Agreement and Plan of Merger
among
TechSys, Inc.
Newco TKSS, Inc.
and
Fuel Cell Companies, Inc.
April 5, 2001
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TABLE OF CONTENTS
Section Page
No. No.
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ARTICLE I
THE MERGER
1.1 The Merger....................................................................................2
1.2 Certificate of Incorporation, Bylaws and Board of Directors...................................2
1.3 Effects of the Merger.........................................................................2
1.4 Manner of Conversion of Stock.................................................................2
1.5 Exchange of Certificates; Payment of Merger Consideration.....................................3
1.6 Tax Treatment.................................................................................4
1.7 Xxxx Xxxxx Xxxxxx.............................................................................4
1.8 Effective Time................................................................................5
1.9 Closing.......................................................................................5
1.10 Title; Risk of Loss...........................................................................5
ARTICLE II
DEFINITIONS
2.1 Definitions...................................................................................5
2.2 Other Definitional Provisions.................................................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
3.1 Organization and Power........................................................................10
3.2 Capitalization................................................................................11
3.3 Validity of Shares of TechSys Common Stock....................................................11
3.4 Authorization; Binding Effect; No Breach......................................................12
3.5 TechSys Reports; Financial Statements.........................................................12
3.6 Governmental Filings..........................................................................13
3.7 Assets of TechSys.............................................................................13
3.8 Absence of Certain Changes....................................................................13
3.9 Litigation....................................................................................13
3.10 Brokerage.....................................................................................14
3.11 Insurance.....................................................................................14
3.12 Tax Matters...................................................................................14
3.13 Contracts and Commitments.....................................................................16
3.14 Proprietary Rights............................................................................17
3.15 Employees.....................................................................................19
3.16 ERISA.........................................................................................19
3.17 Real Estate...................................................................................20
3.18 Compliance with Laws..........................................................................21
3.19 Product Warranty..............................................................................23
3.20 Powers of Attorney............................................................................23
3.21 Bank Accounts.................................................................................23
3.22 Cash, Cash Equivalents and Collectibles.......................................................23
3.23 Disclosure....................................................................................23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization and Power; The Company Shares....................................................23
4.2 Capitalization................................................................................24
4.3 Authorization; Binding Effect; No Breach......................................................25
4.4 Subsidiaries; Investments.....................................................................26
4.5 Financial Statements and Related Matters......................................................26
4.6 Absence of Undisclosed Liabilities............................................................27
4.7 Assets of the Company.........................................................................27
4.8 Absence of Certain Developments...............................................................28
4.9 Governmental Filings..........................................................................29
4.10 Tax Matters...................................................................................29
4.11 Contracts and Commitments.....................................................................31
4.12 Proprietary Rights............................................................................33
4.13 Litigation....................................................................................34
4.14 Brokerage.....................................................................................35
4.15 Insurance.....................................................................................35
4.16 Employees.....................................................................................35
4.17 ERISA.........................................................................................35
4.18 Real Estate...................................................................................36
4.19 Compliance with Laws..........................................................................38
4.20 Product Warranty..............................................................................39
4.21 Powers of Attorney............................................................................39
4.22 Bank Accounts.................................................................................39
4.23 Disclosure....................................................................................39
ARTICLE V
COVENANTS
5.1 Proxy Statement/Prospectus; Registration Statement............................................40
5.2 Access to Properties and Records; Confidentiality.............................................41
5.3 Board Representation..........................................................................42
5.4 Post-Merger Officers of TechSys...............................................................43
5.5 Modification of Certain Warrants..............................................................43
5.6 Grant of Certain Warrants.....................................................................43
5.7 Exclusivity...................................................................................43
5.8 Representations and Warranties of Certain Stockholders of the Company.........................44
5.9 Employment Agreements.........................................................................44
5.10 Business Office...............................................................................44
5.11 TechSys Options...............................................................................44
5.12 Company Stockholder Representation Letter.....................................................44
5.13 Division or Combination of TechSys Common Stock...............................................44
5.14 Cancellation of Company Derivative Securities.................................................44
5.15 Offer by the Company..........................................................................44
5.16 Increase in Authorized Shares of TechSys......................................................45
5.17 Conduct of Business of the Company............................................................45
5.18 Negative Covenants............................................................................45
5.19 No Solicitation...............................................................................47
5.20 Further Assurances............................................................................48
5.21 Disbursements by TechSys......................................................................48
5.22 Disbursements by the Company..................................................................49
5.23 Termination of Certain Relationships by the Company Prior to Closing..........................49
5.24 Feldhammer Capital Warrants...................................................................49
5.25 Limitation on Outstanding Shares of Capital Stock of the Company..............................49
5.26 Ownership of Subsidiaries of the Company......................................................49
5.27 Grant of Additional TechSys Options...........................................................49
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligations to Effect the Merger...................................50
6.2 Conditions to Obligations of the Company to Effect the Merger.................................50
6.3 Conditions to Obligations of TechSys to Effect the Merger.....................................52
ARTICLE VII
[THIS ARTICLE HAS BEEN INTENTIONALLY LEFT BLANK]
ARTICLE VIII
TERMINATION
8.1 Events of Termination.........................................................................55
8.2 Effect of Termination.........................................................................56
8.3 Remedies of Termination After Expiration of Due Diligence Review Period.......................56
ARTICLE IX
MISCELLANEOUS
9.1 Rights and Remedies...........................................................................56
9.2 Waivers, Amendments to be in Writing..........................................................57
9.3 Successors and Assigns........................................................................57
9.4 Governing Law.................................................................................57
9.5 Jurisdiction..................................................................................57
9.6 Notices.......................................................................................57
9.7 Severability of Provisions....................................................................58
9.8 Schedules.....................................................................................58
9.9 Counterparts..................................................................................59
9.10 No Third-Party Beneficiaries..................................................................59
9.11 Headings......................................................................................59
9.12 Merger and Integration........................................................................59
9.13 Transaction Expenses..........................................................................59
9.14 Further Assurances............................................................................59
9.15 Announcements.................................................................................59
9.16 SEC...........................................................................................59
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit Exhibit No.
Form of Warrant Certificate........................................................................ A
Form of Company Stockholders Representation Letter................................................. B
Form of Employment Agreement....................................................................... C
Form of Employment Agreement....................................................................... D
Form of Company Affiliate Letter................................................................... E
Form of Stockholders Agreement......................................................................F
SCHEDULES
Schedule 1.2(a)(iii) - Board of Directors of Surviving Company
Schedule 1.2(a)(iv) - Officers of the Surviving Company
Schedule 1.4(c)(iv) - Surviving Derivative Securities
Schedule 3.1(c) - Directors, Officers, Certificate Of Incorporation and Bylaws of TechSys
Schedule 3.6 - Governmental Filings
Schedule 3.7 - Rights To Use Assets Used In The Business of TechSys
Schedule 3.9 - Litigation Involving The Purchasers
Schedule 3.11 - Insurance Policies of TechSys
Schedule 3.12 - Tax Matters of TechSys
Schedule 3.13(a) - Contracts and Commitments of TechSys
Schedule 3.13(e) - Affiliated Transactions
Schedule 3.14(a) - Proprietary Rights of TechSys
Schedule 3.14(c) - Required Consents to Assignment of Proprietary Rights
Schedule 3.15 - Employees of TechSys
Schedule 3.16 - ERISA - TechSys
Schedule 3.17(a) - Ownership of Real Property of TechSys
Schedule 3.17(b) - Leased Real Property of TechSys
Schedule 3.18(b) - Compliance With Laws For TechSys
Schedule 3.19 - Product Warranty By TechSys
Schedule 3.20 - Powers of Attorney On Behalf of TechSys
Schedule 3.21 - TechSys Bank Accounts
Schedule 3.22 - Cash, Cash Equivalent and Collectibles
Schedule 4.1(a) - Jurisdictions of the Company
Schedule 4.1(b) - Directors, Officers, Certificate of Incorporation and Bylaws of the Company
Schedule 4.2(a) - Capitalization
Schedule 4.2(b) - Capitalization of Subsidiaries of the Company
Schedule 4.3 - Authorizations of the Company
Schedule 4.4 - Subsidiaries and Investments of the Company
Schedule 4.5 - Financial Statements
Schedule 4.6 - Additional Liabilities
Schedule 4.7 - Rights to Use Assets Used in the Business of the Company
Schedule 4.8 - Changes Since the Latest Company Balance Sheet
Schedule 4.9 - Governmental Filings
Schedule 4.10 - Matters of the Company
Schedule 4.11(a) - Contracts and Commitments of the Company
Schedule 4.11(e) - Affiliated Transactions
Schedule 4.12(a) - Proprietary Rights of the Company
Schedule 4.12(c) - Required Consents to Assignment of Proprietary Rights
Schedule 4.13 - Litigation
Schedule 4.14 - Brokerage
Schedule 4.15 - Insurance Policies of the Company
Schedule 4.16 - Employees of the Company
Schedule 4.17 - ERISA - the Company
Schedule 4.18(a) - Ownership of Real Property of the Company
Schedule 4.18(b) - Leased Real Property of the Company
Schedule 4.19(b) - Compliance With Laws for the Company
Schedule 4.20 - Product Warranty by the Company
Schedule 4.21 - Powers of Attorney on Behalf of the Company
Schedule 4.22 - The Company Bank Accounts
Schedule 5.4(b) - Eligible Key Employees of the Company
Schedule 5.6 - Grant of Certain Warrants
Schedule 5.8 - Certain Stockholders of the Company
Schedule 5.11 - Allocation of TechSys Options to Certain Key Employees of TechSys
Schedule 5.12 - Certain Stockholders of the Company
Schedule 5.15 - Offer by the Company
Schedule 5.27 - Additional TechSys Options
Schedule 6.2(m) - Resignations of Certain Directors and Officers of TechSys
Schedule 6.3(q) - Resignations of Certain Directors and Officers of the Company
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER made as of April 5, 2001 (the
"Agreement"), by and among TechSys, Inc., a New Jersey corporation having its
principal office at 00 Xxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("TechSys"),
Newco TKSS, Inc., a New Jersey corporation wholly-owned by TechSys having its
principal office at 00 Xxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 ("Newco," and
together with TechSys, the "Purchasers") and Fuel Cell Companies, Inc., a Nevada
corporation having its principal office at 000 Xxxxxxx Xxxxx, Xxxxxx, Xxx Xxxxxx
00000 (the "Company," and together with the Purchasers, the "Parties").
WHEREAS, TechSys owns 100 shares of common stock, without par
value, of Newco (the "Newco Common Stock"), which TechSys represents constitute
all of the issued and outstanding capital stock of Newco;
WHEREAS, this Agreement contemplates a transaction in which
(i) Newco will merge with and into the Company (the "Merger") pursuant to this
Agreement and the Plan of Merger (as defined in Section 1.1) and the applicable
provisions of the laws of the State of New Jersey and the State of Nevada, (ii)
TechSys will issue the Merger Consideration (as defined in Section 1.4(c)(i)) in
accordance with Section 1.4, and (iii) TechSys shall own such number of shares
of the Capital Stock of the Company (as defined herein), which shall constitute
all of the outstanding Capital Stock of the Company, as provided in Section 1.4;
WHEREAS, the Boards of Directors of each of TechSys, Newco and
the Company have duly approved this Agreement and the transactions contemplated
hereby, including, without limitation, the Merger;
WHEREAS, prior to Closing (as defined herein), each of
TechSys, Newco and the Company shall obtain the approval of their respective
stockholders for the transactions contemplated by this Agreement;
WHEREAS, capitalized terms used in this Agreement but not
defined upon their first usage are defined in Section 2.1.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2),
Newco will be merged with and into the Company pursuant to this Agreement and
the Plan of Merger (the "Plan of Merger") to be filed in the Office of the
Treasurer of the State of New Jersey and in the Office of the Secretary of State
of the State of Nevada, and the separate existence of Newco shall cease. The
Company shall be the surviving corporation in the Merger and shall become a
wholly-owned Subsidiary of TechSys.
1.2 Certificate of Incorporation, Bylaws and Board of Directors.
(a) At the Effective Time:
(i) the articles of incorporation of the Company
shall be the articles of incorporation of the Surviving Company, except that the
articles of incorporation of the Surviving Company shall be amended to change
the name of the Surviving Company to Fuel Cell Cos., Inc. or such other name
upon which TechSys and the Company shall agree;
(ii) the bylaws of the Company, as in force and
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Company;
(iii) the board of directors of the Surviving Company
serving after the Merger shall be those persons listed as directors on Schedule
1.2(a)(iii);
(iv) the officers of the Surviving Company serving
after the Merger and the positions held by each of them shall be as set forth on
Schedule 1.2(a)(iv).
(b) At the Effective Time, or as soon as practicable
thereafter, TechSys shall file with the Department of Treasury of the State of
New Jersey an amendment to its Certificate of Incorporation changing its name to
Fuel Cell Companies, Inc., or such other name as the Parties may agree.
1.3 Effects of the Merger. The Merger shall have the effects provided
therefor by Chapter 10 of the New Jersey Business Corporation Act and Section
92A of the Nevada Revised Statutes.
1.4 Manner of Conversion of Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of any of TechSys, Newco, or the
Company, or any stockholder thereof, the shares of capital stock of the Parties
shall be converted as follows:
(a) Capital Stock of Newco. Each share of capital stock of
Newco issued and outstanding immediately prior to the Effective Time shall be
converted into one fully paid and nonassessable share of common stock of the
Surviving Company.
(b) Cancellation of Capital Stock of the Company. Each share
of Capital Stock of the Company that is owned directly or indirectly by the
Company and each share of Capital Stock of the Company issued and held in the
Company's treasury shall be canceled and retired and shall cease to exist and no
capital stock of TechSys, cash or other consideration shall be paid or delivered
in exchange therefor.
(c) Issuance of Merger Consideration.
(i) Each share of the Capital Stock of the Company
issued and outstanding immediately prior to the Effective Time, excluding any
treasury shares and shares to be canceled pursuant to this Agreement
(collectively, the "Company Shares"), shall be converted at the Effective Time
into the right to receive 0.319746 shares (the "Exchange Ratio") of TechSys
Common Stock (the "Merger Consideration"); provided, that, immediately upon the
consummation of the Merger, TechSys shall effect a 1.56531 for 1 share division
of the TechSys Common Stock or a similarly proportioned stock dividend, in
accordance with Section 14A:7-15.1 of the New Jersey Business Corporations Act.
(ii) Xxxxx shall receive such number of shares of
TechSys Common Stock, if any, as agreed upon by the Company and Xxxxx, which in
no event shall exceed an aggregate of 819,000 shares.
(iii) Fractional Shares. No fraction of a share of
TechSys Common Stock will be issued in connection with the Merger. Calculations
of the number of shares to be received by a shareholder of the Company which
result in a fractional share equal to 0.5 or more of a share will be rounded up
to the nearest whole share of TechSys Common Stock and such calculations which
result in a fractional share equal to 0.49 or less of a share will be rounded
down to the nearest whole share of TechSys Common Stock.
(iv) Company Options and Warrants. At the Effective
Time, other than such warrants set forth on Schedule 1.4(c)(iv), all options or
warrants exercisable for or convertible into shares of Capital Stock of the
Company granted by the Company prior to the date hereof which are outstanding
and unexercised immediately prior to the Effective Time ("Company Derivative
Securities") shall terminate;
1.5 Exchange of Certificates; Payment of Merger Consideration.
(a) Certificate Delivery Requirements. Immediately after the
Effective Time, the Company shall submit a form of Letter of Transmittal to each
stockholder of the Company, pursuant to which each such stockholder of the
Company may surrender to TechSys the certificates that represent the Company
Shares held by such stockholder (the "Certificates"), accompanied by blank stock
powers duly executed by such stockholder of the Company, against delivery of the
portion of the Merger Consideration that is deliverable to such stockholder of
the Company. Each share of the Capital Stock of the Company shall entitle the
holder thereof to receive its share of the Merger Consideration in accordance
with a schedule of the Company's stockholders to be delivered by the Company to
TechSys immediately after the Closing. Until so surrendered, each Certificate
shall be deemed for all purposes, to evidence only the right to receive the
Merger Consideration in accordance with Section 1.4(c)(i), and from and after
the Effective Time, the stockholders of the Company shall each cease to have any
rights as a stockholder of the Company, except for the right to surrender
Certificates in exchange for payment of the Merger Consideration.
(b) Exchange Procedures. Upon surrender by each stockholder of
the Company of its Certificate(s), TechSys shall deliver to each such
stockholder a certificate representing the number of whole shares of TechSys
Common Stock to which such stockholder is entitled pursuant to Section 1.4, and
the Certificate(s) so surrendered shall be canceled immediately.
(c) No Further Transfers of Capital Stock of the Company. As
of the Effective Time, the stock transfer books of the Company shall be closed,
and thereafter there shall be no further registration of transfers on the stock
transfer books of the Surviving Company of the shares of the Company which were
issued and outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Company for any
reason, they shall be canceled and exchanged as provided in Section 1.5(a).
(d) Lost, Stolen or Destroyed Certificates. If any
Certificates evidencing Shares shall have been lost, stolen or destroyed, then
TechSys shall cause payment to be made in exchange for such lost, stolen or
destroyed certificates, upon the delivery to TechSys of an affidavit of that
fact by the holder thereof; provided, however, that TechSys may, in its sole
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificates to deliver an
indemnification agreement, without a bond but secured by any shares of TechSys
Common Stock issuable to such holder, having such terms as it may reasonably
direct as indemnity against any claim that may be made against TechSys with
respect to the certificates alleged to have been so lost, stolen or destroyed.
1.6 Tax Treatment. The Parties intend that the Merger qualify as a
tax-free reorganization within the meaning of Section 368 (a)(1)(A) of the Code,
in accordance with Section 368(a)(2)(E) of the Code. Each Party agrees that it
will use all commercially reasonable efforts to assure that the Merger shall so
qualify, and TechSys and the Company each hereby agree that subsequent to the
Closing, neither it nor the Surviving Company will take any action, or take any
position in a Tax Return, that may reasonably be expected to result in the
failure of the Merger to so qualify.
1.7 Xxxx Xxxxx Xxxxxx. Each Party shall provide to the other Parties
such information as may be reasonably necessary for TechSys and the Company to
determine whether pre-merger notification of the Merger must be filed with the
Federal Trade Commission (the "FTC") pursuant to the Xxxx Xxxxx Xxxxxx Act
("Pre-Merger Notification"). In the event that counsel to TechSys determines
that Pre-Merger Notification must be filed with the FTC, each of the Parties
hereto shall provide such information as may be reasonably necessary to complete
and file the Pre-Merger Notification, and each of TechSys and the Company,
respectively, shall file such Pre-Merger Notification on a timely basis.
1.8 Effective Time. As soon as practicable following fulfillment or
waiver of the conditions specified in Article VI and the consummation of the
Closing, and provided that this Agreement has not been terminated pursuant to
Article VIII, TechSys and the Company shall file the Certificate of Merger with
the Department of Treasury of the State of New Jersey and with the Secretary of
State of the State of Nevada. The effective date and time of the Certificate of
Merger with the Department of Treasury of the State of New Jersey and with the
Secretary of State of the State of Nevada, or, if not simultaneous, the later
thereof, is referred to herein as, the "Effective Time."
1.9 Closing. The closing shall take place at the offices of Pitney,
Xxxxxx, Xxxx & Xxxxx, LLP, 000 Xxxxxx Xxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx commencing
at 10:00 a.m. local time (the "Closing"), or at such other time and place as the
Parties may agree, as soon as practicable after the later of (i) the day of (and
immediately following) the receipt of approval of the Merger by the stockholders
of TechSys and the stockholders of the Company, and (ii) the day on which the
last of the conditions set forth in Article VI is satisfied or duly waived. The
date and time of the Closing are herein referred to as the "Closing Date."
1.10 Title; Risk of Loss. Legal title and risk of loss with respect to
the Company Shares and the business of the Company shall not pass to TechSys
until the Effective Time.
ARTICLE II
DEFINITIONS
2.1 Definitions. For purposes hereof, the following terms, when used
herein with initial capital letters, shall have the respective meanings set
forth herein:
"Affiliate" of any Person means any other Person controlling,
controlled by or under common control with such Person.
"Agreement" means this Agreement and Plan of Merger, including
all Exhibits and Schedules hereto, as it may be amended from time to time in
accordance with its terms.
"Assets of the Company" mean the assets of the Company and its
Subsidiaries shown on the Latest Company Balance Sheet or acquired by the
Company or any Subsidiary of the Company after the date of the Latest Company
Balance Sheet, less any assets disposed of by the Company or such Subsidiary in
the ordinary course of business after the date of the Latest Company Balance
Sheet.
"Assets of TechSys" mean the assets of TechSys and its
Subsidiaries shown on the Latest TechSys Balance Sheet or acquired by TechSys or
any Subsidiary of TechSys after the date of the Latest TechSys Balance Sheet,
less any assets disposed of by TechSys or such Subsidiary in the ordinary course
of business after the date of the Latest TechSys Balance Sheet.
"Books and Records" means all lists, records and other
information pertaining to assets, accounts, personnel and referral sources of
the Company, all lists and records pertaining to suppliers, customers licensees
and licensors of the Company, and all other books, ledgers, files and business
records of every kind relating or pertaining to the Business, in each case
whether evidenced in writing, electronically (including by computer) or
otherwise.
"Business of the Company" means the Company's business of
acquiring and developing technology and products involved in the delivery of
energy, with particular emphasis on fuel cells, for a variety of applications.
"Capital Stock of the Company" has the meaning set forth in
Section 4.2.
"Closing" has the meaning set forth in Section 1.9.
"Closing Date" has the meaning set forth in Section 1.9.
"Code" means the United States Internal Revenue Code of 1986,
as amended.
"Company Shares" has the meaning set forth in Section
1.4(c)(i).
"Due Diligence Review Period" means the period beginning on
the date of this Agreement and ending on the 35th calendar day following such
date; provided, that, the Due Diligence Review Period for TechSys shall end on
the later of: (i) the 35th calendar day following the date of this Agreement;
and (ii) the 10th calendar day following the receipt by TechSys of the Audited
Financial Statements of the Company (as defined in Section 4.5).
"Environmental and Safety Requirements" means all federal,
state, local and foreign statutes, regulations, ordinances and other provisions
having the force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law, in each case
concerning public health and safety, worker health and safety and pollution or
protection of the environment (including all those relating to the presence,
use, production, generation, handling, transport, treatment, storage, disposal,
distribution, labeling, testing, processing, discharge, Release, threatened
Release, control, or cleanup of any Hazardous Substance.
"Environmental Lien" means any Lien, whether recorded or
unrecorded, in favor of any Government Entity relating to any liability arising
under any Environmental and Safety Requirement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means, at a given time, United States generally
accepted accounting principles, consistently applied.
"Government Entity" means the United States of America or any
other nation, any state or other political subdivision thereof, or any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of government.
"Hazardous Substance" means any hazardous, toxic, radioactive
or chemical materials, mixtures, substances or wastes; and (whether or not
included in the foregoing), any pesticides, pollutants, contaminants, petroleum
products or by-products, asbestos, polychlorinated biphenyls (or PCBs), noise or
radiation.
"Indebtedness" of any Person means, without duplication: (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise (other than trade payables and
other current liabilities incurred in the ordinary course of business) and any
commitment by which such Person assures a creditor against loss, including
contingent reimbursement obligations with respect to letters of credit; (b)
indebtedness guaranteed in any manner by such Person, including a guarantee in
the form of an agreement to repurchase or reimburse; (c) obligations under
capitalized leases in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss; (d) any unsatisfied
obligation of such Person for "withdrawal liability" to a "multiemployer plan,"
as such terms are defined under ERISA; and (e) any unfunded liability due to any
Person under any Plan.
"Investment" means, with respect to any Person, any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or other ownership or beneficial interest
(including partnership interests and joint venture interests) of any other
Person, and any capital contribution by such Person to any other Person.
"Knowledge" or "to the Knowledge of" means, with respect to a
Person, (a) the actual knowledge of such Person (which includes the actual
knowledge of all executive officers, directors and executive employees of such
Person) and (b) the knowledge which a prudent business person would have
obtained in the conduct of business after making reasonable inquiry and
reasonable diligence with respect to the particular matter in question.
"Legal Requirement" means any requirement arising under any
law, statute, ordinance, treaty, rule or regulation, determination, direction or
action of an arbitrator, or determination, directive or order of any Government
Entity, including any Environmental and Safety Requirement.
"Lien" means any mortgage, pledge, security interest,
encumbrance, easement, restriction on use, restriction on transfer, charge, or
other lien; provided, however, with respect to any Asset that is not owned,
"Lien" means any mortgage, pledge, security interest, encumbrance, easement,
lease, restriction on use, restriction on transfer, charge, or other lien on the
right of the Company to use or have possession thereof.
"Loss" means, with respect to any Person, any diminution in
value, consequential or other damage, liability, demand, claim, action, cause of
action, cost, damage, deficiency, Tax, penalty, fine or other loss or expense,
whether or not arising out of a third party claim, including all interest,
penalties, reasonable attorneys' fees and expenses and all amounts paid or
incurred in connection with any action, demand, proceeding, investigation or
claim by any third party (including any Government Entity) against or affecting
such Person or which, if determined adversely to such Person, would give rise
to, evidence the existence of, or relate to, any other Loss, and the
investigation, defense or settlement of any of the foregoing, together with any
interest that may accrue thereon.
"Officer's Certificate" of any Person means a certificate
signed by such Person's president or chief financial officer (or an individual
having comparable responsibilities with respect to such Person) stating that (a)
the individual signing such certificate has made or has caused to be made such
investigations as are necessary in order to permit such individual to verify the
accuracy of the information set forth in such certificate and (b) to the
Knowledge of such individual, such certificate does not misstate any material
fact and does not omit to state any fact necessary to make the fact stated
therein not misleading.
"Permitted Lien" means, as to the Company Shares, the TechSys
Shares (as defined herein), and, as to other Assets of the Company, and Assets
of TechSys, (i) any Lien for Taxes not yet due or delinquent or being contested
in good faith by appropriate proceedings for which adequate reserves have been
established in accordance with GAAP, (ii) any statutory Lien arising in the
ordinary course of business by operation of Law with respect to a Liability that
is not yet due or delinquent, and (iii) any minor imperfection of title or
similar Lien which individually or in the aggregate with other such Liens could
not reasonably be expected to materially adversely affect the Business of the
Company or the business of TechSys, as the case may be.
"Person" means an individual, a partnership, a corporation, an
association, a limited liability company, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Plans" means all Employee Pension Plans, Employee Welfare
Plans, Other Plans and Multiemployer Plans to which the Company contributes or
is a party.
"Proprietary Rights" means all of the following owned by,
issued to or licensed to the Company: (a) all inventions (whether or not
patentable or 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 (including software developed by the Company for use in the
Business), 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) the Software; (g) all other proprietary rights; and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
"Release" means a release or discharge of substances,
including hazardous substances, as set forth in CERCLA.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities of Xxx 0000, as amended.
"Software" means all computer programs, software, data bases,
source codes, magnetic tape, diskettes and punchcards used by or useful to the
Company in the conduct of the Business as currently conducted and presently
proposed to be conducted.
"Subsidiary" of any Person means any corporation, partnership,
association or other business entity which such Person, directly or indirectly,
controls or in which such Person has a majority ownership interest. For purposes
of this definition, (i) a Person is deemed to have a majority ownership interest
in a partnership, association or other business entity if such Person is
allocated a majority of the gains or losses of such entity or is or controls the
managing director or general partner of such entity, and (ii) neither Technology
Keiretsu, L.L.C. , a New Jersey limited liability company, nor SupportScape
Inc., a New York corporation, shall be deemed to be a Subsidiary of TechSys.
"Surviving Company" means the Company after the Effective Time
of the Merger.
"Taxes" means any federal, state, county, local or foreign
taxes, charges, fees, levies, other assessments or withholding taxes or charges
imposed by any governmental entity and includes any interest and penalties
(civil or criminal) on or additions to any such taxes.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto and any amendment thereof.
"Transaction Documents" means this Agreement, and all other
agreements, instruments, certificates and other documents to be entered into or
delivered by any Party in connection with the Merger.
"Treasury Regulations" means the United States Treasury
Regulations promulgated pursuant to the Code.
2.2 Other Definitional Provisions.
(a) Accounting Terms. Accounting terms which are not defined
herein have the meanings given to them under GAAP. To the extent that the
definition of an accounting term set forth in this Agreement is inconsistent
with the meaning of such term under GAAP, the definition in this Agreement will
control. To the extent that financial statements were prepared in accordance
with GAAP, no change in accounting principles shall be made from those utilized
in preparing such financial statements (without regard to materiality) including
with respect to the nature of accounts, level of reserves or level of accruals.
For purposes of the preceding sentence, "changes in accounting principles"
includes all changes in accounting principles, policies, practices, procedures
or methodologies with respect to financial statements, their classification or
their display, as well as all changes in practices, methods, conventions or
assumptions (unless required by objective changes in underlying events) utilized
in making accounting estimates.
(b) "Hereof," etc. The terms "hereof," "herein" and
"hereunder" and terms of similar import are references to this Agreement,
including all exhibits and Schedules hereto, as a whole and not to any
particular provision of this Agreement. Section, clause, Schedule and exhibit
references contained in this Agreement are references to Sections, clauses,
Schedules and exhibits in or to this Agreement, unless otherwise specified.
(c) "Including". The term "including" means including, without
limitation.
(d) Successor Laws. Any reference to any particular Code
section or any other law or regulation will be interpreted to include any
revision of or successor to that section regardless of how it is numbered,
classified, or codified.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
As a material inducement to the Company to enter into this Agreement,
TechSys hereby represents and warrants to the Company that:
3.1 Organization and Power
(a) TechSys is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey. TechSys has the
requisite corporate power and authority and all licenses, permits and
authorizations necessary to enter into, deliver and carry out its obligations
pursuant to the Transaction Documents to which it is a party.
(b) Newco is a corporation duly organized, validly existing
and in good standing under the laws of the State of New Jersey. Newco has the
requisite corporate power and authority and all licenses, permits and
authorizations necessary to enter into, deliver and carry out its obligations
pursuant to the Transaction Documents to which it is a party. Newco was formed
by TechSys for the sole purpose of entering into the transactions contemplated
by the Transaction Documents, and except for the rights and obligations created
by this Agreement, Newco has no assets, liabilities or operations of any nature.
Newco has not engaged in any business activities or conducted any operations
other than in connection with the transactions contemplated by this Agreement.
(c) Schedule 3.1(c) lists the directors and officers of
TechSys. TechSys represents and warrants that TechSys has delivered correct and
complete copies of the articles of incorporation and bylaws of TechSys,
including all amendments thereto, to the Company prior to the date of this
Agreement. The minute books and stock transfer ledgers of TechSys, which TechSys
represents and warrants will be made available to the Company prior to Closing,
contain a true and complete record of all action taken at all meetings and by
all written consents in lieu of meetings of the stockholders, the board of
directors and the committees of the board of directors and all transfers in the
capital stock of TechSys.
3.2 Capitalization.
(a) The authorized capital stock of TechSys consists of
20,000,000 shares of Common Stock, without par value (the "TechSys Common
Stock") and 5,000,000 shares of preferred stock (the "TechSys Preferred Stock").
As of March 22, 2001, there were 3,923,544 shares of TechSys Common Stock
outstanding and no shares of TechSys Preferred Stock outstanding. As of March
22, 2001, a total of 7,068,600 shares of TechSys Common Stock were reserved for
issuance pursuant to outstanding securities that are convertible into or
exchangeable for shares of TechSys Common Stock, including: 1,066,100 shares
issuable upon the exercise of options held by employees of TechSys; 310,000
shares issuable upon the exercise of options held by directors of TechSys;
1,350,000 shares issuable upon the exercise of options held by certain
executives of TechSys, to be modified in accordance with Section 5.5 hereof;
75,000 shares issuable upon the exercise of options held by former directors and
employees of TechSys; 467,500 shares issuable upon the exercise of other
warrants; and shares issuable upon the exercise of options held by Xxxxx, to be
canceled at the Effective Time and 100,000 shares issuable upon the exercise of
options to be issued to Xxxxx at the Effective Time, in accordance with an
agreement executed by Xxxxx and TechSys on or before the Effective Time;
provided, that, TechSys and the Company have not otherwise determined that all
agreements between Xxxxx and TechSys and Xxxxx and the Company, respectively,
are not effective. Except for interests pursuant to which shares have been
reserved for issuance as set forth in the preceding sentence or pursuant to this
Agreement, there are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require TechSys to issue, sell or otherwise
cause to become outstanding any of its capital stock or equity interests or
other instruments convertible into such interests.
(b) The authorized capital stock of Newco consists of 2,500
shares of common stock, without par value, of which 100 shares are issued and
outstanding. All of such issued and outstanding shares are owned by TechSys.
3.3 Validity of Shares of TechSys Common Stock. The shares of common
stock of TechSys to be issued in connection with the Merger (the "TechSys
Shares") have been duly authorized and will, when issued in accordance with the
terms hereof, be validly issued, fully paid and non-assessable, and free and
clear of any pre-emptive rights of the stockholders of TechSys.
3.4 Authorization; Binding Effect; No Breach.
(a) The execution, delivery and performance by TechSys of each
Transaction Document to which it is a party has been duly authorized by TechSys.
Each Transaction Document to which TechSys is a party constitutes a valid and
binding obligation of TechSys which is enforceable against TechSys in accordance
with its terms. The execution, delivery and performance by TechSys of the
Transaction Documents to which it is a party do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in a violation of, or (iv) require any
authorization, consent, approval, exemption or other action by or declaration or
notice to any Government Entity pursuant to, the charter or bylaws of TechSys or
any agreement, instrument, or other document, or any Legal Requirement, to which
TechSys or any of its assets is subject.
(b) The execution, delivery and performance by Newco of each
Transaction Document to which it is a party has been duly authorized by Newco.
Each Transaction Document to which Newco is a party constitutes a valid and
binding obligation of Newco which is enforceable against Newco in accordance
with its terms. The execution, delivery and performance by Newco of the
Transaction Documents to which it is a party do not and will not (i) conflict
with or result in a breach of the terms, conditions or provisions of, (ii)
constitute a default under, (iii) result in a violation of, or (iv) require any
authorization, consent, approval, exemption or other action by or declaration or
notice to any Government Entity pursuant to, the charter or bylaws of Newco or
any agreement, instrument, or other document, or any Legal Requirement, to which
Newco or any of its assets is subject.
3.5 TechSys Reports; Financial Statements. TechSys has filed with the
SEC each registration statement, report, proxy statement or information
statement required to be filed by it since January 1, 2000 through the date
hereof, including (i) TechSys' Annual Report on Form 10-KSB for the years ended
December 31, 1999 and 2000 (the "Form 10-KSBs"), and (ii) TechSys' Quarterly
Reports on Form 10-QSB for the calendar quarters ended March 31, 2000, June 30,
2000 and September 30, 2000 (collectively, the "TechSys Reports"), copies of
which have been made available to the Company.
(a) As of their respective dates, the TechSys 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 light of the circumstances in which they were made, not misleading.
(b) As of their respective dates, the consolidated financial
statements included in the Form 10-KSBs complied as to form in all material
respects with then applicable accounting requirements and the published rules
and regulations of the SEC with respect thereto. Each of the consolidated
balance sheets included in or incorporated by reference into the Form 10-KSBs
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of TechSys and its subsidiaries as
of its date and each of the consolidated statements of income and of changes in
cash flows included in or incorporated by reference into the Form 10-KSBs
(including any related notes and schedules) fairly presents in all material
respects the results of operations and changes in cash flows, as the case may
be, of TechSys for the periods set forth therein, in each case in accordance
with GAAP, except as may be noted therein.
3.6 Governmental Filings. Except as set forth on Schedule 3.6, other
than the filing of the Merger Certificate with the State of New Jersey and the
State of Nevada, respectively, the filing with the SEC of the preliminary Proxy
Statement/Prospectus and the Registration Statement (and any amendments
thereto), respectively, the filing with the SEC of a Current Report on Form 8-K
(and any amendments thereto) subsequent to the Effective Time and the Pre-Merger
Notification, if applicable, no notices, reports or other filings are required
to be made by TechSys with, nor are any consents, registrations, approvals,
permits or authorizations required to be obtained by TechSys from, any
Government Entity in connection with the execution and delivery of this
Agreement by TechSys and the consummation of the transactions contemplated by
the Transaction Documents.
3.7 Assets of TechSys.
(a) The Assets of TechSys (which, for purposes of this
Section, 3.7, includes the assets of each Subsidiary of TechSys) and other
assets reflected in the Books and Records of TechSys constitute all of the
assets and rights which are used or useful in the business of TechSys as
currently conducted and presently proposed to be conducted;
(b) TechSys has good and marketable title to, or a valid
leasehold interest in or other rights to use (which other rights to use are
described on the attached Schedule 3.7), all properties and assets used by
TechSys in its business, located on its premises, shown on the Latest TechSys
Balance Sheet or acquired by TechSys since the date of the Latest TechSys
Balance Sheet, in each case free and clear of all Liens, other than Permitted
Liens, and other than (i) properties and assets disposed of in the ordinary
course of business and consistent with TechSys' past practice by TechSys since
the date of the Latest TechSys Balance Sheet (which disposals do not exceed
$25,000 in the aggregate) and (ii) Liens disclosed on the Latest TechSys Balance
Sheet (including any notes thereto); and
(c) TechSys' equipment and other tangible assets are in good
operating condition (subject to normal wear and tear) and fit for use in the
ordinary course of business of TechSys and consistent with its past practice.
3.8 Absence of Certain Changes. Except as disclosed in the TechSys
Reports filed prior to the date hereof, since December 31, 2000, TechSys and its
subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than in, the ordinary and usual course
of such businesses and there has not been any material adverse change in the
financial condition, business, prospects or results of operations of TechSys and
its subsidiaries from December 31, 2000 through the date of this Agreement.
3.9 Litigation. Except as set forth on Schedule 3.9, there are no
civil, criminal or administrative actions, suits, claims, hearing,
investigations, arbitrations, or proceedings pending or, to the Knowledge of
Purchasers, threatened against Purchasers preventing, or which, if determined
adversely to Purchasers would prevent TechSys or Newco from consummating the
transactions contemplated by the Transaction Documents.
3.10 Brokerage. There is no claim for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
the Transaction Documents which is binding upon TechSys or any of its
Subsidiaries.
3.11 Insurance. The attached Schedule 3.11 contains a description of
each insurance policy maintained by TechSys or its Subsidiaries with respect to
TechSys, its Subsidiaries, its properties, assets or business, and each such
policy is in full force and effect. TechSys is not in default of any obligation
pursuant to any insurance policy described on Schedule 3.11.
3.12 Tax Matters. Except as set forth in the attached Schedule 3.12:
(a) TechSys and each Subsidiary of TechSys has timely filed
all Tax Returns that it was required to file.
(b) All such Tax Returns were and are true, correct and
complete in all respects.
(c) All Taxes owed by TechSys and each Subsidiary (whether or
not shown on any Tax Return for all time periods through the Closing Date) have
been paid. The amount of liability for unpaid Taxes for all time periods ending
on or before the Closing Date will not exceed the amount of current liability
accruals for Taxes (excluding reserves for deferred Taxes) as such accruals are
reflected on the most recent TechSys balance sheet.
(d) No information related to Tax matters has been requested
by any Taxing authority and there are no ongoing examinations or claims against
TechSys or any Subsidiary for Taxes, and no notice of any audit, examination, or
claim for Taxes, whether pending or threatened, has been received.
(e) TechSys and each Subsidiary currently are not the
beneficiary of any extension of time within which to file any Tax Return, except
with respect to such Tax Returns due in 2001;
(f) No claim has ever been made by an authority in a
jurisdiction where TechSys or a Subsidiary does not file Tax Returns that it is
or may be subject to taxation by that jurisdiction. TechSys and each Subsidiary
is not required to file Tax Returns in any jurisdiction in which it is not
currently filing Tax Returns.
(g) There are (and as of immediately following the Closing
Date there will be) no Liens other than Permitted Liens on any of the Assets of
TechSys or a Subsidiary that arose in connection with any failure (or alleged
failure) to pay any Tax.
(h) TechSys and each Subsidiary has withheld and paid over to
the proper governmental entities all Taxes required to have been withheld and
paid over in all matters, including in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party.
(i) To the Knowledge of any director or officer of TechSys,
there is no basis for the assertion of any claim relating or attributable to
Taxes which, if adversely determined, would result in any Lien on the Assets of
TechSys or otherwise have an adverse effect on TechSys or any of its
Subsidiaries or their respective businesses.
(j) There are no unresolved disputes or claims concerning the
Tax liability of TechSys or each Subsidiary.
(k) TechSys and each Subsidiary have been, and are currently
not, subject to a Tax audit.
(l) TechSys and each Subsidiary have never waived or extended
any statute of limitations in respect of Taxes or agreed to any extension of
time with respect to any Tax assessment or deficiency as to which the period of
extension has not elapsed.
(m) TechSys has not filed any consent agreement under Section
341(f) of the Code concerning collapsible corporations.
(n) TechSys has never made any payments, is not obligated to
make any payments, and is not a party to any agreement that could obligate it to
make any payments that will not be deductible under Sections 280(G) and 404 of
the Code.
(o) TechSys has never been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(p) TechSys has disclosed on its federal income Tax Returns
all positions taken therein that could give rise to a substantial understatement
of Federal Income Tax within the meaning of Section 6662 of the Code.
(q) TechSys and each Subsidiary are not a party to any Tax
allocation, Tax indemnity or Tax sharing agreement. TechSys (A) has never been a
member of an Affiliated Group filing a consolidated federal income Tax Return
and (B) has no liability for the Taxes of any Person (other than any of TechSys)
under Treas. Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(r) TechSys has a taxable year ended on December 31 of each
year.
(s) TechSys currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not
changed.
(t) There are no tax rulings, requests for rulings, closing
agreements or changes of accounting method relating to TechSys or any of its
Subsidiaries that could affect their liability for Taxes for any period after
the Closing Date.
(u) No property of TechSys is "tax-exempt use property" within
the meaning of Section 168(h) of the Code.
(v) TechSys is not a party to any lease made pursuant to
Section 168(f) of the Code.
(w) TechSys will not be required to include in a taxable
period ending after the date of the Closing income attributable to a prior
taxable period that was not recognized in that prior taxable period as a result
of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or local
or foreign tax law.
3.13 Contracts and Commitments.
(a) Contracts. Schedule 3.13(a) sets forth a complete list of
all agreements to which TechSys is a party and all agreements to which any
Subsidiary is a party (the "TechSys Contracts"). All references to TechSys in
this Section 3.13 refer to both TechSys and to each Subsidiary of TechSys. Other
than this Agreement and the agreements described on the attached Schedule
3.13(a), neither TechSys nor any Subsidiary of TechSys is a party to any written
or oral:
(i) pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit, welfare or stock plan
or arrangement which is not described on Schedule 3.13(a), or any contract with
any labor union, or any severance agreement;
(ii) contract for the employment or engagement as an
independent contractor of any Person on a full-time, part-time, consulting or
other basis;
(iii) contract pursuant to which TechSys has advanced
or loaned funds, or agreed to advance or loan funds, to any other Person;
(iv) contract or indenture relating to any
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any of
the TechSys Shares or any of the Assets of TechSys;
(v) contract pursuant to which TechSys is the lessee
of, or holds or operates, any real or personal property owned by any other
Person;
(vi) contract pursuant to which TechSys is the lessor
of, or permits any third party to hold or operate, any real or personal property
owned by TechSys or of which TechSys is a lessee;
(vii) assignment, license, indemnification or other
contract with respect to any intangible property (including any Proprietary
Right) which is material to the business of TechSys and is not described on
Schedule 3.13(a);
(viii) contract or agreement with respect to services
rendered or goods sold or leased to or from others, other than any customer
purchase order accepted in the ordinary course of business and in accordance
with TechSys' past practice;
(ix) contract prohibiting TechSys from freely
engaging in any business anywhere in the world;
(x) independent sales representative or
distributorship agreement with respect to the business of TechSys; or
(xi) executory contract (other than one described in
Sections 3.13(a)(i) through 3.13(a)(x)) which is material to TechSys or involves
a consideration in excess of $5,000.
(b) Enforceability. Each TechSys Contract described on
Schedule 3.13(a) is a valid and binding agreement of TechSys, enforceable by
TechSys in accordance with its terms, except as such enforceability against the
other parties thereto may be limited by (i) applicable insolvency, bankruptcy,
reorganization, moratorium or other similar laws affecting creditors' rights
generally and (ii) applicable equitable principles (whether considered in a
proceeding at law or in equity).
(c) Compliance. TechSys has performed all obligations required
to be performed by it under each TechSys Contract, and TechSys is not in default
under or in breach of (nor is it in receipt of any claim of any such default
under or breach of) any such obligation. No event has occurred which with the
passage of time or the giving of notice (or both) would result in a default,
breach or event of noncompliance under any obligation of TechSys pursuant to any
TechSys Contract. TechSys has no present expectation or intention of not fully
performing any obligation of TechSys pursuant to any TechSys Contract, and
TechSys has no Knowledge of any breach or anticipated breach by any other party
to any TechSys Contract.
(d) Leases. With respect to each TechSys Contract which is a
lease of personal property, TechSys holds a valid and existing leasehold
interest under such lease for the term thereof.
(e) Affiliated Transactions. Except as set forth on Schedule
3.13(e), no officer, director, stockholder or Affiliate of TechSys (and no
individual related by blood or marriage to any such Person, and no entity in
which any such Person or individual owns any beneficial interest) is a party to
any agreement, contract, commitment or transaction with TechSys (other than this
Agreement) or has any interest in any property used by TechSys.
3.14 Proprietary Rights. All references to TechSys in this Section 3.14
refer to both TechSys and to each Subsidiary of TechSys.
(a) Schedule. The attached Schedule 3.14(a) contains a
complete and accurate list of all Proprietary Rights, both domestic and foreign,
including but not limited to (i) all patented or registered Proprietary Rights
owned by TechSys or used in connection with its business, (ii) all pending
patent applications and applications for registrations of other Proprietary
Rights filed by or on behalf of TechSys or used in connection with the Business,
(iii) all registered trade names, trademarks, corporate names, and websites, and
unregistered trade names, trademarks, and service marks owned by TechSys or used
in connection with its business, (iv) all inventions, trade secrets, or other
proprietary information not otherwise the subject of a patent, patent
application, or registered application to register Proprietary Rights, and (v)
all registered and unregistered copyrights and computer software which are
material to the financial condition, operating results, assets, customer or
supplier relations, employee relations or business prospects of TechSys. The
attached Schedule 3.14(a) also contains a complete and accurate list of all
licenses, covenants not to xxx, and other rights granted by TechSys to any third
party, all licenses, covenants not to xxx, and other rights granted by any third
party to TechSys, with respect to any Proprietary Rights, a general description
of all agreements or arrangements of escrows of source codes in favor of
licensees together with a description of the location of copies of all such
agreements. The Proprietary Rights comprise all intellectual property rights
which are used or useful in the operation of the business of TechSys or is
otherwise owned by TechSys.
(b) Ownership; Claims. TechSys owns and possesses all right,
title and interest in and to (or has the right to use pursuant to a valid and
enforceable license) all Proprietary Rights described on Schedule 3.14(a) which
are necessary or desirable for the operation of TechSys' business as presently
conducted and as presently proposed to be conducted, and TechSys has taken all
necessary actions to maintain and protect its interest in all the Proprietary
Rights. The owners of the Proprietary Rights licensed to TechSys have taken all
necessary actions to maintain and protect the Proprietary Rights which are
subject to such licenses.
(i) TechSys owns in the entirety or has the right to
use all of the Proprietary Rights described on such Schedule and each other
Proprietary Right which is material to the conduct of the business of TechSys
(in each case free and clear of all Liens and free of all claims to the use by
others),
(ii) there have been no claims made against TechSys
asserting the invalidity, misuse or unenforceability of any of such Proprietary
Rights, and there are no grounds known to TechSys for any such claim,
(iii) TechSys has not received any notice of (and is
not aware of any facts which indicate a likelihood of) any infringement or
misappropriation by, or conflict with, any Person with respect to any of such
Proprietary Rights (including any demand or request that TechSys license rights
from any Person),
(iv) the conduct of the business of TechSys has not
infringed, misappropriated or violated, and does not infringe, misappropriate or
violate in any respect, any proprietary right of any other Person;
(v) to the Knowledge of TechSys, such Proprietary
Rights have not been infringed, misappropriated or violated in any respect by
any other Person, and
(vi) the consummation of the transactions
contemplated by this Agreement will have no adverse effect on any such
Proprietary Right.
(c) Except as set forth on Schedule 3.14(c), all Proprietary
Rights set forth on Schedule 3.14(a) may be assigned by TechSys in accordance
with this Agreement without obtaining the prior consent of any Person other than
a Party to this Agreement.
3.15 Employees.
(a) Continued Employment. Except as set forth on Schedule
3.15, to TechSys' Knowledge, no executive or key employee of TechSys, or any
Subsidiary of TechSys, or any group of employees of TechSys or any Subsidiary of
TechSys, has any plans to terminate employment with TechSys or such Subsidiary.
(b) Compliance and Restrictions. TechSys and its Subsidiaries
have substantially complied with all laws relating to the employment of labor,
including provisions of such laws relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes, and
TechSys and its Subsidiaries have no labor relations problem (including any
union organization activities, threatened or actual strikes or work stoppages or
grievances). Except as set forth on the attached Schedule 3.15, neither TechSys,
any Subsidiary of TechSys, nor any employees of TechSys or any Subsidiary of
TechSys are subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement relating to, affecting, or in
conflict with, the business activities as presently conducted or as proposed to
be conducted. Except as set forth on Schedule 3.15, the consummation of this
Agreement will not give rise to (i) the vesting of any restricted stock of
TechSys or any Subsidiary of TechSys, (ii) any change of control provisions set
forth in any agreement between any Person and TechSys or any Subsidiary of
TechSys, (iii) any severance payments to become due and owing to any Person by
TechSys or by any Subsidiary of TechSys, or (iv) any other similar benefits.
3.16 ERISA. All references to TechSys in this Section 3.16 refer to
both TechSys and to each Subsidiary of TechSys. Except as set forth on the
attached Schedule 3.16, with respect to all current employees (including those
on lay-off, disability or leave of absence), former employees, and retired
employees of TechSys:
(a) TechSys neither maintains nor contributes to any (i)
employee welfare benefit plans (as defined in Section 3(1) of ERISA) ("Employee
Welfare Plans"), or (ii) any plan, policy or arrangement which provides
nonqualified deferred compensation, bonus or retirement benefits, severance or
"change of control" (as set forth in Code Section 280G) benefits, or life,
disability, accident, vacation, tuition reimbursement or other fringe benefits
("Other Plans");
(b) TechSys does not maintain, contribute to, or participate
in any defined benefit plan or defined contribution plan which are employee
pension benefit plans (as defined in Section 3(2) of ERISA) ("Employee Pension
Plans");
(c) TechSys does not contribute to or participate in, and has
not contributed to or participated in for the past six years, any multiemployer
plan (as defined in Section 3(37) of ERISA) (a "Multiemployer Plan");
(d) TechSys does not maintain or have any obligation to
contribute to or provide any post-retirement health, accident or life insurance
benefits to any Employee, other than limited medical benefits required to be
provided under Code Section 4980B;
(e) all Plans (and all related trusts and insurance contracts)
comply in form and in operation in all material respects with the applicable
requirements of ERISA and the Code;
(f) all required reports and descriptions (including all Form
5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan
Descriptions) with respect to all Plans have been properly filed with the
appropriate Government Entity or distributed to participants, and TechSys has
complied substantially with the requirements of Code Section 4980B;
(g) with respect to each Plan, all contributions, premiums or
payments which are due on or before the Closing Date have been paid to such
Plan; and
(h) TechSys has not incurred any liability to the Pension
Benefit Guaranty Corporation (the "PBGC"), the United States Internal Revenue
Service, any multiemployer plan or otherwise with respect to any employee
pension benefit plan or with respect to any employee pension benefit plan
currently or previously maintained by members of the controlled group of
companies (as defined in Sections 414(b) and (c) of the Code) that includes
TechSys (the "Controlled Group") that has not been satisfied in full, and no
condition exists that presents a risk to TechSys or any member of the Controlled
Group of incurring such a liability (other than liability for premiums due the
PBGC) which could reasonably be expected to have any adverse effect on TechSys
or any of the TechSys Shares or any of the Assets of TechSys after the Closing.
3.17 Real Estate.
(a) Owned Properties. Except as set forth on Schedule 3.17(a),
neither TechSys nor any Subsidiary owns any real property.
(b) Leased Property. The attached Schedule 3.17(b) lists and
describes briefly all real property leased or subleased to TechSys or to any
Subsidiary of TechSys, and all other real property which is used in the business
of TechSys (or any Subsidiary of TechSys) and not owned by TechSys or any
Subsidiary of TechSys (the "TechSys Leased Real Property"). TechSys has
delivered to the Company's legal counsel correct and complete copies of the
leases and subleases listed on Schedule 3.17(b) (collectively, the "TechSys
Leases"). With respect to the TechSys Leased Real Property and each of the
TechSys Leases, except as otherwise set forth on Schedule 3.17(b):
(i) such TechSys Lease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) TechSys is not aware that any party to such
TechSys Lease is in breach or default, and TechSys is not aware that any event
has occurred which, with notice or lapse of time, would constitute such a breach
or default or permit termination, modification, or acceleration of such TechSys
Lease;
(iii) TechSys is not aware that any party to such
TechSys Lease has repudiated any provision thereof;
(iv) there are no disputes, oral agreements, or
forbearance programs in effect as to such TechSys Lease;
(v) in the case of each TechSys Lease which is a
sublease, the representations and warranties set forth in clauses 3.17(b)(i)
through (v) are true and correct with respect to the underlying lease;
(vi) TechSys has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in the leasehold or
subleasehold created pursuant to such TechSys Lease;
(vii) none of the TechSys Leases has been modified in
any respect, except to the extent that such modifications are in writing and
have been delivered or made available to the Company;
(viii) to the Knowledge of TechSys, all buildings,
improvements and other structures located upon the TechSys Leased Real Property
have received all approvals of Governmental Entities, including licenses and
permits, required in connection with the operation of the business thereon and
have been operated and maintained in accordance with all applicable Legal
Requirements and the terms and conditions of the TechSys Leases; and
(ix) to the Knowledge of TechSys, all buildings,
structures and other improvements located upon the TechSys Leased Real Property,
including all components thereof, are in good operating condition subject to the
provision of usual and customary maintenance in the ordinary course of business
with respect to buildings, structures and improvements of like age and
construction and all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage and other utility lines and systems
serving the TechSys Leased Real Property are sufficient to enable the continued
operation of the TechSys Leased Real Property in the manner currently being used
in connection with the operation of the business of TechSys.
3.18 Compliance with Laws. All references to TechSys in this Section
3.18 refer to both TechSys and to each Subsidiary of TechSys.
(a) Generally. TechSys has not violated any Legal Requirement,
and TechSys has not received notice alleging any such violation.
(b) Required Permits. TechSys has complied with (and is in
compliance with) all permits, licenses and other authorizations required for the
occupation of TechSys facilities and the operation of the business of TechSys.
The items described on the attached Schedule 3.18(b) constitute all of the
permits, filings, notices, licenses, consents, authorizations, accreditation,
waivers, approvals and the like of, to or with any Government Entity which are
required for the consummation of the Merger, or any other transaction
contemplated by the Transaction Documents or the conduct of the business of
TechSys (as it is presently conducted by TechSys) thereafter.
(c) Environmental and Safety Matters. Without limiting the
generality of Sections 3.18(a) and (b):
(i) TechSys has complied, and is in compliance with,
all Environmental and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, TechSys has obtained and complied with, and is in compliance with,
all permits, licenses and other authorizations that may be required pursuant to
Environmental and Safety Requirements for the occupation of its facilities and
the operation of the Business. A list of all such permits, licenses and other
authorizations is set forth on the attached Schedule 3.18(b).
(iii) TechSys has not received any written or oral
notice, report or other information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) or investigatory, remedial or
corrective obligations, relating to it or its facilities and arising under
Environmental and Safety Requirements.
(iv) None of the following exists at any property or
facility owned, operated or occupied by TechSys:
(1) underground storage tanks or surface
impoundments
(2) asbestos-containing material in any form
or condition; or
(3) materials or equipment containing
polychlorinated biphenyls.
(v) TechSys has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or Released any
substance, including any Hazardous Substance, or owned or operated any facility
or property, so as to give rise to liabilities of TechSys for response costs,
natural resource damages or attorneys' fees pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or similar state or local Environmental and Safety Requirements.
(vi) Neither this Agreement nor the consummation of
the Merger will result in any obligations for site investigation or cleanup, or
notification to or consent of any Government Entity or third parties, pursuant
to any so-called "transaction-triggered" or "responsible property transfer"
Environmental and Safety Requirements.
(vii) TechSys has not, either expressly or by
operation of law, assumed or undertaken any liability, including any obligation
for corrective or remedial action, of any other Person relating to any
Environmental and Safety Requirements.
(viii) No Environmental Lien has attached to any
property now or previously owned, leased or operated by TechSys.
(ix) Without limiting the foregoing, no facts, events
or conditions relating to the Leased Real Property, or other past or present
facilities, properties or operations of TechSys will prevent, hinder or limit
continued compliance with Environmental and Safety Requirements, give rise to
any investigatory, remedial or corrective obligations pursuant to Environmental
and Safety Requirements, or give rise to any other liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise) pursuant to Environmental and
Safety Requirements, including any relating to onsite or offsite Releases or
threatened Releases of Hazardous Substances, personal injury, property damage or
natural resource damage.
3.19 Product Warranty. Except as set forth on the attached Schedule
3.19, all products manufactured, serviced, distributed, sold or delivered by
TechSys have been manufactured, serviced, distributed, sold and/or delivered in
conformity with all applicable contractual commitments and all express and
implied warranties. No liability of TechSys exists for replacement or other
damages in connection with any such product.
3.20 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of TechSys, or on behalf of any Subsidiary of TechSys, except
as set forth on Schedule 3.20.
3.21 Bank Accounts. Schedule 3.21 identifies the names and locations of
all banks, depositories and other financial institutions in which TechSys, or
any Subsidiary of TechSys or any other Person on behalf of TechSys, has an
account or safe deposit box and the names of all persons authorized to draw on
such accounts or to have access to such safe deposit boxes.
3.22 Cash, Cash Equivalents and Collectibles. As of the date hereof,
TechSys has, in the aggregate, cash, cash equivalents and collectibles of no
less than $3,000,000 (the "TechSys Cash"), in accordance with Schedule 3.22.
3.23 Disclosure. Neither this Article III nor any certificate or other
item delivered to the Company by or on behalf of Purchasers with respect to the
transactions contemplated by the Transaction Documents contains any untrue
statement of a material fact or omits a material fact which is necessary to make
any statement contained herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As a material inducement to Purchasers to enter into this Agreement,
the Company hereby represents and warrants to Purchasers that:
4.1 Organization and Power; The Company Shares
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. The Company
is duly qualified to do business in each jurisdiction in which its ownership of
property or conduct of business requires it to so qualify. Schedule 4.1(a) lists
every jurisdiction where the Company is duly qualified to do business, lists all
states in which the Company owns, leases or is in control of any personal
property or real property and all states in which any employees of the Company
are located, and identifies each such employee and provides a brief description
of such property. The Company has the requisite corporate power necessary to own
and operate its properties, carry on the Business and enter into, deliver and
carry out the transactions contemplated by the Transaction Documents. Each
Subsidiary of the Company is a corporation duly organized, validly existing and
in good standing under the laws of its respective State of incorporation and is
duly qualified to do business in each jurisdiction in which its ownership of
property or conduct of business requires it to so qualify.
(b) Schedule 4.1(b) lists the directors and officers of the
Company. The Company represents and warrants that the Company has delivered
correct and complete copies of the articles of incorporation and bylaws of the
Company, including all amendments thereto, to TechSys prior to the date of this
Agreement. The minute books and stock transfer ledgers of the Company, which the
Company represents and warrants will be made available to TechSys prior to
Closing, contain a true and complete record of all action taken at all meetings
and by all written consents in lieu of meetings of the stockholders, the board
of directors and the committees of the board of directors and all transfers in
the Capital Stock of the Company.
4.2 Capitalization.
(a) As of the date hereof, the authorized capital stock of the
Company consists solely of 100,000,000 shares of common stock, $0.001 par value
(the "Capital Stock of the Company"), of which 90,556,750 shares are issued and
outstanding. At the Effective Time, the Company shall have no more than
99,900,000 shares of common stock issued and outstanding (including shares of
common stock issuable upon the exercise of options or warrants convertible into
shares of common stock of the Company). The Company is not authorized to issue
preferred stock. All issued and outstanding shares of Capital Stock of the
Company on the date hereof are, and all shares of Capital Stock of the Company
that will be issued and outstanding immediately prior to the Effective Time
shall be, duly authorized, validly issued, outstanding, fully paid and
nonassessable.
The Company owns each share of the Capital Stock of the
Company described in Section 1.4(b) beneficially and of record, free and clear
of all Liens. With respect to the Company and any Subsidiary of the Company,
except as set forth on Schedule 4.2(a):
(i) there are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights or other contracts or commitments that could require the Company (or any
Subsidiary of the Company) to issue, sell or otherwise cause to become
outstanding any of its capital stock or equity interests or other instruments
convertible into such interests;
(ii) there are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights with respect
to the Capital Stock of the Company (or the capital stock of any Subsidiary of
the Company).
(iii) there are no voting trusts, proxies or other
agreements or understandings with respect to the voting of the capital stock of
the Company (or the capital stock of any Subsidiary of the Company);
(iv) no member of the Company has any rights in any
specific property of the Company (or any Subsidiary of the Company).
(v) neither the Company (or any Subsidiary of the
Company) nor any of its respective Affiliates has entered into any agreement, or
is bound by any obligation of any kind whatsoever, to transfer or dispose of the
Company Shares (or any shares of capital stock of any Subsidiary of the
Company), the Business of the Company (or any substantial portion thereof) to
any Person other than TechSys, and neither has entered into any agreement, nor
are either of them bound by any obligation of any kind whatsoever, to issue any
Capital Stock of the Company (or any capital stock of any Subsidiary of the
Company) to any Person.
(vi) since December 31, 1999, (i) the Company has not
declared or made any payment of any dividend or other distribution in respect of
the Capital Stock of the Company, and (ii) there has not been any split,
combination or reclassification or any shares of the Capital Stock of the
Company.
(b) The authorized capital stock of each Subsidiary of the
Company as of the date hereof, which shall be the authorized capital stock of
each such Subsidiary immediately prior to the Effective Time, is set forth on
Schedule 4.2(b). Schedule 4.2(b) also sets forth the number of issued and
outstanding shares of each Subsidiary of the Company on the date hereof, which
shall be the number of issued and outstanding shares of each such Subsidiary of
the Company immediately prior to the Effective Time. Except as set forth on
Schedule 4.2(b), no Subsidiary of the Company is authorized to issue preferred
stock. All issued and outstanding shares of capital stock of each Subsidiary of
the Company on the date hereof are, and all shares of capital stock of each
Subsidiary of the Company that will be issued and outstanding immediately prior
to the Effective Time shall be, duly authorized, validly issued, outstanding,
fully paid and nonassessable, except as set forth on Schedule 4.2(b).
4.3 Authorization; Binding Effect; No Breach. The execution, delivery
and performance by the Company of each Transaction Document to which it is a
party has been duly authorized by the Company. Each Transaction Document to
which the Company is a party constitutes a valid and binding obligation of the
Company which is enforceable against the Company in accordance with its terms.
Except as set forth on Schedule 4.3, the execution, delivery and performance of
the Transaction Documents to which the Company is a party do not and will not
(i) conflict with or result in a breach of the terms, conditions or provisions
of, (ii) constitute a default under, (iii) result in the creation of any Lien
upon any of the Company Shares or any of the Assets of the Company under, (iv)
give any third party the right to modify, terminate or accelerate any liability
or obligation of the Company under, (v) result in a violation of, or (vi)
require any authorization, consent, approval, exemption or other action by or
declaration or notice to any Government Entity pursuant to, the charter or
bylaws of the Company or any agreement, instrument or other document, or any
Legal Requirement, to which the Company, any of the Company Shares or any of the
Assets of the Company is subject. Without limiting the generality of the
foregoing, neither the Company nor any of its Affiliates has entered into any
agreement, or is bound by any obligation of any kind whatsoever, directly or
indirectly, to transfer or dispose of the Company Shares or any portion thereof,
except as provided herein, or, whether by sale of stock or assets, assignment,
merger, consolidation or otherwise, the Business of the Company or the Assets of
the Company (or any substantial portion thereof) to any Person other than
TechSys, and neither the Company nor any of its Affiliates has entered into any
agreement, nor is any such Person bound by any obligation of any kind
whatsoever, to issue any Capital Stock of the Company to any Person.
4.4 Subsidiaries; Investments. Schedule 4.4 sets forth a complete list
of all Subsidiaries of the Company, the respective states of incorporation of
each Subsidiary of the Company and the respective states in which each
Subsidiary of the Company is qualified to conduct business. The Company does not
own, or hold any rights to acquire, any capital stock or any other security,
interest or Investment in any other Person other than investments which
constitute cash or cash equivalents, other than as set forth on Schedule 4.4.
4.5 Financial Statements and Related Matters.
(a) Financial Statements. The Company has delivered to TechSys
the unaudited balance sheet of each of the Company and Micro Fuel Cell Systems,
Inc. as of December 31, 2000 (together, the "Latest Company Balance Sheet") and
the related unaudited consolidated statements of income and cash flows for the
two year period then ended (collectively, the "Unaudited Financial Statements"),
copies of which are annexed to Schedule 4.5. The Company shall, no later than
May 25, 2001, deliver to TechSys the audited consolidated balance sheets of the
Company as of December 31, 2000, and the audited related consolidated statements
of income and cash flows for the 12-month periods ending December 31, 2000 and
December 31, 1999 as well as the interim consolidated balance sheets and
consolidated statements of income and cash flows for the three month period
ended March 31, 2001 (the "Audited Financial Statements").
(i) Except as set forth on the attached Schedule 4.5,
each of the Unaudited Financial Statements (including in all cases the notes
thereto, if any) presents fairly in all material respects the financial
condition of the Company as of the dates of such statements and the results of
operation for such periods, is accurate and complete, is consistent with the
books and records of the Company (which, in turn, are accurate and complete) and
has been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby except as noted therein (subject to the
absence of notes and audit adjustments).
(ii) Except as set forth on the attached Schedule
4.5, each of the Audited Financial Statements (including in all cases the notes
thereto, if any) shall present fairly in all material respects the financial
condition of the Company as of the dates of such statements and the results of
operation for such periods, shall be accurate and complete, shall be consistent
with the books and records of the Company (which, in turn, are, and shall be,
accurate and complete) and shall be prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby except as noted
therein.
(b) Receivables. The notes and accounts receivable of the
Company on the Closing Date represent actual transactions, will be valid
receivables, will be current and collectible, will not be subject to valid
counterclaims or setoffs and will be collected in accordance with their terms at
the aggregate amount recorded on the Company's books and records as of the
Closing, net of an amount of allowances for doubtful accounts set forth on the
Latest Company Balance Sheet, as adjusted for the passage of time through the
Closing Date in accordance with GAAP.
(c) Inventory. The inventory of the Company of the date of the
Latest Company Balance Sheet, net of the reserves applicable to such inventory
set forth on the Latest Company Balance Sheet, as adjusted for the passage of
time through the Closing Date in accordance with GAAP, consists of a quantity
and quality which is usable and salable in the ordinary course of business, and
the items of such inventory are not defective, slow-moving, obsolete or damaged
and are merchantable and fit for their particular use.
(d) Reserves. The allowance for possible other reserves set
forth on the Latest Company Balance Sheet was adequate at the time to cover all
known or reasonably anticipated contingencies.
4.6 Absence of Undisclosed Liabilities. Except as set forth on Schedule
4.6, as of the Closing Date, neither the Company nor any Subsidiary of the
Company has any liability (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to the Company, whether due or to become due,
and regardless of when asserted) other than: (a) the liabilities set forth on
the face of the Latest Company Balance Sheet, (b) current liabilities which have
arisen after the date of the Latest Company Balance Sheet, in the ordinary
course of business and consistent with the Company's past practice, as
applicable (none of which is a liability resulting from breach of contract,
breach of warranty, tort, infringement, violation of law, claim or lawsuit), all
of which have been disclosed in writing to Purchasers, and (c) other liabilities
and obligations expressly disclosed and quantified in the other Schedules to
this Agreement.
4.7 Assets of the Company.
(a) The Assets of the Company (which, for purposes of this
Section 4.7, includes the assets of each Subsidiary of the Company), and other
assets reflected in the Books and Records of the Company constitute all of the
assets and rights which are used or useful in the Business as currently
conducted and presently proposed to be conducted;
(b) The Company has good and marketable title to, or a valid
leasehold interest in or other rights to use (which other rights to use are
described on the attached Schedule 4.7), all properties and assets used by it in
the Business of the Company, located on its premises, shown on the Latest
Company Balance Sheet or acquired by the Company since the date of the Latest
Company Balance Sheet, in the each case free and clear of all Liens, other than
Permitted Liens, and other than (i) properties and assets disposed of in the
ordinary course of business and consistent with the Company's past practice by
the Company since the date of the Latest Company Balance Sheet (which disposals
do not exceed $25,000 in the aggregate) and (ii) Liens disclosed on the Latest
Company Balance Sheet (including any notes thereto); and
(c) The Company's equipment and other tangible assets, and the
equipment and tangible assets of each Subsidiary of the Company, are in good
operating condition (subject to normal wear and tear) and fit for use in the
ordinary course of business of the Company and its Subsidiaries and consistent
with its past practice.
4.8 Absence of Certain Developments. Since December 31, 2000, there has
been no adverse change in the financial condition, operating results, assets,
customer or supplier relations, employee relations or business prospects of the
Company and no customer or vendor has any plans to terminate its relationship
with the Company or any of its Subsidiaries. Without limiting the generality of
the preceding sentence, except as set forth on Schedule 4.8 or otherwise
expressly contemplated by this Agreement, since the date of the Latest Company
Balance Sheet, neither the Company or any Subsidiary of the Company has:
(a) engaged in any activity which has resulted in (i) any
acceleration or delay of the collection of the Company's accounts or notes
receivable, (ii) any delay in the payment in the Company's accounts payable, or
(iii) any increase in the Company's purchases of raw materials, in each case as
compared with the Company's custom and practice in the conduct of the Business
immediately prior to the date of the Latest Company Balance Sheet;
(b) discharged or satisfied any Lien or paid any obligation or
liability, other than current liabilities paid in the ordinary course of
business and consistent with the Company's past practice;
(c) mortgaged or pledged any of the Company Shares or any
Asset or subjected any of the Company Shares or any Asset to any Lien;
(d) sold, assigned, conveyed, transferred, canceled or waived
any property, tangible asset or other intangible asset or right of the Company
other than in the ordinary course of business and consistent with the Company's
past practice;
(e) waived any right of the Company other than in the ordinary
course of business or consistent with the Company's past practice;
(f) made commitments for capital expenditures by the Company
which, in the aggregate, would exceed $10,000;
(g) made any loan or advance to, or guarantee for the benefit
of, or any Investment in, any other Person on behalf of the Company;
(h) granted any bonus or any increase in wages, salary or
other compensation to any employee of the Company (other than any increase in
wages or salaries granted in the ordinary course of business and consistent with
the Company's past practice granted to any employee who is not affiliated with
the Company other than by reason of such Person's employment by the Company);
(i) made any charitable contributions on behalf of the
Company;
(j) suffered damages, destruction or casualty losses which, in
the aggregate, exceed $10,000 (whether or not covered by insurance) to any
Asset;
(k) received any indication from any supplier of the Company
to the effect that such supplier will stop, or decrease the rate of, supplying
materials, products or services to the Company (whether or not the Merger is
consummated), or received any indication from any customer of the Company to the
effect that such customer will stop, or decrease the rate of, buying materials,
products or services from the Company (whether or not the Merger is
consummated);
(l) entered into any transaction other than in the ordinary
course of business and consistent with the Company's past practice, or entered
into any other transaction, whether or not in the ordinary course of business,
which may adversely affect the Company;
(m) declared, set aside, or paid any dividend or made any
distribution with respect to the Company's capital stock or equity interests or
redeemed, purchased, or otherwise acquired any of the Company's capital stock or
equity interests;
(n) adopted or amended any employee benefit or welfare plan
relating to the employees of the Company; or
(o) received any indication from any key employee to the
effect that such key employee will terminate employment with the Company; or
(p) agreed to do any act described in any of clauses 4.8(a)
through (o).
4.9 Governmental Filings. Except as set forth on Schedule 4.9, other
than the filing of the Merger Certificate with the State of New Jersey and the
State of Nevada, respectively, and the Pre-Merger Notification, if applicable,
no notices, reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any Government Entity in connection
with the execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated by the Transaction Documents.
4.10 Tax Matters. Except as set forth in the attached Schedule 4.10:
(a) The Company and each Subsidiary of the Company has timely
filed all Tax Returns that it was required to file.
(b) All such Tax Returns were and are true, correct and
complete in all respects.
(c) All Taxes owed by the Company and each Subsidiary (whether
or not shown on any Tax Return for all time periods through the Closing Date)
have been paid. The amount of liability for unpaid Taxes for all time periods
ending on or before the Closing Date will not exceed the amount of current
liability accruals for Taxes (excluding reserves for deferred Taxes) as such
accruals are reflected on the most recent the Company balance sheet.
(d) No information related to Tax matters has been requested
by any Taxing authority and there are no ongoing examinations or claims against
the Company or any Subsidiary for Taxes, and no notice of any audit,
examination, or claim for Taxes, whether pending or threatened, has been
received.
(e) The Company and each Subsidiary currently are not the
beneficiary of any extension of time within which to file any Tax Return, except
with respect to such Tax Returns due in 2001;
(f) No claim has ever been made by an authority in a
jurisdiction where the Company or a Subsidiary does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. The Company and each
Subsidiary is not required to file Tax Returns in any jurisdiction in which it
is not currently filing Tax Returns.
(g) There are (and as of immediately following the Closing
Date there will be) no Liens other than Permitted Liens on any of the Assets of
the Company or a Subsidiary that arose in connection with any failure (or
alleged failure) to pay any Tax.
(h) The Company and each Subsidiary has withheld and paid over
to the proper governmental entities all Taxes required to have been withheld and
paid over in all matters, including in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party.
(i) To the Knowledge of any director or officer of the
Company, there is no basis for the assertion of any claim relating or
attributable to Taxes which, if adversely determined, would result in any Lien
on the Assets of the Company or otherwise have an adverse effect on the Company
or any of its Subsidiaries or their respective businesses.
(j) There are no unresolved disputes or claims concerning the
Tax liability of the Company or each Subsidiary.
(k) The Company and each Subsidiary have been, and are
currently not, subject to a Tax audit.
(l) The Company and each Subsidiary have never waived or
extended any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency as to which
the period of extension has not elapsed.
(m) The Company has not filed any consent agreement under
Section 341(f) of the Code concerning collapsible corporations.
(n) The Company has never made any payments, is not obligated
to make any payments, and is not a party to any agreement that could obligate it
to make any payments that will not be deductible under Sections 280(G) and 404
of the Code.
(o) The Company has never been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code.
(p) The Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of Federal Income Tax within the meaning of Section 6662 of the
Code.
(q) The Company and each Subsidiary are not a party to any Tax
allocation, Tax indemnity or Tax sharing agreement. The Company (A) has never
been a member of an Affiliated Group filing a consolidated federal income Tax
Return and (B) has no liability for the Taxes of any Person (other than any of
the Company) under Treas. Reg. ss.1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee or successor, by contract, or otherwise.
(r) The Company has a taxable year ended on December 31 of
each year.
(s) The Company currently utilizes the accrual method of
accounting for income Tax purposes and such method of accounting has not
changed.
(t) There are no tax rulings, requests for rulings, closing
agreements or changes of accounting method relating to the Company or any of its
Subsidiaries that could affect their liability for Taxes for any period after
the Closing Date.
(u) No property of the Company is "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(v) The Company is not a party to any lease made pursuant to
Section 168(f) of the Code.
(w) The Company will not be required to include in a taxable
period ending after the date of the Closing income attributable to a prior
taxable period that was not recognized in that prior taxable period as a result
of the installment method of accounting, the completed contract method of
accounting, the long-term contract method of accounting, the cash method of
accounting or Section 481 of the Code or comparable provisions of state or local
or foreign tax law.
4.11 Contracts and Commitments.
(a) Contracts. Schedule 4.11(a) sets forth a complete list of
all agreements to which the Company or any Subsidiary of the Company is a party
(the "Contracts"). All references to the Company in this Section 4.11(a) refer
to both the Company and to each Subsidiary of the Company. Other than this
Agreement and the agreements described on Schedule 4.11(a), neither the Company
nor any Subsidiary of the Company is a party to any written or oral:
(i) pension, profit sharing, stock option, employee
stock purchase or other plan or arrangement providing for deferred or other
compensation to employees or any other employee benefit, welfare or stock plan
or arrangement which is not described on the attached Schedule 4.17, or any
contract with any labor union, or any severance agreement;
(ii) contract for the employment or engagement as an
independent contractor of any Person on a full-time, part-time, consulting or
other basis;
(iii) contract pursuant to which the Company has
advanced or loaned funds, or agreed to advance or loan funds, to any other
Person;
(iv) contract or indenture relating to any
Indebtedness or the mortgaging, pledging or otherwise placing a Lien on any of
the Company Shares or any of the Assets of the Company;
(v) contract pursuant to which the Company is the
lessee of, or holds or operates, any real or personal property owned by any
other Person;
(vi) contract pursuant to which the Company is the
lessor of, or permits any third party to hold or operate, any real or personal
property owned by the Company or of which the Company is a lessee;
(vii) assignment, license, indemnification or other
contract with respect to any intangible property (including any Proprietary
Right) which is material to the Business and is not described on Schedule 4.12;
(viii) contract or agreement with respect to services
rendered or goods sold or leased to or from others, other than any customer
purchase order accepted in the ordinary course of business and in accordance
with the Company's past practice;
(ix) contract prohibiting the Company from freely
engaging in any business anywhere in the world;
(x) independent sales representative or
distributorship agreement with respect to the Business; or
(xi) executory contract (other than one described in
Sections 4.11(a)(i) through 4.11(a)(x)) which is material to the Company or
involves a consideration in excess of $5,000.
(b) Enforceability. Each Contract described on the attached
Schedule 4.11(a) is a valid and binding agreement of the Company, enforceable by
the Company in accordance with its terms, except as such enforceability against
the other parties thereto may be limited by (i) applicable insolvency,
bankruptcy, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) applicable equitable principles (whether
considered in a proceeding at law or in equity).
(c) Compliance. The Company has performed all obligations
required to be performed by it under each Contract, and the Company is not in
default under or in breach of (nor is it in receipt of any claim of any such
default under or breach of) any such obligation. No event has occurred which
with the passage of time or the giving of notice (or both) would result in a
default, breach or event of noncompliance under any obligation of the Company
pursuant to any Contract. The Company has no present expectation or intention of
not fully performing any obligation of the Company pursuant to any Contract, and
the Company have no Knowledge of any breach or anticipated breach by any other
party to any Contract.
(d) Leases. With respect to each Contract which is a lease of
personal property, the Company holds a valid and existing leasehold interest
under such lease for the term thereof.
(e) Affiliated Transactions. Except as set forth on Schedule
4.11(e), no officer, director, stockholder or Affiliate of the Company (and no
individual related by blood or marriage to any such Person, and no entity in
which any such Person or individual owns any beneficial interest) is a party to
any agreement, contract, commitment or transaction with the Company (other than
this Agreement) or has any interest in any property used by the Company.
(f) Copies. Purchasers' legal counsel has been supplied with a
true and correct copy of each written Contract, each as currently in effect.
4.12 Proprietary Rights. All references to the Company in this Section
4.12 refer to both the Company and to each Subsidiary of the Company.
(a) Schedule. The attached Schedule 4.12(a) contains a
complete and accurate list of all Proprietary Rights, both domestic and foreign,
including but not limited to (i) all patented or registered Proprietary Rights
owned by the Company or used in connection with the Business, (ii) all pending
patent applications and applications for registrations of other Proprietary
Rights filed by or on behalf of the Company or used in connection with the
Business, (iii) all registered trade names, trademarks, corporate names, and
websites, and unregistered trade names, trademarks and service marks owned by
the Company or used in connection with the Business, (iv) all inventions, trade
secrets or other proprietary information not otherwise the subject of a patent,
patent application, or registered application to register Proprietary Rights,
and (v) all registered and unregistered copyrights and computer software which
are material to the financial condition, operating results, assets, customer or
supplier relations, employee relations or business prospects of the Company. The
attached Schedule 4.12(a) also contains a complete and accurate list of all
licenses, covenants not to xxx, and other rights granted by the Company to any
third party, all licenses, covenants not to xxx, and other rights granted by any
third party to the Company, with respect to any Proprietary Rights, a general
description of all agreements or arrangements of escrows of source codes in
favor of licensees together with a description of the location of copies of all
such agreements. The Proprietary Rights comprise all intellectual property
rights which are used or useful in the operation of the Business or is otherwise
owned by the Company.
(b) Ownership; Claims. The Company believes that it owns and
possesses all right, title and interest in and to (or has the right to use
pursuant to a valid and enforceable license) all Proprietary Rights described on
Schedule 4.12(a) which are necessary or desirable for the operation of the
Company's business and is not aware of rights which it does not own or possess
which it believes are necessary for its business as presently conducted and as
presently proposed to be conducted, and the Company has taken all necessary
actions to maintain and protect its interest in all the Proprietary Rights. The
Company believes that the owners of the Proprietary Rights licensed to the
Company have taken all necessary actions to maintain and protect the Proprietary
Rights which are subject to such licenses in the United States and in the United
Kingdom.
(i) the Company owns in the entirety or has the right
to use all of the Proprietary Rights described on such Schedule and each other
Proprietary Right which is material to the conduct of the Business (in each case
free and clear of all Liens and free of all claims to the use by others),
(ii) there have been no claims made against the
Company asserting the invalidity, misuse or unenforceability of any of such
Proprietary Rights, and there are no grounds known to the Company for any such
claim,
(iii) the Company has not received any notice of (nor
is it aware of any facts which indicate a likelihood of) any infringement or
misappropriation by, or conflict with, any Person with respect to any of such
Proprietary Rights (including any demand or request that the Company license
rights from any Person),
(iv) the conduct of the Business has not infringed,
misappropriated, or violated, and does not infringe, misappropriate or violate
in any respect, any proprietary right of any other Person, nor would Purchasers'
conduct of the Business as presently conducted infringe, misappropriate or
violate in any respect any proprietary right of any other Person,
(v) to the Knowledge of the Company, such Proprietary
Rights have not been infringed, misappropriated or violated in any respect by
any other Person, and
(vi) the consummation of the transactions
contemplated by this Agreement will have no adverse effect on any such
Proprietary Right.
(c) Except as set forth on Schedule 4.12(c), all Proprietary
Rights set forth on Schedule 4.12(a) may be assigned by the Company in
accordance with this Agreement without obtaining the prior consent of any Person
other than a Party to this Agreement.
4.13 Litigation. Except as set forth on Schedule 4.13, there is no
action, suit, proceeding, order, investigation or claim pending against or
affecting the Company, any Subsidiary of the Company or the Business (pending or
threatened against or affecting any officer, director or employee of the Company
or of any Subsidiary of the Company), at law or in equity, or before or by any
Government Entity, including (a) with respect to the transactions contemplated
by the Transaction Documents, or (b) concerning the design, manufacture,
rendering or sale by the Company of any product or service or otherwise
concerning the conduct of the Business, and, in the case of subsections (a) and
(b), there is no basis for any of the foregoing.
4.14 Brokerage. Except as set forth on Schedule 4.14, there is no claim
for brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by the Transaction Documents which is binding
upon the Company or to which the Company or any of the Company Shares or any of
the Assets of the Company is subject.
4.15 Insurance. The attached Schedule 4.15 contains a description of
each insurance policy maintained by the Company or its Subsidiaries with respect
to the Company, its Subsidiaries, its properties, assets or business, and each
such policy is in full force and effect. The Company are not in default of any
obligation pursuant to any insurance policy described on Schedule 4.15.
4.16 Employees.
(a) Continued Employment. Except as set forth on Schedule
4.16, to the Knowledge of the Company, no executive or key employee of the
Company or any Subsidiary of the Company or any group of employees of the
Company or any Subsidiary of the Company has any plans to terminate employment
with the Company or such Subsidiary.
(b) Compliance and Restrictions. The Company and each of its
Subsidiaries have substantially complied with all laws relating to the
employment of labor, including provisions of such laws relating to wages, hours,
equal opportunity, collective bargaining and the payment of social security and
other taxes, and the Company has no labor relations problem (including any union
organization activities, threatened or actual strikes or work stoppages or
grievances). Except as set forth on Schedule 4.16, neither the Company, any
Subsidiary of the Company nor any employees of the Company or of any Subsidiary
of the Company are subject to any noncompete, nondisclosure, confidentiality,
employment, consulting or similar agreement relating to, affecting, or in
conflict with, the Business activities as presently conducted or as proposed to
be conducted. Except as set forth on Schedule 4.16, the consummation of this
Agreement will not give rise to (i) the vesting of any restricted stock of the
Company or any Subsidiary of the Company, (ii) any change of control provisions
set forth in any agreement between any Person and the Company (or any Subsidiary
of the Company), (iii) any severance payments to become due and owing to any
Person by the Company or by any Subsidiary of the Company, or (iv) any other
similar benefits becoming payable.
4.17 ERISA. All references to the Company in this Section 4.17 refer to
both the Company and to each Subsidiary of the Company. Except as set forth on
the attached Schedule 4.17, with respect to all current employees (including
those on lay-off, disability or leave of absence), former employees, and retired
employees of the Company:
(a) the Company neither maintains nor contributes to any (i)
employee welfare benefit plans (as defined in Section 3(1) of ERISA) (Employee
Welfare Plans), or (ii) any plan, policy or arrangement which provides
nonqualified deferred compensation, bonus or retirement benefits, severance or
"change of control" (as set forth in Code Section 280G) benefits, or life,
disability, accident, vacation, tuition reimbursement or other fringe benefits
(Other Plans);
(b) the Company does not maintain, contribute to, or
participate in any defined benefit plan or defined contribution plan which are
employee pension benefit plans (as defined in Section 3(2) of ERISA) (Employee
Pension Plans);
(c) the Company does not contribute to or participate in, and
has neither contributed to nor participated in for the past six years, any
multiemployer plan (as defined in Section 3(37) of ERISA) (a Multiemployer
Plan);
(d) the Company does not maintain or have any obligation to
contribute to or provide any post-retirement health, accident or life insurance
benefits to any Employee, other than limited medical benefits required to be
provided under Code Section 4980B;
(e) all Plans (and all related trusts and insurance contracts)
comply in form and in operation in all material respects with the applicable
requirements of ERISA and the Code;
(f) all required reports and descriptions (including all Form
5500 Annual Reports, Summary Annual Reports, PBGC-1s and Summary Plan
Descriptions) with respect to all Plans have been properly filed with the
appropriate Government Entity or distributed to participants, and the Company
has complied substantially with the requirements of Code Section 4980B;
(g) with respect to each Plan, all contributions, premiums or
payments which are due on or before the Closing Date have been paid to such
Plan; and
(h) the Company has not incurred any liability to the Pension
Benefit Guaranty Corporation (the PBGC), the United States Internal Revenue
Service, any multiemployer plan or otherwise with respect to any employee
pension benefit plan or with respect to any employee pension benefit plan
currently or previously maintained by members of the controlled group of
companies (as defined in Sections 414(b) and (c) of the Code) that includes the
Company (the Controlled Group) that has not been satisfied in full, and no
condition exists that presents a risk to the Company or any member of the
Controlled Group of incurring such a liability (other than liability for
premiums due the PBGC) which could reasonably be expected to have any adverse
effect on the Company or any of the Company Shares or any of the Assets of the
Company after the Closing.
4.18 Real Estate.
(a) Owned Properties. Except as set forth on Schedule 4.18(a),
neither the Company nor any Subsidiary thereof owns any real property.
(b) Leased Property. The attached Schedule 4.18(b) lists and
describes briefly all real property leased or subleased to the Company or to any
Subsidiary of the Company, and all other real property which is used in the
Business and not owned by the Company or any Subsidiary of the Company (the
"Leased Real Property of the Company"). The Company has delivered to Purchasers'
legal counsel correct and complete copies of the leases and subleases listed on
Schedule 4.18(b) (collectively, the "Company Leases"). With respect to the
Leased Real Property and each of the Leases, except as set forth on Schedule
4.18(b):
(i) such Company Lease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) the Company is not aware that any party to such
Company Lease is in breach or default, and the Company is not aware that any
event has occurred which, with notice or lapse of time, would constitute such a
breach or default or permit termination, modification, or acceleration of such
Company Lease;
(iii) the Company is not aware that any party to such
Company Lease has repudiated any provision thereof;
(iv) there are no disputes, oral agreements, or
forbearance programs in effect as to such Company Lease;
(v) in the case of each Company Lease which is a
sublease, the representations and warranties set forth in clauses 4.18(b) (i)
through (v) are true and correct with respect to the underlying lease;
(vi) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust, or encumbered any interest in the
leasehold or subleasehold created pursuant to such Company Lease;
(vii) none of the Company Leases has been modified in
any respect, except to the extent that such modifications are in writing and
have been delivered or made available to Purchasers;
(viii) to the Knowledge of the Company, all
buildings, improvements and other structures located upon the Leased Real
Property of the Company have received all approvals or Governmental Entities,
including licenses and permits, required in connection with the operation of the
Business thereon and have been operated and maintained in accordance with all
applicable Legal Requirements and the terms and conditions of the Company
Leases; and
(ix) to the Knowledge of the Company, all buildings,
structures and other improvements located upon the Leased Real Property of the
Company, including all components thereof, are in good operating condition
subject to the provision of usual and customary maintenance in the ordinary
course of business with respect to buildings, structures and improvements of
like age and construction and all water, gas, electrical, steam, compressed air,
telecommunication, sanitary and storm sewage and other utility lines and systems
serving the Leased Real Property of the Company are sufficient to enable the
continued operation of the Leased Real Property of the Company in the manner
currently being used in connection with the operation of the Business of the
Company.
4.19 Compliance with Laws. All references to the Company in this
Section 4.19 refer to both the Company and to each Subsidiary of the Company.
(a) Generally. The Company has not violated any Legal
Requirement, and the Company have not received notice alleging any such
violation.
(b) Required Permits. The Company has complied with (and is in
compliance with) all permits, licenses and other authorizations required for the
occupation of the Company's facilities and the operation of the Business of the
Company. The items described on the attached Schedule 4.19(b) constitute all of
the permits, filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity which are required for the consummation of the Merger, or any other
transaction contemplated by the Transaction Documents or the conduct of the
Business (as it is presently conducted by the Company) thereafter.
(c) Environmental and Safety Matters. Without limiting the
generality of Sections 4.19(a) and (b):
(i) The Company has complied, and is in compliance
with, all Environmental and Safety Requirements.
(ii) Without limiting the generality of the
foregoing, the Company has obtained and complied with, and is in compliance
with, all permits, licenses and other authorizations that may be required
pursuant to Environmental and Safety Requirements for the occupation of its
facilities and the operation of the Business. A list of all such permits,
licenses and other authorizations is set forth on the attached Schedule 4.19(b).
(iii) The Company has not received any written or
oral notice, report or other information regarding any liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise) or investigatory,
remedial or corrective obligations, relating to it or its facilities and arising
under Environmental and Safety Requirements.
(iv) None of the following exists at any property or
facility owned, operated or occupied by the Company:
(1) underground storage tanks or surface
impoundments
(2) asbestos-containing material in any form
or condition; or
(3) materials or equipment containing
polychlorinated biphenyls.
(v) The Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or Released any
substance, including any Hazardous Substance, or owned or operated any facility
or property, so as to give rise to liabilities of the Company for response
costs, natural resource damages or attorneys' fees pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or similar state or local Environmental and Safety Requirements.
(vi) Neither this Agreement nor the consummation of
the Merger will result in any obligations for site investigation or cleanup, or
notification to or consent of any Government Entity or third parties, pursuant
to any so-called "transaction-triggered" or "responsible property transfer"
Environmental and Safety Requirements.
(vii) The Company has not, either expressly or by
operation of law, assumed or undertaken any liability, including any obligation
for corrective or remedial action, of any other Person relating to any
Environmental and Safety Requirements.
(viii) No Environmental Lien has attached to any
property now or previously owned, leased or operated by the Company.
(ix) Without limiting the foregoing, no facts, events
or conditions relating to the Leased Real Property, or other past or present
facilities, properties or operations of the Company will prevent, hinder or
limit continued compliance with Environmental and Safety Requirements, give rise
to any investigatory, remedial or corrective obligations pursuant to
Environmental and Safety Requirements, or give rise to any other liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to
Environmental and Safety Requirements, including any relating to onsite or
offsite Releases or threatened Releases of Hazardous Substances, personal
injury, property damage or natural resource damage.
4.20 Product Warranty. Except as set forth on the attached Schedule
4.20, all products manufactured, serviced, distributed, sold or delivered by the
Company or by any Subsidiary of the Company have been manufactured, serviced,
distributed, sold and/or delivered in conformity with all applicable contractual
commitments and all express and implied warranties. No liability of the Company
or any Subsidiary of the Company exists for replacement or other damages in
connection with any such product.
4.21 Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company, or on behalf of any Subsidiary of the
Company, except as set forth on Schedule 4.21.
4.22 Bank Accounts. Schedule 4.22 identifies the names and locations of
all banks, depositories and other financial institutions in which the Company,
or any Subsidiary of the Company or any other Person on behalf of the Company,
has an account or safe deposit box and the names of all persons authorized to
draw on such accounts or to have access to such safe deposit boxes.
4.23 Disclosure. Neither this Article IV nor any schedule, attachment,
written statement, certificate or similar item supplied to Purchasers by or on
behalf of the Company with respect to the transactions contemplated by the
Transaction Documents contains any untrue statement of a material fact or omits
a material fact necessary to make each statement contained herein or therein not
misleading. There is no fact which the Company have not disclosed to Purchasers
in writing and of which the Company or any officer, director or executive
employee of the Company are aware (other than matters of a general economic
nature) and which has had or could reasonably be expected to have a material
adverse effect upon the Assets of the Company, the Company Shares or the
financial condition, operating results, assets, customer or supplier relations,
employee relations or business prospects of the Business of the Company.
ARTICLE V
COVENANTS
5.1 Proxy Statement/Prospectus; Registration Statement.
(a) Proxy Statement/Prospectus. TechSys and the Company shall
cooperate in preparing a proxy statement (the "TechSys Proxy Statement") which
shall be utilized to solicit proxies in connection with the meeting at which the
stockholders of TechSys will vote on the Merger (the "TechSys Meeting") and a
proxy statement/prospectus (the "Proxy Statement/Prospectus") which shall be
utilized to solicit proxies in connection with the meeting at which the
Company's stockholders will vote upon the Merger (the "Company Meeting"). The
Proxy Statement/Prospectus shall also constitute a prospectus for the offer,
sale and registration of the TechSys Shares under the Securities Act. Promptly
after TechSys and the Company confirm that the Proxy Statement/Prospectus is
satisfactory for filing in preliminary form, such Proxy Statement/Prospectus
shall be filed with the SEC. Each party will promptly advise the other party in
writing if at any time prior to the Company Meeting and the TechSys Meeting it
obtains Knowledge of any facts that might make it necessary or appropriate to
amend or supplement the Proxy Statement/Prospectus or the TechSys Proxy
Statement in order to make the statements contained or incorporated by reference
therein not misleading or to comply with applicable law.
(b) Registration Statement. TechSys shall prepare and file
with the SEC a registration statement on Form S-4 (or other appropriate Form)
including such Proxy Statement/Prospectus (the "Registration Statement") to
register the Merger Consideration under the Securities Act as soon as is
reasonably practicable following receipt of final comments from the Staff of the
SEC on the Proxy Statement/Propectus (or advice that such Staff shall not review
such filing), and shall use all reasonable efforts to have the Registration
Statement declared effective by the SEC as promptly as practicable and to
maintain the effectiveness of such Registration Statement. TechSys will afford
the Company and its counsel a reasonable opportunity to comment on (i) the
Registration Statement in preliminary form prior to its being filed with the
SEC, (ii) any response to any comments from the Staff of the SEC with respect to
such Registration Statement in preliminary form, and (iii) any proposed
amendments to the Registration Statement. Each party will promptly advise the
other in writing if at any time prior to the TechSys Meeting and the Company
Meeting it shall obtain Knowledge of any facts that might make it necessary or
appropriate to amend or supplement the Registration Statement in order to make
the statements contained or incorporated by reference therein not misleading or
to comply with applicable law. TechSys shall also take any action required to be
taken under state blue sky or securities laws in connection with the issuance of
the TechSys Shares pursuant to the Merger, and the Company shall furnish TechSys
all information concerning the Company and the holders of its Capital Stock and
shall take any action as TechSys may reasonably request in connection with any
such action.
5.2. Access to Properties and Records; Confidentiality.
(a) TechSys shall permit the Company and its agents and
representatives, including, without limitation, officers, directors, employees,
attorneys, accountants and financial advisors (collectively, "Representatives"),
and the Company shall permit TechSys and its Representatives, reasonable access
to their respective properties, and shall disclose and make available to the
Company and its Representatives or TechSys and its Representatives, as the case
may be, all Books and Records thereof, including all books, papers and records,
electronic or otherwise, relating to their respective assets, stock ownership,
properties, operations, obligations and liabilities, including, but not limited
to, all books of account (including the general ledger and books of original
entry), tax records, minute books of directors' and stockholders' meetings,
organizational documents, bylaws, material contracts and agreements, filings
with any regulatory authority, independent auditors' work papers (subject to the
receipt by such auditors of a standard access representation letter), litigation
files, plans affecting employees, and any other business activities or prospects
in which the Company and its representatives or TechSys and its representatives
may have a reasonable interest. Neither party shall be required to provide
access to or to disclose information where such access or disclosure would
violate or prejudice the rights of any customer or would contravene any law,
rule, regulation, order or judgment or, in the case of a document which is
subject to an attorney-client privilege, would compromise the right of the
disclosing party to claim that privilege. The parties will use all reasonable
efforts to obtain waivers of any such restriction (other than the attorney
client privilege) and in any event make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
(b) All information furnished by the parties hereto previously
in connection with transactions contemplated by this Agreement or pursuant
hereto shall be used solely for the purpose of evaluating the Merger
contemplated hereby, shall be kept confidential and shall be treated as the sole
property of the party delivering the information until consummation of the
Merger contemplated hereby and, if such Merger shall not occur, each party and
each party's Representatives shall return to the other party all documents or
other materials containing, reflecting or referring to such information, will
not retain any copies of such information, shall keep confidential all such
information, and shall not directly or indirectly use such information for any
competitive or commercial purposes or any other purpose not expressing permitted
hereby.
(i) Each party hereto shall inform its
Representatives of the terms of this Section 5.2.
(ii) Any breach of this Section 5.2 by a
Representative of a party hereto shall conclusively be deemed to be a breach
thereof by such party.
(iii) In the event that the Merger contemplated
hereby does not occur or this Agreement is terminated, all documents, notes and
other writings prepared by a party hereto or its Representatives based on
information furnished by the other party, and all other documents and records
obtained from another party hereto in connection herewith, shall be promptly
destroyed. The obligation to keep such information confidential shall continue
for 30 months from the date the proposed Merger is abandoned but shall not apply
to
(1) any information which:
(A) the party receiving the
information can establish by convincing evidence was already in its possession
prior to the disclosure thereof to it by the other party;
(B) was then generally known to the
public other than as a result of a disclosure by any party hereto or its
Representative;
(C) became known to the public
through no fault of the party receiving such information; or
(D) was disclosed to the party
receiving such information by a third party not bound by an obligation of
confidentiality; or
(2) disclosures pursuant to a legal,
regulatory or examination requirement or in accordance with an order of a court
of competent jurisdiction, provided that in the event of any disclosure required
by this clause (2), the disclosing party will give reasonable prior written
notice of such disclosure to the other parties and shall not disclose any such
information without an opinion of counsel supporting its position that such
information must be disclosed.
(c) In addition to all other remedies that may be available to
any party hereto in connection with a breach by any other party hereto of its or
its Representative's obligations under this Section 5.2, each party hereto shall
be entitled to specific performance and injunctive and other equitable relief
with respect to this Section 5.2. Each party hereto waives, and agrees to use
all reasonable efforts to cause its Representatives to waive, any requirement to
secure or post a bond in connection with any such relief.
5.3 Board Representation. Following the consummation of the Merger, the
respective boards of directors of TechSys and the Surviving Company will consist
of seven directors, of which four will be nominated by the board of directors of
the Company prior to the Effective Time (of which no less than one director will
be independent, as defined in NASD Rule 4200) and three will be nominated by the
board of directors of TechSys prior to the Effective Time (of which no less than
one will be independent, as defined in NASD Rule 4200), until such time as
TechSys is no longer qualified as a "Small Business Issuer," as such term is
defined by Rule 405 of the Securities Act, at which time the board of directors
of TechSys shall select an additional independent director, as defined in NASD
Rule 4200, to serve on such board.
5.4 Post-Merger Officers of TechSys. At the first meeting of the board
of directors of TechSys that occurs after the Effective Time:
(a) The following persons shall be elected to the following
offices:
(i) Xxxxxxx Xxxxxxxx and Xxxxx X. Xxxxx shall be
elected to serve as Co-Chairmen of the board of directors of TechSys and
Co-Chief Executive Officers of TechSys;
(ii) Xxxxxx X. Xxxxx shall be elected to serve as
President and Chief Operating Officer of TechSys;
(iii) Xxxxxxx Xxxxxxxx, directly or by an entity
owned by Xxxxxxx Xxxxxxxx, shall be elected to serve as an officer of SOFC
Energy, Inc., which shall be an operating Subsidiary of TechSys after the
Effective Time; and
(iv) Xxxx Xxxxx, directly or by an entity owned by
Xxxx Xxxxx, shall be elected to serve as an officer of SOFC Energy, Inc., which
shall be an operating Subsidiary of TechSys after the Effective Time.
(b) The pre-Merger principals of the Company listed on
Schedule 5.4(b) shall each be named as eligible key employees under the TechSys
2000 Incentive Compensation Plan.
5.5 Modification of Certain Warrants. The warrants to purchase an
aggregate of 1,350,000 shares of TechSys held by each of Xxxxx X. Xxxxx, Xxxxxx
X. Xxxxx and Xxxxxx X. Xxxxxx, M.D., respectively, which were approved by the
stockholders of TechSys on August 16, 2001, shall be modified to be in
substantially the form of Exhibit A annexed hereto.
5.6 Grant of Certain Warrants. At the Effective Time, TechSys shall
grant to the individuals set forth on Schedule 5.6 fully vested warrants,
substantially in the form of Exhibit A annexed hereto, to purchase an aggregate
of 1,350,000 shares of TechSys Common Stock, at an exercise price of $3.00 per
share.
5.7 Exclusivity. Until September 30, 2001 (or the prior termination of
this Agreement), the Company will not and will cause its Affiliates,
representatives and agents not to (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the acquisition
of any capital stock or other voting securities, or any substantial portion of
the assets, of the Company (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by any
Person to do or seek any of the foregoing, unless such solicitation, initiation,
encouragement, participation or facilitation is effected jointly with TechSys.
The Company agrees to notify Purchasers immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the foregoing.
5.8 Representations and Warranties of Certain Stockholders of the
Company. The Company shall secure and deliver to TechSys at or prior to Closing
executed representations and warranties of the stockholders of the Company set
forth on Schedule 5.8, in substantially the form of Exhibit B attached hereto
(the "Company Stockholder Representations"), which are required for the issuance
of an Opinion of Counsel regarding the tax status of the Merger which shall be
filed with the SEC in connection with the Registration Statement.
5.9 Employment Agreements. At Closing, (i) Xxxxxxx Xxxxxxxx and TechSys
shall enter into an employment agreement substantially in the form of Exhibit C
annexed hereto, and (ii) each of Xxxxxxx Xxxxxxxx and Xxxx Xxxxx, respectively,
shall enter into separate employment agreements with TechSys substantially in
the form of Exhibit D annexed hereto. The existing employment agreements by and
between TechSys and Xxxxx X. Xxxxx and TechSys and Xxxxxx X. Xxxxx,
respectively, shall remain in full force and effect and shall be unaffected by
the consummation of the Merger and all other transactions contemplated by this
Agreement.
5.10 Business Office. The post-Merger business office of TechSys shall
be located at 000 Xxxxxxxx Xxxxxxxx, Xxxxxxx Xxxx, Xxx Xxxxxx.
5.11 TechSys Options. At the Effective Time, the key employees of
TechSys set forth on Schedule 5.11 shall be granted options to purchase an
aggregate of 2,550,304 shares of TechSys Common Stock (the "TechSys Options"),
to be allocated to such key employees as set forth on Schedule 5.11, to be
granted as set forth on Schedule 5.11.
5.12 Company Stockholder Representation Letter. On or prior to Closing,
the Company shall deliver to TechSys a representation letter, substantially in
the form of Exhibit E annexed hereto, executed by each of the stockholders of
the Company set forth on Schedule 5.12, which acknowledges each such
stockholder's understanding of such stockholder's responsibilities under, and
restrictions on transfer of shares imposed by, Rule 144 of the Securities Act
and Section 16 of the Exchange Act with respect to the shares of TechSys Common
Stock acquired by such stockholder pursuant to this Agreement (the "Company
Stockholder Representation Letter").
5.13 Division or Combination of TechSys Common Stock. TechSys shall not
divide or combine the TechSys Common Stock prior to the Effective Time, except
as set forth in, and in accordance with, Section 1.4(c)(i).
5.14 Cancellation of Company Derivative Securities. The Company shall
take such action as is necessary to terminate all Company Derivative Securities
(as defined in Section 1.4(c)(iv)), other than such warrants set forth on
Schedule 1.4(c)(iv), at the Effective Time.
5.15 Offer by the Company.
(a) Prior to the submission of the Proxy Statement/Prospectus
to the stockholders of the Company, the Company and TechSys shall determine
whether any offer (an "Offer") to stockholders of the Company is necessary with
respect to any stock redemptions and, if such redemptions shall be made, the
Company shall have completed all payments, if any, due to such stockholders of
the Company pursuant to such Offer. Any Offer shall be made in accordance with
Schedule 5.15.
(b) In connection with any transfer or proposed transfer of
securities of the Company (other than as provided in this Agreement), the
Company shall disclose to any proposed transferee that the Company is
considering making an Offer.
5.16 Increase in Authorized Shares of TechSys. TechSys shall submit to
its stockholders at the next meeting of the stockholders of TechSys a proposal
to amend the Certificate of Incorporation of TechSys to increase the number of
shares of TechSys Common Stock that TechSys is authorized to issue to
100,000,000 shares and to increase the number of shares of TechSys Preferred
Stock that TechSys is authorized to issue to 10,000,000 shares.
5.17 Conduct of the Business of the Company. During the period from the
date of this Agreement to the Effective Time, the Company shall, and shall cause
each Subsidiary of the Company to, conduct their respective businesses only in
the ordinary course and consistent with prudent business practice, except for
transactions permitted hereunder or with the prior written consent of TechSys,
which consent will not be unreasonably withheld. The Company and each of its
Subsidiaries shall use its reasonable best efforts to:
(a) preserve its business organization and that of each
Subsidiary intact;
(b) keep available to itself and each Subsidiary of the
Company the present services of their respective employees; and
(c) preserve for itself and TechSys the goodwill of its
customers and those of the Subsidiaries of the Company and others with whom
business relationships exist.
5.18 Negative Covenants.
(a) Company Negative Covenants. From the date hereof to the
Effective Time, except as otherwise approved by TechSys in writing, or as
permitted or required by this Agreement, neither the Company nor any Subsidiary
of the Company will:
(i) change any provision of its Certificate of
Incorporation or any similar governing documents;
(ii) change any provision of its By-Laws without the
consent of TechSys which consent shall not be unreasonably withheld;
(iii) change the number of shares of its authorized
or issued capital stock (except to increase its issued and outstanding shares of
common stock of the Company to 96,556,750 shares) or issue or grant any option,
warrant, call, commitment, subscription, right to purchase or agreement of any
character relating to its authorized or issued capital stock, or any securities
convertible into shares of such stock, or split, combine or reclassify any
shares of its capital stock, or declare, set aside or pay any dividend, or other
distribution (whether in cash, stock or property or any combination thereof) in
respect of its capital stock;
(iv) grant any severance or termination pay to, or
enter into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan or
arrangement of any type; or award any increase in compensation or benefits to
its directors, officers or employees;
(v) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies or in
response to substantial financial demands upon the business of the Company or
any Subsidiary of the Company;
(vi) make any capital expenditures other than
pursuant to binding commitments existing on the date hereof, expenditures
necessary to maintain existing assets in good repair and expenditures described
in business plans or budgets previously furnished to TechSys.
(vii) file any applications or make any contract with
respect to branching or site location or relocation;
(viii) agree to acquire in any manner whatsoever
(other than to realize upon collateral for a defaulted loan) any business or
entity or make any new investments in securities without the prior written
consent of TechSys;
(ix) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities;
(x) take any action that would result in any of its
representations and warranties contained in Article IV of this Agreement not
being true and correct in any material respect at the Effective Time or that
would cause any of its conditions to Closing not to be satisfied;
(xi) purchase any shares of TechSys Common Stock; or
(xii) agree to do any of the foregoing.
(b) TechSys Negative Covenants. From the date hereof to the
Effective Time, except as otherwise approved by the Company in writing, or as
permitted or required by this Agreement, neither TechSys nor any Subsidiary of
TechSys will:
(i) change any provision of its Certificate of
Incorporation or any similar governing documents;
(ii) change any provision of its By-Laws without the
consent of the Company, which consent shall not be unreasonably withheld;
(iii) change the number of shares of its authorized
or issued capital stock or issue or grant any option, warrant, call, commitment,
subscription, right to purchase or agreement of any character relating to its
authorized or issued capital stock, or any securities convertible into shares of
such stock, or split, combine or reclassify any shares of its capital stock, or
declare, set aside or pay any dividend, or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock;
(iv) grant any severance or termination pay to, or
enter into or amend any employment or severance agreement with, any of its
directors, officers or employees; adopt any new employee benefit plan or
arrangement of any type, or award any increase in compensation or benefits to
its directors, officers or employees;
(v) sell or dispose of any substantial amount of
assets or voluntarily incur any significant liabilities other than in the
ordinary course of business consistent with past practices and policies or in
response to substantial financial demands upon the business of TechSys or any
Subsidiary of TechSys;
(vi) make any capital expenditures other than
pursuant to binding commitments existing on the date hereof, expenditures
necessary to maintain existing assets in good repair and expenditures described
in business plans or budgets previously furnished to the Company.
(vii) file any applications or make any contract with
respect to branching or site location or relocation;
(viii) agree to acquire in any manner whatsoever
(other than to realize upon collateral for a defaulted loan) any business or
entity or make any new investments in securities without the prior written
consent of the Company;
(ix) make any material change in its accounting
methods or practices, other than changes required in accordance with generally
accepted accounting principles or regulatory authorities;
(x) take any action that would result in any of its
representations and warranties contained in Article III of this Agreement not
being true and correct in any material respect at the Effective Time or that
would cause any of its conditions to Closing not to be satisfied;
(xi) purchase any shares of the Company Common Stock;
or
(xii) agree to do any of the foregoing.
5.19 No Solicitation.
(a) So long as this Agreement remains in effect, neither the
Company nor any Subsidiary of the Company shall, unless effected jointly with
TechSys, directly or indirectly, encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person, entity or group
(other than TechSys) concerning any merger or sale of shares of capital stock or
sale of substantial assets or liabilities not in the ordinary course of
business, or similar transactions involving the Company or any Subsidiary of the
Company.
(b) So long as this Agreement remains in effect, neither
TechSys nor any Subsidiary of TechSys shall, unless effected jointly with the
Company, directly or indirectly, encourage or solicit or hold discussions or
negotiations with, or provide any information to, any person, entity or group
(other than the Company) concerning any merger or sale of shares of capital
stock or sale of substantial assets or liabilities not in the ordinary course of
business, or similar transactions involving TechSys or any Subsidiary of
TechSys.
5.20 Further Assurances.
(a) Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use its reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to satisfy
the conditions to Closing and to consummate and make effective the transactions
contemplated by this Agreement, including, without limitation, using reasonable
efforts to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated by this Agreement and using its reasonable best efforts to prevent
the breach of any representation, warranty, covenant or agreement of such party
contained or referred to in this Agreement and to promptly remedy the same. In
case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
Nothing in this section shall be construed to require any party to participate
in any threatened or actual legal, administrative or other proceedings (other
than proceedings, actions or investigations to which it is a party or subject or
threatened to be made a party or subject) in connection with consummation of the
transactions contemplated by this Agreement unless such party shall consent in
advance and in writing to such participation and the other party agrees to
reimburse and indemnify such party for and against any and all costs and damages
related thereto if the Merger is not consummated.
(b) TechSys agrees that from the date hereof to the Effective
Time, except as otherwise approved by the Company in writing or as permitted or
required by this Agreement, TechSys will use reasonable business efforts to
maintain and preserve intact its business organization, properties, leases,
employees and advantageous business relationships, and TechSys will not, nor
will it permit any Subsidiary of TechSys to, take any action: (i) that would
result in any of its representations and warranties contained in Article III of
this Agreement not being true and correct in any material respect at, or prior
to, the Effective Time, or (ii) that would cause any of its conditions to
Closing not to be satisfied, or (iii) that would constitute a breach or default
of its obligations under this Agreement.
5.21 Disbursements by TechSys. TechSys shall not make any disbursements
out of the TechSys Cash other than in the ordinary course of the business of
TechSys without obtaining the prior written consent of the Company prior to
making such disbursement.
5.22 Disbursements by the Company. After the date hereof and no later
than one day prior to the Closing Date, the Company shall increase the Company's
cash by raising no less than $3,000,000 (the "Additional Company Cash"). From
the date hereof until the Effective Time, the Company shall not disburse more
than (a) such amounts as are necessary to repay the Company's outstanding
obligation to Holding Capital Management, L.L.C. ("HCM") in the principal amount
of $500,000, and interest thereon, (b) such amounts expended by the Company in
connection with the Offer, and (c) any additional amounts other than in the
ordinary course of the operation of the Company's business, and no more than
$5,000 on any one item without obtaining the prior written consent of TechSys;
provided, that, no disbursements shall be made under the Company's agreement
with Wise Xxxxxxx.xxx, which shall be terminated on or before one day prior to
Closing.
5.23 Termination of Certain Relationships by the Company Prior to
Closing.
(a) The Company shall terminate all agreements and all other
arrangements, written or otherwise, with Wise Xxxxxxx.xxx on or before one day
prior to Closing;
(b) The Company shall terminate all agreements and all other
arrangements, written or otherwise, with HCM, other than the warrants set forth
on Schedule 4.7 (the "HCM Warrants"), on or before one day prior to Closing;
provided, that, the Company shall, no later than one day prior to Closing,
obtain the written consent of HCM to exchange the HCM Warrants for warrants
convertible into TechSys Common Stock, which shall be issued by TechSys after
Closing and shall be exercisable at such a price and for such number of shares
as adjusted in accordance with the Exchange Ratio and the share division or
stock dividend referred to in Section 1.4(c)(i).
5.24 Feldhammer Capital Warrants. The Company shall, no later than one
day prior to Closing, obtain the written consent of Feldhammer Capital to
exchange all warrants convertible into Capital Stock of the Company held by
Feldhammer Capital for warrants convertible into TechSys Common Stock, as
adjusted in accordance with the Exchange Ratio, equal in value to no less than
7% of the TechSys Cash at the Effective Time.
5.25 Limitation on Outstanding Shares of Capital Stock of the Company.
At the Effective Time, no more than an aggregate of 99,900,000 shares of the
Capital Stock of the Company shall be outstanding (or issuable upon the exercise
of options or warrants convertible into shares of Capital Stock of the Company).
5.26 Ownership of Subsidiaries of the Company. From the date of this
Agreement until the Effective Time, the Company shall at all times own no less
than 60% of the equity and voting power of each Subsidiary of the Company.
5.27 Grant of Additional TechSys Options. At or before the Effective
Time, TechSys shall grant options to purchase no more than an aggregate of
150,000 shares of TechSys Common Stock to the individuals set forth on Schedule
5.27.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligations to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment, at or prior to the Effective Time, of the following conditions:
(a) The Merger shall have been approved and adopted by the
requisite vote of the holders of the TechSys Common Stock, the holders of the
Newco Common Stock and by the requisite vote of the holders of the Company's
Capital Stock.
(b) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act. No stop order suspending
the effectiveness of the Registration Statement shall have been issued by the
SEC and remain in effect.
(c) Xxxxx'x agreements to consent to the transactions
contemplated by this Agreement, to terminate options to purchase shares of
TechSys Common Stock held by Xxxxx, and to consent to the termination of the
respective agreements between Xxxxx and TechSys relating to shares of TechSys
Common Stock and options to purchase shares of TechSys Common Stock and between
Xxxxx and the Company relating to finders fees and stockholder relations shall
be delivered immediately prior to, or at, the Effective Time, or, if not so
delivered, the Company and TechSys shall have determined that the options to
purchase shares of TechSys Common Stock held by Xxxxx and the respective
agreements between Xxxxx and TechSys relating to shares of TechSys Common Stock
and options to purchase shares of TechSys Common Stock and between Xxxxx and the
Company relating to finders fees and stockholder relations are void, and that
the Company and TechSys have agreed to assert defenses to the enforcement
thereof.
(d) Notwithstanding the definition of "change of control" set
forth in Section 1.5 of the First Amended and Restated Employment Agreement,
dated as of December 31, 1997, by and between Continental Choice Care, Inc. and
Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxx shall have agreed to waive his rights upon a
"change of control" under such Employment Agreement with respect to this
transaction (but not with respect to any future transaction).
(e) Each of TechTron, the shareholders of TechTron, Xxxxxxx
Xxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxx Xxxxx shall have entered into a Stockholders
Agreement, substantially in the form of Exhibit F annexed hereto (the
"Stockholders Agreement").
(f) In the event that the Parties are required to file
Pre-Merger Notification with the FTC, the Parties shall have received written
approval of the Merger from the FTC.
6.2 Conditions to Obligations of the Company to Effect the Merger. The
obligations of the Company to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Effective Time of the additional
following conditions:
(a) Each representation and warranty set forth in Article III
shall be true and correct in all material respects as of the Closing.
(b) Purchasers shall have performed in all material respects
each covenant or other obligation required to be performed by them pursuant to
the Transaction Documents prior to the Closing.
(c) The consummation of the transactions contemplated by the
Transaction Documents shall not be prohibited by any Legal Requirement or
subject the Company to any penalty or liability arising under any Legal
Requirement or imposed by any Government Entity.
(d) No action, suit or proceeding shall be pending or
threatened before any Government Entity the result of which could prevent or
prohibit the consummation of any transaction pursuant to the Transaction
Documents, cause any such transaction to be rescinded following such
consummation or adversely affect Purchasers performance of their obligations
pursuant to the Transaction Documents, and no judgment, order, decree,
stipulation, injunction or charge having any such effect shall exists.
(e) All filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity or any other Person that are required for the Purchasers to consummate
the Merger or any other transaction contemplated by the Transaction Documents or
to own the Company Shares or to conduct the Business thereafter (the
"Purchasers' Consents") shall have been duly made or obtained.
(f) TechSys shall have delivered to the Company a Certificate
dated the Closing Date, signed by the President of TechSys stating that the
conditions set forth in Section 6.2 (a) through (e) have been satisfied.
(g) TechSys shall have delivered to the Company a copy of the
resolutions duly adopted by TechSys' board of directors authorizing TechSys'
execution, delivery and performance of the Transaction Documents to which
TechSys is a party and the consummation of the Merger and all other transactions
contemplated by the Transaction Documents, as in effect as of the Closing,
certified by an officer of TechSys.
(h) TechSys shall have delivered to the Company a copy of the
resolutions duly adopted by Newco's board of directors authorizing Newco's
execution, delivery and performance of the Transaction Documents to which Newco
is a party and the consummation of the Merger and all other transactions
contemplated by the Transaction Documents, as in effect as of the Closing,
certified by an officer of Newco.
(i) TechSys shall have delivered to the Company a copy of the
resolutions duly adopted by TechSys as the stockholder of Newco approving the
Merger and this Agreement, certified by an officer of Newco.
(j) TechSys shall have delivered to the Company a certificate
(dated not less than five business days prior to the Closing) of the Treasurer
of the State of New Jersey as to the good standing of TechSys and Newco in New
Jersey.
(k) TechSys shall have delivered to the Company copies of the
Purchasers' Consents.
(l) TechSys shall have delivered to the Company such other
documents relating to the transactions contemplated by the Transaction Documents
to be consummated at the Closing as the Company may reasonably request.
(m) TechSys shall have delivered to the Company written
resignations from each director and officer of TechSys set forth on Schedule
6.2(m) from such directorships and offices, to take effect as of the Closing.
(n) The TechSys Shares, prior to their issuance pursuant to
this Agreement, will be listed on The Nasdaq SmallCap Market.
(o) The TechSys Cash shall not have been reduced by
disbursements made out of the ordinary course of the business of TechSys, unless
such disbursements were made after receipt by TechSys of the consent of the
Company to make such disbursement.
(p) The Company shall have received an Opinion of Counsel as
to the tax free status of the Merger.
6.3 Conditions to Obligations of TechSys to Effect the Merger. The
obligations of TechSys to effect the Merger shall be subject to the fulfillment
or waiver at or prior to the Effective Time of the additional following
conditions.
(a) Each of Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxx Xxxxx
shall have executed employment agreements with TechSys, as provided in Section
5.9.
(b) The Company shall have terminated the Company's agreement
with Wise Xxxxxxx.xxx and shall have made no payments thereunder after the date
hereof.
(c) The Company shall have raised the Additional Company Cash
during the period commencing on the date hereof and ending no later than one day
prior to the Closing Date, and, from the date upon which the Company raised such
Additional Company Cash until the Effective Time, the Company shall not have
disbursed more than (i) such amounts as were necessary to repay the Company's
obligation to HCM in the principal amount of $500,000, and interest thereon,
(ii) such amounts expended by the Company in connection with the Offer, and
(iii) any additional amounts other than in the ordinary course of the operation
of the Company's business, and shall not have disbursed more than $5,000 on any
one item without obtaining the prior written consent of TechSys. The Company
shall not have made any disbursements under the Company's agreement with Wise
Xxxxxxx.xxx, which shall be have been terminated on or before one day prior to
Closing.
(d) The Company shall have delivered the Company Stockholder
Representations (as defined in Section 5.8 hereof), duly executed by each of the
stockholders of the Company set forth on Schedule 5.8.
(e) The Company shall have delivered the Company Stockholder
Representation Letter (as defined in Section 5.12 hereof), duly executed by all
of the stockholders of the Company set forth on Schedule 5.12.
(f) Each representation and warranty set forth in Article IV
shall be true and correct in all material respects as of the Closing, and the
Audited Financial Statements shall present fairly in all material respects the
consolidated financial condition of the Company as of the dates of such
statements and the results of operation for such periods, shall be accurate and
complete, shall be consistent with the books and records of the Company (which,
in turn, are, and shall be, accurate and complete) and shall be prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby except as noted therein.
(g) The Company and each Subsidiary of the Company shall have
performed in all material respects each covenant or other obligation required to
be performed by them pursuant to the Transaction Documents prior to the Closing.
(h) The consummation of the transactions contemplated by the
Transaction Documents shall not be prohibited by any Legal Requirement or
subject Purchasers, any of the Company Shares or any of the Assets of the
Company to any penalty or liability arising under any Legal Requirement or
imposed by any Government Entity.
(i) No action, suit or proceeding shall pending or threatened
before any Government Entity the result of which could prevent or prohibit the
consummation of any transaction pursuant to the Transaction Documents, cause any
such transaction to be rescinded following such consummation or adversely affect
Purchasers' right to conduct the Business or the Company's performance of its
obligations pursuant to the Transaction Documents, and no judgment, order,
decree, stipulation, injunction or charge having any such effect shall exist.
(j) All filings, notices, licenses, consents, authorizations,
accreditation, waivers, approvals and the like of, to or with any Government
Entity or any other Person that are required for the Company to consummate the
Merger or any other transaction contemplated by the Transaction Documents or to
own and transfer the Company Shares or permit the conduct of the Business by
Purchasers thereafter (the "Company's Consents") shall have been duly made or
obtained.
(k) The Company shall have delivered to Purchasers a
Certificate, dated the Closing Date, signed by the President of the Company
stating that the conditions set forth in Sections 6.3(e) through (j) have been
satisfied.
(l) The Company shall have delivered to Purchasers a copy of
the resolutions duly adopted by the Company's board of directors authorizing the
Company's execution, delivery and performance of the Transaction Documents to
which the Company is a party and the consummation of the Merger and all other
transactions contemplated by the Transaction Documents, as in effect as of the
Closing, certified by an officer of the Company;
(m) The Company shall have delivered to Purchasers a
certificate (dated not less than five business days prior to the Closing) of the
Secretary of State of the State of Nevada as to the good standing of the Company
in Nevada.
(n) The Company shall have delivered to Purchasers the Books
and Records;
(o) The Company shall have delivered to Purchasers copies of
the Company Consents.
(p) The Company shall have delivered to Purchasers such other
documents relating to the transactions contemplated by the Transaction Documents
as Purchasers reasonably request.
(q) The Company shall have delivered to Purchasers written
resignations from each director and officer of the Company set forth on Schedule
6.3(q) from such directorships and offices, to take effect as of the Closing.
(r) In the event that the board of directors of TechSys
determines, in its sole discretion, to pursue an opinion of an investment banker
or financial advisor that the Merger is fair to the stockholders of TechSys from
a financial point of view, the board of directors of TechSys shall have received
such opinion from the investment banker or financial advisor prior to Closing.
(s) The Company shall have terminated all agreements and all
other arrangements, written or otherwise, with HCM, other than the HCM Warrants,
and shall have obtained and delivered to TechSys the written consent of HCM to
exchange the HCM Warrants for warrants convertible into TechSys Common Stock.
(t) The Company shall have obtained and delivered to TechSys
the written consent of Feldhammer Capital to exchange all warrants convertible
into Capital Stock of the Company held by Feldhammer Capital for warrants
convertible into TechSys Common Stock.
(u) No more than an aggregate of 99,900,000 shares of the
Capital Stock of the Company shall be outstanding (or issuable upon the exercise
of options or warrants convertible into shares of Capital Stock of the Company).
(v) The Company shall own no less than 52% of the equity and
voting power of each Subsidiary of the Company.
(w) The Company shall have taken all action necessary so that
all Company Derivative Securities, other than such warrants set forth on
Schedule 1.4(c)(iv), will be canceled at the Effective Time.
(x) TechSys shall have received an Opinion of Counsel as to
the tax free status of the Merger.
ARTICLE VII
[THIS ARTICLE HAD BEEN INTENTIONALLY LEFT BLANK]
ARTICLE VIII
TERMINATION
8.1 Events of Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval by the
stockholders of TechSys and the Company,
(a) by mutual consent of the Boards of Directors of TechSys
and the Company;
(b) by either TechSys or the Company if the Merger shall not
have been consummated on or before October 31, 2001, provided the terminating
party is not otherwise in material breach of its obligations under this
Agreement;
(c) by either TechSys or the Company for any reason prior to
the expiration of the Due Diligence Review Period.
(d) by either TechSys or the Company if this Agreement is not
approved at the 2001 annual meeting of the stockholders of TechSys or at such
other meeting of the stockholders of TechSys held prior to September 15, 2001;
(e) by either TechSys or the Company in the event of (i) a
breach by the other party of any representation or warranty contained herein,
which breach has not been cured within 10 days after the giving of written
notice to the breaching party of such breach and which breach, individually or
in the aggregate when combined with other such breaches, would cause the
conditions set forth in Section 6.2 or 6.3, as the case may be, not to be met if
the date of the action described above were the date of the Closing or (ii) a
material breach by the other party of any of the covenants or agreements
contained herein, which breach has not been cured within 30 days after the
giving of written notice to the breaching party of such breach;
(f) by TechSys if any of the conditions specified in Sections
6.1 and 6.2 have not been met or waived by TechSys at such time as such
conditions can no longer be satisfied; and
(g) by the Company if any of the conditions specified in
Sections 6.1 and 6.3 have not been met or waived by the Company at such time as
such conditions can no longer be satisfied.
8.2 Effect of Termination.
In the event of the termination of this Agreement pursuant to Section
8.1, this Agreement, except for the provisions of Article VII and Article VIII,
shall become void and have no effect, without any liability on the part of any
party or its directors, officers or stockholders. Notwithstanding the foregoing,
nothing in this Section 8.2 shall relieve any Party of liability for a material
breach of any provision of this Agreement and provided, further, however, that
if it shall be judicially determined that termination of this Agreement was
caused by an intentional breach of this Agreement, then, in addition to other
remedies at law or equity for breach of this Agreement, the party so found to
have intentionally breached this Agreement shall indemnify and hold harmless the
other Parties for their respective out-of-pocket costs, fees and expenses of
their counsel, accountants, financial advisors and other experts and advisors as
well as fees and expenses incident to negotiation, preparation and execution of
this Agreement and related documentation and stockholders' meetings and
consents.
8.3 Remedies on Termination After Expiration of Due Diligence Review
Period.
(a) In the event that, after the expiration of the Due
Diligence Review Period, the Company terminates this Agreement for any reason
other than as set forth in Section 8.1, the Company shall bear the legal,
accounting and investment banking/financial advisor costs and expenses
(collectively, "Professional Expenses") incurred by TechSys in connection with
the negotiation and preparation of this Agreement and the transactions
contemplated hereby, in an aggregate maximum amount not to exceed $250,000.
(b) In the event that, after the expiration of the Due
Diligence Review Period, TechSys terminates this Agreement for any reason other
than as set forth in Section 8.1, TechSys shall bear the Professional Expenses
incurred by the Company in connection with the negotiation and preparation of
this Agreement and the transactions contemplated hereby, in an aggregate maximum
amount not to exceed $150,000.
ARTICLE IX
MISCELLANEOUS
9.1 Rights and Remedies. No course of dealing between the Parties or
failure or delay in exercising any right, remedy, power or privilege (each, a
"right") pursuant to this Agreement will operate as a waiver of any rights of
any Party, nor will any single or partial exercise of any right under this
Agreement preclude any other or further exercise of such right or the exercise
of any other right. Except as expressly set forth herein, the rights provided
pursuant to this Agreement are cumulative and not exhaustive of any other rights
which may be provided by law.
9.2 Waivers, Amendments to be in Writing. No waiver, amendment,
modification or supplement of this Agreement will be binding upon a Party unless
such waiver, amendment, modification or supplement is set forth in writing and
is executed by such Party.
9.3 Successors and Assigns. Except as otherwise expressly provided in
this Agreement, all covenants and agreements set forth in this Agreement by or
on behalf of the Company and TechSys will bind and inure to the benefit of the
respective successors and assigns of the Company and TechSys, whether so
expressed or not, except that neither this Agreement nor any of the rights,
interests or obligations hereunder may be assigned by the Company without the
prior written consent of TechSys.
9.4 Governing Law. This Agreement will be governed by and construed in
accordance with the domestic laws of the State of New Jersey, without giving
effect to any choice of law or conflict rule of any jurisdiction that would
cause the laws of any other jurisdiction to be applied. In furtherance of the
foregoing, the internal law of the State of New Jersey will control the
interpretation and construction of this Agreement, even if under any choice of
law or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.
9.5 Jurisdiction. Each of the Parties hereby (i) irrevocably submits to
the jurisdiction of the state courts of, and the federal courts located in, the
State of New Jersey in any action or proceeding arising out of or relating to,
this Agreement, (ii) waives, and agrees to assert, by way of motion, as a
defense, or otherwise, in any such suit, action or proceeding, any claim that it
is not subject personally to the jurisdiction of the above-named courts, that
its property is exempt or immune from attachment or execution, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced in or by such court, and waives and agrees not
to seek any review by any court of any other jurisdiction which may be called
upon to grant an enforcement of the judgment of any such court.
9.6 Notices.
(a) All demands, notices, communications and reports
("Notices") provided for in this Agreement will be in writing and will be either
personally delivered, mailed by first class mail (postage prepaid) or sent by
reputable overnight courier service (delivery charges prepaid) to any Party at
the address specified below, or at such address, to the attention of such other
Person, and with such other copy, as the recipient party has specified by prior
written Notice to the sending Party pursuant to the provisions of this Section
9.6.
If to the Company:
000 Xxxxxxx Xxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile Number:
with a copy, which will not constitute notice to the Company or the
Surviving Company (prior to the Closing), to:
Xxxxxxxx & Xxxxxxx, P.L.C.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxxx
Facsimile Number: (000) 000-0000
If to Purchasers:
On or After April 25, 2001:
TechSys, Inc.
000 Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
Prior to April 25, 2001:
TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
with a copy, which will not constitute notice to TechSys, Newco or the
Company (following the Closing), to:
Pitney, Xxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile Number: (000) 000-0000
(b) Any such notice will be deemed to have been given when
delivered personally, on the third business day after deposit in the U.S. mail
or on the business day after deposit with a reputable overnight courier service,
as the case may be.
9.7 Severability of Provisions. If any provision of this Agreement is
held to be invalid for any reason whatsoever, then such provision will be deemed
severable from the remaining provisions of this Agreement and will in no way
affect the validity or enforceability of any other provision of this Agreement.
9.8 Schedules. The Schedules constitute a part of this Agreement and
are incorporated into this Agreement for all purposes.
9.9 Counterparts. The Parties may execute this Agreement in separate
counterparts (no one of which need contain the signatures of all Parties), each
of which will be an original and all of which together will constitute one and
the same instrument.
9.10 No Third-Party Beneficiaries. Except as otherwise expressly
provided in this Agreement, no Person which is not a Party will have any right
or obligation pursuant to this Agreement.
9.11 Headings. The headings used in this Agreement are for the purpose
of reference only and will not affect the meaning or interpretation of any
provision of this Agreement.
9.12 Merger and Integration. Except as otherwise provided in this
Agreement, this Agreement sets forth the entire understanding of the Parties
relating to the subject matter hereof, and all prior understandings, whether
written or oral, are superseded by this Agreement.
9.13 Transaction Expenses. The Company (for itself and for the Company)
and TechSys, whether or not the Merger is consummated, shall bear their own
legal and other fees and expenses with respect to the Merger.
9.14 Further Assurances. From and after the Closing, the Company will,
and will cause their Affiliates to, execute all documents and take any other
action which it is reasonably requested to execute or take to further effectuate
the transactions contemplated by the Transaction Documents.
9.15 Announcements. TechSys and the Company shall cooperate with each
other in the development and distribution of all news releases and other public
filings and disclosures with respect to this Agreement or the Merger
transactions contemplated hereby, and TechSys and the Company agree that unless
approved mutually by them in advance, neither TechSys nor the Company, directly
or indirectly, will issue any press release or written statement for general
circulation relating primarily to the transactions contemplated hereby, except
as may be otherwise required by law or regulation upon the advice of counsel.
9.16 SEC. The Company acknowledges that following the Closing Date
certain stockholders of the Company will have obligations to file certain
reports pursuant to the Exchange Act.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties have executed this Agreement
as of the date first written above.
FUEL CELL COMPANIES, INC.
By: ______________________________
Name: Xxxxxxx Xxxxxxxx
Title: Chief Executive Officer
TECHSYS, INC.
By: _____________________________
Name: Xxxxxx X. Xxxxx
Title: President
NEWCO TKSS, INC.
By: _______________________________
Name: Xxxxxx X. Xxxxx
Title: President
Exhibit A
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED, ASSIGNED
OR OTHERWISE DISPOSED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OR AN OPINION, IF REQUESTED, OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT.
COMMON STOCK PURCHASE WARRANT CERTIFICATE
Issued on ______________, 2001
to Purchase [_____________] Shares of Common Stock of
TECHSYS, INC.
TECHSYS, INC., a New Jersey corporation (the "Company"), hereby
certifies that ________________ and its Permitted Assigns (as defined herein)
(collectively, the "Holder"), for value received, is entitled to purchase from
the Company at any time commencing on the date hereof and terminating on the
Expiration Date (as defined herein) up to ______ shares (each a "Share" and
collectively the "Shares") of the Company's common stock, no par value per share
(the "Common Stock"), at an exercise price of $______ per Share (the "Exercise
Price").
1. Exercise of Warrants.
(a) Procedure. Upon presentation and surrender of this Common
Stock Purchase Warrant Certificate ("Warrant Certificate"), or Lost Certificate
Affidavit (as defined herein), accompanied by a completed Election to Purchase
in the form attached hereto as Exhibit A (the "Election to Purchase") duly
executed, to the Company in accordance with Section 10, together with a check
payable to the Company in the amount of the Exercise Price multiplied by the
number of Shares being purchased, the Company or the Company's Transfer Agent,
as the case may be, shall, within two business days of receipt of the foregoing,
deliver to the Holder hereof, certificates of fully paid and non-assessable
Common Stock which in the aggregate represent the number of Shares being
purchased; provided, however, that the Holder may elect to utilize the cashless
exercise provisions set forth in Section 1(b) in lieu of tendering all or part
of the Exercise Price in cash. The certificates so delivered shall be in such
denominations as may be reasonably requested by the Holder and shall be
registered in the name of the Holder or such other name as shall be designated
by the Holder. All or less than all of the Warrants represented by this Warrant
Certificate may be exercised and, in case of the exercise of less than all, the
Company, upon surrender hereof, will at the Company's expense deliver to the
Holder a new Warrant Certificate or Certificates (in such denominations as may
be requested by the Holder) of like tenor and dated the date hereof entitling
the Holder to purchase the number of Shares represented by this Warrant
Certificate which have not been exercised and to receive all other rights with
respect to the Shares which the Holder has on the date hereof.
(b) Cashless Exercise. Notwithstanding the foregoing provision
regarding payment of the Exercise Price in cash, in lieu of tendering all or
part of the Exercise Price in cash the Holder may:
(i) elect to pay all or part of the Exercise Price by
delivery of shares of Common Stock held by the Holder for at least six months,
in which case (A) the number of shares of Common Stock to be delivered shall be
determined by dividing the aggregate of the Exercise Price for the number of
Shares with respect to which the Holder elects to pay all or part of the
Exercise Price by delivery of shares of Common Stock, by the Market Value (as
defined herein) of one share of Common Stock, (B) such shares of Common Stock so
delivered shall be free and clear of all liens and encumbrances, and (C)
certificates for such shares of Common Stock shall be delivered to the Company
duly endorsed in blank for transfer; and/or
(ii) elect to pay all or part of the Exercise Price
by delivery of a promissory note to the Company in the principal amount of the
aggregate of the Exercise Price for the number of Shares with respect to which
the Holder elects to pay all or part of the Exercise Price by delivery of a
promissory note; provided, the Company may not accept any such promissory note
as payment if the Board of Directors of the Company determines in good faith
that receipt of any such promissory note as payment would, as a result of the
application thereto of generally accepted accounting principles, have a material
adverse effect on the Company. Each promissory note delivered to the Company
pursuant to this Section 1(b) shall be a three-year, full-recourse note, and
shall bear interest at a rate of 7% (compounded annually, computed on the basis
of 360 days counting the actual number of days elapsed).
As used in this Section (1)(b), "Market Value" refers to the Current Market
Value of the Common Stock on the day before the Election to Purchase and this
Warrant Certificate are duly surrendered to the Company for a full or partial
exercise hereof.
2. Expiration. This Warrant shall expire on ________, 200_ (the
"Expiration Date"), notwithstanding termination of the Holder's employment with
the Company prior thereto.
3. Exchange, Transfer and Replacement.
(a) Exchange. At any time prior to the exercise hereof, this
Warrant Certificate may be exchanged upon presentation and surrender to the
Company, alone or with other Warrant Certificates of like tenor of different
denominations registered in the name of the same Holder, for another Warrant
Certificate or Certificates of like tenor in the name of such Holder exercisable
for the aggregate number of Shares as the Warrant Certificate or Certificates
surrendered.
(b) Replacement of Warrant Certificate. Upon receipt of
evidence reasonably satisfactory to the Company of the loss, theft, destruction,
or mutilation of this Warrant Certificate and, in the case of any such loss,
theft, or destruction, upon delivery of an indemnity agreement of the Holder
reasonably satisfactory in form and amount to the Company (collectively, a "Lost
Certificate Affidavit"), or, in the case of any such mutilation, upon surrender
and cancellation of this Warrant Certificate, the Company, at its expense, will
execute and deliver in lieu thereof, a new Warrant Certificate of like tenor.
(c) Cancellation; Payment of Expenses. Upon the surrender of
this Warrant Certificate in connection with any transfer, exchange or
replacement as provided in this Section 3, this Warrant Certificate shall be
promptly canceled by the Company. The Company shall pay all taxes (other than
securities transfer taxes) and all other expenses (other than legal expenses, if
any, incurred by the Holder or transferees) and charges payable in connection
with the preparation, execution and delivery of the Warrant Certificates
pursuant to this Section 3.
(d) Warrant Register. The Company shall maintain, at its
principal executive offices (or at the offices of the transfer agent for the
Warrant Certificate or such other office or agency of the Company as it may
designate by notice to the holder hereof), a register for this Warrant
Certificate (the "Warrant Register"), in which the Company shall record the name
and address of the person in whose name this Warrant Certificate has been
issued, as well as the name and address of each Permitted Assign and each prior
Holder of this Warrant Certificate.
4. Rights and Obligations of Holders of this Warrant Certificate. The
Holder of this Warrant Certificate shall not, by virtue hereof, be entitled to
any rights of a shareholder in the Company, either at law or in equity;
provided, however, that upon exercise of some or all of the Warrants, such
Holder shall, for all purposes, be deemed to have become the Holder of record of
such Common Stock on the date on which this Warrant Certificate, together with a
duly executed Election to Purchase, was surrendered and payment of the aggregate
Exercise Price was made, irrespective of the date of delivery of such share
certificate.
5. Adjustments.
(a) Stock Dividends, Reclassifications, Recapitalizations,
etc. In the event the Company: (i) pays a dividend in Common Stock or makes a
distribution in Common Stock, (ii) subdivides its outstanding Common Stock into
a greater number of shares, (iii) combines its outstanding Common Stock into a
smaller number of shares, or (iv) increases or decreases the number of shares of
Common Stock outstanding by reclassification of its Common Stock (including a
recapitalization in connection with a consolidation or merger in which the
Company is the continuing corporation), then (A) the Exercise Price on the
record date of such dividend or distribution or the effective date of such
action shall be adjusted by multiplying such Exercise Price by a fraction, the
numerator of which is the number of shares of Common Stock outstanding
immediately before such event and the denominator of which is the number of
shares of Common Stock outstanding immediately after such event, and (B) the
number of shares of Common Stock for which this Warrant Certificate may be
exercised immediately before such event shall be adjusted by multiplying such
number by a fraction, the numerator of which is the Exercise Price immediately
before such event and the denominator of which is the Exercise Price immediately
after such event.
(b) Adjustments for Dividends in Stock or Other Securities or
Property. If while this Warrant, or any portion hereof, remains outstanding and
unexpired the holders of the securities as to which purchase rights under this
Warrant exist at the time shall have received, or, on or after the record date
fixed for the determination of eligible stockholders, shall have become entitled
to receive, without payment therefor, other or additional stock or other
securities or property (other than cash) of the Company by way of dividend, then
and in each case, this Warrant shall represent the right to acquire, in addition
to the number of shares of the security receivable upon exercise of this
Warrant, and without payment of any additional consideration therefor, the
amount of such other or additional stock or other securities or property (other
than cash) of the Company that such holder would hold on the date of such
exercise had it been the holder of record of the securities receivable upon
exercise of this Warrant on the date hereof and had thereafter, during the
period from the date hereof to and including the date of such exercise, retained
such shares and/or all other additional stock available to it as aforesaid
during such period, giving effect to all adjustments called for during such
period by the provisions of this Section 5.
(c) Merger, Sale of Assets, etc. If at any time while this
Warrant, or any portion hereof, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation in which the
Company is not the surviving entity, or a reverse triangular merger in which the
Company is the surviving entity but the shares of the Company's capital stock
outstanding immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash, or
otherwise, or (iii) a sale or transfer of the Company's properties and assets
as, or substantially as, an entirety to any other person, then, as a part of
such reorganization, merger, consolidation, sale or transfer, lawful provision
shall be made so that the Holder of this Warrant shall thereafter be entitled to
receive upon exercise of this Warrant, during the period specified herein and
upon payment of the Exercise Price then in effect, the number of shares of stock
or other securities or property of the successor corporation resulting from such
reorganization, merger, consolidation, sale or transfer that a holder of the
shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 5. The foregoing provisions of this Section 5(c) shall similarly
apply to successive reorganizations, consolidations, mergers, sales and
transfers and to the stock or securities of any other corporation that are at
the time receivable upon the exercise of this Warrant. If the per share
consideration payable to the Holder hereof for shares in connection with any
such transaction is in a form other than cash or marketable securities, then the
value of such consideration shall be determined in good faith by the Company's
Board of Directors. In all events, appropriate adjustment (as determined in good
faith by the Company's Board of Directors) shall be made in the application of
the provisions of this Warrant with respect to the rights and interests of the
Holder after the transaction, to the end that the provisions of this Warrant
shall be applicable after that event, as near as reasonably may be, in relation
to any shares or other property deliverable after that event upon exercise of
this Warrant.
(d) Adjustments for Certain Further Issuances of Stock. If
while this Warrant, or any portion hereof, remains outstanding and unexpired the
Company shall issue any shares of Common Stock or any securities convertible,
exchangeable or exercisable for shares of Common Stock (other than shares of
Common Stock or securities exercisable for shares of Common Stock issuable upon
exercise of this Warrant or the Key Employee Warrants, or pursuant to the
Incentive Plan), then the Exercise Price applicable to any subsequent exercise
of this Warrant shall be adjusted by multiplying the Exercise Price then in
effect by a fraction, the numerator of which is the number of shares of Common
Stock and other securities convertible, exchangeable or exercisable for shares
of Common Stock outstanding immediately before such issuance and the denominator
of which is the number of shares of Common Stock and other securities
convertible, exchangeable or exercisable for shares of Common Stock outstanding
immediately after such issuance, giving effect to all adjustments called for
during such period by the provisions of this Section 5.
(e) No Impairment. The Company will not, by any voluntary
action, avoid or seek to avoid the observance or performance of any of the terms
to be observed or performed hereunder by the Company, but will at all times in
good faith assist in the carrying out of all the provisions of this Section 5
and in the taking of all such action as may be necessary or appropriate in order
to protect the rights of the Holder of this Warrant against impairment.
(f) Notice of Adjustment. Whenever the Exercise Price or the
number of shares of Common Stock and other property, if any, issuable upon
exercise of the Warrant Certificates is adjusted, as herein provided, the
Company shall deliver to the Holders of the Warrant Certificates in accordance
with Section 10 a certificate of the Company's Chief Financial Officer setting
forth, in reasonable detail, the event requiring the adjustment and the method
by which such adjustment was calculated and specifying the Exercise Price and
number of shares of Common Stock issuable upon exercise of Warrant Certificates
after giving effect to such adjustment.
(g) Current Market Value. "Current Market Value" per share of
Common Stock or any other security at any date means (i) if the security is
registered under the Exchange Act, the average of the daily closing bid prices
(or the equivalent in an over-the-counter market) for each day on which the
Common Stock is traded for any period on the principal securities exchange or
other securities market on which the Common Stock is being traded (each, a
"Trading Day") during the period commencing eleven Trading Days before such date
and ending on the date one day prior to such date; provided, however that if the
closing bid price is not determinable for at least five Trading Days in such
period, the "Current Market Value" of the security shall be determined as if the
security were not registered under the Exchange Act, or (ii) if the security is
not registered under the Exchange Act, (A) the value of the security, determined
in good faith by the Board of Directors of the Company and certified in a board
resolution, based on the most recently completed arm's-length transaction
between the Company and a person other than an affiliate of the Company and the
closing of which occurs on such date or shall have occurred within the six-month
period preceding such date, or (B) if no such transaction shall have occurred
within the six-month period, the value of the security as determined by an
independent financial expert mutually agreed upon by the Company and the Holder
and, in the event the Company and the Holder fail to so mutually agree within 30
days after the date of the requirement to determine the Current Market Value
hereunder, the parties shall submit the selection of the independent financial
expert to the American Arbitration Association for arbitration in New Jersey.
6. Notices of Certain Events. In case: (i) the Company shall take a
record of the holders of its Common Stock (or other stock or securities at the
time receivable upon the exercise of this Warrant) for the purpose of entitling
them to receive any dividend or other distribution, or any right to subscribe
for or purchase any shares of stock of any class or any other securities, or to
receive any other right, or (ii) of any capital reorganization of the Company,
any reclassification of the capital stock of the Company, any consolidation or
merger of the Company with or into another corporation, or any conveyance of all
or substantially all of the assets of the Company to another corporation, or
(iii) of any voluntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be delivered or
given in the manner provided herein to the Holder of this Warrant a notice
specifying, as the case may be, (A) the date of which a record is to be taken
for the purpose of such dividend, distribution or right, or (B) the date on
which such reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or such stock or
securities at the time receivable upon the exercise of this Warrant) shall be
entitled to exchange their shares of Common Stock (or such other stock or
securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be delivered or given
at least 15 days prior to the date therein specified.
7. Issuance of Certificates. Within two business days of receipt of a
duly completed Election to Purchase, together with this Warrant Certificate and
payment of the Exercise Price, the Company, at its expense, will cause to be
issued in the name of and delivered to the Holder of this Warrant, a certificate
or certificates for the number of fully paid and non-assessable shares of Common
Stock to which the Holder shall be entitled on such exercise. In lieu of
issuance of a fractional share upon any exercise hereunder, the Company will pay
the cash value of that fractional share, calculated on the basis of the Exercise
Price. In the event the shares of Common Stock underlying this Warrant
Certificate are not registered under the Securities Act for resale under a then
effective registration statement, all such certificates shall bear a restrictive
legend to the effect that the Shares represented by such certificate have not
been registered under the Securities Act, and that the Shares may not be sold or
transferred in the absence of such registration or an exemption therefrom, such
legend to be substantially in the form of the bold-face language appearing at
the top of Page 1 of this Warrant Certificate. Where applicable, the Company
shall remove such legends so as to facilitate the transfer of such securities
pursuant to an effective registration statement or, if and to the extent
applicable, pursuant to Rule 144 under the Securities Act, provided (in the case
of Rule 144 transfers) that the Holder has provided such documentation as the
Company and its transfer agent shall reasonably require in connection therewith.
In the event that unlegended certificates have been delivered to a Holder, and a
previously effective registration statement with respect to the underlying
securities is no longer effective and the underlying securities are not
otherwise freely transferable, the Holder shall return such certificates to the
Company in exchange for legended certificates of like tenor within 10 days
following the written request therefor by the Company.
8. Reservation of Stock. The Company covenants that during the term
this Warrant is exercisable, the Company will reserve from its authorized and
unissued Common Stock a sufficient number of shares to provide for the issuance
of Common Stock upon the exercise of this Warrant and, from time to time, will
take all steps necessary to amend its Certificate of Incorporation to provide
sufficient reserves of shares of Common Stock issuable upon exercise of this
Warrant. The Company further covenants that all shares that may be issued upon
the exercise of the rights represented by this Warrant will, upon exercise of
the rights represented by this Warrant and payment of the Exercise Price, all as
set forth herein, be free from all taxes, liens and charges in respect of the
issue thereof (other than taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein). The Company agrees that its
issuance of this Warrant shall constitute full authority to its officers who are
charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock upon any exercise of this
Warrant.
9. Disposition of Warrants or Shares. The Holder of this Warrant
Certificate, and each holder and transferee of any Shares, by his or its
acceptance thereof, agrees that no public distribution of Warrants or Shares
will be made in violation of the provisions of the Securities Act. Any
transferee shall acquire the Warrants subject to all of the relevant terms and
conditions contained in this Warrant Certificate.
10. Notices.
(a) All demands, notices, and communications ("notices")
provided for in this Warrant Certificate will be in writing and will be either
personally delivered, mailed by registered or certified mail (return receipt
requested) or sent by reputable overnight courier service (delivery charges
prepaid) to any party at the address specified below, or at such address, to the
attention of such other Person, and with such other copy, as the recipient party
has specified by prior written notice to the sending party pursuant to the
provisions of this Section 10.
If to the Holder:
__________________
__________________
__________________
__________________
If to the Company:
TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: President
Facsimile Number: (000) 000-0000
with a copy, which will not constitute
notice to the Company, to:
--------------------------------------
Pitney, Xxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile Number: (000) 000-0000
(b) Any such notice will be deemed to have been given when
delivered personally, on the third business day after deposit postage pre-paid
in the U.S. mail, or on the business day after deposit with a reputable
overnight courier service delivery charges pre-paid, as the case may be.
11. Governing Law. This Warrant Certificate will be governed by and
construed in accordance with the domestic laws of the State of New Jersey,
without giving effect to any choice of law or conflict rule of any jurisdiction
that would cause the laws of any other jurisdiction to be applied. In
furtherance of the foregoing, the internal law of the State of New Jersey will
control the interpretation and construction of this Warrant Certificate, even if
under any choice of law or conflict of law analysis, the substantive law of some
other jurisdiction would ordinarily apply.
12. Jurisdiction. Each of the parties hereby (a) irrevocably submits to
the exclusive jurisdiction of the state courts of, and the federal courts
located in, the State of New Jersey in any action or proceeding arising out of
or relating to, this Warrant Certificate, (b) waives, and agrees to assert, by
way of motion, as a defense, or otherwise, in any such suit, action or
proceeding, any claim that it is not subject personally to the jurisdiction of
the above-named courts, that its property is exempt or immune from attachment or
execution under the law of another jurisdiction, that the suit, action or
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that this Warrant Certificate or the subject
matter hereof may not be enforced in or by such court, and agrees not to seek,
any review by any court of any other jurisdiction which may be called upon to
grant an enforcement of the judgment of any such court.
13. Successors and Assigns. This Warrant Certificate shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and Permitted Assigns.
14. Severability. If any provision of this Warrant Certificate is held
to be unenforceable under applicable law, such provision shall be excluded from
this Warrant Certificate, and the balance hereof shall be interpreted as if such
provision were so excluded.
15. Modification and Waiver. This Warrant Certificate and any provision
hereof may be amended, waived, discharged or terminated only by an instrument in
writing signed by the Company and the Holder.
16. Specific Enforcement. The Company and the Holder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Warrant Certificate were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent or cure
breaches of the provisions of this Warrant Certificate and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which either of them may be entitled by law or equity.
17. Assignment. This Warrant Certificate may not be transferred or
assigned, in whole or in part, at any time, except to (i) ______________, a
member of his immediate family or a trust for the benefit of same, or any entity
controlled by any of the foregoing, or (ii) to any third-party with the prior
written consent of the Company, which consent shall not be unreasonably
withheld; so long as such individual or entity acquires the Warrant subject to
this provision ("Permitted Assign"). Assignment to a Permitted Assign can be
effected by the Holder's submission of this Warrant to the Company together with
a duly executed Assignment in substantially the form and substance of the Form
of Assignment which accompanies this Warrant Certificate and, upon the Company's
receipt hereof, and in any event, within three business days thereafter, the
Company shall issue a Warrant Certificate to the Holder to evidence that portion
of this Warrant Certificate, if any as shall not have been so transferred or
assigned.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or by facsimile, by one of its officers thereunto
duly authorized.
TECHSYS, INC.
Date: ___________, 2000 By:
_______________________________________
Name:
Title:
ELECTION TO PURCHASE
To Be Executed by the Holder in Order to Exercise the
Common Stock Purchase Warrant Certificate
The undersigned Holder hereby elects to exercise _______ of the
Warrants represented by the attached Common Stock Purchase Warrant Certificate,
and to purchase the shares of Common Stock issuable upon the exercise of such
Warrants, and requests that certificates for securities be issued in the name
of:
_____________________________________________
(Please type or print name and address)
_____________________________________________
_____________________________________________
_____________________________________________
(Social Security or Tax Identification Number)
and delivered to:
_______________________________________________________________
(Please type or print name and address if different from above)
If such number of Warrants being exercised hereby shall not be all the Warrants
evidenced by the attached Common Stock Purchase Warrant Certificate, a new
Common Stock Purchase Warrant Certificate for the balance of such Warrants shall
be registered in the name of, and delivered to, the Holder at the address set
forth below.
[In full payment of the purchase price with respect to the Warrants
exercised and transfer taxes, if any, the undersigned hereby tenders payment of
$______________ by check, money order or wire transfer payable in United States
currency to the order of TECHSYS, INC.] or [The undersigned elects cashless
exercise in accordance with Section 1(b) of the Common Stock Purchase Warrant
Certificate.]
HOLDER:
Dated: By:
__________________ __________________________________________
Name:_____________________________________
Title:____________________________________
Address:__________________________________
FORM OF ASSIGNMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and transfers unto
_______________ the right represented by the within Warrant to purchase
____________ shares of Common Stock of TECHSYS, INC., a New Jersey corporation,
to which the within Warrant relates, and appoints _____________ Attorney to
transfer such right on the books of TECHSYS, INC., a New Jersey corporation,
with full power of substitution of premises.
Dated: By:
________________ _______________________________________
Name:
Title:
(signature must conform to
name of holder as specified on
the fact of the Warrant)
Address:
_________________________
_________________________
_________________________
Signed in the presence of:
___________________________
Exhibit B
FORM OF REPRESENTATIONS AND WARRANTIES
OF STOCKHOLDERS OF THE COMPANY
__________, 2001
Pitney Xxxxxx Xxxx & Xxxxx LLP
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Re: TechSys, Inc./Newco, Inc./Fuel Cell Companies, Inc. Merger
The undersigned, ___________ (each a "Shareholder," collectively, the
"Shareholders"), being all of the Shareholders of Fuel Cell Companies, Inc., a
Nevada corporation (the "Company"), does hereby certify as follows to Pitney,
Xxxxxx, Xxxx & Xxxxx LLP in connection with the opinion to be delivered by such
Firm regarding the federal income tax consequences of the planned merger
("Merger") of Newco, Inc., a New Jersey corporation ("Merger Subsidiary"), with
and into the Company. The Merger shall be effectuated pursuant to the provisions
of an Agreement and Plan of Merger, dated as of April 5, 2001 ("Merger
Agreement"), by and among TechSys, Inc. ("TechSys"), a New Jersey corporation,
Merger Subsidiary and the Company. This opinion is delivered pursuant to Section
5.8 of the Merger Agreement.
For purposes of this Certificate and unless otherwise indicated, all
sections refer to the Internal Revenue Code of 1986, as amended.
1. The fair market value of the TechSys common stock ("TechSys Common
Stock") and other consideration received by each of the Shareholders will be
approximately equal to the fair market value of the Company common stock
("Company Common Stock") and other securities surrendered in the exchange.
2. None of the compensation received by any Shareholder who is also an
employee of the Company will be separate consideration for, or allocable to, any
of their shares of Company Common Stock; none of the shares of TechSys Common
Stock received by any Shareholder who is also an employee of the Company will be
separate consideration for, or allocable to, any employment agreement; and the
compensation paid to any Shareholder who is also an employee of the Company will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
3. As a result of the Merger, the Company will hold at least ninety
percent (90%) of the fair market value of its net assets and at least seventy
percent (70%) of the fair market value of its gross assets and at least ninety
percent (90%) of the fair market value of Merger Subsidiary's net assets and at
least seventy percent (70%) of the fair market value of Merger Subsidiary's
gross assets held immediately prior to the transaction. For purposes of this
representation, the Company's and Merger Subsidiary's assets shall include all
of its tangible and intangible assets, whether or not such intangible assets are
reflected on its Financial Statements. Further, and for purposes of this
representation, amounts used to pay dissenters or to pay reorganization
expenses, and all redemptions and distributions (except for regular, normal
dividends) made by the Company immediately prior to the Merger will be
considered as assets held by the Company immediately prior to the Merger. The
Company has not redeemed any of the Company Common Stock, made any distribution
with respect to any of the Company Common Stock, or disposed of any of its
assets in anticipation of or as a part of a plan of the acquisition of the
Merger Subsidiary by the Company.
4. Merger Subsidiary will have no liabilities assumed by the Company,
and will not transfer to the Company any assets subject to liabilities, in the
transaction, and none of the Company Common Stock to be surrendered in exchange
for TechSys Common Stock in the Merger will be subject to any liabilities.
5. The Company has no plan or intention to issue additional shares of
its stock that would result in TechSys losing control of the Company within the
meaning of IRC ss.368(c)(1).
6. In the transaction, shares of Company Common Stock representing
control of the Company, as defined in IRC ss.368(c)(1), will be exchanged solely
for TechSys Common Stock. For purposes of this representation, shares of Company
Common Stock exchanged for cash or other property originating with TechSys will
be treated as outstanding Company Common Stock on the date of the transaction.
7. As a result of the transaction, the Company will not have
outstanding any warrants, options, convertible securities, or any other type of
right pursuant to which any person could acquire stock in the Company that, if
exercised or converted, would affect TechSys' acquisition or retention of
control of the Company, as defined in IRC ss.368(c)(1).
8. Following the transaction, the Company will continue its historic
business or use a significant portion of its historic business assets in a
business.
9. There is no intercorporate indebtedness existing between the Company
and either TechSys or Merger Subsidiary that was issued, acquired, or will be
settled at a discount.
10. On the date of the transaction, the fair market value of the assets
of the Company will equal or exceed the sum of its liabilities, plus the amount
of liabilities, if any, which the assets are subject.
11. TechSys does not own, nor has it owned during the past five years,
any Company Common Stock.
12. The payment of cash in lieu of fractional shares of TechSys Common
Stock is solely for the purpose of avoiding the expense and inconvenience to
TechSys of issuing fractional shares of TechSys Common Stock and does not
represent separately bargained-for consideration. The total cash consideration
that will be paid in the Merger to the Shareholders instead of issuing
fractional shares of TechSys Common Stock will not exceed one percent (1%) of
the total consideration that will be issued in the Merger to the Shareholders in
exchange for their Company Common Stock. The fractional share interests of each
Shareholder will be aggregated, and no Shareholder will receive cash in an
amount equal to or greater than the value of one full share of TechSys Common
stock.
13. At least fifty percent (50%) of the value of the Shareholders'
proprietary interests in the Company will be preserved as a proprietary interest
in TechSys received in exchange for Company Common Stock. For purposes of this
representation, proprietary interests will not be preserved to the extent that,
in connection with the Merger: (i) an extraordinary distribution is made with
respect to Company Common Stock; (ii) a redemption or acquisition of Company
Common Stock is made by the Company or a person related to the Company; (iii)
TechSys or a person related to TechSys acquires Company Common Stock for
consideration other than TechSys Common Stock; or (iv) TechSys redeems its stock
issued in the Merger. For purposes of this paragraph, any reference to TechSys
or the Company includes a reference to any successor or predecessor of such
corporation, except that the Company is not treated as a predecessor of TechSys.
A corporation will be treated as related to another corporation if they are both
members of the same affiliated group within the meaning of IRC ss.1504 (without
regard to the exceptions in IRC ss.1504(b)) or they are related as described in
IRC ss.304(a)(2) (disregarding Treasury Regulation ss.1.1502-80(b)), in either
case whether such relationship exists immediately before or immediately after
the acquisition.
14. The Company and Shareholders will pay their respective expenses, if
any, incurred in connection with the Merger. To the best of the Shareholders'
knowledge, TechSys and Merger Subsidiary will pay their respective expenses, if
any, incurred in the Merger.
15. The Company has not filed an election with the Internal Revenue
Service to qualify as an investment company or real estate investment trust as
defined in IRC ss.ss.368(a)(2)(F)(iii) and 368(a)(2)(F)(iv).
16. The Company is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of IRCss.368(a)(3)(A).
17. No stock of Merger Subsidiary will be issued to the Shareholders in
the transaction.
18. The Company is a corporation duly organized and validly existing
and in good standing under the laws of the State of Nevada.
It is understood that Pitney, Xxxxxx, Xxxx & Xxxxx LLP, as counsel to
TechSys and Merger Subsidiary in connection with the Merger, will rely on this
Certificate in rendering its opinion concerning certain of the federal income
tax consequences of the Merger.
_______________________________________
_______________________________________
Exhibit C
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") dated as of the ___ day of
_________, 200_ (the "Commencement Date") by and among TechSys, Inc., a New
Jersey corporation (the "Company"), and
___________________________________________ ("Employee");
WHEREAS, the Company is engaged in the ______________ business
primarily in the areas of _____________________________________________________;
and
WHEREAS, Employee is an individual with experience in the _____________
business; and
WHEREAS, the Company desires to employ Employee and Employee is
desirous of and wishes to enter into an employment arrangement, on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "Affiliate" shall mean a corporation which, directly or indirectly,
controls, is controlled by or is under common control with the Company, and for
purposes hereof, "control" shall mean the ownership of 20% or more of the Voting
Stock of the corporation in question.
1.2 "Basic Fee" shall have the meaning assigned to it in Section 6 of
this Agreement.
1.3 "Board" shall mean the Board of Directors of the Company as duly
constituted from time to time.
1.4 "the Business" shall mean the business to be conducted by the
Company, directly or indirectly, as the provider of goods and services to
individuals in connection with dialysis or infusion therapies and professional
staffing.
1.5 "Commencement Date" shall be the date of this Agreement, as stated
on page 1.
1.6 "Confidential Information" shall include, without limitation by
reason of specification, any information, including, without limitation, trade
secrets, patient, vendor and customer lists, pricing policies, operational
methods, methods of doing business, technical processes, formulae, designs and
design projects, inventions, research projects, strategic plans, product
information, production know-how and other business affairs of the Company or
its Affiliates, which (i) is or are designed to be used in or are or may be
useful in connection with the Business of the Company, any Subsidiary or
__________ Affiliate or any Affiliate of any thereof, or which, in the case of
any of these entities, results from any of the research or development
activities of any such entity, which (ii) is private or confidential in that it
is not generally known or available to the public, except as the result of
unauthorized disclosure by or information supplied by the Employee, or (iii)
which gives the Company or a Subsidiary or a _________ Affiliate or any
Affiliate an opportunity or the possibility of obtaining an advantage over
competitors who may not know or use such information or who are not lawfully
permitted to use the same.
1.7 "Disability" shall mean the inability of Employee to perform
Employee's duties of employment for the Company, if employed by the Company or a
Subsidiary, pursuant to the terms of this Agreement and by-laws of the Company
as hereinafter provided, because of physical or mental disability, where such
disability shall have existed for a period of more than 90 consecutive days or
an aggregate of 120 days in any 365 day period, and if a long-term disability
plan is maintained by the Company or a Subsidiary which employs Employee,
Employee is entitled to receive long term disability payments under a long term
disability plan of the Company or any Subsidiary which employs Employee. The
fact of whether or not a Disability exists hereunder shall be determined by
appropriate medical experts jointly selected by the Board and Employee. The
existence of a Disability means that, Employee's mental and/or physical
condition substantially interferes with Employee's performance of his duties for
the Company, its Subsidiaries and _____________ Affiliates as specified in this
Agreement.
1.8 "______________ Affiliate" shall mean a partnership, limited
partnership, corporation, joint venture, limited liability company or other
entity in which the Company or a Subsidiary has an ownership interest and which
engages in the Business.
1.9 "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization, association,
corporation, institution, public benefit corporation, entity or government
(whether Federal, state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency, body or department
thereof).
1.10 "Service Area" shall mean the continental United States of
America.
1.11 "Subsidiary" shall mean a corporation of which more than 50% of
the Voting Stock is owned, directly or indirectly, by the Company.
1.12 "Term" shall mean the term of this Agreement.
1.13 "Termination Date" shall have the meaning assigned to it in
Section 8.
1.14 "Year" shall mean each twelve-month period, or part thereof,
during which Employee is retained hereunder, commencing on the Commencement Date
and on the same day of any subsequent calendar year, the first such subsequent
Year being the twelve-month period which will begin on the first anniversary of
the Commencement Date.
1.15 "Voting Stock" shall mean capital stock of a corporation which
gives the holder the right to vote in the election of directors for such
corporation in the ordinary course of business and not as the result of, or
contingent upon, the happening of any event.
Wherever from the context it appears appropriate, each word or phrase
stated in either the singular or the plural shall include the singular and the
plural, and each pronoun stated in the masculine, feminine or neuter gender
shall include the masculine, feminine and neuter.
2. RETENTION AND DUTIES OF EMPLOYEE
2.1 Employment; Title; Duties. The Company hereby retains Employee, and
Employee hereby accepts appointment as Chairman of the Board and Chief Executive
Officer of the Company. The principal duty of Employee shall be to perform those
services set forth on Exhibit A attached hereto and incorporated herein, and to
render services as are necessary and desirable to protect and advance the best
interests of the Company, acting, in all instances, under the supervision of and
in accordance with the policies set by the Board. Without further compensation,
Employee agrees to serve (if requested to do so) as Chairman of the Board, chief
executive officer and director of any Subsidiary (and as a shareholder, officer
and director of any entity to which the Company provides services, equipment or
supplies).
2.2 Performance of Duties. Employee shall be available and hereby
agrees to devote such working time and efforts to the performance of Employee's
duties hereunder and to the performance of such other duties as are assigned him
from time-to-time by the Board, as are necessary or appropriate; provided,
however, that parties hereto recognize that Employee has other business
endeavors and thus, are not committed to work full time for the Company and its
Subsidiaries and in any event, Employee shall not be required to perform more
than 750 hours of service pursuant to this Agreement in any year. During the
Term, Employee shall not engage in or become employed, directly or indirectly,
in a business which competes with the business of the Company, without the prior
written consent of the Board, nor shall he act as a consultant to or provide any
services to, whether on a remunerative basis or otherwise, the commercial or
professional business of any other Person which competes with the business of
the Company, without such written consent, which, in both instances, may be
given or withheld by the Board in its absolute discretion.
3. TERM OF EMPLOYMENT
The employment of Employee pursuant to this Agreement shall commence as
of the Commencement Date and end on __________________, unless sooner terminated
pursuant to Section 8 of this Agreement or otherwise extended in accordance with
Section 4.
4. EXTENSION OF TERM OF EMPLOYMENT
If Employee's employment hereunder has not previously been terminated
in accordance with Section 8 hereof, then on the first anniversary of the
Commencement Date the Term shall be extended for one additional year and on each
subsequent anniversary of the Commencement Date, the Term shall be extended for
one additional year, unless the Board shall provide written notice to Employee
ninety (90) days or more prior to such anniversary date that this Agreement will
not be so extended. The rights of termination set forth in Section 8 shall be
applicable during any such extended term.
5. COMPENSATION AND BENEFITS
The Company and/or its Subsidiaries shall pay Employee as compensation
for all of the services to be rendered by it hereunder during the Term, and in
consideration of the various restrictions imposed upon Employee during the Term,
and otherwise under this Agreement, the Basic Fee and other benefits as provided
for and determined pursuant to Sections 6 to 8, inclusive, of this Agreement.
6. BASIC COMPENSATION/BONUS
6.1 The Company shall pay Employee, as compensation for all of the
services to be rendered by him hereunder during each Year, a fee of $300,000 per
Year (as adjusted upward by the Board from time to time) (the "Basic Fee"),
payable in substantially equal bi-weekly payments, less such deductions or
amount as are required to be deducted or withheld by applicable laws or
regulations, deductions for employee contributions to welfare benefits provided
by the Company or a Subsidiary to Employee and less such other deductions or
amounts, if any, as are authorized by Employee. The Basic Fee shall be prorated
for the month in which retention of Employee by the Company or a Subsidiary
commences or terminates, and for any Year which is less than 12 months in
duration. The Basic Fee may be increased from time-to-time by the Board (without
Employee's participation as a director) and once increased, shall not thereafter
be reduced.
6.2 Employee will be paid cash bonuses in accordance with the bonus
arrangement to be established by the Board (the "Bonus").
7. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
7.1 Additional Benefits. The Company shall provide the following
additional benefits to Employee during the Term:
(i) participation on an equitable basis in any employee
benefit plans established for senior management employees of the Company.
(ii) the lease or financing by the Company for use by Employee
(or the Company shall reimburse Employee for these payments if the lease or
financing is in its name or Employee's name) of a late model luxury automobile
(excluding payments by the Company of insurance and other expenses thereof which
shall be paid by the Company in addition to the lease payments); provided,
however, the aggregate lease or financing payments per month may not exceed
$1,500.
(iii) the payment of premiums for $1,000,000 of term life
insurance on Employee's life (the beneficiary of who shall be the Company).
(iv) the payment of premiums for disability insurance coverage
for Employee.
(v) participation by Employee in a stock option plan for
senior management of the Company on a basis consistent with other members of
senior management of the Company.
7.2 Reimbursement for Expenses. The Company shall pay or reimburse
Employee for all reasonable expenses actually incurred or paid by Employee
during the Term in the performance of its services under this Agreement, upon
presentation of such bills, expense statements, vouchers or such other
supporting information as the Board may reasonably require. In the event the
Company requires personnel of Employee to travel on business during the term,
Employee shall be reimbursed for first class airline and deluxe hotel and any
other travel expenses of its personnel in accordance with this Section 7.2.
8. TERMINATION
8.1 Death. If Employee dies during the Term, on the date of his death
this Agreement shall terminate without further liability of the Company to make
any further payments to Employee hereunder except with respect to amounts
previously due and owing to Employee hereunder.
8.2 Disability. If, during the Term, Employee has a Disability, the
Company may, at any time after Employee has a Disability, terminate Employee's
employment under this Agreement without further liability of the Company to make
any further payments to Employee hereunder except with respect to amounts
previously due and owing to Employee hereunder.
8.3 Notice of Termination. Any purported termination of employment by
the Company or a Subsidiary by reason of Employee's Disability shall be
communicated by written Notice of Termination to the other party hereto. For
purposes of this Agreement, a "Notice of Termination" shall mean a notice given
by the Company or a Subsidiary, as the case may be, which shall indicate the
specific basis for termination and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for determination of any
payments under this Agreement.
8.4 Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean the date specified in the Notice of Termination, which
shall not be more than ninety (90) days after such Notice of Termination is
given, as such date may be modified pursuant to the following two sentences.
9. REPRESENTATION AND WARRANTY BY EMPLOYEE
Employee hereby represents and warrants to the Company, the same being
part of the essence of this Agreement that, as of the Commencement Date, he is
not a party to any agreement, contract or understanding, and that no facts or
circumstances exist which would in any way restrict or prohibit him in any
material way from undertaking or performing any of his obligations under this
Agreement. The foregoing representation and warranty shall remain in a effect
throughout the Term.
10. CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS
10.1 Acknowledgment of Confidentiality. Employee understands and
acknowledges that he may obtain Confidential Information during the Term of this
Agreement. Employee further acknowledges that the services to be rendered by him
are of a special, unique and extraordinary character and that, in connection
with such services, he will have access to Confidential Information vital to the
Company's and Affiliates' business. Accordingly, Employee agrees that he shall
not, either during the Term or at any time within one year after Termination
Date, (i) use or disclose any such Confidential Information outside the Company
and Affiliates; or (ii) except as required in the proper performance of his
services hereunder, remove or aid in the removal from the premises of the
Company or any Affiliate, of any Confidential Information or any property or
material relating thereto.
The foregoing confidentiality provisions shall cease to be applicable
to any Confidential Information which becomes generally available to the public
(except by reason of or as a consequence of a breach by Employee of his
obligations under this Section 10).
In the event Employee is required by law or a court order to disclose
any such Confidential Information, he shall promptly notify the Company of such
requirement and provide the Company with a copy of any court order or of any law
which in his opinion requires such disclosure and, if the Company so elects,
permit the Company an adequate opportunity, at its own expense to contest such
law or court order.
10.2 Delivery of Material. Employee shall promptly, and without charge,
deliver to the Company on the termination of its retention hereunder, or at any
other time the Company may so request, all memoranda, notes, records, reports,
manuals, computer disks, videotapes, drawings, blueprints and other documents
(and all copies thereof) relating to the Business of the Company and the
Affiliates, and all property associated therewith, which he may then possess or
have under his control.
10.3 Patient Lists. Employee acknowledges that (i) all lists of
patients, referrers, and customers and vendors of the Company or its
Subsidiaries or its __________ Affiliates developed during the course of
Employee's employment and/or by the Company or a Subsidiary are and shall be the
sole and exclusive property of the Company and its Affiliates, as the case may
be, and Employee further acknowledges and agrees that he neither has nor shall
have any personal right, title or interest therein; (ii) that such lists are and
must continue to be confidential; and (iii) that such lists are not readily
accessible to competitors of the Company or its Affiliates.
10.4 Ideas, Programs, Etc. If, during the Term, Employee in connection
with the performance of its duties hereunder, invent or develop any ideas,
patient lists or the like, relating to or useful in connection with the Business
of the Company the same are and shall remain the property of the Company, and he
will promptly deliver all copies of the same to the Company, assign his interest
therein to the Company and execute such documents as Company's counsel may
request to convey title thereto to the Company. Employee shall not be entitled
to any compensation, other than as provided in this Agreement, for carrying out
its obligations to the Company under Subsection 10.4 or any other Subsection of
this Section 10.
10.5 Extension of Section 10. All of the provisions of Section 10 shall
be deemed to be applicable to all Confidential Information, and to all ideas,
programs, etc., as referred to Subsection 10.4, to which Employee may have
obtained access or which it may have invented or developed during his employment
by the Company.
11. DISPUTES AND REMEDIES
11.1 WAIVER OF JURY TRIAL. EMPLOYEE AND THE COMPANY HEREBY WAIVE THE
RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY DISPUTE WHICH ARISES UNDER THIS
AGREEMENT.
11.2 Injunctive Relief. If Employee commits a breach, or threatens to
commit a breach, of any of the provisions of Section 10, the Company shall have
the following rights and remedies (each of which shall be independent of the
other, and shall be severally enforceable, and all of which shall be in addition
to, and not in lieu of, any other rights and remedies available to the Company
at law or in equity):
(i) the right and remedy to have the provisions of this
Agreement specifically enforced by any court having equity jurisdiction, it
being acknowledged by Employee that any such breach or threatened breach will or
may cause irreparable injury to the Company and that money damages will or may
not provide an adequate remedy to the Company; and
(ii) the right and remedy to require Employee to account for
and pay over to the Company all compensation, profits, monies, increments,
things of value or other benefits, derived or received by Employee as the result
of any acts or transactions constituting a breach of any of the provisions of
Section 10 of this Agreement, and Employee hereby agrees to account for and pay
over all such compensation, profits, monies, increments, things of value or
other benefits to the Company.
11.3 Partial Enforceability. If any provision contained in Section 10,
or any part thereof, is construed to be invalid or unenforceable, the same shall
not affect the remainder of Employee's agreements, covenants and undertakings,
or the other restrictions which it and he have accepted, in Section 10, and the
remaining such agreements, covenants, undertakings and restrictions shall be
given the fullest possible effect, without regard to the invalid parts.
11.4 Intention of Parties. It is distinctly understood and agreed that
the confidentiality, proprietary right, and restrictive covenant provisions of
this Agreement have been accepted, and agreed to by Employee in contemplation of
this Agreement. It is therefore the specific intention of the parties any
general considerations of public policy to the contrary notwithstanding, that
the provisions of Section 10 of this Agreement shall be enforced as written and
to the fullest extent possible.
11.5 Adjustment of Restrictions. Despite the prior provisions of this
Section 11, if any covenant or agreement contained in Section 10, or any part
thereof, is held by any court of competent jurisdiction to be unenforceable
because of the duration of such provision, the court making such determination
shall have the power to reduce the duration of such provision and, in its
reduced form, such provision shall be enforceable.
11.6 Attorneys Fees and Expenses. In the event that any action, suit or
other proceeding at law or in equity is brought to enforce the provisions of
this Agreement, or to obtain money damages for the breach thereof, and such
action results in the award of a judgment for money damages or in the granting
of any injunction in favor of the Company, then all reasonable expenses,
including, but not limited to, reasonable attorneys' fees and disbursements
(including those incurred on appeal) of the Company in such action, suit or
other proceeding shall (on demand of the Company) forthwith be paid by Employee.
If such action results in judgment in favor of Employee, then all reasonable
expenses, including but not limited to, reasonable attorney's fees and
disbursements (including those incurred on appeal) of Employee in such action,
suit or other proceeding shall (on demand of Employee) forthwith be paid by the
Company.
12. SURVIVAL
The provisions of Sections 10 and 11 and this Section 12 shall survive
termination of this Agreement and remain enforceable according to their terms.
13. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other provisions
hereof.
14. NOTICES
All notices, demands and requests required or permitted to be given
under the provisions of this Agreement shall be deemed duly given if made in
writing and delivered personally or mailed by postage paid certified or
registered mail, return receipt requested, accompanied by a second copy sent by
ordinary mail, which notices shall be addressed as follows:
If to the Company:
-----------------
TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If to Employee:
--------------
By notifying the other parties in writing, given as aforesaid, any
party may from time-to-time change its address or the name of any person to
whose attention notice is to be given, or may add another person, to whose
attention notice is to be given, in connection with notice to any party.
15. ASSIGNMENT AND SUCCESSORS
Neither this Agreement nor any of his rights or duties hereunder may be
assigned or delegated by Employee. This Agreement is not assignable by the
Company except to any successor in interest which takes over all or
substantially all of the business of the Company, as it is conducted at the time
of such assignment. Any corporation into or with which the Company is merged or
consolidated or which takes over all or substantially all of the business of the
Company shall be deemed to be a successor of the Company for purposes hereof.
This Agreement shall be binding upon and, except as aforesaid, shall inure to
the benefit of the parties and their respective successors and permitted
assigns. The Company will require any successors (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company, by written agreement in form of substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
16. ENTIRE AGREEMENT; WAIVER AND OTHER
16.1 Integration. This Agreement contains the entire agreement of the
parties hereto on its subject matter and supersedes all previous agreements
between the parties hereto, written or oral, express or implied, covering the
subject matter hereof. No representations, inducements, promises or agreements,
oral or otherwise, not embodied herein, shall be of any force or effect.
16.2 No Waiver. No waiver or modification of any of the provisions of
this Agreement shall be valid unless in writing and signed by or on behalf of
the party granting such waiver or modification. No waiver by any party of any
breach or default hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other breach or default,
nor shall it in any way affect any of the other terms or conditions of this
Agreement or the enforceability thereof. No failure of the Company to exercise
any power given it hereunder or to insist upon strict compliance by Employee
with any obligation hereunder, and no custom or practice at variance with the
terms hereof, shall constitute a waiver of the right of the Company to demand
strict compliance with the terms hereof.
Employee shall not have the right to sign any waiver or modification of
any provisions of this Agreement on behalf of the Company, nor shall any action
taken by Employee reduce his obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties hereto after the Commencement
Date. Neither this Agreement nor any of the rights of any of the parties
hereunder may be terminated except as provided herein.
16.3 Obligations of Company. The Company's obligation to pay Employee
the compensation and to make the arrangements provided herein shall be absolute
and unconditional and shall not be affected by any circumstance, including,
without limitation, any setoff, counterclaim, recoupment, defense or other right
which the Company may have against Employee or anyone else. All amounts payable
by the Company hereunder shall be paid without notice or demand. Except as
expressly provided herein, the Company waives all rights which it may now have
or may hereafter have conferred upon it, by statute or otherwise, to terminate,
cancel or rescind this Agreement in whole or in part. Each and every payment
made hereunder by the Company shall be final and the Company will not seek to
recover for any reason all or any part of such payment from Employee or any
person entitled thereto. Employee shall not be required to mitigate the amount
of any payment or other benefit provided for in this Agreement by seeking other
employment or otherwise.
16.4 Rights of Beneficiaries of Employee. This Agreement shall inure to
the benefit of, and be enforceable by, Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee should die while any amounts would still be
payable to Employee hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Employee's devisee, legatee or other designee or, if there be
no such designee, to Employee's estate.
17. GOVERNING LAW
This Agreement shall be governed by and construed, and the rights and
obligations of the parties hereto enforced in accordance with the laws of the
State of New Jersey.
18. HEADINGS
The Section and Subsection headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS THEREOF, the parties have executed this Agreement s of the
date first written above, which shall be deemed to be the Commencement Date.
TECHSYS, INC.
By: ___________________________
___________________________
, Employee
EXHIBIT A
The principal duty of Employee shall be to perform the services set out below:
Employee shall be made available to the Company to be
Chairman of the Board and chief executive officer of the Company.
Exhibit D
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (the "Agreement") is dated as of the ___ day
of _____________, 200_ (the "Commencement Date") by and between TechSys, Inc., a
New Jersey corporation (the "Company"), and
___________________________________________ ("Employee");
WHEREAS, The Company desires to employ Employee and Employee is
desirous of and wishes to enter into an employment arrangement with the Company
on the terms and conditions hereinafter set forth;
NOW, THEREFORE, it is agreed as follows:
1. DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
set forth below:
1.1 "Affiliate" shall mean a Person which, directly or indirectly,
controls, is controlled by or is under common control with the
Company, and for purposes hereof, "control" shall mean the
ownership of 20% or more of the Voting Stock of the
corporation in question.
1.2 "Basic Salary" shall have the meaning assigned to it in
Section 6 of this Agreement.
1.3 "Board" shall mean the Board of Directors of the Company as
duly constituted from time to time.
1.4 "the Business" shall mean the business from time to time
conducted and proposed to be conducted by the Company,
directly or indirectly.
1.5 "Change of Control" shall mean (i) the approval by a majority
of the public holders of the voting stock of the Company of a
merger, reorganization or consolidation as a result of which
the shareholders of the Company immediately prior to such
approval do not, immediately after the consummation of such
transaction own more than 50% of the voting stock of the
surviving entity, (ii) the liquidation or dissolution of the
Company, if and solely to the extent the Company has engaged
in a substantial business following the Commencement Date or,
if the Company shall then be engaged in a business, upon the
sale of all or substantially all of the Company's assets;
(iii) the acquisition, other than from the Company directly,
by any Person or group, within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, of beneficial
ownership of (50%) or more of the outstanding common stock of
the Company, or (iv) if the individuals who serve on the Board
as of the date of the Employment Agreement no longer
constitute a majority of the members of the Board; provided,
however, that any person who becomes a director subsequent to
the Commencement date who is elected to fill a vacancy by a
majority of the individuals then serving on the Board shall be
considered as if such person was a member prior to the
Commencement date.
1.6 "Commencement Date" shall be the date of this Agreement, as
stated on page 1.
1.7 "Confidential Information" shall include, without limitation
by reason of specification, any information, including,
without limitation, trade secrets, patient, payer, vendor and
customer lists, pricing and pricing policies, operational
methods, methods of doing business, technical processes,
formulae, designs and design projects, inventions, research
projects, strategic plans, product information, production
know-how, marketing, sales and distribution plans, procedures
and methods and other business affairs of the Company or its
Affiliates, which (i) is or are designed to be used in or are
or may be useful in connection with the Business of the
Company, any Subsidiary or any Affiliate of any thereof, or
which, in the case of any of these entities, results from any
of the research or development activities of any such entity,
which (ii) is private or confidential in that it is not
generally known or available to the public, except as the
result of unauthorized disclosure by or information supplied
by Employee or any other person or entity in violation of any
agreement with the Company, or (iii) which gives the Company
of a Subsidiary or any Affiliate an opportunity or the
possibility of obtaining an advantage over competitors who may
not know or use such information or who are not lawfully
permitted to use the same.
1.8 "Control Closing" shall mean the date upon which the any
transaction which constitutes a Change of Control shall be
consummated.
1.9 "Disability" shall mean the inability of Employee to perform
Employee's duties of employment for the Company, if employed
by the Company or a Subsidiary, pursuant to the terms of this
Agreement and by-laws of the Company as hereinafter provided,
because of physical or mental disability, where such
disability shall have existed for a period of more than 90
consecutive days or an aggregate of 120 days in any 365 day
period, and if a long-term disability plan is maintained by
the Company or a Subsidiary which employs Employee, Employee
is entitled to receive long term disability payments under a
long term disability plan of the Company or any Subsidiary
which employs Employee. The fact of whether or not a
Disability exists hereunder shall be determined by appropriate
medical experts jointly selected by the Board and Employee.
The existence of a Disability means that employee's mental
and/or physical condition substantially interferes with
Employee's performance of his or her duties for the Company,
it's Subsidiaries or Affiliates as specified in this
Agreement.
1.10 "Employment Year" shall mean each twelve-month period, or part
thereof, during which Employee is employed hereunder,
commencing on the Commencement Date and on the same day of any
subsequent calendar year, the first such subsequent Employment
Year being the twelve month period which will begin on the
first anniversary of the Commencement Date.
1.11 "Person" shall mean any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated
organization, association, corporation, institution, public
benefit corporation, entity or government (whether Federal,
state, county, city, municipal or otherwise, including,
without limitation, any instrumentality, division, agency,
body or department thereof).
1.12 "Retirement" shall mean that Employee shall have reached age
65 and shall voluntarily retire under the Company's or a
Subsidiary's retirement plans (if any) applicable to him or
any earlier actual voluntary retirement by Employee from his
employment with the Company and its Subsidiaries.
1.13 "Service Area" shall mean the continental United States of
America.
1.14 "Subsidiary" shall mean a Person of which more than 50% of the
Voting Stock is owned, directly or indirectly, by the Company.
All subsidiaries are also Affiliates.
1.15 "Term" shall mean the term of employment of Employee under
this Agreement.
1.16 "Termination Date" shall have the meaning assigned to it in
Section 8.
1.17 "Voting Stock" shall mean, in the case of a corporation,
capital stock of the corporation which gives the holder the
right to vote in the election of directors for such
corporation, and in the case of a partnership, limited
liability company, trust or other non-individual Person, the
right to participate in the election or appointment of
members, trustees, managing partner or like positions or to
direct the disposition of a trust's corpus or income, in each
case in the ordinary course of business and not as the result
of, or contingent upon, the happening of any event.
Wherever from the context it appears appropriate, each word or
phrase stated in either the singular or the plural shall
include the singular and the plural, and each pronoun stated
in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter.
2. EMPLOYMENT AND DUTIES OF EMPLOYEE
2.1 Employment; Title; Duties. The Company hereby employs
Employee, and Employee hereby accepts appointment as President
and Chief Operating Officer. The principal duty of Employee
shall be to perform those services set forth on Exhibit A
attached hereto and incorporated herein, and to render
services as are necessary and desirable to protect and advance
the best interests of the Company, acting, in all instances,
under the supervision of and in accordance with the policies
set by the Board of the Company. Without further compensation,
Employee agrees to serve (if requested to do so) as a director
of the Company and as an officer and/or director of any
Subsidiary or any Affiliate.
Employee shall report to and be under the supervision of the
Board.
2.2 Performance of Duties. Employee shall devote substantially all
his full working time and efforts to the performance of his
duties as an executive of the Company and to the performance
of such other duties as are assigned him from time-to-time by
the Board. During the Term, and for a period of one year
thereafter, Employee shall not engage in or become employed,
directly or indirectly, in a business which competes with the
business of the Company without the prior written consent of
the Board, nor shall he act as a consultant to or provide
professional business of any other Person which competes with
the business of the Company, without such written consent,
which, in both instances, may be given or withheld by the
Board in its absolute discretion. The Company acknowledges
that Employee currently provides advisory services to Dialysis
West and certain of its affiliates (collectively, "Dialysis
West") in Arizona. Employee warrants that his duties for
Dialysis West are not now, and will not in the future be, in
violation of any covenant not to compete or other contractual
or legal restriction binding on the Company or its assets and
Employee agrees to immediately terminate his arrangements with
Dialysis West in the event this warrant shall be found to be
untrue when made or at any future date.
3. TERMS OF EMPLOYMENT
The employment of Employee pursuant to this Agreement shall commence as
of the Commencement Date and end on ________________, 20__, unless sooner
terminated pursuant to Section 8 of this Agreement or otherwise extended in
accordance with Section 4.
4. EXTENSION OF TERM OF EMPLOYMENT
If Employee's employment hereunder has not previously been terminated
in accordance with Section 8 hereof, then on the first anniversary of the
Commencement Date the Term shall be extended for one additional year and on each
subsequent anniversary of the Commencement Date, the Term shall be extended for
one additional year, unless the Board shall provide written notice to Employee
ninety (90) days or more prior to such anniversary date that this Agreement will
not be so extended. The rights of termination set forth in Section 8 shall be
applicable during any such extended term.
5. COMPENSATION AND BENEFITS
The Company and/or its Subsidiaries shall pay Employee as compensation
for all of the services to be rendered by him hereunder during the Term, and in
consideration of the various restrictions imposed upon Employee during the Term,
and otherwise under this Agreement, the Basic Salary and other benefits as
provided for and determined pursuant to Sections 6 to 8, inclusive, of this
Agreement.
6. BASIC SALARY/BONUS
6.1 The Company shall pay Employee, as compensation for all of the
services to be rendered by him hereunder during each
Employment Year, a salary of $250,000 per Employment Year (as
adjusted upward by the Board from time to time) (the "Basic
Salary"), payable in substantially equal bi-weekly payments,
less such deductions or amounts as are required to be deducted
or withheld by applicable laws or regulations, deductions for
employee contributions to welfare benefits provided by the
Company or a Subsidiary to Employee and less such other
deductions or amounts, if any, as are authorized by Employee.
Unless otherwise agreed by Employee and the Board, the Basic
Salary should be increased by five percent (5%) per Employment
Year during the Term from the Base Salary in effect during the
immediately preceding full Employment Year. The Basic Salary
shall be prorated for the month in which employment by the
Company or a Subsidiary commences or terminates, and for any
Employment Year which is less than 12 months in duration. The
Basic Salary may be increased from time-to-time by the Board
(without Employee's participation as a director) and once
increased, shall not thereafter be reduced.
6.2 Employee will be paid cash bonuses at the discretion of the
Board (without Employee's participation as a director) in
accordance with the bonus plan attached as Exhibit B hereto
(the "Bonus").
7. ADDITIONAL BENEFITS AND REIMBURSEMENT FOR EXPENSES
7.1 Additional Benefits. The Company shall provide the following
additional benefits to Employee during the Term:
(i) participation on an equitable basis in any employee
benefit plans established for senior management
employees of the Company.
(ii) four (4) weeks vacation with pay in each Employment
Year. There will be no carryover of unused vacation
time or pay from Employment Year to Employment Year.
Employee shall also be entitled to all holiday
privileges approved by the Board during the Term, not
to be less than six (6) days per year.
(iii) the lease or financing by the Company for use by
Employee (or the Company shall reimburse Employee for
these payments if the lease or financing is in his
name) of a late model luxury automobile (excluding
payments by the Company of insurance and other
expenses thereof which shall be paid by the Company
in addition to the lease payment); provided, however,
the aggregate lease or financing payments per month
may not exceed $1,500.
(iv) the payment of premiums for $1,000,000 of term life
insurance on Employee's life (The beneficiary of whom
shall be the Company).
(v) The payment of premiums for disability insurance
coverage for Employee.
(vi) Participation by Employee in a stock option plan for
senior management of the Company on a basis
consistent with other members of senior management of
the Company.
7.2 Reimbursement for Expenses. The Company shall pay or reimburse
Employee for all reasonable expenses actually incurred or paid
by him during the Term in the performance of his services
under this Agreement, upon presentation of such bills, expense
statements, vouchers or such other supporting information as
the Board may reasonably require. In the event the Company
requires Employee to travel on business during the Term,
Employee shall be reimbursed for any travel expenses in
accordance with this Section 7.2.
8. TERMINATION OF EMPLOYMENT
8.1 Death. If Employee dies during the Term, on the date of his
death this Agreement shall terminate without further liability
of the Company to make any further payments to Employee
hereunder except with respect to amounts previously due and
owing to Employee hereunder.
8.2 Disability. If, during the Term, Employee has a Disability,
the Company may, at any time after Employee has a Disability,
terminate Employee's employment by written notice to him and
the Company shall have no further liability to Employee
hereunder except with respect to amounts previously due and
owing to Employee hereunder.
8.3 Retirement. The Agreement will be terminated by Employee's
Retirement at the date of such Retirement.
8.4 Cause Termination. If Employee is terminated for cause,
including without limitation upon a material breach of this
agreement or conviction of a felony or another crime relating
to moral turpitude or fraud or crimes against the Company or
its Subsidiaries or other Affiliates, this Agreement shall
terminate without any further liability on the part of the
Company.
8.5 Change of Control. Employee shall be entitled to terminate his
employment pursuant to this Agreement following a Change of
Control (a "Control Termination"). Employee shall elect a
Control Termination, if any, by the delivery of a written
notice (a "Control Termination Notice") to the Company. The
Control Termination Notice shall set forth that Employee has
elected to exercise a Control Termination effective on the
date set forth in the Control Termination Notice. In the event
a Change of Control shall result from open market purchases
not previously consented to by the Board, the Control
Termination Notice shall be sent not more than 60 days
following the Change of Control and shall designate a
resignation date not less than 20 nor more than 30 days
following the delivery of the Control Termination Notice. In
the event a Change of Control shall result from any other
transaction, the Company shall have the right to require
Employee to elect to deliver or not deliver the Control
Termination Notice within 15 days of the Company's written
request. The Company's written request shall be delivered
after the date on which the Board approves the negotiation of
the Change of Control, approves the Change of Control or
approves the submission of the Change of Control to the
shareholders of the Company, whichever shall first occur,
whether or not such approval is contingent. Unless the Company
shall request a shorter period, the date upon which Employee's
employment shall terminate shall be not less than 30 days
following the Control Closing. In no event shall the change of
Control Termination be effective or binding on the Company or
Employee unless and until the Control Closing shall be
consummated. In the event there shall not be a Control Closing
following the Employee's election to deliver or not deliver a
Control Termination Notice at the Company's request, the
provisions of this Agreement shall remain in full force and
effect with respect to any subsequent Change of Control. Upon
the effective date of the Control Termination, Employee shall
be entitled to receive all amounts due and owing to the
Employee as of the date the Company receives notice of the
Control Termination, plus an aggregate amount equal to two
years then-current Base Salary. The change of control
severance amount is payable 50% in cash as of the date of the
Closing or 30 days after Employee's delivery of the notice of
Control Termination, if such date is after the Closing, with
the remainder payable in six months following the date of the
first payment.
8.5 Notice of Termination. Any purported termination of employment
by the Company or a Subsidiary shall be communicated by
written Notice of Termination to Employee. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice
given by the Company or a Subsidiary, as the case may be,
which shall indicate the specific basis for termination and
shall set forth in reasonable detail the facts and
circumstances claimed to provide a basis for determination of
any payments under this Agreement.
8.6 Date of Termination. For purposes of this Agreement, "Date of
Termination" shall mean the date specified in the Notice of
Termination, which shall not be more than ninety (90) days
after such Notice of Termination is given.
9. REPRESENTATION AND WARRANTY BY EMPLOYEE
Employee hereby represents and warrants to the Company, the same being
part of the essence of this Agreement that, as of the Commencement Date, he is
not a party to any agreement, contract or understanding, he is not undertaking
any activity and that no facts or circumstances exist which (i) would in any way
restrict or prohibit him in any material way from undertaking or performing any
of his obligations under this Agreement or (ii) would cause the Company to be in
material breach of any agreement to which the Company or any Subsidiary or
Affiliate is a party or to which any of their assets is subject. The foregoing
representations and warranties shall remain in effect throughout the Term.
10. CONFIDENTIAL INFORMATION AND PROPRIETARY INTERESTS
10.1. Acknowledgment of Confidentiality. Employee understands and
acknowledges that he may obtain Confidential Information
during the course of his employment by the Company. Employee
further acknowledges that the services to be rendered by him
are of a special, unique and extraordinary character and that,
in connection with such services, he will have access to
Confidential Information vital to the Company's and
Affiliates' business. Accordingly, Employee agrees that he
shall not, either during the Term thereafter (i) use or
disclose any such Confidential Information outside the Company
and Affiliates; or (ii). except as required in the proper
performance of his services hereunder, remove or aid in the
removal from the premises of the Company or any Affiliate, of
any Confidential Information or any property or material
relating thereto.
In the event Employee is required by law or a court order to disclose
any such Confidential Information, he shall promptly notify the Company of such
requirement and provide the Company with a copy of any court order or of any law
which in his opinion requires such disclosure and, if the Company so elects,
permit the Company an adequate opportunity, at its own expense, to contest such
law or court order. Employee shall assist the Company as a witness in any such
contest without charge to the Company or any Affiliate.
10.2 Delivery of Material. Employee shall promptly, and without
charge, deliver to the Company on the termination of his
employment hereunder, or at any other time the Company may so
request, all memoranda notes, records, reports, manuals,
computer disks, videotapes, drawings, blueprints and other
documents (and all copies thereof) relating to the Business of
the Company and the Affiliates, and all property associated
therewith, together with all security cards, automobiles,
credit cards, telephones and other equipment owned or leased
by the Company which he may then posses or have under his
control.
10.3 Lists. Employee acknowledges that (i) all lists of referrers
and customers and vendors of the Company and its Affiliates
developed during the course of Employee's employment and/or by
the Company or an Affiliate are and shall be the sole and
exclusive property of the Company and its Affiliates, as the
case may be, and Employee further acknowledges and agrees that
he neither has nor shall have any personal right, title or
interest therein; (ii) that such lists are and must continue
to be confidential; and (iii) that such lists are not readily
accessible to competitors of the company or its Affiliates.
10.4 Ideas, Programs, Etc. If, during the Term, Employee invents or
develops any ideas, patient lists or the like, relating to or
useful in connection with the Business of the Company, the
same are and shall remain the property of the Company, and he
will promptly deliver all copies of the same to the Company;
assign his interest therein to the Company and execute such
documents as Company's counsel may request to convey title
thereto to the Company. Employee shall not be entitled to any
compensation, other than as provided in this Agreement, for
carrying out his obligations to the Company under Subsection
10.4 any other Subsection of this Section 10.
10.5 Extension of Section 10. All of the provisions of Section 10
shall be deemed to be applicable to all Confidential
Information, and to all ideas, programs, etc. as referred to
Subsection 10.4, to which Employee may have obtained access or
which he may have invented or developed during his employment
by the Company.
11. DISPUTES AND REMEDIES
11.1 WAIVER OF JURY TRIAL. EMPLOYEE AND THE COMPANY HEREBY WAIVE
THE RIGHT TO A TRIAL BY JURY IN THE EVENT OF ANY DISPUTE WHICH
ARISES UNDER THIS AGREEMENT.
11.2 Injunctive Relief. If Employee commits a breach, or threatens
to commit a breach, of any of the provisions of Sections 2.2,
9 or 10, the Company shall have the following rights and
remedies (each of which shall be independent of the other, and
shall be severally enforceable, and all of which shall be in
addition to, and not in lieu of, any other rights and remedies
available to the Company at law or in equity:
(i) the right and remedy to have the provisions of this
Agreement specifically enforced by any court having
equity jurisdiction, it being acknowledged by
Employee that any such breach or threatened breach
will or may cause irreparable injury to the Company
and that money damages will or may not provide an
adequate remedy to the Company; and
(ii) the right and remedy to require Employee to account
for and pay over to the Company all compensation,
profits, monies, increments, things of value or other
benefits, derived or received by Employee as the
result of any acts or transactions constituting a
breach of any of the provisions of Sections 2.2, 9 or
10 of this Agreement, and Employee hereby agrees to
account for and pay over all such compensation,
profits, monies, increments, things of value or other
benefits to the Company.
11.3 Partial Enforceability. If any provision contained in Sections
2.2 or 10, or any part thereof, is construed to be invalid or
unenforceable, the same shall not affect the remainder of
Employee's agreements, covenants and undertakings, or the
other restrictions which he has accepted in Sections 2.2, 9
and 10, and the remaining such agreements, covenants,
undertakings and restriction shall be given the fullest
possible effect, without regard to the invalid parts.
11.4 Intention of Parties. It is distinctly understood and agreed
that the confidentiality, proprietary right, and restrictive
covenant provisions of this Agreement have been accepted, and
agreed to by Employee in contemplation of this Agreement. It
is therefore the specific intention of the parties, any
general considerations of public policy to the contrary
notwithstanding, that the provisions of Sections 2.2, 9 and 10
of this Agreement shall be enforced as written and to the
fullest extent possible.
11.5 Adjustment of Restrictions. Despite the prior provisions of
this Section 11, if any covenant or agreement contained in
Sections 2.2, 9 or 10, or any part thereof, is held by any
court of competent jurisdiction to be unenforceable because of
the duration of such provision, the court making such
determination shall have the power to reduce the duration of
such provision and, in it reduced form, such provision shall
be enforceable.
11.6 Attorneys Fees and Expenses. In the event that any action,
suit or other proceeding at law or in equity is brought to
enforce the provisions of this Agreement, or to obtain money
damages for the breach thereof, and such action results in the
award of a judgment for money damages or in the granting of
any injunction in favor of the Company, then all reasonable
expenses, including, but not limited to, reasonable attorneys'
fees and disbursements (including those incurred on appeal) of
the Company in such action, suit or other proceeding shall (on
demand of the Company) forthwith be paid by Employee. If such
action results in a judgment in favor of Employee, then all
reasonable expenses, including but not limited to, reasonable
attorney's fees and disbursements (including those incurred on
appeal) of Employee in such action, suit or other proceeding
shall (on demand of Employee) forthwith be paid by the
Company.
12. SURVIVAL
The provisions of Sections 2.2, 9, 10 and 11 and this Section 12 shall
survive termination of this Agreement and remain enforceable according to their
terms.
13. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall in no way affect the validity or enforceability of any other provisions
hereof.
14. NOTICES
All notices, demands and requests required or permitted to be given
under the provisions of this Agreement shall be deemed duly given if made in
writing and delivered personally or mailed by postage prepaid certified or
registered mail, return receipt requested, accompanied by a second copy sent by
ordinary mail, which notices shall be addressed as follows:
If to the Company:
TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
If to Employee:
By notifying the other parties in writing, given as aforesaid, nay
party may from time-to-time change its address or the name of any person to
whose attention notice is to be given, in connection with notice to any party.
15. ASSIGNMENT AND SUCCESSORS
Neither this Agreement nor any of his rights of duties hereunder may be
assigned or delegated by Employee. This Agreement is not assignable by the
Company except to any successor in interest which takes over all or
substantially al of the business of the Company, as it is conducted at the time
of such assignment. Any corporation into or with which the Company is merged or
consolidated or which takes over all or substantially all of the business of the
Company shall be deemed to be a successor of the Company for purposes hereof.
This Agreement shall be binding upon and except as aforesaid, shall inure to the
benefit of the parties and their respective successors and permitted assigns.
The Company will require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company, by written agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
16. ENTIRE AGREEMENT; WAIVER AND OTHER
16.1 Integration. This Agreement contains the entire agreement of
the parties hereto on its subject matter and supersedes all
previous agreements between the parties hereto, written or
oral, express or implied, covering the subject matter hereof.
No representations, inducements, promises or agreements, oral
or otherwise, not embodied herein, shall be of any force or
effect.
16.2 No Waiver. No waiver or modification of any of the provisions
of this Agreement shall be valid unless in writing and signed
by or on behalf of the party granting such waiver or
modification. No waiver or any party of any breach or default
hereunder shall be deemed a waiver of any repetition of such
breach or default or shall be deemed a waiver of any other
breach or default, nor shall it in any way affect any of the
other terms or conditions of this Agreement or the
enforceability thereof. No failure of the Company to exercise
any power given it hereunder or to insist upon strict
compliance by Employee with any obligation hereunder, and no
custom or practice at variance with the terms hereof, shall
constitute a waiver of the right of the Company to demand
strict compliance with the terms hereof.
Employee shall not have the right to sign any waiver or modification of
any provisions of this Agreement on behalf of the Company, nor shall any action
taken by Employee reduce his obligations under this Agreement.
This Agreement may not be supplemented or rescinded except by
instrument in writing signed by all of the parties hereto after the Commencement
Date. Neither this Agreement nor any of the rights of any of the parties
hereunder may be terminated except as provided herein.
16.3 Obligations of Company. The Company's obligation to pay
Employee the compensation and to make the arrangements
provided herein shall be absolute and unconditional and shall
not be affected by any circumstance, including, without
limitation, any setoff, counterclaim, recoupment, defense or
other right which the Company may have against Employee or
anyone else. All amounts payable by the Company hereunder
shall be paid without notice or demand. Except as expressly
provided herein, the Company waives all rights which it may
now have or may hereafter have conferred upon it, by statute
or otherwise, to terminate, cancel or rescind this Agreement
in whole or in part. Each and every payment made hereunder by
the Company shall be final and the Company will not seek to
recover for any reason all or any part of such payment from
Employee or any person entitled thereto. Employee shall not be
required to mitigate the amount of any payment or other
benefit provided for in this Agreement by seeking other
employment or otherwise.
16.4 Rights of Beneficiaries of Employee. This Agreement shall
inure to the benefit of, and be enforceable by, Employee's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If
Employee should die while any amounts would still be payable
to Employee hereunder if he had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to Employee's
devisee, legatee or other designee or, if there be no such
designee, to the Employee's estate.
17. GOVERNING LAW
This Agreement shall be governed by and construed, and the rights and
obligations of the parties hereto enforced, in accordance with the laws of the
State of New Jersey.
18. HEADINGS
The Section and Subsection headings contained herein are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above, which shall be deemed to be the Commencement Date.
TECHSYS, INC.
By: ______________________________
______________________________
, Employee
EXHIBIT A
The principal duty of Employee as President and Chief Operating Officer
of the Company shall be to perform the services set out below:
1. Manage the day-to-day operations of the Company, its Subsidiaries and
its other Affiliates.
2. Hire and dismiss officers and employees of the Company, its
Subsidiaries and its other Affiliates and define their duties.
3. Oversee the preparation of budgets and financial statements for the
Company, its Subsidiaries and its other Affiliates.
4. Otherwise be responsible to the Board for the administration of
corporate staff.
EXHIBIT B
Annual performance bonus is based on Annual Earnings Before Taxes
("EBT"). The bonus is calculated as follows:
No bonus unless current year's EBT with respect to which a
bonus is being paid (the "Bonus Year") is higher than the EBT
in the year immediately prior to the Bonus Year ("Prior Year
EBT")
Bonus equal to 10% EBT in the Bonus Year for EBT in the Bonus
Year which exceeds the Prior Year EBT, provided, however, the
Bonus may not exceed 100% of Base.
Exhibit E
April 5, 2001
TechSys, Inc.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
I am delivering this letter to you in connection with the
proposed merger (the "Merger") of Newco TKSS, Inc. ("Newco"), a New Jersey
corporation wholly-owned by TechSys, Inc., a New Jersey corporation ("TechSys"),
with and into Fuel Cell Companies, Inc. ("FCCI"), a Nevada corporation, pursuant
to the Agreement and Plan of Merger dated as of April 5, 2001 (the "Merger
Agreement") by and among Newco, TechSys and FCCI. Capitalized terms used herein
and not otherwise defined have the meanings assigned to them in the Merger
Agreement.
I (which includes, for the purposes of this letter, any entity
or partnership of which I control or of which I own no less than 20% of the
voting power) currently own shares of the capital stock of FCCI ("FCCI Capital
Stock"). As a result of the Merger, I will receive shares of TechSys Common
Stock in exchange for my shares of FCCI Capital Stock.
I have been advised that as of the date of this letter, I may
be deemed to be an "affiliate" of FCCI, as the term "affiliate" is defined for
purposes of paragraph (d) of Rule 144 ("Rule 144"), and paragraphs (c) and (d)
of Rule 145 ("Rule 145"), of the rules and regulations promulgated under the
Securities Act of 1933, as amended (the "Securities Act") by the Securities
Exchange Commission ("SEC").
I hereby acknowledge to, represent to, and agree with, TechSys
that:
A. Transfer Restrictions During Merger Consummation Period. I
shall not sell, transfer, reduce my risk with respect to or otherwise dispose of
("Transfer") any FCCI Capital Stock during the period commencing on the date
hereof and ending immediately after financial results covering at least 30 days
of post-Merger combined operations have been published by TechSys by means of
the filing of a Form 10-Q, Form 10-K or Form 8-K under the Securities Exchange
Act of 1934, as amended, the issuance of a quarterly earnings report, or any
other public issuance which satisfies the requirements of ASR 135 ("Public
Disclosure of Post-Merger Results"), in each case except for Transfers by
operation of law, by will or under the laws of descent and distribution. For
purposes of this paragraph only, "FCCI Capital Stock" includes TechSys Common
Stock, as converted. I understand that TechSys has agreed to publish financial
results covering at least 30 days of post-Merger combined operations of TechSys
and FCCI as soon as practicable (but in no event later than 30 days) following
the close of the first calendar quarter ending 31 days after the Effective Time.
B. Compliance with Rule 144 and Rule 145. I have been advised
that the issuance of TechSys Common Stock to me pursuant to the Merger will be
registered with the SEC under the Securities Act on a Registration Statement on
Form S-4. However, I have also been advised that because I may be deemed to be
an affiliate of FCCI at the time the Merger is submitted for a vote of FCCI's
stockholders, and because I may be deemed to be an affiliate of TechSys upon the
consummation of the Merger, any Transfer of TechSys Common Stock is restricted
under each of Rule 144 and Rule 145. I agree that, for so long as I may be
deemed an affiliate of either FCCI or TechSys, I shall not Transfer any TechSys
Common Stock received by me or any of my affiliates, unless:
(1) such Transfer is made in conformity with the
volume and other limitations of Rule 144 and Rule 145,
(2) in the opinion of TechSys' counsel or counsel
reasonably acceptable to TechSys, such Transfer is otherwise exempt from
registration under the Securities Act, or
(3) such Transfer is registered under the Securities
Act.
C. Compliance with Section 16 of the Exchange Act.
(1) I am aware that, as a stockholder and affiliate
of TechSys, I will be obligated under Section 16 of the Exchange Act ("Section
16") to file certain reports required thereunder with the SEC, and I agree (i)
to make all such filings in a timely manner, and (ii) that, in the event that I
do not file any report required to be filed by me pursuant to Section 16 in a
timely manner, I will promptly inform TechSys of my inability to file such
report; and
(2) I understand that TechSys is a publicly traded
company and that, pursuant to Section 16, I cannot Transfer any of my shares of
TechSys Common Stock while in possession of any material non-public information.
D. Standstill Agreement. As of the date hereof, I do not own
any shares of TechSys Common Stock. I agree that I will not purchase or
Transfer, privately or in the public market, any shares of TechSys Common Stock
during the period that begins on the date hereof and ends on the earlier of:
(1) the first calendar day after Public Disclosure of
Post-Merger Results has been made by TechSys; and
(2) the 31st calendar day after the date of
termination of the Merger Agreement.
E. Consultation with Counsel. I have carefully read this
letter and the Agreement and I have had the opportunity to discuss the
requirements of such documents and other applicable limitations upon my ability
to Transfer TechSys Common Stock to the extent I felt necessary with my counsel
or counsel for FCCI.
Execution of this letter is not an admission on my part that I
am, or any person or entity controlled by me is, an "affiliate" of FCCI as
described in the second paragraph of this letter, or a waiver of any rights I
may have to object to any claim that I am such an affiliate on or after the date
of this letter. This letter shall terminate concurrently with any termination of
the Agreement in accordance with the terms.
Very truly yours,
____________________________
Name:
Accepted this 5th day
of April, 2001 by
TECHSYS, INC.
By:____________________
Name: Xxxxxx X. Xxxxx
Title: President
Exhibit F
STOCKHOLDERS AGREEMENT
by and among
TECHSYS, INC.
and
THE STOCKHOLDERS NAMED HEREIN
Dated as of _________ ___, 2001
STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT, dated as of __________ __, 2001 (this
"Stockholders Agreement"), by and among TECHSYS, INC., a New Jersey corporation
having its principal office at 00 Xxxxx Xxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
("TechSys") and each of the Stockholders (as defined in Section 1.2) set forth
on the signature page hereto.
RECITALS
WHEREAS, TechSys has entered into an Agreement and Plan of
Merger (the "Merger Agreement") by and among TechSys, Newco TKSS, Inc., a
wholly-owned subsidiary of TechSys created for the sole purpose of consummating
the transactions contemplated by the Merger Agreement ("Newco"), and Fuel Cell
Companies, Inc., a Nevada corporation having its principal office at 000 Xxxxxxx
Xxxxx, Xxxxxx, Xxx Xxxxxx 00000 ("FCCI"), which contemplates a transaction in
which, at the effective time of the Merger, as set forth in the Merger Agreement
(the "Effective Time"), Newco will merge with and into FCCI (the "Merger")
pursuant to the terms of the Merger Agreement, the Plan of Merger to be filed in
the Office of the Treasurer of the State of New Jersey and the Office of the
Secretary of State of the State of Nevada (the "Plan of Merger"), and the
applicable provisions of the laws of the State of New Jersey and the State of
Nevada;
WHEREAS, prior to the Effective Time, TechTron, a Delaware
corporation ("TechTron"), was a principal stockholder of TechSys, each of Xxxxxx
X. Xxxxx ("Xxxxxx Xxxxx") and Xxxxx X. Xxxxx ("Xxxxx Xxxxx," and together with
TechTron and Xxxxxx Xxxxx, the "TechSys Principals") were principal stockholders
of TechTron, and each of Xxxxxxx Xxxxxxxx ("Bricklin"), Xxxxxxx Xxxxxxxx
("Xxxxxxxx"), Xxxx Xxxxx ("Xxxxx"), 3939 Corp. Pension Fund ("3939 Corp.")
Millennium Pension Fund ("Millennium"), and 00 Xxxxxxxxx Xxxxxxx Xxxx ("00
Xxxxxxxxx," and together with Bricklin, Janowski, Moore, 3939 Corp. and
Millennium, the "FCCI Principals") were, directly or indirectly, principal
stockholders of FCCI;
WHEREAS, the Stockholders (as defined in Section 2.1) are
entering into this Stockholders Agreement as a condition of the Merger
Agreement, and this Stockholders Agreement shall be effective upon consummation
of the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and those contained in the Merger Agreement, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions.
(a) The following terms, as used herein, have the following
meanings:
"Affiliate" means any entity controlling, controlled by or under common
control with a designated Person. For the purposes of this definition, "control"
shall have the meaning specified for that word in Rule 405 promulgated by the
Securities and Exchange Commission under the Securities Act.
"Business Day" means each day, with the exception of the following
days: Saturdays, Sundays, and any other days that banks in New Jersey are
authorized to be closed.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
prior to or after the date hereof, or any federal statute or statutes which
shall have been enacted to take the place of such Act, together with all rules
and regulations promulgated thereunder.
"Notice" means notice given both in writing (by facsimile or by
electronic mail) and by telephone (either through direct communication or by
leaving a message on voicemail, an answering machine, with an answering service
or with an authorized representative). All Notice provided under this Agreement
must be provided both in writing and by telephone.
"Notify" means to give Notice to any Person pursuant to the terms of
this Stockholder's Agreement.
"Person" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or a government
organization or an agency or political subdivision thereof.
"Restricted Security" and "Restricted Securities" means (i) the TechSys
Common Stock and any TechSys Common Stock issuable upon the exercise of warrants
or options or issuable upon the conversion of any other securities owned
directly or beneficially by any Stockholder immediately after the Effective
Time, and (ii) any TechSys Common Stock and any TechSys Common Stock issuable
upon the exercise of warrants or options or issuable upon the conversion of any
other securities acquired by any Stockholder thereafter.
"Securities Act" means the Securities Act of 1933, as amended prior to
or after the date hereof, or any federal statute or statutes which shall be
enacted to take the place of such Act, together with all rules and regulations
promulgated thereunder.
"Stockholder" means each of TechTron, Xxxxxx Xxxxx, Xxxxx Xxxxx,
Bricklin, Janowski, Moore, 3939 Corp., Millennium, and 44 Corporate (and any
entity or partnership over which any such Person has control or over which any
such Person directly or indirectly owns or controls 20% or more of the voting
power), for so long as each is a stockholder of TechSys or holds options or
warrants or other securities that may be exercised or converted into shares of
TechSys Common Stock or for so long as such shares of TechSys Common Stock,
options, warrants, or other securities are held by a nominee or affiliate of
such Person, as hereafter set forth.
"Stockholders" means all of such Persons defined herein as a
Stockholder, collectively.
"TechSys" means TechSys, Inc., as defined in the Preamble to this
Stockholders Agreement, regardless of any name change subsequent to the date of
this Stockholders Agreement.
"TechSys Common Stock" means the common stock of TechSys, no par value
per share.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
Term Section
---- -------
TechSys Preamble
Merger Agreement Recitals
Newco Recitals
FCCI Recitals
Merger Recitals
Effective Time Recitals
Plan of Merger Recitals
TechTron Recitals
Xxxxxx Xxxxx Recitals
Xxxxx Xxxxx Recitals
TechSys Principals Recitals
Bricklin Recitals
Xxxxxxxx Recitals
Xxxxx Recitals
3939 Corp. Recitals
Millennium Recitals
44 Corporate Recitals
FCCI Principals Recitals
Transfer 2.02
Consent 2.02
Majority Selling Stockholders 2.05(b)
Majority Stockholder Sale 2.05(b)
Estate 2.05(b)(i)
Notice of Proposed Sale 2.05(b)(i)
Notice of Intention to Participate 2.05(b)(ii)
Transferable Estate Shares 2.05(c)(ii)
Family Group 2.05(d)
Selling Stockholder 2.05(e)
Selling Stockholder Sale 2.05(e)
Offer 2.05(e)
Offered Shares 2.05(e)
Notice of Intention to Purchase 2.05(e)(i)
Supermajority Selling Stockholders 4.01
Third Party Purchaser 4.01
FCCI Directors 5.02(a)(i)
TechSys Directors 5.02(a)(ii)
ARTICLE II
SECURITIES TRANSFER RESTRICTIONS
Each Stockholder agrees that Restricted Securities shall not be
transferable except upon the conditions specified in this Article II, the
purposes of which include ensuring compliance with the provisions of the
Securities Act and state securities laws in respect of the transfer of any
Restricted Security.
Section 2.01. Restrictive Legends.
(a) Unless and until otherwise permitted by this Article II,
each certificate for a Restricted Security issued to a Stockholder, or to any
subsequent transferee of such certificate shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER, VOTING, AND OTHER MATTERS AS SET
FORTH IN A CERTAIN STOCKHOLDERS AGREEMENT, DATED AS OF [______
__], 2001, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM
TECHSYS, INC."
(b) TechSys may order or issue instructions for the transfer
agent for any Restricted Securities to stop the Transfer of any Restricted
Securities represented by certificates bearing the legend set forth in
subsections (a) of this Section 2.01 until the conditions of this Article II
with respect to the Transfer of such shares have been satisfied.
Section 2.02. Restrictions on Transfer of TechSys Common Stock. Except
as provided in this Stockholders Agreement, no Stockholder may sell, transfer,
encumber, hypothecate or otherwise dispose of any Restricted Security (a
"Transfer"), privately, by operation of law, by reason of death, in the public
market, or otherwise without the prior written consent of all of the other
Stockholders, which consent may be unreasonably withheld by any Stockholder for
any reason or for no reason ("Consent"). If a Transfer of any Restricted
Security is made in violation of this Stockholders Agreement, such Transfer
shall be deemed to have not occurred, and the purported transferee thereof shall
have no rights thereon.
Section 2.03. Notice of Proposed Transfer. Prior to any proposed
Transfer of any Restricted Security by which the transferor seeks to obtain
Consent pursuant to Section 2.02, the Stockholder desiring to effect such
Transfer shall deliver (a) Notice to TechSys and to each of the other
Stockholders which briefly describes the manner of such Transfer, and (b) a
written opinion of counsel for such holder (who may be inside counsel in the
case of an institutional holder) or counsel for TechSys to the effect that such
Transfer may be effected without the registration of such securities under the
Securities Act.
Section 2.04. Termination of Restrictions.
(a) Notwithstanding the provisions of this Article II, the
restrictions imposed by this Article II upon the transferability of Restricted
Securities shall terminate as to any particular Restricted Security when this
Stockholders Agreement is terminated pursuant to Section 6.01 or Section 6.05.
(b) Whenever the restrictions imposed by this Article II shall
terminate, as herein above provided, the holder of any Restricted Securities
then outstanding as to which such restrictions shall have terminated shall be
entitled to receive from TechSys, without expense to such holder, one or more
new certificates for Restricted Securities not bearing the restrictive legend
set forth in Subsection (a) of Section 2.01 hereof, as applicable.
Section 2.05. Non-Applicability of Restrictions on Transfer.
(a) Notwithstanding the provisions of Section 2.02 hereof, any
Stockholder may from time to time Transfer all or any part of such Stockholder's
Restricted Securities, without the Consent of any other Stockholder, as follows:
(i) to a nominee identified in writing to TechSys as
being the nominee of or for such Stockholder, and any nominee of or for a
beneficial owner of Restricted Securities identified in writing to TechSys as
being the nominee of or for such beneficial owner may from time to time Transfer
all or part of the Restricted Securities registered in the name of such nominee
but held as nominee on behalf of such beneficial owner, to such beneficial
owner, or
(ii) to an Affiliate of such Stockholder,
provided, that, each such transferee referred to in
clauses (i) and (ii) above shall remain subject to all restrictions on the
Transfer of the Restricted Securities herein contained and shall agree in
writing to be bound by the other terms and conditions of this Stockholders
Agreement, and provided further, that, subsequent to such Transfer, with respect
to each such transferee, the provisions of this Stockholders Agreement that
refer to the death of a Stockholder shall refer to the death of the original
Stockholder hereunder.
(b) Notwithstanding the provisions of Section 2.02 hereof, in
the event that a Stockholder or Stockholders holding more than 50% of the
Restricted Securities covered by this Stockholders Agreement ("Majority Selling
Stockholders") propose to sell 30% or more of their Restricted Securities to any
Person (including any other Stockholder) (a "Majority Stockholder Sale"), such
Majority Selling Stockholders must first:
(i) provide Notice to TechSys, each other
Stockholder, and the estate of any deceased Stockholders (an "Estate") of the
Majority Selling Stockholder's intention to so sell ("Notice of Proposed Sale"),
and provide to each other Stockholder and each Estate information regarding the
number of shares being offered by the Majority Selling Stockholders, the total
number of shares owned by the Majority Selling Stockholders, the terms and
conditions, including price, of the proposed sale, and all other material facts
relating to the proposed sale; and
(ii) allow each other Stockholder, and each Estate,
to participate in such proposed sale on a pro rata basis on the same terms and
conditions by providing TechSys and any Majority Selling Stockholder with Notice
of such Stockholder's or such Estate's intention to participate in such proposed
sale ("Notice of Intention to Participate"); provided, that, Consent to the
Majority Stockholder Sale shall be deemed to be given by each Stockholder and
Estate that does not deliver Notice of Intention to Participate to TechSys and
to any Majority Stockholder on or before 8:00 a.m. Eastern Time on the third
Business Day after the date of delivery by the Majority Selling Stockholders of
the Notice of Proposed Sale.
(c) Notwithstanding the provisions of Section 2.02 hereof,
without obtaining the Consent of any other Stockholder, any individual
Stockholder may Transfer Restricted Securities, with or without consideration,
upon the death of such Stockholder pursuant to applicable laws of descent and
distribution; provided, that:
(i) upon the death of any individual Stockholder, any
shares of Restricted Securities to be sold by the Estate or otherwise
Transferred by the Estate pursuant to the applicable laws of descent and
distribution shall first be offered by the Estate to the other Stockholders,
which shall have the right to purchase such Restricted Securities, on a pro rata
basis; and
(ii) in the event that any such other Stockholder
elects not to purchase all or any portion of its pro rata share of the
Restricted Securities offered by the Estate, the Stockholders electing to
purchase their entire pro rata share of such Restricted Securities shall have
the right to purchase the balance of the Restricted Securities offered by the
Estate. In the event that any Restricted Security or Restricted Securities of
such other Stockholder are not purchased by the other Stockholders, the Estate
may freely Transfer such Restricted Security or Restricted Securities not
purchased by such other Stockholder (the "Transferable Estate Shares"), provided
that such Transfer is not made in contravention of any state or federal
securities law. Neither the Transferable Estate Shares Transferred in accordance
with Section 2.05(c)(ii), nor the transferee or transferees of such Transferable
Estate Shares, shall be bound by the terms, conditions or restrictions set forth
in this Stockholders Agreement.
(d) Notwithstanding the provisions of Section 2.02 hereof,
without obtaining the Consent of any other Stockholder, any Stockholder may
Transfer Restricted Securities among such Stockholder's Family Group; provided,
that, with respect to Restricted Securities other than those Transferred
pursuant to Section 2.05(c)(ii) hereof, the restrictions contained in this
Stockholders Agreement shall continue to be applicable to, and bind the
transferee of, the Restricted Securities after any such Transfer, the
transferees of such Restricted Securities shall have agreed in writing in an
instrument satisfactory in form and substance to the Stockholders to be bound by
the provisions of this Stockholders Agreement with respect to the Restricted
Securities so Transferred, and (prior to the death of Stockholder) each such
transferee of Restricted Securities shall have entered into proxies and other
agreements satisfactory to the other Stockholders pursuant to which the
Stockholder shall have the sole right to vote such Restricted Securities for all
purposes.
For purposes of this Stockholders Agreement, "Family Group"
means Stockholder's spouse and descendants (whether natural or adopted), any
trust which at the time of such Transfer and at all times thereafter is and
remains solely for the benefit of Stockholder and/or Stockholder's spouse and/or
descendants and any family partnership the partners of which consist solely of
Stockholder, such spouse, such descendants or such trusts; and, provided
further, that, upon the death of an individual Stockholder who Transferred
Restricted Securities to a Family Group, each member of such Family Group shall
have the rights and privileges bestowed upon an Estate pursuant to Section 2.05
hereof.
(e) Notwithstanding the provisions of Section 2.02 hereof, if
at any time a Stockholder desires to sell (a "Selling Stockholder") all or any
portion of its shares of TechSys Common Stock (a "Selling Stockholder Sale"),
the Selling Stockholder shall Notify each other Stockholder of such desire by
delivering to TechSys and each other Stockholder Notice of Proposed Sale
offering each other Stockholder (an "Offer") the right to purchase such shares
(the "Offered Shares") at a price equal to the average of the closing prices of
the TechSys Common Stock for five trading days immediately preceding the date
that such Offer is made, which shall be payable to the Selling Stockholder in
cash.
(i) If any other Stockholder desires to purchase all
or any part of the Offered Shares, such Stockholder shall Notify the Selling
Stockholder and TechSys of its election to purchase all or a portion of the
Offered Shares ("Notice of Intention to Purchase"), which Notice shall state the
number of Offered Shares such Stockholder desires to purchase; provided, that,
Consent to the Selling Stockholder Sale shall be deemed to be given by each
Stockholder that does not deliver Notice of Intention to Purchase to TechSys and
to the Selling Stockholder on or before 8:00 a.m. Eastern Time on the third
Business Day after the date of delivery by the Selling Stockholder of the Notice
of Proposed Sale. Such communication shall, when taken in conjunction with the
Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of the Offered Shares (subject to the
limitations as to an Stockholder's right to purchase more than its pro rata
share of such Offered Shares). Sales of the Offered Shares to be sold to such
Stockholder pursuant to this Section 2.05(e) shall be made at the offices of
TechSys on the 14th day following the date of the Offer (or if such 14th day is
not a Business Day, then on the next succeeding Business Day). Such sales shall
be effected by the Selling Stockholder's delivery to such Stockholder of an
original certificate or certificates evidencing the Offered Shares to be
purchased by it, duly endorsed for Transfer to such Stockholder, against payment
to the Selling Stockholder of the purchase price therefor by such Stockholder.
(ii) in the event that any such other Stockholder
elects not to purchase all or any portion of its pro rata share of the Offered
Shares, the Stockholders electing to purchase their entire pro rata share of
such Restricted Securities shall have the right to purchase the balance of the
Offered Shares. In the event that any Offered Shares are not purchased by the
other Stockholders, the Selling Stockholder may freely Transfer such Offered
Shares not purchased by such other Stockholders in a broker's transaction in the
open market, provided that such Transfer is not made in contravention of any
state or federal securities law.
ARTICLE III
INFORMATION RIGHTS
Section 3.01. Inspection, Consultation and Advice. TechSys shall permit
each Stockholder and such persons as it may designate, at such Stockholder's
expense, to examine the books of TechSys and allow access to such information of
TechSys as may be necessary to effect a Transfer or an underwritten offering of
such Stockholder's Restricted Securities; provided, that, each Stockholder and
each such person designated by such Stockholder, including, without limitation,
each underwriter, must be bound by the confidentiality provisions set forth in
Section 3.02.
Section 3.02. Confidentiality Agreement. Each Stockholder receiving
information pursuant to Section 3.01 shall use its best efforts to ensure that
any information which is delivered by TechSys to such Stockholder pursuant to
Section 3.01 will be kept confidential, not be copied except for internal use,
and be used solely to evaluate and protect such Stockholder's investment in the
Restricted Securities; provided, that, the foregoing obligation shall not
prohibit any such Stockholder from divulging any information, whether or not
confidential, to any regulatory authority having jurisdiction over such
Stockholder, if such Stockholder is compelled to do so by any judicial or
administrative process or by other requirements of law provided such Stockholder
seeks a protective order with respect to such information, or to any prospective
purchaser of Restricted Securities from such Stockholder so long as such
prospective purchaser agrees to be bound by the confidentiality provisions
contained herein; and, provided further, that, the foregoing obligation shall
remain in effect as to any confidential information except to the extent that
such information can be shown to have been
(a) previously known on a non-confidential basis by such
Stockholder,
(b) in the public domain through no fault of such Stockholder,
or
(c) later lawfully acquired by such Stockholder from sources
other than TechSys other than information known by such Stockholder to be
acquired in violation of an existing confidentiality agreement.
The obligation of each Stockholder to hold any confidential
information in confidence shall be satisfied if such Stockholder exercises the
same care with respect to such information as it would take to preserve the
confidentiality of its own similar information.
ARTICLE IV
DRAG ALONG RIGHTS
Section 4.01. Drag Along Right. In the event that Stockholders holding
85% or more of the shares of the Restricted Securities covered by this
Stockholders Agreement ("Supermajority Selling Stockholders"), desire to sell
50% or more of their Restricted Securities to an unaffiliated third party (a
"Third Party Purchaser"), and such Third Party Purchaser desires to purchase all
of the outstanding shares of Restricted Securities covered by this Stockholders
Agreement, each Stockholder hereby agrees to sell 100% of their respective
shares of Restricted Securities to the Third Party Purchaser at the price agreed
upon by the Third Party Purchaser and the Supermajority Selling Stockholders;
provided, that, (i) the Third Party Purchaser pays the same cash consideration
for all of the Restricted Securities, (ii) such sale is made upon identical
terms and conditions for all Stockholders, and (iii) the Supermajority Selling
Stockholders notify each other Stockholder of their intention to sell and
provide to each other Stockholder information regarding the number of shares
being offered by the Supermajority Selling Stockholders, the total number of
shares owned by the Supermajority Selling Stockholders, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale; and provided further, that, in the event that the
sale of Restricted Securities of any Stockholder pursuant to this Section 4.01
would create a liability for such Stockholder under Section 16 of the Exchange
Act, or in the event that such sale would be in violation of any federal and/or
state securities law, such Stockholder may, at the sole discretion of such
Stockholder, exclude the Restricted Securities of such Stockholder from the sale
by presenting documentation or other demonstrable materials to TechSys and the
Supermajority Selling Stockholders that verifies that such sale would create a
liability or be in contravention to any securities law.
ARTICLE V
REPRESENTATION RIGHTS
Section 5.01. Board of Directors. Stockholder Obligations. The
Stockholders shall take all steps necessary, acting in their respective
capacities as stockholders, directors or officers of TechSys, as the case may
be, including such steps necessary to expand or reduce the size of the Board of
Directors, to perform their obligations and agreements hereunder, to cause
TechSys to perform its obligations and agreements hereunder and to implement and
cause TechSys to implement the provisions of this Stockholders Agreement,
including without limitation, the calling and holding of stockholders' meetings
for the election of directors, attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings.
Section 5.02. Election of Directors.
(a) The Board of Directors of TechSys shall consist of a
maximum of seven directors; provided, that, at such time as TechSys is no longer
qualified as a "Small Business Issuer," as such term is defined by Rule 405 of
the Securities Act, the Board of Directors of TechSys shall designate an
additional independent director to serve on its Board. At any time at which
stockholders of TechSys will have the right to, or will, vote shares of capital
stock of TechSys, or consent in writing to the election of directors, the
Stockholders shall vote all shares of capital stock of TechSys presently owned
or hereafter acquired by them to cause and maintain the election to the Board of
Directors of the following persons:
(i) four representatives designated by the board of
directors of FCCI prior to the Effective Time (the "FCCI Directors"), which
shall initially be Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxx Xxxxx, and Xxxx
Xxxxx; and
(ii) three representatives designated by the board of
directors of TechSys prior to the Effective Time (the "TechSys Directors") which
shall initially be Xxxxx X. Xxxxx, Xxxxxx X. Xxxxx and Xxxxxxx Xxxxxxx.
TechSys shall cause the nomination for election to the Board
of Directors of the individuals set forth above.
(b) Quorum, Board Action. The required quorum for Board of
Directors action shall be the presence at a Board of Directors meeting of at
least four Directors; provided, that, a quorum must include at least one TechSys
Director and one FCCI Director.
All action of the Board of Directors shall require (i) the
affirmative vote of at least a majority of the Directors at a properly convened
meeting of the Board of Directors at which a quorum is present, or (ii) the
unanimous written consent of the Board of Directors; provided, that, in the
event there is a vacancy on the Board and an individual has been nominated to
fill such vacancy, the first order of business shall be to fill such vacancy.
(c) Removal, Vacancies. Except as otherwise set forth herein,
each of the directors designated in Section 5.02 shall be elected at any meeting
of stockholders at which directors are to be elected and shall serve until his
resignation or removal. Any TechSys Director may be removed only upon the vote
of a majority of the other TechSys Directors, and the Board of Directors shall
not submit to the stockholders of TechSys any proposal for the removal of any
TechSys Director. Any FCCI Director may be removed only upon the vote of a
majority of the other FCCI Directors, and the Board of Directors shall not
submit to the stockholders of TechSys any proposal for the removal of any FCCI
Director. Any additional independent director designated to serve on the Board
of Directors pursuant to Section 5.02(a) may be removed only upon the vote of
73% or more of the other directors, and the Board of Directors shall not submit
to the stockholders of TechSys any proposal for the removal of any such
director, except on the vote of 73% or more of the directors. In the event any
director ceases to serve as a member of the Board of Directors during his or her
term of office, the resulting vacancy on the Board of Directors may be filled at
any time:
(i) by a designee designated by the other FCCI
Directors, if such vacancy is due to the cessation of any FCCI Director's
service as a member of the Board, or
(ii) by a designee designated by the other TechSys
Directors, if such vacancy is due to the cessation of any TechSys Director's
service as a member of the Board; or
(ii) if neither the FCCI Directors nor the TechSys
Directors is entitled to designate a designee to fill such vacancy at such time,
then by the Board as constituted immediately prior to such time.
ARTICLE VI
MISCELLANEOUS
Section 6.01. Term of Stockholders Agreement.
(a) The provisions of Articles 2, 4, and 5 shall terminate
upon the earliest to occur of any one of the following events:
(i) the voluntary or involuntary liquidation or
dissolution of TechSys;
(ii) an acquisition, consolidation, or merger of
TechSys into or with another corporation that results in the Stockholders owning
equity securities that are registered under the Securities Exchange Act of 1934
and listed on any of the New York Stock Exchange, the American Stock Exchange or
the NASDAQ Stock Market and constituting, in the aggregate, less than 35% of the
outstanding shares of the surviving corporation in such merger;
(iii) five and one-half years after the date of this
Stockholders Agreement, or
(iv) the Stockholders beneficially own, in the
aggregate, less than 35% of the TechSys Common Stock.
(b) The covenants contained in Article III (Information
Rights) shall terminate (i) upon the occurrence of an event specified in Section
6.01(a)(i), (ii) or (iii) or (ii) if the Stockholders beneficially own in
aggregate less than 10% of the TechSys Common Stock.
Section 6.02. Severability; Governing Law. If any provisions of this
Stockholders Agreement shall be determined to be illegal or unenforceable by any
court of law, the remaining provisions shall be severable and enforceable in
accordance with their terms. This Stockholders Agreement shall be governed by,
and construed in accordance with, the laws of the State of New Jersey.
Section 6.03. Injunctive Relief. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the parties if any
party fails to comply with the provisions of this Stockholders Agreement.
Accordingly, the parties shall be entitled to obtain specific performance of
this Stockholders Agreement and to obtain immediate injunctive relief, without
the posting of a bond.
Section 6.04. Binding Effect. This Stockholders Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns, legal representatives and heirs.
Section 6.05. Modification or Amendment. This Stockholders Agreement or
any term hereof may be amended, waived, or terminated only with the written
consent of TechSys and Stockholders holding, in the aggregate, greater than 85%
of the Restricted Securities held by the Stockholders.
Section 6.06. Aggregation. All Restricted Securities held or acquired
by affiliated Persons and nominees shall be aggregated for the purpose of
determining the availability of any rights under this Stockholders Agreement.
Section 6.07. Counterparts. This Stockholders Agreement may be executed
in two or more counterparts, each of which shall be deemed to be an original,
but all of which taken together shall constitute one and the same instrument.
Section 6.08. Notices. All notices to be given or otherwise made to any
party to this Stockholders Agreement shall be deemed to be sufficient if
contained in a written instrument, delivered by hand in person, or by express
overnight courier service, or by electronic facsimile transmission, or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or at such other address
as may hereafter be designated in writing by the addressee to TechSys:
If to TechSys to:
----------------
TechSys, Inc.
000 Xxxxxxxx Xxxxxxxx
Xxxxxxx Xxxx, Xxx Xxxxxx 00000
Attn: President
Facsimile Number: (000) 000-0000
with a copy to:
--------------
Pitney, Xxxxxx, Xxxx & Xxxxx LLP
000 Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000-0000
Attention: Xxxxxx Xxxxx
Facsimile Number: (000) 000-0000
If to any Stockholder, to its address set forth on the signature pages
hereto. All such notices shall, when mailed or telegraphed, be effective when
received or when attempted delivery is refused.
Section 6.09. Entire Agreement. This Stockholders Agreement embodies
the entire agreement and understanding between the parties hereto with respect
to the subject matter hereof and supersedes all prior oral or written agreements
and understandings relating to the subject matter hereof No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Stockholders Agreement shall affect, or be used to interpret,
change or restrict, the express terms and provisions of this Stockholders
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Stockholders
Agreement to be executed as of the date first above written.
__________________________________
Name: Xxxxx X. Xxxxx
Address:
__________________________________
Name: Xxxxxx X. Xxxxx
Address:
__________________________________
Name: Xxxxxxx Xxxxxxxx
Address:
__________________________________
Name: Xxxxxxx Xxxxxxxx
Address:
__________________________________
Name: Xxxx Xxxxx
Address:
3939 CORP. PENSION FUND
By: __________________________________
Name: Xxxxxxx Xxxxxxxx
Title: Trustee
Address:
MILLENNIUM PENSION FUND
By: __________________________________
Name: Xxxx Xxxxx
Title: Trustee
Address:
44 CORPORATE PENSION FUND
By: __________________________________
Name: Xxxxxxx Xxxxxxxx
Title: Trustee
Address:
TECHSYS, INC.
By: __________________________________
Name: Xxxxxx X. Xxxxx
Title: President
Address:
TECHTRON, INC.
By: __________________________________
Name: Xxxxx X. Xxxxx
Title: Chairman
Address:
