AGREEMENT FOR THE PURCHASE
AND SALE OF ASSETS
Between
AremisSoft Corporation, a Delaware corporation,
as Purchaser,
Eltrax Systems, Inc., a Minnesota corporation,
and Eltrax Hospitality Group, Inc., a Georgia corporation,
as Seller
This Agreement for the Purchase and Sale of Assets (the "Agreement") is
made this 28th day of September, 2000, by and among AremisSoft Corporation ( the
"Purchaser"), a Delaware corporation, Eltrax Systems, Inc., a Minnesota
corporation ("ESI"), and Eltrax Hospitality Group, Inc., a Georgia corporation
("EHGI"), and provides for the Purchaser to acquire substantially all of the
assets of EHGI, subject to the liabilities assumed in this Agreement by the
Purchaser and no other liabilities. All references to dollars in this Agreement
refer to United States dollars unless otherwise specified.
WHEREAS, the Purchaser desires to acquire, on the terms and subject to the
conditions reflected below, the business of EHGI insofar as the same is
conducted through the use of the Acquired Assets; and
WHEREAS, ESI and EHGI believe that it is desirable and in their best
interests to sell the Acquired Assets to the Purchaser;
NOW, THEREFORE, the parties to this Agreement for the Purchase and Sale of
Assets do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the capitalized terms identified below in this
Article I shall have the meanings indicated, and variants and derivatives of the
following terms shall have correlative meanings. To the extent that certain of
the definitions set forth below express agreements between or among parties to
this Agreement, or contain representations or warranties or covenants of a
party, the parties agree to the same by execution of this Agreement. The parties
to this Agreement agree that agreements, representations, warranties, and
covenants expressed in any part or provision of this Agreement shall for all
purposes of this Agreement be treated in the same manner as other such
agreements, representations, warranties, and covenants contained elsewhere in
this Agreement, and the Article or Section of this Agreement within which such
an agreement, representation, warranty, or covenant appears shall have no
separate meaning or effect on the same.
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1.1 [Omitted]
1.2 Acquired Assets: The assets to be acquired by the Purchaser pursuant to
the terms hereof, as identified on Section 1.2 of the Acquired Business
Disclosure Document attached hereto, including, but not limited to all
Intellectual Property and Software Products used in the Acquired Business, and
all other assets of EHGI, tangible or intangible (including contractual,
warranty, and other rights), the use or value of which is related to the assets
so identified.
1.3 Acquired Business: The businesses in which the Acquired Assets are
utilized, as described on Section 1.3 of the Acquired Business Disclosure
Document attached hereto.
1.4 Acquired Business Balance Sheet: The balance sheet as at July 31, 2000
or, if available prior to the Closing, the balance sheet as at the date provided
for in Section 8.1(15) included in the Unaudited Financial Statements of the
Acquired Business, excluding the Excluded Assets.
1.5 Acquired Business Disclosure Document: The document delivered by ESI
and EHGI to the Purchaser containing certain disclosures relative to this
Agreement, a copy of which is attached to this Agreement as Exhibit 1.5.
1.6 Acquired Facilities: All warehouses, stores, plants, production
facilities, manufacturing facilities, processing facilities, fixtures, and
improvements owned or leased by EHGI or otherwise used in connection with the
operation of the Acquired Business or leased or subleased to others, but only
to the extent that the same consist of Acquired Assets.
1.7 Affiliate: When used with respect to a person, an "affiliate" of that
person is a person Controlling, Controlled by, or under common Control with that
person.
1.8 Agreement: This Agreement for the Purchase and Sale of Assets,
including all of its Schedules and Exhibits specifically referred to in this
Agreement that have been or are to be delivered by a party to this Agreement to
another such party in connection with the Transaction or this Agreement, and
including all duly adopted amendments, modifications, and supplements to or of
this Agreement and such Schedules and Exhibits.
1.9 Assumed Liabilities: The Liabilities of EHGI to be assumed by the
Purchaser pursuant to this Agreement, as specifically identified in Section 1.9
to the Acquired Business Disclosure Document or as described on Section 6.5
below, and no other Liabilities.
1.10 Business Day: Any day that is not a Saturday, Sunday, or a day On
which banks in New York, New York, are authorized to close.
1.11 Closing: The completion of the Transaction, to take place as Described
in Article II.
1.12 Closing Date: The date on which the Closing actually occurs, as agreed
by the parties, but shall not in any event be prior to satisfaction or waiver of
the conditions to Closing set forth in Article VIII hereof.
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1.13 Closing Time: The time at which the Closing actually occurs, which
shall take place at 5:00 p.m. eastern daylight time, on the Closing Date, unless
otherwise agreed by the parties.
1.14 Code: The Internal Revenue Code of 1986, as amended and in effect at
the time of execution of the Agreement.
1.15 [Omitted]
1.16 Consideration: The net sum of $7,965,000 to be paid by the Purchaser
to ESI or EHGI at the Closing for the Acquired Assets.
1.17 Control: Generally, the power to direct the affairs of an Entity by
reason of either (i) owning or controlling the right to vote a sufficient number
of shares of voting stock or other voting interest of such Entity, or (ii)
having the right to direct the general management of the affairs of such Entity
by contract or otherwise.
1.18 Counsel to ESI and EHGI: Jaffe, Raitt, Heuer & Xxxxx, P.C., Xxx
Xxxxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000.
1.19 Counsel to the Purchaser: Xxxxxx Eng Xxxx & Xxxxxxxx, 000 Xxxxxxx
Xxxx, Xxxxx 0000, Xxxxxxxxxx, XX 00000.
1.20 Entity: A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a business,
whether active or passive.
1.21 ERISA: The Employee Retirement Income Security Act of 1974 as amended
and in effect at the time of execution of this Agreement.
1.22 [Omitted]
1.23 Excluded Assets: Notwithstanding the definition of the Acquired Assets
or the Acquired Business, the assets identified in Section 1.23 of the Acquired
Business Disclosure Document shall not be deemed part of the Acquired Assets.
1.24 GAAP: Generally accepted accounting principles, as in effect in the
United States on the date of any statement, report or determination that
purports to be, or is required to be, prepared or made in accordance with "GAAP"
consistently applied throughout the periods to which reference is made.
1.25 HSR Act: The Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
1.26 Intellectual Property: All Software Products (including, but not
limited to, all versions, renewals, modifications and extensions of any Software
Product), patents, patent applications, trade and service marks, trade and
service xxxx registrations, trade names, copyrights,
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licenses, sublicenses, inventions, trade secrets, technology, know-how, domain
names, customer lists, prospect lists and other similar intangible property.
1.27 Inventories: The stock of raw materials, work-in-process and finished
goods, including but not limited to finished goods purchased for resale, held by
EHGI for manufacturing, assembly, processing, finishing, sale, or resale to
others (including other Subsidiaries or divisions of EHGI), from time to time in
the ordinary course of the business of EHGI in the form in which such
inventories then are held or after manufacturing, assembling, finishing,
processing, incorporating with other goods or items, refining, or the like.
1.28 IRS: The United States Internal Revenue Service.
1.29 Liabilities: At any point in time (the Determination Time), the
obligations of a person or Entity, whether known or unknown, contingent or
absolute, recorded on its books or not, arising or resulting in any way from
facts, events, agreements, obligations or occurrences that existed or transpired
at a prior point in time, or resulted from the passage of time to the
Determination Time.
1.30 Local Counsel: Special counsel retained by the Purchaser, ESI or EHGI,
as the case may be, to advise as to certain matters of state law or local law in
states or localities in which the Purchaser, ESI or EHGI, as the case may be,
desires such Local Counsel.
1.31 Multiemployer Plan: A "multiemployer plan," as defined in ERISA
Section 3(37) or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and regulations adopted under ERISA or the Code.
1.32 Parent: An Entity which Controls, directly or indirectly, or through
one or more intermediaries, a Subsidiary.
1.33 [Omitted]
1.34 Payables: Liabilities of a party arising from the borrowing of money
or the incurring of obligations for services, merchandise or goods purchased.
1.35 [Omitted]
1.36 [Omitted]
1.37 Pension Plan: A "pension plan" or "employee pension benefit plan," as
defined in Section 3(2) of ERISA or successor provisions to such provision
adopted by amendments to ERISA or any regulations adopted under ERISA or the
Code.
1.38 [Omitted]
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1.39 Projections: The projections of economic results of the Acquired
Business, prepared by ESI or EHGI on a monthly basis through December 31, 2000
and delivered to the Purchaser pursuant to the terms of this Agreement. Such
Projections include, separately and consolidated, projected financial results
for each separate business operation of the Acquired Business and for each
separate facility of the Acquired Business.
1.40 Proprietary Rights: Trade secrets, copyrights, patents, trademarks,
service marks, customer lists, and all similar types of intangible property
developed, created or owned by EHGI in connection with the Acquired Assets, or
used by EHGI in connection with its business, whether or not the same are
entitled to legal protection.
1.41 Purchaser: AremisSoft Corporation, a Delaware corporation.
1.42 Receivables: Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of EHGI, and customarily reflected
as assets in balance sheets of entities prepared in accordance with GAAP,
indicating moneys owed to EHGI.
1.43 [Omitted]
1.44 [Omitted]
1.45 Software Products: Any instruction or instructions, in source-code or
object code format, for controlling the operation of any computer processing
unit together with all user documentation related thereto. Software Products
include, but are not limited to, the applications identified on Section 1.45 of
the Acquired Business Disclosure Document.
1.46 Subsidiary: With respect to any Entity, another Entity of which fifty
percent (50%) or more of the effective voting power, or the effective power to
elect a majority of the board of directors or similar governing body, or fifty
percent (50%) or more of the true equity interest; is owned by such first
Entity, directly or indirectly.
1.47 Transaction: The sale of the Acquired Assets, and the assumption of
the Assumed Liabilities, for the Consideration as contemplated by, and subject
to the terms and conditions of, this Agreement.
1.48 Unaudited Financial Statements: The balance sheet as at July 31, 2000
or (if available prior to the Closing) the balance sheet as at the date provided
for in Section 8.1(15), the balance sheet as at December 31, 1999, the income
statement for the period ended July 31, 2000 or (if available prior to the
Closing) for the period ended as of the date provided for in Section 8.1(15),
the income statement for the period ended December 31, 1999 and the related
notes provided therewith, for the Acquired Business, excluding therefrom the
Excluded Assets, prepared in accordance with GAAP, other than the presentation
of appropriate footnote disclosure, schedules, the division of equity and
inter-company accounts, as required by GAAP and, in the case of the December 31,
1999 balance sheet, annual maintenance obligations during 2000 have been
eliminated from deferred revenue accounts.
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1.49 Welfare Plan: A "welfare plan" or an "employee welfare benefit plan,"
as defined in Section 3(1) of ERISA or successor provisions to such provision
adopted by amendments to ERISA and regulations adopted under ERISA and the Code.
ARTICLE II
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time, subject
in all instances to each of the terms, conditions, provisions and limitations
contained in this Agreement, EHGI shall, and ESI shall cause EHGI to, sell,
transfer, convey, and assign to the Purchaser, by instruments reasonably
satisfactory in form and substance to the Purchaser and its counsel, and the
Purchaser shall acquire from EHGI, the Acquired Assets, and shall assume the
Assumed Liabilities, and only those Liabilities and no others, in exchange for
the Consideration. ESI and EHGI represent that the Acquired Assets are all the
assets reasonably necessary for the conduct of the Acquired Business in the
ordinary course (exclusive of working capital) in the same manner as that in
which such business has been conducted in the immediate past, including, without
limitation, all Proprietary Rights, Software Products and Intellectual Property
used in the ordinary conduct of the Acquired Business and all contract,
warranty, and other intangible rights relating to or arising out of such
Acquired Business. ESI and EHGI further represent that all assets and
liabilities of Eltrax International, Inc. of the type included in the Acquired
Assets and Assumed Liabilities, other than the assets to be transferred pursuant
to definitive agreements as provided in Section 11.1 below and shares of any
Subsidiaries of Eltrax International, Inc., have been transferred to EHGI or
will be transferred to EHGI prior to the Closing and are reflected in the
Acquired Business Balance Sheet. Neither the Purchaser nor any of its Affiliates
is assuming, becoming liable for, agreeing to discharge or in any manner
becoming in any way responsible for any of the Liabilities of ESI or EHGI other
than the Assumed Liabilities. Purchaser hereby agrees to pay, perform or
discharge all of the Assumed Liabilities. ESI hereby represents that, prior to
the Closing, neither ESI nor any Affiliate of ESI other than EHGI holds any
right, title or interest to the Acquired Assets and there are no other
agreements, understandings, or arrangements which, as of or after the Closing,
would materially adversely effect the Acquired Assets and the Acquired Business,
the ability of EHGI to sell, transfer, convey and assign the Acquired Assets and
the Acquired Business to the Purchaser or result in the assumption of any
Liabilities by the Purchaser other than the Assumed Liabilities.
2.2 Manner of Payment. Payment of the Consideration by the Purchaser shall
be made in immediately available funds by wire transfer of federal funds to such
account or accounts of ESI or EHGI or of designated third-parties (it being
understood that ESI and EHGI will be using a portion of the Consideration
proceeds to pay amounts owed certain third-parties who have played legal,
financial and other advisory roles in connection with the Transaction) as shall
have been adequately described to the Purchaser in writing not less than three
Business Days prior to the Closing.
2.3 Closing. The Closing hereunder shall simultaneously take place at the
offices of Purchaser, Counsel to the Purchaser, ESI, EHGI, Counsel to ESI and
EHGI, or at such other places as the parties to this Agreement may agree upon,
on the Closing Date.
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2.4 Sales and Property Taxes. It being the intent of the parties that the
Transaction be exempt from sales, use and transfer taxes pursuant to the "Casual
Sale" provisions of Section 560-12-1-.07 of the Official Code of Georgia tax
rules and regulations, EHGI shall pay all sales, use and transfer taxes, if any,
arising from the transfer of the Acquired Assets and the Acquired Business.
Purchaser will not be responsible for any employee related withholding taxes
accrued prior to the Closing, other than those related to the salaried employees
referenced in Section 6.5 below.
ARTICLE III
ACQUISITION OF FOREIGN OPERATIONS
3.1 Agreement to Acquire Foreign Operations. On or prior to the Closing
Date, ESI shall, and ESI shall cause its Subsidiaries to, sell, transfer, convey
and assign to the Purchaser certain assets and liabilities of the operations of
EHGI currently conducted in the foreign jurisdictions of Australia (Eltrax
(Australia) Pty. Ltd.), Belgium (Eltrax Group, Inc.), Hong Kong (Eltrax
Hospitality Ltd.), Malaysia (Eltrax (Malaysia) SBD. BHD), Norway (Eltrax Systems
Scandinavia AS), Singapore (Eltrax Systems Pte. Ltd.), Switzerland (Eltrax
Holdings, AG and Eltrax AG) and the United Kingdom (Eltrax UK Limited) (for
purposes of this Agreement, the companies identified in this sentence are
referred to as the "Affiliated Sellers"). The Purchaser shall acquire such
assets and liabilities in exchange for aggregate consideration of $2,035,000
allocated as follows, (i) Australia, $300,000, (ii) Belgium, $330,000, (iii)
Hong Kong, $580,000, (iv) Norway, $235,000, (v) Singapore and Malaysia,
$280,000, (vi) Switzerland, $300,000, and (vii) United Kingdom, $10,000. This
Transaction and the other transactions involving the Affiliated Sellers (the
"Related Transactions") are all interrelated transactions. ESI and the Purchaser
contemplate that in connection with the Related Transactions, the purchaser may
be a wholly-owned (direct or indirect) Subsidiary of the Purchaser and the
seller will be a wholly-owned (direct or indirect) Subsidiary of ESI. In that
event, Purchaser will be jointly and severally liable for the obligations of its
wholly-owned Subsidiary and ESI will be jointly and severally liable for the
obligations of its Subsidiary with respect to the Related Transactions. The
terms of the definitive agreements for the Related Transactions will be, to the
extent possible, identical to those set forth in this Agreement, giving due and
reasonable regard to the nuances of the laws of the various countries in which
the Affiliated Sellers are located. The Purchaser and ESI shall proceed in good
faith to finalize the purchase agreements for the Related Transactions as soon
as is practicable, consistent with the foregoing. The Closing of this
Transaction, and the closings of the Related Transactions, shall be dependent on
one another, such that none of the transactions shall close unless all of them
close, notwithstanding any other provision of this Agreement or of the purchase
agreements for the Related Transactions to the contrary. ESI and the Purchaser
hereby agree that notwithstanding any provision of any agreement relative to the
Related Transactions (including, without limitation, any "integration" clause
included in any such agreement), in the event of a conflict between a provision
of this Agreement and any provision of any agreement relative to th Related
Transactions, the provisions of this Agreement shall control.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to ESI and EHGI:
4.1 Organization. The Purchaser is a corporation duly organized, validly
existing, and in good standing under the general corporate laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as it is now being conducted.
4.2 Authority Relative to This Agreement. The Purchaser has the requisite
corporate power and authority to enter into this Agreement and to carry out its
obligations hereunder. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
and approved by the requisite level of corporate authority of Purchaser and no
other corporate proceedings on the part of the Purchaser are necessary to
approve and adopt this Agreement or to approve the consummation of the
Transactions contemplated hereby, including, without limitation, delivery of the
Consideration. This Agreement has been duly and validly executed and delivered
by the Purchaser and constitutes a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms.
4.3 Absence of Breach; No Consents. The execution, delivery and performance
of this Agreement, and the performance by Purchaser of its obligations hereunder
(except for compliance with the HSR Act, and compliance with any regulatory or
licensing laws applicable to the business of the Purchaser, all of which, to the
extent applicable to Purchaser, will be satisfied in all material respects prior
to the Closing) do not, except as disclosed in Schedule 4.3, (1) conflict with,
and will not result in a breach of, any of the provisions of the Certificate of
Incorporation or Bylaws of Purchaser; (2) contravene any law, rule or regulation
of any State or Commonwealth or any political subdivision of the United States,
or of any applicable foreign jurisdiction, or any order, writ, judgment,
injunction, decree, determination, or award affecting or binding upon the
Purchaser or any of its Subsidiaries, in such a manner as to provide a basis for
enjoining or otherwise preventing consummation of the Transaction; (3) conflict
with or result in a breach of or default under any indenture or loan or credit
agreement or any other agreement or instrument to which Purchaser or any of its
Subsidiaries is a party, in such a manner as to provide a basis of enjoining or
otherwise preventing consummation of the Transaction; or (4) require the
authorization, consent, approval or license of any third party of such a nature
that the failure to obtain the same would provide a basis for enjoining or
otherwise preventing consummation of the Transaction.
4.4 Brokers. No broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with this Agreement
or the Transaction or any related transaction based upon any agreements, written
or oral, made by or on behalf of Purchaser or any of its Subsidiaries.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ESI AND EHGI
ESI and EHGI, individually and collectively, represent and warrant to the
Purchaser as follows:
5.1 Organization and Qualification. Each of ESI and EHGI is a corporation
duly organized, validly existing, and in good standing under the laws of its
respective jurisdictions of incorporation and each has the requisite corporate
power and authority to carry on its business as it is now being conducted. Each
of ESI and EHGI is duly qualified as a foreign corporation to do business, and
is in good standing, in each jurisdiction where the character of the properties
owned or leased by it, or the nature of its activities, is such that
qualification as a foreign corporation in that jurisdiction is required by law
except where the failure to be so qualified would not reasonably be expected to
have a material adverse effect on such Entity's business.
5.2 Authority Relative to This Agreement. This Agreement has been duly and
validly executed and delivered by ESI and EHGI and constitutes a valid and
binding Agreement of ESI and EHGI enforceable in accordance with its terms. Each
of ESI and EHGI has all requisite corporate power and authority to enter into
this Agreement and to carry out the Transaction contemplated hereby, and its
doing so has been duly and sufficiently authorized, subject only to governmental
regulatory approvals as and to the extent specifically set forth elsewhere in
this Agreement.
5.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement by ESI and EHGI, and the performance by ESI and
EHGI of their respective obligations hereunder, do not, (1) except as identified
in Section 5.3.1 of the Acquired Business Disclosure Document, conflict with or
result in a breach of any of the provisions of the Articles of Incorporation or
Bylaws of ESI or EHGI; (2) except as identified in Section 5.3.2 of the Acquired
Business Disclosure Document, contravene any law, ordinance, rule, or regulation
of any State or Commonwealth or political subdivision of the United States or of
any applicable foreign jurisdiction (except for the HSR Act and compliance with
regulatory or licensing laws, ordinances, rules or regulations, all of which, to
the extent applicable to ESI or EHGI will be satisfied in all material respects
prior to the Closing), or contravene any order, writ, judgment, injunction,
decree, determination, or award of any court or other authority having
jurisdiction over, or cause the suspension or revocation of any authorization,
consent, approval, or license, presently in effect, which affects or binds, ESI
or EHGI or all or any part of the Acquired Business or any material properties
of the Acquired Business, except in any such case where such contravention,
suspension or revocation will not have a material adverse effect on the
business, condition (financial or otherwise), operations or prospects of the
Acquired Business and will not have a material adverse effect on the validity of
this Agreement or on the validity of the consummation of the Transaction; (3)
except as identified in Section 5.3.3 of the Acquired Business Disclosure
Document, conflict with or result in a material breach of or default under any
material indenture or loan or credit agreement or any other agreement or
instrument to which ESI or EHGI is a party or by which any of the material
properties of the Acquired Business may be affected or bound; (4) except as
identified in Section 5.3.4 of the Acquired Business Disclosure Document,
require the authorization, consent, approval, or license of any third party,
except for those the failure of which to obtain would not reasonably be expected
to have a material adverse effect on the Acquired
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Business or the Acquired Assets; or (5) except as identified in Section 5.3.5 of
the Acquired Business Disclosure Document, constitute grounds for the loss or
suspension of any permits, licenses, or other authorizations used in the
Acquired Business.
5.4 Brokers. No broker, finder, or investment banker is entitled to any
brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of ESI, EHGI or any of their
Subsidiaries. EHGI does not have any obligation to pay finder's or broker's fees
or commissions in connection with the exercise of options to renew or extend
real estate leases to which the EHGI is a party.
5.5 Financial Statements. EHGI has heretofore delivered to the Purchaser
the following:
(1) The Unaudited Financial Statements of the Acquired Business;
(2) The Projections.
All of the historical financial statements contained in such documents were
prepared from the books and records of ESI and EHGI. The Unaudited Financial
Statements were prepared in accordance with GAAP (as qualified in Section 1.48
above). Without limiting the foregoing, as of the Acquired Business Balance
Sheet, EHGI owned each of the assets included in preparation of the Acquired
Business Balance Sheet, and the valuation of such assets in the Acquired
Business Balance Sheet is consistent with GAAP (as qualified in Section 1.48
above); and EHGI had no Liabilities required to be included in the Acquired
Business Balance Sheet in accordance with GAAP (as qualified in Section 1.48
above) for which the Acquired Business or any part of the Acquired Assets is
responsible or liable, other than those included in the Acquired Business
Balance Sheet, nor any Liabilities required to be included in the Acquired
Business Balance Sheet in accordance with GAAP (as qualified in Section 1.48
above) in amounts in excess of the amounts included for them in the Acquired
Business Balance Sheet. The Purchaser acknowledges that projections of future
economic performance are necessarily unreliable and subject to the occurrence or
nonoccurrence of a variety of events, but ESI and EHGI represent that the
Projections have been prepared on the basis of assumptions that are, in the
judgment of ESI and EHGI, reasonable in all respects and are not, to the
knowledge of ESI or EHGI, contrary in any material respect to fact or to events
that have occurred or are presently in existence. From the date hereof through
the Closing Date ESI and EHGI will continue to prepare financial statements for
the Acquired Business on the same basis that they have done so in the past, will
promptly deliver the same to the Purchaser, and agree that from and after such
delivery the foregoing representations will be applicable to each financial
statement so prepared and delivered.
5.6 Absence of Material Differences From the Acquired Business Disclosure
Document. Except as specifically disclosed in the Acquired Business Disclosure
Document in sections corresponding to the subsections below:
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(1) No Undisclosed Liabilities. EHGI has no Liabilities relating to or
affecting the Acquired Business or the Acquired Assets which are not, to
the extent required by GAAP (as qualified in Section 1.48 above),
adequately reflected or reserved against on the face of the Acquired
Business Balance Sheet, except Liabilities incurred since the date of the
Acquired Business Balance Sheet in the ordinary course of business of the
Acquired Business and consistent with past practice. Without limiting the
foregoing, (a) EHGI is not in any default or in breach, in any material
respect, under any contract, license, mortgage, indenture, deed or permit
held or affecting the Acquired Business, (b) there are no leasehold
improvements currently due and owing at any of the Acquired Facilities for
which the Acquired Business is or will be responsible, and (c) there are no
deferred rents due to lessors at or with respect to any of such Acquired
Facilities, and (d) the Acquired Business Disclosure Document sets forth,
as a part thereof, each Liability of or affecting the Acquired Business or
the Acquired Assets in an amount in excess of $10,000 and each person to
whom the aggregate amount of such Liabilities is in excess of $10,000.
(2) No Material Adverse Change, Etc. Since the date of the Acquired
Business Balance Sheet, other than as contemplated or caused by this
Agreement, there has not been (a) any material adverse change in the
business, condition (financial or otherwise), operations, or prospects of
the Acquired Business; (b) any damage, destruction or loss, whether covered
by insurance or not, having a material adverse effect on the business,
condition (financial or otherwise), operations or prospects of the Acquired
Business, or materially adversely affecting the Acquired Assets; (c) any
entry into or termination of any material commitment, contract, agreement
or transaction affecting the Acquired Business or the Acquired Assets
(including, without limitation, any material borrowing or capital
expenditure or sale or other disposition of any material asset or assets)
other than this Agreement and agreements executed in the ordinary course of
business; (d) any transfer of or right granted under any material lease,
license, agreement, patent, trademark, trade name or copyright included
among the Acquired Assets; (e) any sale or other disposition of any asset
of the Acquired Business, or any mortgage, pledge or imposition of any lien
or other encumbrance on any asset of the Acquired Business or of any
corporation included in the Acquired Assets, or any agreement relating to
any of the foregoing, other than in the ordinary course of business; or (f)
any default or breach in any material respect under any contract, license
or permit held by or for or affecting the Acquired Business. Since the date
of the Acquired Business Balance Sheet, ESI and EHGI have conducted the
Acquired Business businesses only in the ordinary and usual course, and
without limiting the foregoing, no changes have been made in (a) executive
compensation levels, or (b) the manner in which other employees of EHGI are
compensated, or (c) supplemental benefits provided to any such executives
or other employees of EHGI, or (d) inventory levels of the Acquired
Business in relation to sales levels, except, in any such case, in the
ordinary course of business and, in any event, without material adverse
effect on the business, condition (financial or otherwise), operations, or
prospects of the Acquired Business.
(3) Taxes. ESI and EHGI have properly filed or caused to be filed (or
obtained proper extensions in respect of) all federal, state, local, and
foreign income and other tax returns, reports, and declarations that are
required by applicable law to be filed by them and that relate to or in any
way affect the Acquired Business or the Acquired Assets except for
12
those the failure of which to file would not have an adverse effect on the
Acquired Business or the Acquired Assets, and have paid, or will pay when
due all federal, state, local, and foreign income and other taxes properly
due (including any amounts deferred as a result of an extension or
otherwise) for the periods covered by such returns, reports, and
declarations.
(4) Litigation. (a) No material investigation or review by any governmental
entity with respect to the Acquired Business or any of the Acquired Assets
or the use thereof is, to the best of the knowledge of ESI and EHGI,
pending or threatened (other than inspections and reviews customarily made
of businesses such as the Acquired Business), nor has any governmental
entity indicated an intention to conduct the same, and (b) there is no
action, suit or proceeding pending or, to the best of the knowledge of ESI
and EHGI, threatened against or affecting the Acquired Business or the
Acquired Assets at law or in equity, or before any federal, state,
municipal, or other governmental department, commission, board, bureau,
agency, or instrumentality.
(5) Employees, Etc. There are no collective bargaining, bonus, profit
sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by EHGI for the benefit of directors, officers or
employees of EHGI and there are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between EHGI,
on the one hand, and any current or former directors, officers or other
employees of EHGI, on the other hand. The Acquired Business Disclosure
Document identifies each person whose annualized income from EHGI, on the
date of the Acquired Business Balance Sheet, exceeded or would exceed on an
annualized basis, or whose income from EHGI in the fiscal year begun
immediately thereafter is at a rate exceeding, $50,000 per annum. EHGI is
not, and following the Closing will not be, bound by any express or implied
contract or agreement to employ, directly or as a consultant or otherwise,
any person for any specific period of time or until any specific age except
as specified in agreements in writing identified in the Acquired Business
Disclosure Document or executed pursuant to the provisions hereof.
(6) Compliance With Laws. The Acquired Business and each of the Acquired
Assets is in substantial compliance with all, and neither ESI nor EHGI have
received notice of any violation of any, laws or regulations applicable to
EHGI or the operations of the Acquired Business, including, without
limitation, the laws and regulations relevant to the use or utilization of
premises, or with respect to which compliance is a condition of engaging in
any aspect of the business of the Acquired Business, except to the extent
the failure of which any of the foregoing to be true would not have a
material adverse effect on the Acquired Business or the Acquired Assets.
The Acquired Business has all permits, licenses, zoning rights, and other
governmental authorizations necessary to conduct its business as presently
conducted, except to the extent the failure of the Acquired Business to
have any of the foregoing would not have a material adverse effect on the
Acquired Business or the Acquired Assets. All such permits, licenses,
zoning rights, and other governmental authorizations will, as a part and
consequence of the Transactions, be transferred to the Purchaser at the
Closing.
13
(7) Ownership of Assets. EHGI has (or as of the Closing will have) good,
marketable and insurable title, or valid, effective and continuing
leasehold rights (including licenses) in the case of leased or licensed
property, to all real property (as to which, in the case of owned property,
such title is fee simple) and all personal property owned or leased by it
and comprising a part of the Acquired Assets or the Acquired Business, or
used by it in the conduct of the Acquired Business in such a manner as to
create the reasonable appearance or reasonable expectations that the same
is owned or leased by it; such ownership or leasehold rights are, or at the
Closing will be, free and clear of all liens, claims, encumbrances and
charges (other than those customarily held by a lessor or licensor in a
lease or license of real property), except liens for taxes not yet due and
minor imperfections of title and encumbrances, if any, which, singularly or
in the aggregate, are not substantial in amount and do not
materially-detract from the value of the property subject thereto or
materially impair the use thereof; no other person has any ownership or
similar right in, or contractual or other right to acquire any such right
in, any of such assets; and such ownership or leasehold rights will be
conveyed to the Purchaser at the Closing pursuant to the Transaction. ESI
and EHGI do not know of any potential action by any party, governmental or
other, and no proceedings with respect thereto have been instituted of
which ESI or EHGI has notice, that would materially affect EHGI's ability
to use and to utilize each of such assets in the business of the Acquired
Business. Neither ESI nor EHGI has received any default notices from any
mortgagee regarding any leased properties of the Acquired Business or any
leasehold interests which comprise any part of the Acquired Assets. Section
5.6(7) of the Acquired Business Disclosure Document contains a reasonably
detailed listing, as of the date specified therein, of all Acquired Assets
including, but not limited to, (a) accounts receivable as provided in
clause (13) below, (b) miscellaneous current assets in excess of $10,000,
(c) prepaid expenses in excess of $10,000, (d) Software Products, (e) real
property, and (f) gross aggregate additions for each of the past four years
by location of (i) buildings and improvements, (ii) leasehold improvements,
and (iii) automobiles and trucks.
(8) Proprietary Rights, Software Products and Intellectual Property. EHGI
possesses full ownership of, or adequate and enforceable exclusive
long-term licenses or other exclusive rights to use (without payment), all
Proprietary Rights, Software Products and Intellectual Property used in the
Acquired Business or utilized in connection with the Acquired Assets, and
all such ownership, license or other rights shall be conveyed to the
Purchaser at the Closing pursuant to the Transaction; neither ESI nor EHGI
has received any notice of conflict which asserts the rights of others with
respect thereto; and EHGI has, in all material respects, performed all of
the obligations required to be performed by it, and is not in default in
any material respect, under any agreement relating to any such Proprietary
Rights, Software Products and Intellectual Property.
(9) Trade Names. The Acquired Business Disclosure Document identifies each
trade name, fictitious business name, or other similar name under which ESI
or EHGI has conducted any part of the Acquired Business or in which ESI or
EHGI has utilized any of the Acquired Assets during the five (5) years
preceding the date of this Agreement.
14
(10) Subsidiaries, Etc. No Subsidiary of ESI or EHGI (other than EHGI),
directly or indirectly, owns any of the Acquired Assets or conducts any
part of the Acquired Business. EHGI is not a partner of or joint venturer
with any other person or Entity in relation to any of the Acquired Assets
or any portion of the Acquired Business.
(11) Employee Benefit Plans. EHGI does not maintain or contribute to any
Pension Plan or any Welfare Plan, nor is EHGI presently, nor has it been
within the last six years, a participating employer in any Multiemployer
Plan affecting, in any case, employees of EHGI.
(12) Facilities. To ESI and EHGI's knowledge (as applied to all of the
following), the Acquired Facilities are (as to physical plant and
structure) structurally sound and none of the Acquired Facilities, nor any
of the vehicles or other equipment used by EHGI in connection with the
Acquired Business has any material defects and all of them are in all
material respects in good operating condition and repair and are adequate
for the uses to which they are being utilized; none of such Acquired
Facilities, vehicles or other equipment is in need of maintenance or
repairs except for ordinary, routine maintenance and repairs (normal wear
and tear excepted) which are not material in nature or cost. EHGI is not in
any material breach, violation or default of any lease affecting the
Acquired Business or the Acquired Assets with respect to, or as a result of
which, the other party, whether lessor, lessee, sublessor, or sublessee
thereto, has the right to terminate the same and neither ESI nor EHGI have
received notice of any claim or assertion that it is or may be in any such
breach, violation or default.
(13) Accounts Receivable. All accounts receivable of EHGI reflected in the
Acquired Business Balance Sheet represent transactions in the ordinary
course of business, and are collectible, net of any reserves. As of the
date specified therein, the Acquired Business Disclosure Document
specifically identifies (a) the aging of Receivables, (b) each Receivable
in excess of $10,000, (c) each Receivable in an amount in excess of $5,000
that is more than 90 days past due, and (d) each Receivable from a person
or Entity from whom the aggregate of such Receivables exceeds $10,000.
(14) Inventories. All Inventories of EHGI reflected in the Acquired
Business Balance Sheet are of quality and quantity usable and salable in
the ordinary course of business except for obsolete items and items of
below-standard quality, all of which, in the aggregate, are immaterial in
amount. Items included in EHGI's Inventories are carried on the books of
EHGI, and are valued on the Acquired Business Balance Sheet consistent with
GAAP (as qualified in Section 1.48 above).
(15) Contracts. The Acquired Assets and the Acquired Business are not
affected by any contracts, agreements or understandings, whether express or
implied, written or verbal, provided, however, that the Acquired Assets or
the Acquired Business may be affected by, and the Acquired Business
Disclosure Document need not identify, any such contracts, agreements, or
understandings that fall into one of the following categories: (a) those
that are terminable on notice of less than thirty-two (32) days and do not
involve payments or obligations of more than $10,000 in any period of
thirty-one (31) days or less
15
(on termination or otherwise); or (b) those that involve aggregate payment
or obligation remaining unpaid as of the date of the Agreement of less than
$10,000. All items excluded in (b) above represent, in the aggregate, less
than $100,000. Neither ESI nor EHGI is a party to any executory contract to
sell or transfer any part of any leasehold interest included in the
Acquired Assets or utilized by the Acquired Business. True and accurate
copies of all leases of properties included in the Acquired Assets or
utilized by the Acquired Business, including all amendments, supplements,
extensions and modifications thereof, have heretofore been delivered to the
Purchaser by EHGI.
(16) Accounts Payable. The accounts payable reflected on the Acquired
Business Balance Sheet do, and those reflected in the most recent balance
sheet included in the Unaudited Financial Statements do, and those
reflected on the books of EHGI at the time of the Closing will, reflect all
amounts owed by EHGI in respect of trade accounts due and other Payables of
the Acquired Business or relating to the Acquired Assets, and the actual
Liability of EHGI in respect of such obligations was not, and will not be,
on any of such dates, in excess of the amounts so reflected on the balance
sheets or the books of the Acquired Business, as the case may be.
(17) Labor Matters. To the best of the knowledge of ESI and EHGI, there are
no activities or controversies, including without limitation, any labor
organizing activities, election petitions or proceedings, proceedings
preparatory thereto, unfair labor practice complaints, labor strikes,
disputes, slowdowns, or work stoppages, pending or, threatened, affecting
the employees of EHGI.
(18) [Omitted]
(19) Title to and Utilization of Real Properties and Leasehold Estates.
Except as disclosed in the Acquired Business Disclosure Document, EHGI owns
fee, simple or a valid leasehold interest in, all real property included in
the Acquired Assets and has the unbridled right to use the same (other than
those customarily held by a lessor or licensor in a lease or license of
real property), and is not aware of any claim, notice or threat to the
effect that its right to own and use such property is subject in any way to
any challenge, claim, assertion of rights, proceedings toward condemnation
or confiscation, in whole or in part, or is otherwise subject to challenge.
To ESI and EHGI's knowledge, each parcel of real property the ownership of,
or leasehold interest in, which is included among the Acquired Assets is
free of any and all hazardous wastes, toxic substances, or other types of
contamination in quantities or conditions requiring remediation, and EHGI
is not subject to any Liability resulting from or related to any such
wastes, substances or contaminants in connection with any such property.
5.7 Full Disclosure. The documents, certificates, and other writings
furnished or to be furnished by or on behalf of ESI and/or EHGI to the Purchaser
pursuant to the provisions of this Agreement, taken together in the aggregate,
do not and will not contain any untrue statements of a material fact, or omit to
state any material fact necessary to make the statements made, in the light of
the circumstances under which they are made, not misleading.
16
5.8 Actions Since Balance Sheet Date. Except as set forth on the Acquired
Business Disclosure Document, since the date of the Acquired Business Balance
Sheet, neither ESI nor EHGI has taken any actions that would be prohibited under
the provisions of this Agreement (without the prior consent of the Purchaser )
after the date of this Agreement.
ARTICLE VI
COVENANTS OF THE PURCHASER
6.1 Affirmative Covenants. From the date hereof through the Closing Date,
the Purchaser will use commercially reasonable efforts to satisfy the conditions
to Closing set forth in this Agreement and otherwise to ensure the prompt and
expedient consummation of the Transaction substantially as contemplated by this
Agreement, and will use commercially reasonable efforts to cause the Transaction
to be consummated, provided in all instances that the representations and
warranties of ESI and EHGI in this Agreement are and remain true and accurate in
all material respects and that the covenants and agreements of ESI and EHGI in
this Agreement are honored and that the conditions to the obligations of the
Purchaser set forth in this Agreement are not incapable of satisfaction.
6.2 Cooperation. The Purchaser shall reasonably cooperate with ESI and EHGI
and its counsel, accountants and agents in every way in carrying out the
Transactions contemplated herein, and in delivering all documents and
instruments deemed reasonably necessary or useful by EHGI.
6.3 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by the Purchaser in connection with the preparation of this
Agreement and in preparation for the Transactions contemplated hereby shall be
paid by the Purchaser.
6.4 Publicity. Prior to the Closing any written news releases by the
Purchaser pertaining to this Agreement or the Transaction shall be submitted to
ESI for review and approval prior to release by the Purchaser, and shall be
released only in a form approved by ESI, provided, however, that (1) such
approval shall not be unreasonably withheld, and (2) such review and approval
shall not be required of releases by the Purchaser if prior review and approval
would prevent the timely and accurate dissemination of such press release as
required to comply, in the judgment of counsel, with any applicable law, rule or
policy.
6.5 Offers of Employment. Subject to the terms and conditions of this
Agreement, promptly after the Closing, Purchaser shall offer employment to all
employees of EHGI other than those set forth in Schedule 6.5, on terms and
conditions acceptable to Purchaser. Purchaser shall not be liable for any
liabilities associated with any employee terminated by ESI or EHGI.
Notwithstanding the foregoing, the Purchaser shall assume responsibility for
compensation for all employees of EHGI, other than those indicated in Schedule
6.5, accrued after the last payroll period immediately prior to the Closing to
the extent consistent with the historical payroll practices of EHGI and the
Acquired Business. The Purchaser shall not assume responsibility for any
scheduled or unscheduled payroll payments due the employees of the Acquired
Business indicated on Schedule 6.5 for any form of compensation which may be
accrued by such employees. The Purchaser will include in its offers of
employment to all employees, other than those indicated in Schedule 6.5, the
same number of days of vacation accrued by such employees, as employees of
17
EHGI, as of the Closing Date if, and only if, EHGI is not required by law to pay
such accrued vacation to the employees upon their termination by EHGI (assuming
that Purchaser makes the offers of employment contemplated in this Section 6.5).
The Purchaser will not be liable, in any manner, for any payments or other
compensation which may be required to be paid to such employees upon their
termination by EHGI pursuant to any federal, state or local law or rule.
6.6 Cooperation. Purchaser acknowledges that post-Closing, ESI intends to
cause EHGI to be dissolved, its assets liquidated and its affairs wound up.
Purchaser will reasonably cooperate with ESI, EHGI and their respective counsel,
accountants, agents and representatives in every way in that regard and in
executing and delivering all documents and instruments deemed reasonably
necessary or useful by ESI or EHGI in that regard. Without limiting the
foregoing, Purchaser shall use its best efforts to cause those employees of EHGI
who currently are officers of EHGI and who become employed by Purchaser to
remain as officers of EHGI, without compensation, and shall use its best efforts
to cause such employees to execute and deliver, on behalf of EHGI, the documents
and instruments contemplated in the immediately preceding sentence and to
otherwise further the dissolution, liquidation and winding up of EHGI, as
directed by ESI; provided, however, that Purchaser shall not be required to take
any action which may expose Purchaser or any of its officers, directors,
employees or agents to any liability in connection with such action. EHGI shall
reimburse Purchaser for any and all reasonable out-of-pocket expenses which it
incurs and pays in connection with it duties and obligations under this Section
6.6, but EHGI shall not be required to reimburse Purchaser for the time spent by
its employees in furtherance of such duties and obligations. Purchaser shall use
its best efforts to retain, and on request, shall provide ESI and EHGI with
access to or copies of, all documents which ESI and/or EHGI may reasonably
request in connection with the dissolution, liquidation and winding up of EHGI
or in preparing and filing any and all tax returns and financial statements for
any periods ending on or prior to December 31, 2000, or in connection with any
audit activities in respect of any periods ending on or prior to December 31,
2000.
ARTICLE VII
COVENANTS OF ESI AND EHGI
7.1 Affirmative Covenants. From the date hereof through the Closing Date,
ESI and EHGI will take every action reasonably required of it to satisfy the
conditions to Closing set forth in this Agreement and otherwise to ensure the
prompt and expedient consummation of the Transaction substantially as
contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the
representations and warranties of the Purchaser in this Agreement are and remain
true and accurate and that the covenants and agreements of the purchaser in his
Agreement are honored and that the conditions to the obligations of ESI and EHGI
set forth in this Agreement are not incapable of satisfaction.
7.2 Employment Contracts. Pending the Closing, and effective upon the
consummation of the Transaction, ESI and EHGI will reasonably cooperate with the
Purchaser's efforts to have executed one (1) year employment contracts between
the Purchaser and each of the persons identified on Schedule 7.2, at an annual
salary equal to that set forth for such individual in such schedule; such
contracts shall provide that the Acquired Business may terminate them at any
time for cause, or without cause may terminate them upon sixty (60) days prior
written notice.
18
7.3 Covenant Not to Compete. ESI and EHGI will execute a five (5) year
noncompetition agreement with the Purchaser to preclude ESI and EHGI from
engaging in any business competitive with that of the Acquired Business,
directly or indirectly, alone or in collaboration with others, except with the
written consent of the Purchaser or as a shareholder of less than one percent
(1%) of the common stock of a publicly held company engaged in one or more of
such businesses and with such other terms as are mutually acceptable to ESI,
EHGI and Purchaser.
7.4 Access and Information. Subject to the terms and conditions of the
existing confidentiality agreement between ESI and the Purchaser (the terms and
conditions of which are incorporated herein by reference), between the date of
this Agreement and the Closing Date ESI and EHGI shall afford to the Purchaser
and to the Purchaser's accountants, counsel, and other representatives
reasonable access during normal business hours throughout the period prior to
the Closing to all of its and its Subsidiaries properties, books, contracts,
commitments, records (including, but not limited to, tax returns), and personnel
relating to the Acquired Assets or the Acquired Business and, during such
period, shall furnish promptly to the Purchaser (1) all written communications
to its directors or to its shareholders generally relating to the Acquired
Assets or the Acquired Business, (2) internal monthly financial statements of
the Acquired Business when and as available, and (3) all other information
relating to the Acquired Assets or the Acquired Business as the Purchaser may
reasonably request, but no investigation pursuant to this Section 7.4 shall
affect any representations or warranties of ESI or EHGI, or the conditions to
the obligations of the Purchaser to consummate the Transaction contained in this
Agreement. Purchaser and its representatives shall use their best efforts to
assert their rights hereunder in such a manner as to minimize interference with
the business of ESI and EHGI.
7.5 No Solicitation. Until the Closing Date or the termination of this
Agreement in accordance with its terms, ESI and EHGI, and those acting on behalf
of any of them will not, and ESI and EHGI will use its best efforts to cause its
officers, employees, agents, and representatives (including any investment
banker) to not, directly or indirectly, solicit, encourage, or initiate any
discussions with, or negotiate or otherwise deal with, or provide any
information to, any person or Entity other than the Purchaser and its officers,
employees, and agents, in relation to the Acquired Assets or the Acquired
Business. ESI or EHGI will notify the Purchaser immediately upon receipt of an
inquiry, offer or proposal relating to any of the foregoing. None of the
foregoing shall prohibit providing information to others in a manner in keeping
with the ordinary conduct of the ESI or EHGI's business, or providing
information to government authorities.
7.6 Conduct of Business Pending The Transactions. ESI and EHGI covenant and
agree with the Purchaser that, prior to the consummation of the Transaction or
the termination of this Agreement pursuant to its terms, unless the Purchaser
shall otherwise consent in writing, which consent shall not be unreasonably
withheld or delayed, and except as otherwise contemplated by this Agreement or
disclosed in the Acquired Business Disclosure Document, ESI and EHGI will comply
with each of the following:
(1) The Acquired Business, and the other businesses that relate to, use or
affect the Acquired Assets, if any, will be conducted only in the ordinary
and usual course, ESI and EHGI shall use reasonable efforts to keep intact
the business organization and good will
19
of the Acquired Business, keep available the services of the employees of
EHGI whose principal activities relate to the Acquired Business and
maintain relationships, in a manner reasonably consistent with historical
practices, with suppliers, lenders, creditors, distributors, employees,
customers and others having business or financial relationships with the
Acquired Business, and it shall immediately notify the Purchaser of any
event or occurrence or emergency material to and not in the ordinary and
usual course of business of, the Acquired Business or affecting any
material part of the Acquired Assets, or any of its Subsidiaries.
(2) [Omitted]
(3) [Omitted]
(4) They shall not create, incur or assume any long-term or short-term
indebtedness for money borrowed or make any capital expenditures or
commitment for capital expenditures, affecting the Acquired Business or any
of the Acquired Assets, except in the ordinary course of business and
consistent with past practice;
(5) They shall not (a) adopt, enter into, or amend an bonus, profit
sharing, compensation, stock option, warrant, pension, retirement, deferred
compensation, employment, severance, termination, or other employee benefit
plan, agreement trust fund or arrangement for the benefit or welfare of any
employees of the Acquired Business, or (b) agree to any material (in
relation to historical compensation) increase in the compensation payable
or to become payable to, or any increase in the contractual term of
employment of, any such employee except, with respect to employees who are
not officers or directors, in the ordinary course of business and
consistent with past practice.
(6) They shall not sell, lease, mortgage, encumber, or otherwise dispose of
or grant any interest in any of the Acquired Assets except for sales,
encumbrances and other dispositions or grants in the ordinary course of
business of the Acquired Business and consistent with past practice and
except for liens for taxes not yet due or liens or encumbrances that are
not material in amount or effect and do not impair the use of the property,
or as specifically provided for or permitted in this Agreement.
(7) They shall not enter into, or terminate, any material contact,
agreement, commitment, or understanding relating to or affecting the
Acquired Assets or the Acquired Business.
(8) They shall not enter into any agreement, commitment, or understanding,
whether in writing or otherwise, with respect to any of the matters
referred to in subparagraphs (1) through (7) above.
(9) EHGI will, and ESI will cause EHGI to, continue to properly and
promptly file when due (or obtain proper extensions with respect to) all
federal, state, local, foreign, and other tax returns, reports, and
declarations required to be filed by it relating to the Acquired Assets or
the Acquired Business, and will pay when due, all taxes and
20
governmental charges due (including any amounts deferred as a result of an
extension or otherwise) from or payable by it relating to the Acquired
Assets or the Acquired Business.
(10) ESI and EHGI will comply in all material respects with all laws and
regulations applicable to the operations of the Acquired Business and the
utilization of the Acquired Assets.
(11) ESI and EHGI will maintain in full force and effect insurance coverage
relating to the Acquired Assets or the Acquired Business of a type and
amount consistent with past practice, but not less than that presently in
effect.
7.7 Cooperation. ESI and EHGI will reasonably cooperate with the Purchaser
and its counsel, accountants, and agents in every way in carrying out the
transactions contemplated by this Agreement and in delivering all documents and
instruments deemed reasonably necessary or useful by the Purchaser.
7.8 Expenses. Whether or not the Transaction is consummated, all costs and
expenses incurred by ESI and EHGI in connection with the preparation of this
Agreement and in preparation for the Transaction and in connection with the
Closing of the Transaction contemplated hereby shall be paid by ESI and EHGI.
7.9 Publicity. Prior to the Closing any written news releases by ESI or
EHGI pertaining to this Agreement or the Transaction shall be submitted to the
Purchaser for review and approval prior to release by ESI or EHGI, and shall be
released only in a form approved by the Purchaser, provided, however, that (1)
approval shall not be unreasonably withheld and (2) such review and approval
shall not be required of releases by ESI or EHGI if prior review and approval
would prevent the timely and accurate dissemination of such press release as
required to comply, in he judgment of counsel, with any applicable law, rule or
policy.
7.10 Updating the Exhibits and Disclosure Documents. ESI or EHGI shall
notify the Purchaser of any changes additions, or events which may cause any
change in or addition to the Acquired Business Disclosure Document or any
Schedules delivered by them under this Agreement promptly after the occurrence
of the same and again at the Closing by delivery of appropriate updates to the
Acquired Business Disclosure Document and to all such Schedules. No such
notification made pursuant to this Section shall be deemed to cure any breach of
any representation or warranty made in this Agreement unless the Purchaser
specifically agrees hereto in writing nor shall any such notification be
considered to constitute or give rise to a waiver by the Purchaser of any
condition set forth in this Agreement.
7.11 Payment of Unassumed Liabilities. EHGI agrees to promptly pay when
due, or otherwise to discharge, without cost or expense to the Purchaser, each
and every Liability of EHGI relating to the Acquired Business other than the
Assumed Liabilities.
21
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Obligation of Purchaser. The obligation of the Purchaser
to effect the Transaction shall be subject to the fulfillment at or prior to the
Closing of the following conditions, unless Purchaser shall waive such
fulfillment:
(1) This Agreement and the Transaction contemplated hereby shall have
received those approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third parties
(including lenders, holders of debt securities and lessors), identified in
the attached Schedule 8.1(1) (including the expiration of any applicable
waiting period under the HSR Act).
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state court or other authority which
prohibits the consummation of the Transaction.
(3) ESI and EHGI shall have performed in all material respects each of its
agreements and obligations contained in this Agreement and required to be
performed on or prior to the Closing and shall have complied with all
material requirements, rules, and regulations of all regulatory authorities
having jurisdiction relating to the Transaction.
(4) No material adverse change shall have taken place in the business,
condition (financial or otherwise) operations, or prospects of the Acquired
Business or the Acquired Assets since the date of the Acquired Business
Balance Sheet other than those, if any, that result from the changes
permitted by, and transactions contemplated by, this Agreement.
(5) The representations and warranties of ESI and EHGI set forth in this
Agreement shall be true in all material respects as of the date of this
Agreement or, except in such respects as, in the reasonable judgment of the
Purchaser, do not materially and adversely affect the business, condition
(financial or otherwise), operations, or prospects of the Acquired Business
or the Acquired Assets, as of the Closing Time as if made as of such time.
(6) The Purchaser shall have received from ESI and EHGI an officer's
certificate, executed by the Chief Executive Officer of ESI and the
President of EHGI (in their capacities as such) dated the Closing Date, as
to the satisfaction of the conditions in paragraphs (3), (4), and (5) above
and including, as exhibits, copies of all authorizing board and, where
necessary, shareholder resolutions and true and complete copies of their
charter documents.
(7) The Purchaser shall have received, on and as of the Closing Date, an
opinion of Counsel to ESI and EHGI or Local Counsel to ESI and EHGI, as
appropriate, each addressed to Purchaser, directly, substantially in the
form as attached hereto as Exhibit 8.1(7).
22
(8) [Omitted]
(9) Purchaser shall have received from EHGI a Xxxx of Sale or such other or
additional documents sufficient to transfer title to the Acquired Assets to
the Purchaser and the delivery of all Software Products and Intellectual
Property, in each case reasonably satisfactory in form and substance to the
Purchaser and its counsel.
(10) Purchaser shall have received a release, reasonably satisfactory in
form and substance to the Purchaser and its counsel, from PNC Bank, NA,
releasing any and all liens and encumbrances it may have on the Acquired
Assets or the Acquired Business.
(11) All conditions to the closing of all of the agreements relative to the
Related Transactions, as described in Section 3.1 above, have been
satisfied or waived, it being an express requirement that all of the
agreements described in Section 3.1 above close on the same day, adjusted
for the appropriate time zones for each jurisdiction.
(12) The agreement for marketing, distributing, maintaining and supporting
the Software Product commonly referred to as "Squirrel," substantially in
the form and substance as Exhibit 8.1(12) attached hereto, are executed and
delivered to Purchaser.
(13) The agreement for marketing, distributing, maintaining and supporting
the Software Product commonly referred to as "Senercom," substantially in
the form and substance as Exhibit 8.1(13) attached hereto, are executed and
delivered to Purchaser.
(14) The employment agreements between the Purchaser and the persons
identified on Schedule 7.2 have been executed and delivered by the parties.
(15) ESI and EHGI will use commercially reasonable efforts to make
available to the Purchaser prior to Closing an updated unaudited balance
sheet and income statement with related notes and schedules as of the end
of the month immediately prior to the Closing Date. If those updated
financial statements are produced, they shall, for purposes of the
definition of "Unaudited Financial Statements," replace and supersede the
balance sheet as at July 31, 2000 and the income statement for the period
ended July 31, 2000, in their entirety, for all purposes relevant to this
Agreement.
(16) The agreements relative to the Related Transactions, as provided in
Section 3.1 above, are executed and delivered to Purchaser.
8.2 Conditions to Obligation of ESI and EHGI. The obligation of ESI and
EHGI to effect the Transaction shall be subject to the fulfillment at or prior
to the Closing of the following conditions, unless ESI and EHGI shall waive such
fulfillment:
(1) This Agreement and the Transaction contemplated hereby shall have
received those approvals, consents, authorizations, and waivers from
governmental and other regulatory agencies and other third parties
(including lenders, holders of debt
23
securities and lessors) as identified on Schedule 8.1(1) (including the
expiration of any applicable waiting period under the HSR Act).
(2) There shall not be in effect a preliminary or permanent injunction or
other order by any federal or state authority which prohibits the
consummation of the Transaction.
(3) The Purchaser shall have performed in all material respects each of its
agreements and obligations contained in this Agreement required to be
performed on or prior to the Closing and shall have complied with all
material requirements, rules and regulations of all regulatory authorities
having jurisdiction relating to the Transaction.
(4) The representation and warranties of the Purchaser set forth in this
Agreement shall be true in all material respects as of the date of this
Agreement and, except in such respects as do not materially and adversely
affect the business of the Purchaser and is Subsidiaries, taken as a whole,
as of the Closing Time as if made as of such time.
(5) EHGI shall have received from the Purchaser an officers' certificate
executed by the Chief Executive Officer and the Chief Financial Officer of
the Purchaser (in their capacities as such), dated the Closing Date, as to
the satisfaction of the conditions of paragraphs (3) and (4) above and
including, as exhibits, copies of all authorizing board and, where
necessary, shareholder resolutions and true and complete copies of its
charter documents.
(6) ESI and EHGI shall have received, on and as of the Closing Date, an
opinion of Counsel to the Purchaser addressed to ESI and EHGI,
substantially in the form as attached hereto as Exhibit 8.2(6).
(7) EHGI shall have received from the Purchaser evidence satisfactory to
the EHGI and its counsel that the Consideration has been, or is in the
process of being, delivered in the form of immediately available funds via
wire transfer or other means acceptable to EHGI.
(8) The License Agreement for the limited use of the "System Software", as
defined in the Amended and Restated Preferred Vendor Agreement dated May
15, 1992 between Holiday Inns, Inc. and Encore Systems, Inc., as amended
(the "Holiday Inn Contract"), for purposes of the performance of EHGI's
rights and obligations under the Holiday Inn Contract, substantially in the
form and substance as Exhibit 8.2(8) attached hereto, is executed and
delivered to EHGI.
(9) EHGI shall have received from Purchaser an Assumption of Liabilities
Agreement relating to the Assumed Liabilities, substantially in the form
and substance as Exhibit 8.2(9) attached hereto.
(10) The agreements relative to the Related Transactions, as provided in
Section 3.1 above, are executed and delivered to ESI.
24
(11) All other conditions to the closing of all of the agreements relative
to the Related Transactions, as described in Section 3.1 above, have been
satisfied or waived, it being an express requirement that all of the
agreements described in Section 3.1 above, close on the same day, adjusted
for the appropriate time zones for each jurisdiction.
ARTICLE IX
TERMINATION, AMENDMENT, WAIVER
9.1 Termination. This Agreement and the Transaction may terminated at any
time prior to the Closing, whether before or after any necessary shareholders
approval:
(1) By mutual consent of the Purchaser and ESI and EHGI;
(2) By the Purchaser or ESI and EHGI upon the material breach of this
Agreement by the other; or
(3) By either the Purchaser or ESI and EHGI, upon written notice to the
other, if the conditions to such party's obligations to consummate the
Transaction, in the case of Purchaser, as provided in Section 8.1, or, in
the case of ESI and EHGI, as provided in Section 8.2, were not, or cannot
reasonably be, satisfied on or before October 26, 2000. unless the failure
of condition is the result of the material breach of this Agreement by the
party seeking to terminate this Agreement.
9.2 Amendment. This Agreement may be amended by ESI, EHGI and the Purchaser
by action taken at any time. This Agreement may not be amended except by an
instrument in writing signed on behalf of ESI, EHGI and the Purchaser.
9.3 Waiver. At any time prior to the Closing Date, the Purchaser, ESI or
EHGI, by action taken by their respective Boards of Directors, may, but shall
not be obligated to, (1) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (2) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (3) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
9.4 Relief. In the event of liability on the part of ESI or EHGI to the
Purchaser in accordance with the provisions of this Agreement prior to the
Closing, the parties recognize and acknowledge that monetary measures of damages
will not reasonably be calculable and that specific performance and injunctive
relief should therefore be available to the Purchaser.
ARTICLE X
INDEMNITY
10.1 Indemnification of Purchaser. ESI and EHGI hereby agree to jointly and
severally indemnify, defend and hold harmless, the Purchaser and its officers,
directors, shareholders, managers, members, employees, independent contractors,
agents, successors and assigns
25
(collectively, the "Purchaser Parties"), for,
from and against any and all liabilities, losses, costs or expenses which any of
the Purchaser Parties may suffer or for which any of the Purchaser Parties may
become liable and which are based on, the result of, arise out of or are
otherwise related to any of the following:
(1) any inaccuracy or misrepresentation in, or breach of any representation
or warranty of ESI or EHGI contained in this Agreement, any of the
documents or agreements executed in connection with this Agreement
(collectively, the "Attendant Documents") or any certificate, schedule,
list or other instrument to be furnished by ESI or EHGI to the Purchaser
pursuant to this Agreement or any of the Attendant Documents;
(2) any breach or failure of ESI or EHGI to perform any covenant or
agreement required to be performed by ESI or EHGI pursuant to this
Agreement or any of the Attendant Documents including, without limitation,
EHGI's obligations to pay the unassumed Liabilities under Section 7.11
above;
(3) any and all actions, suits, proceedings, demands, assessments,
judgments, costs and expenses, including reasonable attorneys' fees and
consultants' fees (collectively, the "Related Expenses"), incident to any
of the foregoing.
10.2 Indemnification of ESI and EHGI. Purchaser hereby agrees to indemnify,
defend and hold harmless, ESI, EHGI and their respective officers, directors,
shareholders, managers, members, employees, independent contractors, agents,
successors and assigns (collectively, the "Seller Parties"), for, from and
against any and all liabilities, losses, costs or expenses which any of the
Seller Parties may suffer or for which any of the Seller Parties may become
liable and which are based on, the result of, arise out of or are otherwise
related to any of the following:
(1) any inaccuracy or misrepresentation in, or breach of any representation
or warranty of the Purchaser contained in this Agreement, any of the
Attendant Documents or any certificate, schedule, list or other instrument
to be furnished by the Purchaser to ESI or EHGI pursuant to this Agreement
or any of the Attendant Documents;
(2) any breach or failure of the Purchaser to perform any covenant or
agreement required to be performed by the Purchaser pursuant to this
Agreement or any of the Attendant Documents including, without limitation,
Purchaser's obligations to pay the Assumed Liabilities under Section 2.1
above;
(3) any and all Related Expenses incident to any of the foregoing.
10.3 Remedies Not Exclusive. The Purchaser Parties and the Seller Parties
shall be entitled to exercise and resort to all rights and remedies for
misrepresentation or breach as are afforded at law or in equity, including,
without limitation, rescission, specific performance or such other non-monetary
remedies and relief as may be afforded under this Agreement or by a court of
competent jurisdiction. Neither the existence or exercise of any specific
remedies is intended to be exclusive or impair or otherwise adversely affect in
any manner whatsoever any rights, remedies or
26
relief otherwise available, and each and every right and remedy will be
cumulative and in addition to every other right and remedy provided in this
Agreement or by law. Notwithstanding the foregoing, other than actions for fraud
or other intentional torts, the remedies set forth in this Article 10 shall be
the Purchaser Parties' and the Seller Parties' sole and exclusive remedies
relative to the recovery of economic or monetary damages.
10.4 Procedures. If any proceedings are instituted or any claim or demand
is asserted by any person not a party to this Agreement in respect of which any
of the Purchaser Parties or the Seller Parties may seek indemnification pursuant
to this Section 10, the indemnified party shall promptly cause written notice
(the "Notice") of the assertion of any such claim or demand to be made to the
indemnifying party; provided, however, that the failure of the indemnified party
to give prompt Notice shall not relieve the indemnifying party of its
obligations hereunder unless, and only to the extent that, such failure caused
the damages for which the indemnifying party is obligated to be greater than
they would have been had the indemnified party given the indemnifying party
prompt Notice hereunder. Except as otherwise provided herein, the indemnifying
party shall have the right, at its option and expense, to defend against,
negotiate, or settle any such claim or demand, and if the indemnifying party
exercises that option, the indemnifying party shall not be liable for the fees
and expenses incurred after the date the indemnifying party notifies the
indemnified party of such exercise by a counsel employed by the indemnified
party. An indemnifying party may not settle any such claim or demand without the
written consent (which consent shall not be unreasonably withheld, conditioned
or delayed) of the indemnified party unless such settlement requires no more
than a monetary payment for which the indemnified party is fully indemnified or
involves other matters not binding upon the indemnified party. An indemnifying
party shall not be liable for any settlement of any such claim or demand
effected without its prior written consent (which consent shall not be
unreasonably withheld, conditioned or delayed). In the event that the
indemnifying party shall fail to respond within ten (10) days after the giving
of the Notice, then the indemnified party may retain counsel and conduct the
defense thereof as it may, in its sole discretion, deem proper, at the sole cost
and expense of the indemnifying party. The parties agree to cooperate fully with
each other in connection with the defense, negotiation or settlement of any such
legal proceeding, claim or demand.
10.5 Cooperation. The Purchaser shall, and shall cause its accountants,
counsel, employees and other representatives to, reasonably cooperate with ESI
and EHGI in connection with any and all disputes which may arise in connection
with any and all Liabilities other than the Assumed Liabilities (the "Excluded
Liabilities"). ESI and EHGI shall, and shall cause its accountants, counsel,
employees and other representatives to, reasonably cooperate with the Purchaser
in connection with any and all disputes which may arise in connection with any
and all of the Assumed Liabilities. Without limiting the generality of the
foregoing, the Purchaser shall cause its accountants, counsel, employees and
other representatives, to make available to ESI or EHGI, their employees, work
papers, documents and other information and materials reasonably requested by
ESI or EHGI in connection with the Excluded Liabilities and ESI and EHGI shall
cause its respective accountants, counsel, employees and other representatives,
to make available to the Purchaser, its employees, work papers, documents and
other information and materials reasonably requested by the Purchaser in
connection with the Assumed Liabilities. The party requesting cooperation (ESI
and EHGI in connection with the Excluded Liabilities or the Purchaser in
connection with the Assumed Liabilities) shall pay all out-of-pocket expenses
reasonably incurred
27
and paid by the cooperating party to third parties in connection with such
cooperative efforts; provided, however, that the party requesting cooperation
shall not be obligated to reimburse the cooperating party for the time spent by
any of their or their Affiliates' employees' time spent in connection with such
cooperative efforts.
10.6 Initial Limitation. Other than the rights to defend and hold harmless
with respect to third party claims, neither Party (defined below) shall have any
liability for indemnification pursuant to Section 10.1 and Section 10.2, above,
until the aggregate amount of all losses suffered by the Party seeking
indemnification with respect to such matters exceeds the sum of $100,000;
provided, however, that this limitation shall not apply to breaches by EHGI of
its obligations under Section 7.11 above or Purchaser of its obligations to pay
the Assumed Liabilities. For purposes of this Section 10.6 and Section 10.7
below, Purchaser, on the one hand, and ESI and EHGI, collectively, on the other
hand, shall each constitute a "Party."
10.7 Aggregate Limitation. The aggregate liability, for either Party, for
indemnification pursuant to Section 10.1 or Section 10.2, above, shall not
exceed the sum of $10,000,000; provided, however, that this limitation shall not
apply to breaches by EHGI of its obligations under Section 7.11 above or
Purchaser of its obligations to pay the Assumed Liabilities.
10.8 Available Insurance Limitation. The amount of any recovery for
indemnification pursuant to Section 10.1 or Section 10.2, above, shall be
determined after taking into account all amounts to which the indemnified party
is entitled and actually receives under the provisions of all insurance policies
with third parties (i.e. actual insurance policies and not self-insurance or
retention programs) subject to offset for any increase in premiums attributable
to such losses or payments made in respect of such losses. The parties agree to
use reasonable efforts to collect amounts available under any such insurance
policies.
10.9 Balance Sheet Adjustment Limitation. With respect to any claim of
indemnification related to any breach of Sections 5.5, 5.6(1), 5.6(13), and/or
5.6(14) or any other representation or warranty concerning the Unaudited
Financial Statements, the amount of any recovery by the Purchaser Parties for
indemnification pursuant to Section 10.1, above, as a result of any breach of
Sections 5.5, 5.6(1), 5.6(13), and/or 5.6(14) or any other representation or
warranty concerning the Unaudited Financial Statements, shall be reduced by any
Balance Sheet Gains (defined below). Upon any such claim for recovery, or upon
the reasonable request of ESI or EHGI after a claim has been made by Purchaser
hereunder, Purchaser shall deliver to ESI or EHGI a report identifying Balance
Sheet Gains or will represent in writing that there are no Balance Sheet Gains.
For purposes of this Agreement, the term "Balance Sheet Gains" means any
realization with respect to any current asset in excess of its value as
reflected on the Acquired Business Balance Sheet (as adjusted to account for any
ordinary course changes thereto through the Closing Date), or any positive
realization with respect to any Liability reflected on the Acquired Business
Balance Sheet (as adjusted to account for any ordinary course changes thereto
through the Closing Date) (in that the Purchaser is actually responsible for any
amount less than that reflected thereon).
28
10.10 Application of Indemnification Provisions. The parties agree that the
limitations of the indemnification provisions contained in Sections 10.6, 10.7,
10.8 and 10.9 above do not apply to the parties' rights and obligations to
defend and hold harmless with regard to third party claims, pursuant to Sections
10.1 and 10.2 above, and shall apply on a collective basis to all agreements for
indemnification including those to be entered into in respect of each of the
Related Transactions, pursuant to Section 3.1 above. For example, a claim for
indemnification as a result of a balance sheet adjustment, pursuant to Section
10.9 above, shall be determined after taking into account any positive
adjustments to the Acquired Business Balance Sheet or to the balance sheets of
any foreign jurisdiction entities (as set forth in Section 3.1 above) and shall
similarly be accompanied by the report or representation contemplated in Section
10.9 above. The parties further agree that the Purchaser's right to put any
Receivables back to ESI or EHGI, as and to the extent provided in Section 11.1
below, shall be determined on a collective basis, taking into consideration all
receivables of EHGI and all of the foreign entities identified in Section 3.1
above, the Purchaser's or its Affiliates' collection efforts, and the aggregate
reserves of EHGI and all of the foreign entities identified in Section 3.1
above.
ARTICLE XI
GENERAL PROVISIONS
11.1 Collection of Accounts Receivable. Upon and after the Closing, the
Purchaser shall have the right and authority to collect all Receivables
transferred to Purchaser pursuant to this Agreement and to endorse the name of
EHGI on any checks received on account of any such Receivables. ESI and EHGI
shall promptly transfer and deliver to Purchaser any cash, checks or other
property which ESI and EHGI may receive in respect of such accounts after the
Closing Date. ESI and EHGI will cooperate with Purchaser, at its reasonable
request, on and after the Closing Date in endeavoring to collect all Receivables
transferred to Purchaser by furnishing, at Purchaser's cost and expense, such
information, testimony and other assistance as Purchaser may reasonably require
in connection with collection of such accounts. Payments received from customers
in respect of any Receivables shall be applied to the oldest outstanding
Receivable from such customer, unless such customer, acting on its own volition,
specifically identifies such payment to a particular Receivable, in which case
such payment shall be applied to the specified Receivable. Purchaser hereby
agrees not to coerce or suggest, directly or indirectly, in any way, to any
customer that they identify any payment to a particular Receivable, and in the
event of any such coercion or suggestion Purchaser agrees to make a credit to
ESI or EHGI, for any Receivables put to ESI or EHGI as provided below, in an
amount equal to five times the amount of that Receivable. Purchaser shall use
commercially reasonable efforts to collect the Receivables (but shall not be
obligated hereunder to bring any action to collect any Receivables) but if it
shall fail to collect the full amount of any such Receivable within 180 days
after the Closing Date, Purchaser shall have the right to put such Receivable to
EHGI (or ESI, if EHGI is no longer in existence), whereupon ESI or EHGI (as
applicable) shall repurchase such Receivable from Purchaser at the face amount
thereof; provided, however, that ESI or EHGI (as applicable) shall not have any
obligation to repurchase any Receivables until the aggregate amount of
Receivables which Purchaser has a right to, and has elected to, put to ESI or
EHGI (as applicable) exceeds the amount of any reserve for such Receivables as
of the Closing Date and then only to the extent of such excess. Any such put
29
right must be exercised on or before 360 days after the Closing Date unless
extended in writing by ESI. Notwithstanding the foregoing, Purchaser shall not
have the right to put to ESI or EHGI (as applicable) any Receivable which
Purchaser has compromised or settled or agreed to accept payment at less than
the face amount thereof in full satisfaction thereof or otherwise given a credit
in respect thereof. Upon a put of a receivable to ESI or EHGI, Purchaser will
cooperate with ESI or EHGI, at its reasonable request, in endeavoring to collect
all Receivables put to ESI or EHGI by furnishing, at ESI or EHGI's cost and
expense, such information, testimony and other assistance as ESI or EHGI may
reasonably require in connection with collection of such accounts.
11.2 Maintenance and Support of Performer. After the Closing, upon a sale
by Purchaser of the Software Product commonly referred to as "Performer" and the
entering into of an agreement for its maintenance and support, Purchaser and ESI
agree that Purchaser shall subcontract with ESI, or any Subsidiary of ESI as
designated by ESI, for purposes of providing such maintenance and support. The
terms and conditions shall be substantially similar to those currently utilized
by EHGI for the maintenance and support of Performer; provided, however, that
ESI shall be responsible for invoicing and collecting all maintenance and
support fees generated thereunder. Notwithstanding the foregoing, Purchaser
shall be responsible for the management of the Performer customer accounts. On
or before the 15th day of each month, ESI shall deliver to Purchaser an amount
equal to 15% of all such fees which ESI collected during the previous month.
Upon 90 days written notice, either ESI or Purchaser shall have the right to
terminate their obligations hereunder. Upon a termination, Purchaser and ESI
shall use commercially reasonable efforts to complete the invoicing, collection
and division of all previously accrued maintenance and support fees generated
from the subcontracting of such services by Purchaser to ESI.
11.3 Asset Acquisition Statement. Prior to the Closing, the parties agree
to jointly prepare and file the Asset Acquisition Satement on Form 8594, as
required by the Internatl Revenue Service, and to use commercially reasonable
methods to determine the allocation of the Consideration to be disclosed
therein.
11.4 Arbitration. In the event that there shall be a dispute arising out of
or relating to this Agreement, the Transaction, any document referred to herein
or centrally related to the subject matter hereof, or the subject matter of any
of the same, the parties agree that such dispute shall be submitted to binding
arbitration in Los Angeles County, California, under the auspices of, and
pursuant to the rules of, the American Arbitration Association as then in
effect, or such other procedures as the parties may agree to at the time, before
an arbitrator selected pursuant to the rules of the American Arbitration
Association. Any award issued as a result of such arbitration shall be final and
binding between the parties, and shall be enforceable by an court having
jurisdiction over the party against whom enforcement is sought.
11.5 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be deemed given if and when delivered
personally or three (3) business days following mailing 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 given.
30
If to the Purchaser:
AremisSoft Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Roys Poyiadjis, CEO
with a required copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxx Eng Linn & Xxxxxxxx
000 Xxxxxxx Xxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
If to ESI or EHGI:
Eltrax Systems, Inc.
000 Xxxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. X'Xxxxxx, Chairman
with a required copy to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
Jaffe, Raitt, Heuer & Xxxxx, P.C.
Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
11.6 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 Survival of Representations, Warranties, Etc. The representations,
warranties, covenants, and agreements of the parties contained herein shall
survive the Closing and any investigation of the other party made prior thereto.
Representations and warranties shall so survive for a period of three (3) years
from the Closing, except for those contained in Sections 4.1, 4.2, 4.3, 5.1, 5.2
and 5.3 which shall survive indefinitely, and for those contained in Section 5.5
which shall survive until March 31, 2001.
11.8 Miscellaneous. This Agreement and the existing confidentiality
agreement referenced in Section 7.4 constitute the entire agreement and
supersedes all of the prior agreements and understandings, both written and
oral, between the parties, with respect to the subject matter hereof, except as
specifically provided otherwise or referred to herein, so that no such external
or separate agreements relating to the subject matter of this Agreement (1)
shall have any effect or be binding, unless the same is referred to specifically
in this Agreement or is executed by the parties after the date hereof; (2) is
not intended to confer upon any other person any rights or remedies
31
hereunder; (3) shall not be assigned by operation of law or otherwise except for
assignments of all or any part of the rights of the Purchaser hereunder, which
may be freely assigned by the Purchaser so long as the obligations of the
Purchaser under this Agreement remain obligations of, or their performance is
unconditionally guaranteed (which must be a guaranty of performance, and not
just collection, with no duty on the part of ESI or EHGI to pursue the assignee
first, and which guarantee must be approved by ESI in advance, which approval
will not be unreasonably withheld) by, the Purchaser; and (4) shall be governed
in all respects, including validity, interpretation and effect, by the internal
laws of the State of California, without regard to the principles of conflict of
laws thereof. It is acknowledged and understood by ESI and EHGI that Purchaser
may assign it rights, but not its obligations, hereunder, after execution and
prior to the Closing, to one or more wholly-owned (direct or indirect)
Subsidiaries of Purchaser. This Agreement may be executed in two or more
counterparts which together shall constitute a single agreement and facsimile
signatures shall have equal dignity with original signatures for all purposes.
11.9 Certain Exhibits. The parties acknowledge that they have not yet
finalized the documents to be attached to this Agreement as Exhibits 8.1(7),
8.1(12), 8.1(13), 8.2(6) and 8.2(9) but they agree that they shall endeavor in
good faith to do so by the close of business on October 5, 2000. Each party's
approval of those documents prior to the Closing shall be an additional
condition precedent to its obligations to consummate the Transaction.
[INTENTIONALLY LEFT BLANK.]
32
IN WITNESS WHEREOF, the undersigned have caused this Agreement for the
Purchase and Sale of Assets to be signed on September __, 2000 by their
respective officers thereunto duly authorized.
The Purchaser:
AremisSoft Corporation
By: ___________________________________
Roys Poyiadjis, CEO
ESI:
Eltrax Systems, Inc.
By: ___________________________________
Xxxxxxx X. X'Xxxxxx, Chairman
EHGI:
Eltrax Hospitality Group, Inc.
By: ___________________________________
SCHEDULE 4.3
to the
Agreement for the Purchase and Sale of Assets
to which
AremisSoft Corporation, as Purchaser,
Eltrax Systems, Inc. and Eltrax Hospitality Group, Inc., as Sellers
are parties
ABSENCE OF BREACH; NO CONSENTS
A. Capitalized terms this Schedule uses, but does not define, have the meanings
the captioned Agreement specifies.
B. No exception is taken to the representations and warranties in Section 4.3 of
the Agreement.
End of Schedule
SCHEDULE 6.5
to the
Agreement for the Purchase and Sale of Assets
to which
AremisSoft Corporation, as Purchaser,
Eltrax Systems, Inc. and Eltrax Hospitality Group, Inc., as Sellers
are parties
OFFER OF EMPLOYMENT
A. Capitalized terms this Schedule uses, but does not define, have the meanings
the captioned Agreement specifies.
B. List those employees of EHGI that shall not be extended offer of employment
by the Purchaser pursuant to Section 6.5 of the Agreement: None
End of Schedule
SCHEDULE 7.2
to the
Agreement for the Purchase and Sale of Assets
to which
AremisSoft Corporation, as Purchaser,
Eltrax Systems, Inc. and Eltrax Hospitality Group, Inc., as Sellers
are parties
EMPLOYMENT CONTRACT
A. Capitalized terms this Schedule uses, but does not define, have the meanings
the captioned Agreement specifies.
B. List and provide the name and salary of the individuals that will be offered
an employment contract by the Purchaser pursuant to Section 7.2 of the
Agreement:
------------------------ --------------------------
Name Salary
---- ------
------------------------ --------------------------
Xxxx Xxxxxxx $150,000
------------------------ --------------------------
Xxxx Xxxxxxx $120,000
------------------------ --------------------------
Xxxxxxxxxxx Xxxxxxx $75,000
------------------------ --------------------------
End of Schedule
SCHEDULE 8.1(1)
to the
Agreement for the Purchase and Sale of Assets
to which
AremisSoft Corporation, as Purchaser,
Eltrax Systems, Inc. and Eltrax Hospitality Group, Inc., as Sellers
are parties
CONDITIONS TO OBLIGATION OF PURCHASER
A. Capitalized terms this Schedule uses, but does not define, have the meanings
the captioned Agreement specifies.
B. This Agreement and Transaction contemplated hereby shall have received those
approvals, consents, authorizations and waivers from governmental and other
regulatory agencies and other third parties (including lenders, holders of debt
securities and lessors), as identified as follows (including the expiration of
any applicable waiting period under the HSR Act):
1) PNC Bank, National Association, pursuant to the Revolving Credit and
Security Agreement, dated March 14, 2000, as amended.
2) Holiday Inns, Inc., pursuant to the Amended and Restated Preferred
Vendor Agreement, dated May 15, 1992, as amended.
3) Holiday Inns, Inc., pursuant of the Software Development, Licensing and
Services Agreement, dated August 26, 1993.
4) Cereus Technology Partners, Inc., pursuant to the Agreement and Plan of
Merger, dated June 12, 2000.
5) IPC Commercial Properties, pursuant to the Office Building Lease
Agreement, dated May 13, 1993, as amended.
6) AzCal Fund 200 L.L.C., pursuant to the Standard Office
Lease-Gross/American Industrial Real Estate Association, dated January 21,
1999.
7) DirecPC Value Added Reseller ("VAR") Agreement, between Xxxxxx Network
Systems, a division of Xxxxxx Electronic Corporation and Eltrax Hospitality
Group, Inc.
8) Value Added Reseller Agreement - United States, between ACCPAC
International, Inc. and Eltrax Hospitality Group, Inc., dated __________.
9) Software Reselling and Support Agreement, Letter of Intent, between
Daylight and Eltrax Hospitality Group, Inc., dated _________.
10) VAR Agreement, between SynXis, Inc. and Eltrax Systems, Inc., dated
________.
11) Rio System Reseller Equipment, between Rio Systems Inc. and Eltrax
Systems Inc., dated May 18, 2000.
12) Remarketer Sales and License Agreement, between Southern DataComm, Inc.
and Encore Systems, dated May 8, 1997.
13) North American Manufacturing Partner Agreement, between Pervasive
Software, Inc. and Lodgistix International, dated December 23, 1998.
14) Agreement, DecisionOne Corporation and Lodgistix, Inc., dated September
4, 1997 and extended on August 7, 1998.
15) Electronic Data Systems Corporation, pursuant to the Software License
Agreement, dated November 13, 1992, as amended by the Amendment to Software
License Agreement, dated September 9, 1994.
16) The parties on the LANmark matrix attached as Addendum A with the
designation "GVNMNTDA FORM 4067R FEB 87" in the "Software Agreement" column
on the matrix, pursuant to their respective Order for Supplies or
Services/Request for Quotations.
End of Schedule
