to the policy has repudiated any provision
thereof. NMP has been covered during the past three years by insurance in scope
and amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. Except as set forth in Section 4(p) of the
Disclosure Schedule, NMP currently has no and has never had any self-insurance
arrangements.
(q) Litigation. Section 4(q) of the Disclosure Schedule sets
forth each instance in which NMP (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge or (ii) is a party or, to the
Knowledge of NMP, is threatened to be made a party to any charge, complaint,
action, suit, proceeding, hearing, or investigation of or in any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. Except as specifically described on
Section 4(q) of the Disclosure Schedule, no matter listed thereon could
reasonably be expected, individually, to result in a Material adverse effect to
NMP. NMP has no reason to believe that any such charge, complaint, action, suit,
proceeding, hearing, or investigation may be brought or threatened against NMP.
(r) Employees. To the Knowledge of NMP, no non-clerical
employee or any full-time group of employees has any plans to terminate
employment with NMP. NMP is not a party to or bound by any collective bargaining
agreement, nor has it experienced any strikes, grievances, claims of unfair
labor practices, or other collective bargaining disputes. NMP has not committed
any unfair labor practice. NMP has no Knowledge of any organizational effort
presently being made or threatened by or on behalf of any labor union with
respect to employees of NMP.
(s) Employee Benefits. Section 4(s) of the Disclosure Schedule
lists all Employee Benefit Plans that NMP maintains or to which NMP contributes
for the benefit of any current or former employee of NMP.
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(i) Each Employee Benefit Plan (and each related trust
or insurance contract) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code.
(ii) All required reports and descriptions, if any,
(including Form 5500 Annual Reports, Summary Annual Reports,
PBGC-1's and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each Employee Benefit
Plan. The requirements of Part 6 of Subtitle B of Title I of ERISA
and of Code Sec. 4980B have been met with respect to each Employee
Welfare Benefit Plan.
(iii) All contributions (including all employer
contributions and employee salary reduction contributions) which are
due have been paid to each Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each Employee Pension
Benefit Plan or accrued in accordance with the past custom and
practice of NMP. All premiums or other payments which are due for
all periods ending on or before the Closing Date have been paid with
respect to each Employee Welfare Benefit Plan.
(iv) Each Employee Benefit Plan which is an Employee
Pension Benefit Plan meets the requirements of a "qualified plan"
under Code Sec. 401(a) and has received a currently valid and
favorable determination letter from the Internal Revenue Service,
and that nothing has occurred since the receipt of such letter that
would materially affect the tax qualified status of each such
Employee Pension Benefit Plan.
(v) The market value of assets under each Employee
Pension Benefit Plan (other than any Multiemployer Plan) equals or
exceeds the present value of Liabilities thereunder (determined on
an accumulated benefit obligation basis) as of the last day of the
most recent plan year. No Employee Pension Benefit Plan (other than
any Multiemployer Plan) has been completely or partially terminated
or been the subject of a Reportable Event as to which notices would
be required to be filed with the PBGC. No proceeding by the PBGC to
terminate any Employee Pension Benefit Plan (other than any
Multiemployer Plan) has been instituted or, to the Knowledge of NMP
(including employees with responsibility for employee benefits
matters) of NMP, threatened.
(vi) There have been no Prohibited Transactions with
respect to any Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or comply
in connection with the administration or investment of the assets of
any Employee Benefit Plans. No charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand with respect to
the administration or the investment of the assets of any Employee
Benefit Plan (other than routine claims for benefits) is pending or,
to the Knowledge of the Sellers and
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the directors and officers (and employees with responsibility for
employee benefits matters) of NMP, threatened. Neither the Sellers
nor any of the directors or the officers (or employees with
responsibility for litigation matters) of NMP has any Knowledge of
any Basis for any such charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand.
(vii) NMP has delivered to the Buyer correct and
complete copies of (A) the plan documents and summary plan
descriptions, (B) the most recent determination letter received from
the Internal Revenue Service, (C) the most recent Form 5500 Annual
Report, and (D) all related trust agreements, insurance contracts,
and other funding agreements which implement each Employee Benefit
Plan.
NMP does not contribute to, has never contributed to, nor ever has
been required to contribute to any Multiemployer Plan or has any Liability
(including withdrawal Liability) under any Multiemployer Plan. NMP has not
incurred, and neither the Sellers nor any of the directors or the officers (or
employees with responsibility for litigation matters) of NMP has any reason to
expect that NMP will incur, any Liability to the PBGC (other than PBGC premium
payments) or otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any Employee Pension Benefit Plan
that NMP and the Controlled Group of Corporations which includes NMP maintains
or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute. NMP does not maintain, nor
has it ever maintained or contributed to, or ever has been required to
contribute to any Employee Welfare Benefit Plan providing health, accident, or
life insurance benefits to former employees, their spouses, or their dependents
(other than in accordance with Code Sec. 162(k)).
(t) Guaranties. NMP is not a guarantor nor is it otherwise
liable for any Liability or obligation (including indebtedness) of any other
person other than such potential liabilities to which NMP is subject based on
the acts or omissions of its employees, subcontractors and other agents
performing services for NMP in the Ordinary Course of Business (of which NMP has
no Knowledge of any claim for actual liability therefor).
(u) Environment, Health, and Safety.
(i) NMP and its Affiliates have complied in all Material
respects with all laws (including rules and regulations thereunder)
of federal, state, local, and foreign governments (and all agencies
thereof) concerning the environment, public health and safety, and
employee health and safety, and no charge, complaint, action, suit,
proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against any of them alleging any failure to
comply with any such law or regulation.
(ii) NMP has no Material Liability (and to the Knowledge
of NMP there is no Basis for any present or future charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
or demand against NMP giving rise to any Liability) under the
Occupational Safety and Health Act, as amended, or any other
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law (or rule or regulation thereunder) of any federal, state, local,
or foreign government (or agency thereof) concerning employee health
and safety.
(iii) NMP does not have any Material Liability (and NMP
has not exposed any employee to any substance or condition that
could form the Basis for any present or future charge, complaint,
action, suit, proceeding, hearing, investigation, claim, or demand
(under the common law or pursuant to statute) against NMP giving
rise to any Liability) for any illness of or personal injury to any
employee.
(iv) NMP has obtained and been in compliance in all
Material respects with all of the terms and conditions of all
permits, licenses, and other authorizations which are required
under, and has complied in all material respects with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all federal, state, local, and foreign laws (including
rules, regulations, codes, plans, judgments, orders, decrees,
stipulations, injunctions, and charges thereunder) relating to
public health and safety, worker health and safety, and pollution or
protection of the environment, including laws relating to emissions,
discharge, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials
or wastes into ambient air, surface water, ground water, or lands or
otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or
toxic materials or wastes.
(v) Legal Compliance. Except as it would not, individually or
in the aggregate, have a Material adverse effect:
(i) NMP has complied with all laws (including rules and
regulations thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), including, without
limitation, the Fair Labor Standards Act of 1938, as amended, and
the rules and regulations promulgated thereunder. No charge,
complaint, action, suit, proceeding, hearing, investigation, claim,
demand, or notice has been filed or commenced against NMP which is
currently pending and alleges any failure to comply with any such
law or regulation.
(ii) NMP has complied with all applicable laws
(including rules and regulations thereunder) relating to the
employment of labor (including but not limited to the engagement of
independent contractors under the Fair Labor Standards Act of 1938,
as amended, and the rules and regulations promulgated thereunder),
employee civil rights, hiring of engaging non-United States
citizens, and equal employment opportunities.
(iii) NMP has not violated in any respect or received a
notice or charge asserting any violation of the Xxxxxxx Act, the
Xxxxxxx Act, the Xxxxxxxx-Xxxxxx Act, or the Federal Trade Act, each
as amended.
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(iv) NMP has not:
(A) made or agreed to make any contribution,
payment, or gift of funds or property to any governmental
official, employee, or agent where either the contribution,
payment, or gift or the purpose thereof was illegal under the
laws of any federal, state, local, or foreign jurisdiction;
(B) established or maintained any unrecorded fund
or asset for any purpose, or made any false entries on any
books or records for any reason; or
(C) made or agreed to make any contribution, or
reimbursed any political gift or contribution made by any
other person, to any candidate for federal, state, local, or
foreign public office in excess of $500.
(v) To the Knowledge of NMP, NMP has filed in a timely
manner all material reports, documents, and other materials it was
required to file (and the information contained therein was correct
and complete in all respects) under all applicable laws (including
rules and regulations thereunder).
(vi) NMP has possession of all records and documents it
was required to retain under all applicable laws (including rules
and regulations thereunder).
(w) Certain Business Relationships with NMP. Except as set
forth in Section 4(w) of the Disclosure Schedule, neither the Sellers nor its
Affiliates has been involved in any business arrangement or relationship with
NMP within the past twelve (12) months other than service relationships in the
Ordinary Course of Business, and neither the Sellers nor its Affiliates owns any
material property or right, tangible or intangible, which is used in NMP's
Business.
(x) Brokers' Fees. NMP does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or similar
representative with respect to the transactions contemplated by this Agreement.
(y) Disclosure. The representations and warranties contained
in this Section 4 as amended, modified and/or supplemented by the Disclosure
Schedules do not contain any untrue statement of a fact or omit to state any
Material fact necessary in order to make the statements and information
contained in this Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing or the
earlier termination of this Agreement.
(a) General. Each of the Parties will use its reasonable
efforts to take all action and to do all things necessary, proper, or advisable
to consummate and make effective the
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transactions contemplated by this Agreement (including satisfying the closing
conditions set forth in Section 7 below).
(b) Notices and Consents. Each of the Parties will give any
notices to third parties, and will use best efforts to obtain third party
consents, that the other Party may reasonably request in connection with matters
disclosed or required to be disclosed in the Disclosure Schedule. Each of the
Parties will take any additional action that may be necessary, proper, or
advisable in connection with any other notices to, filings with, and
authorizations, consents, and approvals of governments, governmental agencies,
and third parties that he, she or it may be required to give, make, or obtain.
(c) Operation of Business. Except as contemplated hereby, or
as may be incidental to or in furtherance of the transactions contemplated
hereby, or as may have been set forth herein or in the Disclosure Schedule,
neither Party will (and Sellers will not cause or permit NMP to) engage in any
practice, take any action, embark on any course of inaction, or enter into any
transaction outside the Ordinary Course of Business.
(d) Preservation of Business. Except as contemplated hereby,
or as may be incidental to or in furtherance of the transactions contemplated
hereby, or as may have been set forth herein or in the Disclosure Schedule, NMP
will use reasonable commercial efforts to keep its business and properties
substantially intact, including its present operations, physical facilities,
working conditions, and relationships with lessors, licensers, suppliers,
customers, and employees.
(e) Access.
(i) Only in the event that neither Buyer or Sellers
exercised its right to terminate this Agreement as provided in
Section 9 herein, each Party will permit representatives of the
other Party to have access at reasonable times, and in a manner so
as not to interfere with the normal business operations of such
Party, to the headquarters of such Party and to all books, records,
contracts, Tax records, and documents of or pertaining to such
Party; provided, however, that Buyer shall direct all requests for
information and material only through Sellers' Representatives,
unless otherwise agreed to by Buyer and Seller's Representative in
writing.
(ii) Buyer shall proceed to arrange with the Sellers a
mutually agreeable time and place at which Buyer may conduct
interviews with key employees and/or customers of NMP mutually
agreed to by Buyer and the Sellers' Representatives.
(f) Notice of Developments. Each Party will give prompt
written notice to the other Party of any Material development affecting the
assets, Liabilities, business, financial condition, operations, results of
operations, or future prospects of such Party. Each Party will give prompt
written notice to the others of any Material development affecting the ability
of the Parties to consummate the transactions contemplated by this Agreement.
Except for the right of NMP or Buyer to update any Disclosure Schedule as
provided in Section 4 hereof, no disclosure by any Party pursuant to this
Section 5(f) shall be deemed to amend or supplement Annex III or the
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Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, and/or breach of covenant.
(g) Exclusivity. Until such time as this Agreement is
terminated in accordance with Section 9 herein, NMP and the Sellers will not (i)
solicit, initiate, or encourage the submission of any proposal or offer from any
person relating to any (A) liquidation, dissolution, or recapitalization, (B)
merger or consolidation, (C) acquisition or purchase of securities or assets, or
(D) similar transaction or business combination involving NMP 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 any of the
foregoing. The Sellers will notify the Buyer immediately if any person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
(h) Cancellation and Exchange of Options, Bonus Programs and
Phantom Stock Plans. NMP shall have provided for the cancellation, at or prior
to the Closing, of all NMP stock option plans, deferred bonus programs or
phantom equity plans. The outstanding NMP Options will be exchanged for Buyer
Options that will be delivered by Buyer to the NMP Optionholders at Closing. The
number of Buyer Options to be issued and the exercise prices therefor shall be
as set forth on Annex V hereto. All Buyer Options will utilize the same vesting
schedule as the canceled NMP Options. In conjunction with the cancellation of
the NMP Options, all eligible employees who have not executed customary NMP
employee non-disclosure agreements shall have signed cancellation agreements
which include provisions that each employee will not, for a period of one year
from the date of Closing or one year from the termination of his or her
employment with his or her employer (i.e., NMP) whichever period is longer: (i)
service or solicit any customers of his or her employer, or (ii) solicit for
employment any employee of his or her employer.
6. Additional Covenants. The Parties further covenant and agree as
follows:
(a) 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
Section 8 below). NMP acknowledges and agrees that from and after the Closing
the Buyer will be entitled to possession of all documents, books, records,
agreements, and financial data of any sort relating to NMP; provided that
Sellers may retain any copies of the foregoing as shall be necessary to comply
with applicable tax and other laws, regulations and ordinances.
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any charge, complaint, action,
suit, proceeding, hearing, investigation, 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 NMP, each of the other Parties will cooperate with
him or it and his, her or its counsel in
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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 Section 8 below).
(c) Transition. The Founders will not take any action that
primarily is designed or intended to have the effect of discouraging any lessor,
licenser, customer, supplier, or other business associate of NMP from
maintaining the same business relationships with NMP after the Closing for a
period of twenty-four (24) months thereafter as it maintained with NMP prior to
the Closing. The Founders will refer all customer inquiries relating to NMP's
Business to the Buyer and/or NMP from and after the Closing for a period of
twenty-four (24) months thereafter.
(d) Confidentiality. The Sellers will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement for a period of three (3)
years from the Closing, and except as otherwise permitted hereunder or as may be
required by law, deliver promptly to the Buyer or destroy, at the reasonable
request and option of the Buyer, all tangible embodiments (and all copies) of
the Confidential Information which are in its possession. In the event that the
Sellers are requested or required (by request for information or documents in
any legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar legal process) to disclose any Confidential Information, the Sellers
will notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the provisions
of this Section 6(d). If, in the absence of a protective order or the receipt of
a waiver hereunder, the Sellers are compelled to disclose any Confidential
Information or else stand liable for contempt, then Sellers may disclose the
Confidential Information; provided, however, that the Sellers shall use their
reasonable efforts to obtain, at the reasonable request of the Buyer, an order
or other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as the Buyer shall
reasonably designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the public immediately
prior to the time of disclosure.
(e) Termination of Bank Facilities; Release of Guaranties.
Sellers shall take all reasonable best efforts necessary to (i) retire all of
NMP's outstanding bank indebtedness and (ii) fully, completely and
unconditionally release and/or substitute Buyer or NMP at or prior to Closing as
guarantor for the Sellers on all leases of NMP or other guarantees.
(f) Monitoring Information. Prior to the Closing, each Party
shall deliver such information to the other Party as may reasonably be requested
by Buyer, NMP or Sellers.
(g) Landlords' Consents. On or before the Closing Date, NMP
shall obtain from its landlords (to the extent required under the pertinent
premises lease) written consent to the assignment of all leases being assumed by
Buyer, which assignments are deemed to have resulted from the transactions
contemplated by this Agreement.
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(h) Additional Tax Matters. Buyer and Sellers recognize that
each of them will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by the Buyer and/or NMP
to the extent such records and information pertain to events occurring on or
prior to the Closing Date; therefore, Buyer agrees to cause NMP to (A) use its
best efforts to properly retain and maintain such records for a period of six
(6) years from the date the Tax Returns for the year in which the Closing occurs
are filed or until the expiration of the statute of limitations as may be
extended by law from time to time that applies to the Tax Return in question
(i.e., including Tax Returns for years preceding the year in which the Closing
occurs), whichever is later, and (B) allow the Sellers and their agents and
representatives at times and dates mutually acceptable to the Parties, to
inspect, review and make copies of such records as such other party may deem
necessary or appropriate from time to time, such activities to be conducted
during normal business hours and at the other Party's expense.
(i) Covenant Not to Compete. For a period of three (3) years
from and after the Closing Date, the Founders will agree not to compete with
NMP's Business as provided in the Employment Agreement with each of the Founders
in the form of Exhibit E hereto. For purposes of this Agreement, the Parties
have agreed to allocate $50,000 of the Purchase Price and the payment of the
Earnout Notes to the covenants not to compete contained in the Employment
Agreements.
(j) Reorganization Intent. The Parties agree that the Merger
is intended to be a tax-free reorganization under Section 368 of the Code, and
this Agreement is intended to be a "plan of reorganization" within the meaning
of the regulations promulgated under such section of the Code. None of the
Parties has taken, shall take or fail to take any action that would jeopardize
the qualification of the Merger as such a tax-free reorganization (other than
actions contemplated by this Agreement or as may be otherwise legally required).
(k) Conduct During Earned Payout Period. Sellers acknowledge
and agree that, during the Earned Payout Period, Buyer shall be entitled to
oversee the operation and management of NMP's Business, including the setting of
goals and review of budgets and performance. The Founders further agree, during
the Earned Payout Period, not to allow NMP to cut staff, capital expenditures
and general and administrative expenses or take other actions that are not
consistent with NMP's prior practices and/or prudent business practices, and
Founders agree not and not to allow NMP to engage in any activity in order to
increase current year profits of the business of NMP at the expense of the
longer term growth of the business of NMP. During the Earned Payout Period, the
Buyer agrees that it will not (i) unreasonably require that the business of NMP
be operated substantially different as it was prior to the Merger except in so
far as the prior practices of NMP were imprudent or unreasonable or its
productivity efficiency and profitability can be improved and increased through
economies of scale, Buyer's experience or otherwise; (ii) unreasonably change
(A) the prices charged for NMP's services, (B) the level of compensation of
NMP's full-time corporate employees or (C) the level NMP's general and
administrative expenses, unless the prior business practices were unreasonable
or imprudent and/or unless the changes are reasonably necessary to support the
growth of NMP's business.
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(l) AppNet Options. Within seven (7) days after the Closing,
the Buyer shall deliver to certain employees of NMP mutually selected by Xxx
Xxxxx and Xxx Xxxxxxx, stock options covering 111,500 shares of Buyer Common
Stock at an exercise price of $3.00 per share.
7. Conditions to Obligations to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction or waiver of the following
conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Sellers shall have performed and complied with
all of their covenants hereunder in all Material respects through
the Closing;
(iii) NMP will have procured all third party consents
and given all notices required in connection with this Agreement and
the transactions contemplated hereby, including without limitation
all action necessary in connection with and/or the receipt of any
notices to, filings with, and authorizations, consents and approvals
of governments, governmental agencies, and third parties as set
forth herein or in the Disclosure Schedule including any Filing
required under the Xxxx-Xxxxx-Xxxxxx Act;
(iv) 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 wherein
an unfavorable judgment, order, decree, stipulation, injunction, or
charge would (A) prevent consummation of any of the transactions
contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation, or (C) affect adversely the right of the Buyer to own,
operate, or control NMP Shares or NMP (and no such judgment, order,
decree, stipulation, injunction, or charge shall be in effect);
(v) NMP shall have delivered to the Buyer a certificate
(without qualification as to knowledge or Materiality or otherwise)
to the effect that each of the conditions specified above in Section
7(a)(i)-(iv) is satisfied in all respects;
(vi) the acquisition by the Buyer of NMP Shares shall
represent one hundred percent (100%) of the issued and outstanding
capital stock of NMP and all of such NMP Shares shall be free and
clear of any Security Interests or other liens, claims or
encumbrances of any nature whatsoever;
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(vii) the Sellers shall have purchased any personal use
assets (e.g., automobiles) from NMP at a purchase price equal to the
greater of (A) the net book value of such assets as of the Closing
or (B) the outstanding Funded Indebtedness secured by such assets;
(viii) the Buyer shall have received from Sellers an
executed Escrow Agreement in the form and substance set forth as
Exhibit A attached hereto;
(ix) the Buyer shall have received from each Seller an
executed joinder to the Stockholders Agreement in the form and
substance set forth as Exhibit C attached hereto;
(x) the Buyer and NMP shall have received from Xxxxxxxx
X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxx, Xx. an
executed employment agreement in the form and substance attached
hereto as Exhibit E;
(xi) the Buyer shall have received from each Seller an
executed joinder to the Registration Agreement in the form and
substance set forth as Exhibit F attached hereto;
(xii) the Buyer shall have received the resignations,
effective as of the Closing, of each director of NMP prior to the
Closing and the termination in full without liability of any
consulting or management agreements with Columbia Capital or its
Affiliates;
(xiii) the Buyer shall be satisfied that the Net Worth
of NMP on the Stub Period End equaled or exceeded $1,300,000 or an
appropriate adjustment shall have been made to the Purchase Price as
provided in Section 2(i);
(xiv) the Buyer shall be satisfied that the Net Service
Revenues of NMP during the fiscal year ended December 31, 1997
equaled or exceeded $2,900,000 and during the six month period ended
on the Stub Period End equaled or exceeded $2,100,000;
(xv) the Buyer shall be satisfied that the Adjusted EBIT
of NMP during the fiscal year ended December 31, 1997 equaled or
exceeded $360,000 or 12.3% of Net Service Revenues for such fiscal
year and during the six month period ended on the Stub Period End
equaled or exceeded $31,500 or 1.5% of Net Service Revenues for such
period;
(xvi) the Buyer shall be satisfied in its sole
discretion with the results of its continuing legal, financial and
business due diligence investigations of NMP, all of which shall be
final and completed to Buyer's satisfaction prior to Closing;
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(xvii) no Material adverse change shall have occurred in
NMP's Business or its future prospects;
(xviii) Sellers shall have caused NMP to cancel each
outstanding phantom stock, deferred bonus or option plan, if any,
and all outstanding NMP Options shall have been canceled pursuant to
the Option Cancellation Agreement in the form of Exhibit I hereto;
(xix) Sellers shall have caused each party receiving
Buyer's Shares under this Agreement to execute an Equity
Subscription Agreement in the form of Exhibit D hereto;
(xx) all liens and Security Interests securing debts of
NMP which have been paid in full prior to or at the Closing shall
have been fully released of record to the reasonable satisfaction of
the Buyer and all Uniform Commercial Code financing statements
covering such debts shall have been terminated;
(xxi) no unsatisfied liens for the failure to pay Taxes
of any nature whatsoever shall exist against NMP (other than liens
for Taxes not yet due and payable and Taxes the payment of which are
being contested by NMP in good faith to the extent reserved against
in the Financial Statements), or against or in any way affecting any
NMP Share;
(xxii) the Sellers shall and NMP shall have caused all
of NMP's officers, directors and/or key employees of NMP to, have
repaid in full all debts and other obligations, if any, owed to NMP;
(xxiii) the Buyer shall have received from NMP the
Financial Statements;
(xxiv) all appropriate corporate and shareholder
authorizations of NMP shall have been obtained;
(xxv) since December 31, 1997, NMP shall have made no
dividend, consulting or other payment to the Sellers, except as set
forth on Section 4(m) of the Disclosure Schedule and bonuses as set
forth on Section 4(m) of the Disclosure Schedule;
(xxvi) except as set forth on the Disclosure Schedule,
since December 31, 1997, NMP shall not have transferred, conveyed,
disposed of and/or sold any of Material assets, except in the
Ordinary Course of Business;
(xxvii) all Intellectual Property created or developed
by any Seller and any other current employee of NMP that has been
used historically by NMP or is being used currently by NMP (other
than "work for hire" which has been developed by NMP for a customer
and continues to be used by NMP in the
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performance of continuing services for that customer) shall be one
hundred percent (100%) owned by NMP as of the Closing Date;
(xxviii) the Buyer and Newco shall have received from
NMP an opinion of counsel in the form and substance set forth as
Exhibit G hereto; and
(xxix) at least ninety-five percent (95%) of all
shareholders of NMP shall have agreed to participate in the Merger
without any dissenter's rights exercised.
The Buyer may waive any condition specified in this Section 7(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligations of the Sellers. The obligations
of the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction or waiver of the
following conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all Material
respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all Material respects through the
Closing;
(iii) Buyer will have procured all third party consents
needed by Buyer and given all notices required in connection with
this Agreement and the transactions contemplated hereby, including
without limitation all action necessary in connection with and/or
the receipt of any notices to, filings with, and authorizations,
consents and approvals of governments, governmental agencies, and
third parties as set forth herein or in the Disclosure Schedule
including any filing required under the Xxxx-Xxxxx-Xxxxxx Act;
(iv) the Buyer shall have issued the Buyer Options to
the NMP Optionholders to satisfy and secure the cancellation of the
NMP Options;
(v) 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 wherein
an unfavorable judgment, order, decree, stipulation, injunction, 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 judgment, order, decree, stipulation,
injunction, or charge shall be in effect);
(vi) the Buyer shall have delivered to the Sellers a
certificate (without qualification as to knowledge or Materiality or
otherwise) to the effect that each of the conditions specified above
in Section 7(b)(i)-(iii) is satisfied in all respects;
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(vii) Sellers shall have received from the Buyer an
executed Escrow Agreement in the form and substance set forth as
Exhibit A attached hereto;
(viii) each Seller shall have received from the Buyer an
executed joinder to the Stockholders Agreement in the form and
substance set forth as Exhibit C attached hereto;
(ix) the Buyer shall execute and deliver an Equity
Subscription Agreement in the form of Exhibit D hereto, with each of
the Sellers acquiring Buyer Shares;
(x) Xxxxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx and Xxxxxxxx
X. Xxxxxxx, Xx. shall have received from the Buyer an executed
employment agreement, in the form and substance attached hereto as
Exhibit E;
(xi) each Seller shall have received from the Buyer an
executed joinder to the Registration Agreement in the form and
substance set forth as Exhibit F attached hereto;
(xii) the Sellers shall be satisfied in their sole
discretion with the results of its continuing legal, financial and
business due diligence investigations of Buyer, all of which shall
be final and completed to Sellers' satisfaction prior to Closing;
(xiii) the Sellers' Representatives shall have received,
in form and substance reasonably satisfactory to him or her, an
opinion of Hunton & Xxxxxxxx to the effect that, for federal income
tax purposes, the Merger will qualify as a "reorganization" under
Section 368(a) of the Code;
(xiv) the Sellers shall have received from Buyer and
Newco an opinion of counsel in the form and substance set forth as
Exhibit H hereto; and
(xv) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Sellers.
The Sellers' Representatives may waive any condition specified in
this Section 7(b) if they execute a writing so stating at or prior to the
Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival. All of the representations and warranties of the
Sellers contained in Section 4 above (other than the representations and
warranties of the Sellers contained in Section 4(h) above) shall survive the
Closing hereunder (even if the Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of the Closing) and continue
in full force and effect for a period ending on March 31, 2001. All of the
representations and warranties of
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the Buyer shall survive the Closing hereunder and continue in full force and
effect for a period ending on March 31, 2001. The other representations,
warranties, and covenants of the Parties contained in this Agreement (including
the representations and warranties of the Sellers contained in Section 4(h)
above) shall survive the Closing (even if the damaged Party knew or had reason
to know of any misrepresentation or breach of warranty or covenant at the time
of the Closing) and continue in full force and effect for the applicable statute
of limitations period thereafter, except as otherwise provided elsewhere in this
Agreement.
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(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event NMP or the Sellers, as applicable,
breach any of their representations, warranties, agreements, and
covenants contained herein, (other than a breach by a Seller of
his/her individual representations and warranties, which are
addressed in Section (8)(b)(ii) below) and provided that the
particular representation, warranty, agreement, or covenant survives
the Closing and that the Buyer makes a written claim for
indemnification against the Sellers pursuant to Section 10(h) below
within the applicable survival period, then the Sellers agree,
without affecting the right of contribution which such Sellers shall
have among themselves with respect to this Section 8(b), to jointly
and severally indemnify the Buyer from and against the entirety of
any Adverse Consequences the Buyer may suffer through and after the
date of the claim for indemnification (including any Adverse
Consequences the Buyer may suffer after the end of the applicable
survival period resulting from, arising out of, relating to, in the
nature of, or caused by the breach; provided, however, that the
Sellers shall not have any obligation to indemnify the Buyer from
and against any Adverse Consequences resulting from, arising out of,
relating to, in the nature of, or caused by the breach of any
representation or warranty or covenant of Sellers in this Agreement
(i) until the Buyer has suffered aggregate losses by reason of all
such breaches in excess of a $50,000 threshold (at which point the
Sellers will be obligated to indemnify the Buyer from and against
all such aggregate indemnifiable losses relating back to the first
dollar) or (ii) in excess of 25% of the actual Purchase Price paid
to Sellers (after which point Sellers shall have no obligation to
indemnify Buyer from and against further such Adverse Consequences);
provided, further, however, that the limitations set forth (a) in
(i) and (ii) above specifically shall not apply to the liability of
Sellers with respect to Adverse Consequences resulting from or
attributable to intentional fraud by the Sellers and (b) in (i)
above (but not (ii) above) specifically shall not apply to the
liability of Sellers with respect to any breaches of the
representations and warranties contained in Section 4(g), Section
4(h) and Section 4(n) hereof. Notwithstanding the foregoing, the
liability of each Seller shall, in all events, be limited to 25% of
the portion of the Purchase Price actually received by such Seller
(other than in the case of intentional fraud by such Seller and
other than the breach by a Seller of his/her individual
representatives and warranties in Section 3(a)).
(ii) In the event any Seller breaches any of its
representations and warranties, contained in Section 3(a) herein,
and provided that the particular representation, warranty, or
covenant survives the Closing and that the Buyer makes a written
claim for indemnification against such Seller pursuant to Section
10(h) below within the applicable survival period, then, subject to
the limitations set forth in Section 8(b)(i) above, such Seller
agrees to indemnify the Buyer from and against the entirety of any
Adverse Consequences the Buyer may suffer through and after the date
of the claim for indemnification (including any Adverse Consequences
the
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Buyer may suffer after the end of the applicable survival period)
resulting from, arising out of, relating to, in the nature of, or
caused by the breach.
(iii) The Sellers agree to indemnify the Buyer from and
against the entirety of any transfer Taxes which may become due and
owing by reason of the transactions contemplated by this Agreement.
(iv) The Sellers agree to indemnify the Buyer from and
against the entirety of any brokerage fees or investment banking
commissions due by Sellers or NMP by reason of the transactions
contemplated by this Agreement.
(v) The Parties shall make appropriate adjustments for
tax and insurance benefits in determining the liability of the
Sellers under this Section 8.
(c) Indemnification Provisions for Benefit of the Sellers. In
the event the Buyer breaches any of its representations, warranties, and
covenants contained herein, and provided that the particular representation,
warranty, or covenant survives the Closing and that the Sellers make a written
claim for indemnification against the Buyer pursuant to Section 10(h) below
within the applicable survival period, then the Buyer agrees to indemnify the
Sellers from and against the entirety of any Adverse Consequences in excess of
$50,000 threshold (at which point the Buyer will be obligated to indemnify the
Sellers from and against all such aggregate indemnifiable losses including
losses relating back to the first dollar) up to a maximum of $2,000,000, the
Sellers may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Sellers may suffer after the end of the
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach; provided, however, that the limitation set
forth above shall not apply to the liability of Buyer with respect to Adverse
Consequences resulting from or attributable to intentional fraud by the Buyer.
(d) Matters Involving Third Parties. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 8, then the Indemnified Party shall
notify in writing each Indemnifying Party thereof promptly, which notice shall
describe the matter in reasonable detail, including relevant evidence and
estimated loss; provided, however, that no delay on the part of the Indemnified
Party in notifying any Indemnifying Party shall relieve the Indemnifying Party
from any liability or obligation hereunder unless (and then solely to the
extent) the Indemnifying Party thereby is damaged and materially prejudiced from
adequately defending such claim. In the event any Indemnifying Party notifies
the Indemnified Party within thirty (30) days after the Indemnified Party has
given notice of the matter that the Indemnifying party is assuming the defense
thereof, (A) the Indemnifying Party will defend the Indemnified Party against
the matter with counsel of its choice reasonably satisfactory to the Indemnified
Party, (B) the Indemnified Party may retain separate co-counsel at its sole cost
and expense (except that the Indemnifying Party will be responsible for the fees
and expenses of the separate co-counsel to the extent the Indemnified Party
reasonably concludes that the counsel the Indemnifying Party has selected has a
conflict of interest), (C) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement or compromise with respect to the
-46-
matter without the written consent of the Indemnifying Party (not to be withheld
unreasonably), and (D) the Indemnifying Party will not consent to the entry of
any judgment with respect to the matter, or enter into any settlement or
compromise which does not include a provision whereby the plaintiff or claimant
in the matter releases the Indemnified Party from all Liability with respect
thereto, without the written consent of the Indemnified Party (not to be
withheld unreasonably). In the event no Indemnifying Party notifies in writing
the Indemnified Party within thirty (30) days after the Indemnified Party has
given notice of the matter that the Indemnifying Party is assuming the defense
thereof, however, the Indemnified Party may defend against, or enter into any
settlement with respect to, the matter in any manner it reasonably may deem
appropriate. At any time after commencement of any such action, any Indemnifying
Party may request an Indemnified Party to accept a bona fide offer from the
other Party(ies) to the action for a monetary settlement payable solely by such
Indemnifying Party (which does not burden or restrict the Indemnified Party nor
otherwise prejudice him or her) whereupon such action shall be taken unless the
Indemnified Party determines that the dispute should be continued, the
Indemnifying Party shall be liable for indemnity hereunder only to the extent of
the lesser of (i) the amount of the settlement offer or (ii) the amount for
which the Indemnified Party may be liable with respect to such action. In
addition, the Party controlling the defense of any third party claim shall
deliver, or cause to be delivered, to the other Party copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the defense of the third party
claim, and timely notices of, and the right to participate in (as an observer)
any hearing or other court proceeding relating to the third party claim.
(e) Exclusive Remedy. The Parties acknowledge and agree that
the foregoing indemnification provisions in this Section 8 shall be the
exclusive monetary remedy of the Parties for any breach of the representations,
warranties and covenants of the Parties contained in this Agreement.
(f) Payment; General Right of Offset. The Indemnifying Parties
shall promptly pay to the Indemnified Party as may be entitled to indemnity
hereunder in cash the amount of any Adverse Consequences to which such
Indemnified Party may become entitled to by reason of the provisions of Section
2 or Section 8 of this Agreement. Such amount of Adverse Consequences shall be
due and payable upon the earlier of (i) 30 days after written notice of an
indemnification claim by the Indemnified Party and such claim has not been
disputed by the Indemnifying Parties or their representatives (in the case of
Sellers) in writing; (ii) 10 days after Indemnifying Parties' have agreed in
writing that such amount of Adverse Consequences is their obligation; and (iii)
10 days after written notice of an order from the arbitrator(s) retained in
accordance with Section 8(h) below requiring the Indemnified Parties to pay such
amount to the Indemnified Party. Notwithstanding the foregoing, in connection
with the indemnification of Buyer pursuant to Section 8(b)(i), Section
8(b)(iii), Section 8(b)(iv) or Section 8(b)(v), (i) Buyer shall first seek
indemnification payments through offset against the Contingent Cash Payment and
the Earned Payout Amount, after an indemnification claim has been made therefor,
for the amount of any Adverse Consequences or any other payments to which Buyer
may become entitled to by reason of the provisions of this Agreement and (ii)
any one or more of the Sellers shall have the option to satisfy such Seller's
obligation to the Buyer under Section 8(b) by surrendering to Buyer that portion
of the Stock Portion of the Purchase Price required to fund that obligation
(with such
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surrendered Stock valued at the greater of (A) such Stock's then fair market
value (as determined in good faith by the Buyer's Board of Directors) or (B) the
value stated in Section 2(h)).
(g) Other Indemnification Provisions. Subject in all events to
the time limitations set forth in Section 8(a) and the monetary and other
limitations in Section 8(b) and 8(d), the foregoing indemnification provisions
are in addition to, and not in derogation of, any statutory or common law remedy
any Party may have for breach of representation, warranty, or covenant.
(h) Arbitration with Respect to Certain Indemnification
Matters. THE PARTIES AGREE TO SUBMIT TO ARBITRATION, IN ACCORDANCE WITH THESE
PROVISIONS, ANY DISPUTED CLAIM OR CONTROVERSY ARISING FROM OR RELATED TO THE
ALLEGED BREACH OF THIS AGREEMENT OR ANY DISPUTED INDEMNIFICATION CLAIM MADE
PURSUANT TO THIS SECTION 8. THE PARTIES FURTHER AGREE THAT THE ARBITRATION
PROCESS AGREED UPON HEREIN SHALL BE THE EXCLUSIVE MEANS FOR RESOLVING ALL
DISPUTES MADE SUBJECT TO ARBITRATION HEREIN, BUT THAT NO ARBITRATOR SHALL HAVE
AUTHORITY TO EXPAND THE SCOPE OF THESE ARBITRATION PROVISIONS. ANY ARBITRATION
HEREUNDER SHALL BE CONDUCTED UNDER THE COMMERCIAL ARBITRATION RULES OF THE
AMERICAN ARBITRATION ASSOCIATION (AAA). EITHER PARTY MAY INVOKE ARBITRATION
PROCEDURES HEREIN BY WRITTEN NOTICE FOR ARBITRATION CONTAINING A STATEMENT OF
THE MATTER TO BE ARBITRATED. THE PARTIES SHALL THEN HAVE FOURTEEN (14) DAYS IN
WHICH THEY MAY IDENTIFY A MUTUALLY AGREEABLE, NEUTRAL ARBITRATOR. AFTER THE
FOURTEEN (14) DAY PERIOD HAS EXPIRED, THE PARTIES SHALL PREPARE AND SUBMIT TO
THE AAA A JOINT SUBMISSION, WITH EACH PARTY TO CONTRIBUTE HALF OF THE
APPROPRIATE ADMINISTRATIVE FEE. IN THE EVENT THE PARTIES CANNOT AGREE UPON A
NEUTRAL ARBITRATOR WITHIN FOURTEEN (14) DAYS AFTER WRITTEN NOTICE FOR
ARBITRATION IS RECEIVED, THEIR JOINT SUBMISSION TO THE AAA SHALL REQUEST
ARBITRATORS WHO ARE PRACTICING ATTORNEYS WITH PROFESSIONAL EXPERIENCE IN THE
FIELD OF CORPORATE LAW, AND THE PARTIES SHALL ATTEMPT TO SELECT AN ARBITRATOR
FROM THE PANEL ACCORDING TO AAA PROCEDURES. UNLESS OTHERWISE AGREED BY THE
PARTIES, THE ARBITRATION HEARING SHALL TAKE PLACE IN THE WASHINGTON, D.C.
METROPOLITAN AREA, AT A PLACE DESIGNATED BY THE AAA. ALL ARBITRATION PROCEDURES
HEREUNDER SHALL BE CONFIDENTIAL. EACH PARTY SHALL BE RESPONSIBLE FOR ITS COSTS
INCURRED IN ANY ARBITRATION, AND THE ARBITRATOR SHALL NOT HAVE AUTHORITY TO
INCLUDE ALL OR ANY PORTION OF SAID COSTS IN AN AWARD REGARDLESS OF WHICH PARTY
PREVAILS. THE ARBITRATOR MAY INCLUDE EQUITABLE RELIEF. ANY ARBITRATION AWARDED
SHALL BE ACCOMPANIED BY A WRITTEN STATEMENT CONTAINING A SUMMARY OF THE ISSUES
IN CONTROVERSY, A DESCRIPTION OF THE AWARD, AND AN EXPLANATION OF THE REASONS
FOR THE AWARD.
9. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
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(i) the Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing in
the event the Sellers are in breach of any representation, warranty,
or covenant contained in this Agreement in any Material respect and
such breach has not been cured within ten (10) days of written
notice thereof, and the Sellers may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing
in the event the Buyer is in breach of any representation, warranty,
or covenant contained in this Agreement in any Material respect and
such breach has not been cured within ten (10) days of written
notice thereof;
(iii) the Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the Closing if
the Closing shall not have occurred on or before October 16, 1998 by
reason of the failure of any condition precedent under Section 7(a)
hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in
this Agreement); or
(iv) the Sellers may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing if the
Closing shall not have occurred on or before October 16, 1998 by
reason of the failure of any condition precedent under Section 7(b)
hereof (unless the failure results primarily from the Sellers
himself or itself breaching any representation, warranty, or
covenant contained in this Agreement).
Nothing contained in this Section 9(a) shall alter, affect, modify
or restrict any Parties' rights to rely on and/or seek indemnification for a
breach of any of the representations and warranties and/or conditions or
covenants of any of the Parties contained in this Agreement.
(b) Effect of Termination. If either Buyer or Sellers
terminate this Agreement pursuant to Section 9(a) above, all obligations of the
Parties hereunder shall terminate without any Liability of any Party to any
other Party.
10. Miscellaneous.
(a) [Reserved]
(b) Press Releases and Announcements. Except as may be
required by applicable securities laws or stock exchange requirements, no Party
shall issue any press release or public announcement relating to the subject
matter of this Agreement prior to, at or about the Closing without the prior
written approval of the Buyer and the Sellers, which written approval will not
be unreasonably withheld; provided, however, that any Party may make any public
disclosure it believes in good faith is required by law or regulation (in which
case the disclosing Party will advise the other Parties prior to making the
disclosure).
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(c) 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.
(d) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, that may have related in any way to the subject
matter hereof; provided, however, that unless and until the consummation of the
purchase and sale transaction contemplated hereunder occurs, the Confidentiality
Agreement shall remain in full force and effect.
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his, her or its rights, interests, or obligations hereunder without the
prior written approval of the Buyer and the Sellers; provided, however, that the
Buyer or Newco may assign (i) any or all of its rights and interests hereunder
to a wholly-owned Subsidiary of Buyer (in any or all of which cases the Buyer
and Newco nonetheless shall remain liable and responsible for the performance of
all of its respective obligations hereunder) or (ii) any or all of its rights
under Section 8 of the Agreement to any lender providing debt financing to the
Buyer or its Affiliates.
(f) Facsimile/Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. 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.
(g) Descriptive Headings. The descriptive section headings
contained in this Agreement are inserted for convenience or reference only and
shall not control or affect in any way the meaning, interpretation, or
construction of any of the provisions of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
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If to NMP or the Sellers:
Xxxxxxxx X. Xxxxxxx, President and Sellers' Representative
NMP, Inc.
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
and to:
Xxxx Xxxxxx, Sellers' Representative
c/o Columbia Capital
000 X. Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Hunton & Xxxxxxxx
000 Xxxxxxxx Xx.
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to the Buyer:
AppNet Systems, Inc.
0000X Xxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
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with a copy to:
Xxxxx & Xxxxxxx L.L.P.
000 Xxxxxxxxxx Xxxxxx, XX
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail, or
electronic mail), but no such notice, request, demand, claim, or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any Party may
change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
(i) Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA WITHOUT GIVING
EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE
COMMONWEALTH OF VIRGINIA OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE COMMONWEALTH OF
VIRGINIA.
(j) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Sellers. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a
court of competent jurisdiction declares that any term or provision hereof is
invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
-52-
(l) Expenses. Each of the Parties and NMP will bear his, her
or its own costs and expenses (including legal fees and expenses and investment
banking fees) incurred in connection with this Agreement and the transactions
contemplated hereby. Buyer and Sellers agree that NMP's expenses shall be
included as Funded Indebtedness. The Sellers acknowledge and agree that NMP has
not borne or will bear any of the Sellers' costs and expenses (including any of
its legal fees and expenses and investment banking fees) in connection with this
Agreement or any of the transactions contemplated hereby.
(m) Construction. The language used in this Agreement will be
deemed to be the language chosen by the Parties to express their mutual intent,
and no rule of strict construction shall be applied against any Party. 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 Parties intend that each representation,
warranty, and covenant contained herein shall have independent significance. If
any Party has breached any representation, warranty, or covenant relating to the
same subject matter as any other representation, warranty or covenant
(regardless of the relative levels of specificity) which the Party has not
breached, it shall not detract from or mitigate the fact that the Party is in
breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
(o) 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.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
as of the date first above written.
BUYER:
APPNET SYSTEMS, INC.
By: /s/ Xxxxxxxx X. XxXxxxx
--------------------------------------
Name: Xxxxxxxx X. XxXxxxx
-------------------------------
Title: Vice President, Secretary
-------------------------------
and Treasurer
-------------------------------
NEWCO:
NMP ACQUISITION SUB #1, INC.
By: /s/ Xxxxxxxx X. XxXxxxx
--------------------------------------
Name: Xxxxxxxx X. XxXxxxx
-------------------------------
Title: Vice President, Secretary
-------------------------------
and Treasurer
-------------------------------
NMP:
NEW MEDIA PUBLISHING, INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxxx Xxxxxxx
-------------------------------
Title: President
-------------------------------
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SELLERS:
/s/ Xxxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxxx X. Xxxxxxx, Xx.
-----------------------------------------
Xxxxxxxx X. Xxxxxxx, Xx.
/s/ Xxxxx X. Xxxxxx
-----------------------------------------
Xxxxx X. Xxxxxx
COLUMBIA NMP INVESTORS, L.L.C.,
a Virginia limited liability company
By: Columbia Capital Corporation
Its: Managing Member
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx
Vice President
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