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ASSET PURCHASE AGREEMENT
BETWEEN
PAPERCLIP SOFTWARE, INC.
AND
ACCESS SOLUTIONS INTERNATIONAL, INC.
APRIL 15, 1997
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LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
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Schedule 1.1 Purchased Deposits
Schedule 1.3 Purchased Fixed Assets
Schedule 1.6 Purchased Prepaid Items
Schedule 1.8 Purchased Intellectual Property
Schedule 6.1 Where Seller is Qualified as a Foreign
Corporation
Schedule 6.5 Seller 1996 Financial Statements
Schedule 6.6 Exceptions to Inventory
Schedule 6.8(a) Contracts
Schedule 6.8(b) Required Consents
Schedule 6.9 Real Property; Liens
Schedule 6.10 Permits and Licenses
Schedule 6.13 Certain Developments Since
December 31, 1996
Schedule 6.14 Certain Material Changes Since
December 31, 1996
Schedule 6.15 Litigation
Schedule 6.18 Employee Benefit Plans
Schedule 6.20 Insurance
Schedule 7.4 Certain Developments Since
December 31, 1996
Schedule 7.7 Changes to Access Capitalization
EXHIBITS
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Exhibit A Forms of Lock-Up Agreement
TABLE OF CONTENTS
Page
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ARTICLE I
Section 1. Purchase and Sale of Assets 2
1.1 Purchased Deposits 2
1.2 Purchased Receivables 2
1.3 Purchased Fixed Assets 2
1.4 Purchased Inventory 2
1.5 Purchased Contracts 2
1.6 Purchased Prepaid Items 3
1.7 Purchased Rights 3
1.8 Purchased Intellectual Property 3
1.9 Excluded Assets 4
ARTICLE II
Section 2. Purchase Price and Payment 4
2.1 Purchase Price 4
2.2 Adjustment to Purchase Price 4
2.3 Payment of Share Portion of Purchase Price 4
2.4 Allocation of Purchase Price 4
2.5 Adjustment of Shares 5
ARTICLE III
Section 3. Closing 5
ARTICLE IV
Section 4. Assumption of Liabilities; Indemnification 5
4.1 Assumption by Purchaser 5
4.2 Indemnification by Seller 5
4.3 Indemnification by Purchaser 6
4.4 Limitations on Indemnity 6
4.5 Indemnification Proceedings 6
4.6 Remedies Not Exclusive 7
ARTICLE V
Section 5. Other Actions 7
5.1 Purchaser to Act as Agent for Seller 7
5.2 Delivery of Property Received after Closing 7
5.3 Purchaser Appointed Attorney for Seller 7
5.4 Execution of Further Documents 8
5.5 Preparation of Form S-4 and the Proxy Statements;
Stockholder Meetings; Other Filings 8
5.6 Employees of Business 10
5.7 Use of Name 11
5.8 Access Board of Directors 11
5.9 Seller Obligations Not to Compete or Disclose 11
5.10 Cooperation in Connection with Stock Transfer
Instructions and Liquidating Distributions 11
ARTICLE VI
Section 6. Representations and Warranties by Seller 12
6.1 Corporate Existence and Qualification of Seller 12
6.2 Seller's Corporate Documents 12
6.3 Authorization of Agreement 12
6.4 No Violation 13
6.5 SEC Documents; Undisclosed Liabilities 13
6.6 Inventory 14
6.7 Accounts Receivable 14
6.8 Material Contracts and Obligations14
6.9 Title to Real Property; Liens; Condition of Properties 16
6.10 Licenses 16
6.11 Arms-Length Transactions; Conflicts of Interest 17
6.12 Intellectual Property 17
6.13 Absence of Certain Developments 17
6.14 Undisclosed Liabilities 18
6.15 Litigation; Compliance with Law 19
6.16 Employee Claims Against the Business 19
6.17 Unemployment Insurance Rating 19
6.18 Employee Benefit Plans 19
6.19 Labor Relations 20
6.20 Insurance Policies 21
6.21 Bank Accounts 21
6.22 Capitalization 21
6.23 Investment Representation 22
6.24 Disclosure 22
ARTICLE VII
Section 7. Representations and Warranties by Access 22
7.1 Corporate Existence and Qualification 22
7.2 Access's Corporate Documents 22
7.3 Authorization of Agreement, Etc. 23
7.4 Absence of Certain Developments 23
7.5 Undisclosed Liabilities 23
7.6 Litigation; Compliance with Law 23
7.7 Capitalization; Status of Access Common Shares 24
7.8 SEC Filings 24
7.9 Information Supplied by Access 25
ARTICLE VIII
Section 8. Conduct Prior to Closing 25
8.1 Carry On in Ordinary Course 25
8.2 No General Increases 25
8.3 Contracts and Commitments 26
8.4 Dispositions and Sale of Purchased Assets 26
8.5 Preservation of Organization 26
8.6 No Default 26
8.7 Compliance with Laws 26
8.8 Operation of Business 26
8.9 Consents 26
8.10 Advisement of Changes 26
8.11 No Solicitation 27
8.12 No Delaying Transactions 27
8.13 Lock-Up Agreements 28
8.14 Best Efforts 28
ARTICLE IX
Section 9. Conditions to Obligations of Access28
9.1 Compliance by Seller; Correctness of Representations
and Warranties of Seller 28
9.2 Certified Resolutions of the Seller28
9.3 Approval by Purchaser's Counsel 29
9.4 Opinions of Counsel for Seller 29
9.5 Consents of Third Parties 30
9.6 Certificate of Chief Executive Officer of Seller 30
9.7 Approval of Governmental Authorities 30
9.8 Corporate Authority 30
9.9 Lock-Up Agreement 30
9.10 Approval of Access Stockholders 30
9.11 Form S-4 Effective 31
ARTICLE X
Section 10. Conditions to Obligations of the Seller 31
10.1 Compliance by Access; Correctness of
Representations and Warranties 31
10.2 Certified Resolutions of Access 31
10.3 Approval by Seller's Counsel 31
10.4 Opinion of Xxxxxxx & Xxxxxx 31
10.5 Certificate of President of Purchaser 32
10.6 Approval of Governmental Authorities 33
10.7 Corporate Authority 33
10.8 Access Purchase Securities 33
10.9 Form S-4 Effective 33
ARTICLE XI
Section 11. Fees and Expenses 33
ARTICLE XII
Section 12. Termination and Effect 34
12.1 Termination of Agreement 34
12.2 Effect of Xxxxxxxxxxx 00
XXXXXXX XXXX
Xxxxxxx 00. Acknowledgments of Seller 35
13.1 Restricted Securities 35
13.2 Access to Information 36
ARTICLE XIV
Section 14. Broker's Commissions 36
ARTICLE XV
Section 15. Access to Facilities, Properties and Records 36
ARTICLE XVI
Section 16. Survival of Representations 36
ARTICLE XVIII
Section 17. Miscellaneous 37
17.1 Amendment to Agreement; Waivers; Procedure 37
17.2 Binding Effect 37
17.3 Entire Agreement 37
17.4 Headings 38
17.5 Confidential Information; Publicity38
17.6 Notices 38
17.7 Bulk Sales Law 39
17.8 Counterparts 39
17.9 No Benefit to Others 39
17.10 Governing Law 40
17.11 No Waiver 40
17.12 Severability 40
17.13 Time of Essence 40
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, made as of April 15th, 1997, by and between
PAPERCLIP SOFTWARE, INC., a Delaware corporation (hereinafter called the
"Seller"), and ACCESS SOLUTIONS INTERNATIONAL, INC., a Delaware corporation
(hereinafter called "Access" or the "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business of developing and
distributing computer software for document management and imaging systems
(hereinafter generally called the "Business"); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase from Seller, all of the assets of Seller related
to the Business, on the terms and conditions hereinafter set forth; and
WHEREAS, as a condition to the willingness of Access to enter into this
Agreement, those directors and officers of Seller who are also stockholders of
Seller (the "Seller Significant Stockholders") have entered into that certain
Stockholder Agreement of even date ("Seller Stockholder Agreement"), which
provides, among other things, that each Seller Significant Stockholder will
vote the shares of Seller Common Stock which he owns in favor of the approval
and adoption of this Agreement and the consummation of the transactions
contemplated hereby; and
WHEREAS, as a further condition to the willingness of Access to enter
into this Agreement, Seller has entered into that certain Management Agreement
of even date (the "Management Agreement") which provides, among other things,
that Access will manage the Seller's operations from the date hereof until the
consummation of the transactions contemplated hereby or the earlier
termination of this Agreement; and
WHEREAS, following such purchase and sale, Seller intends to liquidate
and dissolve as a corporation and distribute the Access Purchase Securities
(as defined below) to the shareholders of Seller.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
Section 1. Purchase and Sale of Assets.
Subject to the terms and conditions set forth in this Agreement, Seller
hereby agrees to sell, transfer, assign and deliver to Purchaser, and
Purchaser hereby agrees to purchase from Seller, as of the Closing Date (as
hereinafter defined), all of the properties and assets of Seller, tangible or
intangible, real or personal, belonging to or used in the Business, as and
where the same shall exist at the close of business on the Closing Date
(hereinafter collectively called the "Purchased Assets"), including, without
limitation, the following:
Section 1.1. Purchased Deposits.
All deposits of cash or cash equivalents, certificates of deposit and
other cash items relating to the Business or its operations for payroll
accounts, utilities or otherwise, including, without limitation, those
described on Schedule 1.1 attached hereto (hereinafter called "Purchased
Deposits").
Section 1.2. Purchased Receivables.
All trade, accounts, and notes receivable arising out of the sale or
lease of goods or the rendition of services by Seller, and all security
therefor (hereinafter called the "Purchased Receivables").
Section 1.3. Purchased Fixed Assets.
All machinery, equipment, leasehold improvements, furniture,
furnishings, plant and office equipment and other fixed assets used in the
Business, including without limitation, the machinery and equipment listed on
Schedule 1.3 hereto (hereinafter collectively called the "Purchased Fixed
Assets").
Section 1.4. Purchased Inventory.
All inventories, including manufacturing, administrative and other
supplies used in the Business (hereinafter called the "Purchased Inventory").
Section 1.5. Purchased Contracts.
All rights under the Contracts (as defined in Section 6.8(a)) of the
Seller relating to the Business that are included among the Assumed
Liabilities, together with such additions thereto and deletions therefrom as
shall have occurred in the ordinary course of business prior to the Closing
Date (as defined in Section 3) (hereinafter called the "Purchased Contracts").
Section 1.6. Purchased Prepaid Items.
All credits, prepaid and deferred items and advanced payments such as
prepaid rentals, security deposits, taxes (excluding prepaid income taxes and
taxes relating to assets other than the
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Purchased Assets), unbilled charges and deposits relating to the operations of
the Business and any other items set forth in Schedule 1.6 attached hereto;
excluding from the foregoing, however, prepaid items with respect to which
Purchaser shall receive no benefit, such as prepaid insurance (hereinafter
called the "Purchased Prepaid Items").
Section 1.7. Purchased Rights.
All data and records relating to the Business, wherever located,
including books and records (other than: (i) minute books and records of
directors' and shareholders' meetings and other documents relating to Seller's
corporate existence; (ii) records of Seller such as general ledgers, and (iii)
Seller's tax returns), customer lists, dealer and distributor lists, credit
information and correspondence, proprietary data, all designs and drawings,
patterns, slogans, copyrights, processes, formulae, know-how, trade secrets,
processes, inventions and discoveries (whether patentable or not) manuals,
computer software, data stored in computers, contract rights, warranties or
other transferable benefits that Seller may have received from manufacturers
or suppliers as to any of the Purchased Assets and other similar intangible
property and rights (including goodwill) (all of the foregoing hereinafter
collectively called the "Purchased Rights"). Seller shall retain the right to
examine such books and records transferred to the Purchaser, or to make
extracts or copies therefrom, for a period of six years after the date hereof,
or until such time as all tax matters relating to Seller's tax year 1997 and
prior years have been resolved, whichever shall last occur, during reasonable
business hours, and during such other times as the Purchaser and Seller may
agree, and to remove such books and records in connection with any
proceedings, claims or actions which may be brought against Seller, in any
judicial or formal or informal administrative proceeding or before any
arbitration tribunal. Purchaser shall have the right to inspect and copy such
books and records that are not included in the Purchased Rights during
reasonable business hours for a period of six years after the Closing Date.
Section 1.8. Purchased Intellectual Property.
All trademarks, trade names, applications to register trademarks or
trade names, licenses, patents, patent applications, copyrights and copyright
applications, and other similar rights used in the Business, including,
without limitation, those listed in Schedule 1.8 attached hereto (hereinafter
collectively called the "Purchased Intellectual Property") and all rights to
xxx for infringement or other violations of the Purchased Rights or the
Purchased Intellectual Property.
Section 1.9. Excluded Assets.
Notwithstanding the provisions of Sections 1.1 through 1.8, the parties
agree that the Purchased Assets shall not include Seller's corporate
existence, minute book, stock record book and corporate seal, any rights of
Seller under this Agreement, the Management Agreement, and any agreements
between Seller and A.R. Baron & Co., Inc. ("AR Baron").
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ARTICLE II
Section 2. Purchase Price and Payment.
Section 2.1. Purchase Price The aggregate purchase price of the
Purchased Assets (the "Purchase Price") shall be the sum of: (a) One Million
Five Hundred Forty-Four Thousand Four Hundred Thirty-Eight (1,544,438) shares
of common stock of Access, $.01 par value per share (the "Access Purchase
Shares"), plus an equivalent number of Purchaser's Class B Warrants ("Access
Purchase Warrants") (collectively, the Access Purchase Shares and Access
Purchase Warrants are sometimes hereinafter referred to as the "Access
Purchase Securities"), plus the amount of the Cash Adjustment and the Share
Adjustment calculated pursuant to Section 2.2 (the "Share Portion of the
Purchase Price"), plus (b) the amount of the "Assumed Liabilities" (as
hereinafter defined) assumed by Purchaser hereunder.
Section 2.2. Adjustment to Purchase Price. Seller has issued
Convertible Promissory Notes dated December 19, 1996, in the aggregate
principal amount of $129,690.74 ("Seller Convertible Notes"). Prior to the
Closing, at Access' request, Seller shall issue notices to the holders of the
Seller Convertible Notes that the Seller Convertible Notes will be prepaid
unless the holder elects to convert its Seller Convertible Note into shares of
Seller common stock. At the Closing, Access shall deliver sufficient cash to
satisfy Seller's obligation to pay such Seller Convertible Notes (the "Cash
Adjustment") and will deliver to Seller one (1) Access Purchase Share and
Access Purchase Warrant for each five (5) share(s) of PaperClip common stock
issued to former holders of Seller Convertible Notes who elect to so convert
(the "Share Adjustment").
Section 2.3. Payment of Share Portion of Purchase Price.
At the Closing (as defined in Section 3 below), the Purchaser shall
deliver to or for the account of Seller the Access Purchase Securities, plus
the Share Adjustment and the Cash Adjustment.
Section 2.4. Allocation of Purchase Price. The Purchase Price shall be
allocated to the Purchased Assets in accordance with the values to be jointly
agreed upon prior to the Closing. Purchaser and Seller shall jointly prepare
Form 8594 pursuant to Section 1060 of the Internal Revenue Code of 1986, as
amended, on a basis consistent with such allocations, and none of the parties
hereto shall take any position with any governmental or regulatory authority
inconsistent therewith.
Section 2.5. Adjustment of Shares. If Access effects any change in its
outstanding common stock by reason of stock dividends, stock splits or
recapitalization between the date of this Agreement and the Closing Date
without receipt of consideration, then the aggregate number of Access Purchase
Securities shall be appropriately adjusted.
ARTICLE III
Section 3. Closing.
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The closing of the transactions contemplated hereby (the "Closing")
shall take place at the offices of Xxxxxxx & Xxxxxx, 2700 Hospital Trust
Tower, Providence, Rhode Island at 10:00 a.m. on a date to be specified by the
parties which (subject to the prior satisfaction or waiver of the conditions
set forth in Sections 9 and 10) shall be no later than the fifth business day
after the day on which the conditions in Sections 9.2 (first clause), 9.7,
9.10, 9.11, 10.6 and 10.9 have been satisfied, or at such other time and place
as the parties hereto shall agree in writing. The date on which the Closing
occurs is hereinafter referred to as the "Closing Date". The transactions
contemplated hereby (except for the payments and actual transfer of the
Purchased Assets) shall be deemed to have been consummated as of the close of
business on the "Closing Date" for all tax, payroll, bonus, utility, expense,
earnings, pension, income, liability, billing, operating and accounting and
all other purposes relating to the acquisition of the Purchased Assets by the
Purchaser. At the Closing, Seller will deliver to Purchaser such bills of
sale, endorsements, assignments, or other instruments in form and substance
satisfactory to Purchaser and its counsel, as may be necessary to vest in
Purchaser good and marketable title to the Purchased Assets sold to the
Purchaser hereunder, subject to no liens, encumbrances or security interests
except as are listed on Schedule 6.9 hereto ("Permitted Liens").
ARTICLE IV
Section 4. Assumption of Liabilities; Indemnification.
Section 4.1. Assumption by Purchaser.
The Purchaser shall, by appropriate instruments to be executed and
delivered at the Closing, assume and agree to perform, pay or discharge, to
the extent not theretofore performed, paid or discharged, Seller's
liabilities, obligations, debts, contracts or other commitments of any kind
whatsoever, known or unknown, fixed or contingent, as the same shall exist on
the Closing Date (hereinafter collectively called the "Assumed Liabilities");
provided, however, that it is expressly agreed that the Assumed Liabilities
shall not include, and Purchaser shall not be obligated to assume or become
liable for, any of Seller's liabilities or obligations, known or unknown,
fixed or contingent, now existing or hereafter arising, which shall arise out
of or relate to: (i) any liability or obligation of Seller to Discovery
Laboratories, Inc. ("Discovery") arising out of any agreement between
Discovery and Seller or out of any transactions contemplated by that certain
letter of intent dated February 21, 1997, between Discovery and Seller
("Discovery Letter of Intent"); (ii) any liability or obligation of Seller to
AR Baron arising out of any agreement between AR Baron and Seller; (iii) any
liability or obligation of Seller under Seller's stock options, warrants,
agreements to issue stock options and warrants, and any other securities or
instruments convertible into securities except for the Seller Convertible
Notes; or (iv) any agreement designated on Schedule 6.8 (a) as not being
assumed by Access.
Section 4.2 Indemnification by Seller.
Seller hereby agrees to indemnify, defend and hold harmless Purchaser
and its officers, directors and stockholders from, and will pay to Purchaser
and such persons the amount of any losses, liabilities, claims, demands,
judgments, damages, expenses and costs (including, without limitation,
reasonable counsel fees) whether or not involving a third party claim,
arising, directly or
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indirectly, from or in connection with Seller's failure
to pay, discharge or perform any of its liabilities or obligations that are
not assumed by Access under this Agreement.
Section 4.3. Indemnification by Purchaser.
Purchaser hereby agrees to indemnify, defend and hold harmless Seller,
and its officers, directors and stockholders from and will pay to Seller and
such persons the amount of any losses, liabilities, claims, demands,
judgments, damages, expenses and costs (including, without limitation,
reasonable counsel fees), whether or not involving a third party claim,
arising, directly or indirectly, from or in connection with Purchaser's
failure to pay, discharge or perform any Assumed Liability.
Section 4.4 Limitations on Indemnity.
Notwithstanding anything contained in this Agreement to the contrary:
(a) If the Closing occurs, neither Seller nor Purchaser shall
have any liability for indemnification with respect to any
representation or warranty made prior to the Closing Date or any
covenant to be performed prior to the Closing Date.
(b) The amount of any claim for indemnification shall be
limited to the actual out-of-pocket expenses incurred by the indemnitee
after taking into account tax benefits actually realized in the current
fiscal year.
Section 4.5. Indemnification Proceedings.
Each party entitled to indemnification pursuant to this Article IV (the
"indemnified party") shall give notice to the party required to provide
indemnification pursuant to this Article IV (the "indemnifying party")
promptly after such indemnified party acquires actual knowledge of any claim
as to which indemnity may be sought, and shall permit the indemnifying party
(at its expense) to assume the defense of any claim or any litigation
resulting therefrom; provided, that counsel for the indemnifying party, who
shall conduct the defense of such claim or litigation, shall be reasonably
acceptable to the indemnified party, and the indemnified party may participate
in such defense at the indemnified party's expense; and provided, further,
that the failure by any indemnified party to give notice as provided in this
Section 4.5 shall not relieve the indemnifying party of its obligations under
this Article IV except to the extent that the failure results in a failure of
actual notice to the indemnifying party and such indemnifying party is
prejudiced solely as a result of the failure to give notice.
Section 4.6. Remedies Not Exclusive
The remedies provided in Sections 4.2 and 4.3 will not be exclusive of
or limit any other remedies that may be available to Access or Seller,
respectively.
ARTICLE V
Section 5. Other Actions.
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Section 5.1. Purchaser to Act as Agent for Seller.
This Agreement shall not constitute an agreement to assign any claim,
contract or franchise if any attempted assignment of the same without the
consent of the other party thereto would constitute a breach thereof or in any
way affect the rights of the Seller thereunder. If such consent is not
obtained, or if any attempted assignment would be ineffective or would
diminish the Seller's rights thereunder so that the Purchaser would not in
fact receive all such rights, then subject to the terms and conditions of
Section 5.3, Purchaser may act as agent for Seller in order to obtain for
Purchaser the benefits thereunder.
Section 5.2. Delivery of Property Received After Closing.
From and after the Closing Date: (a) Seller agrees that it will
promptly upon receipt transfer or deliver to Purchaser, from time to time, any
cash or other property in the form received that Seller may receive after the
Closing relating to the Purchased Assets, and (b) Purchaser agrees that it
will promptly upon receipt transfer or deliver to Seller, from time to time,
any cash or other property in the form that Purchaser may receive after the
Closing Date relating to assets of the Seller other than the Purchased Assets.
Section 5.3. Purchaser Appointed Attorney for Seller.
Seller agrees that, effective as of the Closing Date, it hereby
constitutes and appoints Purchaser, its successors and assigns, the true and
lawful attorney of Seller in the name of Purchaser, or in the name of Seller
but for the benefit and at the expense of Purchaser, to: (i) institute and
prosecute all proceedings that Purchaser may deem proper in order to collect,
assert or enforce any claim, right or title of any kind in or to the Purchased
Assets as provided in this Agreement; (ii) defend or compromise any and all
actions, suits or proceedings in respect of any of the Purchased Assets, and
to do all such acts and things in relation thereto as Purchaser shall deem
advisable; and (iii) take all action that Purchaser, its successors or
assigns, may reasonably deem proper in order to provide for Purchaser, its
successors and assigns, the benefits under any of the Purchased Assets where
any required consent of another party to the sale or assignment thereof to
Purchaser pursuant to this Agreement shall not have been obtained. If
Purchaser, in the name of Seller, desires to institute and prosecute any
action, suit or proceeding, or take any other action pursuant to this Section
5.3, Purchaser shall provide Seller ten days' written notice prior to taking
any such action in the name of Seller. Seller acknowledges that the foregoing
powers are coupled with an interest and shall be irrevocable by Seller.
Purchaser shall be entitled to retain for its own account any amounts
collected pursuant to the foregoing powers, including any amounts payable as
interest in respect thereof. Purchaser shall indemnify Seller for any damages
Seller may incur on account of the acts of Purchaser taken pursuant to the
authority granted to it under Section 5.1 and this Section 5.3.
Section 5.4. Execution of Further Documents.
From and after the Closing, upon the request and at the expense of
Purchaser, Seller shall execute, acknowledge and deliver all such further
acts, bills of sale, assignments, transfers, conveyances, powers of attorney
and assurances as may be reasonably required to convey and
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transfer to and vest in Purchaser and protect its right, title and interest in
all of the Purchased Assets, and as may otherwise be appropriate to carry out
the transactions contemplated by this Agreement.
Section 5.5. Preparation of Form S-4 and the Proxy Statements;
Stockholder Meetings; Other Filings.
(a) Seller will, as soon as reasonably practicable following the date
of this Agreement, take all action necessary in accordance with applicable law
and its Certificate of Incorporation and By-laws to convene a meeting of its
stockholders (the "Seller Stockholder Meeting") for the purpose of obtaining
the affirmative vote at the Seller Stockholder Meeting of the holders of a
majority of the votes represented by the outstanding Seller Common Stock
("Seller Stockholder Approval"). The Proxy Statement for such meeting shall
contain the recommendation of Seller's Board of Directors that the
stockholders vote to approve and adopt this Agreement and the transactions
contemplated hereby, and such recommendation shall not be withdrawn; provided,
however, that such recommendation is subject to the exercise of the discretion
of the Seller's Board of Directors of its fiduciary duties to Seller's
shareholders. Seller shall use its reasonable best efforts to solicit from its
stockholders proxies in favor of such adoption and approval and shall take all
other action necessary to secure the vote of stockholders required by Delaware
Law to effect the transactions contemplated hereby.
(b) As soon as practicable after execution and delivery of this
Agreement, Seller shall prepare in accordance with the applicable requirements
of the Securities and Exchange Act of 1934, as amended ("Exchange Act"), and
the Delaware General Corporation Law ("Delaware Law"), a proxy statement in
connection with the Seller Stockholder Meeting (the "Proxy Statement"). Access
shall cooperate with the Seller in the preparation and filing of the Proxy
Statement, including any and all amendments and supplements thereto. Access
and Seller will cooperate in order to prepare and file with the United States
Securities and Exchange Commission ("SEC") a registration statement on Form
S-4 in connection with the issuance of the Access Purchase Securities (the
"Form S-4"), in which the Proxy Statement will be included as a part of the
joint proxy/prospectus. Seller and Access shall each use all reasonable
efforts to have the Form S-4 declared effective under the Securities Act of
1933, as amended ("Securities Act") as soon as practicable after such filing.
Seller will use all reasonable efforts to cause the Proxy Statement to be
mailed to each of Seller's stockholders and, if Access elects or is required
to do so, Access will use all reasonable efforts to cause the Proxy Statement
to be mailed to Access' stockholders, in each case as promptly as reasonably
practicable after the Form S-4 is declared effective under the Securities Act.
Access will also take any action (other than qualifying to do business in any
jurisdiction in which it is not now so qualified or filing a general consent
to service of process) required to be taken under any applicable state
securities or "blue sky" laws in connection with the issuance of the Access
Purchase Securities and Seller shall furnish all information concerning Seller
and its stockholders as may be reasonably requested in connection with any
such action.
(c) If the Board of Directors of Access determines that it is
necessary or desirable to do so, Access will, as soon as reasonably
practicable following the date of this Agreement, take all action necessary in
accordance with applicable law and its Restated Certificate of Incorporation
and By-laws to convene a meeting of its stockholders (the "Access Stockholder
Meeting") for the purpose of obtaining the affirmative vote at the Access
Stockholder Meeting of the holders of a majority of the votes represented by
the outstanding Access Common Stock ("Access Stockholder Approval"). The
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proxy statement for such meeting (which shall be part of the joint
proxy/prospectus contained in the Form S-4) shall contain the recommendation
of Access' Board of Directors that the stockholders vote to approve and adopt
this Agreement and the transactions contemplated hereby, and such
recommendation shall not be withdrawn; provided, however, that such
recommendation is subject to the exercise of the discretion of the Access'
Board of Directors of its fiduciary duties to Access' shareholders. Access
shall use its reasonable best efforts to solicit from its stockholders proxies
in favor of such adoption and approval and shall take all other action
necessary to secure the vote of stockholders required by Delaware Law to
effect the transactions contemplated hereby.
(d) As soon as practicable after the execution and delivery of this
Agreement, Seller and Purchaser shall promptly and properly prepare and file
any other schedules, statements, reports, or other documents required (if any)
under the Exchange Act, the Securities Act, or any other federal or state
securities laws relating to the transactions contemplated hereby (the "Other
Filings"). Each party shall notify the other party hereto promptly of the
receipt by such party of any stop order, comments or requests for additional
information from any governmental official with respect to the Proxy
Statement, the Form S-4 or any Other Filing made by such party and will supply
the other party with copies of all correspondence between such party and its
representatives, on the one hand, and the appropriate government official, on
the other hand, with respect to the Proxy Statement, Form S-4 and Other
Filings made by such party. Each of the Seller and Purchaser shall use
reasonable efforts to obtain and furnish the information required to be
included in the Form S-4, the Proxy Statement and any Other Filing and, after
consultation with the other party, to respond promptly to any comments made by
any government official with respect to any filing.
(e) Seller shall use all reasonable efforts to cause to be delivered
to Access a so-called "cold comfort" letter of Xxxxxx Xxxxxxxx LLP, the
Seller's independent public accountants, dated a date within two business days
before the date on which the Form S-4 shall become effective, addressed to
Access, in form reasonably satisfactory to Access and customary in scope and
substance for letters delivered by independent public accountants in
connection with registration statements similar to the Form S-4.
(f) Access shall use all reasonable efforts to cause to be delivered
to Seller a so-called "cold comfort" letter of Price Waterhouse LLP, Access'
independent accountants, dated a date within two business days before the date
on which the Form S-4 shall become effective, addressed to Seller, in form
reasonably satisfactory to Seller and customary in scope and substance for
letters delivered by independent public accountants in connection with the
registration statements similar to the Form S-4.
(g) Access agrees to use reasonable efforts to effect, prior to the
Closing Date, the listing on the NASDAQ Small Cap market, upon official notice
of issuance, of the Access Purchase Securities to be issued to Seller
hereunder.
(h) Seller hereby agrees to indemnify and holds harmless Access and
its directors, officers, advisors and agents and Access hereby agrees to
indemnify and holds harmless Seller and its directors, officers, advisors and
agents, from and against any loss, claim, damage, cost, liability, obligation
or expense (including reasonable attorney's fees and costs of investigation)
to which any indemnified party may become subject under the Securities Act,
Exchange Act, or otherwise, insofar as such loss, claim, damage, cost,
liability, obligation or expense or actions in respect thereof: (i)
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relates solely to a claim brought against such indemnified party by a third
party who is not affiliated with either the indemnified party or the
indemnifying party; and (ii) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the Form
S-4 or the Proxy Statement or arises out of or is based upon the omission or
alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein with respect to such
indemnifying party not misleading; and (iii) such untrue statement or omission
or alleged omission is made in any information with respect to the
indemnifying party furnished in writing by such indemnifying party
specifically for inclusion in the Proxy Statement, Form S-4 or any Other
Filing.
Section 5.6. Employees of Business. Seller acknowledges that Purchaser
is under no obligation to offer employment to any salaried or hourly employee
of the Business. Purchaser, however, agrees that, under terms and conditions
of employment Purchaser will unilaterally establish for all applicants for
employment, Purchaser will consider for employment on the same basis as any
other applicant for employment former employees of the Business, if such
former employees apply and are otherwise qualified and available for
employment with Purchaser. All such successful applicants shall be new
employees of Purchaser under such new terms and conditions. On or before the
Closing Date, Seller will terminate the employment of all salaried and hourly
employees on the payroll of the Business (other than those who Purchaser has
agreed will remain employees of Seller following the Closing Date). Seller
hereby acknowledges that Purchaser will not become a party to, or assume any
obligation under any "employee benefit plans," within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended, to
which Seller is or may have been a party.
Section 5.7. Use of Name.
From and after the Closing Date neither Seller nor any affiliate of
Seller shall use the name "PAPERCLIP SOFTWARE, INC." or "PAPERCLIP IMAGING
SOFTWARE, INC." in any form or combination or variations in any manner.
Section 5.8 Access Board of Directors.
For a period of two years following the Closing Date, and for such
additional period (not to exceed one year) as Seller shall hold at least
twenty-five (25%) percent of the Access Purchase Securities, Access shall
nominate one person designated by Seller (who initially shall be Xxxxxxx
Xxxxxxxx) to Access's Board of Directors. In addition, during such two-year
period, Seller will be entitled to designate one person who will be permitted
to attend all meetings of Access's Board of Directors as an "advisor" or
"observer"; and, in the event that Xx. Xxxxxxxx or any other designee of
Seller resigns from Access's Board of Directors, Seller will be entitled to
designate an additional "advisor" or "observer."
Section 5.9. Seller Obligations Not to Compete or Disclose.
(a) For a period of three years following the Closing, Seller shall
not: (i) compete with Access in the conduct of the Business conducted by
Seller at or prior to the Closing, or (ii) except as consented to in writing
by Access, engage or participate, directly or indirectly, whether for its own
account or for that of any other person, firm or corporation, and whether as a
stockholder, partner or
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investor possessing an ownership interest exceeding 5% in any such entity or
in any other capacity, in any business that is substantially similar to that
of Seller at or prior to the Closing.
(b) Following the Closing, except as may be required by any applicable
law, as may be disclosed to Seller's professional advisors, and as may be
authorized in writing by Access, Seller shall not directly or indirectly,
publish, disclose or use, any secret, confidential, proprietary or other
information not in the public domain, relating to any aspect of the Business
at or prior to the Closing, including, without limitation, information
pertaining to any of the Purchased Assets.
Section 5.10. Cooperation in Connection With Stock Transfer
Instructions and Liquidating Distributions.
At or following the Closing Date, subject to the terms of the Lock-Up
Agreement (as defined in Section 8.13) Access will provide reasonable
cooperation to Seller in presenting instructions to Access's stock transfer
agent in order to subdivide the certificates for the Access Purchase Shares
and Access Purchase Warrants into smaller denominations, and thereby
facilitate one or more liquidating distributions by Seller to its
shareholders.
ARTICLE VI
Section 6. Representations and Warranties by Seller.
In order to induce Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereunder, Seller makes the following
representations, warranties, covenants and agreements:
Section 6.1. Corporate Existence and Qualification of Seller.
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and to carry on its
business as it is now being conducted. Seller is qualified to do business as a
foreign corporation in the states set forth in Schedule 6.1. Seller has no
subsidiaries.
Section 6.2. Seller's Corporate Documents.
Copies of the Certificate of Incorporation and By-Laws, including the
respective amendments thereto, of Seller, certified by the Secretary of
Seller, have been delivered to the Purchaser, and such copies are true,
complete and correct.
Section 6.3. Authorization of Agreement.
(a) Seller has all requisite corporate power to enter into this
Agreement and to consummate the transactions contemplated hereby. Except for
the Seller Stockholder Approval, all corporate and other actions required to
be taken by Seller to authorize it to carry out this Agreement and the
transactions contemplated hereby have been, or as of the Closing Date shall
have been, duly and properly taken. This Agreement and the Management
Agreement have been duly executed and
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delivered by Seller, and each constitutes a valid and binding obligation of
the Seller, enforceable against Seller in accordance with its terms.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with any Federal, state or local governmental or any
court, administrative or regulatory agency or commission ("Governmental
Entity") is required by or with respect to Seller in connection with the
execution and delivery of this Agreement by Seller or the consummation of the
transactions contemplated by this Agreement, except: (i) the filing with the
SEC of the Form S-4 and the Proxy Statement and (ii) such filings with
Governmental Entities as might be required to satisfy the applicable
requirements of state securities or "blue sky" laws in connection with the
transactions contemplated by this Agreement.
Section 6.4. No Violation.
Neither the execution and delivery by the Seller of this Agreement nor
the consummation of the transactions contemplated hereby violate or will
violate any provision of law applicable to, or any provision of the
Certificate of Incorporation or by-laws of, Seller or conflict with or will
result in any breach of any term, condition or provision of, or constitute or
will constitute (with due notice or lapse of time or both) a default under, or
will result in the creation or imposition of any lien, charge or encumbrance
upon any of the Purchased Assets pursuant to the terms of, any mortgage, deed
of trust or other agreement or instrument to which Seller is a party or by
which or to which Seller or any of the Purchased Assets are subject or bound,
except to the extent Seller shall have obtained a waiver or release thereof.
Section 6.5. SEC Documents; Undisclosed Liabilities.
(a) Seller has filed with the SEC the Seller's registration statement
on Form SB-2 (the "Company SB-2), which became effective on August 9, 1995
(the "Seller's SB-2 Effective Date"), and all required reports, schedules,
forms, statements and other documents since the Seller's SB-2 Effective Date
(together with such Form SB-2 registration statement, the "Seller SEC
Documents"). As of their respective dates, the Seller SEC Documents complied
as to form in all material respects with the requirements of the Securities
Act, or the Exchange Act, as the case may be, and none of the Seller SEC
Documents when filed contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(b) As of their respective dates, the financial statements of the
Seller included in the Seller SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles (except, in the case
of unaudited statements, as permitted by the rules and regulations of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present, in all material respects,
the financial position of the Seller as of the dates thereof and the results
of its
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operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments).
(c) Attached hereto as Schedule 6.5 are the audited financial
statements of Seller for the year ended December 31, 1996 ("Seller 1996
Financial Statements"). Seller 1996 Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis and fairly present, in all material respects, the financial
position of Seller as of such date and the results of its operations and cash
flows for the period then ended.
(d) Except as set forth in the filed Seller SEC Documents, or in
Schedule 6.5, as of the date of this Agreement, the Seller does not have any
liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles
to be recognized or disclosed on a balance sheet of the Seller or in the notes
thereto and which, individually or in the aggregate, would have a material
adverse effect on the Seller.
(e) None of the information contained in the Proxy Statement or any
Other Filing shall, on the date the Proxy Statement is first mailed to
stockholders or the Other Filing is made, as the case may be, at the time of
the Seller Stockholders Meeting or on the Closing Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they will be made, not misleading. Notwithstanding
the foregoing, the Seller makes no representations or warranties with respect
to any information supplied by Purchaser specifically for use in any of the
foregoing documents. The Proxy Statement shall comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
rules and regulations promulgated thereunder and any Other Filings filed by
the Seller shall comply as to form in all material respects with all
applicable requirements of law.
Section 6.6. Inventory.
Except as set forth on Schedule 6.6 hereto, all inventory set forth on
the Seller 1996 Financial Statement, and all additions to inventory of the
Business since December 31, 1996 consist of items of a quantity and quality
usable or salable in the ordinary course of the business at prevailing market
prices without discount. All inventories not written off have been priced at
the lower of cost or market on a first in, first out basis. Except as set
forth in Schedule 6.6 hereto, since December 31, 1996, no inventory items
relating to the Business have been sold or disposed of except in the ordinary
course of business. Schedule 6.6 sets forth the locations of all items of
inventory.
Section 6.7. Accounts Receivable.
All Purchased Receivables relating to the Business as shown on the
Seller 1996 Financial Statement or on the accounting records of the Seller as
of the date hereof are valid, genuine and subsisting, have arisen in the
ordinary course of business from customers believed to be commercially
responsible, and the reserves shown on the Seller's 1996 Financial Statement,
are
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adequate and calculated consistent with past practice and consistent with
generally accepted accounting principles. Since December 31, 1996, any
proceeds collected on accounts receivable have been applied only to
liabilities set forth on the Seller 1996 Financial Statement.
Section 6.8. Material Contracts and Obligations.
(a) Except for matters relating to real property listed on Schedule 6.9
hereto, Schedule 6.8(a) is a true, complete and accurate list prepared by the
Seller, categorized by subject matter, of the following contracts, agreements,
commitments, options, liens, licenses, mortgages, other security interests,
understandings or promises, whether written or oral ("Contract"), to which
Seller is a party or by which it is or any of its properties or assets are
bound:
(i) purchase or sale orders and agreements to or with any one
customer or supplier for the sale of products or services of an amount
or value in excess of $5,000;
(ii) all employment contracts with any officer, consultant,
director or employee;
(iii) all plans, contracts or arrangements providing for stock
options or stock purchases, bonuses, pensions, deferred compensation,
retirement payments, profit-sharing or the like;
(iv) all contracts for construction or for the purchase of
equipment, machinery and other items;
(v) all contracts relating to the rental or use of equipment,
other personal property or fixtures (except personal property leases
and installment and conditional sales agreements having a value per
item or aggregate payments of less than $5,000 and with terms of less
than one year);
(vi) all license agreements, either as licensor or licensee;
(vii) all joint venture contracts and agreements involving a
sharing of profits;
(viii) all franchise agreements;
(ix) all distributor, sales agency and other similar
agreements;
(x) all loan or guaranty agreements, credit agreements, notes
or other evidences of indebtedness, indentures or instruments
evidencing liens or secured transactions; and
(xi) all other contracts, except those which: (i) are
cancelable on 30 days' or less notice without any penalty or other
financial obligation, or (ii) if not so cancelable, involve annual
aggregate payments by or to the Seller of $5,000 or less.
Each of the Contracts were entered into in the ordinary course of business of
the Business, is valid, binding and enforceable by or against Seller and is in
full force and effect. Except as set forth on Schedule 6.8(a), neither the
Seller nor (to the knowledge of the Seller) any other party thereto is in
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default in any respect under the terms of any material Contract. Seller has
delivered to Purchaser true and complete copies or descriptions of the
Contracts required to be listed in Schedule 6.8(a).
(b) Neither the execution and delivery of this Agreement nor the
consummation of any of the transactions contemplated hereby, nor compliance
with the terms and provisions hereof, will result in the creation or
imposition of any lien upon any of the property or assets of the Seller, or
conflict in any way with the provisions of or result in a breach of or
termination of or a default or acceleration of any obligation under, or except
as set forth on Schedule 6.8(b), require the consent of any person pursuant
to, any such Contract.
(c) There is no term or provision of any Contract to which the Seller
is a party or by which it or any of its properties are bound, or, of any
provision of any state, federal or foreign law, judgment, decree, order,
statute, rule or regulation applicable to or binding upon the Seller or its
properties, which materially adversely affects the business, condition,
affairs or operations of the Seller or any of its properties or assets
relating to the Business.
Section 6.9. Title to Real Property; Liens; Condition of Properties.
(a) Schedule 6.9 contains an accurate legal description by categories
of the Seller's real estate and easements and other rights in real property,
owned or leased by or to Seller relating to the Business. All such leases of
real property are valid, binding and enforceable in accordance with their
terms, and, except as set forth on Schedule 6.9, neither the Seller nor, to
Seller's knowledge, any other party thereto is in default thereunder.
(b) To the best of Seller's knowledge the Purchased Assets include all
of the property and property rights used or necessary in the operation of the
Business as presently conducted. Except for minor defects in title which do
not materially affect their use or value, and except for leased assets set
forth on Schedule 6.9, Seller owns good and marketable title to all Purchased
Assets. All of the Purchased Assets are free and clear of all security
interests, mortgages, pledges, liens, conditional sales agreements, leases,
encumbrances, charges, or claims of third parties of any nature whatsoever
except as set forth on Schedules 6.8(a) or 6.9 hereto, all of which shall be
released and discharged prior to the Closing Date.
(c) To Seller's knowledge, all real estate leased to Seller relating to
the Business, and all Purchased Fixed Assets of Seller, and the Seller's use
of the same, comply in all material respects with all applicable ordinances
and regulations and building, zoning or other laws. All Purchased Fixed Assets
are and will be, as of the Closing Date, in good working order and condition
and suitable for use in the operation of the business of the Business, subject
to ordinary wear and tear.
Section 6.10. Licenses.
The licenses listed on Schedule 6.10 hereto (the "Licenses") constitute
all licenses, permits, and governmental authorizations and approvals necessary
for the operation of the Business. The Seller has duly obtained and legally
and validly holds all the Licenses, all of which are valid and in
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full force and effect. No proceeding (judicial, administrative, or otherwise)
has been commenced or to Seller's knowledge threatened which could lead to a
revocation, suspension, or limitation of the rights under any License, and the
Seller is in compliance with each of the Licenses and knows of no state of
fact which could lead to any such revocation, suspension, or limitation. The
Licenses expire on the dates set forth on Schedule 6.10, and the Seller has no
reason to believe that any of the Licenses will not be renewed, nor has any
person or entity informed the Seller that such person or entity intends to
oppose any such renewal. Seller has delivered to Purchaser true and complete
copies of each of the Licenses.
Section 6.11. Arms-Length Transactions, Conflicts of Interest.
To the knowledge of Seller: (a) all transactions by the Business with
parties other than Seller are and have been conducted on an arm's-length
basis, and (b) neither the elected officers of the Seller nor the key
employees of the Business, or their respective spouses, have (or had during
the past three fiscal years) any material direct or indirect ownership or
profit participation in outside business enterprises with which the Business
had material purchases, sales or business dealings.
Section 6.12. Intellectual Property.
There is set forth in Schedule 1.8 hereto a true and complete list of
all domestic and foreign patents, copyrights, trademarks, trade names, and all
registrations or applications with respect thereto, and all licenses or rights
under the same relating to the Business presently owned by the Seller. There
is not outstanding with respect thereto any license or other permission
granted by the Seller to any other person, firm or corporation, except as set
forth in Schedule 1.8. Seller owns or possesses adequate licenses or other
rights to use every item of intellectual property used in its business and the
same are sufficient to conduct the business substantially as now conducted.
There are no outstanding claims asserted against the Seller alleging
infringement of any patent, copyright, trademark, trade name, trade secret,
license or other intellectual property right of any other person, firm or
corporation, and Seller does not hold, nor is Seller aware that there exists
any adversely held patent, copyright, trademark, trade name or license or
other intellectual property right on which such a claim could reasonably be
based. The Seller does not know of any person, firm or corporation producing,
selling or using products or services which constitute an infringement of any
of the Purchased Rights or the Purchased Intellectual Property.
Section 6.13. Absence of Certain Developments.
Except as set forth on Schedule 6.13 attached hereto or on any other
Schedule to the Agreement, since December 31, 1996 the Seller has not:
(i) entered into any contract, commitment or agreement under
which the Seller has outstanding indebtedness, obligation or liability
for borrowed money or deferred purchase price of property in excess of
$10,000 or has the right or obligation to incur such indebtedness,
obligation or liability;
(ii) discharged or satisfied any lien or paid any obligation
or liability (absolute or contingent), other than in the ordinary
course of business;
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(iii) mortgaged or pledged any of its assets, tangible or
intangible, or subjected them to any lien, except liens for current
property taxes not yet due and payable;
(iv) sold, leased, subleased, assigned or transferred any of
its tangible or intangible assets, except in the ordinary course of
business, or canceled any debts or claims;
(v) suffered any substantial losses on the sale or disposition
of individual items of non-inventory property or waived any rights of
material value (other than in connection with the cancellation of sales
orders), whether or not in the ordinary course of business, or received
notice of cancellation of any firm order in excess of $5,000;
(vi) made any changes in employee compensation, vacation
policies or fringe benefit plans, except in the ordinary course of
business and consistent with past practices and not in excess of 5% of
any employee's compensation level during its most recently completed
fiscal year;
(vii) entered into any other transaction other than in the
ordinary course of business, or entered into any other material single
transaction, whether or not in the ordinary course of business which
involves payments by or to the Seller in excess of $50,000 with respect
to the purchase of raw materials, $50,000 with respect to the sale of
inventory, and $50,000 with respect to other transactions:
(viii) suffered damage, destruction or other casualty loss, or
forfeiture of, any property or assets having a value in excess of
$10,000, whether or not covered by insurance or which has had or may
reasonably be expected to have a material adverse effect on its
business, financial condition or prospects;
(ix) made any capital expenditures, additions or improvements
or commitments for the same, except those made in the ordinary course
of business which in the aggregate do not exceed $20,000;
(x) made any voluntary prepayments of indebtedness or lease
obligations;
(xi) made any change in accounting procedures or practices;
(xii) authorized or effected any declaration, setting aside or
payment of any dividends or other distribution (whether in cash, stock
or property) with respect to any of Seller's capital stock;
(xiii) authorized or effected any split, combination or
reclassification of any of its capital stock or any issuance of any
other securities in respect of, in lieu of or in substitution for
shares of its capital stock; or
(xiv) entered into any agreement or understanding to do any of
the foregoing.
Section 6.14. Undisclosed Liabilities.
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Except as set forth on Schedule 6.14, the Seller does not have any
material liabilities or obligations, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, and Seller does not know of any
basis for any claim against Seller for any such material liabilities or
obligations, except: (i) to the extent set forth in this Agreement or in the
Schedules hereto or shown in the Seller's 1996 Financial Statement or (ii)
liabilities or obligations incurred in the ordinary course of business since
December 31, 1996.
Section 6.15. Litigation; Compliance with Law.
Except as set forth on Schedule 6.15, there are no actions, suits,
claims, proceedings or investigations (whether or not purportedly on behalf of
or against the Seller) pending or, to the Seller's knowledge, threatened
against the Seller at law or in equity, or before or by any Federal, state,
municipal or other governmental court, department commission, board, bureau,
agency or instrumentality, domestic or foreign. Seller is not in default with
respect to any order, writ, injunction or decree of any court or Federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality pertaining to the Business. Seller has complied in
all material respects with all laws, regulations and orders applicable to the
Business, including, without limitation, all laws relating to the safe conduct
of business and environmental protection and conservation. Seller has not
received notification of any asserted past or present failure so to comply
with any of such laws or with the Federal Occupational Safety and Health Act
that has not been remedied. Seller has no knowledge of any pending or
threatened litigation or government action which could prohibit or interfere
with the performance of this Agreement.
Section 6.16. Employee Claims against the Business.
No officer or employee of the Seller has any claim or claims against
Seller, and Seller is not obligated or liable to any of such persons in any
way or for any amounts, except current salaries, wages and current and accrued
vacation pay and bonuses, severance obligations, reimbursable business
expenses incurred in the ordinary course of business and incentive
compensation.
Section 6.17. Unemployment Insurance Rating.
Seller will complete and execute all forms required in connection with
the transfer to the Purchaser of unemployment insurance funds, and ratings and
workmen's compensation ratings (if and to the extent permissible under
applicable state law) with respect to the Business on account of the
transactions contemplated hereunder.
Section 6.18. Employee Benefit Plans.
(a) Schedule 6.18 contains a true and complete list as of the date of
this Agreement of all employee benefit plans or arrangements applicable to the
employees of Seller employed in the Business and all fixed or contingent
liabilities or obligations of Seller with respect to any person now
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or formerly employed by Seller in the Business including, without limitation,
pension or thrift plans, individual or supplemental pension or accrued
compensation arrangements, contributions to hospitalization or other health or
life insurance programs, incentive plans, bonus arrangements and vacation,
sick leave, disability and termination arrangements or policies, including
workers' compensation policies. Except as listed in Schedule 6.18, Seller
maintains no other employee benefit plan or arrangement applicable to the
employees of Seller employed in the Business and possesses no other fixed or
contingent liabilities or obligations with respect to any person now employed
by Seller in the Business. Schedule 6.18 also includes true and complete
copies of all employee handbooks, rules and regulations.
(b) Seller has furnished Purchaser with copies of all applicable plan
documents, trust documents, insurance contract summary plan descriptions of
the written plans and arrangements listed in Schedule 6.18 and with
descriptions, in writing, of the unwritten plans and arrangements listed in
Schedule 6.18.
(c) Seller has no employee benefit plans that are "tax qualified plans"
under Sections 401 et seq. of the Internal Revenue Code of 1986, as amended
(the "Code").
(d) All employee benefit and welfare plans or arrangements listed in
Schedule 6.18 were established and have been executed, managed and
administered in all material respects in accordance with all applicable
requirements of the Code, of the Employee Retirement Income Security Act of
1974, as amended, and of other applicable laws. Seller is not aware of the
existence of any governmental audit or examination of any of such plans or
arrangements or of any facts which would lead it to believe that any such
audit or examination is pending or threatened. There have been no federal
pension law excise taxes assessed against any of the benefit or welfare plans,
and Seller is not aware of any proceedings or events that could result in the
assessment of such excise taxes.
(e) There exists no action, suit or claim (other than routine claims
for benefits) with respect to any of such plans or arrangements pending or, to
the knowledge of Seller, threatened against any of such plans or arrangements,
and Seller possesses no knowledge of any facts which could give rise to any
such action, suit or claim. Except as set forth in Schedule 6.18, Seller is
not a party to any multi-employer pension benefit or welfare plans.
Section 6.19. Labor Relations.
Seller is not a party to or subject to any collective bargaining
agreements. Except as described in Schedule 6.8(a) hereto, Seller has no
written or oral contracts of employment with any employee.
Seller has provided Purchaser with true and complete copies of all such
written contracts of employment and true and accurate memoranda of any such
oral contracts.
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Seller, in the operation of the Business, has complied in all material
respects with all applicable laws, rules and regulations relating to the
employment of labor including, without limitation, those related to wages,
hours, collective bargaining, occupational safety, discrimination, and the
payment of social security and other payroll related taxes, and it has not
received any notice alleging that it has failed to comply in any material
respect with-any of the foregoing. There are no material controversies,
disputes or proceedings pending or, to the best of its knowledge, threatened,
between it and employees (singly or collectively) of the Business. In this
regard, Seller is now in material compliance with all federal, state and local
laws respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practice within the meaning of Section 8(a) of the Labor Management Relations
Act, 1947. There are no claims or complaints pending or to Seller's knowledge
threatened against Seller before any court or governmental agency involving
allegedly unlawful employment practices relating to Seller, except as referred
to in Schedule 6.19, and Seller will retain and assume all liability resulting
therefrom. To the knowledge of Seller, there are no union campaigns being
conducted to solicit cards from employees to authorize any additional unions
or to request a National Labor Relations Board certification election with
respect to any of Seller's employees at the Business.
Section 6.20. Insurance Policies.
The Seller has furnished the Purchaser with a list, attached hereto as
Schedule 6.20, which sets forth a brief description of all policies of fire,
liability and other forms of insurance currently maintained in force by the
Seller in respect to the Business and/or the Purchased Assets.
Section 6.21. Bank Accounts.
Schedule 1.1 attached hereto sets forth the name and location of each
bank in which the Business has an account, lock box or safe-deposit box and
names of all persons authorized to draw thereon or have access thereto.
Section 6.22. Capitalization.
(a) The authorized capital of Seller consists of 30,000,000 shares of
common stock, $.01 par value ("Seller Common Stock"). As of the close of
business on February 28, 1997: (i) 8,055,521 shares of Seller Common Stock
were issued and outstanding; (ii) no shares of Seller Common Stock were held
by Seller in its treasury; (iii) 990,079 shares of Seller Common Stock were
reserved for issuance pursuant to Seller's stock option plans; (iv) 365,820
shares of Seller Common Stock were reserved for issuance under bridge warrants
exercisable through April 2000; (v) 45,608 shares of Seller Common Stock were
reserved for issuance under warrants issued in connection with 8% secured
notes; (vi) 3,599,500 shares of Seller Common Stock were reserved for issuance
under Class A Warrants exercisable through August 9, 2000; (vii) 359,950
shares of Seller Common Stock were reserved for issuance under an option
exercisable through 2000; (viii) 359,950 shares of Seller Common Stock were
reserved for issuance under Class A Warrants exercisable through 2000; and
(ix) 432,303 shares of Seller Common Stock were reserved for issuance in
connection with the principal portion of the Seller Convertible Notes.
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(b) Except as set forth above, at the close of business on February 28,
1997 no shares of capital stock or other voting securities of Seller were
issued, reserved for issuance or outstanding. From February 28, 1997 to the
date of this Agreement, no shares of capital stock or other securities of
Seller have been issued. There are no other outstanding securities, options,
warrants, rights, agreements, arrangements or undertakings of any kind, to
which the Seller is a party or by which it is bound, obligating Seller to
issue, grant, extend or enter into any such security, option, warrant, right,
agreement, arrangement or undertaking.
Section 6.23. Investment Representation.
Seller is acquiring the Access Purchase Securities for Seller's own
account and not for the purpose of distribution except through the Form S-4 or
an exemption from registration under the Act. Seller is not acquiring the
Access Purchase Securities for purposes of any other distribution or with the
intent otherwise to divide Seller's participation with others or resell or
otherwise distribute the Access Purchase Securities except through the Form
S-4 or an exemption from registration under the Act.
Section 6.24. Disclosure.
Seller has provided Purchaser with complete and accurate information as
to Seller and its affairs. No representation or warranty made by Seller set
forth herein, or in any Schedule hereto, in any supplement to any Schedule, in
the Management Agreement, or in any certificate or other document delivered or
to be delivered in connection with the transactions contemplated by 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 the statement
not misleading in light of the circumstances in which it was made.
ARTICLE VII
Section 7. Representations and Warranties by Access.
In order to induce Seller to enter into this Agreement and to
consummate the transactions contemplated hereunder, Access makes the following
representations, warranties, covenants and agreements:
Section 7.1. Corporate Existence and Qualification.
Access is a corporation duly organized and validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own its properties and to carry on its
business as it is now being conducted and as it will be conducted on the
Closing Date. Access is qualified to do business as a foreign corporation in
all states where the conduct of its business so requires, including Rhode
Island and New York. Access has no subsidiaries.
Section 7.2. Access's Corporate Documents.
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Copies of the Restated Certificate of Incorporation and By-Laws,
including the respective amendments thereto, of Access, certified by the
Assistant Secretary of Access, have been delivered to Seller, and such copies
are true, complete and correct.
Section 7.3. Authorization of Agreement, Etc.
(a) Access has all requisite corporate power to enter into this
Agreement and to consummate the transactions contemplated hereby. Except for
the Access Director Approval and the Access Stockholder Approval, all
corporate and other actions required to be taken by Access to authorize it to
carry out this Agreement and the transactions contemplated hereby, have been,
or as of the Closing Date shall have been, duly and properly taken. This
Agreement and the Management Agreement have been duly executed and delivered
by Access, and each constitutes a valid and binding obligation of Access,
enforceable against Access in accordance with its terms. Neither the execution
and delivery by Access of this Agreement, the purchase of the Purchased
Assets, the assumption of the Assumed Liabilities nor the delivery of the
Access Purchase Securities, violate or will violate any provision of law
applicable to, or any provision of the corporate charter or by-laws of Access,
or conflict with or will result in any breach of any term, condition or
provision of, or constitute or will constitute (with due notice or lapse of
time or both) a default under, or will result in the creation or imposition of
any lien, charge or encumbrance upon any property of Access or upon the Access
Purchase Securities, pursuant to the terms of, any mortgage, deed of trust or
other agreement or instrument to which Access is a party or by which or to
which Access, or any of such property or the Access Purchase Securities, are
subject or bound, except to the extent that Access shall have obtained a
waiver or release thereof.
(b) The execution and delivery by Access of this Agreement and the
purchase of the Purchased Assets, the assumption of the Assumed Liabilities
and the delivery of the Access Purchase Securities or any other transaction
contemplated hereby require no consent, approval, order or authorization of,
or registration, declaration or filing with any Governmental Entity except as
referenced in Section 6.3 (b).
Section 7.4. Absence of Certain Developments. Except as set forth in
Schedule 7.4 attached hereto, since December 31, 1996, Access has not: (i) had
any change or changes in its condition, operations, business, properties,
assets or liabilities of any character, whether or not in the ordinary course
of business, that has had individually or in the aggregate, a material adverse
effect; (ii) made any changes in accounting procedures or practices; (iii)
authorized or effected any declaration, setting aside or payment of any
dividend or other distribution (whether in cash, stock or property) with
respect to any of Access's capital stock; or (iv) entered into any agreement
or understanding to do any of the foregoing.
Section 7.5. Undisclosed Liabilities. Access does not have any material
liabilities or obligations, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, and Access does not know of any
basis for any claim against Access for any such material liabilities or
obligations, except: (i) to the extent set forth in this Agreement or in the
Schedules hereto or
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shown in Access's December 31, 1996 unaudited financial statements or (ii)
liabilities or obligations incurred in the ordinary course of business since
December 31, 1996.
Section 7.6. Litigation; Compliance with Law. There are no actions,
suits, claims, proceedings or investigations pending or to Access's knowledge,
threatened against Access at law or in equity, or before or by any Federal,
state, municipal or other governmental court, department commission, board,
bureau, agency or instrumentality, domestic or foreign. Access is not in
default with respect to any order, writ, injunction or decree of any court or
Federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality pertaining to it. Access has complied in all
material respects with all laws, regulations and orders applicable to its
business, including, without limitation, all laws relating to the safe conduct
of business and environment protection and conservation. Access has not
received notification of any asserted past or present failure so to comply
with any of such laws or with the federal Occupational Safety and Health Act
that has not been remedied. Access has no knowledge of any pending or
threatened litigation or government action which would prohibit or interfere
with the performance of this Agreement.
Section 7.7. Capitalization; Status of Access Common Shares.
(a) The authorized capital stock of Access consists of 13,000,000
shares of Common Stock, par value $.01 per share, and 1,000,000 shares of
preferred stock, par value $.01 per share. Except as set forth in the
Prospectus dated October 16, 1996, previously delivered by Access to Seller or
as set forth on Schedule 7.7 hereto, there are not, and on the Closing will
not be, outstanding: (i) any options, warrants or other rights to purchase any
capital stock of Access; (ii) any securities convertible into or exchangeable
for shares of such stock; or (iii) any other commitments of any kind for the
issuance of additional shares of capital stock or options, warrants or other
securities of Access.
(b) Except as set forth above, no shares of capital stock or other
voting securities of Access are issued, reserved for issuance or outstanding.
There are no other outstanding securities, options, warrants, rights,
agreements, arrangements or undertakings of any kind, to which Access is a
party or by which it is bound, obligating Access to issue, grant, extend or
enter into any such security, option, warrant, right, agreement, arrangement
or undertaking.
(c) The Access Purchase Securities to be delivered to the Seller (or
for the Seller's account) in connection with the transactions contemplated
hereby will be, at the time of delivery, duly authorized, fully paid and
non-assessable and free and clear of all liens, claims and encumbrances. At
the time of delivery such Access Purchase Securities shall be free of any
transfer restriction legends other than the legend provided for in Section
13.1 hereof.
Section 7.8. SEC Filings.
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(a) Access has filed with the SEC all reports and filings required to
be filed with the SEC pursuant to the Securities Act, the Exchange Act, and
any other applicable federal securities laws, including without limitation:
(i) its Prospectus dated October 16, 1996, relating to its offering of
1,066,667 Units, each Unit consisting of two shares of common stock and one
redeemable warrant; and (ii) its quarterly reports on Form 10-QSB for the
quarterly periods, ending September 30, 1996, and December 31, 1996,
respectively.
(b) All of the reports and filings referred to in subparagraph (a) and
any that are filed prior to the Closing comply and will comply in all material
respects as to form and substance with the applicable federal securities laws
pursuant to which they were filed. To the best of Access' knowledge, no such
report or other filing, or any exhibit, schedule or attachment thereto
(whether or not incorporated by reference) contains or will contain any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances in which such statements were made.
(c) There has not been any material adverse change in the business,
operations or liabilities or prospects of Access since December 31, 1996, and
the filings and reports listed in the clauses (i) and (ii) inclusive, of
subparagraph (a), fairly and accurately reflect such business, operations and
liabilities and prospects as of the respective dates thereof. Without limiting
the generality of the foregoing sentence, Access has not filed a report on
Form 8-K since December 31, 1996.
Section 7.9. Information Supplied by Access.
None of the information supplied or to be supplied by Access for
inclusion or incorporation by reference in the Proxy Statement or in any other
filing of Seller will, at the time of the Seller Stockholder Meeting or on the
Closing Date, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statement not misleading in light of the circumstances under which they were
or will be made.
ARTICLE VIII
Section 8. Conduct Prior to Closing.
From and after the execution of this Agreement, and until the Closing
Date:
Section 8.1. Carry On in Ordinary Course. Seller shall carry on the
Business in the ordinary course of business and substantially in the same
manner as heretofore, and shall not make or institute any unusual or novel
methods of purchase, sale, lease, management, accounting or operation or make
any capital expenditures or take any action other than in the ordinary course.
Section 8.2. No General Increases. Without the prior written consent of
Purchaser, Seller shall not grant any general or uniform increase in the rates
of pay or employees of the Business nor grant any general or uniform increase
in the benefits under any bonus or pension plan or other contract or
commitment relating to employees of the Business; and except as approved in
writing by Purchaser, Seller shall not increase the compensation payable or to
become payable to officers or
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key salaried employees of the Business, or increase any bonus, insurance,
pension or other benefit plan, payment or arrangement made to, for or with any
of such officers, key salaried employees or agents of the Business.
Section 8.3. Contracts and Commitments. Seller shall not enter into any
contract or commitment affecting the Purchased Assets or engage in any
transaction not in the usual and ordinary course of business of the Business
and consistent with the business practices of the Business without the prior
written consent of Purchaser.
Section 8.4. Dispositions and Sale of Purchased Assets. Seller shall
not sell or dispose of or agree to sell or dispose of, any of the Purchased
Assets (other than Purchased Inventory in the ordinary course of business).
Section 8.5. Preservation of Organization. Seller shall use its
reasonable best efforts, provided that no material expenditure is required, to
preserve intact the business organization of the Business, to keep available
the services of current employees of the Business and to preserve for
Purchaser the present relationships of the Business with its suppliers and
customers and others having business relations with the Business.
Section 8.6. No Default. Seller shall not knowingly do any act or omit
to do any act, or (to the extent controllable by Seller) permit any act or
omission to act, which will cause a breach of any material contract,
commitment, judgment, order, injunction or obligation relating to the
Purchased Assets or the Business.
Section 8.7. Compliance with Laws. Seller shall duly comply with all
applicable laws in all material respects as may be required for the operation
of the Business and for the valid and effective transfer of the Purchased
Assets and the consummation of the transactions contemplated hereby.
Section 8.8. Operation of Business. Seller shall take or suffer no
action as shall render any warranty or representation contained in Article VI
untrue, inaccurate or misleading at Closing.
Section 8.9. Consents. Seller shall use its best efforts to obtain all
written consents of third parties necessary to transfer the Purchased Assets
to Buyer, but shall not be obligated to make any payments to third parties in
so doing unless Seller has heretofore agreed with any third party to make such
payments.
Section 8.10. Advisement of Changes.
Seller or Access, as the case may be, shall promptly advise the other
party orally and in writing upon its becoming aware of: (i) any representation
or warranty made by it in this Agreement being untrue or inaccurate as of the
date made in any material respect, (ii) the failure by it to comply with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or (iii) any change or
event which would have a material
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adverse effect on such party or on the ability of the conditions set forth in
Articles IX or X to be satisfied; provided however, that no such notification
shall affect the representations, warranties, covenants or agreements of the
parties or the conditions to the obligations of the parties under this
Agreement. Should either party become aware of a condition that requires a
change in the Schedules to this Agreement to ensure they were accurate on the
date made, Seller or Access, as the case may be, will promptly deliver to the
other party a supplement to such Schedules specifying such change.
Section 8.11. No Solicitation.
(a) Seller shall not, nor shall it authorize or permit any officer,
director or employee of or any investment banker, attorney or other advisor or
representative of, Seller, directly or indirectly: (i) solicit, initiate or
knowingly encourage the submission of any takeover proposal (as defined
below), (ii) enter into any agreement providing for any takeover proposal or
(iii) participate in any negotiations regarding, or furnish to any person any
non-public information with respect to, or take any other action knowingly to
facilitate the making of, any takeover proposal; provided, however, that if,
at any time prior to the receipt of the Seller Stockholder Approval, the Board
of Directors of the Seller determines in good faith that it is necessary to do
so in order to comply with its fiduciary duties to the Seller's stockholders
under applicable law, as advised by outside counsel, the Seller may, with
respect to an actual or potential unsolicited takeover proposal and subject to
compliance with Section 8.11: (x) furnish non-public information with respect
to the Seller to such person making such actual or potential unsolicited
takeover proposal and (y) participate in negotiations regarding such proposal.
(b) Neither the Board of Directors of the Seller nor any committee
thereof shall: (i) withdraw or modify, or propose to withdraw or modify, in a
manner adverse to Access, the approval or recommendation by such Board of
Directors or any such committee of this Agreement or the Closing, (ii) approve
or recommend or propose to approve or recommend, any takeover proposal or
(iii) enter into any agreement with respect to any takeover proposal.
(c) In addition to the obligations of Seller set forth in paragraphs
(a) and (b) of this Section 8.11, Seller shall promptly advise Access orally
and in writing of any request for information or of any takeover proposal or
any inquiry with respect to or which could reasonably be expected to lead to
any takeover proposal which, in any such case, is either: (i) in writing or
(ii) made to any executive officer or director of the Seller, the identity of
the person making any such request (to the extent practicable), takeover
proposal or inquiry and all the material terms and conditions thereof. Seller
will keep Access fully informed of the status and details (including
amendments or proposed amendments) of any such request, takeover proposal or
inquiry.
For purposes of this Agreement, the term "takeover proposal" shall mean
any proposal for a merger, consolidation or other business combination
involving Seller or any proposal or offer to acquire in any manner, directly
or indirectly, an equity interest in, any voting securities of, or a
substantial portion of the assets of Seller other than the transactions
contemplated by this Agreement.
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Section 8.12. No Delaying Transactions. Between the date of this
Agreement and the Closing Date, neither Seller nor Access will enter into any
transaction or enter into negotiations for any transaction that will delay the
consummation of the transactions contemplated by this Agreement.
Section 8.13. Lock-Up Agreements. Prior to the Closing, Access shall
use its reasonable best efforts to cause such of its shareholders who have
executed so-called "lock-up" agreements to execute a new lock-up agreement
containing a schedule substantially in the form of the schedule set forth in
Exhibit A-1. If Seller is reasonably satisfied with the percentage of such
shareholders of Access who have executed such a lock-up agreement, then, at
the Closing, Seller shall execute and deliver a lock-up agreement
substantially in the form of Exhibit A-1. Otherwise, at the Closing, Seller
shall execute and deliver a lock-up agreement substantially in the form of
Exhibit A-2 (the form of lock-up agreement to be so executed and delivered by
Seller shall be referred to as the "Lock-Up Agreement").
Section 8.14. Best Efforts. Between the date of this Agreement and the
Closing Date, Seller and Access will each use its reasonable best efforts to
cause the conditions in Article IX and X to be satisfied.
ARTICLE IX
Section 9. Conditions to Obligations of Access.
The obligation of Access to take the actions required to be taken by
Access at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Access, in whole or in part):
Section 9.1. Compliance by Seller; Correctness of Representations and
Warranties of Seller.
Except to the extent that Seller has delegated operational control of
the Business to Access pursuant to the Management Agreement, the Seller shall
have complied with and performed in all material respects all the terms,
covenants and conditions of this Agreement to be complied with and performed
(except as would not have a material adverse effect on the Business or the
Purchased Assets), and each of the representations and warranties made by the
Seller under this Agreement shall be true and correct in all material respects
as of the date of this Agreement (other than those representations and
warranties that expressly relate to an earlier date).
Section 9.2. Certified Resolutions of the Seller.
The Seller Stockholder Approval shall have been obtained, and Seller
shall have delivered to Purchaser a certificate signed by the Secretary or
Assistant Secretary of the Seller under its corporate seal setting forth the
votes constituting the authorization and approval of the board of directors
and
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stockholders of Seller of the sale of the Purchased Assets contemplated hereby
on the terms set forth herein.
Section 9.3. Approval by Purchaser's Counsel.
All actions, proceedings, instruments and documents required to carry
out this Agreement or incidental thereto and all other related legal matters
have been approved by counsel for the Purchaser, which approval will not be
unreasonably withheld.
Section 9.4. Opinions of Counsel for Seller.
(a) The Purchaser shall have received an opinion of Shereff, Friedman,
Xxxxxxx & Xxxxxxx, LLP, counsel for the Seller, dated the Closing Date, in
form and substance reasonably satisfactory to the Purchaser and its counsel,
to the effect that: (i) the Seller is a corporation duly organized and validly
existing and in good standing under the laws of Delaware and, has full
corporate power and authority, to carry on its business as it is now being
conducted and to own or hold under lease the properties and assets it now owns
or holds under lease; (ii) the Seller has all requisite corporate power and
authority to enter into this Agreement, to sell, convey, assign, transfer and
deliver the Purchased Assets to the Purchaser as provided in this Agreement
and to carry out any other transactions and agreements contemplated hereby;
(iii) the instruments of transfer and assignment delivered by the Seller to
the Purchaser are adequate to convey all rights of the Seller in the Purchased
Assets to Access in accordance with their terms; (iv) to such counsel's
knowledge, Section 6.22 accurately sets forth the capitalization of Seller;
(v) all corporate and other proceedings required to be taken by or on the part
of the Seller to authorize the Seller to carry out this Agreement and for the
Seller to sell, convey, assign, transfer and deliver the Purchased Assets and
enter into and perform its obligations under any other closing documents have
been duly and properly taken including any necessary approval by the
stockholders of the Seller of the transactions contemplated by this Agreement;
(vi) this Agreement and the instruments of transfer and other closing
documents have been duly executed and delivered by the Seller and constitute
valid and binding obligations of the Seller enforceable in accordance with
their terms; (vii) the execution, delivery and performance of this Agreement
will not contravene any applicable provision of law, any order of any court or
other agency of government known to such counsel, the Certificate of
Incorporation or By-Laws of the Seller; or, to such counsel's knowledge,
conflict with or result in any breach of the terms of, or constitute a default
under, any indenture, agreement or other instrument to which it is a party or
by which it or any of its assets is bound other than as would not have a
material adverse effect on the Business of Seller; (viii) the execution and
delivery of the Agreement and the consummation of the transactions
contemplated by the Agreement do not require any authorization, consent,
approval, exemption or other action by or notice to any court, arbitrator,
administrative or governmental body pursuant to any applicable law, statute,
ordinance, rule or regulation applicable to the Seller or the Business other
than as would not have a material adverse effect on the Business of the
Seller; (ix) there are no agreements known to such counsel pursuant to which
Seller has pledged its assets, or granted a lien, security interest or
encumbrance on any of the Purchased Assets except as set forth in Schedule
6.9; and (x) to the best of such counsel's knowledge, the information supplied
by the Seller in the Form S-4 (including any documents incorporated by
reference therein) on the effective date of the Form S-4, the date of mailing
of the Proxy Statement, and the date of the Seller Stockholder Meeting did not
contain any untrue statement of material fact or omit to state a material fact
-28-
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
In delivering such opinion and to the extent specified in such opinion
and deemed appropriate by such counsel and counsel to the Purchaser, such
counsel may rely, as to factual matters, upon certificates of the officers of
the Seller and upon opinions of associate counsel satisfactory to the
Purchaser and its counsel. Such opinion shall be limited to matters of New
York Law, Delaware Law and federal law.
(b) The Purchaser shall have received an opinion of Xxxxx, Xxxxxxxxx &
Xxxxxx, P.C., patent and trademark counsel to Seller, in form and substance
reasonably satisfactory to the Purchaser and its counsel.
Section 9.5. Consents of Third Parties.
All necessary consents, waivers or approvals of third parties required
for the lawful consummation of the transactions contemplated by this Agreement
as set forth on Schedule 6.8(b) shall have been obtained (and shown by
evidence reasonably satisfactory to the Purchaser) and shall be in full force
and effect.
Section 9.6. Certificate of Chief Executive Officer of Seller.
The Seller shall have delivered to Access a certificate of its Chief
Executive Officer, certifying, in such form as Access may reasonably request,
as to the fulfillment of the conditions set forth in Sections 9.1 and 9.5.
Section 9.7. Approval of Governmental Authorities.
No court or governmental authority shall have issued, any order, writ,
injunction or decree prohibiting the Purchaser from consummating the
transactions contemplated hereby or shall have commenced or threatened any
lawsuit concerning such transactions or indicated its opposition to such
transactions.
Section 9.8. Corporate Authority.
Purchaser shall have received all documents it shall have reasonably
requested from Seller relating to the existence and corporate and tax good
standing of Seller and the authority of Seller to enter into and consummate
the transactions contemplated by this Agreement.
Section 9.9. Lock-Up Agreement.
Seller shall have delivered to Access the "Lock-up Agreement."
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Section 9.10. Approval of Access Stockholders.
If applicable pursuant to Section 5.5(c), the Access Stockholder
Approval shall have been obtained.
Section 9.11. Form S-4 Effective.
The Form S-4 shall have become effective, and, at the Closing Date, no
stop order suspending the effectiveness of the Form S-4 shall have been issued
and no proceedings for that purpose shall have been instituted or shall be
pending or contemplated by the SEC.
ARTICLE X
Section 10. Conditions to Obligations of the Seller.
The obligation of the Seller to take the actions required to be taken
by Seller at the Closing is subject to the satisfaction at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
Section 10.1. Compliance by Access; Correctness of Representations
and Warranties.
Access shall have complied with and performed in all material respects
all the terms, covenants and conditions of this Agreement to be complied with
and performed (except as would have a material adverse effect on Access), and
all of the representations and warranties made by Access under this Agreement
shall be true and correct in all material respects as of the date of this
Agreement (other than those representations and warranties that expressly
relate to an earlier date).
Section 10.2. Certified Resolutions of Access.
Access shall have delivered to Seller a certificate signed by its
Secretary or Assistant Secretary respectively, under its corporate seal,
setting forth the votes or consents constituting the authorization and
approval of the directors (and, if applicable pursuant to Section 5.5(c), the
stockholders) of Access of this Agreement and the transactions contemplated
hereby on the terms set forth herein.
Section 10.3. Approval by Seller's Counsel.
All actions, proceedings, instruments and documents required to carry
out this Agreement or incidental thereto, and all other related legal matters,
shall have been approved by counsel for the Seller, which approval will not be
unreasonably withheld.
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Section 10.4. Opinion of Xxxxxxx & Xxxxxx.
The Seller shall have received an opinion of Xxxxxxx & Xxxxxx, counsel
for Access, dated the Closing Date, in form and substance reasonably
satisfactory to the Seller and its counsel to the effect that: (i) the
Purchaser is a corporation duly organized and existing and in good standing
under the laws of the State of Delaware and has full corporate power and
authority to carry on its business as it is now being conducted and to own or
hold under lease the properties and assets it now owns or holds under lease;
(ii) Purchaser is qualified to do business in Rhode island and New Jersey;
(iii) Purchaser has all requisite corporate power and authority to enter into
this Agreement, to purchase the Purchased Assets from Seller, to assume the
Assumed Liabilities, to deliver the Access Purchase Securities and to carry
out any of the transactions and agreements contemplated hereby; (iv) all
corporate and other proceedings required to be taken on the part of the
Purchaser to authorize it to enter into this Agreement and to perform its
obligations hereunder have been duly and properly taken; (v) this Agreement
and the other closing documents have been duly executed and delivered by the
Purchaser and constitute the valid and binding obligations of the Purchaser
enforceable in accordance with their terms; (vi) the execution, delivery and
performance of this Agreement will not violate any provision of law, any order
of any court or other agency of government known to such counsel, the
corporate charter or By-Laws of the Purchaser, or to such counsel's knowledge,
conflict with or result in any breach of the terms of, or constitute a default
under, any indenture, agreement, or other instrument to which it is a party or
by which it or any of its assets are bound other than as would not have a
material adverse effect on Purchaser; (vii) the execution and delivery of this
Agreement and consummation of the transactions contemplated by the Agreement
do not require any authorization, consent, approval, exemption or other action
by or notice to any court, arbitrator, administrative or governmental body
pursuant to any law, statute, ordinance, rule or regulation applicable to the
Purchaser other than as would not have a material adverse effect on Purchaser;
(viii) to such counsel's knowledge, Section 7.7 accurately sets forth the
capitalization of Purchaser; (ix) to the best of such counsel's knowledge, the
information supplied by Access in the Form S-4 (including documents
incorporated by reference therein) on the effective date of the Form S-4, the
date of mailing, and the date of the Access Stockholder Meeting (if
applicable) did not contain any untrue statement of 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; and (x) the Access Purchase Securities delivered to Seller are
duly authorized, fully paid and non-assessable, free and clear of liens,
claims and encumbrances and any transfer restrictions and legends other than
the legend provided in Section 13.1 hereof and the Lock-Up Agreement.
In delivering such opinion and to the extent specified in such opinion
and deemed appropriate by such counsel and counsel to the Seller, such counsel
may rely, as to factual matters, upon certificates of the officers of the
Purchaser and, upon opinions of associate counsel satisfactory to Seller and
its counsel. Such opinion shall be limited to matters of New York Law,
Delaware Law and federal law.
Section 10.5. Certificate of President of Purchaser.
The Purchaser shall have delivered to the Seller a certificate of its
President certifying, in such form as the Seller may reasonably request, as to
the fulfillment of the conditions set forth in Section 10.1 hereof.
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Section 10.6. Approval of Governmental Authorities.
No court or governmental authority shall have issued any order, writ,
injunction or decree prohibiting Seller from consummating the transactions
contemplated hereby, or shall have commenced or threatened any lawsuit
concerning such transactions or indicated its opposition to such transactions.
Section 10.7. Corporate Authority.
Seller shall have received all documents it shall have reasonably
requested from Access relating to the existence and corporate and tax good
standing of Access.
Section 10.8. Access Purchase Securities.
Purchaser shall have delivered certificates representing the Access
Purchase Securities to Seller.
Section 10.9. Form S-4 Effective.
The Form S-4 shall have become effective, and on the Closing Date, no
stop order suspending the effectiveness of the Form S-4 shall have been issued
and no proceedings for that purpose shall have been instituted or shall be
pending or contemplated by the SEC.
ARTICLE XI
Section 11. Fees and Expenses.
(a) Purchaser and Seller will pay their respective expenses, including
the expenses of their legal and accounting representatives and management
consultants, in connection with the origin, negotiation, execution and
performance of this Agreement, provided, however, that if the Closing occurs,
Purchaser shall assume and pay at the Closing Seller's reasonable expenses in
connection therewith.
(b) Seller shall pay, or cause to be paid, in same day funds to Access
Seven Hundred Fifty Thousand Dollars ($750,000) (the "Termination Fee") upon
demand if: (i) Access or Seller terminates this Agreement pursuant to Section
12.1(g); or (ii) if Access or Seller terminates this Agreement pursuant to
Section 12.1(c) where there shall have been made public prior to the Seller
Stockholder Meeting a takeover proposal involving Seller. Seller acknowledges
that the agreement contained in this Section 11(b) is an integral part of the
transactions contemplated by this Agreement, and that, without this agreement,
Access would not enter into this Agreement. Accordingly, if Seller fails
promptly to pay the amount due pursuant to this Section 11(b), and in order to
obtain such payment, Access commences a suit that results in a judgment
against Seller for the Termination Fee, Seller shall pay to Access its
reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit, together with interest on the amount of the
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Termination Fee at the prime rate of Fleet National Bank in effect on the date
such payment was required to be made.
ARTICLE XII
Section 12. Termination and Effect.
Section 12.1 Termination of Agreement. This Agreement may be terminated
by notice given prior to or at the Closing, whether before or after the Seller
Stockholder Approval or the Access Stockholder Approval:
(a) At the election of Seller, if any one or more of the
conditions in Article X to the obligation of the Seller to Closing has
not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Seller to comply with its obligations under this Agreement) and Seller
has not waived such condition on or before the Closing Date; or
(b) At the election of Access, if any one or more of the
conditions in Article IX to the obligation of the Purchaser to Closing
has not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the
failure of Access to comply with its obligations under this Agreement)
and Access has not waived such condition on or before the Closing Date;
or
(c) At the election of Seller or Access, if the Seller
Stockholders Meeting shall have concluded without the Seller
Stockholder Approval having been obtained;
(d) At the election of Access, if the Access Stockholder
Meeting shall have concluded without the Access Stockholder Approval
having been obtained (if applicable);
(e) At the election of Seller or Access, if a breach of any
provision of this Agreement has been committed by the other party which
has a material adverse effect and such breach has not been waived;
(f) At the election of Purchaser or Seller, if the Closing
shall not have taken place on or before October 31, 1997 (or such later
date as may be agreed to in writing by Access and Seller), provided
that the party exercising such right of termination shall not then be
in default under its obligations hereunder;
(g) At the election of Seller or Access, if the Board of
Directors of Seller approves or recommends a bona fide takeover
proposal to merge with or into Seller or to acquire, directly or
indirectly, all or a substantial portion of the shares of Seller Common
Stock then outstanding or all or substantially all of the assets of
Seller and otherwise on terms that the
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Board of Directors of Seller determines in its good faith judgment to
be more favorable to Seller's stockholders than the transactions
contemplated by this Agreement;
(h) By mutual written consent of Access and Seller;
(i) At the election of Access or Seller, if the Board of
Directors of Access shall not have ratified the execution of this
Agreement and authorized the transactions contemplated hereby on or
before April 30, 1997 (the "Access Director Approval"); or
(j) At the election of Seller, if Access shall not have
delivered to Seller by April 30, 1997 the agreement or agreements of
Stockholders of Access who hold at least twenty (20%) percent of the
common stock of Access to vote the shares of Access common stock that
he, she or it owns in favor of the consummation of the transactions
contemplated hereby.
Section 12.2. Effect of Termination.
If this Agreement is terminated pursuant to Section 12.1, all further
obligations of the parties under this Agreement will terminate, and this
Agreement shall become null and void and of no further effect, except for the
provisions of Sections 4.2, 4.3, 4.4, 11 and 17.5, without any liability on
the part of any party or any of its employees, representatives, agents,
directors, officers or stockholders; provided, however, that if this Agreement
is terminated by a party because of a willful breach of the Agreement by the
other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's willful failure to comply with its obligations under this
Agreement, the terminating party's right to pursue all legal remedies will
survive such termination; and, provided, further, that recovery for any
damages suffered shall be limited to actual out of pocket expenses incurred as
a result of such breach; and provided, further, that if this Agreement is
terminated due to failure to obtain the Access Director Approval or the Access
Stockholder Approval (if applicable), Access will amend the Convertible
Promissory Note dated January 29, 1997, issued by Seller so as to extend the
"Maturity Date" (as defined therein) to June 30, 1998. If a condition
precedent to any party's obligation is not satisfied, nothing contained herein
shall be deemed to require such party to terminate this Agreement, rather than
to waive such condition and proceed with the Closing.
ARTICLE XIII
Section 13. Acknowledgments of Seller.
Section 13.1. Restricted Securities. All certificates representing the
Access Purchase Securities shall be stamped with a legend in substantially the
following form:
The holder of this certificate has agreed not to directly or indirectly
issue, offer to sell, sell, grant an option for the sale of, transfer,
assign, hypothecate, pledge, or otherwise dispose of or encumber
(either pursuant to Rule 144 of the regulations under the Securities
Act of 1933, as amended, or otherwise), the securities represented by
this certificate, whether or not beneficially owned or registered in
the name of the holder, without the prior written consent of
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Access Solutions International, Inc. ("Company") and Xxxxxx Xxxxxxx &
Company, Inc., ("JSC"), except to the extent set forth in an agreement
dated [June _____, 1997] among PaperClip Software, Inc., the Company
and JSC and any subsequent agreement among the holder of this
certificate, the Company and JSC.
Section 13.2. Access to Information. Seller acknowledges receipt and
review of Access' Prospectus dated October 16, 1996, Form 10-QSB for the
quarterly period ending September 30, 1996 and Form 10-QSB for the quarterly
period ending December 31, 1996. Seller is aware of the financial condition of
Access, has had ample opportunity to investigate and ask questions regarding
same, and does not have any unanswered questions regarding same.
ARTICLE XIV
Section 14. Brokers' Commissions.
The parties hereby agree and warrant to each other that there are no
claims for brokerage commissions, or placement or finders' fees in connection
with the transactions contemplated by this Agreement, other than JSC, the
expenses of which will be paid by Access. Access hereby agrees to indemnify
and hold Seller harmless from the commissions, fees or claims of any person,
firm or corporation employed or retained or claiming to be employed or
retained, by Access to bring about, or to represent it, in the transactions
contemplated hereby. Seller hereby agrees to indemnify and hold Access
harmless from the commissions, fees or claims of any person, firm or
corporation employed or retained or claiming to be employed or retained, by
Seller or its agents to bring about, or to represent it, in the transactions
contemplated hereby.
ARTICLE XV
Section 15. Access to Facilities, Properties and Records.
From and after the date of this Agreement, each party hereto shall
afford to the officers, attorneys, accountants and other authorized
representatives of the other party hereto free and full access to the
facilities, properties, books and records of business and such party in order
that the other party may have full opportunity to make such investigation as
it shall desire to make of the affairs of such party regarding to the
Business, provided that such investigation shall not unreasonably interfere
with the operations of the business and shall at all times be governed by
those certain Confidentiality Agreements between Seller and Access dated
November 7, 1996, ("Confidentiality Agreements") which agreements shall remain
in full force and effect.
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ARTICLE XVI
Section 16. Survival of Representations.
Seller and Access agree that the representations and warranties
contained in this Agreement shall terminate upon the Closing, and thereafter
shall have no further force or effect.
ARTICLE XVII
Section 17. Miscellaneous.
Section 17.1. Amendment to Agreement; Waivers; Procedure.
(a) Each party to this Agreement may, by written notice to the other:
(i) extend the time for the performance of any of the obligations or other
acts of the other party, (ii) waive any inaccuracies in the representations of
the other party contained in this Agreement or in any document delivered
pursuant to this Agreement, and (iii) waive any compliance with any of the
covenants of the other party contained in this Agreement and waive performance
of any of the obligations of the other party.
(b) This Agreement may be amended by the parties at any time before or
after the Seller Stockholder Approval or the Access Stockholder Approval (if
applicable); provided, however, that after any such approval, there shall not
be made any amendment that by law requires further approval by the
stockholders of Seller or Access without first obtaining such further
approval. Neither this Agreement nor any provisions hereof may be amended,
modified or waived except by an instrument in writing signed on behalf of
Access and Seller.
(c) In order to be effective, a termination of this Agreement pursuant
to Section 12.1, or an amendment, extension or waiver pursuant to this Section
17.1, shall require in the case of Access or Seller, action by its Board of
Directors or the duly authorized designee of its Board of Directors.
Section 17.2. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns; provided, however,
that neither Access nor Seller may assign this Agreement in whole or in part
without the prior written consent of the other party, which consent will not
be unreasonably withheld or delayed.
Section 17.3. Entire Agreement.
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Seller
and Access dated January 2, 1997, and the letter from Access to Seller dated
March 26, 1997). This Agreement and the Schedules referred to herein, along
with the Management Agreement, the Shareholders' Agreements and the
Confidentiality Agreements, contain the entire agreement of the parties hereto
with respect to the purchase of the Purchased Assets and the other
transactions contemplated herein, and any reference herein to this Agreement
shall be deemed to include the Schedules hereto. In the event of any
inconsistency between the statements in the body of this Agreement and those
in the Schedules, the statements in the body of this Agreement will control.
Section 17.4. Headings.
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The descriptive headings in the Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
Section 17.5. Confidential Information; Publicity.
Any confidential information obtained by any party hereto from any
other shall not be disclosed or used by any such party should such
transactions not be effected, and each party shall be bound by the terms and
provisions of the Confidentiality Agreements (which shall remain in full force
and effect) and return to the other all documents and written information
obtained from such other party as such other party's counsel may request in
writing. Except as in the reasonable opinion of counsel to a party, may be
required by law, the parties agree that they will not make any public
disclosure of the transactions contemplated by this Agreement, including
announcements to employees, without the prior written approval of the content
of such disclosure from each other, which approval will not be unreasonably
withheld.
Section 17.6. Notices.
Any notice, waiver, request, information or other document to be given
hereunder to either of the parties by the other shall be in writing and will
be deemed to have been duly given when: (a) delivered personally (with written
confirmation of receipt), (b) sent by telecopier (with written confirmation of
receipt), provided that a copy is mailed by certified mail, return receipt
requested, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case as
follows:
If to Access, addressed to:
ACCESS SOLUTIONS INTERNATIONAL, INC.
000 Xxx Xxx Xxxx
Xxxxx Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, President and CEO
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx X. Xxxxxxxxx, Esq.
Xxxxxxx & Xxxxxx
0000 Xxxxxxxx Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Telecopy No.: (000) 000-0000
If to Seller, addressed to:
PAPERCLIP SOFTWARE, INC.
Xxxxx Xxxxxxxxxx Xxxxx
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Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxx, Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy (which shall not constitute notice) to
Xxxxxxx X. Xxxxxxxx, Esq.
Shereff, Friedman, Xxxxxxx & Xxxxxxx, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Any party may change the address to which notices are to be sent to it
by giving written notice of such change of address to the other parties in the
manner herein provided for giving notice.
Section 17.7. Bulk Sales Law.
Without admitting that the bulk sales law of any state is applicable to
the transactions contemplated by this Agreement, the parties waive compliance
with the bulk sales law of any state and Seller hereby agrees to indemnify and
hold harmless Purchaser and its respective stockholders, officers, directors,
employees and agents from and against any and all liabilities arising by
reason of such non-compliance in connection with the sale of the Purchased
Assets to Purchaser.
Section 17.8. Counterparts.
This Agreement may be executed in two or more counterparts, and each
such counterpart hereof shall be deemed to be an original instrument, and all
such counterparts together shall be deemed to constitute but one agreement.
Section 17.9. No Benefit to Others.
The representations, warranties, covenants and agreements contained in
this Agreement are for the sole benefit of the parties hereto and their
successors and permitted assigns, and they shall not be construed as
conferring any rights on any other persons.
Section 17.10. Governing Law.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York (without regard to the conflicts of law
principles thereof).
Section 17.11. No Waiver.
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Unless otherwise expressly stated, the rights and remedies of the
parties to this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power or privilege
under this Agreement or the documents referred to in this Agreement will
operate as a waiver of such right, power or privilege, and no single or
partial exercise of any such right, power or privilege will preclude any other
or further exercise of such right, power or privilege or the exercise of any
other right, power or privilege.
Section 17.12. Severability.
If any provision of this Agreement is held invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Agreement
will remain in full force and effect. Any provision of this Agreement held
invalid or unenforceable only in part or degree will remain in force and
effect to the extent not held invalid or unenforceable.
Section 17.13. Time of Essence.
With regard to all dates and time periods set forth or referred to in
this Agreement, time is of the essence.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
PAPERCLIP SOFTWARE, INC.
By: /s/ Xxxxxxx Xxxxx
---------------------------------------
Xxxxxxx Xxxxx, Chief Executive Officer
ACCESS SOLUTIONS INTERNATIONAL, INC.
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Xxxxxx X. Xxxxx, President and CEO
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