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EXHIBIT 10.13
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF JUNE 28, 1996
BY AND AMONG
ABR INFORMATION SERVICES, INC.
("ABR"),
XX XXXXX COMPANY
("XX XXXXX"), AND
XX XXXXX'X SHAREHOLDERS
(THE "SHAREHOLDERS").
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TABLE OF CONTENTS
1. TRANSFER AND ISSUANCE OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Issuance of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2. SECURITIES ACT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Restrictions on Disposition of ABR Shares . . . . . . . . . . . . . . . . . . 2
2.2. Evidence of Compliance with Private Offering Exemption . . . . . . . . . . . . 2
2.3. Notice of Limitation Upon Disposition . . . . . . . . . . . . . . . . . . . . 3
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF
XX XXXXX AND THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2. The Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6. Accounts Receivable and COBRA Payables . . . . . . . . . . . . . . . . . . . . 7
3.7. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . 8
3.9. No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.10. Compliance With Laws and Orders . . . . . . . . . . . . . . . . . . . . . . . 9
3.11. Title to and Condition of Properties . . . . . . . . . . . . . . . . . . . . . 10
3.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.13. Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.14. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.15. Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16. Employment Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.17. Trade Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.18. Major Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.19. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.20. Shareholder Affiliates' Relationships to XX Xxxxx . . . . . . . . . . . . . . 18
3.21. No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.22. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4. REPRESENTATIONS AND WARRANTIES OF ABR . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.3. No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.4. Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6. Investment Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.7. Approvals and Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
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5. POST-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.1. Noncompetition; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 20
5.2. Income Tax Returns and Allocation of Tax . . . . . . . . . . . . . . . . . . . 21
5.3. Restriction on Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.4. Rule 144 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.1. By the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.2. By ABR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.3. Indemnification of Third-Party Claims . . . . . . . . . . . . . . . . . . . . 23
6.4. Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.5. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.6. Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . 24
6.7. Indemnification - Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . 25
7. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.1. Documents Delivered by XX Xxxxx and the Shareholders . . . . . . . . . . . . . 25
7.2. Documents Delivered by ABR . . . . . . . . . . . . . . . . . . . . . . . . . . 26
8. RESOLUTION OF DISPUTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.1. Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.2. Arbitrators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.3. Procedures; No Appeal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.4. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.5. Entry of Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
8.6. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.7. Continued Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
8.8. Tolling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.1. Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.2. Further Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
9.3. Disclosures and Announcements . . . . . . . . . . . . . . . . . . . . . . . . 28
9.4. Assignment; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . 28
9.5. Law Governing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.6. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.7. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
9.9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.10. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.11. Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
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DISCLOSURE SCHEDULES
--------------------
Schedule 3.1.(c) - Foreign Corporation Qualification
Schedule 3.1.(e) - Director/Officer List
Schedule 3.1.(f) - Capitalization
Schedule 3.3 - Violation, Conflict, Default
Schedule 3.5.(a) - Provision for Taxes
Schedule 3.5.(b) - Tax Returns (Exceptions to Representations)
Schedule 3.5.(c) - Tax Audits
Schedule 3.6 - Accounts Receivable (Aged Schedule)
Schedule 3.7 - Certain Changes
Schedule 3.8 - Off-Balance Sheet Liabilities
Schedule 3.9 - Litigation Matters
Schedule 3.10.(a) - Non-Compliance with Laws
Schedule 3.10.(b) - Licenses and Permits
Schedule 3.10.(c) - Environmental Matters (Exceptions to Representations)
Schedule 3.11.(a) - Liens
Schedule 3.11.(c) - Real Property Occupied
Schedule 3.12 - Insurance
Schedule 3.13.(b) - Personal Property Leases
Schedule 3.13.(e) - Powers of Attorney
Schedule 3.13.(f) - Collective Bargaining Agreements
Schedule 3.13.(g) - Loan Agreements, etc.
Schedule 3.13.(h) - Guarantees
Schedule 3.13.(k) - Material Contracts
Schedule 3.14 - Labor Matters
Schedule 3.15.(a) - Employee Plans/Agreements
Schedule 3.17 - Trade Rights
Schedule 3.18 - Major Customers
Schedule 3.19 - Bank Accounts
Schedule 3.20 - Shareholder Affiliates' - Relationships to XX Xxxxx
Schedule 7.1.(g) - Closing Date Balance Sheet
EXHIBITS
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Exhibit A - Employment Agreement
Exhibit B - Registration Rights Agreement
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") dated as
of June 28, 1996, is by and among ABR INFORMATION SERVICES, INC, a Florida
corporation ("ABR"), THE XX XXXXX COMPANY, a Virginia corporation ("XX Xxxxx"),
and the shareholders whose signatures appear on the signature page(s) hereto
(the "Shareholders").
RECITALS
1. XX Xxxxx is engaged in the business of providing
employee benefits administration services, including, without limitation,
administration, record-keeping and compliance of flexible spending accounts,
qualified plans, payroll processing and other employee benefit programs and
compliance with COBRA health benefits (the "Business").
2. The Shareholders other than Xxxx Xxxxxx have been
granted rights to acquire capital stock of XX Xxxxx upon the sale of XX Xxxxx,
which capital stock shall be issued to such Shareholders in connection with and
immediately prior to the transaction contemplated hereby and shall be deemed to
be issued and outstanding for the purposes of this Agreement.
3. The Shareholders own all of the issued and
outstanding shares of capital stock of XX Xxxxx (the "Shares").
4. ABR desires to acquire all of the Shares from the
Shareholders solely in exchange for shares of voting common stock, $.01 par
value per share, of ABR (the "Common Stock"), upon the terms and conditions
herein set forth.
5. For federal income tax purposes, it is intended that
the transaction contemplated hereby will constitute a reorganization within the
meaning of Section 368(a)(1)(B) (a "B Reorganization") of the Internal Revenue
Code of 1986, as amended (the "Code").
6. For financial accounting purposes, it is intended
that the transaction contemplated hereby be accounted for as a "pooling."
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows:
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1. TRANSFER AND ISSUANCE OF SHARES
1.1. Transfer of Shares. Subject to the terms and conditions of
this Agreement, at the Closing (as defined in Section 7), the Shareholders
shall transfer to ABR all of the Shareholders' right, title and interest in and
to all of the Shares.
1.2. Issuance of Shares. At the Closing and in exchange for the
Shares, ABR shall issue and deliver to the Shareholders a number of validly
issued, fully paid and nonassessable shares of Common Stock which, when
multiplied by the average closing per share sales price of the Common Stock on
The Nasdaq Stock Market for the thirty (30) trading days prior to the day
before the Closing Date (as defined herein) (the "Issue Price"), results in an
aggregate value of $8.0 million (the "ABR Shares"). In the event that the
issued and outstanding shares of Common Stock shall have been changed into a
different number of shares as a result of a stock split, reverse stock split,
stock dividend, recapitalization, reclassification, reorganization, merger or
other similar transaction with a record date within the 30 trading day period
described above, the average closing per share sales price to calculate the
Issue Price shall be adjusted accordingly in order for the ABR Shares, if
delivered after such record date, to be adjusted accordingly. Any fractional
shares resulting from such computation shall be eliminated by rounding upward
to the nearest whole share.
2. SECURITIES ACT PROVISIONS
2.1. Restrictions on Disposition of ABR Shares. Each of the
Shareholders covenants and warrants that the ABR Shares to be received pursuant
to this Agreement are acquired for each of their own account and not with the
present view towards the distribution thereof and he or she will not dispose of
the ABR Shares except (i) pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Act"), or (ii) in any other
transaction which, in the reasonable opinion of counsel acceptable to ABR, is
exempt from registration under the Act or the rules and regulations of the
Securities and Exchange Commission thereunder, including, without limitation,
Rule 144 under the Act. In order to effectuate the covenants of this
subsection 2.1, an appropriate endorsement will be placed on the certificate
evidencing the ABR Shares at the time of distribution of such shares by ABR
pursuant to this Agreement, and stop transfer instructions shall be placed with
the transfer agent for the securities. A substitute certificate shall be
promptly delivered to the Shareholders removing such endorsement from those ABR
Shares which have been registered pursuant to an effective registration
statement under the Act and ABR shall remove any stop transfer instructions
with the transfer agent regarding such ABR Shares.
2.2. Evidence of Compliance with Private Offering Exemption. Each
of the Shareholders represents to ABR that he or she or his or her
representative has the financial sophistication to assess the merits and risks
of the transaction contemplated hereby and agrees to supply ABR with such items
as counsel for ABR may require in order to evidence the private offering
character of the distribution of the ABR Shares made pursuant to this
Agreement.
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2.3. Notice of Limitation Upon Disposition. The Shareholders are
aware that the ABR Shares distributed to them will not have been registered
pursuant to the Securities Act of 1933, as amended; therefore, under current
interpretations and applicable rules, except as provided in the Registration
Rights Agreement (as defined in Section 7.2(e) hereof), the Shareholders will
be required to retain such shares for a period of at least two (2) years
following the Closing Date and, at the expiration of such two (2) year period,
sales of the ABR Shares may be confined to brokerage transactions of limited
amounts requiring certain notification filings with the Securities and Exchange
Commission and such disposition may be available only if ABR is current in its
filings with the Securities and Exchange Commission under the Act, and the
other limitations imposed by the rules of the Securities and Exchange
Commission on the disposition of the ABR Shares.
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF XX XXXXX AND THE
SHAREHOLDERS
XX Xxxxx and the Shareholders make the following representations and
warranties to ABR with respect or related to, or concerning, XX Xxxxx, each of
which is true and correct on the date hereof, is or shall be unaffected by any
investigation heretofore or hereafter made by ABR, or any of ABR's agents or
representatives, or any knowledge of ABR, its agents or representatives other
than as specifically disclosed in the Disclosure Schedules delivered to ABR at
the time of the execution of this Agreement, and shall survive the Closing of
the transactions provided for herein. The representations and warranties of XX
Xxxxx and the Shareholders hereunder shall be joint and several except for the
representations in Section 3.2. with respect solely to each of the
Shareholders, and any representations to the "knowledge" of XX Xxxxx or the
Shareholders, which shall be deemed made separately by XX Xxxxx or the
Shareholders, as the case may be. For purposes of this Agreement including
without limitation Section 4, each of XX Xxxxx, the Shareholders and ABR shall
be deemed to have knowledge of the subject matter of any representation or
warranty if the Shareholders has actual knowledge thereof.
3.1. Corporate.
3.1.(a) Organization. XX Xxxxx is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Virginia.
3.1.(b) Corporate Power; Validity. XX Xxxxx has all
requisite corporate power and authority to own, operate and lease its
properties and to carry on the Business as and where such is now being
conducted. XX Xxxxx has full power, legal right and authority to
enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby and
delivered on the date hereof (such other documents are sometimes
referred to herein as "Ancillary Instruments"), and to carry out the
transactions contemplated hereby and thereby. This Agreement and each
Ancillary Instrument that provides for its execution by XX Xxxxx has
been duly and validly executed and delivered by XX Xxxxx.
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3.1.(c) Qualification. XX Xxxxx is duly licensed or
qualified to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of the properties
owned or leased by it, or the nature of the Business, makes such
licensing or qualification necessary except where failure to be so
qualified or licensed would not have a material adverse effect on the
financial condition or results of operations of XX Xxxxx. The states
in which XX Xxxxx is licensed or qualified to do business are listed
in Schedule 3.1.(c).
3.1.(d) No Subsidiaries. XX Xxxxx does not own, directly or
indirectly, any capital stock or other equity securities of any
corporation or maintain any direct or indirect equity or other
ownership interest in any entity or business.
3.1.(e) Corporate Documents, etc. The copies of the articles
or certificate of incorporation and bylaws of XX Xxxxx, as amended or
restated (hereinafter, "Certificate of Incorporation" and "Bylaws,"
respectively), which have been delivered to ABR are true, correct and
complete copies of such instruments as presently in effect. The
corporate minute books and stock record books of XX Xxxxx which have
been furnished to ABR for inspection are true, correct and complete
and accurately reflect all meetings held of, and corporate action
taken by, the shareholders and Board of Directors of XX Xxxxx. The
duly elected and qualified directors and officers of XX Xxxxx are
listed in Schedule 3.1.(e).
3.1.(f) Capitalization. The authorized capital stock of XX
Xxxxx consists entirely of 5,000 shares of Common Stock. No shares of
such capital stock are issued or outstanding except for 1,851.85
shares of voting Common Stock which are owned of record and
beneficially by the Shareholders as set forth on Schedule 3.1.(f).
All such shares of capital stock of XX Xxxxx are validly issued, fully
paid and nonassessable. There are no (a) securities convertible into
or exchangeable for any of XX Xxxxx'x capital stock or other
securities, (b) options, warrants or other rights to purchase or
subscribe to capital stock or other securities of XX Xxxxx or
securities which are convertible into or exchangeable for capital
stock or other securities of XX Xxxxx, or (c) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the
issuance, sale or transfer of any capital stock or other equity
securities of XX Xxxxx, any such convertible or exchangeable
securities or any such options, warrants or other rights.
3.2. The Shareholders.
3.2.(a) Power. Each of the Shareholders has full power,
legal right and authority to enter into, execute and deliver this
Agreement and the Ancillary Instruments to which the Shareholders are
a party and to carry out the transactions contemplated hereby and
thereby.
3.2.(b) Validity. This Agreement and each Ancillary
Instrument that provides for its execution by the Shareholders have
been duly and validly executed and
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delivered by the Shareholders and is the legal, valid and binding
obligation of the Shareholders, enforceable in accordance with their
terms, subject to the limitations contained herein, and except as such
may be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles.
3.2.(c) Title. The Shareholders are transferring good and
valid title to the Shares to be transferred by the Shareholders
hereunder, free and clear of all Liens (as defined in Section 3.12),
including, without limitation, voting trusts or agreements, proxies,
marital or community property interests.
3.3. No Violation. Except as set forth on Schedule 3.3, neither
the execution and delivery of this Agreement or the Ancillary Instruments nor
the consummation by XX Xxxxx and the Shareholders of the transactions
contemplated hereby and thereby (a) violates in any material respect any
currently existing statute, law, ordinance, rule or regulation (collectively,
"Laws") or any currently existing order, writ, injunction, judgment, plan or
decree (collectively, "Orders") of any court, arbitrator, department,
commission, board, bureau, agency, authority, instrumentality or other body,
whether federal, state, municipal, foreign or other (collectively, "Government
Entities"), (b) requires any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law assuming, for this
purpose, that ABR will cause XX Xxxxx after the Closing not to take any action
that would result in a violation of such law), or (c) subject to obtaining the
consents referred to in Schedule 3.3, violates or conflicts with, or
constitutes a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or results in the termination of, or
accelerates the performance required by, or results in the creation of any Lien
upon any of the assets of XX Xxxxx (or the Shares) under, any term or provision
of the Certificate of Incorporation or Bylaws of XX Xxxxx, or of any material
contract, commitment, understanding, arrangement, agreement or restriction of
any kind or character to which XX Xxxxx or the Shareholders is a party or by
which XX Xxxxx or the Shareholders or any of its, his or her assets or
properties may be bound or affected.
3.4. Financial Statements. True and complete copies have been
delivered to ABR of the financial statements of XX Xxxxx consisting of the
balance sheets of XX Xxxxx as of December 31, 1995, 1994, 1993, 1992 and 1991,
(the December 31, 1995 balance sheet is referred to herein as the "Recent
Balance Sheet"), and the related statement of income for each of the years then
ended (including the notes contained therein or annexed thereto), all of which
financial statements have been audited by independent accountants for XX Xxxxx
for such years and periods. All of such XX Xxxxx financial statements
(including all notes and schedules contained therein or annexed thereto) and
the Closing Balance Sheet (as required pursuant to Section 7.1.(g) hereof),
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, have been prepared in accordance with the books
and records of XX Xxxxx, and fairly present, in accordance with generally
accepted accounting principles, the financial position, the results of
operations and cash flows of XX Xxxxx as of the dates and for the years and
periods indicated. True and correct copies have been delivered to ABR of all
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written reports submitted to XX Xxxxx or the Shareholders by XX Xxxxx'x
accountants related to the books and records of XX Xxxxx.
3.5. Tax Matters.
3.5.(a) Provision For Taxes. Except as set forth on Schedule
3.5.(a), the provision made for taxes on the Closing Balance Sheet is
sufficient for the payment of all federal, state, foreign, county,
local and other income, ad valorem, excise, profits, franchise,
occupation, property, payroll, sales, use, gross receipts and other
taxes (and any interest and penalties) and assessments ("Taxes"),
whether or not disputed, that were unpaid and owed by XX Xxxxx as of
the date of the Closing Balance Sheet. Since the date of the Recent
Balance Sheet and excluding the effect of the transactions
contemplated herein, XX Xxxxx has not incurred any taxes other than
taxes incurred in the ordinary course of business consistent in type
and amount with past practices.
3.5.(b) Tax Returns Filed. Except as set forth on Schedule
3.5.(b), all federal, state, foreign, county, local and other tax
returns required to be filed by or on behalf of XX Xxxxx have been
timely filed and when filed were true and correct, and the taxes shown
as due thereon were paid or adequately accrued. True and complete
copies of all tax returns or reports filed by XX Xxxxx for each of its
three (3) most recent tax years have been delivered to ABR. XX Xxxxx
has duly withheld and paid all Taxes which it was required to withhold
and pay in connection with amounts heretofore paid to any employee,
independent contractor, creditor or shareholder of XX Xxxxx.
3.5.(c) No Tax Audits. Except as set forth on Schedule
3.5.(c), the federal and state income tax returns of XX Xxxxx have not
been audited by the Internal Revenue Service or any state taxing
authorities, and neither XX Xxxxx nor the Shareholders has received
from the Internal Revenue Service or from the income tax authorities
of any state, county, local or other jurisdiction any notice of
underpayment of income taxes by XX Xxxxx or other deficiency with
respect to XX Xxxxx'x taxes which has not been paid nor any objection
to any return or report filed by XX Xxxxx. There are no outstanding
agreements or waivers extending the statutory period of limitations
applicable to any tax return or report.
3.5.(d) No Consolidated Group. XX Xxxxx has never been a
member of an affiliated group of corporations that filed a
consolidated tax return.
3.5.(e) Other. XX Xxxxx has not (i) filed any consent or
agreement under Section 341(f) of the Internal Revenue Code of 1986,
as amended (the "Code"), (ii) applied for any tax ruling, (iii)
entered into a closing agreement with any taxing authority, (iv) filed
an election under Section 338(g) or Section 338(h)(10) of the Code
(nor has a deemed election under Section 338(e) of the Code occurred),
or (v) been a party to any tax allocation or tax sharing agreement.
XX Xxxxx is not a "United States real property holding company" within
the meaning of Section 897 of the Code.
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3.6. Accounts Receivable and COBRA Payables. All accounts
receivable of XX Xxxxx reflected on the Recent Balance Sheet and as incurred in
the normal course of business since the date thereof, represent arm's length
sales actually made in the ordinary course of business. To the best knowledge
of the Shareholders, no portion of the accounts receivable is or will be (i)
subject to counterclaim or set-off, or (ii) otherwise in dispute, in an
aggregate amount which exceeds $10,000. To the best knowledge of the
Shareholders, all of the accounts receivable are and as of the Closing Date
will be good and collectible in full within 120 days following the Closing
Date. Schedule 3.6 contains an aged schedule of accounts receivable included
in the Closing Balance Sheet. The cash and cash equivalents held by XX Xxxxx
related to insurance premiums collected on behalf of customers as of the
Closing Date are equal to or greater than any insurance premiums payable
relating to providing COBRA compliance services (the "COBRA Business").
3.7. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 3.7, or as reflected in the Recent Balance Sheet and
excluding the transactions contemplated herein, since December 31, 1995 there
has not been:
3.7.(a) No Adverse Change. Any material adverse change in
the financial condition, assets, liabilities, business or operations
of XX Xxxxx;
3.7.(b) No Damage. Any material loss, damage or destruction,
whether covered by insurance or not, affecting the Business or the
properties of XX Xxxxx;
3.7.(c) No Increase in Compensation. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of XX Xxxxx (including, without limitation, any
increase or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other
employee benefit granted, made or accrued, other than in the ordinary
course of business;
3.7.(d) No Labor Disputes. Any labor disputes, union
organization attempts or any work stoppage due to labor disagreements
, other than routine individual grievances which are not material to
the Business, financial condition or the results of operations of XX
Xxxxx;
3.7.(e) No Commitments. Any loan commitment or related
financial transaction by XX Xxxxx (including, without limitation, any
borrowing or capital expenditure) other than in the ordinary course of
business consistent with past practice;
3.7.(f) No Dividends. Any declaration, setting aside, or
payment of any dividend or any other distribution in respect of the
capital stock of XX Xxxxx; any redemption, purchase or other
acquisition by XX Xxxxx of any shares of its capital stock, or any
security relating thereto; or any other payment to any shareholder of
XX Xxxxx as such a shareholder;
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3.7.(g) No Disposition of Property. Any sale, lease or other
transfer or disposition of any properties or assets of XX Xxxxx;
3.7.(h) No Indebtedness. Any indebtedness for borrowed money
incurred, assumed or guaranteed by XX Xxxxx;
3.7.(i) No Liens. Any mortgage, pledge, lien or
encumbrance made on any of the properties or assets of XX Xxxxx;
3.7.(j) No Amendment of Contracts. Any amendment or
termination of any contract or agreement of XX Xxxxx, or any waiver of
material rights thereunder, other than in the ordinary course of
business, which would have a material adverse effect on the Business,
financial condition or results of operations of XX Xxxxx;
3.7.(k) Loans and Advances. Any loan or advance (other than
advances to employees in the ordinary course of business for travel
and entertainment in accordance with past practice) from XX Xxxxx to
any person including, but not limited to, any Shareholder Affiliate
(as defined in Section 3.13(d)); or
3.7.(l) Credit. Any grant of credit from XX Xxxxx to
any customer on terms or in amounts more favorable than those which
have been extended to such customer in the past, any other change in
the terms of any credit heretofore extended, or any other change of
policies or practices with respect to the granting of credit.
3.8. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet or in Schedule 3.8,
XX Xxxxx has no liabilities (secured or unsecured, and whether accrued,
absolute, contingent, direct, indirect or otherwise, and whether known or
unknown), other than liabilities incurred since the date of the Recent Balance
Sheet in the ordinary course of business and consistent with past practice and
liabilities which will not have an adverse effect on the Business, financial
condition or results of operations of XX Xxxxx.
3.9. No Litigation. Except as set forth in Schedule 3.9, there is
no action, suit, arbitration, proceeding, investigation or inquiry, whether
civil, criminal or administrative ("Litigation"), pending or, to the best
knowledge of the Shareholders, threatened, against XX Xxxxx, its officers and
directors (in such capacity), the Business or any of its assets. Except as set
forth in Schedule 3.9, neither XX Xxxxx, the Business or its assets is subject
to any Order of any Government Entity.
3.10. Compliance With Laws and Orders.
3.10.(a) Compliance. Except as set forth in Schedule
3.10.(a), XX Xxxxx has not received notice that it (including its
operations, practices, properties and assets) is not in compliance
with all applicable material Laws and Orders of all Government
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Entities, including, without limitation, those applicable to
discrimination in employment, occupational safety and health, trade
practices, competition and pricing, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and
the Environmental Laws (as hereinafter defined). All reports and
returns required to be filed by XX Xxxxx with any Government Entity
have been filed, and were accurate and complete when filed. Without
limiting the generality of the foregoing:
(i) XX Xxxxx has made all required payments
pursuant to the required percentage to its unemployment
compensation reserve accounts with the appropriate
governmental departments of the states where it is required to
maintain such accounts; and
(ii) XX Xxxxx has not received any report for the
past five (5) years required under the federal Occupational
Safety and Health Act of 1970, as amended, and under all other
applicable health and safety laws and regulations.
3.10.(b) Licenses and Permits. XX Xxxxx has all
material licenses, permits, approvals, authorizations and consents of
all Government Entities and all certifications required for the
conduct of the Business (as presently conducted) and operation of any
of the facilities at which the Business is conducted. All such
licenses, permits, approvals, authorizations and consents are
described in Schedule 3.10.(b), are in full force and effect and will
not be affected or made subject to loss, limitation or any obligation
to reapply as a result of the transactions contemplated hereby.
Except as set forth in Schedule 3.10.(b), to the best knowledge of the
Shareholders, XX Xxxxx (including its operations, practices,
properties and assets) is and has been in compliance with all such
permits and licenses, approvals, authorizations and consents.
3.10.(c) Environmental Matters. The applicable Laws
relating to pollution or protection of the environment, including Laws
relating to emissions, discharges, generation, storage, releases or
threatened releases of pollutants, contaminants, chemicals or
industrial, toxic, hazardous or petroleum or petroleum-based
substances or wastes ("Waste") into the environment (including,
without limitation, ambient air, surface water, ground water, land
surface or subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Waste including, without
limitation, the Clean Water Act, the Clean Air Act, the Resource
Conservation and Recovery Act, the Toxic Substances Control Act and
the Comprehensive Environmental Response Compensation Liability Act
("CERCLA"), as amended, and their state and local counterparts are
herein collectively referred to as the "Environmental Laws." Without
limiting the generality of the foregoing provisions of this Section
3.10, to the best knowledge of the Shareholders, XX Xxxxx is in full
compliance with all material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and
timetables contained in the Environmental Laws or contained in any
regulations, code, plan, order, decree, judgment, injunction, notice
or demand letter issued, entered, promulgated or approved thereunder.
Except as set
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forth in Schedule 3.10.(c), there is no Litigation nor any demand,
claim, hearing or notice of violation pending or threatened against XX
Xxxxx relating in any way to the Environmental Laws or any Order
issued, entered, promulgated or approved thereunder. Except as set
forth in Schedule 3.10.(c), to the best knowledge of the Shareholders,
there are no past or present events, conditions, circumstances,
activities, practices, incidents, actions, omissions or plans which
will interfere with or prevent compliance or continued compliance with
the Environmental Laws or with any Order issued, entered, promulgated
or approved thereunder, or which will give rise to any liability,
including, without limitation, liability under CERCLA or similar state
or local Laws, or otherwise form the basis of any Litigation, hearing,
notice of violation, study or investigation, based on or related to
the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Waste.
3.10.(d) COBRA Compliance. With respect to the
conduct of the COBRA Business, XX Xxxxx has not received notice of,
nor has XX Xxxxx (through its acts or omissions) created circumstances
which would give of any law related to the continuation of health care
coverage, including, without limitation, the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended ("COBRA").
3.11. Title to and Condition of Properties.
3.11.(a) Title. XX Xxxxx has good and valid title to
all of its assets and properties that it purports to own, including,
without limitation, all such properties (tangible and intangible)
reflected in the Recent Balance Sheet (except for assets held under
capitalized leases and property sold since the date of the Recent
Balance Sheet in the ordinary course of business), free and clear of
all mortgages, liens, (statutory or otherwise) security interests,
claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens"), except
those Liens that are described in Schedule 3.11(a). Except as
described in Schedule 3.11(a), XX Xxxxx'x assets or properties are not
subject to any restrictions with respect to the transferability
thereof.
3.11.(b) Condition. All tangible personal property
and assets owned or utilized by XX Xxxxx are in good operating
condition, and have been maintained consistent with the standards
generally followed in the industry.
3.11.(c) Real Property. XX Xxxxx does not own any
real property. Schedule 3.11.(c) sets forth all real property used or
occupied by XX Xxxxx (the "Real Property"), true and correct copies of
leases for the Real Property have heretofore been delivered to ABR.
There are no oral terms or past practice inconsistent with the written
terms thereof. All such leases are valid and binding agreements,
enforceable in accordance
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with their respective terms, and are in full force and effect. XX
Xxxxx has performed all obligations required to be performed by it to
date under each such lease and is not in breach or default in any
respect thereunder, and there has been no event which, with the giving
of notice or the lapse of time or both, would become a breach or
default thereunder. To the best knowledge of XX Xxxxx and the
Shareholders, no lessor or landlord to any of such leases is in breach
or default thereunder. There are now in full force and effect duly
issued certificates of occupancy permitting the Real Property and
improvements located thereon to be legally used and occupied by XX
Xxxxx as the same are now constituted.
3.12. Insurance. Set forth in Schedule 3.12 is a complete and
accurate list and description of all policies of fire, liability, professional
liability, general liability, business interruption, workers compensation,
health and other forms of insurance presently in effect with respect to the
Business and the properties of XX Xxxxx, true and correct copies of which have
heretofore been delivered to ABR. Schedule 3.12 includes, without limitation,
the carrier, the description of coverage, the limits of coverage, retention or
deductible amounts, amount of annual premiums, date of expiration and the date
through which premiums have been paid with respect to each such policy, and any
pending claims in excess of $5,000, whether or not covered by insurance.
Schedule 3.12 indicates each policy as to which (a) the coverage limit has been
reached or (b) the total incurred losses to date equal 75% or more of the
coverage limit. No notice of cancellation or termination has been received
with respect to any such policy. Each policy is in full force and effect and
all premiums with respect thereto covering all periods up to and including the
date hereof have been paid. XX Xxxxx has not been refused any insurance with
respect to any aspect of the operations of the Business nor has its coverage
been limited by any insurance carrier to which it has applied for insurance or
with which it has carried insurance during the last three (3) years. XX Xxxxx
has not received any written notice from or on behalf of any insurance carrier
issuing any such policy that insurance rates therefor will hereafter be
substantially increased (except to the extent that insurance rates may be
increased for all similarly situated risks) or that there will hereafter be a
cancellation or an increase in a deductible (or an increase in premiums in
order to maintain an existing deductible) or nonrenewal of any such policy.
Such policies are sufficient in all material respects for compliance by XX
Xxxxx with all requirements of all contracts to which XX Xxxxx is a party.
None of such policies will in any way be affected by, or terminate or lapse by
reason of, the transactions contemplated hereby, unless terminated by ABR
subsequent hereto.
3.13. Contracts and Commitments.
3.13.(a) Real Property Leases. Except as set forth in
Schedule 3.13.(a), XX Xxxxx has no leases of real property.
3.13.(b) Personal Property Leases. Except as set
forth in Schedule 3.13.(b), XX Xxxxx has no leases of personal
property involving consideration or other expenditure in excess of
$5,000.
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3.13.(c) Sales Commitments. True and complete copies
of all contracts or commitments with respect to those customers set
forth on Schedule 3.18 have been delivered by XX Xxxxx to ABR. XX
Xxxxx has no sales contracts or commitments except those made in the
ordinary course of business, at arm's length.
3.13.(d) Contracts With Affiliates and Certain Others.
Except as set forth in Schedule 3.13.(d) and except for this Agreement
and the Ancillary Instruments, XX Xxxxx has no agreement,
understanding, contract or commitment (written or oral) with any
Shareholder Affiliate (as defined herein) or any employee, agent,
consultant, dealer or franchisee that is not cancelable by XX Xxxxx,
on notice of not longer than 30 days without liability, penalty or
premium of any nature or kind whatsoever. For purposes of this
Agreement, "Shareholder Affiliate" shall mean and include the
Shareholders, the Shareholders' spouse, any person who would be the
heir or descendant of any such person if he or she were not living,
and any entity in which any of the foregoing has a direct or indirect
interest, except through the ownership of less than 5% of the
outstanding shares of any entity whose securities are listed on a
national securities exchange or traded in the national
over-the-counter market.
3.13.(e) Powers of Attorney. Except as set forth on
Schedule 3.13.(e), XX Xxxxx has not given a power of attorney, which
is currently in effect, to any person, firm or corporation for any
purpose whatsoever.
3.13.(f) Collective Bargaining Agreements. Except as
set forth in Schedule 3.13.(f), XX Xxxxx is not a party to any
collective bargaining agreements with any unions, guilds, shop
committees or other collective bargaining groups.
3.13.(g) Loan Agreements. Except as set forth in
Schedule 3.13.(g), XX Xxxxx is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
as a signatory, guarantor or otherwise. Copies of all such agreements
have heretofore been delivered by XX Xxxxx to ABR.
3.13.(h) Guarantees. Except as set forth in Schedule
3.13.(h) and except for indemnification undertakings set forth in XX
Xxxxx'x agreements with its customers, XX Xxxxx has not guaranteed the
payment or performance of any person, firm or corporation, agreed to
indemnify any person or act as a surety, or otherwise agreed to be
contingently or secondarily liable for the obligations of any person.
3.13.(i) Contracts Subject to Renegotiation. XX Xxxxx
is not a party to any contract with any governmental body which by its
terms allows any governmental body to reduce the rate of fees payable
to XX Xxxxx thereunder.
3.13.(j) Burdensome or Restrictive Agreements. XX
Xxxxx is not a party to nor is it bound by any agreement requiring it
to assign any interest in any trade secret or proprietary information,
or prohibiting or restricting it from competing in any business
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or geographical area or soliciting customers or otherwise restricting
it from carrying on the Business anywhere in the world.
3.13.(k) Other Material Contracts. Except as set
forth in Schedule 3.13.(k), XX Xxxxx is not a party or subject to any
lease, contract or commitment of any nature involving consideration or
other expenditure in excess of $5,000.
3.13.(l) No Default. XX Xxxxx is not in default under
any lease, contract or commitment to which it is a party or is
otherwise bound, nor has any event or omission occurred which through
the passage of time or the giving of notice, or both, would constitute
a default thereunder or cause the acceleration of any of XX Xxxxx'x
obligations or result in the creation of any Lien on any of the assets
owned, used or occupied by XX Xxxxx.
3.14. Labor Matters. Except as set forth in Schedule 3.14, within
the last five (5) years XX Xxxxx has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with the Business. Except to the extent set forth in Schedule 3.14,
to the knowledge of the Shareholders, (a) XX Xxxxx is in compliance with all
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice charge or complaint
actually pending or threatened against XX Xxxxx; (c) there is no labor strike,
dispute, request for representation, slowdown or stoppage actually pending or
threatened against or affecting XX Xxxxx nor any secondary boycott with respect
to products of XX Xxxxx; (d) no question concerning representation has been
raised or is threatened respecting the employees of XX Xxxxx; (e) no grievance
which might have a material adverse effect on XX Xxxxx, nor any arbitration
proceeding arising out of or under collective bargaining agreements, is pending
and no such claim therefor exists; and (f) there are no administrative charges
or court complaints against XX Xxxxx concerning alleged employment
discrimination or other employment related matters pending or threatened before
the U.S. Equal Employment Opportunity Commission or any Government Entity.
3.15. Employee Benefit Plans.
3.15.(a) Disclosure. Schedule 3.15.(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive bonus
or other bonus, medical, dental, life, accident insurance, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
collective bargaining agreements, severance agreements or plans,
vacation and sick leave plans, programs, arrangements and policies,
including, without limitation, all "employee benefit plans" (as
defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")), all employee manuals, and all written
statements of policies, practices or understandings relating to
employment, which are provided to, for the benefit of, or relate to,
any
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persons employed by XX Xxxxx. The items described in the foregoing
sentence are hereinafter sometimes referred to collectively as
"Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided by XX Xxxxx to ABR. Each of the Employee
Plans/Agreements is identified on Schedule 3.15.(a), to the extent
applicable, as one or more of the following: an "employee pension
benefit plan" (as defined in Section 3(2) of ERISA), a "defined
benefit plan" (as defined in Section 414 of the Code), an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and/or as
a plan intended to be qualified under Section 401 of the Code. No
Employee Plan/Agreement is a "multiemployer plan" (as defined in
Section 4001 of ERISA), and XX Xxxxx has never contributed nor been
obligated to contribute to any such multiemployer plan.
3.15.(b) Terminations, Proceedings, Penalties, etc.
With respect to each Employee Plan/Agreement that is subject to the
provisions of Title IV of ERISA and with respect to which XX Xxxxx, or
any of its assets may, directly or indirectly, be subject to any
Liability, contingent or otherwise, or the imposition of any Lien
(whether by reason of the complete or partial termination of any such
plan, the funded status of any such plan, any "complete withdrawal"
(as defined in Section 4203 of ERISA) or "partial withdrawal" (as
defined in Section 4205 of ERISA) by any person from any such plan, or
otherwise):
(i) no such plan has been terminated so as to
subject, directly or indirectly, any assets of XX Xxxxx to any
liability, contingent or otherwise, or the imposition of any
lien under Title IV of ERISA;
(ii) no proceeding has been initiated or
threatened by any person (including the Pension Benefit
Guaranty Corporation ("PBGC")) to terminate any such plan;
(iii) no condition or event currently exists or
currently is expected to occur that could subject, directly or
indirectly, any assets of XX Xxxxx to any liability,
contingent or otherwise, or the imposition of any lien under
Title IV of ERISA, whether to the PBGC or to any other person
or otherwise on account of the termination of any such plan;
(iv) if any such plan were to be terminated as of
the Closing Date, no assets of XX Xxxxx would be subject,
directly or indirectly, to any liability, contingent or
otherwise, or the imposition of any lien under Title IV of
ERISA;
(v) no "reportable event" (as defined in Section
4043 of ERISA) has occurred with respect to any such plan;
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(vi) no such plan which is subject to Section 302
of ERISA or Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code, respectively), whether or
not waived; and
(vii) no such plan is a multiemployer plan or a
plan described in Section 4064 of ERISA.
3.15.(c) Prohibited Transactions, etc. To the best of
the knowledge of the Shareholders, there have been no "prohibited
transactions" within the meaning of Section 406 of ERISA or Section
4975 of the Code for which a statutory or administrative exemption
does not exist with respect to any Employee Plan/Agreement, and to the
best of the knowledge of the Shareholders, no event or omission has
occurred in connection with which XX Xxxxx or its assets or any
Employee Plan/Agreement, directly or indirectly, could be subject to
any material liability under ERISA, the Code or any other Law or Order
applicable to any Employee Plan/Agreement, or under any agreement,
instrument, Law or Order pursuant to or under which XX Xxxxx has
agreed to indemnify or is required to indemnify any person against
liability incurred under any such Law or Order.
3.15.(d) Full Funding. The funds available under each
Employee Plan/Agreement which is intended to be a funded plan equal or
exceed the amounts required to be paid, or which would be required to
be paid if such Employee Plan/Agreement were terminated, on account of
rights vested or accrued as of the Closing Date (using the actuarial
methods and assumptions then used by XX Xxxxx in connection with the
funding of such Employee Plan/Agreement).
3.15.(e) Controlled Group; Affiliated Service Group;
Leased Employees. No organization is or has been: (i) a member of a
controlled group of corporations as defined in Section 414(b) of the
Code, of which XX Xxxxx was a member, or (ii) under common control, as
determined under Section 414(c) of the Code, with XX Xxxxx. XX Xxxxx
has never been a member of an "affiliated service group" within the
meaning of Section 414(m) of the Code. There are not and never have
been any leased employees within the meaning of Section 414(n) of the
Code who perform services for XX Xxxxx.
3.15.(f) Payments and Compliance. With respect to
each Employee Plan/Agreement, (i) all payments due from XX Xxxxx to
date have been made and all amounts properly accrued to date as
liabilities of XX Xxxxx which have not been paid have been properly
recorded on the books of XX Xxxxx (as appropriate) and, to the extent
such liabilities were due and payable but were not paid as of the date
of the Closing Balance Sheet, are reflected in the Closing Balance
Sheet; (ii) XX Xxxxx has complied with, and each such Employee
Plan/Agreement conforms in form and operation to, all applicable laws
and regulations, including but not limited to ERISA and the Code, in
all material respects and all reports and information relating to such
Employee
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Plan/Agreement required to be filed with any governmental entity have
been timely filed; (iii) all reports and information relating to each
such Employee Plan/Agreement required to be disclosed or provided to
participants or their beneficiaries have been timely disclosed or
provided; (iv) each such Employee Plan/Agreement which is intended to
qualify under Section 401 of the Code has received a favorable
determination letter from the Internal Revenue Service with respect to
such qualification, its related trust has been determined to be exempt
from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such letter that has or is likely to
adversely affect such qualification or exemption; (v) there are no
actions, suits or claims pending (other than routine claims for
benefits) or threatened with respect to such Employee Plan/Agreement
or against the assets of such Employee Plan/Agreement; and (vi) no
Employee Plan/Agreement is a plan which is established and maintained
outside the United States primarily for the benefit of individuals
substantially all of whom are nonresident aliens.
3.15.(g) Post-Retirement Benefits. Other than such
continuation of benefit coverage under group health plans as is
required by applicable law, XX Xxxxx does not maintain and has not
maintained retiree life or retiree health plans providing for
continuing coverage for any employee or any beneficiary of an employee
after the employee's termination of employment.
3.15.(h) No Triggering of Obligations. The
consummation of the transactions contemplated by this Agreement will
not (i) entitle any current or former employee of XX Xxxxx to
severance pay, unemployment compensation or any other payment, except
as expressly provided in this Agreement or in any of the Ancillary
Instruments, (ii) accelerate the time of payment or vesting, or
increase the amount of compensation due to any such employee or former
employee or (iii) result in any prohibited transaction described in
Section 406 of ERISA or Section 4975 of the Code for which an
exemption is not available.
3.15.(i) Delivery of Documents. There has been
delivered to ABR, with respect to each Employee Plan/Agreement:
(i) a copy of the annual report, if required
under ERISA, with respect to each such Employee Plan/Agreement
for the last two years;
(ii) a copy of the summary plan description,
together with each summary of material modifications, required
under ERISA with respect to such Employee Plan/Agreement, all
material employee communications relating to such Employee
Plan/Agreement, and, unless the Employee Plan/Agreement is
embodied entirely in an insurance policy to which XX Xxxxx is
a party, a true and complete copy of such Employee
Plan/Agreement;
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(iii) if the Employee Plan/Agreement is funded
through a trust or any third party funding vehicle (other than
an insurance policy), a copy of the trust or other funding
agreement and the latest financial statements thereof; and
(iv) the most recent determination letter received
from the Internal Revenue Service with respect to each
Employee Plan/Agreement that is intended to be a "qualified
plan" under Section 401 of the Code.
With respect to each Employee Plan/Agreement for which an annual
report has been filed and delivered to ABR pursuant to clause (i) of
this Section 3.15.(i), no material adverse change has occurred with
respect to the matters covered by the latest such annual report since
the date thereof.
3.15.(j) Future Commitments. XX Xxxxx has no
announced plan or legally binding commitment to create any additional
Employee Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement except as contemplated herein or in the Employment
Agreement (as defined in Section 7.1(h) hereof).
3.16. Employment Compensation. A true and correct list has been
provided to ABR of all employees to whom XX Xxxxx is paying compensation, and,
in the case of salaried employees, such list identifies the current annual rate
of compensation for each employee and, in the case of hourly or commission
employees, identifies certain reasonable ranges of rates and the number of
employees falling within each such range.
3.17. Trade Rights. Schedule 3.17 lists all Trade Rights (as
defined below) in which XX Xxxxx now has any interest, specifying whether such
Trade Rights are owned, controlled, used or held (under license or otherwise)
by XX Xxxxx, and also indicating which of such Trade Rights are registered.
All Trade Rights shown as registered in Schedule 3.17 have been properly
registered, all pending registrations and applications have been properly made
and filed and all annuity, maintenance, renewal and other fees relating to
registrations or applications are current. In order to conduct the Business,
as such is currently being conducted, XX Xxxxx does not require any Trade
Rights that it does not already have. XX Xxxxx is not infringing and has not
infringed any Trade Rights of another in the operation of the Business, nor to
the best of the knowledge of XX Xxxxx or the Shareholders, is any other person
infringing the Trade Rights of XX Xxxxx. XX Xxxxx has not granted any license
or made any assignment of any Trade Right listed on Schedule 3.17, nor does XX
Xxxxx pay any royalties or other consideration for the right to use any Trade
Rights of others. Except as set forth on Schedule 3.9, there is no Litigation
pending or threatened to challenge XX Xxxxx'x right, title and interest with
respect to its continued use and right to preclude others from using any Trade
Rights of XX Xxxxx. The consummation of the transactions contemplated hereby
will not alter or impair any Trade Rights owned or used by XX Xxxxx. As used
herein, "Trade Rights" shall mean and include: (i) all trademark rights,
business identifiers, trade dress, service marks, trade names and brand names,
all registrations thereof and applications therefor and all goodwill associated
with the foregoing; (ii) all copyrights, copyright registrations and copyright
applications, and all other rights
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associated with the foregoing and the underlying works of authorship; (iii) all
patents and patent applications, and all international proprietary rights
associated therewith; (iv) all contracts or agreements granting any right,
title, license or privilege under the intellectual property rights of any third
party; (v) all inventions, mask works and mask work registrations, know-how,
discoveries, improvements, designs, trade secrets, shop and royalty rights,
employee covenants and agreements respecting intellectual property and
non-competition and all other types of intellectual property; and (vi) all
claims for infringement or breach of any of the foregoing.
3.18. Major Customers. Schedule 3.18 contains a list of the ten
(10) largest customers of XX Xxxxx for each of the two (2) most recent fiscal
years (determined on the basis of the total dollar amount of net revenues
attributable thereto) showing the total dollar amount of net revenues
attributable thereto during each such year. Neither XX Xxxxx nor the
Shareholders have any knowledge or information of any facts indicating, nor any
other reason to believe, that any of the customers listed on Schedule 3.18 will
not continue to be customers of XX Xxxxx after the Closing at substantially the
same level as heretofore.
3.19. Bank Accounts. Schedule 3.19 sets forth the names and
locations of all banks, trust companies, savings and loan associations and
other financial institutions at which the XX Xxxxx maintains a safe deposit
box, lock box or checking, savings, custodial or other account of any nature,
the type and number of each such account and the signatories therefore, a
description of any compensating balance arrangements, and the names of all
persons authorized to draw thereon, make withdrawals therefrom or have access
thereto.
3.20. Shareholder Affiliates' Relationships to XX Xxxxx. Except as
set forth on Schedule 3.20, no Shareholder Affiliate has any direct or indirect
interest in (i) any entity which does business with XX Xxxxx or is competitive
with the Business, or (ii) any property, asset or right which is used by XX
Xxxxx in the conduct of the Business.
3.21. No Brokers or Finders. Neither XX Xxxxx nor any of its
directors, officers, employees, shareholders or agents have retained, employed
or used any broker or finder in connection with the transaction provided for
herein or in connection with the negotiation thereof.
3.22. Disclosure. No representation or warranty by XX Xxxxx and/or
the Shareholders in this Agreement, nor any certificate, schedule, document or
exhibit hereto furnished or to be furnished by or on behalf of XX Xxxxx or the
Shareholders pursuant to this Agreement contains any untrue statement of
material fact or omits a material fact necessary to make the statements
contained therein not misleading.
4. REPRESENTATIONS AND WARRANTIES OF ABR
ABR makes the following representations and warranties to the
Shareholders, each of which is true and correct on the date hereof, is or shall
be unaffected by any investigation heretofore or hereafter made by the
Shareholders, or any of the Shareholders' agents or
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representatives, or any knowledge to the Shareholders, their agents or
representatives, and shall survive the Closing of the transactions provided for
herein.
4.1. Corporate.
4.1.(a) Organization. ABR is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
4.1.(b) Corporate Power. ABR has all requisite corporate
power to enter into this Agreement and the Ancillary Instruments and
to carry out the transactions contemplated hereby and thereby.
4.2. Authority. The execution and delivery of this Agreement and
each Ancillary Instrument that provides for its execution by ABR and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of ABR. No other corporate act or
proceeding on the part of ABR or its shareholders is necessary to authorize
this Agreement or the Ancillary Instruments or the consummation of the
transactions contemplated hereby and thereby. This Agreement and each
Ancillary Instrument that provides for its execution by ABR is the legal, valid
and binding obligation of ABR, enforceable in accordance with their respective
terms, subject to the limitations contained herein, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.3. No Brokers or Finders. Except for the engagement of Broadview
Associates, L.P. by ABR, neither ABR nor any of its directors, officers,
employees or agents have retained, employed or used any broker or finder in
connection with the transaction provided for herein or in connection with the
negotiation thereof. ABR has agreed to pay all fees and expenses of Broadview
Associates, L.P. in connection with the transactions contemplated hereby.
4.4. Prospectus. The Prospectus dated March 21, 1996 relating to
the public offering by ABR of 3,452,500 shares of Common Stock does not contain
any untrue statement of material fact or omits a material fact necessary to
make the statements contained therein not misleading as of the date hereof
(except for certain market information relating to the Common Stock).
4.5. Disclosure. No representation or warranty by ABR in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of ABR pursuant to this Agreement
or in connection with transactions contemplated hereby, contains any untrue
statement of material fact or omits a material fact necessary to make the
statements contained therein not misleading.
4.6. Investment Intent. The Shares are being acquired by ABR for
investment only and not with the view to resale or other distribution.
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4.7. Non-Taxable Event. To the best knowledge and belief of ABR,
the consummation of the transactions contemplated herein shall constitute a B
Reorganization.
4.8. Approvals and Filings. No governmental approval or filing
with any federal, state or local agency is required of ABR in order to
consummate the transactions contemplated herein; provided, however, that ABR
shall comply with the applicable Federal securities laws and regulations of the
Securities and Exchange Commission or The Nasdaq Stock Market with respect to
the public disclosure of the consummation of these transactions and any related
filings.
5. POST-CLOSING COVENANTS
5.1. Noncompetition; Confidentiality. As an inducement to ABR to
execute this Agreement and complete the transactions contemplated hereby, and
in order to preserve the goodwill associated with Business being acquired
pursuant to this Agreement, and in addition to and not in limitation of any
covenants contained in any agreement executed and delivered pursuant to Section
7.1.(c) hereof, the Shareholders hereby covenant and agree as follows:
5.1.(a) Covenant Not to Compete. For a period of five (5)
years from the Closing Date, the Shareholders will not directly or
indirectly:
(i) engage in, continue in or carry on any
business which competes with, or intends to compete with, XX
Xxxxx or ABR in any aspect with respect to the Business or is
substantially similar thereto, including owning or controlling
any financial interest in any person, corporation,
partnership, firm or other form of business organization which
is so engaged (a "Competing Business");
(ii) consult with, advise or assist in any way,
whether or not for consideration, any Competing Business,
including, but not limited to, advertising or otherwise
endorsing the products of any Competing Business; soliciting
customers or otherwise serving as an intermediary for any
Competing Business; loaning money or rendering any other form
of financial assistance to or engaging in any form of business
transaction on other than an arm's length basis with any
Competing Business;
(iii) offer employment to or solicit the employment
of an employee of XX Xxxxx or ABR, without the prior written
consent of ABR; or
(iv) engage in any practice the purpose of which
is to evade the provisions of this covenant not to compete or
to commit any act which adversely affects the Business;
provided, however, that the foregoing shall not prohibit the ownership
of securities of corporations which are listed on a national
securities exchange or traded in the national
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over-the-counter market in an amount which shall not exceed 5% of the
outstanding shares of any such corporation. The parties agree that
the geographic scope of this covenant not to compete shall extend to
all areas in which XX Xxxxx or ABR conducts the Business. The parties
agree that ABR may sell, assign or otherwise transfer this covenant
not to compete, in whole or in part, to any entity that purchases all
or part of the Business or ABR as long as the Employment Agreement is
assumed by such entity.
5.1.(b) Covenant of Confidentiality. The Shareholders shall
not at any time after the Closing, except as explicitly requested by
ABR or required by applicable Law or Order, and except in the course
of employment by XX Xxxxx, (i) use for any purpose, (ii) disclose to
any person, or (iii) keep or make copies of documents, tapes, discs or
programs containing, any Confidential Information concerning XX Xxxxx.
For purposes of this Agreement, "Confidential Information" shall mean
and include, without limitation, all Trade Rights in which XX Xxxxx
has an interest, all customer lists and customer information, and all
other information concerning the finances, customer lists, operations,
processes, apparatus, equipment, packaging, services, marketing and
distribution methods of XX Xxxxx not previously disclosed to the
public directly by XX Xxxxx or otherwise available to the public.
This covenant shall not preclude the Shareholders from disclosing to
their advisors or Government Entities financial information of XX
Xxxxx necessary to prepare, file or defend any tax return or report of
XX Xxxxx or the Shareholders. The parties agree that this covenant of
confidentiality shall have no geographic or temporal limitations.
5.1.(c) Equitable Relief for Violations. Each of the
Shareholders agrees that the provisions and restrictions contained in
this Section 5.1 are necessary to protect the legitimate continuing
interests of ABR in acquiring the Shares, and that any violation or
breach of these provisions will result in irreparable injury to ABR
for which a remedy at law would be inadequate and that, in addition to
any relief at law which may be available to ABR for such violation or
breach and regardless of any other provision contained in this
Agreement, ABR shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this
Section 5.1.
5.1.(d) Breach by ABR. The covenants of the Shareholders
contained in this Section 5.1 shall be suspended during any period in
which ABR is in material breach of this Agreement, the Employment
Agreement or the Registration Rights Agreement.
5.2. Income Tax Returns and Allocation of Tax. The Shareholders
shall be responsible for the payment by XX Xxxxx of all Taxes of XX Xxxxx due
on the accrual basis on or before the Closing Date and the Shareholders shall
not be responsible for any liability arising from the transactions described in
the Recitals occurring on the Closing Date. ABR shall be responsible for the
payment by XX Xxxxx of all Taxes of XX Xxxxx accruing on and after the Closing
Date including any liability arising from the transaction described in the
Recitals occurring on the Closing Date. The Shareholders shall cause to be
prepared and timely and properly filed on behalf of the Shareholders and XX
Xxxxx, all returns and filings with respect to federal, Virginia
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Taxes, or any other state with respect to which a return or filing is required
under applicable law accruing on or before the Closing Date consistent with
this Agreement. Such Taxes, returns, and filings shall be determined by
closing XX Xxxxx'x books and records as of and including the Closing Date, or
if the allocation of an item of income, loss, deduction, or credit cannot be
definitely allocated to an ascertainable date, such item shall be pro rated on
a daily basis. The Shareholders, XX Xxxxx and ABR shall cooperate, and shall
cause their respective affiliates, officers, employees, agents, auditors and
representatives to cooperate, in preparing and filing all returns, reports, and
forms relating to Taxes, including maintaining and making available to each
other all records necessary in connection with Taxes and in resolving all
disputes and audits with respect to all taxable periods relating to Taxes.
5.3. Restriction on Sales. The Shareholders shall not dispose of
the ABR shares in any manner until ninety (90) days after ABR has first
reported thirty (30) days of combined operations of ABR and XX Xxxxx and only
pursuant to the Registration Rights Agreement or pursuant to Rule 144 under the
Act.
5.4. Rule 144 Compliance. ABR shall file such information,
documents and reports and take such other action as shall hereafter be required
by the Securities and Exchange Commission as a condition to the availability of
Rule 144 under the Act with respect to the ABR Shares.
6. INDEMNIFICATION
6.1. By the Shareholders. Subject to the terms and conditions of
this Article 6, the Shareholders, severally (in proportion to each such
Shareholder's percentage ownership of the Shares) and not jointly, hereby agree
to indemnify, defend and hold harmless ABR, its directors, officers and
employees (hereinafter "ABR's Affiliates") and XX Xxxxx, its directors,
officers and employees from and against all Claims (as hereinafter defined)
asserted against, resulting to, imposed upon, or incurred by ABR, ABR's
Affiliates or XX Xxxxx, directly or indirectly, by reason of, arising out of or
resulting from (a) the inaccuracy or breach of any representation or warranty
of the Shareholders contained in this Agreement, (b) the breach of any covenant
by the Shareholders contained in this Agreement, (c) any dispute involving, or
Claim made by, any current or former shareholder of XX Xxxxx (other than the
Shareholders), or (d) any matter disclosed in Schedule 3.9. As used in this
Article 6, "Claim" shall mean and include (i) all debts, liabilities and
obligations; (ii) all losses, damages (but excluding consequential damages),
judgments, awards, settlements, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and reasonable attorneys' fees and expenses); and (iii)
all demands, claims, suits, actions, costs of investigation, causes of action,
proceedings and assessments, in each case after deduction of any insurance
recovery that is remitted to the Indemnified Party (as hereinafter defined) as
a result of any of the foregoing. Notwithstanding anything contained in this
Section 6.1 to the contrary, with respect to those matters susceptible to cure
by the Shareholders, the liability of the Shareholders under this Section 6.1
shall be subject to notice of the breach, default or dispute at issue and an
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opportunity to cure the matters addressed in the notice within thirty (30) days
after such notice is given.
6.2. By ABR. Subject to the terms and conditions of this Article
6, ABR hereby agrees to indemnify, defend and hold harmless the Shareholders
and their heirs and personal representatives from and against all Claims
asserted against, resulting to, imposed upon or incurred by any such person,
directly or indirectly, by reason of or resulting from (a) the inaccuracy or
breach of any representation or warranty of ABR contained in or made pursuant
to this Agreement, or (b) the breach of any covenant of ABR contained in this
Agreement.
6.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 6 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
6.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party or parties from whom indemnification is sought (whether one
or more, the "Indemnifying Party") prompt written notice of any Claim,
and the Indemnifying Party will have the right to undertake the
defense thereof by representatives chosen by it. The Indemnified
Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by the
Indemnifying Party in connection with such Claim and in the possession
or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in prosecuting the defense
of any such Claim, and the Indemnified Party shall be entitled to
participate in the defense of such Claim. Subject to the provisions
of Sections 6.3.(b) and 6.3.(c) hereof, if the Indemnifying Party has
acknowledged its liability for indemnification hereunder and the
defense of such Claim is assumed by the Indemnifying Party, and
(except for a Claim based upon any matter disclosed in Schedule 3.9 in
which case no such approval shall be necessary) upon approval by the
Indemnified Party of counsel selected by the Indemnifying Party, the
Indemnifying Party shall be free to compromise or settle such Claim
without the consent of the Indemnified Party and shall have no
liability for any compromise or settlement of such Claim without its
written consent.
6.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to assume the
defense of such Claim actively and in good faith, the Indemnified
Party will (upon further notice) have the right to undertake the
defense, compromise or settlement of such Claim or consent to the
entry of a judgment with respect to such Claim, on behalf of and for
the account of and risk of the Indemnifying Party, and the
Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to
judgment therein.
6.3.(c) Indemnified Party's Rights. Anything in this Article
6 to the contrary notwithstanding, (i) except for a Claim based upon
any matter disclosed in
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Schedule 3.9, if there is a reasonable probability that a Claim may
materially and adversely affect the Indemnified Party other than as a
result of money damages or other money payments, the Indemnified Party
shall have the right to defend and, with the consent of the
Indemnifying Party (which shall not be unreasonably withheld), to
compromise or settle such Claim as to the non-monetary component of
such compromise or settlement, and (ii) the Indemnifying Party shall
not, without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from
all liability in respect of such Claim.
6.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 6. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party,
and/or to the Indemnified Party in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment, determination,
settlement or compromise and all other Claims of the Indemnified Party with
respect thereto. If the Indemnifying Party desires to appeal from an adverse
judgment, then the Indemnifying Party shall post and pay the cost of the
security or bond to stay execution of the judgment pending appeal. Upon the
payment in full by the Indemnifying Party of such amounts, the Indemnifying
Party shall succeed to the rights of such Indemnified Party, to the extent not
waived in settlement, against the third party who made such third party Claim.
6.5. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing.
6.6. Limitations on Indemnification. Except for any willful and
knowing breach or misrepresentation and except for any action brought by any
former employees and shareholders of XX Xxxxx, as to which a claim for
indemnification hereunder may be brought without limitation as to time or
amount:
6.6.(a) Time Limitation. No claim for indemnification shall
be brought under Section 6.1 of this Article 6 for the inaccuracy or
breach of a representation or warranty, or the breach of any covenant,
contained in or made pursuant to this Agreement unless the nature of
such claim for indemnification has been described in reasonable detail
and with identification to this Section 6 in a written notice provided
by an Indemnified Party to an Indemnifying Party and which are
determined during the period which ends on the date of issuance to ABR
of the first independent audit report on the combined results of ABR
and XX Xxxxx.
6.6.(b) Aggregate Amount Limitation for the Shareholders.
Notwithstanding any provision of this Article 6 to the contrary, the
aggregate amount of the
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indemnification obligations of the Shareholders pursuant to Section
6.1 of this Article 6 shall not exceed for the purposes of these
indemnification provisions 10% of the value of the consideration
received. Furthermore, each of the Shareholders may (but shall not be
required to) elect to satisfy any liability for indemnification
hereunder by transferring a number of ABR Shares which, when
multiplied by the Issue Price, result in an aggregate value which
equals or exceeds the dollar amount of such Shareholder's
indemnification liability.
6.6.(c) Threshold Limitation. Notwithstanding any provision
of this Article 6 to the contrary, no claim for indemnification may be
brought by an Indemnified Party unless and until such party has become
subject to, or incurred liability for, Claims totaling no less than
Eighty Thousand Dollars ($80,000) in the aggregate (the
"Indemnification Threshold"). Once an Indemnified Party has satisfied
the Indemnification Threshold, such party shall be eligible to receive
indemnification for all Claims in accordance with the terms and
conditions of this Article 6.
6.7. Indemnification - Exclusive Remedy. The provisions of this
Article 6 shall constitute the exclusive remedy for any claim based upon the
subject matter of the indemnification undertakings in Section 6.1 and 6.2.
7. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall occur concurrent
with the execution of this Agreement effective as of 12:01 A.M. on June 28,
1996. Such date is referred to in this Agreement as the "Closing Date." In
the event that the ABR Shares cannot be issued and delivered to the
Shareholders by 5:00 p.m. EST on the Closing Date, the Shares shall be
delivered to Xxxxx & Xxxxxxx to be held in escrow with instructions to release
the Shares to ABR immediately upon the issuance and delivery of the ABR Shares
hereunder.
7.1. Documents Delivered by XX Xxxxx and the Shareholders. At the
Closing, XX Xxxxx and the Shareholders shall deliver to ABR the following
documents, in each case duly executed or otherwise in proper form:
7.1.(a) Stock Certificates. Stock certificates representing
the Shares, duly endorsed for transfer or with duly executed stock
powers attached.
7.1.(b) Opinion of Counsel. A written opinion of Xxxxx &
Xxxxxx, counsel to XX Xxxxx and the Shareholders, dated as of the
Closing Date, addressed to ABR.
7.1.(c) Certified Resolutions. Certified copies of the
resolutions of the Board of Directors and the shareholders of XX
Xxxxx, authorizing and approving this Agreement and the Ancillary
Instruments, and the consummation of the transactions contemplated
hereby and thereby.
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7.1.(d) Articles; Bylaws. A copy of the Bylaws of XX Xxxxx
certified by its secretary, and a copy of the Certificate of
Incorporation of XX Xxxxx, certified as of a recent date by the
Secretary of State of the state of incorporation of XX Xxxxx, and good
standing certificates, certified as of a recent date by the Secretary
of State of such state and all other states in which XX Xxxxx is
qualified to do business.
7.1.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing (as a corporate officer or otherwise
on behalf of another person) any document executed and delivered to
ABR pursuant to the terms hereof.
7.1.(f) [Intentionally Omitted.]
7.1.(g) [Intentionally Omitted.]
7.1.(h) Employment Agreement. An employment agreement
between XX Xxxxx and Xxxx Xxxxxx, one of the Shareholders, dated as of
the Closing Date, substantially in the form of Exhibit A attached
hereto and incorporated herein (the "Employment Agreement").
7.2. Documents Delivered by ABR. At the Closing, ABR shall deliver
to the Shareholders the following, in each case duly executed or otherwise in
proper form:
7.2.(a) Stock Certificates. A letter addressed to ABR's
Transfer Agent authorizing the Transfer Agent to issue and deliver the
ABR Shares to the Shareholders.
7.2.(b) Opinion of Counsel. A written opinion of Xxxxx &
Lardner, counsel to ABR, dated as of the Closing Date, addressed to XX
Xxxxx.
7.2.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of (i) ABR authorizing and
approving this Agreement and the consummation of the transactions
contemplated hereby and (ii) XX Xxxxx ratifying the Employment
Agreement (subsequent to the newly appointed Board of Directors of XX
Xxxxx).
7.2.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to XX Xxxxx or the Shareholders by ABR pursuant to the terms hereof.
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7.2.(e) Registration Rights Agreement. A registration rights
agreement between ABR and the Shareholders, dated as of the Closing
Date, substantially in the form of Exhibit B attached hereto and
incorporated herein.
7.2.(f) Employment Agreement. The Employment Agreement,
dated as of the Closing Date.
8. RESOLUTION OF DISPUTES
8.1. Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement, any Ancillary Instrument (except the Employment
Agreement and Registration Rights Agreement) or any contract or agreement
entered into pursuant hereto, or arising out of or relating to the performance
by the parties of its or their terms, shall be settled by binding arbitration
held in the county and state of the party defending any such action in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association then in effect, except as specifically otherwise provided in this
Article 8. Notwithstanding the foregoing, ABR may, in its discretion, apply to
a court of competent jurisdiction for equitable relief from any violation or
threatened violation of the covenants under Article 5 of this Agreement.
8.2. Arbitrators. The panel to be appointed shall consist of three
neutral arbitrators.
8.3. Procedures; No Appeal. The arbitrators shall allow such
discovery as the arbitrators determine appropriate under the circumstances and
shall resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within 120 days after the selection of the arbitrators. The
arbitrators shall give the parties written notice of the decision, with the
reasons therefor set out, and shall have 30 days thereafter to reconsider and
modify such decision if any party so requests within 10 days after the
decision. Thereafter, the decision of the arbitrators shall be final, binding,
and nonappealable with respect to all persons, including (without limitation)
persons who have failed or refused to participate in the arbitration process.
8.4. Authority. The arbitrators shall have authority to award
relief under legal or equitable principles, including interim or preliminary
relief. Unless the arbitrators find that exceptional circumstances require
otherwise, the arbitrators will include in the award the prevailing party's
costs of arbitration and reasonable attorneys' fees.
8.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrators may be entered in any court having in personam and subject matter
jurisdiction. ABR and the Shareholders hereby submit to the in personam
jurisdiction of the Federal and State courts in Virginia and Florida, for the
purpose of confirming any such award and entering judgment thereon.
8.6. Confidentiality. All proceedings under this Article 8, and
all evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties.
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8.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 8 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith.
8.8. Tolling. All applicable statutes of limitation shall be
tolled while the procedures specified in this Article 8 are pending. The
parties will take such action, if any, required to effectuate such tolling.
9. MISCELLANEOUS
9.1. Disclosure Schedule. The Schedules described herein have been
compiled in a bound volume (the "Disclosure Schedule"), executed by XX Xxxxx
and the Shareholders and dated and delivered to ABR on the Closing Date. The
Disclosure Schedule includes a table of contents and/or index to all of the
information and documents contained therein. The Disclosure Schedule shall not
vary, change or alter the language of the representations and warranties
contained in this Agreement and, to the extent the language in the Disclosure
Schedule does not conform in every respect to the language of such
representations and warranties, such language in the Disclosure Schedule shall
be disregarded and be of no force or effect.
9.2. Further Assurance. From time to time, each of the parties
hereto will execute and deliver such documents and take such other action as
any one of the other parties hereto may reasonably request in order to
consummate more effectively the transactions contemplated hereby.
9.3. Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by ABR, XX Xxxxx or the
Shareholders shall be subject to the approval of the other parties in all
essential respects, except that approval of XX Xxxxx or the Shareholders shall
not be required as to any statements and other information which ABR may submit
to the Securities and Exchange Commission, The Nasdaq Stock Market ("Nasdaq")
or ABR's shareholders as required pursuant to any rule or regulation of the
Securities and Exchange Commission, Nasdaq or applicable law.
9.4. Assignment; Parties in Interest.
9.4.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other parties. Notwithstanding the foregoing, ABR may, without
consent of any other party, cause one or more controlled subsidiaries
of ABR to carry out all or part of the transactions contemplated
hereby; provided, however, that ABR shall, nevertheless, remain liable
for all of its obligations, and those of any such subsidiary, to the
Shareholders hereunder.
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9.4.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person
(besides the parties hereto) any right or remedy under or by reason of
this Agreement.
9.5. Law Governing Agreement. This Agreement may not be modified
or terminated orally, and shall be construed and interpreted according to the
laws of the State of Florida, excluding its conflicts of law rules.
9.6. Amendment and Modification. ABR and the Shareholders may
amend, modify and supplement this Agreement in such manner as may be agreed
upon in writing signed by ABR and the Shareholders.
9.7. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; or (b) sent to the parties at their respective addresses
indicated herein by registered or certified U.S. mail, return receipt requested
and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are
as follows:
(a) If to ABR, to:
ABR Information Services, Inc.
00000 X.X. Xxxxxxx 00, Xxxxx
Xxxx Xxxxxx, XX 00000-0000
Attention: Xx. Xxxxxxx Xxxxxxxxx,
Senior Vice President and
Chief Financial Officer
(with a copy to)
Xxxxx & Lardner
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
or to such other person or address as ABR shall furnish to the Shareholders in
writing.
29
34
(b) If to the Shareholders, to:
[to each Shareholder individually]
c/o The X.X. Xxxxx Company
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
(with a copy to)
Xxxxx & Xxxxxx
0000 X Xxxxxx XX
0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxxx
or to such other person or address as the Shareholders shall designate in
writing.
(c) If to XX Xxxxx, to ABR as specified above.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if sent by overnight courier pursuant to this paragraph,
such communication shall be deemed delivered upon receipt; and if sent by U.S.
mail pursuant to this paragraph, such communication shall be deemed delivered
as of the date of delivery indicated on the receipt issued by the relevant
postal service, or, if the addressee fails or refuses to accept delivery, as of
the date of such failure or refusal. Any party to this Agreement may change
its address for the purposes of this Agreement by giving notice thereof in
accordance with this Section and any such notice of change of address shall be
effective only upon receipt.
9.8. Expenses.
9.8.(a) Brokerage. Except as provided in Section 4.3 hereof,
the Shareholders and ABR each represent and warrant to each other that
there is no broker involved or in any way connected with the transfer
provided for herein on their behalf respectively (and the Shareholders
represents and warrants that there is no broker involved on behalf of
XX Xxxxx) and each agrees to hold the other harmless from and against
all other claims for brokerage commissions or finder's fees in
connection with the execution of this Agreement or the transactions
provided for herein.
9.8.(b) Expenses to be Paid by the Shareholders. The
Shareholders shall pay, and shall indemnify, defend and hold ABR and
XX Xxxxx harmless from and against, each of the following:
30
35
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
(ii) Professional Fees. All fees and expenses of
their own, as well as XX Xxxxx'x, legal, accounting (except
fees and expenses related to an audit of XX Xxxxx'x financial
statements as requested by ABR), investment banking and other
professional counsel in connection with the transactions
contemplated hereby.
9.8.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
9.8.(d) Costs of Litigation or Arbitration. The parties
agree that (subject to Section 6.6 and to the discretion, in an
arbitration proceeding, of the arbitrators as set forth in Section
8.4) the prevailing party in any action brought with respect to or to
enforce any right or remedy under this Agreement shall be entitled to
recover from the other party or parties all reasonable costs and
expenses of any nature whatsoever incurred by the prevailing party in
connection with such action, including, without limitation, reasonable
attorneys' fees and prejudgment interest.
9.9. Entire Agreement. This Agreement, the Employment Agreement
and the Registration Rights Agreement embody the entire agreement between the
parties hereto with respect to the transactions contemplated herein, and there
have been and are no prior or contemporaneous agreements, representations or
warranties between the parties other than those set forth or provided for
herein or therein.
9.10. Severability. In the event that any provision of this
Agreement shall be held to be invalid or unenforceable for any reason by the
arbitrators or a court of competent jurisdiction (as the case may be), the
remaining provisions of this Agreement shall continue in full force and effect
as though the invalid or unenforceable provisions had not been included herein.
Notwithstanding the foregoing, in the event that any provision relating to the
duration or scope of any covenant or restriction contained herein shall be
declared by a court of competent jurisdiction to exceed the maximum time period
and/or scope of restriction, such provision shall be deemed to become, and
thereafter shall be equal to, the maximum duration and/or scope of restriction
deemed enforceable by said court.
9.11. Gender. Whenever the context requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be deemed to include and designate the masculine,
feminine or neuter gender.
9.12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
31
36
9.13. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
ABR:
ABR INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxxxxx,
Senior Vice President
and Chief Financial Officer
THE SHAREHOLDERS:
/s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx
/s/ Xxxx XxXxxxxx
--------------------------------------------
Xxxx XxXxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxxxx Xxxxxxxx
/s/ Xxxxxxx XxXxxxxxx
--------------------------------------------
Xxxxxxx XxXxxxxxx
/s/ Xxxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxxx X. Xxxxxxx
32
37
[Continuation of Signature Page of
Agreement and Plan of Reorganization
with ABR Information Services, Inc.]
XX XXXXX:
XX XXXXX COMPANY
By: /s/ Xxxx Xxxxxx
------------------------------------------
President
33
38
EXHIBIT A
EMPLOYMENT AND NONCOMPETITION AGREEMENT
[Note: Exhibit A was filed separately as Exhibit 10.14 to the
Company's Form 10-K for the fiscal year ended 7/31/96]
39
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of
the 28th day of June, 1996, by and between ABR Information Services, Inc., a
Florida corporation ("ABR"), and the shareholders listed on the signature page
(collectively referred to as the "Holders").
RECITALS
WHEREAS, ABR, The X.X. Xxxxx Company, a Virginia corporation ("XX
Xxxxx"), and the Holders are parties to that certain Agreement and Plan of
Reorganization dated as of June 28, 1996 (the "Agreement") pursuant to which
ABR will acquire all of the capital stock of XX Xxxxx from the Holders;
WHEREAS, the closing of the transactions contemplated by the Agreement
(the "Closing") is occurring on the date hereof and, in connection therewith,
ABR has issued to the Holders that number of its shares (the "Shares") of
Common Stock, $.01 par value per share (the "Common Stock"), with a fair market
value of $8.0 million based on the average closing price of the Common Stock
for the thirty (30) trading days prior to the day before the Closing;
WHEREAS, the parties hereto have agreed to certain registration rights
with respect to the Shares in accordance with the terms and conditions
hereinafter set forth. Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and in the Purchase Agreement, the
parties hereto agree as follows:
1. DEMAND REGISTRATION RIGHTS.
(a) Subject to the other terms and conditions contained
herein, commencing three (3) months after the Closing and continuing for a
period of two (2) years after the Closing, if the Holders have not registered
for sale fifty percent (50%) of the Shares pursuant to Section 2, the Holders
collectively holding more than fifty-percent (50%) of the Shares may demand in
writing (a "demand registration request") that ABR file a registration
statement (a "demand registration statement") under the Securities Act of 1933,
as amended (the "Act"), covering the proposed sale to the public of up to 50%
of the Shares as specified therein. If the demand registration request is made
on behalf of the Holders holding less than 100% of the Shares then still held
by all Holders, then ABR shall send written notice of such demand registration
request to the remaining Holders within ten (10) days of receipt thereof.
Unless a remaining Holder shall deliver a written request for inclusion in the
demand registration statement of a specified
40
number of his or her Shares to ABR within twenty (20) days of the date of such
notice by ABR, all rights of such remaining Holder to participate in such
demand registration statement shall be automatically terminated.
(b) Subject to Section 3, upon receipt of a demand
registration request in compliance with Section 1(a) from the of Holders (or,
if such request is initially made on behalf of Holder less than 100% of the
Shares as described above, upon expiration of the 20-day period in which the
remaining Holders must request registration), ABR will, as promptly as
practicable and in any event within thirty (30) days, prepare and file with the
Securities and Exchange Commission ("Commission") (and all applicable state
securities authorities) a registration statement, on such form as it may
determine in its discretionary judgment to be appropriate, covering such
proposed sale of the Shares requested to be registered pursuant to the demand
registration request. ABR shall only be required to register 50% of the Shares
pursuant to this Section 1 and, in the event Holders desire to register in the
aggregate more than 50% of the Shares, the excess number of Shares requested to
be registered shall be reduced on a pro rata basis based on the number of
Shares owned by each Holder requesting registration. The public offering of
the Shares to be covered by the demand registration statement shall be effected
through a "shelf offering" under Rule 415 of the Act on a Form S-1, Form S-2 or
Form S-3 (or successor or similar forms) registration statement, with sales of
all the Shares registered thereunder to be effected through normal brokers'
transactions or in transactions in the over-the-counter market or on any other
national securities exchange or market on which the Common Stock is listed or
traded or in a privately negotiated transaction.
(c) Subject to Section 3, ABR will use its continuing
best efforts to have the demand registration statement declared effective under
the Act by the Commission (and under applicable state securities laws by all
applicable state securities authorities) as soon as practicable after the
filing thereof and to maintain the effectiveness thereof for a period of no
longer than six months (or until all of the Shares covered thereby have been
sold if such sales are completed before the end of such 6-month period);
provided, however, ABR shall only be required to have the demand registration
statement be declared effective and maintain the effectiveness thereof
commencing three (3) months after the Closing and no later than two (2) years
after the Closing. ABR shall obtain customary opinions of legal counsel,
comfort letters from ABR's independent public accountants and take such other
action as is necessary and customary to have the demand registration statement
declared effective under the Act by the Commission and to maintain the
effectiveness for the period described above.
(d) ABR shall only be required to file one demand
registration statement for the benefit of the Holders pursuant to this Section
1; provided, however, a demand registration statement filed by ABR pursuant to
this Section 1 shall not count as the one allowed demand registration statement
until it has become effective under the Act and has been maintained effective
for a period of six months (or until all shares covered thereby have been sold
if such sales are completed before the end of such 6-month period).
-2-
41
(e) ABR shall be entitled to include, as part of the
demand registration statement filed pursuant to a demand registration request,
additional shares of Common Stock proposed to be sold by ABR and/or other
shareholders of ABR; provided, however, the rights of ABR and/or such other
shareholders to include Common Stock under such demand registration statement
shall be subordinate in all respects to the prior rights of Holders to include
the Shares thereunder if a conflict of interests thereunder shall occur among
such parties.
2. PIGGYBACK REGISTRATION RIGHTS.
(a) If, at any time and from time to time, ABR and/or
other shareholders of ABR shall determine to register shares of Common Stock
under the Act for the purpose of effecting a firmly underwritten public
offering thereof for cash, ABR shall give prompt written notice thereof to all
Holders who then hold Shares describing the material terms of the proposed
public offering; provided, however, that ABR shall not be required to give such
notice to the Holders if: (i) the proposed registration is not to be made on
Commission Form X-0, X-0 or S-3 (or the successors to such forms); or (ii) is
(A) a registration of securities other than Common Stock, (B) a registration of
a stock option, incentive compensation, profit sharing or other employee
benefit plan or securities issued or issuable pursuant to any such plan, or (C)
a registration of securities proposed to be issued in exchange for securities
or assets of, or in connection with a merger, share exchange, consolidation or
other business combination involving, another corporation or entity.
(b) Subject to subsection (c) of this Section 2, upon
receiving any notice required under subsection (a) of Section 2, any Holder
desiring to participate in such a registration statement (a "piggyback
registration") shall provide written notice of such intent to ABR (a "piggyback
registration request") within twenty (20) days after the date of ABR's notice.
Such piggyback registration request shall be accompanied by: (i) a Power of
Attorney in form reasonably satisfactory to ABR, duly executed by such Holder;
(ii) a Letter of Transmittal and Custody Agreement in form reasonably
satisfactory to ABR, duly executed by such Holder; (iii) the stock certificates
representing the Shares to be registered by such Holder (or a letter from the
pledgee of any Shares agreeing to deliver the stock certificates upon payment
of the amount specified therein) accompanied by stock powers' duly executed in
blank by or on behalf of such Holder; and (iv) any other documents necessary in
ABR's reasonable opinion to facilitate the Holder's participation in such
registration (collectively, the "Registration Documents"). ABR shall use its
best efforts to register all of the Shares requested to be registered by each
Holder on his or her piggyback registration request concurrently with the
registration of the Common Stock by ABR on its own behalf and on the same terms
and conditions of the offering and sale as contemplated and agreed to by ABR.
Holders requesting to participate in any piggyback registration must sell their
Shares subject thereto on the same terms and conditions of the offering and
sale (including, without limitation, purchase price and underwriting discount
per share, but excluding any differing allocation agreed to by ABR with respect
to any over-allotment option granted) as agreed to by ABR in connection with
its sale of Common Stock thereunder. ABR shall promptly deliver to all Holders
requesting to participate in any piggyback registration copies of any
preliminary and final prospectuses relating to the public offering.
-3-
42
(c) ABR shall not be required to include any Shares which
have been requested to be registered by a Holder in any piggyback registration
under this Section 2 if ABR or the underwriters believe that, in their opinion,
the inclusion of the Shares proposed to be included by the Holders would
interfere with the timing, pricing or marketing of the Common Stock being
offered by ABR; provided, however, any reduction in the number of Shares
requested to be included by Holders in any such piggyback registration will be
made on a pro rata basis (based on the number of Shares requested to be
included therein) among the Holders (with any reduction in the number of Shares
requested to be included by Holders made on a pro rata basis based on the
number of Shares owned by each Holder requesting registration) and any other
holders of Common Stock also requesting participation in such piggyback
registration. ABR may, in its sole discretion, withdraw any such registration
statement and abandon any proposed piggyback registration in which the Holders
have requested to participate, in which case the Holders shall retain their
rights under Sections 1 and 2 hereof.
3. DENIAL, POSTPONEMENT OR SUSPENSION OF DEMAND REGISTRATION.
(a) If ABR receives a demand registration request in
compliance with Section l(a) and is then contemplating filing with the
Commission within the next thirty (30) days a registration statement which
would otherwise trigger the application of piggyback registration rights of
Holders under Section 2 hereof, then ABR may deny the demand registration
request. ABR agrees that it shall not be permitted to deny any request for the
demand registration statement until nine (9) months after the Closing. ABR
shall give prompt written notice to the Holders of any such denial and permit
the Holders the opportunity to register for sale the Shares in a piggyback
registration.
(b) ABR shall be entitled, in its sole discretion, to
postpone one-time for up to 150 days, including, without limitation, ABR's
determination that the demand registration statement would have an adverse
effect on any proposal or plan by ABR to engage in any acquisition of assets or
any merger, consolidation, tender offer or similar transaction (or, if longer,
180 days from the effective date with the Commission of any ABR registration
statement relating to a public offering or distribution of Common Stock or
other securities in which the Holders were granted piggyback registration
rights), the filing with the Commission of the demand registration statement,
and to suspend sales under the demand registration statement for up to 150 days
(or, if longer, 180 days from the effective date with the Commission of any
then pending ABR registration statement relating to a public offering or
distribution of Common Stock or other securities); provided, however, that in
computing the 6-month period for which ABR is required to maintain
effectiveness of the demand registration statement, the period of any such
suspension shall not be included. ABR shall give prompt written notice to the
Holders of any such postponement or suspension and shall likewise give prompt
written notice to the Holders of termination of such postponement or
suspension. Each Holder thereby agrees to postpone the sale of any Shares
registered pursuant to the demand registration statement during any
postponement or suspension of sales of Common Stock thereunder by ABR.
-4-
43
4. EXPENSES. Holders participating in the demand registration
statement or any piggyback registration shall pay (a) the expenses of any
attorneys, accountants or other advisors or professionals which any of them
engage in connection with their sale of Shares pursuant to the demand
registration statement or any piggyback registration, (b) all underwriting or
brokers' commission and discounts, if any, associated with the Shares being
sold by them pursuant to the demand registration statement or any piggyback
registration, and (c) all additional registration and qualification fees and
expenses related to the Shares being sold by them pursuant to the demand
registration statement or any piggyback registration. ABR shall pay all other
expenses involved in registering the Shares, including, without limitation,
attorneys' fees and accounting fees for ABR.
5. HOLDBACK AGREEMENT: FURTHER COOPERATION: CONFIDENTIALITY.
(a) By execution of this Agreement, each Holder hereby
agrees that he or she will not for a period commencing nine 99) months and
ending two (2) years after the Closing offer, sell or otherwise dispose of any
Shares owned by such Holder, in the open market or otherwise, during the period
when he or she has knowledge that an ABR registration statement (other than
those, such as Form S-8, as to which notice need not be given to Holders by ABR
under Section 1(a) hereof) is contemplated or pending or within 180 days after
the effective date with the Commission of any such registration statement
relating to a public offering or distribution of Common Stock, other than as
permitted hereunder.
(b) In connection with the demand registration statement
or any piggyback registration, Holders will furnish or cause to be furnished
such other information with respect thereto and render such further cooperation
to ABR, any underwriter and any broker/dealer as ABR, such underwriter or
broker/dealer may reasonably request. Holders participating in any such
registration statement hereby agree to execute and enter into customary
underwriting documents in connection therewith as are requested by the managing
underwriter of such offering or ABR; provided, however, that the Holders'
obligation to indemnify any persons in connection with such registration
statement shall be limited to the matters set forth in Section 6 hereof and
that such documents shall include the indemnification of the Holders by ABR
provided for in Section 6 hereof.
(c) Upon receiving any notice from ABR hereunder
respecting any contemplated or pending registration statement of ABR, each
Holder shall strictly maintain the confidentiality of such contemplated or
pending registration statement and shall make no public disclosures or comments
with respect thereto, and shall not otherwise trade in any securities of ABR
during such period.
6. INDEMNIFICATION. In the event that any Shares are included in
a registration referred to herein:
(a) Each Holder participating in a registration hereunder
will severally indemnify, defend and hold harmless ABR and the underwriter (and
their affiliates, and their
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44
respective directors, officers, stockholders, representatives and employees),
from and against all loss, claim, damage and expense whatsoever reasonably
incurred (including attorneys' fees and expenses) (collectively, "Losses"),
based upon, incurred in connection with, arising out of or otherwise in respect
of any such Holder's (i) untrue statement or alleged untrue statement of any
material fact contained in the registration statement relating thereto,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, or (ii) omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement in
reliance upon and in conformity with written information furnished to ABR by
such Holder and stated to be specifically for use therein.
(b) ABR agrees to indemnify, defend and hold harmless
each Holder participating in a registration hereunder (and their affiliates,
and their directors, officers, stockholders, representatives and employees)
from and against all Losses based upon, incurred in connection with, arising
out of or otherwise in respect of ABR's (i) untrue statement or alleged untrue
statement of any material fact contained in the registration statement relating
thereto, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, or (iii) omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(c) The obligations and liabilities of any party to
indemnify any other under this Article 6 with respect to claims shall be
subject to the following terms and conditions:
(i) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party or parties from whom indemnification is sought (whether one
or more, the "Indemnifying Party") prompt written notice of any claim,
and the Indemnifying Party will have the right to undertake the
defense thereof by representatives chosen by it. The Indemnified
Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by the
Indemnifying Party in connection with such claim and in the possession
or under the control of the Indemnified Party, for the use of the
Indemnifying Party and its representatives in prosecuting the defense
of any such claim, and the Indemnified Party shall be entitled to
participate in the defense of such claim. Subject to the provisions
of Sections 6(c)(ii) and 6(c)(iii) hereof, if the Indemnifying Party
has acknowledged its liability for indemnification hereunder and the
defense of such claim is assumed by the Indemnifying Party, and upon
approval by the Indemnified Party of counsel selected by the
Indemnifying Party, the Indemnifying Party shall be free to compromise
or settle such claim without the consent of the Indemnified Party and
shall have no liability for any compromise or settlement of such claim
without its written consent.
-6-
45
(ii) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such claim, fails to assume the
defense of such claim actively and in good faith, the Indemnified
Party will (upon further notice) have the right to undertake the
defense, compromise or settlement of such claim or consent to the
entry of a judgment with respect to such claim, on behalf of and for
the account of and risk of the Indemnifying Party, and the
Indemnifying Party shall thereafter have no right to challenge the
Indemnified Party's defense, compromise, settlement or consent to
judgment therein.
(iii) Indemnified Party's Rights. Anything in this Section
6(c) to the contrary notwithstanding, (i) if there is a reasonable
probability that a claim may materially and adversely affect the
Indemnified Party other than as a result of money damages or other
money payments, the Indemnified Party shall have the right to defend
and, with the consent of the Indemnifying Party (which shall not be
unreasonably withheld), to compromise or settle such claim as to the
non-monetary component of such compromise or settlement, and (ii) the
Indemnifying Party shall not, without the written consent of the
Indemnified Party, settle or compromise any claim or consent to the
entry of any judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnified
Party of a release from all liability in respect of such claim.
7. DAMAGES. No Holder shall have any right to take any action to
restrain, enjoin or other delay any registration statement as the result of any
controversy that might arise with respect to the interpretation or
implementation of the registration rights afforded in this Agreement; provided,
however, that such Holder shall not be prohibited from exercising any other
remedies available to such Holder.
8. NOTICES. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; or (b) sent to the parties at their respective addresses indicated
herein by registered or certified U.S. mail, return receipt requested and
postage prepaid, or by private overnight mail courier service. The respective
addresses to be used for all such notices, demands or request are as follows:
(i) If to ABR: ABR Information Services, Inc.
00000 X.X. Xxxxxxx 00 Xxxxx
Xxxx Xxxxxx, XX 00000 Attn:
Xxxxxxx Xxxxxxxxx
with a required copy to: Xxxxx & Lardner
000 X. Xxxxx Xxxxxx
Xxxxx 0000
X.X. Xxx 0000
Xxxxx, XX 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
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46
(ii) If to Holders: [Each Holder Individually]
c/o The X.X. Xxxxx Company
0000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
with a required copy to: Xxxxx & Xxxxxx
0000 X Xxxxxx XX
0xx Xxxxx
Xxxxxxxxxx, XX 2006
Attn: Xxxxxxxx X. Xxxxxxxxx, Esq.
If personally delivered, such communication shall be delivered upon
actual receipt; if sent by overnight courier pursuant to this Section, such
communication shall be deemed delivered upon receipt; and if sent by U.S. mail
pursuant to this Section, such communication shall be deemed delivered as of
the date of delivery indicated on the receipt issued by the relevant postage
service or if the addressee fails or refuses to accept deliver, as of the date
of such failure or refusal. Any party to this Agreement may change its address
for the purposes of this Agreement by giving notice thereof in accordance with
this Section, with any notice of change of address effective only upon receipt.
9. ENTIRE AGREEMENT. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there has been and are no agreements, representations
and warranties between the parties other than those set forth or provided for
herein.
10. FURTHER ASSURANCES. Each of the parties shall execute such
agreements and documents and take such further actions as may be reasonable
required or desirable to carry out the provisions hereof and the transactions
contemplated hereby.
11. GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Florida without regard to
principles of conflicts of law or any rule of interpretation or construction as
to which party drafted this Agreement.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of ABR, its successors and assigns, and each of the
Holders and his or her heirs, executors, administrators and legal
representatives.
14. NO WAIVER. No waiver by any party hereto of any breach of, or
compliance with, any condition or provision of this Agreement by the other
party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time.
-8-
47
No such waiver shall be enforceable unless expressed in a written instrument
executed by the party against whom enforcement is sought.
15. SEVERABILITY. If a court of competent jurisdiction should
decide that any of the provisions of this Agreement are not enforceable, in
whole or in part, the parties declare it is their intention that such
unenforceable provisions be deemed reformed so that they apply only to the
maximum extent to which they can be enforced.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
ABR INFORMATION SERVICES, INC.
By: /s/ Xxxxxxx Xxxxxxxxx
-----------------------------------
HOLDERS
/s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx
/s/ Xxxx XxXxxxxx
--------------------------------------------
Xxxx XxXxxxxx
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxxxx Xxxxxxxx
--------------------------------------------
Xxxxxxxxx Xxxxxxxx
/s/ Xxxxxxx XxXxxxxxx
--------------------------------------------
Xxxxxxx XxXxxxxx
/s/ Xxxxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxxxx X. Xxxxxxx
-9-
