1
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
EXECUTIVE VENTURE PARTNERS, LTD.
BRAINWORKS VENTURES, INC.,
EVP ACQUISITION CORPORATION
AND
THE STOCKHOLDERS OF EXECUTIVE VENTURE PARTNERS, LTD.
SIGNATORY HERETO
AS OF MAY 8, 2001
2
TABLE OF CONTENTS
ARTICLE I. TERMS OF MERGER.................................................. 2
SECTION 1.01 Merger......................................... 2
SECTION 1.02 Time and Place of Closing...................... 2
SECTION 1.03 Effective Time................................. 2
ARTICLE II. ARTICLES, BYLAWS, MANAGEMENT 2
SECTION 2.01 Articles of Incorporation...................... 2
SECTION 2.02 Bylaws......................................... 2
SECTION 2.03 Directors and Officers......................... 2
ARTICLE III. MANNER OF CONVERTING AND EXCHANGING SHARES....................... 3
SECTION 3.01 Conversion of Shares........................... 3
SECTION 3.02 Exchange of Shares............................. 3
SECTION 3.03 Anti-Dilution Provisions....................... 4
SECTION 3.04 Shares Held by TARGET or PURCHASER............. 4
SECTION 3.05 Status of TARGET after the Effective Time...... 4
SECTION 3.06 Rights of Former TARGET Stockholders........... 4
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TARGET......................... 5
SECTION 4.01 Organization, Standing and Power............... 5
SECTION 4.02 Authority; No Breach........................... 5
SECTION 4.03 Capital Stock.................................. 6
SECTION 4.04 Financial Statements........................... 6
SECTION 4.05 Absence of Undisclosed Liabilities............. 6
SECTION 4.06 Absence of Certain Changes of Events........... 6
SECTION 4.07 Tax Matters.................................... 6
SECTION 4.08 TARGET Patents, Trademarks and Trade Names..... 7
SECTION 4.09 Proprietary Information........................ 7
SECTION 4.10 Assets......................................... 7
SECTION 4.11 Material Contracts............................. 8
SECTION 4.12 Legal Proceedings.............................. 8
SECTION 4.13 Statements True and Correct.................... 8
SECTION 4.14 Charter Provisions............................. 8
SECTION 4.15 No Subsidiaries................................ 8
SECTION 4.16 Compliance with Laws........................... 8
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER...................... 9
SECTION 5.01 Organization, Standing and Power............... 9
SECTION 5.02 Authority; No Breach........................... 9
SECTION 5.03 Capital Stock.................................. 10
SECTION 5.04 PURCHASER SEC Reports.......................... 10
SECTION 5.05 Financial Statements........................... 11
SECTION 5.06 Absence of Undisclosed Liabilities............. 11
SECTION 5.07 Absence of Certain Changes or Events........... 11
SECTION 5.08 Tax Matters.................................... 12
3
SECTION 5.09 Environmental Matters.......................... 12
SECTION 5.10 Compliance with Laws........................... 13
SECTION 5.11 Legal Proceedings.............................. 14
SECTION 5.12 Reports........................................ 14
SECTION 5.13 Statements True and Correct.................... 14
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB....... 14
SECTION 6.01 Organization, Standing and Power............... 14
SECTION 6.02 Authority; No Breach........................... 15
ARTICLE VII. ADDITIONAL AGREEMENTS............................................ 16
SECTION 7.01 Employee Benefits and Contracts................ 16
SECTION 7.02 Indemnification Against Certain Liabilities.... 16
SECTION 7.03 Tax Reporting.................................. 16
ARTICLE VIII. CLOSING DELIVERIES............................................... 16
SECTION 8.01 Deliveries by TARGET........................... 16
SECTION 8.02 Deliveries by PURCHASER and MERGER SUB......... 17
SECTION 8.03 Deliveries by Others........................... 17
ARTICLE IX. ESCROW AND INDEMNIFICATION....................................... 17
SECTION 9.01 Escrow Fund.................................... 17
SECTION 9.02 Indemnification................................ 18
SECTION 9.03 Escrow Period: Release From Escrow............. 19
SECTION 9.04 Claims Upon Escrow Fund........................ 19
SECTION 9.05 Objections to Claims........................... 20
SECTION 9.06 Resolution of Conflicts and Arbitration........ 20
SECTION 9.07 Stockholders' Agent............................ 21
SECTION 9.08 Actions of the Stockholders' Agent............. 21
SECTION 9.09 Third-Party Claims............................. 21
ARTICLE X. MISCELLANEOUS.................................................... 22
SECTION 10.01 Definitions.................................... 22
SECTION 10.02 Expenses....................................... 27
SECTION 10.03 Brokers and Finders............................ 27
SECTION 10.04 Entire Agreement............................... 27
SECTION 10.05 Amendments..................................... 28
SECTION 10.06 Waivers........................................ 28
SECTION 10.07 Assignment..................................... 28
SECTION 10.08 Notices........................................ 28
SECTION 10.09 Governing Law.................................. 29
SECTION 10.10 Counterparts................................... 29
SECTION 10.11 Captions....................................... 29
SECTION 10.12 Enforcement of Agreement....................... 29
SECTION 10.13 Severability................................... 29
SECTION 10.14 Survival....................................... 30
SECTION 10.15 Fax Execution.................................. 30
ii
4
LIST OF EXHIBITS
EXHIBIT NUMBER DESCRIPTION
- -------------- -----------
1 Articles of Incorporation of TARGET (Section 2.01).
2 Form of Investor Representation Statement (Section 8.01(c)).
3 Form of Registration Rights Agreement (Section 8.01(c)).
4 Form of Escrow Agreement (Section 8.01(e)).
iii
5
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and
entered into as of May 8, 2001, by and among EXECUTIVE VENTURE PARTNERS, LTD.
("TARGET"), a corporation organized and existing under the laws of The
Commonwealth of Massachusetts, with its principal office located at 35 Flagg
Road, Southborough, Massachusetts 01772, BRAINWORKS VENTURES, INC.
("PURCHASER"), a corporation organized and existing under the laws of the State
of Nevada, with its principal office located at 101 Marietta Street, Suite 3450,
Atlanta, Georgia 30303, the stockholders of TARGET signatory hereto and EVP
ACQUISITION CORPORATION ("MERGER SUB"), a corporation organized and existing
under the laws of the State of Georgia and a wholly-owned subsidiary of
PURCHASER.
PREAMBLE
Certain terms used in this Agreement are defined in Section 10.01
hereof.
The Boards of Directors of TARGET, MERGER SUB and PURCHASER are of
the opinion that the transactions described herein are in the best interests of
the parties and their respective stockholders. This Agreement provides for the
combination of TARGET with MERGER SUB by virtue of the merger of TARGET with and
into MERGER SUB, as a result of which the outstanding shares of the capital
stock of TARGET (to the extent provided herein) shall be converted into the
right to receive the merger consideration provided for herein, and the
stockholders of TARGET shall become stockholders of PURCHASER. The transactions
described in this Agreement are subject to the satisfaction of certain
conditions described in this Agreement.
Following the Closing of the Merger, MERGER SUB will be operated as a
separate subsidiary of PURCHASER.
W I T N E S S E T H
WHEREAS, the respective Boards of Directors of PURCHASER, MERGER SUB
and TARGET each have approved this Agreement and the merger of TARGET with and
into MERGER SUB upon the terms and conditions contained herein;
WHEREAS, PURCHASER, as the sole shareholder of MERGER SUB, has
approved this Agreement, the Merger and the transactions contemplated hereby
pursuant to action taken by written consent in accordance with Section 14-2-720
of the OCGA and the Articles of Incorporation and Bylaws of MERGER SUB;
WHEREAS, the stockholders of TARGET, all of whom are signatory
hereto, agree that the execution and delivery of this Agreement by them shall
constitute (i) their mutual consent and agreement to terminate that certain
Common Shareholders' Agreement among TARGET and each of the stockholders of
TARGET and all of such stockholders' rights thereunder; and (ii) their approval
of this Agreement, the Merger and the transactions contemplated hereby by
unanimous written consent in accordance with Section 43 of the MassBCL and the
Articles of Organization and Bylaws of TARGET;
6
NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:
ARTICLE I.
TERMS OF MERGER
SECTION 1.01 MERGER. Subject to the terms and conditions of this
Agreement, at the Effective Time, TARGET shall be merged with and into MERGER
SUB in accordance with the provisions of Section 14-2-1107 of the OCGA and with
the effect provided in Section 14-2-1106 of the OCGA and the provisions of
Section 79 of the MassBCL (the "Merger"). MERGER SUB shall be the Surviving
Corporation resulting from the Merger and a wholly-owned subsidiary of
PURCHASER. The Merger shall be consummated pursuant to the terms of this
Agreement.
SECTION 1.02 TIME AND PLACE OF CLOSING. The Closing shall take place at
10:00 a.m. on the date that the Effective Time occurs or at such other time as
the Parties, acting through their chief executive officers or chief financial
officers, and each of the stockholders of TARGET signatory hereto may mutually
agree (the "Closing Date"). The place of Closing shall be at the offices of
Rogers & Hardin LLP located at 229 Peachtree Street, NE, 2700 International
Tower, Atlanta, Georgia 30303, or such other place as may be mutually agreed
upon by the Parties and each of the stockholders of TARGET signatory hereto.
SECTION 1.03 EFFECTIVE TIME. The Merger and other transactions
contemplated by this Agreement shall become effective on the later of (a) the
date and the time the Articles of Merger reflecting the Merger shall be filed
with the Secretary of State of The Commonwealth of Massachusetts in accordance
with Section 79 of the MassBCL or (b) the date and at the time the Certificate
of Merger reflecting the Merger shall be filed with the Secretary of State of
the State of Georgia in accordance with the relevant provisions of the OCGA (the
"Effective Time"). Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon in writing by the chief executive officers of each Party,
the Parties shall use their reasonable efforts to cause the Effective Time to
occur (a) on the date hereof; or (b) such later date as may be mutually agreed
upon in writing by the chief executive officers of each Party and by each
stockholder of TARGET signatory hereto.
ARTICLE II.
ARTICLES, BYLAWS, MANAGEMENT
SECTION 2.01 ARTICLES OF INCORPORATION. The Articles of Incorporation
of MERGER SUB in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation until otherwise amended
or repealed; provided, however that at the Effective Time of the Merger, Article
I of the Articles of Incorporation of MERGER SUB shall be amended to read in its
entirety: "The Name of the Corporation is Executive Venture Partners, Inc." A
current copy of the Articles of Incorporation of MERGER SUB is attached as
Exhibit 1 to this Agreement.
SECTION 2.02 BYLAWS. The Bylaws of MERGER SUB in effect immediately
prior to the Effective Time shall be the Bylaws of the Surviving Corporation
until otherwise amended or repealed.
SECTION 2.03 DIRECTORS AND OFFICERS. The Officers of TARGET immediately
prior to the Effective Time shall continue to serve as Officers of the Surviving
Corporation. The Directors of MERGER SUB immediately prior to the Effective Time
shall continue to serve as the Directors of the Surviving Corporation.
2
7
ARTICLE III.
MANNER OF CONVERTING AND EXCHANGING SHARES
SECTION 3.01 CONVERSION OF SHARES. Subject to the provisions of this
Article III, at the Effective Time, by virtue of the Merger and without any
action on the part of the holders thereof, the shares of TARGET shall be
converted as follows:
(a) Subject to the remaining provisions of this Section 3.01, each
share of TARGET Common Stock outstanding immediately prior to the Effective
Time, other than shares held by PURCHASER or any of the PURCHASER Subsidiaries,
in each case other than in a fiduciary capacity or as a result of debts
previously contracted (the "Outstanding TARGET Shares"), shall automatically be
converted at the Effective Time into the right to receive twenty (20) whole
shares of PURCHASER Common Stock and each holder of a certificate or
certificates theretofore representing Outstanding TARGET Shares immediately
prior to the Effective Time shall thereafter surrender such certificate or
certificates and shall be entitled, upon such surrender, to receive in exchange
therefor a certificate or certificates for the aggregate number of shares of
PURCHASER Common Stock to which such holder is entitled pursuant to this Section
3.01 (the "Stock Consideration").
(b) Except as contemplated in Section 3.01 hereof, each share of
the TARGET Common Stock that is not an Outstanding TARGET Share, as of the
Effective Time shall be cancelled without consideration therefor.
(c) Notwithstanding anything herein to the contrary, 31,252 shares
of PURCHASER Common Stock comprising the Stock Consideration that the Warranting
Stockholders would otherwise be entitled to receive (collectively, the "Escrow
Shares") shall be issued in the name of the Escrow Agent as nominee for the
Warranting Stockholders, which Escrow Shares shall be allocated pro rata among
the Warranting Stockholders on the basis of their ownership of shares of TARGET
Common Stock unless they agree to a different allocation. The Escrow Shares
shall be beneficially owned by the Warranting Stockholders pro rata, as
described in the preceding sentence, and the Escrow Shares shall be held in
escrow and shall be available to compensate PURCHASER for certain damages as
provided in Article IX. To the extent not used for such purposes, the Escrow
Shares shall be released, all as provided in Article IX hereof.
SECTION 3.02 EXCHANGE OF SHARES.
(a) From and after the Effective Time, upon exchange of a
certificate or certificates which immediately prior thereto represents
outstanding shares of TARGET Common Stock, a TARGET stockholder shall be
entitled to receive, upon surrender to PURCHASER of such certificate or
certificates duly endorsed in blank or accompanied by appropriate stock powers
executed in blank, (i) one or more certificates as requested by such stockholder
(properly issued, executed and countersigned, as appropriate) representing that
number of whole shares of PURCHASER Common Stock representing the Stock
Consideration to which such stockholder shall have become entitled pursuant to
the provisions of Section 3.01 hereof, and all of the certificate or
certificates for such TARGET Common Stock so surrendered shall forthwith be
canceled. No portion of the Stock Consideration to be received pursuant to
Section 3.01 hereof upon exchange of a certificate may be issued or paid to a
person other than the person in whose name the certificate surrendered in
exchange therefor is registered. From the Effective Time until surrender in
accordance with the provisions of this Section 3.02, each certificate shall
represent for all purposes only the right to receive the Stock Consideration
provided in Section 3.01 hereof. All payments in
3
8
respect of shares of TARGET Common Stock that are made in accordance with the
terms hereof shall be deemed to have been made in full satisfaction of all
rights pertaining to such securities.
(b) In the case of any lost, mislaid, stolen or destroyed
certificate, the TARGET stockholder may be required, as a condition precedent to
delivery to the stockholder of the consideration described in Section 3.01
hereof, to deliver to PURCHASER a reasonably satisfactory indemnity agreement as
PURCHASER may direct as indemnity against any claim that may be made against
PURCHASER or the Surviving Corporation with respect to the certificate alleged
to have been lost, mislaid, stolen or destroyed.
(c) After the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the shares of TARGET Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, certificates representing the TARGET Common Stock are
presented to the Surviving Corporation or PURCHASER for transfer, they shall be
canceled and exchanged for the consideration (if any) described in Section 3.01
hereof.
(d) Any shares of PURCHASER Common Stock that remain unclaimed by
such former stockholders for six months after the Effective Time shall be held
by PURCHASER, and any former holder of TARGET Common Stock who has not
theretofore complied with Sections 3.02 (a) and (b) hereof shall thereafter look
only to PURCHASER for issuance of the number of shares of PURCHASER Common Stock
to which such holder has become entitled pursuant to the provisions of Section
3.01 hereof; provided, however, that neither PURCHASER nor any party hereto
shall be liable to a former holder of shares of TARGET Common Stock for any
amount required to be paid to a public official pursuant to any applicable
abandoned property, escheat or similar law.
SECTION 3.03 ANTI-DILUTION PROVISIONS. In the event TARGET or PURCHASER
changes the number of shares of TARGET Common Stock or PURCHASER Common Stock,
respectively, issued and outstanding prior to the Effective Time as a result of
a stock split, stock dividend or similar recapitalization with respect to such
stock and the record date therefor (in the case of a stock dividend) or the
effective date therefor (in the case of a stock split or similar
recapitalization) shall be prior to the Effective Time, the consideration
payable pursuant to this Article III shall be equitably adjusted.
SECTION 3.04 SHARES HELD BY TARGET OR PURCHASER. Except as contemplated
in Section 3.01(a) hereof, each of the shares of TARGET Common Stock held by
TARGET or PURCHASER or any PURCHASER Company, in each case other than in a
fiduciary capacity or as a result of debts previously contracted, shall be
canceled and retired at the Effective Time and no consideration shall be issued
in exchange therefor.
SECTION 3.05 STATUS OF TARGET AFTER THE EFFECTIVE TIME. After
consummation of the Merger, Surviving Corporation shall be a separate subsidiary
of PURCHASER.
SECTION 3.06 RIGHTS OF FORMER TARGET STOCKHOLDERS. To the extent
permitted by Law, former stockholders of record of TARGET shall be entitled to
vote after the Effective Time at any meeting of PURCHASER stockholders the
number of whole shares of PURCHASER Common Stock into which their respective
shares of TARGET Common Stock may have been converted, regardless of whether
such holders have exchanged their certificate or certificates for TARGET Common
Stock for certificates representing PURCHASER Common Stock in accordance with
the provisions of this Agreement. Whenever a dividend or other distribution is
declared by PURCHASER on the PURCHASER Common Stock, the record date for which
is at or after the Effective Time, the declaration shall include dividends or
other distributions on all shares
4
9
issuable pursuant to this Agreement, but no dividend or other distribution
payable to the holders of record of PURCHASER Common Stock as of any time
subsequent to the Effective Time shall be delivered to the former holder of
TARGET Common Stock until such holder surrenders such holder's certificate or
certificate which formerly represented such shares of TARGET Common Stock for
exchange or appropriate stock power as provided in Section 3.02 hereof this
Agreement. However, upon surrender thereof, both the PURCHASER Common Stock
certificate (together with all such undelivered dividends or other distributions
without interest) shall be delivered and paid with respect to each share
represented by such certificate.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF TARGET
With such exceptions, if any, as may be set forth in a letter (the
"TARGET Disclosure Letter") to be delivered by TARGET to PURCHASER on the date
hereof, TARGET hereby represents and warrants to PURCHASER as follows:
SECTION 4.01 ORGANIZATION, STANDING AND POWER. TARGET is a corporation
duly organized, validly existing, and in good standing under the Laws of the
Commonwealth of Massachusetts. TARGET'S predecessor was an informal general
partnership, the general partners of which caused TARGET to be organized
effective March 6, 2001 (the "Date of Organization"). TARGET'S only operations
prior to its Date of Organization involved planning and business development.
TARGET has the corporate power and authority to carry on its business as now
conducted and to own, lease and operate its Assets. TARGET is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed, except for such jurisdictions in which the failure to be so
qualified or licensed is not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET.
SECTION 4.02 AUTHORITY; NO BREACH.
(a) TARGET has the corporate power and authority necessary to execute,
deliver and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated herein,
including the Merger, have been duly and validly authorized by all necessary
corporate action in respect thereof on the part of TARGET, including the
unanimous written consent of all the holders of the outstanding TARGET Common
Stock. This Agreement represents a legal, valid, and binding obligation of
TARGET, enforceable against TARGET in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by TARGET, nor
the consummation by TARGET of the transactions contemplated hereby, nor
compliance by TARGET with any of the provisions hereof, will (i) conflict with
or result in a breach of any provision of TARGET's Articles of Organization or
Bylaws, or (ii) constitute or result in a Default under, or require any Consent
pursuant to, or result in the creation of any Lien on any Asset of TARGET under,
any Contract or Permit of TARGET, where such Default or Lien, or any failure to
obtain such Consent, is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET.
(c) Other than in connection or compliance with the provisions of the
Securities Laws, applicable state corporate and securities Laws, and other than
Consents required from
5
10
Regulatory Authorities, and other than notices to or filings with the Internal
Revenue Service or the Pension Benefit Guaranty Corporation with respect to any
employee benefit plans, and other than Consents, filings or notifications which,
if not obtained or made, are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on TARGET, no notice to, filing with,
or Consent of any public body or authority is necessary for the consummation by
TARGET of the Merger and the other transactions contemplated in this Agreement.
SECTION 4.03 CAPITAL STOCK.
(a) The authorized capital stock of TARGET consists of 200,000
shares of TARGET Common Stock, of which 25,000 shares are issued and outstanding
as of the date of this Agreement. All of the issued and outstanding shares of
capital stock of TARGET are duly and validly issued and outstanding and are
fully paid and nonassessable under the MassBCL. Neither the MassBCL nor any
private contract entitles any Person to any preemptive rights in the TARGET
Common Stock.
(b) Except as set forth in Section 4.03(a) above, there are no
shares of capital stock or other equity securities of TARGET outstanding and no
outstanding options, warrants, scrip, rights to subscribe to, calls, or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of TARGET or
contracts, commitments, understandings, or arrangements by which TARGET is or
may be bound to issue additional shares of its capital stock or options,
warrants, or rights to purchase or acquire any additional shares of its capital
stock.
SECTION 4.04 FINANCIAL STATEMENTS. TARGET has previously delivered to
PURCHASER copies of the TARGET Financial Statements for the period ended March
31, 2001 and will deliver to PURCHASER copies of the TARGET Financial
Statements, if any, prepared subsequent to the date hereof and prior to the
Effective Date. The TARGET Financial Statements (as of the dates thereof) (a)
are in accordance with the books and records of TARGET, which are complete and
correct in all material respects and which have been or will have been, as the
case may be, maintained in accordance with good business practices, and (b)
present or will present, as the case may be, fairly in all material respects the
financial position of TARGET as of the dates indicated and the results of
operations, changes in stockholders' equity, and cash flows of TARGET for the
periods indicated.
SECTION 4.05 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
the TARGET Disclosure Letter, TARGET has no Liabilities that are reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
TARGET, except Liabilities which are accrued or reserved against in the balance
sheet of TARGET as of March 31, 2001 included in the TARGET Financial Statements
or reflected in the notes thereto. Except as set forth in the TARGET Financial
Statements, TARGET has not incurred or paid any other Liability since its Date
of Organization, except for such Liabilities incurred or paid in the ordinary
course of business consistent with past business practice and which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
SECTION 4.06 ABSENCE OF CERTAIN CHANGES OF EVENTS. Except as set forth
in the TARGET Disclosure Letter, since its Date of Organization, there have been
no events, changes or occurrences which have had, or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on TARGET.
SECTION 4.07 TAX MATTERS.
6
11
No Tax returns have been required to be filed by or on behalf of
TARGET.
SECTION 4.08 TARGET PATENTS, TRADEMARKS AND TRADE NAMES. The TARGET
Disclosure Letter sets forth a true and complete list of its "Proprietary
Intellectual Property", if any, and all technology and processes used by any
TARGET in its business which are material to its business and are used pursuant
to a license or other right granted by a third party (collectively, the
"Licensed Intellectual Property" and, together with the Proprietary Intellectual
Property, herein referred to as "Intellectual Property"), excluding off the
shelf commercially available software. A true and complete list of all such
licenses with respect to Licensed Intellectual Property is set forth in the
TARGET Disclosure Letter, excluding off the shelf commercially available
software. TARGET possesses the right to use pursuant to valid and effective
agreements, all its Proprietary Intellectual Property, and the consummation of
the transactions contemplated hereby will not alter or impair any such rights,
except for such defects in title or other matters which in the aggregate would
not have a Material Adverse Effect on TARGET. No claims are pending against
TARGET by any person with respect to the use of any Proprietary Intellectual
Property or challenging or questioning the validity or effectiveness of any
license or agreement relating to the same, and, to the Knowledge of TARGET, the
current use by TARGET of its Proprietary Intellectual Property does not infringe
on the rights of any third party.
SECTION 4.09 PROPRIETARY INFORMATION. TARGET is the sole owner of or
possesses sufficient legal rights to all data, trade secrets, information and
proprietary rights and processes presently used by TARGET or necessary for the
conduct of the TARGET's business as conducted and as presently proposed to be
conducted (the "Information Rights"), free and clear of any Liens of any nature
whatsoever except as described in TARGET Disclosure Letter. TARGET has taken all
reasonable actions to protect the Information Rights. The business conducted or
proposed to be conducted by TARGET does not and will not cause TARGET to
infringe or violate any of the Information Rights of any other Person, and
except as set forth in TARGET Disclosure Letter, does not and will not require
TARGET to obtain any license or other agreement to use any Information Rights
currently in existence of others. There are no outstanding options, licenses or
agreements of any kind relating to the Information Rights, nor is TARGET bound
by or a party to any options, licenses or agreements of any kind with respect to
the Information Rights of any other Person. Except as set forth in TARGET
Disclosure Letter, TARGET has not received any communications alleging that
TARGET has violated or, by conducting its business as presently conducted or as
proposed to be conducted, would violate any of the Information Rights of any
Person. Except as set forth in the TARGET Disclosure Letter, TARGET is not aware
that any employee of TARGET is obligated under any contract (including any
license, covenant or commitment of any nature), or subject to any judgment,
decree or order of any court or administrative agency, that would conflict or
interfere with (i) the performance of such employee's duties as an officer,
employee or director of TARGET, (ii) the use of such employee's best reasonable
efforts to promote the interests of TARGET, or (iii) TARGET's business as
conducted or as proposed to be conducted. TARGET does not believe that it is or
will be necessary to use any inventions or works of authorship of its employees
(or persons it currently intends to hire) made prior to their employment by
TARGET.
SECTION 4.10 ASSETS. Except as set forth in the TARGET Disclosure
Letter or as disclosed or reserved against in the TARGET Financial Statements,
TARGET has good and marketable title, free and clear of all Liens, to all of its
Assets. All material tangible properties used in the businesses of TARGET are AS
IS WHERE IS, and no other warranty as to their condition or fitness for any use
is expressed or implied hereby. No Assets which are material to the business of
7
12
TARGET are held under leases or subleases. The Assets of TARGET include all
assets which are used in the operation of the business of TARGET as presently
conducted.
SECTION 4.11 MATERIAL CONTRACTS. Except as set forth in the TARGET
Disclosure Letter or otherwise reflected in the TARGET Financial Statements,
neither TARGET nor its Assets, businesses or operations, is a party to, or is
bound or affected by, or receives benefits under, (a) any employment, severance,
termination, consulting or retirement Contract providing for aggregate payments
to any Person in any calendar year in excess of $50,000, and (b) any Contract
relating to the borrowing of money by TARGET or the guarantee by TARGET of any
such obligation (other than Contracts evidencing deposit liabilities, purchases
of federal funds, fully secured repurchase agreements, trade payables, and
Contracts relating to borrowings or guarantees made in the ordinary course of
business) (the "TARGET Contracts"). TARGET is not in Default under any TARGET
Contract, except for such defaults as would not have a Material Adverse Effect
on TARGET.
SECTION 4.12 LEGAL PROCEEDINGS. Except as set forth in the TARGET
Disclosure Letter, there is no Litigation instituted or pending or, to the
Knowledge of TARGET, threatened (or unasserted but considered probable of
assertion and which, if asserted, would have at least a reasonable probability
of an unfavorable outcome) against TARGET, or against any Asset, interest, or
right of TARGET, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET, nor are there any Orders of any
Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against TARGET, that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on TARGET.
SECTION 4.13 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by TARGET or any
Affiliate thereof to PURCHASER pursuant to this Agreement or any other document,
agreement or instrument referred to herein contains or will contain any untrue
statement of material fact or will omit to state a material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be supplied by
TARGET or any Affiliate thereof for inclusion in any documents to be filed by
TARGET or any Affiliate thereof with the SEC or any other Regulatory Authority
in connection with the transactions contemplated hereby, will, at the respective
time such documents are filed be false or misleading with respect to any
material fact, or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 4.14 CHARTER PROVISIONS. The execution and delivery of this
Agreement and the consummation of the Merger and the other transactions
contemplated by this Agreement by TARGET will not result in the grant of any
rights to any person under the Articles of Organization, Bylaws or other
governing instruments of TARGET.
SECTION 4.15 NO SUBSIDIARIES. Since the Date of Organization, TARGET
has not formed, incorporated, organized or invested in any Subsidiary.
SECTION 4.16 COMPLIANCE WITH LAWS.
(a) TARGET has in effect all Permits necessary for it to own, lease
or operate its Assets and to carry on its business as now conducted, except for
those Permits the absence of which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on TARGET, and there
has occurred no Default under any such Permit, other than Defaults which are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on TARGET.
8
13
(b) Except as set forth in the TARGET Disclosure Letter, TARGET:
(i) is not in violation of any Laws, Orders or
Permits applicable to its business or employees conducting
its business, if any, except for violations which are not
reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on TARGET; and
(ii) to its Knowledge, has not received any
notification or communication from any agency or department
of federal, state, or local government or any Regulatory
Authority or the staff thereof (A) asserting that TARGET is
not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces,
where such noncompliance is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on TARGET, (B) threatening to revoke any Permits, the
revocation of which is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect
on TARGET, or (C) requiring TARGET to enter into or consent
to the issuance of a cease and desist order, formal
agreement, directive, commitment or memorandum of
understanding, or to adopt any Board resolution or similar
undertaking, which restricts materially the conduct of its
business, or in any manner relates to its capital adequacy,
its credit or reserve policies, its management, or the
payment of dividends.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
With such exceptions, if any, as may be set forth in a letter (the
"PURCHASER Disclosure Letter") to be delivered by PURCHASER to TARGET on the
date hereof or as set forth in PURCHASER's SEC Documents, PURCHASER hereby
represents and warrants to TARGET as follows:
SECTION 5.01 ORGANIZATION, STANDING AND POWER. PURCHASER is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Nevada. PURCHASER has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its Assets.
PURCHASER is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed, except for such
jurisdictions in which the failure to be so qualified or licensed is not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
SECTION 5.02 AUTHORITY; NO BREACH.
(a) PURCHASER has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of PURCHASER.
This Agreement represents a legal, valid, and binding obligation of PURCHASER,
enforceable against PURCHASER in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by
PURCHASER, nor the consummation by PURCHASER of the transactions contemplated
hereby, nor compliance by
9
14
PURCHASER with any of the provisions hereof will (i)
conflict with or result in a breach of any provision of PURCHASER's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of any PURCHASER Company under, any Contract or Permit of any PURCHASER
Company, where such Default or Lien, or any failure to obtain such Consent, is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER, or, (iii) violate any Law or Order applicable to any
PURCHASER Company or any of their respective Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and rules
of the NASD, and other than Consents required from Regulatory Authorities, and
other than notices to or filings with the Internal Revenue Service or the
Pension Benefit Guaranty Corporation with respect to any employee benefit plans,
and other than Consents, filings or notifications which, if not obtained or
made, are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER, no notice to, filing with, or Consent of
any public body or authority is necessary for the consummation by PURCHASER of
the Merger and the other transactions contemplated in this Agreement.
SECTION 5.03 CAPITAL STOCK.
(a) The authorized capital stock of PURCHASER consists of 25,000,000
shares of PURCHASER Common Stock, of which _____ shares are issued and
outstanding as of the date of this Agreement. All of the issued and outstanding
shares of PURCHASER Common Stock are, and all of the shares of PURCHASER Common
Stock to be issued in exchange for shares of TARGET Common Stock upon
consummation of the Merger, when issued in accordance with the terms of this
Agreement, will be, duly and validly issued and outstanding and fully paid and
nonassessable under the NGCL. None of the outstanding shares of PURCHASER Common
Stock has been, and none of the shares of PURCHASER Common Stock to be issued in
exchange for shares of TARGET Common Stock upon consummation of the Merger will
be, issued in violation of any preemptive rights of the current or past
stockholders of PURCHASER.
(b) Except as set forth in Section 5.03(a) of this Agreement, or as
set forth in the PURCHASER Disclosure Letter or in PURCHASER's SEC Documents,
there are no shares of capital stock or other equity securities of PURCHASER
outstanding and no outstanding options, warrants, scrip, rights to subscribe to,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of
PURCHASER or contracts, commitments, understandings, or arrangements by which
PURCHASER is or may be bound to issue additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional shares of its
capital stock.
SECTION 5.04 PURCHASER SEC REPORTS. PURCHASER has heretofore made
available to TARGET its SEC Documents. As of the date thereof, PURCHASER's SEC
Documents were prepared in all material respects in accordance with the 1934 Act
and did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Except as set forth in the Purchaser Disclosure Letter, PURCHASER
has timely filed all SEC Documents required to be filed by it pursuant to the
1933 Act and the 1934 Act which complied as to form, at the time such form,
document or report was filed, in all material respects with the applicable
requirements of the 1933 Act and the 1934 Act.
10
15
SECTION 5.05 FINANCIAL STATEMENTS. The PURCHASER Financial
Statements (as of the dates thereof and for the periods covered thereby) (a) are
or, if dated after the date of this Agreement, will be in accordance with the
books and records of the PURCHASER Companies, which are or will be, as the case
may be, complete and correct in all material respects and which have been or
will have been, as the case may be, maintained in accordance with good business
practices, and (b) present or will present, as the case may be, fairly in all
material respects the consolidated financial position of the PURCHASER Companies
as of the dates indicated and the consolidated results of operations, changes in
stockholders' equity, and cash flows of the PURCHASER Companies for the periods
indicated, in accordance with GAAP (subject to exceptions as to consistency
specified therein or as may be indicated in the notes thereto or, in the case of
interim financial statements, to normal recurring year-end adjustments that are
not material and the absence of notes and schedules).
SECTION 5.06 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth
in the PURCHASER Disclosure Letter or in PURCHASER's SEC Documents, no PURCHASER
Company has any Liabilities that are reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PURCHASER, except Liabilities
which are accrued or reserved against in the PURCHASER Financial Statements or
reflected in the notes thereto. Except as set forth in the PURCHASER Disclosure
Letter or in PURCHASER's SEC Documents, no PURCHASER Company has incurred or
paid any Liability since December 31, 2000, except for such Liabilities incurred
or paid in the ordinary course of business consistent with past business
practice and which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER.
SECTION 5.07 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set
forth in the PURCHASER Disclosure Letter or in PURCHASER's SEC Documents, since
December 31, 2000, except as disclosed in SEC Documents filed by PURCHASER prior
to the date of this Agreement, there have been no events, changes or occurrences
which have had, or are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER.
11
16
SECTION 5.08 TAX MATTERS.
(a) All Tax returns required to be filed by or on behalf of any of
the PURCHASER Companies have been timely filed or requests for extensions have
been timely filed, granted, and have not expired for periods ended on or before
December 31, 2000, and on or before the date of the most recent fiscal year end
immediately preceding the Effective Time, except to the extent that all such
failures to file, taken together, are not reasonably likely to have a Material
Adverse Effect on PURCHASER, and all returns filed are complete and accurate to
the Knowledge of PURCHASER. All Taxes shown on filed returns have been paid. As
of the date of this Agreement, there is no audit examination, deficiency, or
refund Litigation with respect to any Taxes that is reasonably likely to result
in a determination that would have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER, except as reserved against in the PURCHASER
Financial Statements delivered prior to the date of this Agreement. All Taxes
and other Liabilities due with respect to completed and settled examinations or
concluded Litigation have been paid.
(b) None of the PURCHASER Companies has executed an extension or
waiver of any statute of limitations on the assessment or collection of any Tax
due that is currently in effect, and no unpaid tax deficiency has been asserted
in writing against or with respect to any PURCHASER Company, which deficiency is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER.
(c) Adequate provision for any Taxes due or to become due for any of
the PURCHASER Companies for the period or periods through and including the date
of the respective PURCHASER Financial Statements has been made and is reflected
on such PURCHASER Financial Statements.
(d) Deferred Taxes of the PURCHASER Companies have been provided for
in accordance with GAAP.
SECTION 5.09 ENVIRONMENTAL MATTERS. Except as set forth in the
PURCHASER Disclosure Letter or in PURCHASER's SEC Documents:
(a) Each PURCHASER Company, its Participation Facilities and its
Loan Properties are, and have been, in compliance with all Environmental Laws,
except for violations which are not reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect on PURCHASER.
(b) There is no Litigation pending or, to the Knowledge of
PURCHASER, threatened before any court, governmental agency or authority or
other forum in which any PURCHASER Company or any of its Participation
Facilities has been or, with respect to threatened Litigation, may be named as a
defendant (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material (as defined below) or oil, whether or not occurring at, on,
under or involving a site owned, leased or operated by any PURCHASER Company or
any of its Participation Facilities, except for such Litigation pending or, to
the Knowledge of PURCHASER, threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER.
(c) There is no Litigation pending or, to the Knowledge of
PURCHASER, threatened before any court, governmental agency or board or other
forum in which any of its Loan Properties (or any PURCHASER Company in respect
of such Loan Property) has been or, with
12
17
respect to threatened Litigation, may be named as a defendant or potentially
responsible party (i) for alleged noncompliance (including by any predecessor),
with any Environmental Law or (ii) relating to the release into the environment
of any Hazardous Material or oil, whether or not occurring at, on, under or
involving a Loan Property, except for such Litigation pending or, to the
Knowledge of PURCHASER, threatened that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER.
(d) To the Knowledge of PURCHASER, there is no reasonable basis for
any Litigation of a type described in subsections (b) or (c), except such as is
not reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
(e) During the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
there have been no releases of Hazardous Material or oil in, on, under or
affecting such property, Participation Facility, or to the Knowledge of
PURCHASER, Loan Property, except such as are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on PURCHASER.
(f) Prior to the period of (i) any PURCHASER Company's ownership or
operation of any of their respective current properties, (ii) any PURCHASER
Company's participation in the management of any Participation Facility, or
(iii) any PURCHASER Company's holding of a security interest in a Loan Property,
to the Knowledge of PURCHASER, there were no releases of Hazardous Material or
oil in, on, under or affecting any such property, Participation Facility or Loan
Property, except such as are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on PURCHASER.
SECTION 5.10 COMPLIANCE WITH LAWS.
(a) Each PURCHASER Company has in effect all Permits necessary for
it to own, lease or operate its Assets and to carry on its business as now
conducted, except for those Permits the absence of which are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
PURCHASER, and there has occurred no Default under any such Permit, other than
Defaults which are not reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER.
(b) Except as set forth in the PURCHASER Disclosure Letter or in
PURCHASER's SEC Documents, no PURCHASER Company:
(i) is in violation of any Laws, Orders or
Permits applicable to its business or employees conducting
its business, except for violations which are not
reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER; or
(ii) to its Knowledge, has received any
notification or communication from any agency or department
of federal, state, or local government or any Regulatory
Authority or the staff thereof (A)asserting that any
PURCHASER Company is not in compliance with any of the Laws
or Orders which such governmental authority or Regulatory
Authority enforces, where such noncompliance is reasonably
likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER, (B) threatening to
revoke any Permits, the revocation of
13
18
which is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on PURCHASER, or (C)
requiring any PURCHASER Company to enter into or consent to
the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to
adopt any Board resolution or similar undertaking, which
restricts materially the conduct of its business, or in any
manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of
dividends.
SECTION 5.11 LEGAL PROCEEDINGS. Except as set forth in the PURCHASER
Disclosure Letter or in PURCHASER's SEC Documents, there is no Litigation
instituted or pending or, to the Knowledge of PURCHASER, threatened (or
unasserted but considered probable of assertion and which, if asserted, would
have at least a reasonable probability of an unfavorable outcome) against
PURCHASER, or against any asset, interest, or right of PURCHASER, that is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on PURCHASER, nor are there any Orders of any Regulatory Authorities,
other governmental authorities, or arbitrators outstanding against PURCHASER,
that are reasonably likely to have, individually or in the aggregate, a Material
Adverse Effect on PURCHASER.
SECTION 5.12 REPORTS. Except as set forth in the PURCHASER Disclosure
Letter or in PURCHASER's SEC Documents, since December 31, 2000, each PURCHASER
Company has timely filed all reports and statements, together with any
amendments required to be made with respect thereto, that it was required to
file with all Regulatory Authorities. As of their respective dates, each of such
reports and documents, including the financial statements, exhibits, and
schedules thereto, complied in all material respects with all applicable Laws.
As of its respective date, none of such reports and documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
SECTION 5.13 STATEMENTS TRUE AND CORRECT. No statement, certificate,
instrument or other writing furnished or to be furnished by any PURCHASER
Company or any Affiliate thereof to TARGET pursuant to this Agreement or any
other document, agreement or instrument referred to herein contains or will
contain any untrue statement of material fact or will omit to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of the information supplied or
to be supplied by any PURCHASER Company or any Affiliate thereof for inclusion
in any documents to be filed by any PURCHASER Company or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time such documents
are filed, be false or misleading with respect to any material fact, or omit to
state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. All documents that
any PURCHASER Company or any Affiliate thereof is responsible for filing with
any Regulatory Authority in connection with the transactions contemplated hereby
will comply as to form in all material respects with the provisions of
applicable Law.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
PURCHASER and MERGER SUB hereby jointly and severally represent and
warrant to TARGET as follows:
SECTION 6.01 ORGANIZATION, STANDING AND POWER. MERGER SUB is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of
14
19
Georgia. MERGER SUB has the corporate power and authority to acquire TARGET and
its Assets and to conduct TARGET's business and is duly qualified or licensed to
transact business as a foreign corporation in good standing in the States of the
United States and foreign jurisdiction where the character of its assets or the
nature of conduct of its business required it to be so qualified or licensed,
except for such jurisdictions in which the failure to be so qualified or
licensed is not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on MERGER SUB or TARGET.
SECTION 6.02 AUTHORITY; NO BREACH.
(a) MERGER SUB has the corporate power and authority necessary to
execute, deliver and perform its obligations under this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated herein, including the Merger, have been duly and validly authorized
by all necessary corporate action in respect thereof on the part of MERGER SUB.
This Agreement represents a legal, valid, and binding obligation of MERGER SUB,
enforceable against MERGER SUB in accordance with its terms.
(b) Neither the execution and delivery of this Agreement by MERGER
SUB, nor the consummation by MERGER SUB of the transactions contemplated hereby,
nor compliance by MERGER SUB with any of the provisions hereof will (i) conflict
with or result in a breach of any provision of MERGER SUB's Articles of
Incorporation or Bylaws, or (ii) constitute or result in a Default under, or
require any Consent pursuant to, or result in the creation of any Lien on any
Asset of MERGER SUB under, any Contract or Permit of MERGER SUB, where such
Default or Lien, or any failure to obtain such Consent, is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on MERGER SUB,
or (iii) violate any Law or Order applicable to MERGER SUB or any of its Assets.
(c) Other than in connection or compliance with the provisions of
the Securities Laws, applicable state corporate and securities Laws, and other
than Consents required from Regulatory Authorities, and other than notices to or
filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, and other than Consents,
filings or notifications which, if not obtained or made, are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect on
MERGER SUB, no notice to, filing with, or Consent of any public body or
authority is necessary for the consummation by MERGER SUB of the Merger and the
other transactions contemplated in this Agreement.
15
20
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.01 EMPLOYEE BENEFITS AND CONTRACTS. Following the Effective
Time, PURCHASER shall provide generally to officers and employees of TARGET
employee benefits under employee benefit plans (other than stock option or other
plans involving the potential issuance of PURCHASER Common Stock), on terms and
conditions which when taken as a whole are substantially similar to those
currently provided by the PURCHASER Companies to their similarly situated
officers and employees. For purposes of participation and vesting under such
employee benefit plans, (i) the service of the employees of TARGET prior to the
Effective Time shall be treated as service with a PURCHASER Company
participating in such employee benefit plans, and (ii) all deductible amounts
paid by the employees of TARGET through the Closing Date under the TARGET
Benefit Plans shall be credited to such employees for the current plan year
under PURCHASER's employee benefits plans after the Closing Date. PURCHASER also
shall honor in accordance with their terms all employment, severance, consulting
and other compensation Contracts set forth in the TARGET Disclosure Letter
between TARGET and any current or former director, officer, or employee thereof
and all provisions for vested benefits or other vested amounts earned or accrued
through the Effective Time under the TARGET Benefit Plans.
SECTION 7.02 INDEMNIFICATION AGAINST CERTAIN LIABILITIES. PURCHASER
agrees that all rights to indemnification and all limitations of liability
existing in favor of the officers and directors of TARGET as provided in its
Articles of Organization and Bylaws as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect, without any amendment thereto, for a period
of not less than four (4) years from the Effective Time; provided, however, that
all rights to any indemnification in respect of any claim asserted or made
within such period shall continue until the final disposition of such claim.
SECTION 7.03 TAX REPORTING. The Parties agree to report the Merger as
a tax free "reorganization" and not as a taxable sale of stock of TARGET.
ARTICLE VIII.
CLOSING DELIVERIES
SECTION 8.01 DELIVERIES BY TARGET. At Closing TARGET shall deliver the
following to PURCHASER, unless delivery is waived by PURCHASER pursuant to
Section 10.06(a) of this Agreement:
(a) a certificate, dated as of the Effective Time and signed on
TARGET's behalf by TARGET's chief executive officer, to the effect that the
representations and warranties of TARGET set forth or referred to in this
Agreement shall be true and correct in all respects as of the date of this
Agreement and as of the Effective Time with the same effect as though all such
representations and warranties had been made on and as of the Effective Time
(provided that representations and warranties which are confined to a specified
date shall speak only as of such date), except (i) as expressly contemplated by
this Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 4.03 of this Agreement,
which shall be true in all respects) the inaccuracies of which relate to matters
that are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on TARGET;
(b) an opinion of Robert DeN. Cope, counsel to TARGET, in form and
substance
16
21
reasonably acceptable to PURCHASER;
(c) a fully-executed copy of the Investor Representation Statement
completed by each holder of Outstanding TARGET Shares in substantially the form
of Exhibit 2 hereto and a counterpart signature page to the Registration Rights
Agreement in substantially the form of Exhibit 3 hereto (the "Registration
Rights Agreement");
(d) the certificate(s) from each of the stockholders of TARGET that
represent all of the Outstanding TARGET Shares immediately prior to the
Effective Time, endorsed in blank or accompanied by the appropriate stock powers
executed in blank; and
(e) Annex B to the Escrow Agreement attached hereto as Exhibit 4,
which annex lists the contribution of PURCHASER Common Stock made by each
Warranting Stockholder to the Escrow Fund.
SECTION 8.02 DELIVERIES BY PURCHASER AND MERGER SUB. At Closing
PURCHASER shall deliver to TARGET the following, unless delivery is waived by
TARGET pursuant to Section 10.06(b) of this Agreement:
(a) a certificate to TARGET, dated as of the Effective Time and
signed on PURCHASER's behalf by PURCHASER's chief executive officer and chief
financial officer, to the effect that the representations and warranties of
PURCHASER and MERGER SUB set forth or referred to in this Agreement shall be
true and correct in all respects as of the date of this Agreement and as of the
Effective Time with the same effect as though all such representations and
warranties had been made on and as of the Effective Time (provided that
representations and warranties which are confined to a specified date shall
speak only as of such date), except (i) as expressly contemplated by this
Agreement, or (ii) for representations and warranties (other than the
representations and warranties set forth in Section 5.03 of this Agreement,
which shall be true in all respects) the inaccuracies of which relate to matters
that are not reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on PURCHASER;
(b) an executed counterpart signature page to the Registration
Rights Agreement; and
(c) an executed counterpart signature page to the Escrow Agreement.
SECTION 8.03 DELIVERIES BY OTHERS. At Closing, the following
deliveries shall be made, unless delivery is waived by both TARGET and PURCHASER
pursuant to Sections 10.06(a) and 10.06(b) of this Agreement:
(a) Escrow Agent shall deliver to PURCHASER and the Warranting
Stockholders an executed signature page to the Escrow Agreement; and
(b) Stockholders' Agent shall deliver to PURCHASER and the Escrow
Agent an executed counterpart signature page to the Escrow Agreement.
ARTICLE IX.
ESCROW AND INDEMNIFICATION
SECTION 9.01 ESCROW FUND.
(a) At the Closing, the Escrow Shares shall be registered in the
name of, and be
17
22
deposited with, First Union National Bank (or other institution agreeable to
both PURCHASER and TARGET) as escrow agent (the "Escrow Agent"), such deposit
and any Additional Escrow Shares to constitute the Escrow Fund and to be
governed by the terms set forth herein and in the Escrow Agreement in
substantially the form attached hereto as Exhibit 4. The Escrow Fund shall be
available to compensate PURCHASER pursuant to the indemnification obligations of
the Warranting Stockholders. In the event PURCHASER issues any Additional Escrow
Shares (as defined below), such shares will be issued in the name of the Escrow
Agent and delivered to the Escrow Agent in the same manner as the Escrow Shares
delivered at the Closing.
(b) Except for dividends paid in stock declared with respect to the
Escrow Shares ("Additional Escrow Shares"), which shall be treated as Escrow
Shares pursuant to Section 9.01(a) hereof, any cash dividends, dividends payable
in securities or other distributions of any kind made in respect of the Escrow
Shares will be delivered to the Warranting Stockholders based on each such
Warranting Stockholder's Proportional Allotment. Each Warranting Stockholder
shall have voting rights with respect to the Escrow Shares deposited in the
Escrow Fund with respect to such stockholder's Proportional Allotment so long as
such Escrow Shares are held in escrow, and PURCHASER will take all reasonable
steps necessary to allow the exercise of such rights. While the Escrow Shares
remain in the Escrow Agent's possession pursuant to this Agreement and the
Escrow Agreement, the Warranting Stockholders shall retain and shall be able to
exercise all other incidents of ownership of such Escrow Shares which are not
inconsistent with the terms and conditions of this Agreement.
SECTION 9.02 INDEMNIFICATION.
(a) All representations and warranties made by TARGET herein, or in
any certificate, schedule or exhibit delivered pursuant hereto, shall survive
the Closing and continue in full force and effect until the twelve (12) month
anniversary of the Closing Date (sometimes referred to herein as the
"Termination Date").
(b) (i) Subject to the limitations set forth in this Article IX, the
Warranting Stockholders shall (severally and not jointly) indemnify and hold
harmless PURCHASER and the Surviving Corporation and its respective officers,
directors, agents, attorneys and employees, and each person, if any, who
controls or may control PURCHASER or the Surviving Corporation within the
meaning of the Securities Act (hereinafter referred to individually as an
"PURCHASER Indemnified Person" and collectively as "PURCHASER Indemnified
Persons") from and against any and all losses, costs, damages, liabilities and
expenses arising from claims, demands, actions, causes of action, including,
without limitation, legal fees, (collectively, "Damages") arising out of any
misrepresentation or breach of or default in connection with any of the
representations, warranties, covenants and agreements given or made by TARGET in
this Agreement, the TARGET Disclosure Letter or any exhibit or schedule to this
Agreement. The sole recourse of the Indemnified Persons shall be against the
Escrow Fund and claims against the Escrow Fund shall be the sole and exclusive
remedy of Indemnified Persons for any Damages hereunder; provided, however, if
any Warranting Stockholder so desires, the indemnification to be paid by such
Warranting Stockholder may be paid in cash.
(ii) Nothing in this Agreement shall limit the liability in
amount or otherwise of any TARGET stockholder in connection with any breach by
such stockholder of any representation or covenant in the Investor
Representation Statement or of TARGET with respect to fraud or criminal activity
in connection with this Agreement.
(c) Prior to the Termination Date, no claim for Damages shall be
made under Article
18
23
IX unless the aggregate of Damages exceeds $50,000 for which claims are made
hereunder by the PURCHASER Indemnified Persons, in which case the PURCHASER
Indemnified Persons shall be entitled to seek compensation for all Damages
without regard to the limitation set forth in this Section 9.02(c) (the
"Limitation"). At the Termination Date, PURCHASER may make a claim for Damages
under Article IX without regard to the Limitation.
SECTION 9.03 ESCROW PERIOD: RELEASE FROM ESCROW.
(a) The Escrow Period shall terminate upon the twelve (12) month
anniversary of the Effective Time; provided, however, that a portion of the
Escrow Fund, which, in the reasonable judgment of PURCHASER, subject to the
objection of the Stockholders' Agent and the subsequent arbitration of the
matter in the manner provided in Section 9.06 hereof, is necessary to satisfy
any unsatisfied claims specified in any Officer's Certificate theretofore
delivered to the Escrow Agent prior to termination of the Escrow Period with
respect to facts and circumstances existing prior to expiration of the Escrow
Period, shall remain in the Escrow Fund until such claims have been resolved.
(b) Within five (5) business days after the Termination Date (the
"Release Date"), the Escrow Agent shall release from escrow to the Warranting
Stockholders each such stockholder's Proportional Allotment of the Escrow Shares
and Additional Escrow Shares (if any), less with respect to each such
stockholder the number of Escrow Shares and Additional Shares with a value (as
determined pursuant to Section 9.04) equal to (A) such stockholder's
Proportional Allotment of any liability delivered to PURCHASER in accordance
with Section 9.04 in satisfaction of indemnification claims by Indemnitee and
(B) such stockholder's Proportional Allotment of any liability subject to
delivery to PURCHASER in accordance with Section 9.03(a) with respect to any
pending but unresolved indemnification claims of PURCHASER. Any Escrow Shares
and Additional Escrow Shares held as a result of clause (B)shall be released to
such Warranting Stockholders or released to PURCHASER (as appropriate) promptly
upon resolution of each specific indemnification claim involved. Escrow Shares
and Additional Escrow Shares shall be released to the Warranting Stockholders
based on each such stockholder's Proportional Allotment thereof. PURCHASER will
take such action as may be necessary to cause such certificates to be issued in
the names of the appropriate persons. Certificates representing Escrow Shares
and Additional Escrow Shares so issued that are subject to resale restrictions
under applicable securities laws will bear a legend to that effect. No
fractional shares shall be released and delivered from Escrow to the Warranting
Stockholders. In lieu of any fraction of an Escrow Share to which a Warranting
Stockholder would otherwise be entitled, such stockholder will receive from
PURCHASER an amount of cash (rounded to the nearest whole cent) equal to the
product of such fraction multiplied by the Average Closing Price.
(c) No Escrow Shares or Additional Escrow Shares or any beneficial
interest therein may be pledged, sold, assigned or transferred, including by
operation of law, by any Warranting Stockholder or be taken or reached by any
legal or equitable process in satisfaction of any debt or other liability of any
such stockholder, prior to the delivery to such stockholder of his Proportional
Allotment of the Escrow Fund by the Escrow Agent as provided herein.
(d) The Escrow Agent is hereby granted the power to effect any
transfer of Escrow Shares contemplated by this Agreement. PURCHASER will
cooperate with the Escrow Agent in promptly issuing stock certificates to effect
such transfers.
SECTION 9.04 CLAIMS UPON ESCROW FUND. Upon receipt by the Escrow Agent
on or before the Release Date of a certificate signed by any officer of
PURCHASER (an "Officer's
19
24
Certificate") stating that with respect to the indemnification obligations of
the Warranting Stockholders set forth in Section 9.02, Damages exist and
specifying in reasonable detail the individual items of such Damages included in
the amount so stated, the date each such item was paid, or properly accrued or
arose, and the nature of the misrepresentation, breach of warranty, covenant or
claim to which such item is related, the Escrow Agent shall, subject to the
provisions of this Article IX, deliver to PURCHASER out of the Escrow Fund, as
promptly as practicable, PURCHASER Common Stock or cash held in the Escrow Fund
having a value equal to such Damages, with each share of PURCHASER Common Stock
having a value equal to its Per Share Market Value on the date the Escrow Agent
receives the Officer's Certificate. For the purpose of compensating PURCHASER
for its Damages pursuant to this Agreement, the PURCHASER Common Stock in the
Escrow Fund shall be valued at its Per Share Market Value on the date the Escrow
Agent receives a claim upon the Escrow Fund by PURCHASER pursuant to Section
9.04.
SECTION 9.05 OBJECTIONS TO CLAIMS.
(a) At the time of delivery of any Officer's Certificate to the
Escrow Agent, a duplicate copy of such Officer's Certificate shall be delivered
to the Stockholders' Agent and for a period of thirty (30) days after such
delivery, the Escrow Agent shall make no delivery of PURCHASER Common Stock or
cash pursuant to Section 9.04 hereof unless the Escrow Agent shall have received
written authorization from the Stockholders' Agent to make such delivery. After
the expiration of such thirty (30) day period, the Escrow Agent shall make
delivery of the PURCHASER Common Stock or cash in the Escrow Fund in accordance
with Section 9.04 hereof, provided that no such payment or delivery may be made
if the Stockholders' Agent shall object in a written statement to the claim made
in the Officer's Certificate, and such statement shall have been delivered to
the Escrow Agent and to PURCHASER prior to the expiration of such thirty (30)
day period.
(b) In case the Stockholders' Agent shall so object in writing to
any claim or claims by PURCHASER made in any Officer's Certificate, PURCHASER
shall have thirty (30) days to respond in a written statement to the objection
of the Stockholders' Agent. If after such thirty (30) day period there remains a
dispute as to any claims, then the Stockholders' Agent and PURCHASER shall
attempt in good faith for sixty (60) days to agree upon the rights of the
respective parties with respect to each of such claims. If the Stockholders'
Agent and PURCHASER should so agree, a memorandum setting forth such agreement
shall be prepared and signed by both parties and shall be furnished to the
Escrow Agent. The Escrow Agent shall be entitled to rely on any such memorandum
and shall distribute the PURCHASER Common Stock or cash from the Escrow Fund in
accordance with the terms thereof.
SECTION 9.06 RESOLUTION OF CONFLICTS AND ARBITRATION.
(a) If no agreement can be reached after good faith negotiation
between the parties pursuant to Section 9.05, either PURCHASER or the
Stockholders' Agent may, by written notice to the other, demand arbitration of
the matter unless the amount of the Damages is at issue in pending litigation
with a third party, in which event arbitration shall not be commenced until such
amount is ascertained or both parties agree to arbitration; and in either such
event the matter shall be settled by arbitration conducted and resolved in
accordance with the Expedited Rules of Commercial Arbitration of the American
Arbitration Association.
(b) Judgment upon any award rendered by the arbitrator may be
entered in any court having jurisdiction. Any such arbitration shall be held in
Fulton County, Georgia under the
20
25
commercial rules then in effect of the American Arbitration Association. The
arbitrator shall have the right to apportion the fees and expenses of the
arbitration as he or she deems just.
SECTION 9.07 STOCKHOLDERS' AGENT.
(a) Kirk K. Reiss shall be constituted and appointed as agent
("Stockholders' Agent") for and on behalf of the Warranting Stockholders to give
and receive notices and communications, to authorize delivery to PURCHASER of
the PURCHASER Common Stock or other property from the Escrow Fund in
satisfaction of claims by PURCHASER, to object to such deliveries, to agree to,
negotiate, enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or appropriate in the judgment of the
Stockholders' Agent for the accomplishment of the foregoing. Such agency may be
changed by the holders of a majority in interest of the Escrow Fund from time to
time upon not less than 10 days' prior written notice to PURCHASER. No bond
shall be required of the Stockholders' Agent, and the Stockholders' Agent shall
receive no compensation for his services. Notices or communications to or from
the Stockholders' Agent shall constitute notice to or from each of the
Warranting Stockholders.
(b) The Stockholders' Agent shall not be liable for any act done or
omitted hereunder as Stockholder' Agent while acting in good faith and in the
exercise of reasonable judgment and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. The
Warranting Stockholders shall severally indemnify the Stockholders' Agent and
hold him harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Stockholders' Agent and arising out
of or in connection with the acceptance or administration of his duties
hereunder.
(c) The Stockholders' Agent shall have reasonable access to
information about TARGET and/or TARGET Business and the reasonable assistance of
TARGET's and/or TARGET Business's officers and employees for purposes of
performing his duties and exercising his rights hereunder, provided that the
Stockholders' Agent shall treat confidentially and not disclose any nonpublic
information from or about TARGET and TARGET Business to anyone (except on a need
to know basis to individuals who agree to treat such information
confidentially).
SECTION 9.08 ACTIONS OF THE STOCKHOLDERS' AGENT. A decision, act,
consent or instruction of the Stockholders' Agent shall constitute a decision of
all Warranting Stockholders for whom shares of PURCHASER Common Stock otherwise
issuable to them are deposited in the Escrow Fund and shall be final, binding
and conclusive upon each such Warranting Stockholder, and the Escrow Agent and
PURCHASER may rely upon any decision, act, consent or instruction of the
Stockholders' Agent as being the decision, act, consent or instruction of each
and every such Warranting Stockholder. The Escrow Agent and PURCHASER are hereby
relieved from any liability to any person for any acts done by them in
accordance with such decision, act, consent or instruction of the Stockholders'
Agent.
SECTION 9.09 THIRD-PARTY CLAIMS. In the event PURCHASER becomes aware
of a third-party claim which PURCHASER believes may result in a demand against
the Escrow Fund, PURCHASER shall notify the Stockholders' Agent of such claim,
and the Stockholders' Agent and the Warranting Stockholders for whom shares of
PURCHASER Common Stock otherwise issuable to them are deposited in the Escrow
Fund shall be entitled, at their expense, to participate in any defense of such
claim with the consent of PURCHASER which shall not be unreasonably withheld.
PURCHASER shall have the right in its sole discretion to settle any such claim.
In the event that the Stockholders' Agent has consented to any such settlement,
the Stockholders' Agent shall have no
21
26
power or authority to object under Section 9.05 or any other provision of this
Article IX to the amount of any claim by PURCHASER against the Escrow Fund for
indemnity with respect to such settlement.
ARTICLE X.
MISCELLANEOUS
SECTION 10.01 DEFINITIONS. Except as otherwise provided herein, the
capitalized terms set forth below (in their singular and plural forms as
applicable) shall have the following meanings:
"Additional Escrow Shares" shall have the meaning provided in Section
9.01(b).
"Affiliate" of a Person shall mean: (a) any other Person directly, or
indirectly through one or more intermediaries, controlling, controlled by or
under common control with such Person or (b) any officer, director, partner,
employer, or direct or indirect beneficial owner of any 10% or greater equity or
voting interest of such Person.
"Agreement" shall mean this Agreement and Plan of Merger, the TARGET
Disclosure Letter, the PURCHASER Disclosure Letter and the Exhibits delivered
pursuant hereto and incorporated herein by reference.
"Assets" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible, accrued or
contingent, or otherwise relating to or utilized in such Person's business,
directly or indirectly, in whole or in part, whether or not carried on the books
and records of such Person, and whether or not owned in the name of such Person
or any Affiliate of such Person and wherever located.
"Closing" shall mean the closing of the transactions contemplated
hereby, as described in Section 1.02 of this Agreement.
"Closing Date" shall have the meaning provided in Section 1.02 of
this Agreement.
"Consent" shall mean any consent, approval, authorization, clearance,
exemption, waiver, or similar affirmation by any Person pursuant to any
Contract, Law, Order, or Permit.
"Contract" shall mean any written or oral agreement, arrangement,
authorization, commitment, contract, indenture, instrument, lease, obligation,
plan, practice, restriction, understanding or undertaking of any kind or
character, or other document to which any Person is a party or that is binding
on any Person or its capital stock, Assets or business.
"Damages" shall have the meaning provided in Section 9.02(b)(i).
"Default" shall mean (a) any breach or violation of or default under
any Contract, Order or Permit, (b) any occurrence of any event that with the
passage of time or the giving of notice or both would constitute a breach or
violation of or default under any Contract, Order or Permit, or (c) any
occurrence of any event that with or without the passage of or the giving of
notice would give rise to a right to terminate or revoke, change the current
terms of, or renegotiate, or to accelerate, increase, or impose any Liability
under, any Contract, Order or Permit.
22
27
"Effective Time" shall mean the date and time at which the Merger
becomes effective as defined in Section 1.03 of this Agreement.
"Environmental Laws" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection Agency and
state and local agencies with primary jurisdiction over pollution or protection
of the environment.
"Escrow Agent" shall have the meaning provided in Section 9.01(a).
"Escrow Fund" shall have the meaning provided in Section 9.01(a).
"Escrow Shares" shall have the meaning provided in Section 3.01(c).
"Exhibits" 1 through 4, inclusive, shall mean the Exhibits so marked,
copies of which are attached to this Agreement. Such Exhibits are hereby
incorporated by reference herein and made a part hereof and may be referred to
in this Agreement and any other related instrument or document without being
attached hereto.
"Expenses" shall have the meaning provided in Section 10.02 of this
Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied during the periods involved.
"Hazardous Material" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section
9601 et seq., or any similar federal, state or local Law.
"Internal Revenue Code" shall mean the Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" as used with respect to a TARGET shall mean the actual
knowledge, without requirement of inquiry, of Robert H. Cawly, Kirk K. Reiss and
Mark Peterson, and as used with respect to PURCHASER and MERGER SUB shall mean
the actual knowledge, without requirement of inquiry, of Marc J. Schwartz and
Dr. Donald Ratajczak.
"Law" shall mean any code, law, ordinance, regulation, reporting or
licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost or expense (including,
without limitation, costs of investigation, collection and defense), claim,
deficiency, guaranty or endorsement of or by any Person (other than endorsements
of notes, bills, checks, and drafts presented for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute or
contingent, liquidated or unliquidated, matured or unmatured, or otherwise.
"Licensed Intellectual Property" shall have the meaning provided in
Section 4.08 of this Agreement.
23
28
"Lien" shall mean any conditional sale agreement, easement,
encroachment, encumbrance, hypothecation, lien, mortgage, pledge, restriction,
security interest, title retention or other security arrangement, or any adverse
right or interest, charge, or claim of any nature whatsoever of, on, or with
respect to any property or property interest, other than (i) Liens for current
property Taxes not yet due and payable, (ii) pledges to secure deposits and
other Liens incurred in the ordinary course of the banking business, and (iii)
Liens which are not reasonably likely to have, individually or in the aggregate,
a Material Adverse Effect on a Party.
"Limitation" shall have the meaning provided in Section 9.02(c).
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, governmental or other examination or
investigation, hearing, inquiry, administrative or other proceeding.
"Loan Property" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest, and, where required by the context, includes the
owner or operator of such property, but only with respect to such property.
"MassBCL" means Chapter 156B of the Massachusetts General Laws, as in
effect on the date hereof.
"material" for purposes of this Agreement shall be determined in
light of the facts and circumstances of the matter in question, provided that
any specific monetary amount stated in this Agreement shall determine
materiality in that instance.
"Material Adverse Effect" on a Party shall mean an event, change or
occurrence which has a material adverse impact on (a) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (b) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y) changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, and (z)
the Merger and compliance with the provisions of this Agreement on the operating
performance of the Parties.
"Merger" shall mean the merger of TARGET with and into MERGER SUB
referred to in Section 1.01 of this Agreement.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NGCL" shall mean the Nevada General Corporation Law.
"1933 Act" shall mean the Securities Act of 1933, as amended.
"1934 Act" shall mean the Securities Exchange Act of 1934, as amended.
"OCGA" shall mean the Official Code of Georgia Annotated.
"Officer's Certificate" shall have the meaning provided in Section
9.04.
24
29
"Order" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or writ
of any federal, state, local or foreign or other court, arbitrator, mediator,
tribunal, administrative agency or Regulatory Authority.
"Outstanding TARGET Shares" shall have the meaning provided in
Section 3.01(a) of this Agreement.
"Participation Facility" shall mean any facility or property in which
the Party in question participates in the management (including any property or
facility held in a joint venture) and, where required by the context, said term
means the owner or operator of such facility or property, but only with respect
to such facility or property.
"Party" shall mean TARGET, PURCHASER and MERGER SUB, and "Parties"
shall mean all of TARGET, PURCHASER and MERGER SUB.
"Permit" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, or permit to which any, Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its capital stock, Assets,
Liabilities, or business.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Per Share Market Value" shall mean on any particular date: the
closing bid price for a share of PURCHASER Common Stock in the over-the-counter
market, as reported by the OTC Bulletin Board or in the National Quotation
Bureau Incorporated (or similar organization or agency succeeding to its
functions of reporting prices) at the close of business on such date; or if the
PURCHASER Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of the "Pink
Sheet" quotes for the relevant conversion period, as determined in good faith by
the Board of Directors of PURCHASER; or if the PURCHASER Common Stock is not
then publicly traded, the fair market value of a share of Common Stock as
determined by an the Board of Directors of PURCHASER in good faith.
"Proportional Allotment" shall mean, with respect to each Warranting
Stockholder, the quotient obtained by dividing (a) the total number of Escrow
Shares beneficially owned by such Warranting Stockholder by (b) the total number
of Escrow Shares.
"Proprietary Intellectual Property" shall have the meaning provided
in Section 4.08 of this Agreement.
"PURCHASER Common Stock" shall mean the $.01 par value common stock
of PURCHASER.
"PURCHASER Companies" shall mean, collectively, PURCHASER and all
PURCHASER Subsidiaries.
"PURCHASER Disclosure Letter" shall have the meaning set forth in
Article V hereof.
25
30
"PURCHASER Financial Statements" shall mean the consolidated
financial statements of PURCHASER contained in PURCHASER's SEC Documents,
including the notes thereto.
"PURCHASER Indemnified Person" or "PURCHASER Indemnified Persons"
shall have the meaning provided in Section 9.02(b).
"PURCHASER Stock Plans" shall mean the existing stock option and
other stockbased compensation plans of PURCHASER.
"PURCHASER Subsidiaries" shall mean the Subsidiaries of PURCHASER.
"Registration Rights Agreement" shall have the meaning set forth in
Section 8.01(c) of this Agreement.
"Regulatory Authorities" shall mean, collectively, the Federal Trade
Commission, the United States Department of Justice, the NASD, the SEC and all
state securities agencies.
"Release Date" shall have the meaning provided in Section 9.03(b).
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean all reports and registration statements
filed, or required to be filed, by a Party or any of its Subsidiaries with any
Regulatory Authority pursuant to the Securities Laws.
"Securities Laws" shall mean the 1933 Act and the 1934 Act, state
blue sky laws, and the rules and regulations of any Regulatory Authority
promulgated thereunder.
"Stock Consideration" shall have the meaning provided in Section
3.01(a) of this Agreement.
"Stockholders' Agent" shall have the meaning provided in Section
9.07(a).
"Subsidiaries" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
5% or more of the outstanding equity securities either directly or through an
unbroken chain of entities as to each of which 5% or more of the outstanding
equity securities is owned directly or indirectly by its parent; provided,
however, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.
"Surviving Corporation" shall mean TARGET as the surviving
corporation resulting from the Merger.
"TARGET Benefit Plans" shall mean all pension, retirement,
profit-sharing, deferred compensation, stock option, employee stock ownership,
severance pay, vacation, bonus, or other incentive plans, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, currently adopted, maintained by,
sponsored in whole or in part by, or contributed to by TARGET for the benefit of
employees, retirees, dependents, spouses, directors, independent contractors, or
other beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate.
26
31
"TARGET Business" shall mean the business of providing professional
services in development and implementation of asset valuation strategies and
corporate venturing, which business may be conducted through a division or unit
of the PURCHASER or any PURCHASER Company after the Effective Time.
"TARGET Common Stock" shall mean the no par value common stock of
TARGET.
"TARGET Disclosure Letter" shall have the meaning set forth in
Article IV hereof.
"TARGET Financial Statements" shall mean the unaudited balance sheets
(including related notes and schedules, if any) of TARGET as of March 31, 2001,
for the one month period then ended, and the related statement of
income(including related notes and schedules, if any), as previously furnished
by TARGET to PURCHASER.
"Taxes" shall mean any federal, state, county, local, foreign and
other taxes, assessments, charges, fares, and impositions, including interest
and penalties thereon or with respect thereto.
"Termination Date" shall have the meaning provided in Section
9.02(a).
"Warranting Stockholders" shall mean each of the following
stockholders of TARGET: Robert H. Cawly, Kirk K. Reiss, Mark Peterson, John P.
Cayce, Donald Ratajczak and Dean W. Andersen.
SECTION 10.02 EXPENSES.
Each of the Parties shall bear and pay all direct costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder, including filing, registration and application fees, printing fees,
and fees and expenses of its own financial or other consultants, investment
bankers, accountants, and counsel (the "Expenses"), provided that any expenses
of TARGET in excess of $15,000 shall be paid by stockholders of TARGET.
SECTION 10.03 BROKERS AND FINDERS. Except as set forth in the TARGET
Disclosure Letter, each of the Parties represents and warrants that neither it
nor any of its officers, directors, employees, or Affiliates has employed any
broker or finder or incurred any Liability for any financial advisory fees,
investment bankers' fees, brokerage fees, commissions, or finders' fees in
connection with this Agreement or the transactions contemplated hereby. In the
event of a claim by any broker or finder based upon its representing or being
retained by or allegedly representing or being retained by TARGET, PURCHASER or
MERGER SUB, each of TARGET, PURCHASER and MERGER SUB, as the case may be, agrees
to indemnify and hold the other Parties harmless of and from any Liability in
respect of any such claim.
SECTION 10.04 ENTIRE AGREEMENT. Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral. Nothing in this Agreement
expressed or implied, is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, other than as provided in
Sections 7.01 and 7.03 of this Agreement.
27
32
SECTION 10.05 AMENDMENTS. To the extent permitted by Law, this
Agreement may be amended by a subsequent writing signed by all of the
stockholders of TARGET signatory hereto and each of the Parties upon the
approval of the Boards of Directors of each of the Parties.
SECTION 10.06 WAIVERS.
(a) Prior to or at the Effective Time, PURCHASER, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by TARGET, to waive or extend the time for the compliance or
fulfillment by TARGET of any and all of its obligations under this Agreement,
and to waive any or all of the conditions precedent to the obligations of
PURCHASER under this Agreement, except any condition which, if not satisfied,
would result in the violation of any Law. No such waiver shall be effective
unless in writing signed by a duly authorized officer of PURCHASER.
(b) Prior to or at the Effective Time, TARGET, acting through its
Board of Directors, chief executive officer or other authorized officer, shall
have the right to waive any Default in the performance of any term of this
Agreement by PURCHASER or MERGER SUB, to waive or extend the time for the
compliance or fulfillment by PURCHASER or MERGER SUB of any and all of their
respective obligations under this Agreement, and to waive any or all of the
conditions precedent to the obligations of TARGET under this Agreement, except
any condition which, if not satisfied, would result in the violation of any Law.
No such waiver shall be effective unless in writing signed by a duly authorized
officer of TARGET.
(c) The failure of any Party or any stockholder of TARGET signatory
hereto at any time or times to require performance of any provision hereof shall
in no manner affect the right of such Party or stockholder at a later time to
enforce the same or any other provision of this Agreement. No waiver of any
condition or of the breach of any term contained in this Agreement in one or
more instances shall be deemed to be or construed as a further or continuing
waiver of such condition or breach or a waiver of any other condition or of the
breach of any other term of this Agreement.
SECTION 10.07 ASSIGNMENT. Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any Party or stockholder of TARGET signatory hereto
(whether by operation of Law or otherwise) without the prior written consent of
the other Parties and each of the stockholders of TARGET signatory hereto.
Subject to the immediately preceding sentence, this Agreement will be binding
upon, inure to the benefit of, and be enforceable by the Parties and the
stockholders of TARGET signatory hereto and their respective successors and
assigns.
SECTION 10.08 NOTICES. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:
PURCHASER or
MERGER SUB: Brainworks Ventures, Inc.
101 Marietta Street
Suite 3450
28
33
Atlanta, Georgia 30303
Telecopy Number: (404) 524-1667
Attention: Marc J. Schwartz
Copy to Counsel (which shall not constitute notice to PURCHASER or MERGER SUB):
Rogers & Hardin LLP
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Telecopy Number: (404) 525-2224
Attention: Robert C. Hussle, Esq.
TARGET: Executive Venture Partners, Ltd.
35 Flagg Road
Southborough, MA 01772
Telecopy Number: (508) ___-____
Attention: Robert C. Cawly
Copy to Counsel (which shall not constitute notice to TARGET):
Robert DeN. Cope
Woodbourne Farm
644 Monroe Road
Bath, NH 03740-4027
Telecopy Number: (603) 747-2913
SECTION 10.09 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia, without regard to
any applicable conflicts of Laws, except to the extent that the federal laws of
the United States may apply to the Merger.
SECTION 10.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
SECTION 10.11 CAPTIONS. The captions contained in this Agreement are
for reference purposes only and are not part of this Agreement.
SECTION 10.12 ENFORCEMENT OF AGREEMENT. The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement was not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the Parties shall be entitled
to seek an injunction or injunctions to prevent breaches of this Agreement and
to enforce specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in addition to any
other remedy to which they are entitled at law or in equity.
SECTION 10.13 SEVERABILITY. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or
29
34
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
SECTION 10.14 SURVIVAL. The respective representations, warranties,
obligations, covenants and agreements of the Parties shall not survive the
Effective Time of this Agreement except that (i) Articles II, III, IX, X, and
Sections 7.01, 7.02 and 7.03 of this Agreement shall survive the Effective Time
and Article IV shall survive the Effective Time to the extent provided in
Article IX.
SECTION 10.15 FAX EXECUTION. For the purposes of executing this
Agreement, (a)a document signed and transmitted by facsimile machine or
telecopier shall be treated as an original document; (b) the signature of any
party on such document shall be considered as an original signature; (c) the
document transmitted (or the document of which the page containing the signature
or signatures of one of more parties is transmitted) shall have the same effect
as a counterpart thereof containing original signatures; and (d) at the request
of a party, each party who executed a document transmitted by facsimile machine
or telecopier, shall re-execute such document or a counterpart as an original.
No party may raise the use of a facsimile machine or telecopier for the purpose
of transmitting a signature of that party or another party as a defense to the
enforcement of this Agreement or any other document required to be delivered in
accordance with its terms, including any amendment thereof.
[Signatures on following page]
30
35
IN WITNESS WHEREOF, each of the Parties has caused this Agreement to
be executed and delivered on its behalf, and each of the stockholders of TARGET
have executed and delivered this Agreement, all as of the day and year first
above written.
BRAINWORKS VENTURES, INC.
By: /s/ Marc J. Schwartz
--------------------------------
Its: Vice President
-------------------------
EXECUTIVE VENTURE PARTNERS, LTD.
By: /s/ Robert H. Cawly
--------------------------------
Its: President
------------------------
EVP ACQUISITION CORPORATION
By: /s/ Marc J. Schwartz
--------------------------------
Its: Vice President
-------------------------
STOCKHOLDERS OF EXECUTIVE VENTURE
PARTNERS, LTD.
/s/ Robert H. Cawly
-----------------------------------
ROBERT H. CAWLY
/s/ Kirk K. Reiss
-----------------------------------
KIRK K. REISS
/s/ Mark Peterson
-----------------------------------
MARK PETERSON
/s/ John P. Cayce
-----------------------------------
JOHN P. CAYCE
/s/ Donald Ratajczak
-----------------------------------
DONALD RATAJCZAK
/s/ Dean W. Andersen
-----------------------------------
DEAN W. ANDERSEN
/s/ Robert DeN. Cope
-----------------------------------
ROBERT DEN. COPE