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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
THE BISYS GROUP, INC.,
BI-EXAM ACQUISITION CORP.,
EXAMCO, INC.,
X. XXXXXXXX HOUSTON, JR.,
AND
XXXXXXX X. XXXXXXXXXX OR HIS SUCCESSOR, AS TRUSTEE
FOR THE XXXXXX X. XXXXXXX TRUST, THE XXXXXXXX X.
XXXXXXX TRUST AND THE XXXXXXX X. XXXXXXX TRUST
DATED AS OF MARCH 25, 1999
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TABLE OF CONTENTS
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ARTICLE I THE MERGER ............................................................ 2
SECTION 1.01 The Merger ........................................................ 2
SECTION 1.02 Effect Of the Merger .............................................. 2
SECTION 1.03 Consummation of the Merger ........................................ 2
SECTION 1.04 Charter; By-Laws; Directors and Officers .......................... 2
SECTION 1.05 Further Assurances ................................................ 3
ARTICLE II CONVERSION OF SECURITIES ............................................. 4
SECTION 2.01 Conversion of Securities of the Company ........................... 4
SECTION 2.02 Ascribed Value .................................................... 6
SECTION 2.03 Escrow ............................................................ 7
SECTION 2.04 Acquisition Common Stock .......................................... 7
SECTION 2.05 Exchange of Certificates; Surrender of Warrant and SAR Agreements . 7
SECTION 2.06 Adjustment of Merger Consideration ................................ 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SHAREHOLDERS ...... 11
SECTION 3.01 Authority Relative to Agreement ................................... 11
SECTION 3.02 Shareholders' Title to Stock ...................................... 11
SECTION 3.03 Organization, Standing and Qualification .......................... 11
SECTION 3.04 Stock of the Company .............................................. 12
SECTION 3.05 Subsidiaries ...................................................... 12
SECTION 3.06 Articles of Incorporation and By-Laws ............................. 12
SECTION 3.07 Execution and Performance of Agreement; Validity and Binding Nature 12
SECTION 3.08 Financial Statements .............................................. 13
SECTION 3.09 Intellectual Rights ............................................... 13
SECTION 3.10 Software .......................................................... 14
SECTION 3.11 Contract Parties, Suppliers and Consultants ....................... 15
SECTION 3.12 Employment, Deferred Compensation or Similar Agreements; Collective
Bargaining Agreements; Employee Benefit Plans .................. 16
SECTION 3.13 Inventory ......................................................... 17
SECTION 3.14 Real Estate ....................................................... 18
SECTION 3.15 Title to and Condition of Personal Property ....................... 18
SECTION 3.16 Accounts Receivable ............................................... 18
SECTION 3.17 Consignment and Return Items ...................................... 18
SECTION 3.18 Taxes ............................................................. 19
SECTION 3.19 Litigation ........................................................ 19
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TABLE OF CONTENTS
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SECTION 3.20 Other Material Contracts and Commitments .......................... 19
SECTION 3.21 Labor Relations ................................................... 20
SECTION 3.22 Insurance ......................................................... 20
SECTION 3.23 Conduct of Business and Absence of Changes ........................ 21
SECTION 3.24 Compliance with Laws; Governmental Authorizations ................. 21
SECTION 3.25 Officers, Directors and Depositories .............................. 21
SECTION 3.26 Environmental Matters ............................................. 21
SECTION 3.27 Third Party and Governmental Consents ............................. 22
SECTION 3.28 Licenses and Permits .............................................. 22
SECTION 3.29 Absence of Undisclosed Liabilities ................................ 23
SECTION 3.30 Marketable Securities and Other Investments ....................... 23
SECTION 3.31 Loans to or from Officers, Directors, Shareholders or Employees ... 23
SECTION 3.32 Service Warranties; Contract Losses ............................... 23
SECTION 3.33 Backlog ........................................................... 24
SECTION 3.34 Year 2000 Compliance .............................................. 24
SECTION 3.35 Representations and Warranties True; No Misleading Statements ..... 25
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS ..................................................... 25
SECTION 4.01 Authority and Capacity Relative to Agreement ...................... 25
SECTION 4.02 Execution and Performance of Agreement; Validity and Binding Nature 25
SECTION 4.03 Stock of the Company .............................................. 26
SECTION 4.04 Additional Representations and Covenants of Shareholders .......... 27
SECTION 4.05 Representations and Warranties True; No Misleading Statements ..... 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT .............................. 30
SECTION 5.01 Organization and Qualification .................................... 30
SECTION 5.02 Subsidiaries ...................................................... 30
SECTION 5.03 Capitalization .................................................... 30
SECTION 5.04 Authority Relative to Agreement ................................... 31
SECTION 5.05 Non-Contravention ................................................. 31
SECTION 5.06 Parent Public Information ......................................... 31
SECTION 5.07 Parent Financial Statements ....................................... 32
SECTION 5.08 Absence of Certain Changes or Events .............................. 32
SECTION 5.09 Third Party and Governmental Consents ............................. 32
SECTION 5.10 Compliance with Law ............................................... 33
SECTION 5.11 Tax Representations ............................................... 33
SECTION 5.12 Reliance .......................................................... 34
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SECTION 5.13 Representations and Warranties True; No Misleading
Statements ........................................... 34
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF ACQUISITION .............. 34
SECTION 6.01 Organization and Qualification .......................... 35
SECTION 6.02 Capitalization .......................................... 35
SECTION 6.03 Authority Relative to Agreement ......................... 35
SECTION 6.04 Non-Contravention ....................................... 35
SECTION 6.05 Third Party and Governmental Consents ................... 36
SECTION 6.06 Other Matters ........................................... 36
SECTION 6.07 Representations and Warranties True; No Misleading
Statements ........................................... 37
ARTICLE VII COVENANTS ................................................. 37
SECTION 7.01 Conduct of the Company's Business ....................... 37
SECTION 7.02 Certain Covenants of Parent ............................. 39
SECTION 7.03 Access to Information ................................... 40
SECTION 7.04 Further Assurances ...................................... 41
SECTION 7.05 Inquiries and Negotiations .............................. 41
SECTION 7.06 Employment and Non-Competition Agreements ............... 42
SECTION 7.07 Notification of Certain Matters ......................... 42
SECTION 7.08 Indemnification ......................................... 43
SECTION 7.09 Confidentiality ......................................... 45
SECTION 7.10 Covenants of Shareholders ............................... 46
SECTION 7.11 Transfer Restrictions After the Effective Time .......... 46
SECTION 7.12 Registration Rights Agreements .......................... 46
SECTION 7.13 Repayment of Related Party Loans ........................ 47
SECTION 7.14 Year 2000 ............................................... 47
SECTION 7.15 HREI Lease .............................................. 47
ARTICLE VIII CONDITIONS TO THE MERGER ................................. 47
SECTION 8.01 Conditions to Each Party's Obligation to Effect the
Merger ............................................... 47
SECTION 8.02 Conditions to the Obligation of the Company and the
Shareholders to Effect the Merger .................... 48
SECTION 8.03 Conditions to the Obligation of Parent and Acquisition
to Effect the Merger ................................. 48
ARTICLE IX TERMINATION AND ABANDONMENT ................................ 50
SECTION 9.01 Termination and Abandonment ............................. 50
SECTION 9.02 Effect of Termination ................................... 51
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TABLE OF CONTENTS
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ARTICLE X MISCELLANEOUS ................................................. 51
SECTION 10.01 Survival of Representations and Warranties ............... 51
SECTION 10.02 Expenses, Etc ............................................ 51
SECTION 10.03 Publicity ................................................ 52
SECTION 10.04 Execution in Counterparts ................................ 52
SECTION 10.05 Notices .................................................. 52
SECTION 10.06 Waivers .................................................. 53
SECTION 10.07 Entire Agreement ......................................... 54
SECTION 10.08 Applicable Law ........................................... 54
SECTION 10.09 Binding Effect, Benefits ................................. 54
SECTION 10.10 Assignability ............................................ 54
SECTION 10.11 Amendments ............................................... 54
SECTION 10.12 Interpretation ........................................... 54
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INDEX TO SCHEDULES AND EXHIBITS
Schedule Description
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2.01(d) SAR Holders' Equity Interests
2.06(a) Reference Products Business
3.02 Shareholders Agreements
3.03 States and Jurisdictions in which
the Company does Business
3.04 Stock of the Company
3.05 Subsidiaries
3.06 Articles of Incorporation and By-Laws of the
Company
3.09 Intellectual Rights
3.10(a) Software
3.11(a) Contract Parties
3.11(b) Major Suppliers
3.12(a) Employment Contracts and Deferred Compensation
Agreements
3.12(b) Employee Benefit Plans
3.12(c) Multi-Employer Plans
3.14(a) Owned Real Estate
3.14(b) Real Estate Leases
3.15 Liens
3.17 Consignment and Return Items
3.18 Tax Audits
3.19 Litigation
3.20 Material Contracts/Affiliates
3.22 Insurance
3.23 Changes Since February 28, 1999
3.25 Officers, Directors and Depositories
3.27 Consents
3.28 Licenses
3.30 Marketable Securities and Other
Investments
3.31 Related Party Loans
3.33 Backlog of Services
4.04(l) Shareholder Interests
Exhibit Section Ref. Description
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A 2.03 Escrow Agreement
B 4.04(e) Form of Accredited Investor
Certificate
C 7.12 Form of Registration Rights
Agreement
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D 8.02(e) Form of Opinion of Parent's
Counsel to the Company and the
Shareholders
E 8.03(h) Form of Opinion of Company's
Counsel to Parent and
Acquisition
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 25, 1999, among THE BISYS GROUP, INC., a Delaware corporation, with an
address at 000 Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000 ("Parent"), BI-EXAM
ACQUISITION CORP., a Louisiana corporation and a wholly-owned subsidiary of
Parent, with an address at 000 Xxxxx Xxxx, Xxxxxx Xxxxx, Xxx Xxxxxx 00000
("Acquisition"), EXAMCO, INC., a Louisiana corporation, with an address at 0000
Xxxxxxxxx Xxxxxxx, Xxx Xxxxxxx, Xxxxxxxxx 00000 (the "Company"), X. XXXXXXXX
HOUSTON, JR., with an address at 0000X Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxx 00000
("Houston"), XXXXXXX X. XXXXXXXXXX OR HIS SUCCESSOR, AS TRUSTEE FOR THE XXXXXX
X. XXXXXXX TRUST (the "N.E. Trust"), THE XXXXXXXX X. XXXXXXX TRUST (the "X.X.
Trust") AND THE XXXXXXX X. XXXXXXX TRUST, with an address at 0000 Xxxxxxxxx
Xxxxxxx, Xxx Xxxxxxx 00000-0000 (the "M.R. Trust", and collectively, the
"Trusts") (the Trusts, together with Houston, herein referred to from time to
time collectively as the "Shareholders" and individually each as a
"Shareholder"). The Company and Acquisition are hereinafter sometimes referred
to as the "Constituent Corporations" and the Company as the "Surviving
Corporation."
WHEREAS, the Company is engaged in the business of providing
technology-driven professional certification training (including initial
qualification and licensing, advanced certification, continuing professional
education and workplace certification) to the financial services, marine
transportation and healthcare industries;
WHEREAS, Parent, Acquisition and the Company desire that
Acquisition merge with and into the Company in accordance with Section
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Merger"),
upon the terms and conditions set forth herein and in accordance with the
Louisiana Business Corporation Law (the "Louisiana BCL"), with the result that
the Company shall continue as the surviving corporation and the separate
existence of Acquisition (except as it may be continued by operation of law)
shall cease;
WHEREAS, Parent, Acquisition and the Company desire that upon
the Merger, at the Effective Time (as hereinafter defined), all outstanding
shares of the capital stock of the Company be converted into the right to
receive fully paid and nonassessable shares of Common Stock, $.02 par value, of
Parent ("Parent Common Stock") and the outstanding shares of Acquisition be
converted into the right to receive fully paid and nonassessable shares of
Common Stock, no par value, of the Surviving Corporation, as hereinafter
provided;
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WHEREAS, Parent, Acquisition and the Company desire that,
immediately after the Effective Time and solely as a result of the Merger,
Parent will own all the issued and outstanding shares of the capital stock of
the Surviving Corporation; and
WHEREAS, the respective Boards of Directors of the Company,
Parent and Acquisition have approved the Merger;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants, agreements and conditions contained
herein, and in order to set forth the terms and conditions of the Merger and the
mode of carrying the same into effect, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time, in accordance with this Agreement and
the Louisiana BCL, Acquisition shall be merged with and into the Company, the
separate existence of Acquisition (except as it may be continued by operation of
law) shall cease, and the Company shall continue as the surviving corporation
under the name EXAMCO Inc. unless and until the Articles of Incorporation
(hereinafter defined) shall be further amended to change the name of the
Surviving Corporation.
SECTION 1.02 Effect Of the Merger. Upon the effectiveness of
the Merger, the Surviving Corporation shall succeed to and assume all the rights
and obligations of Acquisition and the Company in accordance with the Louisiana
BCL, and the Merger shall otherwise have the effects set forth in Section 115 of
the Louisiana BCL.
SECTION 1.03 Consummation of the Merger. As soon as
practicable after the satisfaction or waiver of the conditions to the
obligations of the parties to effect the Merger set forth herein, provided that
this Agreement has not been terminated previously, the parties hereto will cause
the Merger to be consummated by filing with the Secretary of State of the State
of Louisiana a properly executed Certificate of Merger in accordance with the
Louisiana BCL. The Merger shall be effective when effective under Louisiana law
(the time of such effectiveness being the "Effective Time").
SECTION 1.04 Charter; By-Laws; Directors and Officers.
Immediately after the Effective Time, the Articles of Incorporation of the
Company shall be the Articles of Incorporation of the Surviving Corporation
until thereafter amended in accordance with the provisions thereof and as
provided by the Louisiana BCL. As of
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the Effective Time, the By-Laws of the Surviving Corporation shall be the
By-Laws of the Company as in effect immediately prior to the Effective Time,
until thereafter amended in accordance with the provisions thereof and the
Articles of Incorporation of the Surviving Corporation and as provided by the
Louisiana BCL. The initial directors and officers of the Surviving Corporation
shall be the directors and officers set forth below, in each case until their
respective successors are duly elected and qualified.
Directors
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Officers
Xxxxxxx Xxxxxxxx Chief Executive Officer
X. Xxxxxxxx Houston, Jr. President
Xxxxxx X. Xxxxxxx Executive Vice President,
Chief Financial Officer
and Treasurer
Xxxxxx X. Xxxxxxxx Executive Vice President
Xxxx X. Rybarcyzk Executive Vice President,
Human Resources
Xxxxxxx X. Xxxxxxxxxx Senior Vice President
W. Xxxxxx Xxxxx Senior Vice President
Xxxxx X. Dell Senior Vice President, General
Counsel and Secretary
Xxxxxx X. Xxxxxx Assistant Secretary
SECTION 1.05 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver, in
the name and on behalf of either of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporation, all such other acts and things
necessary, desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry out
the purposes of this Agreement.
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ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Securities of the Company. By
virtue of the Merger and without any action on the part of the holders of the
common stock, no par value, of the Company ("Company Common Stock"), at the
Effective Time all outstanding shares of the Company Common Stock (subject to
the terms of Section 2.05(c) below) shall be converted into the right to receive
fully paid and nonassessable shares of Parent Common Stock on the following
basis:
(a) Net Merger Price. Subject to the terms of Section 2.06
below, the aggregate consideration to be paid in connection with the Merger
shall be paid in the form of Parent Common Stock valued, as set forth below, at
Ten Million Two Hundred Thousand Dollars ($10,200,000) (the "Gross Merger
Price") less the Ascribed Value (as set forth in Section 2.02 below) of the
Petra Rights (hereinafter defined) and the SARs (hereinafter defined), which
Petra Rights and SARs shall be converted to rights to purchase or otherwise
acquire Parent Common Stock and/or cash pursuant to the terms hereof as of the
Effective Time (the "Net Merger Price"). The Net Merger Price shall be divided
by the average of the closing price per share of Parent Common Stock (the
"Average Price") as reported by the National Association of Securities Dealers
Inc. Automated Quotation System ("NASDAQ") for the trading days in the period
from the date of execution of this Agreement until the day immediately prior to
the date on which the Effective Time shall occur provided that if there shall be
fewer than ten (10) trading days in such period, then the Average Price shall be
the average of the closing price per share as quoted on the NASDAQ for each of
the last ten (10) trading days prior to the Effective Time, which Average Price
shall be used to determine the number of shares of Parent Common Stock into
which the outstanding shares of Company Common Stock shall be converted in the
Merger (the "Aggregate Parent Common Stock Consideration").
(b) Exchange Value. Each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any rights to
receive shares of Company Common Stock which are deemed to result from the
conversion of the Warrant (hereinafter defined) or the SARs (hereinafter
defined) pursuant to Sections 2.01(c) and (d) below and excluding any such
shares held in the treasury of the Company, which shall be cancelled as provided
in paragraph (e) below) (all such shares collectively referred to herein as the
"Exchange Shares") shall be converted into the right to receive the number of
shares of Parent Common Stock (the "Exchange Value"), determined by dividing the
Aggregate Parent Common Stock Consideration by the aggregate number of Exchange
Shares, subject to the terms of Section 2.06 below. If, prior to the Effective
Time, Parent
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should split or combine the outstanding shares of Parent Common Stock, or pay a
stock dividend or other stock distribution in Parent Common Stock, then the
determination of the Exchange Value shall be appropriately adjusted to reflect
such split, combination, dividend or other distribution.
(c) In connection with the closing of the transactions
contemplated by that certain Loan and Security Agreement by and between the
Company and Petra Capital, L.L.C., a Georgia limited liability company
("Petra"), dated as of August 12, 1998, the Company issued to Petra that certain
Stock Purchase Warrant dated August 12, 1998 (the "Warrant") pursuant to which
it granted to Petra the right to purchase shares of Company Common Stock, at a
price per share of one cent, and upon the other terms and conditions set forth
therein. Pursuant to Section 5(f) of the Warrant, in the event of a Capital
Reorganization (as defined therein), Petra's right to purchase Company Common
Stock is converted to the right to purchase, upon exercise of the Warrant and
payment of the exercise price therefor, the kind and amount of shares of stock
and other property which Petra would have owned or been entitled to receive
pursuant to such Capital Reorganization if the Warrant had been exercised
immediately prior to such Capital Reorganization, subject to the terms therein
set forth. Upon exercise of the Warrant immediately prior to the Effective Time,
Petra would have been entitled to purchase 604 shares of Company Common Stock
(the "Petra Rights"). Pursuant to an agreement bearing even date herewith (the
"Petra Agreement"), Petra has agreed to accept at the Effective Time, in
consideration of the cancellation of the Warrant immediately prior to the
Effective Time, the right to receive an amount in cash (the "Modified Petra
Rights") determined by multiplying (x) 453 by (y) the Exchange Value and then
multiplying said product by (z) the Average Price, subject to the terms of
Section 2.06 below. At the Effective Time, pursuant to the terms of the Warrant,
the Petra Rights shall be deemed to be converted into the right to receive an
amount in cash equal to the Modified Petra Rights, which amount shall be paid by
Parent in accordance with the terms hereof.
(d) Pursuant to certain Stock Appreciation Rights Agreements
between the Company and each of Xxxxxx X. Xxxxxxxx, III ("Xxxxxxxx"), Xxxxxxx X.
Xxxxxxxxxx ("Xxxxxxxxxx"), W. Xxxxxx Xxxxx ("Slate") and Xxxxxxx X. Xxxxxxxx
("Xxxxxxxx") (collectively, the "SAR Holders and individually, each a "SAR
Holder"), as amended (the "SAR Agreements"), each SAR Holder is entitled to
receive a certain percentage interest in the appreciation of the equity value of
the Company (the "API") upon the terms and conditions set forth in the SAR
Agreement. Pursuant to Section 12 of the SAR Agreements, immediately prior to
the consummation of the transactions contemplated hereby, each SAR Holder's
rights to the API shall be automatically converted, effective immediately prior
to the Effective Time, into an equity interest in the Company, as set forth on
Schedule 2.01(d) hereto.
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The number of shares of Company Common Stock deemed to represent such equity
interests which the SAR Holders are entitled to receive under the SAR
Agreements, as set forth on Schedule 2.01(d) hereto, subject to the terms of
Section 2.06 below, are referred to herein, in the aggregate, or as to each SAR
Holder, as the "SARs". Pursuant to an agreement bearing even date herewith (the
"SAR Holder Agreement"), (i) each SAR Holder other than Xxxxxxxx has agreed to
accept sixty percent (60%) of such SAR Holder's rights to the API in Parent
Common Stock and, in consideration of such SAR Holder's obligations under a
"Noncompetition Agreement" (hereinafter defined), forty percent (40%) of such
SAR Holder's rights to the API in cash, and (ii) Xxxxxxxx has agreed to accept
fifty percent (50%) of his rights to the API in Parent Common stock and, in
consideration of his obligations under a "Non-Competition Agreement"
(hereinafter defined), fifty percent (50%) of his rights to the API in cash. At
the Effective Time, each SAR Holder's SARs, as set forth on Schedule 2.01(d),
other than Xxxxxxxx'x SARs, shall be deemed to be converted into the (i) right
to receive a number of shares of Parent Common Stock equal to sixty percent
(60%) of the number of SARs held by such SAR Holder multiplied by the Exchange
Value, and (ii) the right to receive an amount in cash determined by multiplying
(x) forty percent (40%) of the number of SARs held by such SAR Holder by (y) the
Exchange Value and then multiplying said product by (z) the Average Price. At
the Effective Time, Xxxxxxxx'x SARs, as set forth on Schedule 2.01(d), shall be
deemed to be converted into the (i) right to receive a number of shares of
Parent Common Stock equal to fifty percent (50%) of the number of SARs held by
Xxxxxxxx multiplied by the Exchange Value and (ii) the right to receive an
amount in cash determined by multiplying (x) fifty percent (50%) of the number
of SAR's held by Xxxxxxxx by (y) the Exchange Value and then multiplying said
product by (z) the Average Price. All such amounts of cash payable to the SAR
Holders hereunder shall be paid by Parent in accordance with the terms hereof.
(e) Treasury Stock. Any shares of capital stock held in the
treasury of the Company as of the Effective Time shall be canceled and retired
as of the Effective Time and no capital stock of Parent, cash or other
consideration shall be paid or delivered in exchange therefor.
SECTION 2.02 Ascribed Value. Subject to the terms of Section
2.06 below, the ascribed value of the Petra Rights and the SARs (the "Ascribed
Value"), for the purposes of Section 2.01(a), shall be the product calculated by
multiplying (A) the Gross Merger Price by (B) a fraction, the numerator of which
is the sum of the number of Petra Rights and the SARs (collectively, the
"Convertible Rights") and the denominator of which is the sum of the number of
shares of Company Common Stock outstanding immediately prior to the Effective
Time plus the number of Convertible Rights.
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SECTION 2.03 Escrow. As security for the indemnification
obligations of the Shareholders under Section 7.08 hereof, the Shareholders
agree that as of the Effective Time Parent shall withhold and deposit in escrow
on behalf of the Shareholders, pro rata according to their "Percentage Shares"
(hereinafter defined), pursuant to an escrow agreement substantially in the form
of Exhibit A hereto (the "Escrow Agreement"), a number of shares of Parent
Common Stock having a value of One Hundred Fifty Thousand Dollars ($150,000.00)
based on the Average Price. Parent acknowledges that the shares of Parent Common
Stock held in escrow pursuant to the Escrow Agreement shall be outstanding
shares of Parent Common Stock and shall be treated as outstanding shares of
Parent Common Stock for financial accounting purposes, and the Shareholders
shall be entitled to receive any dividends and distributions on said shares of
Parent Common Stock if, as and when declared by the Board of Directors of Parent
and to vote said shares of Parent Common Stock on all matters submitted to a
vote of Parent's shareholders generally.
SECTION 2.04 Acquisition Common Stock. At the Effective Time,
each of the One Hundred (100) shares of the common stock, no par value, of
Acquisition issued and outstanding immediately prior to the Effective Time shall
be converted into the right to receive one (1) share of the common stock, no par
value, of the Surviving Corporation, which shall constitute all of the issued
and outstanding shares of the Surviving Corporation after the Effective Time.
SECTION 2.05 Exchange of Certificates; Surrender of Warrant
and SAR Agreements. (a) Promptly after the Effective Time, each Shareholder
shall deliver to Parent the certificate or certificates representing their
shares of Company Common Stock (each, a "Certificate") in form sufficient for
transfer and cancellation pursuant thereto, the holder of the Warrant shall
surrender same to Parent and the SAR Holders shall terminate and surrender to
Parent their respective SAR Agreements, which shall thereupon be deemed
terminated and of no further force or effect. As a condition to the issuance of
Parent Common Stock and payment of cash consideration hereunder, as applicable,
each holder or deemed holder of an interest in shares of Company Common Stock
and/or cash consideration pursuant to this Agreement who is not a party hereto,
including, without limitation Petra and the SAR Holders, shall submit the
Certificate (or Certificates) for such shares, if applicable, (or, in the case
of Petra, the Warrant and in the case of the SAR Holders, the originally
executed SAR Agreements, each marked cancelled and terminated) to Parent
together with a letter of transmittal, in form and substance satisfactory to
Parent, containing such investment representations and warranties and covenants,
respectively, consistent with Section 4.04, as shall be required by Parent (the
"Transmittal Letter").
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Upon surrender of a Certificate (or Certificates) for cancellation to Parent in
form sufficient for transfer and cancellation pursuant hereto and delivery to
Parent of such other documents as may reasonably be required by Parent, the
Shareholder surrendering such Certificate (or Certificates) (or, in the case of
Petra, the Warrant, and in the case of the SAR Holders, the originally executed
SAR Agreements, marked cancelled and terminated), in each case along with the
Transmittal Letter, if applicable, such Shareholder or Petra or the SAR Holder,
as the case may be, shall be entitled to receive in exchange therefor (w) a
certificate evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in respect of the shares of Company Common
Stock evidenced by such Certificate (or Certificates) or the SAR Agreement, as
applicable (after taking into account all shares of Company Common Stock then
held of record by such holder), (x) in the case of the Warrant Holder, an amount
in cash equal to the Modified Petra Rights, (y) in the case of each SAR Holder,
an amount of cash as provided in Section 2.01(d) hereof, and/or (z) a check
representing the amount of cash in lieu of fractional shares of Parent Common
Stock, if any, and unpaid dividends or other distributions, if any, to which
such holder is entitled pursuant to the provisions of this Section 2.05, after
giving effect to any applicable withholding tax, and the Certificate (or
Certificates) or Warrant or SAR Agreement, as applicable, so surrendered shall
forthwith be cancelled. No interest will be paid or accrued on the cash in lieu
of fractional shares and unpaid dividends and distributions, if any, payable to
the shareholders.
(b) No dividends or other distributions declared after the
Effective Time with respect to Parent Common Stock shall be paid with respect to
any shares of Company Common Stock represented by a Certificate until such
Certificate is surrendered for exchange as provided herein. After surrender of
any such Certificate, there shall be paid to the holder of the certificate
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
declared with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any applicable withholding taxes thereon, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to the date of such surrender and
with a payment date subsequent to the date of such surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
applicable withholding taxes thereon.
(c) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
Certificates, the Warrant or the SAR Agreement, as applicable, and such
fractional share interests will not entitle
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the owner thereof to vote or to any rights of a shareholder of Parent. Each
holder of shares of Company Common Stock (or Petra or the SAR Holders, as the
case may be), who would otherwise have been entitled to receive in the Merger a
fraction of a share of Parent Common Stock (after taking into account all
certificates surrendered by such holder) shall be entitled to receive, in lieu
thereof, a check in an amount (without interest) equal to such fractional part
of a share of Parent Common Stock multiplied by the Average Price.
(d) From and after the date of this Agreement, the stock
transfer books of the Company shall be closed, and there shall be no further
registrations of transfers of shares of Company Common Stock on the records of
the Company.
(e) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting of a bond in such reasonable amount as
the Surviving Corporation may direct, Parent shall issue in exchange for such
Certificate the shares of Parent Common Stock and, if any, cash in lieu of
fractional shares and unpaid dividends and distributions on shares of Parent
Common Stock deliverable in respect thereof as provided herein.
(f) Promptly after the Effective Time, the Surviving
Corporation shall issue to Parent a certificate representing One Hundred (100)
shares of the common stock of the Surviving Corporation, and Parent shall cause
the certificates representing the shares of the capital stock of Acquisition to
be canceled.
SECTION 2.06 Adjustment of Merger Consideration. (a) The
parties hereto acknowledge that the Company and the Shareholders desire to sell
and transfer for cash consideration, subject to the prior written consent of
Parent, the assets used or useable in the Company's Reference Products Business,
which consent shall not be unreasonably withheld, as described in Schedule
2.06(a) hereto (the "Reference Products Business"). In the event that the sale
and transfer for cash consideration of all or any portion of the Reference
Products Business is completed by the Surviving Corporation on or before June
15, 1999, then, in such event, the following recalculations and adjustments
shall be made: (i) the Gross Merger Price shall be increased by an amount equal
to fifty percent (50%) of the aggregate of the cash consideration received by
the Surviving Corporation for (x) the Reference Products Business or any such
portion thereof which is sold as contemplated hereby and (y) the services to be
provided by the Surviving Corporation to the purchaser or purchasers thereof
(less the aggregate out-of-pocket expenses actually incurred by the Surviving
Corporation in connection with any such sale), up to a maximum increase of
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$500,000, and such increased amount, in addition to the Gross Merger Price,
shall be the "Adjusted Gross Merger Price"; (ii) the Ascribed Value under
Section 2.02 shall be recalculated and adjusted for purposes of Section 2.01(a)
hereof (the "Adjusted Ascribed Value") by using the Adjusted Gross Merger Price
in the calculation under Section 2.02 instead of the Gross Merger Price; (iii)
the Net Merger Price shall be recalculated and adjusted based on the Adjusted
Gross Merger Price and the Adjusted Ascribed Value (the "Adjusted Net Merger
Price"); (iv) the Aggregate Parent Common Stock Consideration shall be
recalculated and adjusted based on the Adjusted Net Merger Price and the Average
Price (the "Adjusted Aggregate Parent Common Stock Consideration"); (v) the
Exchange Value shall be recalculated and adjusted using the Adjusted Aggregate
Parent Common Stock Consideration (the "Adjusted Exchange Value"); (vi) the
Modified Petra Rights shall be recalculated and adjusted using the Adjusted
Exchange Value; and (vii) the SARs under Section 2.01(d) hereof shall be
recalculated and adjusted based on the Adjusted Exchange Value.
(b) If the sale of all of the Reference Products Business is
completed as provided in Section 2.06(a) hereof following the Effective Time and
on or prior to June 15, 1999, the number of shares of Parent Common Stock to be
delivered to the Shareholders in consideration of the Merger, the amount of cash
to be delivered to Petra in consideration of the Modified Petra Rights, and the
number of shares of Parent Common Stock and the amount of cash consideration to
be delivered to the SAR Holders pursuant to Section 2.01(d) hereof shall be
adjusted as provided in Section 2.06(a) hereof as of the date of the closing of
the sale of the last remaining assets constituting the Reference Products
Business. If any portion, but not all, of the Reference Products Business is
sold as of June 15, 1999, said amounts shall be adjusted as provided in Section
2.06(a) hereof as of June 15, 1999 based on fifty percent (50%) of the aggregate
of the cash consideration received by the Surviving Corporation for (i) such
portion of the Reference Products Business which is sold as of June 15, 1999 and
(ii) the services to be provided by the Surviving Corporation to the purchaser
or purchasers thereof (less the aggregate out-of-pocket expenses actually
incurred by the Surviving Corporation in connection with any such sale), up to a
maximum aggregate increase of $500,000. The date as of which the aforementioned
amounts shall be adjusted is herein referred to as the "Adjustment Date". Parent
shall deliver as promptly as practicable, but no later than thirty (30) days
following the Adjustment Date, to the Shareholders, the SAR Holders and Petra,
as applicable, the additional shares of Parent Common Stock and/or cash
consideration, as applicable, to which the Shareholders, the SAR Holders and
Petra are entitled as a result of the adjustments made pursuant to Section
2.06(a), together with a written statement showing in reasonable detail the
calculation thereof.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND SHAREHOLDERS
Each of the Company and each Shareholder, jointly and
severally, hereby represents and warrants to Parent and Acquisition, knowing and
intending that each of Parent and Acquisition is relying hereon in entering into
the transactions contemplated hereby, as follows:
SECTION 3.01 Authority Relative to Agreement. The Company has
all requisite power and authority to enter into and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Board of Directors of the Company and the Shareholders,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the transactions contemplated hereby.
SECTION 3.02 Shareholders' Title to Stock. The shares of
Company Common Stock identified on Schedule 3.04 represent, collectively, all of
the issued and/or outstanding shares of capital stock or other equity interests
in the Company, other than the Warrant and the rights set forth in the SAR
Agreements. Except as listed in Schedule 3.02, neither the Company nor the
Shareholders are parties to any shareholders agreement, buy-sell agreement or
similar agreement or arrangement.
SECTION 3.03 Organization, Standing and Qualification. The
Company is a corporation, duly organized, validly existing and in good standing
under the laws of the State of Louisiana and has the corporate power and lawful
authority to own and hold its properties and conduct its business as now owned,
held and conducted in its state of incorporation and the states in which it has
qualified to do business. The Company is qualified and in good standing in all
states (or other jurisdictions) in which such qualification is required by
reason of the nature or extent of business conducted by the Company therein,
except where the failure to be so qualified would not have Material Adverse
Effect (hereinafter defined). Such states (and jurisdictions) are specified in
Schedule 3.03 attached hereto. As used in this Agreement, the term "Material
Adverse Effect" shall mean, with respect to any party, a material adverse effect
on the assets, financial condition, operating results or business of such party
and its subsidiaries, taken as a whole.
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SECTION 3.04 Stock of the Company. The authorized capital
stock of the Company consists in its entirety of 1,000,000 shares of Company
Common Stock, without par value, of which 10,000 shares of Company Common Stock
are validly issued and outstanding, fully paid and nonassessable. The number of
shares of Company Common Stock owned of record by each holder thereof is set
forth in Schedule 3.04 hereof. Except for (i) the Warrant and (ii) the
obligations of the Company under the SAR Agreements, the Company does not have
any outstanding subscription, warrants, convertible securities, obligations,
options, or rights entitling others to acquire shares of capital stock of the
Company, or any outstanding securities, options, warrants, rights or other
instruments convertible into shares of capital stock of the Company.
SECTION 3.05 Subsidiaries. There is no corporation,
partnership, joint venture, or other entity in which the Company has, directly
or indirectly, any investment or to which the Company has made an advance of
cash, other than as listed on Schedule 3.05 attached hereto. The Company is not
under any obligation to acquire any securities from any person or entity.
SECTION 3.06 Articles of Incorporation and By-Laws. True and
complete copies of the Company's Articles of Incorporation (the "Articles of
Incorporation") and By-Laws (in each case together with any amendments thereto)
are attached hereto as Schedule 3.06.
SECTION 3.07 Execution and Performance of Agreement; Validity
and Binding Nature. The execution and delivery of this Agreement, and the
performance by the Company of the terms of this Agreement and the transactions
contemplated hereby, will not result in a breach of any of the terms of, or
constitute a violation of or default under, the Articles of Incorporation or
By-Laws of the Company or any statute, contract, indenture or other instrument
by which the Company or any of its properties are bound, except as the
consummation of the Merger may be prohibited by the certain Loan and Security
Agreement dated as of August 12, 1998 between the Company and Petra (the "Petra
Loan Agreement") and the certain Loan Agreements dated as of August 11, 1998
between Regions Bank, an Alabama banking corporation ("Regions Bank"), and the
Company (the "Regions Bank Loan Agreement"). Except as provided in Section 3.27
hereof, no consent, approval, authorization or order of any court or
governmental authority is required in connection with the execution and delivery
of this Agreement by the Company and the performance by the Company of the terms
of this Agreement and the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company. This Agreement is, and the
documents and agreements executed and delivered by the Company pursuant to the
terms hereof, when duly executed and delivered by all parties whose execution
and delivery thereof is required, will be, legal, valid, and binding obligations
of the Company, enforceable against the Company in accordance with their
respective
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terms, except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
general application affecting the rights of creditors generally or by general
principles of equity.
SECTION 3.08 Financial Statements. The Company has delivered
to Parent the unaudited balance sheet of the Company as of February 28, 1999
(the "Balance Sheet") and the unaudited statement of income and retained
earnings for the nine months ended February 28, 1999. The Company also has
delivered to Parent the audited balance sheet of the Company as at May 31, 1998,
and the related statements of income and retained earnings and cash flows for
the year then ended and notes thereto, audited by Xxxxxx-Xxxxx & Co.,
independent certified public accountants, and the reviewed balance sheets of the
Company as at May 31, 1997 and 1996, respectively, and the related statements of
income and retained earnings and cash flows and notes thereto for the fiscal
years then ended, in each case as reviewed by Xxxxxx-Xxxxx & Co. The Balance
Sheet and said financial statements and notes thereto as of said dates and for
said periods are hereinafter referred to collectively as the "Financial
Statements"). Each of the Financial Statements (a) is true and correct and has
been prepared from the books and records of the Company, (b) has been prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis with prior periods covered thereby, subject, in the case of
the interim statements, to year end adjustments (which consist of normal
recurring accruals) and in the case of the interim and the reviewed statements,
the absence of certain footnote disclosures, and (c) presents fairly in all
material respects the financial position of the Company as at its respective
date and the results of the Company's operations, changes in stockholders'
equity (deficit) and cash flows for such period in all respects, subject, in the
case of unaudited statements, to year end adjustments (which consist of normal
recurring accruals) and in the case of the interim and the reviewed statements,
the absence of certain footnote disclosures. All prepaid expenses included
therein as assets represent payments or accruals theretofore made by the
Company, the benefit and advantage of which may be obtained and enjoyed by the
business of the Company. The books and records of the Company have been kept,
and will be kept to the Effective Time, in reasonable detail and in accordance
with the same accounting principles heretofore used consistently applied and
fairly and accurately reflect, and will fairly and accurately reflect to the
Effective Time, all of the transactions of the Company, and are and will be
complete and correct in all material respects.
SECTION 3.09 Intellectual Rights. Schedule 3.09 attached
hereto contains a complete and correct list and accurate description of all
trademarks, trademark and service xxxx applications, trade names, service marks,
logos and other identifying symbols, names or marks, copyrights, patents, patent
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applications and, to the extent material to the Company's business, inventions,
processes, designs, formulas, trade secrets, and other intellectual and/or
proprietary rights or interests (collectively, "Intellectual Rights") (i) owned
by the Company, free and clear of all licenses, liens, charges or encumbrances,
except as specified in such Schedule, or (ii) licensed to the Company under
valid and enforceable agreements, in each case exclusive of the Software
(hereinafter defined) identified on Schedule 3.10 hereof. The Company owns, or
possesses adequate rights to use, all Intellectual Rights necessary for the
conduct of its business. The Company is the exclusive owner of the corporate
name "EXAMCO, Inc." in the State of Louisiana and the Company has used, prior to
the date hereof, the tradename "EXAMCO" in the ordinary and regular course of
business. Upon consummation of the Merger, the Surviving Corporation shall have
the absolute right to use and authorize others to use all of the Intellectual
Rights, free from any claims, security interests, or other liens whatsoever. To
the knowledge of the Company and the Shareholders, there are no infirmities
concerning the validity of any of the Intellectual Rights and there are no
infringements by any third parties upon any Intellectual Rights. There is no
conflict with or infringement by the Company of the rights of others with
respect to same.
SECTION 3.10 Software.
(a) Schedule 3.10(a) hereto contains a true, complete and
accurate list and summary description of (i) all computer software and related
programs owned by the Company, including all software, source codes and object
codes and (ii) all computer software and related programs licensed by the
Company for use in connection with the business of the Company, other than
off-the-shelf software licensed to the Company which is not material to the
operation of the Company's business or the services provided by the Company
(collectively, the "Software"). The Company owns and has a right to resell all
of the owned Software and has a valid license to use all of the licensed
Software, and upon consummation of the Merger, the Surviving Corporation shall
have the absolute right to use all of the Software and authorize others to use
all of the owned Software, free from any claim, security interest or other lien
or encumbrance whatsoever, except as set forth on Schedule 3.10(a). The Company
is the exclusive licensee of the Software indicated on Schedule 3.10(a) as being
exclusively licensed by the Company. The Software constitutes the only computer
software or programs necessary for the operation of the Company's business.
(b) The Company has provided to Parent true and complete
copies of all licenses, leases, contracts and other written instruments giving
the Company rights in any Software and/or source codes thereof which are not
owned by the Company (collectively, the "Software Contracts"), all of which
Software Contracts are legally valid and binding and enforceable in
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accordance with their respective terms. Neither the Company, nor, to the
knowledge of the Company or the Shareholders, any other party thereto, is in
violation of any term or provision of any Software Contract. The use of the
owned Software by the Company does not, and upon consummation of the Merger the
use of the Software by the Surviving Corporation will not, in any manner,
infringe upon any rights of any third parties. The use of any source codes
related to Software which is not owned by the Company, and the exercise of the
rights of the Company in and to such source codes, as provided in any of the
Software Contracts, does not, and upon consummation of the Merger the use of any
such source codes and exercise of such rights by the Surviving Corporation
pursuant to the terms of the Software Contracts will not, in any manner,
infringe upon the rights of any third parties.
(c) All source codes relating to the Software which is owned
by the Company (the "Owned Source Codes") are in the possession of the Company
and constitute trade secret information of the Company. Except as set forth in
Schedule 3.10(a), no third party has any copy of any of the Owned Source Codes
or any right, title, interest or license, conditional or otherwise, with respect
to any of the Owned Source Codes under any circumstances whatsoever, and the
Company has not granted any such right, title, interest or license covering any
future period with respect to any of the Owned Source Codes under any
circumstances whatsoever. Upon consummation of the Merger, the Surviving
Corporation shall own and have possession of, and shall have the right to use,
the Owned Source Codes, free from any claim, security interest or other lien or
encumbrance whatsoever.
(d) Except as set forth in Schedule 3.10(a) with respect to
certain documentation relating to Software owned by the Company, the Company
owns in respect of all Software owned by the Company and has possession of, and
the Surviving Corporation will own in respect of all Software owned by the
Company and have possession of immediately after the Effective Time, complete
and adequate documentation in all material respects, including without
limitation, documentation of source codes, object codes and engineering change
notices, reflecting the current versions of all Software listed on Schedule
3.10(a) so as to enable the Surviving Corporation to conduct fully after the
Effective Time the business conducted by the Company prior to the Effective Time
in the same manner as theretofore conducted. The Company's present employees are
capable of producing such documentation as is not currently in possession of the
Company with respect to Software owned by the Company.
SECTION 3.11 Contract Parties, Suppliers and Consultants.
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(a) Schedule 3.11(a) contains the names and business addresses
of the customers of the Company with respect to which the Company presently has
contracts or arrangements to provide goods or services (collectively, the
"Contract Parties"), all of which are material to the operation of the Company's
business. Schedule 3.20 identifies the respective contracts or arrangements the
Company has entered into with respect to the Contract Parties which will remain
to be performed, in whole or in part, after the Effective Time. True and
complete copies of those contracts or arrangements which are in writing have
been heretofore delivered to Parent, and written summary descriptions of those
contracts or arrangements which are oral have been heretofore delivered to
Parent. No Contract Party listed in Schedule 3.11(a) has expressed to the
Company or to any Shareholder its intention to cancel or otherwise terminate its
relationship with the Company, and, to the best knowledge of the Company and
each Shareholder, all of such contracts and arrangements will continue in full
force and effect after the Effective Time and a continuing relationship with
each such Contract Party is not in jeopardy.
(b) Schedule 3.11(b) contains the names and business addresses
of all of the suppliers and consultants from whom the Company purchased, during
the twelve (12) month period ending February 28, 1999, goods and/or services,
the aggregate cost of which exceeded Twenty Five Thousand Dollars ($25,000) or
which suppliers or consultants are in any event material to the continued
operation of the Company's business in the ordinary course (collectively, the
"Major Suppliers"). Except as disclosed on Schedule 3.11(b), the Company has no
other suppliers or consultants which are material to the business of the Company
as presently conducted. No Major Supplier listed in Schedule 3.11(b) has
expressed to the Company or to any Shareholder its intention to cancel or
otherwise terminate its relationship with the Company, and, to the knowledge of
the Company and each Shareholder, a continuing relationship with each such
supplier is not in jeopardy.
SECTION 3.12 Employment, Deferred Compensation or Similar
Agreements; Collective Bargaining Agreements; Employee Benefit Plans.
(a) Except as disclosed in Schedule 3.12(a), the Company is
not a party to any agreement or employment contract or deferred compensation or
similar arrangement with any of its employees or former employees. There are no
collective bargaining agreements covering any employees of the Company. The
business of the Company is not affected by any present strike or other labor
disturbance involving the Company's employees nor, to the best knowledge of the
Company or any Shareholder, is any union attempting to represent, as collective
bargaining agent, any person employed by the Company.
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(b) Except as disclosed in Schedule 3.12(b), the Company does
not sponsor or maintain and is not otherwise a party to or liable under any
plan, program, fund or arrangement (whether or not qualified for Federal income
tax purposes), whether benefiting a single individual or multiple individuals,
and whether funded or not, that is an "employee pension benefit plan," or an
"employee welfare benefit plan," as such terms are defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any incentive
or other benefit arrangement for its employees, their dependents and
beneficiaries.
(c) Except as disclosed in Schedule 3.12(c) hereto, the
Company has not and does not contribute to any multi-employer plan (as defined
in Section 3(37) of ERISA), has not incurred any liability under Section 4201 of
ERISA for any complete or partial withdrawal from any multi-employer plan and
has not assumed any such liability by any prior owner of any of its assets or
properties.
(d) Each employee pension benefit plan maintained by the
Company and listed on Schedule 3.12(b) complies in all material respects with
the requirements of ERISA. No "reportable event" within the meaning of Section
403 of ERISA has occurred with respect to any such plan and Seller has not
engaged in any "prohibited transaction" within the meaning of Section 406(a) or
(b) of ERISA or of Section 4975(c) of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the "Code"), with respect
to any such plan; and no such plan has been terminated in accordance with the
procedures set forth in Section 4041 or 4042 of ERISA.
(e) No liability has been incurred by the Company for any tax
imposed by Section 4975 of the Code with respect to any plan described in
Schedule 3.12(b). The Company has, and shall have, for all periods ending on or
prior to the Effective Time, administered each employee pension benefit plan and
each employee welfare benefit plan described in Schedule 3.12(b) in all material
respects in compliance with the reporting, disclosure and all other requirements
applicable thereto under ERISA, the Code or any other applicable law.
SECTION 3.13 Inventory. The value shown for inventory on the
Balance Sheet fairly presents the Company's inventory as of the date of the
Balance Sheet in accordance with GAAP at the lower of cost or market value
thereof based on the average cost basis method of inventory valuation, and all
inventory acquired since that date has been reflected on the Company's books
pursuant to such method, subject to adjustments in accordance with the Company's
practices with respect thereto (and in any event in accordance with GAAP)
consistently applied. The inventory of the Company is in good and merchantable
condition exclusive of reserves shown on the Balance Sheet for obsolete items as
determined in
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accordance with GAAP. No write-downs of the Company's inventory have occurred
since February 28, 1999. The Company does not currently use, nor has it within
the past five (5) years used, the last in, first out method of inventory
valuation.
SECTION 3.14 Real Estate.
(a) Except as set forth in Schedule 3.14(a), the Company owns
no real estate and has no ownership interest, directly or indirectly, in any
real estate.
(b) Schedule 3.14(b) contains a true and correct list of all
leases, subleases or other agreements under which the Company is lessee or
subtenant or lessor or sublessor of real estate.
(c) All such leased real estate (and improvements thereon) is
in good operating condition and repair and, to the knowledge of the Company and
each Shareholder, conforms in all material respects with all applicable
building, zoning, planning, environmental and other regulations, ordinances or
laws, and the Company has the right to use all real estate necessary to the
conduct of its business as currently conducted.
SECTION 3.15 Title to and Condition of Personal Property. The
Company has merchantable title to all personal property reflected in the Balance
Sheet or acquired subsequent to the date of the Balance Sheet (other than
inventory disposed of since that date in the ordinary course of business), free
and clear of all liens or encumbrances except as described in Schedule 3.15
hereto (the "Liens"). All of the personal property owned by the Company is in
good operating condition and repair. The Company owns or has the right to use
all such personal property necessary to the conduct of its business as currently
conducted.
SECTION 3.16 Accounts Receivable. The accounts receivable of
the Company reflected in the Balance Sheet or acquired by the Company subsequent
to the date of the Balance Sheet (a) are true, bona fide accounts receivable of
the Company, created in the ordinary course of business; (b) have been collected
or are fully collectible in amounts not less than the aggregate amount thereof,
net of reserves established therefor on the books of the Company and reflected
in the Balance Sheet; (c) are not subject to any offsets, credits or
counterclaims; and (d) have not at any time been placed for collection with any
attorney, collection agency or similar individual or firm.
SECTION 3.17 Consignment and Return Items. Except as reflected
in the Balance Sheet or incurred since the date of the Balance Sheet in the
ordinary course of business and consistent with past practices and disclosed in
Schedule 3.17, the Company has no obligation (other than warranty obligations)
to accept a return
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for credit of any products shipped to customers or distributors or others prior
to the date hereof or to be shipped prior to the Effective Time.
SECTION 3.18 Taxes. The Company has properly completed and
filed all federal, state, county, municipal and other tax returns, reports and
declarations which are required to be filed by it and has paid or accrued on the
Financial Statements all taxes, penalties and interest which have become (or may
hereafter become) due pursuant thereto or which became (or may hereafter become)
due pursuant to assessments. The Company has not received any notice of
deficiency or assessment of additional taxes, and no tax audits are in process.
The last year for which the federal or state income taxes or other taxes of the
Company have been examined is set forth accurately and completely on Schedule
3.18 hereto. The Company has not granted any waiver of any statute of limitation
with respect to, or any extension of a period for the assessment of, any
federal, state, county, municipal or other tax. The accruals and reserves for
taxes reflected in the Balance Sheet are adequate to cover all taxes (including
interest and penalties, if any, thereon) due and payable or accrued in
accordance with GAAP as a result of the operations of the Company for all
periods prior to the date of the Balance Sheet. The Company has not filed an
election under Section 1362(a) of the Code to be taxed as an S Corporation.
SECTION 3.19 Litigation. Except as disclosed in Schedule 3.19,
there is no litigation, investigation or proceeding pending or, to the knowledge
of the Company and each director and officer of the Company, threatened,
involving the Company or any of its properties. There are no outstanding orders,
writs, injunctions or decrees of any court, governmental agency or arbitration
tribunal materially affecting or materially limiting the conduct of the business
of the Company.
SECTION 3.20 Other Material Contracts and Commitments. Except
as disclosed in Schedule 3.20 or in another Schedule hereto, the Company is not
a party to, and none of its properties are bound by, any of the following types
of contracts or commitments, written or oral: (i) mortgages, indentures,
security agreements and other agreements and instruments relating to the
borrowing of money or extension of credit or imposition of an encumbrance on any
of the assets of the Company, (ii) agreements with any labor union or other
collective bargaining unit, (iii) bonus or compensation agreements (including
nonqualified deferred compensation) which have not been incurred in the ordinary
course of business of the Company consistent with past practices, (iv)
profit-sharing, stock option, pension, or retirement agreements, shareholder or
similar agreements or arrangements, trusts, or funds for the benefit of
employees, (v) sales agency, manufacturer's representative, distributorship or
supply agreements, (vi) other contracts and commitments which in any case
involve payments or receipts of more
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than $25,000, (vii) any contract for the purchase, sale or lease of real or
personal property, either as lessor or lessee, which contracts have not been
fully performed as of the date hereof, or which in any case involve payment in
excess of $25,000; (viii) any contract with any officer, director or with any
employee of the Company (other than agreements relating to current wage or
salary payments terminable by the Company on notice of thirty (30) days or
less), (ix) any contract or promissory note or other instrument with any
Affiliate (as hereinafter defined) of the Company, or (x) any guarantee or
obligation to provide funds or assume the debt of any person or entity. The
Company has delivered or otherwise made available to Parent complete and correct
copies of all written contracts and commitments, together with all amendments
thereto, and accurate descriptions of all oral agreements, described in Schedule
3.20 or any other Schedule hereto. The Company is not in default with respect to
any such contract, and, to the knowledge of the Company and each of the
Shareholders, no other party to any such contract is in default with respect
thereto. Except as disclosed in Schedule 3.20, each such contract will continue
in full force and effect after the Effective Time without any right on the part
of any party thereto to terminate the same as a result of the occurrence of the
Merger. For purposes of this Agreement, "Affiliate" of the Company means (i) any
corporation, partnership, trust or other entity in control of, controlled by or
under common control with the Company; and (ii) any officer, director, trustee,
general partner of any corporation, partnership, trust or other entity in
control of, controlled by or under common control with the Company. Schedule
3.20 discloses all Affiliates of the Company other than persons unrelated to the
Company which may be deemed to be under common control with the Company solely
by reason of equity interests in such persons being held by shareholders of the
Company which are business entities currently in existence.
SECTION 3.21 Labor Relations. Except as disclosed in Schedule
3.19, the Company, in the conduct of its affairs, has substantially complied
with all applicable laws (including, without limitation, labor and tax laws),
and regulations relating to the hiring and employment of employees and
independent contractors, including, without limitation, those related to
discrimination, wages, hours, collective bargaining, employee pension and
welfare benefit plans, and the payment of (and withholding for) income, Social
Security and other taxes, and the Company is not liable for any penalties or
damages for failure to comply with any of the foregoing. There are no unfair
labor practice claims or charges pending or threatened involving the Company.
SECTION 3.22 Insurance. Schedule 3.22 hereto contains a list
and description (including the name of the insurer, coverage and expiration
date) of all insurance policies maintained by the Company. Schedule 3.22 further
lists all claims presently pending or threatened which are covered by such
policies. The Company has
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not received notice of cancellation or non-renewal of any of such policies.
SECTION 3.23 Conduct of Business and Absence of Changes.
Except as disclosed in Schedule 3.23, since February 28, 1999 the Company has
conducted its business in the regular and ordinary course and has not (i)
undergone any material adverse change in its condition (financial or otherwise),
assets, liabilities, business, or operations, (ii) sold or otherwise disposed of
or encumbered any of its assets outside of the ordinary course of its business,
(iii) declared, set aside, made or paid any cash or stock dividend or
distribution or purchased, issued or sold any shares of its capital stock, (iv)
incurred any indebtedness for borrowed money or issued or sold any debt
securities, except for borrowings in the ordinary course of business consistent
with prior practice under the Company's line of credit disclosed in Schedule
3.23 hereto, (v) granted any increase in the salary or other compensation
payable or to become payable to any officers or employees (other than routine
salary increases for employees in the ordinary course of business consistent
with prior practice) or any changes in personnel policies or employee benefits,
or (vi) made any payment to any Shareholder except for payments described in a
Schedule hereto and regular salary and ordinary and necessary business expenses.
SECTION 3.24 Compliance with Laws; Governmental
Authorizations. The Company is in compliance, in all material respects, with all
statutes, laws, ordinances, rules, regulations, judgments, orders, decrees,
governmental permits and other governmental authorizations or approvals
applicable to it or any of its properties, and all governmental authorizations
or approvals necessary in any material respect for the conduct of the business
of the Company have been duly and lawfully obtained and are in full force and
effect, and there are no proceedings pending or, to the knowledge of the Company
and each of the Shareholders, threatened which may result in the revocation,
cancellation or suspension, or any materially adverse modification, of any
thereof. The Company has not received notice of any alleged violation of any
applicable statute, law, ordinance, rule, regulation, judgment, order, decree,
governmental permit or other governmental authorization or approval necessary in
any material respect for the conduct of the business of the Company.
SECTION 3.25 Officers, Directors and Depositories. Schedule
3.25 hereto contains the names of all the officers and directors of the Company
and the names of all depositories of its funds and the names of the officers and
other persons empowered to sign instruments withdrawing funds from said
depositories.
SECTION 3.26 Environmental Matters.
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(a) Since August 30, 1996, the business and operations of the
Company have been conducted in compliance with all Federal, state and local
laws, rules, regulations and directives pertaining to the environment. No
governmental agency has asserted any claim or threatened to assert any claim
against the Company in respect of its business, any assets owned or leased by
it, real properties leased by it, or the condition, use or operation thereof by
the Company, arising out of any Federal, state or local law, rule, regulation or
directive pertaining to the environment.
(b) To the knowledge of the Company and each Shareholder,
there are nowhere on any real property leased, used or otherwise under the
control of the Company any deposits, dumps, or tanks of toxic or other
poisonous, dangerous or noxious waste, fluids, solvents, chemicals or effluents,
all of which chemicals, fuels and fluids are properly and safely stored,
identified, labeled and maintained in accordance with applicable industrial
standards and all governmental or other laws or regulations relating thereto.
The Company does not unlawfully discharge and has not unlawfully discharged from
any real property leased, used or otherwise under its control, whether by
effluent, emission or other means, any noxious, toxic, hazardous or deleterious
matter or gases. All discharges of waste material and other substances from the
Company's operating facilities are in compliance with applicable law and covered
by valid permits and licenses, where required.
SECTION 3.27 Third Party and Governmental Consents. Except as
disclosed in Schedule 3.27 hereto, and except for the filing of a Certificate of
Merger with the Secretary of State of Louisiana in accordance with the Louisiana
BCL (collectively, the "Required Consents"), no consent, authorization,
approval, order, license, certificate or permit of or from, or registration,
declaration or filing with, any governmental authority or any court or other
tribunal or any other person, firm or entity, nor under any contract, indenture,
mortgage, lease, license or other agreement or instrument to which the Company
is a party or by which the Company or any of its assets or properties is subject
or bound, is required by or with respect to the Company in connection with the
execution, delivery or performance of this Agreement or of any other agreement,
document or instrument to be executed and delivered by the Company pursuant
hereto or in connection herewith or the consummation of the transactions
contemplated hereby or thereby.
SECTION 3.28 Licenses and Permits. The Company has obtained
all governmental consents, approvals, waivers and permits and all consents,
approvals or waivers of third parties required in connection with the ownership
of the assets of the Company and the operation of the Company's business as
presently and heretofore conducted (herein collectively referred to as the
"Licenses"). The
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Licenses are listed on Schedule 3.28 attached hereto. No other licenses or
permits are required to conduct or operate the Company's business as presently
conducted.
SECTION 3.29 Absence of Undisclosed Liabilities. Except as and
to the extent disclosed or accrued on the Financial Statements submitted to
Parent pursuant to the terms hereof, there exist no liabilities or obligations
of any nature whatsoever (whether absolute, contingent or otherwise, matured or
unmatured, or known or unknown) in respect of the Company's business or assets
of the type customarily reflected in financial statements prepared in accordance
with GAAP, except for liabilities or obligations incurred in the ordinary course
of business after the date of the Balance Sheet. Neither the Company nor any
Shareholder knows or has any reasonable grounds to know, after due inquiry, of
any basis for assertion against the Company of any claim or liability of any
nature in any amount not fully disclosed in the Financial Statements.
SECTION 3.30 Marketable Securities and Other Investments.
Schedule 3.30 lists all of the marketable securities and other investments
included in the Balance Sheet (the "Company Investments"), all of which are
owned by the Company free and clear of all liens, encumbrances or claims, except
as disclosed in Schedule 3.30. The value ascribed to each of the Company
Investments is in accordance with GAAP, and the Financial Statements are in
conformity with the requirements of Financial Accounting Standards Board
Statement No. 115. All of the Company Investments are readily marketable except
as described in Schedule 3.30. Since the date of the Balance Sheet, there has
been no material decline in the aggregate market value of the Company
Investments.
SECTION 3.31 Loans to or from Officers, Directors,
Shareholders or Employees. Except as set forth in Schedule 3.31, the Company
does not have outstanding any loans, advances or other indebtedness incurred by
any director, officer, Shareholder or employee of the Company or any member of
their respective families, and there are no loans or advances made to the
Company by or indebtedness incurred by the Company to any, director, officer,
Shareholder or employee of the Company or any member of their respective
families (the "Related Party Loans"). True and complete copies of all promissory
notes or other agreements or documents evidencing the Related Party Loans have
been heretofore delivered to Parent.
SECTION 3.32 Service Warranties; Contract Losses. Adequate
provision in accordance with GAAP has been made in the Financial Statements for
claims under warranties provided for in all contracts with Contract Parties. The
Financial Statements adequately reflect the known and anticipated losses, if
any, for any outstanding and uncompleted contracts with Contract Parties,
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and there are no such known or anticipated losses that are not so reflected in
the Financial Statements.
SECTION 3.33 Backlog. Schedule 3.33 discloses the backlog of
services to be provided by the Company pursuant to each contract with a Contract
Party, the reasonably anticipated value of such services and the date by which
performance by the Company of each such contract is anticipated to be completed.
SECTION 3.34 Year 2000 Compliance. (a) Except as set forth in
Schedule 3.10(a), all date-related output, calculations or results before,
during or after the calendar year 2000 that are produced or used by any
hardware, software (other than off-the-shelf software licensed to the Company
and that has not been customized for use in connection with the Company's
business), firmware or facilities systems (collectively, the "Computer Systems")
owned or used by the Company and material to the Company's business are Year
2000 Compliant. For purposes of this Section, "Year 2000 Compliant" means:
(i) all dates receivable by the Computer Systems, as
well as calculations, output and results will (1) include a consistent-length
century indicator of at least two base ten digits, and (2) have date elements in
interfaces and data storage that will permit specifying the century to eliminate
date ambiguity;
(ii) when any date data is represented without a
century, either in an interface or in data storage, the correct century will be
unambiguous for all manipulations involving that data;
(iii) data calculations involving either a single
century or multiple centuries will neither (1) cause an abnormal ending or
operation, nor (2) generate incorrect results or results inconsistent with
output or results from any other century;
(iv) when sorting by date, all records will be sorted in
accurate chronological sequence; and when the date is used as a key, records
will be read and written in accurate chronological sequence; and
(v) leap years will be determined by the following
standard: (i) if dividing the year by 4 yields an integer, it is a leap year,
except for years ending in 00, but (ii) a year ending in 00 is a leap year if
dividing it by 400 yields an integer.
(b) The Company has reviewed its operations with a view to
assessing whether its business, or the business of any of its Affiliates, will
be vulnerable to a Year 2000 Problem (hereinafter defined) and has a reasonable
basis to believe that no
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Year 2000 Problem exists or is likely to be created. The Company shall take all
actions necessary and commit adequate resources to assure that its
computer-based and other systems (and those of all of its Affiliates) are able
to effectively process dates, including dates before, on or after January 1,
2000, without experiencing any Year 2000 Problem that could reasonably be
expected to have a Material Adverse Effect. For purposes of this Agreement, a
"Year 2000 Problem" shall mean any significant risk that computer hardware,
software or equipment containing embedded microchips essential to the business
or operations of the Company will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively and reliably
as in the case of time periods occurring before January 1, 2000, including
without limitation the making of accurate leap year calculations.
SECTION 3.35 Representations and Warranties True; No
Misleading Statements. All of the representations and warranties set forth in
this Article III shall be true and correct as of the Effective Time as if made
at that time. The representations and warranties made herein and in any
Schedule, list or other document specifically referred to herein and delivered
by the Company or the Shareholders pursuant hereto, and all information provided
by the Company for inclusion in the Merger Information (hereinafter defined),
taken as a whole, do not contain any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
ADDITIONAL
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants to Parent and
Acquisition, as to itself, severally and not jointly, as follows, knowing and
intending that each of Parent and Acquisition is relying hereon in entering into
the transactions contemplated hereby:
SECTION 4.01 Authority and Capacity Relative to Agreement.
Such Shareholder has all requisite power, authority and legal capacity to enter
into and perform each of its obligations hereunder.
SECTION 4.02 Execution and Performance of Agreement; Validity
and Binding Nature. The execution and delivery of this Agreement, and the
performance by such Shareholder of the terms of this Agreement and the
transactions contemplated hereby, will not result in a material breach of any of
the terms of, or constitute a violation or default under, any statute or
contract, indenture or other instrument by which such Shareholder or any of
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its respective properties are bound, and no consent, approval, authorization or
order of any court or governmental authority is required in connection with the
execution and delivery of this Agreement by such Shareholder and the performance
by such Shareholder of the terms of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
Shareholder and, together with the other documents and agreements to be executed
by all parties whose execution and delivery thereof is required, constitutes the
legal, valid and binding obligations of such Shareholder, enforceable against
such Shareholder in accordance with their respective terms, except to the extent
that enforceability may be limited by bankruptcy, receivership, moratorium,
conservatorship, reorganization or other laws of general application affecting
the rights of creditors generally or by general principles of equity, provided
that the Shareholders make no representation or warranty with respect to the
enforceability of any Non-Competition Agreement (hereinafter defined) or any
restrictive covenant agreement referenced in Section 7.06(c) executed in
connection with this Agreement by any person other than Houston. Such
Shareholder has the legal right and authority to vote the shares of Company
Common Stock held of record by it in favor of the execution, delivery and
performance of this Agreement and the consummation of the Merger in accordance
with the provisions hereof.
SECTION 4.03 Stock of the Company. The number of shares of
Company Common Stock beneficially owned by such Shareholder is as identified on
Schedule 3.04 opposite the respective Shareholder's name. The shares of Company
Common Stock beneficially owned by such Shareholder are owned free and clear of
all liens, claims, options, encumbrances or restrictions whatsoever. Such
Shareholder has the full legal right and power and all authorizations and
approvals required by law or otherwise to sell, transfer and deliver such shares
as contemplated hereunder and to make the representations, warranties and
agreements set forth in this Agreement. Except with respect to the shares of the
Company Common Stock identified on Schedule 3.04 opposite the respective
Shareholder's name, such Shareholder has no outstanding claim against the
Company or any right whatsoever with respect to any shares of the capital stock
of the Company, including without limitation any other option, warrant or other
right to acquire shares of the capital stock of the Company or any securities,
options or other instruments convertible or exchangeable into shares of capital
stock of the Company. Except as set forth in Schedule 3.02, no Shareholder is a
party to any shareholders agreement, buy-sell agreement or similar agreement or
arrangement with respect to the Company Common Stock or other equity interest in
the Company.
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SECTION 4.04 Additional Representations and Covenants of
Shareholders.
(a) Each Shareholder understands that the issuance of the
shares of Parent Common Stock pursuant to this Agreement is intended to be
exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act") by reason of Section 4(2) thereof based, in part, upon the
representations, warranties and agreements of such Shareholder contained in this
Agreement.
(b) Each Shareholder understands that neither the Securities
and Exchange Commission (the "SEC") nor any state securities commission has
approved the Parent Common Stock or passed upon or endorsed the merits of an
investment therein or confirmed the accuracy or adequacy of any information
provided by Parent to the Shareholders or the accuracy or adequacy of any of the
representations, warranties and agreements of Parent contained herein.
(c) Except as contemplated pursuant to Section 7.12 hereof,
such Shareholder is acquiring Parent Common Stock solely for its own account for
investment and not with a view to resale or distribution thereof, in whole or in
part. Such Shareholder has no agreement or arrangement, formal or informal,
written or oral, with any person to sell or transfer or otherwise dispose of all
or any part of the Parent Common Stock, and has no present plans to enter into
any such agreement or arrangement.
(d) Such Shareholder did not become aware of the offer and
sale of Parent Common Stock through or as a result of any form of general
solicitation or general advertising including, without limitation, any article,
notice, advertisement or other communication published in any newspaper,
magazine or other media in connection with the offer and sale of Parent Common
Stock contemplated hereby and is not purchasing Parent Common Stock through or
as a result of any seminar or meeting to which such Shareholder was invited.
(e) Houston meets the requirements of at least one of the
categories of an "accredited investor", as defined in Rule 501(a) promulgated
under the Securities Act and as set forth in the form of Accredited Investor
Certification attached hereto as Exhibit B. In connection with the closing of
the transactions contemplated by this Agreement, Houston shall certify to
Parent, in the form of the certification set forth in Exhibit B, as to which
category (or categories) of accredited investor is applicable to him.
(f) Such Shareholder, or such Shareholder together with its
purchaser representative, if any, has such knowledge and experience in
financial, tax, and business matters in general, and investments in securities
in particular, so as to enable such
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Shareholder to evaluate the merits and risks of an investment in Parent Common
Stock and to make an informed investment decision with respect thereto.
(g) Such Shareholder recognizes that it must bear the
substantial economic risks of the investment in Parent Common Stock
indefinitely, because none of the Parent Common Stock may be sold, transferred,
hypothecated or otherwise disposed of unless such Parent Common Stock is
registered under the Securities Act and applicable state securities laws or an
exemption from such registration is available. Legends shall be placed on the
certificates representing Parent Common Stock issuable stating that the shares
represented thereby have not been registered under the Securities Act or
applicable state securities laws, and appropriate notations thereof will be made
in Parent's stock books.
(h) Such Shareholder has adequate means of providing for its
current financial needs and foreseeable contingencies and has no need for
liquidity of its investment in Parent Common Stock for an indefinite period of
time.
(i) Such Shareholder is not relying on Parent or any of its
employees or agents with respect to the legal, tax, economic and related
considerations of an investment in Parent Common Stock, other than as expressly
contained in the representations and warranties of Parent contained in Article V
hereof. There has been delivered to each Shareholder copies of this Agreement,
Parent's Annual Report on Form 10-K for the Fiscal Year Ended June 30, 1998,
Parent's 1998 Annual Report to Stockholders, Parent Quarterly Reports on Form
10-Q for the Quarters ended September 30, 1998 and December 31, 1998, Parent's
Proxy Statement for its Annual Meeting held on November 16, 1998, Parent's
Financial Statements (hereinafter defined) and the "Risk Factors" section of
Parent's Prospectus dated October 9, 1998 (collectively, the "Parent Public
Information"). Each Shareholder has read and fully understands the Parent Public
Information.
(j) Such Shareholder, or such Shareholder together with its
purchaser representative, if any, (i) has had the opportunity to obtain all
information requested by it for the purpose of verifying the Parent Public
Information or for any other purpose related hereto and (ii) has had the
opportunity to meet with representatives of Parent and to have them answer any
questions and provide such additional information regarding the terms and
conditions of the transactions contemplated hereby, the information with respect
to Parent included in the Parent Public Information and the business and
prospects of Parent deemed relevant by such Shareholder, all of which questions
have been answered and all of which requested information has been provided to
the full satisfaction of such Shareholder. Such Shareholder is aware that an
investment in Parent Common Stock is speculative and involves
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significant risks, including, among other things, the risk of the loss of such
Shareholder's entire investment in Parent Common Stock.
(k) In evaluating the suitability of an investment in Parent,
and in deciding to enter into this Agreement, such Shareholder has not relied
upon any representation or other information (whether oral or written) other
than as set forth in the representations and warranties of Parent contained in
Article V of this Agreement and in the Parent Public Information. No oral or
written representations have been made, or oral or written information
furnished, to such Shareholder or such Shareholder together with its purchaser
representative, if any, in connection with the offer and sale of Parent Common
Stock that are in any way inconsistent with the representations and warranties
of Parent contained herein or any of the information contained in the Parent
Public Information.
(l) Except as described in Schedule 4.04(l) hereto, such
Shareholder has no beneficial interest, directly or indirectly, in any person,
firm, corporation, partnership or other entity which is or within the past two
years has been a supplier of any goods or services to the Company, including,
without limitation, any Major Supplier, or from which the Company has received
fees, including, without limitation, any Contract Party, other than as the
beneficial owner of 1% or less of the voting securities of a publicly held
corporation. The nature and amount of any such beneficial interest is disclosed
in Schedule 4.04(l).
(m) Such Shareholder is familiar with the business, historical
financial performance and prospects of the Company, including the risks
associated therewith.
(n) Such Shareholder, if an individual person, is not required
to obtain any spousal consent in connection with the transactions contemplated
hereby.
SECTION 4.05 Representations and Warranties True; No
Misleading Statements. All of the representations and warranties set forth in
this Article IV shall be true and correct as of the Effective Time as if made at
that time. The representations and warranties made in this Article IV or other
document specifically referred to in this Article IV and delivered by such
Shareholder pursuant hereto do not contain any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company and each
Shareholder as follows:
SECTION 5.01 Organization and Qualification. Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its business
as it is now being conducted. Parent is duly qualified as a foreign corporation
to do business, and is in good standing, in each jurisdiction in which the
character of its properties owned or leased or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
would not have a Material Adverse Effect on Parent.
SECTION 5.02 Subsidiaries. Each subsidiary of Parent is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as it is now being conducted. Each such subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on Parent.
All the outstanding shares of capital stock of Parent's subsidiaries are validly
issued, fully paid and nonassessable and are owned by Parent or by a
wholly-owned subsidiary of Parent.
SECTION 5.03 Capitalization. The authorized capital stock of
Parent consists of 80,000,000 shares of Parent Common Stock, and, as of January
25, 1999, 26,796,917 shares of Parent Common Stock were issued and outstanding,
all of which were validly issued and are fully paid and nonassessable. Except as
contemplated hereby and except for options and stock purchase rights outstanding
under Parent's employee stock purchase and stock option plans, and rights
outstanding under the Rights Agreement dated May 7, 1997 between Parent and Bank
of New York, as rights agent, no subscription, warrant, option, convertible
security, stock appreciation or other right (contingent or other) to purchase or
acquire any shares of any class of capital stock of Parent is authorized or
outstanding and there is not any agreement of Parent to issue any shares,
warrants, options or other such rights or to distribute to holders of any class
of its capital stock any evidences of indebtedness or assets. Parent does not
have any obligation (contingent or other) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or
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to pay any dividend or make any other distribution in respect thereof. At the
Effective Time, Parent will have sufficient authorized but unissued shares or
treasury shares of Parent Common Stock available for issuance in accordance with
Article II hereof. Such shares of Parent Common Stock, when issued in accordance
with Article II hereof, will be validly issued, fully-paid and nonassessable.
SECTION 5.04 Authority Relative to Agreement. Parent has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Parent and the consummation by Parent of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Parent, and no other
corporate proceedings on the part of Parent are necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent and constitutes the legal, valid and binding
obligation of Parent, enforceable against Parent in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
general application affecting the rights of creditors generally or by general
principles of equity.
SECTION 5.05 Non-Contravention. The execution and delivery of
this Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby will not (i) conflict with any provision of the Certificate
of Incorporation or By-Laws of Parent or any of its subsidiaries or (ii) result
(with the giving of notice or the lapse of time or both) in any violation of or
default or loss of a benefit under, or permit the acceleration of any obligation
under, any mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any of its subsidiaries or
any of their respective properties, other than any such violation, default, loss
or acceleration that would not materially adversely affect the ability of Parent
to consummate the transactions contemplated hereby or to conduct the business of
the Company and its subsidiaries after the Effective Time.
SECTION 5.06 Parent Public Information. Parent has provided to
each Shareholder, or will provide each Shareholder prior to the shareholders'
meeting referred to in Section 7.01(j) hereof, a copy of the Parent Public
Information. The Parent Public Information does not, and will not, as of the
Effective Time, contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
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SECTION 5.07 Parent Financial Statements. The consolidated
financial statements of Parent included in the Parent Public Information (the
"Parent Financial Statements") (a) have been prepared from the books and records
of Parent and its consolidated subsidiaries and (b) have been prepared in
accordance with GAAP consistently applied and consistent with prior periods,
subject, in the case of unaudited interim consolidated financial statements, to
year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures. The consolidated financial statements
of Parent included in the Parent Public Information fairly present in all
material respects the financial position of Parent and its subsidiaries as of
their respective dates, and the related consolidated statements of operations,
shareholders' equity and cash flows included in the Parent Public Information
fairly present in all material respects the results of operations of Parent and
its subsidiaries for the respective periods then ended, subject, in the case of
unaudited interim financial statements, to year-end adjustments (which consist
of normal recurring accruals) and the absence of certain footnote disclosures.
SECTION 5.08 Absence of Certain Changes or Events. Except as
contemplated hereby and except for the issuance of Parent Common Stock pursuant
to employee benefit plans of Parent described in Section 5.03 above, since
December 31, 1998 Parent has not (i) issued any Parent Common Stock or
securities or obligations convertible into or exchangeable for Parent Common
Stock, (ii) incurred any material liabilities (absolute or contingent), except
in the ordinary course of business or (iii) suffered any Material Adverse Effect
on Parent and its consolidated subsidiaries taken as a whole.
SECTION 5.09 Third Party and Governmental Consents. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state, local or foreign governmental or regulatory
authority or other person is required to be made or obtained by Parent in
connection with the execution and delivery of this Agreement by Parent or the
consummation by Parent of the transactions contemplated hereby, except for (i)
filings pursuant to the Securities Act and the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and the rules and regulations promulgated by the
SEC thereunder, if applicable, (ii) filings with state securities agencies under
state securities or blue sky laws, if applicable,(iii) the filing with Nasdaq of
an application for the listing on the Nasdaq National Market of shares of Parent
Common Stock to be issued in connection with the Merger, (iv) the filing of a
Certificate of Merger with the Secretary of State of Louisiana in accordance
with the Louisiana BCL, (v) any licenses, permits, franchises or other
governmental authorizations pertaining to the business of the Company and its
subsidiaries that are required as a result of the consummation of the
transactions contemplated hereby and (vi) such consents, approvals, orders or
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authorizations which if not obtained, or registrations, declarations or filings
which if not made, would not materially adversely affect the ability of Parent
to consummate the transactions contemplated hereby or to conduct the business of
the Company and its subsidiaries, if any, after the Effective Time.
SECTION 5.10 Compliance with Law. Neither Parent nor any of
its subsidiaries is in default under any order of any court, governmental
authority or arbitration board or tribunal. Neither Parent nor any such
subsidiary has received notice of any alleged violation of any applicable laws,
ordinances and governmental rules and regulations to which Parent or any such
subsidiary is subject, including, without limitation, federal securities and
banking laws. Neither Parent nor any subsidiary has failed to obtain any
licenses, permits, franchises or other governmental authorizations necessary to
the ownership of its properties or to the conduct of its business, except where
the failure to obtain such licenses, permits, franchises or other governmental
authorizations would not have a Material Adverse Effect on Parent.
SECTION 5.11 Tax Representations.
(a) Acquisition was formed solely for the purpose of merging
into the Company in accordance with the terms of this Agreement.
(b) Except for assets transferred by Parent to Acquisition
pursuant to this Agreement, prior to the Effective Time, Acquisition shall have
had no historical assets or liabilities, and, except for this Agreement and its
obligations hereunder, Acquisition shall have no contracts or obligations.
Accordingly, the Surviving Corporation shall assume no liabilities of
Acquisition and Acquisition shall not transfer to the Company any assets which
are subject to liabilities.
(c) Assets transferred for purposes of this Agreement by
Parent to Acquisition, or by Parent to the Surviving Corporation, as the case
may be, shall be transferred pursuant to this Agreement for the purpose set
forth in Treasury Regulations Section 1.368-2(j)(3).
(d) All of the issued and outstanding shares of stock of
Acquisition are owned by Parent such that Acquisition is a 100% owned subsidiary
of Parent, and Parent has been and immediately prior to the Merger will be in
control of Acquisition within the meaning of Section 368 of the Code.
(e) Following the Merger of Acquisition into the Company
pursuant to the terms of this Agreement, the Surviving Corporation will hold
substantially all of the properties of Acquisition and the Company, all within
the meaning of Section 368(a)(2)(E) of the Code.
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(f) Parent Common Stock transferred pursuant to this Agreement
in exchange for the shares of Company Common Stock will be voting common stock
of Parent within the meaning of Section 368(a)(2)(E) of the Code.
(g) After the completion of the Merger, Parent will control
the Surviving Corporation within the meaning of Section 368(c) of the Code.
(h) Parent has no present plan or intention to liquidate the
Surviving Corporation, to merge the Surviving Corporation with or into another
corporation, to sell or otherwise dispose of the stock of the Surviving
Corporation except for transfers of stock to corporations controlled by Parent,
or to cause the Surviving Corporation to sell or otherwise dispose of any of its
assets or any of the assets acquired from Acquisition, except for the
disposition of immaterial assets as contemplated pursuant to the terms of this
Agreement, dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled by the Surviving Corporation.
(i) Parent presently intends that, following the Merger, the
Surviving Corporation will continue the historic business of the Company.
SECTION 5.12 Reliance. Parent acknowledges, warrants,
represents and agrees that it has not relied, and will not rely, in connection
with the transactions contemplated by this Agreement, upon any representation,
warranty, fact or statement (or failure to make any statement) of or by the
Company or any Shareholder except for the representations and warranties
expressly set forth in this Agreement.
SECTION 5.13 Representations and Warranties True; No
Misleading Statements. All of the representations and warranties set forth in
this Article V shall be true and correct as of the Effective Time as if made at
that time. The representations and warranties made herein and in any other
document specifically referred to herein and delivered by Parent pursuant hereto
do not contain any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements herein or therein, in
light of the circumstances under which they were made, not misleading.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition and Parent, jointly and severally, represent and
warrant to the Company and each Shareholder as follows:
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SECTION 6.01 Organization and Qualification. Acquisition is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Louisiana and has all requisite corporate power and authority to
own or lease and operate its properties and assets and to carry on its business
as it is now being conducted. Acquisition is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the financial condition,
operating results or business of Acquisition.
SECTION 6.02 Capitalization. The authorized capital stock of
Acquisition consists of 1,000 shares of common stock, no par value. As of the
date hereof, 100 shares of such common stock are validly issued and outstanding,
fully paid and nonassessable and are owned of record and beneficially by Parent,
and no shares of such common stock are held in the treasury of Acquisition.
Acquisition has no commitments to issue or sell any shares of such common stock
or any securities or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire from Acquisition, any shares of
such common stock, and no securities or obligations evidencing any such rights
are outstanding.
SECTION 6.03 Authority Relative to Agreement. Acquisition has
all requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Acquisition and by Parent as its sole stockholder, and no other corporate
proceedings on the part of Acquisition are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Acquisition and constitutes the legal, valid and binding
obligation of Acquisition, enforceable against Acquisition in accordance with
its terms except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
general application affecting the rights of creditors generally or by principals
of equity.
SECTION 6.04 Non-Contravention. The execution and delivery of
this Agreement by Acquisition and the consummation by Acquisition of the
transactions contemplated hereby will not (i) conflict with any provision of the
Articles of Incorporation or By-Laws of Acquisition or (ii) result (with the
giving of notice or the lapse of time or both) in any violation of or default or
loss of a benefit under, or permit the acceleration of any obligation under, any
mortgage, indenture, lease, agreement, license, judgment, order, decree,
statute, law, ordinance, rule or
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regulation applicable to Acquisition or its properties, other than any such
violation, default, loss or acceleration that would not adversely affect the
ability of Acquisition to consummate the transactions contemplated hereby.
SECTION 6.05 Third Party and Governmental Consents. No
consent, approval, order or authorization of, or registration, declaration or
filing with, any Federal, state, local or foreign governmental or regulatory
authority or other person is required to be made or obtained by Acquisition in
connection with the execution and delivery of this Agreement by Acquisition or
the consummation by Acquisition of the transactions contemplated hereby, except
for (i) the filing of a Certificate of Merger with the Secretary of State of the
State of Louisiana in accordance with the Louisiana BCL, (ii) any licenses,
permits, franchises or other governmental authorizations pertaining to the
business of Acquisition that are required as a result of the consummation of the
transactions contemplated hereby and (iii) such consents, approvals, orders or
authorizations which if not obtained, or registrations, declarations or filings
which if not made, would not adversely affect the ability of Acquisition to
consummate the transactions contemplated hereby.
SECTION 6.06 Other Matters. Acquisition has been formed for
the sole purpose of effecting the Merger and, except as contemplated by this
Agreement, Acquisition has not conducted any business activities and does not
have any material liabilities or obligations. Prior to and at the Effective
Time, Acquisition will have no material assets or liabilities, and, except for
this Agreement and its obligations hereunder, no contracts or other obligations.
SECTION 6.07 Representations and Warranties True; No
Misleading Statements. All of the representations and warranties set forth in
this Article VI shall be true and correct as of the Effective Time as if made at
that time. The representations and warranties made herein and in any Schedule,
list or other document specifically referred to herein and delivered by
Acquisition pursuant hereto, and all information provided by Acquisition for
inclusion in the Merger Information, taken as a whole, do not contain any untrue
statements of a material fact or omit to state a material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
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ARTICLE VII
COVENANTS
SECTION 7.01 Conduct of the Company's Business. The Company
and each Shareholder covenants and agrees that, prior to the Effective Time,
unless Parent shall otherwise consent in writing or as otherwise expressly
contemplated by this Agreement:
(a) the business of the Company shall be conducted only in,
and the Company shall not take any action except in, the ordinary
course of business and consistent with past practice; and
(b) The Company shall not, directly or indirectly, do any of
the following:
(i) sell, pledge, dispose of or encumber (or permit any of its
subsidiaries to sell, pledge, dispose of or encumber) any assets of the
Company or any of its subsidiaries, except inventory and immaterial
assets in the ordinary course of business and the collection of
accounts receivable in the ordinary course of business; (ii) amend or
propose to amend its Articles of Incorporation or By-Laws; (iii) split,
combine or reclassify any outstanding shares of its capital stock, or
declare, set aside or pay any dividend payable in cash, stock, property
or otherwise with respect to such shares; (iv) redeem, purchase,
acquire or offer to acquire (or permit any of its subsidiaries to
redeem, purchase, acquire or offer to acquire) any shares of its
capital stock of any class; or (v) enter into any contract, agreement,
commitment or arrangement with respect to any of the matters set forth
in this paragraph (b);
(c) The Company shall not (i) issue, sell, pledge or dispose
of, or agree to issue, sell, pledge or dispose of, any additional
shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock of any class or other property or assets, except in
respect of the Warrant and the SAR Agreements in accordance with their
respective terms; (ii) acquire (by merger, consolidation or acquisition
of stock or assets) any corporation, partnership or other business
organization or division thereof (except an existing wholly-owned
subsidiary); (iii) incur any indebtedness for borrowed money or issue
any debt securities, except for borrowings in the ordinary course of
business consistent with prior practice under the Company's line of
credit disclosed in Schedule 3.23
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hereto; (iv) repay any outstanding indebtedness for borrowed money
other than scheduled payments of interest in the ordinary course of
business and payments required under the Company's line of credit
disclosed in Schedule 3.23 hereto; (v) enter into or modify any
contract, lease, agreement or commitment, except in the ordinary course
of business and consistent with past practice; (vi) terminate, modify,
assign, waive, release or relinquish any contract rights or amend any
rights or claims not in the ordinary course of business; or (vii)
settle or compromise any claim, action, suit or proceeding pending or
threatened against the Company, or, if the Company may be liable or
obligated to provide indemnification, against the Company's directors
or officers, before any court, governmental agency or arbitrator;
provided that nothing herein shall require any action that might impair
or otherwise affect the obligation of any insurance carrier under any
insurance policy maintained by the Company;
(d) The Company shall not institute any increase in the salary
or other compensation payable or to become payable to any officers or
employees (other than routine salary increases for employees in the
ordinary course of business consistent with prior practice) or enter
into any employment agreement or make any loan to or enter into any
material transaction of any other nature with any officer or employee
of the Company or any subsidiary;
(e) The Company shall not take any action to institute any new
severance or termination pay practices with respect to any directors,
officers or employees of the Company or its subsidiaries or to increase
the benefits payable under its severance or termination pay practices;
(f) The Company shall not adopt or amend, in any respect,
except as contemplated hereby or as may be required by applicable law
or regulation, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare
of any directors, officers or employees;
(g) The Company shall use its best efforts, to the extent not
prohibited by the foregoing provisions of this Section 7.01, to
maintain its relationships with the Contract Parties and the Major
Suppliers, and, if and as requested by Parent or Acquisition, (i) the
Company shall use reasonable good faith efforts to make reasonable
arrangements for representatives of Parent or Acquisition to meet with
the Contract Parties and Major Suppliers, as designated by Parent, in
order to ensure that the Company's relationships with such customers
and suppliers will remain in force under substantially the same terms
following the Effective Time as are in effect on the date hereof, and
(ii) the Company shall schedule, and the management of the Company
shall participate
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in, meetings of representatives of Parent or Acquisition with employees
of the Company or any of its subsidiaries;
(h) The Company and the other parties thereto shall terminate,
effective as of the Effective Time, each of the agreements disclosed in
Schedule 3.02 to which they are parties, except as otherwise set forth
in such Schedule 3.02;
(i) The Company shall hold a shareholders' meeting for the
purpose of authorizing and approving the consummation of the Merger in
accordance with the provisions hereof no later than March 25, 1999;
(j) The Company shall use good faith efforts, dedicating all
resources required, to complete the Merger so that the Effective Time
shall occur no later than April 1, 1999;
(k) The Company shall use its best efforts to obtain all
Required Consents; and
(l) The Company shall use its best efforts to cause Regions
Bank to unconditionally release the Company as guarantor of the
indebtedness of Houston Real Estate Investments, L.L.C. ("HREI") to
Regions Bank.
SECTION 7.02 Certain Covenants of Parent.
(a) Parent covenants and agrees that, prior to the Effective
Time, unless the Company shall otherwise consent in writing or as otherwise
expressly contemplated by this Agreement, Parent shall not amend its Certificate
of Incorporation or By-Laws in a manner that could reasonably be expected to be
materially adverse to the Shareholders. Parent shall use good faith efforts,
dedicating all resources required, to complete the Merger so that the Effective
Time shall occur no later than April 1, 1999.
(b) Parent covenants and agrees to pay in full on or before
the Effective Time the Company's outstanding indebtedness to Petra under the
Petra Loan Agreement in the principal amount of $4,000,000, plus accrued
interest to the date of payment, and the Company's outstanding indebtedness to
Regions Bank (i) under the Regions Bank Loan Agreement in the principal amount
of $490,751.93, plus accrued interest to the date of payment and (ii) under the
Company's outstanding line of credit with Regions Bank, plus accrued interest to
the date of payment.
(c) Parent covenants and agrees that if, during the period
between the execution of this Agreement and the Effective Time, facts or
circumstances are brought to the actual knowledge and awareness of an officer of
Parent, which facts or circumstances such officer reasonably believes to
constitute a
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breach of a representation, warranty or covenant made by the Company or any
Shareholder in this Agreement, Parent and/or Acquisition shall as promptly as
practicable give written notice thereof to the Company and the Shareholders. If,
after the giving of such notice by Parent and/or Acquisition, the Company and/or
the Shareholders do not cure such breach to the satisfaction of Parent, in its
discretion, prior to the Effective Time, Parent and Acquisition shall have the
right to terminate this Agreement at any time prior to the Effective Time, in
which event none of the parties hereto shall have any further liability
hereunder to any other party hereto as a result of such termination, provided
that nothing herein shall relieve any party from liability for any willful
breach hereof. If, after the giving of said notice by Parent and/or Acquisition,
Parent and Acquisition elect not to terminate this Agreement and proceed to
consummate the transactions contemplated hereby, Parent and Acquisition shall be
deemed to have waived the breach set forth in said notice, but such waiver shall
be effective only as to said breach. For purposes of this Section 7.02(c),
Parent, through its officers or otherwise, shall not be deemed to have actual
knowledge or awareness, after the date of execution of this Agreement, of any
facts or circumstances which constitute a breach of a representation, warranty
or covenant made by the Company or the Shareholders in this Agreement by reason
of any inspection by Parent and/or Acquisition (or their respective officers or
other representatives) prior to the date of this Agreement of any of the
businesses, operations, affairs, books, leases, contracts, commitments,
instruments, minutes, records, financial information, properties, personnel or
the like of the Company or any Shareholder, and, in the event of any dispute as
to the provisions of this Section 7.02(c), neither the Company nor any
Shareholder shall assert, for purposes of this Section 7.02(c), that any such
facts or circumstances were brought to the actual knowledge and awareness of
Parent or any officer of Parent on or after the date of execution of this
Agreement as a result of any such inspection prior to the date of execution of
this Agreement.
SECTION 7.03 Access to Information. (a) The Company shall, and
shall cause its officers, directors, employees, representatives and agents to,
afford, from the date hereof to the Effective Time, the officers, employees,
accountants, attorneys and other representatives and agents of Parent reasonable
and complete access, subject to the terms of the Confidentiality Agreement
(hereinafter defined), upon reasonable notice, to its premises and its officers,
employees, agents, properties, books, records and workpapers, including
auditors' workpapers to the extent permitted by the Company's auditors, and
shall furnish Parent all financial, operating and other information and data as
Parent, through its officers, accountants, attorneys and other employees or
agents, may reasonably request. Provided Purchaser and its representatives are
given full access pursuant to the terms hereof, Parent shall use good faith
efforts to complete its due diligence review as promptly
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as practicable and without unreasonably disrupting the ordinary course of
business of the Company.
(b) Parent shall, and shall cause its officers, directors,
employees, representatives and agents to, afford, from the date hereof to the
Effective Time, the officers, employees, representatives and agents of the
Company reasonable access during regular business hours to its officers,
employees, agents, properties, books, records and workpapers, and shall furnish
the Company all financial, operating and other information and data as the
Company, through its officers, employees or agents, may reasonably request.
(c) No investigation pursuant to this Section 7.03 shall
affect, add to or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to effect the
Merger.
SECTION 7.04 Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, using all reasonable efforts to obtain
all necessary waivers, consents and approvals and to effect all necessary
registrations and filings; provided that the foregoing shall not require Parent
or the Company to agree to make, or to permit Parent or the Company to make, any
divestiture of a significant asset in order to obtain any waiver, consent or
approval.
SECTION 7.05 Inquiries and Negotiations. (a) Neither the
Company nor any of its affiliates, shareholders, directors, officers, employees,
representatives or agents shall, from March 1, 1999 through the Effective Time
directly or indirectly, (i) solicit or initiate any discussions, submissions of
proposals or offers or negotiations with, or (ii) participate in any
negotiations or discussions with, or provide any information or data of any
nature whatsoever to, or otherwise cooperate in any other way with, or assist or
participate in, facilitate or encourage any effort or attempt by, any person,
other than Parent and its affiliates, representatives and agents, concerning any
merger, consolidation, sale of substantial assets, sale of shares of capital
stock or other securities, recapitalization, debt restructuring or similar
transaction involving the Company or any subsidiary, or any division of the
Company or any subsidiary. The Company shall immediately notify Parent if any
proposal, offer, inquiry or other contact is received by, any information is
requested from, or any discussions or negotiations are sought to be initiated or
continued with, the Company in respect of any such transaction, and shall, in
any such notice to Parent, indicate the identity of the offeror and
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the terms and conditions of any proposals or offers or the nature of any
inquiries or contacts, and thereafter, without engaging in any conduct
prohibited hereby, shall keep Parent informed of the status and terms of any
such proposals or offers. The Company shall not release any third party from, or
waive any provision of, any confidentiality or standstill agreement to which the
Company is a party.
SECTION 7.06 Employment and Non-Competition Agreements. (a) At
or prior to the Effective Time, (i) the Company shall terminate, effective
immediately prior to the Effective Time, any and all existing employment
agreements between the Company and each of Houston, each SAR Holder and any
other officer of the Company; (ii) each of Houston, Hovancik, Xxxxxxxxxx and
Slate shall enter into, effective as of the Effective Time, an employment
agreement with Parent and/or the Surviving Corporation in Parent's standard form
(collectively, the "Employment Agreements"); and (iii) each of Houston,
Hovancik, Sonnenberg, Slate and Xxxxxxxx shall enter into, effective as of the
Effective Time, a non-competition and confidentiality agreement for the benefit
of Parent and the Surviving Corporation in Parent's standard form (collectively,
the "Non-Competition Agreements").
(b) The Company covenants and agrees to use its
reasonable best efforts to cause the termination, effective immediately prior to
the Effective Time, of any and all existing employment agreements identified on
Schedule 3.12(a) hereto, not including agreements with employees identified in
Section 7.06(a) above, which employment agreements shall be terminated pursuant
to the terms of Section 7.06(a) above.
(c) At the Effective Time, Parent shall grant to
Houston and to certain other key employees of the Surviving Corporation employee
stock options to purchase up to 40,000 shares of Parent Common Stock (16,000 of
which shall be for Houston, 12,000 of which shall be for Xxxxxxxx, 6,000 of
which shall be for Xxxxxxxxxx and 6,000 of which shall be for Slate), all in
accordance with the terms of Parent's stock option plans in effect at the
Effective Time and subject to the terms of the standard BISYS stock option
agreement and restrictive covenant agreement.
SECTION 7.07 Notification of Certain Matters. The Company
shall give prompt notice to Parent and Acquisition, and Parent and Acquisition
shall give prompt notice to the Company, of (i) the occurrence, or failure to
occur, of any event that such party believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time and (ii) any material failure of the Company, Parent or
Acquisition, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied
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by it hereunder; provided, however, that failure to give such notice shall not
constitute a waiver of any defense that may be validly asserted.
SECTION 7.08 Indemnification.
(a) Indemnifiable Breaches. Each Shareholder shall be jointly
and severally liable to and shall jointly and severally indemnify, protect,
defend and hold harmless Parent and its successors and the Surviving Corporation
and its successors, pursuant to the terms of this Section 7.08, against any and
all claims, damages, liabilities and expenses (including reasonable attorneys'
fees) (collectively, "Damages") sustained by Parent or the Surviving
Corporation, in excess of insurance proceeds or other amounts actually received
by Parent or the Surviving Corporation, resulting from or in connection with the
breach of any representation, warranty, covenant or other agreement made by the
Company or any Shareholder in or pursuant to this Agreement or any other
agreement or instrument executed and delivered by or on behalf of the Company
and/or such Shareholder pursuant hereto or in connection herewith (such breaches
or failures being hereinafter referred to individually as an "Indemnifiable
Breach" and collectively as "Indemnifiable Breaches"); provided, however, that
no Shareholder shall be required to pay Parent and/or the Surviving Corporation,
as the case may be, pursuant to this Section 7.08, (i) with respect to any one
or group of related Indemnifiable Breaches, an amount in excess of such
Shareholder's Percentage Share (as hereinafter defined) of Damages in connection
with such Indemnifiable Breach or group of related Indemnifiable Breaches; (ii)
with respect to all Indemnifiable Breaches, an amount in excess of such
Shareholder's Percentage Share of the aggregate amount of all Damages resulting
from all Indemnifiable Breaches; and (iii) in any event, in the aggregate, an
amount in excess of the dollar value equivalent of Parent Common Stock, valued
at the Average Price, received by such Shareholder upon consummation of the
Merger pursuant to the terms hereof (the "Cap"). For purposes of this Agreement,
each Shareholder's "Percentage Share" shall mean the percentage determined by
dividing (x) the number of shares of Parent Common Stock issuable to such
Shareholder in the Merger by (y) the total number of shares of Parent Common
Stock issuable to all Shareholders in the Merger. The indemnification
obligations of the Shareholders under this Section 7.08 shall apply to Damages
sustained by Parent and/or the Surviving Corporation in respect of Indemnifiable
Breaches if and when the aggregate amount of such Damages in respect of such
Indemnifiable Breaches, including insurance proceeds and other amounts actually
received by Parent or the Surviving Corporation in connection therewith, exceeds
One Hundred Thousand Dollars ($100,000) (the "Basket") and in the event the
aggregate amount of the Damages sustained by Parent and/or the Surviving
Corporation in respect of Indemnifiable Breaches, including insurance proceeds
and other amounts actually
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received in connection therewith, exceeds the Basket, the indemnification
obligations of the Shareholders under this Section 7.08 shall apply to all
Damages actually sustained by Parent and/or the Surviving Corporation in respect
of Indemnifiable Breaches. For purposes of this Section 7.08, Indemnifiable
Breaches shall be deemed to be a group of related Indemnifiable Breaches if (i)
they pertain to obligations of the Company or any Shareholder to a single party
or group of affiliated parties or obligations of a single party or group of
affiliated parties to the Company or any Shareholder, (ii) they pertain to the
same or similar transactions or (iii) they involve the same or similar legal or
factual issues.
(b) Satisfaction of Claims. Subject to the terms of the second
sentence of Section 7.08(d) below and the terms of the Escrow Agreement, any
Shareholder shall be permitted to satisfy all or any portion of such
Shareholder's obligation(s) under this Section 7.08 by delivering to Parent or
the Surviving Corporation, as the case may be, shares of Parent Common Stock in
an amount equal to such Shareholder's liability based on a per share value equal
to the Average Price, provided that the delivery by any Shareholder of shares of
Parent Common Stock in order to satisfy a portion of such Shareholder's
obligation(s) to Parent or the Surviving Corporation under this Section 7.08
shall not relieve such Shareholder of its obligation to satisfy in full its
obligations to Parent and the Surviving Corporation under this Section 7.08.
(c) Indemnification by Parent. Parent and Acquisition shall be
jointly and severally liable to, and shall jointly and severally indemnify,
protect, defend and hold harmless each Shareholder and its respective successors
against any and all claims, damages, liabilities and expenses (including
reasonable attorneys' fees) sustained by any Shareholder, resulting from or in
connection with the breach of any representation, warranty, covenant or other
agreement made by Parent or Acquisition in or pursuant to this Agreement or any
other agreement or instrument executed and delivered by or on behalf of Parent
and/or Acquisition pursuant hereto or in connection herewith.
(d) Other Remedies. Notwithstanding anything herein to the
contrary, any party hereto shall be entitled to (i) seek specific enforcement of
the terms and provisions of this Agreement in the event of a breach thereof and
(ii) xxx for damages in the event of a wrongful termination of this Agreement in
violation of Article IX hereof or the failure to consummate the transactions
contemplated hereby through no fault of such party. In the event Parent and/or
the Surviving Corporation becomes entitled to any sums under the terms hereof,
Parent and/or the Surviving Corporation shall have the right but not the
obligation to set off such liabilities of the Shareholders against any existing
or future liabilities of Parent or the
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Surviving Corporation to the Shareholders or any of them individually, other
than against amounts owed by the Surviving Corporation to any such Shareholders
as compensation for employment. The terms of this Section 7.08 are intended to
benefit the parties hereto and any and all claims for indemnification hereunder
must be made during the period commencing on the date hereof and continuing
until expiration of three (3) years after the Effective Time.
(e) Limitation on Remedies. The provisions of this Section
7.08 constitute the sole and exclusive remedies available to the parties under
this Agreement. Accordingly, any party hereto may enforce any rights it may have
against another party hereto in connection with the transactions contemplated by
this Agreement, including the right to collect Damages, only in accordance with
the terms and conditions set forth in this Section 7.08.
SECTION 7.09 Confidentiality. Except as otherwise provided in
that certain Confidentiality Agreement dated January 21, 1999, as amended,
between the Company and the Parent with regard to information about the Company
(the "Confidentiality Agreement"), Parent and Acquisition, on the one hand, and
the Company and the Shareholders, on the other, shall hold, and shall use their
respective best efforts to cause their respective officers, directors,
employees, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning the
other parties furnished to such party in connection with the transactions
contemplated by this Agreement, except to the extent that such information can
be shown to have been (i) previously known on a nonconfidential basis by the
receiving party; (ii) in the public domain through no fault of the receiving
party; (iii) later lawfully acquired by such party from sources other than the
other parties; or (iv) independently developed by such party without the use of
such information; provided that each party may disclose such information to its
affiliates and its affiliates' officers, directors, employees, consultants,
advisors and agents, lenders and other investors in connection with the
transactions contemplated by this Agreement so long as such persons are informed
by such party of the confidential nature of such information and are directed by
such party to treat such information confidentially. If the transactions
contemplated by this Agreement are abandoned, such confidentiality shall be
maintained and each party shall, and shall use its best efforts to cause its
respective officers, directors, employees, consultants, advisors and agents to,
destroy or deliver to the other party(s), upon request, all documents and other
materials, and all copies thereof, obtained by such party or on its behalf from
the other party(s) in connection with this Agreement that are subject to such
confidentiality. The terms of this Section 7.09 shall survive indefinitely.
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SECTION 7.10 Covenants of Shareholders. (a) Each Shareholder
hereby agrees not to:
(i) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any shares of Company Common Stock
owned by such Shareholder, other than as provided herein;
(ii) grant any proxies or enter into a voting agreement or
other arrangement with respect to any shares of Company Common Stock
owned by such Shareholder, other than as provided herein; or
(iii) deposit any shares of Company Common Stock owned by such
Shareholder into a voting trust.
(b) Each Shareholder hereby agrees not to take any action that
would make any representation or warranty herein of such Shareholder untrue or
incorrect in any material respect or that would have the effect of preventing or
disabling such Shareholder from performing its obligations under this Agreement.
(c) Each Shareholder hereby waives any and all dissenter's
rights with respect to Company Common Stock granted pursuant to Section 12:131
of the Louisiana BCL.
(d) Each Shareholder hereby agrees to surrender the
Certificates owned by such Shareholder in exchange for certificates representing
shares of Parent Common Stock and cash, if applicable, within five (5) business
days after the Effective Time.
(e) Each Shareholder agrees to vote the shares of Company
Common Stock held by such Shareholder in favor of the execution, delivery and
performance of this Agreement and the consummation of the Merger in accordance
with the provisions hereof.
SECTION 7.11 Transfer Restrictions After the Effective Time.
Each Shareholder hereby agrees that, from and after the Effective Time such
Shareholder shall not offer, sell, or otherwise dispose of the shares of Parent
Common Stock received by such Shareholder in connection with the Merger other
than (i) pursuant to an effective registration statement under the Securities
Act, or (ii) otherwise pursuant to an exemption from the registration
requirements of the Securities Act.
SECTION 7.12 Registration Rights Agreements. Parent, each Shareholder
and each SAR Holder shall be entitled to certain registration rights upon
receipt of Parent Common Stock in
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54
connection with the Merger, as provided in the registration rights agreement in
the form of Exhibit C hereto (the "Registration Rights Agreement"), provided
such person or entity executes and delivers to Parent a Registration Rights
Agreement and delivers such further information as shall be required by Parent
in connection with any registration statement provided for therein.
SECTION 7.13 Repayment of Related Party Loans. Each Related Party Loan
shall be repaid to the Company or the Surviving Corporation, as the case may be,
on or before the first to occur of (a) the maturity date pursuant to the terms
of such loan or (b) the first sale or other disposition by the obligor of such
Related Party Loan of Parent Common Stock received in the Merger.
SECTION 7.14 Year 2000. At the reasonable request of Parent or
Acquisition, the Company and the Shareholders shall provide Parent or
Acquisition, as the case may be, with assurances and substantiations (including,
without limitation, the results of internal or external audit reports),
reasonably acceptable to Parent and Acquisition, as to the capability of the
Company to conduct its business and operations before, on and after January 1,
2000 without experiencing any Year 2000 Problems.
SECTION 7.15 HREI Lease. The Shareholders covenant and agree that
immediately prior to the Effective Time they will cause HREI and the Company to
enter into an amendment of the Lease dated September 24, 1996 between HREI and
the Company, in form and substance satisfactory to Parent and its counsel (the
"HREI Lease Amendment"), pursuant to which the Surviving Corporation shall have
the unconditional right to terminate said lease without penalty, upon six
months' prior written notice to HREI, which termination may be effective at any
time after the expiration of two (2) years after the Effective Time.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at the Effective Time of the following condition:
(a) no preliminary or permanent injunction or other order,
decree or ruling issued by any court of competent jurisdiction nor any
statute, rule, regulation or order entered, promulgated or enacted by
any governmental, regulatory or administrative agency or authority
shall be in effect that would prevent the consummation of the Merger as
contemplated hereby.
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SECTION 8.02 Conditions to the Obligation of the Company and
the Shareholders to Effect the Merger. The obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following additional conditions:
(a) Parent and Acquisition shall have performed and complied
in all material respects with all obligations and agreements required
to be performed and complied with by them under this Agreement at or
prior to the Effective Time;
(b) the representations and warranties of Parent and
Acquisition contained in this Agreement shall be true and correct in
all material respects at and as of the Effective Time as if made at and
as of such date, except as otherwise contemplated or permitted by this
Agreement;
(c) the Company shall have received a certificate signed by
the Chief Executive Officer or Chief Financial Officer of Parent, dated
as of the Effective Time, to the effect that the conditions set forth
in paragraphs (a) and (b) above have been satisfied; and
(d) Parent shall have executed and delivered to each of
Houston, Hovancik, Xxxxxxxxxx and Slate his respective Employment
Agreement.
(e) the Company and the Shareholders shall have received the
opinion of Xxxxxxx & Xxxxxx, P.C., counsel to Parent and Acquisition,
substantially in the form of Exhibit D attached hereto.
(f) Parent shall have authorized and stand ready to complete
the issuance of the stock options contemplated pursuant to Section
7.06(c) hereof.
SECTION 8.03 Conditions to the Obligation of Parent and
Acquisition to Effect the Merger. The obligation of Parent and Acquisition to
effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the following additional conditions:
(a) The Company shall have performed and complied in all
material respects with all obligations and agreements required to be
performed and complied with by it under this Agreement at or prior to
the Effective Time;
(b) The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct in
all material respects at and as of the
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56
Effective Time as if made at and as of such date, except as otherwise
contemplated or permitted by this Agreement;
(c) Parent shall have received a certificate signed by the
Chairman and Chief Executive Officer of the Company, dated as of the
Effective Time, (i) to the effect that the conditions set forth in
paragraphs (a) and (b) above have been satisfied and (ii) certifying
with respect to the amount of Borrowings as of the Effective Time;
(d) Parent shall have received reasonable assurances that all
relationships with Contract Parties and Major Suppliers shall remain in
force after the Effective Time upon substantially the same terms in
effect prior to the Merger, except where any failure to receive such
assurance would not have a Material Adverse Effect on the Company or
the Surviving Corporation.
(e) Any and all existing employment agreements between the
Company and each of Houston, each SAR Holder and any other officer of
the Company shall have been terminated effective on or prior to the
Effective Time, and each of Houston, Hovancik, Xxxxxxxxxx and Slate
shall have executed and delivered to Parent his respective Employment
Agreement, and each of Houston, Hovancik, Sonnenberg, Slate and
Xxxxxxxx shall have executed and delivered to Parent his respective
Noncompetition Agreement;
(f) Houston shall have executed and delivered an Accredited
Investor Certification in the form of Exhibit B attached hereto;
(g) Parent shall have performed a complete inspection of all
businesses, operations, affairs, books, leases, contracts, commitments,
documents, instruments, minutes, records, financial information,
properties, personnel and the like of the Company, including without
limitation, inspection of customer agreements, vendor agreements,
leases, software licenses, financials, asset and liability evaluations
and analyses of personnel related issues, and shall be satisfied with
the results thereof and the information obtained thereby.
(h) Parent and Acquisition shall have received the opinion of
Xxxxxxxxxx, Barnett, Brown, Read, Xxxxxxx & Xxxxx, L.L.P., counsel to
the Company and the Shareholders, substantially in the form of Exhibit
E attached hereto;
(i) Parent shall have determined, in its good faith judgment,
that the business of the Company shall have been operated, from
February 28, 1999 through the Effective Time, in the normal and
ordinary course including, without limitation that no distributions or
dividends shall have been
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declared and/or issued by the Company and no stock options or bonuses
granted, declared or issued for the officers or employees of the
Company and that the Company, Houston and other management employees
shall have used their reasonable good faith efforts to preserve the
goodwill of the business of the Company and to maintain and keep the
assets intact and that no additional liabilities have been incurred,
other than in the normal course of business;
(j) The Merger shall have been approved by holders of shares
representing, immediately prior the Effective Time, one hundred percent
(100%) of the outstanding Company Common Stock;
(k) The Company shall have received all Required Consents and
delivered same to Parent;
(l) Parent shall have received duly executed resignation
letters from all of the officers and directors of the Company;
(m) Regions Bank shall have unconditionally released the
Company's guarantee of the indebtedness of HREI by a writing in form
and substance reasonably satisfactory to Parent and its counsel;
(n) The Company and HREI shall have entered into the HREI
Lease Amendment in form and substance satisfactory to Parent and its
counsel; and
(o) The Shareholders shall have executed and delivered the
Escrow Agreement to Parent and the escrow agent under the Escrow
Agreement.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.01 Termination and Abandonment. (a) This Agreement
may be terminated and the Merger may be abandoned at any time prior to the
Effective Time:
(i) by mutual action of the Boards of Directors of
Parent and the Company;
(ii) by the Company and the Shareholders, if all of
the conditions set forth in Section 8.03 shall have been
complied with and performed and one or more of the conditions
set forth in Sections 8.01 and 8.02 shall not have been
complied with or performed in any material respect and such
noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature
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58
cannot be cured or eliminated) by Parent and Acquisition on or
before April 1, 1999 (the "Drop Dead Date");
(iii) by Parent or Acquisition, if all of the
conditions set forth in Section 8.02 shall have been complied
with and performed and one or more of the conditions set forth
in Sections 8.01 and 8.03 shall not have been complied with or
performed in any material respect and such noncompliance or
nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Company on or
before the Drop Dead Date; or
(iv) by the Company and the Shareholders, if Parent
shall not have fulfilled its obligations under Section 7.02(b)
hereof on or before the Drop Dead Date.
(b) The Drop Dead Date may be extended by mutual
agreement of the parties hereto.
SECTION 9.02 Effect of Termination. Except as provided in
Section 7.09 with respect to confidential information and except as provided in
Section 10.02 hereof with respect to expenses, in the event of the termination
of this Agreement and the abandonment of the Merger pursuant to Section 9.01,
this Agreement shall thereafter become void and have no effect, and no party
hereto shall have any liability to any other party hereto or its shareholders or
directors or officers in respect thereof, except that nothing herein shall
relieve any party from liability for any willful breach hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Survival of Representations and Warranties. The
representations and warranties of Shareholders in this Agreement and in any
instrument delivered pursuant hereto shall survive the Effective Time until the
expiration of three (3) years after the Effective Time, provided that this
Section 10.01 shall not limit any other covenant or agreement of the parties
that by its terms contemplates performances beyond such period.
SECTION 10.02 Expenses, Etc. (a) Whether or not the
transactions contemplated by this Agreement are consummated, neither the Company
and the Shareholders, on the one hand, and Parent and Acquisition, on the other
hand, shall have any obligation to pay any of the fees and expenses of the other
incident to the negotiation, preparation and execution of this Agreement,
including, without limitation, the fees and expenses of counsel, accountants,
consultants, investment bankers and other experts (collectively, the
"Professional Fees"), provided, however,
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that Professional Fees incurred by the Company and the Shareholders in
connection with the consummation of the Merger in excess of $50,000 in the
aggregate shall be the sole responsibility of the Shareholders and shall not be
paid out of Company funds either before or after the Effective Time, and
provided further, that consulting fees paid by the Company to Xx. Xxxxxxx
Xxxxxxxx on a weekly basis in excess of $1,000.00 per week during the period
from March 1, 1999 through the Effective Time may be included in the $50,000
limit for Professional Fees herein described. Notwithstanding the foregoing, if
this Agreement shall have been terminated as a result of the willful and
material misrepresentations by a party or the willful and material breach by a
party of any of its covenants and agreements contained herein, such party shall
pay the costs and expenses incurred by the other parties in connection with this
Agreement.
(b) No person or entity is entitled to receive from the
Company or Parent any investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services in connection with this Agreement or
the transactions contemplated hereby. The Shareholders, on the one hand, and
Parent and Acquisition, on the other hand, shall indemnify the other and hold it
harmless from and against any claims for finders' fees or brokerage commissions
in relation to or in connection with such transactions as a result of any
agreement or understanding between such indemnifying party and any third party.
SECTION 10.03 Publicity. The Company and Parent agree that
they will not issue any press release or make any other public announcement
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party, except that the Company, Parent or
Acquisition may make such public disclosure that it believes in good faith to be
required by law (in which event such party shall consult with the other prior to
making such disclosure).
SECTION 10.04 Execution in Counterparts. For the convenience
of the parties, this Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 10.05 Notices. All notices that are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient if given in writing and delivered by hand or national overnight
courier service, transmitted by telecopy or mailed by registered or certified
mail, postage prepaid, as follows:
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60
If to Parent and/or Acquisition, to:
The BISYS Group, Inc.
Overlook at Great Notch
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: Chairman and Chief Executive Officer
with a copy to:
The BISYS Group, Inc.
Overlook at Great Notch
000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
If to the Company or the Shareholders, to:
EXAMCO, INC.
0000 Xxxxxxxxx Xxxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000
Attention: Xx. X. Xxxxxxxx Houston, Jr.
with a copy to:
Xxxxxxxxxx, Barnett, Brown, Read, Xxxxxxx & Xxxxx, L.L.P.
3200 Energy Centre
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx Xxxxxxxx, Esq.
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 10.06 Waivers. The Company, on the one hand, and
Parent and Acquisition, on the other hand, may, by written notice to the other,
(i) extend the time for the performance of any of the obligations or other
actions of the other under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in any
document delivered pursuant to this Agreement; (iii) waive compliance with any
of the conditions of the other contained in this Agreement; or (iv) waive
performance of any of the obligations of the other under this Agreement. Except
as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this
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Agreement shall not operate or be construed as a waiver of any subsequent
breach.
SECTION 10.07 Entire Agreement. This Agreement, its Schedules,
the documents executed at the Effective Time in connection herewith, including
without limitation the documents included as Exhibits hereto, and the
Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by any party that is not
embodied in this Agreement or such other documents, and none of the parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
SECTION 10.08 Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflict of laws.
SECTION 10.09 Binding Effect, Benefits. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives and permitted successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective permitted successors and assigns,
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
SECTION 10.10 Assignability. Neither this Agreement nor any of
the parties' rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto.
SECTION 10.11 Amendments. This Agreement may be modified,
amended or supplemented at any time by action of the respective Boards of
Directors of the Company, Parent and Acquisition, and the Shareholders. Without
limiting the generality of the foregoing, this Agreement may only be amended,
varied or supplemented by an instrument in writing, signed by all of the parties
hereto.
SECTION 10.12 Interpretation. All reference to the "knowledge
of Company" or to a matter which has been "expressed to the Company", or to
words of similar import shall be deemed to be references to the actual or
constructive knowledge of one or more of the directors or officers of the
Company.
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IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement and Plan of Merger as of the day and year first above written.
THE BISYS GROUP, INC.
By:/s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: President & CEO
BI-EXAM ACQUISITION CORP.
By:/s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: President
EXAMCO, INC.
(SEAL)
By:/s/ X. Xxxxxxxx Houston, Jr.
-------------------------------
Name: X. Xxxxxxxx Houston, Jr.
Title: President
SHAREHOLDERS
/s/ X. Xxxxxxxx Houston, Jr.
-------------------------------
X. Xxxxxxxx Houston, Jr.
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxx or his
Successor as Trustee for the
Xxxxxx X. Xxxxxxx Trust
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxx or his
Successor as Trustee for the
Xxxxxxxx X. Xxxxxxx Trust
/s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxxxxx or his
Successor as Trustee for the
Xxxxxxx X. Xxxxxxx Trust
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63
CERTIFICATE OF SECRETARY
The undersigned Secretary [Assistant Secretary] of BI-Exam Acquisition
Corp., a Louisiana corporation, hereby certifies in such capacity that this
Agreement and Plan of Merger has been approved by the sole shareholder of such
corporation in the manner required by law.
Dated: March 25, 1999 /s/ Xxxxx X. Dell
------------------------------------
Xxxxx X. Dell,
Secretary [Assistant
Secretary] of BI-Exam
Acquisition Corp., a
Louisiana corporation
* * * * * * * * * * * * * * *
SIGNATURE OF PRESIDENT
Pursuant to Section 112 of the Louisiana Business Corporation Law, the
undersigned corporation has caused this Agreement and Plan of Merger to be
executed by its President [Vice President or President] as indicated below.
Dated: March 25, 1999 /s/ Xxxx X. Xxxxxx
-----------------------------------
Xxxx X. Xxxxxx,
President [Vice President or
President] of BI-Exam
Acquisition Corp., a
Louisiana corporation
64
CERTIFICATE OF SECRETARY
The undersigned Secretary of EXAMCO, Inc., a Louisiana corporation,
hereby certifies in such capacity that this Agreement and Plan of Merger has
been approved by the shareholders of such corporation in the manner required by
law.
Dated: 3/25 , 1999 /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------
XXXXXXX X. XXXXXXXXXX,
Secretary of EXAMCO, Inc.,
a Louisiana corporation
* * * * * * * * * * * * * * *
SIGNATURE OF PRESIDENT
Pursuant to Section 112 of the Louisiana Business Corporation Law, the
undersigned corporation has caused this Agreement and Plan of Merger to be
executed by its President as indicated below.
Dated: 3/25, 1999 /s/ X. Xxxxxxxx Houston, Jr.
----------------------------
X. XXXXXXXX HOUSTON, JR.
President of EXAMCO, Inc.,
a Louisiana corporation
65
ACKNOWLEDGMENT
STATE OF NEW JERSEY
COUNTY OF PASSAIC
BE IT KNOWN that on this 25th day of March, 1999, before me, the
undersigned Notary, duly commissioned, qualified and sworn within and for the
State and County aforesaid, personally came and appeared:
/s/ Xxxx X. Xxxxxx
------------------
appearing herein in his capacity as the President [Vice-President or President]
of BI-Exam Acquisition Corp., to me personally known to be the identical person
whose name is subscribed to the foregoing instrument as the said officer of the
said corporation, and declared and acknowledged to me, Notary, in the presence
of the undersigned competent witnesses, that he executed the same on behalf of
the said corporation with full authority of its Board of Directors, and that the
said instrument is the free act and deed of the said corporation and was
executed for the uses, purposes and benefits therein expressed.
WITNESSES:
/s/ Xxxxx X. Dell /s/ Xxxx X. Xxxxxx
----------------- ------------------
Xxxx X. Xxxxxx, President
[Vice-President or President]
/s/ Xxxxx Xxxxxxxx /s/ Xxxx X. X'Xxxxxxx
------------------ ---------------------
NOTARY PUBLIC
66
ACKNOWLEDGMENT
STATE OF LOUISIANA
PARISH OF ORLEANS
BE IT KNOWN that on this 25th day of March, 1999, before me, the
undersigned Notary, duly commissioned, qualified and sworn within and for the
State and Parish aforesaid, personally came and appeared:
X. XXXXXXXX HOUSTON, JR.
appearing herein in his capacity as the President of EXAMCO, Inc., to me
personally known to be the identical person whose name is subscribed to the
foregoing instrument as the said officer of the said corporation, and declared
and acknowledged to me, Notary, in the presence of the undersigned competent
witnesses, that he executed the same on behalf of the said corporation with full
authority of its Board of Directors, and that the said instrument is the free
act and deed of the said corporation and was executed for the uses, purposes and
benefits therein expressed.
WITNESSES:
/s/ Xxxxxxx X. Xxxxxxxxxx /s/ X. Xxxxxxxx Houston, Jr.
------------------------ ----------------------------
X. XXXXXXXX HOUSTON, JR.,
President
/s/ Xxxxxxx X. Xxxxxxxx /s/ T. Xxxxxx Xxxxxx
---------------------- --------------------
NOTARY PUBLIC
67
INDEX TO DEFINED TERMS
Term Section Reference
---- -----------------
"Acquisition" Recitals
"Adjusted Aggregate Parent Common
Stock Consideration" 2.06(a)
"Adjusted Ascribed Value" 2.06(a)
"Adjusted Exchange Value" 2.06(a)
"Adjusted Gross Merger Price" 2.06(a)
"Adjusted Net Merger Price" 2.06(a)
"Adjustment Date" 2.06(b)
"Ascribed Value" 2.02
"Affiliate" 3.20
"Agreement" Recitals
"Aggregate Parent Common Stock 2.01(a)
Consideration"
"API" 2.01(d)
"Articles of Incorporation" 3.06
"Average Price" 2.01(a)
"Balance Sheet" 3.08
"Basket" 7.08(a)
"Cap" 7.08(a)
"Certificate" 2.03
"Code" 3.12(d)
"Company" Recitals
"Company Common Stock" 2.01
"Company Investments" 3.30
"Computer Systems" 3.34(a)
"Confidentiality Agreement" 7.09
"Constituent Corporations" Recitals
"Contract Parties" 3.11(a)
"Convertible Rights" 2.02
"Damages" 7.08(a)
"Drop Dead Date" 9.01(b)
"Effective Time" 1.03
"Employment Agreements" 7.06(a)
"ERISA" 3.12(b)
"Escrow Agreement" 2.03
"Exchange Act" 5.09
"Exchange Shares" 2.01(b)
"Exchange Value" 2.01(b)
"Financial Statements" 3.08
"GAAP" 3.08
"Gross Merger Price" 2.01(a)
"Houston" Recitals
"Xxxxxxxx" 2.01(d)
"HREI" 7.01(m)
"HREI Lease Amendment" 7.15
"Indemnifiable Breach" 7.08(a)
"Intellectual Rights" 3.09
"X.X. Trust" Recitals
"Licenses" 3.28
"Liens" 3.15
"Louisiana BCL" Recitals
"Major Suppliers" 3.11(b)
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"Material Adverse Effect" 3.03
"Merger" Recitals
"M.R. Trust" Recitals
"Modified Petra Rights" 2.01(c)
"NASDAQ" 2.01(a)
"Net Merger Price" 2.01(a)
"N.E. Trust" Recitals
"Non-Competition Agreements" 7.06(a)
"Owned Source Codes" 3.10(c)
"Parent" Recitals
"Parent Common Stock" Recitals
"Parent Financial Statements" 5.07
"Parent Public Information" 4.04(i)
"Percentage Share" 7.08(a)
"Petra" 2.01(c)
"Petra Loan Agreement" 3.07
"Petra Agreement" 2.01(c)
"Petra Rights" 2.01(c)
"Professional Fees" 10.02(a)
"Reference Products Business" 2.06(a)
"Regions Bank" 3.07
"Regions Bank Loan Agreement" 3.07
"Registration Rights Agreement" 7.12
"Related Party Loans" 3.31
"Required Consents" 3.27
"SAR Agreements" 2.01(d)
"SAR Holders" 2.01(d)
"SAR Holders Agreements" 2.01(d)
"SARs" 2.01(d)
"SEC" 4.04(b)
"Securities Act" 4.04(a)
"Shareholders" Recitals
"Shareholder's Percentage Share" 7.08(a)
"Slate" 2.01(d)
"Software" 3.10(a)
"Software Contracts" 3.10(b)
"Xxxxxxxxxx" 2.01(d)
"Surviving Corporation" Recitals
"Xxxxxxxx" 2.01(d)
"Transmittal Letter" 2.04(a)
"Trusts" Recitals
"Warrant" 2.01(c)
"Year 2000 Compliant" 3.34(a)
"Year 2000 Problem" 3.34(b)
ii
