ASSET PURCHASE AGREEMENT
between
PAPERCLIP SOFTWARE, INC.
and
ACCESS SOLUTIONS INTERNATIONAL, INC.
April 15, 1997
TABLE OF CONTENTS
Page
ARTICLE I
Section 1. Purchase and Sale of Assets 2
1.1 Purchased Deposits 2
1.2 Purchased Receivables 2
1.3 Purchased Fixed Assets 2
1.4 Purchased Inventory 2
1.5 Purchased Contracts 2
1.6 Purchased Prepaid Items 3
1.7 Purchased Rights 3
1.8 Purchased Intellectual Property 3
1.9 Excluded Assets 4
ARTICLE II
Section 2. Purchase Price and Payment 4
2.1 Purchase Price 4
2.2 Adjustment to Purchase Price 4
2.3 Payment of Share Portion of Purchase Price 4
2.4 Allocation of Purchase Price 4
2.5 Adjustment of Shares 5
ARTICLE III
Section 3. Closing 5
ARTICLE IV
Section 4. Assumption of Liabilities; Indemnification 5
4.1 Assumption by Purchaser 5
4.2 Indemnification by Seller 5
4.3 Indemnification by Purchaser 6
4.4 Limitations on Indemnity 6
4.5 Indemnification Proceedings 6
4.6 Remedies Not Exclusive 7
ARTICLE V
Section 5. Other Actions 7
5.1 Purchaser to Act as Agent for Seller 7
5.2 Delivery of Property Received after Closing 7
5.3 Purchaser Appointed Attorney for Seller 7
5.4 Execution of Further Documents 8
5.5 Preparation of Form S-4 and the Proxy
Statements; Stockholder Meetings; Other Filings 8
5.6 Employees of Business 10
5.7 Use of Name 11
5.8 Access Board of Directors 11
5.9 Seller Obligations Not to Compete or Disclose 11
5.10 Cooperation in Connection with Stock Transfer
Instructions and Liquidating Distributions 11
ARTICLE VI
Section 6. Representations and Warranties by Seller 12
6.1 Corporate Existence and Qualification of Seller 12
6.2 Seller's Corporate Documents 12
6.3 Authorization of Agreement 12
6.4 No Violation 13
6.5 SEC Documents; Undisclosed Liabilities 13
6.6 Inventory 14
6.7 Accounts Receivable 14
6.8 Material Contracts and Obligations 14
6.9 Title to Real Property; Liens; Condition
of Properties 16
6.10 Licenses 16
6.11 Arms-Length Transactions; Conflicts of Interest 17
6.12 Intellectual Property 17
6.13 Absence of Certain Developments 17
6.14 Undisclosed Liabilities 19
6.15 Litigation; Compliance with Law 19
6.16 Employee Claims Against the Business 19
6.17 Unemployment Insurance Rating 19
6.18 Employee Benefit Plans 20
6.19 Labor Relations 21
6.20 Insurance Policies 21
6.21 Bank Accounts 21
6.22 Capitalization 21
6.23 Investment Representation 22
6.24 Disclosure 22
ARTICLE VII
Section 7. Representations and Warranties by Access 22
7.1 Corporate Existence and Qualification 23
7.2 Access's Corporate Documents 23
7.3 Authorization of Agreement, Etc. 23
7.4 Absence of Certain Developments 24
7.5 Undisclosed Liabilities 24
7.6 Litigation; Compliance with Law 24
7.7 Capitalization; Status of Access Common Shares 24
7.8 SEC Filings 25
7.9 Information Supplied by Access 25
ARTICLE VIII
Section 8. Conduct Prior to Closing 26
8.1 Carry On in Ordinary Course 26
8.2 No General Increases 26
8.3 Contracts and Commitments 26
8.4 Dispositions and Sale of Purchased Assets 26
8.5 Preservation of Organization 26
8.6 No Default 26
8.7 Compliance with Laws 27
8.8 Operation of Business 27
8.9 Consents 27
8.10 Advisement of Changes 27
8.11 No Solicitation 27
8.12 No Delaying Transactions 28
8.13 Lock-Up Agreements 28
8.14 Best Efforts 28
ARTICLE IX
Section 9. Conditions to Obligations of Access 29
9.1 Compliance by Seller; Correctness of
Representations and Warranties of Seller 29
9.2 Certified Resolutions of the Seller 29
9.3 Approval by Purchaser's Counsel 29
9.4 Opinions of Counsel for Seller 29
9.5 Consents of Third Parties 31
9.6 Certificate of Chief Executive Officer of
Seller 31
9.7 Approval of Governmental Authorities 31
9.8 Corporate Authority 31
9.9 Lock-Up Agreement 31
9.10 Approval of Access Stockholders 31
9.11 Form S-4 Effective 31
ARTICLE X
Section 10. Conditions to Obligations of the Seller 32
10.1 Compliance by Access; Correctness of
Representations and Warranties 32
10.2 Certified Resolutions of Access 32
10.3 Approval by Seller's Counsel 32
10.4 Opinion of Xxxxxxx & Xxxxxx 32
10.5 Certificate of President of Purchaser 33
10.6 Approval of Governmental Authorities 33
10.7 Corporate Authority 34
10.8 Access Purchase Securities 34
10.9 Form S-4 Effective 34
ARTICLE XI
Section 11. Fees and Expenses 34
ARTICLE XII
Section 12. Termination and Effect 35
12.1 Termination of Agreement 35
12.2 Effect of Xxxxxxxxxxx 00
XXXXXXX XXXX
Xxxxxxx 00. Acknowledgments of Seller 36
13.1 Restricted Securities 36
13.2 Access to Information 37
ARTICLE XIV
Section 14. Broker's Commissions 37
ARTICLE XV
Section 15. Access to Facilities, Properties and Records 37
ARTICLE XVI
Section 16. Survival of Representations 37
ARTICLE XVIII
Section 17. Miscellaneous 38
17.1 Amendment to Agreement; Waivers; Procedure 38
17.2 Binding Effect 38
17.3 Entire Agreement 38
17.4 Headings 39
17.5 Confidential Information; Publicity 39
17.6 Notices 39
17.7 Bulk Sales Law 40
17.8 Counterparts 40
17.9 No Benefit to Others 40
17.10 Governing Law 41
17.11 No Waiver 41
17.12 Severability 41
17.13 Time of Essence 41
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of April 15th, 1997, by and between
PAPERCLIP SOFTWARE, INC., a Delaware corporation (hereinafter called the
"Seller"), and ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called "Access" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of developing and distributing
computer software for document management and imaging systems (hereinafter
generally called the "Business"); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase from Seller, all of the assets of Seller related
to the Business, on the terms and conditions hereinafter set forth; and
WHEREAS, as a condition to the willingness of Access to enter into this
Agreement, those directors and officers of Seller who are also stockholders of
Seller (the "Seller Significant Stockholders") have entered into that certain
Stockholder Agreement of even date ("Seller Stockholder Agreement"), which
provides, among other things, that each Seller Significant Stockholder will vote
the shares of Seller Common Stock which he owns in favor of the approval and
adoption of this Agreement and the consummation of the transactions contemplated
hereby; and
WHEREAS, as a further condition to the willingness of Access to enter into
this Agreement, Seller has entered into that certain Management Agreement of
even date (the "Management Agreement") which provides, among other things, that
Access will manage the Seller's operations from the date hereof until the
consummation of the transactions contemplated hereby or the earlier termination
of this Agreement; and
WHEREAS, following such purchase and sale, Seller intends to liquidate and
dissolve as a corporation and distribute the Access Purchase Securities (as
defined below) to the shareholders of Seller.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
Section 1. Purchase and Sale of Assets.
Subject to the terms and conditions set forth in this Agreement, Seller
hereby agrees to sell, transfer, assign and deliver to Purchaser, and Purchaser
hereby agrees to purchase from Seller, as of the Closing Date (as hereinafter
defined), all of the properties and assets of Seller, tangible or intangible,
real or personal, belonging to or used in the Business, as and where the same
shall exist at the close of business on the Closing Date (hereinafter
collectively called the "Purchased Assets"), including, without limitation, the
following:
Section 1.1. Purchased Deposits.
All deposits of cash or cash equivalents, certificates of deposit and other
cash items relating to the Business or its operations for payroll accounts,
utilities or otherwise, including, without limitation, those described on
Schedule 1.1 attached hereto (hereinafter called "Purchased Deposits").
Section 1.2. Purchased Receivables.
All trade, accounts, and notes receivable arising out of the sale or lease
of goods or the rendition of services by Seller, and all security therefor
(hereinafter called the "Purchased Receivables").
Section 1.3. Purchased Fixed Assets.
All machinery, equipment, leasehold improvements, furniture, furnishings,
plant and office equipment and other fixed assets used in the Business,
including without limitation, the machinery and equipment listed on Schedule 1.3
hereto (hereinafter collectively called the "Purchased Fixed Assets").
Section 1.4. Purchased Inventory.
All inventories, including manufacturing, administrative and other supplies
used in the Business (hereinafter called the "Purchased Inventory").
Section 1.5. Purchased Contracts.
All rights under the Contracts (as defined in Section 6.8(a)) of the Seller
relating to the Business that are included among the Assumed Liabilities,
together with such additions thereto and deletions therefrom as shall have
occurred in the ordinary course of business prior to the Closing Date (as
defined in Section 3) (hereinafter called the "Purchased Contracts").
Section 1.6. Purchased Prepaid Items.
All credits, prepaid and deferred items and advanced payments such as
prepaid rentals, security deposits, taxes (excluding prepaid income taxes and
taxes relating to assets other than the Purchased Assets), unbilled charges and
deposits relating to the operations of the Business and any other items set
forth in Schedule 1.6 attached hereto; excluding from the foregoing, however,
prepaid items with respect to which Purchaser shall receive no benefit, such as
prepaid insurance (hereinafter called the "Purchased Prepaid Items").
Section 1.7. Purchased Rights.
All data and records relating to the Business, wherever located, including
books and records (other than: (i) minute books and records of directors' and
shareholders' meetings and other documents relating to Seller's corporate
existence; (ii) records of Seller such as general ledgers, and (iii) Seller's
tax returns), customer lists, dealer and distributor lists, credit information
and correspondence, proprietary data, all designs and drawings, patterns,
slogans, copyrights, processes, formulae, know-how, trade secrets, processes,
inventions and discoveries (whether patentable or not) manuals, computer
software, data stored in computers, contract rights, warranties or other
transferable benefits that Seller may have received from manufacturers or
suppliers as to any of the Purchased Assets and other similar intangible
property and rights (including goodwill) (all of the foregoing hereinafter
collectively called the "Purchased Rights"). Seller shall retain the right to
examine such books and records transferred to the Purchaser, or to make extracts
or copies therefrom, for a period of six years after the date hereof, or until
such time as all tax matters relating to Seller's tax year 1997 and prior years
have been resolved, whichever shall last occur, during reasonable business
hours, and during such other times as the Purchaser and Seller may agree, and to
remove such books and records in connection with any proceedings, claims or
actions which may be brought against Seller, in any judicial or formal or
informal administrative proceeding or before any arbitration tribunal. Purchaser
shall have the right to inspect and copy such books and records that are not
included in the Purchased Rights during reasonable business hours for a period
of six years after the Closing Date.
Section 1.8. Purchased Intellectual Property.
All trademarks, trade names, applications to register trademarks or trade
names, licenses, patents, patent applications, copyrights and copyright
applications, and other similar rights used in the Business, including, without
limitation, those listed in Schedule 1.8 attached hereto (hereinafter
collectively called the "Purchased Intellectual Property") and all rights to xxx
for infringement or other violations of the Purchased Rights or the Purchased
Intellectual Property.
Section 1.9. Excluded Assets.
Notwithstanding the provisions of Sections 1.1 through 1.8, the parties
agree that the Purchased Assets shall not include Seller's corporate existence,
minute book, stock record book and corporate seal, any rights of Seller under
this Agreement, the Management Agreement, and any agreements between Seller and
A.R. Baron & Co., Inc. ("AR Baron").
ARTICLE II
Section 2. Purchase Price and Payment.
Section 2.1. Purchase Price The aggregate purchase price of the Purchased
Assets (the "Purchase Price") shall be the sum of: (a) One Million Five Hundred
Forty-Four Thousand Four Hundred Thirty-Eight (1,544,438) shares of common stock
of Access, $.01 par value per share (the "Access Purchase Shares"), plus an
equivalent number of Purchaser's Class B Warrants ("Access Purchase Warrants")
(collectively, the Access Purchase Shares and Access Purchase Warrants are
sometimes hereinafter referred to as the "Access Purchase Securities"), plus the
amount of the Cash Adjustment and the Share Adjustment calculated pursuant to
Section 2.2 (the "Share Portion of the Purchase Price"), plus (b) the amount of
the "Assumed Liabilities" (as hereinafter defined) assumed by Purchaser
hereunder.
Section 2.2. Adjustment to Purchase Price. Seller has issued Convertible
Promissory Notes dated December 19, 1996, in the aggregate principal amount of
$129,690.74 ("Seller Convertible Notes"). Prior to the Closing, at Access'
request, Seller shall issue notices to the holders of the Seller Convertible
Notes that the Seller Convertible Notes will be prepaid unless the holder elects
to convert its Seller Convertible Note into shares of Seller common stock. At
the Closing, Access shall deliver sufficient cash to satisfy Seller's obligation
to pay such Seller Convertible Notes (the "Cash Adjustment") and will deliver to
Seller one (1) Access Purchase Share and Access Purchase Warrant for each five
(5) share(s) of PaperClip common stock issued to former holders of Seller
Convertible Notes who elect to so convert (the "Share Adjustment").
Section 2.3. Payment of Share Portion of Purchase Price.
At the Closing (as defined in Section 3 below), the Purchaser shall deliver
to or for the account of Seller the Access Purchase Securities, plus the Share
Adjustment and the Cash Adjustment.
Section 2.4. Allocation of Purchase Price. The Purchase Price shall be
allocated to the Purchased Assets in accordance with the values to be jointly
agreed upon prior to the Closing. Purchaser and Seller shall jointly prepare
Form 8594 pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended, on a basis consistent with such allocations, and none of the parties
hereto shall take any position with any governmental or regulatory authority
inconsistent therewith.
Section 2.5. Adjustment of Shares. If Access effects any change in its
outstanding common stock by reason of stock dividends, stock splits or
recapitalization between the date of this Agreement and the Closing Date without
receipt of consideration, then the aggregate number of Access Purchase
Securities shall be appropriately adjusted.
ARTICLE III
Section 3. Closing.
The closing of the transactions contemplated hereby (the "Closing") shall
take place at the offices of Xxxxxxx & Xxxxxx, 2700 Hospital Trust Tower,
Providence, Rhode Island at 10:00 a.m. on a date to be specified by the parties
which (subject to the prior satisfaction or waiver of the conditions set forth
in Sections 9 and 10) shall be no later than the fifth business day after the
day on which the conditions in Sections 9.2 (first clause), 9.7, 9.10, 9.11,
10.6 and 10.9 have been satisfied, or at such other time and place as the
parties hereto shall agree in writing. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date". The transactions contemplated
hereby (except for the payments and actual transfer of the Purchased Assets)
shall be deemed to have been consummated as of the close of business on the
"Closing Date" for all tax, payroll, bonus, utility, expense, earnings, pension,
income, liability, billing, operating and accounting and all other purposes
relating to the acquisition of the Purchased Assets by the Purchaser. At the
Closing, Seller will deliver to Purchaser such bills of sale, endorsements,
assignments, or other instruments in form and substance satisfactory to
Purchaser and its counsel, as may be necessary to vest in Purchaser good and
marketable title to the Purchased Assets sold to the Purchaser hereunder,
subject to no liens, encumbrances or security interests except as are listed on
Schedule 6.9 hereto ("Permitted Liens").
ARTICLE IV
Section 4. Assumption of Liabilities; Indemnification.
Section 4.1. Assumption by Purchaser.
The Purchaser shall, by appropriate instruments to be executed and
delivered at the Closing, assume and agree to perform, pay or discharge, to the
extent not theretofore performed, paid or discharged, Seller's liabilities,
obligations, debts, contracts or other commitments of any kind whatsoever, known
or unknown, fixed or contingent, as the same shall exist on the Closing Date
(hereinafter collectively called the "Assumed Liabilities"); provided, however,
that it is expressly agreed that the Assumed Liabilities shall not include, and
Purchaser shall not be obligated to assume or become liable for, any of Seller's
liabilities or obligations, known or unknown, fixed or contingent, now existing
or hereafter arising, which shall arise out of or relate to: (i) any liability
or obligation of Seller to Discovery Laboratories, Inc. ("Discovery") arising
out of any agreement between Discovery and Seller or out of any transactions
contemplated by that certain letter of intent dated February 21, 1997, between
Discovery and Seller ("Discovery Letter of Intent"); (ii) any liability or
obligation of Seller to AR Baron arising out of any agreement between AR Baron
and Seller; (iii) any liability or obligation of Seller under Seller's stock
options, warrants, agreements to issue stock options and warrants, and any other
securities or instruments convertible into securities except for the Seller
Convertible Notes; or (iv) any agreement designated on Schedule 6.8 (a) as not
being assumed by Access.
Section 4.2 Indemnification by Seller.
Seller hereby agrees to indemnify, defend and hold harmless Purchaser and
its officers, directors and stockholders from, and will pay to Purchaser and
such persons the amount of any losses, liabilities, claims, demands, judgments,
damages, expenses and costs (including, without limitation, reasonable counsel
fees) whether or not involving a third party claim, arising, directly or
indirectly, from or in connection with Seller's failure to pay, discharge or
perform any of its liabilities or obligations that are not assumed by Access
under this Agreement.
Section 4.3. Indemnification by Purchaser.
Purchaser hereby agrees to indemnify, defend and hold harmless Seller, and
its officers, directors and stockholders from and will pay to Seller and such
persons the amount of any losses, liabilities, claims, demands, judgments,
damages, expenses and costs (including, without limitation, reasonable counsel
fees), whether or not involving a third party claim, arising, directly or
indirectly, from or in connection with Purchaser's failure to pay, discharge or
perform any Assumed Liability.
Section 4.4 Limitations on Indemnity.
Notwithstanding anything contained in this Agreement to the contrary:
(a) If the Closing occurs, neither Seller nor Purchaser shall have any
liability for indemnification with respect to any representation or
warranty made prior to the Closing Date or any covenant to be performed
prior to the Closing Date.
(b) The amount of any claim for indemnification shall be limited to
the actual out-of-pocket expenses incurred by the indemnitee after taking
into account tax benefits actually realized in the current fiscal year.
Section 4.5. Indemnification Proceedings.
Each party entitled to indemnification pursuant to this Article IV (the
"indemnified party") shall give notice to the party required to provide
indemnification pursuant to this Article IV (the "indemnifying party") promptly
after such indemnified party acquires actual knowledge of any claim as to which
indemnity may be sought, and shall permit the indemnifying party (at its
expense) to assume the defense of any claim or any litigation resulting
therefrom; provided, that counsel for the indemnifying party, who shall conduct
the defense of such claim or litigation, shall be reasonably acceptable to the
indemnified party, and the indemnified party may participate in such defense at
the indemnified party's expense; and provided, further, that the failure by any
indemnified party to give notice as provided in this Section 4.5 shall not
relieve the indemnifying party of its obligations under this Article IV except
to the extent that the failure results in a failure of actual notice to the
indemnifying party and such indemnifying party is prejudiced solely as a result
of the failure to give notice.
Section 4.6. Remedies Not Exclusive
The remedies provided in Sections 4.2 and 4.3 will not be exclusive of or
limit any other remedies that may be available to Access or Seller,
respectively.
ARTICLE V
Section 5. Other Actions.
Section 5.1. Purchaser to Act as Agent for Seller.
This Agreement shall not constitute an agreement to assign any claim,
contract or franchise if any attempted assignment of the same without the
consent of the other party thereto would constitute a breach thereof or in any
way affect the rights of the Seller thereunder. If such consent is not obtained,
or if any attempted assignment would be ineffective or would diminish the
Seller's rights thereunder so that the Purchaser would not in fact receive all
such rights, then subject to the terms and conditions of Section 5.3, Purchaser
may act as agent for Seller in order to obtain for Purchaser the benefits
thereunder.
Section 5.2. Delivery of Property Received After Closing.
From and after the Closing Date: (a) Seller agrees that it will promptly
upon receipt transfer or deliver to Purchaser, from time to time, any cash or
other property in the form received that Seller may receive after the Closing
relating to the Purchased Assets, and (b) Purchaser agrees that it will promptly
upon receipt transfer or deliver to Seller, from time to time, any cash or other
property in the form that Purchaser may receive after the Closing Date relating
to assets of the Seller other than the Purchased Assets.
Section 5.3. Purchaser Appointed Attorney for Seller.
Seller agrees that, effective as of the Closing Date, it hereby constitutes
and appoints Purchaser, its successors and assigns, the true and lawful attorney
of Seller in the name of Purchaser, or in the name of Seller but for the benefit
and at the expense of Purchaser, to: (i) institute and prosecute all proceedings
that Purchaser may deem proper in order to collect, assert or enforce any claim,
right or title of any kind in or to the Purchased Assets as provided in this
Agreement; (ii) defend or compromise any and all actions, suits or proceedings
in respect of any of the Purchased Assets, and to do all such acts and things in
relation thereto as Purchaser shall deem advisable; and (iii) take all action
that Purchaser, its successors or assigns, may reasonably deem proper in order
to provide for Purchaser, its successors and assigns, the benefits under any of
the Purchased Assets where any required consent of another party to the sale or
assignment thereof to Purchaser pursuant to this Agreement shall not have been
obtained. If Purchaser, in the name of Seller, desires to institute and
prosecute any action, suit or proceeding, or take any other action pursuant to
this Section 5.3, Purchaser shall provide Seller ten days' written notice prior
to taking any such action in the name of Seller. Seller acknowledges that the
foregoing powers are coupled with an interest and shall be irrevocable by
Seller. Purchaser shall be entitled to retain for its own account any amounts
collected pursuant to the foregoing powers, including any amounts payable as
interest in respect thereof. Purchaser shall indemnify Seller for any damages
Seller may incur on account of the acts of Purchaser taken pursuant to the
authority granted to it under Section 5.1 and this Section 5.3.
Section 5.4. Execution of Further Documents.
From and after the Closing, upon the request and at the expense of
Purchaser, Seller shall execute, acknowledge and deliver all such further acts,
bills of sale, assignments, transfers, conveyances, powers of attorney and
assurances as may be reasonably required to convey and transfer to and vest in
Purchaser and protect its right, title and interest in all of the Purchased
Assets, and as may otherwise be appropriate to carry out the transactions
contemplated by this Agreement.
Section 5.5. Preparation of Form S-4 and the Proxy Statements; Stockholder
Meetings; Other Filings.
(a) Seller will, as soon as reasonably practicable following the date of
this Agreement, take all action necessary in accordance with applicable law and
its Certificate of Incorporation and By-laws to convene a meeting of its
stockholders (the "Seller Stockholder Meeting") for the purpose of obtaining the
affirmative vote at the Seller Stockholder Meeting of the holders of a majority
of the votes represented by the outstanding Seller Common Stock ("Seller
Stockholder Approval"). The Proxy Statement for such meeting shall contain the
recommendation of Seller's Board of Directors that the stockholders vote to
approve and adopt this Agreement and the transactions contemplated hereby, and
such recommendation shall not be withdrawn; provided, however, that such
recommendation is subject to the exercise of the discretion of the Seller's
Board of Directors of its fiduciary duties to Seller's shareholders. Seller
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of such adoption and approval and shall take all other action necessary
to secure the vote of stockholders required by Delaware Law to effect the
transactions contemplated hereby.
(b) As soon as practicable after execution and delivery of this Agreement,
Seller shall prepare in accordance with the applicable requirements of the
Securities and Exchange Act of 1934, as amended ("Exchange Act"), and the
Delaware General Corporation Law ("Delaware Law"), a proxy statement in
connection with the Seller Stockholder Meeting (the "Proxy Statement"). Access
shall cooperate with the Seller in the preparation and filing of the Proxy
Statement, including any and all amendments and supplements thereto. Access and
Seller will cooperate in order to prepare and file with the United States
Securities and Exchange Commission ("SEC") a registration statement on Form S-4
in connection with the issuance of the Access Purchase Securities (the "Form
S-4"), in which the Proxy Statement will be included as a part of the joint
proxy/prospectus. Seller and Access shall each use all reasonable efforts to
have the Form S-4 declared effective under the Securities Act of 1933, as
amended ("Securities Act") as soon as practicable after such filing. Seller will
use all reasonable efforts to cause the Proxy Statement to be mailed to each of
Seller's stockholders and, if Access elects or is required to do so, Access will
use all reasonable efforts to cause the Proxy Statement to be mailed to Access'
stockholders, in each case as promptly as reasonably practicable after the Form
S-4 is declared effective under the Securities Act. Access will also take any
action (other than qualifying to do business in any jurisdiction in which it is
not now so qualified or filing a general consent to service of process) required
to be taken under any applicable state securities or "blue sky" laws in
connection with the issuance of the Access Purchase Securities and Seller shall
furnish all information concerning Seller and its stockholders as may be
reasonably requested in connection with any such action.
(c) If the Board of Directors of Access determines that it is necessary or
desirable to do so, Access will, as soon as reasonably practicable following the
date of this Agreement, take all action necessary in accordance with applicable
law and its Restated Certificate of Incorporation and By-laws to convene a
meeting of its stockholders (the "Access Stockholder Meeting") for the purpose
of obtaining the affirmative vote at the Access Stockholder Meeting of the
holders of a majority of the votes represented by the outstanding Access Common
Stock ("Access Stockholder Approval"). The proxy statement for such meeting
(which shall be part of the joint proxy/prospectus contained in the Form S-4)
shall contain the recommendation of Access' Board of Directors that the
stockholders vote to approve and adopt this Agreement and the transactions
contemplated hereby, and such recommendation shall not be withdrawn; provided,
however, that such recommendation is subject to the exercise of the discretion
of the Access' Board of Directors of its fiduciary duties to Access'
shareholders. Access shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of such adoption and approval and shall take all
other action necessary to secure the vote of stockholders required by Delaware
Law to effect the transactions contemplated hereby.
(d) As soon as practicable after the execution and delivery of this
Agreement, Seller and Purchaser shall promptly and properly prepare and file any
other schedules, statements, reports, or other documents required (if any) under
the Exchange Act, the Securities Act, or any other federal or state securities
laws relating to the transactions contemplated hereby (the "Other Filings").
Each party shall notify the other party hereto promptly of the receipt by such
party of any stop order, comments or requests for additional information from
any governmental official with respect to the Proxy Statement, the Form S-4 or
any Other Filing made by such party and will supply the other party with copies
of all correspondence between such party and its representatives, on the one
hand, and the appropriate government official, on the other hand, with respect
to the Proxy Statement, Form S-4 and Other Filings made by such party. Each of
the Seller and Purchaser shall use reasonable efforts to obtain and furnish the
information required to be included in the Form S-4, the Proxy Statement and any
Other Filing and, after consultation with the other party, to respond promptly
to any comments made by any government official with respect to any filing.
(e) Seller shall use all reasonable efforts to cause to be delivered to
Access a so-called "cold comfort" letter of Xxxxxx Xxxxxxxx LLP, the Seller's
independent public accountants, dated a date within two business days before the
date on which the Form S-4 shall become effective, addressed to Access, in form
reasonably satisfactory to Access and customary in scope and substance for
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(f) Access shall use all reasonable efforts to cause to be delivered to
Seller a so-called "cold comfort" letter of Price Waterhouse LLP, Access'
independent accountants, dated a date within two business days before the date
on which the Form S-4 shall become effective, addressed to Seller, in form
reasonably satisfactory to Seller and customary in scope and substance for
letters delivered by independent public accountants in connection with the
registration statements similar to the Form S-4.
(g) Access agrees to use reasonable efforts to effect, prior to the Closing
Date, the listing on the NASDAQ Small Cap market, upon official notice of
issuance, of the Access Purchase Securities to be issued to Seller hereunder.
(h) Seller hereby agrees to indemnify and holds harmless Access and its
directors, officers, advisors and agents and Access hereby agrees to indemnify
and holds harmless Seller and its directors, officers, advisors and agents, from
and against any loss, claim, damage, cost, liability, obligation or expense
(including reasonable attorney's fees and costs of investigation) to which any
indemnified party may become subject under the Securities Act, Exchange Act, or
otherwise, insofar as such loss, claim, damage, cost, liability, obligation or
expense or actions in respect thereof: (i) relates solely to a claim brought
against such indemnified party by a third party who is not affiliated with
either the indemnified party or the indemnifying party; and (ii) arises out of
or is based upon any untrue statement or alleged untrue statement of a material
fact contained in the Form S-4 or the Proxy Statement or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein with
respect to such indemnifying party not misleading; and (iii) such untrue
statement or omission or alleged omission is made in any information with
respect to the indemnifying party furnished in writing by such indemnifying
party specifically for inclusion in the Proxy Statement, Form S-4 or any Other
Filing.
Section 5.6. Employees of Business. Seller acknowledges that Purchaser is
under no obligation to offer employment to any salaried or hourly employee of
the Business. Purchaser, however, agrees that, under terms and conditions of
employment Purchaser will unilaterally establish for all applicants for
employment, Purchaser will consider for employment on the same basis as any
other applicant for employment former employees of the Business, if such former
employees apply and are otherwise qualified and available for employment with
Purchaser. All such successful applicants shall be new employees of Purchaser
under such new terms and conditions. On or before the Closing Date, Seller will
terminate the employment of all salaried and hourly employees on the payroll of
the Business (other than those who Purchaser has agreed will remain employees of
Seller following the Closing Date). Seller hereby acknowledges that Purchaser
will not become a party to, or assume any obligation under any "employee benefit
plans," within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, to which Seller is or may have been a party.
Section 5.7. Use of Name.
From and after the Closing Date neither Seller nor any affiliate of Seller
shall use the name "PAPERCLIP SOFTWARE, INC." or "PAPERCLIP IMAGING SOFTWARE,
INC." in any form or combination or variations in any manner.
Section 5.8 Access Board of Directors.
For a period of two years following the Closing Date, and for such
additional period (not to exceed one year) as Seller shall hold at least
twenty-five (25%) percent of the Access Purchase Securities, Access shall
nominate one person designated by Seller (who initially shall be Xxxxxxx
Xxxxxxxx) to Access's Board of Directors. In addition, during such two-year
period, Seller will be entitled to designate one person who will be permitted to
attend all meetings of Access's Board of Directors as an "advisor" or
"observer"; and, in the event that Xx. Xxxxxxxx or any other designee of Seller
resigns from Access's Board of Directors, Seller will be entitled to designate
an additional "advisor" or "observer."
Section 5.9. Seller Obligations Not to Compete or Disclose.
(a) For a period of three years following the Closing, Seller shall not:
(i) compete with Access in the conduct of the Business conducted by Seller at or
prior to the Closing, or (ii) except as consented to in writing by Access,
engage or participate, directly or indirectly, whether for its own account or
for that of any other person, firm or corporation, and whether as a stockholder,
partner or investor possessing an ownership interest exceeding 5% in any such
entity or in any other capacity, in any business that is substantially similar
to that of Seller at or prior to the Closing.
(b) Following the Closing, except as may be required by any applicable law,
as may be disclosed to Seller's professional advisors, and as may be authorized
in writing by Access, Seller shall not directly or indirectly, publish, disclose
or use, any secret, confidential, proprietary or other information not in the
public domain, relating to any aspect of the Business at or prior to the
Closing, including, without limitation, information pertaining to any of the
Purchased Assets.
Section 5.10. Cooperation in Connection With Stock Transfer Instructions
and Liquidating Distributions.
At or following the Closing Date, subject to the terms of the Lock-Up
Agreement (as defined in Section 8.13) Access will provide reasonable
cooperation to Seller in presenting instructions to Access's stock transfer
agent in order to subdivide the certificates for the Access Purchase Shares and
Access Purchase Warrants into smaller denominations, and thereby facilitate one
or more liquidating distributions by Seller to its shareholders.
ARTICLE VI
Section 6. Representations and Warranties by Seller.
In order to induce Purchaser to enter into this Agreement and to consummate
the transactions contemplated hereunder, Seller makes the following
representations, warranties, covenants and agreements:
Section 6.1. Corporate Existence and Qualification of Seller.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own its properties and to carry on its business as it is
now being conducted. Seller is qualified to do business as a foreign corporation
in the states set forth in Schedule 6.1. Seller has no subsidiaries.
Section 6.2. Seller's Corporate Documents.
Copies of the Certificate of Incorporation and By-Laws, including the
respective amendments thereto, of Seller, certified by the Secretary of Seller,
have been delivered to the Purchaser, and such copies are true, complete and
correct.
Section 6.3. Authorization of Agreement.
(a) Seller has all requisite corporate power to enter into this Agreement
and to consummate the transactions contemplated hereby. Except for the Seller
Stockholder Approval, all corporate and other actions required to be taken by
Seller to authorize it to carry out this Agreement and the transactions
contemplated hereby have been, or as of the Closing Date shall have been, duly
and properly taken. This Agreement and the Management Agreement have been duly
executed and delivered by Seller, and each constitutes a valid and binding
obligation of the Seller, enforceable against Seller in accordance with its
terms.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Federal, state or local governmental or any
court, administrative or regulatory agency or commission ("Governmental Entity")
is required by or with respect to Seller in connection with the execution and
delivery of this Agreement by Seller or the consummation of the transactions
contemplated by this Agreement, except: (i) the filing with the SEC of the Form
S-4 and the Proxy Statement and (ii) such filings with Governmental Entities as
might be required to satisfy the applicable requirements of state securities or
"blue sky" laws in connection with the transactions contemplated by this
Agreement.
Section 6.4. No Violation.
Neither the execution and delivery by the Seller of this Agreement nor the
consummation of the transactions contemplated hereby violate or will violate any
provision of law applicable to, or any provision of the Certificate of
Incorporation or by-laws of, Seller or conflict with or will result in any
breach of any term, condition or provision of, or constitute or will constitute
(with due notice or lapse of time or both) a default under, or will result in
the creation or imposition of any lien, charge or encumbrance upon any of the
Purchased Assets pursuant to the terms of, any mortgage, deed of trust or other
agreement or instrument to which Seller is a party or by which or to which
Seller or any of the Purchased Assets are subject or bound, except to the extent
Seller shall have obtained a waiver or release thereof.
Section 6.5. SEC Documents; Undisclosed Liabilities.
(a) Seller has filed with the SEC the Seller's registration statement on
Form SB-2 (the "Company SB-2), which became effective on August 9, 1995 (the
"Seller's SB-2 Effective Date"), and all required reports, schedules, forms,
statements and other documents since the Seller's SB-2 Effective Date (together
with such Form SB-2 registration statement, the "Seller SEC Documents"). As of
their respective dates, the Seller SEC Documents complied as to form in all
material respects with the requirements of the Securities Act, or the Exchange
Act, as the case may be, and none of the Seller SEC Documents when filed
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 light of the circumstances under which they were made, not
misleading.
(b) As of their respective dates, the financial statements of the Seller
included in the Seller SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, were prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by the rules and regulations of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present, in all material respects, the financial
position of the Seller as of the dates thereof and the results of its operations
and cash flows for the periods then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
(c) Attached hereto as Schedule 6.5 are the audited financial statements of
Seller for the year ended December 31, 1996 ("Seller 1996 Financial
Statements"). Seller 1996 Financial Statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis and
fairly present, in all material respects, the financial position of Seller as of
such date and the results of its operations and cash flows for the period then
ended.
(d) Except as set forth in the filed Seller SEC Documents, or in Schedule
6.5, as of the date of this Agreement, the Seller does not have any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) required by generally accepted accounting principles to be recognized
or disclosed on a balance sheet of the Seller or in the notes thereto and which,
individually or in the aggregate, would have a material adverse effect on the
Seller.
(e) None of the information contained in the Proxy Statement or any Other
Filing shall, on the date the Proxy Statement is first mailed to stockholders or
the Other Filing is made, as the case may be, at the time of the Seller
Stockholders Meeting or on the Closing Date, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they will be made, not misleading. Notwithstanding the foregoing, the
Seller makes no representations or warranties with respect to any information
supplied by Purchaser specifically for use in any of the foregoing documents.
The Proxy Statement shall comply as to form in all material respects with the
applicable provisions of the Exchange Act and the rules and regulations
promulgated thereunder and any Other Filings filed by the Seller shall comply as
to form in all material respects with all applicable requirements of law.
Section 6.6. Inventory.
Except as set forth on Schedule 6.6 hereto, all inventory set forth on the
Seller 1996 Financial Statement, and all additions to inventory of the Business
since December 31, 1996 consist of items of a quantity and quality usable or
salable in the ordinary course of the business at prevailing market prices
without discount. All inventories not written off have been priced at the lower
of cost or market on a first in, first out basis. Except as set forth in
Schedule 6.6 hereto, since December 31, 1996, no inventory items relating to the
Business have been sold or disposed of except in the ordinary course of
business. Schedule 6.6 sets forth the locations of all items of inventory.
Section 6.7. Accounts Receivable.
All Purchased Receivables relating to the Business as shown on the Seller
1996 Financial Statement or on the accounting records of the Seller as of the
date hereof are valid, genuine and subsisting, have arisen in the ordinary
course of business from customers believed to be commercially responsible, and
the reserves shown on the Seller's 1996 Financial Statement, are adequate and
calculated consistent with past practice and consistent with generally accepted
accounting principles. Since December 31, 1996, any proceeds collected on
accounts receivable have been applied only to liabilities set forth on the
Seller 1996 Financial Statement.
Section 6.8. Material Contracts and Obligations.
(a) Except for matters relating to real property listed on Schedule 6.9
hereto, Schedule 6.8(a) is a true, complete and accurate list prepared by the
Seller, categorized by subject matter, of the following contracts, agreements,
commitments, options, liens, licenses, mortgages, other security interests,
understandings or promises, whether written or oral ("Contract"), to which
Seller is a party or by which it is or any of its properties or assets are
bound:
(i) purchase or sale orders and agreements to or with any one
customer or supplier for the sale of products or services of an amount
or value in excess of $5,000;
(ii) all employment contracts with any officer, consultant,
director or employee;
(iii) all plans, contracts or arrangements providing for stock
options or stock purchases, bonuses, pensions, deferred compensation,
retirement payments, profit-sharing or the like;
(iv) all contracts for construction or for the purchase of
equipment, machinery and other items;
(v) all contracts relating to the rental or use of equipment,
other personal property or fixtures (except personal property leases
and installment and conditional sales agreements having a value per
item or aggregate payments of less than $5,000 and with terms of less
than one year);
(vi) all license agreements, either as licensor or licensee;
(vii) all joint venture contracts and agreements involving a
sharing of profits;
(viii) all franchise agreements;
(ix) all distributor, sales agency and other similar agreements;
(x) all loan or guaranty agreements, credit agreements, notes or
other evidences of indebtedness, indentures or instruments evidencing
liens or secured transactions; and
(xi) all other contracts, except those which: (i) are cancelable
on 30 days' or less notice without any penalty or other financial
obligation, or (ii) if not so cancelable, involve annual aggregate
payments by or to the Seller of $5,000 or less.
Each of the Contracts were entered into in the ordinary course of business of
the Business, is valid, binding and enforceable by or against Seller and is in
full force and effect. Except as set forth on Schedule 6.8(a), neither the
Seller nor (to the knowledge of the Seller) any other party thereto is in
default in any respect under the terms of any material Contract. Seller has
delivered to Purchaser true and complete copies or descriptions of the Contracts
required to be listed in Schedule 6.8(a).
(b) Neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby, nor compliance with
the terms and provisions hereof, will result in the creation or imposition of
any lien upon any of the property or assets of the Seller, or conflict in any
way with the provisions of or result in a breach of or termination of or a
default or acceleration of any obligation under, or except as set forth on
Schedule 6.8(b), require the consent of any person pursuant to, any such
Contract.
(c) There is no term or provision of any Contract to which the Seller is a
party or by which it or any of its properties are bound, or, of any provision of
any state, federal or foreign law, judgment, decree, order, statute, rule or
regulation applicable to or binding upon the Seller or its properties, which
materially adversely affects the business, condition, affairs or operations of
the Seller or any of its properties or assets relating to the Business.
Section 6.9. Title to Real Property; Liens; Condition of Properties.
(a) Schedule 6.9 contains an accurate legal description by categories of
the Seller's real estate and easements and other rights in real property, owned
or leased by or to Seller relating to the Business. All such leases of real
property are valid, binding and enforceable in accordance with their terms, and,
except as set forth on Schedule 6.9, neither the Seller nor, to Seller's
knowledge, any other party thereto is in default thereunder.
(b) To the best of Seller's knowledge the Purchased Assets include all of
the property and property rights used or necessary in the operation of the
Business as presently conducted. Except for minor defects in title which do not
materially affect their use or value, and except for leased assets set forth on
Schedule 6.9, Seller owns good and marketable title to all Purchased Assets. All
of the Purchased Assets are free and clear of all security interests, mortgages,
pledges, liens, conditional sales agreements, leases, encumbrances, charges, or
claims of third parties of any nature whatsoever except as set forth on
Schedules 6.8(a) or 6.9 hereto, all of which shall be released and discharged
prior to the Closing Date.
(c) To Seller's knowledge, all real estate leased to Seller relating to the
Business, and all Purchased Fixed Assets of Seller, and the Seller's use of the
same, comply in all material respects with all applicable ordinances and
regulations and building, zoning or other laws. All Purchased Fixed Assets are
and will be, as of the Closing Date, in good working order and condition and
suitable for use in the operation of the business of the Business, subject to
ordinary wear and tear.
Section 6.10. Licenses.
The licenses listed on Schedule 6.10 hereto (the "Licenses") constitute all
licenses, permits, and governmental authorizations and approvals necessary for
the operation of the Business. The Seller has duly obtained and legally and
validly holds all the Licenses, all of which are valid and in full force and
effect. No proceeding (judicial, administrative, or otherwise) has been
commenced or to Seller's knowledge threatened which could lead to a revocation,
suspension, or limitation of the rights under any License, and the Seller is in
compliance with each of the Licenses and knows of no state of fact which could
lead to any such revocation, suspension, or limitation. The Licenses expire on
the dates set forth on Schedule 6.10, and the Seller has no reason to believe
that any of the Licenses will not be renewed, nor has any person or entity
informed the Seller that such person or entity intends to oppose any such
renewal. Seller has delivered to Purchaser true and complete copies of each of
the Licenses.
Section 6.11. Arms-Length Transactions, Conflicts of Interest.
To the knowledge of Seller: (a) all transactions by the Business with
parties other than Seller are and have been conducted on an arm's-length basis,
and (b) neither the elected officers of the Seller nor the key employees of the
Business, or their respective spouses, have (or had during the past three fiscal
years) any material direct or indirect ownership or profit participation in
outside business enterprises with which the Business had material purchases,
sales or business dealings.
Section 6.12. Intellectual Property.
There is set forth in Schedule 1.8 hereto a true and complete list of all
domestic and foreign patents, copyrights, trademarks, trade names, and all
registrations or applications with respect thereto, and all licenses or rights
under the same relating to the Business presently owned by the Seller. There is
not outstanding with respect thereto any license or other permission granted by
the Seller to any other person, firm or corporation, except as set forth in
Schedule 1.8. Seller owns or possesses adequate licenses or other rights to use
every item of intellectual property used in its business and the same are
sufficient to conduct the business substantially as now conducted. There are no
outstanding claims asserted against the Seller alleging infringement of any
patent, copyright, trademark, trade name, trade secret, license or other
intellectual property right of any other person, firm or corporation, and Seller
does not hold, nor is Seller aware that there exists any adversely held patent,
copyright, trademark, trade name or license or other intellectual property right
on which such a claim could reasonably be based. The Seller does not know of any
person, firm or corporation producing, selling or using products or services
which constitute an infringement of any of the Purchased Rights or the Purchased
Intellectual Property.
Section 6.13. Absence of Certain Developments.
Except as set forth on Schedule 6.13 attached hereto or on any other
Schedule to the Agreement, since December 31, 1996 the Seller has not:
(i) entered into any contract, commitment or agreement under
which the Seller has outstanding indebtedness, obligation or liability
for borrowed money or deferred purchase price of property in excess of
$10,000 or has the right or obligation to incur such indebtedness,
obligation or liability;
(ii) discharged or satisfied any lien or paid any obligation or
liability (absolute or contingent), other than in the ordinary course
of business;
(iii) mortgaged or pledged any of its assets, tangible or
intangible, or subjected them to any lien, except liens for current
property taxes not yet due and payable;
(iv) sold, leased, subleased, assigned or transferred any of its
tangible or intangible assets, except in the ordinary course of
business, or canceled any debts or claims;
(v) suffered any substantial losses on the sale or disposition of
individual items of non-inventory property or waived any rights of
material value (other than in connection with the cancellation of
sales orders), whether or not in the ordinary course of business, or
received notice of cancellation of any firm order in excess of $5,000;
(vi) made any changes in employee compensation, vacation policies
or fringe benefit plans, except in the ordinary course of business and
consistent with past practices and not in excess of 5% of any
employee's compensation level during its most recently completed
fiscal year;
(vii) entered into any other transaction other than in the
ordinary course of business, or entered into any other material single
transaction, whether or not in the ordinary course of business which
involves payments by or to the Seller in excess of $50,000 with
respect to the purchase of raw materials, $50,000 with respect to the
sale of inventory, and $50,000 with respect to other transactions:
(viii) suffered damage, destruction or other casualty loss, or
forfeiture of, any property or assets having a value in excess of
$10,000, whether or not covered by insurance or which has had or may
reasonably be expected to have a material adverse effect on its
business, financial condition or prospects;
(ix) made any capital expenditures, additions or improvements or
commitments for the same, except those made in the ordinary course of
business which in the aggregate do not exceed $20,000;
(x) made any voluntary prepayments of indebtedness or lease
obligations;
(xi) made any change in accounting procedures or practices;
(xii) authorized or effected any declaration, setting aside or
payment of any dividends or other distribution (whether in cash, stock
or property) with respect to any of Seller's capital stock;
(xiii) authorized or effected any split, combination or
reclassification of any of its capital stock or any issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock; or
(xiv) entered into any agreement or understanding to do any of
the foregoing.
Section 6.14. Undisclosed Liabilities.
Except as set forth on Schedule 6.14, the Seller does not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, and Seller does not know of any basis for any
claim against Seller for any such material liabilities or obligations, except:
(i) to the extent set forth in this Agreement or in the Schedules hereto or
shown in the Seller's 1996 Financial Statement or (ii) liabilities or
obligations incurred in the ordinary course of business since December 31, 1996.
Section 6.15. Litigation; Compliance with Law.
Except as set forth on Schedule 6.15, there are no actions, suits, claims,
proceedings or investigations (whether or not purportedly on behalf of or
against the Seller) pending or, to the Seller's knowledge, threatened against
the Seller at law or in equity, or before or by any Federal, state, municipal or
other governmental court, department commission, board, bureau, agency or
instrumentality, domestic or foreign. Seller is not in default with respect to
any order, writ, injunction or decree of any court or Federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality pertaining to the Business. Seller has complied in all material
respects with all laws, regulations and orders applicable to the Business,
including, without limitation, all laws relating to the safe conduct of business
and environmental protection and conservation. Seller has not received
notification of any asserted past or present failure so to comply with any of
such laws or with the Federal Occupational Safety and Health Act that has not
been remedied. Seller has no knowledge of any pending or threatened litigation
or government action which could prohibit or interfere with the performance of
this Agreement.
Section 6.16. Employee Claims against the Business.
No officer or employee of the Seller has any claim or claims against
Seller, and Seller is not obligated or liable to any of such persons in any way
or for any amounts, except current salaries, wages and current and accrued
vacation pay and bonuses, severance obligations, reimbursable business expenses
incurred in the ordinary course of business and incentive compensation.
Section 6.17. Unemployment Insurance Rating.
Seller will complete and execute all forms required in connection with the
transfer to the Purchaser of unemployment insurance funds, and ratings and
workmen's compensation ratings (if and to the extent permissible under
applicable state law) with respect to the Business on account of the
transactions contemplated hereunder.
Section 6.18. Employee Benefit Plans.
(a) Schedule 6.18 contains a true and complete list as of the date of this
Agreement of all employee benefit plans or arrangements applicable to the
employees of Seller employed in the Business and all fixed or contingent
liabilities or obligations of Seller with respect to any person now or formerly
employed by Seller in the Business including, without limitation, pension or
thrift plans, individual or supplemental pension or accrued compensation
arrangements, contributions to hospitalization or other health or life insurance
programs, incentive plans, bonus arrangements and vacation, sick leave,
disability and termination arrangements or policies, including workers'
compensation policies. Except as listed in Schedule 6.18, Seller maintains no
other employee benefit plan or arrangement applicable to the employees of Seller
employed in the Business and possesses no other fixed or contingent liabilities
or obligations with respect to any person now employed by Seller in the
Business. Schedule 6.18 also includes true and complete copies of all employee
handbooks, rules and regulations.
(b) Seller has furnished Purchaser with copies of all applicable plan
documents, trust documents, insurance contract summary plan descriptions of the
written plans and arrangements listed in Schedule 6.18 and with descriptions, in
writing, of the unwritten plans and arrangements listed in Schedule 6.18.
(c) Seller has no employee benefit plans that are "tax qualified plans"
under Sections 401 et seq. of the Internal Revenue Code of 1986, as amended (the
"Code").
(d) All employee benefit and welfare plans or arrangements listed in
Schedule 6.18 were established and have been executed, managed and administered
in all material respects in accordance with all applicable requirements of the
Code, of the Employee Retirement Income Security Act of 1974, as amended, and of
other applicable laws. Seller is not aware of the existence of any governmental
audit or examination of any of such plans or arrangements or of any facts which
would lead it to believe that any such audit or examination is pending or
threatened. There have been no federal pension law excise taxes assessed against
any of the benefit or welfare plans, and Seller is not aware of any proceedings
or events that could result in the assessment of such excise taxes.
(e) There exists no action, suit or claim (other than routine claims for
benefits) with respect to any of such plans or arrangements pending or, to the
knowledge of Seller, threatened against any of such plans or arrangements, and
Seller possesses no knowledge of any facts which could give rise to any such
action, suit or claim. Except as set forth in Schedule 6.18, Seller is not a
party to any multi-employer pension benefit or welfare plans.
Section 6.19. Labor Relations.
Seller is not a party to or subject to any collective bargaining
agreements. Except as described in Schedule 6.8(a) hereto, Seller has no written
or oral contracts of employment with any employee. Seller has provided Purchaser
with true and complete copies of all such written contracts of employment and
true and accurate memoranda of any such oral contracts.
Seller, in the operation of the Business, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor including, without limitation, those related to wages,
hours, collective bargaining, occupational safety, discrimination, and the
payment of social security and other payroll related taxes, and it has not
received any notice alleging that it has failed to comply in any material
respect with-any of the foregoing. There are no material controversies, disputes
or proceedings pending or, to the best of its knowledge, threatened, between it
and employees (singly or collectively) of the Business. In this regard, Seller
is now in material compliance with all federal, state and local laws respecting
employment and employment practices, terms and conditions of employment, and
wages and hours, and is not engaged in any unfair labor practice within the
meaning of Section 8(a) of the Labor Management Relations Act, 1947. There are
no claims or complaints pending or to Seller's knowledge threatened against
Seller before any court or governmental agency involving allegedly unlawful
employment practices relating to Seller, except as referred to in Schedule 6.19,
and Seller will retain and assume all liability resulting therefrom. To the
knowledge of Seller, there are no union campaigns being conducted to solicit
cards from employees to authorize any additional unions or to request a National
Labor Relations Board certification election with respect to any of Seller's
employees at the Business.
Section 6.20. Insurance Policies.
The Seller has furnished the Purchaser with a list, attached hereto as
Schedule 6.20, which sets forth a brief description of all policies of fire,
liability and other forms of insurance currently maintained in force by the
Seller in respect to the Business and/or the Purchased Assets.
Section 6.21. Bank Accounts.
Schedule 1.1 attached hereto sets forth the name and location of each bank
in which the Business has an account, lock box or safe-deposit box and names of
all persons authorized to draw thereon or have access thereto.
Section 6.22. Capitalization.
(a) The authorized capital of Seller consists of 30,000,000 shares of
common stock, $.01 par value ("Seller Common Stock"). As of the close of
business on February 28, 1997: (i) 8,055,521 shares of Seller Common Stock were
issued and outstanding; (ii) no shares of Seller Common Stock were held by
Seller in its treasury; (iii) 990,079 shares of Seller Common Stock were
reserved for issuance pursuant to Seller's stock option plans; (iv) 365,820
shares of Seller Common Stock were reserved for issuance under bridge warrants
exercisable through April 2000; (v) 45,608 shares of Seller Common Stock were
reserved for issuance under warrants issued in connection with 8% secured notes;
(vi) 3,599,500 shares of Seller Common Stock were reserved for issuance under
Class A Warrants exercisable through August 9, 2000; (vii) 359,950 shares of
Seller Common Stock were reserved for issuance under an option exercisable
through 2000; (viii) 359,950 shares of Seller Common Stock were reserved for
issuance under Class A Warrants exercisable through 2000; and (ix) 432,303
shares of Seller Common Stock were reserved for issuance in connection with the
principal portion of the Seller Convertible Notes.
(b) Except as set forth above, at the close of business on February 28,
1997 no shares of capital stock or other voting securities of Seller were
issued, reserved for issuance or outstanding. From February 28, 1997 to the date
of this Agreement, no shares of capital stock or other securities of Seller have
been issued. There are no other outstanding securities, options, warrants,
rights, agreements, arrangements or undertakings of any kind, to which the
Seller is a party or by which it is bound, obligating Seller to issue, grant,
extend or enter into any such security, option, warrant, right, agreement,
arrangement or undertaking.
Section 6.23. Investment Representation.
Seller is acquiring the Access Purchase Securities for Seller's own account
and not for the purpose of distribution except through the Form S-4 or an
exemption from registration under the Act. Seller is not acquiring the Access
Purchase Securities for purposes of any other distribution or with the intent
otherwise to divide Seller's participation with others or resell or otherwise
distribute the Access Purchase Securities except through the Form S-4 or an
exemption from registration under the Act.
Section 6.24. Disclosure.
Seller has provided Purchaser with complete and accurate information as to
Seller and its affairs. No representation or warranty made by Seller set forth
herein, or in any Schedule hereto, in any supplement to any Schedule, in the
Management Agreement, or in any certificate or other document delivered or to be
delivered in connection with the transactions contemplated by this Agreement
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary to make the statement not
misleading in light of the circumstances in which it was made.
ARTICLE VII
Section 7. Representations and Warranties by Access.
In order to induce Seller to enter into this Agreement and to consummate
the transactions contemplated hereunder, Access makes the following
representations, warranties, covenants and agreements:
Section 7.1. Corporate Existence and Qualification.
Access is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware and has all requisite corporate
power and authority to own its properties and to carry on its business as it is
now being conducted and as it will be conducted on the Closing Date. Access is
qualified to do business as a foreign corporation in all states where the
conduct of its business so requires, including Rhode Island and New York. Access
has no subsidiaries.
Section 7.2. Access's Corporate Documents.
Copies of the Restated Certificate of Incorporation and By-Laws, including
the respective amendments thereto, of Access, certified by the Assistant
Secretary of Access, have been delivered to Seller, and such copies are true,
complete and correct.
Section 7.3. Authorization of Agreement, Etc.
(a) Access has all requisite corporate power to enter into this Agreement
and to consummate the transactions contemplated hereby. Except for the Access
Director Approval and the Access Stockholder Approval, all corporate and other
actions required to be taken by Access to authorize it to carry out this
Agreement and the transactions contemplated hereby, have been, or as of the
Closing Date shall have been, duly and properly taken. This Agreement and the
Management Agreement have been duly executed and delivered by Access, and each
constitutes a valid and binding obligation of Access, enforceable against Access
in accordance with its terms. Neither the execution and delivery by Access of
this Agreement, the purchase of the Purchased Assets, the assumption of the
Assumed Liabilities nor the delivery of the Access Purchase Securities, violate
or will violate any provision of law applicable to, or any provision of the
corporate charter or by-laws of Access, or conflict with or will result in any
breach of any term, condition or provision of, or constitute or will constitute
(with due notice or lapse of time or both) a default under, or will result in
the creation or imposition of any lien, charge or encumbrance upon any property
of Access or upon the Access Purchase Securities, pursuant to the terms of, any
mortgage, deed of trust or other agreement or instrument to which Access is a
party or by which or to which Access, or any of such property or the Access
Purchase Securities, are subject or bound, except to the extent that Access
shall have obtained a waiver or release thereof.
(b) The execution and delivery by Access of this Agreement and the purchase
of the Purchased Assets, the assumption of the Assumed Liabilities and the
delivery of the Access Purchase Securities or any other transaction contemplated
hereby require no consent, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity except as referenced in
Section 6.3 (b).
Section 7.4. Absence of Certain Developments. Except as set forth in
Schedule 7.4 attached hereto, since December 31, 1996, Access has not: (i) had
any change or changes in its condition, operations, business, properties, assets
or liabilities of any character, whether or not in the ordinary course of
business, that has had individually or in the aggregate, a material adverse
effect; (ii) made any changes in accounting procedures or practices; (iii)
authorized or effected any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to any
of Access's capital stock; or (iv) entered into any agreement or understanding
to do any of the foregoing.
Section 7.5. Undisclosed Liabilities. Access does not have any material
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, and Access does not know of any basis for any
claim against Access for any such material liabilities or obligations, except:
(i) to the extent set forth in this Agreement or in the Schedules hereto or
shown in Access's December 31, 1996 unaudited financial statements or (ii)
liabilities or obligations incurred in the ordinary course of business since
December 31, 1996.
Section 7.6. Litigation; Compliance with Law. There are no actions, suits,
claims, proceedings or investigations pending or to Access's knowledge,
threatened against Access at law or in equity, or before or by any Federal,
state, municipal or other governmental court, department commission, board,
bureau, agency or instrumentality, domestic or foreign. Access is not in default
with respect to any order, writ, injunction or decree of any court or Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality pertaining to it. Access has complied in all material
respects with all laws, regulations and orders applicable to its business,
including, without limitation, all laws relating to the safe conduct of business
and environment protection and conservation. Access has not received
notification of any asserted past or present failure so to comply with any of
such laws or with the federal Occupational Safety and Health Act that has not
been remedied. Access has no knowledge of any pending or threatened litigation
or government action which would prohibit or interfere with the performance of
this Agreement.
Section 7.7. Capitalization; Status of Access Common Shares.
(a) The authorized capital stock of Access consists of 13,000,000 shares of
Common Stock, par value $.01 per share, and 1,000,000 shares of preferred stock,
par value $.01 per share. Except as set forth in the Prospectus dated October
16, 1996, previously delivered by Access to Seller or as set forth on Schedule
7.7 hereto, there are not, and on the Closing will not be, outstanding: (i) any
options, warrants or other rights to purchase any capital stock of Access; (ii)
any securities convertible into or exchangeable for shares of such stock; or
(iii) any other commitments of any kind for the issuance of additional shares of
capital stock or options, warrants or other securities of Access.
(b) Except as set forth above, no shares of capital stock or other voting
securities of Access are issued, reserved for issuance or outstanding. There are
no other outstanding securities, options, warrants, rights, agreements,
arrangements or undertakings of any kind, to which Access is a party or by which
it is bound, obligating Access to issue, grant, extend or enter into any such
security, option, warrant, right, agreement, arrangement or undertaking.
(c) The Access Purchase Securities to be delivered to the Seller (or for
the Seller's account) in connection with the transactions contemplated hereby
will be, at the time of delivery, duly authorized, fully paid and non-assessable
and free and clear of all liens, claims and encumbrances. At the time of
delivery such Access Purchase Securities shall be free of any transfer
restriction legends other than the legend provided for in Section 13.1 hereof.
Section 7.8. SEC Filings.
(a) Access has filed with the SEC all reports and filings required to be
filed with the SEC pursuant to the Securities Act, the Exchange Act, and any
other applicable federal securities laws, including without limitation: (i) its
Prospectus dated October 16, 1996, relating to its offering of 1,066,667 Units,
each Unit consisting of two shares of common stock and one redeemable warrant;
and (ii) its quarterly reports on Form 10-QSB for the quarterly periods, ending
September 30, 1996, and December 31, 1996, respectively.
(b) All of the reports and filings referred to in subparagraph (a) and any
that are filed prior to the Closing comply and will comply in all material
respects as to form and substance with the applicable federal securities laws
pursuant to which they were filed. To the best of Access' knowledge, no such
report or other filing, or any exhibit, schedule or attachment thereto (whether
or not incorporated by reference) contains or will contain 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 not misleading in light of
the circumstances in which such statements were made.
(c) There has not been any material adverse change in the business,
operations or liabilities or prospects of Access since December 31, 1996, and
the filings and reports listed in the clauses (i) and (ii) inclusive, of
subparagraph (a), fairly and accurately reflect such business, operations and
liabilities and prospects as of the respective dates thereof. Without limiting
the generality of the foregoing sentence, Access has not filed a report on Form
8-K since December 31, 1996.
Section 7.9. Information Supplied by Access.
None of the information supplied or to be supplied by Access for inclusion
or incorporation by reference in the Proxy Statement or in any other filing of
Seller will, at the time of the Seller Stockholder Meeting or on the Closing
Date, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statement
not misleading in light of the circumstances under which they were or will be
made.
ARTICLE VIII
Section 8. Conduct Prior to Closing.
From and after the execution of this Agreement, and until the Closing Date:
Section 8.1. Carry On in Ordinary Course. Seller shall carry on the
Business in the ordinary course of business and substantially in the same manner
as heretofore, and shall not make or institute any unusual or novel methods of
purchase, sale, lease, management, accounting or operation or make any capital
expenditures or take any action other than in the ordinary course.
Section 8.2. No General Increases. Without the prior written consent of
Purchaser, Seller shall not grant any general or uniform increase in the rates
of pay or employees of the Business nor grant any general or uniform increase in
the benefits under any bonus or pension plan or other contract or commitment
relating to employees of the Business; and except as approved in writing by
Purchaser, Seller shall not increase the compensation payable or to become
payable to officers or key salaried employees of the Business, or increase any
bonus, insurance, pension or other benefit plan, payment or arrangement made to,
for or with any of such officers, key salaried employees or agents of the
Business.
Section 8.3. Contracts and Commitments. Seller shall not enter into any
contract or commitment affecting the Purchased Assets or engage in any
transaction not in the usual and ordinary course of business of the Business and
consistent with the business practices of the Business without the prior written
consent of Purchaser.
Section 8.4. Dispositions and Sale of Purchased Assets. Seller shall not
sell or dispose of or agree to sell or dispose of, any of the Purchased Assets
(other than Purchased Inventory in the ordinary course of business).
Section 8.5. Preservation of Organization. Seller shall use its reasonable
best efforts, provided that no material expenditure is required, to preserve
intact the business organization of the Business, to keep available the services
of current employees of the Business and to preserve for Purchaser the present
relationships of the Business with its suppliers and customers and others having
business relations with the Business.
Section 8.6. No Default. Seller shall not knowingly do any act or omit to
do any act, or (to the extent controllable by Seller) permit any act or omission
to act, which will cause a breach of any material contract, commitment,
judgment, order, injunction or obligation relating to the Purchased Assets or
the Business.
Section 8.7. Compliance with Laws. Seller shall duly comply with all
applicable laws in all material respects as may be required for the operation of
the Business and for the valid and effective transfer of the Purchased Assets
and the consummation of the transactions contemplated hereby.
Section 8.8. Operation of Business. Seller shall take or suffer no action
as shall render any warranty or representation contained in Article VI untrue,
inaccurate or misleading at Closing.
Section 8.9. Consents. Seller shall use its best efforts to obtain all
written consents of third parties necessary to transfer the Purchased Assets to
Buyer, but shall not be obligated to make any payments to third parties in so
doing unless Seller has heretofore agreed with any third party to make such
payments.
Section 8.10. Advisement of Changes.
Seller or Access, as the case may be, shall promptly advise the other party
orally and in writing upon its becoming aware of: (i) any representation or
warranty made by it in this Agreement being untrue or inaccurate as of the date
made in any material respect, (ii) the failure by it to comply with or satisfy
in any material respect any covenant, condition or agreement to be complied with
or satisfied by it under this Agreement or (iii) any change or event which would
have a material adverse effect on such party or on the ability of the conditions
set forth in Articles IX or X to be satisfied; provided however, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement. Should either party become aware of a condition that
requires a change in the Schedules to this Agreement to ensure they were
accurate on the date made, Seller or Access, as the case may be, will promptly
deliver to the other party a supplement to such Schedules specifying such
change.
Section 8.11. No Solicitation.
(a) Seller shall not, nor shall it authorize or permit any officer,
director or employee of or any investment banker, attorney or other advisor or
representative of, Seller, directly or indirectly: (i) solicit, initiate or
knowingly encourage the submission of any takeover proposal (as defined below),
(ii) enter into any agreement providing for any takeover proposal or (iii)
participate in any negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action knowingly to
facilitate the making of, any takeover proposal; provided, however, that if, at
any time prior to the receipt of the Seller Stockholder Approval, the Board of
Directors of the Seller determines in good faith that it is necessary to do so
in order to comply with its fiduciary duties to the Seller's stockholders under
applicable law, as advised by outside counsel, the Seller may, with respect to
an actual or potential unsolicited takeover proposal and subject to compliance
with Section 8.11: (x) furnish non-public information with respect to the Seller
to such person making such actual or potential unsolicited takeover proposal and
(y) participate in negotiations regarding such proposal.
(b) Neither the Board of Directors of the Seller nor any committee thereof
shall: (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Access, the approval or recommendation by such Board of Directors or
any such committee of this Agreement or the Closing, (ii) approve or recommend
or propose to approve or recommend, any takeover proposal or (iii) enter into
any agreement with respect to any takeover proposal.
(c) In addition to the obligations of Seller set forth in paragraphs (a)
and (b) of this Section 8.11, Seller shall promptly advise Access orally and in
writing of any request for information or of any takeover proposal or any
inquiry with respect to or which could reasonably be expected to lead to any
takeover proposal which, in any such case, is either: (i) in writing or (ii)
made to any executive officer or director of the Seller, the identity of the
person making any such request (to the extent practicable), takeover proposal or
inquiry and all the material terms and conditions thereof. Seller will keep
Access fully informed of the status and details (including amendments or
proposed amendments) of any such request, takeover proposal or inquiry.
For purposes of this Agreement, the term "takeover proposal" shall mean any
proposal for a merger, consolidation or other business combination involving
Seller or any proposal or offer to acquire in any manner, directly or
indirectly, an equity interest in, any voting securities of, or a substantial
portion of the assets of Seller other than the transactions contemplated by this
Agreement.
Section 8.12. No Delaying Transactions. Between the date of this Agreement
and the Closing Date, neither Seller nor Access will enter into any transaction
or enter into negotiations for any transaction that will delay the consummation
of the transactions contemplated by this Agreement.
Section 8.13. Lock-Up Agreements. Prior to the Closing, Access shall use
its reasonable best efforts to cause such of its shareholders who have executed
so-called "lock-up" agreements to execute a new lock-up agreement containing a
schedule substantially in the form of the schedule set forth in Exhibit A-1. If
Seller is reasonably satisfied with the percentage of such shareholders of
Access who have executed such a lock-up agreement, then, at the Closing, Seller
shall execute and deliver a lock-up agreement substantially in the form of
Exhibit A-1. Otherwise, at the Closing, Seller shall execute and deliver a
lock-up agreement substantially in the form of Exhibit A-2 (the form of lock-up
agreement to be so executed and delivered by Seller shall be referred to as the
"Lock-Up Agreement").
Section 8.14. Best Efforts. Between the date of this Agreement and the
Closing Date, Seller and Access will each use its reasonable best efforts to
cause the conditions in Article IX and X to be satisfied.
ARTICLE IX
Section 9. Conditions to Obligations of Access.
The obligation of Access to take the actions required to be taken by Access
at the Closing is subject to the satisfaction, at or prior to the Closing, of
each of the following conditions (any of which may be waived by Access, in whole
or in part):
Section 9.1. Compliance by Seller; Correctness of Representations and
Warranties of Seller.
Except to the extent that Seller has delegated operational control of the
Business to Access pursuant to the Management Agreement, the Seller shall have
complied with and performed in all material respects all the terms, covenants
and conditions of this Agreement to be complied with and performed (except as
would not have a material adverse effect on the Business or the Purchased
Assets), and each of the representations and warranties made by the Seller under
this Agreement shall be true and correct in all material respects as of the date
of this Agreement (other than those representations and warranties that
expressly relate to an earlier date).
Section 9.2. Certified Resolutions of the Seller.
The Seller Stockholder Approval shall have been obtained, and Seller shall
have delivered to Purchaser a certificate signed by the Secretary or Assistant
Secretary of the Seller under its corporate seal setting forth the votes
constituting the authorization and approval of the board of directors and
stockholders of Seller of the sale of the Purchased Assets contemplated hereby
on the terms set forth herein.
Section 9.3. Approval by Purchaser's Counsel.
All actions, proceedings, instruments and documents required to carry out
this Agreement or incidental thereto and all other related legal matters have
been approved by counsel for the Purchaser, which approval will not be
unreasonably withheld.
Section 9.4. Opinions of Counsel for Seller.
(a) The Purchaser shall have received an opinion of Shereff, Friedman,
Xxxxxxx & Xxxxxxx, LLP, counsel for the Seller, dated the Closing Date, in form
and substance reasonably satisfactory to the Purchaser and its counsel, to the
effect that: (i) the Seller is a corporation duly organized and validly existing
and in good standing under the laws of Delaware and, has full corporate power
and authority, to carry on its business as it is now being conducted and to own
or hold under lease the properties and assets it now owns or holds under lease;
(ii) the Seller has all requisite corporate power and authority to enter into
this Agreement, to sell, convey, assign, transfer and deliver the Purchased
Assets to the Purchaser as provided in this Agreement and to carry out any other
transactions and agreements contemplated hereby; (iii) the instruments of
transfer and assignment delivered by the Seller to the Purchaser are adequate to
convey all rights of the Seller in the Purchased Assets to Access in accordance
with their terms; (iv) to such counsel's knowledge, Section 6.22 accurately sets
forth the capitalization of Seller; (v) all corporate and other proceedings
required to be taken by or on the part of the Seller to authorize the Seller to
carry out this Agreement and for the Seller to sell, convey, assign, transfer
and deliver the Purchased Assets and enter into and perform its obligations
under any other closing documents have been duly and properly taken including
any necessary approval by the stockholders of the Seller of the transactions
contemplated by this Agreement; (vi) this Agreement and the instruments of
transfer and other closing documents have been duly executed and delivered by
the Seller and constitute valid and binding obligations of the Seller
enforceable in accordance with their terms; (vii) the execution, delivery and
performance of this Agreement will not contravene any applicable provision of
law, any order of any court or other agency of government known to such counsel,
the Certificate of Incorporation or By-Laws of the Seller; or, to such counsel's
knowledge, conflict with or result in any breach of the terms of, or constitute
a default under, any indenture, agreement or other instrument to which it is a
party or by which it or any of its assets is bound other than as would not have
a material adverse effect on the Business of Seller; (viii) the execution and
delivery of the Agreement and the consummation of the transactions contemplated
by the Agreement do not require any authorization, consent, approval, exemption
or other action by or notice to any court, arbitrator, administrative or
governmental body pursuant to any applicable law, statute, ordinance, rule or
regulation applicable to the Seller or the Business other than as would not have
a material adverse effect on the Business of the Seller; (ix) there are no
agreements known to such counsel pursuant to which Seller has pledged its
assets, or granted a lien, security interest or encumbrance on any of the
Purchased Assets except as set forth in Schedule 6.9; and (x) to the best of
such counsel's knowledge, the information supplied by the Seller in the Form S-4
(including any documents incorporated by reference therein) on the effective
date of the Form S-4, the date of mailing of the Proxy Statement, and the date
of the Seller Stockholder Meeting did not contain any untrue statement of
material fact or omit 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.
In delivering such opinion and to the extent specified in such opinion and
deemed appropriate by such counsel and counsel to the Purchaser, such counsel
may rely, as to factual matters, upon certificates of the officers of the Seller
and upon opinions of associate counsel satisfactory to the Purchaser and its
counsel. Such opinion shall be limited to matters of New York Law, Delaware Law
and federal law.
(b) The Purchaser shall have received an opinion of Xxxxx, Xxxxxxxxx &
Xxxxxx, P.C., patent and trademark counsel to Seller, in form and substance
reasonably satisfactory to the Purchaser and its counsel.
Section 9.5. Consents of Third Parties.
All necessary consents, waivers or approvals of third parties required for
the lawful consummation of the transactions contemplated by this Agreement as
set forth on Schedule 6.8(b) shall have been obtained (and shown by evidence
reasonably satisfactory to the Purchaser) and shall be in full force and effect.
Section 9.6. Certificate of Chief Executive Officer of Seller.
The Seller shall have delivered to Access a certificate of its Chief
Executive Officer, certifying, in such form as Access may reasonably request, as
to the fulfillment of the conditions set forth in Sections 9.1 and 9.5.
Section 9.7. Approval of Governmental Authorities.
No court or governmental authority shall have issued, any order, writ,
injunction or decree prohibiting the Purchaser from consummating the
transactions contemplated hereby or shall have commenced or threatened any
lawsuit concerning such transactions or indicated its opposition to such
transactions.
Section 9.8. Corporate Authority.
Purchaser shall have received all documents it shall have reasonably
requested from Seller relating to the existence and corporate and tax good
standing of Seller and the authority of Seller to enter into and consummate the
transactions contemplated by this Agreement.
Section 9.9. Lock-Up Agreement.
Seller shall have delivered to Access the "Lock-up Agreement."
Section 9.10. Approval of Access Stockholders.
If applicable pursuant to Section 5.5(c), the Access Stockholder Approval
shall have been obtained.
Section 9.11. Form S-4 Effective.
The Form S-4 shall have become effective, and, at the Closing Date, no stop
order suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the SEC.
ARTICLE X
Section 10. Conditions to Obligations of the Seller.
The obligation of the Seller to take the actions required to be taken by
Seller at the Closing is subject to the satisfaction at or prior to the Closing,
of each of the following conditions (any of which may be waived by Seller, in
whole or in part):
Section 10.1. Compliance by Access; Correctness of Representations and
Warranties.
Access shall have complied with and performed in all material respects all
the terms, covenants and conditions of this Agreement to be complied with and
performed (except as would have a material adverse effect on Access), and all of
the representations and warranties made by Access under this Agreement shall be
true and correct in all material respects as of the date of this Agreement
(other than those representations and warranties that expressly relate to an
earlier date).
Section 10.2. Certified Resolutions of Access.
Access shall have delivered to Seller a certificate signed by its Secretary
or Assistant Secretary respectively, under its corporate seal, setting forth the
votes or consents constituting the authorization and approval of the directors
(and, if applicable pursuant to Section 5.5(c), the stockholders) of Access of
this Agreement and the transactions contemplated hereby on the terms set forth
herein.
Section 10.3. Approval by Seller's Counsel.
All actions, proceedings, instruments and documents required to carry out
this Agreement or incidental thereto, and all other related legal matters, shall
have been approved by counsel for the Seller, which approval will not be
unreasonably withheld.
Section 10.4. Opinion of Xxxxxxx & Xxxxxx.
The Seller shall have received an opinion of Xxxxxxx & Xxxxxx, counsel for
Access, dated the Closing Date, in form and substance reasonably satisfactory to
the Seller and its counsel to the effect that: (i) the Purchaser is a
corporation duly organized and existing and in good standing under the laws of
the State of Delaware and has full corporate power and authority to carry on its
business as it is now being conducted and to own or hold under lease the
properties and assets it now owns or holds under lease; (ii) Purchaser is
qualified to do business in Rhode island and New Jersey; (iii) Purchaser has all
requisite corporate power and authority to enter into this Agreement, to
purchase the Purchased Assets from Seller, to assume the Assumed Liabilities, to
deliver the Access Purchase Securities and to carry out any of the transactions
and agreements contemplated hereby; (iv) all corporate and other proceedings
required to be taken on the part of the Purchaser to authorize it to enter into
this Agreement and to perform its obligations hereunder have been duly and
properly taken; (v) this Agreement and the other closing documents have been
duly executed and delivered by the Purchaser and constitute the valid and
binding obligations of the Purchaser enforceable in accordance with their terms;
(vi) the execution, delivery and performance of this Agreement will not violate
any provision of law, any order of any court or other agency of government known
to such counsel, the corporate charter or By-Laws of the Purchaser, or to such
counsel's knowledge, conflict with or result in any breach of the terms of, or
constitute a default under, any indenture, agreement, or other instrument to
which it is a party or by which it or any of its assets are bound other than as
would not have a material adverse effect on Purchaser; (vii) the execution and
delivery of this Agreement and consummation of the transactions contemplated by
the Agreement do not require any authorization, consent, approval, exemption or
other action by or notice to any court, arbitrator, administrative or
governmental body pursuant to any law, statute, ordinance, rule or regulation
applicable to the Purchaser other than as would not have a material adverse
effect on Purchaser; (viii) to such counsel's knowledge, Section 7.7 accurately
sets forth the capitalization of Purchaser; (ix) to the best of such counsel's
knowledge, the information supplied by Access in the Form S-4 (including
documents incorporated by reference therein) on the effective date of the Form
S-4, the date of mailing, and the date of the Access Stockholder Meeting (if
applicable) did not contain any untrue statement of material fact or omit 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; and (x) the Access Purchase Securities delivered to Seller are
duly authorized, fully paid and non-assessable, free and clear of liens, claims
and encumbrances and any transfer restrictions and legends other than the legend
provided in Section 13.1 hereof and the Lock-Up Agreement.
In delivering such opinion and to the extent specified in such opinion and
deemed appropriate by such counsel and counsel to the Seller, such counsel may
rely, as to factual matters, upon certificates of the officers of the Purchaser
and, upon opinions of associate counsel satisfactory to Seller and its counsel.
Such opinion shall be limited to matters of New York Law, Delaware Law and
federal law.
Section 10.5. Certificate of President of Purchaser.
The Purchaser shall have delivered to the Seller a certificate of its
President certifying, in such form as the Seller may reasonably request, as to
the fulfillment of the conditions set forth in Section 10.1 hereof.
Section 10.6. Approval of Governmental Authorities.
No court or governmental authority shall have issued any order, writ,
injunction or decree prohibiting Seller from consummating the transactions
contemplated hereby, or shall have commenced or threatened any lawsuit
concerning such transactions or indicated its opposition to such transactions.
Section 10.7. Corporate Authority.
Seller shall have received all documents it shall have reasonably requested
from Access relating to the existence and corporate and tax good standing of
Access.
Section 10.8. Access Purchase Securities.
Purchaser shall have delivered certificates representing the Access
Purchase Securities to Seller.
Section 10.9. Form S-4 Effective.
The Form S-4 shall have become effective, and on the Closing Date, no stop
order suspending the effectiveness of the Form S-4 shall have been issued and no
proceedings for that purpose shall have been instituted or shall be pending or
contemplated by the SEC.
ARTICLE XI
Section 11. Fees and Expenses.
(a) Purchaser and Seller will pay their respective expenses, including the
expenses of their legal and accounting representatives and management
consultants, in connection with the origin, negotiation, execution and
performance of this Agreement, provided, however, that if the Closing occurs,
Purchaser shall assume and pay at the Closing Seller's reasonable expenses in
connection therewith.
(b) Seller shall pay, or cause to be paid, in same day funds to Access
Seven Hundred Fifty Thousand Dollars ($750,000) (the "Termination Fee") upon
demand if: (i) Access or Seller terminates this Agreement pursuant to Section
12.1(g); or (ii) if Access or Seller terminates this Agreement pursuant to
Section 12.1(c) where there shall have been made public prior to the Seller
Stockholder Meeting a takeover proposal involving Seller. Seller acknowledges
that the agreement contained in this Section 11(b) is an integral part of the
transactions contemplated by this Agreement, and that, without this agreement,
Access would not enter into this Agreement. Accordingly, if Seller fails
promptly to pay the amount due pursuant to this Section 11(b), and in order to
obtain such payment, Access commences a suit that results in a judgment against
Seller for the Termination Fee, Seller shall pay to Access its reasonable costs
and expenses (including reasonable attorneys' fees) in connection with such
suit, together with interest on the amount of the Termination Fee at the prime
rate of Fleet National Bank in effect on the date such payment was required to
be made.
ARTICLE XII
Section 12. Termination and Effect.
Section 12.1 Termination of Agreement. This Agreement may be terminated by
notice given prior to or at the Closing, whether before or after the Seller
Stockholder Approval or the Access Stockholder Approval:
(a) At the election of Seller, if any one or more of the conditions in
Article X to the obligation of the Seller to Closing has not been satisfied
as of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Seller to comply with its
obligations under this Agreement) and Seller has not waived such condition
on or before the Closing Date; or
(b) At the election of Access, if any one or more of the conditions in
Article IX to the obligation of the Purchaser to Closing has not been
satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Access to comply
with its obligations under this Agreement) and Access has not waived such
condition on or before the Closing Date; or
(c) At the election of Seller or Access, if the Seller Stockholders
Meeting shall have concluded without the Seller Stockholder Approval having
been obtained;
(d) At the election of Access, if the Access Stockholder Meeting shall
have concluded without the Access Stockholder Approval having been obtained
(if applicable);
(e) At the election of Seller or Access, if a breach of any provision
of this Agreement has been committed by the other party which has a
material adverse effect and such breach has not been waived;
(f) At the election of Purchaser or Seller, if the Closing shall not
have taken place on or before October 31, 1997 (or such later date as may
be agreed to in writing by Access and Seller), provided that the party
exercising such right of termination shall not then be in default under its
obligations hereunder;
(g) At the election of Seller or Access, if the Board of Directors of
Seller approves or recommends a bona fide takeover proposal to merge with
or into Seller or to acquire, directly or indirectly, all or a substantial
portion of the shares of Seller Common Stock then outstanding or all or
substantially all of the assets of Seller and otherwise on terms that the
Board of Directors of Seller determines in its good faith judgment to be
more favorable to Seller's stockholders than the transactions contemplated
by this Agreement;
(h) By mutual written consent of Access and Seller;
(i) At the election of Access or Seller, if the Board of Directors of
Access shall not have ratified the execution of this Agreement and
authorized the transactions contemplated hereby on or before April 30, 1997
(the "Access Director Approval"); or
(j) At the election of Seller, if Access shall not have delivered to
Seller by April 30, 1997 the agreement or agreements of Stockholders of
Access who hold at least twenty (20%) percent of the common stock of Access
to vote the shares of Access common stock that he, she or it owns in favor
of the consummation of the transactions contemplated hereby.
Section 12.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 12.1, all further
obligations of the parties under this Agreement will terminate, and this
Agreement shall become null and void and of no further effect, except for the
provisions of Sections 4.2, 4.3, 4.4, 11 and 17.5, without any liability on the
part of any party or any of its employees, representatives, agents, directors,
officers or stockholders; provided, however, that if this Agreement is
terminated by a party because of a willful breach of the Agreement by the other
party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination; and, provided, further, that recovery for any damages suffered
shall be limited to actual out of pocket expenses incurred as a result of such
breach; and provided, further, that if this Agreement is terminated due to
failure to obtain the Access Director Approval or the Access Stockholder
Approval (if applicable), Access will amend the Convertible Promissory Note
dated January 29, 1997, issued by Seller so as to extend the "Maturity Date" (as
defined therein) to June 30, 1998. If a condition precedent to any party's
obligation is not satisfied, nothing contained herein shall be deemed to require
such party to terminate this Agreement, rather than to waive such condition and
proceed with the Closing.
ARTICLE XIII
Section 13. Acknowledgments of Seller.
Section 13.1. Restricted Securities. All certificates representing the
Access Purchase Securities shall be stamped with a legend in substantially the
following form:
The holder of this certificate has agreed not to directly or indirectly
issue, offer to sell, sell, grant an option for the sale of, transfer,
assign, hypothecate, pledge, or otherwise dispose of or encumber (either
pursuant to Rule 144 of the regulations under the Securities Act of 1933,
as amended, or otherwise), the securities represented by this
certificate, whether or not beneficially owned or registered in the name
of the holder, without the prior written consent of Access Solutions
International, Inc. ("Company") and Xxxxxx Xxxxxxx & Company, Inc.,
("JSC"), except to the extent set forth in an agreement dated [June
_____, 1997] among PaperClip Software, Inc., the Company and JSC and any
subsequent agreement among the holder of this certificate, the Company
and JSC.
Section 13.2. Access to Information. Seller acknowledges receipt and review
of Access' Prospectus dated October 16, 1996, Form 10-QSB for the quarterly
period ending September 30, 1996 and Form 10-QSB for the quarterly period ending
December 31, 1996. Seller is aware of the financial condition of Access, has had
ample opportunity to investigate and ask questions regarding same, and does not
have any unanswered questions regarding same.
ARTICLE XIV
Section 14. Brokers' Commissions.
The parties hereby agree and warrant to each other that there are no claims
for brokerage commissions, or placement or finders' fees in connection with the
transactions contemplated by this Agreement, other than JSC, the expenses of
which will be paid by Access. Access hereby agrees to indemnify and hold Seller
harmless from the commissions, fees or claims of any person, firm or corporation
employed or retained or claiming to be employed or retained, by Access to bring
about, or to represent it, in the transactions contemplated hereby. Seller
hereby agrees to indemnify and hold Access harmless from the commissions, fees
or claims of any person, firm or corporation employed or retained or claiming to
be employed or retained, by Seller or its agents to bring about, or to represent
it, in the transactions contemplated hereby.
ARTICLE XV
Section 15. Access to Facilities, Properties and Records.
From and after the date of this Agreement, each party hereto shall afford
to the officers, attorneys, accountants and other authorized representatives of
the other party hereto free and full access to the facilities, properties, books
and records of business and such party in order that the other party may have
full opportunity to make such investigation as it shall desire to make of the
affairs of such party regarding to the Business, provided that such
investigation shall not unreasonably interfere with the operations of the
business and shall at all times be governed by those certain Confidentiality
Agreements between Seller and Access dated November 7, 1996, ("Confidentiality
Agreements") which agreements shall remain in full force and effect.
ARTICLE XVI
Section 16. Survival of Representations.
Seller and Access agree that the representations and warranties contained
in this Agreement shall terminate upon the Closing, and thereafter shall have no
further force or effect.
ARTICLE XVII
Section 17. Miscellaneous.
Section 17.1. Amendment to Agreement; Waivers; Procedure.
(a) Each party to this Agreement may, by written notice to the other: (i)
extend the time for the performance of any of the obligations or other acts of
the other party, (ii) waive any inaccuracies in the representations of the other
party contained in this Agreement or in any document delivered pursuant to this
Agreement, and (iii) waive any compliance with any of the covenants of the other
party contained in this Agreement and waive performance of any of the
obligations of the other party.
(b) This Agreement may be amended by the parties at any time before or
after the Seller Stockholder Approval or the Access Stockholder Approval (if
applicable); provided, however, that after any such approval, there shall not be
made any amendment that by law requires further approval by the stockholders of
Seller or Access without first obtaining such further approval. Neither this
Agreement nor any provisions hereof may be amended, modified or waived except by
an instrument in writing signed on behalf of Access and Seller.
(c) In order to be effective, a termination of this Agreement pursuant to
Section 12.1, or an amendment, extension or waiver pursuant to this Section
17.1, shall require in the case of Access or Seller, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
Section 17.2. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither Access nor Seller may assign this Agreement in whole or in part
without the prior written consent of the other party, which consent will not be
unreasonably withheld or delayed.
Section 17.3. Entire Agreement.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Seller and
Access dated January 2, 1997, and the letter from Access to Seller dated March
26, 1997). This Agreement and the Schedules referred to herein, along with the
Management Agreement, the Shareholders' Agreements and the Confidentiality
Agreements, contain the entire agreement of the parties hereto with respect to
the purchase of the Purchased Assets and the other transactions contemplated
herein, and any reference herein to this Agreement shall be deemed to include
the Schedules hereto. In the event of any inconsistency between the statements
in the body of this Agreement and those in the Schedules, the statements in the
body of this Agreement will control.
Section 17.4. Headings.
The descriptive headings in the Agreement are inserted for convenience only
and do not constitute a part of this Agreement.
Section 17.5. Confidential Information; Publicity.
Any confidential information obtained by any party hereto from any other
shall not be disclosed or used by any such party should such transactions not be
effected, and each party shall be bound by the terms and provisions of the
Confidentiality Agreements (which shall remain in full force and effect) and
return to the other all documents and written information obtained from such
other party as such other party's counsel may request in writing. Except as in
the reasonable opinion of counsel to a party, may be required by law, the
parties agree that they will not make any public disclosure of the transactions
contemplated by this Agreement, including announcements to employees, without
the prior written approval of the content of such disclosure from each other,
which approval will not be unreasonably withheld.
Section 17.6. Notices.
Any notice, waiver, request, information or other document to be given
hereunder to either of the parties by the other shall be in writing and will be
deemed to have been duly given when: (a) delivered personally (with written
confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by certified mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case as
follows:
If to Access, addressed to:
ACCESS SOLUTIONS INTERNATIONAL, INC.
000 Xxx Xxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President and CEO
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
If to Seller, addressed to:
PAPERCLIP SOFTWARE, INC.
Xxxxx Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to
Xxxxxxx X. Xxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Any party may change the address to which notices are to be sent to it by
giving written notice of such change of address to the other parties in the
manner herein provided for giving notice.
Section 17.7. Bulk Sales Law.
Without admitting that the bulk sales law of any state is applicable to the
transactions contemplated by this Agreement, the parties waive compliance with
the bulk sales law of any state and Seller hereby agrees to indemnify and hold
harmless Purchaser and its respective stockholders, officers, directors,
employees and agents from and against any and all liabilities arising by reason
of such non-compliance in connection with the sale of the Purchased Assets to
Purchaser.
Section 17.8. Counterparts.
This Agreement may be executed in two or more counterparts, and each such
counterpart hereof shall be deemed to be an original instrument, and all such
counterparts together shall be deemed to constitute but one agreement.
Section 17.9. No Benefit to Others.
The representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto and their successors
and permitted assigns, and they shall not be construed as conferring any rights
on any other persons.
Section 17.10. Governing Law.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York (without regard to the conflicts of law principles
thereof).
Section 17.11. No Waiver.
Unless otherwise expressly stated, the rights and remedies of the parties
to this Agreement are cumulative and not alternative. Neither the failure nor
any delay by any party in exercising any right, power or privilege under this
Agreement or the documents referred to in this Agreement will operate as a
waiver of such right, power or privilege, and no single or partial exercise of
any such right, power or privilege will preclude any other or further exercise
of such right, power or privilege or the exercise of any other right, power or
privilege.
Section 17.12. Severability.
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in force and effect to the
extent not held invalid or unenforceable.
Section 17.13. Time of Essence.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
PAPERCLIP SOFTWARE, INC.
By:________________________________
Xxxxxxx Xxxxx, Chief Executive Officer
ACCESS SOLUTIONS INTERNATIONAL, INC.
By:_______________________________
Xxxxxx X. Xxxxx, President and CEO
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule 1.1 Purchased Deposits
Schedule 1.3 Purchased Fixed Assets
Schedule 1.6 Purchased Prepaid Items
Schedule 1.8 Purchased Intellectual Property
Schedule 6.1 Where Seller is Qualified as a Foreign
Corporation
Schedule 6.5 Seller 1996 Financial Statements
Schedule 6.6 Exceptions to Inventory
Schedule 6.8(a) Contracts
Schedule 6.8(b) Required Consents
Schedule 6.9 Real Property; Liens
Schedule 6.10 Permits and Licenses
Schedule 6.13 Certain Developments Since
December 31, 1996
Schedule 6.14 Certain Material Changes Since
December 31, 1996
Schedule 6.15 Litigation
Schedule 6.18 Employee Benefit Plans
Schedule 6.20 Insurance
Schedule 7.4 Certain Developments Since
December 31, 1996
Schedule 7.7 Changes to Access Capitalization
Exhibits
Exhibit A Forms of Lock-Up Agreement
