AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
DATED AS OF APRIL 7, 1997
AMONG
PRINTRAK INTERNATIONAL INC.
A DELAWARE CORPORATION
TFP ACQUISITION CORP.
A SOUTH CAROLINA CORPORATION
AND
TFP INC.
A SOUTH CAROLINA CORPORATION
TABLE OF CONTENTS
PAGE
1. DEFINITIONS.1
2. REORGANIZATION AND MERGER . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 SURVIVING CORPORATION . . . . . . . . . . . . . . . . . . . . . . 2
2.2 ARTICLES OF INCORPORATION AND BYLAWS OF TFP . . . . . . . . . . . 2
2.3 COMMON STOCK OF MERGER SUB. . . . . . . . . . . . . . . . . . . . 2
2.4 CONVERSION OF TFP STOCK . . . . . . . . . . . . . . . . . . . . . 2
2.5 CONVERSION OF TFP DERIVATIVE SECURITIES . . . . . . . . . . . . . 2
2.6 PROTECTION AGAINST DILUTION AS TO CONVERSION RATE . . . . . . . . 2
2.7 EXCHANGE OF STOCK CERTIFICATES AND DERIVATIVE SECURITIES. . . . . 3
2.8 FRACTIONAL SHARES . . . . . . . . . . . . . . . . . . . . . . . . 3
2.9 ISSUANCE OF PRINTRAK COMMON STOCK . . . . . . . . . . . . . . . . 4
2.10 TRANSFER BOOKS. . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 TFP DISSENTING SHARES . . . . . . . . . . . . . . . . . . . . . . 4
2.12 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . . 4
3. THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. REPRESENTATIONS AND WARRANTIES OF TFP . . . . . . . . . . . . . . . . . . 5
4.1 ORGANIZATION AND EXISTENCE OF TFP . . . . . . . . . . . . . . . . 5
4.2 AUTHORITY AND BINDING EFFECT. . . . . . . . . . . . . . . . . . . 5
4.3 AUTHORIZED CAPITAL STOCK OF TFP . . . . . . . . . . . . . . . . . 6
4.4 NO SUBSIDIARIES . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.5 TFP FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 6
4.6 LEASES, TITLE TO PROPERTIES, ETC. . . . . . . . . . . . . . . . . 7
4.7 ABSENCE OF CERTAIN EVENTS . . . . . . . . . . . . . . . . . . . . 7
4.8 INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.9 GUARANTIES AND SURETYSHIP . . . . . . . . . . . . . . . . . . . . 9
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. . . . . . . . . . . . . . . . 9
4.11 TAXES AND TAX RETURNS . . . . . . . . . . . . . . . . . . . . . .10
4.12 NOTES AND ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . . . . .11
4.13 FIXED ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . .11
4.14 MATERIAL CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . .11
4.15 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . .12
4.16 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
4.17 LICENSES, PERMITS, ETC. . . . . . . . . . . . . . . . . . . . . .13
4.18 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.19 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . . .14
4.20 EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
4.21 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . .14
4.22 BANK ACCOUNTS AND POWERS OF ATTORNEY. . . . . . . . . . . . . . .16
4.23 PRODUCT WARRANTIES AND LIABILITIES. . . . . . . . . . . . . . . .16
4.24 LABOR MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.25 QUESTIONABLE PAYMENTS . . . . . . . . . . . . . . . . . . . . . .16
4.26 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
4.27 CONFLICT OF INTEREST. . . . . . . . . . . . . . . . . . . . . . .17
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4.28 BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . . .17
4.29 ENVIRONMENTAL AND SAFETY MATTERS. . . . . . . . . . . . . . . . .17
4.30 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . .18
4.31 REPRESENTATIONS REGARDING POOLING OF INTERESTS. . . . . . . . . .18
4.32 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . .18
5. REPRESENTATIONS AND WARRANTIES OF PRINTRAK AND MERGER SUB . . . . . . . .18
5.1 ORGANIZATION AND EXISTENCE. . . . . . . . . . . . . . . . . . . .18
5.2 AUTHORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
5.3 ABSENCE OF CERTAIN CHANGES. . . . . . . . . . . . . . . . . . . .19
5.4 VALIDITY OF PRINTRAK COMMON STOCK . . . . . . . . . . . . . . . .19
5.5 CAPITAL STOCK OF MERGER SUB . . . . . . . . . . . . . . . . . . .19
5.6 INVESTMENT INTENT . . . . . . . . . . . . . . . . . . . . . . . .19
5.7 PRINTRAK FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . .19
5.8 BROKERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
5.9 AUTHORIZED CAPITAL STOCK OF PRINTRAK. . . . . . . . . . . . . . .20
5.10 SEC REPORTS OF PRINTRAK . . . . . . . . . . . . . . . . . . . . .20
5.11 MATERIAL CONTRACTS. . . . . . . . . . . . . . . . . . . . . . . .20
5.12 LITIGATION. . . . . . . . . . . . . . . . . . . . . . . . . . . .21
5.13 CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . .21
5.14 INTELLECTUAL PROPERTY . . . . . . . . . . . . . . . . . . . . . .21
5.15 EMPLOYEE BENEFIT PLANS. . . . . . . . . . . . . . . . . . . . . .22
5.16 REPRESENTATIONS REGARDING POOLING OF INTERESTS. . . . . . . . . .23
5.17 FULL DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . .24
6. COVENANTS OF TFP AND PRINCIPAL SHAREHOLDER. . . . . . . . . . . . . . . .24
6.1 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . .24
6.2 ACCESS TO INFORMATION . . . . . . . . . . . . . . . . . . . . . .25
6.3 PRESERVATION OF GOODWILL. . . . . . . . . . . . . . . . . . . . .25
6.4 SHAREHOLDERS' APPROVAL. . . . . . . . . . . . . . . . . . . . . .25
6.5 TRADE SECRETS . . . . . . . . . . . . . . . . . . . . . . . . . .26
6.6 PREPARATION OF PROXY STATEMENT. . . . . . . . . . . . . . . . . .26
6.7 TRANSACTION EXPENSES. . . . . . . . . . . . . . . . . . . . . . .26
6.8 CLEARANCE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . .26
6.9 FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . . . . . .26
7. MUTUAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
7.1 BLUE SKY COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . .26
7.2 PUBLIC ANNOUNCEMENTS. . . . . . . . . . . . . . . . . . . . . . .26
7.3 CONFIDENTIALITY OF INFORMATION FURNISHED. . . . . . . . . . . . .27
7.4 REASONABLE EFFORTS TO SATISFY CONDITIONS. . . . . . . . . . . . .27
7.5 COVENANTS OF PRINTRAK . . . . . . . . . . . . . . . . . . . . . .27
7.6 POOLING OF INTERESTS. . . . . . . . . . . . . . . . . . . . . . .27
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8. CONDITIONS TO OBLIGATIONS OF TFP. . . . . . . . . . . . . . . . . . . . .27
8.1 PRINTRAK'S AND MERGER SUB'S REPRESENTATIONS AND
WARRANTIES TRUE AT CLOSING. . . . . . . . . . . . . . . . . . . .27
8.2 ESCROW AGREEMENT; REGISTRATION RIGHTS AGREEMENT . . . . . . . . .28
8.3 OPINION OF PRINTRAK'S AND MERGER SUB'S COUNSEL. . . . . . . . . .28
8.4 NO MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . . . . .28
8.5 EMPLOYMENT AND NON-COMPETE AGREEMENT. . . . . . . . . . . . . . .28
9. CONDITIONS TO OBLIGATIONS OF PRINTRAK AND MERGER SUB. . . . . . . . . . .28
9.1 TFP'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. . . . . . .28
9.2 OPINION OF TFP'S COUNSEL. . . . . . . . . . . . . . . . . . . . .28
9.3 NO DAMAGE OR DESTRUCTION. . . . . . . . . . . . . . . . . . . . .28
9.4 CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . .28
9.5 UCC TERMINATION STATEMENTS. . . . . . . . . . . . . . . . . . . .29
9.6 NO MATERIAL ADVERSE CHANGES . . . . . . . . . . . . . . . . . . .29
9.7 SHAREHOLDER REPRESENTATIONS . . . . . . . . . . . . . . . . . . .29
9.8 INTENTIONALLY OMITTED . . . . . . . . . . . . . . . . . . . . . .29
9.9 TFP EMPLOYEE OPTIONS. . . . . . . . . . . . . . . . . . . . . . .29
9.10 SECURITIES COMPLIANCE . . . . . . . . . . . . . . . . . . . . . .29
9.11 ASSIGNMENTS OF RIGHTS IN TECHNOLOGY . . . . . . . . . . . . . . .30
9.12 EMPLOYMENT AND NON-COMPETE AGREEMENT. . . . . . . . . . . . . . .30
9.13 SHAREHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . .30
9.14 JAMIS MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . .30
9.15 ESCROW AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .30
10. MUTUAL CONDITIONS TO OBLIGATIONS OF PRINTRAK, MERGER SUB AND TFP. . . . .30
10.1 APPROVALS . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
10.2 NO LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . .30
10.3 NATURE OF STATEMENTS. . . . . . . . . . . . . . . . . . . . . . .30
10.4 POOLING LETTER. . . . . . . . . . . . . . . . . . . . . . . . . .31
10.5 TFP SHAREHOLDERS' APPROVAL. . . . . . . . . . . . . . . . . . . .31
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . .31
12. INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
12.1 INDEMNIFICATION OF PRINTRAK . . . . . . . . . . . . . . . . . . .31
12.2 LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . .31
12.3 INDEMNIFICATION OF TFP. . . . . . . . . . . . . . . . . . . . . .32
12.4 CLAIMS PROCEDURE. . . . . . . . . . . . . . . . . . . . . . . . .32
12.5 TREATMENT OF INDEMNITY PAYMENTS . . . . . . . . . . . . . . . . .33
12.6 AGREEMENT OF TFP INDEMNITORS. . . . . . . . . . . . . . . . . . .33
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
14. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
14.1 CROSS REFERENCE TABLE . . . . . . . . . . . . . . . . . . . . . .34
14.2 CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . .35
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15. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
15.1 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
15.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
15.3 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . .36
15.4 SUCCESSORS BOUND. . . . . . . . . . . . . . . . . . . . . . . . .37
15.5 CAPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.6 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.7 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . . .37
15.8 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.10 ATTORNEYS' FEES . . . . . . . . . . . . . . . . . . . . . . . . .37
15.11 WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
15.12 SEVERABILITY. . . . . . . . . . . . . . . . . . . . . . . . . . .37
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AGREEMENT AND PLAN OF REORGANIZATION AND MERGER
THIS AGREEMENT AND PLAN OF REORGANIZATION AND MERGER (this "Agreement")
dated as of April 7, 1997, among Printrak International Inc., a Delaware
corporation ("Printrak"), TFP Acquisition Corp., a South Carolina corporation
and a wholly-owned subsidiary of Printrak ("Merger Sub"), TFP Inc., a South
Carolina corporation ("TFP"), and Xxxxx X. Xxxxx (the "Principal Shareholder").
R E C I T A L S:
A. Printrak, Merger Sub, TFP, and their respective Boards of Directors
and the Principal Shareholder deem it advisable to effect a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "Tax Code"), pursuant to which Merger Sub
(the "Merger") shall be merged with and into TFP in accordance with the terms
and provisions of this Agreement.
B. As a result of the Merger the shareholders of TFP ("TFP Shareholders")
will receive shares of Common Stock, $.0001 par value, of Printrak (the
"Printrak Common Stock") in exchange for the issued and outstanding shares of
Common Stock or Preferred Stock of TFP (collectively, the "TFP Stock"), all as
more fully described in and subject to the specific terms and provisions of this
Agreement.
C. This Agreement sets forth the terms and conditions to which the
parties hereto have agreed and further contemplate the consummation of certain
related transactions hereinafter described.
NOW, THEREFORE, in consideration of the premises and the mutual promises
and covenants of the parties hereto, and subject to the terms and conditions set
forth herein, the parties herein agree as follows:
1. DEFINITIONS. Certain terms are used in this Agreement as specifically
defined herein. Unless elsewhere defined in this Agreement, these definitions
are set forth or referred to in Section 14 of this Agreement. As used in this
Agreement, unless the context requires otherwise, the term "TFP" shall mean and
refer to TFP, Inc. and its subsidiaries.
2. REORGANIZATION AND MERGER. Subject to the terms and conditions of
this Agreement, the parties hereto agree that Merger Sub and TFP shall execute
and file the Articles of Merger in substantially the form attached hereto as
EXHIBIT A with the South Carolina Secretary of State, whereupon Merger Sub shall
be merged with and into TFP and TFP shall be the surviving corporation in such
merger and shall become a wholly owned subsidiary of Printrak. It is intended
that for federal tax purposes the Merger shall constitute a reorganization
within the meaning of Section 368(a)(1)(A) and 368(a)(2)(E) of the Code. The
parties intend that the Merger shall be accounted for using the pooling-of-
interests method.
2.1 SURVIVING CORPORATION. Upon the effectiveness of the Articles
of Merger (hereinafter referred to as the "Effective Time of the Merger"),
Merger Sub shall be merged with and into TFP and the separate existence of
Merger Sub shall cease. TFP shall be the corporation surviving the Merger.
2.2 ARTICLES OF INCORPORATION AND BYLAWS OF TFP. The Articles of
Incorporation and Bylaws of Merger Sub at and immediately prior to the Effective
Time of the Merger shall be the Articles of Incorporation and Bylaws of TFP
following the Effective Time of the Merger.
2.3 COMMON STOCK OF MERGER SUB. Each share of the common stock of
Merger Sub (the "Merger Sub Common Stock") issued and outstanding immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger and
without any action on the part of any holder thereof, be converted into one (1)
share of Common Stock of TFP.
2.4 CONVERSION OF TFP STOCK. Subject to the other terms of this
Section 2, each share of TFP Stock outstanding immediately prior to the
Effective Time of the Merger shall, by virtue of the Merger and without any
action on the part of any holder thereof, be converted into a number of shares
of Printrak Common Stock equal to the Conversion Number, subject to adjustment
pursuant to Section 2.6 below and subject further to the provisions of Section
2.8 regarding the elimination of fractional shares. As used herein, the term
"Conversion Number" means the number obtained by dividing (a) One Million Four
Hundred Thousand (1,400,000) shares of Printrak Common Stock by (b) that number
of shares of TFP Stock that is equal to the sum of (i) the total number of
shares of TFP Stock that are issued and outstanding immediately prior to the
Effective Time of the Merger, plus (ii) the total number of shares of TFP Stock,
if any, that are directly or indirectly ultimately issuable by TFP upon the
exercise, conversion or exchange of all TFP Derivative Securities that are
issued and outstanding immediately prior to the Effective Time of the Merger.
Each share of TFP Preferred Stock shall be treated as one share of TFP Common
Stock.
2.5 CONVERSION OF TFP DERIVATIVE SECURITIES. Subject to the other
terms of this Section 2, each TFP Derivative Security and each Option to
purchase shares of Common Stock of TFP held by an employee or director of TFP
("TFP Employee Options") outstanding immediately prior to the Effective Time of
the Merger shall, by virtue of the Merger and without any action on the part of
any holder thereof, be converted into the right to acquire that number of shares
of Printrak Common Stock determined by multiplying the number of shares of TFP
Common Stock into which such TFP Derivative Security or TFP Employee Options are
convertible immediately prior to the Effective Time of the Merger by the
Conversion Number, at an exercise price per share of Printrak Common Stock equal
to the exercise price per share of each TFP Derivative Security or TFP Employee
Options divided by the Conversion Number, subject to adjustment pursuant to
Section 2.6 below and subject further to the provisions of Section 2.8 regarding
the elimination of fractional shares. Such TFP Employee Options shall be
assumed by Printrak under the terms of an employee option plan to be established
by Printrak which shall provide the holders of such options with substantially
the same rights and obligations as TFP's Stock Option Plan.
2.6 PROTECTION AGAINST DILUTION AS TO CONVERSION RATE. In the event
that Printrak subdivides or consolidates the Printrak Common Stock or declares a
Common Stock dividend with respect to the Printrak Common Stock or recapitalizes
or reclassifies its shares of Common Stock subsequent to the execution of this
Agreement and effective prior to the Closing Date, the conversion
2
rate and type of security (and the exercise price, with respect to TFP
Derivative Securities and TFP Employee Options) shall be proportionately
adjusted.
2.7 EXCHANGE OF STOCK CERTIFICATES AND DERIVATIVE SECURITIES.
Immediately following the Closing, TFP and Printrak shall jointly submit to
Printrak's registrar and transfer agent, ChaseMellon Shareholder Services LLC,
000 Xxxxx Xxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, XX 00000 (the "Exchange Agent"),
an instruction letter including a list of the names, addresses and social
security numbers/taxpayer identification numbers of each holder of shares of TFP
Stock outstanding immediately prior to the Effective Time of the Merger who has
delivered the certificate or certificates representing all TFP Stock held by
such TFP Shareholder to Printrak and for which the holders thereof are not
entitled to claim dissenters' rights under the South Carolina Business
Corporation Act of 1988, as amended (the "South Carolina Code"). As soon as
reasonably practicable following the Effective Time of the Merger, Printrak
shall cause the Exchange Agent to cause each such TFP Shareholder to receive, in
exchange for the TFP Stock held by such TFP Shareholder, a certificate or
certificates representing the number of whole shares of Printrak Common Stock
into which the shares of TFP Stock so surrendered shall have been converted by
the Merger (less the shares of Printrak Common Stock which are to be held in
escrow pursuant to Section 2.13 below) and the cash payment in lieu of a
fractional share of Printrak Common Stock, if any, to which such TFP Shareholder
shall be entitled. Subject to any applicable escheat laws, until so surrendered
and exchanged, each certificate which prior to the Effective Time of the Merger
represented outstanding shares of TFP Stock shall be deemed for all corporate
purposes of Printrak, other than the payment of dividends or other
distributions, to evidence the ownership of the number of whole shares of
Printrak Common Stock into which the shares of TFP Stock represented thereby
shall have been converted and shall be deemed to represent, in lieu of a
fractional share of Printrak Common Stock, the right to receive cash. No cash
or stock dividend payable, no certificate representing split shares deliverable,
and no other distribution payable or deliverable to holders of record of
Printrak Common Stock at any time subsequent to the Effective Time of the Merger
shall be paid or delivered to the TFP Shareholder of any certificate which at
the Effective Time of the Merger represented TFP Stock unless and until such
certificate is surrendered to Printrak. However, subject to any applicable
escheat laws, upon such surrender there shall be paid or delivered to the
initial holder of record of the certificate or certificates for Printrak Common
Stock issued in exchange therefor, the amount of cash, a certificate
representing the number of shares of Printrak Common Stock, or the other
property resulting from any such dividends, splits, or other distributions, as
the case may be, which shall have therefore become payable or deliverable with
respect to Printrak Common Stock subsequent to the Effective Time of the Merger.
No interest shall be payable with respect to such payment or delivery of
dividends or other distributions upon the surrender of certificates which
represented TFP Stock at the Effective Time of the Merger. Following the
Effective Time of the Merger, Printrak shall exchange, or cause to be exchanged,
agreements in respect of all TFP Employee Options exchanged pursuant to Section
2.5 above for the existing agreements governing such TFP Employee Options, which
agreements shall, in the case of options to purchase TFP Stock, be governed by
the terms of Printrak's 1997 Replacement Option Plan to be established by
Printrak having terms comparable to the terms of TFP's Stock Option Plan.
2.8 FRACTIONAL SHARES. No certificates or scrip representing
fractional shares of Printrak Common Stock shall be issued upon surrender of
certificates of TFP Stock converted in connection with the Merger, and no
dividend, stock split, or other distribution of Printrak shall relate to any
such fractional share interest, and no such fractional share interest will
entitle the owner thereof to vote or to any other rights of a stockholder of
Printrak. In lieu of any such fractional share, each TFP
3
Shareholder shall be entitled, upon surrender of such TFP Shareholder's
certificate or certificates representing TFP Stock, to receive a cash payment
therefor, without interest, at a pro rata amount based on the closing price per
share of Printrak Common Stock on the NASDAQ/NMS on the trading day immediately
preceding the Effective Date of the Merger. No interest shall accrue with
respect to any cash held for the benefit of TFP Shareholders of unsurrendered
certificates representing shares of TFP Stock. Securities issued in exchange
for TFP Derivative Securities and TFP Employee Options shall represent the right
to purchase a number of shares of Printrak Common Stock rounded to the nearest
whole number thereof.
2.9 ISSUANCE OF PRINTRAK COMMON STOCK. All shares of Printrak
Common Stock into which shares of the TFP Stock shall have been converted in
connection with the Merger shall be deemed to have been issued in full
satisfaction of all rights pertaining to such converted shares and shall, when
issued pursuant to the provisions hereof, be fully paid and nonassessable.
2.10 TRANSFER BOOKS. The stock transfer books of TFP pertaining to
TFP Stock outstanding at the Effective Time of the Merger shall be closed at the
Effective Time of the Merger, and thereafter no transfer of any such shares of
TFP Stock shall be recorded thereon. In the event a transfer of ownership of
shares of TFP Stock is not recorded on the stock transfer books of TFP, a
certificate or certificates representing the number of whole shares of Printrak
Common Stock into which such shares of TFP Stock shall have been converted in
connection with the Merger may be issued to the transferee of such shares of TFP
Stock if the certificate or certificates representing such shares of TFP Stock
is or are surrendered to the Exchange Agent accompanied by all documents deemed
necessary by the Exchange Agent to evidence and effect such transfer of
ownership of shares of TFP Stock and accompanied by the payment of any
applicable stock transfer tax with respect to such transfer.
2.11 TFP DISSENTING SHARES. TFP Shareholders holding any shares of
TFP stock that are eligible to be "Dissenting Shares" within the meaning of
Chapter 13 of the South Carolina Code with respect to the Merger and as to which
dissenter's rights to require the purchase of such shares have been properly
exercised will be entitled to their rights under Chapter 13 of the South
Carolina Code with respect to such shares. Shares of TFP Stock as to which
dissenting shareholders' rights of appraisal have not been properly perfected
under Chapter 13 of the South Carolina Code will be converted as provided in
Section 2.4 above.
2.12 FURTHER ASSURANCES. TFP agrees that if, at any time after the
Effective Time of the Merger, Printrak considers or is advised that any further
deeds, assignments or assurances are reasonably necessary or desirable to be
obtained from TFP or its officers or directors, to consummate the Merger or to
carry out the purposes of this Agreement at or after the Effective Time of the
Merger, then Printrak, TFP and their respective officers and directors may
execute and deliver all such proper deeds, assignments and assurances and do all
other things necessary or desirable to consummate the Merger and to carry out
the purposes of this Agreement, in the name of TFP or otherwise.
2.13 ESCROW AGREEMENT. Pursuant to an Escrow Agreeement to be
entered into on or before the Closing (as defined in Section 3 below) in
substantially the form of EXHIBIT B (the "Escrow Agreement"), among Printrak,
the Indemnitors, the Escrow Agent and the TFP Shareholders (as those terms are
defined in the Escrow Agreement). Printrak will withhold, pro rata, from the
shares of Printrak Common Stock that would otherwise be delivered to holders of
TFP Stock in the Merger,
4
five percent (5%) of the shares of Printrak Common Stock issued in the Merger
upon the conversion of outstanding TFP Stock (the "Escrow Shares") (the
withholding of shares of Printrak Common Stock pursuant to this subparagraph (a)
will be allocated among the holders of the shares of TFP Stock that are
outstanding immediately prior to the Effective Time of the Merger, pro rata
according to the number of outstanding shares of TFP Stock held by each such
holder immediately prior to the Effective Time of the Merger).
Printrak will deposit in an escrow pursuant to the Escrow Agreement
(the "Escrow") stock certificates representing the Escrow Shares and related
stock powers. The Escrow Shares and such stock powers, and any other property
with respect thereto delivered to the Escrow Agent as provided in the Escrow
Agreement will be held as collateral to secure the indemnification obligations
of the TFP Shareholders under Section 12 hereof in accordance with the Escrow
Agreement.
3. THE CLOSING. The delivery of the various opinions, certificates,
consents, instruments and documents which this Agreement contemplates (the
"Closing") shall take place at the offices of Stradling, Yocca, Xxxxxxx & Xxxxx,
a Professional Corporation, counsel to Printrak, in Newport Beach, California,
on April 30, 1997, or such other day and time as shall be mutually agreed upon
by Printrak and TFP, but in no event later than May 31, 1997. The date of, and
the time at which, the Closing takes place is herein referred to as the "Closing
Date." As soon as practicable after the Closing, the appropriate officers of
Printrak, Merger Sub and TFP shall take all necessary action to bring about the
Effective Time of Merger.
4. REPRESENTATIONS AND WARRANTIES OF TFP. TFP and the Principal
Shareholder jointly and severally make the representations and warranties set
forth below as of the date of this Agreement and as of the date of the Closing.
Except as otherwise provided to the contrary, each party makes the
representations and warranties without qualification as to knowledge. When a
representation or warranty is made "to the best knowledge of" TFP (or language
similar thereto), such knowledge shall be deemed to include the actual knowledge
of the Key Employees. When a representation or warranty is made "to the best
knowledge of" the Principal Shareholder (or language similar thereto), such
knowledge shall be deemed to be the actual knowledge of the Principal
Shareholder.
4.1 ORGANIZATION AND EXISTENCE OF TFP. TFP is a corporation duly
organized, validly existing and in good standing under the laws of the State of
South Carolina and has all requisite corporate power to carry on its business as
now conducted and as proposed to be conducted and to enter into and, subject to
shareholder approval, perform its obligations under this Agreement. Except as
set forth on SCHEDULE 4.1, TFP is qualified to do business as a foreign
corporation and is in good standing in every jurisdiction in which the character
or location of the assets owned by it or the nature of the business transacted
by it requires such qualification where the failure to so qualify would have a
Material Adverse Effect. TFP has delivered to Printrak, or will deliver at the
Closing, true, correct and complete copies of (a) the Articles of Incorporation
(duly certified by the South Carolina Secretary of State), (b) the Bylaws
(certified by the Secretary of TFP), and (c) the Minute and Stock Books
(certified by the Secretary of TFP) of TFP.
4.2 AUTHORITY AND BINDING EFFECT. The Principal Shareholder has the
full legal right and capacity to execute and deliver this Agreement and each
agreement referenced herein to which he is a party and to consummate the
transactions contemplated by, and comply with his obligations under, such
agreements. TFP has the full corporate power and authority to execute and
5
deliver this Agreement and each agreement referenced herein to which it is a
party and to consummate the transactions contemplated by, and comply with its
obligations under, such agreements. This Agreement and each agreement
referenced herein to which TFP is a party, and the consummation by TFP of its
obligations herein and therein, have been duly authorized by all necessary
corporate action of TFP, other than the approval of its shareholders in
accordance with applicable law. This Agreement has been, and at the Closing
each agreement referenced herein will be, duly executed and delivered by TFP
and, to the extent he is a party thereto, the Principal Shareholder. This
Agreement is, and when duly executed and delivered at the Closing each agreement
referenced herein will be, the valid and binding agreement of TFP and/or the
Principal Shareholder, as the case may be, enforceable against TFP and/or the
Principal Shareholder, as the case may be, in accordance with their respective
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally and (ii) general principles of equity relating to the availability of
equitable remedies. No further action is required to be taken by TFP or the
Principal Shareholder, nor is it necessary for either of such parties to obtain
any action, approval or consent by or from any third persons, governmental or
other, to enable each of the such parties to enter into or perform their
respective obligations under this Agreement and each agreement referenced herein
to which it is a party, except for the consents of third parties to the Merger,
as required by the Contracts, which shall be obtained by TFP on or before the
Closing (unless waived in writing by Printrak). Such consents are set forth in
SCHEDULE 4.2 hereto.
4.3 AUTHORIZED CAPITAL STOCK OF TFP. As of the date hereof, the
authorized capital stock of TFP consists of 5,000,000 shares of redeemable
convertible Preferred Stock, no par value, and 15,000,000 shares of Common
Stock, no par value, of which 903,615 shares of Preferred Stock and 3,240,964
shares of Common Stock are validly issued and outstanding, fully paid and
nonassessable and not issued in violation of the preemptive rights of any
person. All of the outstanding shares of Preferred Stock and Common Stock of
TFP have been issued in transactions which were either exempt from registration
under the Securities Act of 1933, (the "Securities Act") as amended, and all
applicable state securities laws and blue sky acts. All shares of TFP Stock
which have been reacquired by TFP have reverted to the status of authorized but
unissued shares and are no longer outstanding. SCHEDULE 4.3 hereto contains a
true, correct and complete list of all outstanding convertible securities,
subscriptions, options, warrants, preemptive rights or other agreements or
commitments obligating TFP to issue shares of TFP Stock or relating to the
transfer or registration of TFP Stock, none of which have been issued in
violation of applicable securities laws or the preemptive rights of any person.
4.4 NO SUBSIDIARIES. Except for the following subsidiaries or
equity investments TFP has no subsidiaries or equity investments in any person:
(a) TFP GmbH, a wholly owned European subsidiary; and (b) Instant Image
Corporation, a wholly owned subsidiary.
4.5 TFP FINANCIAL STATEMENTS. TFP has delivered to Printrak (a) the
balance sheet (hereinafter referred to as the "TFP Balance Sheet") of TFP at
December 31, 1996 (hereinafter referred to as the "Balance Sheet Date") and the
related statements of income and shareholders' equity of TFP for the fiscal year
then ended, together with the related notes thereto, as certified by KPMG Peat
Marwick LLP, whose unqualified opinion thereon is included therewith; and (b)
the audited balance sheets of TFP at December 31, 1994 and 1995, and the related
statements of income and shareholders' equity of TFP for the periods then ended,
together with the related notes thereto, as certified by Deloitte & Touche LLP,
whose unqualified opinion thereon is included therewith, hereafter
6
collectively referred to as the "Financial Statements". Such financial
statements are complete and correct in all material respects and in accordance
with the books of account and records of TFP, and present fairly in all material
respects the financial position of TFP at the dates indicated and the results of
its operations and the changes in its financial position for the periods then
ended, in accordance with generally accepted accounting principles ("GAAP")
consistently applied.
4.6 LEASES, TITLE TO PROPERTIES, ETC. Attached hereto as SCHEDULE
4.6 is a general description of each parcel of real property owned or leased by
TFP. SCHEDULE 4.6 hereto also describes each lease agreement under which TFP
has any leasehold interest in any real property. TFP is in possession of all
such real properties owned or leased by it and described in SCHEDULE 4.6 hereto.
TFP has good title to all properties and assets owned by it, including those
reflected in the TFP Balance Sheet (other than properties and assets reflected
in the TFP Balance Sheet which have since been sold or otherwise disposed of in
the Ordinary Course of Business) and those described in SCHEDULE 4.6 hereto free
and clear of all liens, mortgages, security interests and encumbrances,
including any conditional sale or other title retention agreement (collectively,
"Liens"), except:
(a) liens for taxes not yet due and payable;
(b) statutory liens in immaterial amounts which are not yet
delinquent;
(c) minor defects and irregularities in title or encumbrances
which do not impair the use thereof for the purposes for which they are held;
and
(d) as set forth in the TFP Balance Sheet or in SCHEDULE 4.6
hereto.
The leases set forth in SCHEDULE 4.6 hereto are in full force and effect
and there is no existing default of a material nature under any of such leases
on the part of TFP or, to the best knowledge of TFP and the Principal
Shareholder, the other party thereunder. Such leases consist only of documents
described in SCHEDULE 4.6 hereto, complete and correct copies of which have been
provided by TFP to Printrak. To the best knowledge of TFP and the Principal
Shareholder, none of the buildings, structures or appurtenances located upon the
real properties described in SCHEDULE 4.6 hereto or the operation and
maintenance thereof as now operated or maintained, contravenes any zoning
ordinance or other administrative regulation (whether or not permitted because
of prior nonconforming use) or violates any restrictive covenant or any
provision of law, the effect of which would materially interfere with or prevent
the continued use of such properties for the purposes for which they are now
being used or would materially adversely affect the value thereof. The
buildings and major items of equipment and machinery reflected on the TFP
Balance Sheet are generally in such operating condition and repair, ordinary
wear and tear excepted, as is adequate for the conduct of TFP's business. TFP
has provided to Printrak a complete and correct copy of each policy of title
insurance pertaining to the real properties (exclusive of leasehold interests)
owned by TFP, and described in SCHEDULE 4.6 hereto.
4.7 ABSENCE OF CERTAIN EVENTS. Except as set forth in SCHEDULE 4.7
attached hereto, since the Balance Sheet Date, TFP has not:
(a) made any changes in its authorized capital or outstanding
securities;
(b) issued, sold, delivered or agreed to issue, sell or
deliver any of its capital stock, bonds or other corporate securities, pursuant
to existing employee stock options, or
7
granted or agreed to grant any options, warrants or other rights calling for the
issuance, sale or delivery thereof;
(c) borrowed or agreed to borrow any funds or incurred, or
become subject to, any obligations or liability (absolute or contingent), except
obligations and liabilities incurred in the Ordinary Course of Business;
(d) paid any obligations or liability (absolute or contingent)
other than current liabilities reflected in or shown on the TFP Balance Sheet
and current liabilities incurred since the Balance Sheet Date in the Ordinary
Course of Business;
(e) declared or made, or agreed to declare or make, any
payment of dividends or distributions of any assets of any kinds whatsoever in
respect of its capital stock, or purchased, redeemed or otherwise acquired, or
agreed to purchase, redeem or otherwise acquire, any of its outstanding capital
stock;
(f) except in the Ordinary Course of Business, sold,
transferred, or otherwise disposed of, or agreed to sell, transfer, or otherwise
dispose of, any of its assets, properties, or rights, or canceled or otherwise
terminated, or agreed to cancel or otherwise terminate, any debts or claims;
(g) except in the Ordinary Course of Business, entered or
agreed to enter into any agreement or arrangement granting any preferential
right to purchase any of its assets, properties, or rights, or requiring the
consent of any party to the transfer and assignment of any such assets,
properties, or rights;
(h) waived any rights of value, without consideration
therefor, which in the aggregate would have a Material Adverse Effect on TFP;
(i) made or permitted any amendment or termination of any non-
trade contract, agreement, or license to which it is a party or to which it or
any of its assets or properties are subject;
(j) made, directly or indirectly, any accrual or arrangement
for or payment of bonuses or special compensation of any kind or any severance
or termination to pay any of its present or former officers, directors, or
employees;
(k) increased or agreed to increase the rate of compensation
payable or to become payable by it to any of its officers, directors, or
employees or adopted any new, or made any increase in, any existing, profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan, payment or arrangement made to, for, or with any
of such officers, directors, or employees;
(l) made any capital expenditures (or commitments therefor) in
excess of $25,000 individually or in the aggregate;
(m) entered into any other material transaction other than in
the Ordinary Course of Business;
8
(n) experienced any labor trouble or been informed of the loss
or potential loss of any management or technical personnel which has, or can be
anticipated to have, a Material Adverse Effect;
(o) been cited for any material violations of the federal
Occupational Safety Health Act of 1970 or any rules or regulations promulgated
thereunder or any other act, rules or regulations of any other governmental
agency;
(p) suffered any damages, destruction or losses which in the
aggregate are material to TFP's business, or incurred or become subject to any
material claim or liability for any damages or alleged damages for any actual or
alleged negligence or other tort or breach of contract which are in the
aggregate material to TFP's business;
(q) failed to operate the business of TFP in the ordinary
course so as to use reasonable efforts to preserve the business intact, to keep
available to Printrak the services of TFP's employees, and to preserve for
Printrak the goodwill of TFP's suppliers, customers and others having business
relations with it except where such failure would not have a Material Adverse
Effect;
(r) changed its accounting methods or practices by TFP
materially adversely affecting its assets, liabilities or business; or
(s) experienced any change in TFP's condition (financial or
otherwise), assets, liabilities, working capital, reserves, earnings, business
or prospects, except for changes contemplated hereby or changes which have not,
individually or in the aggregate, been materially adverse.
4.8 INDEBTEDNESS. The TFP Balance Sheet reflects all indebtedness
for borrowed money owed by TFP or to which any of its assets or properties are
subject as of the date thereof and which is required to be reflected by GAAP
therein. A complete and correct copy of each note, loan, credit or other
similar instrument pursuant to which any such indebtedness for borrowed money
was incurred has been delivered to Printrak.
4.9 GUARANTIES AND SURETYSHIP. TFP is not a party to or bound by
any guaranties, matters of suretyship, and other similar instruments.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
TFP Balance Sheet or in SCHEDULE 4.10, TFP does not have any debts,
obligations, liabilities or commitments of any nature, whether due or to become
due, absolute, contingent or otherwise, that, in accordance with GAAP, are
required to be disclosed in a balance sheet or the footnotes thereto, and are
not shown on the TFP Balance Sheet delivered pursuant hereto, other than
liabilities incurred after the Balance Sheet Date in the Ordinary Course of
Business and consistent with past practice. Such post-Balance Sheet Date
liabilities are not material in amount and have not had and are not expected to
have, individually or in the aggregate, a Material Adverse Effect. As to each
liability, debt, obligation or commitment, fixed or contingent, that is set
forth on SCHEDULE 4.10, TFP shall provide the following information, in writing
as an attachment to such Schedule: (i) a summary description of the liability,
debt, obligation or commitment, together with copies of all relevant
documentation relating thereto, the amounts claimed and any other action or
relief sought and, if in connection with a claim, suit or proceeding, the name
of the claimant and all other parties involved therewith and the identity of the
court or agency in
9
which such claim, suit or proceeding is being prosecuted, and (ii) the best
estimate of TFP and the Principal Shareholders of the maximum amount, if any,
which is likely to become payable with respect to any contingent liability. For
purposes hereof, if no written estimate is provided, such best estimate shall be
deemed to be zero.
4.11 TAXES AND TAX RETURNS.
(a) Except as set forth on SCHEDULE 4.11: (i) TFP has duly
filed all Tax Returns (as hereinafter defined) which are required by law to be
filed by it on or prior to the date hereof; (ii) TFP has duly paid all Taxes (as
hereafter defined) due or claimed to be due from it with respect to all taxable
periods or portions of periods ended on or before the date hereof (whether or
not shown on any Tax Return), and there are no assessments or claims for payment
of Taxes now pending or, to the best knowledge of TFP , threatened, nor any
audit of the records of TFP being made or threatened by any taxing authority for
any such periods or portions thereof; and (iii) to the knowledge of TFP, there
are no facts or circumstances which could reasonably be expected to constitute a
basis for assessments or claims for the payment of additional Taxes. The
amounts set up as provisions for Taxes, if any, on the most recent balance sheet
included in the Financial Statements are sufficient for the payment of all
unpaid Taxes of TFP, accrued for or applicable to the periods ended on such date
and all years and periods prior thereto and for which TFP, at those dates, was
liable. True and correct copies of TFP's three most recently filed tax returns
have been delivered to Printrak. TFP has properly withheld and paid, or accrued
for payment, when due, to appropriate state and/or federal authorities, all
sales and use taxes, if any, and all amounts required to be withheld from
payments made to its employees, independent contractors, creditors,
shareholders, or other third parties and has also paid all employment taxes as
required under applicable laws.
(b) TFP has not waived any statute of limitation in respect of
any Taxes or assessments by any federal, state, county, local, foreign or other
taxing jurisdiction or agreed to any extension of time with respect to an
assessment or deficiency in any Tax. TFP has not filed a consent under
Section 341(f) of the Tax Code concerning collapsible corporations.
(c) TFP has not made any payments, and is not obligated to
make any payments, nor is TFP a party to any agreement that under any
circumstances could obligate it to make any payments, that would not be
deductible under Section 280G of the Tax Code. TFP has not been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Tax Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Tax Code. TFP is not a party to any tax allocation or tax sharing
agreement.
(d) Except as set forth on SCHEDULE 4.11, TFP is not, and has
never been, required to file a consolidated or combined state or federal income
Tax Return with any other person or entity and is not liable for the Taxes of
any person under Treas. Reg. Section 1.1502-6 (or any similar provision of
state, local, or foreign law), as transferee or successor, by contract or
otherwise.
(e) For purposes of this Agreement, the term "Tax" or "Taxes"
means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Tax Code Section 59A), customs
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value
10
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
(f) For purposes of this Agreement, the term "Tax Return"
means any return, declaration, report, claim for refund, or information return
or statement relating to Taxes, including any schedule or attachment thereto,
and including any amendment thereof.
4.12 NOTES AND ACCOUNTS RECEIVABLE. Attached hereto as SCHEDULE
4.12 are (i) an accurate list of all accounts and notes receivable of TFP,
including any accounts or notes receivable not reflected in the TFP Balance
Sheet, (ii) an aging of all such accounts and notes receivable showing amounts
due in 30-day aging categories and (iii) an accurate list of all work in process
of TFP, in each case, as of the date of this Agreement. All such accounts and
notes receivable and work in process on such listing arose from, and all
accounts and notes receivable of TFP created between December 31, 1996 and the
Closing will have arisen from, the provision of services or sale of products by
TFP in the ordinary course of business. Neither TFP nor the Principal
Shareholder has received any notice or knows of any counterclaim or set-off with
respect to any such accounts or notes receivable or work in process, or any
facts or circumstances that would be the basis for any such counterclaim or set-
off, which is not reflected or taken into account in the contractual allowance
or bad debt reserves set forth in the TFP Balance Sheet or accrued in the
Ordinary Course of Business. Except to the extent collected since the Balance
Sheet Date, all notes and accounts receivable or work in process reflected on
the TFP Balance Sheet are, and all notes and accounts receivable or work in
process accruing between the Balance Sheet Date and the Closing Date will be (i)
bona fide claims against debtors for sale or other charges, (ii) subject to no
material expenses, set-offs or counterclaims, and (iii) collected in an amount
equal to the net amount thereof as set forth on the TFP Balance Sheet and those
arising after the TFP Balance Sheet Date less the reserves provided therefor
within 180 days of the date when due. Set forth on SCHEDULE 4.12 is an accurate
list of all accounts receivable of TFP as of the date hereof subject to any
"factoring" or similar arrangement.
4.13 FIXED ASSETS. SCHEDULE 4.13 is a list of all of the fixed
assets used in the Business, other than any fixed asset the replacement cost of
which would be less than $500.00 and which is not of material importance to
TFP's operations. The fixed assets are in good working order and condition,
ordinary wear and tear excepted, have been properly maintained, are suitable for
the uses for which they are being utilized in the Business, do not require more
than regularly scheduled maintenance in the ordinary course, consistent with
TFP's established maintenance policies, to keep them in good operating condition
and comply with all requirements under applicable laws, regulations and licenses
which govern the use and operation thereof.
4.14 MATERIAL CONTRACTS. Except only as to contracts and documents
listed in SCHEDULE 4.14 hereto or any other Schedule attached to this Agreement,
TFP is not a party to or bound by, and none of its assets and properties are
subject to, any:
(a) contract not made in the Ordinary Course of Business;
(b) employment, consulting, or representation contract;
(c) contract with any labor union or association;
11
(d) bonus, pension, profit sharing, retirement, stock
purchase, stock option, hospitalization, insurance or other plan or agreement
providing employee benefits;
(e) lease with respect to any property, real or personal,
whether as lessor or lessee, providing for an annual rental in excess of
$10,000;
(f) continuing contract which involves payments by TFP of in
excess of $10,000 individually or $50,000 in the aggregate;
(g) contract or commitment for any capital expenditures
exceeding $10,000 individually or in the aggregate; or
(h) executory contracts for the provision of services by TFP
exceeding $50,000 in any year.
A complete and correct copy of each contract listed on SCHEDULE 4.14
hereto or on any other Schedule attached hereto (collectively, the "Contracts")
has been provided to Printrak, and each such contract is in full force and
effect and TFP is not, and to the best knowledge of TFP and the Principal
Shareholder, no other party thereto is in default thereunder.
Each of such contracts, agreements, leases, licenses and instruments
so listed, or required to be so listed, in SCHEDULE 4.14 is a valid and binding
obligation of TFP and, to the best knowledge of TFP and the Principal
Shareholder, the other parties thereto, enforceable in accordance with its
terms, except as may be affected by bankruptcy, insolvency, moratorium or
similar laws affecting creditors' rights generally and general principles of
equity relating to the availability of equitable remedies. Except as otherwise
set forth in SCHEDULE 4.14 hereto, there have not been any defaults by TFP or,
to the best knowledge of TFP, defaults or any claims of default or claims of
nonenforceability by the other party or parties which, individually or in the
aggregate, would have a Material Adverse Effect on TFP, and there are no facts
or conditions that have occurred or that are anticipated to occur which, through
the passage of time or the giving of notice, or both, would constitute a default
by TFP, or to the best knowledge of TFP, by the other party or parties, under
any of such contracts, agreements, leases, licenses and instruments or would
cause a creation of a lien, security interest or encumbrance upon any of the
assets of TFP or otherwise have a Material Adverse Effect on TFP.
4.15 INTELLECTUAL PROPERTY. Attached hereto as SCHEDULE 4.15 is an
accurate list and description of all patents, patent applications, patent
licenses, copyrights, copyright licenses, trademarks, trademark applications and
trademark licenses, and other trade secrets, know-how or intellectual property
rights (the "Intellectual Property") owned, held, utilized or applied for by
TFP. Except as set forth on SCHEDULE 4.15, TFP owns all Intellectual Property
rights that are necessary or required for the conduct of its business as
presently conducted, such rights are sufficient for such conduct of its business
as presently conducted, and no royalties, honoraria, fees or other payments are
payable with respect to such Intellectual Property. Except as set forth in
SCHEDULE 4.15 hereto:
(a) TFP has not infringed, is not now infringing, and has no
knowledge of any infringement or claimed infringement by TFP of any patent,
patent right, copyright, trademark, trademark right, trade secret or other
intellectual property right of others;
12
(b) neither TFP nor Principal Shareholder has any knowledge of
any infringement of the patents, patent rights, copyrights, trademarks,
trademark rights, trade secrets, or other intellectual property rights of, or
under license to, TFP, nor of pending or threatened opposition proceedings
relating to any pending or contemplated patent or trademark application of TFP;
(c) neither TFP nor Principal Shareholder has any knowledge of
any threatened or contemplated cancellation or revocation of any agreement
granting to TFP any patent, copyright or trademark license or right; or
(d) in no instance has the eligibility of any copyright to any
material property included in the Intellectual Property been forfeited to the
public domain by omission of any required notice or any other action.
Except as disclosed on SCHEDULE 4.15, all personnel, including
employees, agents and consultants, who have contributed to or participated in
the conception and development of Intellectual Property on behalf of TFP either
(i) have been party to a "work-for-hire" arrangement or agreement with TFP, in
accordance with applicable federal and state law, that has accorded TFP full,
effective, exclusive and original ownership of all Intellectual Property thereby
arising, or (ii) have executed appropriate instruments of assignment in favor of
TFP as assignee that have conveyed to TFP full, effective and exclusive
ownership of all Intellectual Property thereby arising. TFP has validly and
effectively obtained the right and license to use, copy, modify and distribute
any third-party programming and materials contained in TFP's software programs
and related technical documentation pursuant to contracts listed on SCHEDULE
4.15. TFP has no obligation for royalties, fees, payments or other obligations
to any third party except as expressly set forth in SCHEDULE 4.15. TFP's
software programs and related technical documentation do not contain derivative
works of any programming or materials not owned in their entirety or duly
licensed by TFP.
4.16 INSURANCE. SCHEDULE 4.16 contains an accurate description of
all policies of fire, general liability, property, worker's compensation, errors
and omissions and other forms of insurance maintained by or on behalf of TFP in
connection with the Business as protection for TFP's assets and the Business.
Except as set forth in SCHEDULE 4.16 hereto, all of such policies are now in
full force and effect and policies covering the same risks and in substantially
the same amounts have been in full force and effect since January 1, 1994. TFP
has not received any notice of cancellation or material amendment of any such
policies; no coverage thereunder is being disputed; and all material claims
thereunder have been filed in a timely fashion.
4.17 LICENSES, PERMITS, ETC. Attached hereto as SCHEDULE 4.17 is a
list and description of all material licenses, franchises, permits, easements,
certificates, consents, rights and privileges, and other governmental
authorizations necessary or appropriate to the conduct of the business of TFP
OTHER THAN those listed on SCHEDULE 4.1. All such items are in full force and
effect and complete and correct copies thereof have been furnished to Printrak.
TFP is in compliance in all material respects with all conditions or
requirements imposed by or in connection with such Licenses and Permits and with
respect to its operation of the Business, and TFP has not received any notice,
nor does TFP have any knowledge that any governmental authority intends to
cancel, terminate or modify any of such licenses or permits or that valid
grounds for any such cancellation, termination or modification currently exist.
13
4.18 LITIGATION. Except as set forth in SCHEDULE 4.18 hereto, there
is neither (a) any action, suit, proceeding or investigation, nor (b) any
counter or cross-claim in an action brought by or on behalf of TFP, whether at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, that is pending or, to the best knowledge of TFP,
threatened, against TFP, which (i) could reasonably be expected to affect
adversely TFP's ability to perform its obligations under this Agreement or the
agreements referenced herein or complete any of the transactions contemplated
hereby or thereby, or (ii) involves the reasonable possibility of any judgment
or liability, or which may become a claim, against Printrak, Merger Sub, the
Business or any of the assets of TFP prior to or subsequent to the Effective
Time of the Merger. Except as set forth in Schedule 4.18, none of TFP or the
Principal Shareholder is subject to any judgment, order, writ, injunction or
decree of any court, arbitrator or governmental department, commission, board,
bureau, agency or instrumentality having jurisdiction over TFP, any of its
assets or the Business.
4.19 COMPLIANCE WITH LAWS. Since the date of its incorporation TFP
has complied in all material respects with all applicable foreign, federal,
state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations, including, without limitation, those
imposing taxes, in every applicable jurisdiction, in respect of the ownership of
its assets and properties and the conduct of its business where the effect of
failure to so comply would have a Material Adverse Effect. Except as disclosed
in SCHEDULE 4.19 hereto, and without limiting the generality of this Section
4.19, there are no unresolved (i) proceedings or investigations instituted or,
to the best knowledge of TFP, threatened, by any such governmental authorities
against TFP or relating to the Business, or (ii) citations issued or, to the
best knowledge of TFP, threatened against TFP or the Business by any
governmental authorities, or (iii) other notices of deficiency or charges of
violation brought or, to the best knowledge of TFP, threatened against TFP or
the Business, including under any federal or state regulation or otherwise,
which could have, individually or in the aggregate, a Material Adverse Effect,
or interfere with the maintenance of the permits, licenses, franchises,
certificates, authorizations or any right to operate held by TFP; and, to the
best knowledge of TFP, there are no facts or circumstances upon which any such
proceedings, investigations, citations, notices, disallowances or charges may be
instituted, issued or brought hereafter.
4.20 EMPLOYEES. Attached hereto as SCHEDULE 4.20 is a list of the
names and annual rates of salary and other compensation of all the present
officers, directors, employees, and contractual agents of TFP. SCHEDULE 4.20
hereto summarizes the bonus, profit sharing, incentive, percentage compensation,
vacation and other like benefits, if any, payable to such officers, directors,
employees, and agents as of the date hereof. Except as disclosed in SCHEDULE
4.20 the transactions contemplated by this Agreement will not trigger any
obligations of TFP under any employment, severance or other agreement, whether
written or oral, with any of TFP's employees, nor will they give rise to any
form of indemnity, claim or right to or of any employee of TFP under any
agreement, law, rule or regulation, whether as a change in the condition of
employment of such employee or otherwise. There are no claims, actions, suits,
proceedings, or investigations pending, or to the best knowledge of TFP and the
Principal Shareholders, threatened against TFP or any of its officers,
directors, employees or agents in regard to race, creed, gender, age or other
forms of discrimination, sexual harassment, wrongful discharge, or any other
similar allegations.
4.21 EMPLOYEE BENEFIT PLANS. SCHEDULE 4.21 hereto contains a
complete list of TFP's Employee Plans. True, correct and complete copies or
descriptions of such Employee Plans
14
have been delivered to Printrak. For purposes of this Section 4.21, the term
"Employee Plan" includes all present (including those terminated or transferred
within the past five (5) years) plans, programs, agreements, arrangements, and
methods of contribution or compensation (including all amendments to and
components of the same, such as a trust with respect to a plan) providing any
remuneration or benefits, other than current cash compensation, to any current
or former employee of TFP or to any other person who provides services to TFP,
whether or not such plan or plans, programs, agreements, arrangements, and
methods of contribution or compensation are subject to the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and whether or not such plan
or plans, programs, agreements, arrangements and methods of contribution or
compensation are qualified under the Tax Code. The term Employee Plan includes,
but is not limited to, pension, retirement, profit sharing, stock option, stock
bonus, and nonqualified deferred compensation plans and includes any Employee
Plan that is a multiemployer plan as defined in Section 3(37) of ERISA. The
term Employee Plan also includes, but is not limited to, disability, medical,
dental, health insurance, life insurance, incentive plans, vacation benefits,
and fringe benefits. Any and all tax returns, reports, forms or other documents
required to be filed by TFP under applicable federal, state or local law with
respect to TFP's Employee Plans have been timely filed and are correct and
complete in all respects; and any and all amounts due by TFP to any governmental
agency or entity with respect to the Employee Plans have been timely and fully
paid. Except as set forth in SCHEDULE 4.21, all Employee Plans are now, and
have always been, established, maintained and operated in accordance with all
applicable laws (including, but not limited to, ERISA and the Tax Code) and all
regulations and interpretations thereunder and in accordance with their plan
documents. All written communications with respect to each Employee Plan by any
person (including, but not limited, to the members of any plan committee, all
plan fiduciaries, plan administrators, TFP and its management, and TFP's
employees) accurately reflect the documents and operations of each such Employee
Plan. Except as disclosed in SCHEDULE 4.21, each funded Employee Plan providing
for payment of deferred compensation is and always has been qualified under
Section 401 of the Code. Except as disclosed in SCHEDULE 4.21, the Internal
Revenue Service has issued one or more determination letters with respect to
each funded Employee Plan stating that, from the inception of each such Employee
Plan, such Employee Plan has been and is qualified under Section 401 of the Tax
Code and each trust maintained in connection with each such Employee Plan has
been and is exempt under Section 501 of the Tax Code. Except set forth in
SCHEDULE 4.21, there is no unfunded liability for vested or nonvested benefits
under any funded Employee Plan, and all contributions required to be made to or
with respect to each Employee Plan have been completely and timely paid. All
reports, forms and other documents required to be filed with any governmental
entity with respect to any Employee Plan have been timely filed and, to the best
knowledge of TFP, are accurate. There have been no filings with respect to any
Employee Plan with the Pension Benefit Guaranty Corporation ("PBGC"). No
liability to the PBGC has been incurred or is expected with respect to any
Employee Plan except for insurance premiums, and all insurance premiums incurred
or accrued up to and including the Closing Date have been or will be timely paid
by TFP. No amount is, and as of the Closing Date no amount will be, due or
owing from TFP to any "multiemployer plan" (as defined in Section 3(37) of
ERISA) on account of any withdrawal therefrom. There has been no event or
condition, nor is any event or condition expected, that would present a risk of
termination of any Employee Plan, or which would constitute a "reportable event"
within the meaning of Section 404(3) of ERISA and the regulations and
interpretations thereunder. There has been no merger, consolidation, or
transfer of assets or liabilities (including, but not limited to, a split-up or
split-off) with respect to any Employee Plan. There is and there has been no
actual or, to the best knowledge of TFP, anticipated, threatened or expected
litigation or arbitration concerning or involving any Employee Plan. No
complaints to or by any governmental entity have been filed or, to the best
knowledge of TFP, have
15
been threatened or are expected with respect to any Employee Plan. No Employee
Plan or any other person has any liability to any plan participant, beneficiary
or other person under any provision of ERISA, the Tax Code or any other
applicable law by reason of any transaction as described in Section 406 of ERISA
and Section 4975 of the Code with respect to any Employee Plan. No Employee
Plan provides medical benefits to one or more former employees (including
retirees), other than benefits required to be provided under Section 4980B of
the Tax Code. There is no contract, agreement or benefit arrangement covering
any employee of TFP which individually or collectively would constitute an
"excess parachute payment" under Section 280G of the Tax Code.
4.22 BANK ACCOUNTS AND POWERS OF ATTORNEY. Attached hereto as
SCHEDULE 4.22 is a list setting forth:
(a) the name of each bank, savings and loan or other financial
institution in which TFP has any account or safe deposit box, the account name
and number of each such account or safe deposit box, and the names of all
persons authorized to draw thereon or have access thereto; and
(b) the name of each person, corporation, firm association, or
business entity or enterprise holding a general or special power of attorney
from TFP and a summary of the terms thereof.
4.23 PRODUCT WARRANTIES AND LIABILITIES. Except as set forth on
SCHEDULE 4.23 attached hereto and except for the warranties contained in certain
of the contracts listed in SCHEDULE 4.14, TFP has not given or made any express
warranties to third parties with respect to any services performed or products
sold by it. Neither TFP nor the Principal Shareholder has any knowledge of any
fact or of the occurrence of any event forming the basis of any present or
future claim against TFP not fully covered by insurance, for liability on
account of products liability or on account of any express or implied product
warranty, except for warranty obligations and product returns in the Ordinary
Course of Business and as set forth on SCHEDULE 4.23.
4.24 LABOR MATTERS. TFP is not a party to a collective bargaining
agreement with any labor union or association. There are no discussions,
negotiations, demands or proposals which are pending or have been conducted or
made with or by any labor union or association since January 1, 1994, and there
are no pending or threatened labor disputes, strikes, or work stoppages which
may have a Material Adverse Effect. TFP is in substantial compliance with all
foreign, federal and state laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and is not engaged in
any unfair labor practices.
4.25 QUESTIONABLE PAYMENTS. TFP has not made, and neither TFP nor
the Principal Shareholder has any knowledge that any shareholder, officer,
director, employee, agent or other representative acting on its behalf has made,
directly or indirectly, any bribes, kickbacks, or political contributions with
corporate funds, payments from corporate funds not recorded on the books and
records of TFP, payments from corporate funds which were falsely recorded on the
books and records of TFP, payments from corporate funds to governmental
officials in their individual capacities or illegal payments from corporate
funds to obtain or retain business either within the United States of America or
abroad.
4.26 BROKERS. TFP is not a party to or in any way obligated under
any contract or other agreement regarding, and there are no outstanding claims
against it for the payment of, any
16
broker's or finder's fee in connection with the origin, negotiation, execution,
or performance of this Agreement or the transactions contemplated hereby.
4.27 CONFLICT OF INTEREST. Except as set forth in SCHEDULE 4.27, no
Principal Shareholder, officer or director of TFP or any Member of the Immediate
Family of any such person:
(a) has any direct or indirect interest in (A) any entity
which does business with TFP, or (B) except by virtue of being a shareholder of
TFP, any property, asset or right which is used by TFP in the conduct of its
business;
(b) has any contractual relationship with TFP other than with
respect to the performance of services as an officer or director; or
(c) has been involved in any transaction with TFP during the
past three (3) years other than with respect to the performance of service as an
officer or director as to the issuance of securities of TFP.
4.28 BOOKS AND RECORDS. The books and records of TFP are in all
material respects complete and correct and have been maintained in accordance
with good business practice and generally accepted accounting principles and
reflect a true record of all meetings or proceedings of its Board of Directors
and shareholders to the knowledge of TFP.
4.29 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
SCHEDULE 4.29, TFP has complied with, and the operation of the Business is in
compliance with, in all material respects, all federal, state, local and
regional statutes, laws, ordinances, rules, regulations and orders relating to
the protection of human health and safety, natural resources or the environment,
including, but not limited to, air pollution, water pollution, noise control,
on-site or off-site hazardous substance discharge, disposal or recovery, toxic
or hazardous substances, training, information and warning provisions relating
to toxic or hazardous substances, and employee safety relating to or adversely
affecting the Business or TFP's assets (collectively the "Environmental Laws");
and no notice of violation of any Environmental Laws or of any permit, license
or other authorization relating thereto has been received, nor is any such
notice pending or, to the best knowledge of TFP, threatened. Except as set
forth in SCHEDULE 4.29, (i) except in compliance with applicable Environmental
Laws and any licenses or permits relating thereto, there has been no
generation, use treatment, storage, transfer, disposal, release or threatened
release, in, at, under, from, to or into, or on such properties of toxic or
hazardous substances during the ownership or occupancy thereof by TFP or, to the
best knowledge of TFP, prior to such ownership or occupancy, and (ii) in no
event has there been any generation, use, treatment, storage, transfer,
disposal, release or threatened release, in, at, under, from, to or into, or on
such properties of toxic or hazardous substances that has resulted in or is
reasonably likely to result in a material adverse effect on the Business or any
TFP's assets. For the purposes of this Section 4.30, "toxic or hazardous
substances" shall include any material, substance or waste that, because of its
quantity, concentration or physical or chemical characteristics, is deemed under
any federal, state, local or regional statute, law, ordinance, regulation or
order, or by any governmental agency pursuant thereto, to pose a present or
potential hazard to human health or safety or the environment, including, but
not limited to, (i) any material, waste or substance which is defined as a
"hazardous substance" pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980 (42 U.S.C. Section 9601, ET SEQ.), as
amended, and its related state and local counterparts, (ii) asbestos and
asbestos containing materials and polychlorinated biphenyls, and (iii) any
petroleum hydrocarbon
17
including oil, gasoline (refined and unrefined) and their respective
constituents and any wastes associated with the exploration, development or
production of crude oil, nature gas or geothermal energy.
4.30 CONFIDENTIALITY. Since the date of incorporation of TFP, TFP
has taken reasonable steps necessary to maintain the continuing protection of
its proprietary, confidential and trade secret information and Intellectual
Property. Such protections include, but are not limited to, having every TFP
employee who has access to proprietary or confidential information except as
disclosed on SCHEDULE 4.30, sign a nondisclosure and inventions assignment
agreement, true and correct copies of which have been delivered to Printrak,
containing standard provisions that are adequate to maintain the confidentiality
of TFP's proprietary, confidential and trade secret information and Intellectual
Property.
4.31 REPRESENTATIONS REGARDING POOLING OF INTERESTS.
(a) TFP is not and has never been a subsidiary or division of
another corporation.
(b) TFP does not own and has never owned any Printrak Common
Stock.
(c) TFP has not changed the equity interest of the voting TFP
Stock in contemplation of effecting this Agreement, either within two years
before the merger anticipated hereunder was initiated or between the dates the
anticipated merger was initiated and consummated, except as permitted by
Accounting Principles Board Opinion Xx. 00 ("XXX Xx. 00"). For purposes of the
foregoing, the anticipated merger is deemed to be initiated on the earlier of
(i) the date that the major terms of the merger, including the ratio of
conversion of stock, were announced publicly, which was April 7, 1997, or
otherwise formally made known to the shareholders of either Printrak or TFP or
(ii) the date that shareholders of either company were notified in writing of an
exchange offer or a merger, as the case may be. The foregoing sentence is to be
interpreted with reference to XXX Xx. 00.
(d) TFP has not reacquired any of its own stock during the
two-year period immediately preceding the date hereof.
4.32 FULL DISCLOSURE. All of the representations and warranties made
by TFP in this Agreement, and all statements set forth in the certificates
delivered by TFP at the Closing pursuant to this Agreement, are true, correct
and complete in all material respects and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
such representations, warranties or statements, in light of the circumstances
under which they were made, misleading.
5. REPRESENTATIONS AND WARRANTIES OF PRINTRAK AND MERGER SUB. Printrak
and Merger Sub, jointly and severally, represent and warrant to and agree with
TFP and the Principal Shareholder that:
5.1 ORGANIZATION AND EXISTENCE. Each of Printrak and Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and South Carolina, respectively, and has all
requisite corporate power to carry on its business as now conducted. Each of
Printrak and Merger Sub is qualified to do business as a foreign
18
corporation and is in good standing in every jurisdiction in which the character
or location of the assets owned by it or the nature of the business transacted
by it require such qualification where the failure to so qualify would not have
a Material Adverse Effect.
5.2 AUTHORITY. Printrak and Merger Sub have the corporate power and
have taken or will take all necessary and proper corporate action to authorize
and approve this Agreement and the consummation hereof, and the execution and
delivery of this Agreement and consummation hereof do not and will not violate
any provision of any judicial or governmental decree, order, or judgment or
conflict with, or result in a breach of or constitute a default under, the
Certificate or Articles of Incorporation (as applicable) or Bylaws of either
Printrak or Merger Sub or any agreement or instrument to which either of them is
a party or by which either is bound. The execution, delivery, and performance
by Printrak and Merger Sub of this Agreement, each agreement referenced herein
to which it is a party and the consummation of the transactions contemplated
hereby and thereby have been duly authorized and approved by the Board of
Directors of Printrak and Merger Sub and by Printrak as the sole shareholder of
Merger Sub and no further corporate action is necessary on the part of Printrak
or Merger Sub, assuming due execution by the other parties hereto and thereto.
This Agreement has been, and at the Closing each agreement referenced herein to
which it is a party will be, duly executed and delivered by Printrak and Merger
Sub. This Agreement is, and when duly executed and delivered at the Closing
each agreement referenced herein will be, the valid and binding agreement of
Printrak, and, to the extent it is a party thereto, Merger Sub, enforceable
against it in accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally and (ii) general principles
of equity relating to the availability of equitable remedies.
5.3 ABSENCE OF CERTAIN CHANGES. Since December 31, 1996, there has
been no change in the business, prospects, or condition, financial or otherwise,
of Printrak, except as set forth in the SEC Filings and changes in the Ordinary
Course of Business that in the aggregate have not been materially adverse. To
the knowledge of Printrak, except as set forth in the SEC Filings, there are no
new developments in any business conducted by Printrak, nor any new or improved
materials, products, processes, or services useful in connection with the
business of Printrak or its customers or suppliers, which can reasonably be
expected to have a Material Adverse Effect.
5.4 VALIDITY OF PRINTRAK COMMON STOCK. The Printrak Common Stock to
be issued pursuant to the provisions of this Agreement in connection with the
Merger will be, when issued upon the terms and for the consideration specified
in this Agreement, validly issued and outstanding, fully paid and nonassessable.
5.5 CAPITAL STOCK OF MERGER SUB. The authorized capital stock of
Merger Sub consists of 1,000 shares of Common Stock, 1,000 of which shares are
validly issued and outstanding, fully paid and nonassessable, and owned by
Printrak as of the date hereof.
5.6 INVESTMENT INTENT. The TFP Stock to be acquired by Printrak as
a result of the Merger is being and will be acquired by Printrak for its own
account for investment and not with any present intention of distribution
thereof.
5.7 PRINTRAK FINANCIAL STATEMENTS. The financial statements of
Printrak for its third quarter ended December 31, 1996 are complete and correct
in all material respects in accordance with the books of account and records of
Printrak, and present fairly the financial position of Printrak,
19
at the dates indicated and the results of its operations and the changes in
their respective shareholders equity for the periods then ended, in accordance
with generally accepted accounting principles consistently applied.
5.8 BROKERS. Except as disclosed in SCHEDULE 5.8, neither Printrak
nor Merger Sub is a party to or in any way obligated under any contract or other
agreement regarding, and there are no outstanding claims against either of them
for the payment of, any broker's or finder's fee in connection with the origin,
negotiation, execution, or performance of this Agreement or the transactions
contemplated hereby.
5.9 AUTHORIZED CAPITAL STOCK OF PRINTRAK. As of the date hereof,
the authorized capital stock of Printrak consists of 20,000,000 shares of Common
Stock, $.0001 par value per share, of which 9,675,728 shares are validly issued
and outstanding as of the date hereof, fully paid and nonassessable and not
issued in violation of the preemptive rights of any shareholder. As of the date
hereof, Printrak has options and warrants to purchase an aggregate of 1,199,757
shares of Common Stock outstanding.
5.10 SEC REPORTS OF PRINTRAK. Printrak has furnished TFP copies of
the reports of Printrak filed with the Securities and Exchange Commission set
forth in SECTION 7.5 ("SEC Reports"). Said reports are accurate and complete in
all material respects and do not omit any material information required to be
set forth therein. Printrak has timely filed with the Securities and Exchange
Commission all reports required to be filed by it since its public offering in
July 1996. Printrak has furnished TFP with all the information required to be
received under Rule 502(b)(2)(ii)(C) of Regulation D ("Rule 502") promulgated
under the Securities Act of 1933, as amended.
5.11 MATERIAL CONTRACTS. Except only as to contracts and documents
listed in SCHEDULE 5.11 hereto or any other Schedule attached to this Agreement,
Printrak is not a party to or bound by, and none of its assets and properties
are subject to, any:
(a) contract not made in the Ordinary Course of Business;
(b) employment, consulting, or representation contract;
(c) contract with any labor union or association;
(d) bonus, pension, profit sharing, retirement, stock
purchase, stock option, hospitalization, insurance or other plan or agreement
providing employee benefits;
(e) lease with respect to any property, real or personal,
whether as lessor or lessee, providing for an annual rental in excess of
$100,000;
(f) continuing contract which involves payments by Printrak of
in excess of $100,000 individually or $500,000 in the aggregate;
(g) contract or commitment for any capital expenditures
exceeding $100,000 individually or in the aggregate; or
20
(h) executory contracts for the provision of services by
Printrak exceeding $500,000 in any year.
A complete and correct copy of each contract listed on SCHEDULE 5.11
hereto or on any other Schedule attached hereto (collectively, the "Contracts")
has been provided to TFP, and each such contract is in full force and effect and
Printrak is not, and to the best knowledge of Printrak and the Principal
Shareholder, no other party thereto is in default thereunder.
Each of such contracts, agreements, leases, licenses and instruments
so listed, or required to be so listed, in SCHEDULE 5.11 is a valid and binding
obligation of Printrak and, to the best knowledge of Printrak, the other parties
thereto, enforceable in accordance with its terms, except as may be affected by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally and general principles of equity relating to the availability of
equitable remedies. Except as otherwise set forth in SCHEDULE 5.11 hereto,
there have not been any defaults by Printrak or, to the best knowledge of
Printrak, defaults or any claims of default or claims of nonenforceability by
the other party or parties which, individually or in the aggregate, would have a
Material Adverse Effect on Printrak, and there are no facts or conditions that
have occurred or that are anticipated to occur which, through the passage of
time or the giving of notice, or both, would constitute a default by Printrak,
or to the best knowledge of Printrak, by the other party or parties, under any
of such contracts, agreements, leases, licenses and instruments or would cause a
creation of a lien, security interest or encumbrance upon any of the assets of
Printrak or otherwise have a Materially Adverse Effect on Printrak.
5.12 LITIGATION. There is neither (a) any action, suit, proceeding
or investigation, nor (b) any counter or cross-claim in an action brought by or
on behalf of Printrak, whether at law or in equity, or before or by any
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or before any arbitrator of any kind, that is pending or,
to the best knowledge of Printrak, threatened, against Printrak, which (i) could
reasonably be expected to affect adversely Printrak's ability to perform its
obligations under this Agreement or the agreements referenced herein or complete
any of the transactions contemplated hereby or thereby, or (ii) which may
reasonably be expected to have a Material Adverse Effect on Printrak or Merger
Sub prior to or subsequent to the Effective Time of the Merger. Printrak is not
subject to any judgment, order, writ, injunction or decree of any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over Printrak, any of its assets or the
Business.
5.13 CONFIDENTIALITY. Since January 1, 1991, Printrak has taken
reasonable steps necessary to maintain the continuing protection of its
proprietary, confidential and trade secret information and Intellectual
Property. Such protections include, but are not limited to, having every
Printrak employee who has access to proprietary or confidential information sign
a nondisclosure and inventions assignment agreement, true and correct copies of
which have been delivered to TFP, containing standard provisions that are
adequate to maintain the confidentiality of Printrak's proprietary, confidential
and trade secret information and Intellectual Property.
5.14 INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE 5.14,
Printrak owns all Intellectual Property rights that are necessary or required
for the conduct of its business as presently conducted, such rights are
sufficient for such conduct of its business as presently conducted, and no
royalties, honoraria, fees or other payments are payable with respect to such
Intellectual Property. Except as set forth in SCHEDULE 5.14 hereto:
21
(a) Printrak has not infringed, is not now infringing, and has
no knowledge of any infringement or claimed infringement by Printrak of any
patent, patent right, copyright, trademark, trademark right, trade secret or
other intellectual property right of others;
(b) Printrak has no knowledge of any infringement of the
patents, patent rights, copyrights, trademarks, trademark rights, trade secrets,
or other intellectual property rights of, or under license to, Printrak, nor of
pending or threatened opposition proceedings relating to any pending or
contemplated patent or trademark application of Printrak;
(c) Printrak has no knowledge of any threatened or
contemplated cancellation or revocation of any agreement granting to Printrak
any patent, copyright or trademark license or right; or
(d) in no instance has the eligibility of any copyright to any
material property included in the Intellectual Property been forfeited to the
public domain by omission of any required notice or any other action.
Except as disclosed on SCHEDULE 5.14, all personnel, including
employees, agents and consultants, who have contributed to or participated in
the conception and development of Intellectual Property on behalf of Printrak
either (i) have been party to a "work-for-hire" arrangement or agreement with
Printrak, in accordance with applicable federal and state law, that has accorded
Printrak full, effective, exclusive and original ownership of all Intellectual
Property thereby arising, or (ii) have executed appropriate instruments of
assignment in favor of Printrak as assignee that have conveyed to Printrak full,
effective and exclusive ownership of all Intellectual Property thereby arising.
Printrak has validly and effectively obtained the right and license to use,
copy, modify and distribute any third-party programming and materials contained
in Printrak's software programs and related technical documentation pursuant to
contracts listed on SCHEDULE 5.14. Printrak has no obligation for royalties,
fees, payments or other obligations to any third party except as expressly set
forth in SCHEDULE 5.14. Printrak's software programs and related technical
documentation do not contain derivative works of any programming or materials
not owned in their entirety duly licensed by Printrak.
5.15 EMPLOYEE BENEFIT PLANS. SCHEDULE 5.15 hereto contains a
complete list of Printrak's Employee Plans. True, correct and complete copies
or descriptions of such Employee Plans have been delivered to TFP. For purposes
of this Section 5.15, the term "Employee Plan" includes all present (including
those terminated or transferred within the past five (5) years) plans, programs,
agreements, arrangements, and methods of contribution or compensation (including
all amendments to and components of the same, such as a trust with respect to a
plan) providing any remuneration or benefits, other than current cash
compensation, to any current or former employee of Printrak or to any other
person who provides services to Printrak, whether or not such plan or plans,
programs, agreements, arrangements, and methods of contribution or compensation
are subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and whether or not such plan or plans, programs, agreements,
arrangements and methods of contribution or compensation are qualified under the
Tax Code. The term Employee Plan includes, but is not limited to, pension,
retirement, profit sharing, stock option, stock bonus, and nonqualified deferred
compensation plans and includes any Employee Plan that is a multiemployer plan
as defined in Section 3(37) of ERISA. The term Employee Plan also includes, but
is not limited to, disability, medical, dental, health insurance, life
insurance, incentive plans, vacation benefits, and fringe benefits. Any and all
tax returns, reports, forms or other
22
documents required to be filed by Printrak under applicable federal, state or
local law with respect to Printrak's Employee Plans have been timely filed and
are correct and complete in all respects; and any and all amounts due by
Printrak to any governmental agency or entity with respect to the Employee Plans
have been timely and fully paid. Except as set forth in SCHEDULE 5.15, all
Employee Plans are now, and have always been, established, maintained and
operated in accordance with all applicable laws (including, but not limited to,
ERISA and the Tax Code) and all regulations and interpretations thereunder and
in accordance with their plan documents. All written communications with
respect to each Employee Plan by any person (including, but not limited, to the
members of any plan committee, all plan fiduciaries, plan administrators,
Printrak and its management, and Printrak's employees) accurately reflect the
documents and operations of each such Employee Plan. Each funded Employee Plan
providing for payment of deferred compensation is and always has been qualified
under Section 401 of the Code. The Internal Revenue Service has issued one or
more determination letters with respect to each funded Employee Plan stating
that, from the inception of each such Employee Plan, such Employee Plan has been
and is qualified under Section 401 of the Tax Code and each trust maintained in
connection with each such Employee Plan has been and is exempt under Section 501
of the Tax Code. Except set forth in SCHEDULE 5.15, there is no unfunded
liability for vested or nonvested benefits under any funded Employee Plan, and
all contributions required to be made to or with respect to each Employee Plan
have been completely and timely paid. All reports, forms and other documents
required to be filed with any governmental entity with respect to any Employee
Plan have been timely filed and, to the best knowledge of Printrak, are
accurate. There have been no filings with respect to any Employee Plan with the
Pension Benefit Guaranty Corporation ("PBGC"). No liability to the PBGC has
been incurred or is expected with respect to any Employee Plan except for
insurance premiums, and all insurance premiums incurred or accrued up to and
including the Closing Date have been or will be timely paid by Printrak. No
amount is, and as of the Closing Date no amount will be, due or owing from
Printrak to any "multiemployer plan" (as defined in Section 3(37) of ERISA) on
account of any withdrawal therefrom. There has been no event or condition, nor
is any event or condition expected, that would present a risk of termination of
any Employee Plan, or which would constitute a "reportable event" within the
meaning of Section 404(3) of ERISA and the regulations and interpretations
thereunder. There has been no merger, consolidation, or transfer of assets or
liabilities (including, but not limited to, a split-up or split-off) with
respect to any Employee Plan. There is and there has been no actual or, to the
best knowledge of Printrak, anticipated, threatened or expected litigation or
arbitration concerning or involving any Employee Plan. No complaints to or by
any governmental entity have been filed or, to the best knowledge of Printrak,
have been threatened or are expected with respect to any Employee Plan. No
Employee Plan or any other person has any liability to any plan participant,
beneficiary or other person under any provision of ERISA, the Tax Code or any
other applicable law by reason of any transaction as described in Section 406 of
ERISA and Section 4975 of the Code with respect to any Employee Plan. No
Employee Plan provides medical benefits to one or more former employees
(including retirees), other than benefits required to be provided under Section
4980B of the Tax Code. There is no contract, agreement or benefit arrangement
covering any employee of Printrak which individually or collectively would
constitute an "excess parachute payment" under Section 280G of the Tax Code.
5.16 REPRESENTATIONS REGARDING POOLING OF INTERESTS.
(a) Printrak has not been a subsidiary or division of another
corporation during the preceding five years.
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(b) Printrak did not own and has never owned any TFP Stock
prior to the consummation of the transactions contemplated herein.
(c) Printrak does not presently intend to directly or
indirectly retire or reacquire all or part of the Printrak Common Stock issued
to the TFP Shareholders hereunder.
(d) Printrak does not intend or plan to dispose, or cause TFP
to dispose, of a significant portion of the assets of either company within two
years after the combination, or to liquidate or merge TFP, except as provided
herein. The foregoing shall be interpreted with reference to XXX Xx. 00.
(e) Printrak has no plan or intention to cause TFP to issue
additional shares of capital stock or to sell or otherwise dispose of any of the
TFP Stock acquired hereunder that would result in Printrak losing control of the
Company within the meaning of Section 368(c) of the Tax Code.
(f) Printrak intends that TFP will continue its historic
business or use a significant portion of its historic business assets in a
business.
(g) None of the compensation received by any shareholder-
employee of TFP will be separate consideration for, or allocable to, any of
their shares of TFP Stock, none of the shares of Printrak Common Stock received
by any shareholder-employee will be separate consideration for, or allocable to,
any employment agreement.
5.17 FULL DISCLOSURE. All of the representations and warranties made
by Printrak in this Agreement, and all statements set forth in the certificates
delivered by Printrak at the Closing pursuant to this Agreement, are true,
correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make such representations, warranties or statements, in light of the
circumstances under which they were made, misleading.
6. COVENANTS OF TFP AND PRINCIPAL SHAREHOLDER. TFP and Principal
Shareholder covenant with Printrak and Merger Sub that:
6.1 CONDUCT OF BUSINESS. Except as specifically contemplated in
this Agreement, from the date of this Agreement to the Effective Time of the
Merger, the business of TFP will be operated diligently and only in the Ordinary
Course of Business, and, in particular, TFP, without the prior written consent
of Printrak, which will not be unreasonably withheld, will not:
(a) cancel or permit any insurance of a material nature to
lapse or terminate, unless renewed or replaced by like coverage;
(b) change its Articles of Incorporation or Bylaws;
(c) be in material default under any material contract,
agreement, commitments or undertaking of any kind;
(d) violate or fail to comply with any laws applicable to it
or its properties or business where the effect of the failure to so comply would
have a Material Adverse Effect;
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(e) commit any act or permit the occurrence of any event or
the existence of any condition of the type described in clauses (a) through (s)
of Section 4.7 hereof;
(f) enter into any contract, agreement or other commitment of
the type described in clauses (a) through (e) and (g) of Section 4.14 hereof;
(g) fail to maintain and repair any material amount of its
assets in accordance with good standards of maintenance and as required in any
leases or other agreements pertaining thereto;
(h) acquire, purchase, or redeem any TFP Stock;
(i) issue or enter into any subscriptions, options, agreements
or other binding commitments in respect of the issuance, transfer, sale,
registration, or encumbrance of any shares of TFP Stock;
(j) cause or voluntarily permit a change in any method of
accounting for tax purposes during or applicable to its current tax year which
would render inaccurate, misleading or incomplete the information concerning
Taxes set forth or referred to in Section 4.11 hereof, or that would have a
Material Adverse Effect for any period prior to the Effective Time of the
Merger; or
(k) permit any affiliate to sell or reduce its risk relative
to the shares received by such affiliate until financial results covering at
least thirty (30) days of post-merger combined results have been published.
6.2 ACCESS TO INFORMATION. From and after the date of this
Agreement, TFP shall give to Printrak, its counsel, accountants, engineers, and
other representatives, reasonable access to all the properties, books,
contracts, commitments and records of TFP so that Printrak may have the
opportunity to make such investigation as it deems necessary, provided that such
investigation shall not (i) unreasonably interfere with the employees, business,
or operations of TFP, or (ii) violate any governmental regulations or laws or
any customers or vendor confidentiality agreements now in effect and to which
TFP is a party. Any such investigation shall not affect the representations and
warranties of TFP contained in this Agreement.
6.3 PRESERVATION OF GOODWILL. TFP will use its reasonable best
efforts to preserve its business organization, to keep available to Printrak the
services of the respective officers and employees of TFP and to preserve for
Printrak the goodwill of all suppliers, customers, and others having business
relations with TFP.
6.4 SHAREHOLDERS' APPROVAL. This Agreement and the transaction
contemplated hereby have been approved by the Board of Directors of TFP. The
Board of Directors of TFP shall solicit the unanimous written consent or call a
special meeting of its shareholders for the purpose of approving the terms and
provisions of this Agreement and the Merger as soon as practicable after the
date hereof. The Board of Directors of TFP shall recommend that TFP's
Shareholders approve this Agreement and the Merger, and shall endeavor to secure
such approval. Principal Shareholder shall vote all shares owned by him in
favor of approval of this Agreement and the Merger.
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6.5 TRADE SECRETS. From and after the date hereof, TFP will not use
or divulge to any competitor of TFP or any unauthorized person, and will use its
reasonable best efforts to insure that the employees and agents of TFP do not
use or divulge, any confidential information, trade secrets, processes, formulas
or know-how relating to the business or properties of TFP at the date hereof.
6.6 PREPARATION OF PROXY STATEMENT. TFP will prepare, with the
cooperation of Printrak, a proxy statement (the "Proxy Statement") and notice of
shareholders meeting to be distributed to TFP Shareholders in connection with a
meeting of the TFP Shareholders to be called to consider and vote upon the
Merger. Except as may be consented to by Printrak, which consent will not be
unreasonably withheld, TFP agrees not to publish any communication other than
the Proxy Statement in respect of this Agreement or the Merger. TFP agrees to
submit to Printrak for its prior review all proxy soliciting material.
6.7 TRANSACTION EXPENSES. Each party will pay all expenses incurred
by them in connection with the negotiation, execution and performance of this
Agreement or any other agreement or transaction, whether or not the transactions
contemplated hereby are consummated, including the fees and expenses of counsel
and brokers, if any, for TFP and the TFP Shareholders, except that TFP may use
its assets to pay One Hundred Thousand Dollars ($100,000) of TFP's attorneys
fees payable to Nelson, Mullins, Xxxxx & Xxxxxxxxxxx. Printrak acknowledges
that TFP has retained Nelson, Mullins, Xxxxx & Scarborough in connection with
the transactions contemplated by this Agreement. TFP shall cause Nelson,
Mullins, Xxxxx & Xxxxxxxxxxx to apprise Printrak, on a bi-weekly basis, of
approximate fees and expenses incurred to date.
6.8 CLEARANCE CERTIFICATES. TFP shall use its reasonable best
efforts to obtain at or prior to closing hereof (i) certificates of the
appropriate state agencies of each state other than South Carolina in which TFP
is qualified to do business, indicating that TFP is not delinquent in the
payment of income, franchise, sales or other state taxes or the filing of any
tax returns; and (ii) a Certificate of Release from the Employment Authority of
appropriate states, other than South Carolina, stating that, as of a date not
more than thirty (30) days prior to the Closing Date, no contributions, interest
or penalties are due by TFP to that Employment Authority;
6.9 FURTHER ASSURANCES. TFP hereby agrees to execute and deliver
from time to time at the request of Printrak and without consideration such
additional instruments of conveyance and transfer and to take such other actions
as Printrak may reasonably require to more effectively carry out and effectuate
the Merger and the transactions contemplated hereby.
7. MUTUAL COVENANTS. Printrak, Merger Sub, and TFP covenant and agree,
each with the other, that:
7.1 BLUE SKY COMPLIANCE. Printrak will use its best efforts to
obtain prior to the Effective Time of the Merger all necessary state securities
law and blue sky act permits and approvals required to permit the issuance of
the shares of Printrak Common Stock to be issued in connection with the Merger,
and TFP shall furnish to Printrak all information concerning TFP and the TFP
Shareholders that Printrak may reasonably request in connection with any such
action.
7.2 PUBLIC ANNOUNCEMENTS. Neither Printrak nor TFP shall make any
public announcement or statement with respect to this Agreement or the Merger
without the prior written consent of the other party; provided, however,
Printrak may disclose the existence and terms of this
26
Agreement or the Merger if, in its judgment, it is required to do so under
applicable securities laws. If any party desires to make a joint announcement
or statement, the parties will consult with each other and exercise reasonable
efforts to agree upon the text of a joint public announcement or statement to be
made by Printrak and TFP.
7.3 CONFIDENTIALITY OF INFORMATION FURNISHED. The parties will
comply with the provisions of that certain Confidentiality Agreement dated March
6, 1997 between Printrak and TFP regarding confidential information disclosed by
the parties to each other in connection with the Merger.
7.4 REASONABLE EFFORTS TO SATISFY CONDITIONS. Consistent with
applicable law and with their fiduciary duties to their respective shareholders,
(i) TFP agrees to use its reasonable best efforts to bring about the
satisfaction of the covenants and conditions specified in Sections 6, 7, 9 and
10 hereof, and (iii) Printrak and Merger Sub agree to use their reasonable best
efforts to bring about the satisfaction of the covenants and conditions
specified in Sections 7, 8 and 10 hereof.
7.5 COVENANTS OF PRINTRAK.
(a) Printrak will, prior to the Closing, provide TFP and each
TFP Shareholder with its Prospectus dated July 2, 1996 and all Form 10-Q's and
Form 8-K's and all other items filed by Printrak under Sections 13(a), 14(a) and
(c) and 15(d) of the Securities Exchange Act of 1934 since the date of such
Prospectus. Printrak will provide TFP and each TFP Shareholder with a
description of the Printrak Common Stock. Printrak will also provide written
information about any terms or arrangements of the proposed transaction which
affect any TFP Shareholder that are materially different from those which affect
any other TFP Shareholder. Printrak also will cause appropriate representatives
of Printrak to answer questions and provide information on the terms and
conditions of the offering of the Printrak Common Stock and to verify financial
information with respect to Printrak.
(b) Printrak shall, prior to the Effective Time, file an
additional listing application with Nasdaq/NM to include the shares of Printrak
Common Stock to be issued hereunder with the Nasdaq/NM.
(c) Printrak will use its reasonable best efforts to preserve
its business organization, to keep available to Printrak the services of its
officers and employees and to preserve the goodwill of its suppliers, customers
and others having business with Printrak.
7.6 POOLING OF INTERESTS. The parties shall not take any action
which would preclude the use of the pooling-of-interests method of accounting
for the Merger, and shall take all actions reasonably required for the use of
the pooling-of-interests method of accounting for the Merger.
8. CONDITIONS TO OBLIGATIONS OF TFP. The obligations of TFP to complete
the Closing as set forth in Section 3 under this Agreement shall, at the option
of TFP, be subject to the following conditions precedent:
8.1 PRINTRAK'S AND MERGER SUB'S REPRESENTATIONS AND WARRANTIES TRUE
AT CLOSING. TFP shall not have discovered any material error, misstatement or
omission in the representations and warranties made by Printrak and Merger Sub
in Section 5 hereof; the representations and warranties made by Printrak and
Merger Sub herein shall be deemed to have been
27
made again at and as of the time of Closing and shall then be true in all
material respects; Printrak and Merger Sub shall have performed and complied
with all agreements and conditions required by this Agreement to be performed by
them at or prior to the Closing; and TFP shall have received a certificate,
dated the Closing Date, of the President or a Vice President of each of Printrak
and Merger Sub to the effect set forth in this Section 8.1.
8.2 ESCROW AGREEMENT; REGISTRATION RIGHTS AGREEMENT. Printrak shall
have executed and delivered an Escrow Agreement in the form of EXHIBIT B hereto
and a Registration Rights Agreement in the form of EXHIBIT C hereto.
8.3 OPINION OF PRINTRAK'S AND MERGER SUB'S COUNSEL. TFP shall have
received an opinion of Stradling, Yocca, Xxxxxxx & Xxxxx, a Professional
Corporation, counsel for Printrak and Merger Sub, dated the Closing Date,
substantially in the form and to the effect of EXHIBIT D hereto.
8.4 NO MATERIAL ADVERSE CHANGES. Prior to Closing there shall have
been no changes in the business, properties, or operations of Printrak since
December 31, 1996 which would have, or could reasonably be expected to have, a
Material Adverse Effect.
8.5 EMPLOYMENT AND NON-COMPETE AGREEMENT. Printrak shall have
executed and delivered to TFP and Principal Shareholder an Employment and Non-
Compete Agreement, substantially in the form of EXHIBIT H attached hereto.
9. CONDITIONS TO OBLIGATIONS OF PRINTRAK AND MERGER SUB. The obligations
of Printrak and Merger Sub under this Agreement shall, at the option of Printrak
and Merger Sub, be subject to the following conditions:
9.1 TFP'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. Printrak
and Merger Sub shall have not discovered any material error, misstatement, or
omission in the representations and warranties made by TFP in Section 4 hereof;
provided, however, that no such representation or warranty shall be deemed
materially incorrect if (i) it results from the consummation of any transactions
specifically permitted or contemplated by this Agreement, (ii) it is not
materially adverse and significant to the business, financial condition, or
operations of TFP taken as a whole, or (iii) its effect could not reasonably be
expected to have a Material Adverse Effect, and, TFP shall have performed and
complied with all material agreements required by this Agreement to be performed
or complied with by it at or prior to the Closing.
9.2 OPINION OF TFP'S COUNSEL. Printrak shall have received an
opinion of Nelson, Mullins, Xxxxx & Scarborough, counsel for TFP, dated the
Closing Date, substantially in the form and to the effect of EXHIBIT E hereto.
9.3 NO DAMAGE OR DESTRUCTION. Prior to Closing there shall not have
occurred any casualty to any facility, property, or equipment owned or used by
TFP which is materially adverse and significant to the business, financial
condition, or operations of TFP taken as a whole.
9.4 CERTIFICATES. Printrak shall have received the following
documents:
(a) A Certificate of Existence, as of a recent date, from the
South Carolina Secretary of State and a Tax Compliance Certificate from the
South Carolina Tax Commission;
28
(b) A certificate signed by a duly authorized officer of TFP
and Principal Shareholder and dated as of the Closing Date, certifying that (i)
all representations and warranties of such parties were true and correct in all
material respects when made and remain true and correct in all material respects
as of the Closing Date; and (ii) all of the respective covenants, agreements,
obligations and conditions of such parties required to have been performed as of
or prior to the Closing have been fully performed and complied with;
(c) A certificate signed by the Secretary of TFP, and dated as
of the Closing Date, as to the incumbency of each officer of TFP executing this
Agreement and the other agreements being delivered pursuant hereto, and
certifying the effectiveness, accuracy and completeness of the copies attached
to such certificate of resolutions duly adopted by TFP's Board of Directors and
its shareholders, as the case may be, authorizing the execution and delivery of
this Agreement by TFP, and the performance by TFP of its obligations hereunder
and the consummation of the transactions contemplated hereby;
(d) Consents to the assignment of all agreements, licenses
and/or permits listed or required to be listed on Schedules 4.2 and 4.17 hereto;
and
(e) A schedule listing the aggregate price paid by the TFP
Shareholders and received by TFP for the shares of TFP Stock held by the TFP
Shareholders or, if different, such TFP Shareholders' basis in their shares.
9.5 UCC TERMINATION STATEMENTS. TFP shall have delivered or caused
to be delivered to Printrak, at or before the Closing, UCC Termination
Statements and such other releases as Printrak may reasonably request, duly
completed and executed by each person having any security interest, lien, claim
or other encumbrances or adverse interests in or on any of the assets of TFP
listed on Schedule 9.5 hereto, in order to evidence the termination thereof.
9.6 NO MATERIAL ADVERSE CHANGES. There shall have been no change in
the business, financial condition, or results of operations of TFP since the
date hereof which has had a Material Adverse Effect or could reasonably be
expected to have a Material Adverse Effect.
9.7 SHAREHOLDER REPRESENTATIONS. Printrak shall receive a
representation letter executed by each TFP Shareholder, each holder of TFP
Employee Options and each holder of TFP Derivative Securities in the form
attached hereto as EXHIBIT F.
9.8 INTENTIONALLY OMITTED.
9.9 TFP EMPLOYEE OPTIONS. Immediately prior to the Effective Time
of the Merger, there shall be outstanding options or warrants in respect of any
TFP Stock for the purchase of no more than 348,000 shares of the Common Stock of
TFP and there will be no other options, warrants or any other securities
convertible into or exchangeable for any shares of TFP Stock.
9.10 SECURITIES COMPLIANCE. Printrak shall have obtained all
necessary approvals to qualify the issuance of the Printrak Common Stock under
all applicable State Blue Sky laws, or in the alternative, Printrak shall have
determined, to the reasonable satisfaction of its legal counsel, that such
issuance is exempt from the requirements under such Blue Sky laws.
29
9.11 ASSIGNMENTS OF RIGHTS IN TECHNOLOGY. TFP shall have received
instruments of assignment or release duly executed and delivered by Xxxxx X.
Xxxxx and Xxxxxxx X. Xxxxxxx in the form of EXHIBIT G attached hereto.
9.12 EMPLOYMENT AND NON-COMPETE AGREEMENT. Principal Shareholder
shall have executed and delivered to Printrak an Employment and Non-Compete
Agreement, substantially in the form of EXHIBIT H attached hereto.
9.13 SHAREHOLDER MATTERS. The parties to that certain Shareholders'
Agreement dated as of August 21, 1995 shall have agreed that such agreement
shall be terminated conditional upon the occurrence of the Merger, and effective
immediately prior to the Effective Time of the Merger, and that the preemptive
rights set forth in such agreement shall have no applicability with respect to
the exchange of TFP Stock and TFP Derivative Securities in the Merger. The
holders of TFP Series A Preferred Stock shall have ratified and consented to all
issuances of TFP Derivative Securities as required by Section 1(c) of TFP's
Articles of Incorporation and shall have waived any and all noncompliance by TFP
with such Section.
9.14 JAMIS MATTERS. Northpointe Institute shall have executed and
delivered to TFP a letter agreement, substantially in the form of EXHIBIT I
attached hereto.
9.15 ESCROW AGREEMENT. Each TFP Shareholder shall have executed and
delivered to Printrak the Escrow Agreement, substantially in the form of EXHIBIT
B attached hereto.
10. MUTUAL CONDITIONS TO OBLIGATIONS OF PRINTRAK, MERGER SUB AND TFP. The
obligations of Printrak, Merger Sub and TFP under this Agreement shall, at the
option of any of them, be subject to the following conditions.
10.1 APPROVALS. Printrak, Merger Sub and TFP shall have received any
necessary consents to, or approvals of, the transactions contemplated by this
Agreement of any governmental agencies and authorities, and such approvals and
the transactions contemplated hereby shall not have been contested by any
federal or state governmental authority by formal proceeding and no party hereto
shall have any knowledge of the existence of any fact or the occurrence of any
event forming the basis for a reasonable belief that such approvals or the
transactions contemplated hereby will be contested by any federal or state
governmental authority or by any other third party by formal proceeding.
10.2 NO LITIGATION. No material claim, action, suit, proceeding,
litigation, or investigation which challenges the consummation of the
transactions contemplated in this Agreement or which seeks to enjoin any of the
transactions contemplated herein, shall be instituted or threatened against any
party hereto by any governmental authority or by any other third party and no
party hereto shall have any knowledge of the existence of any fact or the
occurrence of any event forming the basis for a reasonable belief that any such
claim, action, suit, proceeding, litigation, or investigation will be instituted
or threatened against any party hereto.
10.3 NATURE OF STATEMENTS. All covenants, agreements, and statements
contained herein, in any Schedule hereto or in any certificate or other
instrument delivered by or on behalf of TFP or Printrak and Merger Sub pursuant
to this Agreement or in connection with the transactions contemplated hereby,
shall be deemed representations and warranties by TFP or Printrak and Merger
Sub, as the case may be.
30
10.4 POOLING LETTER. Printrak shall have received from Deloitte &
Touche, LLP, independent auditors, a letter confirming that the Merger shall be
treated for accounting purposes as a pooling of interest.
10.5 TFP SHAREHOLDERS' APPROVAL. The TFP Shareholders shall have
approved the terms and provisions of this Agreement and of the Merger at the
special meeting of TFP Shareholders called by TFP or by written consent pursuant
to Section 6.4 hereof in accordance with applicable provisions of the Code and
the Articles of Incorporation and Bylaws of TFP. Holders of no more than 9% of
the shares of TFP Stock outstanding shall be entitled to claim dissenters'
rights under Chapter 13 of the South Carolina Code with respect to such shares.
11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
provided in this Agreement, all representations and warranties made in this
Agreement or in any certificate delivered pursuant hereto or otherwise shall
survive the consummation of the transactions contemplated hereby for a period of
one (1) year following the Closing and after one (1) year shall be terminated
and extinguished, except insofar as the damaged party shall have asserted in
writing pursuant to Section 12.4 hereof, a specific claim setting forth the
specific facts and circumstances relating thereto with respect to such
representations, warranties, covenants and agreements prior to the expiration of
such rights, in which event the party liable shall remain liable with respect to
such claim.
12. INDEMNITY.
12.1 INDEMNIFICATION OF PRINTRAK. Subject to the limitations
contained in this section, the persons and entities who are holders of
outstanding shares of TFP Stock immediately prior to the Effective Time of the
Merger (the "TFP Indemnitors") shall, jointly but not severally, on a pro rata
basis, defend, indemnify and hold harmless Printrak, its officers, directors,
shareholders, employees and agents from and against any and all losses, claims,
judgments, liabilities, demands, charges, suits, penalties, costs or expenses,
including court costs and attorneys' fees ("Claims and Liabilities") with
respect to or arising from (i) the breach of any warranty or any inaccuracy of
any representation made by TFP or the Principal Shareholder in this Agreement,
or (ii) the breach of any covenant or agreement made by TFP or the Principal
Shareholder in this Agreement.
12.2 LIMITATIONS. Anything to the contrary notwithstanding, (i)
Printrak shall not be indemnified and held harmless in respect of any Claims and
Liabilities which are covered by insurance owned by TFP to the extent that any
net loss is reduced by such insurance and (ii) the liability of each holder of
TFP Stock shall be limited to such holder's Pro Rata Share (as defined in the
Escrow Agreement) of the Escrowed Property (as defined in the Escrow Agreement)
in or to be placed in the Escrow. In addition, Printrak and the Merger Sub
agree not to seek recourse against, and shall not recover from TFP Shareholders
on account of, any Claims and Liabilities until the aggregate amount thereof
exceeds Three Hundred Thousand Dollars ($300,000) (the "Minimum Aggregate
Liability Amount"), at which time claims may be asserted for all amounts in
excess of the Minimum Aggregate Liability Amount. The parties further agree
that in the event of a misrepresentation or breach of warranty contained in
Section 4 that results not in any Claims and Liabilities but in a net benefit to
Printrak or TFP, the fair market value of such net benefit shall be credited
against, and shall increase the amount of, the Minimum Aggregate Liability
Amount.
31
12.3 INDEMNIFICATION OF TFP. Printrak shall defend, indemnify and
hold harmless TFP, and its officers, directors, shareholders, employees and
agents against and in respect to all Claims and Liabilities with respect to or
arising from (i) breach of any warranty or any inaccuracy of any representation
made by Printrak or Merger Sub, or (ii) breach of any covenant or agreement made
by Printrak or Merger Sub in this Agreement; provided, however, notwithstanding
anything to the contrary Printrak's liability hereunder shall be limited to
$750,000. In addition, the TFP Shareholders agree not to seek recourse against,
and shall not recover from Printrak on account of, any Claims and Liabilities
until the aggregate amount thereof exceeds Three Hundred Thousand Dollars
($300,000) (the "Minimum Aggregate Liability Amount"), at which time claims may
be asserted for all amounts in excess of the Minimum Aggregate Liability Amount.
The parties further agree that in the event of a misrepresentation or breach of
warranty contained in Section 5 that results not in any Claims and Liabilities
but in a net benefit to Printrak or TFP, the fair market value of such net
benefit shall be credited against, and shall increase the amount of, the Minimum
Aggregate Liability Amount.
12.4 CLAIMS PROCEDURE. Promptly after the receipt by any indemnified
party (the "Indemnitee") of notice of the commencement of any action or
proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Section 12, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of his or its indemnification obligations contained in
this Section 12, except where, and solely to the extent that, such failure
actually and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within sixty (60) days after receipt
of such notice, but not in any event after the settlement or compromise of such
claim, the right to defend, at his or its own expense and by his or its own
counsel, any such matter involving the asserted liability of the Indemnitee;
provided, however, that if the Indemnitee determines that, as a result of an
existing or prospective business relationship between Printrak or any of its
subsidiaries on the one hand and any other party or parties to such claim on the
other hand, or as a result of other reasonable circumstances, there is a
reasonable probability that a claim may materially and adversely affect him or
it, other than solely as a result of money payments required to be reimbursed in
full by such Indemnifying Party under this Section 12, the Indemnitee shall have
the right to defend, compromise or settle such claim or suit; and, provided,
further, that such settlement or compromise shall not, unless consented to in
writing by such Indemnifying Party, be conclusive as to the liability of such
Indemnifying Party to the Indemnitee. In any event, the Indemnitee, such
Indemnifying Party and his or its counsel shall cooperate in the defense
against, or compromise of, any such asserted liability, and in cases where the
Indemnifying Party shall have assumed the defense, the Indemnitee shall have the
right to participate in the defense of such asserted liability at the
Indemnitee's own expense. In the event that such Indemnifying Party shall
decline to participate in or assume the defense of such action, prior to paying
or settling any claim against which such Indemnifying Party is, or may be,
obligated under this Section 12 to indemnify an Indemnitee, the Indemnitee shall
first supply such Indemnifying Party with a copy of a final court judgment or
decree holding the Indemnitee liable on such claim or, failing such judgment or
decree, the terms and conditions of the settlement or compromise of such claim.
An Indemnitee's failure to supply such final court judgment or decree or the
terms and conditions of a settlement or compromise to such Indemnifying Party
shall not relieve such Indemnifying Party of any of his or its indemnification
obligations contained in this Section 12, except where, and solely to the extent
that, such failure actually and materially prejudices the rights of such
Indemnifying Party. If the Indemnifying Party is defending the claim as set
forth above, the
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Indemnifying Party shall have the right to settle the claim only with the
consent of the Indemnitee; provided, however, that if the Indemnitee shall fail
to consent to the settlement of such a claim by the Indemnifying Party, which
settlement (i) the claimant has indicated it will accept, and (ii) includes an
unconditional release of the Indemnitee and its affiliates by the claimant and
imposes no material restrictions on the future activities of the Indemnitee and
its affiliates, the Indemnifying Party shall have no liability with respect to
any payment required to be made to such claimant in respect of such claim in
excess of the proposed amount of settlement. If the Indemnitee is defending the
claim as set forth above, the Indemnitee shall have the right to settle or
compromise any claim against it after consultation with, but without the prior
approval of, any Indemnifying Party; provided, however, that such settlement or
compromise shall not, unless consented to in writing by such Indemnifying Party,
be conclusive as to the liability of such Indemnifying Party to the Indemnitee.
12.5 TREATMENT OF INDEMNITY PAYMENTS. Any payment made to an
Indemnified Person pursuant to this Section 12 or the Escrow Agreement shall be
treated as a reduction in the consideration paid by Printrak in connection with
the Merger.
12.6 AGREEMENT OF TFP INDEMNITORS. By virtue of the approval of the
Merger by the shareholders of TFP and the acceptance by the TFP Indemnitors of
the consideration payable by Printrak to the TFP Indemnitors upon the Closing
and consummation of the Merger as provided herein, the TFP Indemntors will,
without the need for any further action on their part, have agreed and consented
to (i) their indemnification and other obligations under this Section 12; (ii)
all of the terms and conditions of the Escrow Agreement and the establishment of
the Escrow pursuant to the terms and conditions of this Agreement and the Escrow
Agreement to secure their indemnification obligations under this Section 12; and
(iii) the appointment of the Representative as the TFP Indemnitors'
representative for purposes of this Section 12 and the Escrow Agreement and as
attorney-in-fact and agent for and on behalf of each TFP Indemnitor, and the
taking by the Representative of any and all actions and making of any decisions
required or permitted to be taken or made by the Representative on their behalf
under this Section 12 or the Escrow Agreement. TFP agrees that, in connection
with the solicitation of votes, proxies and/or consents of TFP Shareholders for
the approval fo the merger, TFP will use its best efforts to ensure that each
TFP Shareholder is advised of the provsions of this Section, and agrees that the
provisions of this Section 12 and the Escrow Agreement will be personally
binding on each TFP Shareholder who is a TFP Indemnitor.
13. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval by the
shareholders of TFP and Merger Sub:
(a) by the mutual consent of the respective Boards of
Directors of Printrak, Merger Sub, and TFP;
(b) by the Board of Directors of Printrak if any condition to
the obligation of Printrak or Merger Sub under this Agreement to be complied
with or performed by TFP at or before the Closing shall not have been complied
with or performed at the time required for such compliance or performance and
such noncompliance or nonperformance shall not have been waived by Printrak;
(c) by the Board of Directors of TFP if any condition to the
obligation of TFP under this Agreement to be complied with or performed by
Printrak or Merger Sub at or before the Closing shall not have been complied
with or performed at the time required for such compliance or performance and
such noncompliance or nonperformance shall not have been waived by TFP; or
33
(d) by the Board of Directors of either TFP or Printrak if the
Closing shall not have been consummated on or before June 30, 1997.
Notice of such termination by any party hereto pursuant to this
Section 13 shall be given as soon as practicable to the other parties hereto.
In the event of a termination of this Agreement pursuant to this Section 13,
this Agreement, and any further obligation of Printrak, TFP and the Principal
Shareholders under this Agreement, shall terminate without any obligation or
liability of any party to any other parties hereto.
14. DEFINITIONS.
14.1 CROSS REFERENCE TABLE. The following terms defined elsewhere in
this Agreement in the Sections set forth below shall have the respective
meanings therein defined:
Term Definition
---- ----------
Agreement Preamble
XXX Xx. 00 4.34
Balance Sheet Date 4.5
Claims and Liabilities 12.1
Closing 3
Closing Date 3
Code 2.10
Conversion Number 2.4
Effective Time of the Merger 2.1
Environmental Permits 4.30
ERISA 4.21
Exchange Agent 2.6
Hazardous Material 4.30
Hazardous Materials Activities 4.30
Indemnifying Party 12.4
Indemnitee 12.4
Intellectual Property 4.15
Merger Recitals
Merger Sub Preamble
Merger Sub Common Stock 2.3
NASDAQ 2.6
Principal Shareholder Preamble
Printrak Shares 4.32
Printrak Preamble
Printrak Common Stock Recitals
Proxy Statement 6.6
Rule 144 4.32
Rule 502 5.10
TFP Preamble
TFP Balance Sheet 4.5
TFP Stock Recitals
34
SEC 11.1
SEC Filings 5.3
SEC Reports 5.10
Securities Act 4.3
To the best knowledge of 4
Tax Code Recitals
TFP Employee Options 2.5
TFP Shareholder Recitals
14.2 CERTAIN DEFINITIONS. The following terms shall have the
following meanings:
(a) BUSINESS. The term "Business" shall mean the business as
now operated by TFP or as it evolves.
(b) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. The term
"generally accepted accounting principles" shall mean generally accepted
accounting principles, as defined by the Financial Accounting Standards Board as
of the date hereof.
(c) KEY EMPLOYEE. The term "Key Employee" shall mean Xxxxx X.
Xxxxx, Xxxxx X. Xxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxxx X. Xxxxxxx, Xxxxxxx X.
Xxxxxxx, Xx., Xxxxxxx X. Xxxxxx and Xxxx Xxxxxx.
(d) MATERIAL ADVERSE EFFECT. The term "Material Adverse
Effect" shall mean any change in or effect on the business, operations, assets
or financial condition of TFP or Printrak, as applicable, which is materially
adverse to TFP or Printrak.
(e) MEMBER OF THE IMMEDIATE FAMILY. The term "Member of the
Immediate Family" shall mean, with respect to any individual, each spouse,
parent, brother, sister or child of such individual, each trust created in whole
or in part for the benefit of the aforementioned and each custodian or guardian
of any property of one or more of the aforementioned.
(f) ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of
Business" shall mean the ordinary course of business consistent with past custom
and practice (including, without limitation, with respect to quantity and
frequency).
(g) TFP DERIVATIVE SECURITIES. The term "TFP Derivative
Securities" shall mean, collectively, (a) any warrant, option, right or other
security that entitles the holder thereof to purchase or otherwise acquire any
shares of the capital stock of TFP ("TFP Warrants"); (b) any notice, evidence of
indebtedness, stock or other securing that is convertible into or exchangeable
for any shares of the capital stock of TFP ("TFP Convertible Security"), except
for TFP Stock, (c) any warrant, option, right or other security that entitles
the holder thereof to purchase or otherwise acquire any TFP Convertible
Security; and (d) any note, evidence of indebtedness, stock or other security
that is convertible into or exchangeable for any TFP Warrant; provided, however,
TFP Employee Options shall not be included in TFP Derivative Securities.
(h) NON TRADE PAYABLES. The term "nontrade payables" shall
refer to obligations for other than money borrowed and other than for products
or services purchased or obtained in connection with manufacturing and selling
the TFP's products.
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15. MISCELLANEOUS.
15.1 EXPENSES. Whether or not the merger is consummated, each party
hereto shall pay its own expenses (including, without limitation, counsel and
accounting fees and expenses) incident to the presentation and carrying out of
this Agreement and the consummation of the transactions contemplated herein.
15.2 NOTICES. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
properly given or made on the date personally delivered or on the date mailed,
by first class registered or certified mail with postage prepaid, by private
nationally recognized courier service or by facsimile and confirmed, if
delivered, mailed, courier or facsimile to the respective parties hereto at the
following addresses:
If to Printrak or Merger Sub, to:
--------------------------------
Printrak International Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxx X. XxXxxxxxx
With a copy to:
--------------
Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
If to TFP, to:
-------------
TFP Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx
Attention: Xx. Xxxxx X. Xxxxx
With a copy to:
--------------
Nelson, Mullins, Xxxxx & Xxxxxxxxxxx
000 Xxxxx Xxxx, 00xx Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Any party hereto may designate a different address by providing written
notice of such new address to the other parties hereto.
15.3 ASSIGNMENT. This Agreement may not be assigned by any party
hereto without the written consent of the other parties hereto.
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15.4 SUCCESSORS BOUND. Subject to the provisions of Section 15.3,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
15.5 CAPTIONS. The captions of the sections and paragraphs of this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
15.6 AMENDMENT. This Agreement may be amended only by an instrument
in writing executed by the parties hereto.
15.7 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates, and documents referred to herein constitute the entire agreement
of the parties hereto, and supersede all prior understandings with respect to
the subject matter hereof, and no representation or warranty not included herein
has been relied upon by any party hereto.
15.8 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
15.9 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of California.
15.10 ATTORNEYS' FEES. In the event of any dispute, controversy, or
proceeding between the parties concerning this Agreement or the transactions
contemplated hereby, the prevailing party shall be entitled to receive from the
other party its costs and expenses, including attorneys' fees.
15.11 WAIVER. All waivers hereunder must be made in writing, and
failure of any party at any time to require another party's performance of any
obligation under this Agreement shall not affect, limit or waive a party's right
of any time to require strict performance of that obligation thereafter. Any
waiver of any breach of any provision of this Agreement shall not be construed
in any way as a waiver of any continuing or succeeding breach of such provision
or waiver or modification of the provision.
15.12 SEVERABILITY. In the event any court, administrative agency or
other governmental entity with appropriate jurisdiction and authority determines
that any term or part of this Agreement is invalid or unenforceable, the
remainder of this Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the date first written above.
PRINTRAK INTERNATIONAL INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx, Chairman, President
and Chief Executive Officer
TFP ACQUISITION CORP.,
a South Carolina corporation
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Xxxxxxx X. Xxxxx, President
TFP INC.,
a South Carolina corporation
By: /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, President
/s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, individually
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