1
EXHIBIT 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
HALIS, INC., a Georgia corporation,
PRN ACQUISITION CO., a Georgia corporation,
PHYSICIANS RESOURCE NETWORK, INC., a Florida corporation,
and
THE SOLE SHAREHOLDER OF PHYSICIANS RESOURCE NETWORK, INC.
-------------------------
Dated as of July 7, 1997
-------------------------
================================================================================
2
TABLE OF CONTENTS
Page
SECTION 1. DESCRIPTION OF TRANSACTION......................................................................1
1.1 Merger of PRN into the Subsidiary...............................................................1
1.2 Effect of Merger................................................................................1
1.3 Closing; Effective Time.........................................................................2
1.4 Articles of Incorporation and Bylaws; Directors and Officers....................................2
1.5 Conversion of Shares............................................................................2
1.6 Closing of PRN Transfer Books...................................................................3
1.7 Exchange of Certificates........................................................................3
1.8 Merger Consideration............................................................................4
1.9 Tax Consequences................................................................................4
1.10 Further Action..................................................................................4
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PRN AND THE SHAREHOLDER.......................................4
2.1 Due Organization; No Subsidiaries; Etc..........................................................4
2.2 Articles of Incorporation and Bylaws; Records...................................................5
2.3 Capitalization, Etc.............................................................................5
2.4 Financial Statements............................................................................6
2.5 Absence of Changes..............................................................................7
2.6 Title to Assets.................................................................................8
2.7 Bank Accounts; Receivables; Customers...........................................................9
2.8 Equipment; Leasehold............................................................................9
2.9 Proprietary Assets.............................................................................10
2.10 Contracts......................................................................................11
2.11 Liabilities....................................................................................13
2.12 Compliance with Legal Requirements.............................................................14
2.13 Governmental Authorizations....................................................................14
2.14 Tax Matters....................................................................................14
2.15 Employee and Labor Matters; Benefit Plans......................................................15
2.16 Environmental Matters..........................................................................18
2.17 Sale of Products; Performance of Services......................................................18
2.18 Insurance......................................................................................18
2.19 Related Party Transactions.....................................................................19
2.20 Legal Proceedings; Orders......................................................................19
2.21 Authority; Binding Nature of Agreement.........................................................20
2.22 Non-Contravention; Consents....................................................................20
2.23 Full Disclosure................................................................................21
SECTION 3. REPRESENTATIONS AND WARRANTIES OF HALIS AND THE SUBSIDIARY.....................................21
3.1 SEC Filings; Financial Statements..............................................................21
3.2 Authority; Binding Nature of Agreement.........................................................21
3.3 Valid Issuance.................................................................................22
i
3
SECTION 4. CERTAIN COVENANTS OF PRN AND THE SHAREHOLDER...................................................22
4.1 Access and Investigation.......................................................................22
4.2 Operation of PRN's Business....................................................................22
4.3 Notification; Updates to Disclosure Schedule...................................................24
4.4 No Negotiation.................................................................................25
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES............................................................25
5.1 Filings and Consents...........................................................................25
5.2 Public Announcements...........................................................................25
5.3 Best Efforts...................................................................................25
5.4 Employment and Noncompetition Agreements.......................................................25
5.5 Release........................................................................................26
5.6 Termination of Employee Plans..................................................................26
5.7 FIRPTA Matters.................................................................................26
5.8 Payment of Mulberry Indebtedness...............................................................26
5.9 Release of Personal Guaranties.................................................................26
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF HALIS AND THE SUBSIDIARY................................26
6.1 Accuracy of Representations....................................................................26
6.2 Performance of Covenants.......................................................................26
6.3 Consents.......................................................................................27
6.4 Agreements and Documents.......................................................................27
6.5 No Material Adverse Change.....................................................................27
6.6 Termination of Employee Plans..................................................................27
6.7 FIRPTA Compliance..............................................................................27
6.8 Rule 506.......................................................................................27
6.9 No Restraints..................................................................................27
6.10 No Legal Proceedings...........................................................................28
6.11 Completion of Due Diligence....................................................................28
6.12 Shareholder Investment Certifications..........................................................28
6.13 Existing Xxxxxxxxxx Indebtedness...............................................................28
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PRN AND THE
SHAREHOLDER....................................................................................28
7.1 Accuracy of Representations....................................................................28
7.2 Performance of Covenants.......................................................................28
7.3 Consents.......................................................................................28
7.4 Agreements and Documents.......................................................................28
7.5 No Restraints..................................................................................29
ii
4
SECTION 8. TERMINATION....................................................................................29
8.1 Termination Events.............................................................................29
8.2 Termination Procedures.........................................................................30
8.3 Effect of Termination..........................................................................30
SECTION 9. INDEMNIFICATION, ETC...........................................................................30
9.1 Survival of Representations and Warranties.....................................................30
9.2 Shareholder's Indemnity Agreement..............................................................30
9.3 Indemnity Agreement of HALIS and the Surviving Corporation.....................................31
9.4 Indemnification Procedure......................................................................32
9.5 Set-off........................................................................................33
9.6 Limitations on Liability of Shareholder........................................................33
SECTION 10. REGISTRATION OF SHARES.........................................................................33
10.1 Registration Statement.........................................................................33
10.2 Indemnification................................................................................34
10.3 Delay of Registration..........................................................................35
SECTION 11. MISCELLANEOUS PROVISIONS.......................................................................36
11.1 Further Assurances.............................................................................36
11.2 Fees and Expenses..............................................................................36
11.3 Attorneys' Fees................................................................................36
11.4 Notices........................................................................................36
11.5 Confidentiality................................................................................37
11.6 Time of the Essence............................................................................38
11.7 Headings.......................................................................................38
11.8 Counterparts...................................................................................38
11.9 Governing Law; Venue...........................................................................38
11.10 Successors and Assigns.........................................................................38
11.11 Remedies Cumulative; Specific Performance......................................................39
11.12 Waiver.........................................................................................39
11.13 Amendments.....................................................................................39
11.14 Severability...................................................................................39
11.15 Parties in Interest............................................................................39
11.16 Entire Agreement...............................................................................39
11.17 Construction...................................................................................40
iii
5
EXHIBITS
Exhibit A - Shareholder
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Forms of Employment Agreement and Noncompetition Agreement
Exhibit E - Form of Release
Exhibit F - Persons to execute estoppel certificates
Exhibit G - Form of Shareholder Investment Certification
The Company hereby agrees to furnish supplementally a copy of any omitted
exhibits to the Commission upon request.
iv
6
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of July 7, 1997, by and among: HALIS, INC., a Georgia
corporation ("HALIS"); PRN ACQUISITION CO., a Georgia corporation and a wholly
owned subsidiary of HALIS (the "Subsidiary"); PHYSICIANS RESOURCE NETWORK, INC.,
a Florida corporation ("PRN"); and the party identified on Exhibit A, who is the
sole shareholder of PRN (the "Shareholder"). Certain capitalized terms used in
this Agreement are defined in Exhibit B.
RECITALS
X. XXXXX, PRN and the Subsidiary intend to effect a merger of PRN into
the Subsidiary in accordance with this Agreement and the Georgia Business
Corporation Code and the Florida General Corporation Act (the "Merger"). Upon
consummation of the Merger, PRN will cease to exist, and the Subsidiary will
continue to exist as the surviving corporation of the Merger.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been adopted and approved by the respective
boards of directors of HALIS, PRN and the Subsidiary.
D. The capitalization of PRN consists of 1,000 shares of voting common
stock, $.10 par value per share, of which 1,000 shares are issued and
outstanding, and 10,000 shares of non-voting common stock, $.10 par value per
share, of which 10,000 shares are issued and outstanding (collectively, the "PRN
Common Stock").
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF PRN INTO THE SUBSIDIARY. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), PRN shall be merged with and into the Subsidiary, and the separate
existence of PRN shall cease. The Subsidiary will continue as the surviving
corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF MERGER. The Merger shall have the effects set forth in
this Agreement and in the applicable provisions of the Georgia Business
Corporation Code and the Florida Business Corporation Act.
7
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxx, Xxxxxxxx & Xxxxxxx, 0000 Xxxxxxxxx Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx
00000, at 1:00 p.m. local time on July 7, 1997, or at such other time and date
during the period from July 7, 1997 through July 30, 1997, as the parties shall
designate (the "Scheduled Closing Time"). (The date on which the Closing
actually takes place is referred to in this Agreement as the "Closing Date.")
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed certificate of merger for the merger of PRN into the
Subsidiary, conforming to the requirements of the Georgia Business Corporation
Code, shall be filed with the Secretary of State of the State of Georgia, and
properly executed certificate of merger for the merger of PRN into the
Subsidiary, conforming to the requirements of the Florida Business Corporation
Act, shall be filed with the Secretary of State of the State of Florida. The
Merger shall take effect at the time such certificate of merger is filed with
the Secretary of State of the State of Georgia and the articles of merger are
filed with the Secretary of State of the State of Florida (the "Effective
Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless the parties agree otherwise prior to the Effective Time:
(a) the Articles of Incorporation of the Subsidiary shall continue
as the Articles of Incorporation of the Surviving Corporation;
(b) the Bylaws of the Subsidiary shall continue as the Bylaws of
the Surviving Corporation;
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals
identified on Exhibit C.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.7(b), at the Effective Time, by
virtue of the Merger and without any further action on the part of HALIS, PRN ,
the Subsidiary or the Shareholder, each share of PRN Common Stock outstanding
immediately prior to the Effective Time shall be canceled and retired and
converted into the right to receive a pro rata share of the aggregate Merger
Consideration described in Section 1.8.
(b) If any shares of PRN Common Stock outstanding immediately prior
to the Effective Time are unvested or are subject to a repurchase option, risk
of forfeiture or other condition under any restricted stock purchase agreement
or other agreement with PRN , then the shares of HALIS Common Stock issued in
exchange for such shares of PRN Common Stock will be unvested and subject to the
same repurchase option, risk of forfeiture or other condition, and the
certificates representing such shares of HALIS Common Stock may accordingly be
marked with appropriate legends.
2
8
1.6 CLOSING OF PRN TRANSFER BOOKS. At the Effective Time, the holders
of certificates representing shares of PRN Common Stock that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
shareholders of PRN , and the stock transfer books of PRN shall be closed with
respect to all shares of such PRN Common Stock outstanding immediately prior to
the Effective Time. No further transfer of any such shares of PRN capital stock
shall be made on such stock transfer books after the Effective Time. If, after
the Effective Time, a valid certificate previously representing any of such
shares of PRN Common Stock (an "PRN Stock Certificate") is presented to HALIS,
such PRN Stock Certificate shall be canceled and shall be exchanged as provided
in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At the Closing, the Shareholder shall surrender his PRN Stock
Certificate(s) to the Surviving Corporation, together with such transmittal
documents as the Surviving Corporation may reasonably require, and the Surviving
Corporation shall deliver to such Shareholder the aggregate Merger Consideration
to be paid at Closing pursuant to Section 1.8.
(b) No fractional shares of HALIS Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any Shareholder who would
otherwise be entitled to receive a fraction of a share of HALIS Common Stock
(after aggregating all fractional shares of HALIS Common Stock issuable to such
holder) shall, upon surrender of such Shareholder's PRN Stock Certificate(s), be
paid in cash at a rate of $2.37 per share in lieu of such fractional shares.
(c) Until surrendered as contemplated by this Section 1.7, each PRN
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive a pro rata share of the Merger
Consideration. If any PRN Stock Certificate shall have been lost, stolen or
destroyed, HALIS may, in its discretion and as a condition precedent to the
issuance of any certificate representing HALIS Common Stock, require the owner
of such lost, stolen or destroyed PRN Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as HALIS may reasonably
direct) as indemnity against any claim that may be made against HALIS with
respect to such PRN Stock Certificate.
(d) The shares of HALIS Common Stock to be issued in the Merger
shall be characterized as "restricted securities" for purposes of Rule 144 under
the Securities Act, and each certificate representing any of such shares shall
bear a legend identical or similar in effect to the following legend (together
with any other legend or legends required by applicable state securities laws or
otherwise):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS
3
9
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
(e) HALIS shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
PRN Common Stock pursuant to this Agreement such amounts as HALIS may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
(f) HALIS shall not be liable to any holder or former holder of PRN
Common Stock for any shares of HALIS Common Stock (or dividends or distributions
with respect thereto), or for any cash amounts, delivered to any public official
pursuant to any applicable abandoned property, escheat or similar law.
1.8 MERGER CONSIDERATION. The aggregate merger consideration to be
paid by HALIS to the Shareholder in consideration of the Merger ("Merger
Consideration") shall consist of shares of HALIS Common Stock having an
aggregate value, based on a per share price equal to the average asked price of
HALIS Common Stock for the ten trading days immediately prior to the Closing
Date, equal to $7,972,500. A certificate representing the Merger Consideration
shall be delivered to the Shareholder at closing.
1.9 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.10 FURTHER ACTION. If, at any time after the Effective Time, any
further action is determined by HALIS to be necessary or desirable to carry out
the purposes of this Agreement or to vest HALIS with full right, title and
possession of and to all rights and property of PRN , the officers and directors
of HALIS shall be fully authorized (in the name of PRN and otherwise) to take
such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PRN AND THE SHAREHOLDER
PRN and the Shareholder jointly and severally represent and
warrant, to and for the benefit of HALIS and the Subsidiary, as follows as of
the date hereof and as of the Closing Date:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) PRN is a corporation duly organized, validly existing and in
good standing under the laws of the State of Florida and has all necessary power
and authority: (i) to conduct its business in the manner in which its business
is currently being conducted and in the manner in which
4
10
its business is proposed to be conducted; (ii) to own and use its assets in the
manner in which its assets are currently owned and used and in the manner in
which its assets are proposed to be owned and used; and (iii) to perform its
obligations under all Contracts by which it is bound.
(b) PRN has not conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the name "Tampa Medical Group Management".
(c) PRN is not and has not been required to be qualified,
authorized, registered or licensed to do business as a foreign corporation in
any jurisdiction other than the jurisdictions identified in Part 2.1(c) of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on PRN . PRN is in good standing as a foreign corporation in each of the
jurisdictions identified in Part 2.1(c) of the Disclosure Schedule.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth
(i) the names of the members of the PRN's board of directors, (ii) the names of
the members of each committee of PRN's board of directors, and (iii) the names
and titles of PRN's officers.
(e) PRN has no subsidiaries, and has never owned, beneficially or
otherwise, any shares or other securities of, or any direct or indirect interest
of any nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. PRN has
delivered to HALIS accurate and complete copies of: (i) PRN's articles of
incorporation and bylaws, including all amendments thereto; (ii) the stock
records of PRN ; and (iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or otherwise
without a meeting) of the shareholder of PRN , the board of directors of PRN and
all committees of the board of directors of PRN . There have been no meetings or
other proceedings or actions of the shareholder of PRN , the board of directors
of PRN or any committee of the board of directors of PRN that are not fully
reflected in such minutes or other records. There has not been any violation of
any of the provisions of PRN's articles of incorporation or bylaws or of any
resolution adopted by PRN's shareholder, PRN's board of directors or any
committee of PRN's board of directors. The books of account, stock records,
minute books and other records of PRN are accurate, up-to-date and complete, and
have been maintained in accordance with prudent business practices and all
applicable Legal Requirements.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of PRN consists of 1,000 shares
of voting common stock, of which 1,000 shares have been issued and are
outstanding, and 10,000 shares of non-voting common stock, of which 10,000
shares have been issued and are outstanding. There are no shares of capital
stock held in PRN's treasury. Part 2.3(a) of the Disclosure Schedule sets forth
the names of PRN shareholder and the number of shares of PRN common stock owned
of record by each of such shareholder. All of the outstanding shares of PRN
common stock have been duly
5
11
authorized and validly issued, and are fully paid and non-assessable, and none
of such shares is subject to any repurchase option or restriction on transfer.
(b) There is no: (i) outstanding subscription, option, call,
warrant or right (whether or not currently exercisable) to acquire, or otherwise
relating to, any shares of the capital stock or other securities of PRN ; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
PRN ; (iii) Contract under which PRN is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or (iv)
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of PRN .
Except as set forth in Part 2.3(c) of the Disclosure Schedule, PRN has never
issued or granted any option, call, warrant or right to acquire, or otherwise
relating to, any shares of its capital stock or other securities.
(c) All outstanding shares of PRN Common Stock have been issued in
compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(d) Except as set forth in Part 2.3(e) of the Disclosure Schedule,
PRN has never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities. All securities so reacquired by PRN were
reacquired in compliance with (i) the applicable provisions of the Florida
Business Corporation Act and all other applicable Legal Requirements, and (ii)
any requirements set forth in applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) PRN has delivered to HALIS the following financial statements
and notes (collectively, the "Company Financial Statements"):
(i) the unaudited balance sheet of PRN as of December
31, 1996, and the related audited statements of income, shareholder's
equity and cash flow of PRN for the year then ended; and
(ii) the unaudited balance sheet of PRN as of April
30, 1997 (the "Unaudited Balance Sheet"), and the related unaudited
statements of income, shareholder' equity and cash flow of PRN for the
four-month period then ended.
(b) The Company Financial Statements are accurate and complete in
all material respects and present fairly the financial position of PRN as of the
respective dates thereof and the results of operations and cash flows of PRN for
the periods covered thereby. The Company Financial Statements have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods covered except that the Company
Financial Statements for the four-month period ended April 30, 1997 do not
contain footnotes and
6
12
are subject to normal and recurring year-end audit adjustments, which will not,
individually or in the aggregate, be material in magnitude).
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Disclosure Schedule, since April 30, 1997:
(a) there has not been any material adverse change in PRN's
business, condition, assets, liabilities, operations, financial performance or
prospects, and no event has occurred that will, or could reasonably be expected
to, have a Material Adverse Effect on PRN ;
(b) there has not been any material loss, damage or destruction
to, or any material interruption in the use of, any of PRN's assets (whether or
not covered by insurance);
(c) PRN has not declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, and
has not repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities;
(d) PRN has not sold, issued or authorized the issuance of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire, or otherwise relating to, any capital stock or any other security, or
(iii) any instrument convertible into or exchangeable for any capital stock or
other security;
(e) there has been no amendment to PRN's articles of incorporation
or bylaws, and PRN has not effected or been a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(f) PRN has not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(g) PRN has not made any capital expenditure which, when added to
all other capital expenditures made by PRN since April 30, 1997, exceeds $10,000
in the aggregate;
(h) PRN has not (i) entered into or permitted any of the assets
owned or used by it to become bound by any Material Contract (as defined in
Section 2.10(a)), or (ii) amended or prematurely terminated, or waived any
material right or remedy under, any Material Contract to which it is or was
party or under which it has or has had any rights or obligations;
(i) PRN has not (i) acquired, leased or licensed any right or
other asset from any other Person, (ii) sold or otherwise disposed of, or leased
or licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right, except for immaterial rights or other immaterial assets
acquired, leased, licensed or disposed of in the ordinary course of business and
consistent with PRN's past practices;
7
13
(j) PRN has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) PRN has not made any pledge of any of its assets or otherwise
permitted any of its assets to become subject to any Encumbrance, except for
pledges of immaterial assets made in the ordinary course of business and
consistent with PRN's past practices;
(l) PRN has not (i) lent money to any Person, or (ii) incurred or
guaranteed any indebtedness for borrowed money;
(m) PRN has not (i) established, adopted or amended any Employee
Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(n) PRN has not changed any of its methods of accounting or
accounting practices in any respect;
(o) PRN has not made any Tax election;
(p) PRN has not commenced or settled any legal Proceeding;
(q) PRN has not entered into any material transaction or taken any
other material action outside the ordinary course of business or inconsistent
with its past practices; and
(r) PRN has not agreed or committed to take any of the actions
referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) PRN owns, and has good, valid and marketable title to, all
assets purported to be owned by it, including: (i) all assets reflected on the
Unaudited Balance Sheet; (ii) all assets referred to in Parts 2.7(b), 2.8 and
2.9 of the Disclosure Schedule and all of PRN's rights under the Contracts
identified in Part 2.10(a) of the Disclosure Schedule; and (iii) all other
assets reflected in PRN books and records as being owned by PRN. Except as set
forth in Part 2.6(a) of the Disclosure Schedule, all of said assets are owned by
PRN free and clear of any liens or other Encumbrances, except for (i) any lien
for current taxes not yet due and payable, and (ii) minor liens that have arisen
in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the assets subject thereto or
materially impair the operations of PRN.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets
that are being leased or licensed to PRN.
8
14
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate and
complete information with respect to each account maintained by or for the
benefit of PRN at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate
and complete breakdown and aging of all accounts receivable, notes receivable
and other receivables of PRN as of April 30, 1997. Except as set forth in Part
2.7(b) of the Disclosure Schedule, all existing accounts receivable of PRN
(including those accounts receivable reflected on the Unaudited Balance Sheet
that have not yet been collected and those accounts receivable that have arisen
since April 30, 1997 and have not yet been collected) (i) represent valid
obligations of customers of PRN arising from bona fide transactions entered into
in the ordinary course of business, and (ii) are current and will be collected
in full, without any counterclaim or set off, when due net of an allowance for
doubtful accounts not to exceed $10,000 in the aggregate.
(c) Part 2.7(c) of the Disclosure Schedule accurately identifies,
and provides an accurate and complete breakdown of the revenues received from,
each customer or other Person that (together with such Person's affiliates)
accounted for more than $300,000 of the net revenues of PRN in 1995 or 1996. PRN
has not received any notice or other communication indicating that any customer
or other Person identified in Part 2.7(c) of the Disclosure Schedule intends or
expects to cease dealing with PRN or to reduce the volume of business transacted
by such Person with PRN below historical levels.
(d) Part 2.7(d) of the Disclosure Schedule provides an accurate
and complete breakdown of all pending and unfilled orders received by PRN for
products, systems and services.
2.8 EQUIPMENT; LEASEHOLD.
(a) Part 2.8 of the Disclosure Schedule provides accurate and
complete information with respect to all material items of equipment, fixtures,
leasehold improvements and other tangible assets owned by or leased to PRN. The
assets identified in Part 2.8 of the Disclosure Schedule are adequate for the
uses to which they are being put, are in good condition and repair (ordinary
wear and tear excepted) and are adequate for the conduct of PRN's business in
the manner in which such business is currently being conducted and in the manner
in which such business is proposed to be conducted.
(b) PRN does not own any real property or any interest in real
property, except for the leasehold(s) created under the real property lease(s)
identified in Part 2.10(a) of the Disclosure Schedule.
9
15
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth, with
respect to each Company Proprietary Asset that has been registered, recorded or
filed with any Governmental Body or with respect to which an application has
been filed with any Governmental Body, (i) a brief description of such Company
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration, recordation, filing or application. Part 2.9(a)(2) of
the Disclosure Schedule identifies and provides a brief description of all other
Company Proprietary Assets owned by PRN. Part 2.9(a)(3) of the Disclosure
Schedule identifies and provides a brief description of each Company Proprietary
Asset that is owned by any other Person and that is licensed to or used by PRN
(except for any Company Proprietary Asset that is licensed to PRN under any
third party software license generally available to the public at a cost of less
than $500), and identifies the license agreement or other agreement under which
such Company Proprietary Asset is being licensed to or used by PRN. Except as
set forth in Part 2.9(a)(4) of the Disclosure Schedule, PRN has good, valid and
marketable title to all of the Proprietary Assets identified in Parts 2.9(a)(1)
and 2.9(a)(2) of the Disclosure Schedule, free and clear of all liens and other
Encumbrances, and has a valid right to use all Proprietary Assets identified in
Part 2.9(a)(3) of the Disclosure Schedule. Except as set forth in Part 2.9(a)(5)
of the Disclosure Schedule, PRN is not obligated to make any payment to any
Person for the use of any Company Proprietary Asset. Except as set forth in Part
2.9(a)(6) of the Disclosure Schedule, PRN is free to use, modify, copy,
distribute, sell, license or otherwise exploit each of the Company Proprietary
Assets on an exclusive basis.
(b) PRN has taken all measures and precautions necessary to
protect and maintain the confidentiality and secrecy of all Company Proprietary
Assets (except Company Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Company Proprietary Assets. Except as set forth in Part 2.9(b) of the Disclosure
Schedule, PRN has not disclosed or delivered or permitted to be disclosed or
delivered to any Person, and no Person (other than PRN) has access to or has any
rights with respect to, the source code, or any portion or aspect of the source
code, of any Company Proprietary Asset.
(c) None of PRN Proprietary Assets infringes or conflicts with any
Proprietary Asset owned or used by any other Person. PRN is not infringing,
misappropriating or making any unlawful use of, and PRN has not at any time
infringed, misappropriated or made any unlawful use of, or received any notice
or other communication of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the best of the knowledge of PRN and the
Shareholder, no other Person is infringing, misappropriating or making any
unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Company Proprietary Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule:
(i) each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of PRN; and (ii) there has
not been any material claim by any customer or other Person alleging that any
Company Proprietary Asset does not conform in all material respects with any
10
16
specification, documentation, performance standard, representation or statement
made or provided by or on behalf of PRN, and, to the best of the knowledge of
PRN and the Shareholder, there is no basis for any such claim. PRN has
established adequate reserves on the Unaudited Balance Sheet to cover all costs
associated with any obligations that PRN may have with respect to the correction
or repair of programming errors or other defects in the Company Proprietary
Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable PRN to conduct its business in the manner in which
such business has been conducted and in the manner in which such business is
proposed to be conducted. Except as set forth in Part 2.9(e) of the Disclosure
Schedule, (i) PRN has not licensed any of the Company Proprietary Assets to any
Person on an exclusive basis, and (ii) PRN has not entered into any covenant not
to compete or Contract limiting its ability to exploit fully any of its
Proprietary Assets or to transact business in any market or geographical area or
with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule,
all current and former employees of PRN have executed and delivered to PRN
written agreements (containing no exceptions to or exclusions from the scope of
their coverage) that are substantially identical to the form of 0 attached to
the Disclosure Schedule as Appendices 2.9(1) and 2.9(2). PRN has never engaged
or received services from any consultant or independent contractor in connection
with the design or development of any Proprietary Asset.
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies each
Company Contract that constitutes a "Material Contract." For purposes of this
Agreement, each of the following shall be deemed to constitute a "Material
Contract":
(i) any Contract relating to the employment or engagement
of, or the performance of services by, any employee, consultant or
independent contractor;
(ii) any Contract relating to the acquisition, transfer,
use, development, sharing or license of any technology or any
Proprietary Asset;
(iii) any Contract imposing any restriction on PRN's right or
ability (A) to compete with any other Person, (B) to acquire any
product or other asset or any services from any other Person, to sell
any product or other asset to or perform any services for any other
Person or to transact business or deal in any other manner with any
other Person, or (C) to develop or distribute any technology;
(iv) any Contract creating or involving any agency
relationship, distribution arrangement or franchise relationship;
(v) any Contract relating to the acquisition, issuance or
transfer of any securities;
11
17
(vi) any Contract creating or relating to the creation of
any Encumbrance with respect to any asset owned or used by PRN;
(vii) any Contract involving or incorporating any guaranty,
any pledge, any performance or completion bond, any indemnity, any
right of contribution or any surety arrangement;
(viii) any Contract creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses, costs or
liabilities;
(ix) any Contract relating to the purchase or sale of any
product or other asset by or to, or the performance of any services by
or for, any Related Party (as defined in Section 2.19);
(x) any Contract to which any Governmental Body is a party
or under which any Governmental Body has any rights or obligations, or
involving or directly or indirectly benefiting any Governmental Body
(including any subcontract or other Contract between PRN and any
contractor or subcontractor to any Governmental Body);
(xi) any Contract entered into outside the ordinary course
of business or inconsistent with PRN past practices;
(xii) any Contract that has a term of more than 60 days and
that may not be terminated by PRN (without penalty) within 60 days
after the delivery of a termination notice by the Subject Business; and
(xiii) any Contract that contemplates or involves (A) the
payment or delivery of cash or other consideration in an amount or
having a value in excess of $5,000 in the aggregate, or (B) the
performance of services having a value in excess of $5,000 in the
aggregate.
(b) PRN has delivered to HALIS accurate and complete copies of
all Contracts identified in Part 2.10(a) of the Disclosure Schedule, including
all amendments thereto. Each Contract identified in Part 2.10(a) of the
Disclosure Schedule is valid and in full force and effect, and is enforceable by
PRN in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
(c) Except as set forth in Part 2.10(c) of the Disclosure S
chedule:
(i) PRN has not violated or breached, or committed any default
under, any Company Contract, and, to the best of the knowledge of PRN
and the Shareholder, no
12
18
other Person has violated or breached, or committed any default under,
any Company Contract;
(ii) to the best of the knowledge of PRN and the Shareholder,
no event has occurred, and no circumstance or condition exists, that
(with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach of any of the
provisions of any Company Contract, (B) give any Person the right to
declare a default or exercise any remedy under any Company Contract,
(C) give any Person the right to accelerate the maturity or performance
of any Company Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) PRN has not received any notice or other communication
regarding (A) any actual or possible violation or breach of, or default
under, any Company Contract, or (B) any actual or possible termination
of any Company Contract; and
(iv) PRN has not waived any of its material rights under any
Contract.
(d) No Person is renegotiating, or has the right to renegotiate,
any amount paid or payable to PRN under any Company Contract or any other term
or provision of any Company Contract.
(e) The Contracts identified in Part 2.10(a) of the Disclosure
Schedule collectively constitute all of the Material Contracts necessary to
enable PRN to conduct its business in the manner in which its business is
currently being conducted and in the manner in which its business is proposed to
be conducted.
(f) Part 2.10(f) of the Disclosure Schedule identifies and
provides a brief description of each proposed Contract as to which any pending
bid, offer or proposal has been submitted or received by PRN.
2.11 LIABILITIES.
(a) PRN has no accrued, contingent or other liabilities of any
nature, either matured or unmatured (whether or not required to be reflected in
financial statements in accordance with generally accepted accounting
principles, and whether due or to become due), except for: (i) liabilities
identified as such in the "liabilities" column of the Unaudited Balance Sheet;
(ii) accounts payable or accrued salaries that have been incurred by PRN since
April 30, 1997, in the ordinary course of business and consistent with PRN's
past practices; and (iii) the liabilities identified in Part 2.11(a) of the
Disclosure Schedule.
(b) Part 2.11(c) of the Disclosure Schedule provides an accurate
and complete breakdown of PRN "deferred support revenue" and all related
obligations and other liabilities of PRN.
13
19
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. PRN is, and has at all times
since September 20, 1988 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have in any individual case or in the aggregate, a
Material Adverse Effect on PRN. Except as set forth in Part 2.12 of the
Disclosure Schedule, since September 20, 1988, PRN has not received any notice
or other communication from any Governmental Body regarding any actual or
possible violation of, or failure to comply with, any Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by PRN, and PRN has
delivered to HALIS accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable PRN to conduct its business in
the manner in which its business is currently being conducted and in the manner
in which its business is proposed to be conducted. PRN is, and at all times
since September 20, 1988 has been, in compliance with the material terms and
requirements of the respective Governmental Authorizations identified in Part
2.13 of the Disclosure Schedule. Since September 20, 1988, PRN has not received
any notice or other communication from any Governmental Body regarding (i) any
actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (ii) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of PRN
with any Governmental Body with respect to any transaction occurring or any
taxable period ending on or before the Closing Date (the "Company Returns") (i)
have been or will be filed when due, and (ii) have been, or will be when filed,
accurately and completely prepared in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. PRN
has delivered to HALIS accurate and complete copies of all Company Returns filed
for 1994, 1995 and 1996.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. PRN will
establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
April 30, 1997, through the Closing Date, and PRN will disclose the dollar
amount of such reserves to HALIS on or prior to the Closing Date.
(c) Each Company Return relating to income Taxes that has been
filed with respect to any period ended on or prior to September 20, 1988 has
either (i) been examined and audited by all relevant Governmental Bodies, or
(ii) by virtue of the expiration of the limitation period under applicable Legal
Requirements, is no longer subject to examination or audit by any
14
20
Governmental Body. Except as set forth in Part 2.14(c) of the Disclosure
Schedule, there has been no examination or audit of any Company Return, and no
such examination or audit has been proposed or scheduled by any Governmental
Body. PRN has delivered to HALIS accurate and complete copies of all audit
reports and similar documents (to which PRN has access) relating to the Company
Returns. Except as set forth in Part 2.14(c) of the Disclosure Schedule, no
extension or waiver of the limitation period applicable to any of the Company
Returns has been granted (by PRN or any other Person), and no such extension or
waiver has been requested from PRN.
(d) Except as set forth in Part 2.14(d) of the Disclosure
Schedule, no claim or Legal Proceeding is pending or has been threatened against
or with respect to PRN in respect of any Tax. There are no unsatisfied
liabilities for Taxes (including liabilities for interest, additions to tax and
penalties thereon and related expenses) with respect to any notice of deficiency
or similar document received by PRN. There are no liens for Taxes upon any of
the assets of PRN , except liens for current Taxes not yet due and payable. PRN
has not entered into or become bound by any agreement or consent pursuant to
Section 341(f) of the Code. PRN has not been, and PRN will not be, required to
include any adjustment in taxable income for any tax period (or portion thereof)
pursuant to Section 481 of 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of PRN that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code. PRN
is not, and has never been, a party to or bound by any tax indemnity agreement,
tax sharing agreement, tax allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule contains a list of all
salaried employees of PRN as of the date of this Agreement, and correctly
reflects their salaries, any other compensation payable to them (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements), their dates of employment and their positions. PRN is not a party
to any collective bargaining contract or other Contract with a labor union
involving any of its employees.
(b) Part 2.15(b) of the Disclosure Schedule identifies each
employee of PRN who is not fully available to perform work because of disability
or other leave, and sets forth the basis of such leave and the anticipated date
of return to full service.
(c) Part 2.15(c) of the Disclosure Schedule identifies each
salary, bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance pay, termination pay, hospitalization, medical,
insurance, supplemental unemployment benefits, profit-sharing,
15
21
pension or retirement plan, program or agreement (individually referred to as a
"Plan" and collectively referred to as the "Plans") sponsored, maintained,
contributed to or required to be contributed to by PRN for the benefit of any
current or former employee of PRN .
(d) PRN does not maintain, sponsor or contribute to, and, to the
best of the knowledge of PRN and the Shareholder, PRN has not at any time in the
past maintained, sponsored or contributed to, any employee pension benefit plan
(as defined in Section 3(2)) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of employees or former
employees of PRN (a "Pension Plan").
(e) PRN does not maintain, sponsor or contribute to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles or Merger Subtitles of ERISA) for
the benefit of employees or former employees of PRN (a "Welfare Plan") except
for those Welfare Plans described in Part 2.15(e) of the Disclosure Schedule,
none of which is a multiemployer plan (within the meaning of Section 3(37) of
ERISA).
(f) With respect to each Plan, PRN has delivered to HALIS:
(i) an accurate and complete copy of such Plan (including
all amendments thereto);
(ii) an accurate and complete copy of the annual report (if
required under ERISA) with respect to such Plan for each of 1996 and
1995;
(iii) an accurate and complete copy of (A) the most recent
summary plan description, together with each Summary of Material
Modifications (if required under ERISA) with respect to such Plan, and
(B) each material employee communication relating to such Plan;
(iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or
other funding agreement (including all amendments thereto) and accurate
and complete copies of the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating
to such Plan, including service provider agreements, insurance
contracts, minimum premium contracts, stop-loss agreements, investment
management agreements, subscription and participation agreements and
recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with
respect to such Plan (if such Plan is intended to be qualified under
Section 401(a) of the Code).
16
22
(g) PRN is not required to be, and, to the best of the knowledge
of PRN and the Shareholder, PRN has never been required to be, treated as a
single employer with any other Person under Section 4001(b)(1) of ERISA or
Section 414(b), (c), (m) or (o) of the Code. PRN has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. To
the best of the knowledge of PRN and the Shareholder, PRN has never made a
complete or partial withdrawal from a "multiemployer plan" (as defined in
Section 3(37) of ERISA) resulting in "withdrawal liability" (as defined in
Section 4201 of ERISA), without regard to subsequent reduction or waiver of such
liability under either Section 4207 or 4208 of ERISA.
(h) PRN does not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law).
(i) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee of PRN
after any such employee's termination of service (other than (i) benefit
coverage mandated by applicable law, including coverage provided pursuant to
Section 4980B of the Code, (ii) deferred compensation benefits accrued as
liabilities on the Unaudited Balance Sheet, and (iii) benefits the full cost of
which are borne by current or former employees of PRN (or their beneficiaries)).
(j) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(k) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
ERISA and the Code.
(l) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service, and neither PRN , nor any of the Shareholder are aware of any
reason why any such determination letter should be revoked.
(m) Except as set forth in Part 2.15(m) of the Disclosure
Schedule, neither the execution, delivery or performance of this Agreement, nor
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will result in any bonus payment, golden parachute payment,
severance payment or other payment to any current or former employee or director
of PRN (whether or not under any Plan), or materially increase the benefits
payable under any Plan, or result in any acceleration of the time of payment or
vesting of any such benefits.
(n) PRN is in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, employee compensation, wages, bonuses and terms and conditions of
employment.
17
23
(o) PRN has good labor relations, and neither PRN nor any of the
Shareholder has any knowledge of any facts indicating that (i) the consummation
of the Merger or any of the other transactions contemplated by this Agreement
will have a material adverse effect on PRN's labor relations, or (ii) any of
PRN's employees intends to terminate his or her employment with PRN .
2.16 ENVIRONMENTAL MATTERS. PRN is and has at all times been in
compliance, in all material respects, with all applicable Environmental Laws.
PRN possesses all permits and other Governmental Authorizations required under
applicable Environmental Laws, and PRN is and has at all times been in
compliance with the terms and requirements of all such Governmental
Authorizations. PRN has not received any notice or other communication (whether
from a Governmental Body, citizens group, employee or otherwise) that alleges
that PRN is not in compliance with any Environmental Law, and, to the best of
the knowledge of PRN and the Shareholder, there are no circumstances that could
reasonably be expected to prevent or interfere with PRN compliance with any
Environmental Law in the future. To the best of the knowledge of PRN and the
Shareholder, no current or prior owner of any property leased or controlled by
PRN has received any notice or other communication (whether from a Governmental
Body, citizens group, employee or otherwise) that alleges that such current or
prior owner or PRN is not or was not in compliance with any Environmental Law.
All Governmental Authorizations currently held by PRN pursuant to Environmental
Laws are identified in Part 2.16 of the Disclosure Schedule.
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Other than normal returns for refunds in the ordinary course
of business at levels consistent with past experience under PRN's standard
return policy, PRN will not incur or otherwise become subject to any material
liability arising from (i) any product, system, program, Proprietary Asset or
other asset designed, developed, manufactured, assembled, sold, supplied,
installed, repaired, licensed or made available by PRN on or prior to the
Closing Date, or (ii) any consulting services, installation services,
programming services, repair services, maintenance services, training services,
support services or other services performed by PRN on or prior to the Closing
Date.
(b) Except as set forth in Part 2.17(b) of the Disclosure
Schedule, no customer or other Person has, at any time since September 20, 1988,
asserted or threatened to assert any claim against PRN (other than claims that
have been resolved satisfactorily at no material cost to PRN ) under or based
upon (i) any warranty provided by or on behalf of PRN , or (ii) any services
performed by PRN .
2.18 INSURANCE. Part 2.18 of the Disclosure Schedule provides accurate
and complete information with respect to each insurance policy maintained by, at
the expense of or for the benefit of PRN and with respect to any claims made
thereunder. PRN has delivered to HALIS accurate and complete copies of the
insurance policies identified in Part 2.18 of the Disclosure Schedule. Each of
the insurance policies identified in Part 2.18 of the Disclosure Schedule is in
full force and effect. Since September 20, 1988, PRN has not received any notice
or other communication regarding any
18
24
actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with respect to
any insurance policy.
2.19 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.19
of the Disclosure Schedule: (a) no Related Party has, and no Related Party has
at any time since September 20, 1988 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of PRN ; (b) no
Related Party is, or has at any time since September 20, 1988 been, indebted to
PRN ; (c) since September 20, 1988, no Related Party has entered into, or has
had any direct or indirect financial interest in, any material Contract,
transaction or business dealing involving PRN ; (d) no Related Party is
competing, or has at any time since September 20, 1988 competed, directly or
indirectly, with PRN ; and (e) no Related Party has any claim or right against
PRN (other than rights to receive compensation for services performed as an
employee of PRN ). For purposes of this Section 2.19, each of the following
shall be deemed to be a "Related Party": (i) each of the Shareholder; (ii) each
individual who is, or who has at any time since September 20, 1988 been, an
officer or director of PRN ; (iii) each individual who is, or who at any time
since September 20, 1988 has been, a member of the immediate family of any of
the individuals referred to in clauses "(i)" and "(ii)" above; and (iv) any
trust or other Entity (other than PRN ) in which any one of the individuals
referred to in clauses "(i)," "(ii)" and "(iii)" above holds (or in which more
than one of such individuals collectively hold), beneficially or otherwise, a
material voting, proprietary or equity interest.
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.20(a) of the Disclosure
Schedule, there is no pending Legal Proceeding, and, to the best of the
knowledge of PRN and the Shareholder, no Person has threatened to commence any
Legal Proceeding: (i) that involves PRN or any of the assets owned or used by
PRN ; or (ii) that challenges, or that may have the effect of preventing,
delaying, making illegal or otherwise interfering with, the Merger or any of the
other transactions contemplated by this Agreement. To the best of the knowledge
of PRN and the Shareholder, except as set forth in Part 2.20(a) of the
Disclosure Schedule, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that will, or that could reasonably be
expected to, give rise to or serve as a basis for the commencement of any such
Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the Disclosure
Schedule, no Legal Proceeding has ever been commenced by, and no Legal
Proceeding has ever been pending against, PRN .
(c) There is no order, writ, injunction, judgment or decree to
which PRN , or any of the assets owned or used by PRN , are subject. Neither the
Shareholder nor PRN is subject to any order, writ, injunction, judgment or
decree that relates to PRN business or to any of the assets owned or used by PRN
. To the best of the knowledge of PRN and the Shareholder, no officer or other
employee of PRN is subject to any order, writ, injunction, judgment or decree
that prohibits
19
25
such officer or other employee from engaging in or continuing any conduct,
activity or practice relating to PRN's business.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The Shareholder and
PRN have the absolute and unrestricted right, power and authority to enter into
and to perform their respective obligations under this Agreement; and the
execution, delivery and performance by PRN of this Agreement has been duly
authorized by all necessary action on the part of PRN and its board of directors
and shareholder. This Agreement constitutes the legal, valid and binding
obligation of the Shareholder and PRN , enforceable against the Shareholder and
PRN in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.22 of
the Disclosure Schedule, neither (i) the execution, delivery or performance of
this Agreement or any of the other agreements referred to in this Agreement, nor
(ii) the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will directly or indirectly (with or without
notice or lapse of time):
(a) contravene, conflict with or result in a violation of (i) any
of the provisions of PRN's articles of incorporation or bylaws, or (ii) any
resolution adopted by PRN's shareholder, or PRN's board of directors or any
committee of PRN's board of directors;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which PRN , or any of the assets owned or used by PRN , is subject;
(c) contravene, conflict with or result in a violation of any of
the terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by PRN or that otherwise relates to PRN's business or to any of the
assets owned or used by PRN;
(d) contravene, conflict with or result in a violation or breach
of, or result in a default under, any provision of any Company Contract, or give
any Person the right to (i) declare a default or exercise any remedy under any
Company Contract, (ii) accelerate the maturity or performance of any Company
Contract, or (iii) cancel, terminate or modify any Company Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by PRN (except for
minor liens that will not, in any case or in the aggregate, materially detract
from the value of the assets subject thereto or materially impair the operations
of PRN).
20
26
Except as set forth in Part 2.22 of the Disclosure Schedule, PRN is not and will
not be required to make any filing with or given any notice to, or to obtain any
Consent from, any Person in connection with (x) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the Disclosure
Schedule) does not, and Shareholder's Closing Certificate (as defined in Section
6.4(f)) will not, (i) contain any representation, warranty or information that
is false or misleading with respect to any material fact, or (ii) omit to state
any material fact necessary in order to make the representations, warranties and
information contained and to be contained herein and therein not false or
misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF HALIS AND THE SUBSIDIARY
HALIS and the Subsidiary, jointly and severally, represent and
warrant to PRN and the Shareholder as follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) HALIS has delivered to PRN accurate and complete copies
(excluding copies of exhibits) of each report, registration statement (on a form
other than Form S-8) and definitive proxy statement filed by HALIS with the SEC
between January 1, 1997 and the date of this Agreement (the "HALIS SEC
Documents"). As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the HALIS SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the HALIS SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in the HALIS
SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered, except as may be indicated in
the notes to such financial statements and (in the case of unaudited statements)
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to normal and recurring
year-end audit adjustments (which will not, individually or in the aggregate, be
material in magnitude); and (iii) fairly present the consolidated financial
position of HALIS as of the respective dates thereof and the consolidated
results of operations of HALIS for the periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. HALIS and the
Subsidiary each have the absolute and unrestricted right, power and authority to
perform their respective obligations under this Agreement; and the execution,
delivery and performance by HALIS and the Subsidiary of this
21
27
Agreement have been duly authorized by all necessary action on the part of HALIS
and the Subsidiary and their respective boards of directors. This Agreement
shall constitute the legal, valid and binding obligation of HALIS and the
Subsidiary, enforceable against each of them in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
3.3 VALID ISSUANCE. The HALIS Common Stock to be issued as Merger
Consideration will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
SECTION 4. CERTAIN COVENANTS OF PRN AND THE SHAREHOLDER
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), PRN shall, and
shall cause its Representatives to: (a) provide HALIS and HALIS's
Representatives with reasonable access to PRN's Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and other
documents and information relating to PRN ; and (b) provide HALIS and HALIS's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to PRN , and with such
additional financial, operating and other data and information regarding PRN ,
as HALIS may reasonably request. Notwithstanding the provisions of Section
11.17, paragraph 7 of the letter agreement between PRN and HALIS dated May 19,
1997 ("Letter of Intent") shall remain in effect through the Closing Date and
shall bind HALIS with respect to any Evaluation Material (as defined in the
Letter of Intent) provided to HALIS or its Representatives during the
Pre-Closing Period.
4.2 OPERATION OF PRN'S BUSINESS. During the Pre-Closing Period, unless
HALIS otherwise consents in writing:
(a) PRN shall conduct its business and operations in the ordinary
course and in substantially the same manner as such business and operations have
been conducted prior to the date of this Agreement;
(b) PRN shall use reasonable efforts to preserve intact its
current business organizations, keep available the services of its current
officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with PRN ;
(c) PRN shall keep in full force all insurance policies identified
in Part 2.18 of the Disclosure Schedule;
(d) PRN shall cause its officers to report regularly to HALIS
concerning the status of PRN's business;
22
28
(e) PRN shall not declare, accrue, set aside or pay any dividend
or make any other distribution in respect of any shares of capital stock, and
shall not repurchase, redeem or otherwise reacquire any shares of capital stock
or other securities;
(f) PRN shall not sell, issue or authorize the issuance of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire, or relating to, any capital stock or other security, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
(g) neither PRN, nor any of the Shareholder shall amend or permit
the adoption of any amendment to PRN articles of incorporation or bylaws, or
effect or permit PRN to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(h) PRN shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(i) PRN shall not make any capital expenditure, except for capital
expenditures that, when added to all other capital expenditures made on behalf
of PRN during the Pre-Closing Period, do not exceed $25,000 in the aggregate;
(j) PRN shall not (i) enter into or become bound by, or permit any
of the assets owned or used by it to become bound by, any Material Contract, or
(ii) amend or prematurely terminate, or waive any material right or remedy
under, any Material Contract;
(k) PRN shall not, other than in the ordinary course of business
consistent with past practice (i) acquire, lease or license any right or other
asset from any other Person, (ii) sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person, or (iii) waive or
relinquish any right, except for immaterial assets acquired, leased, licensed or
disposed of by PRN pursuant to Contracts that are not Material Contracts;
(l) PRN shall not (i) lend money to any Person, or (ii) incur or
guarantee any indebtedness, except that PRN may make routine borrowings in the
ordinary course of business under its respective existing lines of credit;
(m) PRN shall not (i) establish, adopt or amend any Employee
Benefit Plan, (ii) pay any bonus or make any profit-sharing or similar payment
to, or increase the amount of the wages, salary, commissions, fringe benefits or
other compensation or remuneration payable to, any of its directors, officers or
employees, or (iii) hire any new employee whose aggregate annual compensation is
expected to exceed $25,000;
(n) PRN shall not change any of its methods of accounting or
accounting practices in any respect;
23
29
(o) PRN shall not make any Tax election;
(p) PRN shall not commence or settle any Legal Proceeding;
(q) PRN shall not enter into any material transaction or take any
other material action outside the ordinary course of business or inconsistent
with its past practices; and
(r) PRN shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" of this Section 4.2.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, PRN and the Shareholder shall
promptly notify HALIS in writing of:
(i) the discovery by PRN or the Shareholder of any event,
condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes an inaccuracy
in or breach of any representation or warranty made by PRN or the
Shareholder in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause
or constitute an inaccuracy in or breach of any representation or
warranty made by PRN or the Shareholder in this Agreement if (A) such
representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of PRN or the
Shareholder; and
(iv) any event, condition, fact or circumstance that would
make the timely satisfaction of any of the conditions set forth in
Section 6 or Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then PRN or the Shareholder shall promptly deliver to HALIS an
update to the Disclosure Schedule specifying such change. No such update shall
be deemed to supplement or amend the Disclosure Schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
PRN or the Shareholder in this Agreement, or (ii) determining whether any of the
conditions set forth in Section 6 has been satisfied.
24
30
4.4 NO NEGOTIATION. During the Pre-Closing Period, neither PRN nor
the Shareholder shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal
or offer from any Person (other than HALIS) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into
any agreement with, or provide any non-public information to, any Person (other
than HALIS) relating to or in connection with a possible Acquisition
Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than HALIS) relating to a possible Acquisition Transaction.
PRN shall promptly notify HALIS in writing of any inquiry, proposal or offer
relating to a possible Acquisition Transaction that is received by PRN or the
Shareholder during the Pre-Closing Period.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given by
such party in connection with the Merger and the other transactions contemplated
by this Agreement, and (b) shall use his, its or their best efforts to obtain
each Consent (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger or any of the other transactions contemplated by this Agreement. PRN
shall promptly deliver to HALIS a copy of each such filing made, each such
notice given and each such Consent obtained by PRN during the Pre-Closing
Period. HALIS shall promptly deliver to PRN a copy of each such filing made,
each such notice given and each such consent obtained by HALIS during the
Pre-Closing Period.
5.2 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) neither
PRN nor the Shareholder shall (and PRN shall not permit any of its
Representatives to) issue any press release or make any public statement
regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without HALIS's prior written
consent, and (b) HALIS will use reasonable efforts to consult with PRN prior to
issuing any press release or making any public statement regarding the Merger.
5.3 BEST EFFORTS. During the Pre-Closing Period, (a) PRN and the
Shareholder shall use their reasonable best efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis, and (b) HALIS shall use
its reasonable best efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis.
5.4 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. At the Closing, Xxxxxxx
X. Xxxxxxxxxx shall execute and deliver to HALIS an Employment Agreement in the
form of
25
31
Exhibit D-1 (the "Employment Agreement") and a Noncompetition Agreement in the
form of Exhibit D-2 (the "Noncompetition Agreement").
5.5 RELEASE. At the Closing, the Shareholder shall execute and deliver
to HALIS a Release in the form of Exhibit E (the "Release").
5.6 TERMINATION OF EMPLOYEE PLANS. At the Closing, PRN shall terminate
all bonus plans and other benefit plans under which any of its employees or
former employees may have any rights, and shall ensure that no employee or
former employee of PRN has any rights thereunder and that any liabilities of PRN
thereunder (including any such liabilities relating to services performed prior
to the Closing) are fully extinguished at no cost to PRN .
5.7 FIRPTA MATTERS. At the Closing, (a) PRN shall deliver to HALIS a
statement (in such form as may be reasonably requested by counsel to HALIS)
conforming to the requirements of Section 1.897-2(h)(1)(i) of the United States
Treasury Regulations, and (b) PRN shall deliver to the Internal Revenue Service
the notification required under Section 1.897-2(h)(2) of the United States
Treasury Regulations.
5.8 PAYMENT OF MULBERRY INDEBTEDNESS. HALIS agrees that at or
immediately prior to the Closing, HALIS will pay in full the existing
indebtedness of PRN in the principal amount of $80,000 to Mulberry Street
Investment Company, together with all accrued and unpaid interest thereon (the
"Mulberry Indebtedness."
5.9 RELEASE OF PERSONAL GUARANTIES. On or before December 31, 1997,
HALIS shall cause all personal guaranties with respect to the indebtedness of
PRN in the principal amount of $520,000 to Central Bank of Florida to be
terminated by refinancing, payment in full or otherwise.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF HALIS AND THE SUBSIDIARY
The obligations of HALIS and the Subsidiary to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by PRN and the Shareholder in this Agreement and in each of the
other agreements and instruments delivered to HALIS in connection with the
transactions contemplated by this Agreement shall have been accurate in all
respects as of the date of this Agreement, and shall be accurate in all respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time
(without giving effect to any update to the Disclosure Schedule).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that PRN or
the Shareholder is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all respects.
26
32
6.3 CONSENTS. All Consents required to be obtained in connection with
the Merger and the other transactions contemplated by this Agreement (including
the Consents identified in Part 2.22 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.4 AGREEMENTS AND DOCUMENTS. HALIS shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) the Employment Agreement and the Noncompetition Agreement,
executed by Xxxxxxx X. Xxxxxxxxxx;
(b) a Release, executed by the Shareholder;
(c) the statement referred to in Section 5.7, executed by PRN;
(d) estoppel certificates, each dated as of a date not more than
five days prior to the Closing Date and satisfactory in form and
content to HALIS, executed by the Persons identified on Exhibit F and
by such other Persons as HALIS may reasonably specify;
(e) a legal opinion of Harris, Barrett, Xxxx & Dew, dated as of the
Closing Date, satisfactory in form and substance to HALIS and its
counsel; and
(f) a certificate executed by PRN and the Shareholder and
containing the representation and warranty of PRN and the Shareholder
that each of the representations and warranties set forth in Section 2
is accurate in all material respects as of the Closing Date as if made
on the Closing Date and that the conditions set forth in Sections 6.1,
6.2, 6.3, 6.4 and 6.5 have been duly satisfied (the "PRN and
Shareholder's Closing Certificate").
6.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in PRN business, condition, assets, liabilities, operations,
financial performance or prospects since the date of this Agreement.
6.6 TERMINATION OF EMPLOYEE PLANS. PRN shall have provided HALIS with
evidence, satisfactory to HALIS, as to the termination of the plans referred to
in Section 5.6.
6.7 FIRPTA COMPLIANCE. PRN shall have filed with the Internal Revenue
Service the notification referred to in Section 5.7.
6.8 RULE 506. All applicable requirements of Rule 506 under the
Securities Act shall have been satisfied.
6.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
27
33
6.10 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened
to commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the Merger or seeking to prohibit
or limit the exercise by PRN of any material right pertaining to its ownership
of stock of the Surviving Corporation.
6.11 COMPLETION OF DUE DILIGENCE. HALIS shall have completed its due
diligence investigation of PRN and shall have been satisfied with the results
thereof.
6.12 SHAREHOLDER INVESTMENT CERTIFICATIONS. A Shareholder Investment
Certification in the form of Exhibit G executed by the Shareholder shall have
been delivered to HALIS.
6.13 EXISTING XXXXXXXXXX INDEBTEDNESS. Xxxxxxx X. Xxxxxxxxxx
("Xxxxxxxxxx") shall have subscribed for additional shares of PRN Common Stock
in consideration of the cancellation of all indebtedness (including unpaid
principal and accrued interest to the date of subscription) of PRN to
Xxxxxxxxxx.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PRN AND THE
SHAREHOLDER.
The obligations of PRN and the Shareholder to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by HALIS and the Subsidiary in this Agreement and in each of the
other agreements and instruments delivered to PRN in connection with the
transactions contemplated by this Agreement shall have been accurate in all
respects as of the date of this Agreement, and shall be accurate in all respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations
that HALIS is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all respects.
7.3 CONSENTS. All Consents required to be obtained in connection with
the merger and the other transactions contemplated by this Agreement shall have
been obtained and shall be in full force and effect.
7.4 AGREEMENTS AND DOCUMENTS.
(a) HALIS and the Subsidiary shall have entered into the
Employment Agreement described in Section 6.4(a);
(b) PRN shall have received a legal opinion of Xxxxx, Xxxxxxxx &
Xxxxxxx in form and substance satisfactory to PRN and its counsel; and
28
34
(c) PRN shall have received a certificate executed by HALIS and the
Subsidiary, and containing the representation and warranty of HALIS and the
Subsidiary that each of the representations and warranties set forth in Section
3 are accurate in all material respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.4
have been duly satisfied (the "HALIS Closing Certificate").
7.5 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
PRN shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by PRN illegal.
SECTION 8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by HALIS if HALIS reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of HALIS to comply with or
perform any covenant or obligation of HALIS set forth in this Agreement);
(b) by PRN if PRN reasonably determines that the timely
satisfaction of any condition set forth in Section 7 has become impossible
(other than as a result of any failure on the part of PRN or the Shareholder to
comply with or perform any covenant or obligation set forth in this Agreement or
in any other agreement or instrument delivered to HALIS);
(c) by HALIS at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by PRN at or after the Scheduled Closing Time if any condition
set forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(e) by HALIS if the Closing has not taken place on or before July
30, 1997 (other than as a result of any failure on the part of HALIS to comply
with or perform any covenant or obligation of HALIS set forth in this
Agreement);
(f) by PRN if the Closing has not taken place on or before July 30,
1997 (other than as a result of the failure on the part of PRN or the
Shareholder to comply with or perform any covenant or obligation set forth in
this Agreement or in any other agreement or instrument delivered to HALIS);
(g) by the mutual consent of HALIS and PRN; or
(h) by HALIS under the circumstances described in Section 4.3(b).
29
35
8.2 TERMINATION PROCEDURES. If HALIS wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), HALIS shall
deliver to PRN a written notice stating that HALIS is terminating this Agreement
and setting forth a brief description of the basis on which HALIS is terminating
this Agreement. If PRN wishes to terminate this Agreement pursuant to Section
8.1(b), Section 8.1(d) or Section 8.1(f), PRN shall deliver to HALIS a written
notice stating that PRN is terminating this Agreement and setting forth a brief
description of the basis on which PRN is terminating this Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or liability arising from any prior breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 11, as well
as paragraph 7 of the Letter of Intent.
SECTION 9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of PRN, the Shareholder, HALIS and the Subsidiary
contained in this Agreement shall survive the Closing and shall continue for a
period of two years following the Closing Date; except that representations and
warranties contained in Sections 2.6, 2.9, 2.14 and 2.15 shall survive until
expiration of the applicable statutes of limitation for breach of such
representations and warranties. The expiration of any representation or warranty
shall not affect any party's right to claim indemnification for a breach of such
representation or warranty, provided such party gives notice of such claim in
accordance with the provisions of this Section 9 prior to the expiration of such
representation or warranty.
9.2 SHAREHOLDER'S INDEMNITY AGREEMENT. Subject to the provisions of
Section 9.6 hereof, the Shareholder shall defend, indemnify and hold harmless
HALIS and the Surviving Corporation (and their respective directors, officers,
employees, agents, affiliates, successors and assigns) from and against any and
all direct or indirect requests, demands, claims, payments, defenses,
obligations, recoveries, deficiencies, fines, penalties, interest, assessments,
actions, liens, causes of action, suits, proceedings, judgments, losses, Damages
(including without limitation punitive, exemplary or consequential damages, lost
income and profits, interruptions of business and diminution in the value of the
Stock), liabilities, costs, and expenses of any kind (including without
limitation (i) interest, penalties and reasonable attorneys' fees and expenses,
(ii) attorneys' fees and expenses necessary to enforce their rights to
indemnification hereunder, and (iii) consultants' fees and other costs of
defending or investigating any claim hereunder), and interest on any amount
payable as a result of the foregoing, whether accrued, absolute, contingent,
known, unknown, or otherwise as of the Closing Date or thereafter asserted
against, imposed upon or incurred by HALIS, the Surviving Corporation or any of
their respective directors, officers, employees, agents, affiliates, successors
or assigns (a "Loss of HALIS") by reason of, resulting from, arising out of,
based upon, awarded or asserted against or otherwise in respect of:
30
36
(a) any period or periods of PRN ending prior to the Closing and
which involve any claims against HALIS, PRN, the Surviving Corporation or their
respective properties or assets, relating to actions or inactions of PRN or its
respective officers, directors, shareholder, employees or agents prior to
Closing, or the operation of the business of PRN prior to the Closing unless
such liability was disclosed on the Company Financial Statements and adequate
reserves were established therefor;
(b) any breach of any representation and warranty contained in this
Agreement or any misrepresentation in or omission on the part of PRN or the
Shareholder contained in any certificate furnished or to be furnished to HALIS
by PRN or the Shareholder pursuant to this Agreement;
(c) any breach or nonfulfillment on the part of PRN or the
Shareholder of any covenant contained in this Agreement;
(d) the failure of PRN or the Shareholder to obtain, prior to the
Closing Date, any consents, approvals and waivers of governmental agencies or
entities, lessors, landlords, suppliers, and other third parties as may be
necessary to permit the consummation of the Merger and to permit the Surviving
Corporation to continue to operate the business of PRN in the manner presently
conducted after the Closing Date;
(e) the failure of the Surviving Corporation to collect any
accounts receivable of PRN existing on the Closing Date, net of reserve for bad
debts set forth in the Financial Statements, within 180 days following the
Closing Date; provided, however, that upon receipt of full payment from
Shareholder, the Surviving Corporation shall reassign to the Shareholder any
such account receivable;
(f) any federal, state, local or foreign taxes, including any
interest and penalties thereon, due from PRN or the Shareholder with respect to
any period prior to the Closing Date, other than amounts accrued therefor on the
Financial Statements.
9.3 INDEMNITY AGREEMENT OF HALIS AND THE SURVIVING CORPORATION. HALIS
and the Surviving Corporation shall indemnify and hold harmless the Shareholder
(and his successors and assigns) from and against any and all direct or indirect
requests, demands, claims, payments, defenses, obligations, recoveries,
deficiencies, fines, penalties, interest, assessments, actions, liens, causes of
action, suits, proceedings, judgments, losses, Damages (including without
limitation punitive, exemplary or consequential damages and lost income and
profits and interruptions of business), liabilities, costs, and expenses of any
kind (including without limitation (i) interest, penalties and reasonable
attorneys' fees and expenses, (ii) attorneys' fees and expenses necessary to
enforce their rights to indemnification hereunder, and (iii) consultants' fees
and other costs of defending or investigating any claim hereunder, and interest
on any amount payable as a result of the foregoing) whether accrued, absolute,
contingent, known, unknown or otherwise as of the Closing Date or thereafter
asserted against, imposed upon or incurred by Shareholder or its
31
37
respective representatives or assigns, (a "Loss of Shareholder") by reason of,
resulting from, arising out of, based upon, awarded or asserted against in
respect of or otherwise in respect of:
(a) any period or periods of the Surviving Corporation beginning
after the Closing and which involve any claims against the Shareholder or their
respective assets relating to actions or inactions of HALIS or the Surviving
Corporation or their respective officers, directors, shareholder, employees or
agents after the Closing, or the operation of the Surviving Corporation after
the Closing, including without limitation any claims arising out of equipment
and automobile leases in effect on the Closing Date (except to the extent any of
the foregoing arise from the acts or omissions of the Shareholder); and
(b) any breach of any representation and warranty or nonfulfillment
of any covenant or agreement on the part of HALIS or the Subsidiary contained in
this Agreement, including without limitation the breach of the covenant of HALIS
in Section 5.9, or any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of the HALIS or the Subsidiary contained in any
certificate furnished or to be furnished to the Shareholder by HALIS or the
Subsidiary pursuant to this Agreement.
9.4 INDEMNIFICATION PROCEDURE.
(a) Upon obtaining knowledge thereof, the party to be indemnified
hereunder (the "Indemnitee") shall promptly notify the indemnifying party
hereunder (the "Indemnitor") in writing of any damage, claim, loss, liability or
expense or other matter which the Indemnitee has determined has given or could
give rise to a claim for which indemnification rights are granted hereunder
(such written notice referred to as the "Notice of Claim"). The Notice of Claim
shall specify, in all reasonable detail, the nature and estimated amount of any
such claim giving rise to a right of indemnification, to the extent the same can
reasonably be estimated. Any failure on the part of an Indemnitee to give timely
notice to the Indemnitor of a claim shall not affect the right of the Indemnitee
to obtain indemnification from the Indemnitor with respect to such claim unless
the Indemnitor is actually harmed by such failure to notify, and only to the
extent of such actual harm.
(b) With respect to any matter set forth in a Notice of Claim
relating to a third party claim the Indemnitor shall defend, in good faith and
at its expense, any such claim or demand, and the Indemnitee, at its expense,
shall have the right to participate in the defense of any such third party
claim. So long as Indemnitor is defending, in good faith, any such third party
claim, the Indemnitee shall not settle or compromise such third party claim. The
Indemnitee shall make available to the Indemnitor or its representatives all
records and other materials reasonably required by them for use in contesting
any third party claim and shall cooperate fully with the Indemnitor in the
defense of all such claims. If the Indemnitor does not defend any such third
party claim or if the Indemnitor does not provide the Indemnitee with prompt and
reasonable assurances that the Indemnitor will satisfy the third party claim,
the Indemnitee may, at its option, elect to defend any such third party claim,
at the Indemnitor's expense. An Indemnitor may not settle or compromise any
claim without obtaining a full and unconditional release of the Indemnitee,
unless the Indemnitee consents in writing to such settlement or compromise.
Notwithstanding the foregoing,
32
38
if there is a reasonable probability that a third party claim for which HALIS or
the Surviving Corporation has indemnification rights against the Shareholder
hereunder will materially and adversely affect HALIS or the Surviving
Corporation other than as a result of money damages or other payments, HALIS or
the Surviving Corporation shall be entitled to conduct the defense of such claim
at the Shareholder' expense.
9.5 SET-OFF. HALIS and the Surviving Corporation shall have the right
to set-off and apply against any other amounts owing from HALIS or the Surviving
Corporation to the Shareholder under any other agreement between HALIS or the
Surviving Corporation and Shareholder, all sums in respect of which the
Shareholder may be liable pursuant to Section 9.2 hereof, such right of set-off
to be in addition to and not in lieu of or an election against any and all other
remedies available to HALIS and the Surviving Corporation under this Agreement
or at law or in equity.
9.6 LIMITATIONS ON LIABILITY OF SHAREHOLDER. Shareholder shall have no
liability with respect to Losses of HALIS arising under subparagraphs (a), (b),
or (d) of Section 9.2 until the total of all Losses of HALIS with respect
thereto exceeds $25,000. If the aggregate Losses of HALIS exceed such $25,000
threshold, PRN and the Shareholder shall be liable for all Losses of HALIS to
the extent (and only to the extent) Losses of HALIS exceed such $25,000
threshold.
SECTION 10. REGISTRATION OF SHARES
10.1 REGISTRATION STATEMENT.
(a) No later than September 30, 1997, HALIS shall file with the
SEC a registration statement (the "Registration Statement") with respect to
resales of shares of HALIS Common Stock received in the Merger by each
Participating Holder (as defined in Section 10.1(c)). HALIS shall use reasonable
efforts: (a) to cause the Registration Statement to be declared effective by the
SEC as soon as practicable but in any event on or before the first anniversary
of the Closing Date; and (b) to cause the Registration Statement to remain
effective until the earlier of (i) the third anniversary of the Closing Date, or
(ii) the date on which the distribution described in the Registration Statement
is completed as to all Participating Holders (as defined in subsection (c)
below).
(b) HALIS shall (at its own expense):
(i) prepare and file promptly with the SEC such amendments
to the Registration Statement, and such supplements to the related
prospectus, as may be required in order to comply with the applicable
provisions of the Securities Act, including, without limitation, to
maintain the effectiveness or currency thereof;
(ii) furnish to the respective Participating Holders such
numbers of copies of a prospectus conforming to the requirements of the
Securities Act as they may reasonably
33
39
request in order to facilitate the disposition of the shares covered
by the Registration Statement; and
(iii) use reasonable efforts to register and qualify the
shares covered by the Registration Statement under the Securities laws
of such states as the respective Participating Holders may reasonably
request, provided, however, that HALIS shall not be required in
connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any of
such states.
(c) Notwithstanding anything to the contrary herein, no Person who
receives HALIS Common Stock in the Merger shall have any rights under this
Section 10 unless such Person executes and delivers to HALIS a written
agreement, reasonably satisfactory in form and content to HALIS, confirming that
such Person wishes to be allowed to sell HALIS Common Stock pursuant to the
Registration Statement and agrees to be bound by the provisions of this Section
10. (A Person who holds any of the HALIS Common Stock delivered in the Merger
and who executes and delivers such an agreement is referred to in this Section
10 as a "Participating Holder.") Any Participating Holder who delivers such an
agreement more than 30 days after the Closing Date may be required to pay, as a
condition to exercising rights under this Section 10, the amount of incremental
expenses incurred by HALIS in complying therewith. No Participating Holder shall
sell any HALIS Common Stock pursuant to the Registration Statement at any time
HALIS shall have furnished written notice that the Registration Statement is not
then effective or the prospectus that forms a part thereof is not current.
(d) Notwithstanding anything to the contrary contained herein, all
of HALIS's obligations under this Section 10 (including its obligation to file
and maintain the effectiveness of the Registration Statement) shall terminate
and expire as of the earliest date on which all of the shares of HALIS Common
Stock issued in the Merger can be sold without any restrictions as to volume or
manner of sale pursuant to subsection (k) of Rule 144 under the Securities Act.
10.2 INDEMNIFICATION.
(a) HALIS agrees to indemnify, to the extent permitted by law,
each Participating Holder against all Damages suffered by such Participating
Holder as a result of any untrue or alleged untrue statement of material fact
contained in the Registration Statement or in the related prospectus or
preliminary prospectus (or in any amendment thereof or supplement thereto) or as
a result of any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as such untrue statement or omission or alleged untrue statement
or omission results from or is contained in any information furnished in writing
to HALIS by such Participating Holder for use therein or results from such
Participating Holder's failure to deliver a copy of a Registration Statement or
related prospectus (or any amendment thereof or supplement thereto) after HALIS
has furnished such Participating Holder with a sufficient number of copies
thereof.
34
40
(b) In connection with the Registration Statement, each
Participating Holder (i) shall furnish to HALIS in writing such information and
affidavits as HALIS reasonably requests for use in connection with such
Registration Statement or the related prospectus, and (ii) to the extent
permitted by law, will indemnify HALIS, its directors and officers and each
Person who controls HALIS (within the meaning of the Securities Act) against all
Damages resulting from any untrue or alleged untrue statement of material fact
contained in such Registration Statement or in the related prospectus or
preliminary prospectus (or in any amendment thereof or supplement thereto) or
from any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission or alleged untrue statement or
omission results from or is contained in any information or affidavit furnished
in writing by such Participating Holder.
(c) Any Person entitled to indemnification under this Section 10
will (i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (ii) unless in the indemnified
party's reasonable judgment a conflict of interest exists between the
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). Any indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will pay the fees and expenses of only one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest exists between such indemnified party and any other
indemnified party with respect to such claim (in which case the indemnifying
party will pay the fees and expenses of additional counsel).
10.3 DELAY OF REGISTRATION. For a period not to exceed 30 days, HALIS
may delay the filing or effectiveness of the Registration Statement, or suspend
the use of the Registration Statement (and the Participating Holders hereby
agree not to offer or sell any shares of HALIS Common Stock pursuant to the
Registration Statement during such period), at any time when HALIS, in its
reasonable judgment (confirmed in writing if requested by any Participating
Holder), believes any event has occurred giving rise to HALIS's indemnification
obligation pursuant to Section 10.2(a). HALIS shall use commercially reasonable
efforts to correct the Registration Statement within said 30-day period.
SECTION 11. MISCELLANEOUS PROVISIONS
11.1 FURTHER ASSURANCES. Each party hereto shall execute and cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
35
41
11.2 FEES AND EXPENSES. Subject to Section 9, all fees, costs and
expenses (including legal fees and accounting fees) that have been incurred or
that are incurred in the future by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) any
investigation and review conducted by such party of the other parties' business
(and the furnishing of information in connection with such investigation and
review), (b) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule) and all agreements, certificates, opinions
and other instruments and documents delivered or to be delivered in connection
with the transactions contemplated by this Agreement, (c) the preparation and
submission of any filing or notice required to be made or given in connection
with any of the transactions contemplated by this Agreement, and the obtaining
of any Consent required to be obtained in connection with any of such
transactions, and (d) the consummation of the Merger shall be paid: (i) by
HALIS, if incurred by HALIS or the Subsidiary; and (ii) by PRN , if incurred by
PRN or the Shareholder; provided, however, that PRN shall not incur any
additional debt, defer the payment of any expenses, or take any other action not
in the ordinary course of business for the purpose of providing funds for the
payment of such expenses.
11.3 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
11.4 NOTICES. Any notice or other communication required or permitted
to be delivered to any party under this Agreement shall be in writing and shall
be deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to HALIS:
HALIS, Inc.
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
36
42
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to PRN :
Physicians Resource Network, Inc.
0000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Harris, Barrett, Xxxx & Dew
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxx
Facsimile: (000) 000-0000
if to the Shareholder:
Xxxxxxx X. Xxxxxxxxxx
00000 Xxxxxx Xxxxx
Xxxxx, Xxxxxxx 00000
11.5 CONFIDENTIALITY. On and at all times after the Closing Date, PRN
and the Shareholder shall keep confidential, and shall not use or disclose to
any other Person, any non-public document or other non-public information in PRN
or such Shareholder's possession that relates to the business of HALIS or the
Subsidiary.
11.6 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
11.7 HEADINGS. The bold-faced Section headings contained in this
Agreement are for convenience of reference only, shall not be deemed to be a
part of this Agreement and shall not be referred to in connection with the
construction or interpretation of this Agreement.
37
43
11.8 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
11.9 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of Georgia (without
giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement shall be brought
to or otherwise commenced in any state or federal court located in Xxxxxx
County, Georgia. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in Xxxxxx County,
Georgia (and each appellate court located in the State of Georgia) in
connection with any such legal proceeding;
(ii) agrees that each state and federal court located in
Xxxxxx County, Georgia shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or
federal court located in Xxxxxx County, Georgia, any claim that such
party is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum,
that the venue of such proceeding is improper or that this Agreement
or the subject matter of this Agreement may not be enforced in or by
such court.
11.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: PRN
and its successors and assigns (if any); the Shareholder and his personal
representatives, executors, administrators, estates, heirs, successors and
assigns (if any); HALIS and its successors and assigns (if any); and the
Subsidiary and its successors and assigns (if any). This Agreement shall inure
to the benefit of: PRN ; the Shareholder; HALIS; the Subsidiary; and the
respective successors, heirs personal representatives and assigns (if any) of
the foregoing.
11.11 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach or threatened
breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (b) an injunction restraining such breach or threatened
breach.
38
44
11.12 WAIVER.
(a) No failure on the part of any party to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
party in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No party shall be deemed to have waived any claim arising
out of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
11.13 AMENDMENTS. Subject to Section 10.9, this Agreement may not be
amended, modified, altered or supplemented other than by means of a written
instrument duly executed and delivered on behalf of all of the parties hereto.
11.14 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.15 PARTIES IN INTEREST. Except for the provisions of Sections 9 and
10, none of the provisions of this Agreement is intended to provide any rights
or remedies to any Person other than the parties hereto and their respective
successors, heirs, personal representatives and assigns (if any).
11.16 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof, including without limitation the Letter
of Intent (other than paragraph 7 thereof, which shall survive to the extent
provided herein).
11.17 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
39
45
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of this
Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and
delivered as of the date first above written.
"HALIS"
HALIS, INC., a Georgia corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------------------
Xxxxx Xxxxxx, Executive Vice President,
Chief Administrative Officer and Secretary
"SUBSIDIARY"
PRN ACQUISITION CO.,
a Georgia corporation
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Xxxxx Xxxxxx, President
"PRN"
PHYSICIANS RESOURCE NETWORK, INC.
a Florida corporation
By: /s/ Xxxxxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxxxxx X. Xxxxxxxxxx, President
40
46
"THE SHAREHOLDER"
/s/ Xxxxxxx X. Xxxxxxxxxx (SEAL)
---------------------------------------
Xxxxxxx X. Xxxxxxxxxx
41
47
EXHIBIT A
Shareholders of Physicians Resource Network, Inc.
No. of Shares of
Name Common Stock Held
---- -----------------
Xxxxxxx X. Xxxxxxxxxx Voting Common Stock - 1,000
Non-Voting Common Stock - 10,000
48
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a
material portion of PRN's business or assets;
(b) the issuance, disposition or acquisition of (i) any capital
stock or other equity security of PRN or HALIS, as the case may be;
(ii) any option, call, warrant or right (whether or not immediately
exercisable) to acquire, or otherwise relating to, any capital stock
or other equity security of PRN or HALIS, as the case may be; or (iii)
any security, instrument or obligation that is or may become
convertible into or exchangeable for any capital stock or other equity
security of PRN or HALIS, as the case may be; or
(c) any merger, consolidation, business combination, share
exchange, reorganization or similar transaction involving PRN or
HALIS, as the case may be.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit B is attached (including the Disclosure
Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which PRN is a party; (b) by which PRN or any of its assets are or may become
bound or under which PRN has, or may become subject to, any obligation; or (c)
under which PRN has or may acquire any right or interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to PRN or otherwise used by PRN .
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
X-0
00
XXXXXXXXXX XXXXXXXX. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to HALIS on behalf of PRN and
the Shareholder.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security), any restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ENVIRONMENTAL LAW. "Environmental Law" means any federal, state, local
or foreign Legal Requirement relating to pollution or protection of human health
or the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city, local or other political subdivision.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by
B-2
50
or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitute, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on PRN if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or in the
Shareholder' Closing Certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on
PRN's business, condition, assets, liabilities, operations, financial
performance or prospects.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
asbestos, PCBs, petroleum and petroleum products and any other substance that is
now or in the future regulated by any Environmental Law or that is otherwise a
danger to health, reproduction or the environment.)
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset; or (b) right to use or exploit
any of the foregoing.
REPRESENTATIVES "Representatives" shall mean officers, directors,
employees, agents, attorneys, accounts, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise tax,
ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any
B-3
51
fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
B-4
