AGREEMENT AND PLAN OF MERGER
AMONG
PMT SERVICES, INC.,
PMT ACQUISITION CORPORATION
AND
XXXXXX XXXX ASSOCIATES, INC.
DATED: JUNE 28, 1996
TABLE OF CONTENTS
PAGE
----
RECITALS 1......................................................................... 1
ARTICLE 1 - THE MERGER.............................................................. 1
1.1 The Merger.................................................. 1
1.2 The Closing................................................. 2
1.3 Effective Time.............................................. 2
ARTICLE 2 - ARTICLES OF INCORPORATION AND BYLAWS AND OFFICERS
AND DIRECTORS OF THE SURVIVING CORPORATION.............................. 2
2.1 Articles of Incorporation................................... 2
2.2 Bylaws...................................................... 2
2.3 Directors................................................... 2
2.4 Officers.................................................... 2
ARTICLE 3 - CONVERSION OF MHA STOCK................................................. 2
3.1 Conversion of Shares........................................ 2
3.2 Fractional Shares........................................... 4
3.3 Exchange of Certificates.................................... 4
3.4 Stock Splits, Etc. of PMT Common Stock...................... 4
3.5 Conversion of Merger Sub Stock.............................. 4
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF MHA................................... 5
4.1 Existence; Good Standing; Corporate Authority;
Compliance With Law......................................... 5
4.2 Authorization, Validity and Effect of Agreements............ 5
4.3 Capitalization.............................................. 5
4.4 Prior Sales of Securities................................... 6
4.5 Subsidiaries................................................ 6
4.6 Other Interests............................................. 6
4.7 No Violation................................................ 6
4.8 Financial Statements........................................ 6
4.9 Contracts................................................... 7
4.10 No Material Adverse Changes................................. 7
4.11 Tax Matters................................................. 7
4.12 Employees and Fringe Benefit Plans.......................... 8
4.13 Assets; Leaseholds.......................................... 10
4.14 Lawfully Operating.......................................... 11
4.15 No Subleases or Licenses.................................... 11
4.16 Power of Attorney........................................... 11
4.17 Cash Flow of Merchant Accounts.............................. 11
4.18 No Litigation............................................... 12
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4.19 Corporate Records........................................... 12
4.20 No Defaults................................................. 12
4.21 Inventory................................................... 12
4.22 Hazardous Substances........................................ 12
4.23 Labor Matters............................................... 14
4.24 Pooling of Interests........................................ 15
4.25 No Brokers.................................................. 15
4.26 PMT Stock Ownership......................................... 15
4.27 Full Disclosure............................................. 15
ARTICLE 5 - REPRESENTATIONS AND WARRANTIES OF PMT
AND MERGER SUB.......................................................... 15
5.1 Existence; Good Standing; Corporate Authority;
Compliance With Law......................................... 15
5.2 Authorization, Validity and Effect of Agreements............ 16
5.3 Capitalization.............................................. 16
5.4 Subsidiaries................................................ 16
5.5 Other Interests............................................. 16
5.6 No Violation................................................ 17
5.7 SEC Documents............................................... 17
5.8 Litigation.................................................. 17
5.9 Taxes....................................................... 17
5.10 Absence of Certain Changes.................................. 18
5.11 No Brokers.................................................. 18
5.12 MHA Stock Ownership......................................... 18
5.13 PMT Common Stock............................................ 18
5.14 Pooling of Interests........................................ 18
5.15 Full Disclosure............................................. 18
ARTICLE 6 - COVENANTS............................................................... 19
6.1 Covenants of PMT and MHA.................................... 19
6.2 Registration................................................ 21
6.3 Blackout Period............................................. 23
6.4 Covenants of MHA............................................ 23
6.5 Covenants of PMT............................................ 26
ARTICLE 7 - CONDITIONS.............................................................. 27
7.1 Conditions to Each Party's Obligation to Effect the Merger.. 27
7.2 Conditions to Obligation of MHA to Effect the Merger........ 28
7.3 Conditions to Obligation of PMT and Merger Sub to
Effect the Merger........................................... 28
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ARTICLE 8 - TERMINATION............................................................ 30
8.1 Termination by Mutual Consent............................... 30
8.2 Termination by Either PMT or MHA............................ 30
8.3 Termination by MHA.......................................... 30
8.4 Termination by PMT.......................................... 30
8.5 Effect of Termination and Abandonment....................... 30
8.6 Extension; Waiver........................................... 31
ARTICLE 9 - GENERAL PROVISIONS...................................................... 31
9.1 Survival of Representations and Warranties.................. 31
9.2 Notices..................................................... 31
9.3 Assignment, Binding Effect; Benefit......................... 31
9.4 Entire Agreement............................................ 32
9.5 Amendment................................................... 32
9.6 Governing Law............................................... 32
9.7 Counterparts................................................ 32
9.8 Headings.................................................... 32
9.9 Interpretation............................................. 32
9.10 Waivers..................................................... 32
9.11 Incorporation of Exhibits................................... 33
9.12 Severability................................................ 33
9.13 Expenses.................................................... 33
9.14 Enforcement of Agreement.................................... 33
9.15 Press Releases.............................................. 33
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), is executed as of
the 28th day of June, 1996, by and among PMT Services, Inc., a Tennessee
corporation ("PMT"), PMT Acquisition Corporation, a newly formed Texas
corporation and wholly owned subsidiary of PMT ("Merger Sub"), and Xxxxxx Xxxx
Associates, Inc., a Texas corporation ("MHA").
RECITALS
A. The Boards of Directors of PMT and MHA each have determined
that a business combination between PMT and MHA is in the best interests of
their respective companies and shareholders and presents a opportunity for their
respective companies to enhance the service provided to consumers and achieve
long-term strategic and financial benefits, and, accordingly, have agreed to
effect the merger provided for herein upon the terms and subject to the
conditions set forth herein.
B. For federal income tax purposes, it is intended that the
merger provided for herein shall qualify as a reorganization within the meaning
of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the
"Code"), and for financial accounting purposes shall be accounted for as a
"pooling of interests."
C. PMT, Merger Sub and MHA desire to make certain
representations, warranties and agreements in connection with the merger.
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger
Subject to the terms and conditions of this Agreement, at the
Effective Time (as defined in Section 1.3), Merger Sub shall be merged with and
into MHA in accordance with this Agreement and the separate corporate existence
of Merger Sub shall thereupon cease (the "Merger"). MHA shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall be a wholly owned subsidiary of PMT. The Merger shall
have the effects specified in Section 5.06 of the Texas Business Corporation Act
("TBCA").
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
principal offices of MHA at 10:00 a.m., local time, on the first business day
immediately following the day on which the last to be fulfilled or waived of the
conditions set forth in Article 7 shall be fulfilled or waived in accordance
herewith or (b) at such other time, date or place as PMT and MHA may agree. The
date on which the Closing occurs is hereinafter referred to as the "Closing
Date."
1.3 Effective Time. If all the conditions to the Merger set forth in
Article 7 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 8, the parties
hereto shall cause Articles of Merger meeting the requirements of Section 5.04
of the TBCA to be properly executed and filed in accordance with such Section on
the Closing Date. The Merger shall become effective at the time of filing of
the Articles of Merger or at such later time which the parties hereto shall have
agreed upon and designated in such filing as the effective time of the Merger
(the "Effective Time").
ARTICLE 2
ARTICLES OF INCORPORATION AND BYLAWS
AND OFFICERS AND DIRECTORS OF THE SURVIVING CORPORATION
2.1 Articles of Incorporation. The Articles of Incorporation of
Merger Sub in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
2.2 Bylaws. The Bylaws of Merger Sub in effect immediately prior to
the Effective Time shall be the Bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
2.3 Directors. The directors of Merger Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation as of the
Effective Time.
2.4 Officers. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation as of the
Effective Time.
ARTICLE 3
CONVERSION OF MHA STOCK
3.1 Conversion of Shares. At the Effective Time, each of the
outstanding MHA Shares (as defined below) shall be converted into the number of
shares of Common Stock, $.01 par value per share, of PMT (the "PMT Common
Stock") determined by dividing the Aggregate
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Issuable PMT Shares by the Outstanding MHA Shares. For purposes of this
section, the capitalized terms shall have the definitions set forth:
(a) "Aggregate Issuable PMT Shares" shall mean the PMT Base
Shares multiplied by a fraction, the numerator of which is the Outstanding
MHA Shares and the denominator of which is the sum of Outstanding MHA
Shares and the Dissenting MHA Shares.
(b) "PMT Base Shares" shall mean (a) 600,000 shares if the
Average Price is not less than $21.333 and not more than $25.333 per share
or, if the Average Price is less than $21.333 per share, that number of
shares computed by dividing $12.8 million by the Average Price (rounded to
the nearest 1/100 of a share) and, if the Average Price is greater than
$25.333 per share, that number of shares computed by dividing $15.2 million
by the Average Price minus (b) the number of shares of PMT Common Stock
determined by dividing the outstanding balance of the Compass Bank Debt as
of the Closing Date by the Average Price (rounded to the nearest 1/100 of a
share).
(c) "Outstanding MHA Shares" shall mean all of the issued and
outstanding shares of each series of MHA Common Stock immediately prior to
the Effective Time (including any shares which may have been issued upon
exercise of currently outstanding options or warrants) less Dissenting MHA
Shares.
(d) The "Average Price" of PMT Common Stock shall mean the
average of the daily highest and lowest sale price of PMT Common Stock as
traded on the Nasdaq National Market ("NASDAQ") for the twenty (20) trading
days which end ten (10) days prior to the Closing Date. For purposes of
determining the Average Price, the sale price of PMT Common Stock for the
trading days prior to the stock split effective on June 12, 1996, shall be
proportionately adjusted to reflect their equivalent post stock split sale
price.
(e) "Dissenting MHA Shares" shall mean outstanding shares of MHA
Common Stock, the holders of which have perfected their rights to dissent
to the Merger under the TBCA.
(f) "Compass Bank Debt" shall mean that certain debt obligation
due by MHA to Compass Bank as evidenced by a promissory note dated November
29, 1994, executed by MHA payable to the order of Compass Bank in the
original principal amount of $280,000, which in no event shall be greater
than $145,000 at the Effective Time.
Notwithstanding anything to the contrary contained herein, in the
event the Average Price is less than $19.333 per share, PMT may, at its option
and without penalty, terminate this Agreement unless MHA agrees to accept for
purposes of this Section 3.1 an Average Price of $19.333 per share.
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3.2 Fractional Shares. In lieu of the issuance of fractional shares
of PMT Common Stock, each shareholder of MHA, upon surrender of a certificate
which immediately prior to the Effective Time represented MHA Common Stock,
shall be entitled to receive a cash payment (without interest) equal to the fair
market value of any fraction of a share of PMT Common Stock to which such holder
would be entitled but for this provision. For purposes of calculating such
payment, the fair market value of a fraction of a share of PMT Common Stock
shall be such fraction multiplied by the Average Price, as determined in Section
3.1(d).
3.3 Exchange of Certificates. After the Effective Time, each holder
of an outstanding certificate or certificates theretofore representing
Outstanding MHA Shares (other than shares as to which dissenters rights have
been perfected and not withdrawn or otherwise forfeited under the TBCA) upon
surrender thereof, together with a completed letter of transmittal, to Xxxxxx
Xxxxxxx Xxxxxx & Xxxxx (the "Exchange Agent"), as exchange agent for PMT, shall
be entitled to receive in exchange therefor any payment due in lieu of
fractional shares and a certificate or certificates representing the number of
whole shares of PMT Common Stock into which such holders' Outstanding MHA Shares
were converted in a manner reasonably satisfactory to MHA. Until so
surrendered, each outstanding certificate representing Outstanding MHA Shares
shall be deemed for all purposes to represent the number of whole shares of PMT
Common Stock into which the Outstanding MHA Shares theretofore represented shall
have been converted. PMT may, at its option, refuse to pay any dividend or
other distribution, if any, payable to the holders of shares of PMT Common Stock
to the holders of certificates representing Outstanding MHA Shares until such
certificates are surrendered for exchange, provided, however, that, subject to
the rights of PMT under its charter, upon surrender and exchange of such MHA
certificates there shall be paid to the record holders of the PMT stock
certificate or certificates issued in exchange therefor the amount, without
interest, of dividends and other distributions, if any, which have become
payable with respect to the number of whole shares of PMT Common Stock into
which the Outstanding MHA Shares theretofore represented thereby shall have been
converted and which have not previously been paid. Under the terms of its
credit agreements, PMT has agreed not to pay any cash dividends.
3.4 Stock Splits, Etc. of PMT Common Stock. In the event PMT changes
the number of shares of PMT Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend, recapitalization,
reorganization or any other transaction in which any security of PMT or any
other entity or cash is issued or paid in respect of the outstanding shares of
PMT Common Stock and the record date therefor is after the date of this
Agreement and prior to the Effective Time, the conversion ratio, as well as the
dollar amount set forth in Section 3.1(b), shall be proportionately adjusted.
3.5 Conversion of Merger Sub Stock. At and as of the Effective Time,
each share of common stock, $.01 par value per share, of Merger Sub shall be
converted into one share of common stock, $.01 par value per share, of MHA.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MHA
Except as set forth in the disclosure letter delivered prior to the
execution hereof to PMT and attached hereto as Exhibit A (the "MHA Disclosure
Letter"), MHA represents and warrants to PMT as of the date of this Agreement as
follows:
4.1 Existence; Good Standing; Corporate Authority; Compliance With
Law. MHA is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Texas. MHA is duly licensed or
qualified to do business as a foreign corporation and is in good standing under
the laws of any other state of the United States in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or financial condition of MHA (a "MHA Material Adverse Effect"). MHA
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. MHA is not in violation
of any order of any court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation to which MHA or
any of its properties or assets is subject, where such violation would have a
MHA Material Adverse Effect. MHA has obtained all licenses, permits and other
authorizations and has taken all actions required by applicable law or
governmental regulations in connection with its business as now conducted,
except where such failure to obtain the same would not have a MHA Material
Adverse Effect.
4.2 Authorization, Validity and Effect of Agreements. MHA has the
full corporate power and authority to execute and deliver this Agreement and all
agreements and documents contemplated hereby. The consummation by MHA of the
transactions contemplated hereby has been duly authorized by all requisite
corporate action, including the required approvals by the Board of Directors of
MHA and the holders of the outstanding shares of MHA Common Stock. This
Agreement constitutes, and all agreements and documents contemplated hereby
(when executed and delivered pursuant hereto for value received) will
constitute, the valid and legally binding obligations of MHA, enforceable in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity.
4.3 Capitalization. The authorized capital stock of MHA consists of
1,000,000 shares of common stock, $.002 par value (the "MHA Common Stock"). As
of the date hereof, there are issued and outstanding 998,000 shares of MHA
Common Stock. MHA has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of MHA on any matter. All issued and outstanding shares of MHA
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. There are no options, warrants, calls subscriptions,
convertible securities, or other rights,
5
agreements or commitments which obligate MHA to issue, transfer or sell any
shares of capital stock of MHA.
4.4 Prior Sales of Securities. All offers and sales of MHA Common
Stock prior to the date hereof were at all relevant times exempt from the
registration requirements of the Securities Act of 1933, as amended, and were
duly registered or the subject of an available exemption from the registration
requirements of the applicable state securities or Blue Sky laws, or the
relevant statutes of limitations have expired, or civil liability therefor has
been eliminated by an offer to rescind.
4.5 Subsidiaries. MHA has no subsidiaries, except as provided in the
MHA Disclosure Letter.
4.6 Other Interests. Except as set forth in the MHA Disclosure
Letter, MHA does not own directly or indirectly any interest or investment in
any corporation, partnership, joint venture, business, trust or other entity.
4.7 No Violation. After approval by requisite shareholder vote,
neither the execution and delivery by MHA of this Agreement nor the consummation
by MHA of the transactions contemplated hereby in accordance with the terms
hereof, will: (i) conflict with or result in a breach of any provisions of the
Articles of Incorporation or Bylaws of MHA; (ii) conflict with, result in a
breach of any provision of or the modification or termination of, constitute a
default under, or result in the creation of imposition of any lien, security
interest, charge or encumbrance upon any of the assets of MHA pursuant to any
material commitment, lease, contract, or other material agreement or instrument
to which MHA is a party; or (iii) violate any order, arbitration award,
judgment, writ, injunction, decree, statute, rule or regulation applicable to
MHA, the violation of which would have a MHA Material Adverse Effect.
4.8 Financial Statements. MHA has delivered its unaudited financial
statements for the year ended December 31, 1995 and for the four month period
ended April 30, 1996 and will deliver promptly unaudited interim financial
statements for each month and quarter subsequent thereto if prepared prior to
the Closing Date. Each of the balance sheets provided to PMT (including any
related notes and schedules) fairly presents in all materials respects the
financial position of MHA as of its date and each of the statements of income,
retained earnings and cash flows provided to PMT (including any related notes
and schedules) fairly presents in all material respects the results of
operations, retained earnings or cash flows of MHA for the periods set forth
therein (subject, in the case of unaudited statements, to the omission of
footnotes and to normal year end audit adjustments which would not be material
in amount or effect) in each case in accordance with sound accounting principles
consistently applied during the periods involved, except as may be noted
therein. Such financial statements have been prepared from the books and
records of MHA which accurately and fairly reflect in all material respects the
transactions and dispositions of the assets of MHA. As of April 30, 1996 or any
subsequent date for which a balance sheet is provided, MHA did not have material
liabilities, contingent or otherwise, whether due or to become due, known or
unknown, other than as indicated on the balance sheet
6
of such date or the notes thereto except for those incurred in the ordinary
course of business since the date of such balance sheet. MHA has adequately
funded all accrued employee benefit costs and such funding (to the date thereof)
is reflected in the most recent balance sheet provided to PMT.
4.9 Contracts. Schedule 4.9 lists all material contracts and other
agreements to which MHA is a party including:
(a) any Independent Service Organizations ("ISO's") Agreements and
any Independent Training Organization ("ITO") Agreements
(collectively known as ISO/ITO Agreements);
(b) any agreements with authorization network vendors ("Vendor
Agreements");
(c) all agreements with processing banks; or
(d) any agreements that limit the right of MHA prior to the
Closing Date, or PMT, or its subsidiaries, after the Closing Date,
to engage in or to compete with any person in any business,
including the method by which any business may be conducted by MHA
prior to the Closing Date, or by PMT, or its subsidiaries, after
the Closing Date.
Each contract listed in Schedule 4.9 is in full force and effect, each
is a legal, valid and binding contract, and there is no material default (or any
event which, with the giving of notice or lapse of time or both, would be a
material default) by MHA, in the timely performance or any material obligation
to be performed or paid under such contract.
4.10 No Material Adverse Changes. Since May 31, 1996, there has not
been (i) any material adverse change in the financial condition, results of
operations, business, prospects, assets or liabilities (contingent or otherwise,
whether due or to become due, known or unknown), of MHA, except for changes in
the ordinary course of business consistent with historical experience resulting
from the seasonal nature of MHA's business: (ii) any extraordinary dividend
declared or paid or distribution made on the capital stock of MHA, or any
capital stock thereof redeemed or repurchased; (iii) any incurrence of long term
debt in excess of $50,000; (iv) any salary, bonus or compensation increases to
any officers, employees or agents of MHA, other than customary increases; (v)
any pending or threatened labor disputes or other labor problems against or
potentially affecting MHA; or (vi) any other transaction entered into by MHA,
except in the ordinary course of business and consistent with past practice.
4.11 Tax Matters. Except as set forth in the MHA Disclosure Letter,
MHA has duly paid all Taxes and other charges (whether or not shown on any Tax
return) due or claimed to be due from it by federal, foreign, state or local
taxing authorities; and true and correct copies of all Tax reports and returns
relating to such Taxes and other charges for the fiscal years from
7
1991 through 1995 have been heretofore delivered to PMT (other than MHA's 1995
federal income tax return for which an extension has been filed). The reserves
for Taxes contained in the financial statements and carried on the books of MHA
(other than any reserve for deferred taxes established to reflect timing
differences between book and tax income) are adequate to cover all Tax
liabilities as of the date of this Agreement. Since April 30, 1996, MHA has not
incurred any Tax liabilities other than in the ordinary course of business;
there are no Tax liens (other than liens for current Taxes not yet due) upon any
properties or assets of MHA (whether real, personal or mixed, tangible or
intangible), and, except as reflected in the financial statements, there are no
pending or threatened questions or examinations relating to, or claims asserted
for, Taxes or assessments against MHA. MHA has not granted or been requested to
grant any extension of the limitation period applicable to any claim for Taxes
or assessments with respect to Taxes. MHA is not a party to any Tax allocation
or sharing agreement. If MHA has ever been a member of an affiliated group
within the meaning of Section 1504 of the Code filing a consolidated federal
income tax return (an "Affiliated Group"), each such Affiliated Group has filed
all Tax returns that it was required to file for each taxable period during
which MHA was a member of the Affiliated Group, and has paid all taxes owed by
the Affiliated Group (whether or not shown on the Tax return) for each taxable
period during which MHA was a member of the Affiliated Group. MHA has no
liability for the Taxes of any Affiliated Group under Treasury Regulation
1.1502-6 (or any similar provision of state, local or foreign law). MHA has
withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor or shareholder. For purposes of this Agreement, "Tax" means any
federal, state, local, or foreign income, gross receipts, license, payroll,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Section 59A of the Internal Revenue Code of
1986, as amended ("Code")), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or addition minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
4.12 Employees and Fringe Benefit Plans.
(a) The MHA Disclosure Letter sets forth the names, ages and
titles of all members of the Board of Directors and officers of
MHA and all employees of MHA earning in excess of $50,000 per
annum, and the annual rate of compensation (including bonuses)
being paid to each such member of the Board of Directors, officer
and employee as of the most recent practicable date.
(b) The MHA Disclosure Letter lists each employment, bonus,
deferred compensation, pension, stock option, stock appreciation
right, profit-sharing or retirement plan, arrangement or
practice, each medical, vacation, retiree medical, severance pay
plan, and each other agreement or fringe benefit plan,
arrangement or practice, of MHA, whether legally binding or not,
which affects one or more of its employees, including all
"employee benefit plans" as defined by Section 3(3) of the
Employee Retirement Income
8
Security Act of 1974, as amended ("ERISA") (collectively, the
"Plans"). All Plans which are subject to Title IV of ERISA or the
minimum funding standards of Section 412 of the Code shall be
referred to as the "Pension Plans."
(c) For each Plan which is an "employee benefit plan" under
Section 3(3) of ERISA, MHA has delivered to the Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent Form 5500 Annual
Report, and all related trust agreements, insurance contracts and
funding agreements which implement each such Plan.
(d) MHA does not have any commitment, whether formal or
informal and whether legally binding or not, (i) to create any
additional such Plan; (ii) to modify or change any such Plan; or
(iii) to maintain for any period of time any such Plan. The MHA
Disclosure Letter contains an accurate and complete description
of the funding policies (and commitments, if any) of MHA with
respect to each such existing Plan.
(e) MHA has no unfunded past service liability in respect of
any of its Plans; the actually computed value of vested benefits
under any Pension Plan of MHA (determined in accordance with
methods and assumptions utilized by the Pension Benefit Guaranty
Corporation ("PBGC") applicable to a plan terminating on the date
of determination) does not exceed the fair market value of the
fund assets relating to such Pension Plan; neither MHA nor any
Plan nor any trustee, administrator, fiduciary or sponsor of any
Plan has engaged in any prohibited transactions as defined in
Section 406 of ERISA or Section 4975 of the Code for which there
is no statutory exemption in Section 408 of ERISA or Section 4975
of the Code; all filings, reports and descriptions as to such
Plans (including Form 5500 Annual Reports, Summary Plan
Descriptions, PBCG-1's and Summary Annual Reports) required to
have been made or distributed to participants, the Internal
Revenue Service, the United States Department of Labor and other
governmental agencies have been made in a timely manner or will
be made on or prior to the Closing Date; there is no material
litigation, disputed claim, governmental proceeding or
investigation pending or threatened with respect to any of such
Plans, the related trusts, or any fiduciary, trustee,
administrator or sponsor of such Plans; such Plans have been
established, maintained and administered in all material respects
in accordance with their governing documents and applicable
provisions of ERISA and the Code and Treasury Regulations
promulgated thereunder; there has been no "Reportable Event" as
defined in Section 4043 of ERISA with respect to any Pension Plan
that has not been waived by the Pension Benefit Guaranty
Corporation; and each Pension Plan and each Plan which is
intended to be a qualified plan under Section 401(a) of the Code
has received, within the last three years, a favorable
determination letter from the Internal Revenue Service.
(f) MHA has complied in all material respects with all
applicable federal, state and local laws, rules and regulations
relating to employees' employment and/or
9
employment relationships, including, without limitation, wage
related laws, anti-discrimination laws, employee safety laws and
COBRA (defined herein to mean the requirements of Code Section
4980B, Proposed Treasury Regulation Section 1.162-26 and Part 6
of Subtitle B of Title I of ERISA).
(g) The consummation of the transactions contemplated by
this Agreement will not (i) result in the payment or series of
payments by MHA to any employee or other person of an "excess
parachute payment" within the meaning of Section 280G of the
Code, (ii) entitle any employee or former employee of MHA to
severance pay, unemployment compensation or any other payment,
and (iii) accelerate the time of payment or vesting of any stock
option, stock appreciation right, deferred compensation or other
employee benefits under any Plan (including vacation and sick
pay).
(h) None of the Plans which are "welfare benefit plans,"
within the meaning of Section 3(1) of ERISA, provide for
continuing benefits or coverage after termination or retirement
from employment, except for COBRA rights under a "group health
plan" as defined in Code Section 4980B(g) and ERISA Section 607.
(i) Neither MHA nor any "affiliate" of MHA (as defined in
ERISA) has ever participated in or withdrawn from a multi-
employer plan as defined in Section 4001 (a)(3) of Title IV of
ERISA, and MHA has not incurred and does not owe any liability as
a result of any partial or complete withdrawal by any employer
from such a multi-employer plan as described under Sections
4201,4203, or 4205 of ERISA.
(j) No Pension Plan has been completely or partially
terminated, nor has any plan been instituted by the PBGC to
terminate any such Pension Plan; MHA has not incurred, and does
not presently owe, any liability to the PBGC or the Internal
Revenue Service with respect to any Pension Plan including, but
not by way of limitation, any liability for PBGC premiums or
excise taxes under Code Section 4971.
4.13 Assets; Leaseholds.
(a) MHA owns the assets reflected on the April 30, 1996 MHA
balance sheet (including any patents, copyrights, trade names,
service marks and other names and marks used in connection with
its business), with good and marketable title, free and clear of
any and all claims, liens, mortgages, options, charges,
conditional sale or title retention agreements, security
interests, restrictions, easements, or encumbrances whatsoever
and free and clear of any rights or privileges capable of
becoming claims, liens, mortgages, options, charges, security
interests, restrictions, easements or encumbrances, except (i)
for certain of the assets which are encumbered by liens that MHA
has the means to remove prior to the Effective Time, (ii) as
shown on the title insurance policies previously furnished to
PMT, (iii) real property taxes not yet due and payable, (iv)
utility easements for utilities serving the Property, and (v)
minor imperfections of title which do not materially affect the
value and use of such assets.
10
(b) MHA owns good and marketable leasehold title to the
premises leased by MHA, free and clear of any and all claims,
liens, mortgages, options, charges, conditional sale or title
retention agreements, security interests, restrictions,
easements, or encumbrances whatsoever and free and clear of any
rights or privileges capable of becoming claims, liens,
mortgages, options, charges, security interests, restrictions,
easements or encumbrances, except to the extent expressly set
forth in the leases. Following the Merger, MHA will continue to
have all its rights under such leases for the premises now leased
by MHA free and clear of any claims, liens, mortgages, options,
charges, security interests, restrictions, easements, rights,
privileges and encumbrances, except to the extent expressly set
forth in the leases, and the Merger will not result in any
increase in rents or charges under any lease.
4.14 Lawfully Operating. To the best knowledge of MHA, MHA has
been and currently is conducting and each of the premises leased or owned have
been and now are being used and operated, in compliance in all material respects
with all statutes, regulations, bylaws, orders, covenants, restrictions or plans
of federal, state, regional, county or municipal authorities, agencies or board
applicable to the same.
4.15 No Subleases or Licenses. There are no subleases or licenses
to use all or any portion of the premises leased by MHA, except as set forth in
the leases. The leases are valid, binding and enforceable in accordance with the
terms of each, and are in good standing. MHA is not in default in payment of
rent, or in the performance of any of its material obligations under the leases
and, to the best of MHA's knowledge after reasonable investigation, no ground
lessor to any such landlord or lessors is in default of any ground lease. To the
best knowledge of MHA, the landlords or lessors under the leases are not in
breach of any of their Obligations under the leases and no ground lessor to any
such landlord or lessor is in default of any ground lease. No state of facts
exists which, after notice or lapse of time or both, would result in a breach or
default under the leases by MHA. The copies of the leases which MHA has
delivered to PMT are true, correct and complete copies of the leases and MHA has
delivered to PMT all amendments, modifications, letter agreements and
instruments of whatever form which relate to such leases (except correspondence
sent or received in the ordinary course of business, including percentage rent
reports, which do not alter the terms of the leases).
4.16 Power of Attorney. There are no outstanding powers of
attorney executed on behalf of MHA.
4.17 Cash Flow of Merchant Accounts. Attached hereto as Schedule
4.17 is MHA's most recent Visa/Mastercard Settlement Report (the "Settlement
Report") issued by First USA and First Tennessee Bank. Since the date of the
Settlement Report, there has not been any material adverse change in the cash
flow of the merchant accounts with respect to which MHA receives residual
payments from MHA's processing banks (the "Merchant Accounts") taken as a whole.
11
4.18 No Litigation. Except as set forth in the MHA Disclosure
Letter, there are currently no pending, and the directors and executive officers
of MHA are not aware of any threatened, lawsuits or administrative proceedings
or investigations against MHA or to which its assets are subject, which, if
adversely determined, could have a material adverse effect on the financial
condition results of operations, business, prospects, assets, or liabilities of
MHA. MHA is not subject to any currently existing order, writ, injunction, or
decree relating to its operations.
4.19 Corporate Records. True and correct copies of the Articles
of Incorporation and bylaws of MHA have been delivered to PMT. The corporate
minute books of MHA submitted to PMT for review correctly reflect all corporate
action taken at all the meetings (or by written consent in lieu thereof) of its
directors and shareholders and correctly record all resolutions thereof.
4.20 No Defaults. MHA has in all material respects performed all
material obligations to be performed by it under all contracts, agreements, and
commitments to which it is a party, and there is not under any such contracts,
agreements, or commitments any existing default or event of default or event
which with notice or lapse of time or both would constitute a default, which
default would have a MHA Material Adverse Effect.
4.21 Inventory. The inventories of MHA consist solely of items of
quality and quantity useable and saleable in the ordinary course of business and
will be maintained at normal levels continuously until the Closing Date.
4.22 Hazardous Substances. For purposes of this Agreement, the
following terms shall have the following meanings:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S)(S) 9601 et
seq.;
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings relating in
any way to any Environmental Law (for purposes of (i) and(ii) below, "Claims")
or any permit issued under any such Environmental Law, including without
limitation:
(i) any and all Claims by governmental or regulatory
authorities for investigation, oversight, enforcement, cleanup,
removal, response, remedial or other actions or damages pursuant
to any applicable Environmental Law; and
(ii) any and all Claims by any third party seeking
damages, response, costs, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment;
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"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law now in effect
and as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to the environment, health, or safety of hazardous, toxic or dangerous
materials, substances or wastes, including without limitation CERCLA; the Toxic
Substances Control Act, as amended, 15 U.S.C. (S)(S) 2601 et seq.; the Clean Air
Act, as amended, 42 U.S.C. (S)(S) 7401 et seq.; the Federal Water Pollution
Control Act, as amended, 33 U.S.C. (S)(S) 1251 et seq.; the Federal Insecticide,
Fungicide, and Rodenticide Act, as amended, 7 U.S.C. (S)(S) 136, et seq.; the
Hazardous Materials Transportation Act, as amended, 49 U.S.C. (S)(S) 1801 et
seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C. (S)(S)
6901 et seq.; the Safe Drinking Water Act, 42 U.S.C. (S)(S) 300f et seq.; the
Clean Water Act, as amended, 33 U.S.C. (S)(S) 1251, Ct seq.; and any similar
state or local law;
"Hazardous Materials" shall mean those materials listed in Section
101(14) of CERCLA, as hereinafter defined, and any other substance defined as
toxic or hazardous under any federal, state or local law, rules, regulation,
ordinance code or policy, including, but not limited to:
(i) any petroleum or petroleum products, flammable explosives,
radioactive materials, asbestos, asbestos products, urea formaldehyde
foam insulation, polychlorinated biphenyls, including transformers or
other equipment that contain dielectric fluid containing detectible
levels of polychlorinated biphenyls, and radon gas;
(ii) any hazardous, toxic or dangerous waste, substance or
material defined as such in (or for purposes of) any current
Environmental Law or currently listed as such pursuant to any
Environmental Law; and
(iii) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental
authority:
"Improperly" means done in any manner that poses a threat to human
health, safety or the environment;
"MHA Property" shall mean (i) any real property and improvements
presently owned, leased, used, operated or occupied by MHA, and (ii) any other
real property and improvements at any previous time owned, leased, used,
operated or occupied by MHA, but only as to the time owned, leased, used,
operated or occupied by MHA;
"Release" means disposing, depositing, discharging, injecting,
spilling, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing and the like, into or upon any land or water or air, or otherwise
entering into the environment.
To the best knowledge of MHA:
13
(a) Hazardous Materials have not at any time been illegally or
Improperly generated, used, treated or stored on, or transported to or
from, any MHA Property;
(b) No asbestos containing materials or other Hazardous Materials
have been installed in or affixed to structures on any MHA Property;
(c) Hazardous Materials have not at any time been disposed of or
otherwise Released on any MHA Property;
(d) MHA is currently, and has at all times in the past been, in
compliance with all applicable Environmental Laws and the requirements of
any permits issued under such Environmental Laws with respect to any MHA
Property;
(e) There are no past, pending or, to the knowledge of MHA,
threatened Environmental Claims against MHA or any MHA Property;
(f) There are no facts or circumstances, conditions or
occurrences on any MHA Property or otherwise that could reasonably be
anticipated by MHA:
(i) to form the basis of an Environmental Claim against MHA
or any MHA Property; or
(ii) to cause such MHA Property to be subject to any
restrictions on the ownership, occupancy, use or transferability
of such MHA Property under any Environmental Law; and
(g) There are not now, nor have there been at any time, any
aboveground or underground storage tanks located on any MHA Property.
4.23 Labor Matters. MHA is not a party to any collective bargaining
agreement and has not been the subject of any union activity or labor dispute,
and there have not been any strike of any kind called or threatened to be called
against MHA. To the best knowledge of MHA, MHA has not violated any applicable
federal or state law or regulation relating to labor or labor practices. MHA has
no liability to any of its employees, agents, or consultants in connection with
grievances by, or the termination of, such employees, agents, or consultants.
4.24 Pooling of Interests. MHA has not taken or failed to take any action
which, to the actual knowledge of the management and Board of Directors of MHA,
would prevent the accounting for the Merger as a pooling of interests in
accordance with Accounting Principles Board Opinion No. 16, the interpretative
releases issued pursuant thereto, and the pronouncements of the SEC.
14
4.25 No Brokers. MHA has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of MHA
or PMT to pay any Finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. MHA is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
4.26 PMT Stock Ownership. MHA does not own any shares of PMT Common
Stock or other securities convertible into PMT Common Stock.
4.27 Full Disclosure. All of the information provided by MHA (including but
not limited to information with respect to Compass Communications, Inc., a
subsidiary of MHA) and its representatives herein or in the MHA Disclosure
Letter are true, correct, and complete in all material respects and no
representation, warranty, or statement made by MHA in or pursuant to this
Agreement contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make such
representation, warranty, or statement not misleading to PMT. None of the
executive officers of MHA has withheld from PMT or its representatives
disclosure of any event, condition, or fact that such officer knows, could
materially adversely affect the financial condition, results of operations,
business, prospects, assets, or liabilities of MHA (including but not limited to
information with respect to Compass Communications, Inc., a subsidiary of MHA),
other than business conditions affecting the credit card services business
generally.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PMT AND MERGER SUB
Except as set forth in the disclosure letter delivered at or prior to
the execution hereof to MHA and attached hereto as Exhibit B (the "PMT
Disclosure Letter"), PMT and Merger Sub represent and warrant to MHA as of the
date of this Agreement as follows:
5.1 Existence; Good Standing; Corporate Authority; Compliance With Law.
Each of PMT and Merger Sub is a corporation duly incorporated and validly
existing under the laws of the state of its incorporation. PMT is duly licensed
or qualified to do business as a foreign corporation and is in good standing
under the laws of any other state of the United States in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have a material adverse effect on the business, results of
operations or financial condition of PMT (a "PMT Material Adverse Effect"). PMT
has all requisite corporate power and authority to own, operate and lease its
properties and carry on its business as now conducted. PMT nor any of its
properties or assets is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule
15
or regulation to which PMT is subject, where such violation would have a PMT
Material Adverse Effect. PMT has all licenses, permits and other authorizations
and has taken all actions required by applicable law or governmental regulations
in connection with its business as now conducted, where the failure to obtain an
such item or to take any such action would have a PMT Material Adverse Effect.
5.2 Authorization, Validity and Effect of Agreements. Each of PMT
and Merger Sub has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated hereby.
The consummation by PMT and Merger Sub of the transactions contemplated hereby
has been duly authorized by all requisite corporate action. This Agreement
constitutes, and all agreements and documents contemplated hereby (when executed
and delivered pursuant hereto for value received) will constitute, the valid and
legally binding obligations of PMT and Merger Sub, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
5.3 Capitalization. The authorized capital stock of PMT consists of
40,000,000 shares of common stock, no par value ("PMT Common Stock") and
10,000,000 shares of preferred stock, $.01 par value (the "PMT Preferred
Stock"). As of the date of this Agreement, there were 31,717,803 shares of PMT
Common Stock issued and outstanding, and no shares of PMT Preferred Stock issued
and outstanding. PMT has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of PMT on any matter. All issued and outstanding shares of PMT
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. Other than as provided for in the PMT Disclosure
Letter, there are no options, warrants, calls, subscriptions, convertible
securities, or other rights, agreements or commitments other than letters of
intent which obligates PMT to issue, transfer or sell any shares of capital
stock of PMT.
5.4 Subsidiaries. PMT has no subsidiaries except for Merger Sub.
Merger Sub has been formed to effect the transactions contemplated by this
Agreement. The authorized capital stock of Merger Sub consists of 1,000 shares
of Common Stock, $.01 par value. Each of the outstanding shares of capital
stock of Merger Sub is duly authorized, validly issued, fully paid and
nonassessable, and is owned by PMT free and clear of all liens, pledges,
security interests, claims or other encumbrances. Merger Sub has not engaged in
any activities other than in connection with the transactions contemplated by
this Agreement.
5.5 Other Interests. Neither PMT nor Merger Sub owns directly or
indirectly any interest or investment (whether equity or debt) in any
corporation, partnership, joint venture, business, trust or entity.
5.6 No Violation. Neither the execution and delivery by PMT and
Merger Sub of this Agreement, nor the consummation by PMT and Merger Sub of the
transactions contemplated hereby in accordance with the terms hereof, will: (i)
conflict with or result in a breach of any provisions of the Charter or Bylaws
of PMT or Merger Sub; (ii) conflict with, result in a breach of any provision of
or the modification or termination of, constitute a default under, or result in
the creation or imposition of any lien, security interest, charge, or
encumbrance upon any of the assets of PMT or Merger Sub pursuant to any material
commitment, lease, contract, or other
16
material agreement or instrument to which PMT or Merger Sub is a party; or (iii)
violate any order, arbitration award, judgment, writ, injunction, decree,
statute, rule, or regulation applicable to PMT or Merger Sub.
5.7 SEC Documents. Prior to the date hereof, PMT has delivered to
MHA copies of all of PMT's Annual Reports on Forms 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as filed with the Securities and
Exchange Commission ("SEC") since June 14, 1996, and its proxy statement dated
November 14, 1995 (the "PMT Reports"). The PMT Reports (i) were prepared in all
material respects in accordance with the applicable requirements of the
Securities Exchange Act of 1934, as amended (the "1934 Act") and the rules and
regulations promulgated thereunder, and (ii) as of their respective dates, did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the PMT Reports (including the related notes and schedules)
fairly presents the consolidated financial position of PMT as of its date and
each of the consolidated statements of income, retained earnings and cash flows
included in or incorporated by reference into the PMT Reports (including any
related notes and schedules) fairly presents the results of operations, retained
earnings or cash flows of PMT for the periods set forth therein (subject, in the
case of unaudited statements, to normal year-end audit adjustments which would
not be material in amount or effect) in each case in accordance with generally
accepted accounting principles consistently applied during the periods involved,
except as may be noted therein. These representations shall be deemed to be
made with respect to PMT Reports filed subsequent to the date hereof at the time
of their filing. PMT has made all filings required to be filed by PMT under the
0000 Xxx.
5.8 Litigation. There are no actions, suits or proceedings pending
against PMT or, to the actual knowledge of the executive officers of PMT,
overtly threatened in writing against PMT, at law or in equity, or before or by
any federal or state commission, board, bureau, agency or instrumentality, that
are reasonably likely to have a PMT Material Adverse Effect except as set forth
in the PMT Disclosure Letter.
5.9 Taxes. The provisions for taxes shown on the PMT financial
statements for the year ended July 31, 1995 are adequate to cover the liability
of PMT for all taxes (including employer income tax withholding, social security
and unemployment taxes) to the date thereof.
5.10 Absence of Certain Changes. Since June 14, 1995, there has not
been any material adverse change in the financial condition, results of
operations, business, prospects, assets or liabilities (contingent or otherwise,
whether due or to become due, known or unknown), of PMT, except for changes in
the ordinary course of business consistent with historical experience resulting
from the seasonal nature of PMT's business.
5.11 No Brokers. PMT has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
MHA or PMT to
17
pay any finder's fees, brokerage or agent's commissions or other like payments
in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby. PMT is not aware of any
claim for payment of any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby.
5.12 MHA Stock Ownership. Neither PMT nor Merger Sub owns any shares
of capital stock of MHA or other securities convertible into capital stock of
MHA.
5.13 PMT Common Stock. The issuance and delivery by PMT of shares of
PMT Common Stock in connection with the Merger and this Agreement have been duly
and validly authorized by all necessary corporate action on the part of PMT.
The shares of PMT Common Stock to be issued in connection with the Merger and
this Agreement, when issued in accordance with the terms of this Agreement, will
be validly issued, fully paid and nonassessable.
5.14 Pooling of Interests. PMT has not taken or failed to take any
action which, to the actual knowledge of the executive officers of PMT, would
prevent the accounting for the Merger as a pooling of interests in accordance
with Accounting Principles Board Opinion No. 16, the interpretative releases
issued pursuant thereto, and the pronouncements of the SEC.
5.15 Full Disclosure. All of the information provided by PMT and its
representatives herein or in the PMT Disclosure Letter are true, correct and
complete in all material respects and no representation, warranty, or statement
made by PMT in or pursuant to this Agreement contains or will contain any untrue
statement of a material fact or omits or will omit to state any material fact
necessary to make such representation, warranty, or statement not misleading to
MHA. None of the executive officers of PMT has withheld from MHA or its
representatives disclosure of any event, condition, or fact that such officer
knows could materially adversely affect the financial condition, results of
operations, business, prospects, assets, or liabilities of PMT, other than
business conditions affecting the credit card services business generally.
ARTICLE 6
COVENANTS
6.1 Covenants of PMT and MHA. During the period from the date hereof
and continuing until the Effective Time (except as expressly contemplated or
permitted hereby, or to the extent that the other parties shall otherwise
consent in writing) each of PMT and MHA covenants with the other that, insofar
as the obligations relate to it:
(a) Each of PMT and MHA shall carry on their respective
businesses in the usual, regular and ordinary course in substantially the
same manner as heretofore conducted and shall use all reasonable efforts to
preserve intact their present business organizations, maintain their rights
and franchises and preserve their relationships with
18
customers, suppliers and others having business deals with them to the end
that their good will and ongoing businesses shall not be impaired in any
material respect at the Effective Time.
(b) From the date hereof to the Effective Time, each of MHA and
PMT shall allow all designated officers, attorneys, accountants and other
representatives of the other access at all reasonable times during regular
business hours to the records and files, correspondence, audits and
properties, as well as to all information relating to commitments,
contracts, titles and financial position, or otherwise pertaining to the
business and affairs, of MHA and PMT.
(c) PMT and MHA shall cooperate and promptly prepare and PMT
shall, at PMT's expense, file with the SEC, as soon as practicable after
the Closing Date, a Registration Statement on Form S-3 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "1933 Act"),
with respect to the resale of the PMT Common Stock issuable in the Merger.
PMT and MHA will cause the Registration Statement to comply as to form in
all material respects with the applicable provisions of the 1933 Act, and
the rules and regulations thereunder. PMT shall use all reasonable efforts,
and MHA will cooperate with PMT, to have the Registration Statement
declared effective by the SEC by November 30, 1996, or as promptly as
practicable thereafter. PMT agrees to use its best efforts to keep the
Registration Statement effective for a period of 150 days (plus any
Blackout Period) after the effective date or through February 28, 1997,
whichever is later, and to promptly file amendments to the Registration
Statement or promptly file such reports and/or statements required by the
Securities Exchange Act of 1934 ("Exchange Act"), as amended, to the extent
necessary so that such Registration Statement, including the Exchange Act
reports and/or statements incorporated therein, will not include an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. PMT shall use
its best efforts to obtain prior to the effective date of the Registration
Statement, and prior to the effective date of any registration statement
effected pursuant to Section 6.2 hereof, all necessary state securities law
or "Blue Sky" permits or approvals required to carry out the transactions
contemplated by this Agreement. PMT agrees that the Registration Statement
and each amendment or supplement thereto, at the time it is filed or
becomes effective, will not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of circumstances under which they
were made, not misleading; provided, however, that the foregoing shall not
apply to the extent that any such untrue statement of a material fact or
omission to state a material fact was made by PMT in reliance upon and in
conformity with information concerning MHA furnished to PMT by MHA for use
in the Registration Statement. MHA agrees that the information provided by
it for inclusion in the Registration Statement and each amendment or
supplement thereto, at the time it is filed or becomes effective, will not
include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
19
statements therein, in light of the circumstances under which they were
made, not misleading. No amendment or supplement to the Registration
Statement will be made by PMT or MHA without the approval of the other
party. PMT will advise MHA and each of the holders of the PMT Common Stock
issuable in the Merger, promptly after it receives notice thereof, of the
time when the Registration Statement has become effective or any supplement
or amendment has been filed, the issuance of any stop order, the suspension
of the qualification of the PMT Common Stock issued in connection with the
Merger for offering or sale in any jurisdiction, or any request by the SEC
for amendment of the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information.
(d) Except as and to the extent required by law, PMT and MHA
hereby agree not to disclose or use, and each shall cause its
representatives not to disclose or use, any confidential information with
respect to the other party hereto furnished, or to be furnished, by such
other party or their representatives in connection herewith at any time or
in any manner other than in connection with its evaluation of the Merger.
Except as required by law, and as set forth in this subparagraph (d),
neither MHA nor its representatives shall make any public statements
regarding the Merger or this Agreement without the prior approval of PMT.
After reasonable prior notice to MHA, PMT may make such statements,
disclosures and filings as it is advised by its counsel are necessary or
appropriate for a public company. In the event the Merger is not effective
for any reason, the confidentiality letter agreement between PMT and MHA
shall remain in full force and effect.
(e) PMT represents that it believes it is currently eligible to
utilize Form S-3 and currently believes there is no material non-public
information which would preclude it from filing a registration statement on
Form S-3. PMT agrees to use its best efforts to avoid any event that makes
PMT ineligible to use Form S-3 in accordance with this Agreement.
(f) PMT agrees to use its best efforts to file with the SEC in a
timely manner all reports and other documents required of PMT under the
1993 Act and the Exchange Act.
6.2 Registration.
(a) Beginning after February 28, 1997, PMT and MHA agree that if at
any time thereafter PMT shall propose to file a registration statement with
respect to any of its Common Stock on a form suitable for a secondary
offering, it will give notice in writing to such effect to the registered
holders of the PMT shares of Common Stock to be issued in the Merger (the
"PMT Shares"), at least 30 days prior to such filing, and, at the written
request of any such registered holder, made within 10 days after the
receipt of such notice, will include therein at PMT's cost and expense
(except for the fees and expenses of counsel to such holders and
underwriting discounts and commissions,
20
attributable to the PMT Shares included therein) such of the PMT Shares as
such holders shall request; provided, however, that if the offering being
registered by PMT is underwritten and if no other outstanding Common Stock
of any selling shareholder of PMT is included therein and if the
representative of the underwriters certifies in writing that the inclusion
therein of the PMT Shares would materially and adversely affect the sale of
the securities to be sold by PMT thereunder, the public offering of the PMT
Shares included in such registration statement shall be delayed for a
period of 90 days after the commencement of the underwritten public
offering, provided that the representative of the underwriters certifies in
writing that such delayed offering would not materially and adversely
affect the sale of the securities to be sold by PMT or, if the
representative of the underwriters will not so certify, the MHA
Shareholders shall not be permitted to participate in the registration.
PMT, at its own expense, will cause the prospectus included in such
registration statement to meet the requirements of the Securities Act until
the earlier of the date that is 270 days after the effective date of such
registration statement (or 365 days after such date if such offering of the
PMT Shares is delayed as set forth in this Section 6.2(a)) or until all
shares included therein have been sold.
(b) At the time any registration statement filed in accordance with
the provisions of Section 6.1(c) or 6.2(a) becomes effective, and at the
effective date of any post-effective amendment thereto, PMT will, at its
own expense, furnish to the holders of the PMT Shares included in such
registration statement pursuant to Section 6.1(c) or 6.2, an opinion of
PMT's counsel to the effect that the registration statement and the
prospectus contained therein, and each amendment or supplement thereto, as
of their respective effective or issue dates, comply as to form in all
material respects with the requirements of the Securities Act and the rules
and regulations thereunder. Such counsel shall also state that no facts
have come to the attention of such counsel that cause them to believe that
such registration statement, the prospectus contained therein, or any
amendment or supplement thereto, as of their respective effective or issue
dates, contains any untrue statement of any material fact or omits to state
any material fact necessary to make the statements therein not misleading
(except that no statement need be made with respect to any financial
statements, notes thereto or other financial or statistical data or other
expertized material contained therein). If for any reason PMT's counsel is
unable to make such statement, PMT shall so notify the MHA Shareholders and
shall use its best efforts to remove expeditiously all impediments to the
rendering of such opinion.
(c) PMT shall promptly notify the participating holders of the PMT
Shares of the occurrence of any event as a result of which any current
prospectus included in a registration statement filed pursuant to this
Section 6.2 includes any misstatement of a material fact or omits to state
any material fact to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and
shall promptly file amendments to the Registration Statement or promptly
file such reports and/or statements required by the Exchange Act to the
extent necessary so that such registration statement, including the
Exchange Act reports and/or statements incorporated
21
therein, will not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of circumstances under which they were
made, not misleading.
(d) PMT's obligations under Section 6.2(a) with respect to each holder
of PMT Shares are expressly conditioned upon such holder's furnishing to
PMT in writing such information concerning such holder and the terms of
such holder's proposed offering as PMT shall reasonably request for
inclusion in the registration statement. In the case of each registration
effected pursuant to this Agreement, PMT shall indemnify each holder
thereof (and each underwriter for such holder and each person, if any, who
controls such underwriter within the meaning of the Securities Act) from
any loss, claim, damage or liability arising out of or based upon any
untrue statement of a material fact contained in such registration
statement or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except for any such statement or omission based on information furnished in
writing by such holder of PMT Shares expressly for use in connection with
such registration statement; and such holder shall indemnify PMT (and each
of its officers and directors who has signed such registration statement,
each director, each person, if any, who controls PMT within the meaning of
the Securities Act, each underwriter for PMT and each person, if any, who
controls such underwriter within the meaning of the Securities Act) and
each other such holder against any loss, claim, damage or liability arising
from any such statement or omission which was made in reliance upon
information furnished in writing to PMT by such holder of PMT Shares
expressly for use in connection with such registration statement.
(e) PMT shall furnish to each holder of PMT Shares such number of
copies of any prospectus (including any preliminary prospectus and any
amended or supplemented prospectus) in conformity with the requirements of
the 1933 Act, and such other documents, as such holder of PMT Shares may
reasonably request in order to effect the offering and sale of the PMT
Shares to be offered and sold, but only while PMT shall be required under
the provisions hereof to cause the registration statement to remain
current.
(f) PMT shall not be required to effect a registration under this
Agreement if in the written opinion of counsel to PMT, which counsel and
the opinion so rendered shall be reasonably acceptable to the holders of
PMT Shares requesting registration, such holders may sell without
registration under the 1933 Act all PMT Shares for which they requested
registration under the provisions of the 1933 Act and in the quantity in
which the PMT Shares were proposed to be sold, or if PMT shall have
obtained from the SEC a "no-action" letter to that effect.
6.3 Blackout Period. PMT shall be entitled, once per registration
statement, to (i) postpone the filing or effectiveness of any Registration
Statement contemplated under Section 6.1(c) and Section 6.2 hereof; or (ii) if
effective, elect that any such Registration Statement not
22
be useable and require the MHA Shareholders to suspend sales pursuant to the
prospectus contained therein, for a reasonable period of time, but not in excess
of 60 days (a "Blackout Period"), if PMT determines in good faith that the
registration and distribution of the shares of PMT Common Stock (or the use of
the Registration Statement or related prospectus) would interfere with any
pending material acquisition, material corporation reorganization or any other
premature disclosure thereof. PMT shall promptly give the MHA Shareholders
written notice of such termination, containing a general statement of the
reasons for such postponement or restriction of use and an approximation of the
anticipated delay.
6.4 Covenants of MHA. MHA covenants and agrees that between the date
hereof and continuing until the Effective Time (except as expressly contemplated
or permitted hereby, or to the extent that PMT shall otherwise consent in
writing):
(a) Prior to the Effective Time, MHA agrees (a) that it shall,
and shall direct and use its best efforts to cause its directors, officers,
employees, shareholders, advisors, accountants and attorneys (the
"Representatives"), including such Representatives of any of MHA's
affiliated entities or persons, not to, initiate, solicit or encourage,
directly or indirectly, any inquiries or the making or implementation of
any proposal or offer (including, without limitation, any proposal or offer
to its shareholders) with respect to a merger, acquisition, consolidation
or similar transaction involving, or any purchase of all or any significant
portion of the assets or any equity securities of MHA (any such proposal or
offer being hereinafter referred to as a "Acquisition Proposal") or engage
in any negotiations concerning, or provide any confidential information or
data to, or have any discussions with, any person relating to an
Acquisition Proposal, or otherwise facilitate any effort or attempt to make
or implement a Acquisition Proposal; (b)that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing
and will take the necessary steps to inform the individuals or entities
referred to above of the obligations undertaken in this Section 6.4(a).
(b) MHA will make all normal and customary repairs, replacements,
and improvements to its facilities, will not dispose of any assets (other
than inventory in the ordinary course of business) other than at fair
market value and with the prior written consent of PMT, and without
limiting the generality of the foregoing or the covenants set forth in
6.1(a), MHA will not, without the prior written consent of PMT which
consent shall not be unreasonably withheld with respect to the matters set
forth in (ix):
(i) change its Articles of Incorporation or bylaws or merge
and consolidate with or into any entity or obligate itself to do so;
(ii) other than a dividend in customary amounts payable
prior to Closing, declare, set aside or pay any cash dividend or other
distribution on or in respect of shares of its capital stock, or any
redemption, retirement or purchase with respect to its capital stock
or issue any additional shares of its capital stock.
23
MHA may pay reasonable fees and expenses related to the transaction
contemplated herein in accordance with a schedule of estimated fees
and expenses approved by PMT;
(iii) other than normal payments on loans for borrowed
money, discharge or satisfy any lien, charge, encumbrance or
indebtedness outside the ordinary course of business, except those
required to be discharged or satisfied;
(iv) authorize, guarantee or incur indebtedness aggregating
in excess of $50,000;
(v) make any capital expenditures or capital additions or
betterments, or commitments therefor, aggregating in excess of
$50,000;
(vi) loan funds to any person;
(vii) institute, settle or agree to settle any litigation,
action or proceeding before any court or governmental body;
(viii) mortgage, pledge or subject to any other encumbrance
any of its property or assets, tangible or intangible;
(ix) other than ordinary and customary raises for employees
authorize any compensation increases of any kind whatsoever for any
employee, provided MHA shall pay owing or accrued deferred
compensation;
(x) enter into any material contract including leases and
real estate agreements; or
(xi) enter into any transaction outside the ordinary course
of business.
(c) [Intentionally deleted.]
(d) Without the prior written consent of PMT, MHA shall not take any
action which would cause or tend to cause the conditions upon the
obligations of the parties hereto to effect the transactions contemplated
hereby not to be fulfilled; including without limitation, taking, causing
to be taken, or permitting or suffering to be taken or to exist any action,
condition or thing which would cause the representations and warranties
made by MHA herein not to be true, correct and accurate as of the Closing
Date.
(e) MHA shall not take any action that will result, directly or
indirectly, in a material adverse change in the value of the Merchant
Accounts taken as a whole since April 30, 1996.
24
(f) MHA, prior to the Closing Date, shall have delivered its unaudited
financial statements for the year ended December 31, 1995 and for the four
month period ended April 30, 1996, in each case in accordance with sound
accounting principles consistently applied during the periods involved,
except as may be noted therein. MHA shall promptly provide to PMT monthly
and quarterly financial statements of MHA.
(g) MHA, prior to the Closing Date, shall have arranged for the
cancellation or exercise of the outstanding options or warrants to purchase
MHA Common Stock.
(h) From and after the date hereof and until the Effective Time, MHA
shall not (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes; (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize qualification of
the Merger as a reorganization within the meaning of Section 368(a)(2)(E)
of the Code; or (iii) enter into any contract, agreement, commitment or
arrangement with respect to either of the foregoing.
(i) From and after the date hereof and until the Effective Time, MHA
shall not incur (i) liabilities to the shareholders of MHA in excess of the
unpaid principal of $750,000, plus accrued and unpaid interest thereon, and
(ii) liability to Compass Bank in excess of $145,000.
6.5 Covenants of PMT. PMT covenants and agrees that between the date
hereof and continuing until the Effective Time (except as expressly contemplated
or permitted hereby, or to the extent that MHA shall otherwise consent in
writing):
(a) PMT shall promptly prepare and submit to the Nasdaq National
Market a listing application covering the shares of PMT Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to
the Effective Time, approval for the listing of such PMT Common Stock,
subject to official notice of issuance.
(b) PMT shall promptly send MHA copies of all filings with the SEC.
(c) Without the prior written consent of MHA, PMT shall not take any
action which would cause or tend to cause the conditions upon the
obligations of the parties hereto to effect the transactions contemplated
hereby not to be fulfilled; including without limitation, taking, causing
to be taken, or permitting or suffering to be taken or to exist any action,
condition or thing which would cause the representations and warranties
made by PMT herein not to be true, correct and accurate as of the Closing
Date.
(d) From and after the date hereof and until the Effective Time, PMT
shall not (i) knowingly take any action, or knowingly fail to take any
action, that would jeopardize the treatment of the Merger as a "pooling of
interests" for accounting purposes; (ii) knowingly take any action, or
knowingly fail to take any action, that would jeopardize
25
qualification of the Merger as a reorganization within the meaning of
Section 368(a)(2)(E) of the Code; or (iii) enter into any contract,
agreement, commitment or arrangement with respect to either of the
foregoing.
(e) To the extent PMT elects, for whatever reason or no reason, not to
retain any MHA employees, for one year following the Closing Date, PMT will
not oppose such person's claim for unemployment benefits, and PMT shall
complete all appropriate questionnaires or claim forms required by state
officials in this regard.
(f) PMT agrees that after the Effective Time, it will indemnify any
person who has rights to indemnification from MHA to the same extent and on
the same conditions as such person is entitled to indemnification pursuant
to MHA's Articles of Incorporation or Bylaws as in effect on the date of
this Agreement.
(g) PMT shall report post-Merger combined results of MHA and PMT no
later than 60 days after the end of PMT's first fiscal quarter ending after
the date hereof including at least 30 days of post-merger combined results
following the Effective Time if the requirement for publication of 60 days
post-Merger combined results shall not have been satisfied in some other
manner by such time in compliance with applicable rules.
(h) PMT shall, as successor to MHA, satisfy the liabilities to the
shareholders of MHA as referenced herein at Section 6.4(i)(i) within thirty
(30) days of the Closing Date.
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) No action or proceeding shall have been instituted before a
court or other governmental body by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement or to obtain an amount of damages or other material relief in
connection with the execution of the Agreement or the related agreements or
the consummation of the Merger; and no governmental agency shall have given
notice to any party hereto to the effect that consummation of the
transactions contemplated by this Agreement would constitute a violation of
any law or that it intends to commence proceedings to restrain consummation
of the Merger.
26
(b) The PMT Common Stock to be issued in the Merger shall have
been listed on the NASDAQ, and all necessary state securities law permits
or approvals shall have been obtained.
(c) PMT and MHA shall have received an opinion of their own
counsel satisfactory to them, generally to the effects that (i) the Merger
qualifies as a reorganization under Section 368(a)(2)(E) of the Code, (ii)
no material gain or loss will be recognized by MHA or PMT as a result of
the Merger, (iii) shareholders of MHA who receive in the Merger solely
either PMT Common Stock or PMT Common Stock and cash in lieu of fractional
shares will recognize no gain or loss for federal income tax purposes with
respect to the PMT Common Stock received in the Merger, and (iv) the Merger
will not have a material adverse effect on the federal income tax
consequences of PMT; provided that the failure to satisfy the requirements
of clauses (ii) and (iv) of this subsection shall constitute a condition to
consummation of the Merger only if asserted by PMT, and the failure to
satisfy the requirements of clause (iii) of this subsection shall
constitute a condition to consummation of the Merger only if asserted by
MHA.
(d) All consents, authorizations, orders and approvals of (or
filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement, including those required under the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, shall have been obtained
or made, except for filings in connection with the Merger and any other
documents required to be filed after the Effective Time and except where
the failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a material adverse
effect on the business of PMT and MHA, taken as a whole, following the
Effective Time.
(e) PMT shall have received from MHA copies of all resolutions
adopted by the Board of Directors and shareholders of MHA in connection
with this Agreement and the transactions contemplated hereby. MHA shall
have received from PMT and Merger Sub copies of all resolutions adopted by
the Board of Directors of each respective company and the shareholders of
Merger Sub in connection with this Agreement and the transactions
contemplated hereby.
7.2 Conditions to Obligation of MHA to Effect the Merger. The obligation of
MHA to effect the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) PMT shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of PMT and Merger Sub contained in this
Agreement and in any document delivered in connection herewith shall be
true and correct as of the Closing Date, and MHA shall have received a
certificate of the President or the Chief Operating Officer, dated the
Closing Date, certifying to such effect.
27
(b) From the date of this Agreement through the Effective Time, there
shall not have occurred any material change in the financial condition,
business, operations or prospects of PMT, that would have or would be
reasonably likely to have a PMT Material Adverse Effect other than any such
change that affects both MHA and PMT in a substantially similar manner.
(c) MHA shall have received a written opinion, dated as of the Closing
Date, from the legal counsel of PMT, in form and substance satisfactory to
it, as to certain matters agreed upon by legal counsel of PMT and MHA.
(d) Prior to June 28, 1996, MHA shall not have notified PMT in writing
that MHA's review of PMT's business, operations, and the matters disclosed
in the PMT Disclosure Letter has revealed matters (described in reasonable
detail) which in MHA's reasonable business judgment would adversely affect
the business or operations of PMT.
7.3 Conditions to Obligation of PMT and Merger Sub to Effect the Merger.
The obligations of PMT and Merger Sub to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) MHA shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of MHA contained in this Agreement and in
any document delivered in connection herewith shall be true and correct as
of the Closing Date, and PMT shall have received a certificate of the
President of MHA, dated the Closing Date, certifying to such effect.
(b) PMT shall be satisfied that the Merger will qualify for
accounting by PMT as a pooling of interests under generally accepted
accounting principles and under applicable rules and regulations of the
SEC. In connection therewith, PMT shall have received, on or before the
Closing Date, a letter from Price Waterhouse LLP (or any other accountants
of PMT's choosing) dated as of the Closing Date to the effect that the
transactions contemplated by this Agreement may be treated by PMT as a
"pooling of interests" for accounting purposes.
(c) [Intentionally omitted.]
(d) From the date of this Agreement through the Effective Time, there
shall not have occurred any material change in the financial condition,
business, operations or prospects of MHA, other than any such change that
affects both MHA and PMT in a substantially similar manner.
(e) [Intentionally omitted.]
28
(f) PMT shall have received a written opinion, dated as of the Closing
Date, from the legal counsel of MHA, in form and substance satisfactory to
it, as to certain matters agreed upon by legal counsel of PMT and MHA.
(g) Prior to June 28, 1996, PMT shall not have notified MHA in writing
that PMT's review of MHA's business, operations, and the matters disclosed
in the MHA Disclosure Letter has revealed matters (described in reasonable
detail) which in PMT's reasonable business judgment would adversely affect
the business or operations of MHA.
(h) Prior to June 28, 1996, PMT shall have determined that the
consummation of the Merger meets all applicable requirements of any loan
agreements to which it is a party.
(i) In order to ensure that following the consummation of the Merger
certain directors and officers of MHA shall not engage in certain
activities as specified in the noncompetition agreements, the directors of
MHA shall have executed noncompetition agreements, in form and substance
satisfactory to PMT and the directors.
(j) The liabilities to the Shareholders of MHA as of the Closing Date
shall not exceed the unpaid principal of $750,000 plus accrued but unpaid
interest thereon.
(k) The Dissenting MHA Shares shall not exceed 10% of the total number
of outstanding shares of MHA Common Stock.
ARTICLE 8
TERMINATION
8.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, before or after
the approval of this Agreement by the shareholders of MHA, by the mutual consent
of PMT and MHA.
8.2 Termination by Either PMT or MHA. This Agreement may be terminated and
the Merger may be abandoned by action of the Board of Directors of either PMT or
MHA if (a) the Merger shall not have been consummated by August 1, 1996, or (b)
a United States federal or state court of competent jurisdiction or United
States federal or state governmental, regulatory or administrative agency or
commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have become final and non-appealable; provided, that the
party seeking to terminate this Agreement pursuant to this clause (b) shall have
used all reasonable efforts to remove such injunction, order or decree.
29
8.3 Termination by MHA. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, before or after the
adoption and approval by the shareholders of MHA, by action of the Board of
Directors of MHA, if there has been a breach by PMT or Merger Sub of any
representation or warranty contained in this Agreement which would have or would
be reasonably likely to have a PMT Material Adverse Effect, or (b) there has
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of PMT, which breach is not curable or, if curable, is not
cured within 30 days after written notice of such breach is given by MHA to PMT.
8.4 Termination by PMT. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, by action of the Board
of Directors of PMT, if (a) there has been a breach by MHA of any representation
or warranty contained in this Agreement which would have or would be reasonably
likely to have an MHA Material Adverse Effect, (b) there has been a material
breach of any of the covenants or agreements set forth in this Agreement on the
part of MHA, which breach is not curable or, if curable, is not cured within 30
days after written notice of such breach is given by PMT to MHA, or (c) the
Merger will not qualify for accounting by PMT as a pooling of interests under
generally accepted accounting principles and under applicable rules and
regulations of the SEC.
8.5 Effect of Termination and Abandonment. Upon termination of this
Agreement pursuant to this Article, this Agreement shall be void and of no other
effect, and there shall be no liability by reason of this Agreement or the
termination thereof on the part of any party hereto, or on the part of the
respective directors, officers, employees, agents or shareholders of any of
them.
8.6 Extension; Waiver. At any time prior to the Effective Time, any party
hereto, by action taken by its Board of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such parry contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 9
GENERAL PROVISIONS
9.1 Non-survival of Representations and Warranties. All representations
and warranties of PMT and MHA in this Agreement or in any instrument delivered
pursuant to this Agreement shall be deemed to the extent expressly provided
herein to be conditions to the Merger and shall not survive the Merger.
30
9.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, by courier service (with proof of service), hand
delivery or certified or registered mail (return receipt requested and first-
class postage prepaid), addressed as follows:
If to PMT or Merger Sub: If to MHA:
Xxxxxxx X. Daily X. X. Xxxxxx
President 00000 Xxxxxxx Xxxx
XXX Services, Inc. Suite 000
Xxx Xxxxxxxx Xxxxx, Xxxxx 000 Xxxxxx, Xxxxx 00000-0000
Xxxxxxxxx, Xxxxxxxxx 00000
with a copy to: with a copy to:
X. Xxxxx Xxxx Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx Xxxxxx & Xxxxx Xxxxx, Xxxxxx & Xxxxxxx, P.C.
000 Xxxxx Xxxxxx, Xxxxx 0000 00000 Xxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000 Xxxxx 000
Xxxxxx, Xxxxx 00000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
9.3 Assignment, Binding Effect; Benefit. Neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
9.4 Entire Agreement. This Agreement, the Exhibits, the MHA Disclosure
Letter, the PMT Disclosure Letter, the confidentiality letter and any documents
delivered by the parties in connection herewith constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior agreements and understandings among the parties with respect thereto. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
9.5 Amendment. This Agreement may be amended by the parties hereto, by
action taken by their respective Boards of Directors, at any time before or
after approval of matters presented in connection with the Merger by the
shareholders of MHA and PMT, but after any such stockholder approval, no
amendment shall be made which by law requires the further approval of
shareholders without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.6 Governing Law. The validity of this Agreement, the construction of
its terms and the determination of the rights and duties of the parties hereto
shall be governed by and
31
construed in accordance with the laws of the United States and those of the
State of Texas applicable to contracts made and to be performed wholly within
such state.
9.7 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
9.8 Headings. Headings of the Articles and Sections of this Agreement are
for the convenience of the parties only, and shall be given no substantive or
interpretive effect whatsoever.
9.9 Interpretation. In this Agreement, unless the context otherwise
requires, words describing the singular number shall include the plural and vice
versa, and words denoting any gender shall include all genders and words
denoting natural persons shall include corporations and partnerships and vice
versa.
9.10 Waivers. Except as provided in this Agreement, 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 hereunder shall not operate or be construed as a waiver
of any prior or subsequent breach of the same or any other provision hereunder.
9.11 Incorporation of Exhibits. The MHA Disclosure Letter, the PMT
Disclosure Letter and the Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully
set forth herein.
9.12 Severability. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
9.13 Expenses. Each party to this Agreement shall bear its own expenses
in connection with the Merger and the transactions contemplated hereby;
provided, however, that if the Merger is not consummated for any reason other
than (a) a willful breach of this Agreement by MHA; (b) the failure by MHA to
satisfy the covenant set forth in Section 6.4(e); (c) MHA's taking or causing to
be taken any action which it knows, after reasonable inquiry to its independent
accountants, would disqualify the transaction as a pooling of interests; or (d)
the failure of MHA's shareholders to approve the Merger, then PMT shall promptly
reimburse MHA for its
32
reasonable expenses incurred in connection with the preparation and audit of
MHA's audited financial statements.
9.14 Enforcement of Agreement. The parties hereto agree that irreparable
damage would occur in the event that any of the provisions of this Agreement was
not performed in accordance with its specific terms or was otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of competent jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
9.15 Press Releases. All press releases issued by PMT or MHA with
respect to these transactions shall be in form reasonably approved by PMT and
MHA.
33
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf as of the day and year
first written above.
PMT SERVICES, INC.
ATTEST:
By:/s/ Xxxxxxx Xxxxxx By: /s/ X.X. Xxxxxxx
---------------------------- --------------------------
Director of Human Resources Xxxxxx X. Xxxxxxx, Xx.
Chief Operating Officer
PMT ACQUISITION CORPORATION
ATTEST:
By:/s/ Xxxxxxx Xxxxxx By: /s/ X.X. Xxxxxxx
---------------------------- -------------------------
Director of Human Resources Xxxxxx X. Xxxxxxx, Xx.
Secretary
XXXXXX XXXX ASSOCIATES, INC.
ATTEST:
By:/s/ Xxxxxx Xxxxxx By: /s/ X.X. Xxxxxx
------------------------ ------------------------
X. X. Xxxxxx
President
34
