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EXHIBIT 2 B
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
AIM GROUP, INC.,
AIM SOLUTIONS, INC.,
CLIENT SERVER SOLUTIONS, INC.,
CSS FINANCIAL SOFTWARE SALES, INC.
AND
XXXX XXXXXXXX,
XXXXX X. XXXXXXX,
XXXXXX XXXXX,
L. XXXXXX XXXXXX,
XXXXXXX XXXXXXXX
AND
XXXXXXX XXXXXX, XX.
Dated as of November 15, 1999
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER AND PLAN OF REORGANIZATION..................................1
SECTION 1.1. The Merger.......................................................1
SECTION 1.2. Effects of the Merger............................................2
SECTION 1.3. Conversion of Company Shares.....................................2
SECTION 1.4. Pre Closing Transfers............................................3
SECTION 1.5. Closing..........................................................4
SECTION 1.6.Acknowledgement Regarding Merger Consideration Allocation.........4
ARTICLE II CONVERSION OF THE SHARES..............................................4
SECTION 2.1. Conversion of the Company's Shares...............................4
SECTION 2.2. Adjustments; Delivery of Certificates............................9
ARTICLE III REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY................9
SECTION 3.1. Organization and Qualification...................................9
SECTION 3.2. Certificate of Incorporation and By-Laws.........................9
SECTION 3.3. Capitalization..................................................10
SECTION 3.4. Authority.......................................................10
SECTION 3.5. No Conflict; Required Filings and Consents......................11
SECTION 3.6. Permits; Compliance.............................................11
SECTION 3.7. Financial Statements............................................11
SECTION 3.8. No Undisclosed Liabilities......................................12
SECTION 3.9. Absence of Certain Changes or Events............................12
SECTION 3.10. Absence of Litigation..........................................14
SECTION 3.11. Brokers........................................................14
SECTION 3.12. Tax Matters....................................................15
SECTION 3.13. Real Property..................................................16
SECTION 3.14. Intellectual Property..........................................17
SECTION 3.15. Tangible Assets................................................19
SECTION 3.16. Inventory......................................................19
SECTION 3.17. Contracts......................................................19
SECTION 3.18. Notes Receivable and Accounts Receivable.......................20
SECTION 3.19. Powers of Attorney.............................................21
SECTION 3.20. Insurance......................................................21
SECTION 3.21. Employees......................................................21
SECTION 3.22. Employee Benefits..............................................22
SECTION 3.23. Guaranties.....................................................23
SECTION 3.24. Environment, Health and Safety.................................23
SECTION 3.25. Certain Business Relationships with the Company................24
SECTION 3.26. Delivery of Information........................................24
SECTION 3.27. Product and Service Warranties.................................24
SECTION 3.28. Product and Service Liability..................................24
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SECTION 3.29. Certain Business Practices..................................................25
SECTION 3.30. Disclosure..................................................................25
SECTION 3.31. Limitation on Representations and Warranties................................25
ARTICLE IIIA REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS.................................25
SECTION 3.1A. Authorization of Transaction...............................................25
SECTION 3.2A. Noncontravention...........................................................25
SECTION 3.3A. Brokers' Fees..............................................................26
SECTION 3.4A. Company Shares.............................................................26
SECTION 3.5A. [Intentionally Deleted.]...................................................26
SECTION 3.6A. Investment Representations.................................................26
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER................................27
SECTION 4.1. Organization and Qualification...............................................27
SECTION 4.2. Authority....................................................................28
SECTION 4.3. No Conflict; Required Filings and Consents...................................28
SECTION 4.4. Limitation on Representations and Warranties.................................29
SECTION 4.5. Reports; Financial Statements................................................29
SECTION 4.6. Absence of Certain Changes or Events.........................................29
SECTION 4.7. Ownership of Buyer...........................................................29
SECTION 4.8. Brokers......................................................................29
SECTION 4.9. Capitalization...............................................................30
ARTICLE V COVENANTS..........................................................................30
SECTION 5.1. Affirmative Covenants of the Company.........................................30
SECTION 5.2. Negative Covenants of the Company............................................30
SECTION 5.3. Negative Covenants of Parent and Buyer.......................................32
SECTION 5.4. Access and Information.......................................................32
ARTICLE VI ADDITIONAL AGREEMENTS.............................................................33
SECTION 6.1. Appropriate Action; Consents; Filings........................................33
SECTION 6.2. Transfer of Company Liabilities Prior to the Closing Date....................34
SECTION 6.3. Payment by Company of Certain Outstanding Obligations Prior to the Closing
Date......................................................................................34
SECTION 6.4. Employment and Non-Competition Agreements....................................34
SECTION 6.5. Landlord Approvals...........................................................34
SECTION 6.6. Contract Assignments/Novations...............................................34
SECTION 6.7. Best Efforts.................................................................35
SECTION 6.8. Public Announcements.........................................................35
SECTION 6.9. Tail Insurance...............................................................35
SECTION 6.10. No Competing Transaction....................................................35
SECTION 6.11. Tax-Deferred Reorganization.................................................35
SECTION 6.12. Additional Tax Matters.....................................................35
SECTION 6.13. Registration Rights Agreement..............................................37
SECTION 6.14. [Intentionally Deleted.]....................................................37
SECTION 6.15. Settlement With Certain Stockholders of CSS and CSS Financial...............37
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SECTION 6.16. Approval of Merger and Termination of the Shareholders Operating
Agreements...................................................................................37
SECTION 6.17. Stockholder Approval..........................................................37
ARTICLE VII CLOSING CONDITIONS..................................................................37
SECTION 7.1. Conditions to Obligations of Each Party Under This Agreement....................37
SECTION 7.2. Additional Conditions to Obligations of Buyer and/or Parent.....................38
SECTION 7.3. Additional Conditions to Obligations of the Company and the Stockholders........39
ARTICLE VIII TERMINATION, AMENDMENT, WAIVER AND
INDEMNIFICATION.................................................................................40
SECTION 8.1. Termination.....................................................................40
SECTION 8.2. Investigation...................................................................41
SECTION 8.3. Amendment.......................................................................41
SECTION 8.4. Waiver..........................................................................41
SECTION 8.5. Fees, Expenses and Other Payments...............................................41
SECTION 8.6. Indemnification.................................................................41
ARTICLE IX GENERAL PROVISIONS...................................................................44
SECTION 9.1. Effectiveness of Representations, Warranties and Agreements.....................44
SECTION 9.2. Notices.........................................................................45
SECTION 9.3. Certain Definitions.............................................................46
SECTION 9.4. Headings; Construction..........................................................53
SECTION 9.5. Severability....................................................................53
SECTION 9.6. Entire Agreement and Modification...............................................53
SECTION 9.7. Assignment......................................................................54
SECTION 9.8. Parties in Interest.............................................................54
SECTION 9.9. Waiver; Remedies Cumulative.....................................................54
SECTION 9.10. Further Assurances.............................................................54
SECTION 9.11. Governing Law..................................................................54
SECTION 9.12. Jurisdiction; Service of Process...............................................54
SECTION 9.13. Counterparts...................................................................55
EXHIBITS DESCRIPTION
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Exhibit A Form of Escrow Agreement
Exhibit A-1 Form of Long Term Promissory Note for L. Xxxxxx Xxxxxx
Exhibit A-2 Form of Long Term Promissory Note for Xxxxxxx Xxxxxxxx
Exhibit A-3 Form of Long Term Promissory Note for Xxxxxxx Xxxxxx, Xx.
Exhibit A-4 Form of Short Term Promissory Note for Xxxx Xxxxxxxx
Exhibit A-5 Form of Short Term Promissory Note for L. Xxxxxx Xxxxxx
Exhibit A-6 Form of Short Term Promissory Note for Xxxxxxx Xxxxxxxx
Exhibit A-7 Form of Short Term Promissory Note for Xxxxxxx Xxxxxx, Xx.
Exhibit A-8 Form of Short Term Promissory Note for Xxxxxx Xxxxx
Exhibit A-9 Form of Short Term Promissory Note for Xxxxx X. Xxxxxxx
Exhibit A-10 Form of Long Term Promissory Note for Xxxx Xxxxxxxx
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Exhibit B-1 Form of Employment Agreement for L. Xxxxxx Xxxxxx
Exhibit B-2 Form of Employment Agreement for Xxxxxxx Xxxxxxxx
Exhibit B-3 Form of Employment Agreement for Xxxxxxx Xxxxxx, Xx.
Exhibit B-4 Form of Key Employment Agreement
Exhibit C-1 Form of Non-Competition Agreement for L. Xxxxxx Xxxxxx
Exhibit C-2 Form of Non-Competition Agreement for Xxxxxxx Xxxxxxxx
Exhibit C-3 Form of Non-Competition Agreement for Xxxxxxx Xxxxxx, Xx.
Exhibit D Legal Opinion of Counsel to the Company
Exhibit E Legal Opinion of Counsel to Parent and Buyer
Exhibit F Transferred Lease(s) and Landlord Consent(s)
Exhibit G Registration Rights Agreement
Exhibit H-1 Articles of Merger
Exhibit H-2 Certificates of Merger
Exhibit I Stockholder Payment Table
SCHEDULE
NUMBER DESCRIPTION
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1.4 Pre-Closing Transfers
2.1(a) Escrow Distribution Chart and Employee Shares
2.1(e) Calculation of Adjusted Working Capital
2.1(e)(ii) Trial Balance
3.2 Officers and Directors; Certificate of Incorporation and By-Laws;
Minutes; Stock Certificates and Transfer Books
3.3 Capitalization Matters
3.5 Filings and Consents
3.7 Financial Statements
3.8 Liabilities
3.9 Certain Changes or Events of the Company
3.10 Litigation Matters
3.11 Brokers
3.12(c) Tax Returns
3.12(f) Additional Tax Matters
3.12(g) Unpaid Taxes
3.13(a) Real Property Owned
3.13(b) Real Property Leased or Subleased
3.14(c) Intellectual Property Owned
3.14(d) Intellectual Property Licensed, Sublicensed, Agreements or Permission
3.15 Tangible Assets
3.16 Inventory
3.17 Contracts
3.20 Insurance Policies
3.21 Employees
3.22 Employee Benefit Plans
3.23 Guaranties
3.24 Environmental Matters
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3.25 Certain Business Relationships with the Company
3.27 Standard Sale, Lease and Performance Terms and Conditions
5.2 Negative Covenants
6.9 Evidence of Discontinued Products and Operations Coverage Liability
Insurance
6.15 Settlement Agreement between the Stockholders, CSS and CSS Financial
6.16 Agreements Terminating Shareholders Operating Agreements and Board
Resolutions Approving Merger
7.2(c) Contracts or Agreements Requiring Consents or Waivers
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated as of
November 15, 1999 (this "Agreement"), by and among AIM Group, Inc., a Delaware
corporation ("Parent"); AIM Solutions, Inc., a Delaware corporation ("Buyer")
and a wholly-owned subsidiary of Parent; Client Server Solutions, Inc., a
Delaware corporation ("CSS"), and CSS Financial Software Sales, Inc., a Georgia
corporation ("CSS Financial" and, together with CSS, collectively, the
"Company"); and Xxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxxx X. Xxxxxxx, L. Xxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxx and Xxxxxxx Xxxxxx, Xx., stockholders of the Company
("Stockholders") (Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xx. and L. Xxxxxx Xxxxxx are
sometimes hereinafter referred to as the "Warranting Stockholders").
W I T N E S S E T H:
WHEREAS, Parent, the Buyer, the Company and the Warranting Stockholders
entered into that certain Agreement and Plan of Merger, dated as of May 4, 1999
(the "Original Agreement");
WHEREAS, the parties to the Original Agreement desire to amend and restate
the Original Agreement in this Agreement;
WHEREAS, the Stockholders are the owners of all of the issued and
outstanding shares (all of such shares being collectively referred to as the
"Shares") of the common stock, no par value per share, of CSS and of the common
stock, no par value per share, of CSS Financial (the "Company Common Stock"),
and the Buyer and Company desire to merge CSS and CSS Financial with and into
the Buyer (the merger of CSS into Buyer shall be hereinafter referred to as the
"CSS Merger," the merger of CSS Financial into the Buyer shall be hereinafter
referred to as the "CSS Financial Merger" and, together the CSS Merger and CSS
Financial Merger shall be collectively referred to as the "Merger"), all upon
the terms and subject to the conditions of this Agreement; and
WHEREAS, Parent and the Stockholders are made a party hereto for the
purposes as set forth herein; and
WHEREAS, certain capitalized terms used in this Agreement are defined in
Section 9.3.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
THE MERGER AND PLAN OF REORGANIZATION
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
hereof, as promptly as practicable following the satisfaction or waiver of the
conditions set forth in Articles III, IIIA and IV hereof, unless the parties
shall otherwise agree, (a) articles of merger in the form attached hereto as
Exhibit H-1 (the "Articles of Merger") providing for the CSS Financial Merger
shall be duly prepared and executed by Buyer and CSS Financial, and filed by
Buyer, as the surviving corporation (sometimes also referred to as the
"Surviving Corporation"),
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in accordance with the relevant provisions of the Georgia Business Corporation
Code and the Delaware General Corporation Law; (b) a certificate of merger in
the form attached hereto as Exhibit H-2 ("Certificate of Merger") providing for
the CSS Merger shall be duly prepared and executed by Buyer and CSS, and filed
by Buyer as the Surviving Corporation, in accordance with the relevant
provisions of the Delaware General Corporation Law; and the parties hereto shall
take any other actions required by law to make the Merger effective. Following
the Merger, Buyer, with all its purposes, objects, rights, privileges, powers
and franchises, shall continue, and both of CSS and CSS Financial shall cease to
exist. The Merger shall be effective at the time (the "Effective Time") and on
the date (the "Effective Date") that properly executed Articles of Merger and a
Certificate of Merger are duly filed with the Secretary of State of Georgia and
the Secretary of State of Delaware, respectively, in accordance with Section
14-2-1101 of the Georgia Business Corporation Code and Section 252 of the
Delaware General Corporation Law, respectively; provided, however, that by
mutual consent of the parties, such Articles of Merger and Certificate of Merger
may provide for a later date of effectiveness of the Merger not more than thirty
(30) days after such filing. At the Effective Time and Effective Date, a closing
shall take place at the offices of Freedman, Levy, Xxxxx & Xxxxxxx, in
Washington, D. C., as set forth in Section 1.5 hereof.
SECTION 1.2 Effects of the Merger. The CSS Financial Merger shall have the
effects set forth in Section 14-2-1106 of the Georgia Business Corporation Code
and Section 259 of the Delaware General Corporation Law. The CSS Merger shall
have the effects set forth in Section 259 of the Delaware General Corporation
Law. As of the Effective Time, the Surviving Corporation shall be a wholly-owned
subsidiary of Parent. The Articles of Incorporation of Buyer shall remain the
Articles of Incorporation of the Surviving Corporation after the Effective Date
unless and until amended in accordance with their terms and as provided by law.
The bylaws of Buyer as in effect on the Effective Date shall be the bylaws of
the Surviving Corporation unless and until amended in accordance with their
terms and as provided by law.
SECTION 1.3 Conversion of the Company Shares. At the Effective Time, by
virtue of the Merger and without any action on the part of Parent, Buyer, the
Company or the holder of any of the following securities:
(a) Any shares of capital stock of the Company which are held in the
treasury of the Company shall be cancelled.
(b) All issued and outstanding shares of the capital stock of Buyer
shall be converted into and become One Hundred (100) issued and outstanding
shares of common stock of the Surviving Corporation.
(c) Subject to Sections 1.1, 1.5, 2.1 and 2.2 of this Agreement, the
Shares issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive a total of Five Million One Hundred
Seventy-Five Thousand Dollars ($5,175,000.00) ("Merger Consideration") payable
in the form of: (i) Four Hundred Thousand Dollars ($400,000.00) (the "Cash
Consideration"), in cash payable by wire transfer or delivery of other
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immediately available funds at the Closing by the Buyer in escrow as set forth
in Section 2.1(a) hereof for the benefit of the Stockholders; (ii) the issuance
to the Stockholders at Closing of promissory notes in the aggregate principal
amount of One Million Three Hundred Twenty-Five Thousand Dollars
($1,325,000.00), in the forms attached hereto as Exhibits X-0, X-0, X-0, X-0,
X-0 and A-9 (the "Short Term Notes"), having a term of either four (4) months or
six (6) months and bearing simple interest at a rate of eight percent (8%) per
annum; (iii) the issuance to the Stockholders at Closing of promissory notes in
the aggregate principal amount of Five Hundred Thousand Dollars ($500,000.00),
in the forms attached hereto as Exhibits X-0, X-0, X-0 and A-10 (the "Long Term
Notes"), having a term of two (2) years and bearing simple interest at the rate
of three percent (3%) per annum, and (iv) the issuance of Two Million Nine
Hundred Fifty Thousand Dollars ($2,950,000.00) worth of common stock of Parent,
based upon a per share price of $3.00 per share (the "AIM Common Stock"), or
Nine Hundred Eighty-Three Thousand Three Hundred Thirty-Three (983,333) shares
of AIM Common Stock, with One Hundred Fifty Thousand (150,000) of such shares
(the "Escrow Shares") to be held in escrow and distributed to the Stockholders
on such terms and conditions as set forth in the form of Escrow Agreement
attached hereto as Exhibit A. The amount of the Merger Consideration payable to
each Stockholder at Closing shall be paid in amounts specified in Exhibit I
hereto. The Merger Consideration shall be subject to pre-Closing adjustments and
post-Closing adjustments as set forth in Section 2.1(e) below. The portion of
the Merger Consideration allocated to the covenant not to compete set forth in
the Non-Compete Agreements attached hereto as Exhibits C-1, C-2 and C-3 shall
equal one percent (1%) of the Merger Consideration (as modified by any Merger
Consideration Adjustments made as of the Closing Date under Section 2.1(e)), and
shall be payable at the Closing out of the cash portion of the Merger
Consideration.
SECTION 1.4 Pre-Closing Transfers. Notwithstanding anything contained
herein to the contrary, prior to the Closing Date in accordance with Sections
6.2 and 6.3 hereof, the Company shall transfer, distribute and/or dispose of all
of the following items (listed in detail on Schedule 1.4 attached hereto) to the
Stockholders or to a third party at the direction of the Stockholders, all with
the effect that the following items shall not be owned by the Company, nor
assumed by Buyer, at the Closing Date: (i) any notes or accounts receivable due
to the Company from its officers, directors or the Stockholders, or due from the
Company to its officers, directors or the Stockholders; (ii) any real property
owned by the Company (and any fixtures located thereon) and any mortgages, deeds
of trust or other indebtedness on or relating to such real property for which
the Company is liable in any manner whatsoever; (iii) any automobiles or
vehicles leased or owned by the Company that are used for personal purposes by
the Stockholders or any employee of the Company, and any leases or indebtedness
on or relating to such automobiles or vehicles for which the Company are liable
in any manner whatsoever; (iv) all life insurance policies owned by the Company
or paid for by the Company; (v) all of the Company's Liabilities reflected on
the Balance Sheet and any other Liabilities, other than those Liabilities
consisting of Accounts Payable up to a maximum amount of One Million Dollars
($1,000,000) and as otherwise set forth on Schedule 3.8, which Liabilities shall
be assumed by the Warranting Stockholders; and (vi) any cash in excess of (a)
the amount necessary to fully cover all checks issued by the Company up to and
through the Closing Date and (b) Two Hundred Fifty Dollars ($250.00) for use by
the Company as xxxxx cash after the Closing. Any Taxes generated in
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connection with such transfers, distributions or disposals shall be borne solely
by the Stockholders or shall be reimbursed to Buyer by the Stockholders.
Furthermore, prior to the Closing Date, the Company shall fully pay all
outstanding pension plan and profit sharing contributions due from the Company,
and the Company shall terminate all such plans on or prior to the Closing Date.
SECTION 1.5 Closing. The closing of the merger (the "Closing") will take
place at the offices of Freedman, Levy, Xxxxx & Xxxxxxx, Washington, D. C., at
10:00 A.M. (EDT) no later than four (4) business days after the receipt by
Parent of confirmation from the Georgia and Delaware Secretaries of State that
the Certificates of Merger have been approved as filed, or at such other place,
time and date as the parties may agree upon in writing (the "Closing Date").
SECTION 1.6 ACKNOWLEDGEMENT REGARDING MERGER CONSIDERATION ALLOCATION. THE
STOCKHOLDERS, COMPANY, BUYER AND PARENT ACKNOWLEDGE THAT THE MERGER
CONSIDERATION IS NOT BEING DISTRIBUTED PRO RATA BASED ON EACH STOCKHOLDER'S
RELATIVE OWNERSHIP PERCENTAGE AND THAT THE STOCKHOLDERS ARE ACCORDED DISPARATE
TREATMENT WITH RESPECT TO THE TRANSACTIONS AND AGREEMENTS CONTEMPLATED BY THIS
AGREEMENT AND THE SETTLEMENT AGREEMENT. EACH OF THE STOCKHOLDERS, COMPANY, BUYER
AND PARENT ACKNOWLEDGE, CONSENT AND AGREE TO THE ALLOCATION OF THE MERGER
CONSIDERATION AS SET FORTH IN THIS AGREEMENT AND THE SETTLEMENT AGREEMENT AND
THE DISPARATE TREATMENT ACCORDED TO THE STOCKHOLDERS WITH RESPECT TO THE
TRANSACTIONS AND AGREEMENTS CONTEMPLATED BY THIS AGREEMENT AND THE SETTLEMENT
AGREEMENT.
ARTICLE II
CONVERSION OF SHARES
Section 2.1 Conversion of the Company's Shares.
(a) At the Closing, Parent and Buyer shall (i) deliver the Cash
Consideration in cash payable by wire transfer or delivery of other immediately
available funds to the escrow account of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P., to be
distributed as set forth on the attached Schedule 2.1(a); (ii) issue the Notes
attached hereto as Exhibits X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0, X-0 and A-10
to the Stockholders; (iii) issue to the Stockholders Eight Hundred Thirty-Three
Thousand Three Hundred Thirty-Three (833,333) shares of AIM Common Stock; and
(iv) deliver the Escrow Shares to Freedman, Levy, Xxxxx & Xxxxxxx, the escrow
agent ("Escrow Agent") under the Escrow Agreement. In addition to such delivery
and issuance of the Merger Consideration, on the date which is thirty (30) days
following the Closing (or on January 3, 2000 in the case of Xxxxx Xxxxxxx),
Parent shall issue in the name of and deliver to certain employees of the
Company, as designated on Schedule 2.1(a) attached hereto, Fifty Thousand
(50,000) shares of AIM Common Stock (the "Employee Shares"); provided, however,
that if any such recipients of the Employee Shares have voluntarily terminated
their employment with the Buyer or been terminated for cause by the Buyer prior
to the date of delivery of the Employee Shares,
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then such employees shall not be entitled to receive the Employee Shares and the
Warranting Stockholders shall have the right to reallocate such undelivered
Employee Shares among the remaining recipients of the Employee Shares. All such
certificates of the AIM Common Stock issued pursuant to this Section 2.1(a)
shall bear the restrictive legend contained in Section 3.6A(vi) hereof.
(b) At the Closing, the holders of certificate(s) which immediately
prior to the Effective Time represented all of the Shares (the "Certificates")
shall deliver the Certificates to Parent, and the Certificates shall be in such
form and have such other provisions as Parent and the Company may reasonably
specify. After the Effective Time, upon surrender of the Certificates to Parent
(and, for the Escrow Shares, subject to the terms and vesting schedule of the
Escrow Agreement), the Stockholders shall be entitled to receive in exchange for
such Certificates (i) the certificates representing whole shares of AIM Company
Common Stock (no fractional shares of AIM Common Stock shall be issued) which
such holder has the right to receive pursuant to the provisions of this
Agreement, and the Certificates so surrendered shall forthwith be cancelled, and
(ii) the Notes and cash amounts provided in Section 2.1(a) hereof.
(c) Following the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of Company Shares, which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article II.
(d) No certificate or scrip representing fractional shares of AIM
Common Stock shall be issued upon the surrender for exchange of Certificates,
and any fractional share interests resulting from the conversion of the Company
Shares into the shares of AIM Common Stock shall be rounded to the nearest whole
share of AIM Common Stock within the total maximum number of 1,033,333 shares of
AIM Common Stock to be issued in the Merger to the Stockholders.
(e) Merger Consideration Adjustment.
(i) Notwithstanding anything contained in this Agreement to the
contrary, the Company's adjusted working capital measured as of the close of
business on the Closing Date (the "Adjusted Working Capital") shall be no less
than Six Hundred Thousand Dollars ($600,000.00). Adjusted Working Capital shall
be comprised of cash, Accounts Receivable, prepaid expenses, deposits, fixed
asset purchases, accruals, customer deposits, deferred revenues, the debt of the
Company to Buckhead Bank ("Bank Debt"), employee bonuses of the Company paid
after Closing by Buyer and trade accounts payable (including accrued and unpaid
employee bonuses and employee expense reimbursement) incurred in the Ordinary
Course of Business ("Accounts Payable") of the Company in the amounts and values
set forth below in this Section 2.1(e)(i), but as adjusted as hereinafter
provided in Section 2.1(e). The calculation of Adjusted Working Capital and its
components as of the Closing Date shall be set forth on Schedule 2.1(e).
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(ii) If, on the Closing Date, Adjusted Working Capital is less
than $600,000 , then the Long Term Note portion of the Merger Consideration
payable pursuant to Section 2.1(a) shall be reduced by the amount of such
deficiency ("Merger Consideration Adjustment"). The Buyer shall be entitled to
reduce the first installment payment of principal and interest on the Long Term
Notes by the amount of such deficiency, and next to reduce the outstanding
principal balance of the Long Term Notes by any remaining deficiency, all in
relative proportions set forth on Exhibit I hereto. The amount to be determined
under this Section 2.1(e)(ii) shall be based upon an estimated trial balance to
be prepared by the Company and presented to the Buyer on or immediately prior to
the Closing Date. This trial balance shall be attached hereto as Schedule
2.1(e)(ii).
(iii) If, on the last day of the month in which the date that is
nine (9) months after the Closing Date is contained (the "Post-Closing Date
Adjustment Date"), Adjusted Working Capital measured as of the Closing Date is
less than $600,000, then the Merger Consideration shall be reduced by the amount
of such deficiency, less the amount of any adjustment to the Merger
Consideration made under Section 2.1(e)(ii) above. In addition to any Long Term
Note reduction under Section 2.1(e)(ii) above, the Buyer shall be entitled to
further reduce the first installment payment of principal and interest on the
Long Term Notes by the amount of such deficiency, and next to further reduce the
outstanding principal balance of the Long Term Notes by any remaining
deficiency, all in relative proportions set forth on Exhibit I hereto.
(iv) If, on the Post-Closing Adjustment Date, Adjusted Working
Capital is greater than $600,000 , then the Merger Consideration shall be
increased by half of the amount by which Adjusted Working Capital exceeds
$600,000, and the Buyer shall pay the Stockholders half of the amount by which
Adjusted Working Capital exceeds the amount set forth in Section 2.1(e)(i) in
cash by wire transfer or delivery of other immediately available funds, with
Buyer retaining the other half of that excess, subject to the provisions of
Sections 2.1(e)(v) and (vi) hereof.
(v) Solely for purposes of determining Adjusted Working Capital
under Sections 2.1(e)(iii) and (iv) above, the amount of the Accounts Receivable
component of Adjusted Working Capital shall be determined by comparing Accounts
Receivable of the Company measured at the Closing Date and the amount of such
Accounts Receivable actually collected by Buyer for the period beginning on the
day following the Closing Date and ending on the Post-Closing Adjustment Date.
If Buyer subsequently collects any Accounts Receivable that were uncollected as
of the Post-Closing Adjustment Date, Buyer shall be entitled to retain any such
collections.
(vi) The amounts to be determined under Sections 2.1(e)(iii),
(iv) and (v) shall be based upon a final Balance Sheet dated as of the Closing
Date. Buyer may choose to have such final Balance Sheet prepared by a
nationally-recognized, independent certified public accounting firm selected by
the Buyer. Buyer shall deliver the calculation and determination of the Merger
Consideration Adjustment to the Warranting Stockholders and Melioris within
forty-
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five (45) days after the Post-Closing Adjustment Date. Such calculation shall be
deemed conclusive and binding on the parties for purposes of computing the
Merger Consideration Adjustment unless the Warranting Stockholders and/or
Melioris object pursuant to the provisions of this Section 2.1(e)(vi). If the
Warranting Stockholders and/or Melioris have any objections to the determination
of the Merger Consideration Adjustment under this Section 2.1(e)(vi), then such
objecting Stockholder must deliver a detailed statement describing their
objections to the Buyer within thirty (30) days after receiving the appropriate
determination of the Merger Consideration Adjustment and supporting calculations
from the Buyer. The Buyer and the Warranting Stockholders and/or Melioris (as
the case may be) will use reasonable efforts to resolve any such objections
themselves. Any dispute regarding the determination of the Merger Consideration
Adjustment shall be resolved in the manner set forth in Section 2.1(f) hereof.
If the Warranting Stockholders and/or Melioris do not provide such written
notice to Buyer within such 30-day period, then Buyer shall make the appropriate
Merger Consideration Adjustment in accordance with this Section 2.1(e) within
ten (10) days after the date by which the Warranting Stockholders and/or
Melioris were required to provide such written notice under this Section
2.1(e)(vi).
(vii) In the event the Merger Consideration Adjustment results in
a reduction in the principal amount of the original Long Term Notes, the
original Long Term Notes shall be deemed to have been canceled on the
Post-Closing Adjustment Date, and Melioris and the Warranting Stockholders shall
have the right to receive replacement promissory notes (the "Replacement Notes")
from the Buyer. Upon surrender of the original Long Term Notes for cancellation
to the Buyer, the Buyer shall promptly issue the Replacement Notes to Melioris
and the Warranting Stockholders, which Replacement Notes shall have a principal
balance equal to the principal balance of the original Long Term Notes less the
portion of the Merger Consideration Adjustment that results in a reduction in
the principal amount of the original Long Term Notes. The Replacement Notes
shall be guaranteed by Parent. The reduced principal amount and interest on the
reduced principal amount of the Replacement Notes shall be payable on the same
terms, payment dates and conditions as the original Notes. Notwithstanding
anything herein to the contrary, in the event that, on the date of maturity of
the Short Term Notes payable to the Warranting Stockholders, Parent and Buyer
have good faith reason to believe that the Merger Consideration Adjustment shall
exceed $500,000, then Parent and Buyer shall be entitled to withhold payment on
the Warranting Stockholders' Short Term Notes, on a pro-rata basis, in the
amount by which Parent and Buyer determine in good faith that the Merger
Consideration Adjustment will most likely exceed $500,000 ("Adjustment
Withholding"). If on the Post-Closing Adjustment Date the Merger Consideration
Adjustment actually exceeds $500,000, the Adjustment Withholding shall be
applied to the extent necessary to eliminate such actual excess and the
Adjustment Withholding so applied shall be retained by Parent and the Buyer. In
the event that, on the Post-Closing Adjustment Date, the Adjustment Withholding
exceeds the amount by which the Merger Consideration Adjustment exceeds $500,000
or the Merger Consideration Adjustment does not exceed $500,000, the portion of
the Adjustment Withholding not applied to eliminate the Merger Consideration
Adjustment shall be paid to the Warranting Stockholders, with simple interest in
the amount of eight percent (8%) per annum, from the date the Adjustment
Withholding was first due and payable under the Short Term Notes until the date
that amount is actually paid to the Warranting Stockholders.
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(f) Dispute Resolution Mechanism. If the parties do not obtain a final
resolution of a dispute regarding the determination of the Merger Consideration
Adjustment under Section 2.1(e) hereof within thirty (30) days after Buyer has
received the statement of objections from Melioris and/or the Warranting
Stockholders, the Buyer and Melioris and/or the Warranting Stockholders will
select an accounting firm mutually acceptable to them to resolve any remaining
objections. If Buyer and Melioris and/or the Warranting Stockholders are unable
to agree on the choice of an accounting firm, Buyer will select a
nationally-recognized, independent certified public accounting firm. The
determination of any accounting firm so selected will be set forth in writing
and will be conclusive and binding upon the parties. Buyer will revise the
determination of the Merger Consideration Adjustment, as the case may be and as
appropriate, to reflect the resolution of any objections thereto.
(i) In the event the parties submit any unresolved objections
with respect to the determination of the amount of the Merger Consideration
Adjustment to an accounting firm for resolution as provided herein, Buyer and
Melioris and/or Warranting Stockholders will share responsibility for the fees
and expenses of the accounting firm as follows (with each and every Stockholder
who submits objections being responsible for sharing, on a pro-rata basis, the
cost of the fees which are required to be paid by Melioris and/or the Warranting
Stockholders under this Section 2.1(f)(i)):
(A) if the accounting firm agrees with Buyer's determination
of the amount of the Merger Consideration Adjustment (with the amount so
determined by the Buyer referred to herein as the "Buyer's Value"), Melioris
and/or the Warranting Stockholders will be responsible for all of the fees and
expenses of the accounting firm incurred in connection with the preparation of
the determination with which the accounting firm agrees;
(B) if the accounting firm agrees with Melioris and/or the
Warranting Stockholders' determination of the amount of the Merger Consideration
Adjustment (with the amount so determined by Melioris and/or the Warranting
Stockholders referred to herein as the "Stockholders' Value"), Buyer will be
responsible for all of the fees and expenses of the accounting firm incurred in
connection with the preparation of the determination with which the accounting
firm agrees; and
(C) if the accounting firm determines that the amount of the
Merger Consideration Adjustment (the "Actual Value") is different from either
the Buyer's Value or the Stockholders' Value, the party whose determination is
closest to the Actual Value will be responsible for that fraction of the fees
and expenses of the accounting firm equal to (x) the difference between the
closest party's determination and the Actual Value over (y) the greater of the
difference between (I) the Buyer's Value and the Stockholders' Value and (II)
the other party's determination (which is furthest from the Actual Value) and
the Actual Value, and the other party will be responsible for the remainder of
the fees and expenses.
(ii)Each party will make the work papers and back-up materials
used in determining the Buyer's Value and Stockholders' Value available to the
other party and their
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accountants and other representatives at reasonable times and upon reasonable
notice at any time during (I) the preparation of Buyer's Value or Stockholders'
Value, (II) the review by either party of the other party's determination of the
Merger Consideration Adjustment, and (III) the resolution by the parties of any
objections thereto.
Section 2.2 Adjustments; Delivery of Certificates. If, between the date of
this Agreement and the Effective Time, the Shares or the shares of AIM Common
Stock shall have been exchanged into a different number of shares or a different
class by reason of any reclassification, recapitalization, split-up,
combination, exchange of shares or readjustment, or a stock dividend thereon
shall be declared with a record date within such period, the amount into which
the Company Shares will be converted in the Merger shall be correspondingly
adjusted.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
CONCERNING THE COMPANY
Each of the Company and the Warranting Stockholders hereby represent and
warrant, jointly and severally, to Parent and Buyer as follows as of the date of
this Agreement and as of the Closing Date:
SECTION 3.1 Organization and Qualification. Each of CSS and CSS Financial
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, has all requisite corporate or
other power and authority to own, lease and operate its properties and to carry
on its business as it is now being conducted, and is duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by it or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to so qualify would not have a
Company Material Adverse Effect. The Company has no Subsidiaries, and does not,
directly or indirectly, own or control any investment or interest (whether in
the form of debt or equity) in any other Person.
SECTION 3.2 Certificate of Incorporation and By-Laws. Schedule 3.2 contains
(i) a list of the officers and directors of the Company, (ii) complete and
correct copies of the Certificate of Incorporation and By-Laws or equivalent
organizational documents of each of CSS and CSS Financial, in each case as
amended or restated, as in effect as of the Closing Date, (iii) the minute books
relating to all meetings of stockholders, board of directors and committees of
the Company, (iv) stock certificate books the Company and (v) stock transfer
books of the Company. The Company is not in violation of any of the provisions
of its Certificate of Incorporation or By-Laws or equivalent organizational
documents, in each case as amended or restated. In addition, the minute books
(containing the record of meetings of the stockholders, the board of directors
and any committees of the board of directors), the stock certificate books and
the stock transfer books of the Company are correct and complete.
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SECTION 3.3 Capitalization. The authorized capital stock of the CSS
consists of Five Thousand (5,000) shares of common stock, of which Two Thousand
Two Hundred Thirty-Seven (2,237) shares will be issued and outstanding
immediately prior to the Effective Time, and (a) all of which Shares are duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights created by statute, CSS's Certificate of Incorporation or
By-Laws or any agreement to which CSS is a party or bound, (b) zero (0) shares
of common stock were held in treasury of CSS and (c) as of the Closing Date, all
of the issued and outstanding shares of common stock shall be owned by and held
in the name of the Stockholders. The authorized capital stock of the CSS
Financial consists of Five Thousand (5,000) shares of common stock, of which Two
Thousand Two Hundred Thirty-Seven (2,237) shares will be issued and outstanding
immediately prior to the Effective Time, and (a) all of which Shares are duly
authorized, validly issued, fully paid and non-assessable and not subject to
preemptive rights created by statute, CSS Financial's Articles of Incorporation
or By-Laws or any agreement to which CSS Financial is a party or bound, (b) zero
(0) shares of common stock were held in treasury of CSS Financial and (c) as of
the Closing Date, all of the issued and outstanding shares of common stock shall
be owned by and held in the name of the Stockholders. There are no bonds,
debentures, notes or other indebtedness, issued or outstanding, having the right
to vote on any matters on which the Company's stockholders may vote. Except as
set forth on Schedule 3.3 hereto, there are no options, warrants, calls or other
rights (including subscription rights or registration rights), agreements,
proxies, voting rights agreements, voting trusts, arrangements or commitments of
any character, presently outstanding, which (i) obligate the Company to issue,
deliver or sell shares of its capital stock or debt securities, (ii) obligate
the Company to grant, extend or enter into any such option, warrant, call or
other such right, agreement, arrangement or commitment, (iii) obligate the
Company to repurchase, redeem or otherwise acquire any shares of Company Common
Stock, or (iv) relate to the issued or unissued capital stock of, or other
equity interests in, the Company.
SECTION 3.4 Authority. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, and subject to any necessary
stockholder approval of the Merger, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and, except for any
required approval of the Merger and any adoption of this Agreement by the
stockholders of the Company in connection with the consummation of the Merger,
no other corporate proceeding on the part of the Company is necessary to
authorize this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery thereof by the Stockholders,
Parent and Buyer, constitutes the legal, valid and binding obligation of the
Company enforceable in accordance with its terms.
SECTION 3.5 No Conflict; Required Filings and Consents.
(a) Except as set forth in Schedule 3.5, the execution and delivery of
this Agreement by the Company does not, and the performance of this Agreement by
the Company
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will not (i) conflict with or violate the Certificate of Incorporation or
By-Laws or equivalent organizational documents, in each case as amended or
restated of CSS or CSS Financial, (ii) conflict with or violate any federal,
state, foreign or local law, statute, ordinance, rule, regulation, order,
judgment or decree (collectively, "Laws") and applicable to the Company or by
which any of its properties is bound or subject to, or (iii) result in any
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or require payment
under, or result in the creation of an Encumbrance on, any of the properties or
Assets of the Company pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company is a party or by which CSS or CSS Financial or
any of their respective properties is bound or subject, except for breaches,
defaults, events, rights of termination, amendment, acceleration or
cancellation, payment obligations or Liens or Encumbrances that would not have a
Company Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require the
Company to obtain any consent, approval, authorization or permit of, or to make
any filing with or notification to, any governmental or regulatory authority,
domestic or foreign ("Governmental Entities") based on Laws and other
requirements of Governmental Entities, except (i) for applicable requirements,
if any, of the Securities Act and the Exchange Act and (ii) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not, either individually or in the aggregate,
prevent the Company from performing its obligations under this Agreement.
SECTION 3.6 Permits; Compliance. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease
and operate its properties and to carry on its business as it is now being
conducted (collectively, the "Company Permits"). The Company is not in conflict
with, or in default or violation of (a) any Law applicable to the Company or
which any of its properties is bound by or subject to or (b) any of the Company
Permits, the failure to obtain or the violation of which would have a Company
Material Adverse Effect. The Company has not received from any Governmental
Entity any written notification with respect to possible conflicts, defaults or
violations of Laws. To the Knowledge of the Warranting Stockholders, there is no
action, proceeding or investigation pending or threatened regarding the
suspension or cancellation of any of the Company permits.
SECTION 3.7 Financial Statements. Schedule 3.7 contains true, correct and
complete copies of the unaudited balance sheet of each of CSS and CSS Financial
as of December 31, 1998 (the "Balance Sheet"), and the related statements of
operations, statements of cash flows and statements of stockholders equity for
the period then ended, and the notes and schedules thereto, together with the
report thereon of Xxxxxxx & Xxxxxx, LLC (collectively, the "Financial
Statements"). The Financial Statements are attached hereto as Schedule 3.7 and
have been prepared from books and records of CSS and CSS Financial on a basis
consistent with preceding years and throughout the periods involved (except as
otherwise noted therein). The
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Financial Statements fairly present the financial condition, results of
operations and changes in cash flows of CSS and CSS Financial at the dates
thereof and for the periods indicated in the Financial Statements. No financial
statement of any Person other than the Company is required by GAAP to be
included in the Financial Statements, other than included herein.
SECTION 3.8 No Undisclosed Liabilities. Except as set forth on Schedule
3.8, the Company has no liabilities or other obligations of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise
("Liability" or "Liabilities") that could reasonably be expected to have a
Company Material Adverse Effect, and there is no existing condition, situation
or set of circumstances which could reasonably be expected to result in such a
Liability, other than Liabilities fully reflected or reserved against on the
face of the Balance Sheet as adjusted for Liabilities incurred in the Ordinary
Course of Business since December 31, 1998 through the Closing Date.
SECTION 3.9 Absence of Certain Changes or Events. Since December 31, 1998,
there has not been any material adverse change in the business, financial
condition, operations, results of operations or future prospects of the Company.
Without limiting the generality of the foregoing, since that date and except as
otherwise disclosed in Schedule 3.9:
(a) the Company has not sold, leased, transferred, or assigned any of
its Assets, tangible or intangible, other than sales to its customers for fair
consideration in the Ordinary Course of Business;
(b) the Company has not entered into any agreement, contract, lease or
license (or series of related agreements, contracts, leases and licenses)
outside the Ordinary Course of Business;
(c) no party (including the Company) has accelerated, terminated,
modified or canceled any material agreement, contract, lease or license (or
series of related agreements, contracts, leases and licenses) to which the
Company is a party or by which the Company is bound;
(d) the Company has not imposed, granted, allowed or consented to any
Security Interest upon any of its Assets;
(e) the Company has not made any capital expenditure (or series of
related capital expenditures) either involving more than an aggregate of Fifty
Thousand Dollars ($50,000.00), unless with respect to a capital expenditure made
after the date hereof, otherwise approved in writing by the Buyer, or outside
the Ordinary Course of Business;
(f) the Company has not made any capital investment in, any loan to,
or any acquisition of the securities or Assets of, any other Person (or series
of related capital investments, loans, and acquisitions);
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(g) the Company has not issued any note, bond, or other debt security
or created, incurred, assumed, or guaranteed any indebtedness for borrowed money
or capitalized lease obligation;
(h) the Company has not delayed or postponed the payment of Accounts
Payable, Accrued Expenses or other Liabilities outside the Ordinary Course of
Business;
(i) the Company has not canceled, compromised, waived, or released any
right or claim (or series of related rights and claims);
(j) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(k) there has been no change made or authorized in the Certificate of
Incorporation or By-Laws or equivalent organizational documents, in each case as
amended or restated of CSS or CSS Financial prior to May 3, 1999;
(l) neither CSS or CSS Financial has issued, sold or otherwise
disposed of any of its respective capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its respective capital stock;
(m) neither CSS or CSS Financial has declared, set aside, or paid any
dividend or made any distribution with respect to its respective capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its respective capital stock;
(n) the Company has not experienced any damage, destruction, or loss
(whether or not covered by insurance) to its Assets;
(o) the Company has not made any loan to, or entered into any other
transaction with, any of its directors, officers and employees;
(p) the Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(q) the Company has not granted any increase in the compensation of
any of its directors, officers and employees;
(r) the Company has not adopted, amended, modified or terminated any
bonus, profit-sharing, incentive, severance or other plan, contract or
commitment for the benefit of any of its directors, officers and employees (or
taken any such action with respect to any other Employee Benefit Plan);
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(s) the Company has not made any other change in employment terms for
any of its directors, officers and employees outside the Ordinary Course of
Business;
(t) the Company has not made any political contribution or pledged to
make any charitable contribution;
(u) the Company has not done any act, or failed to do any act which it
had a duty or obligation to perform, which has or could result in a breach of
any obligation of the Company;
(v) there has not been any other occurrence, event, incident, action,
failure to act or transaction outside the Ordinary Course of Business involving
the Company; and
(w) the Company has not committed to any of the foregoing.
SECTION 3.10 Absence of Litigation. Except as set forth on Schedule 3.10,
(a) there is no claim, action, suit, litigation, proceeding, arbitration or
investigation of any kind, at law or in equity (including actions or proceedings
seeking injunctive relief), pending or threatened against the Company or any
properties or rights of the Company, which, if finally determined adversely, are
reasonably likely to have a Company Material Adverse Effect, and (b) the Company
is not subject to any continuing order of, consent decree, settlement agreement
or other similar written agreement with or continuing investigation by, any
court or Governmental Entity, or any judgment, order, writ, injunction, decree
or award of any court, Governmental Entity or arbitrator. In respect of the
matters relating to or arising in connection with the actions set forth in
Schedule 3.10, to the Knowledge of the Company and the Warranting Stockholders
there is no fact, event, condition, circumstance or other matter which either
has, or is reasonably likely to have resulted in, an event or determination
having a Company Material Adverse Effect. The Company has delivered to Parent or
Buyer copies of all pleadings, correspondence and other documents relating to
each matter disclosed in Schedule 3.10.
SECTION 3.11 Brokers. Except as set forth on Schedule 3.11, no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. The Company has
heretofore furnished to Parent a correct copy of all agreements between the
Company and any broker, finder or investment adviser pursuant to which such firm
or individual would be entitled to any payment relating to the Merger. The
Merger Consideration shall be reduced to reflect the payment of such fees by the
Company in the event any such fees are not paid by the Stockholders or by the
Company prior to the Closing Date.
SECTION 3.12 Tax Matters.
(a) The Company has filed all Tax Returns in a timely manner that it
was required to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed
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by the Company (whether or not shown on any Tax Return) have been paid. The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return. No claim has ever been made by an authority in a
jurisdiction where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security Interests on any
of the Assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax or file any Tax Return.
(b) The Company has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party.
(c) There is no dispute or claim concerning any Liability for Taxes of
the Company claimed or raised by any Governmental Entity. Schedule 3.12(c) lists
all federal, state, local, and foreign income Tax Returns filed with respect to
the Company for taxable periods ended on or after December 31, 1993, and
indicates those Tax Returns that have been audited, and indicates those Tax
Returns that currently are the subject of audit. The Company has delivered to
Parent correct and complete copies of all federal income Tax Returns,
examination reports and statements of deficiencies assessed against or agreed to
by the Company since December 31, 1993.
(d) The Company has not waived any statute of limitations in respect
of Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) The Company has not filed any consent under Section 341(f) of the
Code concerning collapsible corporations. The Company has not made any payments,
or is not obligated to make any payments, and is not a party to any agreement
that under certain circumstances could obligate it to make any payments that
will not be deductible under Section 280G of the Code. The Company has not been
a United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. The Company is not a party to any Tax allocation
or sharing agreement. The Company (i) has not been a member of an Affiliated
Group filing a consolidated federal income Tax Return (other than a group the
common parent of which was the Company) and (ii) has no Liability for the Taxes
of any Person (other than the Company) under Treas. Reg. Section 1.1502-6 (or
any similar provision of state, local, or foreign law), as a transferee or
successor by contract, or otherwise.
(f) Schedule 3.12(f) sets forth the following information with respect
to the Company as of the most recent practicable date: (A) the adjusted tax
basis of the Company in its Assets; (B) the amount of any net operating loss,
net capital loss, unused investment or other credit, unused foreign tax, or
excess charitable contribution allocable to the Company; and (C) the amount of
any inter-company items or any deferred gain or loss allocable to the Company
with respect to any inter-company transaction.
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(g) Schedule 3.12(g) sets forth the amount of all unpaid Taxes of the
Company as of the Closing Date.
SECTION 3.13 Real Property.
(a) Schedule 3.13(a) lists and describes all real property owned by
the Company. The Company represents and warrants that no Lien or Encumbrance
exists with respect to any such property, except as fully described on Schedule
3.13(a). The Company will not own any real property as of the Closing Date.
(b) Schedule 3.13(b) lists and describes briefly all real property
leased or subleased to the Company. The Company has delivered to Buyer correct
and complete copies of the leases and subleases listed in Schedule 3.13(b). With
respect to each lease and sublease listed in Schedule 3.13(b):
(i) to the Knowledge of the Company and the Warranting
Stockholders, the lease or sublease is legal, valid, binding, enforceable and in
full force and effect;
(ii) to the Knowledge of the Company and the Warranting
Stockholders, the consummation of the Merger will not affect the terms or
enforceability of the lease or sublease;
(iii) to the Knowledge of the Company and the Warranting
Stockholders, no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(iv) to the Knowledge of the Company and the Warranting
Stockholders, no party to the lease or sublease has repudiated any provision
thereof;
(v) there are no disputes, oral agreements or forbearance programs
in effect as to the lease or sublease;
(vi) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold;
(vii) to the Knowledge of the Company and the Warranting
Stockholders, all facilities leased or subleased thereunder have received all
approvals of Governmental Entities (including licenses and permits) required in
connection with the operation thereof and have been operated and maintained in
accordance with applicable laws, rules, and regulations the failure to obtain or
the violation of which would have a Company Material Adverse Effect; and
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(viii) all facilities leased or subleased thereunder are supplied
with functional utilities and other services necessary for the normal and usual
operation of said facilities.
SECTION 3.14 Intellectual Property.
(a) The Company owns or has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property necessary for the
operation of the Company's business as presently conducted. Each item of
Intellectual Property owned or used by the Company is owned or available for use
by the Company on identical terms and conditions immediately subsequent to the
Closing Date. The Company has taken all reasonably necessary and desirable
action to maintain and protect each item of Intellectual Property that it owns
or uses.
(b) The Company has not interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual Property
rights of any third party. None of the Stockholders and officers (and employees
with responsibility for Intellectual Property matters) of the Company has ever
received any oral or written charge, complaint, claim, demand or notice alleging
any such interference, infringement, misappropriation or violation (including
any claim that the Company must license or refrain from using any Intellectual
Property rights of any third party). To the Company's Knowledge, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(c) Schedule 3.14(c) identifies each patent or trademark and copyright
registration which has been issued to the Company or any Affiliate of the
Company with respect to any of its Intellectual Property, identifies each
pending patent application or application for registration which the Company or
any Affiliate of the Company has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other permission which the
Company or any Affiliate of the Company has granted to any third party with
respect to any of its Intellectual Property (together with any exceptions). The
Company has delivered to Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements and permissions (as amended to
date). Schedule 3.14(c) also identifies each trade name or unregistered
trademark used by the Company or any Affiliate of the Company in connection with
any of its businesses. With respect to each item of Intellectual Property
required to be identified in Schedule 3.14(c):
(i) the Company possesses all right, title, and interest in and to
the item, free and clear of any Security Interest, license, or other
restriction;
(ii) no royalty or other remuneration of any type is payable with
respect to any such item of Intellectual Property;
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(iii) such item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(iv) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand is pending or threatened which challenges the
legality, validity, enforceability, use or ownership of such item; and
(v) the Company has never agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other conflict with
respect to such item.
(d) Schedule 3.14(d) identifies each item of Intellectual Property
that any third party owns and that the Company or any Affiliate of the Company
uses pursuant to license, sublicense, agreement or permission, other than
shrink-wrap licenses for personal computer software. The Company has delivered
to Buyer correct and complete copies of all such licenses, sublicenses,
agreements, and permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in Schedule 3.14(d):
(i) the license, sublicense, agreement or permission covering such
item is legal, valid, binding, enforceable and in full force and effect;
(ii) the license, sublicense, agreement or permission will
continue to be legal, valid, binding, enforceable and in full force and effect
on identical terms following the Closing Date;
(iii) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which with notice
or lapse of time would constitute a breach or default or permit termination,
modification or acceleration thereunder;
(iv) no party to the license, sublicense, agreement or permission
has repudiated any provision thereof;
(v) no royalty or other remuneration of any type is payable with
respect to any such item of Intellectual Property;
(vi) with respect to each sublicense, the representations and
warranties set forth in items (i) through (iv) above are true and correct with
respect to the underlying license;
(vii) the underlying item of Intellectual Property is not subject
to any outstanding injunction, judgment, order, decree, ruling or charge;
(viii) no action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or, to the Knowledge of the
Warranting Stockholders,
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threatened which challenges the legality, validity or enforceability of the
underlying item of Intellectual Property; and
(ix) the Company has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission.
(e) Neither the Warranting Stockholders nor any of the directors and
officers (nor any employees with responsibility for Intellectual Property
matters) of the Company have any Knowledge of any new products, inventions,
procedures or methods of manufacturing or processing that any competitors or
other third parties have developed which reasonably could be expected to
supersede or make obsolete any product or process of the Company.
SECTION 3.15 Tangible Assets. Schedule 3.15 lists all the tangible Assets
of the Company. Except as set forth on Schedule 3.15, the Company owns and has
good and marketable title to all the tangible property and Assets necessary for
the conduct of its business as presently conducted and as proposed to be
conducted, including, but not limited to, those Assets listed on Schedule 3.15.
The Company has no Knowledge of any defects in any of the tangible Assets in
accordance with normal industry practice, and the tangible Assets are in good
operating condition and repair. There are no Security Interests on any of the
Assets of the Company, except as set forth in Schedule 3.15.
SECTION 3.16 Inventory. Schedule 3.16 lists all the inventory ("Inventory")
of the Company as of May 3, 1999. The Inventory of the Company consists of raw
materials and supplies, manufactured and purchased parts, goods/work-in-process
and finished goods, all of which is merchantable and fit for the purpose for
which it was procured or manufactured, and none of which is slow-moving,
obsolete, damaged or defective, subject only to the reserve for inventory
write-down set forth on the face of the Balance Sheet (rather than in any notes
thereto) as adjusted for the passage of time through the Closing Date in
accordance with the past custom and practice of the Company. Except as set forth
on Schedule 3.16, there are no Security Interests on any of the Inventory of the
Company.
SECTION 3.17 Contracts. Schedule 3.17 lists the following Contracts and
other agreements to which the Company is a party as of the date hereof:
(a) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments of any
amount or for a term of more than one (1) year;
(b) any agreement (or group of related agreements) for the purchase or
sale of raw materials, commodities, supplies, products or other personal
property, or for the furnishing or receipt of services of any amount or which
has a term of any duration;
(c) any partnership or joint venture agreement;
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(d) any agreement (or group of related agreements) under which it has
created, incurred, assumed or guaranteed any indebtedness for borrowed money, or
any capitalized lease obligation, in any amount, or under which it has imposed a
Security Interest on any of its Assets, tangible or intangible;
(e) any agreement concerning confidentiality or non-competition;
(f) any agreement with the Stockholders or Affiliates of the
Stockholders;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance or other material plan or
arrangement (including any Employee Benefit Plan) for the benefit of its current
or former directors, officers and employees;
(h) any collective bargaining agreement;
(i) any agreement for the employment of any individual on a full-time,
part-time, consulting or other basis;
(j) any agreement under which the consequences of a default or
termination could have a Company Material Adverse Effect; or
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of Ten Thousand Dollars
($10,000.00).
The Company has delivered to Buyer a correct and complete copy of each
written agreement listed in Schedule 3.17 and attached a written summary setting
forth the terms and conditions of each oral agreement referred to in Schedule
3.17. With respect to each such agreement, to the Knowledge of the Company and
the Warranting Stockholders: (i) such agreement is legal, valid, binding,
enforceable and in full force and effect; (ii) such agreement will continue to
be legal, valid, binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (iii)
no party is in breach or default, and no event has occurred which with notice or
lapse of time would constitute a breach or default, or permit termination,
modification or acceleration, under such agreement; and (iv) no party has
repudiated any provision of such agreement.
SECTION 3.18 Notes Receivable and Accounts Receivable. All notes receivable
and accounts receivable, other than those accounts receivable transferred to the
Stockholders prior to Closing, as listed on Schedule 1.2(b)(i) (collectively,
"Accounts Receivable"), of the Company are reflected properly on its books and
records and, to the best Knowledge of the Company, are valid receivables subject
to no known setoffs or counterclaims and have arisen only from bona fide
arms-length transactions in the Ordinary Course of Business of the Company. On
the Closing Date, there are no Accounts Receivable due from the Stockholders or
any of the Company's officers or directors.
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SECTION 3.19 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Company.
SECTION 3.20 Insurance. Schedule 3.20 sets forth the following information
with respect to each current insurance policy (including policies providing
property, casualty, liability and workers' compensation coverage and bond and
surety arrangements) to which the Company has been a party, a named insured, or
otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder and the name
of each covered insured;
(c) the policy number, the period of coverage and the amount of the
annual premiums payable;
(d) the scope (including an indication of whether the coverage was on
a claims made, occurrence, or other basis) and amount (including a description
of how deductibles and ceilings are calculated and operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy and to the Knowledge of the Company
and the Warranting Stockholders: (i) such policy is legal, valid, binding,
enforceable and in full force and effect; (ii) such policy will continue to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (iii)
neither the Company nor any other party to the policy is in breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under such policy; and (iv) no party to the policy has repudiated
any provision thereof. The Company has been covered during the past three (3)
years by insurance in scope and amount customary and reasonable for the business
in which it has engaged during the aforementioned period. Schedule 3.20 also
describes any self-insurance arrangements affecting the Company.
SECTION 3.21 Employees. Schedule 3.21 sets forth a true and complete list
of all employees of the Company, their respective positions, locations, salaries
or hourly wages and severance arrangements, each as of the date hereof and as of
the Closing Date. To the Knowledge of the Warranting Stockholders and the
officers (and employees with responsibility for employment matters) of the
Company, no executive, key employee or group of employees has any plans to
terminate employment with the Company. Except as set forth in Schedule 3.21,
each employee of the Company is employed on an "at will" basis and has no right
to any material compensation following termination of employment. Each employee
of the Company has
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executed a proprietary information and inventions agreement in the form provided
to counsel for Parent and Buyer. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices or other collective bargaining disputes. To the
Knowledge of the Company and the Warranting Stockholders, the Company has not
committed any unfair labor practice. There is no organizational effort presently
being made or threatened by or on behalf of any labor union with respect to
employees of the Company.
SECTION 3.22 Employee Benefits.
(a) Except as set forth on Schedule 3.22, with respect to all
employees, former employees, directors and independent contractors of the
Company and their dependents and beneficiaries, neither the Company nor any
ERISA Affiliate presently maintains, contributes to or has any Liability under
or with respect to any Employee Benefit Plan. The plans, programs and
arrangements set forth on Schedule 3.22 are herein referred to as the "Company
Employee Benefit Plans." Each Company Employee Benefit Plan (and each related
trust, insurance contract or other funding arrangement) complies in form and in
operation in all material respects with the applicable requirements of ERISA,
the Code, other applicable Laws and governing documents and agreements. With
respect to each Company Employee Benefit Plan, there has been no act or omission
by the Company or any ERISA Affiliate that would impair the right or ability of
the Company or any ERISA Affiliate to unilaterally amend in whole or part or
terminate such Company Employee Benefit Plan at any time, subject to the terms
of any insurance contract or other contractual arrangements with third parties,
and the Company has delivered to Buyer true and complete copies of: (i) the plan
documents, including any related trust agreements, insurance contracts or other
funding arrangements, or a written summary of the terms and conditions of the
plan if there is no written plan document; (ii) the most recent IRS Form 5500;
(iii) the most recent financial statement and, if applicable, actuarial
valuation; (iv) all correspondence with the Internal Revenue Service, the
Department of Labor and other governmental agencies with respect to the past
three (3) plan years other than IRS Form 5500 filings; and (v) the most recent
summary plan description.
(b) Neither the Company nor any of its directors, officers or
employees has any Liability with respect to any Company Employee Benefit Plan
for failure to comply with ERISA, the Code, any other applicable Laws or any
governing documents or agreements.
(c) No Company Employee Benefit Plan is an Employee Pension Benefit
Plan, and no Company Employee Benefit Plan has any unfunded Liability. With
respect to the Company Employee Benefit Plans, all applicable contributions and
premium payments for all periods ending prior to the Closing Date (including
periods from the first day of the then current plan year to the Closing Date)
shall be made prior to the Closing Date in accordance with past practice.
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(d) Neither the Company nor any ERISA Affiliate maintains, maintained,
contributes to, or has any Liability (including, but not limited to, current or
potential withdrawal Liability) with respect to any Multiemployer Plan or
Employee Pension Benefit Plan.
(e) With respect to all employees and former employees of the Company,
neither the Company nor any ERISA Affiliate presently maintains, contributes to
or has any Liability under any funded or unfunded medical, health or life
insurance plan or arrangement for present or future retirees or present or
future terminated employees except as required by the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, or state continuation coverage
laws. There has been no act or acts which would result in a disallowance of a
deduction or the imposition of a tax pursuant to Section 4980B, or any
predecessor provision, of the Code or any related regulations. No event has
occurred with respect to which the Company or any Affiliates could be liable for
a material Tax imposed by any of Sections 4972, 4976, 4977, 4979 or 4980 of the
Code, or for a material civil penalty under Section 502(c) of ERISA.
(f) There is no pending, or to the Knowledge of the Company,
threatened legal action, proceeding, audit, examination or investigation against
or involving any Company Employee Benefit Plan maintained by the Company or any
ERISA Affiliate (other than routine claims for benefits). To the Knowledge of
the Company, there is no basis for, and there are no facts which could give rise
to, any such condition, legal action, proceeding or investigation. Any bonding
required with respect to any Company Employee Benefit Plans in accordance with
applicable provisions of ERISA has been obtained and is in full force and
effect.
SECTION 3.23 Guaranties. Except as set forth in Schedule 3.23, the Company
is not a guarantor or otherwise liable for any Liability or obligation
(including indebtedness) of any other Person.
SECTION 3.24 Environment, Health and Safety.
(a) Except as set forth on Schedule 3.24, the Company has complied
with all Environmental, Health and Safety Laws, and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand or notice has been
filed or commenced against the Company alleging any failure so to comply.
Without limiting the generality of the preceding sentence, the Company has
obtained and been in compliance with all of the terms and conditions of all
permits, licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health and Safety Laws. The Company has
provided Buyer with correct and complete copies of all reports and studies
within the possession or control of the Company or the Stockholders with respect
to past or present environmental conditions or events at any real property
presently or previously owned or leased by the Company.
(b) Except as set forth on Schedule 3.24, the Company has no Liability
(and the Company has not handled or disposed of any substance, arranged for the
disposal of any
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substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could form the basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against the Company
giving rise to any Liability) for damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health and
Safety Law.
(c) Except as set forth on Schedule 3.24, all properties owned
(previously or currently) or leased and equipment used in the business of the
Company, and its predecessors and Affiliates, have been free of asbestos, PCB's,
underground storage tanks, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, polychlorinated biphenyls,
landfills, surface impoundments, disposal areas and Extremely Hazardous
Substances.
SECTION 3.25 Certain Business Relationships with the Company. Except as
described in Schedule 3.25, neither the Stockholders nor any Affiliates of the
Stockholders have been involved in any business arrangement or relationship with
the Company within the past twelve (12) months (other than employment by the
Company), and neither the Stockholders nor any Affiliates of the Stockholders
own any Asset which is used in the business of the Company.
SECTION 3.26 Delivery of Information. The Stockholders acknowledge the
receipt and review by the Stockholders of the most recent filings made by Parent
with the SEC under the Securities Act and the Exchange Act.
SECTION 3.27 Product and Service Warranties. To the Knowledge of the
Company and the Warranting Stockholders, each product sold, leased or delivered,
and each service performed, by the Company has been in conformity with all
applicable contractual commitments and all express and implied warranties, and
the Company has no Liability (and there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against any of them giving rise to any Liability) for the replacement or
repair of any product, the substandard performance of any service, or other
damages in connection with the product sold or services provided by the Company,
subject only to the reserve for product and service warranty claims set forth on
the face of the Balance Sheet (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Company. No product sold, leased or delivered, or service
performed, by the Company is subject to any guaranty, warranty or other
indemnity beyond the applicable standard terms and conditions of sale, lease or
performance. Schedule 3.27 includes copies of the standard terms and conditions
of sale, lease or performance for the Company (containing applicable guaranty,
warranty and indemnity provisions).
SECTION 3.28 Product and Service Liability. To the Knowledge of the Company
and the Warranting Stockholders, the Company has no Liability (and there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against the Company giving
rise to any Liability) arising out of any injury or damages (whether actual or
alleged) to any Person or its property or its business operations or prospects
as
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a result of the ownership, possession or use of (i) any product sold, leased or
delivered by the Company or (ii) any service performed by the Company.
SECTION 3.29 Certain Business Practices. Neither the Company nor any
director, manager, officer, stockholder, agent or employee of the Company has
(i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees or to foreign or
domestic political parties or campaigns or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.
SECTION 3.30 Disclosure. No representation, warranty or covenant made by
the Company or the Warranting Stockholders in this Agreement or in any exhibit
or schedules delivered pursuant hereto contains an untrue statement of a
material fact, and except as set forth herein or in any such exhibit or
schedule, neither the Company nor the Stockholders know of any fact or
circumstances which is reasonably likely to have a Company Material Adverse
Effect.
SECTION 3.31 Limitation on Representations and Warranties. Neither the
Company nor the Warranting Stockholders make any representation or warranty to
the Buyer or Parent regarding the probable success or profitability of the
Company after the Closing Date.
ARTICLE IIIA
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
The Stockholders hereby represent and warrant to Parent and Buyer as
follows:
SECTION 3.1A Authorization of Transaction. The Stockholders have full power
and authority to execute and deliver this Agreement and to perform all
obligations hereunder and thereunder required to be performed by the
Stockholders. This Agreement constitutes the valid and legally binding
obligation of the Stockholders, enforceable in accordance with its terms and
conditions. Each Stockholder is a natural person over 21 years of age. None of
the Stockholders has had a legal representative appointed by a court of law or
otherwise to act in behalf of the Stockholders or with respect to any property
of the Stockholders. The Stockholders are not required to give any notice to,
make any filing with, or obtain any authorization, consent or approval of any
Governmental Entity in order to consummate the transactions contemplated by this
Agreement.
SECTION 3.2A Non-contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby and
thereby, will (a) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of any
government, Governmental Entity, or court to which the Stockholders are subject
or (b) except with respect to Shareholders Operating Agreements, which
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will be terminated prior to Closing, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any agreement, contract, lease, license, instrument or other arrangement
to which the Stockholders are a party, by which the Stockholders are bound or to
which any Assets of the Stockholders are subject.
SECTION 3.3A Brokers' Fees. Except as set forth on Schedule 3.11,
Stockholders have no Liability or obligation to pay any fees or commissions to
any broker, finder, or agent with respect to the transactions contemplated by
this Agreement.
SECTION 3.4A Company Shares. As of the Closing Date, Stockholders will hold
of record and will own beneficially all the outstanding shares of Company Common
Stock, free and clear of any restrictions on transfer (other than any
restrictions under the Securities Act and state securities laws), Encumbrances,
Security Interests, options, warrants, purchase rights, contracts, commitments
and/or other rights whatsoever. Except with respect to Shareholders Operating
Agreements, which will be terminated prior to Closing, none of the Stockholders
is a party to any option, warrant, purchase right or other contract or
commitment whatsoever that could require any of the Stockholders to sell,
transfer or otherwise dispose of any capital stock of the Company (other than
this Agreement). As of the Closing Date, Stockholders shall not be parties to
any voting trust, proxy, voting rights agreement or other agreement or
understanding with respect to the voting of any capital stock of the Company.
SECTION 3.5A [Intentionally Deleted.]
SECTION 3.6A Investment Representations. With respect to the AIM Common
Stock being issued to the Stockholders as part of the Merger Consideration, the
Stockholders represent and warrant to the Buyer and Parent as follows:
(i) Experience. The Stockholders are capable of evaluating the merits
and risks of this investment, have the capacity to protect their own respective
interests, and have the financial ability to bear the economic risks of the
investment.
(ii) Investment. The Stockholders are acquiring the AIM Common Stock
for investment for their own account and not as nominees or agents, and not with
a view to, or for resale in connection with, any distribution thereof. The
Stockholders understand that the AIM Common Stock to be delivered has not been
and may not be registered under the Securities Act of 1933 (the "Securities
Act") by reason of an exemption from the registration provisions of the
Securities Act, the availability of which depends upon, among other things, the
bona fide nature of the investment intent and the accuracy of their
representations as contained herein. The Stockholders are domiciled in the State
of Georgia, except for L. Xxxxxx Xxxxxx, who is a resident of Florida.
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(iii) Holding Period. The Stockholders acknowledge that the AIM Common
Stock may not be sold in the absence of an effective registration statement
under the Securities Act or unless an exemption from such registration is
available.
(iv) Access to Information. The Stockholders have had a reasonable
opportunity to discuss Parent's business, management and financial affairs with
its management and the opportunity to review in detail Parent's publicly
available information related to the Stockholders' investment in Parent. The
Stockholders' questions pertaining to Parent were answered fully and to the
Stockholders' satisfaction.
(v) Securities Administrators. The Stockholders understand that no
securities administrator of any state has made any finding or determination
relating to the fairness of the investment and that no securities administrator
of any state has or will recommend or endorse the purchase of the AIM Common
Stock.
(vi) Transfer and Legend. The AIM Common Stock shall not be sold,
pledged, hypothecated or otherwise transferred unless it is registered under the
Securities Act and applicable state securities laws or is exempt therefrom. The
Stockholders acknowledge that the certificate representing the AIM Common Stock
shall be endorsed with a legend which provides substantially as follows:
The securities evidenced hereby have not been registered under the
Securities Act of 1933, or the laws of any other jurisdiction, and may
not be sold, transferred, assigned, pledged or otherwise distributed
unless there is an effective registration statement under such Act and
applicable securities laws covering such securities or AIM Group, Inc.
receives an opinion of counsel for the holder of the securities
(concurred in by counsel for AIM Group, Inc.) stating that such sale,
transfer, assignment, pledge or distribution is exempt from the
registration and prospectus delivery requirements of such Act and
applicable securities laws.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
Parent and Buyer hereby represent and warrant, jointly and severally, to
the Company and the Stockholders that:
SECTION 4.1 Organization and Qualification. Each of Parent and Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all requisite
power and authority to own, lease and operate its properties and to carry on its
business as it is now being conducted, and each
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of Parent and Buyer is duly qualified and in good standing to do business in
each jurisdiction in which the nature of the business conducted by it or the
ownership or leasing of its properties makes such qualification necessary,
except for such failures to be so qualified or licensed and in good standing as
would not, individually or in the aggregate, have a Parent Material Adverse
Effect.
SECTION 4.2 Authority. Each of Parent and Buyer has all requisite corporate
power and authority to execute and deliver this Agreement, to perform its
respective obligations hereunder and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action and no other corporate proceeding on the part of Parent or
Buyer is necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
Parent and Buyer and, assuming the due authorization, execution and delivery
thereof by the Stockholders and the Company, constitutes the legal, valid and
binding obligations of Parent and Buyer enforceable in accordance with its
terms.
SECTION 4.3 No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by Parent and Buyer
do not, and the performance of this Agreement by Parent and Buyer will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws of Parent
or Buyer, (ii) conflict with or violate any Laws in effect as of the date of
this Agreement applicable to Parent or Buyer or by which any of their respective
properties is bound, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of a lien
or encumbrance on, any of the properties or Assets of Parent or Buyer pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Buyer is
a party or by which Parent or Buyer or any of their respective properties is
bound by or subject to, except for breaches, defaults, events, rights of
termination, amendment, acceleration or cancellation, payment obligations or
Liens or Encumbrances that would not have a Parent Material Adverse Effect.
(b) The execution and delivery of this Agreement by Parent and Buyer
do not, and the performance of this Agreement by Parent and Buyer will not,
require Parent or Buyer to obtain any consent, approval, authorization or permit
of, or to make any filing with or notification to, any Governmental Entities,
except (i) for applicable requirements, if any, of the Securities Act and the
Exchange Act and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
either individually or in the aggregate, prevent Parent or Buyer from performing
its obligations under this Agreement.
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SECTION 4.4 Limitation on Representations and Warranties.
(a) Neither Parent nor Buyer makes any other representation or
warranty to the Company or the Stockholders, or any of the Company's or the
Stockholders' employees, agents, consultants or representatives except as
expressly provided in this Agreement.
(b) Neither Parent nor Buyer make any representation or warranty to
the Company or the Stockholders regarding the probable success or profitability
of Buyer or Parent.
SECTION 4.5 Reports; Financial Statements.
(a) Parent is current in all forms, reports, statements and other
documents required to be filed with the SEC (collectively, the "Parent SEC
Reports"). The Parent SEC Reports, including all Parent SEC Reports filed after
the date of this Agreement and prior to the Closing Date, were or will be
prepared in all material respects in accordance with the requirements of
applicable Law (including, the Securities Act and the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
Parent SEC Reports). As of their respective dates, the Parent SEC Reports did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(b) Each of the financial statements (including, in each case, any
related notes thereto) contained in the Parent SEC Reports filed prior to, on or
after the date of this Agreement (i) have been or will be prepared in accordance
with, and complied or will comply as to form with, the published rules and
regulations of the SEC and GAAP applied on a consistent basis throughout the
periods involved (except as otherwise noted therein) and (ii) fairly present or
will fairly present the financial position of Parent as of the respective dates
thereof and the results of its operations and cash flows for the periods
indicated, except that any unaudited interim financial statements were or will
be subject to normal and recurring year-end adjustments.
SECTION 4.6 Absence of Certain Changes or Events. Except as and to the
extent disclosed in the Parent SEC Reports filed prior to the date of this
Agreement or as contemplated in this Agreement, since the end of the calendar
period for which Parent filed its most recent Parent SEC Report, there has not
been (a) a Parent Material Adverse Effect or (b) any significant change by
Parent in its accounting methods, principles or practices.
SECTION 4.7 Ownership of Buyer. All of the outstanding capital stock of
Buyer is owned directly by Parent.
SECTION 4.8 Brokers. Parent and Buyer have engaged a broker in connection
with this and other transactions. To the extent there is any fee for the
services of the broker retained by Parent and Buyer in connection with the
transactions contemplated by this
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Agreement, Parent and Buyer shall be solely responsible for any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement.
SECTION 4.9 Capitalization. The authorized capital stock of the Parent
consists of Twelve Million (12,000,000) shares of AIM Common Stock, of which
Three Million Two Thousand Six Hundred Thirty-Seven (3,002,637) shares were
issued and outstanding as of August 9, 1999, and (a) all of which shares are
duly authorized, validly issued, fully paid and non-assessable and not subject
to preemptive rights created by statute, the Parent's Certificate of
Incorporation or By-Laws or any agreement to which the Parent is a party or
bound, (b) Three Thousand One Hundred Fifty (3,150) shares of AIM Common Stock
were held in treasury of the Parent as of June 30, 1999 and (c) the issued and
outstanding shares of Parent are traded publicly on the NASD Bulletin Board.
Parent also has authorized One Million (1,000,000) shares of preferred stock, of
which One Hundred Fifty Thousand (150,000) shares were issued and outstanding as
of June 30, 1999. The authorized capital stock of the Buyer consists of One
Hundred Thousand (100,000) shares of common stock, of which One Hundred (100)
shares are issued and outstanding as of the date of this Agreement, and (a) all
of which shares are duly authorized, validly issued, fully paid and
non-assessable and not subject to preemptive rights created by statute, the
Buyer's Certificate of Incorporation or By-Laws or any agreement to which the
Buyer is a party or bound, (b) zero (0) shares of common stock were held in
treasury of the Buyer and (c) all of the issued and outstanding shares of common
stock are owned by and held in the name of AIM Group, Inc.
ARTICLE V
COVENANTS
SECTION 5.1 Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, prior to the Closing Date, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Parent, the Company
will: (a) operate only in the Ordinary Course of Business; and (b) use its best
efforts to (1) preserve and/or maintain, in all material respects and consistent
with past custom and practice, its business and properties, including its
present operations, physical facilities, working conditions and relationships
with its present employees and Persons having significant business relations
with it, including, without limitation, suppliers and customers, (2) maintain
and keep its properties and Assets in as good repair and condition as at
present, ordinary wear and tear excepted, (3) keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that currently
maintained, and (4) at the request of Parent or Buyer, obtain pre-clearance
certificates and file such instruments and documents as are necessary to permit
Buyer to merge the Company with and into the Buyer on the Closing Date or
immediately following the Closing Date.
SECTION 5.2 Negative Covenants of the Company. Except as expressly
contemplated by this Agreement (including, without limitation, Section 1.4
hereof) or as previously disclosed to Buyer or Parent in writing on Schedule
5.2, or otherwise consented to in writing by Buyer or Parent, from the date of
this Agreement until the Closing Date, the Company
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shall not, directly or indirectly through any Affiliate or otherwise (and the
Stockholders shall not and shall not cause the Company to), and shall not permit
any Affiliate to directly or indirectly, do any of the following:
(a) (i) increase the compensation payable to, or to become payable to,
any employee, director or executive officer; (ii) grant any severance or
termination pay to, or enter into any employment or severance agreement with,
any director, officer or employee; (iii) establish, adopt, enter into, amend,
modify or terminate any Employee Benefit Plan or arrangement except as may be
required by applicable Law; or (iv) hire any person other than persons to
replace existing employees who cease to be employed with the Company prior to
the Closing, with such replacement persons being hired at the same total cost
and salary as the former whom they are replacing;
(b) declare or pay any dividend on or make any other distribution in
respect of, outstanding shares of its capital stock;
(c) (i) redeem, purchase or otherwise acquire any shares of its
capital stock, or any securities or obligations convertible into or exchangeable
for any shares of its capital stock, or any options, warrants or conversion or
other rights to acquire any shares of its capital stock, or any such securities
or obligations; (ii) effect any reorganization or recapitalization; or (iii)
split, combine or reclassify any of its capital stock, or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for, shares of its capital stock;
(d) (i) issue, deliver, award, grant or sell, or authorize or propose
the issuance, delivery, award, grant or sale (including the grant of any
Security Interests, Liens, claims, pledges, limitations in voting rights,
charges or other Encumbrances) of, any shares of any class of its capital stock
(including shares held in treasury), any securities convertible into or
exercisable or exchangeable for any other shares, or any rights, warrants or
options to acquire, any such shares; and (ii) amend or otherwise modify the
terms of any such rights, warrants or options the effect of which shall be to
make such terms more favorable to the holders thereof;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in, all or a portion of the Assets of, or by any
other manner, any corporation, partnership, association or other business,
organization or division thereof, or otherwise acquire or agree to acquire any
Assets of any other Person (other than the purchase of Assets from suppliers or
vendors in the Ordinary Course of Business) which are material, individually or
in the aggregate, to the Company;
(f) sell, lease, exchange, mortgage, pledge, transfer or otherwise
dispose of, or agree to sell, lease, exchange, mortgage, pledge, transfer or
otherwise dispose of, any of its material Assets (other than in the Ordinary
Course of Business);
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(g) propose or adopt any amendments to its Certificate of
Incorporation or its By-Laws or equivalent organizational documents;
(h) (i) change any of its methods of accounting in effect on the date
of the Balance Sheet, or (ii) make or rescind any material election relating to
Taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, or change in
any material respect any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of the
federal income Tax Return for the taxable year ended December 31, 1998, except,
in the case of clause (i) or clause (ii), as may be required by Law or GAAP;
(i) enter into any Contract outside the Ordinary Course of Business;
(j) create, or permit the creation of, any Lien upon any Assets
outside the Ordinary Course of Business;
(k) enter into any employment Contract or collective bargaining
agreement, or modify the terms of any existing such Contract or agreement;
(l) make any capital expenditures other than in the Ordinary Course of
Business, unless the Company has received the prior written consent of the
Buyer;
(m) amend or renew, or enter into any Contract involving operations
outside of the United States; or
(n) take or agree to take any action that would or is reasonably
likely to result in any representations and warranties of the Company or the
Stockholders set forth in this Agreement being untrue or in any of the
conditions to the Merger not being satisfied.
SECTION 5.3 Negative Covenants of Parent and Buyer. Except as expressly
contemplated by this Agreement or otherwise consented to in writing by the
Company, from the date of this Agreement until the Closing Date, Parent and
Buyer will not take or agree to take any action that would or is reasonably
likely to result in any representations and warranties of Parent or Buyer set
forth in this Agreement being untrue or in any of the conditions to the Merger
not being satisfied.
SECTION 5.4 Access and Information. The Company shall (i) provide Parent,
Buyer and their officers, directors, employees, agents, counsel, accountants,
financial advisors, consultants and other representatives (collectively, the
"Parent Representatives"), with full access, upon reasonable prior notice, to
all officers, employees and accountants of the Company and to their assets,
properties, Contracts, books, records and all such other information and data
concerning the business and operations of the Company as Parent, Buyer or any of
the Parent Representatives reasonably may request in connection with such
investigation. Such investigation will involve, among other things, Parent's or
Buyer's review and confirmation of the
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Company's Financial Statements, the legal review of the Company's Contracts and
leases, the review of the Company's patient, client and referral lists and
reference checks of the Company. Parent will provide the Stockholders with all
information reasonably requested by the Stockholders to enable the Stockholders
to evaluate the merits of the Merger.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Appropriate Action; Consents; Filings.
(a) The Company, Parent and Buyer shall each use its best efforts to:
(i) take, or cause to be taken, all appropriate action, and do, or cause to be
done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the transactions contemplated by this
Agreement; (ii) obtain from any Governmental Entities any consents, licenses,
permits, waivers, approvals, authorizations or orders required to be obtained or
made by Parent, Buyer or the Company in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated herein, including, without limitation, the Merger;
(iii) make all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement required under the federal
securities laws and the rules and regulations thereunder, if any, and any other
applicable federal or state securities laws, and (B) any other applicable Law;
provided that Parent, Buyer and the Company shall cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filing and,
if requested, accepting all reasonable additions, deletions or changes suggested
in connection therewith. The Company, Parent and Buyer shall furnish all
information required for any application or other filing to be made pursuant to
the rules and regulations of any applicable Law in connection with the
transactions contemplated by this Agreement.
(b) (i) Each of the Company, Parent and Buyer shall give any notices
to third parties, and use its best efforts to obtain any third party consents
(A) necessary, proper or advisable to consummate the transactions contemplated
in this Agreement, (B) disclosed or required to be disclosed in the schedules
contained herein, (C) otherwise required under any Contracts, licenses, leases
or other agreements in connection with the consummation of the transactions
contemplated herein or (D) required to prevent a Company Material Adverse Effect
from occurring prior to or after the Closing Date or a Parent Material Adverse
Effect from occurring prior to or after the Closing Date.
(ii) In the event that any party shall fail to obtain any third
party consent described in subsection (b) (i) above, such party shall use its
best commercially reasonable efforts, and shall take any such actions reasonably
requested by the other party hereto, to minimize any adverse effect upon the
Company, Parent and Buyer and their respective businesses resulting, or which
could reasonably be expected to result after the Closing Date, from the failure
to obtain such consent.
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SECTION 6.2 Transfer of Company Liabilities Prior to the Closing Date. The
Company and the Warranting Stockholders shall do all acts necessary to transfer,
distribute and/or dispose of all long-term Liabilities of the Company reflected
on the Balance Sheet and any long-term Liabilities arising after the date of the
Balance Sheet up to and through the Closing Date (other than those Liabilities
reflected on Schedule 3.8) to the Warranting Stockholders, and the Warranting
Stockholders shall assume such Liabilities all with the effect that such
Liabilities shall not be owned by the Company, nor assumed by Buyer, at the
Closing Date. Any Taxes generated in connection with such transfers,
distributions or disposals shall be borne by the Warranting Stockholders or
shall be reimbursed to the Buyer by the Warranting Stockholders.
SECTION 6.3 Payment by Company of Certain Outstanding Obligations Prior to
the Closing Date. Prior to the Closing Date, the Company and the Warranting
Stockholders shall do all acts necessary to cause the Company to fully pay all
outstanding pension plan and profit sharing contributions due from the Company,
if any, and the Company shall terminate all such plans on or prior to the
Closing Date.
SECTION 6.4 Employment and Non-Competition Agreements. Prior to the Closing
Date, the Warranting Stockholders shall do all acts necessary (i) to cause the
Warranting Stockholders and all employees of the Company designated by Parent or
the Buyer to execute the form of Employment and Non-Competition Agreements
attached hereto as Exhibits X-0, X-0, X-0 and B-4 and to deliver all such
fully-executed Employment and Non-Competition Agreements to Parent and Buyer
prior to the Closing Date; and (ii) to cause the Warranting Stockholders to also
execute the Non-Competition Agreements attached hereto as Exhibits C-1, C-2 and
C-3, and deliver such fully-executed Non-Competition Agreements to Parent and
Buyer prior to the Closing Date.
SECTION 6.5 Landlord Approvals. Within a commercially reasonable period of
time after the Closing Date, the Company and the Warranting Stockholders shall
use their best commercially reasonable efforts to cause the landlord with
respect to the following leased locations to issue its written consent, if
necessary, to the change in the tenant from the Company to the Buyer without any
charge or cost and without any material change in the terms of the applicable
lease or other arrangement previously existing between such party and the
Company or the Warranting Stockholders, with such transferred leases and
landlord approvals to such transfer being attached hereto as Exhibit F: (1) 000
Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000; (2) 0000 Xxxxxxxx
Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000; (3) 0000 X. Xxxxx Xx. Xxxxx
Xxxx, Xxxxx 000, Xxxxx, Xxxxxxx 00000; and (4) Xxxx 000, Xxxxxxxx Xxxxxxxxx
Xxxxxx Xxxxxx, 0000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxx 00000.
SECTION 6.6 Contract Assignments/Novations. Within such reasonable time
after the Closing Date as may be required, the Company and Warranting
Stockholders agree to use their best commercially reasonable efforts do all acts
reasonably necessary to cause all parties to all material contracts with the
Company to issue their written consent, if necessary, to the assignment and
novation of all such contracts from the Company to the Buyer without any charge
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or cost and without any material change in the terms of the applicable contract
or other arrangement previously existing between such party and the Company or
Warranting Stockholders, with such consents to be set forth on Schedule 7.2(c)
hereto. Notwithstanding anything herein to the contrary, the Company and the
Warranting Stockholders represent and warrant that the effectuation of the
transactions contemplated by this Agreement will not cause an acceleration of
the Bank Debt and that any failure to renew and maintain the Company's Key-man
life insurance policies on each of the Warranting Stockholders and listed in
Schedule 1.4 will not cause any default or acceleration in the Bank Debt.
SECTION 6.7 Best Efforts. The parties hereto shall use their best
commercially reasonable efforts to consummate the Merger and the other
transactions contemplated hereby as promptly as practicable.
SECTION 6.8 Public Announcements. The parties hereto agree that only Parent
may make any public announcement of the existence of this Agreement and/or the
transactions contemplated hereby, including but not limited to, the Merger.
SECTION 6.9 Tail Insurance. The Warranting Stockholders shall purchase, at
the sole cost and expense of the Warranting Stockholders, a Discontinued
Products and Operations Coverage liability insurance policy to cover the one (1)
year period immediately following the Closing Date, with such policy to provide
for the same insurance coverage as the Company's existing liability policies,
but at no less than One Million Dollars ($1,000,000.00) of insurance coverage
per occurrence and One Million Dollars ($1,000,000.00) of insurance coverage in
the aggregate, and with evidence of such Discontinued Products and Operations
Coverage liability insurance to be attached hereto as Schedule 6.9.
SECTION 6.10 No Competing Transactions. The Company and the Stockholders
agree that they shall not, individually or in the aggregate, engage in or
conduct any discussions relating to any Competing Transaction.
SECTION 6.11 Tax-Deferred Reorganization. The parties hereto shall use
their commercially reasonable best efforts to cause the Merger to constitute a
tax-deferred reorganization under Code Section 368(a). Parent represents that as
of the date hereof, it has no plan or intention to liquidate, merge or cause the
Surviving Corporation to sell or otherwise dispose of its assets, or do any
other act that would jeopardize the qualification of the Merger contemplated by
this Agreement as a tax-deferred reorganization within the meaning of Section
368(a) of the Code. All parties covenant to report on their applicable federal
and state tax returns the Merger and the consequences of the Merger consistently
with the foregoing.
SECTION 6.12 Additional Tax Matters.
(a) Tax Periods Ending on or before the Closing Date.
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(i) The Warranting Stockholders shall prepare or cause to be
prepared and file or cause to be filed, at Warranting Stockholders' cost and
expense, all Tax Returns for the Company (including, without limitation, the
Company's final federal Form 1120, U.S. Income Tax Return, or final federal Form
1120S, U.S. Income Tax Return for an S Corporation, as the case may be, and any
related state income Tax Return) for all periods ending on or prior to the
Closing Date which are filed after the Closing Date, including but not limited
to the preparation and filing of the final Tax Returns for the Company for the
fiscal year or portion thereof in which the Closing occurs ("Final Tax Return")
on or before the fifteenth (15th) day of the third month, or the fifteenth
(15th) day of the fourth (4th) month for an S Corporation, after Closing and
deliver or cause to be delivered on that same date the Final Tax Return and
financial statements for the time period covered by the Final Tax Return, as
well as the Tax Return for the full year immediately preceding the period
covered by the Final Tax Return and financial statements for that immediately
preceding full year, to the following person: Xxxxx Xxxxxx, AIM Group, Inc.,
0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000. The Stockholders shall
permit Buyer to review and comment on each such Tax Return (including but not
limited to the Final Tax Return) described in the preceding sentence prior to
filing. To the extent required by applicable law, the Stockholders shall include
any income, gain, loss, deduction or other tax items for such periods on the
Stockholders' Tax Return(s) in a manner consistent with the Schedule K-1(s)
relating to such income Tax Return(s) for such periods. The Stockholders shall
be solely liable for, shall pay and shall indemnify Buyer from, any Taxes of the
Company with respect to such periods (other than any Taxes due by reason of
Parent fulfilling its obligation to issue and deliver the Employee Shares
pursuant to Section 2.1(a) hereof).
(ii) The Buyer shall prepare or cause to be prepared and file or
cause to be filed, at Buyer's cost and expense, any Tax Returns for the Company
for all periods beginning on or after the Closing Date, including, without
limitation, the final income Tax Returns, if any, of the Company that may be
required to be filed after the Closing but prior to the merger or liquidation of
the Company into the Buyer.
(b) Cooperation on Tax Matters.
(i) Buyer, the Company and the Stockholders shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns pursuant to this Section 6.12 and any audit,
litigation or other proceeding with respect to Taxes. Such cooperation shall
include the retention and (upon the other party's request) the provision of
records and information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on a mutually
convenient basis to provide additional information and explanation of any
material provided hereunder. The Company and the Stockholders agree to provide
Buyer upon Closing with all books and records with respect to Tax matters
pertinent to the Company relating to any taxable period before Closing
(including any extensions thereof) as to which the statute of limitations has
not expired and warrant that no such books and records have been transferred,
destroyed or discarded and that the Company and the Stockholders have abided by
all record retention agreements, if any, entered into with any taxing authority.
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(ii) Buyer and the Stockholders further agree, upon request, to
use their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to mitigate,
reduce or eliminate any Tax that could be imposed (including, but not limited
to, with respect to the transactions contemplated hereby).
SECTION 6.13 Registration Rights Agreement. Parent and the Stockholders
shall enter into a registration rights agreement substantially in the form
attached hereto as Exhibit G (the "Registration Rights Agreement"), pursuant to
which the Stockholders will receive certain rights to register their shares of
AIM Common Stock in accordance with the terms of such agreement.
SECTION 6.14 [Intentionally Deleted.]
SECTION 6.15 Settlement With Certain Stockholders of CSS and CSS Financial.
The Company and the Warranting Stockholders represent and warrant that any and
all disputes with Xxxxx X. Xxxxxxx and Xxxxxx Xxxxx as stockholders of CSS and
CSS Financial have been settled. A copy of the executed Settlement Agreement
("Settlement Agreement") between the Stockholders, CSS and CSS Financial is
attached hereto as Schedule 6.15.
SECTION 6.16 Approval of Merger and Termination of the Shareholders
Operating Agreements. The Boards of Directors of CSS and CSS Financial have each
validly approved of the Merger prior to the Effective Time. The Stockholders
have taken all action necessary to terminate the Amended and Restated
Shareholders Operating Agreements, each dated as of September 28, 1998 relating
to CSS and CSS Financial (collectively, the "Shareholders Operating Agreements")
immediately prior to the Effective Time. The Agreements Terminating Shareholders
Operating Agreements and Board Resolutions approving of the Merger are each
attached hereto as Schedule 6.16.
SECTION 6.17 Stockholder Approval. The Stockholders shall take all action
necessary under the Delaware General Corporation Law and the Georgia Business
Corporation Code to approve the Merger and adopt this Agreement immediately
prior to the Effective Time.
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1 Conditions to Obligations of Each Party Under This Agreement.
The respective obligations of each party to effect the Merger and the other
transactions contemplated herein shall be subject to the satisfaction at or
prior to the Closing Date of the following conditions, any or all of which may
be waived, in whole or in part, to the extent permitted by applicable Law:
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(a) No Order. No Governmental Entity or federal or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(b) Consents and Approvals. All material consents, approvals and
authorizations legally required to be obtained to consummate the Merger shall
have been obtained from all required Governmental Entities.
(c) Execution of the Settlement Agreement. The Settlement Agreement
shall have been executed by all parties thereto.
SECTION 7.2 Additional Conditions to Obligations of Buyer and/or Parent.
The obligations of Parent and Buyer to effect the Merger and the other
transactions contemplated herein are also subject to the following conditions,
each of which may be waived, in whole or in part, to the extent permitted by
applicable Law, by Parent or Buyer:
(a) Representations and Warranties.
(i) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct when made and on and as of
the Closing Date, as if made on and as of such date, individually or in the
aggregate, except where the failure to be so true and correct would not have a
Company Material Adverse Effect, and except that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. Solely for purposes of this section and in
determining compliance with the conditions set forth herein, any representation
and warranty made by the Company in this Agreement shall be read and interpreted
as if the qualification stated therein with respect to materiality or Company
Material Adverse Effect were not contained therein. Parent or Buyer shall have
received a certificate of the President of the Company to such effect; and
(ii) Each of the representations and warranties of the Warranting
Stockholders or the Stockholders, as the case may be, contained in this
Agreement shall be true and correct when made and on and as of the Closing Date,
as if made on and as of such date, except that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. Parent or Buyer shall have received a certificate of the President or
Chief Financial Officer of the Company to that effect.
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(c) Third Party Consents and Waivers. The Company shall have obtained
consents and waivers, in form and substance reasonably satisfactory to Parent or
Buyer, in respect of the contracts or agreements set forth on Schedule 7.2(c).
(d) Company Material Adverse Effect. The Company shall not have become
subject to any action or event which resulted in or may likely result in a
Company Material Adverse Effect.
(e) Legal Opinion. Parent or Buyer shall have received the legal
opinion of Xxxxxx & Xxxxxx, counsel for the Company and the Warranting
Stockholders, covering the matters set forth on Exhibit D hereto.
(f) Employment and Non-Competition Agreements. The Warranting
Stockholders and such other employees of the Company as shall be identified by
Parent and the Buyer shall execute employment and non-competition agreements
(collectively, the "Employment Agreements") in the forms attached hereto as
Exhibits X-0, X-0, X-0 and B-4, respectively.
(g) Non-Competition Agreements. The Warranting Stockholders shall
execute and deliver to Parent and Buyer Non-Competition Agreements in the forms
attached hereto as Exhibits C-1, C-2 and C-3.
(h) [Intentionally Deleted]
(i) Tail Insurance. The Warranting Stockholders shall deliver to
Parent and Buyer evidence of the purchase by the Warranting Stockholders, at the
sole cost and expense of the Warranting Stockholders of a Discontinued Products
and Operations Coverage liability insurance policy to cover the one (1) year
period immediately following the Closing Date, with such policy to provide for
the same insurance coverage as the Company's existing liability policies, but at
no less than One Million Dollars ($1,000,000.00) of insurance coverage per
occurrence and One Million Dollars ($1,000,000.00) of insurance coverage in the
aggregate, and with evidence of such Discontinued Products and Operations
Coverage liability insurance policy to be attached hereto as Schedule 6.9.
(j) Registration Rights Agreement. The Stockholders shall execute and
deliver to Parent the Registration Rights Agreement in the form attached hereto
as Exhibit G.
SECTION 7.3 Additional Conditions to Obligations of the Company and the
Stockholders. The obligations of the Company and/or the Stockholders to effect
the Merger and the other transactions contemplated in this Agreement are subject
to the following conditions, each of which may be waived, in whole or in part,
to the extent permitted by applicable Law, by the Company or the Stockholders on
behalf of both such parties:
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(a) Representations and Warranties. Each of the representations and
warranties of Parent and Buyer contained in this Agreement shall be true and
correct when made and on and as of the Closing Date as if made on and as of such
date, except where the failure to be so true and correct would not have a Parent
Material Adverse Effect, and except that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date, except where the failure to be so true and correct would not
have a Parent Material Adverse Effect. Solely for purposes of this section and
in determining compliance with the conditions set forth herein, any
representation and warranty made by Parent in this Agreement shall be read and
interpreted as if the qualification stated therein with respect to materiality
or Parent Material Adverse Effect were not contained therein. The Company shall
have received a certificate of the President of Parent to such effect.
(b) Agreements and Covenants. Parent and Buyer shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it or them on or prior to the
Closing Date. The Company shall have received a certificate of the President of
Parent to that effect.
(c) Parent Material Adverse Effect. Parent shall not have become
subject to any action or event which resulted in or may likely result in a
Parent Material Adverse Effect.
(d) Legal Opinion. The Company shall have received the legal opinion
of Freedman, Levy, Xxxxx & Xxxxxxx, counsel to Parent and the Buyer, covering
the matters set forth on Exhibit E.
(e) Nomination of Stockholder for Parent's Board of Directors. At the
Closing, Xxxxxxx Xxxxxx, Xx. will be elected to the Board of Directors of the
Parent. At the first annual meeting of the shareholders of the Parent after the
Closing Date, the Parent will use its best efforts to cause Xxxxxxx Xxxxxx, Xx.
to be nominated to serve on the Parent's Board of Directors.
(f) Certain Agreements. Parent shall have executed the Registration
Rights Agreement in the form attached hereto as Exhibit G and Buyer shall have
executed the Employment Agreements attached hereto as Exhibits X-0, X-0, X-0 and
B-4.
ARTICLE VIII
TERMINATION, AMENDMENT, WAIVER AND INDEMNIFICATION
SECTION 8.1 Termination. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual consent of Parent or Buyer and the Company;
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(b) by Parent or Buyer, upon a material breach of any covenant or
agreement on the part of the Company or the Stockholders as set forth in this
Agreement;
(c) by the Company, upon a material breach of any covenant or
agreement on the part of Parent or Buyer as set forth in this Agreement;
(d) by either Parent, Buyer or the Company, if there shall be any
order of a Governmental Entity which is final and non-appealable preventing the
consummation of the Merger;
(e) by either Parent, Buyer or the Company, if the Closing shall not
have occurred on or before November 30, 1999 (unless the failure to consummate
the Merger by such date shall be due to the action or failure to act of the
party seeking to terminate this Agreement).
SECTION 8.2 Investigation. Notwithstanding any of the foregoing, the right
of any party hereto to terminate this Agreement pursuant to Section 8.1 shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any party hereto, any Person controlling any such party
or any of their respective officers or directors, whether prior to or after the
execution of this Agreement.
SECTION 8.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto.
SECTION 8.4 Waiver. At any time prior to the Closing Date, any party hereto
may (a) extend the time for the performance of any of the obligations or other
acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 8.5 Fees, Expenses and Other Payments. Parent, Buyer, the Company
and the Stockholders each shall bear its and their own respective costs and
expenses which are incurred in connection with the preparation, negotiation and
performance of this Agreement (including any prior memorandum of understanding
or letter of intent relating hereto) and the transactions contemplated hereby,
including all due diligence expenses and fees and expenses of agents,
representatives, counsel and accountants.
SECTION 8.6 Indemnification.
(a) The Warranting Stockholders, severally and not jointly, shall
indemnify and defend each of Parent and the Buyer, and hold them harmless, from
and against any and all losses, damages, Liabilities, claims, demands,
judgments, settlements, costs and expenses of any nature whatsoever (including
reasonable attorneys' fees) (collectively, "Loss"), resulting from or
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arising out of any: (i) breach of any representation or warranty or agreement of
the Company or the Stockholders contained herein; or (ii) Liability of the
Company, whether or not addressed by a representation or warranty, which was
created, incurred or arose from facts, events, conditions or circumstances
existing on or before the Closing Date, to the extent that, but only to the
extent that, such Liability was not reflected or reserved against on the face of
the Balance Sheet (rather than in any notes thereto) as adjusted for Liabilities
incurred in the Ordinary Course of Business since the date of the Balance Sheet
(provided that the items listed on Schedule 3.8 shall be deemed to be incurred
in the Ordinary Course of Business unless otherwise objected to by Parent or
Buyer prior to the Closing Date). No claim for indemnification pursuant to this
Section 8.6(a) may be made subsequent to the date eighteen (18) months after the
Closing Date or in respect of a Loss for which Parent or Buyer has otherwise
been previously reimbursed by the Stockholders, provided, however, that no such
expiration period shall apply to any Loss or Liability arising out of (1) any
claim made by any Stockholder; (2) any dispute between the Company and Sun Time
Enterprises, Inc., with respect to the services and/or software provided to Sun
Time Enterprises, Inc. by the Company (specifically including the law suit
styled Sun Time Enterprises, Inc. v. Client Server Solutions, Inc., Platinum
Software Corporation and Xxxxxxx Xxxxxx, Civil Action File No. 98-004293-CI-11
in the Circuit Court of the Sixth Judicial Circuit of the State of Florida,
Pinellas County Civil Division, and any arbitration with respect to such
dispute) (the "Law Suit"); and (3) any breach of the representations and
warranties in Sections 3.4, 3.1A (only as to such Warranting Stockholder) and
3.4A (only as to such Warranting Stockholder) hereof. Without limiting any other
rights of Parent or Buyer, any such Loss may be deducted by Parent or Buyer from
the outstanding principal amount of the Long Term Note portion of the Merger
Consideration issued to the Warranting Stockholders after the matter has been
finally adjudicated or settled pursuant to this Section 8.6.
(b) (i) If any third party shall notify Parent or Buyer with respect
to any third party claim (a "Third Party Claim") that may give rise to a Loss,
then Parent or Buyer shall promptly notify the Warranting Stockholders thereof
in writing; provided, however, that no delay on the part of Parent or Buyer in
notifying the Warranting Stockholders shall relieve the Warranting Stockholders
from any obligation hereunder unless (and then solely to the extent) the
Warranting Stockholders are prejudiced by such delay.
(ii) The Warranting Stockholders will have the right to defend
Parent and Buyer against the Third Party Claim with counsel selected by
Warranting Stockholders and reasonably satisfactory to Parent or Buyer, so long
as: (A) the Warranting Stockholders so notify Parent and Buyer in writing within
fifteen (15) days of the Third Party Claim becoming known to the Warranting
Stockholders, acknowledging that such claim is in respect of a Loss described in
Section 8.6(a); (B) the Third Party Claim involves only money damages and does
not seek an injunction or other equitable relief; (C) settlement of, or an
adverse judgment with respect to, the Third Party Claim is not, in the good
faith judgment of Parent or Buyer, likely to establish a precedential custom or
practice materially adverse to the continuing business interests of Parent or
Buyer; and (D) the Warranting Stockholders conduct the defense of the Third
Party Claim actively and diligently.
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(iii) So long as the Warranting Stockholders are conducting the
defense of the Third Party Claim in accordance with Section 8.6(b)(ii), (A)
Parent or Buyer may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim; (B) Parent or Buyer will
not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Warranting Stockholders (which consent will not be withheld unreasonably); and
(C) the Warranting Stockholders will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of Parent or Buyer (which consent will not be withheld or
delayed unreasonably).
(iv) In the event that any of the conditions in Section 8.6(b)(ii)
is or becomes unsatisfied, (A) Parent or Buyer may defend against the Third
Party Claim in any manner it reasonably may deem appropriate; provided, however,
that Parent shall not consent to the entry of any judgment or enter into any
settlement or agreement to settle a Third Party Claim without the prior written
consent of the Warranting Stockholders, which consent shall not be unreasonably
withheld; (B) Parent or Buyer shall be reimbursed by Warranting Stockholders, or
Parent or Buyer may deduct such amounts from the next payment(s) due to
Warranting Stockholders under the Long Term Note portion of the Merger
Consideration, promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and expenses); and (C)
the Warranting Stockholders will remain responsible for any Loss that Parent or
Buyer actually suffers resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this Section 8.6.
(c) Notwithstanding anything to the contrary herein, no party from
which indemnification may be sought ("Indemnifying Party") shall have any
liability with respect to any Losses under this Section 8.6 until the total of
all such Losses exceeds One Hundred Fifty Thousand Dollars ($150,000.00)
("Basket Amount"), except as specifically set forth below. In the event the
aggregate of all such Losses exceeds the Basket Amount, then in such event the
Indemnifying Party shall be obligated to indemnify the parties seeking
indemnification ("Indemnified Parties") as provided in this Section 8.6 for all
Losses in excess of the Basket Amount; provided, however, that in no event shall
the aggregate liability of the Indemnifying Party exceed Two Million Six Hundred
Fifty Thousand Dollars ($2,650,000), except as specifically set forth below.
Notwithstanding anything contained herein to the contrary, (i) the Buyer and/or
Parent shall immediately be entitled to indemnification for any and all Losses
or Liabilities, regardless of whether such Losses or Liabilities exceed the
Basket Amount, arising out of or resulting from (a) the Law Suit or any
arbitration or other dispute with Sun Time Enterprises, Inc.; (b) any claim made
by any Stockholder; or (c) any breach of the representations and warranties in
Sections 3.4, 3.1A (only as to such Warranting Stockholder) and 3.4A (only as to
such Warranting Stockholder) hereof, without having to wait for such Losses
and/or Liabilities to exceed the Basket Amount; and (ii) there shall be no
limitation on the liability of the Warranting Stockholders under this Section
8.6 for Losses or Liabilities which relate to any claim made by any Stockholder
or any breach of the representations and warranties in Sections 3.4, 3.1A (only
as to such Warranting Stockholder) and 3.4A (only as to such Warranting
Stockholder) hereof.
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(d) If any event shall occur which would otherwise entitle an
Indemnified Party to assert a claim for indemnification hereunder, no Loss shall
have been sustained by such Indemnified Party for purposes hereof to the extent
of (i) any tax savings realized by such Indemnified Party with respect thereto
or (ii) any proceeds received by such Indemnified Party from any insurance
policies with respect thereto.
(e) An Indemnifying Party shall not be liable under this Section 8.6
for any Loss resulting from any event relating to a breach of any representation
or warranty if the Indemnifying Party can establish that the Indemnified Party
had actual knowledge on or before the Closing Date of such event.
(f) The rights and remedies of an Indemnified Party under this Section
8.6 shall be the exclusive rights and remedies of such Indemnified Party for any
Losses suffered or incurred by an Indemnified Party in connection with the
performance of this Agreement and the consummation of the transactions
contemplated hereby.
(g) Upon payment in full of any claim under this Section 8.6, the
Indemnifying Party shall be subrogated to the extent of such payment to the
rights of the Indemnified Party against any person with respect to the subject
matter of such claim.
(h) The Parent and Buyer shall indemnify and defend each of the
Company and Stockholders, and hold them harmless, from and against any and all
Liabilities and/or Losses resulting from or arising out of any breach of any
representation or warranty or agreement of the Parent or Buyer contained herein,
upon identical terms and conditions as set forth in this Section 8.6 with
respect to the indemnification given by the Company and Warranting Stockholders
to the Parent and/or Buyer.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Effectiveness of Representations, Warranties and Agreements.
(a) Except as set forth in Section 9.1(b), the representations,
warranties and agreements of each party hereto shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any other party hereto, any Person controlling any such party or any of their
officers or directors, whether prior to or after the execution of this
Agreement.
(b) The representations, warranties and agreements in this Agreement
shall terminate on the date which is eighteen (18) months after the Closing
Date, except that the representations, warranties and agreements set forth in
Section 3.3, and Article IIIA, and Section 6.6, Section 6.7, and Article VIII
and Article IX shall not so terminate.
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SECTION 9.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested), or delivered by overnight delivery
service (e.g., Federal Express), to the parties at the following addresses (or
at such other address for a party as shall be specified by like changes of
address) or sent by electronic transmission to the fax number specified below:
(a) If to Parent or Buyer:
AIM Group, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Attention: Chief Financial Officer
Fax No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Freedman, Levy, Xxxxx & Xxxxxxx
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: Xxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
(b) If to the Company or the Warranting Stockholders:
Client Server Solutions, Inc.
000 Xxxxxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Xxxxxx LLP
2700 International Tower
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Hussle, Esq.
Fax No.: (000) 000-0000
(c) If to Xxxx Xxxxxxxx:
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Xx. Xxxx Xxxxxxxx
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
with a copy (which shall not constitute notice) to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
(d) If to Xxxxx X. Xxxxxxx:
Xxxxx X. Xxxxxxx
000 Xxxx Xxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
If to Xxxxxx Xxxxx:
Xxxxxx Xxxxx
00000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxx 00000
in each case, with a copy (which shall not constitute notice) to:
Xxxxxxxxx, Xxxxxxx & Xxxxx, LLP
1600 Xxxxxxx Building
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Accounts Payable" as defined in Section 2.1(e)(i);
"Accounts Receivable" as defined in Section 3.18;
"Accrued Expenses" means accrued salaries and expenses;
"Actual Value" as defined in Section 2.1(f)(i)(C);
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"Adjustment Withholding" as defined in Section 2.1(e)(vii);
"Adjusted Working Capital" as defined in Section 2.1(e)(i);
"Affiliate" means a Person that directly or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common control with, the
first mentioned Person;
"Affiliated Group" means any affiliated group within the meaning of Section
1504 of the Code or any similar group defined under a similar provision of
state, local or foreign law;
"Agreement" as defined in the Preamble;
"AIM Common Stock" as defined in Section 1.3.
"Articles of Merger" as defined in Section 1.1;
"Assets" means any and all properties and assets (real, personal or mixed,
tangible or intangible) of the Company;
"Balance Sheet" as defined in Section 3.7;
"Bank Debt" as defined in Section 2.1(e)(i);
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could form the basis for any
specified consequence;
"Basket Amount" as defined in Section 8.6(c);
"Buyer" as defined in the Preamble;
"Buyer's Value" as defined in Section 2.1(f)(i)(A);
"Cash Consideration" as defined in Section 1.3(c);
"Certificate of Merger" as defined in Section 1.1;
"Certificates" as defined in Section 2.1(b);"Closing" and "Closing Date" as
defined in Section 1.5;
"Code" means the Internal Revenue Code of 1986, as amended;
"Company" as defined in the Preamble;
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"Company Common Stock" as defined in the Preamble;
"Company Employee Benefit Plan" as defined in Section 3.22;
"Company Material Adverse Effect" means any change or effect relating to
the time prior to the Closing Date that, individually or when taken together
with all other such changes or effects, is or is reasonably likely to be
materially adverse to the business, properties, Assets, condition (financial or
otherwise), liabilities or operations of the Company at the time of such change
or effect. A Company Material Adverse Effect shall be deemed to exist if there
shall occur any event which relates to the time prior to the Closing Date and
which causes or may reasonably be expected to cause or result in estimable
monetary loss which, individually or when aggregated with all other events,
exceeds Fifty Thousand Dollars ($50,000.00);
"Company Permits" as defined in Section 3.6;
"Competing Transaction" means any of the following involving the Company or
any Subsidiary or Affiliate of the Company: (i) any merger, consolidation, share
exchange, business combination, or other similar transaction (other than the
transactions contemplated by this Agreement); (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of twenty-five percent (25%) or
more of the Assets of the Company in a single transaction or series of
transactions; or (iii) any offer (whether cash or securities) for twenty-five
percent (25%) or more of the outstanding shares of capital stock of the Company;
"Contract" of any Person means any contract, agreement or instrument of any
type whatsoever (i) to which such Person is a party and by which such Person
either has made a binding undertaking to perform an obligation or is entitled to
any property or right, or (ii) by which any of the Assets of such Person is
bound;
"Control" (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by Contract or credit arrangement or otherwise;
"CSS Merger" as defined in the Preamble;
"CSS Financial Merger" as defined in the Preamble;
"Effective Date" as defined in Section 1.1;
"Effective Time" as defined in Section 1.1;
"Employee Benefit Plan" means (a) any bonus, incentive compensation, profit
sharing, retirement, pension, group insurance, death benefit, group health,
medical expense reimbursement, workers' compensation, dependent care, flexible
benefits or cafeteria, stock
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option, stock purchase, stock appreciation rights, savings, deferred
compensation, consulting, severance pay or termination pay, vacation pay, life
insurance, disability, welfare or other employee benefit or fringe benefit plan,
program or arrangement; or (b) any plan, program or arrangement which is an
Employee Pension Benefit Plan, Employee Welfare Benefit Plan or Multiemployer
Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Section
3(2);
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Section
3(1);
"Employment Agreements" as defined in Section 7.2(f);
"Employee Shares" as defined in Section 2.1(a);
"Encumbrances" means any Security Interests, Liens, claims, pledges,
agreements, limitations on voting rights, charges or other encumbrances of any
nature whatsoever;
"Environmental, Health and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or wastes
into ambient air, surface water, ground water, or lands or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ERISA Affiliate" means each person (as defined in Section 3(9) of ERISA)
that together with the Company (or any person whose liabilities the Company has
assumed or is otherwise subject to) would be considered or has been a single
employer under Section 4001(b) of ERISA or would be considered or has been a
member of the same "controlled group," under common control, a member of the
same affiliated service group or otherwise a single employer within the meaning
of Section 414(b), (c), (m) and (o) of the Code (provided, however, that when
the subject of the provision is a Multiemployer Plan only subsections (b) and
(c) of Section 414 of the Code shall be taken into account).
"Escrow Agent" as defined in Section 2.1(a);
"Escrow Shares" as defined in Section 1.3(c);
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"Exchange Act" means the Securities Exchange Act of 1934, as amended;
"Extremely Hazardous Substance" has the meaning set forth in Section 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended;
"Final Tax Return" as defined in Section 6.12;
"Financial Statements" as defined in Section 3.7;
"GAAP" means United States generally accepted accounting principles as in
effect from time to time;
"Governmental Entities" as defined in Section 3.5(b);
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium);
"Indemnified Parties" as defined in Section 8.6(c);
"Indemnifying Party" as defined in Section 8.6(c);
"Inventory" as defined in Section 3.16;
"Knowledge" or "Known" means, with respect to a particular fact or other
matter, that (i) an individual is actually aware of such fact or other matter or
(ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonable
inquiry concerning the existence of such fact or other matter; a Person (other
than an individual) will be deemed to have "Knowledge" of a particular fact or
other matter if any individual who is serving, or who has at any time served, as
a director, officer,
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partner, executor or trustee of such Person (or in any similar capacity) has, or
at any time had, Knowledge of such fact or other matter;
"Law Suit" as defined in Section 8.6(a);
"Laws" as defined in Section 3.5(a);
"Liability" or "Liabilities" as defined in Section 3.8;
"Lien" means any lien, charge, encumbrance, mortgage, conditional sale
agreement, title retention agreement, financing lease, pledge or Security
Interest of any kind or type and whether arising by Contract or under Law;
"Long Term Notes" as defined in Section 1.3(c);
"Loss" as defined in Section 8.6(a);
"Merger" as defined in the Preamble;
"Merger Consideration" as defined in Section 1.3(c);
"Merger Consideration Adjustment" as defined in Section 2.1(e)(ii);
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37);
"Notes" shall mean the Long Term Notes and the Short Term Notes;
"Ordinary Course of Business" with respect to any entity, means the
ordinary course of business consistent with past custom and practice (including
with respect to quantity and frequency) of that entity;
"Original Agreement" as defined in the Preamble;
"Parent" as defined in the Preamble;
"Parent Material Adverse Effect" shall mean any change or effect that,
individually or when taken together with all such other changes or effects, is
or is reasonably likely to be materially adverse to the business, properties,
Assets, condition (financial or otherwise), liabilities or operations of Parent
and its Subsidiaries, taken as a whole at the time of such change or effect. A
Parent Material Adverse Effect shall be deemed to exist if there shall occur any
event which causes or may reasonably be expected to cause or result in estimable
monetary loss which, individually or when aggregated with all other events,
exceeds Fifty Thousand Dollars ($50,000);
"Parent Representatives" as defined in Section 5.4;
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"Parent SEC Reports" as defined in Section 4.5(a);
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a Governmental Entity (or any
department, agency, or political subdivision thereof) or any other entity;
"Post-Closing Date Adjustment Date" as defined in Section 1.2(c)(iii);
"Registration Rights Agreement" as defined in Section 6.13;
"Replacement Notes" as defined in Section 2.1(e)(vii);
"SEC" means the U.S. Securities and Exchange Commission;
"Securities Act" means the Securities Act of 1933, as amended;
"Security Interest" means any mortgage, pledge, Lien, Encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar Liens, (b) Liens for Taxes not yet due and payable, (c) purchase money
Liens and Liens securing rental payments under capital lease arrangements, and
(d) other Liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money;
"Settlement Agreement" as defined in Section 6.15;
"Shareholders Operating Agreements" as defined in Section 6.16;
"Shares" as defined in the Preamble;
"Short Term Notes" as defined in Section 1.3(c);
"Stockholders" as defined in the Preamble;
"Stockholders' Value" as defined in Section 2.1(f)(i)(B);
"Subsidiary" or "Subsidiaries" of the Company, Parent, the Buyer or any
other Person, means any corporation, partnership, joint venture or other legal
entity of which the Company, Parent, the Buyer or such other Person, as the case
may be (either alone or through or together with any other subsidiary), owns,
directly or indirectly, fifty percent (50%) or more of the capital stock or
other equity interests which the holders thereof are generally entitled to vote
for the election of the board of directors or other governing body of such
corporation or other legal entity;
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"Surviving Corporation" as defined in Section 1.1;
"Tax" or "Taxes" shall mean any and all taxes, charges, fees or levies,
payable to any federal, state, local or foreign taxing authority or agency,
including, without limitation, (i) income, franchise, profits, gross receipts,
minimum, alternative minimum, estimated, ad valorem, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, disability, employment, social security, workers compensation,
unemployment compensation, utility, severance, excise, stamp, windfall profits,
transfer and capital gains taxes, (ii) custom duties, imposts, charges, levies
or other similar assessments of any kind, and (iii) interest, penalties and
additions to tax imposed with respect thereto;
"Tax Return" shall mean 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;
"Third Party Claim" as defined in Section 8.6(b);
"Warranting Stockholders" as defined in the Preamble.
SECTION 9.4 Headings; Construction. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All words used in this Agreement
will be construed to be of such gender or number as the circumstances require.
Unless otherwise expressly provided, the word "including" does not limit the
preceding words or terms.
SECTION 9.5 Severability. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties hereto as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 9.6 Entire Agreement and Modification. This Agreement (together
with the exhibits and schedules) constitutes the entire agreement of the parties
and supersedes all prior agreements and undertakings, both written and oral,
between the parties hereto, or any of them, with respect to the subject matter
hereof. This Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment. This Agreement amends and
replaces in its entirety the Original Agreement.
SECTION 9.7 Assignment. This Agreement shall not be assigned by operation
of law or otherwise.
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SECTION 9.8 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 9.9 Waiver; Remedies Cumulative. No failure or delay on the part of
any party hereto in the exercise of any right hereunder shall impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. To the maximum extent permitted by applicable law, (a) no claim or
right arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver or
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement. All rights and remedies existing under this Agreement are in
addition to, and not exclusive of, any rights or remedies otherwise available.
SECTION 9.10 Further Assurances. The parties hereto agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as another party hereto may reasonably request for the purpose of carrying
out the intent of this Agreement and the documents referred to in this
Agreement.
SECTION 9.11 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF GEORGIA, REGARDLESS OF
THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAW.
SECTION 9.12 Jurisdiction; Service of Process. ANY ACTION OR PROCEEDING
SEEKING TO ENFORCE ANY PROVISION OF, OR BASED ON ANY RIGHT ARISING OUT OF, THIS
AGREEMENT MAY BE BROUGHT AGAINST ANY OF THE PARTIES HERETO IN THE COURTS OF THE
STATE OF GEORGIA, COUNTY OF XXXXXX, OR, IF IT HAS OR CAN ACQUIRE JURISDICTION,
IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA, AND
EACH OF THE PARTIES HERETO CONSENTS TO THE JURISDICTION OF SUCH COURTS (AND OF
THE APPROPRIATE APPELLATE COURTS) IN ANY SUCH ACTION OR PROCEEDING AND WAIVES
ANY OBJECTION TO VENUE LAID THEREIN. PROCESS IN ANY ACTION OR PROCEEDING
REFERRED TO IN THE PRECEDING SENTENCE MAY BE SERVED ON ANY PARTY HERETO ANYWHERE
IN THE WORLD.
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SECTION 9.13 Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
[The next page is the signature page.]
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IN WITNESS WHEREOF, the parties hereto have executed or caused this
Agreement to be executed as of the date first written above by their respective
officer thereunto duly authorized:
AIM GROUP, INC.
By: /s/ Xxxx X. Arena
----------------------------------
Xxxx X. Arena
Chief Executive Officer
AIM SOLUTIONS, INC.
By: /s/ Xxxx X. Arena
----------------------------------
Xxxx X. Arena
President
CLIENT SERVER SOLUTIONS, INC.
By: /s/ Xxxxxxx Xxxxxx, Xx.
----------------------------------
Xxxxxxx Xxxxxx, Xx.
President
CSS FINANCIAL SOFTWARE SALES, INC.
By: /s/ Xxxxxxx Xxxxxx, Xx.
----------------------------------
Xxxxxxx Xxxxxx, Xx.
President
SOLE STOCKHOLDERS:
/s/ L. Xxxxxx Xxxxxx /s/ Xxxx Xxxxxxxx
------------------------------ -------------------------------
L. Xxxxxx Xxxxxx Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx /s/ Xxxxxx Xxxxx
------------------------------ ----------------------------------
Xxxxxxx Xxxxxxxx Xxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxx, Xx. /s/ Xxxxx X. Xxxxxxx
------------------------------ ----------------------------------
Xxxxxxx Xxxxxx, Xx. Xxxxx X. Xxxxxxx
