EXHIBIT 2.1
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AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION
among:
XXXXXX BUSINESS SYSTEMS, INC., a Georgia corporation,
and
AUBIS, L.L.C., a Georgia limited liability company,
and
AUBIS HOSPITALITY SYSTEMS, INC. , a Georgia corporation,
and
AUBIS SYSTEMS INTEGRATION, INC., a Georgia corporation,
and
CERTAIN PERSONS AND AFFILIATES OF AUBIS, L.L.C.
_________________________
Originally Dated as of December 13, 1995
Amended and Restated as of March 29, 1996
_________________________
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TABLE OF CONTENTS
Page
Section 1. DESCRIPTION OF TRANSACTION.................................. A-7
1.1 Merger of Companies into Merger Subs........................ A-7
1.2 Effect of Mergers........................................... A-7
1.3 Closing; Effective Time..................................... A-7
1.4 Articles of Incorporation and Bylaws;
Directors and Officers..................................... A-7
1.5 Conversion of Shares........................................ A-8
1.6 Closing of the Companies' Transfer Books.................... A-8
1.7 Exchange of Certificates.................................... A-8
1.8 Tax Consequences............................................ A-9
1.9 Further Action.............................................. A-9
Section 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT, THE
COMPANIES AND THE DESIGNATED PERSONS....................... A-9
2.1 Due Organization; No Subsidiaries; Etc...................... A-9
2.2 Articles of Incorporation and Bylaws; Records............... A-10
2.3 Capitalization, Etc......................................... A-10
2.4 Financial Statements........................................ A-11
2.5 Absence of Changes.......................................... A-11
2.6 Title to Assets............................................. A-12
2.7 Bank Accounts; Receivables; Customers....................... A-12
2.8 Equipment; Leasehold........................................ A-13
2.9 Proprietary Assets.......................................... A-13
2.10 Contracts................................................... A-14
2.11 Liabilities................................................. A-16
2.12 Compliance with Legal Requirements.......................... A-16
2.13 Governmental Authorizations................................. A-16
2.14 Tax Matters................................................. A-17
2.15 Employee and Labor Matters; Benefit Plans................... A-18
2.16 Environmental Matters....................................... A-20
2.17 Sale of Products; Performance of Services................... A-20
2.18 Insurance................................................... A-20
2.19 Related Party Transactions.................................. A-20
2.20 Legal Proceedings; Orders................................... A-21
2.21 Authority; Binding Nature of Agreement...................... A-21
2.22 Non-Contravention; Consents................................. A-21
2.23 Full Disclosure............................................. A-22
Section 3. REPRESENTATIONS AND WARRANTIES OF XXXXXX.................... A-22
3.1 SEC Filings; Financial Statements........................... A-22
3.2 Authority; Binding Nature of Agreement...................... A-22
3.3 Valid Issuance.............................................. A-23
3.4 Merger Subs................................................. A-23
Section 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE
DESIGNATED PERSONS......................................... A-23
4.1 Access and Investigation.................................... A-23
4.2 Operation of the Companies' Business........................ A-23
4.3 Notification; Updates to Disclosure Schedule................ A-24
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4.4 No Negotiation.............................................. A-25
4.5 Due Diligence Investigation................................. A-25
Section 5. CERTAIN COVENANTS OF XXXXXX................................. A-26
5.1 Access and Investigation.................................... A-26
5.2 Operation of Xxxxxx'x Business.............................. A-26
5.3 Notification................................................ A-27
5.4 No Negotiation.............................................. A-27
5.5 Due Diligence Investigation................................. A-28
Section 6. ADDITIONAL COVENANTS OF THE PARTIES......................... A-28
6.1 Filings and Consents........................................ A-28
6.2 Proxy Statement; Other Filings.............................. A-29
6.3 Shareholders' Approvals..................................... A-29
6.4 Public Announcements........................................ A-29
6.5 Best Efforts................................................ A-29
6.6 Employment Agreement........................................ A-29
6.7 Termination of Employee Plans............................... A-29
6.8 FIRPTA Matters.............................................. A-29
6.9 Conversion of Preferred Stock............................... A-30
Section 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX............... A-30
7.1 Accuracy of Representations................................. A-30
7.2 Performance of Covenants.................................... A-30
7.3 Consents.................................................... A-30
7.4 Agreements and Documents.................................... A-30
7.5 No Material Adverse Change.................................. A-30
7.6 Termination of Employee Plans............................... A-30
7.7 FIRPTA Compliance........................................... A-31
7.8 Rule 506.................................................... A-31
7.9 No Restraints............................................... A-31
7.10 No Legal Proceedings........................................ A-31
7.11 Xxxxxx Shareholders Meeting................................. A-31
7.12 Related Party Debt.......................................... A-31
7.13 Investment Certification.................................... A-31
7.14 HALIS Acquisition........................................... A-31
Section 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT,
THE COMPANIES AND THE DESIGNATED PERSONS................... A-31
8.1 Accuracy of Representations................................. A-31
8.2 Performance of Covenants.................................... A-31
8.3 Consents.................................................... A-31
8.4 Agreements and Documents.................................... A-32
8.5 Xxxxxx Shareholder Meeting.................................. A-32
8.6 No Material Adverse Change.................................. A-32
8.7 No Restraints............................................... A-32
8.8 No Legal Proceedings........................................ A-32
8.9 Related Party Debt.......................................... A-32
8.10 Xxxxxx'x Financial Condition Immediately Prior to Closing... A-32
8.11 HALIS Acquisition........................................... A-32
8.12 Compucom Waiver............................................. X-00
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Xxxxxxx 9. TERMINATION........................................... A-33
9.1 Termination Events.................................... A-33
9.2 Termination Procedures................................ A-33
9.3 Effect of Termination................................. A-33
Section 10. INDEMNIFICATION, ETC.................................. A-33
10.1 Indemnification by the Parent and the
Designated Persons.................................... A-34
10.2 Indemnification by Xxxxxx and the
Surviving Corporation................................. A-34
10.3 Limitations on Indemnification........................ A-34
10.4 Procedure............................................. A-34
Section 11. REGISTRATION OF SHARES................................ A-35
11.1 Registration Statement................................ A-35
11.2 Indemnification....................................... A-36
11.3 Delay of Registration................................. A-36
11.4 Amendment of Section 11............................... A-37
Section 12. MISCELLANEOUS PROVISIONS.............................. A-37
12.1 Designated Persons' Agent............................. A-37
12.2 Further Assurances.................................... A-37
12.3 Fees and Expenses..................................... A-37
12.4 Attorneys' Fees....................................... A-38
12.5 Notices............................................... A-38
12.6 Confidentiality....................................... A-39
12.7 Time of the Essence................................... A-39
12.8 Headings.............................................. A-39
12.9 Counterparts.......................................... A-39
12.10 Governing Law; Venue.................................. A-39
12.11 Successors and Assigns................................ A-40
12.12 Remedies Cumulative; Specific Performance............. A-40
12.13 Waiver................................................ A-40
12.14 Amendments............................................ A-40
12.15 Severability.......................................... A-40
12.16 Parties in Interest................................... A-40
12.17 Entire Agreement...................................... A-41
12.18 Construction.......................................... X-00
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XXXXXXXX
Exhibit A - Designated Persons
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Related Party Debt
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AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION ("Agreement") is made and entered into as of March 29, 1996, by
and among: XXXXXX BUSINESS SYSTEMS, INC., a Georgia corporation ("Xxxxxx");
AUBIS, L.L.C., a Georgia limited liability company ("Parent"); AUBIS HOSPITALITY
SYSTEMS, INC. , a Georgia corporation and a wholly-owned subsidiary of the
Parent ("AHS"); AUBIS SYSTEMS INTEGRATION, INC., a Georgia corporation and a
wholly-owned subsidiary of the Parent ("ASI") (AHS and ASI are hereinafter
sometimes referred to collectively as the "Companies"), and the parties
identified on Exhibit A (the "Designated Persons"). Certain capitalized terms
used in this Agreement are defined in Exhibit B.
RECITALS
X. Xxxxxx, Parent and the Companies entered into an Agreement and
Plan of Merger and Reorganization dated as of December 13, 1995 (the "Original
Agreement") which contemplated a merger of the Companies into Xxxxxx in
accordance with the Georgia Business Corporation Code, in which Xxxxxx would
continue to exist as the surviving corporation of such merger.
B. The parties have subsequently agreed that it is in their mutual
best interest to restructure the transactions contemplated in the Original
Agreement as two separate mergers of the Companies into two newly created wholly
owned subsidiaries of Xxxxxx.
C. The parties wish to amend and restate the Original Agreement to
reflect the revised structure of the mergers and to incorporate certain
additional terms as provided herein.
D. It is intended that the mergers continue to qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
E. This Amended and Restated Agreement has been adopted and approved
by the respective boards of directors of Xxxxxx, and the Companies and the
members of Parent.
F. The Parent owns a total of (i) 1,126 shares of the voting common
stock, $1.00 par value per share, of AHS, representing 100% of the issued and
outstanding stock of AHS, and (ii) 14,288 shares of the voting common stock, no
par value per share, of ASI, representing 100% of the issued and outstanding
stock of ASI (collectively, the "Companies Common Stock.")
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AGREEMENT
The parties to this Agreement agree as follows:
Section 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF COMPANIES INTO MERGER SUBS. Prior to the Closing, Xxxxxx
shall cause to be incorporated and organized two wholly owned subsidiaries of
Xxxxxx (collectively, the "Merger Subs", or each individually, a "Merger Sub").
Prior to the Closing, Xxxxxx shall transfer to one or both of the Merger Subs
certain of Xxxxxx'x assets, and one or both of the Merger Subs shall assume
substantially all of Xxxxxx'x liabilities, all in a manner that is reasonably
satisfactory in form and substance to Parent. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3) AHS shall be merged into one of the Merger Subs and ASI shall be
merged into the other Merger Sub, and the separate existence of the Companies
shall cease (the two mergers of the respective Companies into the respective
Merger Subs shall be referred to hereinafter as the "Mergers"). The respective
Merger Subs shall be the surviving corporations in the Mergers (the "Surviving
Corporations").
1.2 EFFECT OF MERGERS. The Mergers shall have the effects set forth in
this Agreement and in the applicable provisions of the Georgia Business
Corporation Code. Prior to closing, Xxxxxx shall cause the Merger Subs to enter
into this Agreement by addendum whereby each of the Merger Subs adopts the terms
and conditions of the Mergers contained herein.
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 10:00 a.m. local time on the first business day which is two (2) days
after the date Xxxxxx'x shareholders shall have ratified the Mergers, or at such
other time and date 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, but in no event later than one business day after
the Closing, properly executed certificates of merger for the mergers of ASI and
AHS into the respective Merger Subs, conforming to the requirements of the
Georgia Business Corporation Code, shall be filed with the Secretary of State of
the State of Georgia. The Mergers shall take effect at the time the last such
certificates of merger are filed with the Secretary of State of the State of
Georgia (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 respective Merger Subs shall
continue as the Articles of Incorporation of the Surviving Corporations;
(b) the respective Bylaws of the Merger Subs shall continue as the
respective Bylaws of the Surviving Corporations (provided that any
amendments reasonably required to carry into effect the purposes of this
Agreement also may be made);
(c) simultaneously with the Closing, the Articles of Incorporation of
Xxxxxx shall be amended and restated to:
(i) change the name of Xxxxxx to AUBIS, Inc; and
(ii) increase authorized common stock to 100,000,000 shares;
(d) the directors and officers of Xxxxxx and the Surviving Corporations
immediately after the Effective Time shall be the individuals identified on
Exhibit C; and
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(e) immediately following the Closing, Xxxxxx'x Board of Directors
shall cause the number of seats on such Board to increase from 5 members to 7
members. As soon as practicable after the Closing, Xxxxxx'x Board of Directors
shall elect two members to fill the newly created vacancies, one of whom shall
be a mutual nominee of Xxxxx Xxxxxx and Xxxx Xxxxxxxx, the other of whom shall
be a nominee of Xxxx Xxxxxxxx.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.7(b), at the Effective Time, by virtue of the
Mergers and without any further action on the part of Xxxxxx, Parent, the
Companies, the Merger Subs or any Designated Person, all of the Companies Common
Stock outstanding immediately prior to the Effective Time shall be canceled and
retired and converted into the right to receive 10,500,000 shares of $.01 par
value common stock of Xxxxxx ("Xxxxxx Common Stock") (the "Merger
Consideration").
(b) If any shares of Companies 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 the Companies, then the shares of Xxxxxx
Common Stock issued in exchange for such shares of Companies 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 Xxxxxx Common
Stock may accordingly be marked with appropriate legends.
1.6 CLOSING OF THE COMPANIES' TRANSFER BOOKS. At the Effective Time, the
holders of certificates representing shares of Companies Common Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Companies, and the stock transfer books of the
Companies shall be closed with respect to all shares of such Companies Common
Stock outstanding immediately prior to the Effective Time. No further transfer
of any such shares of the Companies' 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 Companies Common Stock
(a "Company Stock Certificate") is presented to Xxxxxx, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At or as soon as practicable following the Effective Time, each
shareholder of record of the Companies shall surrender its respective Company
Stock Certificate(s) to the Xxxxxx, together with such transmittal documents as
Xxxxxx may reasonably require, and Xxxxxx shall deliver to such shareholders of
record of the Companies a certificate or certificates representing the number of
shares of Xxxxxx Common Stock issuable pursuant to Section 1.5 in respect of the
Companies Common Stock represented by the surrendered Company Stock
Certificate(s).
(b) Until surrendered as contemplated by this Section 1.7, each Company
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive shares of Xxxxxx Common Stock as
contemplated by this Section 1.7. If any Company Stock Certificate shall have
been lost, stolen or destroyed, Xxxxxx may, in its discretion and as a condition
precedent to the issuance of any certificate representing Xxxxxx Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit and to deliver a bond (in such sum as Xxxxxx
may reasonably direct) as indemnity against any claim that may be made against
Xxxxxx with respect to such Company Stock Certificate.
(c) The shares of Xxxxxx Common Stock to be issued in the Mergers 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
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UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(d) Xxxxxx shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
Companies Common Stock pursuant to this Agreement such amounts as Xxxxxx 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.
(e) Xxxxxx shall not be liable to any holder or former holder of
Companies Common Stock for any shares of Xxxxxx 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 TAX CONSEQUENCES. For federal income tax purposes, the Mergers are
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.
1.9 FURTHER ACTION. If, at any time after the Effective Time, any further
action is determined by Xxxxxx to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Merger Subs with full right, title and
possession of and to all rights and property of the Companies, the officers and
directors of Xxxxxx shall be fully authorized (in the name of the Companies and
otherwise) to take such action.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT, THE COMPANIES AND
THE DESIGNATED PERSONS
The Companies, the Parent and the Designated Persons jointly and
severally represent and warrant, to and for the benefit of Xxxxxx and the Merger
Subs, as follows (for purposes of this Section 2, unless the context indicates
otherwise, a reference to the "Companies" in the plural shall mean each of the
Companies individually), as of the date hereof and as of the Closing Date:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Companies are corporations duly organized, validly existing
and in good standing under the laws of the State of Georgia and have all
necessary power and authority: (i) to conduct their businesses in the manner in
which their businesses are currently being conducted and in the manner in which
their businesses are proposed to be conducted; (ii) to own and use their assets
in the manner in which their assets are currently owned and used and in the
manner in which their assets are proposed to be owned and used; and (iii) to
perform their obligations under all Contracts by which they are bound.
(b) The Companies have 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 names "AUBIS Hospitality Systems, Inc."
f/k/a "Wiporwil Systems, Inc." f/d/b/a "Dynamic Decisions", with respect to AHS,
and "AUBIS Systems Integration, Inc." f/k/a "G.E. Random & Associates, Inc."
f/d/b/a "Peripheral Design", with respect to ASI.
(c) The Companies are not and have not been required to be qualified,
authorized, registered or licensed to do business as foreign corporations 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 the Companies. The Companies are in good standing as foreign corporations in
each of the jurisdictions identified in Part 2.1(c) of the Disclosure Schedule.
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(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Companies' boards of directors, (ii) the names
of the members of each committee of the Companies' boards of directors, and
(iii) the names and titles of the Companies' officers.
(e) Except as set forth in Part 2.1(e) of the Disclosure Schedule, the
Companies have no subsidiaries, and have 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. The Companies have
delivered to Xxxxxx accurate and complete copies of: (i) the Companies'
articles of incorporation and bylaws, including all amendments thereto; (ii) the
stock records of the Companies; 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 shareholders of the Companies, the boards
of directors of the Companies and all committees of the boards of directors of
the Companies. There have been no meetings or other proceedings or actions of
the shareholders of the Companies, the boards of directors of the Companies or
any committee of the boards of directors of the Companies that are not fully
reflected in such minutes or other records. There has not been any violation of
any of the provisions of the Companies' articles of incorporation or bylaws or
of any resolution adopted by the Companies' shareholders, the Companies' boards
of directors or any committee of the Companies' boards of directors. The books
of account, stock records, minute books and other records of the Companies 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 AHS consists of 100,000 shares of
common stock, of which 1,126 shares have been issued and are outstanding. There
are no shares of capital stock held in AHS's treasury. Part 2.3(a) of the
Disclosure Schedule sets forth the names of AHS's shareholders and the number of
shares of AHS common stock owned of record by each of such shareholders. All of
the outstanding shares of AHS common stock have been duly 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) The authorized capital stock of ASI consists of 100,000 shares of
common stock, of which 14,288 shares have been issued and are outstanding.
There are no shares of capital stock held in ASI's treasury. Part 2.3(b) of the
Disclosure Schedule sets forth the names of ASI's shareholders and the number of
shares of ASI common stock owned of record by each of such shareholders. All of
the outstanding shares of ASI common stock have been duly 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.
(c) 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 the
Companies; (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 the Companies; (iii) Contract under which the Companies are
or may become obligated to sell or otherwise issue any shares of their 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 the Companies. Except as set forth in Part 2.3(c)
of the Disclosure Schedule, the Companies have never issued or granted any
option, call, warrant or right to acquire, or otherwise relating to, any shares
of their capital stock or other securities.
(d) All outstanding shares of Companies 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.
(e) Except as set forth in Part 2.3(e) of the Disclosure Schedule, the
Companies have never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities. All securities so
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reacquired by the Companies were reacquired in compliance with (i) the
applicable provisions of the Georgia Business Corporation Code and all other
applicable Legal Requirements, and (ii) any requirements set forth in applicable
Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Companies will within five days after the restatement date of
this Agreement deliver to Xxxxxx the audited combined balance sheets of AHS and
ASI as of December 31, 1995 and the related audited combined statements of
income of AHS for the year then ended and the accompanying report of Habif,
Arogetti & Xxxxx, P.C., independent certified public accountants to the
Companies (collectively, the "Company Financial Statements").
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Companies as
of the respective dates thereof and the results of operations of the Companies
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 do not contain footnotes.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Disclosure
Schedule, since December 31, 1995.
(a) there has not been any material adverse change in the Companies'
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 the Companies;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the Companies' assets (whether
or not covered by insurance);
(c) the Companies have not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and have not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Companies have 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 the either of the Companies'
articles of incorporation or bylaws, and the Companies have not effected or been
a party to any Acquisition Transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(f) the Companies have not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(g) the Companies have not made any capital expenditure which exceeds
$25,000 in the aggregate;
(h) the Companies have not (i) entered into or permitted any of the
assets owned or used by them 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 they
are or were party or under which they have or have had any rights or
obligations;
(i) the Companies have 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
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(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 the Companies' past practices;
(j) the Companies have not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) the Companies have not made any pledge of any of their assets or
otherwise permitted any of their assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Companies' past practices;
(l) the Companies have not (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(m) the Companies have 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 their
directors, officers or employees, or (iii) hired any new employee;
(n) the Companies have not changed any of their methods of accounting
or accounting practices in any respect;
(o) the Companies have not made any Tax election;
(p) the Companies have not commenced or settled any Legal Proceeding;
(q) the Companies have not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with their past practices; and
(r) the Companies have not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) The Companies own, and have good, valid and marketable title to,
all assets purported to be owned by them, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts
2.7(b), 2.8 and 2.9 of the Disclosure Schedule and all of the Companies' rights
under the Contracts identified in Part 2.10(a) of the Disclosure Schedule; and
(iii) all other assets reflected in the Companies' books and records as being
owned by the Companies. Except as set forth in Part 2.6(a) of the Disclosure
Schedule, all of said assets are owned by the Companies 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 the Companies.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets that
are being leased or licensed to the Companies.
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 the Companies 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 the Companies as of December 31, 1995.
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Except as set forth in Part 2.7(b) of the Disclosure Schedule, all existing
accounts receivable of the Companies (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since December 31,
1995, and have not yet been collected) represent valid obligations of customers
of the Companies arising from bona fide transactions entered into in the
ordinary course of business.
(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 for each of the Companies for the year ended December
31, 1995. The Companies have 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 the Companies or to
reduce the volume of business transacted by such Person with the Companies 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 the Companies
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 the Companies. 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 the Companies'
businesses in the manner in which such businesses are currently being conducted
and in the manner in which such businesses are proposed to be conducted.
(b) The Companies do 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.
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 the Companies. 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 the Companies (except for any Company Proprietary Asset that is licensed
to either Company under any third party software license generally available to
the public at a cost of less than $500). Except as set forth in Part 2.9(a)(4)
of the Disclosure Schedule, each Company 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, the Companies are 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, the Companies are free to use, modify, copy,
distribute, sell, license or otherwise exploit each of the Company Proprietary
Assets on an exclusive basis.
(b) The Companies have 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, the Companies have not disclosed or delivered or permitted
to be disclosed or delivered to any Person, and no Person (other than the
Companies) 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.
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(c) To the knowledge of the Companies, Parent and the Designated
Persons, none of the Companies' Proprietary Assets infringes or conflicts with
any Proprietary Asset owned or used by any other Person. To the knowledge of the
Companies, Parent and the Designated Persons, the Companies are not infringing,
misappropriating or making any unlawful use of, and the Companies have 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 the Companies, the
Parent and the Designated Persons, 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 the Companies; 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 specification, documentation, performance standard, representation or
statement made or provided by or on behalf of the Companies, and, to the best of
the knowledge of the Companies, the Parent and the Designated Persons, there is
no basis for any such claim. Except as set forth in Part 2.9(d) of the
Disclosure Schedule, the Companies have established adequate reserves on the
Unaudited Interim Balance Sheet to cover all costs associated with any
obligations that the Companies 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 the Companies to conduct their business in the manner
in which such businesses have been conducted and in the manner in which such
businesses are proposed to be conducted. Except as set forth in Part 2.9(e) of
the Disclosure Schedule, (i) the Companies have not licensed any of the Company
Proprietary Assets to any Person on an exclusive basis, and (ii) the Companies
have not entered into any covenant not to compete or Contract limiting their
ability to exploit fully any of their 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 employees of the Companies have executed and delivered to the Companies
written agreements (containing no exceptions to or exclusions from the scope of
their coverage) that are substantially identical to the form of the
Confidentiality and Non-Disclosure Agreement attached to the Disclosure Schedule
as Appendices 2.9(f)(1). The Companies have never engaged or received services
from any consultant or independent contractor in connection with the design or
development of any Proprietary Asset. To the knowledge of the Companies, Parent
and the Designated Persons, no former employee of the Company has or claims to
have any rights with respect to, or any ownership interest in, any Company
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 the Companies' 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;
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(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;
(vi) any Contract creating or relating to the creation of any
Encumbrance with respect to any asset owned or used by the
Companies;
(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 the Company and any contractor or
subcontractor to any Governmental Body);
(xi) any Contract entered into outside the ordinary course of
business or inconsistent with the Companies' past
practices;
(xii) any Contract that has a term of more than 60 days and that
may not be terminated by the Company (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) Except as set forth in Part 2.10(b) of the Disclosure Schedule,
the Companies have delivered to Xxxxxx 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 the
Companies 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 Schedule:
(i) The Companies have not violated or breached, or committed
any default under, any Company Contract, and, to the best
of the knowledge of the Companies, the Parent and the
Designated Persons, no other Person has violated or
breached, or committed any default under, any Company
Contract;
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(ii) to the best of the knowledge of the Companies, the Parent
and the Designated Persons, 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) since December 31, 1994, the Companies have not received
any notice or other communication regarding (i) any actual
or possible violation or breach of, or default under, any
Company Contract, or (ii) any actual or possible
termination of any Company Contract; and
(iv) the Companies have not waived any of their material rights
under any Contract.
(d) Except as set forth in Part 2.10(d) of the Disclosure Schedule, no
Person is renegotiating, or has the right to renegotiate, any amount paid or
payable to the Companies 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 the
Companies to conduct their businesses in the manner in which their businesses
are currently being conducted and in the manner in which their businesses are
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 the Companies.
2.11 LIABILITIES.
(a) The Companies have 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 Interim Balance
Sheet; (ii) accounts payable or accrued salaries that have been incurred by the
Companies since December 31, 1995 in the ordinary course of business and
consistent with the Companies' past practices; and (iii) the liabilities
identified in Part 2.11(a) of the Disclosure Schedule.
(b) Part 2.11(b) of the Disclosure Schedule provides an accurate and
complete breakdown of (i) all accounts payable of each Company as of February
29, 1996, and (ii) all notes payable of the Companies and all indebtedness of
the Companies for borrowed money.
(c) Part 2.11(c) of the Disclosure Schedule provides an accurate and
complete breakdown of the Companies' "deferred support revenue" as of December
31, 1995 and all related obligations and other liabilities of the Companies.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Companies are, and have at all
times since December 31, 1994 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 the Companies. Except as set forth in Part 2.12 of
the Disclosure Schedule, since December 31, 1994, the Companies have 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 the Companies, and
the Companies have delivered to Xxxxxx accurate and complete
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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 the Companies to
conduct their businesses in the manner in which their businesses are currently
being conducted and in the manner in which their businesses are proposed to be
conducted. The Companies are, and at all times since December 31, 1994 have
been, in compliance with the material terms and requirements of the respective
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule.
Since December 31, 1994, the Companies have not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) Except as set forth on Part 2.14(a) of the Disclosure Schedule, all
Tax Returns required to be filed by or on behalf of the Companies 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. Except as set forth on Part 2.14(a) of the Disclosure Schedule,
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. Except as set forth on
Part 2.14(a) of the Disclosure Schedule, the Companies have delivered to Xxxxxx
accurate and complete copies of all Company Returns for AHS filed since December
31, 1991, and for ASI filed since June 30, 1992.
(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. The
Companies will establish, in the ordinary course of business and consistent with
their past practices, reserves adequate for the payment of all Taxes for the
period from November 30, 1995 through the Closing Date, and the Companies will
disclose the dollar amount of such reserves to Xxxxxx 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 December 31, 1991 with respect
to AHS, and June 30, 1992 with respect to ASI, 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 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. The Companies have delivered to Xxxxxx
accurate and complete copies of all audit reports and similar documents (to
which the Companies have 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
the Companies or any other Person), and no such extension or waiver has been
requested from the Companies.
(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 the Companies in respect of any Tax. Except as set forth in Part
2.14(d) of the Disclosure Schedule, 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 the Companies. There are no liens for Taxes upon
any of the assets of the Companies, except liens for current Taxes not yet due
and payable. The Companies have not entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. The Companies have
not been, and the Companies 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 the Companies that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or
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indirectly to the payment of any amount that would not be deductible pursuant to
Section 280G or Section 162 of the Code. The Companies are not, and have never
been, a part 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 the Companies 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. The
Companies are 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
the Companies 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, 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 the Companies for the benefit of any current or former
employee of the Companies.
(d) The Companies do not maintain, sponsor or contribute to, and, to
the best of the knowledge of the Companies, the Parent and the Designated
Persons, the Companies have 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 the Companies (a
"Pension Plan").
(e) The Companies do 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 the Companies (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, the Companies have delivered to Xxxxxx:
(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
1993 and 1994;
(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,
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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).
(g) The Companies are not required to be, and, to the best of the
knowledge of the Companies, the Parent and the Designated Persons, the Companies
have 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. The Companies have 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 the Companies, the Parent and the Designated Persons, the Companies
have 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) The Companies do 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 the Companies
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 Interim Balance Sheet, and (iii) benefits the full
cost of which are borne by current or former employees of the Companies (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 the Parent, the Companies, nor any of the Designated Person
is 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 Mergers 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 the Companies (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) The Companies are 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.
(o) The Companies have good labor relations, and neither the Companies,
the Parent nor any of the Designated Persons has any knowledge of any facts
indicating that (i) the consummation of the Mergers or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Companies' labor relations, or (ii) any of the Companies' employees
intends to terminate his or her employment with the Companies.
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2.16 ENVIRONMENTAL MATTERS. The Companies are and have at all times
been in compliance, in all material respects, with all applicable Environmental
Laws. The Companies possess all permits and other Governmental Authorizations
required under applicable Environmental Laws, and the Companies are and have at
all times been in compliance with the terms and requirements of all such
Governmental Authorizations. The Companies have not received any notice or
other communication (whether from a Governmental Body, citizens group, employee
or otherwise) that alleges that the Companies are not in compliance with any
Environmental Law, and, to the best of the knowledge of the Companies, the
Parent and Designated Persons, there are no circumstances that could reasonably
be expected to prevent or interfere with the Companies' compliance with any
Environmental Law in the future. To the best of the knowledge of the Companies,
the Parent and the Designated Persons, no current or prior owner of any property
leased or controlled by the Companies 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 the Companies are
not or were not in compliance with any Environmental Law. All Governmental
Authorizations currently held by the Companies pursuant to Environmental Laws
are identified in Part 2.16 of the Disclosure Schedule.
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except in the ordinary course of business in accordance with past
practices, the Companies 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 the Companies 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 the Companies 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 December 31, 1994, asserted or
threatened to assert any claim against the Companies (other than claims that
have been resolved satisfactorily at no material cost to the Companies) under or
based upon (i) any warranty provided by or on behalf of the Companies, or (ii)
any services performed by the Companies.
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 each of the Companies and with respect to any
claims made thereunder. The Companies have delivered to Xxxxxx 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 December 31, 1994,
the Companies have not received any notice or other communication regarding any
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 December 31, 1994 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of the Companies;
(b) no Related Party is, or has at any time since December 31, 1994 been,
indebted to the Companies; (c) since December 31, 1994, no Related Party has
entered into, or has had any direct or indirect financial interest in, any
material Contract, transaction or business dealing involving the Companies; (d)
no Related Party is competing, or has at any time since December 31, 1994
competed, directly or indirectly, with the Companies; and (e) no Related Party
has any claim or right against the Companies (other than rights to receive
compensation for services performed as an employee of the Companies). (For
purposes of this Section 2.19, each of the following shall be deemed to be a
"Related Party": (i) each of the Designated Persons; (ii) each individual who
is, or who has at any time since December 31, 1992 been, an officer or director
of the Companies; (iii) each individual who is, or who at any time since
December 31, 1992 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 the Companies) 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.)
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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 the
Companies, the Parent and the Designated Persons, no Person has threatened to
commence any Legal Proceeding: (i) that involves the Companies or any of the
assets owned or used by the Companies; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Mergers or any of the other transactions contemplated by this
Agreement. To the best of the knowledge of the Companies, the Parent and the
Designated Persons, 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 is currently pending against the Companies.
(c) There is no order, writ, injunction, judgment or decree to which
the Companies, or any of the assets owned or used by the Companies, are subject.
Neither the Designated Persons, the Parent nor the Companies are is subject to
any order, writ, injunction, judgment or decree that relates to the Companies'
business or to any of the assets owned or used by the Companies. To the best of
the knowledge of the Companies, the Parent and the Designated Persons, no
officer or other employee of the Companies is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to the
Companies' businesses.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The Parent, the Designated
Persons and the Companies 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 Parent and the
Companies of this Agreement have been duly authorized by all necessary action on
the part of the Parent, the Companies and their respective boards of directors
and shareholders. This Agreement constitutes the legal, valid and binding
obligation of the Designated Persons, the Parent and the Companies, enforceable
against the Designated Persons, the Parent and the Companies 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 Mergers 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 the Parent's or the Companies' articles of incorporation or
bylaws, or (ii) any resolution adopted by the Parent's or the Companies'
shareholders, the Parent's or the Companies' boards of directors or any
committee of the Parent's or the Companies' boards 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 the Parent or the Companies, or any of the assets owned or used by the
Parent or the Companies, are 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 the Companies or that otherwise relates to the Companies'
business or to any of the assets owned or used by the Companies;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
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Material Contract, (ii) accelerate the maturity or performance of any Material
Contract, or (iii) cancel, terminate or modify any Material 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 the Companies
(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 the Companies).
Except as set forth in Part 2.22 of the Disclosure Schedule, the Parent and the
Companies are 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 Mergers
or any of the other transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the Disclosure Schedule)
does not, and the Parent's and Designated Persons' Closing Certificate (as
defined in Section 7.4(h)) 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 XXXXXX
Xxxxxx represents and warrants to the Companies, the Parent and the
Designated Persons as follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Xxxxxx will deliver to the Companies, within five (5) days hereof,
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 Xxxxxx with the SEC between January 1, 1992 and the date of
this Agreement (the "Xxxxxx 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 Xxxxxx 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 Xxxxxx 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 Xxxxxx SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereof; (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
Xxxxxx as of the respective dates thereof and the consolidated results of
operations of Xxxxxx for the periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Subject to obtaining the
requisite approval of Xxxxxx'x shareholders with respect to the amendment to
Xxxxxx'x Articles of Incorporation described in Section 1.4(c)(iii) hereof,
Xxxxxx has the absolute and unrestricted right, power and authority to perform
its obligations under this Agreement; and the execution, delivery and
performance by Xxxxxx of this Agreement have been duly authorized by all
necessary action on the part of Xxxxxx and its board of directors. This
Agreement shall constitute the legal, valid and binding obligation of Xxxxxx,
enforceable against it 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.
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3.3 VALID ISSUANCE. The Xxxxxx Common Stock to be issued in the Mergers
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.4 MERGER SUBS. The Merger Subs shall, prior to Closing, have been duly
organized, validly existing and in good standing under the laws of Georgia.
Xxxxxx shall be the sole shareholder of the Merger Subs. Prior to the Closing,
the Mergers shall have been authorized by all necessary action of the part of
Merger Subs, their respective boards of directors and Xxxxxx as sole
shareholder.
Section 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE DESIGNATED
PERSONS
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Parent and
the Companies shall, and shall cause their Representatives to: (a) provide
Xxxxxx and Xxxxxx'x Representatives with reasonable access to the Companies'
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Companies; and (b) provide Xxxxxx and Xxxxxx'x Representatives with such copies
of the existing books, records, Tax Returns, work papers and other documents and
information relating to the Companies, and with such additional financial,
operating and other data and information regarding the Companies, as Xxxxxx may
reasonably request. Notwithstanding the provisions of Section 12.17, paragraph 7
of the letter agreement between Parent and Xxxxxx dated November 16, 1995
("Letter of Intent") shall remain in effect through the Closing Date and shall
bind Xxxxxx with respect to any Evaluation Material (as defined in the Letter of
Intent) provided to Xxxxxx or its Representatives during the Pre-Closing Period.
4.2 OPERATION OF THE COMPANIES' BUSINESSES. During the Pre-Closing Period,
unless Xxxxxx otherwise consents in writing:
(a) the Companies shall conduct their businesses 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) the Companies shall use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and maintain their relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Companies;
(c) the Companies shall keep in full force all insurance policies
identified in Part 2.18 of the Disclosure Schedule;
(d) the Companies shall cause their officers to report regularly to
Xxxxxx concerning the status of the Companies' businesses;
(e) the Companies 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) the Companies 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 the Companies, the Parent nor any of the Designated Persons
shall amend or permit the adoption of any amendment to the Companies' articles
of incorporation or bylaws, or effect or permit either of the Companies to
become a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
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(h) the Companies shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(i) the Companies shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Companies during the Pre-Closing Period, do not exceed $30,000 in
the aggregate;
(j) the Companies shall not (i) enter into or become bound by, or
permit any of the assets owned or used by them 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) the Companies 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 the Companies pursuant to Contracts that are not Material
Contracts;
(l) the Companies shall not (i) lend money to any Person, or (ii) incur
or guarantee any indebtedness, except that the Companies may make routine
borrowings in the ordinary course of business under their respective existing
lines of credit;
(m) The Companies shall not (i) establish, adopt or amend any Employee
Benefit Plan (other than the employee retention program and severance program
referred to in Section 6.9), (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 $35,000;
(n) the Companies shall not change any of their methods of accounting
or accounting practices in any respect, including without limitation any change
with respect to writing off of accounts receivable;
(o) the Companies shall not make any Tax election;
(p) the Companies shall not commence or settle any Legal Proceeding;
(q) the Companies 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) the Companies 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, the Companies, the Parent and the
Designated Persons shall promptly notify Xxxxxx in writing of:
(i) the discovery by the Companies, the Parent or the Designated
Persons 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 the Companies, the
Parent or any of the Designated Persons 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 the Companies, the Parent
or any of the
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Designated Persons 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 the Companies,
the Parent or any of the Designated Persons; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in
Section 7 or Section 8 impossible or unlikely.
(b) Within 10 days following the restatement date of this Agreement,
the Companies shall deliver a final amended and restated Disclosure Schedule
(subject to updates as provided below). To the extent such amended and restated
Disclosure Schedule contains information not previously reflected on the
original Disclosure Schedule or updates thereof subsequently delivered to
Xxxxxx, Xxxxxx shall have the option to terminate this Agreement by giving
notice within 7 days as described in this paragraph. 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 the Companies, the Parent or
the Designated Persons shall promptly deliver to Xxxxxx an update to the
Disclosure Schedule specifying such change. Upon receipt of any such updated
Disclosure Schedule from the Companies, the Parent or the Designated Persons,
Xxxxxx shall have the right to terminate this Agreement in accordance with
Section 9.1(h) by giving notice in accordance with Section 9.2 within 7 days
following delivery of such updated Disclosure Schedule to Xxxxxx. If Xxxxxx
fails to give such notice within such 7 day period, the Disclosure Schedule
shall be deemed amended to include the updated information for all purposes
hereunder.
4.4 NO NEGOTIATION. During the Pre-Closing Period, neither the Companies,
the Parent nor any of the Designated Persons shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Xxxxxx) 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
Xxxxxx) 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 Xxxxxx) relating to a possible Acquisition Transaction.
The Parent or the Companies shall promptly notify Xxxxxx in writing of any
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Parent or the Companies or any of the Designated Persons
during the Pre-Closing Period.
4.5 DUE DILIGENCE INVESTIGATION. Within 10 days following the restatement
date of this Agreement, the Parent shall complete its due diligence
investigation of Xxxxxx. If such investigation reveals any fact that Parent
determines in its sole discretion will affect the business, assets or operations
of Xxxxxx in a material adverse manner, then Parent may, within 20 days
following the restatement date of this Agreement, terminate this Agreement
pursuant to Section 9.1(i). Parent's due diligence investigation of Xxxxxx
shall not in any case diminish, obviate or otherwise affect the representations
or warranties contained in Section 3. Parent's failure to terminate this
Agreement as provided above in this Section shall not affect in any way, or be
deemed a waiver of, Parent's rights under Sections 8 or 10 of this Agreement.
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Section 5. CERTAIN COVENANTS OF XXXXXX
5.1 ACCESS AND INVESTIGATION. During the Pre-Closing Period, Xxxxxx shall,
and shall cause its Representatives to: (a) provide the Parent and the Parent's
Representatives with reasonable access to Xxxxxx'x Representatives, personnel
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to Xxxxxx or the Merger Subs; and (b)
provide the Parent and the Parent's Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to Xxxxxx or the Merger Subs, and with such additional
financial, operating and other data and information regarding Xxxxxx or the
Merger Subs, as the Parent may reasonably request. Notwithstanding the
provisions of Section 12.17, paragraph 7 of the Letter of Intent shall remain in
effect through the Closing Date and shall bind the Parent, the Companies, and
the Designated Persons with respect to any Evaluation Material (as defined in
the Letter of Intent) provided to the Parent, the Companies or the Designated
Persons or their respective Representatives at any time during the Pre-Closing
Period.
5.2 OPERATION OF XXXXXX'X BUSINESS. During the Pre-Closing Period, unless
the Parent otherwise consents in writing:
(a) Xxxxxx 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) Xxxxxx shall use reasonable efforts to preserve intact its current
business organization, 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 relationship
with Xxxxxx;
(c) Xxxxxx shall keep in full force all its insurance policies;
(d) Xxxxxx shall cause its officers to report regularly to Parent
concerning the status of Xxxxxx'x business;
(e) Xxxxxx 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) Except as permitted or contemplated herein, Xxxxxx 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; provided, however, that Xxxxxx may arrange
for the private placement of up to $1.2 million in debt that is convertible into
common stock of Xxxxxx (on the basis of $1 in debt being convertible to one
share of common stock of Xxxxxx) so long as Parent is afforded the opportunity
to participate in any such private placement if it so elects and so long as no
more than 1,200,000 shares of Xxxxxx common stock are issued upon any such
conversion (unless Parent shall consent otherwise);
(g) Except as permitted or contemplated herein, Xxxxxx shall not amend
or permit the adoption of any amendment to Xxxxxx'x articles of incorporation or
bylaws, or become a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(h) Xxxxxx shall not form any subsidiary or acquire any equity interest
or other interest in any other Entity other than the Merger Subs;
(i) Xxxxxx shall not make any capital expenditure, except for capital
expenditures that, when added to all other capital expenditures made on behalf
of Xxxxxx during the Pre-Closing Period, do not exceed $30,000 in the aggregate;
A-26
(j) Xxxxxx 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) Xxxxxx 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 Xxxxxx pursuant to Contracts that are not Material Contracts;
(l) Xxxxxx shall not (i) lend money to any Person, or (ii) incur or
guarantee any indebtedness, except that Xxxxxx may make routine borrowings in
the ordinary course of business, under its existing lines of credit;
(m) Xxxxxx 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 $35,000;
(n) Xxxxxx shall not change any of its methods of accounting or
accounting practices in any respect;
(o) Xxxxxx shall not make any Tax election;
(p) Xxxxxx shall not commence or settle any Legal Proceeding;
(q) Xxxxxx 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) Xxxxxx shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" of this Section 5.2.
5.3 NOTIFICATION.
(a) During the Pre-Closing Period, Xxxxxx shall promptly notify the
Parent in writing of:
(i) the discovery by Xxxxxx 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 Xxxxxx 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 Xxxxxx 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 Xxxxxx; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in
Section 7 or Section 8 impossible or unlikely.
5.4 NO NEGOTIATION. During the Pre-Closing Period Xxxxxx shall not,
directly or indirectly:
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(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) 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
Parent) 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 Parent) relating to a possible Acquisition Transaction;
provided, however, that Xxxxxx may take any of the actions referred to in (a)
through (c) above to the extent Xxxxxx'x Board of Directors in good faith
determines that such action is required in order to discharge the Board of
Directors' fiduciary obligations under the Code, and, if Xxxxxx'x Board of
Directors determines in good faith in the exercise its fiduciary duty that any
such possible Acquisition Transaction would be of greater benefit to Xxxxxx'x
shareholders than the Mergers, Xxxxxx may terminate this Agreement in accordance
with Section 9.1(i). In the event of such a termination, Xxxxxx agrees to
reimburse the Companies for their Merger Fees (as defined in Section 12.3).
In addition, if the Acquisition Transaction accepted by Xxxxxx'x Board of
Directors in lieu of the Mergers are consummated, and the value of consideration
received by Xxxxxx'x shareholders as a result of such Acquisition Transaction
exceeds $3,000,000, at the closing of such Acquisition Transaction, Xxxxxx shall
pay the Companies 25% of the amount by which such consideration exceeds
$3,000,000. Xxxxxx shall have the option of making such payment in cash or in
the same form of consideration paid to Xxxxxx shareholders as a result of such
Acquisition Transaction.
Xxxxxx shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Xxxxxx
during the Pre-Closing Period.
5.5 DUE DILIGENCE INVESTIGATION. Within 10 days following the restatement
date of this Agreement, Xxxxxx shall complete its due diligence investigation of
the Companies. If such investigation reveals facts which lead Xxxxxx reasonably
and in good faith to believe: (i) that the Companies intentionally withheld or
concealed material information requested by Xxxxxx in connection with such due
diligence investigation; (ii) that the representations and warranties contained
in Section 2 are inaccurate in any material respect; or (iii) that there has
been a material adverse change in the Companies' business, assets, liabilities,
operations, financial performance or prospects since December 31, 1995, then
Xxxxxx may, within 20 days following the date of this Agreement, terminate this
Agreement pursuant to Section 9.1(k). Xxxxxx'x due diligence investigation of
Parent shall not in any case diminish, obviate or otherwise affect the
representations or warranties contained in Section 2. Xxxxxx'x failure to
terminate this Agreement as provided above in this Section shall not affect in
any way or be deemed a waiver of Xxxxxx'x rights under Sections 7 or 10 of this
Agreement.
Xxxxxx shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Xxxxxx
during the Pre-Closing Period.
Section 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 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 Mergers 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
Mergers or any of the other transactions contemplated by this Agreement. The
Parent and the Companies shall promptly deliver to Xxxxxx a copy of each such
filing made, each such notice given and each such Consent obtained by the
Companies during the Pre-Closing Period. Xxxxxx shall promptly deliver to the
Parent a copy of each such filing made, each such notice given and each such
consent obtained by Xxxxxx during the Pre-Closing Period.
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6.2 PROXY STATEMENT; OTHER FILINGS.
(a) Xxxxxx and the Companies shall prepare, shall file with the SEC as
promptly as practicable and shall use all reasonable efforts to have cleared by
the SEC, a proxy statement with respect to the Shareholders' Meeting referred to
in Section 6.3, the changes in the articles of incorporation and Bylaws
contemplated in Section 1.4 hereof, the transfer of Xxxxxx assets and
liabilities to the respective Merger Subs as contemplated in Section 1.1 hereof
and the payment of the Merger Consideration described in Section 1.5. The term
"Proxy Statement" shall mean such proxy statement at the time it initially is
mailed to Xxxxxx'x shareholders and all amendments or supplements thereto duly
filed and similarly mailed. Each of Xxxxxx and the Companies agrees to correct
promptly (but in no event later than the date of the Shareholders' Meeting
referred to in Section 6.3) any information provided by it for use in the Proxy
Statement which contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Xxxxxx, Parent and the Companies shall cooperate with each
other in the preparation of such Proxy Statement.
(b) As soon as practicable after the date hereof, Xxxxxx and the
Companies shall promptly prepare and file any other filings required under the
Exchange Act, the Securities Act or any other federal or state securities laws
relating to the Mergers and the transactions contemplated herein ("Other
Filings").
6.3 SHAREHOLDERS' APPROVALS. Xxxxxx, in accordance with applicable law,
shall promptly (i) submit for approval by its shareholders the amendment to
Xxxxxx'x Articles of Incorporation described in Section 1.4(c)(iii) hereof, and
(ii) submit this Agreement and the transactions contemplated hereby for the
ratification of its shareholders; each to occur at an annual meeting of
shareholders (the "Shareholders' Meeting") to be held as soon as practicable.
Subject to the fiduciary duties of the Board of Directors of the Company under
applicable law, Xxxxxx shall use its best efforts to obtain shareholder approval
and ratification.
6.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) neither the
Parent, the Companies nor any of the Designated Persons shall (and the Parent
and the Companies shall not permit any of their Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Mergers, or regarding any of the other transactions contemplated by this
Agreement, without Xxxxxx'x prior written consent, and (b) Xxxxxx will consult
with the Companies prior to issuing any press release or making any public
statement regarding the Mergers.
6.5 BEST EFFORTS. During the Pre-Closing Period, (a) the Parent, the
Companies and the Designated Persons shall use their reasonable best efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis,
and (b) Xxxxxx shall use its reasonable best efforts to cause the conditions set
forth in Section 8 to be satisfied on a timely basis.
6.6 EMPLOYMENT AGREEMENT. At the Closing, each of Xxxxx Xxxxxx and Xxxx
Xxxxxxxx shall execute and deliver to Xxxxxx Employment Agreements in a form
mutually acceptable to Xxxxxx and the respective individuals entering into such
agreements. In addition, the existing employment agreements with Xxxxx Xxxxxx
and Xxxxxx Random shall be terminated at or prior to Closing at no expense to
Xxxxxx or the Companies.
6.7 TERMINATION OF EMPLOYEE PLANS. At the Closing, other than existing
commission arrangements with its employees, the Companies 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 the Companies has any rights thereunder and that any liabilities of
the Companies thereunder (including any such liabilities relating to services
performed prior to the Closing) are fully extinguished at no cost to the
Companies. All employees of the Companies will be included in the benefit plans
of Xxxxxx at no transitional cost to such employees and will thereafter
participate in such benefit plans on the same basis as other employees of
Xxxxxx.
6.8 FIRPTA MATTERS. At the Closing, the Companies shall deliver to Xxxxxx
a statement (in such form as may be reasonably requested by counsel to Xxxxxx)
to the effect that neither of the Companies has been a United States
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real property holding corporation within the meaning of Code (S) 897(c)(2)
during the applicable period specified in Code (S) 897(1)(A)(ii).
6.9 CONVERSION OF PREFERRED STOCK. On or prior to the Closing Date, all
outstanding shares of Xxxxxx convertible preferred stock shall have been
converted into common stock of Xxxxxx and such holders will have no other rights
against Xxxxxx other than as a holder of common stock of Xxxxxx.
Section 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX
The obligations of Xxxxxx to effect the Mergers 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:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Companies, the Parent and the Designated Persons in this
Agreement and in each of the other agreements and instruments delivered to
Xxxxxx in connection with the transactions contemplated by this Agreement shall
have been accurate in all material respects as of the date of this Agreement,
and shall be accurate in all material respects as of the Closing as if made at
the Closing.
7.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Companies, the Parent or any of the Designated Persons 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
Mergers 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.
7.4 AGREEMENTS AND DOCUMENTS. Xxxxxx shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Employment Agreements executed by Xxxxx Xxxxxx and Xxxx Xxxxxxxx in
a form mutually acceptable to Xxxxxx and the respective individuals entering
into such agreements;
(b) the certificate referred to in Section 6.8, executed by the
Companies;
(c) estoppel certificates from the landlords of the premises currently
leased by the Companies, each dated as of a date not more than five (5) days
prior to the Closing Date and satisfactory in form and content to Xxxxxx,
executed by such Persons as Xxxxxx may reasonably specify;
(d) a legal opinion of Xxxxxxxxxx & Xxxx, dated as of the Closing Date,
in form and substance reasonably satisfactory to Xxxxxx; and
(e) a certificate executed by the Companies, the Parent and the
Designated Persons and containing the representation and warranty of the
Companies, the Parent and each Designated Person 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 7.1, 7.2, 7.3, 7.4, 7.5 and 7.12 have been
duly satisfied (the "Companies' Closing Certificate").
7.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in each of the Companies' respective businesses, condition, assets,
liabilities, operations, financial performance or prospects since the date of
this Agreement.
7.6 TERMINATION OF EMPLOYEE PLANS. The Companies shall have provided
Xxxxxx with evidence, satisfactory to Xxxxxx, as to the termination of the plans
referred to in Section 6.9.
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7.7 FIRPTA COMPLIANCE. The Companies shall have provided Xxxxxx with the
statement described in Section 6.9.
7.8 RULE 506. All applicable requirements of Rule 506 under the Securities
Act shall have been satisfied.
7.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Mergers
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 Mergers that makes consummation of the Mergers illegal.
7.10 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 Mergers.
7.11 XXXXXX SHAREHOLDERS MEETING. The Shareholders of Xxxxxx shall have:
(i) approved the amendment to Xxxxxx'x Articles of Incorporation described in
Section 1.4(c)(iii) hereof; (ii) ratified this Agreement and the transactions
contemplated hereby; and (iii) ratified the acquisition by Xxxxxx of all of the
outstanding capital stock of HALIS Software, Inc. pursuant to terms of that
certain Stock Purchase Agreement dated March 29, 1996 by and among Xxxxxx, XXXXX
L.L.C., Xxxx X. Xxxxxxxx and Xxxxx Xxxxx (the "HALIS Acquisition").
7.12 RELATED PARTY DEBT. All debt obligations of the Companies to any
Related Parties shall have been paid or canceled, except such obligations
referred to on Exhibit D hereof.
7.13 INVESTMENT CERTIFICATION. Xxxxxx shall have received a written
acknowledgment from each of the Designated Persons receiving common stock of
Xxxxxx in connection with the Mergers that such Designated Person intends to
accept such common stock for investment purposes, such acknowledgment to be in a
form reasonably acceptable to Xxxxxx.
7.14 HALIS ACQUISITION. All conditions to closing for the HALIS Acquisition
pursuant to the Stock Purchase Agreement described in Section 7.11(iii) shall
have been satisfied or waived prior to Closing.
Section 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT, THE
COMPANIES AND THE DESIGNATED PERSONS.
The obligations of the Companies, the Parent and the Designated Persons to
effect the Mergers and otherwise consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or prior to the Closing, of
the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Xxxxxx in this Agreement and in each of the other agreements
and instruments delivered to the Parent in connection with the transactions
contemplated by this Agreement shall have been accurate in all material respects
as of the date of this Agreement, and shall be accurate in all material respects
as of the Closing as if made at the Closing.
8.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Xxxxxx is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all respects.
8.3 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.
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8.4 AGREEMENTS AND DOCUMENTS.
(a) Xxxxxx shall have entered into the Employment Agreements described
in Section 7.4(a);
(b) The employment agreements with Xxxxx Xxxxxx and Xxxxxx Random shall
have been terminated as contemplated in Section 6.6
(c) The Parent shall have received a legal opinion of Xxxxx, Xxxxxxxx &
Xxxxxxx in form and substance reasonably satisfactory to Parent;
(d) The Parent shall have received a certificate executed by Xxxxxx,
and containing the representation and warranty of Xxxxxx that each of the
representations and warranties set forth in Section 3 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 8.1, 8.2, 8.3, 8.4 and 8.5 have been duly
satisfied (the "Xxxxxx Closing Certificate").
8.5 XXXXXX SHAREHOLDER MEETING. The shareholders of Xxxxxx shall have:
(i) approved the amendment to Xxxxxx'x Articles of Incorporation described in
Section 1.4(c)(iii) hereof; (ii) ratified this Agreement and the transactions
contemplated hereby; and (iii) ratified the HALIS Acquisition.
8.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in Xxxxxx'x business, condition, assets, liabilities, operations,
financial performance or prospects since the date of this Agreement.
8.7 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Mergers
by the Companies 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 Mergers that makes consummation of the Mergers by the
Companies illegal.
8.8 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 Mergers or seeking to prohibit or limit
the exercise by Parent of any material right pertaining to its ownership of
stock of Xxxxxx.
8.9 RELATED PARTY DEBT. All debt obligations of Xxxxxx to any Xxxxxx
Related Parties shall have been paid or canceled. For purposes of this Section
8.9, a "Xxxxxx Related Party" shall mean (i) each individual who is, or who at
any time since December 31, 1992 has been, an officer or director of Xxxxxx and
(ii) each individual who is, or since December 31, 1992 has been, a member of
the immediate family of any of the individuals referred to in clause (i) above;
and (iii) any trust or other Entity (other than Xxxxxx) in which any one of the
individuals referred to in clauses (i) (ii) or (iii) above holds (or in which
more than one of such individuals collectively hold) beneficially or otherwise,
a material voting, proprietary or equity interest.)
8.10 XXXXXX'X FINANCIAL CONDITION IMMEDIATELY PRIOR TO CLOSING. Evidence,
in form reasonably satisfactory to Parent, is provided that Xxxxxx, as of
December 31, 1995, and without contemplation of the Mergers, had working capital
of no less than $200,000.
8.11 HALIS ACQUISITION. All conditions to the closing of the HALIS
Acquisition pursuant to the Stock Purchase Agreement described in Section
7.11(iii) shall have been satisfied or waived prior to Closing.
8.12 COMPUCOM WAIVER. Xxxxxx shall have obtained a Consent and Waiver, in
form and substance reasonably acceptable to the Companies, from Compucom
Acquisition Corp. ("Compucom") whereby Compucom consents to Xxxxxx and the
Surviving Corporations marketing their products and services to the hospitality
and healthcare industries and marketing their network integration products and
services to a variety of industries in all geographic areas; and whereby
Compucom waives its rights under Section 1 of the Non-Competition Agreement
between Compucom and Xxxxxx dated March 25, 1994 with respect to the foregoing
activities.
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Section 9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Xxxxxx if Xxxxxx 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 Xxxxxx to comply with or
perform any covenant or obligation of Xxxxxx set forth in this Agreement);
(b) by the Parent if the Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 8 has become impossible
(other than as a result of any failure on the part of the Parent, the Companies
or any of the Designated Persons to comply with or perform any covenant or
obligation set forth in this Agreement or in any other agreement or instrument
delivered to Xxxxxx);
(c) by Xxxxxx at or after the Scheduled Closing Time if any condition
set forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(d) by the Parent at or after the Scheduled Closing Time if any
condition set forth in Section 8 has not been satisfied by the Scheduled Closing
Time;
(e) by Xxxxxx if the Closing has not taken place on or before June 30,
1996 (other than as a result of any failure on the part of Xxxxxx to comply with
or perform any covenant or obligation of Xxxxxx set forth in this Agreement);
(f) by the Parent if the Closing has not taken place on or before June
30, 1996 (other than as a result of the failure on the part of the Parent, the
Companies or any of the Designated Persons to comply with or perform any
covenant or obligation set forth in this Agreement or in any other agreement or
instrument delivered to Xxxxxx);
(g) by Xxxxxx under the circumstances described in Section 4.3(b);
(h) by Parent under the circumstances described in Section 4.5;
(i) by Xxxxxx under the circumstances described in Section 5.4;
(j) by Xxxxxx under the circumstances described in Section 5.5; or
(k) by the mutual consent of Xxxxxx and the Parent.
9.2 TERMINATION PROCEDURES. If Xxxxxx wishes to terminate this Agreement
pursuant to Section 9.1(a), (c), (e), (g), (i) or (j), Xxxxxx shall deliver to
the Parent a written notice stating that Xxxxxx is terminating this Agreement
and setting forth a brief description of the basis on which Xxxxxx is
terminating this Agreement. If the Parent wishes to terminate this Agreement
pursuant to Section 9.1(b), (d), (f), or (h), the Parent shall deliver to Xxxxxx
a written notice stating that the Parent is terminating this Agreement and
setting forth a brief description of the basis on which the Parent is
terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.1, 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 Sections 12, as
well as paragraph 7 of the Letter of Intent. If Xxxxxx terminates this
Agreement pursuant to Section 9.1(i) it will be liable to the Companies for the
reimbursements and payments described in Section 5.4, in lieu of any other
payments, claims or damages to the Parent, the Companies or the Designated
Persons on account of such termination.
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Section 10. INDEMNIFICATION, ETC.
10.1 INDEMNIFICATION BY THE PARENT AND THE DESIGNATED PERSONS. The Parent
and the Designated Persons, jointly and severally agree to indemnify Xxxxxx and
the Surviving Corporations, and their respective current and future officers,
directors, employees, affiliates, successors and assigns, and hold them harmless
at all times after the date of this Agreement from and against and in respect
of, any and all liabilities, losses, damages, settlements, claims, costs and
expenses, including without limitation attorneys' fees, arising out of or due to
the breach of any representation, warranty or covenant of the Parent, the
Designated Persons or the Companies set forth in this Agreement or in any of the
exhibits or other documents delivered pursuant hereto relating to an event or
condition that arose prior to February 15, 1995, and any and all actions, suits,
proceedings, demands, assessments or judgments, and costs and expenses, incident
to any of the foregoing. Notwithstanding the foregoing, the Parent and the
Designated Persons shall have an obligation to indemnify Xxxxxx and the
Surviving Corporations for any breach of a representation or warranty contained
in Section 2 of this Agreement if the event or condition giving rise to such
breach arose after February 15, 1995 and the Parent, the Companies or the
Designated Persons had actual knowledge of such event or condition on or prior
to the date of this Agreement.
10.2 INDEMNIFICATION BY XXXXXX AND THE SURVIVING CORPORATION. Xxxxxx and
the Surviving Corporations agrees to indemnify the Parent and its current and
future members, officers, directors, employees, affiliates, successors and
assigns, and hold it harmless at all times after the date of this Agreement from
and against and in respect of any and all liabilities, losses, damages,
settlements, claims, costs and expenses, including, without limitation,
attorneys' fees, arising out of or due to the breach of any representation,
warranty or covenant of Xxxxxx set forth in this Agreement or in any of the
exhibits or other documents delivered pursuant hereto, and any and all actions,
suits, proceedings, demands, assessments or judgments, and costs and expenses,
incident to the foregoing.
10.3 LIMITATIONS ON INDEMNIFICATION. Notwithstanding any provision of this
Section 10 to the contrary:
(a) The Parent and the Designated Persons shall not be liable for
payment of any claim for indemnification under Section 10.1 unless and until the
aggregate amount of all indemnifiable claims under Section 10.1 shall exceed
$50,000, in which case the Parent and the Designated Persons shall be liable
only for payment of the amount by which such claims exceed such $50,000
threshold. The total liability of the Parent and the Designated Persons under
Section 10.1 shall not in any event exceed $250,000 in the aggregate.
(b) Xxxxxx and the Surviving Corporations shall not be liable for
payment of any claim for indemnification under Section 10.2 unless and until the
aggregate amount of indemnifiable claims under Section 10.2 shall exceed
$50,000, in which case Xxxxxx or the Surviving Corporations, shall be liable
only for payment of the amount by which such claims exceed such $50,000
threshold. The total aggregate liability of Xxxxxx and the Surviving
Corporations under Section 10.2 shall not in any event exceed $250,000 in the
aggregate.
(c) No party shall have any obligation with respect to a claim pursuant
to Sections 10.1 or 10.2 unless the party asserting such claim shall have
delivered a notice of such claim in good faith in accordance with Section
10.4(a) on or prior to the first day of the twelfth (12th) calendar month
following the Closing Date.
10.4 PROCEDURE.
(a) The Parent and the Designated Persons, on the one hand, and Xxxxxx
and the Surviving Corporations, on the other hand, each agree to promptly notify
each other if any of them becomes aware of any liability, loss, damage,
settlement, claim, cost or expense with respect to which indemnity may be
asserted under this Section 10 (hereinafter referred to as a "claim"), provided
that failure to notify the indemnifying party shall not relieve such party from
liability except to the extent such party is prejudiced thereby. Failure to
deliver a notice prior to the date referred to in Section 10.3(c) shall,
however, absolutely bar any claim for indemnity for such claim. The party
entitled to indemnity (the "Indemnitee") shall permit the party responsible for
such indemnity (the "Indemnitor") to assume the defense of any such claim or any
litigation resulting from such claim.
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(b) If the Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, the Indemnitee may participate, at its expense,
in the defense of such claim or litigation provided that the Indemnitor shall
direct and control the defense of such claim or litigation. Except with the
written consent of Indemnitee, which consent shall not be unreasonably withheld,
the Indemnitor shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnitee of a release from all liability
in respect of such claim or litigation.
(c) If the Indemnitor shall not assume the defense of any such claim or
litigation resulting therefrom, the Indemnitee may defend against such claim or
litigation in such manner as it may deem appropriate. The Indemnitee shall not
enter into any settlement of such claim or litigation without the written
consent of the Indemnitor, which consent shall not be unreasonably withheld.
The Indemnitor shall promptly reimburse the Indemnitee from time to time for any
and all amounts paid for or incurred by the Indemnitee and for which the
Indemnitor is obligated pursuant to this Section 10, upon submission by the
Indemnitee of a statement reflecting the basis upon which such indemnification
is sought and the computation of such amounts.
(d) The Indemnitee shall make available to the Indemnitor or its
Representatives all records and other materials required by them and in the
possession or under control of the Indemnitee, for the use of the Indemnitor and
its Representatives in defending any such claim, and shall in other respects
give reasonable cooperation in such defense.
Section 11. REGISTRATION OF SHARES
11.1 REGISTRATION STATEMENT.
(a) After the Closing Date, Xxxxxx shall file with the SEC a
registration statement (the "Registration Statement") with respect to resales of
shares of Xxxxxx Common Stock received in the Mergers by each Participating
Holder (as defined in Section 11.1(d)). Xxxxxx shall use reasonable efforts:
(a) to cause the Registration Statement to be declared effective by the SEC on
or before the date 90 days after 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) Xxxxxx 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 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 Xxxxxx 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 Xxxxxx Common Stock in the Mergers shall have any rights under this
Section 11 unless such Person executes and delivers to Xxxxxx, a
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written agreement, reasonably satisfactory in form and content to Xxxxxx,
confirming that such Person wishes to be allowed to sell Xxxxxx Common Stock
pursuant to the Registration Statement and agrees to be bound by the provisions
of this Section 11. (A Person who holds any of the Xxxxxx Common Stock
delivered in the Mergers and who executes and delivers such an agreement is
referred to in this Section 11 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
11, the amount of incremental expenses incurred by Xxxxxx in complying
therewith. No Participating Holder shall sell any Xxxxxx Common Stock pursuant
to the Registration Statement at any time Xxxxxx 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
Xxxxxx'x obligations under this Section 11.1 (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 Xxxxxx Common
Stock issued in the Mergers can be sold without any restrictions as to volume or
manner of sale pursuant to subsection (k) of Rule 144 under the Securities Act.
11.2 INDEMNIFICATION.
(a) Xxxxxx 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
Xxxxxx 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 Xxxxxx
has furnished such Participating Holder with a sufficient number of copies
thereof.
(b) In connection with the Registration Statement, each Participating
Holder (i) shall furnish to Xxxxxx in writing such information and affidavits as
Xxxxxx reasonably requests for use in connection with such Registration
Statement or the related prospectus, and (ii) to the extent permitted by law,
will indemnify Xxxxxx, its directors and officers and each Person who controls
Xxxxxx (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 11 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).
11.3 DELAY OF REGISTRATION. For a period not to exceed 90 days, Xxxxxx 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 Xxxxxx Common Stock pursuant to the
Registration Statement during such period),
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at any time when Xxxxxx, in its reasonable judgment (confirmed in writing if
requested by any Participating Holder), believes:
(a) that the filing of a Registration Statement or the offering or sale
of Xxxxxx Common Stock pursuant thereto, or the making of any required
disclosure in connection therewith, could reasonably be expected to have a
material adverse effect upon (i) a pending or scheduled offering of Xxxxxx'x
securities, (ii) an acquisition, merger, consolidation, joint venture, equity
investment or other potentially significant transaction or event, or (iii) any
negotiations, discussions or proposal with respect to any of the foregoing; and
(b) that the failure to disclose any material information with respect
to any of the foregoing could result in a violation of the Securities Act, the
Exchange Act or any provision of any state securities law.
In the event Xxxxxx reasonably believes that any of the foregoing circumstances
are continuing after such 90-day period, it may, with the consent of the holders
of a majority of the shares of Xxxxxx Common Stock subject (or to be subject) to
the Registration Statement (which consent shall not be unreasonably withheld)
extend such 90-day period for one additional 30-day period.
11.4 AMENDMENT OF SECTION 11. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 11 may be amended by
Xxxxxx at any time with the consent of the holders of a majority of the shares
of Xxxxxx Common Stock that are at that time subject (or to be subject) to the
Registration Statement.
Section 12. MISCELLANEOUS PROVISIONS
12.1 DESIGNATED PERSONS' AGENT. The Designated Persons hereby irrevocably
appoint Xxxx X. Xxxxxxxx as their agent for purposes of Sections 10 and 12.10(d)
(the "Designated Persons' Agent"), and Xxxx X. Xxxxxxxx hereby accepts this
appointment as the Designated Persons' Agent. Xxxxxx shall be entitled to deal
exclusively with the Designated Persons' Agent on all matters relating to
Sections 10 and 12.10(d), and shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Designated Person by the Designated Persons'
Agent, and on any other action taken or purported to be taken on behalf of any
Designated Person by the Designated Persons' Agent, as fully binding upon such
Designated Person. If the Designated Persons' Agent shall die, become disabled
or otherwise be unable to fulfill his responsibilities as agent of the
Designated Persons, then the Designated Persons shall, within ten (10) days
after such death or disability, appoint a successor agent and, immediately
thereafter, shall notify Xxxxxx of the identity of such successor. Any such
successor shall become the "Designated Persons' Agent" for purposes of Sections
10 and 12.10(d). If for any reason there is no Designated Persons' Agent at any
time, all references herein to the Designated Persons' Agent shall be deemed to
refer to the Designated Persons.
12.2 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.
12.3 FEES AND EXPENSES. Subject to Sections 10 and 5.4, 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 Mergers (collectively, the "Merger
Fees") shall be paid: (i) by Xxxxxx,
A-37
if incurred by Xxxxxx or the Merger Subs; and (ii) by the Companies, if incurred
by the Companies, Parent or the Designated Persons.
12.4 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).
12.5 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 Xxxxxx:
Xxxxxx Business Systems, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
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 the Parent:
AUBIS, L.L.C.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxx, Chairman & CEO
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxx
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
A-38
if to the Companies:
AUBIS Hospitality Systems, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
AUBIS Systems Integration, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
if to any of the Designated Persons:
c/o Xxxx X. Xxxxxxxx
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
12.6 CONFIDENTIALITY. On and at all times after the Closing Date, the
Parent and each Designated Person shall keep confidential, and shall not use or
disclose to any other Person, any non-public document or other non-public
information in the Parent's or such Designated Person's possession that relates
to the business of the Companies or Xxxxxx.
12.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
12.8 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.
12.9 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.
12.10 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 may be brought
to 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
A-39
(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.
(c) The Designated Persons irrevocably constitute and appoint the
Designated Persons' Agent as their agent to receive notices hereunder and
service of process in connection with any legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement.
12.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Parent, the Companies and their successors and assigns (if any); the Designated
Persons and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Xxxxxx and its
successors and assigns (if any). This Agreement shall inure to the benefit of:
the Parent, the Designated Persons; Xxxxxx; and the respective successors, heirs
personal representatives and assigns (if any) of the foregoing.
12.12 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 of 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.
12.13 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.
12.14 AMENDMENTS. Subject to Section 11.4, 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.
12.15 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.
12.16 PARTIES IN INTEREST. Except for the provisions of Section 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).
A-40
12.17 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).
12.18 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.
(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 Amended and Restated Agreement to be
restated, executed and delivered as of March 29, 1996.
"XXXXXX"
XXXXXX BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Its: President
------------------------------------
"PARENT"
AUBIS, L.L.C.,
a Georgia limited liability company
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Its: Managing Member
------------------------------------
"COMPANIES"
AUBIS HOSPITALITY SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Title: President
----------------------------------
A-41
AUBIS SYSTEMS INTEGRATION, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Title: President
----------------------------------
"DESIGNATED PERSONS"
XXXX XXXXXXXX ENTERPRISES, INC.
By: /s/ Xxxx Xxxxxxxx
-------------------------------------
Xxxx Xxxxxxxx
Its: President
------------------------------------
/s/ Xxxxxx X. Xxxxxx
----------------------------------------
Xxxxxx X. Xxxxxx, in his
individual capacity
/s/ Xxxxxx X. Random
----------------------------------------
Xxxxxx X. Random, in his
individual capacity
/s/ Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx, in his
individual capacity
A-42
EXHIBIT A
Designated Persons
Names
-----
Xxxx Xxxxxxxx Enterprises, Inc.
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Random
A-43
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 the Companies' businesses or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock or
other equity security of the Companies, Xxxxxx or the Merger Subs, 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 the Companies, Xxxxxx or the Merger Subs, 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 the Companies, Xxxxxx or the Merger Subs, as the case may be; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving the Companies, Xxxxxx or the
Merger Subs, as the case may be.
AGREEMENT. "Agreement" shall mean the Amended and Restated Agreement and
Plan of Merger and Reorganization to which this Exhibit B is attached (including
the Disclosure Schedule), as it may be further amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Companies are a party; (b) by which the Companies or any of their
assets are or may become bound or under which the Companies have, or may become
subject to, any obligation; or (c) under which the Companies have or may acquire
any right or interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Companies or otherwise used by the
Companies.
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.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Xxxxxx on behalf of the Parent,
the Companies and the Designated Persons.
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
A-44
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.
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 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 the Companies 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 Parent's and Designated Persons' 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 either of the Companies' 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.
A-45
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 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.
A-46
EXHIBIT C
Directors and Officers of Xxxxxx and Surviving Corporations After the Mergers
X. XXXXXX
------
Directors
---------
1. Xxxxx Xxxxxx
2. Xxxx Xxxxxxx
3. Xxxx X. Xxxxxxxx
4. Xxxx Xxxxxx
5. [To be determined by Xxxx X. Xxxxxxxx]
6. [To be determined mutually by Xxxx X. Xxxxxxxx and Xxxxx Xxxxxx]
7. [To be determined mutually by Xxxx X. Xxxxxxxx and Xxxxx Xxxxxx]
Officers
--------
Xxxx X. Xxxxxxxx - Chairman & CEO
Xxxxx Xxxxxx - President & COO
B. SURVIVING CORPORATION #1 (AHS MERGER SUB)
Directors
---------
Xxxx X. Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxx
Officers
--------
Xxxx X. Xxxxxxxx - Chairman and Chief Executive Officer
C. SURVIVING CORPORATION #2 (ASI MERGER SUB)
Directors
---------
Xxxx X. Xxxxxxxx
Xxxxx Xxxxxx
Xxxx Xxxxxx
Officers
--------
Xxxx X. Xxxxxxxx - Chairman and Chief Executive Officer
A-47
EXHIBIT D
Related Party Debt
(1) Indebtedness payable to AUBIS, L.L.C. in an amount not to exceed $107,500.
(2) Promissory Notes payable to Xxxxxx X. Xxxxxx in the original amount of:
Date
--------
$ 10,000 07/15/94
$ 32,000 08/22/94
$ 5,000 10/06/95
$ 6,000 10/18/94
$ 6,000 11/01/94
$ 6,000 12/15/95
$100,000 02/08/96
--------
Total $165,000
========
(3) Promissory Note from AHS payable to Xxxxx X. Xxxxxxxxx dated November 17,
1995 in the principal amount of $21,100 as replaced by that certain
Promissory Note dated March 28, 1996 in the original principal amount of
$37,527.15.
(4) Promissory Note from AHS payable to Xxxx X. Xxxxxxxx in the original amount
of $9,000 dated December 19, 1995.
A-48
FIRST AMENDMENT TO AMENDED
AND RESTATED AGREEMENT AND PLAN OF MERGER
This First Amendment to Amended and Restated Agreement and Plan of
Merger is entered into as of September 27, 1996 by and among Xxxxxx Business
Systems, Inc., a Georgia corporation ("Xxxxxx"), Aubis, L.L.C., a Georgia
limited liability company ("Parent"), Aubis Hospitality Systems, inc., a Georgia
corporation and wholly-owned subsidiary of the Parent, ("AHS"); Aubis Systems
Integration, Inc., a Georgia corporation and a wholly-owned subsidiary of the
Parent ("ASI") (AHS and ASI are hereinafter sometimes referred to collectively
as the "Companies"), Xxxx Xxxxxxxx Enterprises, Inc., a Georgia corporation,
Xxxxxx Xxxxxx, Xxxxxx Random and Xxxx Xxxxxxxx, all individual residents of
Georgia.
A. The parties hereto entered into an Agreement and Plan of Merger
and Reorganization as of December 31, 1995, which was amended and restated in an
Amended and Restated Agreement and Plan of Merger and Reorganization as of March
29, 1996 (such agreement, as amended and restated, shall be referred to
hereinafter as the "Original Agreement").
B. The parties wish to amend the Original Agreement as provided
herein.
A G R E E M E N T
The parties hereby amend the Original Agreement as follows:
1. All capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Original Agreement.
2. Section 1.4(e) of the Original Agreement is hereby deleted and the
following new Section 1.4(e) is hereby substituted in its place:
"(e) Immediately following the Closing, Xxxxxx'x Board of Directors
shall cause the number of seats on such Board to increase from four members to
seven members. As soon as practicable after the Closing, Xxxxxx'x Board of
Directors shall elect three members to fill the newly created vacancies, two of
whom shall be mutual nominees of Xxxxx Xxxxxx and Xxxx Xxxxxxxx, the other of
whom shall be a nominee of Xxxx Xxxxxxxx."
3. FAAC shall be added as a party to the Original Agreement and shall
be the Merger Sub referred to therein.
4. Section 1.5(a), fourth line, of the Original Agreement is hereby
amended by changing "10,500,000" to "10,000,000."
5. Section 9.1(f) is hereby amended by changing "June 30, 1996" to
"November 30, 1996."
6. AUBIS hereby consents to the offer and sale by Xxxxxx of (i) up to
$1.5 million in debt that is convertible into common stock of Xxxxxx (on the
basis of $1.00 in debt being convertible to one share of Common Stock of Xxxxxx)
so long as AUBIS is afforded the opportunity to participate in such offering if
it so elects and so long as no more than 1,500,000 shares of Xxxxxx Common Stock
are issued upon any such conversion, and (ii) up to 5,000,000 shares of Xxxxxx
Common Stock and 1,666,667 Common Stock Purchase Warrants. This consent is
intended to modify, and is not in addition to, the permitted offerings set
forth in Section 5.2(f) of the Original Agreement.
Except as expressly amended hereby, the Original Agreement shall
continue in full force and effect.
A-49
The parties have caused this First Amendment to be executed and
delivered as of the date first stated above.
XXXXXX BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Its: Chairman
------------------------------------
AUBIS, L.L.C., a Georgia
limited liability company
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Its: Managing Member
------------------------------------
AUBIS HOSPITALITY SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Its: President
------------------------------------
AUBIS SYSTEMS INTEGRATION, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Its: President
------------------------------------
XXXX XXXXXXXX ENTERPRISES, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
-------------------------------------
Its: President
------------------------------------
/s/ Xxxxxx Xxxxxx (SEAL)
----------------------------------
XXXXXX XXXXXX
/s/ Xxxxxx Random (SEAL)
----------------------------------
XXXXXX RANDOM
/s/ Xxxx Xxxxxxxx (SEAL)
----------------------------------
XXXX XXXXXXXX
All individual residents of
the State of Georgia
A-50
SIGNATORY ADDENDUM TO MERGER AGREEMENT
--------------------------------------
In accordance with the provisions of Section 1.2 of the Amended and
Restated Agreement and Plan of Merger dated as of March 29, 1996 among Xxxxxx
Business Systems, Inc., AUBIS L.L.C., AUBIS Hospitality Systems, Inc., AUBIS
Systems Integration, Inc., Xxxx Xxxxxxxx Enterprises, Inc., Xxxxxx X. Xxxxxx,
Xxxxxx X. Random and Xxxx X. Xxxxxxxx, as amended by the First Amendment dated
as of September 27, 1996 (the "Merger Agreement"; capitalized terms used herein
and not defined otherwise shall have the meanings ascribed to them in the Merger
Agreement), the undersigned each hereby certifies and agrees as follows:
1. That the undersigned is a wholly-owned subsidiary of Xxxxxx Business
Systems, Inc.
2. That the sole shareholder and Board of Directors of the undersigned has
authorized, approved and directed that the undersigned become a party to the
Merger Agreement as a Merger Sub thereunder.
3. In consideration of the benefits to accrue to the undersigned as a
Surviving Corporation of the Merger, the undersigned hereby agrees to become a
party to the Merger Agreement as a Merger Sub as contemplated in the Merger
Agreement, adopts the plan of merger set forth therein, and agrees to be bound
by the terms thereof, in each case effective as of the date of this Addendum.
Dated: November 18, 1996
XXXXXX (AHS) ACQUISITION CORP.
BY: /s/ Xxxxx Xxxxxx
------------------------------------
XXXXX XXXXXX
PRESIDENT
XXXXXX (ASI) ACQUISITION CORP.
BY: /s/ Xxxxx Xxxxxx
-------------------------------------
XXXXX XXXXXX
PRESIDENT
