REORGANIZATION AGREEMENT
by and among
XXXXXX GROUP, INC., a Delaware corporation,
UNITED INFORMATION SYSTEMS, INC., a Florida corporation,
UIS INDUSTRIAL LTDA.,
a company organized under the laws of Brazil,
THE SHAREHOLDER OF UNITED INFORMATION SYSTEMS, INC.
and
THE SHAREHOLDERS OF UIS INDUSTRIAL, LTD.
November 17, 1997
REORGANIZATION AGREEMENT
------------------------
THIS REORGANIZATION AGREEMENT (the "Agreement") is made and entered
into as of the 17th day of November, 1997, by and among XXXXXX GROUP, INC., a
Delaware corporation ("Xxxxxx"), UNITED INFORMATION SYSTEMS, INC., a Florida
corporation ("UIS"), UIS INDUSTRIAL LTDA., a company organized under the laws of
Brazil ("UIS Brazil"), and the shareholders of UIS Brazil ("UIS Brazil
Shareholders") and UIS ("UIS Shareholder") whose names are set forth on Schedule
A attached hereto (the UIS Shareholders and UIS Brazil Shareholders are
sometimes collectively hereinafter referred to as "Shareholders"). UIS Brazil
and the UIS Brazil Shareholders shall be jointly and severally liable (under
United States and Brazilian laws) hereunder with respect to any representations
and warranties hereunder made by UIS Brazil and the UIS Brazil Shareholders. UIS
and the UIS Shareholder shall be jointly and severally liable hereunder with
respect to any representations and warranties hereunder made by UIS and the UIS
Shareholders.
W I T N E S S E T H:
WHEREAS, UIS Brazil is engaged in the business of assembling,
manufacturing, distributing and selling personal computers, computer parts,
components and accessories (the "UIS Brazil Business"); and
WHEREAS, UIS is engaged in the business of distributing and selling
computer parts, components and accessories (the "UIS Business"); and
WHEREAS, subject to the terms and conditions hereinafter set forth,
Xxxxxx desires to acquire from the Shareholders and the Shareholders desires to
transfer to Xxxxxx, all the stock owned by the Shareholders in UIS and UIS
Brazil, as the case maybe ("UIS Brazil Stock" and "UIS Stock", and
collectively), in exchange for the "Exchange Stock" (as hereinafter defined);
and
WHEREAS, the UIS Brazil Shareholders constitutes all of the
shareholders of UIS Brazil, and the UIS Shareholder is the Sole Shareholder of
UIS.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as follows:
ARTICLE I
RECITALS, EXHIBITS, SCHEDULES
-----------------------------
The foregoing recitals are true and correct and, together with the
schedules and exhibits referred to hereafter, are hereby incorporated into this
Agreement by this reference. Certain capitalized terms used herein are defined
in Exhibit A hereof.
ARTICLE II
REORGANIZATION
--------------
2.1 Stock Exchange. At Closing, in exchange for the issuance of the
Exchange Stock, and subject to the terms and conditions hereof, Shareholders
hereby agrees to transfer, convey and deliver to Xxxxxx, and Xxxxxx hereby
agrees to acquire from Shareholders, all of the UIS Brazil Stock and UIS Stock,
free and clear of all Encumbrances. Except as may be hereafter agreed by the
Shareholders, the Exchange Stock shall be issued to Shareholders in the amounts
and percentages set forth on Schedule A.
2.2 Pre-Conditions of Closing. Xxxxxx covenants and agrees, and the
obligation of the Shareholders to close hereunder shall be conditioned upon the
following being true and correct at Closing, as follows:
(a) The Exchange Stock shall constitute 67.50% or 5,601,334 of
all of the issued and outstanding shares of stock of Xxxxxx.
(b) The shares of Common Stock of Xxxxxx are trading on the
NASDAQ Bulletin Board under the symbol "SEGI."
(c) Xxxxxx shall have audited financial statements for the
year ended December 31, 1996, and financial statements for the period ended
September 30, 1997 prepared in accordance with generally accepted accounting
principles, all of which shall be provided to the Shareholders prior to Closing.
Xxxxxx shall have cash on hand as of Closing of not less than $2,200,000, and
shall not be a party to any liabilities (other than the Convertible Debentures).
(d) Within thirty (30) days following the Closing, Xxxxxx
shall file a registration statement with the Securities Exchange Commission that
shall include twenty (20%) percent of each of the Shareholders' Exchange Stock
of the Exchange Stock. Shareholders acknowledge that the Exchange Stock will be
subject to certain "lock-up" provisions pursuant to Section 2.5 hereof, but in
no event shall the "lock-up" provisions extend for more than 24 months following
the Closing Date, as hereinafter defined.
(e) Xxxxxx shall enter into an employment agreement with
Xxxxxx Xxxx, substantially in the form attached hereto as Exhibit B.
2.3 Closing Date. The closing of the transactions provided for herein
("Closing") shall take place at the offices of the law firm Atlas, Xxxxxxxx,
Trop & Borkson, P.A. 000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxxxxx
00000, at such date mutually designated by the parties hereto in writing but in
no event later than November 30, 1997 ("Closing Date").
2.4 Qualification as Reorganization. The parties hereto hereby agree
that this transaction is intended to qualify as a reorganization within the
meaning of Section 368(a)(1) of the Internal Revenue Code of 1986, as amended
("Reorganization"). Each of the parties agrees that it shall report the
transaction as a Reorganization on its respective federal income tax return,
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and shall cooperate to the extent reasonably necessary to complete all
information reporting necessary in connection therewith.
2.5 Restrictions on Transferability.
(a) Except as provided in Section 2.5 hereof, the Shareholders
hereby agree that neither the Shareholders nor the Shareholder's
representatives, administrators, successors or assigns will offer, sell,
transfer, assign, pledge, hypothecate, encumber or otherwise attempt to directly
or indirectly dispose of any of the Exchange Stock either pursuant to Rule 144
of the Securities Act of 1933, as amended, a registration statement or
otherwise, or dispose of any beneficial interest therein for a period of twenty
four (24) months following the Closing Date without the prior written consent of
the Oversight Committee of 2M Capital Corp.
(b) Notwithstanding paragraph 2.5(a), the shareholders listed
on Schedule B hereto hereby agree that neither the shareholders nor the
shareholder's representatives, administrators, successors or assigns will offer,
sell, transfer, assign, pledge, hypothecate, encumber or otherwise attempt to
directly or indirectly dispose of any of the Exchange Stock in the amounts
designated on Schedule B either pursuant to Rule 144 of the Securities Act of
1933, as amended, a registration statement or otherwise, or dispose of any
beneficial interest therein for a period of nine (9) months following the
Closing Date without the prior written consent of the Oversight Committee of 2M
Capital Corp.
(c) The Exchange Shares will be subject to any restrictions on
transfer or disposition pursuant to a Registration Statement, imposed by (i) an
underwriter for any public offering of the Company's securities, which lock-up
period the Company anticipates not to exceed twenty-four (24) months from the
effective date of the Registration Statement for such public offering; (ii) the
National Association of Securities Dealers (NASD); or (iii) any national
exchange including the National Association of Securities Dealers Automated
Quotation System ("NASDAQ").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF UIS BRAZIL AND THE UIS BRAZIL
---------------------------------------------------------------
SHAREHOLDERS, UIS AND THE UIS SHAREHOLDER
-----------------------------------------
As to UIS Brazil, UIS Brazil and the UIS Brazil Shareholders hereby
jointly and severally make the following representations and warranties to
Xxxxxx, each of which UIS Brazil and the UIS Brazil Shareholders represent to be
true and correct on the date hereof and (except as UIS Brazil and the
Shareholders may notify Xxxxxx in writing prior to Closing) shall be deemed made
again as of the Closing Date and represented by the UIS Brazil and the UIS
Brazil Shareholders to be true and correct on the Closing Date, and as to UIS,
UIS and the UIS Shareholder jointly and severally hereby make the following
representations and warranties to Xxxxxx, each of which UIS and the UIS
Shareholder represent to be true and correct on the date hereof and (except as
UIS and the UIS Shareholder may notify Xxxxxx in writing prior to Closing) shall
be deemed made again as of the Closing Date and represented by UIS and the UIS
Shareholder to be true and correct on the Closing Date. The following
representations and warranties are made by UIS
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Brazil and the UIS Brazil Shareholders on the one hand and by UIS and the UIS
Shareholder, on the other hand, severally and not jointly:
3.1 Organization. UIS Brazil is a corporation duly organized, validly
existing and in good standing under the Laws of Brazil, and UIS is a corporation
duly organized, validly existing and in good standing under the Laws of Florida.
Neither UIS Brazil nor UIS have subsidiaries or interests in any other Persons
and are not required to be qualified or licensed as foreign corporations in any
jurisdiction in which the failure to be so qualified or licensed would have a
materially adverse effect on their respective Businesses. UIS Brazil and UIS
have the full power and authority to own all their Assets and to conduct their
respective Businesses as and where the Businesses are conducted. Accurate,
current, and complete copies of the Articles of Incorporation and Bylaws of UIS
Brazil and UIS and, if any, all fictitious name registrations of UIS Brazil and
UIS have been delivered to Xxxxxx at or prior to the execution of this
Agreement. The Shareholder constitutes all the Shareholders of UIS and the
Shareholders constitute all the Shareholders of UIS Brazil.
3.2 Authority and Approval of Agreement.
(a) The execution and delivery of this Agreement by UIS Brazil
and the UIS Brazil Shareholders and UIS and the UIS Shareholder, and the
performance of all its respective obligations hereunder have been duly
authorized and approved by all requisite corporate action on the part of the UIS
Brazil and the UIS Brazil Shareholders and UIS and the UIS Shareholder pursuant
to applicable Law, which included unanimous approval by their respective Boards
of Directors and their Shareholders, and said authorization and approval has not
been altered, amended or revoked. Pursuant to said authorization and approval,
UIS Brazil and the UIS Brazil Shareholders and UIS and the UIS Shareholder have
the power and authority to execute and deliver this Agreement and to perform all
its obligations hereunder.
(b) This Agreement and each of the other documents,
instruments and agreements executed by UIS Brazil and the UIS Brazil
Shareholders and UIS and the UIS Shareholder in connection herewith constitute
the valid and legally binding agreements of such Persons enforceable against
such Persons in accordance with its terms, except that: (i) enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application affecting the enforcement of the rights and
remedies of creditors; and (ii) the availability of equitable remedies may be
limited by equitable principles.
3.3 No Violations. Except as set forth on Schedule 3.3 hereto, the
execution, delivery or performance of this Agreement or any other documents,
instruments or agreements executed by UIS Brazil, UIS or the Shareholders of
either in connection herewith, and the consummation of the transactions
contemplated hereby and thereby, do not and will not: (i) constitute a violation
of or default under (either immediately, upon notice or upon lapse of time) the
Articles of Incorporation or Bylaws of UIS Brazil or UIS, any provision of any
Contract to which UIS Brazil or UIS or the Assets of UIS Brazil or UIS may be
bound, any Judgment or any Law; or (ii) result in the creation or imposition of
any Encumbrance upon, or give to any third person any interest in or right to,
any of the UIS Brazil or UIS Assets; or (iii) result in the loss or adverse
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modification of, or the imposition of any fine or penalty with respect to, any
Permit or franchise granted or issued to, or otherwise held by or for the use
of, UIS Brazil or UIS.
3.4 Financial Statements. Attached hereto as Schedule 3.4 are financial
statements of UIS Brazil and UIS ("Financial Statements"), including audited
balance sheets and statements of operations for the fiscal years ended December
31, 1995 and December 31, 1996, and internally prepared income statements and
Balance Sheets of UIS Brazil and UIS at September 30, 1997. The Financial
Statements are true, correct and complete, were prepared in accordance with the
accrual method of accounting and generally accepted accounting principles as
adopted by the American Institute of Certified Public Accountants, and
accurately reflect UIS Brazil's and UIS's financial condition and the results of
their operations for the periods and as of the dates which they purport to
cover. As of the Closing, (a) the net book equity of the Assets in excess of
aggregate liabilities of UIS Brazil and UIS ("Liabilities") shall be not less
than $6,000,000 ("Minimum Net Asset Amount"), and (b) the current assets shall
be at least $500,000 greater than the current liabilities ("Minimum Liquidity").
All dollar amounts are in US dollars based on the conversion price of Brazilian
Real as of the last day of the applicable period.
3.5 Conduct Since Date of Unaudited Statements. Except as disclosed in
Schedule 3.5 hereto, none of the following have occurred since September 30,
1997:
(a) Any change in the Assets, Obligations, Business, financial
condition, prospects or operations of UIS Brazil or UIS which individually or in
the aggregate have had or may have any material adverse effect on the Assets,
the Liabilities, or the Businesses, financial condition or operations of UIS
Brazil or UIS, nor are there any circumstances known to UIS Brazil or UIS which
might result in such change or such an effect;
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Assets or Business;
(c) Any disposition, lease or Encumbrance of the Business, the
Assets, or increase of indebtedness of or guaranteed by UIS Brazil or the UIS
Brazil Shareholders or UIS or the UIS Shareholder, other than in the ordinary
course of business consistent with past practices; provided, however, that no
such disposition, lease or Encumbrance, regardless of the consideration
therefor, has been made between UIS Brazil or UIS, and any of their
shareholders, directors, officers, agents, contractors or employees (or any
member of their respective families);
(d) Any discharge or satisfaction by the UIS Brazil or UIS of
any lien or encumbrance or payment by UIS Brazil or UIS of any obligation or
liability (fixed or contingent) other than (a) current liabilities included in
the Balance Sheets, and (b) current liabilities incurred since the date of the
Balance Sheets in the ordinary course of business;
(e) Any transaction entered into by UIS Brazil or UIS other
than in the ordinary course of business consistent with past practices;
(f) Any notice received by UIS Brazil or the UIS Brazil
Shareholders or UIS or the UIS Shareholder of any actual or threatened labor
dispute or any event or condition of any
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character which has had or can reasonably be expected to have a material adverse
effect on the Businesses, the Assets or the financial condition or operations of
either UIS Brazil or UIS;
(g) Any change in the accounting principles followed by UIS
Brazil or UIS or the methods of applying such principles;
(h) Any Contract binding UIS Brazil or UIS to do or take any
of the actions referred to in this Section 3.5 (other than subsections (b) or
(f)); or
(i) Except for historically normal annual salary increases not
exceeding 6 percent in any individual case, any increase in the compensation,
pension or other benefits payable or to become payable by UIS Brazil or UIS to
any of its officers or employees, or any bonus payments or arrangements made to
or with any of them.
3.6 Title to Assets. Except as set forth in Schedule 3.6 hereto, UIS
Brazil and UIS are the sole and unconditional owners of and have good, valid and
marketable title to all the Assets, free and clear of all Encumbrances, except
for the Liabilities, and there exists no restrictions on the transfer or use of
the Assets. Schedule 3.6 hereto also includes an accurate, current and complete
list of each lease or sublease of Equipment to which UIS Brazil or UIS is a
party or by which UIS Brazil or UIS may be bound and a description of all
Equipment leased under each such lease or sublease. There are no materially
dangerous conditions with respect to any Asset.
3.7 Lease of Real Property. Schedule 3.7 hereto is an accurate and
complete list as of September 30, 1997 of each lease or sublease of Real
Property to which UIS Brazil and UIS is a party or by which UIS Brazil or UIS
may be bound and a description of the Real Property leased thereunder. With
respect to each lease or sublease of UIS Brazil and UIS described on Schedule
3.7 hereto: (i) UIS Brazil and UIS have been in peaceful possession of the
property leased thereunder and neither UIS Brazil nor UIS nor the landlord (to
the knowledge of such UIS Brazil and UIS) is in default thereunder; (ii) no
waiver, indulgence or postponement of any of the Obligations thereunder has been
granted by the lessee or lessor thereunder; and (iii) there exists no event,
occurrence, condition, or act known to UIS Brazil and UIS which upon notice or
lapse of time would be or become a default thereunder. UIS Brazil and UIS have
not violated or breached any provision of any such lease or sublease, and all
Obligations required to be performed by UIS Brazil and UIS have been fully and
properly performed. Except as set forth on Schedule 3.7 hereto, no Consent of
any Person is required under any such lease or sublease in order for such lease
or sublease to continue to be valid and subsisting and entitle Hirel to come
into and remain in possession of the premises demised thereunder after the
consummation of the transactions contemplated by this Agreement.
3.8 Indebtedness. Except for Indebtedness or as set forth on Schedule
3.8 reflected or reserved against in the Balance Sheets and Indebtedness
incurred in the ordinary course of business after the date of the Balance
Sheets, neither UIS Brazil nor UIS have Indebtedness outstanding at the date
hereof. Neither UIS Brazil nor UIS are in default with respect to any
outstanding Indebtedness or any instrument relating thereto, and no such
Indebtedness or any instrument or agreement relating thereto purports to limit
the issuance of any securities by UIS
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Brazil or UIS or the operation of the business of UIS Brazil or UIS. Complete
and correct copies of all instruments (including all amendments, supplements,
waivers and consents) relating to any Indebtedness of UIS Brazil or UIS have
been furnished to Xxxxxx.
3.9 Absence of Undisclosed Liabilities. Except to the extent reflected
or reserved against in the Balance Sheets or incurred in the ordinary course of
business after the date of the Balance Sheets or described in Schedule 3.9,
neither UIS Brazil nor UIS have liabilities or obligations of any nature,
whether accrued, absolute, contingent or otherwise (including, without
limitation, liabilities as guarantor or otherwise with respect to obligations of
others) and whether due or to become due including, without limitation, any
liabilities for Taxes due or to become due.
3.10 Environmental Matters.
(a) UIS Brazil and UIS have obtained all material Permits
which are required in connection with the conduct of the Business under
applicable Laws, and are in full compliance with all Laws, relating to pollution
or protection of the environment including, but not limited to, Laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment (including without limitation ambient air, space water,
groundwater, or land), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes ("Environmental Matters").
(b) UIS Brazil and UIS are in material compliance in the
conduct of their respective Businesses with all terms and conditions of the
required Permits and are also in material compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in those Laws or contained in any Judgment,
notice or demand letter issued, entered, promulgated or approved thereunder.
(c) Neither UIS Brazil nor UIS have received written notice of
any conditions or incidents that violate or prevent compliance or continued
compliance with those Laws otherwise form the basis of any Proceeding, based on
or related to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission, discharge, release
or threatened release into the environment, of any pollutant, contaminant,
chemical, or industrial, toxic or hazardous substance or waste.
(d) Neither UIS Brazil nor UIS have received notice of any
civil, criminal or administrative Proceeding pending or threatened against UIS
Brazil or UIS in connection with the conduct of their Businesses relating in any
way to those laws, or injunctions, notice or demand letter issued, entered,
promulgated or approved thereunder.
3.11 Assets Required for Operation. Attached as Schedule 3.11 is an
accurate and complete list as of September 30, 1997 of all the Assets in excess
of $5,000 in value used in the operation of the Business of UIS Brazil and UIS.
The Assets comprise all of the Assets used in the operation of the Businesses of
UIS Brazil and UIS in the manner and to the extent currently
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conducted. Except as otherwise provided on Schedule 3.11, all of the Assets are
located at the Premises of UIS Brazil or UIS.
3.12 Customers. Attached as Schedule 3.12 is an accurate and complete
list as of September 30, 1997 of the names of UIS Brazil's and UIS's material
customers as of date hereof (defined for these purposes to mean the customers
representing 10% or more of the total sales by UIS Brazil or UIS), their
addresses and telephone numbers. Schedule 3.12 also includes a copy of all
Contracts with customers. Neither UIS Brazil nor UIS have been notified nor has
any reason to believe, that any of its customers will not continue to do
business with Xxxxxx after the consummation of the transaction contemplated
hereby as and to the extent such customer is currently doing business with UIS
Brazil or UIS.
3.13 Other Contracts. Schedule 3.13 hereto is an accurate, and complete
list as of September 30, 1997 and description of each of the Contracts
evidencing aggregate obligations of UIS Brazil or UIS in excess of $50,000 to
which UIS Brazil or UIS is a party or by which UIS Brazil or UIS or any of its
Assets are bound. Each such Contract is a valid and binding obligation of the
parties thereto in accordance with the terms and conditions thereof. No party to
any such Contract is in default with respect to any term or condition thereof,
nor has any event occurred which, through the passage of time or the giving of
notice, or both, would constitute a default thereunder or would cause the
acceleration of any obligation of any party thereto. Except as set forth on
Schedule 3.13 hereto, no Contract described on Schedule 3.13 hereto: (a)
is a Contract that will not continue to be effective in accordance with its
terms subsequent to the transaction contemplated hereby without additional
consideration to or the consent or authorization of any third party to this
Agreement; or (b) is not cancelable by UIS Brazil or UIS giving thirty (30) days
notice or less, without liability, penalty or premium. Except as identified in
Schedule 3.13 hereto, there are no outstanding offers, bids, proposals or
quotations made by UIS Brazil which, if accepted, would create a Contract with
UIS Brazil or UIS.
3.14 Books and Records. UIS Brazil's and UIS's books and records
accurately reflect in all material respects all of UIS Brazil's and UIS's
Assets, Obligations and accruals, and all transactions (normally reflected in
books and records in accordance with the accrual method of accounting) to which
UIS Brazil or UIS is or was a party or by which UIS Brazil or UIS or any of its
Assets are or were affected.
3.15 Tax Returns. UIS Brazil and UIS have duly and timely filed with
the appropriate governmental agencies all tax and other returns and reports
required by any Law to be filed by it and all such returns and reports have been
accurately prepared and properly completed. Accurate and complete copies of all
such returns and reports filed by UIS Brazil during the past three (3) years
have been delivered to Xxxxxx.
3.16 Taxes. All Taxes due, owing and payable by UIS Brazil and UIS have
been fully paid or are reflected on the Financial Statements for the period
ended September 30, 1997. No claim for any Tax due from or assessed against UIS
Brazil or UIS is being contested. Except as set forth on Schedule 3.16 hereto,
none of UIS Brazil's or UIS's Tax returns or reports have been audited by the
Internal Revenue Service or any state or local Tax authority, and neither UIS
Brazil nor UIS have received any notice of deficiency or other adjustment from
the Internal
8
Revenue Service or any state or local Tax authority. There are no agreements,
waivers, or other arrangements providing an extension of time with respect to
the assessment of any Tax against UIS Brazil or UIS, nor are there any Tax
Proceedings now pending or threatened against UIS Brazil or UIS. UIS Brazil and
UIS have made all deposits required by Law, to be made with respect to
employees' withholding and other employment taxes. No state of facts exists or
has existed, nor has any event occurred, which would constitute grounds for the
assessment of any further Tax against UIS Brazil or UIS.
3.17 Proceedings. Neither UIS Brazil nor UIS are a party to, the
subject of, or threatened with any Proceeding nor, to the best of UIS Brazil's
or UIS's knowledge, is there any basis for any Proceeding. Neither UIS Brazil
nor UIS is contemplating the institution of any Proceeding.
3.18 Other Liabilities. No claim of breach of Contract, tort, product
liability or other claim (whether arising from UIS Brazil's or UIS's Business or
otherwise), contingent or otherwise, has been asserted or threatened against UIS
Brazil nor UIS, nor, to the best of UIS Brazil's and UIS's knowledge, is capable
of being asserted by any employee, creditor, claimant or other Person against
UIS Brazil or UIS, except for claims for warranty arising in the ordinary course
of the business of UIS Brazil or UIS. No state of facts exists or has existed,
nor has any event occurred, which could give rise to the assertion of any such
claim by any Person.
3.19 Permits. Schedule 3.19 lists all Permits obtained by UIS Brazil
and UIS to operate their respective Businesses. UIS Brazil and UIS have obtained
and presently hold all Permits which are required under applicable Law to
conduct their respective Businesses as and where currently conducted. All such
Permits are in effect, are included in the Assets and are transferable to
Xxxxxx, and no Consent of any Person is required in connection with any such
Permit for the transactions contemplated by this Agreement. Neither UIS Brazil
nor UIS is in default under, nor has it received any notice of any claim of
default or any other notice with respect to, any such Permit.
3.20 Consents. The execution, delivery and performance by UIS Brazil
and UIS of this Agreement and the consummation by UIS Brazil and UIS of the
transactions contemplated hereby do not require any Consent that has not been
received prior to the date hereof.
3.21 Judgments. There is no outstanding Judgment against UIS Brazil or
UIS or against or affecting any of the Assets or their respective Businesses. To
the best knowledge of UIS Brazil and UIS, there is no health or safety problem
involving or affecting UIS Brazil or UIS or the Assets of either. There are no
open workmen's compensation claims against UIS Brazil or UIS, or any contingent
liability of UIS Brazil or UIS, or any other Obligation, fact or circumstance
which would give rise to any right of indemnification on the part of any current
or former shareholder, director, officer, employee or agent of UIS Brazil or
UIS, or any heir or personal representative thereof, against UIS Brazil or UIS
or any successor to the business of UIS Brazil or UIS.
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3.22 Brokerage Fees. There is no Person acting on behalf of UIS Brazil
or UIS who is entitled to or has any claim for any brokerage or finder's fee or
commission in connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby.
3.23 Compliance with Laws. UIS Brazil and UIS and their respective
Businesses are in material compliance with all Laws where such failure to comply
would materially adversely effect the Business or Assets of UIS and UIS Brazil.
3.24 Labor Agreements, Employee Benefit Plans and Employment
Agreements. Except as reflected in Schedule 3.24 attached hereto, neither UIS
Brazil nor UIS is a party to: (i) any union collective bargaining or similar
agreement; (ii) any profit sharing, pension, retirement, deferred compensation,
bonus, stock option, stock purchase, retainer, consulting, health, welfare or
incentive plan or agreement or other Employee Benefit Plan, whether legally
binding or not; (iii) any plan providing for "fringe benefits" to its employees,
including, but not limited to, vacation, disability, sick leave, medical,
hospitalization and life insurance and other insurance plans, or related
benefits; or (iv) any employment agreement, severance agreement, noncompete
agreement or other Contract with any of their employees.
3.25 Labor Disputes; Unfair Labor Practices. There is no pending or
threatened labor dispute, strike or work stoppage which affects or which may
affect the Businesses of UIS Brazil or UIS or which may interfere with the
continued operation of the Businesses of either. To the best of UIS Brazil's and
UIS's knowledge, neither UIS Brazil nor UIS nor any agent, representative or
management employee of UIS Brazil or UIS has committed any unfair labor practice
as defined in the National Labor Relations Act of 1947, as amended. There is not
now pending or threatened any charge or complaint against UIS Brazil or UIS by
the National Labor Relations Board or any representative thereof. All references
in this section 3.25 as to UIS Brazil relate to Brazilian law.
3.26 Potential Conflicts of Interest. Except as set forth on Schedule
3.26, no officer or director of either UIS Brazil or UIS (a) owns, directly or
indirectly, any interest in (excepting not more than 1 percent stock holdings
for investment purposes in securities of publicly held and traded companies) or
is an officer, director, employee or consultant of any Person which is a
competitor, lessor, lessee, customer or supplier of either UIS Brazil or UIS;
(b) owns, directly or indirectly, in whole or in part, any tangible or
intangible property which either UIS Brazil or UIS is using or the use of which
is necessary for the businesses of either UIS Brazil or UIS; or (c) has any
cause of action or other claim whatsoever against, or owes any amount to, UIS
Brazil or UIS, except for claims in the ordinary course of business, such as for
accrued vacation pay, accrued benefits under employee benefit plans and similar
matters and agreements, none of which claims have accrued for a period greater
than 12 months prior to the date hereof.
3.27 Overtime, Back Wages, Vacation and Minimum Wages. Neither UIS
Brazil nor UIS has received notice of any claim (whether under federal or state
Law, any employment agreement or otherwise) on account of or for: (i) overtime
pay, other than overtime pay for the current payroll period; (ii) wages or
salary for any period other than the current payroll period; (iii) vacation,
time off or pay in lieu of vacation or time off, other than that earned in
respect of
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the current Calendar Year, or (iv) any violation of any statute ordinance or
regulation relating to minimum wages or maximum hours of work.
3.28 Discrimination and Occupational Safety Statutes and Regulations.
Neither UIS Brazil nor UIS has received (including, but not limited to,
governmental agencies of any kind) any claim or basis for any Proceeding against
UIS Brazil or UIS arising out of any Law relating to discrimination in
employment or to employment practices or occupation safety and health standards.
3.29 Employees, Contractors and Agents. UIS and UIS Brazil employ
approximately 320 employees. Except as set forth on Schedule 3.29, neither UIS
Brazil nor UIS has any reason to believe that any of its employees, contractors
or agents will not continue their employment/service with UIS or UIS Brazil
following the consummation of the transactions contemplated herein.
3.30 Insurance. The Assets, Businesses and operations of UIS Brazil and
UIS are insured under various policies of general liability and other forms of
insurance, all of which are listed on Schedule 3.30. All such policies are in
full force and effect in accordance with their terms, no notice of cancellation
has been received, and there is no existing default or event which with the
giving of notice or lapse of time, or both, would constitute a default
thereunder. All premiums to date have been paid in full. Neither UIS Brazil nor
UIS has been refused any insurance, nor has its coverage been limited, beyond
the normal scope of policy limitations, by any insurance carrier to which it has
applied for insurance or with which it has carried insurance during the past
five (5) years.
3.31 Related Parties Transactions. Schedule 3.31 sets forth a complete
list of all contracts and business transactions between UIS Brazil and any
shareholder, officer, director or employee or the spouse of any officer,
director or employee or shareholder of UIS Brazil and a complete list of all
contracts and business transactions between UIS and any shareholder, officer,
director or employee or the spouse of any officer, director or employee or
shareholder of UIS. All transactions listed on Schedule 3.31 were made on terms
no less favorable to UIS Brazil or UIS, respectively, than would be available
from unaffiliated parties. UIS Brazil and UIS Brazil Shareholders, and UIS and
UIS Shareholder represent and warrant herein that all future transactions
involving UIS Brazil, UIS or Xxxxxx and any of its officers, directors or 5%
shareholders shall be on terms no less favorable than could be obtained from
unaffiliated parties.
3.32 Suppliers. Schedule 3.32 sets forth a true, correct and complete
list of the names and addresses of all of the material suppliers of UIS Brazil
and UIS (defined for these purposes to mean the supplier of goods representing
10% or more of the total purchases by UIS Brazil or UIS). Neither UIS Brazil nor
UIS has been notified nor has any reason to believe, that any of its suppliers
will not continue to do business with Xxxxxx after the consummation of the
transaction contemplated hereby as and to the extent such supplier is currently
doing business with UIS Brazil or UIS.
11
3.33 Intangibles. Schedule 3.33 lists all patents, copyrights,
trademarks and other Intangibles owned or used by UIS Brazil or UIS (specifying,
as to each, whether owned or licensed and, if the latter, the licensor). There
are no Proceedings pending or threatened with respect to any Intangible owned or
used by UIS Brazil or UIS. Neither UIS Brazil nor UIS granted any license to any
other Person with respect to any Intangible. Neither UIS Brazil nor UIS
infringes upon or unlawfully or wrongfully use any Intangible owned or claimed
by any other Person. To the best knowledge of UIS and UIS Brazil, except as
reflected in Schedule 3.33, no present or former employee of UIS Brazil or UIS
or any other Person owns or has any proprietary, financial or other interest,
direct or indirect, in whole or in part, in any Intangible which wither UIS
Brazil or UIS owns, possesses or uses in their respective Businesses. Neither
UIS Brazil nor UIS is a party to a noncompetition, confidentiality or
nondisclosure agreement, nor is any present or former employee of UIS Brazil or
UIS is a party to any such agreement, except for such agreements between UIS
Brazil or UIS and its employees set forth in Schedule 3.29.
3.34 Accounts. Set forth on Schedule 3.34 attached hereto is an
accurate and complete list showing (a) the name and address of each bank and
brokerage firm in which UIS Brazil or UIS has an account or safe deposit box,
the number of any such account or any such box and the names of all persons
authorized to craw thereon or to have access thereto; and (b) the names of all
persons, if any, holding powers of attorney from UIS Brazil or UIS with respect
to such bank or brokerage account and a summary statement of the terms thereof.
3.35 Accounts Receivable. Schedule 3.35 contains a true and accurate
aging schedule of all Accounts Receivable of UIS Brazil and UIS as of September
30, 1997. Except as disclosed on Schedule 3.35, (a) each Account Receivable
represents a sale made in the ordinary course of business by UIS Brazil or UIS
which arose pursuant to an enforceable written Contract for a bona fide sale of
goods or for services performed and UIS Brazil and UIS have performed all their
obligations to produce the goods or perform the services to which such Account
Receivable relates, and (b) to the best of UIS Brazil's and UIS's knowledge and
belief, no Account Receivable is subject to any claim for reduction,
counterclaim, setoff, recoupment or other claim for credit, allowances or
adjustments by the obligor thereof. Except as reserved against in the Balance
Sheets or as set forth on Schedule 3.35, all Accounts Receivable are collectible
in full within the terms under which such Accounts Receivable arose.
3.36 Accounts Payable. Schedule 3.36 hereto contains a true and
accurate aging schedule of all accounts payable of UIS Brazil and UIS as of
September 30, 1997. Except as disclosed on Schedule 3.36, (a) each account
payable represents an obligation of UIS Brazil or UIS incurred in the ordinary
course of their respective Businesses for goods sold to, or for bona fide
services performed for UIS Brazil or UIS; and (b) no claim for reduction,
counterclaim, setoff, recoupment or other claim for credit, allowances or
adjustments has been made by UIS Brazil or UIS with respect to any such accounts
payable.
3.37 Improper Payments. Neither UIS Brazil nor UIS, nor any of their
current shareholders, directors, officers, or employees or agents, nor any
Person acting on behalf of UIS Brazil or UIS, has directly or indirectly, made
any bribe, kickback or other payment of a similar or comparable nature, whether
lawful or not, to any person, public or private, regardless of form,
12
whether in money, property or services, to obtain favorable treatment for
business secured or special concessions already obtained for the benefit of UIS
Brazil or UIS. No funds or Assets of UIS Brazil or UIS were donated, loaned or
made available directly or indirectly for the benefit of, or for the purpose of
supporting or opposing, any government or subdivision thereof, political party,
candidate or committee, either domestic or foreign. Neither UIS Brazil nor UIS
has maintained and does not maintain a bank account, or any other account of any
kind, whether domestic or foreign, or which account was not listed, titled or
identified in the name of UIS Brazil or UIS.
3.38 Restrictions on Transferability.
(a) The Shareholders hereby agree that neither the
Shareholders nor the Shareholder's representatives, administrators, successors
or assigns will offer, sell, transfer, assign, pledge, hypothecate, encumber or
otherwise attempt to directly or indirectly dispose of any of the Exchange Stock
either pursuant to Rule 144 of the Securities Act of 1933, as amended, a
registration statement or otherwise, or dispose of any beneficial interest
therein for a period of twenty four (24) months following the Closing Date
without the prior written consent of the Oversight Committee of 2M Capital Corp.
(b) Notwithstanding paragraph 3.38(a), the shareholders listed
on Schedule B hereto hereby agree that neither the shareholders nor the
shareholder's representatives, administrators, successors or assigns will offer,
sell, transfer, assign, pledge, hypothecate, encumber or otherwise attempt to
directly or indirectly dispose of any of the Exchange Stock designated on
Schedule B either pursuant to Rule 144 of the Securities Act of 1933, as
amended, a registration statement or otherwise, or dispose of any beneficial
interest therein for a period of nine (9) months following the Closing Date
without the prior written consent of the Oversight Committee of 2M Capital Corp.
(c) The Exchange Shares will be subject to any restrictions on
transfer or disposition pursuant to such Registration Statement, imposed by (i)
an underwriter for any public offering of the Company's securities, which
lock-up period the Company anticipates not to exceed twenty-four (24) months
from the effective date of the Registration Statement for such public offering;
(ii) the National Association of Securities Dealers (NASD); or (iii) any
national exchange including the National Association of Securities Dealers
Automated Quotation System ("NASDAQ").
3.39 Capitalization.
(a) All of the issued and outstanding shares (quotas) of UIS
Brazil, having one (1) Brazil Real par value, consist of One Million Eight
Hundred Eighty Thousand (1,880,000) shares (quotas). All issued and outstanding
shares of capital stock of UIS Brazil are validly issued, fully paid and
non-assessable. Except as set forth on Schedule 3.39 there are no outstanding
(a) securities convertible into or exchangeable for the shares of capital stock
of UIS Brazil; (b) options, warrants or other rights to purchase or subscribe
shares of capital stock of UIS Brazil or securities convertible into or
exchangeable for shares of capital stock of UIS Brazil; or (iii) contracts,
commitments, agreements, understandings or arrangements of any kind relating
13
to the issuance of any capital stock of UIS Brazil, any such convertible or
exchangeable securities or any such options, warrants or rights.
(b) UIS authorized capitalization consists of Five Thousand
(5,000) shares of common stock having a par value of $1.00 per share, of which
Five Thousand (5,000) shares are issued and outstanding. All issued and
outstanding shares of capital stock of UIS are validly issued, fully paid and
non-assessable. Except as set forth on Schedule 3.39 there are no outstanding
(a) securities convertible into or exchangeable for the shares of capital stock
of UIS; (b) options, warrants or other rights to purchase or subscribe shares of
capital stock of UIS or securities convertible into or exchangeable for shares
of capital stock of UIS; or (iii) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance of any
capital stock of UIS, any such convertible or exchangeable securities or any
such options, warrants or rights.
3.40 Tax Exempt Status of UIS Brazil. UIS Brazil is exempt from any tax
on income imposed by the Brazilian government ("Exemption"), as set forth in
Schedule 3.40, and the consummation of the transaction herein between the
parties hereto will not terminate or otherwise adversely effect UIS Brazil's
Exemption. Such Exemption is in full force in effect.
ARTICLE IV
XXXXXX'X REPRESENTATIONS AND WARRANTIES
---------------------------------------
Xxxxxx hereby makes the following representations and warranties to UIS
Brazil and the UIS Brazil Shareholders and UIS and the UIS Shareholder, each of
which Xxxxxx represents to be true and correct on the date hereof, and (except
as Xxxxxx may notify UIS Brazil and the UIS Brazil Shareholders and UIS and the
UIS Shareholder in writing prior to Closing) shall be deemed made again as of
the Closing Date and represented by Xxxxxx to be true and correct on the Closing
Date.
4.1 Organization. Xxxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and has
the full power and authority to own all its Assets and to conduct its business
as and where its business is presently conducted. Xxxxxx has no subsidiaries or
interest in any other Person, and is not required to be qualified or licensed as
a foreign corporation in any jurisdiction in which the failure to be so
qualified or licensed would have a materially adverse effect on the Business.
Xxxxxx has the full power and authority to own all its Assets and to conduct the
Business as and where the Business is conducted. Accurate, current, and complete
copies of the Articles of Incorporation and Bylaws of Xxxxxx and, if any, all
fictitious name registrations of Xxxxxx have been, delivered to UIS Brazil and
the Shareholders and UIS and the Shareholder of UIS at or prior to the execution
of this Agreement.
4.2 Authority and Approval of Agreement.
(a) The execution and delivery of this Agreement by Xxxxxx and
the performance of all Xxxxxx obligations hereunder have been duly authorized
and approved by all requisite corporate action on the part of Xxxxxx pursuant to
applicable Law. Xxxxxx has the power and authority to execute and deliver this
Agreement and to perform all its obligations hereunder.
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(b) This Agreement and each of the other documents,
instruments and agreements executed by Xxxxxx in connection herewith constitute
the valid and legally binding agreements of Xxxxxx, enforceable against Xxxxxx
in accordance with their terms, except that: (i) enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
of general application affecting the enforcement of the rights and remedies of
creditors; and (ii) the availability of equitable remedies may be limited by
equitable principles.
4.3 No Violations. Except as otherwise set forth in Schedule 4.3, the
execution, delivery or performance of this Agreement or any other documents,
instruments or agreements executed by Xxxxxx in connection herewith, and the
consummation of the transactions contemplated hereby, do not and will not (i)
constitute a violation of or default under (either immediately, upon notice or
upon lapse of time) the Articles of Incorporation or Bylaws of Xxxxxx, any
provision of any Contract to which Xxxxxx may be bound, any Judgment or any Law;
or (ii) result in the creation or imposition of any Encumbrance upon, or give to
any third person any interest in or right to, any of the Xxxxxx Assets; or (iii)
result in the loss or adverse modification of, or the imposition of any fine or
penalty with respect to, any Permit or franchise granted or issued to, or
otherwise held by or for the use of, Xxxxxx.
4.4 Brokerage Fees. There is no Person acting on behalf of Xxxxxx who
is entitled to or has any claim for any brokerage or finder's fee or commission
in connection with the execution of this Agreement or the consummation of the
transactions contemplated hereby.
4.5 Consents. The execution, delivery, and performance by Xxxxxx of
this Agreement and the consummation by Xxxxxx of the transactions contemplated
hereby do not require any Consent that has not been received prior to the date
hereof.
4.6 Closing Representations. Xxxxxx represents and warrants that:
(a) The Exchange Stock shall constitute 67.50% of all of the
issued and outstanding shares of stock of Xxxxxx.
(b) The shares of Common Stock of Xxxxxx are trading on the
NASDAQ Bulletin Board under the symbol "SEGI."
(c) Xxxxxx shall have audited financial statements for the
year ended December 31, 1996, and internally prepared financial statements for
the period ended September 30, 1997 prepared in accordance with generally
accepted accounting principles, all of which shall be provided to the
Shareholders prior to Closing. Xxxxxx shall have cash on hand as of Closing of
not less than $2,200,000, and shall not be a party to any liabilities (other
than the Convertible Debentures of $330,000).
(d) Within thirty (30) days following the Closing, Xxxxxx
shall file a registration statement with the Securities Exchange Commission that
shall include twenty (20%) percent of each of the Shareholders' Exchange Stock.
Shareholders acknowledges that the Exchange Stock will be subject to certain
"lock -up" provisions pursuant to Section 2.5 hereof,
15
but in no event shall the "lock-up" provisions extend for more than 24 months
following the Closing Date, as hereinafter defined.
4.7 Full Disclosure. All the representations and warranties made by
Xxxxxx herein or in any schedule hereto, and all of the statements, documents or
other information pertaining to the transaction contemplated herein made or
given by Xxxxxx, its agents or representatives are true and complete, and do not
omit any information required to make the statements or information provided, in
light of the transactions contemplated herein, true, complete and
non-misleading.
4.8 Financial Statements. Attached hereto as Schedule 4.8 are financial
statements of Xxxxxx ("Financial Statements"), including audited balance sheets
and statements of operations for the fiscal years ended December 31, 1996 and
internally prepared income statements and Balance Sheets of Xxxxxx at September
30, 1997. The Financial Statements are true, correct and complete, were prepared
in accordance with the accrual method of accounting and generally accepted
accounting principles as adopted by the American Institute of Certified Public
Accountants, and accurately reflect Xxxxxx'x financial condition and the results
of its operations for the periods and as of the dates which they purport to
cover.
4.9 Conduct Since Date of Unaudited Statements. Except as disclosed in
Schedule 4.9 hereto, none of the following have occurred since September 30,
1997:
(a) Any change in the Assets, Obligations, Business, financial
condition, prospects or operations of Xxxxxx which individually or in the
aggregate have had or may have any material adverse effect on the Assets, the
Liabilities, or the Business, financial condition or operations of Xxxxxx, nor
are there any circumstances known to Xxxxxx which might result in such change or
such an effect;
(b) Any damage, destruction or loss, whether or not covered by
insurance, adversely affecting the Assets or Business;
(c) Any disposition, lease or Encumbrance of the Business, the
Assets, or increase of indebtedness of or guaranteed by Xxxxxx, other than in
the ordinary course of business consistent with past practices; provided,
however, that no such disposition, lease or Encumbrance, regardless of the
consideration therefor, has been made between Xxxxxx, and any of its
shareholders, directors, officers, agents, contractors or employees (or any
member of their respective families);
(d) Any discharge or satisfaction by Xxxxxx of any lien or
encumbrance or payment by the Xxxxxx of any obligation or liability (fixed or
contingent) other than (a) current liabilities included in the Balance Sheet,
and (b) current liabilities incurred since the date of the Balance Sheet in the
ordinary course of business;
(e) Any transaction entered into by Xxxxxx other than in the
ordinary course of business consistent with past practices;
16
(f) Any notice received by Xxxxxx of any actual or threatened
labor dispute or any event or condition of any character which has had or can
reasonably be expected to have a material adverse effect on the Business, the
Assets or the financial condition or operations of Xxxxxx;
(g) Any change in the accounting principles followed by Xxxxxx
or the methods of applying such principles; or
(h) Any Contract binding Xxxxxx to do or take any of the
actions referred to in this Section 4.9 (other than subsections (b) or (f)).
(i) Any salaries have been paid or have any agreements as to
the payment of any salaries been made since September 30, 1997.
4.10 Title to Assets. Except as set forth in Schedule 4.10 hereto,
Xxxxxx is the sole and unconditional owner of and has good, valid and marketable
title to all the Assets, free and clear of all Encumbrances, except for the
Liabilities, and there exists no restriction on the transfer or use of the
Assets. Schedule 4.10 hereto also includes an accurate, current and complete
list of each lease, or sublease of Equipment, to which Xxxxxx is a party or by
which Xxxxxx may be bound and a description of all Equipment leased under each
such lease or sublease. There are no materially dangerous conditions with
respect to any Asset.
4.11 Lease of Real Property. There is no lease or sublease of Real
Property to which Xxxxxx is a party or by which Xxxxxx may be bound.
4.12 Indebtedness. Except for Indebtedness set forth on Schedule 4.12
as reflected or reserved against in the Balance Sheet and Indebtedness incurred
in the ordinary course of business after the date of the Balance Sheet, the
Company has no Indebtedness outstanding at the date hereof. Xxxxxx is not in
default with respect to any outstanding Indebtedness or any instrument relating
thereto, and no such Indebtedness or any instrument or agreement relating
thereto purports to limit the issuance of any securities by Xxxxxx or the
operation of the business of Xxxxxx. Complete and correct copies of all
instruments (including all amendments, supplements, waivers and consents)
relating to any Indebtedness of the Xxxxxx have been furnished to UIS Brazil and
UIS.
4.13 Absence of Undisclosed Liabilities. Except to the extent reflected
or reserved against in the Balance Sheet or incurred in the ordinary course of
business after the date of the Balance Sheet or described in Schedule 4.13
hereto, Xxxxxx has no liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others) and whether due or
to become due including, without limitation, any liabilities for Taxes (as
defined in Exhibit A) due or to become due.
17
4.14 Environmental Matters.
(a) Xxxxxx has obtained all material Permits which are
required in connection with the conduct of the Business under applicable Laws,
and is in full compliance with all Laws, relating to pollution or protection of
the environment including, but not limited to, Laws relating to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals, or industrial, toxic or hazardous substances or wastes into the
environment (including without limitation ambient air, space water, groundwater,
or land), or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
("Environmental Matters").
(b) Xxxxxx is in material compliance in the conduct of the
Business with all terms and conditions of the required Permits and is also in
material compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in those Laws or contained in any Judgment, notice or demand letter
issued, entered, promulgated or approved thereunder.
(c) Xxxxxx has not received written notice of any conditions
or incidents that violate or prevent compliance or continued compliance with
those Laws otherwise form the basis of any Proceeding, based on or related to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, release or threatened
release into the environment, of any pollutant, contaminant, chemical, or
industrial, toxic or hazardous substance or waste.
(d) Xxxxxx has not received notice of any civil, criminal or
administrative Proceeding pending or threatened against Xxxxxx in connection
with the conduct of the Business relating in any way to those laws, or
injunctions, notice or demand letter issued, entered, promulgated or approved
thereunder.
4.15 Customers. Attached as Schedule 4.15 is an accurate, current and
complete list of the names of Xxxxxx'x material customers as of date hereof
(defined for these purposes to mean the customers representing 10% or more of
the total sales by Xxxxxx), their addresses and telephone numbers. Schedule 4.15
also includes a copy of all Contracts with customers. Xxxxxx has not been
notified nor has any reason to believe, that any of its customers will not
continue to do business with Xxxxxx after the consummation of the transaction
contemplated hereby as and to the extent such customer is currently doing
business with Xxxxxx.
4.16 Other Contracts. As of the closing date, Xxxxxx has no
contracts outstanding.
4.17 Books and Records. Xxxxxx'x books and records accurately reflect
in all material aspects all of Xxxxxx'x Assets, Obligations and accruals, and
all transactions (normally reflected in books and records in accordance with the
accrual method of accounting) to which Xxxxxx is or was a party or by which
Xxxxxx or any of its Assets are or were affected.
18
4.18 Tax Returns. Xxxxxx has duly and timely filed with the appropriate
governmental agencies all tax and other returns and reports required by any Law
to be filed by it and all such returns and reports have been accurately prepared
and properly completed. Accurate and complete copies of all such returns and
reports filed by Xxxxxx during the past three (3) years have been delivered to
UIS Brazil and UIS.
4.19 Taxes. All Taxes due, owing and payable by Xxxxxx have been fully
paid or are reflected on the Financial Statements for the period ended September
30, 1997. No claim for any Tax due from or assessed against Xxxxxx is being
contested. Except as set forth on Schedule 4.19 hereto, none of Xxxxxx'x Tax
returns or reports have been audited by the Internal Revenue Service or any
state or local Tax authority, and Xxxxxx has not received any notice of
deficiency or other adjustment from the Internal Revenue Service or any state or
local Tax authority. There are no agreements, waivers, or other arrangements
providing an extension of time with respect to the assessment of any Tax against
Xxxxxx, nor are there any Tax Proceedings now pending or threatened against
Xxxxxx. Xxxxxx has made all deposits required by Law, to be made with respect to
employees' withholding and other employment taxes. No state of facts exists or
has existed, nor has any event occurred, which would constitute grounds for the
assessment of any further Tax against Xxxxxx.
4.20 Proceedings. Xxxxxx is not a party to, the subject of, or
threatened with any Proceeding nor, to the best of Xxxxxx'x knowledge, is there
any basis for any Proceeding. Xxxxxx is not contemplating the institution of any
Proceeding.
4.21 Other Liabilities. No claim of breach of Contract, tort, product
liability or other claim (whether arising from Xxxxxx'x Business or otherwise),
contingent or otherwise, has been asserted or threatened against Xxxxxx nor, to
the best of Xxxxxx'x knowledge, is capable of being asserted by any employee,
creditor, claimant or other Person against Xxxxxx, except for claims for
warranty arising in the ordinary course of the business of Xxxxxx. No state of
facts exists or has existed, nor has any event occurred, which could give rise
to the assertion of any such claim by any Person.
4.22 Permits. Schedule 4.22 lists all Permits obtained by Xxxxxx to
operate the Business. Xxxxxx has obtained and presently holds all Permits which
are required under applicable Law to conduct the Business as and where currently
conducted. All such Permits are in effect, are included in the Assets and are
transferable to Xxxxxx, and no Consent of any Person is required in connection
with any such Permit for the transactions contemplated by this Agreement. Xxxxxx
is not in default under, nor has it received any notice of any claim of default
or any other notice with respect to, any such Permit.
4.23 Consents. The execution, delivery and performance by Xxxxxx of
this Agreement and the consummation by Xxxxxx of the transactions contemplated
hereby do not require any Consent that has not been received prior to the date
hereof.
4.24 Judgments. There is no outstanding Judgment against Xxxxxx or
against or affecting any of the Assets or the Business. To the best knowledge of
UIS Brazil and UIS, there is no health or safety problem involving or affecting
Xxxxxx or the Assets. There are no open
19
workmen's compensation claims against Xxxxxx, or any contingent liability of
Xxxxxx, or any other Obligation, fact or circumstance which would give rise to
any right of indemnification on the part of any current or former shareholder,
director, officer, employee or agent of Xxxxxx, or any heir or personal
representative thereof, against Xxxxxx or any successor to the business of
Xxxxxx.
4.25 Compliance with Laws. Xxxxxx and the Business are in material
compliance with all Laws where such failure to comply would materially adversely
effect the Business.
4.26 Labor Agreements, Employee Benefit Plans and Employment
Agreements. Except as reflected in Schedule 4.26 attached hereto, Xxxxxx is not
a party to: (i) any union collective bargaining or similar agreement; (ii) any
profit sharing, pension, retirement, deferred compensation, bonus, stock option,
stock purchase, retainer, consulting, health, welfare or incentive plan or
agreement or other Employee Benefit Plan, whether legally binding or not; (iii)
any plan providing for "fringe benefits" to its employees, including, but not
limited to, vacation, disability, sick leave, medical, hospitalization and life
insurance and other insurance plans, or related benefits; or (iv) any employment
agreement, severance agreement, noncompete agreement or other Contract with any
of its employees.
4.27 Labor Disputes; Unfair Labor Practices. There is no pending or
threatened labor dispute, strike or work stoppage which affects or which may
affect the Business or which may interfere with the continued operation of the
Business. To the best of Xxxxxx'x knowledge, neither Xxxxxx nor any agent,
representative or management employee of Xxxxxx has committed any unfair labor
practice as defined in the National Labor Relations Act of 1947, as amended.
There is not now pending or threatened any charge or complaint against Xxxxxx by
the National Labor Relations Board or any representative thereof.
4.28 Potential Conflicts of Interest. Except as set forth on Schedule
4.28, no officer or director of the Company (a) owns, directly or indirectly,
any interest in (excepting not more than one (1%) percent stock holdings for
investment purposes in securities of publicly held and traded companies) or is
an officer, director, employee or consultant of any Person which is a
competitor, lessor, lessee, customer or supplier of Xxxxxx; (b) owns, directly
or indirectly, in whole or in part, any tangible or intangible property which
Xxxxxx is using or the use of which is necessary for the business of Xxxxxx; or
(c) has any cause of action or other claim whatsoever against, or owes any
amount to, Xxxxxx, except for claims in the ordinary course of business, such as
for accrued vacation pay, accrued benefits under employee benefit plans and
similar matters and agreements, none of which claims have accrued for a period
greater than 12 months prior to the date hereof.
4.29 Overtime, Back Wages, Vacation and Minimum Wages. No present or
former employee of Xxxxxx has any claim (whether under federal or state Law, any
employment agreement or otherwise) on account of or for: (i) overtime pay, other
than overtime pay for the current payroll period; (ii) wages or salary for any
period other than the current payroll period; (iii) vacation, time off or pay in
lieu of vacation or time off, other than that earned in respect of the current
Calendar Year, or (iv) any violation of any statute ordinance or regulation
relating to minimum wages or maximum hours of work.
20
4.30 Discrimination and Occupational Safety Statutes and Regulations.
No Person or party (including, but not limited to, governmental agencies of any
kind) has any claim or basis for any Proceeding against Xxxxxx arising out of
any Law relating to discrimination in employment or to employment practices or
occupation safety and health standards.
4.31 Employees, Contractors and Agents. Set forth on Schedule 4.31
annexed hereto is a complete list of Xxxxxx'x employees, contractors and agents,
their respective positions with Xxxxxx, and the compensation and all vacation
and other benefits they are entitled to receive from Xxxxxx. Except as set forth
on Schedule 4.31, Xxxxxx does not have any reason to believe that any of its
employees, contractors or agents will not continue their employment/service with
Xxxxxx following the consummation of the transactions contemplated herein.
4.32 Insurance. The Assets, Business and operations of Xxxxxx are
insured under various policies of general liability and other forms of
insurance, all of which are listed on Schedule 4.32. All such policies are in
full force and effect in accordance with their terms, no notice of cancellation
has been received, and there is no existing default or event which with the
giving of notice or lapse of time, or both, would constitute a default
thereunder. All premiums to date have been paid in full. Xxxxxx has not been
refused any insurance, nor has its coverage been limited, beyond the normal
scope of policy limitations, by any insurance carrier to which it has applied
for insurance or with which it has carried insurance during the past five (5)
years.
4.33 Related Parties Transactions. Schedule 4.33 sets forth a complete
list of all contracts and business transactions between Xxxxxx and any
shareholder, officer, director or employee or the spouse of any officer,
director or employee or shareholder of Xxxxxx.
4.34 Suppliers. Schedule 4.34 sets forth a true, correct and complete
list of the names and addresses of all of the material suppliers of Xxxxxx
(defined for these purposes to mean the supplier of goods representing 10% or
more of the total purchases by Xxxxxx). Xxxxxx has not been notified nor has any
reason to believe, that any of its suppliers will not continue to do business
with Xxxxxx after the consummation of the transaction contemplated hereby as and
to the extent such supplier is currently doing business with Xxxxxx.
4.35 Intangibles. Schedule 4.35 lists all patents, copyrights,
trademarks and other Intangibles owned or used by Xxxxxx (specifying, as to
each, whether owned or licensed and, if the latter, the licensor). There are no
Proceedings pending or threatened with respect to any Intangible owned or used
by Xxxxxx. Xxxxxx has not granted any license to any other Person with respect
to any Intangible. Xxxxxx does not infringe upon or unlawfully or wrongfully use
any Intangible owned or claimed by any other Person. Except as reflected in
Schedule 4.35, no present or former employee of Xxxxxx or any other Person owns
or has any proprietary, financial or other interest, direct or indirect, in
whole or in part, in any Intangible which Xxxxxx owns, possesses or uses in the
Business. Xxxxxx is not a party to a noncompetition, confidentiality or
nondisclosure agreement, nor is any present or former employee of Xxxxxx a party
to any such agreement, except for such agreements between Xxxxxx and its
employees set forth in Schedule 4.35.
21
4.36 Accounts. Set forth on Schedule 4.36 attached hereto is an
accurate and complete list showing (a) the name and address of each bank and
brokerage firm in which Xxxxxx has an account or safe deposit box, the number of
any such account or any such box and the names of all persons authorized to craw
thereon or to have access thereto; and (b) the names of all persons, if any,
holding powers of attorney from Xxxxxx with respect to such bank or brokerage
account and a summary statement of the terms thereof.
4.37 Accounts Receivable. Schedule 4.37 contains a true and accurate
aging schedule of all Accounts Receivable of Xxxxxx as of September 30, 1997.
Except as disclosed on Schedule 4.37, (a) each Account Receivable represents a
sale made in the ordinary course of business by Xxxxxx which arose pursuant to
an enforceable written Contract for a bona fide sale of goods or for services
performed and Xxxxxx has performed all its obligations to produce the goods or
perform the services to which such Account Receivable relates, and (b) to the
best of Xxxxxx'x knowledge and belief, no Account Receivable is subject to any
claim for reduction, counterclaim, setoff, recoupment or other claim for credit,
allowances or adjustments by the obligor thereof. Except as reserved again in
the Balance Sheet or as set forth on Schedule 4.37, all Accounts Receivable are
collectible in full within the terms under which such Accounts Receivable arose.
4.38 Accounts Payable. Schedule 4.38 hereto contains a true and
accurate aging schedule of all accounts payable of Xxxxxx as of September 30,
1997. Except as disclosed on Schedule 4.38, (a) each account payable represents
an obligation of Xxxxxx incurred in the ordinary course of the Business for
goods sold to, or for bona fide services performed for, Xxxxxx; and (b) no claim
for reduction, counterclaim, setoff, recoupment or other claim for credit,
allowances or adjustments has been made by Xxxxxx with respect to any such
accounts payable.
4.39 Improper Payments. Neither Xxxxxx, nor any of its current
shareholders, directors, officers, or employees or agents, nor any Person acting
on behalf of Xxxxxx, has directly or indirectly, made any bribe, kickback or
other payment of a similar or comparable nature, whether lawful or not, to any
person, public or private, regardless of form, whether in money, property or
services, to obtain favorable treatment for business secured or special
concessions already obtained for the benefit of Xxxxxx. No funds or Assets of
Xxxxxx were donated, loaned or made available directly or indirectly for the
benefit of, or for the purpose of supporting or opposing, any government or
subdivision thereof, political party, candidate or committee, either domestic or
foreign. Xxxxxx has not maintained and does not maintain a bank account, or any
other account of any kind, whether domestic or foreign, or which account was not
listed, titled or identified in the name of Xxxxxx.
4.40 Capitalization. Xxxxxx'x authorized capitalization consists of
19,000,000 shares of common stock having $.001 par value, of which Five Hundred
and Ninety Nine Thousand (599,000) shares shall be issued and outstanding on the
day of Closing and 1,000,000 shares of Preferred Stock have $.001 par value, of
which no shares shall be issued and outstanding on the day of Closing. All
issued and outstanding shares of capital stock of Xxxxxx are validly issued,
fully paid and non-assessable. Except as set forth on Schedule 4.40 there are no
outstanding (a) securities convertible into or exchangeable for the shares of
capital stock of Xxxxxx; (b) options, warrants or other rights to purchase or
subscribe shares of capital stock of Xxxxxx or securities
22
convertible into or exchangeable for shares of capital stock of Xxxxxx; or (iii)
contracts, commitments, agreements, understandings or arrangements of any kind
relating to the issuance of any capital stock of Xxxxxx, any such convertible or
exchangeable securities or any such options, warrants or rights.
4.41 Registration Rights. The UIS Brazil Shareholders and UIS
Shareholder are entitled to registration rights, including piggyback
registration rights, for twenty (20%) percent of the Exchange Stock, as
adjusted, with such rights to be available when the Company proposes to file a
registration statement under the Securities Act of 1933, as amended ("33' Act"),
with respect to an offering for its own account of any class of security (other
than in connection with a merger pursuant to a Form S-3) or for the account of
the Company's shareholders. Xxxxxx shall, in each case, give written notice of
the proposed filing to the UIS Brazil Shareholders and UIS Shareholder at least
thirty (30) days prior to the anticipated filing date, and such notice shall
offer such holders the opportunity to register such Exchange Stock as such
holder may request. Xxxxxx will use its best efforts to cause the underwriter,
if any, to permit the UIS Brazil Shareholders and the UIS Shareholder to include
such Exchange Stock on the same terms and conditions as other shares of Common
Stock of Xxxxxx included therein. Notwithstanding the foregoing, if the
underwriter or underwriters of such offering delivers a written opinion to
Xxxxxx that in its sole and absolute discretion the total number of securities
which such holders, Xxxxxx or other persons and entities entitled to be included
in such offering exceeds the number which can reasonably be sold in such
offering, then the securities to be offered for the account of the UIS Brazil
Shareholders and UIS Shareholder will be reduced pro rata to the extent
necessary to reduce the total number of securities to be included in such
offering to the number recommended by such underwriter in its sole and absolute
discretion. Xxxxxx will bear all expenses of such registration, except that the
UIS Brazil Shareholders and the UIS Shareholder shall bear the fees and expenses
of any counsel or other representative attributable to the Exchange Stock.
4.42 Future Sales. Xxxxxx has agreed pursuant to the terms of a
Consulting Agreement that it will not, for a period of twenty-four (24) months
from the Closing Date, without the prior written consent of 2M Capital Corp.,
offer, sell, contract to sell, or otherwise dispose of, any securities of
Xxxxxx, except for the issuance of shares of Common Stock to be issued in a
public offering, at a price not less than ninety (90%) percent of the average of
the closing bid prices of the Common Stock as reported on NASD Bulletin Board
for the ten (10) consecutive trading day period immediately preceding the date
of sale.
4.43 Securities Laws. Xxxxxx is not subject to the reporting
requirements under the Securities and Exchange Act of 1934, as amended ("34
Act"); however, to the extent Xxxxxx is subject to the 33 Act or the 34 Act, to
the best of Xxxxxx'x knowledge, Xxxxxx has complied with all requirements to
which Xxxxxx is subject pursuant to the 33 Act and the 34 Act.
ARTICLE V
INTERPRETATION AND SURVIVAL OF
------------------------------
REPRESENTATIONS AND WARRANTIES
------------------------------
5.1 Interpretation. Each warranty and representation made by a party in
this Agreement or pursuant hereto is independent of all other warranties and
representations made by
23
the same party in this Agreement or pursuant hereto (whether or not covering
identical, related or similar matters) and must be independently and separately
satisfied. Exceptions or qualifications to any such warranty or representation
shall not be construed as exceptions or qualifications to any other warranty or
representation.
5.2 Reliance by Xxxxxx. Notwithstanding the right of Xxxxxx to
investigate UIS Brazil and UIS, their Businesses and the Assets, and
notwithstanding any knowledge of facts determined or determinable by them as a
result of such investigation or right of investigation, Xxxxxx has the
unqualified right to rely upon the representations and warranties made by UIS
Brazil or UIS in this Agreement and in the Schedules attached hereto or pursuant
hereto.
5.3 Reliance by UIS Brazil and UIS. Notwithstanding the right of UIS
Brazil and UIS to investigate Xxxxxx, its Business and the Assets, and
notwithstanding any knowledge of facts determined or determinable by them as a
result of such investigation or right of investigation, UIS Brazil and UIS have
the unqualified right to rely upon the representations and warranties made by
Xxxxxx in this Agreement and in the Schedules attached hereto or pursuant
hereto.
5.4 Survival. All representations and warranties made in this Agreement
or pursuant hereto shall survive the date hereof, the consummation of the
transactions contemplated hereby, and any investigation for a period of eighteen
(18) months except as it relates to taxes, which representations and warranties
shall survive for the period provided for in the Statute of Limitations, and as
it relates to title to the shares of Stock owned by the Shareholders in UIS and
UIS Brazil, the representations and warranties shall survive indefinitely.
ARTICLE VI
OBLIGATIONS TO CLOSING
----------------------
6.1 Conduct of the UIS and UIS Brazil. Prior to the Closing Date, UIS
Brazil and UIS have:
(a) maintain its existence in good standing in its state of
domicile and each other jurisdiction where it is required to be licensed or
qualified as a foreign corporation;
(b) duly and timely file all returns and reports it is
required by Law to file, promptly pay when due all Taxes assessed against it or
any of its Assets, and conform to and fully comply with all the Laws pertaining
to the Business;
(c) conduct the Business in a good and diligent manner
consistent with past practices, not make any change in its business practices
and in good faith use its best efforts to preserve the Business intact, keeping
available the services of its current officers, employees, salesmen, agents, and
representatives, and maintain the goodwill of its suppliers, customers and other
Persons having business relations with UIS Brazil or UIS;
(d) maintain all its tangible Assets in the same condition as
it has in the past and repair and conform to and fully comply with all terms and
conditions pursuant to which any such Assets are held;
24
(e) maintain in full force and effect all insurance policies
and, if any of the Assets are damaged or destroyed by fire or other casualty,
whether or not insured, it shall promptly proceed with the repair, restoration
or replacement thereof;
(f) not alter or amend its Articles of Incorporation or
Bylaws;
(g) not increase the compensation or rate of compensation or
extraordinary benefits payable or to become payable to, any of the its
directors, officers, employees, salesmen, agents, or representatives or pay any
of the foregoing Persons any bonus and not hire any new employees, agents or
representatives, except to replace positions existing as of the date hereof at
compensation comparable to that of the position being replaced, or otherwise
make any material changes in any of its employment arrangements;
(h) keep xxxxxx advised of all material aspects of the
operation of the Business;
(i) not adopt or enter into an Employee Benefit Plan or alter
any existing Employee Benefit Plan, if any;
(j) not create any Obligation for borrowed money and not make
any loans or advances to, or assume, guarantee, endorse, or otherwise become
liable with respect to any Obligation of, any Person, or commit for any capital
expenditure whatsoever, or abandon or sell any of its Assets other than
Inventory sold in the ordinary course of Business;
(k) not perform or omit to perform any act which will cause a
breach of or default under any Contract to which it is a party or by which it or
its Assets may be bound and to take all action necessary to maintain the use and
value of all Permits and Intangibles;
(l) not waive any right of material value; and
(m) not take any action, or enter into any Contract which
requires or commits UIS Brazil or UIS to take any action, which would be
inconsistent with any of the foregoing provisions of this Section 6.1.
6.2 Consents. UIS Brazil and UIS shall obtain, on or before the Closing
Date, all Consents required to consummate the transactions contemplated hereby,
without causing any breach or failure of any warranty or representation made by
UIS Brazil or UIS in this Agreement or pursuant hereto, and without causing any
breach or default of any term or condition of this Agreement to be satisfied or
performed by UIS Brazil or UIS.
6.3 Investigation. From the date of this Agreement until Closing,
unless this Agreement is terminated in accordance with Article XII hereof, UIS
Brazil and UIS shall permit Xxxxxx, their attorneys, accountants, and its other
advisors, authorized representatives and agents full access to UIS Brazil and
UIS and its business and properties during normal business hours to observe and
investigate the Business and the Assets and Obligations of UIS Brazil and UIS,
and to meet with UIS Brazil's and UIS's officers, agents and contractors, and to
audit, examine and copy all of UIS Brazil's and UIS's files, books and records,
and other documents and papers.
25
UIS Brazil and UIS shall furnish Xxxxxx and their authorized attorneys,
underwriters, representatives and agents with all information concerning UIS
Brazil's and UIS's Business, its Assets and Obligations, which they reasonably
request.
6.4 Cooperation. During the period from the date hereof until the
Closing Date, UIS Brazil and UIS shall fully cooperate with Xxxxxx and his
authorized representatives and agents, and shall promptly execute and deliver
all agreements, certificates, instruments, and documents and take such other
actions as are reasonably requested by Xxxxxx. Xxxxxx may engage in the sale of
corporate securities prior or subsequent to the Closing ("Offering"). One of the
purposes for the Offering is to provide Xxxxxx with the funds necessary to
comply with Section 2.2(c) hereof. UIS Brazil and UIS shall promptly provide, in
written format, all information concerning UIS Brazil and UIS and the Business
as Xxxxxx may request in connection with the preparation of any registration or
offering materials for the Offering ("UIS Brazil's and UIS's Disclosures"). UIS
Brazil and UIS agree that all of UIS Brazil's and UIS's Disclosures shall be
true and complete and shall not omit any information required to make the
statements or information provided, in light of the circumstances, true,
complete and not misleading. UIS Brazil and UIS shall provide all other
cooperation reasonably requested in connection with the Offering by Xxxxxx, its
underwriters or attorneys including, but not limited to, the execution of
appropriate cross- indemnities and other documents and instruments. Xxxxxx
hereby indemnifies and holds harmless UIS Brazil and UIS, from and against any
and all Proceedings, Judgments, Obligations, losses, damages, deficiencies,
settlements, assessments, charges, costs and expenses (including, without
limitation, reasonable attorneys' fees, paralegals' fees, investigation
expenses, court costs, interest and penalties) arising out of or in connection
with, or caused by, directly or indirectly, any violations of the Securities
Laws by Xxxxxx based upon UIS Brazil's and UIS's Disclosures; provided, however,
that nothing contained herein shall limit the liability of UIS Brazil and UIS
pursuant to Article XI hereof.
6.5 Notice of Developments. UIS Brazil and UIS shall give Xxxxxx prompt
written notice of any material adverse development with respect to UIS Brazil
and UIS that could cause any of UIS Brazil's and UIS's representations made in
Article III hereof to be untrue or misleading. No disclosure made pursuant to
this Section 6.5, however, shall be deemed to prevent or cure any
misrepresentation, breach of warranty or breach of contract so as to preclude
Xxxxxx from exercising his right to terminate this Agreement pursuant to Article
XII hereof.
6.6 Exclusivity. Neither UIS Brazil nor Shareholder nor UIS nor its
Shareholders shall: (a) solicit, initiate or encourage the submission of any
proposal or offer from any Person relating to the acquisition of the capital
stock or other voting securities of UIS Brazil or UIS or any substantial
proportion of the Assets of UIS Brazil or UIS including any acquisitions
structured as a merger, consolidation or share exchange; and (b) participate in
any discussions or negotiations regarding any information with respect to,
assist or participate in or facilitate in any other manner, any effort or
attempt by any Person to do or seek any of the foregoing. UIS Brazil and UIS
shall notify Xxxxxx in writing if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
6.7 Confidentiality. The parties each agree not to disclose or use for
their own benefit or for the benefit of others, any confidential information of
a special and unique nature and value
26
affecting and relating to UIS Brazil, UIS, Xxxxxx, or the Business that is
disclosed to or otherwise acquired by either party in connection with this
transaction, except for the purpose of Xxxxxx'x and its representatives' and
agents' evaluation of the transactions contemplated hereby or as may be required
by Law, or in connection with any Proceeding arising in connection with this
Agreement. In the event of any breach or threatened breach by either party of
this provision, the parties recognize that such breach could result in
irreparable harm to the nonbreaching party and, accordingly, in such event the
same remedies as are available to Xxxxxx pursuant to Section 12.2 hereof shall
be available to the harmed party. Notwithstanding the foregoing, Xxxxxx shall
have the right to issue a public statement that this Agreement has been executed
with respect to the transactions contemplated herein, and to otherwise comply
with its disclosure obligations under the Securities Laws, which public
statement shall be approved by UIS, which approval shall not be unreasonably
withheld.
ARTICLE VII
CONDITIONS PRECEDENT TO XXXXXX'X OBLIGATIONS
--------------------------------------------
Notwithstanding the execution and delivery of this Agreement or the
performance of any part hereof, Xxxxxx'x obligations to consummate the
transactions contemplated by this Agreement shall be subject to the satisfaction
of each of the conditions set forth in this Article VII, except to the extent
that such satisfaction is waived in writing by Xxxxxx.
7.1 Representations and Warranties of UIS Brazil. All representations
and warranties made by UIS Brazil and UIS in this Agreement and the Schedules
hereto shall have been true and correct in all respects on the date of this
Agreement, and shall be true and correct in all respects on the Closing Date as
though such representations and warranties were again made, without exception or
deviation, on the Closing Date.
7.2 Performance of this Agreement. UIS Brazil and the UIS Brazil
Shareholder and UIS and the UIS Shareholders shall have duly performed or
complied with all of their covenants and obligations under this Agreement that
are to be performed or complied with by UIS Brazil and the UIS Brazil
Shareholder and UIS and the UIS Shareholders on or prior to the Closing Date.
7.3 Absence of Proceedings. No Proceeding shall have been instituted or
threatened on or before the Closing Date by any Person, the result of which did
or could prevent or make illegal the consummation of all or any of the
transactions contemplated by this Agreement, or which had or could have a
material adverse effect on the Business or the Assets.
7.4 Consents. UIS Brazil and UIS shall deliver to Xxxxxx, all Consents,
in form and substance reasonably acceptable to Xxxxxx, as Xxxxxx reasonably
deems required under any of UIS Brazil's or UIS's Contracts or Permits as a
result of the sale of the Assets to Xxxxxx and the other transactions
contemplated under this Agreement. UIS Brazil and UIS shall be responsible to
pay for all costs and expenses incurred in obtaining all such Consents. Included
specifically in the foregoing shall be consents from all lessors of Real
Property to UIS Brazil or UIS, if any, together with estoppel letters from such
lessors, in form reasonably acceptable to Xxxxxx,
27
acknowledging that each applicable lease is in full force and effect, all rent
and other payments due thereunder have been paid and no event of default has
occurred.
7.5 Deliveries by UIS Brazil and UIS. In addition to all other
deliveries to be made by UIS Brazil or UIS hereunder, UIS Brazil and UIS shall
have delivered to Xxxxxx at Closing: an opinion of counsel rendered to Xxxxxx,
in form, substance, and by a law firm reasonably acceptable to Xxxxxx, and its
counsel, as to the matters set forth in Exhibit C attached hereto.
7.6 Releases. Shareholder and the "Affiliates" (as hereinafter defined)
shall have delivered a release, if any, of all claims against UIS Brazil or UIS
and/or the Assets in form and substance satisfactory to Xxxxxx in the reasonable
exercise of its discretion.
7.7 Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to Xxxxxx pursuant to this Article VII or
otherwise reasonably requested by Xxxxxx shall be reasonably satisfactory to
Xxxxxx and its counsel.
ARTICLE VIII
CONDITIONS PRECEDENT TO UIS BRAZIL'S AND UIS'S OBLIGATIONS
----------------------------------------------------------
Notwithstanding the execution and delivery of this Agreement or the
performance of any part hereof, UIS Brazil's and UIS's obligations to consummate
the transaction contemplated by this Agreement shall be subject to the
satisfaction of each of the conditions set forth in this Article VII except to
the extent that such satisfaction is waived by UIS Brazil and UIS in writing.
8.1 Representations and Warranties of Xxxxxx. All representations and
warranties of Xxxxxx contained in this Agreement and any Schedules hereto shall
have been true and correct in all respects on the date of this Agreement, and
shall be true and correct in all respects on the Closing Date as though such
representations and warranties were again made, without exception or deviation,
on the Closing Date, including, but not limited to, all covenants regarding the
Exchange Stock and Xxxxxx.
8.2 Performance of this Agreement. Xxxxxx shall have duly performed or
complied with all of the covenants and obligations under this Agreement to be
performed or complied with by him on or prior to the Closing Date.
8.3 Absence of Proceedings. No Proceeding shall have been instituted or
threatened on or before the Closing Date by any Person, the result of which did
or could prevent or make illegal the consummation of all or any of the
transactions contemplated by this Agreement, or which had or could have a
material adverse effect on the Business or the Assets.
8.4 Consents. Xxxxxx shall deliver to UIS Brazil and UIS all Consents,
in form and substance reasonably acceptable to UIS Brazil and UIS, as UIS Brazil
and UIS reasonably deem required under any of Xxxxxx'x Contracts or Permits as a
result of the transactions contemplated under this Agreement. Xxxxxx shall be
responsible to pay for all costs and expenses incurred in
28
obtaining all such Consents. Included specifically in the foregoing shall be
consents from all lessors of Real Property to Xxxxxx, if any, together with
estoppel letters from such lessors, in form reasonably acceptable to Xxxxxx,
acknowledging that each applicable lease is in full force and effect, all rent
and other payments due thereunder have been paid and no event of default has
occurred.
8.5 Deliveries by Xxxxxx. In addition to all other deliveries to be
made by Xxxxxx hereunder, Xxxxxx shall have delivered to UIS Brazil and UIS at
Closing: an opinion of counsel rendered to UIS Brazil and UIS, in form,
substance, and by a law firm reasonably acceptable to UIS Brazil and UIS, and
its counsel, as to the matters set forth in Exhibit D attached hereto.
8.6 Releases. Shareholder and the "Affiliates" (as hereinafter defined)
shall have delivered a release, if any, of all claims against Xxxxxx and/or the
Assets in form and substance satisfactory to Xxxxxx in the reasonable exercise
of its discretion.
8.7 Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to UIS Brazil and UIS pursuant to this
Article VII or otherwise reasonably requested by UIS Brazil and UIS shall be
reasonably satisfactory to UIS Brazil, UIS and its counsel.
ARTICLE IX
OBLIGATIONS AT CLOSING
----------------------
9.1 Obligations of UIS Brazil and the UIS Brazil Shareholders and UIS
and the UIS Shareholder to Xxxxxx at Closing. In addition to the other
deliveries to be made by UIS Brazil and the UIS Brazil Shareholders and UIS and
the UIS Shareholder as set forth herein, UIS Brazil and the UIS Brazil
Shareholders and UIS and the UIS Shareholders hereby covenant and agree to
deliver or cause to be delivered to Xxxxxx, at Closing, the following:
(a) The UIS Brazil and UIS Stock;
(b) All Consents referred to in Section 7.4 of this
Agreement;
(c) Good Standing Certificates, certifying that UIS Brazil is
duly qualified and is currently in good standing under the laws of Brazil, and
certifying that UIS is duly qualified and is currently in good standing under
the laws of Florida, dated no earlier than five (5) days before the Closing
Date.
(d) Such other documents and instruments as counsel to Xxxxxx
may reasonably request including, without limitation, such documents as
necessary to convey to Xxxxxx all rights to the UIS Brazil and UIS Stock.
(e) Executed employment agreement between Xxxxxx and Xxxxxx
Xxxx, substantially in the form attached hereto as Exhibit B.
29
(f) Executed escrow agreement between Xxxxxx and Xxxxx Xxxx as
set forth in Section 10.1(d) hereof.
9.2 Obligations of Xxxxxx at Closing. In addition to the other
deliveries to be made by Xxxxxx as set forth herein, Xxxxxx hereby covenants and
agrees to deliver or cause to be delivered to UIS Brazil and UIS, at Closing,
the Exchange Stock, as provided in Article II hereof.
(a) The Exchange Stock as set forth in Section 2.2(a) hereof;
(b) All Consents referred to in Section 8.4 of this Agreement;
(c) Good Standing Certificate, certifying that Xxxxxx is duly
qualified and is currently in good standing under the laws of Delaware, dated no
earlier than five (5) days before the Closing Date.
(d) Such other documents and instruments as counsel to UIS
Brazil or UIS may reasonably request including, without limitation, such
documents as necessary to convey to UIS Brazil and UIS all rights to the
Exchange Stock.
(e) Executed employment agreement between Xxxxxx Xxxx and
Xxxxxx, substantially in the form attached hereto as Exhibit B.
(f) Executed escrow agreement between UIS Brazil and the UIS
Brazil Shareholders and UIS and the UIS Shareholder and Xxxxx Xxx and Xxxxxx
Xxxxxxxx as set forth in Section 10.5(d) hereof.
ARTICLE X
INDEMNIFICATION
---------------
10.1 Obligation of UIS Brazil, and UIS Indemnify. As to UIS Brazil, UIS
Brazil agrees that the following shall be deemed made, and as to UIS, UIS agrees
to the following, and the following agreements made as to indemnification are
made by UIS Brazil on the one hand and by UIS, on the other hand, severally and
not jointly.
(a) In addition to, and not in lieu of, any right or remedy
available to Xxxxxx at law or in equity, UIS Brazil and UIS hereby indemnify and
holds Xxxxxx harmless from and against any and all Proceedings, Judgments,
Obligations, losses, damages, deficiencies, settlements, assessments, charges,
costs and expenses (including without limitation reasonable attorneys' fees,
paralegals' fees, investigation expenses, court costs, interest and penalties)
arising out of or in connection with, or caused by, directly or indirectly, any
or all of the following:
(i) Any misrepresentation, breach or failure of any
warranty or representation made by UIS Brazil or Shareholder in this Agreement
or pursuant hereto, including, but not limited to, the failure of the Assets to
include the Minimum Net Asset Amount and the Minimum Liquidity;
30
(ii) Any failure or refusal by UIS Brazil and the UIS
Brazil Shareholders and UIS and the UIS Shareholder to satisfy or perform any
covenant or agreement in this Agreement; and
(iii) Any claim, Obligation of or Judgment against
UIS Brazil and the UIS Brazil Shareholders and UIS and the UIS Shareholder or
affecting the Assets arising, or arising from facts or circumstances occurring,
prior to the date hereof including, but not limited to, any Environmental
Matters, excluding only the Liabilities and other matters disclosed by Exhibit
____ in Schedule ____ herein.
(b) For the remaining provisions of this section 10.1 and
sections 10.2, 10.3 and 10.4, Xxxxxx shall be referred to as the "Indemnified
Party," and each party against whom such indemnity is sought is referred to as
an "Indemnifying Party."
(c) Notwithstanding anything to the contrary contained herein,
UIS , UIS Brazil shall not be liable to Xxxxxx under this Article X for any
claim relating to a breach of any representation or warranty ("Misrepresentation
Claim") unless:
(i) such Misrepresentation Claim is asserted in
writing by the party seeking indemnification hereunder not later than
eighteen (18) months after the Closing Date except as set forth in
section 5.4; and
(ii) the aggregate amount claimed by Xxxxxx due for
all Misrepresentation Claims shall exceed $25,000, in which case the
liability of UIS Brazil and UIS under this Article X shall be from the
first dollar of claim.
(c) Xxxxx Xxxx shall deposit 200,000 shares of Common Stock
("Escrow Shares") of Xxxxxx with Atlas, Xxxxxxxx, Trop & Borkson, P.A. as Escrow
Agent pursuant to an Escrow Agreement, attached hereto as Exhibit F, for a
period of eighteen (18) months from the date hereof for the purpose of securing
the obligations of UIS Brazil and UIS to Xxxxxx to (i) indemnify Xxxxxx under
this Article X; (ii) indemnify Xxxxxx for all taxes due and owing and payable by
UIS and UIS Brazil as set forth in section 3.16 hereof; and (iii) indemnify
Xxxxxx for all representations set forth in section 3.35 and all amounts set
forth on Schedule 3.35 hereof. Absent fraud or willful misconduct, in the event
Xxxxxx becomes obligated to indemnify UIS Brazil and the UIS Brazil Shareholders
and UIS and the UIS Shareholder under this Article X, such Escrow Shares shall
constitute the sole source from which the Indemnified Party may recover.
10.2 Defense of Actions. The Indemnifying Party shall be solely
responsible, at its expense, for litigating, defending or otherwise attempting
to resolve any Proceeding against which the Indemnified Party is indemnified
under this Article X, except that: (i) the Indemnified Party shall have the
right to participate in the defense of any such Proceeding at the Indemnified
Party's expense and through counsel of the Indemnified Party's choice; (ii) the
Indemnified Party may at its option, defend or otherwise attempt to resolve, or
cause the Indemnifying Party to defend or otherwise attempt to resolve, any
Proceeding against which the Indemnified Party is indemnified under this Article
X if the Indemnifying Party does not promptly and diligently
31
defend or otherwise attempt to resolve any such Proceeding or if the Indemnified
Party, in good faith, believes that the defense or resolution of such proceeding
might adversely affect its relations with a customer or supplier, in which event
the Indemnifying Party shall continue to be obligated to indemnify the
Indemnified Party hereunder in connection with such Proceedings; and (iii) the
Indemnifying Party shall not agree to any settlement without the Indemnified
Party's express prior written consent which shall not be unreasonably withheld.
10.3 Notices and Payments. With respect to each separate matter or
series of matters against which the Indemnified Party is indemnified under this
Article X:
(a) Upon the Indemnified Party's receipt of written documents
pertaining to the Proceeding underlying such matter or series of matters, or, if
such matter or series of matters does not involve a third party claim, after the
Indemnified Party first learning of such matter or series of matters and the
amount demanded or claimed in connection therewith, the Indemnified Party shall
give notice to the Indemnifying Party of such documents and information as it
shall have so received.
(b) After a final agreement is reached or a final Judgment is
rendered with respect to such matter or series of matters or the amount owing by
the Indemnifying Party pursuant to this Article X as a result of such matter or
series of matters is otherwise determinable in whole or in part, the Indemnified
Party shall give notice to the Indemnifying Party of the amount owing by the
Indemnifying Party ("Indemnification Amount") with respect to such matter or
series of matters ("Indemnification Payment Notice").
(c) The Indemnifying Party shall pay the Indemnified Party the
Indemnification Amount within ten (10) days of the date the Indemnification
Notice is given.
10.4 Other Rights and Remedies Not Affected. The indemnification rights
of the Indemnified Party under this Article X are independent of and in addition
to such rights and remedies as the Indemnified Party may have at law or in
equity or otherwise for any misrepresentations breach of warranty or failure to
fulfill any agreement or covenant hereunder on the part of any party hereto.
10.5 Obligation of Xxxxxx to Indemnify.
(a) In addition to, and not in lieu of, any right or remedy
available to UIS Brazil and the UIS Brazil Shareholders and UIS and the UIS
Shareholder at law or in equity, Xxxxxx hereby indemnifies and holds UIS Brazil
and the UIS Brazil Shareholders and UIS and the UIS Shareholder harmless from
and against any and all Proceedings, Judgments, Obligations, losses, damages,
deficiencies, settlements, assessments, charges, costs and expenses (including
without limitation reasonable attorneys' fees, paralegals' fees, investigation
expenses, court costs, interest and penalties) arising out of or in connection
with, or caused by, directly or indirectly, any or all of the following:
(i) Any misrepresentation, breach or failure of
any warranty or representation made by Xxxxxx in this Agreement or pursuant
hereto;
32
(ii) Any failure or refusal by Xxxxxx to satisfy or
perform any covenant or agreement in this Agreement; and
(iii) Any claim, Obligation of or Judgment against
Xxxxxx affecting the Assets arising, or arising from facts or circumstances
occurring, prior to the date hereof including, but not limited to, any
Environmental Matters, excluding only the Liabilities.
(b) For the remaining provisions of this section 10.5 and
sections 10.6, 10.7 and 10.8, UIS Brazil and the UIS Brazil Shareholders and UIS
and the UIS Shareholder shall be referred to as the "Indemnified Party," and
each party against whom such indemnity is sought is referred to as an
"Indemnifying Party."
(c) Notwithstanding anything to the contrary contained herein,
neither UIS Brazil nor the UIS Brazil Shareholders nor UIS nor the UIS
Shareholder shall be liable to Xxxxxx under this Article X for any claim
relating to a breach of any representation or warranty ("Misrepresentation
Claim") unless:
(i) such Misrepresentation Claim is asserted in
writing by the party seeking indemnification hereunder not later than
eighteen (18) months after the Closing Date except as set forth in
section 5.4; and
(ii) the aggregate amount claimed by Xxxxxx due for
all Misrepresentation Claims shall exceed $25,000, in which case the
liability of UIS Brazil and the UIS Brazil Shareholders and UIS and the
UIS Shareholder under this Article X shall be from the first dollar of
claim.
(d) Xxxxx Xxx and Xxxxxx Xxxxxxxx, two principal shareholders
of Xxxxxx, shall deposit 15,000 shares of Common Stock ("Escrow Shares") of
Xxxxxx with Atlas, Xxxxxxxx, Trop & Borkson, P.A. as Escrow Agent pursuant to an
Escrow Agreement, attached hereto as Exhibit E, for a period of eighteen (18)
months from the date hereof for the purpose of securing the obligations of
Xxxxxx to indemnify UIS Brazil and the UIS Brazil Shareholders and UIS and the
UIS Shareholder under this Article X. Absent fraud or willful misconduct, in the
event Xxxxxx becomes obligated to indemnify UIS Brazil and the UIS Brazil
Shareholders and UIS and the UIS Shareholder under this Article X, such Escrow
Shares shall constitute the sole source from which the Indemnified Party may
recover.
10.6 Defense of Actions. The Indemnifying Party shall be solely
responsible, at its expense, for litigating, defending or otherwise attempting
to resolve any Proceeding against which the Indemnified Party is indemnified
under this Article X, except that: (i) the Indemnified Party shall have the
right to participate in the defense of any such Proceeding at the Indemnified
Party's expense and through counsel of the Indemnified Party's choice; (ii) the
Indemnified Party may at its option, defend or otherwise attempt to resolve, or
cause the Indemnifying Party to defend or otherwise attempt to resolve, any
Proceeding against which the Indemnified Party is indemnified under this Article
X if the Indemnifying Party does not promptly and diligently defend or otherwise
attempt to resolve any such Proceeding or if the Indemnified Party, in good
faith, believes that the defense or resolution of such proceeding might
adversely affect its
33
relations with a customer or supplier, in which event the Indemnifying Party
shall continue to be obligated to indemnify the Indemnified Party hereunder in
connection with such Proceedings; and (iii) the Indemnifying Party shall not
agree to any settlement without the Indemnified Party's express prior written
consent which shall not be unreasonably withheld.
10.7 Notices and Payments. With respect to each separate matter or
series of matters against which the Indemnified Party is indemnified under this
Article X:
(a) Upon the Indemnified Party's receipt of written documents
pertaining to the Proceeding underlying such matter or series of matters, or, if
such matter or series of matters does not involve a third party claim, after the
Indemnified Party first learning of such matter or series of matters and the
amount demanded or claimed in connection therewith, the Indemnified Party shall
give notice to the Indemnifying Party of such documents and information as it
shall have so received.
(b) After a final agreement is reached or a final Judgment is
rendered with respect to such matter or series of matters or the amount owing by
the Indemnifying Party pursuant to this Article X as a result of such matter or
series of matters is otherwise determinable in whole or in part, the Indemnified
Party shall give notice to the Indemnifying Party of the amount owing by the
Indemnifying Party ("Indemnification Amount") with respect to such matter or
series of matters ("Indemnification Payment Notice").
(c) The Indemnifying Party shall pay the Indemnified Party the
Indemnification Amount within ten (10) days of the date the Indemnification
Notice is given.
10.8 Other Rights and Remedies Not Affected. The indemnification rights
of the Indemnified Party under this Article X are independent of and in addition
to such rights and remedies as the Indemnified Party may have at law or in
equity or otherwise for any misrepresentations breach of warranty or failure to
fulfill any agreement or covenant hereunder on the part of any party hereto.
10.9 Indemnification for Tax Matters.
Notwithstanding anything otherwise provided herein (including, without
limitation, the provisions of sections 10.1 through 10.4, inclusive, of this
Agreement), the following provisions shall govern the allocation of
responsibility as between Xxxxxx and the UIS Shareholder for certain Tax matters
following the Closing Date:
10.9.1 Indemnification for Taxes Attributable to Operations
During Tax Periods Ending On or Prior to the Closing Date. The UIS Shareholder
shall indemnify and hold Xxxxxx, UIS and UIS Brazil harmless from and against
all liabilities for Taxes (including any related losses) attributable to all Tax
periods ending on or prior to the Closing Date imposed with respect to UIS, but
only to the extent that such Taxes exceed Tax refunds then received by or
acknowledged by the applicable Taxing authority to be due to UIS.
34
10.9.2 Tax Payments and Tax Returns for Tax Periods Ending On
or Before the Closing Date. Xxxxxx shall cause UIS to prepare (or cause to be
prepared) and file (or cause to be filed) on a timely basis any Tax Returns of
UIS for Tax periods ending on or prior to the Closing Date that are due
(including all applicable extensions) after the Closing Date. Such Tax Returns
shall be prepared on a basis consistent with past practice to the extent such
practice is consistent with all applicable federal, state, local and foreign tax
laws, rules and regulations. Xxxxxx shall cause UIS to pay (or cause to be paid)
all Taxes shown to be due on such Tax Returns. The UIS Shareholder shall
reimburse and indemnify UIS for such Taxes to the extent not accrued on the
Closing Date Balance Sheet and for the reasonable costs of preparing said Tax
Returns to the extent not accrued on the Closing Date Balance Sheet within five
days of notice to the UIS Shareholder that Xxxxxx has paid such Taxes. The UIS
Shareholder shall be given the opportunity to review such Tax Returns prior to
their being filed.
10.9.3 Cooperation on Tax Matters; Conduct of Proceedings.
10.9.3.1 Xxxxxx and the UIS Shareholder shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the preparation and filing of Tax Returns pursuant to this
Section 10.9 and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to such preparation and filing and to any audit, litigation or other proceeding
relating thereto and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder.
10.9.3.2 Xxxxxx shall be responsible for defending
any audit, litigation or other proceeding with respect to Taxes and shall have
the authority to negotiate, compromise and settle any such audit, litigation or
other proceeding. However, in the event that any such compromise or settlement
would create any indemnification obligation hereunder for the UIS Shareholder in
excess of $5,000, Xxxxxx shall not agree to any such compromise or settlement
without the prior consent of the UIS Shareholder, which shall not be
unreasonably withheld, conditioned or delayed. Xxxxxx shall notify the UIS
Shareholder promptly upon receipt of any notice of such audit, litigation or
other proceeding and shall keep the UIS Shareholder reasonably informed as to
the progress of any such audit, litigation or other proceeding with respect to
Taxes. The UIS Shareholder shall have the right, at their expense, to
participate in the conduct of such audit, litigation or other proceeding. If, as
a result of any such audit, litigation or proceeding Xxxxxx or UIS is required
to pay any additional Taxes, within five days after notice to the UIS
Shareholder that Xxxxxx has paid such Taxes, the UIS Shareholder shall reimburse
Xxxxxx or UIS for that portion of such Taxes attributable to periods for which
the UIS Shareholder have agreed to indemnify Xxxxxx pursuant to this Section
10.9.
10.9.3.3 Notwithstanding the foregoing provisions of
this Section 10.9, the UIS Shareholder shall not be required to indemnify Xxxxxx
for any particular Tax if a sufficient reserve for such Tax was included on the
Closing Balance Sheet.
10.9.3.4 Notwithstanding the foregoing provisions of
this Section 10.9, the obligation of the UIS Shareholder to indemnify Xxxxxx
with respect to any Taxes shall be net of
35
any refunds of Taxes received by UIS after the Closing and attributable to any
Tax period for which the UIS Shareholder is responsible under this Section 10.9
other than any Tax refund to the extent such Tax refund was reflected on the
Closing Balance Sheet.
ARTICLE XI
CONFIDENTIALITY AND COMPETITION
-------------------------------
11.1 Confidential Information and Competition as to UIS Brazil and the
UIS Brazil Shareholders and UIS and the UIS Shareholder.
(a) Confidential Information. UIS Brazil and the UIS Brazil
Shareholders and UIS and the UIS Shareholder (collectively, the "Covenantor")
hereby acknowledges that they possess confidential information of a special and
unique nature and value affecting and relating to the Business, the Assets, the
UIS Brazil's and UIS's operations all of which information is included in the
Assets including, but not limited to, the identity of UIS Brazil's and UIS's
customers and suppliers, prices paid by UIS Brazil and UIS for inventory, its
business practices, marketing strategies, expansion plans, UIS Brazil's and
UIS's Contracts, business records and other records, trade secrets, inventions,
techniques used in UIS Brazil's and UIS's business, know-how and technologies,
whether or not patentable, and other similar information relating to the
Business (all the foregoing regardless of whether same is or becomes known to
third parties is hereinafter referred to collectively as "Confidential
Information"). The Covenantor further recognizes and acknowledges that, upon
Closing, all Confidential Information is the exclusive property of Xxxxxx, is
material and confidential, and greatly affects the legitimate business
interests, goodwill and effective and successful conduct of the Business and
Xxxxxx. Accordingly, the Covenantor hereby covenants and agrees that it will use
the Confidential Information only for the benefit of the Business and shall not
at any time, directly or indirectly, divulge, reveal or communicate any
Confidential Information to any person, firm, corporation or entity whatsoever
other than Xxxxxx or as otherwise contemplated herein, or use any Confidential
Information for its own benefit or for the benefit of others.
(b) Non-Competition. The parties hereto hereby acknowledge and
agree that Xxxxxx would suffer irreparable injury if the Covenantor competes
with Xxxxxx. As a material inducement to Xxxxxx to enter into this Agreement,
the Covenantor hereby covenants and agrees that the Covenantor shall not:
(i) during the period beginning on the Closing Date
and continuing until two (2) years following the termination of employment of
covenants with Xxxxxx or its affiliates, for any reason, directly or indirectly,
operate, organize, maintain, establish, manage, own, participate in, or in any
manner whatsoever, individually or through any corporation, firm or organization
of which the Covenantor shall be affiliated in any manner whatsoever, have any
interest in, whether as owner, operator, partner, stockholder, director,
trustee, officer, lender, employee, principal, agent, consultant or otherwise,
any business or venture other than Xxxxxx in any county or city anywhere in the
world where Xxxxxx does business, which engages in the business or is otherwise
in competition with Xxxxxx or any assigns of Xxxxxx, unless such activity shall
have been previously agreed to in writing by Xxxxxx and its successors and
assigns;
36
(ii) during the period beginning on the Closing
Date and continuing until two (2) years following the termination of employment
convenants with Xxxxxx or its affiliates, for any reason, directly or
indirectly, divert business from Xxxxxx or its successors or assigns, or solicit
business from, divert the business of, or attempt to convert to other methods of
using the same or similar services as are provided by Xxxxxx, any client or
account of Xxxxxx; or
(iii) during the period beginning on the Closing Date
hereof and continuing until two (2) years following the termination of
employment convenants with Xxxxxx or its affiliates, for any reason, directly or
indirectly, solicit for employment, employ or otherwise engage the services of,
any employees or consultants of Xxxxxx or its successors or assigns.
The covenants set forth in this Section 11.1 are in addition
to and not in lieu of any other non-competition agreement to which Xxxxxx and
the Covenantor are parties.
11.2 Injunction and Attorneys' Fees. In view of the irreparable injury
to Xxxxxx that would result from a breach or threatened breach by the Covenantor
of the covenants or agreements under Section 11.1 hereof, and because there is
not an adequate remedy at law to protect Xxxxxx from the ongoing breach of those
covenants, Xxxxxx shall have the right to receive, and the Covenantor hereby
consents to the issuance of, a permanent injunction enjoining the Covenantor
from any violation of the covenants set forth in Section 11.1 hereof. The
Covenantor acknowledges that a permanent injunction is an appropriate remedy for
such a breach or threatened breach. These remedies shall be in addition to and
not in limitation of any other rights or remedies to which Xxxxxx is or may be
entitled at law or in equity under this Agreement. The Covenantor further agrees
that in the event Xxxxxx incurs any fees or costs in order to enforce the
provisions of Section 11.1 hereof and Xxxxxx prevails in such enforcement, the
Covenantor shall pay all fees and costs so incurred by Xxxxxx including, but not
limited to, reasonable attorneys' and paralegals' fees.
11.3 Reasonableness of Restrictions. The Covenantor has carefully read
and considered the provisions of Sections 11.1 and 11.2 hereof and, having done
so, agrees that the covenants set forth in those sections are fair and
reasonable and are reasonably required to protect the legitimate business
interests of Xxxxxx, including, but not limited to, protection of the goodwill
included in the Assets. The Covenantor agrees that the covenants set forth in
Sections 11.1 and 11.2 hereof do not unreasonably impair the ability of the
Covenantor to conduct any unrelated business or to find gainful work in their
respective fields. The parties hereto agree that if a court of competent
jurisdiction holds any of the covenants set forth in Section 11.1 unenforceable,
the court shall substitute an enforceable covenant that preserves, to the
maximum lawful extent, the scope, duration and all other aspects of the covenant
deemed unenforceable, and that the covenant substituted by the court shall be
immediately enforceable against the Covenantor. The foregoing shall not be
deemed to affect the right of the parties hereto to appeal any decision by a
court concerning this Agreement. The provisions of Sections 11.1, 11.2 and 11.3
hereof shall survive the execution of this Agreement and the consummation of the
transactions contemplated hereby.
37
ARTICLE XII
TERMINATION AND REMEDIES
------------------------
12.1 Termination on Default. If, prior to the Closing Date, a party
hereto shall materially breach or default in the full and timely performance and
satisfaction of any of his, hers or its representations and warranties or
obligations under this Agreement, and such breach or default is not cured on or
before the fifth (5th) day after the date notice is given by the non-defaulting
party to the defaulting party specifying the nature of such breach or default
(or on or before the Closing Date if sooner), then the non-defaulting party may
terminate this Agreement immediately upon notice to the defaulting party.
12.2 Termination at Closing. If any of the conditions set forth in
Article VII hereof are not satisfied as of the Closing Date, then Xxxxxx may
terminate this Agreement by notifying UIS and UIS Brazil in writing on the
Closing Date. If any of the conditions set forth in Article VII hereof are not
satisfied as of the Closing Date, then UIS or UIS Brazil may terminate this
Agreement by notifying Xxxxxx in writing on the Closing Date.
12.3 Remedies Not Exclusive. The rights and remedies of the parties
pursuant to this Article XII are not exclusive and are in addition to all other
rights and remedies which they may have at law or in equity and may be exercised
in any manner, order or combination.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Notices. All notices, demands and other communications given
hereunder shall be in writing and shall be deemed to have been duly given: (a)
upon hand delivery thereof, (b) upon telefax and written confirmation of
receipt, (c) upon receipt of any overnight deliveries, or (d) on the third (3rd)
business day after mailing UIS States registered or certified mail, return
receipt requested, postage prepaid, addressed as set forth below, or at such
other address, or to such other person and at such address for that person, as
any party shall designate in writing to the other parties for such purpose in
the manner hereinabove set forth:
If to Xxxxxx: Xxxxxx Group, Inc.
0000 Xxxxxxxxx Xxxx., Xxxxx 000-X
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxx, President
With a copy to: Atlas, Xxxxxxxx, Trop & Borkson, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxx, Esq.
38
If to UIS Brazil: UIS Industrial Ltda. (Brazil)
Xxx XXX, Xxxxxx 000
Xxxxxxxx Xxxxxxxxxx
Xxxxxx-XX-00.000 (Xxxxxx)
Attn: Xxxxx Xxxx, President
With a copy to: Dr. Joao Antonio Xx X. Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxx 000
Xxxxxx-XX-Xxxxxx
If to UIS: UIS Information Systems, Inc.
0000 X.X. 000 Xxxxx,
Xxxx 0
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxx, President
If to Shareholders: c/o Xxxxxx Xxxx
0000 X.X. 000 Xxxxx
Xxxx 0
Xxxxx, Xxxxxxx 00000
With a copy to: Romanik, Lavin, Xxxx & Paoli, P.A.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx, Esq.
13.2 Entire Agreement. This Agreement, including the Exhibits and
Schedules attached hereto and the documents delivered pursuant hereto, sets
forth all the promises, covenants, agreements, conditions and understandings
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements, understandings, inducements
or conditions, expressed or implied, oral or written, except as herein
contained. No changes of or modifications or additions to this Agreement shall
be valid unless the same shall be in writing and signed by the parties hereto.
13.3 Binding Effect; Assignment. This Agreement shall be binding upon
the parties hereto, their beneficiaries, heirs and administrators. No party may
assign or transfer its interests herein, or delegate its duties hereunder,
without the written consent of the other parties; provided, however, that Xxxxxx
may assign its rights hereunder to any subsidiary or affiliated entity, provided
that Xxxxxx shall remain liable hereunder unless UIS Brazil otherwise agrees in
writing.
13.4 Amendment. The parties hereby irrevocably agree that no attempted
amendment, modification, or change (collectively, "Amendment") of this Agreement
shall be valid and effective, unless the parties shall unanimously agree in
writing to such Amendment.
13.5 No Waiver. No waiver of any provision of this Agreement shall be
effective, unless it is in writing and signed by the party against whom it is
asserted, and any such written
39
waiver shall only be applicable to the specific instance to which it relates and
shall not be deemed to be a continuing or future waiver.
13.6 Gender and Use of Singular and Plural. All pronouns shall be
deemed to refer to the masculine, feminine, neuter, singular or plural, as the
identity of the party or parties or their personal representatives, successors
and assigns may require.
13.7 Counterparts. This Agreement and any amendments may be executed in
one or more counterparts, each of which shall be deemed an original and all of
which together will constitute one and the same instrument.
13.8 Headings. The article and section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
13.9 Governing Law. This Agreement shall be construed in accordance
with the laws of the State of Florida and any proceeding arising between the
parties in any manner pertaining or related to this Agreement shall, to the
extent permitted by law, be held in Broward County, Florida.
13.10 Further Assurances. The parties hereto will execute and deliver
such further instruments and do such further acts and things as may be
reasonably required to carry out the intent and purposes of this Agreement.
13.11 Litigation. If any party hereto is required to engage in
litigation or arbitration against any other party hereto, either as plaintiff or
as defendant, in order to enforce or defend any of its or his rights under this
Agreement, and such litigation results in a final judgment in favor of such
party ("Prevailing Party"), then the party or parties against whom said final
judgment is obtained shall reimburse the Prevailing Party for all direct,
indirect or incidental expenses incurred by the Prevailing Party in so enforcing
or defending its or his rights hereunder, including, but not limited to, all
attorneys' fees, paralegals' fees and all sales tax thereon, and all court costs
and other expenses incurred throughout all negotiations, trials or appeals
undertaken in order to enforce the Prevailing Party's rights hereunder.
13.12 Construction. Should any provision of this Agreement require
judicial interpretation, the parties hereto agree that the court interpreting or
construing the same shall not apply a presumption that the terms hereof shall be
more strictly construed against one party by reason of the rule of construction
that a document is to be more strictly construed against the party that itself
or through its agent prepared the same, it being agreed that the parties hereto
and their respective agents and legal counsel have participated in the
preparation hereto.
13.13 Power of Attorney. Each of the Shareholders hereby make,
constitute and appoint Xxxxxx Xxxx, with full power of substitution, their true
and lawful attorney-in-fact, and in the name, place and stead of each such
Shareholder, with the power from time to time to execute, acknowledge, make,
swear to, verify, deliver, record, publish and/or file: (a) any and all
amendments to this Agreement; and (b) all such other instruments as said
attorney may deem necessary or desirable to carry out the provisions of this
Agreement in accordance with its terms
40
and to complete the closing of the transactions contemplated herein. Said
attorney shall have full power and authority to do and perform each and every
act and thing whatsoever requisite and necessary in and about the foregoing as
fully as the Shareholders might or could do if personally present and the
Shareholders hereby ratify and confirm all that said attorney shall lawfully do
or cause to be done by virtue hereof. The foregoing grant of authority is a
Special Power of Attorney coupled with an interest in favor of Xxxxxx Xxxx and
as such shall be irrevocable.
13.14 English Language. The parties hereby acknowledge and agree that
each is fluent in the English language, or that the Agreement has been
translated or explained to them in Portuguese. Cada assinante deste documento
confirma que, alem do fato que este acordo esta escrito na lingua inglesa, ele
entende aquela lingua ou, sim nao, consiguio uma traducao em portugues do mesmo
ou o mesmo foi explicado para ele na lingua portuguesa.
13.15 Best Knowledge. As used in this Agreement, "to the best
knowledge" or words of similar import shall mean actual knowledge possessed by
an executive officer of the parties, and "to the best of Buyer's knowledge" or
words of similar import shall mean actual knowledge possessed by an executive
officer of Buyer.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date and year set forth above.
WITNESSES: XXXXXX:
XXXXXX GROUP, INC., a
Delaware corporation
----------------------------
By:/s/ Xxxxx Xxx
-----------------------------------
____________________________ Xxxxx Xxx, President
UIS:
UNITED INFORMATION SYSTEMS, INC.,
a Florida corporation
----------------------------
By:_________________________________
----------------------------
UIS BRAZIL:
UIS INDUSTRIAS LTDA., a company
organized under the laws of Brazil
----------------------------
By:__________________________________
----------------------------
SHAREHOLDERS:
---------------------------- /s/ Xxxxxx Xxxx
---------------------------- -----------------------------------
Xxxxxx Xxxx
---------------------------- /s/ Xxxxx Xxxxxx Xxxx
---------------------------- -----------------------------------
Xxxxx Xxxxxx Xxxx
---------------------------- /s/ Xxxx Xxxxxx Xxxxxxx xx Xxxxxx
---------------------------- -----------------------------------
Xxxx Xxxxxx Xxxxxxx xx Xxxxxx
---------------------------- /s/ Xxxxx Xxxxxxxx X. xx Xxxxxxxx
---------------------------- -----------------------------------
Xxxxx Xxxxxxxx X. xx Xxxxxxxx
ALL SIGNATURES MUST BE NOTARIZED.
42
SHAREHOLDERS SIGNATURES (con't.)
WITNESSES: SHAREHOLDERS:
/s/ Xxxxxxx Xxxxxx
---------------------------- -----------------------------------
Xxxxxxx Xxxxxx
----------------------------
/s/ Xxxxxx Xxxxx
---------------------------- -----------------------------------
Xxxxxx Xxxxx
----------------------------
ALL SIGNATURES MUST BE NOTARIZED
NOTARIAL CERTIFICATES ARE ON FOLLOWING PAGE
43
SHAREHOLDERS SIGNATURES (con't.)
WITNESSES: SHAREHOLDERS:
/s/ Xxxx Xxxx
---------------------------- -----------------------------------
Xxxx Xxxx
----------------------------
ALL SIGNATURES MUST BE NOTARIZED
NOTARIAL CERTIFICATES ARE ON FOLLOWING PAGE
44
SHAREHOLDERS SIGNATURES (con't.)
WITNESSES: SHAREHOLDERS:
/s/ Xxxxxxx Xxxxx
---------------------------- -----------------------------------
Xxxxxxx Xxxxx
----------------------------
ALL SIGNATURES MUST BE NOTARIZED
NOTARIAL CERTIFICATES ARE ON FOLLOWING PAGE
45
NOTARIAL CERTIFICATES FOR SIGNATURES ON PRECEDING PAGES
STATE OF FLORIDA )
):SS
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _______ day of
November, 1997, by Xxxxx Xxx, as President of Xxxxxx Group, Inc., a Delaware
corporation, who is personally known to me or who has produced __________ as
identification and who did/did not take an oath.
------------------------------
(SEAL) NOTARY PUBLIC
------------------------------
Print Name of Notary
STATE OF FLORIDA )
):SS
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _______ day of
November, 1997, by ______________, as _______________ of United Information
Systems, Inc., a Florida corporation, who is personally known to me or who has
produced __________ as identification and who did/did not take an oath.
------------------------------
(SEAL) NOTARY PUBLIC
------------------------------
Print Name of Notary
COUNTRY OF BRAZIL )
):SS
PROVINCE OF _______ )
The foregoing instrument was acknowledged before me this _______ day of
November, 1997, by ______________, as _______________ of UIS Industrias Ltda., a
company organized under the laws of Brazil, who is personally known to me or who
has produced __________ as identification and who did/did not take an oath.
------------------------------
NOTARY PUBLIC
------------------------------
Print Name of Notary
46
STATE OF FLORIDA )
):SS
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _______ day of
November, 1997, by
____________________________________________________________________, who is/are
personally known to me or who has/have produced __________ as identification and
who did/did not take an oath.
------------------------------
(SEAL) NOTARY PUBLIC
------------------------------
Print Name of Notary
47
STATE OF FLORIDA )
):SS
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _______ day of
_____________, 1997, by Xxxx Xxxx, who is personally known to me or who has
produced __________ as identification and who did/did not take an oath.
----------------------------
(SEAL) NOTARY PUBLIC
-----------------------------
Print Name of Notary
48
STATE OF FLORIDA )
):SS
COUNTY OF ______ )
The foregoing instrument was acknowledged before me this _______ day of
_____________, 1997, by Xxxxxxx Xxxxx, who is personally known to me or who has
produced __________ as identification and who did/did not take an oath.
------------------------------
(SEAL) NOTARY PUBLIC
------------------------------
Print Name of Notary
49
COUNTRY OF BRAZIL )
):SS
PROVINCE OF _______ )
The foregoing instrument was acknowledged before me this _______ day of
November, 1997, by
___________________________________________________________________, who is/are
personally known to me or who has/have produced ________________ as
identification and who did/did not take an oath.
------------------------------
(SEAL) NOTARY PUBLIC
------------------------------
Print Name of Notary
50
EXHIBITS
Exhibit A Defined Terms
Exhibit B Employment Agreement with Xxxxxx Xxxx
Exhibit C Opinion of Counsel Rendered to Xxxxxx Regarding UIS & UIS Brazil
Exhibit D Opinion of Counsel Rendered to UIS Brazil Regarding Xxxxxx
Exhibit E Escrow Agreement with Xxxxxx, Hay and Xxxxxxxx
Exhibit F Escrow Agreement with Xxxxxx and Maia
SCHEDULES
Schedule A Shareholders
Schedule B Shareholders
Schedule 3.3 Violations
Schedule 3.4 Financial Statements
Schedule 3.5 Conduct since date of Financial Statements
Schedule 3.6 Encumbrances on Assets
Schedule 3.7 Lease of real property
Schedule 3.8 Indebtedness
Schedule 3.9 Liabilities
Schedule 3.11 Assets
Schedule 3.12 Customers
Schedule 3.13 Other Contracts
Schedule 3.16 Taxes
Schedule 3.19 Permits
Schedule 3.24 Labor Agreements
Schedule 3.26 Potential Conflicts of Interest
Schedule 3.29 Employees, Contractors & Agents
Schedule 3.30 Insurance
Schedule 3.31 Transactions with Related Parties
Schedule 3.32 Suppliers
Schedule 3.33 Intangibles
Schedule 3.34 Accounts
Schedule 3.35 Accounts Receivable
Schedule 3.36 Accounts Payable
Schedule 3.39 Capitalization
Schedule 3.40 Tax Exempt Status of UIS Brazil
Schedule 3.41 Projections
Schedule 4.3 No Violations
Schedule 4.8 Financial Statements
Schedule 4.9 Encumbrances on Assets
Schedule 4.10 Assets
Schedule 4.12 Indebtedness
Schedule 4.13 Liabilities
Schedule 4.15 Customers
Schedule 4.19 Taxes
Schedule 4.22 Permits
Schedule 4.26 Labor Agreements
Schedule 4.28 Potential Conflicts of Interest
Schedule 4.31 Employees, Contractors and Agents
Schedule 4.32 Insurance
Schedule 4.33 Related Parties Transactions
Schedule 4.34 Suppliers
Schedule 4.35 Intangibles
Schedule 4.36 Accounts
Schedule 4.37 Accounts Receivable
Schedule 4.38 Accounts Payable
SCHEDULE A
SHAREHOLDERS
NAME NUMBER OF EXCHANGE SHARES
---- -------------------------
Xxxxx Xxxxxx Xxxx(1) 2,906,334(3)
Xxxx Xxxxxx Xxxxxxx xx Xxxxxx(1) 190,000(3)
Xxxxx Xxxxxxxx X. xx Xxxxxxxx(1) 38,000(3)
Xxxxxx Xxxx(2) 1,530,000(4)
Xxxxxxx Xxxxxx(2) 55,000(4)
Xxxxxx Xxxxx(2) 55,000(4)
Xxxxxxx Xxxxx(2) 10,000(4)
Xxxx Xxxx(2) 817,000(4)
-------
TOTAL 5,601,334
(1) UIS Brazil Shareholders
(2) UIS Shareholder
(3) In exchange for the UIS Brazil Stock
(4) In exchange for the UIS Stock
SCHEDULE B
NAME NUMBER OF SHARES
---- ----------------
Xxxxx Xxxxxxxx X. xx Xxxxxxxx 38,000
Xxxxxxx Xxxxxx 55,000
Xxxxxx Xxxxx 55,000
Xxxxxxx Xxxxx 10,000
Xxxx Xxxxxx Xxxxxxx xx Xxxxxx 90,000
EXHIBIT A
DEFINED TERMS
All defined terms used in this Agreement and not specifically defined
in context are as defined in this Exhibit A.
"Accounts Receivable" means any right to payment for goods sold,
leased or licensed or for services rendered whether or not it has been earned by
performance, any note receivable, and any other receivable or right to payment
of any nature whatsoever.
"Assets" shall have the meaning set forth in Section 3.1 of this
Agreement.
"Asset" means any real, personal, mixed, tangible or intangible
property of any nature whatsoever, including, without limitation, Real Property,
Leases, Equipment, Accounts Receivable, Inventory, Permits, Intangibles and
Contract Rights.
"Liabilities" shall have the meaning set forth in Section 3.4 of this
Agreement.
"Balance Sheet" shall have the meaning set forth in Section 3.4 of
this Agreement.
"Business" shall have the meaning set forth in the recitals to this
Agreement.
"Closing" shall have the meaning set forth in Section 2.3 of this
Agreement.
"Consent" means any consent, approval, order or authorization of, or
any declaration, filing or registration with, or any application or report to,
or any waiver by, or any other action (whether similar or dissimilar to any of
the foregoing) of, by or with, any person, which is necessary in order to take a
specified action or actions, in a specified manner and/or to achieve a specific
result.
"Contract" means any written or oral contract, agreement, order or
commitment of any nature whatsoever, including, without limitation, any sales
order, purchase order, lease, sublease, license agreement, loan agreement,
mortgage, security agreement, guarantee, management contract, employment
agreement, consulting agreement, partnership agreement, buy-sell agreement,
option, warrant, subscription, call or put.
"Contract Right" means any right, power or remedy under any Contract,
including, without limitation, any right to receive goods or services or
otherwise derive benefit from the payment, satisfaction or performance of
another party's Obligations, and right to demand that another party accept goods
or services or take any other action, and any right to pursue or exercise any
remedy or option.
"Convertible Debentures" means the aggregate of $330,000 of 5% 1 year
Convertible Debentures, (1) a $230,000 Convertible Debenture dated October 15,
1997, having a conversion price of (a) $.5427 per share in the event the
transaction between UIS, the UIS Shareholder, UIS Brazil, the UIS Brazil
Shareholders and Xxxxxx ("Acquisition") is consummated; or (b) $0.05 per share
in the event the Acquisition is not consummated within thirty (30) days of from
the date of the Debentures, and (2) a $100,000 Convertible Debenture dated
September 30, 1997, having a conversion price of (a) $.3090 per share in the
event the Acquisition is consummated; or (b) $0.05 per share in the event the
Acquisition is not consummated within sixty (60) days of from the date of the
Debentures. In the event the Acquisition is not consummated within sixty (60)
days from the date of the Debenture, the Debenture shall become immediately due
and payable. The Debentures also give the debenture holders registration rights,
including piggyback registration rights, for the shares of Common Stock issuable
upon conversion of the Debenture within thirty (30) days after the date the
Acquisition is consummated. The Debentures are also secured by certain
collateral of Xxxxxx listed in a UCC-1 financing statement executed concurrently
with the Debentures.
"Documents" shall mean notes, bills of lading, date contracts,
warehouse receipts or order for delivery of goods and also any other documents
which in the regular course of business or financing is treated as adequately
evidencing that the person in possession of it is entitled to receive, hold and
dispose of the document and the goods its covers.
"Employee Benefit Plan" means any bonus, severance, hospitalization,
vacation, deferred compensation, pension, profit sharing, retirement, payroll
savings, stock option, group insurance, death benefit or welfare plan, or any
other employee benefit plan or fringe benefit arrangement of any nature
whatsoever, including, but not limited to, "employee benefit plans" within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder.
"Encumbrance" means any lien, security interest, pledge, mortgage,
easement, leasehold, assessment, covenant, restriction, reservation, conditional
sale, prior assignment, or any other encumbrance, claim, burden or charge of any
nature whatsoever.
"Equipment" means any equipment, machinery, fixtures, furniture,
leasehold improvements, vehicles, vessels, office equipment, office supplies or
other tangible personal property of any nature whatsoever, but not any such item
which constitutes Inventory.
"Financial Statements" shall have the meaning set forth in Section 3.4
of this Agreement.
"Fiscal Year" shall mean the fiscal year for the applicable entity
ended December 31.
"Indebtedness" as applied to any Person (as defined in this Exhibit
A), (a) all indebtedness of such Person for borrowed money, whether current or
funded, or secured or unsecured, (b) all indebtedness of such Person for the
deferred purchase price of property or services represented by a note or other
security, (c) all indebtedness of such Person created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of UIS Brazil or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (d) all indebtedness of such Person secured by a
purchase money mortgage or other lien to secure all or part of the purchase
price of property subject to such mortgage or lien, (e) all obligations
2
under leases which shall have been or must be, in accordance with generally
accepted accounting principles, recorded as capital leases in respect of which
such Person is liable as lessee, (f) any liability of such Person in respect of
banker's acceptances or letters of credit, and (g) all indebtedness referred to
in clause (a), (b), (c), (d), (e) or (f) above which is directly or indirectly
guaranteed by such Person or which such Person has agreed (contingently or
otherwise) to purchase or otherwise acquire or in respect of which it has
otherwise assured a creditor against loss.
"Intangible" means any name, corporate name, partnership name,
fictitious name, trademark, trademark application, trade name, brand name,
slogan, trade secret, know-how, patent, patent application, copyright, copyright
application, design, formula, invention, blueprint, product right, software
right, license, franchise, authorization or any other intangible property of any
nature whatsoever.
"Inventory" means any raw materials, supplies, work in process,
finished goods, or any other inventory of any nature whatsoever, and other items
held for sale or lease in the ordinary course of business and all computer
software and data systems held for sale or license in the ordinary course of
business.
"Judgment" means any order, writ, injunction, fine, citation, award,
decree, or any other judgment of any nature whatsoever of any foreign, federal,
state or local court, any governmental, administrative or regulatory authority,
or any arbitration tribunal.
"Law" means any provision of any law, statute, ordinance,
constitution, charter, treaty, rule or regulation of any foreign, federal, state
or local governmental, administrative or regulatory authority.
"Leases" means all leases for real or personal property.
"Market Price" of the Stock shall mean the average of the closing
prices of the Stock's sales on all domestic securities exchanges on which such
security may at the time be listed, or, if there have been no sales on any such
exchange on any day, the average of the highest bid and lowest asked prices on
all such exchanges at the end of such day, or, if on any day such security is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, on such day, or, if on any day
such security is not quoted in the NASDAQ System, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization. If at any time such security is not listed on any
domestic securities exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the "Market Price" will be the fair value thereof
determined jointly by Xxxxxx and UIS Brazil; provided that if such parties are
unable to reach agreement within a reasonable period of time, such fair value
will be determined by an appraiser jointly selected by Xxxxxx and UIS Brazil.
The determination of such appraiser will be final and binding on Xxxxxx and UIS
Brazil, and the fees and expenses of such appraiser will be paid by Xxxxxx.
"Obligation" means any debt, liability or obligation of any nature
whatsoever, whether secured, unsecured, recourse, nonrecourse, liquidated,
unliquidated, accrued, absolute, fixed, contingent, ascertained, unascertained,
known, unknown or obligations under executory Contracts.
3
"Permit" means any license, permit, approval, waiver, order,
authorization, right or privilege of any nature whatsoever, granted, issued,
approved or allowed by any foreign, federal, state or local governmental,
administrative or regulatory authority.
"Person" means any individual, sole proprietorship, joint venture,
partnership, corporation, association, cooperation, trust, estate, government
(or any branch, subdivision or agency thereof), governmental, administrative or
regulatory authority, or any other entity of any nature whatsoever.
"Proceeding" means any demand, claim, suit, action, litigation,
investigation, study, arbitration, administrative hearing, or any other
proceeding of any nature whatsoever.
"Real Property" means any real estate, land, building, structure,
improvement, fixture or other real property of any nature whatsoever, including,
but not limited to fee and leasehold interests.
"Securities Act" means the Securities Act of 1933, as amended, and all
rules and regulations promulgated thereunder.
"Securities Laws" Means the Securities Act, the Securities Exchange
Act of 1934, as amended, the Investment Parent Act of 1940, as amended, and all
state or other applicable securities laws, and all rules and regulations
promulgated under each of these laws, collectively.
"UIS Brazil's Disclosures" shall have the meaning as set forth in
Section 6.4.
"Stock Issuance Agreements" means any contracts which relate to the
issuance, sale, right to purchase, redemption, pledge or other disposition of
any capital stock of UIS Brazil or any other securities or Obligations of UIS
Brazil.
"Tax" means (a) any foreign, federal, state or local income, profits,
gross receipts, franchise, sales, use, occupancy, general property, real
property, personal property, intangible property, transfer, fuel, excise,
accumulated earnings, personal holding Parent, unemployment compensation, social
security, withholding taxes, payroll taxes, or any other tax of any nature
whatsoever, (b) any foreign, federal, state or local organization fee,
qualification fee, annual report fee, filing fee, occupation fee, assessment,
rent, or any other fee or charge of any nature whatsoever, or (c) any
deficiency, interest or penalty imposed with respect to any of the foregoing.
4
Schedule 4.3
No Violations
None.
Schedule 4.8
Financial Statements
Schedule 4.9
Encumbrances on Assets
None.
Schedule 4.10
Title to Assets
None.
Schedule 4.12
Indebtedness
Convertible Debentures.
Schedule 4.15
Customers
None.
Schedule 4.16
Other Contracts
None.
Schedule 4.19
Taxes
None.
Schedule 4.22
Permits
None.
Schedule 4.26
Labor Agreements
None.
Schedule 4.28
Potential Conflicts of Interest
None.
Schedule 4.31
Employees, Contractors and Agents
None.
Schedule 4.32
Insurance
None.
Schedule 4.33
Related Parties Transactions
None.
Schedule 4.34
Suppliers
None.
Schedule 4.35
Intangibles
None.
Schedule 4.36
Accounts
None.
Schedule 4.37
Accounts Receivable
None.
Schedule 4.38
Accounts Payable
None.
