Exhibit 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT") is dated as of October 24,
2003 (the "EFFECTIVE DATE"), by and among Pegasus Solutions, Inc., a Delaware
corporation (the "BUYER"), and each shareholder of Unirez, Inc. that signs this
Agreement (each a "SHAREHOLDER" and collectively, the "SHAREHOLDERS").
RECITALS
A. Each Shareholder owns shares of Unirez, Inc., a Texas corporation
(including its subsidiaries and affiliates, "UNIREZ"), common stock, $.01 par
value per share (the "COMMON STOCK").
B. Each Shareholder wishes to sell to Buyer, and Buyer wishes to buy
from each Shareholder, all of the shares (the "SHARES") of Unirez Common Stock
he or she owns, on the terms and conditions set forth herein.
AGREEMENT
For and in consideration of the premises and of the mutual representations,
warranties, covenants and agreements contained herein, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and upon the terms and subject to the conditions hereinafter set
forth, the parties do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Purchase and Sale. On the first business day following the satisfaction
or waiver of all closing conditions set forth herein as mutually agreed by the
parties (the "Closing Date"), and upon the terms and subject to the conditions
of this Agreement, Shareholder agrees to sell, assign, transfer, convey and
deliver to the Buyer, and the Buyer agrees to purchase, the Shares for a total
purchase price of $38,000,000 (if all 2,431 shares of Unirez are purchased) (the
"Purchase Price"). If all Unirez shareholders execute this Agreement, then the
parties agree that the Closing Date shall occur within 30 days of execution by
all Shareholders below and Buyer, subject to the satisfaction or waiver of all
closing conditions set forth herein. If the Closing Date and closing have not
occurred within 75 days of the Effective Date, then this Agreement will
terminate immediately, except for all of the provisions of Article V other than
Sections 5.2 and 5.6, and except to the extent any party has rights due to a
breach of this Agreement by another party. Subject to the provisions herein,
each Shareholder will receive that amount across from his name on the table
below in exchange for his Shares:
Name of Shareholder Number of Shares Sold Total Payment to Holder
Xxxxxx Xxxx 500 $7,815,713.70
Xxxxxx X. Xxxxxxxxxxx 500 $7,815,713.70
Xxxxxxx St. Xxxxxx 500 $7,815,713.70
Xxxxx X. Xxxxx 806 $12,598,930.48
Xxxxxx Xxxxxxx 125 $1,953,928.42
--- -------------
Total 2,431 $38,000,000.00
The Purchase Price shall be paid by wire transfer, bank cashier's or company
check.
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1.2 Payment of the Purchase Price. Subject to the terms and conditions
contained herein, of the Purchase Price described in Section 1.1, $35,000,000 of
the Purchase Price will be paid on the Closing Date (the "Closing Date
Payment"), and $3,000,000 of the Purchase Price will be paid on the first
anniversary of the Closing Date (as and if adjusted, the "Installment"). The
Closing Date Payment and Installment amount will be paid on a pro-rata basis,
based on the number of Shares sold by each Shareholder relative to the total
number of issued and outstanding shares of Common Stock of Unirez.
1.3 Adjustment of Installment. The amount of the Installment will be
subject to adjustment as explained in Section 4.1 of this Agreement and on
Exhibit A to this Agreement. If less than 2,431 shares of Common Stock are
purchased, then the adjustment will be made on a pro-rata basis, based on the
number of Shares sold by each Shareholder relative to the total number of Shares
purchased in accordance with this Agreement. The Installment shall also accrue
interest from the Closing Date until the date such Installment is paid, if ever,
equal to 6% per annum.
1.4 Allocation of Purchase Price. Seller and each Shareholder agree that
the portion of the Purchase Price payable to each Shareholder that is
consideration for the Non-Competition Agreement shall be as follows:
Xxxxxx Xxxx: $100,000.00
Xxxxxx X. Xxxxxxxxxxx: $100,000.00
Xxxxxxx St. Xxxxxx: $100,000.00
Xxxxx X. Xxxxx: $100,000.00
Xxxxxx Xxxxxxx: $30,000.00
Buyer and Shareholder agree to prepare their respective Internal Revenue Service
forms with respect to the sale of the Shares in a manner that is consistent with
such purchase price allocation, and as otherwise required by Section 4.2(d).
ARTICLE II
THE CLOSING
2.1 Deliveries by Shareholder at the Closing. On the Closing Date and as
part of the transactions contemplated hereby, each Shareholder shall deliver, or
cause to be delivered, to Buyer:
(a) Stock Certificates. Certificates representing the Shares, duly endorsed
in blank or accompanied by appropriate stock powers, in proper form for
transfer, with all transfer taxes paid.
(b) Books and Records. Copies of the books, records, financial data and all
other non-public information relating to Unirez possessed by Shareholder.
Without limiting Shareholder's obligation to provide all such information as of
the Closing Date, Shareholder shall provide all such information as soon as
reasonably possible after the Effective Date.
(c) Consents and Approvals. Evidence of all authorizations, consents,
approvals, waivers and releases, if any, necessary for Shareholder to consummate
the transactions contemplated hereby, in form reasonably acceptable to Buyer.
(d) Non-Competition Agreement. A Non-Competition Agreement substantially in
the form of Exhibit B attached hereto (the "Non-Competition Agreement"),
executed by Shareholder.
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(e) Representations and Warranties; Performance of Obligations. A
certificate signed by Shareholder certifying that (i) the representations and
warranties of Shareholder set forth in this Agreement are true and correct as of
and as if made on the Closing Date, and (ii) Shareholder has performed all
obligations required to be performed by such Shareholder under this Agreement.
(f) Other Documents. Such other documents of any kind and such other
matters as Buyer or its counsel may reasonably request.
2.2 Deliveries by Buyer at the Closing. On the Closing Date as part of the
transactions contemplated hereby and subject to the terms and conditions herein,
the Buyer shall deliver, or cause to be delivered, to Shareholder:
(a) Purchase Price. The Purchase Price in accordance with the terms of
Article I.
(b) Non-Competition Agreements. The Non-Competition Agreement executed by
Buyer.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Shareholder. Except as expressly set
forth on the Disclosure Schedule attached hereto as Exhibit C (which such
disclosure must reference and is limited to the specific representation or
warranty to which such disclosure applies), each Shareholder represents and
warrants, jointly and severally (except where expressly specified below to be
severally and not jointly), to the best of his knowledge, to the Buyer as
follows:
(a) Authority; Execution. Each Shareholder severally and not jointly
represents and warrants that: (i) such Shareholder has all requisite power and
authority to execute this Agreement and Ancillary Documents and to consummate
the transactions contemplated hereby, and (ii) this Agreement and the Ancillary
Documents have been duly executed and delivered by such Shareholder and
constitutes the valid and binding obligation of such Shareholder enforceable in
accordance with its terms.
(b) Organization, Authority and Qualification of Unirez.
(i) Unirez is a corporation validly existing and in good standing under the
laws of the State of Texas with corporate power to own its properties and to
conduct its businesses now conducted by it and is duly qualified as a foreign
corporation to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or use of its assets requires such
qualifications. Unirez has no subsidiaries, and Unirez holds no securities
issued by any other corporation or other business organization. The Business
(as defined below) is operated exclusively by Unirez.
(ii) Each Shareholder severally and not jointly represents and warrants that
the execution and delivery of this Agreement and the other agreements,
instruments and other documents contemplated hereby as being executed and/or
delivered by the applicable party (as to each party, the "Ancillary Documents")
and the consummation of the transactions contemplated by the Agreement and the
Ancillary Documents will not:
(A) conflict with or violate any provision of the articles of incorporation
or bylaws of Unirez (current copies of which shall be provided promptly after
the Effective Date by Shareholder to Buyer) or any judgment, decree or order, of
any Governmental Entity (as defined below) applicable to Unirez or Shareholder;
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(B) violate any federal, state, local or foreign law (including common law),
statute, code, ordinance, rule, regulation or other legally-binding requirement
or regulation ("Law(s)") of any jurisdiction as such Law relates to Unirez, any
Shareholder, the business operated by Unirez (the "Business") or any property or
asset of Unirez;
(C) result in the creation of any lien, pledge, claim, charge, security
interest or other encumbrance, option, defect or other rights of any third
person of any nature whatsoever ("Liens") upon any of the Shares, Common Stock
or any property of Unirez;
(D) result in a default (or grounds therefore), give rise to a right of
termination, cancellation or acceleration or to loss of a benefit, or breach any
prohibition or restriction on assignment or transfer under any contract or other
agreement to which Unirez or any Shareholder is a party or by which Unirez or
any Shareholder or any property of Unirez or any Shareholder (including the
Shares) is bound, or any permit, concession, franchise, authorization or license
relating to the Business; or
(E) require the consent, approval, order or authorization of, or the
registration, declaration or filing with, any court, governmental or
administrative agency, commission, authority, board, bureau or instrumentality,
whether federal, state, local or foreign (a "Governmental Entity") or any
individual, corporation, partnership, joint venture, trust, business association
or other entity (hereinafter, a "Person" which term shall include a Governmental
Entity).
(c) Capitalization of Unirez.
(i) Unirez's authorized capital stock consists of 500,000 shares of common
stock, $.01 par value per share, of which 2,431 shares are issued and
outstanding. Each Shareholder severally and not jointly represents and warrants
that all outstanding shares have been validly issued and are fully paid and
nonassessable, and are owned by the Shareholders as set forth in Section 1.1.
Shareholder will provide, promptly after the Effective Date, Buyer with a
current copy of the Unirez stock ledger. There are no outstanding or authorized
conversion or exchange rights, subscriptions, options, warrants, rights,
contract, calls, puts or other arrangements, agreements or commitments
obligating Unirez or, as represented severally and not jointly by each
Shareholder, obligating such Shareholder, to issue, transfer, dispose of or
acquire any shares of Unirez's capital stock or other securities. Each
Shareholder severally and not jointly represents and warrants that there are no
shareholder agreements, voting agreements or other agreements, written or oral,
relating to any Common Stock or securities other than the Shareholder Agreement
as in effect on the Effective Date, a copy of which will be provided by
Shareholder promptly after the Effective Date (the "Shareholder Agreement").
(ii) Each Shareholder severally and not jointly represents and warrants
that, with respect to his Shares as set forth in Section 1.1: (1) such
Shareholder owns of record and beneficially and has good and marketable title to
the Shares free and clear of any and all Liens, (2) Shareholder has the right to
vote the Shares on any matters as to which any shares of Common Stock are
entitled to be voted, free of any right of any other Person, and (3) upon
completion of the transactions contemplated by this Agreement, Buyer will
acquire good and marketable title to the Shares.
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(d) Compliance with Applicable Laws. Unirez has complied and is in
compliance in all material respects with all Laws, permits, licenses, orders,
ordinances or published regulations of any Governmental Entity. All material
permits, licenses, franchises, trade association certifications, code,
governmental approvals and authorizations or other arrangements that are
necessary to conduct the business of Unirez as it is currently being conducted
have been obtained and each is in full force and effect. Unirez has at all
times conducted the business of Unirez in compliance in all material respects
with the conditions and provisions of such permits, licenses, franchises, trade
association certifications, code and governmental approvals and authorizations.
Without limiting the foregoing, Unirez is and has always been in compliance with
all applicable environmental Laws and labor Laws.
(e) Litigation. There are no pending or threatened, suits, actions,
grievances or proceedings against or relating to Unirez, the Business or any
property or asset of the Business. Each Shareholder severally and not jointly
represents and warrants that there are no pending or threatened, suits, actions,
grievances or proceedings against or relating to such Shareholder's Shares.
There is no unsatisfied or outstanding judgment, decree, injunction, rule or
order of any Governmental Entity or arbitrator which (i) could adversely affect
Unirez or the Business or (ii) seeks to enjoin or prohibit the consummation of
the transactions contemplated by this Agreement.
(f) Title, Condition and Sufficiency of Properties. Unirez has good and
valid title to all of its properties and assets (real or personal, tangible or
intangible), free and clear of any Lien, except for Liens on equipment pursuant
to the applicable lease for such equipment. All equipment, machinery, vehicles,
supplies, tools and other tangible assets of Unirez have been properly
maintained and are in good operating condition and repair (normal wear and tear
excepted). The properties and assets of Unirez, including without limitation
Intellectual Property (as defined below), constitute all of the properties,
assets and goodwill necessary for the conduct of the Business by Unirez as
historically conducted, as currently conducted and as reasonably contemplated to
be conducted in the next year of operations. Unirez's hardware, software, other
technologies and operations are sufficient in all material respects to sustain
and service Unirez's projected growth through December 31, 2004.
(g) Intellectual Property. Unirez owns and has good, valid and exclusive
title to, and has the unrestricted right to license and use, each item of
Unirez's Intellectual Property used in the Business, free and clear of any Lien.
"Intellectual Property" means any and all software and other technology, as well
as any and all copyrights, patents, trademarks, trade secrets and other
intellectual property rights. With respect to any Intellectual Property used in
the Business that is not owned exclusively by Unirez, Unirez has the right to
use such Intellectual Property in the conduct of the Business by Unirez as
historically conducted, as currently conducted and as reasonably contemplated to
be conducted in the next year of operations. All necessary registration,
maintenance and renewal fees in connection with such Intellectual Property have
been made and all necessary documents and certificates in connection with such
Intellectual Property have been filed with the relevant authorities in the
United States or foreign jurisdictions, as the case may be. No person has any
rights to use any of Unirez's Intellectual Property. The operation of the
Business, taken as a whole, as such business currently is conducted, or as
reasonably contemplated to be conducted, has not, does not and will not infringe
or misappropriate the Intellectual Property of any other person. No Person has
or is infringing or misappropriating any Intellectual Property of Unirez.
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(h) Insurance. All casualty, liability, business interruption and other
insurance policies and fidelity bonds held by Unirez are of the types and in the
amounts of coverage at least as great as is customary for businesses of similar
size to Unirez in the industry of Unirez. All such policies and bonds are in
full force and effect and there is no threat by any of the insurers to
terminate, or increase the premiums payable under any of such policies or bonds.
Unirez is in compliance in all material respects with the conditions contained
in such policies and bonds.
(i) Contracts.
(i) Each contract between Unirez and any other party (a "Contract") is a
legal, valid and binding obligation of the parties thereto and is in full force
and effect, and will continue in full force and effect following the
transactions contemplated by this Agreement, in each case and without resulting
in a default (with or without notice or lapse of time or both), giving rise to a
right of termination, cancellation or acceleration or to loss of a benefit or
breaching any prohibition or restriction on assignment or transfer. The rights
under the Contracts are sufficient for the continued conduct of Unirez's
Business after the date hereof in substantially the same manner as conducted
prior to the date hereof. Unirez has performed in all material respects all
obligations required to be performed by it to date under the Contracts and is
not (with or without the lapse of time or the giving of notice, or both) in
breach or default thereunder. Each of the parties to the Contracts other than
Unirez has performed all obligations required to be performed by such party to
date under the Contracts and is not (with or without the lapse of time or the
giving of notice, or both) in breach or default thereunder. No defenses,
offsets or counterclaims to any Contract have been asserted or may be made by
any party thereto other than Unirez, and Unirez has not waived any rights under
any Contract. Shareholder does not know, and has not received any notice of the
intention of any party to cancel, discontinue, fail to renew or replace or
otherwise terminate any Contract, except for the Unirez Contracts with Innpoint,
Inc. and Xxx'x Inn, Inc., which have each given notice of its intent to
terminate effective November 2003. Unirez is not a party to and is not bound by
any provision of any Contract which materially adversely affects or could
reasonably be foreseeable to materially and adversely affect the operations,
earnings, assets, properties or Business of Unirez or the prospects of Unirez,
financial or otherwise.
(ii) Unirez is not party to any agreement, understanding or other
arrangement with respect to any of the following:
(A) employee collective bargaining Contracts and other Contracts with any
labor union, including any past practice determinations or arbitration award;
(B) covenants not to compete and Contracts that restrict or limit in any
respect the ability of Unirez to compete in any line of business or with any
Person in any area;
(C) Contracts granting to any Person a power of attorney or other right to
act on behalf of Unirez;
(D) Contracts under which Unirez is a lessor or sublessor of, or makes
available for use by any third party, (i) any real property owned or leased by
Unirez, or any portion of premises otherwise occupied by Unirez, or (ii) any
material personal property owned or leased by Unirez.
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(E) Contracts under which Unirez has borrowed or loaned any money or issued
or received any note, bond, indenture or other evidence of indebtedness or
directly or indirectly guaranteed any indebtedness, liability or obligation of
any third party;
(F) Contracts under which any other Person has directly or indirectly
guaranteed any indebtedness, liability or obligation of Unirez, or letter of
credit issued to guarantee any obligation of Unirez, or any vendor or customer
of Unirez;
(G) joint venture or similar Contracts;
(H) Contracts that provide that the terms and conditions that would
otherwise govern the relationship of the parties thereto will be altered upon a
change of control of Unirez; or
(I) Contracts providing for the indemnification by Unirez of any Person.
(j) Customers. Except in the ordinary course of business consistent with
customary and usual practices in Unirez's industry, no customer of Unirez has
refused to honor any of its commitments to purchase products or services
provided by Unirez or has provided Unirez with any indication of dissatisfaction
with any of Unirez's products or services for the three year period preceding
the date hereof. None of Unirez's customers are agencies or instrumentalities
of any government and Unirez has no maintenance or service agreements or open
order invoices with any agency or instrumentality of any government.
(k) Accounts Receivable. All accounts receivable and notes receivable of
Unirez are legal, valid and binding obligations of the obligors, have arisen
from bona fide transactions in the ordinary course of business consistent with
past practice and are current and collectible, net of any reserves reflected on
the balance sheet (which reserves have been determined in accordance with GAAP
consistent with past practice). Since the date of the Financial Statements,
Unirez has not (i) written off, cancelled, committed or become obligated to
cancel or write off any accounts receivable or notes receivable; (ii) disposed
of or transferred any accounts receivable or notes receivable; or (iii)
collected, acquired or permitted to be created any accounts receivable or notes
receivable except in the ordinary course of its business consistent with past
practice.
(l) Tax Matters. Unirez has duly and timely filed all Tax (defined below)
returns and reports required to be filed by it and all such returns and reports
are true, correct and complete. Unirez has paid all Taxes due and payable
pursuant to such returns and reports. Unirez has adequately accrued (as
reflected in the Financial Statements) for all Taxes that are not yet due and
payable but are attributable to the operation of Unirez prior to and through the
Closing Date. Unirez has withheld or collected all Taxes required to be
withheld or collected from any payment to an employee, independent contractor or
other person and Unirez has paid the same to the proper Tax receiving officers
or authorized depositories. Unirez has made a valid election to be treated as
an S corporation under Section 1362 of the U.S. Internal Revenue Code of 1986,
as amended (the "Code"), and has qualified as an S corporation under Section
1362 of the Code since such election. No action or proceeding for the
assessment or collection of any Taxes is pending or threatened against Unirez.
No deficiency, assessment or other formal claim for any Taxes has been asserted
or made against Unirez that has not been fully paid or finally settled. No
issue has been formally raised by any taxing authority in connection with an
audit or examination of any return of Taxes. "Tax" or "Taxes" shall mean all
taxes, charges, fees, levies or other assessments, and any interest, additions
and penalties thereon. Shareholder is not a "foreign person" for purposes of
establishing that withholding under Section 1445 of the Code is not required.
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(m) Financial Statements. The Shareholders shall deliver promptly after the
Effective Date to Buyer the audited balance sheets of Unirez as of December 31,
2002, and for the year then ended, and the related income and cash flow
statements for such period, and the unaudited balance sheet of Unirez as of
December 31, 2000 and December 31, 2001 and the year to date balance sheet of
Unirez as of July 31, 2003, August 31, 2003 and the most recent month available,
and the related income and cash flow statements for such periods (collectively,
the "Financial Statements"). The Financial Statements are true, correct and
complete, present fairly in all material respects the financial position and
results of operations of Unirez as of the indicated dates and for the indicated
periods and, except for the Financial Statements for the periods ending December
31, 2000 and 2001, have been prepared in accordance with GAAP, applied on a
consistent basis. Except (i) to the extent (and not in excess of the amounts)
reflected in the most recent Financial Statements or expressly in the Disclosure
Schedule and (ii) current liabilities incurred in the ordinary course of
business, consistent with past practice, as of the Effective Date Unirez has no
liabilities, debts or obligations of any nature or kind (absolute, accrued,
contingent or otherwise), including, without limitation, Taxes payable, deferred
Taxes and interest accrued since the most recent Financial Statements required
to be reflected in the Financial Statements (or the notes thereto) in accordance
with GAAPEach Shareholder agrees to use his best efforts to cause Unirez to
permit Buyer to conduct an audit of Unirez for the years ending December 31,
2000 and 2001, and to cause Unirez and its auditors to cooperate with Buyer and
its respective agents in connection with such audit process. However,
completion of audited financial statements for Unirez for 2000 and 2001 as
discussed above will not be a condition to closing and may be completed after
the Closing Date.
(n) Absence of Certain Changes or Events. There has not been any material
change in the assets, liabilities, business, financial conditions, operations,
results of operations or business prospects of Unirez since July 31, 2003 and
Unirez has conducted its business in the ordinary and usual course consistent
with past practice. Without limiting the generality of the foregoing, since July
31, 2003:
(i) Unirez has not sold, transferred or otherwise disposed of, or suffered
the imposition of any Lien on, any of its assets, other than sales of inventory
for fair value in the ordinary course of business consistent with past practice;
(ii) Unirez has not suffered damage, destruction or loss, whether covered by
insurance or not, to any of its assets;
(iii) Unirez has not entered into or otherwise become a party to any
transaction, commitment, dispute or other event or condition of any character
(whether or not in the ordinary course of business) that, individually or in the
aggregate, has had, or which in the future could reasonably be foreseeable to
have, an adverse effect on the Business or the condition or results of
operations of Unirez;
(iv) Unirez has not changed its method of accounting with respect to the
Business;
(v) Unirez has not issued or sold any capital stock, notes, options,
warrants, swaps, derivatives or other securities, entered into any agreements
with respect to the foregoing, or declared or issued any dividends or
distributions not in the ordinary course of Unirez consistent with past practice
with respect to the foregoing, provided that such restriction shall not prevent
Unirez from making a final distribution which is consistent with the terms of
this Agreement;
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(vi) Unirez has not entered into any agreements or arrangements with any
other person or third party that could result in a liability to Unirez not in
the ordinary course of business consistent with past practice of Unirez;
(vii) Unirez has not made or undertaken, or otherwise committed to make or
to undertake, any material capital expenditures or other material obligations in
connection with the Business; and
(viii) There has not occurred, nor has there been any condition, event,
circumstance, change or effect that could result in a material adverse effect on
the business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects (except as a result of general
economic conditions) of Unirez, the long-term debt or capital stock of Unirez or
the consummation of any of the transactions contemplated by this Agreement (a
"Material Adverse Effect").
(o) Related Party Agreements. Except for the Shareholder Agreement, copies
of which will be provided promptly after the Effective Date by Shareholder to
Buyer, no current or former director, executive officer or stockholder of Unirez
or any affiliate or associate of any of the foregoing (i) is a party to any
contract, agreement, arrangement or other commitment to which Unirez is a party
or by or to which any of its properties or assets is bound or subject, or (ii)
has, directly or indirectly, any material interest (financial or otherwise) in
any agreement, arrangement, contract or other commitment, property or asset
(real or personal), tangible or intangible, owned by, used in or pertaining to
the business, ownership or management of Unirez.
(p) Real Property. Unirez is the sole lessee under every lease to which it
is a party and is in possession of the premises purported to be leased under
such leases, and each such lease is legal, valid and binding without any default
under such lease by Unirez or by the lessor.
(q) Brokers. No agent, broker, finder, investment banker, financial advisor
or other Person will be entitled to any fee, commission or other compensation in
connection with any of the transactions contemplated by this Agreement on the
basis of any agreement, act or statement made by Unirez or Shareholder.
(r) Disclosure. Each Shareholder severally and not jointly represents and
warrants that all information furnished or caused to be furnished by such
Shareholder to the Buyer in connection with the transactions contemplated by
this Agreement is accurate in all material respects. Shareholder represents and
warrants there is no material fact or circumstance of adverse significance to
Unirez or its operations which is not disclosed in this Agreement.
(s) Employees and Benefits.
(i) Except as set forth on the Disclosure Schedule, neither Unirez nor any
ERISA Affiliate (defined below) have any plans, contracts, agreements,
arrangements, commitments and programs relating to employment bonuses,
vacations, sick leave and pay, health and accident insurance, pensions, profit
sharing, retirement welfare, stock options, stock purchases, stock ownership,
savings, severance, incentives, deferred compensation or other employee
compensation or benefits, including any "employee benefit plan" as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") (collectively the "Benefit Plans"). "ERISA Affiliate" means any
entity under common control with Unirez within the meaning of Code Section
414(b), (c), (m) or (o).
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(ii) Unirez is in material compliance with the terms of all the Benefit
Plans and all the Benefit Plans materially comply with all applicable
requirements, as the case may be, of the Code, and ERISA, including minimum
funding standards. No further contributions are owed by Unirez with respect to
the Benefit Plans, any interest of Shareholder in the Benefit Plans or in any
other plan, contract or agreement and the Shareholder hereby consents to the
termination of such Benefit Plans. Unirez is not obligated to grant any
increases in the salaries of, is not obligated to pay any bonus or similar
payment to, any employee of Unirez and may terminate all Benefit Plans on or
prior to the date hereof without any liability.
(iii) No Benefit Plan is, or has been, subject to Title IV of ERISA. No
Benefit Plan provides benefits, including death or medical benefits (whether or
not insured), with respect to current or former employees of Unirez or any ERISA
Affiliate beyond their retirement or other termination of service (other than
coverage mandated by applicable Laws), and neither Unirez nor any ERISA
Affiliate has any binding obligation to provide any employee or group of
employees with any such benefits upon their retirement or termination of
employment.
(iv) Neither Unirez nor any Shareholder is (or will be) obligated to make
any payment or transfer, accelerate any payment or transfer, or otherwise
provide any benefit that would constitute an "excess parachute payment" under
Code Section 280G.
ARTICLE IV
COVENANTS & CLOSING CONDITIONS
4.1 Indemnification. Each party will defend, indemnify and hold the other
parties (including affiliates and respective officers, directors, agents,
representatives, controlling persons, and stockholders) harmless from and pay
any and all damages and expenses, directly or indirectly, resulting from,
relating to, arising out of, or attributable to any one of the following: (a)
any breach of any representation or warranty of such party as if such
representation or warranty were made on and as of the Closing Date; or (b) any
breach of any covenant or obligation of such party in this Agreement; provided
that notice for any such indemnification claim is given no later than two years
from the Closing Date. Each Shareholder also agrees, jointly and severally, to
defend, indemnify and hold harmless Buyer (including affiliates and respective
officers, directors, agents, representatives, controlling persons, and
stockholders) from any loss, liability, claim, damage or expense (including
without limitation reasonable legal fees and expenses), as incurred, directly or
indirectly, resulting from, relating to, arising out of, or attributable to the
conduct of Unirez's business on or prior to the Closing Date that is not
disclosed in writing to Buyer prior to the closing, reflected on its Financial
Statements, or incurred since the date of the Financial Statements in the
ordinary course of business consistent with past practice; provided that notice
for any such indemnification claim is given no later than two years from the
Closing Date. Each Shareholder also agrees, jointly and severally, to defend,
indemnify and hold harmless Buyer (including affiliates and respective officers,
directors, agents, representatives, controlling persons, and stockholders) from
any loss, liability, claim, damage or expense (including without limitation
reasonable legal fees and expenses), as incurred, directly or indirectly,
resulting from, relating to, arising out of, or attributable to any and all
liability for Taxes of Unirez or with respect to Unirez's business on or prior
to the Closing Date, other than Taxes of Unirez resulting from making the
Election described in Section 4.2 of this Agreement (including without
limitation any Tax imposed on "built-in" gains within the meaning of Section
1374 of the Code or similar provision), and other than as reflected on its
Financial Statements, or
10
incurred since the date of the Financial Statements in the ordinary course of
business consistent with past practice. Buyer agrees to defend, indemnify and
hold harmless the Shareholders from any loss, liability, claim, damage or
expense (including without limitation reasonable legal fees and expenses), as
incurred, directly or indirectly, resulting from, relating to, arising out of,
or attributable to the Conversion (as defined in Section 4.2(e) below). Buyer
has the right to offset any amounts due under this provision against the
Installment described in Section 1.2. Any obligation of the Shareholders to
make payment under this section will continue even if there is no amount of the
Installment for the indemnification payment to be offset against. Each
Shareholder's liability under this section is limited to (y) a pro rata amount
of any such damages and expenses, based on the number of Shares sold by such
Shareholder relative to the total number of Shares purchased in accordance with
this Agreement, except to the extent that such claim is based on a several and
not joint representation, in which case any non-breaching Shareholder shall have
no liability, and (z) an aggregate amount not to exceed $3,000,000 for all
Shareholders, provided however, that such aggregate amount limitation will not
apply to claims relating to Sections 3.1(a), 3.1(b), 3.1(c), 3.1(g), or 3.1(l)
or claims arising out of fraud or willful misconduct of a Shareholder. Buyer's
aggregate liability under this section with respect to all indemnities is
limited to the amount of any unpaid portion of Purchase Price, except with
respect to liabilities attributable to the Election and the Conversion (as
defined in Sections 4.2(d) and (e) below). The parties agree to use best
efforts to provide reasonable advance notice of any dispute, claim or settlement
for which indemnification is intended to be sought. No indemnification claim
can be settled without the consent of the party hereto subject to such
indemnification obligation, such consent not to be unreasonably withheld.
4.2 Cooperation; Audit Fees; D&O Insurance; 338(h)(10) Election; Conversion.
(a) From the Effective Date until such date after the Closing Date that
Buyer gains effective control of the board of directors and management of
Unirez, each Shareholder agrees: (i) not to take any action that may interfere
with Buyer's efforts to control the board and management of Unirez; (ii) to use
his best efforts to prevent any actions by Unirez not in the ordinary course of
business of Unirez consistent with past practice or otherwise intended to
prevent or encumber Buyer's efforts to obtain majority ownership of Unirez, or
to control the board and management of Unirez; and (iii) to use his best efforts
to allow Buyer to have access to the books and records of Unirez. From the
Closing Date until such date that Buyer gains effective control of the board of
directors and management of Unirez, each Shareholder agrees to actively
cooperate with all reasonable requests of Buyer in its attempts to control the
board and management of Unirez, including without limitation providing notices
to other Unirez-related parties and resigning from the board upon request of
Buyer.
(b) Buyer shall pay all reasonable and necessary fees and expenses incurred
in connection with the audits of Unirez conducted pursuant to Section 3.1(m) for
the periods ending December 31, 2000 and 2001.
(c) Buyer agrees not to terminate the current directors' and officers'
insurance policy of Unirez before expiration of the coverage for which all
premiums and amounts have been paid as of and as reflected in the most recent
Financial Statements, or to take action to amend such policy to terminate
coverage of any Shareholder that is a beneficiary of such policy before such
expiration.
(d) The Shareholders and Buyer shall jointly make an election under Section
338(h)(10) of the Code and any comparable provision of state or local law (the
"Election") with respect to the purchase and sale of the Shares of Unirez in
accordance with applicable Tax laws and as set forth herein and shall cooperate
with each other to take all actions necessary and appropriate as may be required
to effect and preserve such Election. Without limiting the generality of the
foregoing, upon the Closing Date, all Shareholders shall execute and deliver to
Buyer an executed Form 8023 (and any similar forms required under state or local
tax law). After the Closing Date, Buyer shall prepare
11
on a reasonable basis consistent with applicable U.S. Treasury regulations and
deliver to the Shareholders a schedule allocating the Purchase Price plus the
liabilities of Unirez among the assets of Unirez in connection with the
Election. The Shareholders and Buyer hereby agree that such allocation shall be
conclusive and binding on each of them (and their respective affiliates) for all
tax purposes and that they will not take nor permit their affiliates to take any
position inconsistent with such allocation unless otherwise required by law. In
connection with the Election, Buyer shall be obligated to pay prior to the time
such taxes are due to the Shareholders an amount equal to all Taxes that are
imposed on or incurred by the Shareholders which exceed those Taxes which the
Shareholders would have incurred from the sales of the Shares if the Election
had not been made (the "Section 338 Cost"). The Section 338 Cost shall be equal
to the sum of (i) the increased Tax liability of the Shareholders resulting from
the deemed sale of assets for Tax purposes as contemplated by the Election as
opposed to the sale of the Shares as if such Election had not been made, and
(ii) the increased Tax liability of Shareholders as a result of their receipt of
the amounts described in (i) and (ii). Shareholders shall provide Buyer with
reasonably detailed information that will allow Buyer to estimate or confirm the
Section 338 Cost, and, upon the request of Buyer, reasonable access to
additional information and records of Unirez and the Shareholders that will
allow Buyer to estimate or confirm the Section 338 Cost.
(e) Upon the request and at the expense of Buyer, the Shareholders will take
all necessary actions to convert Unirez immediately prior to the closing of the
transactions contemplated hereby into a limited liability partnership organized
under the laws of the State of Delaware (or other entity acceptable to Buyer)
(the "Conversion"). The Conversion will be effected by a conversion or by such
other form of transaction as may be available under applicable law. In
connection with the Conversion, the partnership interests or other equity
interests in the converted entity (the "Units") will possess characteristics no
less favorable than the characteristics of each Shareholder's Shares immediately
prior to the Conversion and Unirez shall maintain its status as an S corporation
for federal income tax purposes. If such Conversion occurs, then for purposes
of this Agreement (a) all references to Unirez in this Agreement shall be deemed
to refer to the entity resulting from the conversion of Unirez as described in
this Section, as well as its predecessor corporation; (b) all references to
Shares or shares of Common Stock in this Agreement shall be deemed to be
references to the Units of the new entity and (c) any references, including
representations and warranties, to Unirez as a corporation incorporated under
the laws of the State of Texas will be deemed to be a reference to Unirez as a
limited liability partnership organized under the laws of the State of Delaware
(or other entity acceptable to Buyer, as described above).
4.3 Advice of Changes. From the Effective Date until such date after the
Closing Date that Buyer gains effective control of the board of directors and
management of Unirez, each Shareholder will promptly advise Buyer in writing of
any fact which, if existing or known on the Effective Date, would have been
required to be disclosed pursuant to this Agreement, could make untrue any
representation or warranty herein (as if such representation were made by Unirez
or Shareholder), could make any obligation or condition herein impossible or
economically unreasonable to fulfill, or which would represent a material fact
the disclosure of which would be relevant to Buyer.
4.4 Conduct of the Business Prior to the Closing. Except as Buyer may
otherwise consent in writing prior to the Closing Date, neither any Shareholder
nor Unirez will enter into any transaction, take any action or fail to take any
action which would result in, or could reasonably be expected to result in or
cause, any of the representations and warranties herein not to be true as of and
as if made on the Closing Date. In addition, each Shareholder will use his best
efforts to prevent Unirez's shareholders, directors and management from taking
(or failing to take, as appropriate) any actions that (a) are not in the
ordinary course of business of Unirez consistent with past practice, (b) would
render
12
untrue any representation or warranty herein (as if such representation were
made by Unirez and Shareholder on and as of the Closing Date), (c) could make
any obligation or condition herein impossible or economically unreasonable to
fulfill for Buyer, (d) could otherwise reasonably be expected to adversely
affect the interests of Buyer, or (e) result in the destruction of books or
records or Unirez, (f) would result in a liability on the balance sheet dated as
of the Closing Date that was not reflected on the balance sheet dated August 31,
2003, or would change the amount of a liability on the balance sheet dated as of
the Closing Date from the amount reflected for that same liability on the
balance sheet dated August 31, 2003, other than changes that were incurred in
the ordinary course of business.
4.5 Closing Date Financial Position. As of the Closing Date, Unirez will
have: (a) cash in the amount of at least $1,000,000; and (b) current accounts
receivable that are at least $1,250,000 in excess of all payables.
4.6 No Other Bids. Each Shareholder will not, and will not permit any
investment banker, attorney, accountant or other representative retained by
Shareholder to, solicit, encourage, furnish information, or take any other
action to agree to endorse or otherwise facilitate any inquiries or the making
of any proposal which constitutes, or reasonably may be expected to lead to, any
proposal for a merger or other business combination involving Unirez or any
proposal to acquire in any manner any of the shares of Common Stock or assets of
Unirez, except for the transactions contemplated by this Agreement and sales of
Unirez's assets in the ordinary course of business.
4.7 Completion of Due Diligence. From and after the Effective Date,
Shareholder will use best efforts to provide and cause Unirez to provide full
and complete access to all information relevant to Unirez. Buyer will complete
its due diligence investigation of Unirez within 16 calendar days of the
Effective Date, subject to the cooperation of Shareholders as required herein.
4.8 Conditions Precedent to Obligations of Buyer. Buyer's obligations on
the Closing Date are subject to the satisfaction of each condition below.
(a) Accuracy of Representations and Warranties; Performance of Obligations.
The representations and warranties of Shareholder set forth in this Agreement
are true and correct as of and as if made on the Closing Date and Effective
Date. Shareholder has performed all obligations required to be performed by
such Shareholder under this Agreement.
(b) No Adverse Changes. Since the Effective Date, there must not have been
any event, series of events or lack of occurrence thereof that could reasonably
be expected to result in a Material Adverse Effect, which includes without
limitation any actions not in the ordinary course of business of Unirez
consistent with past practice (except as contemplated by this Agreement),
pending or threatened litigation, adverse actions by a Governmental Entity, or
material terrorism, war, fire, flood or other "acts of God".
(c) Consents & Approvals. Shareholder shall have received all
authorizations, consents, approvals, waivers and releases, if any, necessary for
Shareholder to consummate the transactions contemplated hereby. Such approvals
include but are not limited to a termination of the Shareholder Agreement.
(d) Due Diligence; Board Approval. Buyer has satisfactorily completed (as
determined in the sole discretion of Buyer) all their due diligence with respect
to the Common Stock, Unirez and the Business. Buyer shall have obtained
approval for the transactions contemplated herein by its board of directors,
which may be granted or withheld in accordance with such directors' discretion
and fiduciary duties.
13
(e) 100% of Common Stock. Buyer shall have the right to obtain 100% of the
issued and outstanding Common Stock of Unirez as of the Closing Date.
4.9 Termination of Shareholder Agreement. Effective upon and as of the
Closing Date, the Shareholders hereby terminate the Shareholder Agreement.
ARTICLE V
GENERAL PROVISIONS
5.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by overnight
courier or facsimile with proof of delivery or mailed by registered or certified
mail (return receipt requested) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(a) if to the Buyer, to: Pegasus Solutions, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxxxxx
Xxxxxxxx Xxxxxx X, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxx X. Xxxxx;
Facsimile: (000) 000-0000; and
Xxxx Xxxxxxxxx;
Facsimile: (000) 000-0000
(b) if to Shareholder, to the address listed on the attached signature page.
Any notice that is delivered personally or by overnight courier or facsimile in
the manner provided herein shall be deemed to have been duly given to the party
to whom it is directed upon delivery to their address as provided herein. Any
notice that is addressed and mailed in the manner herein provided shall be
conclusively presumed to have been given to the party to whom it is addressed at
the close of business, local time of the recipient, on the fourth day after the
day it is so placed in the mail.
5.2 Survival. Except as otherwise specified in a provision hereof, the
provisions of this Agreement shall remain in full force and effect
notwithstanding the closing provided for in this Agreement, provided that the
representations and warranties under Sections 3.1(d), 3.1(e), 3.1(f) , 3.1(g),
3.1(h), 3.1(i), 3.1(j), 3.1(k), 3.1(m), 3.1(n), 3.1(o), 3.1(p), 3.1(q), 3.1(r)
and 3.1(s) shall survive only for a period of two years from the Closing Date.
5.3 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, which such delivery may be by
facsimile.
5.4 Entire Agreement: No Third Party Beneficiaries. This Agreement,
including the documents and instruments referred to herein (a) constitutes the
entire agreement and supersedes all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof;
(b) is not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder, and no party has relied on any representation,
arrangement, understanding or agreement (whether written or oral) not expressly
set out or referred to in this Agreement.
14
5.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING THE CONFLICTS OF LAW
OR CHOICE OF LAW PROVISIONS THEREOF.
5.6 Release. Effective as of the Closing Date, each Shareholder, on behalf
of such Shareholder and each of its heirs, representative, successors, and
assigns (each a "Releasor"), hereby releases and forever discharges Buyer, the
other Shareholders that are party to this Agreement and Unirez and each of their
respective officers, directors, employees, agents, stockholders, controlling
persons, representatives, affiliates, successors and assigns (each a "Releasee")
from any and all actions or liabilities whatsoever, which a Releasor may have
against the respective Releasees arising prior to or as of the Closing Date, or
arising in connection with matters contemplated by this Agreement, including
without limitation any rights to indemnification or reimbursement from Unirez;
provided however (a) that nothing contained herein will operate to release any
obligation of Buyer or any Shareholder under the Agreement, and (b) that such
release will terminate entirely if the Closing Date and closing does not occur
within 75 days of the Effective Date. Shareholder irrevocably covenants to
refrain from commencing or causing to be commenced any legal cause of action of
any kind against any Releasee, based on any matter purported to be released
hereby. Without limiting the generality of the foregoing, effective as of the
Closing Date, all the parties to this Agreement specifically release Shareholder
Xxxxx from any usury claim that Unirez may now or hereafter allege against
Shareholder Xxxxx in connection with Shareholder Xxxxx'x $200,000 loan to Unirez
(the principal and interest for which have been repaid in full) on September 13,
2000 and the concurrent issuance of 306 shares of Common Stock by Unirez to
Shareholder Xxxxx.
5.7 Publicity. Shareholder shall not (i) issue or cause the publication of
any press release or other public announcement, or (ii) otherwise disclose to
third parties, this Agreement, its terms or the transactions contemplated by
this Agreement without the consent of Buyer.
5.8 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto without the
prior written consent of the other parties, except that the Buyer may assign, in
its sole discretion, any or all of its rights, interests and obligations
hereunder to any affiliate or any direct or indirect wholly-owned subsidiary of
the Buyer. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and permitted assigns.
5.9 Severability. If any provision of this Agreement, or any portion of any
provision hereof, shall be deemed invalid or unenforceable pursuant to a final
determination of any court of competent jurisdiction or as a result of future
legislative action, such determination or action shall be construed so as not to
affect the validity or enforceability of any other portion hereof and the
provision deemed invalid or unenforceable shall be enforced to the greatest
extent permitted by law.
5.10 Amendment. This Agreement may be amended only by a written instrument
duly signed by each of the parties hereto.
5.11 Waiver. Any of the terms, covenants, representations, warranties or
conditions of this Agreement may be waived only by a written instrument signed
by the party to this Agreement waiving compliance. No waiver by any party to
this Agreement of any condition or breach of any term, covenant, representation,
or warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition or of the breach
of any other term, covenant, representation or warranty set forth in this
Agreement.
15
5.12 Time is of the Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
5.13 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
5.14 Further Assurances. From and after the Closing Date, each Shareholder
will take all action as may be necessary or appropriate in order to carry out
the purposes of this Agreement and to vest Buyer with full title to all of the
Shares purchased in accordance with this Agreement.
5.15 Specific Performance. Each party to this Agreement acknowledges that
money damages would be both difficult to calculate and would provide an
insufficient remedy for any breach of this Agreement by any party and that any
breach would cause the other party hereto irreparable harm. Accordingly, each
party to this Agreement also agrees that, in the event of any breach or
threatened breach of the provisions of this Agreement by such party, the other
parties to this Agreement are entitled to equitable relief without the
requirement of posting a bond or other security, including in the form of
injunctions and orders for specific performance.
5.16 Confidentiality. Except as provided herein, no party hereto or their
respective affiliates, employees, agents, and representatives will disclose to
any third party any confidential information concerning the business or affairs
of Buyer, Shareholder or Unirez ("Confidential Information") that it may have
acquired from such party in the course of pursuing the transactions contemplated
herein or in a fiduciary capacity without the prior written consent of the
Buyer, Shareholder or Unirez, as the case may be; provided, however, any party
may disclose any such Confidential Information as follows: (a) to such party's
affiliates and its or its affiliates' employees, lenders, counsel, or
accountants, for whose actions the applicable party will be responsible; (b) to
comply with any applicable law or order, provided that the party making the
disclosure notifies the other party of any action of which it is aware which may
result in disclosure; (c) to the extent that the Confidential Information is or
becomes generally available to the public through no fault of the party or its
affiliates making such disclosure; and (d) to the extent that the same
information becomes available (on a non-confidential basis) to the disclosing
party from another source that, to the knowledge of the disclosing party, has no
confidentiality obligation regarding such information. As of the Closing Date,
each Shareholder waives any cause of action arising out of access of Buyer or
its representatives to Confidential Information relating to Unirez.
Notwithstanding the foregoing, Buyer may make such public disclosure of with
respect to this Agreement as may be required by securities laws (as determined
in the sole discretion of Buyer), provided that Buyer will use commercially
reasonable efforts to provide Shareholders with prior notice of any public
announcement prior to the Closing Date. Each party hereto is aware, and
Shareholders will advise each representative of Unirez who is informed of the
matters herein, of the restrictions imposed by the United States securities laws
on the purchase or sale of securities by any person who has received material,
non-public information from the issuer of such securities and on the
communication of such information to any other person when it is reasonably
foreseeable that such other person is likely to purchase, sell or hold such
securities in reliance upon such information. Notwithstanding anything to the
contrary herein, such confidentiality obligations shall not apply to the "tax
treatment or tax structure" (as that phrase is used in Section 1.6011-4(b)(3)
(or any successor provision) of the U.S. Treasury regulations) of the
transactions contemplated by this Agreement, provided however that the
confidentiality obligations nevertheless shall apply at a given time to any and
all items of information not required to be freely disclosable at such time in
order for the transactions hereunder not to be treated as "offered under
conditions of confidentiality" within the meaning of the relevant U.S. Treasury
regulations.
16
5.17 Consistent Provisions. Buyer represents that the substantive terms of
this Agreement are intended to be applicable to all Shareholders listed in
Section 1.1. Buyer agrees that it will not make any material amendments or
concessions with respect to the purchase of Shares from any Shareholder that are
more favorable to such Shareholder than the provisions of this Agreement without
the consent of each other Shareholder party to this Agreement.
5.18 Expenses. All expenses incurred in connection with the preparation and
negotiation of this Agreement, and the consummation of the transactions
contemplated hereby, shall be paid by the party to the Agreement incurring such
expense.
[Signature page follows]
17
IN WITNESS WHEREOF, Buyer has caused this Agreement to be signed by their duly
authorized respective officers, and Shareholder has signed this Agreement, all
as of the Effective Date.
BUYER:
PEGASUS SOLUTIONS, INC., a Delaware corporation
By: /s/ Xxxx X..Xxxxx, III
Name: Xxxx X. Xxxxx, III
Title: Chief Executive Officer
18
WITNESS: SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxxx
Print Name:_______________ Print Name: Xxxxxx X. Xxxxxxx
Address: __________________
Print Name:_______________ __________________
WITNESS: [Consent of Spouse]
___________________________ ____________________________
Print Name:_______________ Print Name:________________
Print Name:_______________
WITNESS: SHAREHOLDER:
___________________________ /s/ Xxxxxxx St. Xxxxxx
Print Name:_______________ Print Name: Xxxxxxx St. Xxxxxx
Address:____________________
Print Name:_______________ ____________________
____________________
WITNESS: [Consent of Spouse]
___________________________ /s/ Xxxxx St. Xxxxxx
Print Name:_______________ Print Name: Xxxxx St. Xxxxxx
Print Name:_______________
19
WITNESS: SHAREHOLDER:
___________________________ /s/ Xxxxx X. Xxxxx
Print Name:_______________ Print Name: Xxxxx X. Xxxxx
Address:____________________
Print Name:_______________ ____________________
____________________
WITNESS: [Consent of Spouse]
___________________________ /s/ Xxxxxxx X. Xxxxx
Print Name:_______________ Print Name: Xxxxxxx X. Xxxxx
Print Name:_______________
WITNESS: SHAREHOLDER:
___________________________ /s/ Xxxxxx X. Xxxx
Print Name:_______________ Print Name: Xxxxxx X. Xxxx
Address:____________________
Print Name:_______________ ____________________
____________________
WITNESS: [Consent of Spouse]
___________________________ /s/ Xxxxxx Xxxx
Print Name:_______________ Print Name: Xxxxxx Xxxx
Print Name:_______________
20
WITNESS: SHAREHOLDER:
___________________________ /s/ Xxxxxx Xxxxxxxxxxx
Print Name:_______________ Name: Xxxxxx Xxxxxxxxxxx
Address:____________________
Print Name:_______________ ____________________
____________________
WITNESS: [Consent of Spouse]
___________________________ /s/ Xxxxxxxxx Xxxxxxxxxxx
Print Name:_______________ Name: Xxxxxxxxx Xxxxxxxxxxx
Print Name:_______________
21
Exhibit A
Adjustment of Installment
(a) Within forty-five (45) days following the Closing Date, Buyer will cause
Unirez to prepare in accordance with GAAP and deliver to the Shareholders (i) a
Balance Sheet, dated as of the Closing Date, certified by an officer of Buyer as
having been prepared in accordance with this Exhibit A, and (ii) a statement
(such statement, together with the Balance Sheet dated as of the Closing Date,
being referred to as the "Closing Statement") setting forth the Net Worth and
the adjustment amount determined in accordance with Section (d) below. The
Closing Statement will include in reasonable detail the calculation of the Net
Worth in accordance with Section (d) below.
(b) If the Shareholders disagree with all or part of the Closing Statement,
they may, within ten (10) business days after receipt of the Closing Statement,
deliver a written notice to Buyer setting forth their disagreement. This notice
of disagreement must specify in reasonable detail those items or amounts as to
which the Shareholders disagree and the basis of the disagreement. If no notice
of disagreement is timely delivered, the Closing Statement will be final,
conclusive and binding on the parties hereto.
(c) If a notice of disagreement is timely delivered by the Shareholders
pursuant to Section (b) above, the parties will, during the ten (10) business
days following delivery, use their reasonable best efforts to reach agreement on
the disputed items. If an agreement is reached, the Closing Statement, as so
agreed, will be final and binding on the parties hereto. If the parties are
unable to reach agreement, KPMG or another nationally recognized "Big Four"
accounting firm on which the parties mutually agree (the "Reviewing
Accountants") will be retained to resolve the dispute. The Reviewing
Accountants will address only those items or amounts in the Closing Statement as
to which the Shareholders have disagreed. The Reviewing Accountants will
deliver to the Shareholders and Buyer, as promptly as practicable, but in no
event later than thirty (30) days after submission to the firm of the disputed
items, a report setting forth its adjustments, if any, to the Closing Statement
and the calculations supporting such adjustments. This report will be final and
binding upon the parties hereto and the Closing Statement, as adjusted pursuant
to such report, will be final and binding on the parties hereto. The cost of
the Reviewing Accountants' review and report shall be borne equally by the
Shareholders and Buyer.
(d) Upon finalization of the Closing Statement, either upon acceptance by
the Shareholders or, in the event of a dispute, upon agreement of the parties to
the Agreement involved in the dispute or the determination by the Reviewing
Accountants, if total assets minus total liabilities reflected on the Closing
Statement ("Net Worth") is less than $2,250,000 (which Closing Statement Net
Worth must be comprised of at least $1,000,000 of cash and an excess of current
receivables over all payables of $1,250,000), then the Installment will be
reduced by the difference between $2,250,000 and the Net Worth shown on the
Closing Statement. Where GAAP allows alternatives for accounting for an item,
the item will be presented in the manner that results in (i) the greater Net
Worth and (ii) the alternative most compliant with the cash and current
receivables components described above, provided that such GAAP alternative is
consistent with the past practice of Unirez and industry standards. In
addition, the Installment may also be reduced in accordance with Section 4.1 of
the Agreement. If the difference exceeds the amount of the Installment, then
the Installment will not be made and each Shareholder will pay promptly to Buyer
such Shareholder's pro rata amount (based on such Shareholder's Shares sold
relative to the total number of Shares sold pursuant to this Agreement) of the
aggregate amount of the excess.
EXHIBIT B
NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") dated as of October ___,
2003 (the "Effective Date") by and between Pegasus Solutions, Inc., a Delaware
corporation ("Buyer"), and ________________, ("Seller", and together with Buyer,
the "Parties" and each individually, a "Party").
RECITALS:
A. Pursuant to a Stock Purchase Agreement (the "Stock Purchase Agreement")
dated October ___, 2003 by and among Buyer, Seller and certain other parties,
Buyer is to acquire Seller's Shares of Unirez, Inc., a Texas corporation (the
"Company").
B. Pursuant to the Stock Purchase Agreement, the Parties are required to
execute and deliver this Agreement in connection with the closing of the
purchase and sale of the Shares.
C. Undefined capitalized terms herein are defined in the Stock Purchase
Agreement.
NOW THEREFORE, the parties, intending to be legally bound, hereby agree as
follows:
1. Acknowledgments by Seller. Seller acknowledges that (a) Seller is a
stockholder, director [and employee] of the Company and, in such capacity, has
occupied a position of trust and confidence with the Company prior to the date
hereof and has become familiar with the Company's confidential information, (b)
Buyer would not have entered into the Stock Purchase Agreement if Seller did not
enter into this Agreement, and (c) Seller is receiving substantial benefits
under the Stock Purchase Agreement.
2. Restrictive Covenants.
2.1 In consideration of the payment that Seller receives under the Stock
Purchase Agreement, Seller hereby agrees that for a period of four (4) years
from the Closing Date, Seller, directly or indirectly, alone or as a partner,
joint venturer, officer, director, member, employee, consultant, agent,
independent contractor, investor or equity interest holder of, or lender to, any
Person or business, will not:
(a) engage in any business that is in competition with any business in
which Buyer or any of its affiliates is engaged as described on Attachment B-1
hereto.
(b) solicit for employment or other similar relationship, any employee or
then currently active independent contractor of Buyer or any of its affiliates.
2.2 Notwithstanding the foregoing, the beneficial ownership of less than 1%
of the equity interests of any Person having a class of equity interests
actively traded on a national securities exchange or over-the-counter market
will not be deemed, in and of itself, to breach the prohibitions of this Section
2.
2.3 Notwithstanding the foregoing, the term of the restrictions contemplated
herein shall be extended in the event of and by the length of any violation by
Seller of Seller's obligations herein.
2.4 Seller agrees and acknowledges that the restrictions in this Section 2
are reasonable in scope and duration and are necessary to protect Buyer and its
affiliates. Seller agrees and acknowledges that Buyer may, without notifying
Seller, notify any subsequent employer or affiliated entity of Seller of
Seller's rights and obligations under this Section 2.
2.5 To the extent permitted by law, if it should ever be held that any
provision contained herein does not contain reasonable limitations as to time,
geographical area or scope of activity to be restrained, then the court or other
authority so holding shall at the request of the Buyer reform such provisions to
the extent necessary to cause them to contain reasonable limitations as to time,
geographical area, and scope of activity to be restrained and to give the
maximum permissible effect to the intentions of the parties hereto set forth
herein; and the court or other authority shall enforce such provisions as so
reformed. If, notwithstanding the foregoing, any provision contained in this
Agreement shall be held to be illegal, invalid, or unenforceable under present
or future laws, such provision shall be fully severable; this Agreement shall be
construed and enforced as if such illegal, invalid, or unenforceable provision
had never comprised a part hereof; and the remaining provisions hereof shall
remain in full force and effect and shall not be affected by the illegal,
invalid, or unenforceable provision or by its severance herefrom. Furthermore,
in lieu of such illegal, invalid, or unenforceable provision, there shall be
added automatically by the Buyer as a part hereof a provision as similar in
terms to such illegal, invalid, or unenforceable provision as may be possible
and be legal, valid and enforceable, and the parties to this Agreement hereby
agree to such provision.
3. Conflicts of Interest. Seller represents to Buyer as follows: (a) there
are no restrictions, agreements or understandings, oral or written, to which
Seller is a party or by which Seller is bound that prevent or make unlawful
Seller's execution or performance of this Agreement, and (b) Seller is not, as
of the Effective Date, in violation of this Agreement.
4. Miscellaneous.
4.1 Entire Agreement. This Agreement and the certificates, documents,
instruments and writings that are delivered pursuant hereto, constitutes the
entire agreement and understanding of the Parties in respect of its subject
matters and supersedes all prior understandings, agreements, or representations
by or among the Parties, written or oral, to the extent they relate in any way
to the subject matter hereof. Except as expressly contemplated hereby and except
for Buyer's affiliates, each of which will be deemed a third party beneficiary
of all obligations of Seller under this Agreement, there are no third party
beneficiaries having rights under or with respect to this Agreement.
4.2 Successors. All of the terms, agreements, covenants, representations,
warranties, and conditions of this Agreement are binding upon, and inure to the
benefit of and are enforceable by, the Parties and their respective successors.
4.3 Time. Time is of the essence in the performance of this Agreement
4.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which together
will constitute one and the same instrument.
4.5 Governing Law. This Agreement and the performance of the Parties'
obligations hereunder will be governed by and construed in accordance with the
laws of the State of Texas, without giving effect to any choice of law
principles. Each Party submits to the jurisdiction of any state or federal
court sitting in Dallas, Texas, in any action arising out of or relating to this
Agreement and agrees that all claims in respect of the action may be heard and
determined in any such court.
4.6 Amendments and Waivers. No amendment, modification, replacement,
termination, or cancellation of any provision of this Agreement will be valid,
unless the same will be in writing and signed by the Parties. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, may be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising because of any prior or
subsequent such occurrence.
4.7 Remedies. If Seller is found to have breached any provision of this
Agreement, then, in addition to all other remedies that may be available to the
applicable Person, an amount of time equal to the period Seller was found to be
in breach will be added to the time periods contemplated by this Agreement. The
Parties agree and acknowledge that the breach of any provision of this Agreement
will cause irreparable damage to Buyer and its affiliates and upon breach of any
provision of this Agreement, Buyer and its affiliates will be entitled to
injunctive relief, specific performance, or other equitable relief without bond
or other security; provided, however, that the foregoing remedies will in no way
limit any other remedies that Buyer or any of its affiliates may have. Buyer
may, without notifying Seller, notify any subsequent employer or affiliated
entity of Seller of Seller's rights and obligations under this Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this Noncompetition
Agreement as of the date first above written.
BUYER
Pegasus Solutions, Inc.
By:_______________________________
Name:_____________________________
Title:____________________________
SELLER
___________________________________
Name:___________________, individually
Attachment B-1
to Noncompetition Agreement
Central Reservation Services
Central Reservation Services is a range of services that include centralized
reservation management technology, access to distribution channels, and business
process outsourcing, such as call center services and data management services.
Representation Services
A set of services for independent hotels and small chains that includes sales
and marketing services, distribution channel connectivity, and voice services.
Distribution Services
Distribution Services connects hotels and channels to manage and distribute
hotel bookings between and among consumers, travel agents, third-party internet
sites, GDSs, hotel central reservation systems, and hotel property management
systems.
- ADS - connectivity from hotels to distributors for the purposes of
checking availability and making bookings for hotels.
- GDS - connectivity from hotels to all GDSs for the purposes of checking
availability and making bookings for hotels.
- Netbooker - engine and web interface that can be private labeled for a
hotel or distributor for the purposes of checking availability and making
bookings for hotels
- Merchant Engine - application that manages distribution and xxxx-up of
merchant hotel transactions between distributors and hotels.
- PegsTour - application that manages distribution and xxxx-up of hotel
allocation transactions between tour operators, wholesale distributors and
hotels.
- Xxxxxxxxx.xxx - consumer website for booking hotels
Financial Services
- Pegasus Commission Processing - a travel agency membership service
(focused on payees) that processes commissions and incentives from travel
suppliers to agency payees
- Electronic Reconciliation and Tracking - a service that provides complete
commission reconciliation, tracking and reporting services to assist agencies
- Global Commission Services - an outsourced commission payment service
provided to suppliers (Payor focused) that makes payments to travel agencies
- PegsPay - an outsource service that processes and manages merchant net
rate payments by paying hotels and other travel suppliers for net rate
inventory; and paying incentives, revenue share, or commissions to multiple
distribution partners/affiliates
Property Management Services
- Pegasus Central - web-based property management system that automates
hotel front office management functions
- NovaPlus and GuestView - applications that automate hotel front office
management functions
Exhibit C
Disclosure Schedule
1. Section 3.1(a) Subject to compliance with right of first refusal
provisions of the Shareholder Agreement (as defined in Section 3.1(c)).
2. Section 3.1(b)(ii)(B) The Shareholders specifically make no
representations with respect to the application of any antitrust Law to the
transactions contemplated by the Agreement.or Ancillary Documents.
3. Section 3.1(b)(ii)(D) Certain of Unirez's hotel reservation
agreements provide that the hotel Section 3.1(i) has the right to terminate
the agreement in the event of a sale of Unirez.
4. Section 3.1(c) Englander Stock Purchase Agreement, dated December 20,
2002, provides for 250 shares to be acquired by Unirez with payment pursuant to
promissory note (face amount of $474,000, payable over 24 months), secured by
such 250 shares.
5. Section 3.1(f) Certain equipment is leased by Unirez and is not owned
by Unirez.
6. Section 3.1(g) Unirez licenses certain off-the-shelf or otherwise
commercially available software pursuant to customary license arrangements.
7. Section 3.1(i)(i) Innpoints, Inc. and Xxx'x Inn, Inc. each have given
notice of their intent Section 3.1(n) to terminate their respective
reservation agreement with Unirez effective November 2003.
8. Section 3.1(i)(ii) Unirez has certain "revenue sharing" agreements
with certain of its international representatives. Certain of the reservation
agreements have customary indemnification clauses.
9. Section 3.1(j) Certain customers may not be current in the amounts
due to Unirez for services provided by Unirez.
10. Section 3.1(k) Certain accounts receivable may be written off in the
ordinary course of business.
11. Section 3.1(s) 401K Plan with ADP (one year waiting period with no
employer match); Premium Only Plan (P.O.P. Section 125) with Ceridian (no cost
for employees and shareholders do not participate); Medical Insurance PPO Plan
with Humana Choice Care (PPO1-employee monthly contributions of $80.00;
PPO2-employee monthly contributions of $60.00); Life Insurance Policy for
$30,000.00 with Humana (at no cost for employee); Optional Dental and Extra Life
Insurance with METlife (100% paid by employee); Optional Long Term Disability
with METlife (employee monthly contributions of $1.00).
Amendment to the Stock Purchase Agreement
Reference is made to that certain Stock Purchase Agreement (the
"Agreement"), dated October 24, 2003, by and among Pegasus Solutions, Inc.
("Buyer") and each shareholder of Unirez, Inc. (each a "Shareholder" and
collectively, the "Shareholders"). This Amendment to the Stock Purchase
Agreement (this "Amendment"), dated as of November 14, 2003, is entered into by
and among Buyer and the Shareholders. All terms used but not defined in this
Amendment shall have the meanings ascribed to such terms in the Agreement.
WHEREAS, the Buyer and Shareholders desire to amend the Agreement solely as set
forth below.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Closing Date. Notwithstanding any conflicting provisions in Section 1.1
of the Agreement or otherwise, Buyer and Shareholders agree that the Closing
Date shall be December 1, 2003, subject to the satisfaction or waiver of all
closing conditions set forth in the Agreement.
2. Payables. As it relates to Section (d) of Exhibit A of the Agreement,
the term "all payables" refers to those payables that are included on the
balance sheet of Unirez (in accordance with GAAP and consistent with past
practice) as of the Closing Date.
3. Buyer Designee. Buyer may designate an affiliated entity to acquire any
portion of the ownership interests of the Shareholders in Unirez.
4. Treatment as Asset Sale. Buyer and each Shareholder agree and
acknowledge that Shareholders' sale of interests in Unirez to Buyer (including
any Buyer designee) shall be treated as an asset sale for state sales tax
purposes.
5. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
BUYER: SHAREHOLDER:
Pegasus Solutions, Inc.
/s/ Xxx X. Xxxxx /s/ Xxxxxxx St. Xxxxxx
-------------------------------- ----------------------------------
Print Name: Xxx X. Xxxxx Print Name: Xxxxxxx St. Xxxxxx
Title: EVP and General Counsel
SHAREHOLDER: SHAREHOLDER:
/s/ Xxxxxx Xxxxxxx /s/ Xxxxxx X. Xxxxxxxxxxx
-------------------------------- -------------------------------------
Print Name: Xxxxxx Xxxxxxx Print Name: Xxxxxx X. Xxxxxxxxxxx
SHAREHOLDER: SHAREHOLDER:
/s/ Xxxxx X. Xxxxx /s/ Xxxxxx Xxxx
-------------------------------- -------------------------------------
Print Name: Xxxxx X. Xxxxx Print Name: Xxxxxx Xxxx
