AGREEMENT AND PLAN OF MERGER
BETWEEN
THE XXXXXXXX GROUP, INC.,
CAG NEWCO, INC.
AND
ANTINORI SOFTWARE, INC.
AS OF JANUARY 29, 1997
TABLE OF CONTENTS
PAGE
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1. PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Fractional Shares . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Escrow Agreements . . . . . . . . . . . . . . . . . . . . . . . . 3
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . 3
1.5 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 4
1.6 Tax-Free Reorganization . . . . . . . . . . . . . . . . . . . . . 4
1.7 Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . . 4
2. REPRESENTATIONS AND WARRANTIES OF ANTINORI . . . . . . . . . . . . . . . 4
2.1 Organization and Good Standing. . . . . . . . . . . . . . . . . . 4
2.2 Power, Authorization and Validity . . . . . . . . . . . . . . . . 5
2.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 No Violation of Existing Agreements . . . . . . . . . . . . . . . 6
2.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.7 Antinori Financial Statements . . . . . . . . . . . . . . . . . . 6
2.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 7
2.10 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . 8
2.11 Agreements and Commitments. . . . . . . . . . . . . . . . . . . . 9
2.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 10
2.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Certain Transactions and Agreements . . . . . . . . . . . . . . . 11
2.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.16 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . 13
2.17 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.19 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 14
2.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 14
2.22 Government Contracts. . . . . . . . . . . . . . . . . . . . . . . 15
2.23 Sale of Antinori. . . . . . . . . . . . . . . . . . . . . . . . . 15
3. REPRESENTATIONS AND WARRANTIES OF XXXXXXXX . . . . . . . . . . . . . . . 16
3.1 Organization and Good Standing. . . . . . . . . . . . . . . . . . 16
3.2 Power, Authorization and Validity . . . . . . . . . . . . . . . . 16
3.3 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.4 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(i)
3.5 No Violation of Existing Agreements . . . . . . . . . . . . . . . 17
3.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
3.7 Xxxxxxxx Financial Statements . . . . . . . . . . . . . . . . . . 18
3.8 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.9 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . 18
3.10 Absence of Certain Changes. . . . . . . . . . . . . . . . . . . . 19
3.11 Agreements and Commitments. . . . . . . . . . . . . . . . . . . . 20
3.12 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 21
3.13 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . 22
3.14 Certain Transactions and Agreements . . . . . . . . . . . . . . . 22
3.15 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.16 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . 25
3.17 No Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.19 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 25
3.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
3.21 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 25
3.22 Government Contracts. . . . . . . . . . . . . . . . . . . . . . . 26
3.23 Sale of Xxxxxxxx. . . . . . . . . . . . . . . . . . . . . . . . . 26
4. ANTINORI PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . 27
4.1 Advise of Changes . . . . . . . . . . . . . . . . . . . . . . . . 27
4.2 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . 27
4.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 27
4.4 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . 29
4.6 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.7 No Other Negotiations . . . . . . . . . . . . . . . . . . . . . . 29
4.8 Access to Information . . . . . . . . . . . . . . . . . . . . . . 30
4.9 Satisfaction of Conditions Precedent. . . . . . . . . . . . . . . 30
4.10 Notification of Employee Problems . . . . . . . . . . . . . . . . 30
4.11 Antinori Affiliate Agreements . . . . . . . . . . . . . . . . . . 30
5. XXXXXXXX PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . . . . . 31
5.1 Advise of Changes . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Maintenance of Business . . . . . . . . . . . . . . . . . . . . . 31
5.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . 31
5.4 Regulatory Approvals. . . . . . . . . . . . . . . . . . . . . . . 33
5.5 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.6 No Other Negotiations . . . . . . . . . . . . . . . . . . . . . . 33
5.7 Access to Information . . . . . . . . . . . . . . . . . . . . . . 33
5.8 Satisfaction of Conditions Precedent. . . . . . . . . . . . . . . 34
5.9 Notification of Employee Problems . . . . . . . . . . . . . . . . 34
(ii)
5.10 Xxxxxxxx Affiliate Agreements . . . . . . . . . . . . . . . . . . 34
6. CLOSING MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.1 The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.2 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . 35
7. CONDITIONS TO OBLIGATIONS OF ANTINORI. . . . . . . . . . . . . . . . . . 35
7.1 Accuracy of Representations and Warranties. . . . . . . . . . . . 36
7.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 36
7.4 Opinion of Xxxxxxxx'x Counsel . . . . . . . . . . . . . . . . . . 36
7.5 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.6 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.7 Pooling Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.8 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . 36
8. CONDITIONS TO OBLIGATIONS OF XXXXXXXX. . . . . . . . . . . . . . . . . . 36
8.1 Accuracy of Representations and Warranties. . . . . . . . . . . . 37
8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . 37
8.4 Opinion of Antinori's Counsel . . . . . . . . . . . . . . . . . . 37
8.5 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.6 Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.7 Pooling Opinion . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.8 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . 37
9. TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . 38
9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.2 Certain Continuing Obligations. . . . . . . . . . . . . . . . . . 38
10. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES, CONTINUING
COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
10.1 Survival of Representations . . . . . . . . . . . . . . . . . . . 39
10.2 Antinori Agreement to Indemnify . . . . . . . . . . . . . . . . . 39
10.3 Xxxxxxxx Agreement to Indemnify . . . . . . . . . . . . . . . . . 40
11. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Governing Law; Dispute Resolution . . . . . . . . . . . . . . . . 40
11.2 Assignment; Binding Upon Successors and Assigns . . . . . . . . . 42
11.3 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.4 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.5 Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.6 Amendment and Waivers . . . . . . . . . . . . . . . . . . . . . . 42
(iii)
11.7 No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.8 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
11.9 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
11.10 Construction of Agreement . . . . . . . . . . . . . . . . . . . . 44
11.11 No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . . 44
11.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 44
11.13 Absence of Third Party Beneficiary Rights . . . . . . . . . . . . 44
11.14 Public Announcement . . . . . . . . . . . . . . . . . . . . . . . 44
11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.16 Time is of the Essence. . . . . . . . . . . . . . . . . . . . . . 45
11.17 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 45
Schedules
Exhibits
(iv)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered
into as of January 29, 1997, among The Xxxxxxxx Group, Inc., a Texas
corporation ("XXXXXXXX"), CAG Newco, Inc., a Texas corporation and a
wholly-owned subsidiary of Xxxxxxxx ("NEWCO"), and Antinori Software, Inc., a
Georgia corporation ("ANTINORI").
RECITALS
A. The parties intend that, subject to the terms and conditions
hereinafter set forth, Newco will merge with and into Antinori (the
"MERGER"). Antinori will be the surviving corporation and will become a
wholly-owned subsidiary of Xxxxxxxx, which will be renamed "XXXXXXXX-XXXXXXXX
GROUP, INC." The merger will occur pursuant to a Plan of Merger substantially
in the form of EXHIBIT A (the "PLAN OF MERGER") and the applicable provisions
of the laws of the States of Texas and Georgia. Upon the Merger, all
outstanding Common Stock of Antinori will be converted into Class A Voting
Common Stock of Xxxxxxxx and all outstanding Common Stock of Newco will be
converted into Common Stock of Antinori, in each case in the manner and on
the basis determined herein and as provided in the Plan of Merger.
B. The Merger is intended to be treated as a "pooling of
interests" for accounting purposes and a tax-free reorganization pursuant to
the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "CODE").
C. Concurrently with the execution and delivery of this
Agreement, Xxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxxx are
executing and delivering to Antinori's Secretary their unanimous written
consents, as all of Antinori's shareholders (the "ANTINORI SHAREHOLDERS"), to
the Merger, this Agreement, the Plan of Merger and the transactions provided
for herein.
D. Concurrently with the execution and delivery of this
Agreement: (i) Xxxxxx X. Xxxxxxxx is entering into with Xxxxxxxx (1) an
Employment Agreement in the form of EXHIBIT B-1, (2) a Noncompetition
Agreement in the form of EXHIBIT C, (3) the Escrow Agreement in the form of
EXHIBIT D-1, (4) an Intellectual Property Rights Agreement in the form of
EXHIBIT F, (5) a Confidentiality Agreement in the form of EXHIBIT N, (6) an
Antinori Affiliate Agreement substantially in the form of EXHIBIT G and (7)
the Shareholders Agreement in the form of EXHIBIT K; (ii) Xxxxx Xxxxxxxx is
entering into with Xxxxxxxx (1) a Escrow Agreement in the form of EXHIBIT
D-1, (2) an Antinori Affiliate Agreement in the form of EXHIBIT G and (3) the
Shareholders Agreement in the form of EXHIBIT K; (iii) Xxxxxxxx Xxxxxxxxx is
entering into with Xxxxxxxx (1) an Employment Agreement in the form of
EXHIBIT B-2, (2) a Noncompetition Agreement in the form of EXHIBIT C, (3) an
Intellectual Property Rights Agreement in the form of EXHIBIT F, (4) a
Confidentiality Agreement in the form of EXHIBIT M, (5) Stock Option
Agreements in the form of Exhibits L-1 and L-2, (6) an Antinori Affiliate
Agreement substantially in the form of EXHIBIT G and (7) the Shareholders
Agreement in the form of EXHIBIT K; (iv) Xxxxxxx Xxxxxx is entering into with
Xxxxxxxx (1) an Employment Agreement in the form of EXHIBIT B-3, (2) a
Noncompetition Agreement in the form of EXHIBIT C, (3) the Escrow Agreement
in the form of EXHIBIT D-1, (4) an Intellectual Property Rights Agreement in
the form of EXHIBIT F, (5) a Confidentiality Agreement in the form of EXHIBIT
N, (6) Stock Option Agreements in the form of EXHIBITS L-3 AND L-4, (7) an
Antinori Affiliate Agreement in the form of EXHIBIT G and (8) the
Shareholders Agreement in the form of EXHIBIT K; (v) Xxxxx
Basset is entering into with Xxxxxxxx a Stock Option Agreement in the form of
EXHIBIT L-5; and (vi) Xxxx XxXxxxxxxx is entering into with Xxxxxxxx a Stock
Option Agreement in the form of EXHIBIT L-6.
E. Concurrently with the execution and delivery of this
Agreement, X.X. Xxxxxxxx is entering into with Xxxxxxxx (1) an Employment
Agreement in the form of EXHIBIT B-4, (2) a Noncompetition Agreement in the
form of EXHIBIT C, (3) the Escrow Agreement in the form of EXHIBIT D-2, (4)
an Intellectual Property Rights Agreement in the form of EXHIBIT F, (5) a
Confidentiality Agreement in the form of EXHIBIT N, (6) an Xxxxxxxx Affiliate
Agreement in the form of EXHIBIT H and (7) the Shareholders Agreement in the
form of EXHIBIT K.
NOW, THEREFORE, in consideration of the foregoing and the
mutual agreements of Xxxxxxxx, Antinori and Newco contained herein, the
parties agree as follows:
1. PLAN OF MERGER
1.1 THE MERGER. The Plan of Merger will be filed with
the Secretaries of State of the States of Texas and Georgia as soon as
practicable after the Closing (as defined in Section 6.1; hereinafter the
"CLOSING"). The effective time of the Merger as specified in the Plan of
Merger (the "EFFECTIVE TIME") will occur on or before January 31, 1997 or on
such other date as the parties may mutually agree upon. Subject to the terms
and conditions of this Agreement and the Plan of Merger, Newco will be merged
with and into Antinori pursuant to the Plan of Merger and in accordance with
applicable provisions of the laws of the States of Texas and Georgia as
follows:
1.1.1 CONVERSION OF SHARES. The shares of
Antinori Common Stock, $.01 par value per share (the "ANTINORI COMMON
STOCK"), that are issued and outstanding immediately prior to the Effective
Time will by virtue of the Merger and at the Effective Time, and without
further action on the part of any holder thereof, be converted into the
Applicable Number of fully paid and nonassessable shares of Xxxxxxxx Class A
Voting Common Stock, no par value per share (the "XXXXXXXX CLASS A COMMON
STOCK"). Unless there is an adjustment to the shares to be issued in the
Merger pursuant to Section 1.1.2 below, the "APPLICABLE NUMBER" will equal
(a) 0.50946871 multiplied by (b) the total number of shares of Antinori
Common Stock issued and outstanding at the Effective Time. The shares to be
issued and the recipients thereof are identified on EXHIBIT 1.1.1.
1.1.2 ADJUSTMENTS FOR CAPITAL CHANGES. If prior
to the Merger, Xxxxxxxx recapitalizes either through a split-up of its
outstanding shares into a greater number, or through a combination of its
outstanding shares into a lesser number, or reorganizes, reclassifies or
otherwise changes its outstanding shares into the same or a different number
of shares of other classes (other than through a split-up or combination of
shares provided for in the previous clause), or declares a dividend on its
outstanding shares payable in shares or securities convertible into shares,
the number of shares of Xxxxxxxx Class A Common Stock into which the shares
of Antinori Common Stock are to be converted will be adjusted appropriately.
AGREEMENT AND PLAN OF MERGER - Page 2
1.1.3 ANTINORI TREASURY STOCK. All shares of
Antinori Common Stock that are held by Antinori as treasury stock shall be
cancelled and retired and no shares of Xxxxxxxx Common Stock, of Class A
Voting or Class B Non-Voting (collectively, "XXXXXXXX COMMON STOCK"), shall
be delivered or paid in exchange therefor.
1.2 FRACTIONAL SHARES. No fractional shares of Xxxxxxxx
Class A Common Stock will be issued in connection with the Merger, but in
lieu thereof, the holder of any shares of Antinori Common Stock who would
otherwise be entitled to receive a fraction of a share of Xxxxxxxx Class A
Common Stock would receive from Xxxxxxxx, promptly after the Effective Time,
an amount of cash equal to $23.83 multiplied by the fraction of a share of
Xxxxxxxx Class A Common Stock to which such holder would otherwise be
entitled.
1.3 ESCROW AGREEMENTS. Pursuant to the Escrow Agreement
in the form of EXHIBIT D-1 (the "ANTINORI ESCROW AGREEMENT"), Xxxxxxxx will
withhold from the shares of Xxxxxxxx Class A Common Stock that would
otherwise be delivered to the Antinori Shareholders, 25,700 shares of
Xxxxxxxx Class A Common Stock, being approximately (and less than) 5% of the
total number of shares of Xxxxxxxx Class A Common Stock issuable to such
shareholders in the Merger. On the Closing Date, Xxxxxxxx will deposit or
cause to be deposited in escrow pursuant to the Antinori Escrow Agreement
certificates representing the shares thus withheld (the "ANTINORI ESCROW
SHARES") as collateral for the indemnification obligations of the Antinori
Shareholders under Section 10.2, pending their release from escrow pursuant
to the Antinori Escrow Agreement.
Also on the Closing Date, Xxxxxxxx will deposit or cause to be
deposited in escrow pursuant to the Xxxxxxxx Escrow Agreement certificates
representing 25,700 shares of Xxxxxxxx Class A Common Stock (the "XXXXXXXX
ESCROW SHARES"). The Xxxxxxxx Escrow Shares will be held as collateral for
the indemnification obligations of the Xxxxxxxx Principal Shareholders under
Section 11.2, and pursuant to the Escrow Agreement in the form of EXHIBIT D-2
(the "XXXXXXXX ESCROW AGREEMENT"), pending their release from escrow pursuant
to the Xxxxxxxx Escrow Agreement.
1.4 EFFECTS OF THE MERGER. At the Effective Time: (a)
the separate existence of Newco will cease and Newco will be merged with and
into Antinori and Antinori will be the surviving corporation pursuant to the
terms of the Plan of Merger, (b) the Articles of Incorporation and Bylaws of
Antinori will continue unchanged as the Articles of Incorporation and Bylaws
of the surviving corporation, (c) each share of Newco Common Stock
outstanding immediately prior to the Effective Time will continue to be an
identical outstanding share of the surviving corporation, (d) the composition
of the Board of Directors of Antinori shall be as set forth in ANNEX 1 to
EXHIBIT A, (e) the officers of Antinori shall be the persons set forth in
ANNEX 1 to EXHIBIT A and (f) the Merger will, at and after the Effective
Time, have all of the effects provided by applicable law.
1.5 FURTHER ASSURANCES. Antinori agrees that if, at any
time after the Effective Time, Xxxxxxxx considers or is advised that any
further deeds, assignments or assurances are reasonably necessary or
desirable to vest, perfect or confirm in the surviving corporation title to
any property or rights of Antinori, Xxxxxxxx and any of its officers are
hereby authorized by
AGREEMENT AND PLAN OF MERGER - Page 3
Antinori to execute and deliver all such proper deeds, assignments and
assurances and do all other things necessary or desirable to vest, perfect or
confirm title to such property or rights in the surviving corporation and
otherwise to carry out the purposes of this Agreement, in the name of
Antinori or otherwise.
1.6 TAX-FREE REORGANIZATION. The parties intend to
adopt this Agreement as a tax-free plan of reorganization and to consummate
the Merger in accordance with the provisions of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code. The shares of Xxxxxxxx Class A Common Stock issued
in the Merger will be issued solely in exchange for the issued and
outstanding shares of Antinori Common Stock pursuant to this Agreement, and
no other transaction other than the Merger represents, provides for or is
intended to be an adjustment to the consideration paid for the Antinori
Common Stock. Except for cash paid in lieu of fractional shares, no
consideration that could constitute "other property" within the meaning of
Section 356 of the Code will be paid by Xxxxxxxx for shares of Antinori
Common Stock in the Merger. In addition, Xxxxxxxx represents that it
presently intends, and that at the Effective Time it will intend, to continue
Antinori's historic business or use a significant portion of Antinori's
business assets in a business. At the Closing, officers of Xxxxxxxx and
officers of Antinori will execute and deliver officers' certificates in the
forms of EXHIBITS E-1 AND E-2.
1.7 POOLING OF INTERESTS. The parties intend that the
Merger be treated as a "pooling of interests" for accounting purposes.
2. REPRESENTATIONS AND WARRANTIES OF ANTINORI
Antinori hereby represents and warrants that, except as set
forth in the Antinori Schedules:
2.1 ORGANIZATION AND GOOD STANDING. Antinori is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Georgia and has the corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted and as proposed to be conducted.
Antinori is duly qualified to do business as a foreign corporation
and is in good standing in each jurisdiction listed in SCHEDULE 2.1, which to
its knowledge is each jurisdiction in which the ownership of its properties,
the employment of its personnel or the conduct of its business requires it to
be so qualified, except where the failure to so qualify would not have a
material adverse effect on Antinori, its assets or properties or its
financial condition.
2.2 POWER, AUTHORIZATION AND VALIDITY.
2.2.1 Antinori has the corporate right, power,
legal capacity and authority to enter into and perform its obligations under
this Agreement and all agreements to which Antinori is or will be a party
that are required to be executed pursuant to this Agreement (the "ANTINORI
ANCILLARY AGREEMENTS"). The execution, delivery and performance of this
Agreement
AGREEMENT AND PLAN OF MERGER - Page 4
and the Antinori Ancillary Agreements have been duly and validly approved by
the Antinori Board of Directors and the Antinori Shareholders, as required by
applicable law.
2.2.2 No filing, authorization or approval,
governmental or otherwise, is necessary to enable Antinori to enter into, and
to perform its obligations under, this Agreement and the Antinori Ancillary
Agreements, except for (a) the filing of the Plan of Merger with the
Secretaries of State of the States of Texas and Georgia (which filing has
been authorized by all necessary corporate approvals) and publication of
notice thereof, and (b) consents required under contracts disclosed in
SCHEDULE 2.5 as exceptions to the representation made in the last sentence of
Section 2.5.
2.2.3 This Agreement and the Antinori Ancillary
Agreements are, or when executed and delivered by Antinori will be, valid and
binding obligations of Antinori, enforceable against Antinori in accordance
with their respective terms, except as to the effect, if any of (a)
applicable bankruptcy and other similar laws affecting the rights of
creditors generally, and (b) rules of law governing specific performance,
injunctive relief and other equitable remedies; provided, however, that the
Antinori Ancillary Agreements will not be effective until the earlier of the
date set forth therein or the Effective Time.
2.3 CAPITALIZATION.
(a) AUTHORIZED/OUTSTANDING CAPITAL STOCK. The
authorized capital stock of Antinori consists of 10,000,000 shares of
Antinori Common Stock, $.01 par value per share, of which 1,010,101 shares
are issued and outstanding as of this date and as of the Closing Date, and
all of which issued and outstanding shares are held of record and owned by
the Antinori Shareholders. Antinori has no authorized or issued share of
Preferred Stock. All issued and outstanding share of Antinori Common Stock
have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any right of rescission and have been
offered, issued, sold and delivered by Antinori in compliance with all
registration or qualification requirements (or applicable exemptions
therefrom) of applicable federal and state securities laws.
(b) OPTIONS/RIGHTS. Except as disclosed on
SCHEDULE 2.3, there are no stock appreciation rights, options, warrants,
conversion privileges or preemptive or other rights or agreements outstanding
to purchase or otherwise acquire any of Antinori's authorized but unissued
capital stock, there are no options, warrants, conversion privileges or
preemptive or other rights or agreements to which Antinori is a party
involving the purchase or other acquisition of any share of Antinori capital
stock, and there is no liability for dividends accrued but unpaid; and there
are no voting agreements, rights of first refusal or other restrictions
(other than normal restrictions on transfer under applicable federal and
state securities laws) applicable to any of Antinori's outstanding securities.
2.4 SUBSIDIARIES. Except as disclosed on SCHEDULE 2.4,
Antinori does not have any subsidiaries or any equity interests, direct or
indirect, in any corporation, partnership, joint venture of other business
entity.
AGREEMENT AND PLAN OF MERGER - Page 5
2.5 NO VIOLATION OF EXISTING AGREEMENTS. Neither the
execution and delivery of this Agreement or any Antinori Ancillary Agreement,
nor the consummation of the transactions provided for herein or therein, will
conflict with, or (with or without notice or lapse of time, or both) result
in a termination, breach, impairment or violation of, (a) any provision of
the Articles of Incorporation or Bylaws of Antinori, as currently in effect,
(b) to the knowledge of Antinori, any material instrument or contract to
which Antinori is a party or by which Antinori is bound, or (c) any federal,
state, local or foreign judgment, writ, decree, order, statute, rule or
regulation applicable to and that would have a material adverse effect on
Antinori or its assets or properties. The consummation of the Merger by
Antinori and succession by Xxxxxxxx to all rights, licenses, franchises,
leases and agreements of Antinori will not require the consent of any third
party and will not have a material adverse effect upon any such rights,
licenses, franchises, leases or agreements pursuant to the terms of those
agreements, other than as set forth in SCHEDULE 2.5.
2.6 LITIGATION. Except as set forth in SCHEDULE 2.6,
there is no action, proceeding or investigation pending or, to Antinori's
knowledge, threatened against Antinori before any court or administrative
agency that, if determined adversely to Antinori, may reasonably be expected
to have a material adverse effect on the present or future operations or
financial condition of Antinori or in which the adverse party or parties seek
to recover in excess of $25,000 against Antinori. Except as set forth on
SCHEDULE 2.6, there is no substantial basis for any person, firm, corporation
or entity to assert a claim against Antinori or Xxxxxxxx as successor in
interest to Antinori based upon: (a) ownership or rights to ownership of any
shares of Antinori Common Stock, (b) any rights as a Antinori securities
holder, including, without limitation, any option or other right to acquire
any Antinori securities, any preemptive rights or any rights to notice or to
vote, or (c) any rights under any agreement between Antinori and any Antinori
securities holder or former Antinori securities holder in such holder's
capacity as such.
2.7 ANTINORI FINANCIAL STATEMENTS. Antinori has
delivered to Xxxxxxxx the financial statements as set forth in SCHEDULE 2.7
(the "ANTINORI FINANCIAL STATEMENTS"). The Antinori Financial Statements
have been prepared on an accrual basis and, in all material respects, (a) are
in accordance with the books and records of Antinori, (b) fairly and
accurately represent the financial condition of Antinori at the respective
dates specified therein and the results of operations for the respective
periods specified therein in both cases in conformity with generally accepted
accounting principles, and (c) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis.
Except as set forth in SCHEDULE 2.7, to the knowledge of Antinori, Antinori
has no material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected, reserved against or disclosed in the Antinori Financial
Statements, except for (i) those that are not required to be reported in
accordance with such accounting principles and (ii) those that may have been
incurred after the issuance of the unaudited balance sheet of Antinori on
December 31, 1996 (the "BALANCE SHEET DATE") in the ordinary course of its
business.
Financial statements of Antinori as of December 31, 1995, December
31, 1994 and December 31, 1993 and for the years then ended, in each case
meeting the requirements of Regulation S-X promulgated by the Securities and
Exchange Commission, can be readily prepared
AGREEMENT AND PLAN OF MERGER - Page 6
from Antinori's financial statements as of such dates and for such years and
from other readily available information.
2.8 TAXES. Except as set forth in SCHEDULE 2.8, to the
knowledge of Antinori, Antinori has filed all federal, state, local and
foreign tax and information returns required to be filed, has paid all taxes
required to be paid in respect of all periods for which returns have been
filed, has made all necessary estimated tax payments, and has no material
liability for taxes in excess of the amount so paid. True, correct and
complete copies of all such tax and information returns have been provided or
made available by Antinori to Xxxxxxxx. Except as set forth on SCHEDULE 2.8,
to the knowledge of Antinori, Antinori is not delinquent in the payment of
any tax or in the filing of any tax returns, and no deficiencies for any tax
have been threatened, claimed, proposed or assessed which have not been
settled or paid. Except as set forth in SCHEDULE 2.8, no tax return of
Antinori has ever been audited by the Internal Revenue Service or any state
taxing agency or authority. For the purposes of this Section 2.8, the terms
"TAX" and "TAXES" include all federal, state, local and foreign income,
gains, franchise, excise, property, sales, use, employment, license, payroll,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding),
and, with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax.
Without limiting the foregoing, Antinori's election for treatment
as a sub-chapter "S" corporation was valid and proper at the time of such
election, has not been revoked and will continue to be valid and proper
through the Effective Time.
2.9 TITLE TO PROPERTIES. Antinori has good and
marketable title to all of its assets as shown on the balance sheet as of the
Balance Sheet Date included in the Antinori Financial Statements, free and
clear of all liens, charges or encumbrances (other than for taxes not yet due
and payable and Permitted Liens (as defined below)), other than such material
assets set forth on SCHEDULE 2.9 as were sold by Antinori in the ordinary
course of business since the Balance Sheet Date or which are subject to
capitalized leases. "PERMITTED LIENS" means any lien, mortgage, encumbrance
or restriction that is reflected in the Antinori Financial Statements and is
not in excess of $100,000 and which does not materially detract from the
value or materially interfere with the use, as currently used, of the
properties subject thereto or affected thereby or otherwise materially impair
the business operations being conducted thereon. There are no UCC financing
statements of record naming Antinori as debtor. Trust Company Bank is not a
creditor of Antinori. The machinery and equipment included in such assets
are in all material respects in good condition and repair, normal wear and
tear excepted, and all leases of real or personal property to which Antinori
is a party are fully effective and afford Antinori peaceful and undisturbed
possession of the subject matter of the lease. To its knowledge, Antinori is
not in violation of any material zoning, building, safety or environmental
ordinance, regulation or requirement or other law or regulation applicable to
the operation of owned or leased properties, and Antinori has not received
any notice of such violation with which it has not complied or had waived.
2.10 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet
Date, except as set forth in SCHEDULE 2.10, there has not been with respect
to Antinori:
AGREEMENT AND PLAN OF MERGER - Page 7
(a) to the knowledge of Antinori, any change in
the financial condition, properties, assets, liabilities business, results of
operations or prospects of Antinori, which change by itself or in conjunction
with all other such changes, whether or not arising in the ordinary course of
business, has had or can reasonably be expected to have a material adverse
effect on Antinori;
(b) to the knowledge of Antinori, any contingent
liability incurred by Antinori as guarantor or surety with respect to the
obligations of others;
(c) any material mortgage, encumbrance or lien
placed on any of the properties of Antinori;
(d) to the knowledge of Antinori, any material
obligation or liability incurred by Antinori other than in the ordinary
course of business;
(e) any purchase or sale or other disposition, or
any agreement or other arrangement for the purchase, sale or other
disposition, of any of the properties or assets of Antinori other than in the
ordinary course of business or in nonmaterial amounts;
(f) to the knowledge of Antinori, any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting the properties, assets or business of Antinori;
(g) any declaration, setting aside or payment of
any dividend on, or the making of any other distribution in respect of, the
capital stock of Antinori, any split, stock dividend, combination or
recapitalization of the capital stock of Antinori or any direct or indirect
redemption, purchase or other acquisition by Antinori of the capital stock of
Antinori;
(h) to the knowledge of Antinori, any material
labor dispute or claim of material unfair labor practices, any change in the
compensation payable or to become payable to any of Antinori's officers,
employees or agents earning compensation at an anticipated annual rate in
excess of $100,000, or any bonus payment or arrangement made to or with any
of such officers, employees or agents (except as previously disclosed in
writing to and approved in writing by Xxxxxxxx); or any change in the
compensation payable or to become payable to any of Antinori's other
officers, employees or agents other than normal annual compensation increases
in accordance with past practices or any bonus payment or arrangement made to
or with any of such other officers, employees or agents other than normal
bonuses or other arrangements made in accordance with past practices;
(i) any material change with respect to the
management, supervisory, development or other key personnel of Antinori (the
management, supervisory, development and other key personnel of Antinori
being listed on SCHEDULE 2.10(i));
(j) any payment or discharge of a material lien
or liability thereof, which lien or liability was not either (i) shown on the
balance sheet as of the Balance Sheet Date
AGREEMENT AND PLAN OF MERGER - Page 8
included in the Antinori Financial Statements or (ii) incurred in the
ordinary course of business after the Balance Sheet Date; or
(k) to the knowledge of Antinori, any obligation,
or material liability incurred by Antinori to any of its officers, directors
or shareholders, or any loans or advances made to any of its officers,
directors, shareholders or affiliate except normal compensation and expense
allowances payable to officers.
2.11 AGREEMENTS AND COMMITMENTS. Except as set forth in
SCHEDULE 2.11, or as listed in SCHEDULE 2.12, SCHEDULE 2.15.3 or SCHEDULE
2.15.6 as required by Section 2.12, Section 2.15.3 or Section 2.15.6,
respectively, to the knowledge of Antinori, Antinori is not a party or
subject to any oral or written executory agreement, obligation or commitment
that is material to Antinori, its financial condition, business or prospects
or which is described below and is not terminable within 60 days without cost
or penalty to Antinori:
(a) Any contract, commitment, letter agreement,
quotation or purchase order providing for payments by or to Antinori in an
aggregate amount of (i) $100,000 or more in the ordinary course of business
or (ii) $100,000 or more not in the ordinary course of business (except for
any contracts, commitments, letter agreements, quotations or purchase orders
providing for outstanding payments to Antinori solely with respect to ongoing
software maintenance services);
(b) Any license agreement as licensor (except for
any nonexclusive software license granted by Antinori to end-user customers
where the form of the license, excluding standard immaterial deviations, has
been provided to Xxxxxxxx);
(c) Any agreement by Antinori to encumber,
transfer or sell rights in or with respect to any Antinori Intellectual
Property (as defined in Section 2.12);
(d) Any agreement for the sale or lease of real
or personal property involving more than $100,000 per year;
(e) Any dealer, distributor, sales
representative, original equipment manufacturer, value added remarketer or
other agreement for the distribution of Antinori's products;
(f) Any franchise agreement or financing
statement;
(g) Any stock redemption or purchase agreement;
(h) Any joint venture contract or arrangement or
any other agreement that involves a sharing of profits with other persons;
(i) Any instrument evidencing indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligations, conditional sale, guarantee or otherwise, except for trade
indebtedness or any advance to any employee of Antinori incurred
AGREEMENT AND PLAN OF MERGER - Page 9
or made in the ordinary course of business, and except as disclosed in the
Antinori Financial Statements; or
(j) Any contract containing covenants purporting
to limit Antinori's freedom to compete in any line of business in any
geographic area.
All agreements, obligations and commitments listed
in SCHEDULE 2.11, SCHEDULE 2.12, SCHEDULE 2.15.3, or SCHEDULE 2.15.6 as
required by Section 2.11, Section 2.12, Section 2.15.3 or Section 2.15.6, as
the case may be, are valid and in full force and effect in all material
respects, and except as expressly noted, a true and complete copy of each has
been delivered to Xxxxxxxx. Except as noted on SCHEDULE 2.11 neither
Antinori nor, to the knowledge of Antinori, any other party is in breach of
or default under any material terms of any such agreement, obligation or
commitment. Antinori is not a party to any contract or arrangement that it
reasonably expects will have a material adverse effect on its business or
prospects.
2.12 INTELLECTUAL PROPERTY. To its knowledge, Antinori
owns all right, title and interest in, or has the right to use, all domestic
and foreign patent applications, patents, patent licenses, trademark
applications, trademarks, service marks, trade names, copyrights
applications, copyrights, trade secrets, know-how, technology, material
software licenses and other intellectual property and proprietary rights used
in or reasonably necessary to the conduct of its business as presently
conducted and the business of the development, production, marketing,
licensing and sale of commercial products using such intellectual property
and proprietary rights (excluding any infringement of any intellectual
property or property rights of a third party to the extent such infringement
may be caused by the use of such intellectual property and proprietary rights
of Antinori in combination with the intellectual property, software or other
products of Xxxxxxxx) ("XXXXXXXX INTELLECTUAL PROPERTY"). Antinori has taken
reasonable measures to protect all Antinori Intellectual Property, and,
except as set forth on SCHEDULE 2.12, Antinori has no knowledge of any
infringement of any Antinori Intellectual Property by any third party.
Notwithstanding the foregoing, the third party products listed on Schedule
2.12 (the "Antinori Third Party Products") are not owned by Antinori and
Antinori does not represent that the Antinori Third Party Products do not
infringe the intellectual property or other property rights of third parties;
Antinori represents only that it has obtained appropriate licensing rights to
the Antinori Third Party Products and its use of the Antinori Third Party
Products does not infringe the rights of Antinori's licensors. Set forth on
SCHEDULE 2.12 delivered to Xxxxxxxx herewith is a true and complete list of
all copyright and trademark registrations and all patents for Antinori
Intellectual Property owned by Antinori. Antinori has no knowledge of any
material loss, cancellation, termination of expiration of any such
registration or patent except as set forth on SCHEDULE 2.12. To the
knowledge of Antinori, the business of Antinori as conducted as of the date
hereof, including (without limitation) the business of development,
production, marketing, licensing and sale of commercial products using
Antinori Intellectual Property and proprietary rights, does not infringe or
violate any of the patents, trademarks, service marks, tradenames,
copyrights, trade secrets, proprietary rights or other intellectual property
of any other person, and Antinori has not received any written or oral claim
or notice of infringement or potential infringement of the intellectual
property of any other person which could be expected to have a material
adverse effect on Antinori's business. Notwithstanding the foregoing, with
respect to the Antinori Third Party Products, Antinori represents only that
it has obtained appropriate licensing rights to such
AGREEMENT AND PLAN OF MERGER - Page 10
Antinori Third Party Products and its use of the Antinori Third Party
Products does not infringe the rights of Antinori's licensors. Antinori has
the right to manufacture all of its products and the right to use all of its
registered user lists, and to its knowledge, is not using any confidential
information or trade secrets of any former employer of any past or present
employees.
2.13 COMPLIANCE WITH LAWS. Except as set forth in
SCHEDULE 2.13 and except where the failure to comply would not have a material
adverse effect on the business, operations or financial conditions of Antinori,
to its knowledge Antinori has complied, or prior to the Closing Date (as defined
in Section 6.1; hereinafter the "CLOSING DATE") will have complied, or is on
will be at the Closing Date in full compliance, in all respects material to
Antinori, with all applicable laws, ordinances, regulations and rules, and all
orders, writs, injunctions, awards, judgements and decrees, applicable to
Antinori or to the assets, properties and business of Antinori, including,
without limitation (a) all applicable federal and state securities laws and
regulations, (b) all applicable federal state and local laws, ordinances and
regulations, and all orders, writs, injunctions, awards, judgments and decrees,
pertaining to (i) the sale, licensing, leasing, ownership or management of
Antinori's owned, leased or licensed real or personal property, products or
technical data, (ii) employment or employment practices, terms and conditions of
employment or wages and hours, or (iii) safety, health, fire prevention,
environmental protection (including toxic waste disposal and related matters
described in Section 2.21), building standards, zoning or other similar matters,
(c) the Export Administration Act and regulations promulgated thereunder or
other laws, regulations, rules, orders, writs, injunctions, judgements or
decrees applicable to the export or re-export of controlled commodities or
technical data, or (d) the Immigration Reform and Control Act. To its
knowledge, Antinori has received all material permits and approvals from and has
made all material filings with third parties, including government agencies and
authorities, that are necessary to the conduct of its business as presently
conducted.
2.14 CERTAIN TRANSACTIONS AND AGREEMENTS. To Antinori's
knowledge, no person who is an officer or director of Antinori, or a member of
any officer's or director's immediate family, has any direct or indirect
ownership interest in any firm or corporation that competes with Antinori
(except with respect to any interest in less than 1% of the outstanding voting
shares of any corporation the stock of which is publicly traded). Except as set
forth in SCHEDULE 2.14, no person who is an officer or director of Antinori, or
any member of any officer's or director's immediate family, is directly or
indirectly interested in any material contract or informal arrangement with
Antinori, except for compensation for services as an officer, director or
employee of Antinori and except for the normal rights of a shareholder. Except
at set forth in SCHEDULE 2.14, none of such officers or directors or family
members has any interest in any property, real or personal, tangible or
intangible, including, without limitation, inventions, patents, copyrights,
trademarks, trade names or trade secrets, used in the business of Antinori,
except for the normal rights of a shareholder.
2.15 EMPLOYEES.
2.15.1 Except as set forth in SCHEDULE 2.15.1,
Antinori has no employment contract or material consulting agreement currently
in effect that is not terminable at will without
AGREEMENT AND PLAN OF MERGER - Page 11
penalty or payment of compensation by Antinori (other than agreements with
the sole purpose of providing for the confidentiality of proprietary
information or assignment of inventions).
2.15.2 Antinori (a) has never been and is not now
subject to a union organizing effort, (b) is not subject to any collective
bargaining agreement with respect to any of its employees, (c) is not subject to
any other contract, written or oral, with any trade or labor union, employees'
association or similar organization, and (d) to its knowledge has no material
current labor dispute. Antinori has no knowledge of any facts indicating that
the consummation of the transactions provided for herein will have a material
adverse effect on its labor relations, and has no knowledge that any of its key
development employees (each of whom is listed on SCHEDULE 2.10(i)) intends to
leave its employ.
2.15.3 SCHEDULE 2.15.3 delivered by Antinori to
Xxxxxxxx herewith contains a list of all pension, retirement, disability,
medical, dental or other health plans, life insurance or other death benefit
plans, profit sharing, deferred compensation agreements, stock, option, bonus or
other incentive plans, vacation, sick, holiday or other paid leave plans,
severance plans or other similar employee benefits plan maintained by Antinori
(the "EMPLOYEE PLANS"), including without limitation all "employee benefit
plans" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Antinori has delivered true and complete copies
or descriptions of all the Employee plans of Antinori to Xxxxxxxx. Except as
set forth in SCHEDULE 2.15.3, each of the Employee Plans, and its operation and
administration, is, to the knowledge of Antinori, in all material respects, in
compliance with all applicable, federal, state, local and other governmental
laws and ordinances, orders, rules and regulations, including the requirements
of ERISA and the Code. Except as set forth in SCHEDULE 2.15.3, any such
Employee Plans that are employee pension benefit plans (as defined in
Section 3(2) of ERISA) which are intended to qualify under Section 401(a)(8) of
the Code have received favorable determination letters that such plans satisfy
the qualification requirements of the Tax Equity and Fiscal Responsibility Act
of 1982, the Deficit Reduction Act of 1994 and the Retirement Equity Act of
1984. In addition, to the knowledge of Antinori, Antinori has never been a
participant in any "prohibited transaction," within the meaning of Section 406
of ERISA with respect to any employee pension benefit plan (as defined in
Section 3(2) of ERISA) which Antinori sponsors as employer or in which Antinori
participates as an employer, which was not otherwise exempt pursuant to
Section 408 of ERISA (including any individual exemption granted under
Section 408(a) of ERISA), or which could result in an excise tax under the Code.
The group health plans as defined in Section 4980B(g) of the Code, that benefit
employees of Antinori are in material compliance with the continuation coverage
requirements of subsection 4980B of the Code. To the knowledge of Antinori,
there are no outstanding violations of Section 4980B of the Code with respect to
any Employee Plan, covered employees or qualified beneficiaries. Except as set
forth in SCHEDULE 2.15.3, no employee of Antinori and no person subject to any
Antinori health plan has made medical claims during the twelve months preceding
the date hereof for $10,000 or more, in the aggregate, or, to Antinori's
knowledge, has any catastrophic illness.
2.15.4 To Antinori's knowledge, no employee of
Antinori is in material violation of (a) any term of any employment contract,
patent disclosure agreement or noncompetition agreement or (b) any other
contract or agreement, or any restrictive covenant, relating to the right of any
such employee to be employed by Antinori or to use trade secrets or
AGREEMENT AND PLAN OF MERGER - Page 12
proprietary information of others. To Antinori's knowledge, the employment
of any employee of Antinori does not of itself subject Antinori to any
liability to any third party.
2.15.5 Except as set forth in SCHEDULE 2.15.5,
Antinori is not a party to any (a) agreement with any executive officer or other
key employee of Antinori (i) the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
Antinori in the nature of any of the transactions contemplated by this Agreement
and the Plan of Merger, (ii) providing any term of employment or compensation
guarantee, or (iii) providing severance benefits or other benefits after the
termination of employment of such employee regardless of the reason for such
termination of employment or (b) agreement or plan, including, without
limitation, any stock option plan, stock appreciation rights plan or stock
purchase plan, any of the benefits of which will be materially increased, or the
vesting of benefits of which will be materially accelerated, by the occurrence
of any of the transactions contemplated by this Agreement and the Plan of Merger
or the value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement and the Plan of Merger.
Antinori is not obligated to make any excess parachute payment, as defined in
Section 280G(b)(1) of the Code, nor will any excess parachute payment be deemed
to have occurred as a result of or arising out of the Merger to the extent
Section 280G of the Code is applicable to Antinori.
2.15.6 A list of all employees, officers and
development consultants of Antinori and their current compensation and benefits
as of the date of this Agreement is set forth on SCHEDULE 2.15.6, which Antinori
has delivered to Xxxxxxxx.
2.15.7 All contributions due from Antinori with
respect to any of the Employee Plans have been made or accrued on Antinori's
financial statements, and no further contributions will be due or will have
accrued thereunder as of the Closing Date.
2.16 CORPORATE DOCUMENTS. Antinori has made available to
Xxxxxxxx for examination all documents and information listed in SCHEDULES 2.1
through 2.22 or other exhibits called for by this Agreement that have been
requested by Xxxxxxxx'x legal counsel, including, without limitation, the
following: (a) copies of Antinori's Articles of Incorporation and Bylaws as
currently in effect; (b) Antinori's minute book containing all records of all
proceedings, consents, actions and meetings of Antinori's directors and
shareholders; (c) Antinori's stock ledger, journal and other records reflecting
all stock issuances and transfers; and (d) all permits, orders and consents
issued by any regulatory agency with respect to Antinori, or any securities of
Antinori, and all applications for such permits, orders and consents.
2.17 NO BROKERS. Except for fees and expenses of The
Xxxxxxxx-Xxxxxxxx Company, Inc. (which fees and expenses shall not exceed
$200,000), Antinori is not obligated for the payment of fees or expenses of any
investment banker, broker or finder in connection with the origin, negotiation
or execution of this Agreement or the Plan of Merger or in connection with any
transaction provided for herein or therein.
2.18 DISCLOSURE. This Agreement, its exhibits and
schedules, and any of the certificates or documents to be delivered by Antinori
to Xxxxxxxx under this Agreement, taken
AGREEMENT AND PLAN OF MERGER - Page 13
together, do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
herein and therein, in light of the circumstances under which such statements
were made, not misleading.
2.19 BOOKS AND RECORDS. The books, records and accounts of
Antinori (a) are in all material respects true and complete, (b) have been
maintained in accordance with reasonable business practices on a basis
consistent with prior years, (c) are stated in reasonable detail and accurately
and fairly reflect the transactions and disposition of the assets of Antinori,
and (d) accurately and fairly reflect the basis for the Antinori Financial
Statements.
2.20 INSURANCE. Antinori maintains fire and casualty,
workers compensation, general liability, "key man" and other insurance as listed
on SCHEDULE 2.20. Antinori has no knowledge that any such insurance will not be
renewed in the normal course.
2.21 ENVIRONMENTAL MATTERS.
2.21.1 During the period that Antinori has leased
the premises currently occupied by it and those premises occupied by it since
the date of its incorporation, Antinori has not caused any and to its knowledge,
there have been no disposals, releases or threatened releases of Hazardous
Materials (as defined below) from or any presence thereof on any such premises
that would have a material adverse effect upon the business or financial
statements of Antinori. Antinori has no knowledge of any presence, disposals,
releases or threatened releases of Hazardous Materials on or from any of such
premises, which may have occurred prior to Antinori having taken possession of
any of such premises that would have a material adverse effect upon the business
or financial statements of Antinori. For purposes of this Agreement, the terms
"DISPOSAL," "RELEASE," and "THREATENED RELEASE" have the definitions assigned
thereto by the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the
purposes of this Section 2.21, "HAZARDOUS MATERIALS" mean any hazardous or toxic
substance, material or waste which is or becomes prior to the Closing Date (as
defined in Section 6.1) regulated under, or defined as a "hazardous substance,"
"pollutant," "contaminant," "toxic chemical," "hazardous material," "toxic
substance" or "hazardous chemical" under (i) CERCLA; (ii) the Emergency Planning
and Community Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; (iii) the
Hazardous Material Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; (iv) the
Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.; (v) the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 ET SEQ.;
(vi) regulations promulgated under any of the above statutes; or (vii) any
applicable state or local statute, ordinance, rule or regulation that has a
scope or purpose similar to those identified above.
2.21.2 To its knowledge, none of the premises
currently leased by Antinori or any premises previously occupied by Antinori is
in material violation of any federal, state or local law, ordinance, regulation
or order relating to industrial hygiene or to the environmental conditions in
such premises.
2.21.3 During the time that Antinori has leased the
premises currently occupied by it or any premises previously occupied by
Antinori, neither Antinori nor, to Antinori's knowledge, any third party, has
used, generated, manufactured or stored in such
AGREEMENT AND PLAN OF MERGER - Page 14
premises or transported to or from such premises any Hazardous Materials that
would have a material adverse effect upon the business or financial
statements of Antinori.
2.21.4 During the time that Antinori has leased the
premises currently occupied by it or any premises previously occupied by
Antinori, there has been no litigation, proceeding or administrative action
brought or threatened in writing against Antinori by, or any settlement reached
by Antinori with, any party or parties alleging the presence, disposal, release
or threatened release of any Hazardous Materials on, from or under any of such
premises.
2.21.5 During the period that Antinori has leased
the premises currently occupied by it or any premises previously occupied by
Antinori, to the knowledge of Antinori, no Hazardous Materials have been
transported from such premises to any site or facility now listed or proposed
for listing on the National Priorities List, at 40 C.F.R. Part 300, or any list
with a similar scope or purpose published by any state authority.
2.22 GOVERNMENT CONTRACTS. Antinori has no business
contracts with any independent or executive agency, division, subdivision, audit
group or procuring office of the federal government or of a state government,
including any prime contractor of the federal government and any higher level
subcontractor of a prime contractor of the federal government, and including any
employees or agents thereof, in each case acting in such capacity.
2.23 SALE OF ANTINORI. There are currently no discussions
to which Antinori is a party relating to (a) sale of all or a material portion
of Antinori's assets or (b) any merger, consolidation, liquidation, dissolution
or similar transaction involving Antinori or in which Antinori issues more than
20% of outstanding Antinori Common Stock or in which Antinori is required to
obtain the approval of its shareholders.
3. REPRESENTATIONS AND WARRANTIES OF XXXXXXXX
Xxxxxxxx hereby represents and warrants that, except as set
forth in the Xxxxxxxx Schedules:
3.1 ORGANIZATION AND GOOD STANDING. Xxxxxxxx is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas and has the corporate power and authority to own, operate
and lease its properties and to carry on its business as now conducted and as
proposed to be conducted.
Xxxxxxxx is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction listed in SCHEDULE 3.1, which to its
knowledge is each jurisdiction in which the ownership of its properties, the
employment of its personnel or the conduct of its business requires it to be so
qualified, except where the failure to so qualify would not have a material
adverse effect on Xxxxxxxx, its assets or properties or its financial condition.
AGREEMENT AND PLAN OF MERGER - Page 15
3.2 POWER, AUTHORIZATION AND VALIDITY.
3.2.1 Xxxxxxxx has the corporate right, power,
legal capacity and authority to enter into and perform its obligations under
this Agreement and all agreements to which Xxxxxxxx is or will be a party that
are required to be executed pursuant to this Agreement (the "XXXXXXXX ANCILLARY
AGREEMENTS"). The execution, delivery and performance of this Agreement and the
Xxxxxxxx Ancillary Agreements have been duly and validly approved by the
Xxxxxxxx Board of Directors and Xxxxxxxx'x shareholders holding not less than
two-thirds of the outstanding shares entitled to vote, as required by applicable
law.
3.2.2 No filing, authorization or approval,
governmental or otherwise, is necessary to enable Xxxxxxxx to enter into, and to
perform its obligations under, this Agreement and the Xxxxxxxx Ancillary
Agreements, except for (a) the filing of the Plan of Merger with the Secretaries
of State of the States of Texas and Georgia (which filing has been authorized by
all necessary corporate action) and publication of notice thereof and
(b) consents required under contracts disclosed in SCHEDULE 3.5 as exceptions to
the representations made in the last sentence of Section 3.5.
3.2.3 This Agreement and the Xxxxxxxx Ancillary
Agreements are, or when executed and delivered by Xxxxxxxx will be, valid and
binding obligations of Xxxxxxxx, enforceable against Xxxxxxxx in accordance with
their respective terms, except as to the effect, if any of (a) applicable
bankruptcy and other similar laws affecting the rights of creditors generally,
and (b) rules of law governing specific performance, injunctive relief and other
equitable remedies; provided, however, that the Xxxxxxxx Ancillary Agreements
will not be effective until the earlier of the date set forth therein or the
Effective Time.
3.3 CAPITALIZATION.
(a) AUTHORIZED/OUTSTANDING CAPITAL STOCK. The
authorized capital stock of Xxxxxxxx consists of 12,000,000 shares of Class A
Voting Common Stock, 500,000 shares of Class B Non-Voting Common Stock, and
5,000,000 shares of Preferred Stock, each no par value, of which 960,629 shares
of Xxxxxxxx Class A Common Stock and 3,167 shares of Class B Non-Voting Common
Stock, respectively, are issued and outstanding as of this date and as of the
Closing Date, and all of which issued and outstanding shares are held of record
and owned as set forth in SCHEDULE 3.3. Xxxxxxxx has no issued and outstanding
shares of Preferred Stock. All issued and outstanding share of Xxxxxxxx Common
Stock have been duly authorized and validly issued, are fully paid and
nonassessable, are not subject to any right of rescission and have been offered,
issued, sold and delivered by Xxxxxxxx in compliance with all registration or
qualification requirements (or applicable exemptions therefrom) of applicable
federal and state securities laws.
(b) OPTIONS/RIGHTS. Except as disclosed on
SCHEDULE 3.3, there are no stock appreciation rights, options, warrants,
conversion privileges or preemptive or other rights or agreements outstanding to
purchase or otherwise acquire any of Xxxxxxxx'x authorized but unissued capital
stock, there are no options, warrants, conversion privileges or preemptive or
other rights or agreements to which Xxxxxxxx is a party involving the purchase
or other acquisition of any share of Xxxxxxxx capital stock, and there is no
liability for dividends accrued but unpaid; and there are no voting agreements,
rights of first refusal or other restrictions (other than normal
AGREEMENT AND PLAN OF MERGER - Page 16
restrictions on transfer under applicable federal and state securities laws)
applicable to any of Xxxxxxxx'x outstanding securities.
3.4 SUBSIDIARIES. Except as disclosed on SCHEDULE 3.4,
Xxxxxxxx does not have any subsidiaries or any equity interests, direct or
indirect, in any corporation, partnership, joint venture of other business
entity.
3.5 NO VIOLATION OF EXISTING AGREEMENTS. Neither the
execution and delivery of this Agreement or any Xxxxxxxx Ancillary Agreement,
nor the consummation of the transactions provided for herein or therein, will
conflict with, or (with or without notice or lapse of time, or both) result in a
termination, breach, impairment or violation of, (a) any provision of the
Articles of Incorporation or Bylaws of Xxxxxxxx, as currently in effect, (b) to
the knowledge of Xxxxxxxx, any material instrument or contract to which Xxxxxxxx
is a party or by which Xxxxxxxx is bound, or (c) any federal, state, local or
foreign judgment, writ, decree, order, statute, rule or regulation applicable to
and that would have a material adverse effect on Xxxxxxxx or its assets or
properties. The consummation by Xxxxxxxx of the Merger will not require the
consent of any third party and will not have a material adverse effect upon any
rights, licenses, franchises, leases or agreements of Xxxxxxxx pursuant to the
terms of those agreements, other than as set forth in SCHEDULE 3.5.
3.6 LITIGATION. Except as set forth in SCHEDULE 3.6, there
is no action, proceeding or investigation pending or, to Xxxxxxxx'x knowledge,
threatened against Xxxxxxxx before any court or administrative agency that, if
determined adversely to Xxxxxxxx, may reasonably be expected to have a material
adverse effect on the present or future operations or financial condition of
Xxxxxxxx or in which the adverse party or parties seek to recover in excess of
$25,000 against Xxxxxxxx. Except as set forth on SCHEDULE 3.6, there is no
substantial basis for any person, firm, corporation or entity to assert a claim
against Xxxxxxxx based upon: (a) ownership or rights to ownership of any shares
of Xxxxxxxx Common Stock, (b) any rights as a Xxxxxxxx securities holder,
including, without limitation, any option or other right to acquire any Xxxxxxxx
securities, any preemptive rights or any rights to notice or to vote, or (c) any
rights under any agreement between Xxxxxxxx and any Xxxxxxxx securities holder
or former Xxxxxxxx securities holder in such holder's capacity as such.
3.7 XXXXXXXX FINANCIAL STATEMENTS. Xxxxxxxx has delivered
to Antinori the financial statements as set forth in SCHEDULE 3.7 (the "XXXXXXXX
FINANCIAL STATEMENTS"). The Xxxxxxxx Financial Statements, in all material
respects, (a) are in accordance with the books and records of Xxxxxxxx,
(b) fairly and accurately represent the financial condition of Xxxxxxxx at the
respective dates specified therein and the results of operations for the
respective periods specified therein in both cases in conformity with generally
accepted accounting principles, and (c) have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis. Except
as set forth in SCHEDULE 3.7, to its knowledge Xxxxxxxx has no material debt,
liability or obligation of any nature, whether accrued, absolute, contingent or
otherwise, and whether due or to become due, that is not reflected, reserved
against or disclosed in the Xxxxxxxx Financial Statements, except for (i) those
that are not required to be reported in accordance with such accounting
principles and (ii) those that may have been incurred after the issuance of the
AGREEMENT AND PLAN OF MERGER - Page 17
unaudited balance sheet of Xxxxxxxx on December 31, 1996 (the "BALANCE SHEET
DATE") in the ordinary course of its business.
Financial statements of Xxxxxxxx as of January 31, 1995, January 31,
1994 and January 31, 1993 and for the years then ended, in each case meeting the
requirements of Regulation S-X promulgated by the Securities and Exchange
Commission, can be readily prepared from Xxxxxxxx'x financial statements as of
such dates and for such years and from other readily available information.
3.8 TAXES. Except as set forth in SCHEDULE 3.8, to its
knowledge Xxxxxxxx has filed all federal, state, local and foreign tax and
information returns required to be filed, has paid all taxes required to be paid
in respect of all periods for which returns have been filed, has made all
necessary estimated tax payments, and has no material liability for taxes in
excess of the amount so paid. True, correct and complete copies of all such tax
and information returns have been provided or made available by Xxxxxxxx to
Xxxxxxxx. Except as set forth in SCHEDULE 3.8, to its knowledge Xxxxxxxx is not
delinquent in the payment of any tax or in the filing of any tax returns, and no
deficiencies for any tax have been threatened, claimed, proposed or assessed
which have not been settled or paid. Except as set forth in SCHEDULE 3.8 no tax
return of Xxxxxxxx has ever been audited by the Internal Revenue Service or any
state taxing agency or authority. For the purposes of this Section 3.8, the
terms "TAX" and "TAXES" include all federal, state local and foreign income,
gains, franchise, excise, property, sales, use, employment, license, payroll,
occupation, recording, value added or transfer taxes, governmental charges,
fees, levies or assessments (whether payable directly or by withholding), and,
with respect to such taxes, any estimated tax, interest and penalties or
additions to tax and interest on such penalties and additions to tax.
3.9 TITLE TO PROPERTIES. Xxxxxxxx has good and marketable
title to all of its assets as shown on the balance sheet as of the Balance Sheet
Date included in the Xxxxxxxx Financial Statements, free and clear of all liens,
charges or encumbrances (other than for taxes not yet due and payable and
Permitted Liens (as defined below)), other than such material assets set forth
on SCHEDULE 3.9 as were sold by Xxxxxxxx in the ordinary course of business
since the Balance Sheet Date or which are subject to capitalized leases.
"PERMITTED LIENS" means any lien, mortgage, encumbrance or restriction that is
reflected in the Xxxxxxxx Financial Statements and is not in excess of $100,000
and which does not materially detract from the value or materially interfere
with the use, as currently used, of the properties subject thereto or affected
thereby or otherwise materially impair the business operations being conducted
thereon. Except for UCC-1 financing statements naming Compass Bank as secured
party and UCC-1 financing statements filed as a precaution by equipment lessors,
there are no UCC financing statements of record naming Xxxxxxxx as debtor. The
machinery and equipment included in such assets are in all material respects in
good condition and repair, normal wear and tear excepted, and all leases of real
or personal property to which Xxxxxxxx is a party are fully effective and afford
Xxxxxxxx peaceful and undisturbed possession of the subject matter of the lease.
To its knowledge, Xxxxxxxx is not violation of any material zoning, building,
safety or environmental ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties, and
Xxxxxxxx has not received any notice of such violation with which it has not
complied or had waived.
AGREEMENT AND PLAN OF MERGER - Page 18
3.10 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet
Date, except as set forth in SCHEDULE 3.10, there has not been with respect to
Xxxxxxxx:
(a) to the knowledge of Xxxxxxxx, any change in the
financial condition, properties, assets, liabilities business, results of
operations or prospects of Xxxxxxxx, which change by itself or in conjunction
with all other such changes, whether or not arising in the ordinary course of
business, has had or can reasonably be expected to have a material adverse
effect on Xxxxxxxx;
(b) to the knowledge of Xxxxxxxx, any contingent
liability incurred by Xxxxxxxx as guarantor or surety with respect to the
obligations of others;
(c) any material mortgage, encumbrance or lien
placed on any of the properties of Xxxxxxxx;
(d) to the knowledge of Xxxxxxxx, any material
obligation or liability incurred by Xxxxxxxx other than in the ordinary course
of business;
(e) any purchase or sale or other disposition, or
any agreement or other arrangement for the purchase, sale or other disposition,
of any of the properties or assets of Xxxxxxxx other than in the ordinary course
of business or in nonmaterial amounts;
(f) to the knowledge of Xxxxxxxx, any damage,
destruction or loss, whether or not covered by insurance, materially and
adversely affecting the properties, assets or business of Xxxxxxxx;
(g) any declaration, setting aside or payment of
any dividend on, or the making of any other distribution in respect of, the
capital stock of Xxxxxxxx, any split, stock dividend, combination or
recapitalization of the capital stock of Xxxxxxxx or any direct or indirect
redemption, purchase or other acquisition by Xxxxxxxx of the capital stock of
Xxxxxxxx;
(h) to the knowledge of Xxxxxxxx, any material
labor dispute or claim of material unfair labor practices, any change in the
compensation payable or to become payable to any of Xxxxxxxx'x officers,
employees or agents earning compensation at an anticipated annual rate in excess
of $100,000, or any bonus payment or arrangement made to or with any of such
officers, employees or agents (except as previously disclosed in writing to and
approved in writing by Antinori); or any change in the compensation payable or
to become payable to any of Xxxxxxxx'x other officers, employees or agents other
than normal annual compensation increases in accordance with past practices or
any bonus payment or arrangement made to or with any of such other officers,
employees or agents other than normal bonuses or other arrangements made in
accordance with past practices;
(i) any material change with respect to the
management, supervisory, development or other key personnel of Xxxxxxxx (the
management, supervisory, development and other key personnel of Xxxxxxxx being
listed on SCHEDULE 3.10(i));
AGREEMENT AND PLAN OF MERGER - Page 19
(j) any payment or discharge of a material lien or
liability thereof, which lien or liability was not either (i) shown on the
balance sheet as of the Balance Sheet Date included in the Xxxxxxxx Financial
Statements or (ii) incurred in the ordinary course of business after the Balance
Sheet Date; or
(k) to the knowledge of Xxxxxxxx, any obligation,
or material liability incurred by Xxxxxxxx to any of its officers, directors or
shareholders, or any loans or advances made to any of its officers, directors,
shareholders or affiliate except normal compensation and expense allowances
payable to officers.
3.11 AGREEMENTS AND COMMITMENTS. Except as set forth in
SCHEDULE 3.11, or as listed in SCHEDULE 3.12, SCHEDULE 3.15.3 or SCHEDULE 3.15.6
as required by Section 3.12, Section 3.15.3 or Section 3.15.6, respectively, to
its knowledge, Xxxxxxxx is not a party or subject to any oral or written
executory agreement, obligation or commitment that is material to Xxxxxxxx, its
financial condition, business or prospects or which is described below and is
not terminable within 60 days without cost or penalty to Xxxxxxxx:
(a) Any contract, commitment, letter agreement,
quotation or purchase order providing for payments by or to Xxxxxxxx in an
aggregate amount of (i) $100,000 or more in the ordinary course of business or
(ii) $100,000 or more not in the ordinary course of business (except for any
contracts, commitments, letter agreements, quotations or purchase orders
providing for outstanding payments to Xxxxxxxx solely with respect to ongoing
software maintenance services);
(b) Any license agreement as licensor (except for
any nonexclusive software license granted by Xxxxxxxx to end-user customers
where the form of the license, excluding standard immaterial deviations, has
been provided to Antinori);
(c) Any agreement by Xxxxxxxx to encumber, transfer
or sell rights in or with respect to any Xxxxxxxx Intellectual Property (as
defined in Section 3.12);
(d) Any agreement for the sale or lease of real or
personal property involving more than $100,000 per year,
(e) Any dealer, distributor, sales representative,
original equipment manufacturer, value added remarketer or other agreement for
the distribution of Xxxxxxxx'x products;
(f) Any franchise agreement or financing statement;
(g) Any stock redemption or purchase agreement;
(h) Any joint venture contract or arrangement or
any other agreement that involves a sharing of profits with other persons;
AGREEMENT AND PLAN OF MERGER - Page 20
(i) Any instrument evidencing indebtedness for
borrowed money by way of direct loan, sale of debt securities, purchase money
obligations, conditional sale, guarantee or otherwise, except for trade
indebtedness or any advance to any employee of Xxxxxxxx incurred or made in
the ordinary course of business, and except as disclosed in the Xxxxxxxx
Financial Statements; or
(j) Any contract containing covenants purporting
to limit Xxxxxxxx'x freedom to compete in any line of business in any
geographic area.
All agreements, obligations and commitments listed
in SCHEDULE 3.11, SCHEDULE 3.12, SCHEDULE 3.15.3, or SCHEDULE 3.15.6 as
required by Section 3.11, Section 3.12, Section 3.15.3 or Section 3.15.6, as
the case may be, are valid and in full force and effect in all material
respects, and except as expressly noted, a true and complete copy of each has
been delivered to Antinori. Except as noted on SCHEDULE 3.11 neither
Xxxxxxxx nor, to the knowledge of Xxxxxxxx, any other party is in breach of
or default under any material terms of any such agreement, obligation or
commitment. Xxxxxxxx is not a party to any contract or arrangement that it
reasonably expects will have a material adverse effect on its business or
prospects.
3.12 INTELLECTUAL PROPERTY. To its knowledge, Xxxxxxxx
owns all right, title and interest in, or has the right to use, all domestic
and foreign patent applications, patents, patent licenses, trademark
applications, trademarks, service marks, trade names, copyrights
applications, copyrights, trade secrets, know-how, technology, material
software licenses and other intellectual property and proprietary rights used
in or reasonably necessary to the conduct of its business as presently
conducted and the business of the development, production, marketing,
licensing and sale of commercial products using such intellectual property
and proprietary rights (excluding any infringement of any intellectual
property or property rights of a third party to the extent such infringement
may be caused by the use of such intellectual property and proprietary rights
of Xxxxxxxx in combination with the intellectual property, software or other
products of Xxxxxxxx) ("XXXXXXXX INTELLECTUAL PROPERTY"). Xxxxxxxx has taken
reasonable measures to protect all Xxxxxxxx Intellectual Property, and,
except as set forth on SCHEDULE 3.12, Xxxxxxxx has no knowledge of any
infringement of any Xxxxxxxx Intellectual Property by any third party.
Notwithstanding the foregoing, the third party products listed on Schedule
3.12 (the "Xxxxxxxx Third Party Products") are not owned by Xxxxxxxx and
Xxxxxxxx does not represent that the Xxxxxxxx Third Party Products do not
infringe the intellectual property or other property rights of third parties;
Xxxxxxxx represents only that it has obtained appropriate licensing rights to
the Xxxxxxxx Third Party Products and its use of the Xxxxxxxx Third Party
Products does not infringe the rights of Xxxxxxxx'x licensors. Set forth on
SCHEDULE 3.12 delivered to Xxxxxxxx herewith is a true and complete list of
all copyright and trademark registrations and all patents for Xxxxxxxx
Intellectual Property owned by Xxxxxxxx. Xxxxxxxx has no knowledge of any
material loss, cancellation, termination of expiration of any such
registration or patent except as set forth on SCHEDULE 3.12. To the
knowledge of Xxxxxxxx, the business of Xxxxxxxx as conducted as of the date
hereof, including (without limitation) the business of development,
production, marketing, licensing and sale of commercial products using
Xxxxxxxx Intellectual Property and proprietary rights, does not infringe or
violate any of the patents, trademarks, service marks, tradenames,
copyrights, trade secrets, proprietary rights or other intellectual property
of any other person, and Xxxxxxxx has not received any written or oral claim
or notice of infringement or potential infringement of the
AGREEMENT AND PLAN OF MERGER - Page 21
intellectual property of any other person which could be expected to have a
material adverse effect on Xxxxxxxx'x business. Notwithstanding the
foregoing, with respect to the Xxxxxxxx Third Party Products, Xxxxxxxx
represents only that it has obtained appropriate licensing rights to such
Xxxxxxxx Third Party Products and its use of the Xxxxxxxx Third Party
Products does not infringe the rights of Xxxxxxxx'x licensors. Xxxxxxxx has
the right to manufacture all of its products and the right to use all of its
registered user lists, and to its knowledge, is not using any confidential
information or trade secrets of any former employer of any past or present
employees.
3.13 COMPLIANCE WITH LAWS. Except as set forth in
SCHEDULE 3.13 and except where the failure to comply would not have a
material adverse effect on the business, operations or financial conditions
of Xxxxxxxx, to its knowledge Xxxxxxxx has complied or prior to the Closing
Date will have complied, or is or will be at the Closing Date in full
compliance, in all respects material to Xxxxxxxx, with all applicable laws,
ordinances, regulations and rules, and all orders, writs, injunctions,
awards, judgements and decrees, applicable to Xxxxxxxx or to the assets,
properties and business of Xxxxxxxx, including, without limitation (a) all
applicable federal and state securities laws and regulations, (b) all
applicable federal state and local laws, ordinances and regulations, and all
orders, writs, injunctions, awards, judgments and decrees, pertaining to (i)
the sale, licensing, leasing, ownership or management of Xxxxxxxx'x owned,
leased or licensed real or personal property, products or technical data,
(ii) employment or employment practices, terms and conditions of employment
or wages and hours, or (iii) safety, health, fire prevention, environmental
protection (including toxic waste disposal and related matters described in
Section 3.21), building standards, zoning or other similar matters, (c) the
Export Administration Act and regulations promulgated thereunder or other
laws, regulations, rules, orders, writs, injunctions, judgements or decrees
applicable to the export or re-export of controlled commodities or technical
data, or (d) the Immigration Reform and Control Act. To its knowledge,
Xxxxxxxx has received all material permits and approvals from and has made
all material filings with third parties, including government agencies and
authorities, that are necessary to the conduct of its business as presently
conducted.
3.14 CERTAIN TRANSACTIONS AND AGREEMENTS. To Xxxxxxxx'x
knowledge, no person who is an officer or director of Xxxxxxxx, or a member
of any officer's or director's immediate family, has any direct or indirect
ownership interest in any firm or corporation that competes with Xxxxxxxx
(except with respect to any interest in less than 1% of the outstanding
voting shares of any corporation the stock of which is publicly traded).
Except as set forth in SCHEDULE 3.14, no person who is an officer or director
of Xxxxxxxx, or any member of any officer's or director's immediate family,
is directly or indirectly interested in any material contract or informal
arrangement with Xxxxxxxx, except for compensation for services as an
officer, director or employee of Xxxxxxxx and except for the normal rights of
a shareholder. Except at set forth in SCHEDULE 3.14, none of such officers
or directors or family members has any interest in any property, real or
personal, tangible or intangible, including, without limitation, inventions,
patents, copyrights, trademarks, trade names or trade secrets, used in the
business of Xxxxxxxx, except for the normal rights of shareholder.
3.15 EMPLOYEES.
3.15.1 Except as set forth in SCHEDULE 3.15.1
Xxxxxxxx has no employment contract or material consulting agreement
currently in effect that is not terminable at will without
AGREEMENT AND PLAN OF MERGER - Page 22
penalty or payment of compensation by Xxxxxxxx (other than agreements with
the sole purpose of providing for the confidentiality of proprietary
information or assignment of inventions).
3.15.2 Xxxxxxxx (a) has never been and is not now
subject to a union organizing effort, (b) is not subject to any collective
bargaining agreement with respect to any of its employees, (c) is not subject
to any other contract, written or oral, with any trade or labor union,
employees' association or similar organization, and (d) to its knowledge has
no material current labor dispute. Xxxxxxxx has no knowledge of any facts
indicating that the consummation of the transactions provided for herein will
have a material adverse effect on its labor relations, and has no knowledge
that any of its key development employees (each of whom is listed on SCHEDULE
3.10.(i)) intends to leave its employ.
3.15.3 SCHEDULE 3.15.3 delivered by Xxxxxxxx to
Xxxxxxxx herewith contains a list of all pension, retirement, disability,
medical, dental or other health plans, life insurance or other death benefit
plans, profit sharing, deferred compensation agreements, stock, option, bonus
or other incentive plans, vacation, sick, holiday or other paid leave plans,
severance plans or other similar employee benefits plan maintained by
Xxxxxxxx (the "EMPLOYEE PLANS"), including without limitation all "employee
benefit plans" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). Xxxxxxxx has delivered true and
complete copies or descriptions of all the Employee plans of Xxxxxxxx to
Xxxxxxxx. Except as set forth in SCHEDULE 3.15.3, each of the Employee
Plans, and its operation and administration, is, to Xxxxxxxx'x knowledge, in
all material respects, in compliance with all applicable, federal, state,
local and other governmental laws and ordinances, orders, rules and
regulations, including the requirements of ERISA and the Code. Except as set
forth in SCHEDULE 3.15.3, any such Employee Plans that are employee pension
benefit plans (as defined in Section 3(2) of ERISA) which are intended to
qualify under Section 401(a)(8) of the Code have received favorable
determination letters that such plans satisfy the qualification requirements
of the Tax Equity and Fiscal Responsibility Act of 1982, the Deficit
Reduction Act of 1994 and the Retirement Equity Act of 1984. In addition, to
its knowledge, Xxxxxxxx has never been a participant in any "prohibited
transaction," within the meaning of Section 406 of ERISA with respect to any
employee pension benefit plan (as defined in Section 3(2) of ERISA) which
Xxxxxxxx sponsors as employer or in which Xxxxxxxx participates as an
employer, which was not otherwise exempt pursuant to Section 408 of ERISA
(including any individual exemption granted under Section 408(a) of ERISA),
or which could result in an excise tax under the Code. The group health
plans as defined in Section 4980B(g) of the Code, that benefit employees of
Xxxxxxxx are in material compliance with the continuation coverage
requirements of subsection 4980B of the Code. To the knowledge of Xxxxxxxx,
there are no outstanding violations of Section 4980B of the Code with respect
to any Employee Plan, covered employees or qualified beneficiaries. Except
as set forth in SCHEDULE 3.15.3, no employee of Xxxxxxxx and no person
subject to any Xxxxxxxx health plan has made medical claims during the twelve
months preceding the date hereof for $10,000 or more, in the aggregate, or,
to Xxxxxxxx'x knowledge, has any catastrophic illness.
3.15.4 To Xxxxxxxx'x knowledge, no employee of
Xxxxxxxx is in material violation of (a) any term of any employment contract,
patent disclosure agreement or noncompetition agreement or (b) any other
contract or agreement, or any restrictive covenant, relating to the right of
any such employee to be employed by Xxxxxxxx or to use trade secrets or
AGREEMENT AND PLAN OF MERGER - Page 23
proprietary information of others. To Xxxxxxxx'x knowledge, the employment
of any employee of Xxxxxxxx does not of itself subject Xxxxxxxx to any
liability to any third party.
3.15.5 Except as set forth in SCHEDULE 3.15.5,
Xxxxxxxx is not a party to any (a) agreement with any executive officer or
other key employee of Xxxxxxxx (i) the benefits of which are contingent, or
the terms of which are materially altered, upon the occurrence of a
transaction involving Xxxxxxxx in the nature of any of the transactions
contemplated by this Agreement and the Plan of Merger, (ii) providing any
term of employment or compensation guarantee, or (iii) providing severance
benefits or other benefits after the termination of employment of such
employee regardless of the reason for such termination of employment, or (b)
agreement or plan, including, without limitation, any stock option plan,
stock appreciation rights plan or stock purchase plan, any of the benefits of
which will be materially increased, or the vesting of benefits of which will
be materially accelerated, by the occurrence of any of the transactions
contemplated by this Agreement and the Plan of Merger or the value of any of
the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement and the Plan of Merger. Xxxxxxxx
is not obligated to make any excess parachute payment, as defined in Section
280G(b)(1) of the Code, nor will any excess parachute payment be deemed to
have occurred as a result of or arising out of the Merger to the extent
Section 280G of the Code is applicable to Xxxxxxxx.
3.15.6 A list of all employees, officers and
development consultants of Xxxxxxxx and their current compensation and
benefits as of the date of this Agreement is set forth on SCHEDULE 3.15.6,
which Xxxxxxxx has delivered to Antinori.
3.15.7 All contributions due from Xxxxxxxx with
respect to any of the Employee Plans have been made or accrued on Xxxxxxxx'x
financial statements, and no further contributions will be due or will have
accrued thereunder as of the Closing Date.
3.16 CORPORATE DOCUMENTS. Xxxxxxxx has made available to
Antinori for examination all documents and information listed in SCHEDULES
3.1 through 3.22 or other exhibits called for by this Agreement that have
been requested by Antinori's legal counsel, including, without limitation,
the following: (a) copies of Xxxxxxxx'x Articles of Incorporation and Bylaws
as currently in effect; (b) Xxxxxxxx'x minute book containing all records of
all proceedings, consents, actions and meetings of Xxxxxxxx'x directors and
shareholders; (c) Xxxxxxxx'x stock ledger, journal and other records
reflecting all stock issuances and transfers; and (d) all permits, orders and
consents issued by any regulatory agency with respect to Xxxxxxxx, or any
securities of Xxxxxxxx, and all applications for such permits, orders and
consents.
3.17 NO BROKERS. Xxxxxxxx is not obligated for the
payment of fees or expenses of any investment banker, broker or finder in
connection with the origin, negotiation or execution of this Agreement or the
Plan of Merger or in connection with any transaction provided for herein or
therein.
3.18 DISCLOSURE. This Agreement, its exhibits and
schedules, and any of the certificates or documents to be delivered by
Xxxxxxxx to Antinori under this Agreement, taken together, do not contain any
untrue statement of a material fact or omit to state a material fact
AGREEMENT AND PLAN OF MERGER - Page 24
necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
3.19 BOOKS AND RECORDS. The books, records and accounts
of Xxxxxxxx (a) are in all material respects true and complete, (b) have been
maintained in accordance with reasonable business practices on a basis
consistent with prior years, (c) are stated in reasonable detail and
accurately and fairly reflect the transactions and disposition of the assets
of Xxxxxxxx, and (d) accurately and fairly reflect the basis for the Xxxxxxxx
Financial Statements.
3.20 INSURANCE. Xxxxxxxx maintains fire and casualty,
workers compensation, general liability, "key man" and other insurance as
listed on SCHEDULE 3.20. Xxxxxxxx has no knowledge that any such insurance
will not be renewed in the normal course.
3.21 ENVIRONMENTAL MATTERS.
3.21.1 During the period that Xxxxxxxx has leased
the premises currently occupied by it and those premises occupied by it since
the date of its incorporation, Xxxxxxxx has not caused any and to its
knowledge, there have been no disposals, releases or threatened releases of
Hazardous Materials (as defined below) from or any presence thereof on any
such premises that would have a material adverse effect upon the business or
financial statements of Xxxxxxxx. Xxxxxxxx has no knowledge of any presence,
disposals, releases or threatened releases of Hazardous Materials on or from
any of such premises, which may have occurred prior to Xxxxxxxx having taken
possession of any of such premises that would have a material adverse effect
upon the business or financial statements of Xxxxxxxx. For purposes of this
Agreement, the terms "DISPOSAL," "RELEASE," and "THREATENED RELEASE" have the
definitions assigned thereto by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq., as
amended ("CERCLA"). For the purposes of this Section 3.21.1, "HAZARDOUS
MATERIALS" mean any hazardous or toxic substance, material or waste which is
or becomes prior to the Closing Date (as defined in Section 6.1) regulated
under, or defined as a "hazardous substance," "pollutant," "contaminant,"
"toxic chemical," "hazardous material," "toxic substance" or "hazardous
chemical" under (i) CERCLA; (ii) the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Section 11001 ET SEQ.; (iii) the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; (iv) the Toxic
Substances Control Act, 15 U.S.C.Section 2601 ET SEQ.; (v) the Occupational
Safety and Health Act of 1970, 29 U.S.C. Section 651 ET SEQ.; (vi)
regulations promulgated under any of the above statutes; or (vii) any
applicable state or local statute, ordinance, rule or regulation that has a
scope or purpose similar to those identified above.
3.21.2 To its knowledge, none of the premises
currently leased by Xxxxxxxx or any premises previously occupied by Xxxxxxxx
is in material violation of any federal, state or local law, ordinance,
regulation or order relating to industrial hygiene or to the environmental
conditions in such premises.
3.21.3 During the time that Xxxxxxxx has leased
the premises currently occupied by it or any premises previously occupied by
Xxxxxxxx, neither Xxxxxxxx nor, to Xxxxxxxx'x knowledge, any third party, has
used, generated, manufactured or stored in such
AGREEMENT AND PLAN OF MERGER - Page 25
premises or transported to or from such premises any Hazardous Materials that
would have a material adverse effect upon the business or financial
statements of Xxxxxxxx.
3.21.4 During the time that Xxxxxxxx has leased
the premises currently occupied by it or any premises previously occupied by
Xxxxxxxx, there has been no litigation, proceeding or administrative action
brought or threatened in writing against Xxxxxxxx, or any settlement reached
by Xxxxxxxx with, any party or parties alleging the presence, disposal,
release or threatened release of any Hazardous Materials on, from or under
any of such premises.
3.21.5 During the period that Xxxxxxxx has leased
the premises currently occupied by it or any premises previously occupied by
Xxxxxxxx, to the knowledge of Xxxxxxxx, no Hazardous Materials have been
transported from such premises to any site or facility now listed or proposed
for listing on the National Priorities List, at 40 C.F.R. Part 300, or any
list with a similar scope or purpose published by any state authority.
3.22 GOVERNMENT CONTRACTS. Xxxxxxxx has no business
contracts with any independent or executive agency, division, subdivision,
audit group or procuring office of the federal government or of a state
government, including any prime contractor of the federal government and any
higher level subcontractor of a prime contractor of the federal government,
and including any employees or agents thereof, in each case acting in such
capacity.
3.23 SALE OF XXXXXXXX. There are currently no
discussions to which Xxxxxxxx is a party relating to (a) sale of all or a
material portion of Xxxxxxxx'x assets or (b) except for (i) the sale of
Xxxxxxxx Common Stock to Science Applications International Corporation
("SAIC"), (ii) subsequent discussions therewith in connection with SAIC's
rights of first refusal arising from the transactions contemplated hereby,
and (iii) discussions with other prospective purchasers of treasury shares of
Xxxxxxxx Common Stock, any merger, consolidation, liquidation, dissolution or
similar transaction involving Xxxxxxxx or in which Xxxxxxxx issues more than
20% of outstanding Xxxxxxxx Common Stock or in which Xxxxxxxx is required to
obtain the approval of its shareholders.
4. ANTINORI PRE-CLOSING COVENANTS
During the period from the date of this Agreement until the
Effective Time, Antinori covenants to and agrees with Xxxxxxxx as follows:
4.1 ADVISE OF CHANGES. Antinori will promptly advise
Xxxxxxxx, in writing, (a) of any event occurring subsequent to the date of
this Agreement that would render any representation or warranty of Antinori
contained in this Agreement, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect, and (b) of
any material adverse change in Antinori's financial condition, properties,
assets, liabilities, business, results of operations or prospects.
4.2 MAINTENANCE OF BUSINESS. The parties understand and
acknowledge that it is their intent to work closely together during the
period from the date hereof until the Closing
AGREEMENT AND PLAN OF MERGER - Page 26
Date. If Antinori becomes aware of a material deterioration in the
relationship with any material customer, supplier or key employee, it will
promptly bring such information to the attention of Xxxxxxxx in writing and,
if requested by Xxxxxxxx, will exert all reasonable efforts to restore the
relationship.
4.3 CONDUCT OF BUSINESS. Except as provided otherwise
herein or as approved or recommended by Xxxxxxxx, Xxxxxxxx will not, without
the prior written consent of Xxxxxxxx, which consent shall not be
unreasonably withheld:
(a) borrow any money except in the ordinary
course of business consistent with past practice;
(b) enter into any transaction not in the
ordinary course of business or enter into any transaction or make any
commitment involving an expense of Antinori or capital expenditure by
Antinori in excess of $100,000;
(c) encumber or permit to be encumbered any
of its assets except in the ordinary course of its business consistent with
past practice and to an extent which is not material;
(d) dispose of any of its material assets
except in the ordinary course of business consistent with past practice;
(e) enter into any material lease or
contract for the purchase or sale of any property, real or personal, tangible
or intangible, except in the ordinary course of business consistent with past
practice;
(f) fail to maintain its equipment and other
assets in good working condition and repair according to the standards it has
maintained to the date of this Agreement, subject only to ordinary wear and
tear;
(g) pay any bonus, royalty, increased salary
(except for annual increases in the ordinary course of business consistent
with past practices and disclosed to Xxxxxxxx in writing) or special
remuneration to any officer, employee or consultant (except pursuant to
existing arrangements heretofore disclosed in writing to Xxxxxxxx) or enter
into any new employment or consulting agreement with any such persons, or
enter into any new agreement or plan of the type described in Section 2.15.3;
(h) change accounting methods except as
necessitated by changes which Antinori is required in order to prepare its
federal, state and local tax returns;
(i) declare, set aside or pay any cash or
stock dividend or other distribution in respect of capital stock or redeem or
otherwise acquire any of its capital stock;
(j) amend or terminate any contract,
agreement or license to which it is a party (except pursuant to arrangements
previously disclosed in writing to Xxxxxxxx)
AGREEMENT AND PLAN OF MERGER - Page 27
except those amended or terminated in the ordinary course of business,
consistent with past practice, and which are not material in amount or effect;
(k) lend any amount to any person or entity,
other than advances for travel and expenses which are incurred in the
ordinary course of business consistent with past practices, not material in
amount, which travel and expenses shall be documented by receipts for the
claimed amounts;
(l) guarantee or act as a surety for any
obligation except for the endorsement of checks and other negotiable
instruments in the ordinary course of business, consistent with past practice;
(m) waive or release any material right or
claim except in the ordinary course of business, consistent with past
practice;
(n) issue or sell any shares of its capital
stock of any class or any other of its securities, or issue or create any
warrants, obligations, subscriptions, options, convertible securities, stock
appreciation rights or other commitments to issue shares of capital stock, or
take any action other than this transaction to call into question the
validity of its election for treatment as a sub-chapter "S" corporation or to
accelerate the vesting of any outstanding option or other security (except
pursuant to existing arrangements disclosed in writing to Xxxxxxxx before the
date of this Agreement);
(o) split or combine the outstanding shares
of its capital stock of any class or enter into any recapitalization
affecting the number of outstanding shares of its capital stock of any class
or affecting any other of its securities;
(p) except for the Merger, merge,
consolidate or reorganize with, or acquire any entity;
(q) amend its Articles of Incorporation or
Bylaws except as may be required by law;
(r) agree to any audit assessment by any tax
authority or file any federal or state income or franchise tax return unless
copies of such returns have been delivered to Xxxxxxxx for its review prior
to filing;
(s) license any of Antinori's technology or
any Antinori Intellectual Property, except in the ordinary course of business
consistent with past practices;
(t) change any insurance coverage except in
the ordinary course of business consistent with past practices;
(u) terminate the employment of any key
employee listed in Schedule 2.10(i); or
AGREEMENT AND PLAN OF MERGER - Page 28
(v) agree to do any of the things described
in the preceding Sections 4.3(a) through 4.3(u).
4.4 CERTAIN AGREEMENTS. Antinori will use all
reasonable efforts to cause all present employees of Antinori to execute
Xxxxxxxx'x forms of assignments of copyright and other intellectual property
rights, noncompetition and trade secret agreements and confidentiality
agreements.
4.5 REGULATORY APPROVALS. Antinori will execute and
file, or join in the execution and filing, of any application or other
document that may be necessary in order to obtain the authorization, approval
or consent of any governmental body, federal, state, local or foreign, which
may be reasonably required, or which Xxxxxxxx may reasonably request, in
connection with the consummation of the transactions provided for in this
Agreement. Antinori will use all reasonable efforts to obtain or assist
Xxxxxxxx in obtaining all such authorizations, approvals and consents.
4.6 LITIGATION. Antinori will notify Xxxxxxxx in
writing promptly after learning of any action, suit, proceeding or
investigation by or before any court, board or governmental agency, initiated
by or against Antinori or threatened against it.
4.7 NO OTHER NEGOTIATIONS. From the date hereof until
the termination of this Agreement (provided such termination is not in breach
of this Agreement) or the consummation of the Merger, Antinori will not, and
will not authorize any officer, director, employee or affiliate of Antinori,
or any other person, on its behalf, directly or indirectly, to (a) solicit,
facilitate, discuss or encourage any offer, inquiry or proposal received from
any party other than Xxxxxxxx concerning the possible disposition of all or
any substantial portion of Antinori's business, assets or capital stock by
merger, sale or any other means or to otherwise solicit, facilitate, discuss
or encourage any such disposition (other than the Merger), or (b) provide any
confidential information to or negotiate with any third party other than
Xxxxxxxx in connection with any offer, inquiry or proposal concerning any
such disposition. Antinori will immediately notify Xxxxxxxx of any such
offer, inquiry or proposal.
4.8 ACCESS TO INFORMATION. Until the Closing Date and
subject to the terms and conditions hereof relating to the confidentiality
and use of confidential and proprietary information, Antinori will provide
Xxxxxxxx and its agents with reasonable access to the files, books, records
and offices of Antinori, including, without limitation, any and all
information relating to Antinori taxes, commitments, contracts, leases,
licenses, real, personal and intangible property, and financial condition,
and specifically including, without limitation, access to Antinori source
code reasonably necessary for Xxxxxxxx to complete its diligence review of
Antinori products and technology. Antinori will cause it accountants to
cooperate with Xxxxxxxx and its agents in making available all financial
information reasonably requested, including without limitation the right to
examine all working papers pertaining to all financial statements prepared or
audited by such accountants.
4.9 SATISFACTION OF CONDITIONS PRECEDENT. Antinori will
use all reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in
AGREEMENT AND PLAN OF MERGER - Page 29
Section 7, and Antinori will use all reasonable efforts to cause the
transactions provided for in this Agreement to be consummated, and, without
limiting the generality of the foregoing, to obtain all consents and
authorizations of third parties and to make all filings with, and give all
notices to, third parties that may be necessary or reasonably required on its
part in order to effect the transactions provided for herein.
4.10 NOTIFICATION OF EMPLOYEE PROBLEMS. Antinori will
promptly notify Xxxxxxxx if any of Antinori's officers becomes aware that any
of the key employees listed in SCHEDULE 2.10(I) intends to leave its employ.
4.11 ANTINORI AFFILIATE AGREEMENTS. To facilitate the
treatment of the Merger for accounting purposes as a "pooling of interests,"
Antinori will use all reasonable efforts to cause each of its affiliates to
execute and deliver to Xxxxxxxx, on or prior to Closing, a written agreement
(the "ANTINORI AFFILIATE AGREEMENT") in substantially the form of EXHIBIT G
providing that such person will make no disposition of Xxxxxxxx Common Stock
(a) in the 30-day period prior to the Effective Time or (b) after the
Effective Time until Xxxxxxxx shall have distributed to its shareholders of
record the first report of quarterly financial statements that include the
combined financial results of Xxxxxxxx and Xxxxxxxx for a period of at least
30 days of combined operations.
5. XXXXXXXX PRE-CLOSING COVENANTS
During the period from the date of this Agreement until the
Effective Time, Xxxxxxxx covenants to and agrees with Antinori as follows:
5.1 ADVISE OF CHANGES. Xxxxxxxx will promptly advise
Antinori, in writing, (a) of any event occurring subsequent to the date of
this Agreement that would render any representation or warranty of Xxxxxxxx
contained in this Agreement, if made on or as of the date of such event or
the Closing Date, untrue or inaccurate in any material respect, and (b) of
any material adverse change in Xxxxxxxx'x financial condition, properties,
assets, liabilities, business, results of operations or prospects.
5.2 MAINTENANCE OF BUSINESS. The parties understand and
acknowledge that it is their intent to work closely together during the
period from the date hereof until the Closing Date. If Xxxxxxxx becomes
aware of a material deterioration in the relationship with any material
customer, supplier or key employee, it will promptly bring such information
to the attention of Antinori in writing and, if requested by Antinori, will
exert all reasonable efforts to restore the relationship.
5.3 CONDUCT OF BUSINESS. Except as provided otherwise
herein or as approved or recommended by Antinori, Xxxxxxxx will not, without
the prior written consent of Antinori, which consent shall not be
unreasonably withheld:
(a) borrow any money except in the ordinary
course of business consistent with past practice;
AGREEMENT AND PLAN OF MERGER - Page 30
(b) enter into any transaction not in the
ordinary course of business or enter into any transaction or make any commitment
involving an expense of Xxxxxxxx or capital expenditure by Xxxxxxxx in excess of
$100,000;
(c) encumber or permit to be encumbered any of
its assets except in the ordinary course of its business consistent with past
practice and to an extent which is not material;
(d) dispose of any of its material assets
except in the ordinary course of business consistent with past practice;
(e) enter into any material lease or contract
for the purchase or sale of any property, real or personal, tangible or
intangible, except in the ordinary course of business consistent with past
practice;
(f) fail to maintain its equipment and other
assets in good working condition and repair according to the standards it has
maintained to the date of this Agreement, subject only to ordinary wear and
tear;
(g) pay any bonus, royalty, increased salary
(except for annual increases in the ordinary course of business consistent with
past practices and disclosed to Antinori in writing) or special remuneration to
any officer, employee or consultant (except pursuant to existing arrangements
heretofore disclosed in writing to Antinori) or enter into any new employment or
consulting agreement with any such persons, or enter into any new agreement or
plan of the type described in Section 3.15.3;
(h) change accounting methods except as
necessitated by changes which Xxxxxxxx is required in order to prepare its
federal, state and local tax returns;
(i) declare, set aside or pay any cash or
stock dividend or other distribution in respect of capital stock or redeem or
otherwise acquire any of its capital stock (except pursuant to agreements
disclosed herein to Antinori);
(j) amend or terminate any contract, agreement
or license to which it is a party (except pursuant to arrangements previously
disclosed in writing to Antinori) except those amended or terminated in the
ordinary course of business, consistent with past practice, and which are not
material in amount or effect;
(k) lend any amount to any person or entity,
other than advances for travel and expenses which are incurred in the ordinary
course of business consistent with past practices, not material in amount, which
travel and expenses shall be documented by receipts for the claimed amounts;
(l) guarantee or act as a surety for any
obligation except for the endorsement of checks and other negotiable instruments
in the ordinary course of business, consistent with past practice;
AGREEMENT AND PLAN OF MERGER - Page 31
(m) waive or release any material right or
claim except in the ordinary course of business, consistent with past practice;
(n) issue or sell any shares of its capital
stock of any class or any other of its securities, or issue or create any
warrants, obligations, subscriptions, options, convertible securities, stock
appreciation rights or other commitments to issue shares of capital stock, or
take any action other than this transaction to accelerate the vesting of any
outstanding option or other security (except to facilitate treatment of the
Merger as a "pooling of interests" for accounting purposes and except pursuant
to existing arrangements disclosed in writing to Antinori before the date of
this Agreement);
(o) split or combine the outstanding shares of
its capital stock of any class or enter into any recapitalization affecting the
number of outstanding shares of its capital stock of any class or affecting any
other of its securities;
(p) except for the Merger, merge, consolidate
or reorganize with, or acquire any entity;
(q) amend its Articles of Incorporation or
Bylaws except as may be required by law;
(r) agree to any audit assessment by any tax
authority or file any federal or state income or franchise tax return unless
copies of such returns have been delivered to Antinori for its review prior to
filing;
(s) license any of Xxxxxxxx'x technology or
any Xxxxxxxx Intellectual Property, except in the ordinary course of business
consistent with past practices;
(t) change any insurance coverage except in
the ordinary course of business consistent with past practices;
(u) terminate the employment of any key
employee listed in Schedule 3.10(i); or
(v) agree to do any of the things described in
the preceding Sections 5.3(a) through 5.3(u).
5.4 REGULATORY APPROVALS. Xxxxxxxx will execute and file,
or join in the execution and filing, of any application or other document that
may be necessary in order to obtain the authorization, approval or consent of
any governmental body, federal, state, local or foreign, which may be reasonably
required, or which Antinori may reasonably request, in connection with the
consummation of the transactions provided for in this Agreement. Xxxxxxxx will
use all reasonable efforts to obtain or assist Antinori in obtaining all such
authorizations, approvals and consents.
AGREEMENT AND PLAN OF MERGER - Page 32
5.5 LITIGATION. Xxxxxxxx will notify Antinori in writing
promptly after learning of any action, suit, proceeding or investigation by or
before any court, board or governmental agency, initiated by or against Xxxxxxxx
or threatened against it.
5.6 NO OTHER NEGOTIATIONS. From the date hereof until the
termination of this Agreement (provided such termination is not in breach of
this Agreement) or the consummation of the Merger, Xxxxxxxx will not, and will
not authorize any officer, director, employee or affiliate of Xxxxxxxx, or any
other person, on its behalf, directly or indirectly, to (a) solicit, facilitate,
discuss or encourage any offer, inquiry or proposal received from any party
other than Antinori concerning the possible disposition of all or any
substantial portion of Xxxxxxxx'x business, assets or capital stock by merger,
sale or any other means or to otherwise solicit, facilitate, discuss or
encourage any such disposition (other than the Merger), or (b) provide any
confidential information to or negotiate with any third party other than
Antinori in connection with any offer, inquiry or proposal concerning any such
disposition. Xxxxxxxx will immediately notify Antinori of any such offer,
inquiry or proposal.
5.7 ACCESS TO INFORMATION. Until the Closing Date and
subject to the terms and conditions hereof relating to the confidentiality and
use of confidential and proprietary information, Xxxxxxxx will provide Antinori
and its agents with reasonable access to the files, books, records and offices
of Xxxxxxxx, including, without limitation, any and all information relating to
Xxxxxxxx taxes, commitments, contracts, leases, licenses, real, personal and
intangible property, and financial condition, and specifically including,
without limitation, access to Xxxxxxxx source code reasonably necessary for
Antinori to complete its diligence review of Xxxxxxxx products and technology.
Xxxxxxxx will cause it accountants to cooperate with Antinori and its agents in
making available all financial information reasonably requested, including
without limitation the right to examine all working papers pertaining to all
financial statements prepared or audited by such accountants.
5.8 SATISFACTION OF CONDITIONS PRECEDENT. Xxxxxxxx will
use all reasonable efforts to satisfy or cause to be satisfied all the
conditions precedent which are set forth in Section 8, and Xxxxxxxx will use all
reasonable efforts to cause the transactions provided for in this Agreement to
be consummated, and, without limiting the generality of the foregoing, to obtain
all consents and authorizations of third parties and to make all filings with,
and give all notices to, third parties that may be necessary or reasonably
required on its part in order to effect the transactions provided for herein.
5.9 NOTIFICATION OF EMPLOYEE PROBLEMS. Xxxxxxxx will
promptly notify Antinori if any of Xxxxxxxx'x officers becomes aware that any of
the key employees listed in SCHEDULE 3.10(i) intends to leave its employ.
5.10 XXXXXXXX AFFILIATE AGREEMENTS. To facilitate the
treatment of the Merger for accounting purposes as a "pooling of interests,"
Xxxxxxxx will use all reasonable efforts to cause each of its affiliates to
execute and deliver to Xxxxxxxx, on or prior to Closing, a written agreement
(the "XXXXXXXX AFFILIATE AGREEMENT") in substantially the form of EXHIBIT H
providing that such person will make no disposition of Xxxxxxxx Common Stock
(a) in the 30-day period prior to the Effective Time or (b) after the Effective
Time until Antinori shall have distributed
AGREEMENT AND PLAN OF MERGER - Page 33
to its shareholders of record its first report of financial statements that
include the combined financial results of Antinori and Xxxxxxxx for a period
of at least 30 days of combined operations.
6. CLOSING MATTERS
6.1 THE CLOSING. Subject to termination of this Agreement
as provided in Section 9, the closing of the transactions provided for herein
(the "CLOSING") will take place at the office of Xxxxx Xxxxxxx Rain Xxxxxxx (A
Professional Corporation), 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 at
9:00 a.m., Dallas, Texas time on or before January 31, 1997, or, if all
conditions to Closing have not been satisfied or waived by such date, such other
place, time and date as Antinori and Xxxxxxxx may mutually select (the "CLOSING
DATE"). Prior to or concurrently with the Closing, the Plan of Merger and such
officers' certificates or other documents as may be required to effectuate the
Merger will be filed in the offices of the Georgia Secretary of State and the
Texas Secretary of State. Accordingly, the Merger will become effective at the
Effective Time.
6.2 EXCHANGE OF CERTIFICATES.
6.2.1 As of the Effective Time, all shares of
Antinori Common Stock that are outstanding immediately prior thereto will, by
virtue of the Merger and without further action, cease to exist, and all such
shares will be converted into the right to receive from Xxxxxxxx the number of
shares of Xxxxxxxx Class A Common Stock determined as set forth in Section 1.1,
subject to Sections 1.2 and 1.3, as identified on EXHIBIT 1.1.1.
6.2.2 At and after the Effective Time, each
certificate representing outstanding shares of Antinori Common Stock will
represent the number of shares of Xxxxxxxx Class A Common Stock into which such
shares of Antinori Common Stock have been converted, and such shares of Xxxxxxxx
Class A Common Stock will be deemed registered in the name of the holder of such
certificate. As soon as practicable after the Effective Time, the holder of
shares of Antinori Common Stock will surrender (a) the certificates of such
shares (the "ANTINORI CERTIFICATES") to Xxxxxxxx for cancellation or (b) an
affidavit of lost (or non-issued) certificate and agreement to indemnify in form
satisfactory to Xxxxxxxx (an "AFFIDAVIT"). Promptly following the Effective
Time and receipt of the Antinori Certificates and of any Affidavits, Xxxxxxxx
will issue to such surrendering holder certificate(s) for the number of shares
of Xxxxxxxx Class A Common Stock to which such holder is entitled pursuant to
Section 1.1, subject to Section 1.2, less the shares of Xxxxxxxx Class A Common
Stock deposited into escrow pursuant to Section 1.3, and Xxxxxxxx will
distribute any cash payable under Section 1.2.
6.2.3 All shares of Xxxxxxxx Class A Common Stock
(and, if applicable, cash in lieu of fractional shares) delivered upon the
surrender of Antinori Certificates in accordance with the terms hereof will be
delivered to the registered holder or placed in escrow with Escrow Agent, as
applicable. After the Effective Time, there will be no further registration of
transfers of the shares of Antinori Common Stock on the stock transfer books of
Antinori. If, after the Effective Time, Antinori Certificates are presented for
transfer or for any other
AGREEMENT AND PLAN OF MERGER - Page 34
reason, there will be canceled and exchanged and certificates therefor will
be delivered or placed in escrow as provided in this Section 6.2.
6.2.4 Until Antinori Certificates representing
Antinori Common Stock outstanding prior to the Merger are surrendered pursuant
to Section 6.2.2 above, such certificates will be deemed, for all purposes, to
evidence ownership of (a) the number of shares of Xxxxxxxx Class A Common Stock
into which the shares of Antinori Common Stock will have been converted, subject
to the obligation to place a portion thereof in escrow as required hereby, and
(b) if applicable, cash in lieu of fractional shares.
7. CONDITIONS TO OBLIGATIONS OF ANTINORI
The obligations of Antinori hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Antinori, but only in a
writing signed on behalf of Antinori by its Chairman of the Board):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Xxxxxxxx set forth in Section 3 shall be true
and complete in all material respects as of the Closing with the same force and
effect as if they had been made at the Closing, and Antinori shall have received
a certificate to such effect executed on behalf of Xxxxxxxx by its Chief
Executive Officer.
7.2 COVENANTS. Xxxxxxxx shall have performed and complied
in all material respects with all of its covenants contained in Section 5 on or
before the Closing and Antinori shall have received a certificate to such effect
signed on behalf of Xxxxxxxx by its Chief Executive Officer.
7.3 COMPLIANCE WITH LAW. There shall be no order, decree,
or ruling by any court or governmental agency or threat thereof, or any other
fact or circumstance, that would prohibit or render illegal the transactions
provided for in this Agreement.
7.4 OPINION OF XXXXXXXX'X COUNSEL. Antinori shall have
received from Xxxxx Xxxxxxx Rain Xxxxxxx (A Professional Corporation), counsel
to Xxxxxxxx, an opinion substantially in the form of EXHIBIT I.
7.5 NO LITIGATION. No litigation or proceeding shall be
pending that will have the probable effect of enjoining or preventing the
consummation of any of the transactions provided for in this Agreement. No
litigation or proceeding shall be pending which could reasonably be expected to
have a material adverse effect on the financial condition or results of
operations of Xxxxxxxx that has not previously been disclosed to Antinori
herein.
7.6 DOCUMENTS. Antinori shall have received all written
consents, assignments, waivers, authorizations or other certificates reasonably
deemed necessary by Antinori's legal counsel to provide for the continuation in
full force and effect of any and all material contracts and leases of Antinori
and for Antinori to consummate the transactions contemplated hereby.
AGREEMENT AND PLAN OF MERGER - Page 35
7.7 POOLING OPINION. Antinori shall have received letters
from Ernst & Young L.L.P. and Xxxxxx Xxxxxxxx L.L.P. regarding the
appropriateness of pooling of interests accounting for the Merger under
Accounting Principles Board No. 16 as consummated in accordance with this
Agreement in the forms of EXHIBIT 7.7.
7.8 CERTAIN AGREEMENTS. X.X. Xxxxxxxx shall confirm his
execution and delivery to Xxxxxxxx of, and the enforceability against him of,
the various agreements and documents specified in Recital E.
8. CONDITIONS TO OBLIGATIONS OF XXXXXXXX
The obligations of Xxxxxxxx hereunder are subject to the
fulfillment or satisfaction on, and as of the Closing, of each of the following
conditions (any one or more of which may be waived by Xxxxxxxx, but only in a
writing signed on behalf of Xxxxxxxx by its Chief Executive Officer):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Antinori set forth in Section 2 shall be true
and complete in all material respects as of the Closing with the same force and
effect as if they had been made at the Closing, and Xxxxxxxx shall have received
a certificate to such effect executed on behalf of Antinori by its Chairman of
the Board.
8.2 COVENANTS. Antinori shall have performed and complied
in all material respects with all of its covenants contained in Section 4 on or
before the Closing and Xxxxxxxx shall have received a certificate to such effect
signed on behalf of Antinori by its Chairman of the Board.
8.3 COMPLIANCE WITH LAW. There shall be no order, decree,
or ruling by any court or governmental agency or threat thereof, or any other
fact or circumstance, that would prohibit or render illegal the transactions
provided for in this Agreement.
8.4 OPINION OF ANTINORI'S COUNSEL. Xxxxxxxx shall have
received from Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P., counsel to Antinori, an opinion
substantially in the form of EXHIBIT J.
8.5 NO LITIGATION. No litigation or proceeding shall be
pending that will have the probable effect of enjoining or preventing the
consummation of any of the transactions provided for in this Agreement. No
litigation or proceeding shall be pending which could reasonably be expected to
have a material adverse effect on the financial condition or results of
operations of Antinori that has not previously been disclosed to Xxxxxxxx
herein.
8.6 DOCUMENTS. Xxxxxxxx shall have received all written
consents, assignments, waivers, authorizations or other certificates reasonably
deemed necessary by Xxxxxxxx'x legal counsel to provide for the continuation in
full force and effect of any and all material contracts
AGREEMENT AND PLAN OF MERGER - Page 36
and leases of Antinori and Xxxxxxxx and for Xxxxxxxx to consummate the
transactions contemplated hereby.
8.7 POOLING OPINION. Xxxxxxxx shall have received from
Xxxxxx Xxxxxxxx L.L.P. an opinion, in the form of EXHIBIT 8.7, that Antinori
qualifies as an entity that may be a party to a business combination for which
the pooling of interests method of accounting would be available.
8.8 CERTAIN AGREEMENTS. Each individual identified in
Recital D shall have confirmed his or her execution and delivery to Xxxxxxxx of,
and the enforceability against him or her of, the various agreements and
documents specified in such recital as executed and delivered by him or her. In
addition, each of Xxxxxxxx X. Xxxxxxxxx, Xxxxxxx Xxxxxx and Xxxxx Basset shall
have entered into agreements in form and substance reasonably acceptable to
Xxxxxxxx with regard to their employment by Antinori prior to the Closing.
9. TERMINATION OF AGREEMENT
9.1 TERMINATION. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by the mutual written consent of Xxxxxxxx
and Xxxxxxxx;
(b) Unless otherwise specifically provided
herein or agreed in writing by Xxxxxxxx and Antinori, this Agreement will be
terminated if all the conditions to Closing have not been satisfied or waived on
or before February 1, 1997 (the "FINAL DATE") other than as a result of a breach
of this Agreement by the terminating party or a breach by any of the affiliates
of the terminating party of the Affiliate Agreements;
(c) by Antinori, if there has been a breach by
Xxxxxxxx of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of Xxxxxxxx, or if any representation of Xxxxxxxx
will have become untrue, in either case that has or can reasonably be expected
to have a material adverse effect on Xxxxxxxx and which Xxxxxxxx fails to cure
within a reasonable time, not to exceed 30 days, after written notice thereof
(except that no cure period will be provided for a breach by Xxxxxxxx which by
its nature cannot be cured);
(d) by Xxxxxxxx, if there has been a breach by
Antinori of any representation, warranty, covenant or agreement set forth in
this Agreement on the part of Antinori, or if any representation of Antinori
will have become untrue, in either case that has or can reasonably be expected
to have a material adverse effect on Antinori and which Antinori fails to cure
within a reasonable time not to exceed 30 days after written notice thereof
(except that no cure period will be provided for a breach by Antinori which by
its nature cannot by cured); or
AGREEMENT AND PLAN OF MERGER - Page 37
(e) by any party, if a permanent injunction or
other order by any federal or state court that would make illegal or otherwise
restrain or prohibit the consummation of the Merger will have been issued and
will have become final and nonappealable.
Any termination of this Agreement under this Section 9.1 will
be effective by the delivery of written notice of the terminating party to the
other parties.
9.2 CERTAIN CONTINUING OBLIGATIONS. Following any
termination of this Agreement pursuant to this Section 9, the parties will
continue to perform their respective obligations under Section 11 but will not
be required to continue to perform their other covenants under this Agreement.
10. SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS
10.1 SURVIVAL OF REPRESENTATIONS.
10.1.1 ANTINORI'S REPRESENTATIONS. All
representations, warranties and covenants of Antinori contained in this
Agreement will remain operative and in full force and effect (but only as of the
date they were made and as of the date of Closing) for a period of one year
after the Closing, regardless of any investigation made by or on behalf of the
parties to this Agreement. Except for Antinori's obligations under Section 11,
Antinori's representations, warranties and covenants contained in this Agreement
will terminate as of the termination of this Agreement in accordance with its
terms.
10.1.2 XXXXXXXX'X REPRESENTATIONS. All
representations, warranties and covenants of Xxxxxxxx contained in this
Agreement will remain operative and in full force and effect (but only as of the
date they were made and as of the date of Closing) for a period of one year
after the Closing, regardless of any investigation made by or on behalf of the
parties to this Agreement. Except for Xxxxxxxx'x obligations under Section 11,
Xxxxxxxx'x representations, warranties and covenants contained in this Agreement
will terminate as of the termination of this Agreement in accordance with its
terms.
10.2 ANTINORI AGREEMENT TO INDEMNIFY.
10.2.1 ANTINORI SHAREHOLDERS INDEMNITY. Subject to
the limitations set forth in Section 10.2.3, the Antinori Shareholders will
indemnify and hold harmless Xxxxxxxx and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control
Xxxxxxxx (hereinafter in this Section 10.2 referred to individually as an
"INDEMNIFIED PERSON" and collectively as "INDEMNIFIED PERSONS") from and against
any and all claims, demands, actions, causes of action, losses, costs, damages,
liabilities and expenses including, without limitation, reasonable legal fees,
net of any recoveries under insurance policies or tax savings known to Xxxxxxxx
at the time of making of claim hereunder, arising out of any misrepresentation
or breach of or default in connection with any of the representations,
warranties and covenants given or made by Antinori in this Agreement or any
certificate, document or instrument delivered
AGREEMENT AND PLAN OF MERGER - Page 38
by or on behalf of Antinori or by the Antinori Shareholders pursuant hereto
(hereafter in this Section 10.2 referred to as "XXXXXXXX DAMAGES").
10.2.2 ANTINORI ESCROW SHARES. In seeking
indemnification for Xxxxxxxx Damages under this Section 10.2 following the
Closing, the Indemnified Persons shall exercise their remedies only with
respect to the Escrow Shares and any other assets deposited in escrow
pursuant to the Antinori Escrow Agreement and the Antinori Shareholders shall
under no circumstances incur liability hereunder except the Escrow Shares;
provided, however, that the foregoing limitation on liability shall not apply
in respect of Xxxxxx X. Xxxxxxxx'x indemnity obligations resulting from fraud
or intentional and willful misrepresentation or intentional and willful
concealment (in which event recourse shall be had first to any Xxxxxxxx
Common Stock or other Xxxxxxxx equity securities held by him). The
indemnification provided for in Section 10.2.1 will not apply unless and
until the aggregate Xxxxxxxx Damages for which one or more Indemnified
Persons seeks indemnification under Section 10.2.1 exceeds $100,000, in which
event the indemnification provided for in Section 10.2.1 will include all
Xxxxxxxx Damages in excess of such sum.
10.3 XXXXXXXX AGREEMENT TO INDEMNIFY.
10.3.1 XXXXXXXX INDEMNITY. Subject to the
limitations set forth in Section 10.3.2, X.X. Xxxxxxxx will indemnify and
hold harmless Xxxxxxxx and its respective officers, directors, agents and
employees, and each person, if any, other than himself who controls or may
control Xxxxxxxx (hereinafter in this Section 10.3 referred to individually
as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED PERSONS") from
and against any and all claims, demands, actions, causes of action, losses,
costs, damages, liabilities and expenses including, without limitation,
reasonable legal fees, net of any recoveries under insurance policies or tax
savings known to Xxxxxxxx at the time of making of claim hereunder, arising
out of any misrepresentation or breach of or default in connection with any
of the representations, warranties and covenants given or made by Xxxxxxxx in
this Agreement or any certificate, document or instrument delivered by or on
behalf of Xxxxxxxx pursuant hereto (hereafter in this Section 10.3 referred
to as "ANTINORI DAMAGES").
10.3.2 XXXXXXXX ESCROW SHARES. In seeking
indemnification for Antinori Damages under this Section 10.3 following the
Closing, the Indemnified Persons shall exercise their remedies only with
respect to the Escrow Shares and any other assets deposited in escrow
pursuant to the Xxxxxxxx Escrow Agreement and X.X. Xxxxxxxx shall under no
circumstances incur liability hereunder except the Escrow Shares; provided,
however, that the foregoing limitation on liability shall not apply in
respect of X.X. Xxxxxxxx'x indemnity obligations resulting from fraud or
intentional and willful misrepresentation or intentional and willful
concealment (in which event recourse shall be had first to any Xxxxxxxx
Common Stock or other Xxxxxxxx equity securities held by him). The
indemnification provided for in Section 10.3.1 will not apply unless and
until the aggregate Antinori Damages for which one or more Indemnified
Persons seeks indemnification under Section 10.3.1 exceeds $100,000, in which
event the indemnification provided for in Section 10.3.1 will include all
Antinori Damages in excess of such sum.
AGREEMENT AND PLAN OF MERGER - Page 39
10.4 TAX AUDIT AGREEMENT. If, following the Closing,
Antinori receives notice of any audit or examination by any taxing authority
of any tax return for Antinori for any period prior to, or prior to and
including, the Closing, then Xxxxxxxx shall promptly notify Xxxxxx X.
Xxxxxxxx, individually, of such notice and Xxxxxx X. Xxxxxxxx at his own
expense may, if Antinori (rather than Xxxxxx X. Xxxxxxxx) defends such audit
or examination, participate in such audit or examination and shall be kept
apprised by Xxxxxxxx of the progress of such audit or examination. Xxxxxxxx
agrees that it will not agree to, and that it will not permit Antinori to
agree to, any audit adjustment or revision that would adversely affect Xxxxxx
X. Xxxxxxxx, individually, without Xxxxxx X. Xxxxxxxx'x approval or
agreement, which approval or agreement shall not be unreasonably withheld.
11. MISCELLANEOUS
11.1 GOVERNING LAW; DISPUTE RESOLUTION. The laws of the
State of Texas (without regard to its choice of law principles that might
apply the law of another jurisdiction) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and
enforcement of the rights and duties of the parties. Any dispute hereunder
("DISPUTE") shall be settled by arbitration in Dallas, Texas and, except as
herein specifically stated, in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA RULES") then in effect.
However, in all events, these arbitration provisions shall govern over any
conflicting rules that may now or hereafter be contained in the AAA Rules.
Any judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction over the subject matter thereof. The arbitrator
shall have the authority to grant any equitable and legal remedies that would
be available in any judicial proceeding instituted to resolve a Dispute.
11.1.1 COMPENSATION OF ARBITRATOR. Any such
arbitration will be conducted before a single arbitrator who will be
compensated for his or her services at a rate to be determined by the parties
or by the American Arbitration Association, but based upon a reasonable
hourly or daily consulting rate for the arbitrator if the parties are not
able to agree upon his or her rate of compensation.
11.1.2 SELECTION OF ARBITRATOR. The American
Arbitration Association will have the authority to select an arbitrator from
a list of arbitrators who are lawyers familiar with Texas contract law and
experienced in mergers and acquisitions; provided, however, that such lawyers
cannot work for a firm then performing services for either party, that each
party will have the opportunity to make such reasonable objection to any of
the arbitrators listed as such party may wish and that the American
Arbitration Association will select the arbitrator from the list of
arbitrators as to whom neither party makes any such objection. If the
foregoing procedure is not followed, each party will choose one person from
the list of arbitrators provided by the American Arbitration Association
(provided that such person does not have a conflict of interest), and the two
persons so selected will select from the list provided by the American
Arbitration Association the person who will act as the arbitrator.
11.1.3 PAYMENT OF COSTS. Xxxxxxxx and Xxxxxxxx
will each pay 50% of the initial compensation to be paid to the arbitrator in
any such arbitration and 50% of the costs of transcripts and other normal and
regular expenses of the arbitration proceedings; provided,
AGREEMENT AND PLAN OF MERGER - Page 40
however, that the prevailing party in any arbitration will be entitled to an
award of attorneys' fees and costs, and all costs of arbitration, including
those provided for above, will be paid by the non-prevailing party, and the
arbitrator will be authorized to make such determinations.
11.1.4 BURDEN OF PROOF. For any Dispute
submitted to arbitration, the burden of proof will be as it would be if the
claim were litigated in a Texas judicial proceeding.
11.1.5 AWARD. Upon the conclusion of any
arbitration proceedings hereunder, the arbitrator will render findings of
fact and conclusions of law and a written opinion setting forth the basis and
reasons for any decision reached and will deliver such documents to each
party to this Agreement along with a signed copy of the award.
11.1.6 TERMS OF ARBITRATION. The arbitrator
chosen in accordance with these provisions will not have the power to alter,
amend or otherwise affect the terms of these arbitration provisions or the
provisions of this Agreement.
11.1.7 EXCLUSIVE REMEDY. Except as specifically
otherwise provided in this Agreement, arbitration will be the sole and
exclusive remedy of the parties for any Dispute arising out of this Agreement.
11.2 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS.
Neither party may assign any of its rights or obligations hereunder without
the prior written consent of the other party. This Agreement will be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns.
11.3 SEVERABILITY. If any provision of this Agreement,
or the application thereof, is for any reason held to any extent to be
invalid or unenforceable, then the remainder of this Agreement and
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties. The
parties further agree to replace such unenforceable provision of this
Agreement with a valid and enforceable provisions that will achieve, to the
extent possible, the economic, business and other purposes of the invalid or
unenforceable provisions.
11.4 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and
the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
all parties reflected hereon as signatories.
11.5 OTHER REMEDIES. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby
or by law on such party, and the exercise of any one remedy will not preclude
the exercise of any other.
11.6 AMENDMENT AND WAIVERS. Any term or provision of
this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally
AGREEMENT AND PLAN OF MERGER - Page 41
or in a particular instance and either retroactively or prospectively), only
by a writing signed by the party to be bound thereby. The waiver by a party
of any breach hereof or default in the performance hereof will not be deemed
to constitute a waiver of any other default of any succeeding breach or
default. This Agreement may be amended by the parties at any time.
11.7 NO WAIVER. The failure of any party to enforce any
of the provisions hereof will not be construed to be a waiver of the right of
such party thereafter to enforce such provisions. The waiver by any party of
the right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
11.8 EXPENSES. Each party will bear its respective
expenses and fees of its own accountants, attorneys, investment bankers and
other professionals incurred with respect to this Agreement and the
transactions contemplated hereby. If the Merger is consummated, Antinori
will pay at or immediately before the Closing the reasonable accounting and
attorneys' fees and expenses and other fees and expenses incurred by Antinori
in connection with the Merger. Antinori will not incur in connection with
the Merger (and its related transactions, preparations and negotiations)
expenses of more than $350,000 for fees and expenses of lawyers, accountants
and other professionals (including, without limitation, the fees and expenses
of The Xxxxxxxx-Xxxxxxxx Company, Inc.), unless any such fees or expenses
incurred by Antinori in excess of the applicable amount set forth for above
are paid by the Antinori Shareholders on or before the Closing (and if such
payment is not made on or before the Closing, then Antinori may (but shall
not be obligated to) pay such excess fees or expenses, in which event
Antinori will be entitled to be reimbursed by the Antinori Shareholders for
such payment and, if not so reimbursed, Antinori will be entitled to treat
the amount of payment as Xxxxxxxx Damages recoverable under Section 10.2
(without regard to the $100,000 minimum specified in Section 10.2) and the
Antinori Escrow Agreement).
11.9 NOTICES. Any notice or other communication required
or permitted to be given under this Agreement will be in writing, will be
delivered personally or by mail or express delivery, postage prepaid, and
will be deemed given upon actual delivery or, if mailed by registered or
certified mail, on the third business day following deposit in the mails,
addressed as follows:
(i) If to Xxxxxxxx:
The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief
Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
AGREEMENT AND PLAN OF MERGER - Page 42
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Antinori:
Antinori Software, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 000
0000 Xxxxxxxxx Xxxxxx XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Chairman
of the Board
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx
A Limited Liability Partnership
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 11.9.
11.10 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. The language
hereof will not be construed for or against either party. A reference to a
section, schedule or exhibit refers to a section in, or a schedule or an
exhibit to, this Agreement, unless otherwise explicitly set forth. The
titles and headings in this Agreement are for reference purposes only and
will not in any manner limit the construction of this Agreement. For the
purposes of such construction, this Agreement will be considered as a whole.
References in this Agreement to the knowledge of Antinori (or similar
phrases) refer to the actual knowledge of any one or more of Xxxxxx X.
Xxxxxxxx, Xxxxxxxx X. Xxxxxxxxx and Xxxxxxx Xxxxxx, each after due inquiry;
references in this Agreement to the knowledge of Xxxxxxxx (or similar
phrases) refer to the actual knowledge of either or both of X. X. Xxxxxxxx
and Xxxxx Xxxx, each after due inquiry.
11.11 NO JOINT VENTURE. Nothing contained in this
Agreement will be deemed or construed as creating a joint venture or
partnership between the parties. No party is by virtue of this Agreement
authorized as an agent, employee or legal representative of any other party.
No party will have the power to control the activities and operations of any
other, and the parties' status is, and at all times, will continue to be,
that of independent contractors with respect to each
AGREEMENT AND PLAN OF MERGER - Page 43
other. No party will have any power or authority to bind or commit any
other. No party will hold itself out as having any authority or relationship
in contravention of this Section 11.11.
11.12 FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other party and to execute such further instruments, documents
and agreements and to give such further written assurances as may be
reasonably requested by the other party to evidence and reflect the
transactions provided for herein and to carry into effect the intent of this
Agreement.
11.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No
provisions of this Agreement are intended, nor will be interpreted, to
provide or create any third party beneficiary rights or any other rights of
any kind in any client, customer, affiliate, partner or employee of any party
or any other person or entity, unless specifically provided otherwise herein,
and, except as so provided, all provisions hereof will be personal solely
between the parties to this Agreement.
11.14 PUBLIC ANNOUNCEMENT. Xxxxxxxx and Antinori will
issue a press release approved by both parties announcing the Merger as soon
as practicable following the execution of this Agreement.
11.15 CONFIDENTIALITY. Except as expressly authorized by
Xxxxxxxx in writing, Antinori will not directly or indirectly divulge to any
person or entity or use any Xxxxxxxx Confidential Information, except as
required for the performance of its duties under this Agreement. Except as
expressly authorized by Antinori in writing, Xxxxxxxx will not directly or
indirectly divulge to any person or entity or use any Antinori Confidential
Information, except as required for the performance of its duties under this
Agreement. As used herein, "XXXXXXXX CONFIDENTIAL INFORMATION" consists of
(a) any information designated by Xxxxxxxx as confidential whether developed
by Xxxxxxxx or disclosed to Xxxxxxxx by a third party, (b) the source code to
any Xxxxxxxx software and any trade secrets relating to any of the foregoing
and (c) any information relating to Xxxxxxxx'x product plans, product
designs, product costs, product prices, product names, finances, marketing
plans, business opportunities, personnel, research development or know-how.
As used herein, "ANTINORI CONFIDENTIAL INFORMATION" consists of (x) any
information designated by Antinori as confidential whether developed by
Antinori or disclosed to Antinori by a third party, (y) the source code to
any Antinori software, and any trade secrets related to any of the foregoing
and (z) any information relating to Antinori product plans, product designs,
product costs, product provides, product names, finances, marketing plan,
business opportunities, personnel, research, development or know-how.
"Xxxxxxxx Confidential Information" and "Antinori Confidential Information"
also include the terms and conditions of this Agreement, except as disclosed
in accordance with Section 11.14. The foregoing restriction will apply to
information about a party whether or not it was obtained from such party's
employees, acquired or developed by the other party during such other party's
performance under this Agreement, or otherwise learned. The foregoing
restrictions will not apply to information that (i) has become publicly known
through no wrongful act of the receiving party, (ii) has been rightfully
received from a third party authorized by the party which is the owner,
creator or compiler to make such disclosure without restriction, (iii) has
been approved or released by written authorization of the party which is the
owner, creator or compiler, or (iv) is being or has therefore been disclosed
AGREEMENT AND PLAN OF MERGER - Page 44
pursuant to a valid court order after a reasonable attempt has been made to
notify the party which is the owner, creator or compiler.
Following any termination of this Agreement pursuant to Section 9,
each party agrees that for a period of two years commencing January 31, 1997,
such party will not initiate discussions with respect to prospective
employment of the other party's employees.
11.16 TIME IS OF THE ESSENCE. The parties acknowledge and
agree that time is of the essence in connection with the execution, delivery
and performance of this Agreement, and that they will each use their best
efforts to satisfy all the conditions to Closing on or before January 31,
1997.
11.17 ENTIRE AGREEMENT. This Agreement, the schedules and
exhibits hereto constitute the entire understanding and agreement of the
parties hereto with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements or understandings, inducements or
conditions, express or implied, written or oral, between the parties with
respect to the subject matter hereof (including, without limitation, that
certain letter of intent between them dated as of October 30, 1996, as
amended). The express
AGREEMENT AND PLAN OF MERGER - Page 45
terms hereof control and supersede any course of performance or usage of
trade inconsistent with any of the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
THE XXXXXXXX GROUP, INC. ANTINORI SOFTWARE, INC.
By: /s/ X.X. Xxxxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------ ------------------------------
X.X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
Chief Executive Officer Chairman of the Board
CAG NEWCO, INC.
By: /s/ Xxxxx Xxxx
------------------------------
Xxxxx Xxxx
Senior Vice President
AGREEMENT AND PLAN OF MERGER - Page 46
Exhibit X-0
XXXXXXX X-0, X-0 and X-0
Xxxxxxx X-0
ARTICLES OF MERGER
OF
CAG NEWCO, INC.
WITH AND INTO
ANTINORI SOFTWARE, INC.
Pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act (the "TBCA") and Section 14-2-1105 of the Georgia Business
Corporation Code (the "GBCC"), the undersigned corporations (the "Constituent
Corporations") hereby adopt the following Articles of Merger for the purpose of
merging CAG Newco, Inc., a Texas corporation ("Newco"), with and into Antinori
Software Inc., a Georgia corporation ("ASI") (the "Merger"). These Articles of
Merger may be executed in a number of identical counterparts, each of which
shall be deemed to be an original and all of which shall collectively constitute
one and the same instrument.
FIRST: The laws of the States of Georgia and Texas permit the Merger.
SECOND: The name of the surviving corporation is Antinori Software, Inc.
and such corporation is to be governed by the laws of the State of Georgia.
THIRD: The Articles of Incorporation of ASI as it shall exist
immediately prior to the Effective Time (as defined below) shall, without
amendments or changes, be and remain the Articles of Incorporation of ASI, the
surviving corporation, immediately after the Effective Time until the same shall
be altered, amended or repealed as provided therein.
FOURTH: The Plan of Merger (the "Plan") duly authorized and approved by
each of the Constituent Corporations is attached hereto as Exhibit A and is
hereby incorporated by reference as part of these Articles of Merger.
FIFTH: As to each Constituent Corporation, the number of shares
outstanding and the designation and number of outstanding shares of each class
entitled to vote as a class on the Plan are as follows:
Name of Number of Shares Designation of Number of
Corporation Outstanding Class Shares
----------- ----------- ----- -------
ASI 1,010,101 Common 1,010,101
Newco 1,000 Common 1,000
SIXTH: As to each Constituent Corporation the total number of shares
voted for and against the Plan, and as to each class entitled to vote as a class
thereon, the number of shares of such class voted for and against the Plan, are
as follows:
Page 1
Name of Total Voted Total Voted
Corporation For Against
----------- ----------- -----------
ASI 1,010,101 0
Newco 1,000 0
SEVENTH: The number of votes cast in favor of the Plan by shareholders of
ASI and Newco was sufficient for approval as required under the TBCA.
EIGHTH: Shareholder approval was required for the Merger under the GBCC
and the Merger was duly approved by the shareholders of ASI and Newco as
required.
NINTH: The approval of the Merger and the Plan was duly authorized by
all action required by the laws of the States of Texas and Georgia and by the
constituent documents of the Constituent Corporations.
TENTH: The Effective Time of the Merger shall be at 11:59 p.m., Dallas,
Texas Time, January 31, 1997.
DATED: January ___, 1997
CAG NEWCO, INC. ANTINORI SOFTWARE, INC.
Page 2
By: By:
---------------------------- ------------------------------------
Name: Xxxxx Xxxx Name: Xxxxxx X. Xxxxxxxx
Title: Senior Vice President Title: Chairman of the Board
Page 3
EXHIBIT X-0
XXX XXXXX XX XXXXX
SECRETARY OF STATE
CERTIFICATE OF MERGER
The undersigned, as Secretary of State of Texas, hereby certifies that the
attached Articles of Merger of
CAG NEWCO, INC.
a Texas corporation
with
ANTINORI SOFTWARE, INC.
a Georgia no permit corporation
have been received in this office and are found to conform to law. ACCORDINGLY,
the undersigned, as Secretary of State, and by virtue of the authority vested in
the Secretary by law, hereby issues this Certificate of merger.
Dated January 31, 1997.
Effective January 31, 1997
/s/ Xxxxxxx X. Xxxxx, Xx.
-----------------------------------
Xxxxxxx X. Xxxxx, Xx.
Secretary of State
Page 1
Secretary of State
Business Information and Services
Suite 315, West Tower
0 Xxxxxx Xxxxxx Xxxx Xx. Xx.
Xxxxxxx, Xxxxxxx 00000-0000
DOCKET NUMBER: 970310862
CONTROL NUMBER: 8814241
EFFECTIVE DATE: 01/31/1997
REFERENCE: 0091
PRINT DATE: 01/31/1997
FORM NUMBER: 411
XXXXXX, XXXXXXX & XXXXXX
XXXXX X. XXXXX
0000 XXXXXXXXX XX XX, XXX 00XX
XXXXXXX, XX 00000
CERTIFICATE OF MERGER
I, the Secretary of State of the State of Georgia, do hereby issue this
certificate pursuant to Title 14 of the Official Code of Georgia Annotated
certifying that articles or a certificate of merger and fees have been filed
regarding the merger of the below entities, effective as of the date shown
above. Attached is a true and correct copy of said filing.
Surviving Entity:
ANTINORI SOFTWARE, INC., A GEORGIA CORPORATION
Nonsurviving Entity/Entities:
CAG NEWCO, INC., A TEXAS CORPORATION
Page 2
/s/ Xxxxx X. Xxxxxx
-----------------------------------
XXXXX X XXXXXX
SECRETARY OF STATE
Page 3
EXHIBIT A-3
PLAN OF MERGER
OF
CAG NEWCO, INC.
WITH AND INTO
ANTINORI SOFTWARE, INC.
This Plan of Merger (this "PLAN") is entered into as of January 29, 1997
among The Xxxxxxxx Group, Inc., a Texas corporation ("XXXXXXXX"), CAG Newco,
Inc., a Texas corporation and a wholly-owned subsidiary of Xxxxxxxx ("NEWCO"),
and Antinori Software, Inc., a Georgia corporation ("ANTINORI").
Page 1
1. EFFECTIVE TIME OF MERGER. Pursuant to the Texas Business
Corporation Act and the Georgia Business Corporation Code, Newco will be merged
with and into Antinori (the "MERGER") and Antinori will be the surviving
corporation of the Merger. The Merger will be effective (the "EFFECTIVE TIME")
at 11:59 p.m., Dallas, Texas time, January 31, 1997, the date on which a copy of
this Plan is filed with the Secretary of State of Texas and the Secretary of
State of Georgia.
2. CONVERSION OF SECURITIES.
(a) CONVERSION OF SHARES. At the Effective Time, each share of
Antinori Common Stock, $.01 par value ("ANTINORI COMMON STOCK"), issued and
outstanding immediately prior to the Effective Time, will, by virtue of the
Merger, be converted into 0.50946871 fully paid and nonassessable shares of
Xxxxxxxx Class A Voting Common Stock, no par value ("XXXXXXXX COMMON STOCK").
No fractional shares of Xxxxxxxx Common Stock will be issued in connection with
the Merger, but in lieu thereof, Xxxxxxxx will pay an amount of cash equal to
$23.83 multiplied by the fraction of a share of Xxxxxxxx Common Stock to which
such holder would otherwise be entitled. No Xxxxxxxx Common Stock will be
issued or paid in exchange for any shares of Antinori Common Stock held by
Antinori as treasury stock.
(b) ESCROW SHARES. At the closing of the Merger, Xxxxxxxx will
deduct from the shares of Xxxxxxxx Common Stock to be delivered to former
holders of Antinori Common Stock (the "SHAREHOLDERS") a number of shares
equaling approximately (and less than) 5% of the shares of Xxxxxxxx Common Stock
to be delivered to the Shareholders in the Merger pursuant to that certain
Escrow Agreement (the "ESCROW AGREEMENT"), dated of even date herewith among the
Shareholders, Xxxxxxxx and U.S. Trust Company of Texas, N.A., as escrow agent
(the "ESCROW AGENT"), and will deliver such shares on behalf of the Shareholders
to the Escrow Agent, to be held in escrow pursuant to the Escrow Agreement to
secure the indemnification obligation of the Shareholders under the Agreement
(as hereinafter defined).
(c) NO CHANGE TO OUTSTANDING XXXXXXXX STOCK. Each share of
Xxxxxxxx Common Stock outstanding immediately prior to the Effective Time will
continue to be an identical outstanding share of Xxxxxxxx Common Stock following
the Merger.
(d) NEWCO COMMON STOCK. At the Effective Time, each share of
Newco Common Stock that is issued and outstanding immediately prior to the
Effective Time shall be converted into one share of Antinori Common Stock.
(e) ANTINORI COMMON STOCK. At the Effective Time,
Page 2
Xxxxxxxx shall own all of the issued and outstanding shares of Antinori
Common Stock and Antinori shall become a wholly-owned subsidiary of Xxxxxxxx.
3. DIRECTORS AND OFFICERS. The directors and officers of Xxxxxxxx and
Antinori after the Effective Time shall be the persons set forth in ANNEX 1
hereto. Such directors and officers will hold their positions as directors and
officers until the election and qualifications of their respective successors or
until their tenure is otherwise terminated in accordance with the bylaws of
Xxxxxxxx or Xxxxxxxx respectively.
4. AGREEMENT. Antinori, Newco and Xxxxxxxx are also parties to that
certain Agreement and Plan of Merger dated as of January 29, 1997 (the
"AGREEMENT"). The Agreement and this Plan are intended to be construed together
in order to effectuate their purposes.
5. FURTHER ASSURANCES. After the Effective Time, Xxxxxxxx and any of
its officers and directors may execute and deliver such deeds, assignments and
assurances and do all other things necessary or desirable to carry out the
purposes of this Plan, in the name of Antinori, Newco or otherwise.
6. ARTICLES OF INCORPORATION; BYLAWS. The articles of incorporation
and bylaws of Antinori will not be amended by virtue of the Merger.
7. TERMINATION. This Plan may be terminated and the proposed Merger
abandoned at any time prior to the Effective Time, whether before or after
approval of this Plan or by the mutual consent of the Boards of Directors of
Xxxxxxxx and Xxxxxxxx.
8. ASSIGNMENT. None of the parties may assign any of its rights or
obligations hereunder without the prior written consent of the other parties.
This Plan will be binding upon and inure to the benefit of the parties and their
respective successors and permitted assigns.
9. GOVERNING LAW. The laws of the State of Texas (without regard to
its choice of law principles that might apply the law of another jurisdiction)
will govern the validity of this Plan, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties.
10. COUNTERPARTS. This Plan may be executed in counterparts, each of
which will be an original as regards any party whose signature appears thereon
and all of which together will constitute one and the same instrument. This
Plan will become binding when one or more counterparts hereof, individually
Page 3
or taken together, bear the signatures of both parties reflected hereon as
signatories.
IN WITNESS WHEREOF, the parties have executed this Plan as of the date
first above written.
THE XXXXXXXX GROUP, INC. ANTINORI SOFTWARE, INC.
By: By:
--------------------------- ------------------------------
X. X. Xxxxxxxx Xxxxxx X. Xxxxxxxx
Chief Executive Officer Chairman of the Board
CAG NEWCO, INC.
By:
---------------------------
Xxxxx Xxxx
Senior Vice President
Page 4
ANNEX 1
X.X. Xxxxxxxx Chairman, CEO, and President; Director
Xxxxxx Xxxxxxxx Vice Chairman, Product and Business Development, Director
Xxxxxxx Xxxxxxx President of Consulting Group & COO, Director
Xxxxx Xxxxxxxxx President of Software Group & COO, Director
Xxxxx Xxxx Senior Vice President & CFO, Treasurer, Assistant Secretary
Xxxxx Xxxxx Executive Vice President, Payment Systems Group
Xxxx Xxxxx Executive Vice President, Software Group
Xxxx Xxxxxxx Executive Vice President, Systems Integration Group
Xxx Xxxxx Executive Vice President, Yield Management
Xxxx Xxxx Senior Vice President, PSN Group
Xxxxxx Xxxx Senior Vice President, Systems Integration Group
Xxxxx Xxxxxx Senior Vice President, ECCHO Group
Xxxxx Xxxxxxx Corporate Secretary
Xxxxx Xxxxxxxx Assistant Corporate Secretary
Xxxx Xxxxxxxx Assistant Corporate Treasurer
Xxx Xxxxxxxx Director
Xxxxx Xxxxxxx Director
Xxxxxxx Xxx Director
Xxxxx Xxxx Director
Xxxxx Xxxx (SAIC) Director
Page 5
EXHIBITS X-0, X-0, X-0 AND B-4
[Exhibit B-1: Employment Agreement of Xxxx X. Xxxxxxxx, Xx. Filed as Exhibit
10.1 to the Company's Registration Statement on Form S-1]
[Exhibit B-2: Employment Agreement of Xxxxxx X. Xxxxxxxx Filed as Exhibit 10.2
to the Company's Registration Statement on Form S-1]
1
EXHIBIT B-3
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") shall become effective as
of the Effective Date indicated below between The Xxxxxxxx Group, Inc., a
Texas corporation ("XXXXXXXX"), and Xxxxxxxx X. Xxxxxxxxx ("XX. XXXXXXXXX").
RECITALS
A. This Agreement is entered into connection with and is ancillary to
an Agreement and Plan of Merger (the "AGREEMENT") dated as of January 29,
1997 between Xxxxxxxx and Antinori Software Inc., a Georgia corporation,
pursuant to which a wholly-owned subsidiary of Xxxxxxxx is to merge with and
into Antinori Software, Inc. (the "MERGER"), such that Antinori Software,
Inc. will become a wholly-owned subsidiary of Xxxxxxxx. The date on which
the Merger becomes effective will be the effective date of this Agreement
(the "EFFECTIVE DATE"). As provided in Section 9(h) below, this Agreement
will be void and have no effect if the Merger does not become effective,
i.e., the Effective Date does not occur, by February 1, 1997.
B. Xx. Xxxxxxxxx is the President, Chief Executive Officer and a
director of Antinori Software, Inc., reporting to the Chairman of its board
of directors, and has been and remains actively involved in the development
and marketing of Antinori Software, Inc.'s products. Xxxxxxxx intends to
continue the business of Antinori Software, Inc. after the Merger and
integrate such business into Xxxxxxxx'x ongoing business. To preserve and
protect the assets of Antinori Software, Inc., including Antinori Software,
Inc.'s goodwill, customers and trade secrets of which Xx. Xxxxxxxxx has and
will have knowledge and to preserve and protect Xxxxxxxx'x goodwill and
business interests going forward, and in consideration for Xxxxxxxx'x
entering into and performing under the Agreement, Xx. Xxxxxxxxx has agreed to
enter into this Agreement.
C. In addition, as contemplated by Section 7 below, Xx. Xxxxxxxxx is
concurrently herewith entering into an Intellectual Property Rights Agreement
and a Confidentiality Agreement in favor of Xxxxxxxx for the purpose of
protecting Xxxxxxxx'x proprietary rights.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein, Xxxxxxxx and Xx. Xxxxxxxxx hereby
agree as follows:
Page 1
1. EMPLOYMENT. Xxxxxxxx will employ Xx. Xxxxxxxxx and Xx. Xxxxxxxxx
accepts employment with Xxxxxxxx for a period of two years from the Effective
Date (the "INITIAL PERIOD"), unless Xx. Xxxxxxxxx'x employment is sooner
terminated in accordance with this Agreement. Xx. Xxxxxxxxx'x employment may
continue after the Initial Period but will then be terminable by either party
at will, with or without cause, which determination may be made in its sole
discretion. The obligations of Xxxxxxxx and Xx. Xxxxxxxxx set forth in the
"Intellectual Property Rights Agreement" and the "Confidentiality Agreement"
(each as defined in Section 7) (referring to intellectual property and
confidentiality, respectively) and in Section 8 (referring to termination)
will survive termination of Xx. Xxxxxxxxx'x employment, regardless of cause.
Xx. Xxxxxxxxx'x primary location of employment shall be in
Atlanta, Georgia or its environs, and he shall undertake such business travel
as is reasonably required in the discharge of his duties set forth below.
2. DUTIES. Xx. Xxxxxxxxx will be employed as a full-time employee of
Xxxxxxxx and initially will serve as the President of its Software Group and
as a director. Unless and until the board of directors of Xxxxxxxx changes
reporting responsibilities, which change the board may make in its sole
discretion, Xx. Xxxxxxxxx shall report to the Chairman and Chief Executive
Officer of Xxxxxxxx. Xx. Xxxxxxxxx agrees that, to the best of his ability
and experience, he will at all times conscientiously perform all of the
duties and obligations assigned to him under this Agreement.
3. FULL-TIME EMPLOYMENT. Xx. Xxxxxxxxx'x employment will be on a
full-time basis, in accordance with standard employee policies for Xxxxxxxx.
Xx. Xxxxxxxxx will not engage in any other business or render any commercial
or professional services, directly or indirectly, to any other person or
organization, whether for compensation or otherwise, provided that Xx.
Xxxxxxxxx may (i) provide incidental assistance to family members on matters
of family business; and (ii) sit on the board of directors of corporations
and other organizations (including, without limitation, charitable and other
nonprofit organizations) that do not compete with Xxxxxxxx; provided in each
case that such activities do not conflict with or interfere with Xx.
Xxxxxxxxx'x normal full-time and first priority obligations to Xxxxxxxx. Xx.
Xxxxxxxxx may make personal investments in nonpublicly traded corporations,
partnerships or other entities that, to the knowledge of Xxxxxxxx, are not at
the time of such investment engaged in any business activities competitive
with Xxxxxxxx. Notwithstanding anything to the contrary contained in this
Agreement, Xx. Xxxxxxxxx may make personal investments in publicly traded
corporations regardless of the business they are engaged in, provided that
Xx. Xxxxxxxxx does not at any time own in excess
Page 2
of 1% of the issued and outstanding stock of any such corporation.
4. SALARY; POTENTIAL BONUS; OPTIONS. Xx. Xxxxxxxxx'x salary for the
term of the Initial Period will be not less than $250,000 per year, payable
on Xxxxxxxx'x regular payroll dates, less required withholdings. Xxxxxxxx
agrees to review Xx. Xxxxxxxxx'x salary on or about six months after the
Effective Date; PROVIDED, HOWEVER, that such review shall not result in a
salary reduction, and a salary increase, if any, shall be totally within
Xxxxxxxx'x discretion.
The board of directors of Xxxxxxxx has the sole discretion whether or
not to establish a bonus pool. If and to the extent the board of directors
of Xxxxxxxx establishes a bonus pool for 1997 or any subsequent year, then
Xx. Xxxxxxxxx will be entitled to participate in the same at a percentage
level reasonably consistent with the participation of other high level
executive officers (e.g., the chief executive officer and chief financial
officer, etc.) of Xxxxxxxx.
On the Effective Date, Xxxxxxxx shall xxxxx to Xx. Xxxxxxxxx options to
purchase up to 33,300 shares of Xxxxxxxx'x Class B Common Stock at an
exercise price of $19.07 per share. One such option shall be an incentive
stock option to the extent allowable by law and shall vest one-third on the
Effective Date, one-third on the first anniversary thereof and one-third on
the second anniversary thereof. The other such option shall be a
non-qualified option with identical vesting terms. Such options shall be
issued under and pursuant to Xxxxxxxx'x existing long term incentive plan,
with terms and conditions as provided therein except as expressly provided
above.
5. BENEFITS. Xx. Xxxxxxxxx will also be entitled to insurance,
vacation and other benefits commensurate with his position in accordance with
Xxxxxxxx'x standard employee policies in effect from time to time. Xx.
Xxxxxxxxx acknowledges receipt of a summary of Xxxxxxxx'x standard employee
benefits policies in effect as of the date hereof.
6. REIMBURSEMENT OF BUSINESS EXPENSES. Xxxxxxxx will, in accordance
with Xxxxxxxx'x policies in effect from time to time, reimburse Xx. Xxxxxxxxx
for all out-of-pocket reasonable business expenses incurred by Xx. Xxxxxxxxx
in connection with the performance of his duties under this Agreement upon
submission of the required documentation required pursuant to Xxxxxxxx'x
standard policies and record-keeping procedures.
7. INTELLECTUAL PROPERTY. Simultaneously with the execution of this
Agreement, Xx. Xxxxxxxxx is executing and delivering and hereby adopts and
agrees to be bound by Xxxxxxxx'x Intellectual Property Rights Agreement, a
copy of which is attached to this Agreement as ATTACHMENT A, and the
Page 3
Confidentiality Agreement, a copy of which is attached to this Agreement as
ATTACHMENT B.
8. TERMINATION.
(a) XXXXXXXX. Xxxxxxxx may terminate Xx. Xxxxxxxxx'x employment
at any time during the Initial Period with or without cause upon written
notice to Xx. Xxxxxxxxx.
(b) BY XX. XXXXXXXXX. During the Initial Period, Xx. Xxxxxxxxx
may terminate Xx. Xxxxxxxxx'x employment upon written notice to Xxxxxxxx only
if Xxxxxxxx is in material breach of this Agreement, provided that such
termination will become effective only upon the expiration of 30 days
following such notice and then only if the breach remains uncured. Such
termination shall be deemed a termination by Xxxxxxxx of Xx. Xxxxxxxxx'x
employment under Section 8(a) for which Xx. Xxxxxxxxx shall have the remedy
set forth in Section 8(c).
(c) REMEDY. Upon termination of Xx. Xxxxxxxxx'x employment
pursuant to Section 8(a) without cause or Section 8(b) only (at which time he
shall cease to be an employee of Xxxxxxxx for all purposes, including for all
benefit plan, insurance and other purposes), Xxxxxxxx will pay to Xx.
Xxxxxxxxx, on Xxxxxxxx'x regular payroll dates and less required withholdings
(if any), salary at the rate paid to Xx. Xxxxxxxxx immediately prior to such
termination, for the lesser of (i) the balance of the Initial Period or (ii)
one year (the "TERMINATION PAYMENTS"). Xxxxxxxx'x obligation to make the
Termination Payments pursuant to this Section 8(c) is in lieu of any damages
or any other payment or benefits, including without limitation stock
benefits, that Xxxxxxxx might otherwise be obligated to pay Xx. Xxxxxxxxx as
a result of Xx. Xxxxxxxxx'x termination of employment; PROVIDED, HOWEVER,
that if at any time Xxxxxxxx terminates Xx. Xxxxxxxxx'x employment without
cause under circumstances in which Xx. Xxxxxxxxx is not entitled to
Termination Payments, or is entitled to Termination Payments that in the
aggregate are less than a lump-sum severance payment consistent with
Xxxxxxxx'x standard severance payment policy, if any, as may be in effect at
the time of termination, determined with applicable credit for Xx.
Xxxxxxxxx'x time of service with Antinori Software, Inc., then Xx. Xxxxxxxxx
shall be entitled to such lump-sum severance payment. (For purposes of
reference and example only, Xxxxxxxx'x standard severance payment policy as
of the date of this Agreement provides for the payment of one week's salary
at the time of termination for each year of service as an employee.)
Xxxxxxxx and Xx. Xxxxxxxxx agree that, in view of the nature of the issues
likely to arise in the event of such a termination, it would be impracticable
or extremely difficult to fix the actual damages resulting from such
termination and proving actual damages, causation and foreseeability in the
case of such termination would be costly, inconvenient and difficult. In
requiring Xxxxxxxx to
Page 4
make the Termination Payments as set forth herein, it is the intent of the
parties to provide, as of the date of this Agreement, for a liquidated amount
of damages to be paid by Xxxxxxxx to Xx. Xxxxxxxxx. Such liquidated amount
shall be deemed full and adequate damages for such termination and is not
intended by either party to be a penalty.
(d) UPON DEATH. If Xx. Xxxxxxxxx dies during the term of this
Agreement, then Xxxxxxxx will pay his estate an amount equal to all salary
accrued, bonuses (if any) accrued and payable and benefits accrued as of the
date of his death.
(e) SURVIVAL. Xx. Xxxxxxxxx'x and Xxxxxxxx'x obligations under
Sections 7, 8 and 9(i) of this Agreement will survive the termination of
Xxxxxxxx'x employment of Xx. Xxxxxxxxx.
(f) OPTIONS. Termination of Xx. Xxxxxxxxx'x employment with
Xxxxxxxx shall not of itself make unexercisable any unexercised options to
purchase stock of Xxxxxxxx except and to the extent expressly provided for
(or referenced) in the agreements evidencing such options.
(g) CAUSE. As used in this Agreement the term "with cause"
shall mean and be limited to: (i) a material breach of this Agreement by Xx.
Xxxxxxxxx that is not corrected within thirty (30) days after written notice
of same from the board of directors of Xxxxxxxx to Xx. Xxxxxxxxx; (ii) xxxxx
and willful neglect by Xx. Xxxxxxxxx of his duties and responsibilities
hereunder; (iii) fraud, criminal misconduct, breach of fiduciary duty,
dishonesty, or gross and willful misconduct by Xx. Xxxxxxxxx in connection
with the performance of his duties and responsibilities hereunder; (iv) Xx.
Xxxxxxxxx being under the influence of alcohol or drugs during business
hours, or being habitually drunk or addicted to drugs; (v) the commission by
Xx. Xxxxxxxxx of any crime of moral turpitude; (vi) material breach by Xx.
Xxxxxxxxx of his obligations under any assignment of copyright and other
intellectual property rights, noncompetition agreement, trade secret
agreement or confidentiality agreement, which breach is not cured within
thirty (30) days after written notice of same from the board of directors of
Xxxxxxxx to Xx. Xxxxxxxxx; or (vii) habitual breach by Xx. Xxxxxxxxx of any
of the material provisions of this Agreement or such other assignment or
agreements (regardless of any prior cure thereof).
9. MISCELLANEOUS.
(a) NOTICES. Any and all notice permitted or required to be
given under this Agreement must be in writing. Notices will be deemed given
(i) when personally received or when sent by facsimile transmission (to the
receiving party's facsimile number), (ii) on the first business day after
having been sent by commercial overnight courier with written verification of
receipt,
Page 5
or (iii) on the third business day after having been sent by registered or
certified mail from a location on the United States mainland, return receipt
requested, postage prepaid, whichever occurs first, at the address set forth
below or at any new address, notice of which will have been given in
accordance with this Section 9(a):
(i) If to Xxxxxxxx: The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief Executive
Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Xx. Xxxxxxxxx: Xxxxxxxx X. Xxxxxxxxx
00 Xxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx
A Limited Liability Partnership
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) AMENDMENTS. This Agreement, including the Attachments
hereto, contains the entire agreement and supersedes and replaces all prior
agreements between Xxxxxxxx and Xx. Xxxxxxxxx, or between Antinori Software,
Inc. and Xx. Xxxxxxxxx, concerning Xx. Xxxxxxxxx'x employment and employment
benefits (including, without limitation, that certain Letter of Agreement
dated October 24, 1995, as amended, between Xx. Xxxxxxxxx and Xxxxxxxx
Software, Inc.), and Xx. Xxxxxxxxx hereby releases and discharges Antinori
Software, Inc. from its obligations under such prior agreements; PROVIDED,
HOWEVER, that this sentence does not supersede and is without prejudice to
Xx. Xxxxxxxxx'x vested option to purchase shares of Xxxxxxxx from Xxxxxx X.
Xxxxxxxx
Page 6
(individually) as set forth in paragraph 3 of such Letter of Agreement (and
the vesting and acceleration provisions of paragraph 4 of such Letter of
Agreement, to the extent they relate to such paragraph 3). This Agreement
may not be changed or modified in whole or in part except by a writing signed
by the party against whom enforcement of the change or modifications is
sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be
assignable by either Xx. Xxxxxxxxx or Xxxxxxxx, except that the rights and
obligations of Xxxxxxxx under this Agreement may be assigned to a corporation
which succeeds Xxxxxxxx as the result of a merger or other corporate
reorganization and which continues the business of Xxxxxxxx, or subsidiary of
Xxxxxxxx, provided that Xxxxxxxx guarantees the performance by such assignee
of Xxxxxxxx'x obligations hereunder.
(d) GOVERNING LAW. The laws of the State of Texas (without
regard to its choice of law principles that might apply the law of another
jurisdiction) will govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties.
(e) NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
(f) SEVERABILITY. Xx. Xxxxxxxxx and Xxxxxxxx recognize that the
limitations contained in this Agreement are reasonably and properly required
for the adequate protection of the interests of Xxxxxxxx. If for any reason
a court of competent jurisdiction or an arbitrator in a binding arbitration
proceeding finds any provision of this Agreement, or the application thereof,
to be unenforceable, then the remaining provisions of this Agreement will be
interpreted so as best to reasonably effect the intent of the parties. The
parties further agree that the court or arbitrator shall replace any such
invalid or unenforceable provisions with valid and enforceable provisions
designed to achieve, to the extent possible, the business purposes and intent
of such unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and
the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
both parties reflected hereon as signatories.
Page 7
(h) EFFECT OF AGREEMENT. This Agreement will be void and have
no effect if the Effective Date does not occur on or before February 1, 1997.
(i) DISPUTE RESOLUTION.
(i) ARBITRATION OF DISPUTES. Any dispute under this
Agreement shall be resolved by arbitration in Dallas, Texas and, except as
herein specifically stated, in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA RULES") then in effect.
However, in all events, these arbitration provisions shall govern over any
conflicting rules that may now or hereafter be contained in the AAA Rules.
Any judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction over the subject matter thereof. The arbitrator
shall have the authority to grant any equitable and legal remedies that would
be available in any judicial proceeding instituted to resolve such dispute.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration
will be conducted before a single arbitrator who will be compensated for his
or her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator if the parties are not able to agree upon his or her
rate of compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Texas contract law; PROVIDED,
HOWEVER, that such lawyers cannot work for a firm then performing services
for either party, that each party will have the opportunity to make such
reasonable objection to any of the arbitrators listed as such party may wish
and that the American Arbitration Association will select the arbitrator from
the list of arbitrators as to whom neither party makes any such objection.
If the foregoing procedure is not followed, then each party will choose one
person from the list of arbitrators provided by the American Arbitration
Association (provided that such person does not have a conflict of interest),
and the two persons so selected will select from the list provided by the
American Arbitration Association the person who will act as the arbitrator.
(iv) PAYMENT OF COSTS. Xxxxxxxx and Xx. Xxxxxxxxx will
each pay 50% of the initial compensation to be paid to the arbitrator in any
such arbitration and 50% of the costs of transcripts and other normal and
regular expenses of the arbitration proceedings; PROVIDED, HOWEVER, that the
prevailing party in any arbitration will be entitled to an award of
attorneys' fees and costs, and all costs of arbitration, including
Page 8
those provided for above, will be paid by the non-prevailing party, and the
arbitrator will be authorized to make such determinations.
(v) BURDEN OF PROOF. For any dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons
for any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award.
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement.
(viii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy
of the parties for any dispute arising out of this Agreement.
(ix) EQUITABLE REMEDY. Notwithstanding the provisions of
this Section 9(i) and the arbitration provided for herein, actions initiated
or maintained by the parties for injunctive or similar equitable relief may
not be subject to arbitration and may be brought by the parties in any court
that has jurisdiction, and should the party bringing any such action prevail,
all costs and expenses (including legal fees) shall be borne by the party
against whom such action was brought.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Page 9
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
THE XXXXXXXX GROUP, INC. /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------
XXXXXXXX X. XXXXXXXXX
By: /s/ X.X. Xxxxxxxx
-------------------------
X.X. Xxxxxxxx
Chief Executive Officer
Page 10
EXHIBIT B-4
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") shall become effective as
of the Effective Date indicated below between The Xxxxxxxx Group, Inc., a
Texas corporation ("XXXXXXXX"), and Mr. Xxxxxxx Xxxxxx ("MR. ISRAEL").
RECITALS
A. This Agreement is entered into connection with and is ancillary to
an Agreement and Plan of Merger (the "AGREEMENT") dated as of January 29,
1997 between Xxxxxxxx and Antinori Software Inc., a Georgia corporation,
pursuant to which a wholly-owned subsidiary of Xxxxxxxx is to merge with and
into Antinori Software, Inc. (the "MERGER"), such that Antinori Software,
Inc. will become a wholly-owned subsidiary of Xxxxxxxx. The date on which
the Merger becomes effective will be the effective date of this Agreement
(the "EFFECTIVE DATE"). As provided in Section 9(h) below, this Agreement
will be void and have no effect if the Merger does not become effective,
i.e., the Effective Date does not occur, by February 1, 1997.
B. Mr. Israel is a Vice President and a shareholder of Antinori
Software, Inc. and has been and remains actively involved in the development
and marketing of Antinori Software, Inc.'s products. Xxxxxxxx intends to
continue the business of Antinori Software, Inc. after the Merger and
integrate such business into Xxxxxxxx'x ongoing business. To preserve and
protect the assets of Antinori Software, Inc., including Antinori Software,
Inc.'s goodwill, customers and trade secrets of which Mr. Israel has and will
have knowledge and to preserve and protect Xxxxxxxx'x goodwill and business
interests going forward, and in consideration for Xxxxxxxx'x entering into
and performing under the Agreement, Mr. Israel has agreed to enter into this
Agreement.
C. In addition, as contemplated by Section 7 below, Mr. Israel is
concurrently herewith entering into an Intellectual Property Rights Agreement
and a Confidentiality Agreement in favor of Xxxxxxxx for the purpose of
protecting Xxxxxxxx'x proprietary rights.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein, Xxxxxxxx and Mr. Israel hereby
agree as follows:
Page 1
1. EMPLOYMENT. Xxxxxxxx will employ Mr. Israel and Mr. Israel
accepts employment with Xxxxxxxx. Mr. Israel's employment is terminable by
either party at will, with or without cause, at any time. The obligations of
Xxxxxxxx and Mr. Israel set forth in the "Intellectual Property Rights
Agreement" and the "Confidentiality Agreement") (each as defined in Section
7) (referring to intellectual property and confidentiality, respectively) and
in Section 8 (referring to termination) will survive termination of Mr.
Israel's employment, regardless of cause.
Mr. Israel's primary location of employment shall be in Atlanta,
Georgia or its environs, and he shall undertake such business travel as is
reasonably required in the discharge of his duties set forth below.
2. DUTIES. Mr. Israel will be employed as a full-time employee of
Xxxxxxxx. Mr. Israel agrees that, to the best of his ability and experience,
he will at all times conscientiously perform all of the duties and
obligations assigned to him under this Agreement, which shall be reasonably
comparable to his duties and obligations at Antinori Software, Inc.
3. FULL-TIME EMPLOYMENT. Mr. Israel's employment will be on a
full-time basis, in accordance with standard employee policies for Xxxxxxxx.
Mr. Israel will not engage in any other business or render any commercial or
professional services, directly or indirectly, to any other person or
organization, whether for compensation or otherwise, provided that Mr. Israel
may (i) provide incidental assistance to family members on matters of family
business; and (ii) sit on the board of directors of corporations and other
organizations (including, without limitation, charitable and other nonprofit
organizations) that do not compete with Xxxxxxxx; provided in each case that
such activities do not conflict with or interfere with Mr. Israel's normal
full-time and first priority obligations to Xxxxxxxx. Mr. Israel may make
personal investments in nonpublicly traded corporations, partnerships or
other entities that, to the knowledge of Xxxxxxxx, are not at the time of
such investment engaged in any business activities competitive with Xxxxxxxx.
Notwithstanding anything to the contrary contained in this Agreement, Mr.
Israel may make personal investments in publicly traded corporations
regardless of the business they are engaged in, provided that Mr. Israel does
not at any time own in excess of 1% of the issued and outstanding stock of
any such corporation.
4. SALARY; OPTIONS. Mr. Israel's initial salary will be not less
than the rate of $130,000 per year, payable on Xxxxxxxx'x regular payroll
dates, less required withholdings. Changes in Mr. Israel's salary shall
occur only by mutual agreement.
On the Effective Date, Xxxxxxxx shall xxxxx to Mr. Israel
Page 2
options to purchase up to 23,100 shares of Xxxxxxxx'x Class B Common Stock at
an exercise price of $19.07 per share. One such option shall be an incentive
stock option to the extent allowable by law and shall vest one-third on the
Effective Date, one-third on the first anniversary thereof and one-third on
the second anniversary thereof. The other such option shall be a
non-qualified option with identical vesting terms. Such options shall be
issued under and pursuant to Xxxxxxxx'x existing long term incentive plan,
with terms and conditions as provided therein except as expressly provided
above.
5. BENEFITS. Mr. Israel will be entitled to insurance, vacation and
other benefits commensurate with his position in accordance with Xxxxxxxx'x
standard employee policies in effect from time to time. Mr. Israel
acknowledges receipt of a summary of Xxxxxxxx'x standard employee benefits
policies in effect as of the date hereof.
6. REIMBURSEMENT OF BUSINESS EXPENSES. Xxxxxxxx will, in accordance
with Xxxxxxxx'x policies in effect from time to time, reimburse Mr. Israel
for all out-of-pocket reasonable business expenses incurred by Mr. Israel in
connection with the performance of his duties under this Agreement upon
submission of the required documentation required pursuant to Xxxxxxxx'x
standard policies and record-keeping procedures.
7. INTELLECTUAL PROPERTY. Simultaneously with the execution of this
Agreement, Mr. Israel is executing and delivering and hereby adopts and
agrees to be bound by Xxxxxxxx'x Intellectual Property Agreement, a copy of
which is attached to this Agreement as ATTACHMENT A, and the Confidentiality
Agreement, a copy of which is attached to this Agreement as ATTACHMENT B.
8. SURVIVAL. Mr. Israel's and Xxxxxxxx'x obligations under Sections
7, 8 and 9(i) of this Agreement will survive the termination of Xxxxxxxx'x
employment of Mr. Israel.
9. MISCELLANEOUS.
(a) NOTICES. Any and all notice permitted or required to be
given under this Agreement must be in writing. Notices will be deemed given
(i) when personally received or when sent by facsimile transmission (to the
receiving party's facsimile number), (ii) on the first business day after
having been sent by commercial overnight courier with written verification of
receipt, or (iii) on the third business day after having been sent by
registered or certified mail from a location on the United States mainland,
return receipt requested, postage prepaid, whichever occurs first, at the
address set forth below or at any new address, notice of which will have been
given in accordance with this Section 9(a):
Page 3
(i) If to Xxxxxxxx: The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief Executive
Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Mr. Israel: Xxxxxxx Xxxxxx
000 Xxxxxx Xxxx.
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx
A Limited Liability Partnership
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
(b) AMENDMENTS. This Agreement, including the Attachments
hereto, contains the entire agreement and supersedes and replaces all prior
agreements between Xxxxxxxx and Mr. Israel, or between Antinori Software,
Inc. and Mr. Israel, concerning Mr. Israel's employment and employment
benefits (including, without limitation, those certain Letters of Agreement
dated December 20, 1994 and September 13, 1996, each between Mr. Israel and
Antinori Software, Inc., but not his accrued rights to commissions as set
forth in those agreements). This Agreement may not be changed or modified in
whole or in part except by a writing signed by the party against whom
enforcement of the change or modifications is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be
assignable by either Mr. Israel or Xxxxxxxx, except that the rights and
obligations of Xxxxxxxx under this Agreement may be assigned to a corporation
which succeeds Xxxxxxxx as the result of a merger or other corporate
reorganization and which continues the business of Xxxxxxxx, or a subsidiary
of Xxxxxxxx, provided that
Page 4
Xxxxxxxx guarantees the performance by such assignee of Xxxxxxxx'x
obligations hereunder.
(d) GOVERNING LAW. The laws of the State of Texas (without
regard to its choice of law principles that might apply the law of another
jurisdiction) will govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties.
(e) NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
(f) SEVERABILITY. Mr. Israel and Xxxxxxxx recognize that the
limitations contained in this Agreement are reasonably and properly required
for the adequate protection of the interests of Xxxxxxxx. If for any reason
a court of competent jurisdiction or an arbitrator in a binding arbitration
proceeding finds any provision of this Agreement, or the application thereof,
to be unenforceable, then the remaining provisions of this Agreement will be
interpreted so as best to reasonably effect the intent of the parties. The
parties further agree that the court or arbitrator shall replace any such
invalid or unenforceable provisions with valid and enforceable provisions
designed to achieve, to the extent possible, the business purposes and intent
of such unenforceable provisions.
(g) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
signature appears thereon and all of which together will constitute one and
the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
both parties reflected hereon as signatories.
(h) EFFECT OF AGREEMENT. This Agreement will be void and have
no effect if the Effective Date does not occur on or before February 1, 1997.
(i) DISPUTE RESOLUTION.
(i) ARBITRATION OF DISPUTES. Any dispute under this
Agreement shall be resolved by arbitration in Dallas, Texas and, except as
herein specifically stated, in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA RULES") then in effect.
However, in all events, these arbitration provisions shall govern over any
conflicting rules that may now or hereafter be contained in the AAA Rules.
Page 5
Any judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction over the subject matter thereof. The arbitrator
shall have the authority to grant any equitable and legal remedies that would
be available in any judicial proceeding instituted to resolve such dispute.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration
will be conducted before a single arbitrator who will be compensated for his
or her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator if the parties are not able to agree upon his or her
rate of compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Texas contract law; PROVIDED,
HOWEVER, that such lawyers cannot work for a firm then performing services
for either party, that each party will have the opportunity to make such
reasonable objection to any of the arbitrators listed as such party may wish
and that the American Arbitration Association will select the arbitrator from
the list of arbitrators as to whom neither party makes any such objection.
If the foregoing procedure is not followed, then each party will choose one
person from the list of arbitrators provided by the American Arbitration
Association (provided that such person does not have a conflict of interest),
and the two persons so selected will select from the list provided by the
American Arbitration Association the person who will act as the arbitrator.
(iv) PAYMENT OF COSTS. Xxxxxxxx and Mr. Israel will each
pay 50% of the initial compensation to be paid to the arbitrator in any such
arbitration and 50% of the costs of transcripts and other normal and regular
expenses of the arbitration proceedings; PROVIDED, HOWEVER, that the
prevailing party in any arbitration will be entitled to an award of
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the non-prevailing party, and the
arbitrator will be authorized to make such determinations.
(v) BURDEN OF PROOF. For any dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons
for any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award.
Page 6
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement.
(viii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement, arbitration will be the sole and exclusive remedy
of the parties for any dispute arising out of this Agreement.
(ix) EQUITABLE REMEDY. Notwithstanding the provisions of
this Section 9(i) and the arbitration provided for herein, actions initiated
or maintained by the parties for injunctive or similar equitable relief may
not be subject to arbitration and may be brought by the parties in any court
that has jurisdiction, and should the party bringing any such action prevail,
all costs and expenses (including legal fees) shall be borne by the party
against whom such action was brought.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Page 7
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the Effective Date.
THE XXXXXXXX GROUP, INC. /s/ Xxxxxxx Xxxxxx
--------------------------------
XXXXXXX XXXXXX
By: /s/ X.X. Xxxxxxxx
-----------------------------
X.X. Xxxxxxxx
Chief Executive Officer
Page 8
EXHIBIT C
[Exhibit C includes a Noncompetition Agreement for each of Xxxxxx X. Xxxxxxxx,
Xxxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxxxxx. A form of the
Noncompetition Agreement is filed herewith.]
NONCOMPETITION AGREEMENT
This NONCOMPETITION AGREEMENT (this "AGREEMENT") is made as of the
Effective Date indicated below by and between The Xxxxxxxx Group, Inc., a Texas
corporation ("XXXXXXXX"), and __________________ ("SHAREHOLDER").
RECITALS
A. This Agreement is entered into in connection with and is ancillary to
that certain Agreement and Plan of Merger (the "Plan") dated as of January 29,
1997 among Xxxxxxxx, Antinori Software, Inc., a Georgia corporation
("ANTINORI"), and CAG Newco, Inc., a Texas corporation and a wholly-owned
subsidiary of Xxxxxxxx, pursuant to which CAG Newco, Inc. will merge with and
into Antinori (the "MERGER"). The date on which the Merger becomes effective
will be the effective date of this Agreement (the "EFFECTIVE DATE").
B. Shareholder is a principal shareholder of Antinori and has been
actively involved in the development and marketing of Antinori's products.
Xxxxxxxx intends to continue the business of Antinori after the Merger and
integrate such business into Xxxxxxxx'x ongoing business. To preserve and
protect the assets of Antinori, including Antinori's goodwill, customers and
trade secrets of which Shareholder has and will have knowledge in his role as
an employee of Xxxxxxxx and to preserve and protect Xxxxxxxx'x goodwill and
business interests going forward, and in consideration for Xxxxxxxx'x
entering into and performing under the Plan, Shareholder has agreed to enter
into this Agreement.
C. Shareholder and Xxxxxxxx believe the limitation as to time,
geographical area and scope of activity contained in this Agreement are
reasonably necessary to, and no greater than that required to, protect the
goodwill and business interests of Xxxxxxxx.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of the parties contained herein, Xxxxxxxx and Shareholder hereby
agree as follows:
1. TIME; SCOPE OF ACTIVITY. For the later of three years following the
Effective Date and two years after the termination of Shareholder's employment
by Xxxxxxxx, Shareholder will not (except to the extent permitted in Section 3
of Shareholder's Employment Agreement with Xxxxxxxx dated the date of this
Agreement) individually or as an employee, partner, officer, director or
shareholder or in any other capacity whatsoever of or
Page 1
for any person, firm, partnership, company or corporation other than
Xxxxxxxx, Xxxxxxxx or other subsidiaries of Xxxxxxxx:
(a) Own, manage, operate, sell, control or participate in the
ownership, management, operation, sales or control of any business engaged, in
the geographical area referred to in Section 2 below, in a business that is
substantially similar to or competitive with the development, marketing,
maintenance, administration, and consultation with respect to, computer software
for financial institutions or other computer software or other products created,
distributed or known by him to be under development by Xxxxxxxx or any of its
subsidiaries prior to the termination of Shareholder's employment with Xxxxxxxx;
or
(b) Directly or indirectly create, develop, sell, license or
otherwise market computer software, or related products or services, that are
substantially similar to or competitive with any computer software, or related
products or services, the creation, development, sale, licensing or other
marketing of which he participated in during Shareholder's employment with
Xxxxxxxx; or
(c) Divulge, transmit or otherwise disclose or cause to be
divulged, transmitted or otherwise disclosed, any business contacts, client or
customer lists, technology, know-how, trade secrets, marketing techniques,
contracts or other confidential or proprietary information of Xxxxxxxx and its
subsidiaries of whatever nature, whether existing on or prior to the date of
this Agreement or arising from and after the date of this Agreement (provided,
however, that for purposes of this Agreement, information (other than client or
customer lists) shall not be considered to be confidential or proprietary if (i)
it is a matter of public record, (ii) it is generally known in the industry, or
(iii) the Shareholder can demonstrate that such information was already known to
the recipient thereof other than by reason of any breach of any obligation under
this Agreement or any other confidentiality or non-disclosure agreement); or
(d) Recruit, attempt to hire, solicit, assist others in recruiting
or hiring, or refer to others concerning employment, in or with respect to the
geographical areas referred to in Section 2 below, any person who is an employee
of Xxxxxxxx or any of their subsidiaries or induce or attempt to induce any such
employee to terminate his employment with Xxxxxxxx or any of its subsidiaries.
2. GEOGRAPHICAL AREAS. The geographical areas in which the
restrictions provided for in this Agreement apply include all cities, counties
and states of the United States, and all other countries, in which Xxxxxxxx or
Xxxxxxxx has engaged in licensing or sales or otherwise conducted business or
selling or licensing efforts at any time during the two years prior to the
Effective Date of this Agreement or during the term of this Agreement.
Shareholder acknowledges that the scope and period of restrictions provided for
in Section 1 and the geographical area to which the
NONCOMPETITION AGREEMENT - Page 2
restrictions apply as described in this Section 2 are fair and reasonable and
are reasonably required for the protection of Xxxxxxxx and that this
Agreement accurately describes the business to which the restrictions are
intended to apply.
3. CONSENT TO INJUNCTION. Shareholder acknowledges that any breach of
the covenants of this Agreement will result in immediate and irreparable injury
to Xxxxxxxx and, accordingly, consents to the application of injunctive relief
and such other equitable remedies for the benefit of Xxxxxxxx as may be
appropriate if such a breach occurs or is threatened. The foregoing remedies
will be in addition to all other legal remedies to which Xxxxxxxx may be
entitled hereunder, including, without limitation, monetary damages.
NONCOMPETITION AGREEMENT - Page 3
4. MISCELLANEOUS.
(a) NOTICES. Any notice or other communication required or
permitted to be given under this Agreement will be in writing, will be delivered
personally or by mail or express delivery, postage prepaid, and will be deemed
given upon actual delivery or, if mailed by registered or certified mail, on the
third business day following deposit in the mails, addressed as follows:
(i) If to Xxxxxxxx:
The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief Executive
Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(ii) If to Shareholder:
____________________________
____________________________
____________________________
Phone: _____________________
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx
A Limited Liability Partnership
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 4(a).
(b) AMENDMENTS. This Agreement contains the entire agreement and
supersedes and replaces all prior agreements between Xxxxxxxx and Shareholder or
Antinori and Shareholder concerning
NONCOMPETITION AGREEMENT - Page 4
the subject matter hereof. This Agreement may not be changed or modified in
whole or in part except by a writing signed by the party against whom
enforcement of the change or modification is sought.
(c) SUCCESSORS AND ASSIGNS. This Agreement will not be assignable
by either Shareholder or Xxxxxxxx, except that the rights and obligations of
Xxxxxxxx under this Agreement may be assigned to a corporation which becomes the
successor to Xxxxxxxx as the result of a merger or other corporate
reorganization and which continues the business of Xxxxxxxx, or any other
subsidiary of Xxxxxxxx, provided that Xxxxxxxx guarantees the performance by
such assignee of Xxxxxxxx'x obligations hereunder.
(d) GOVERNING LAW. The laws of the State of Texas (without regard
to its choice of law principles that might apply the law of another
jurisdiction) will govern the validity of this Agreement, the construction of
its terms, and the interpretation and enforcement of the rights and duties of
the parties.
(e) NO WAIVER. The failure of any party to enforce any of the
provisions of this Agreement will not be construed to be a waiver of the right
of such party thereafter to enforce such provisions. The waiver by any party of
the right to enforce any of the provisions of this Agreement on any occasion
will not be construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
(f) SEVERABILITY. Shareholder and Xxxxxxxx recognize that the
limitations contained herein are reasonably and properly required for the
adequate protection of the interests of Xxxxxxxx. The intent of the parties is
that the provisions of this Agreement be enforced to the fullest extent
permissible under applicable law. If for any reason a court of competent
jurisdiction or a binding arbitration proceeding finds any provision or position
of this Agreement or the application thereof, to be invalid or unenforceable,
then this Agreement will be deemed amended to revise that provision or position
to the minimum extent necessary to render it valid and enforceable and the
remaining provisions of this Agreement will be interpreted so as best to
reasonably effect the intent of the parties.
(g) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose name appears
thereon and all of which together will constitute one and the same instrument.
This Agreement will become binding when one or more counterparts hereof,
individually or taken together, bear the signatures of both parties reflected
hereon as signatories.
(h) EFFECT OF AGREEMENT. This Agreement will be void and have no
effect if the Effective Date does not occur on or before February 1, 1997.
(i) DISPUTE RESOLUTION.
NONCOMPETITION AGREEMENT - Page 5
(i) ARBITRATION OF DISPUTES. Any dispute under this
Agreement shall be resolved by arbitration in Dallas, Texas and, except as
herein specifically stated, in accordance with the commercial arbitration rules
of the American Arbitration Association ("AAA RULES") then in effect. However,
in all events, these arbitration provisions shall govern over any conflicting
rules that may now or hereafter be contained in the AAA Rules. Any judgment
upon the award rendered by the arbitrator may be entered in any court having
jurisdiction over the subject matter thereof. The arbitrator shall have the
authority to grant any equitable and legal remedies that would be available in
any judicial proceeding instituted to resolve such dispute.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration will
be conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon a reasonable hourly or daily consulting
rate for the arbitrator if the parties are not able to agree upon his or her
compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Texas contract law and experienced in
mergers and acquisitions; provided, however, that such lawyers cannot work for a
firm then performing services for either party, that each party will have the
opportunity to make such reasonable objection to any of the arbitrators listed
as such party may wish and that the American Arbitration Association will select
the arbitrator from the list of arbitrators as to whom neither party makes any
such objection. If the foregoing procedure is not followed, then each party
will choose one person from the list of arbitrators provided by the American
Arbitration Association (provided that such person does not have a conflict of
interest), and the two persons so selected will select from the list provided by
the American Arbitration Association the person who will act as the arbitrator.
(iv) PAYMENT OF COSTS. Xxxxxxxx and Shareholder will each
pay 50% of the initial compensation to be paid to the arbitrator in any such
arbitration and 50% of the costs of transcripts and other normal and regular
expenses of the arbitration proceedings; provided, however, that the prevailing
party in any arbitration will be entitled to an award of attorneys' fees and
costs, and all costs of arbitration, including those provided for above, will be
paid by the non-prevailing party, and the arbitrator will be authorized to make
such determinations.
(v) BURDEN OF PROOF. For any dispute submitted to
arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any
NONCOMPETITION AGREEMENT - Page 6
arbitration proceedings hereunder, the arbitrator will render findings of
fact and conclusions of law and a written opinion setting forth the basis and
reasons for any decision reached and will deliver such documents to each
party to this Agreement along with a signed copy of the award.
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions of
this Agreement.
(viii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement (including as provided in Section 3), arbitration
will be the sole and exclusive remedy of the parties for any dispute arising out
of this Agreement.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
NONCOMPETITION AGREEMENT - Page 7
IN WITNESS WHEREOF, this Agreement is made and effective as of the
Effective Date.
THE XXXXXXXX GROUP, INC. SHAREHOLDER
By: /s/ X.X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxx
---------------------------- -----------------------------------
X.X. Xxxxxxxx Name: Xxxxxx X. Xxxxxxxx
Chief Executive Officer
NONCOMPETITION AGREEMENT - Page 8
EXHIBITS D-1 AND D-2
EXHIBIT D-1
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is entered into as of January
31, 1997, among The Xxxxxxxx Group, Inc., a Texas corporation ("XXXXXXXX"),
Xxxxxx X. Xxxxxxxx, Xxxxx Xxxxxxxx and Xxxxxxx Xxxxxx, who are the
shareholders (collectively, the "HOLDERS") of Antinori Software, Inc., a
Georgia corporation ("ANTINORI"), and U.S. Trust Company of Texas, N.A.
("ESCROW AGENT").
RECITALS
X. Xxxxxxxx, Xxxxxxxx and a wholly-owned subsidiary of Xxxxxxxx have
entered into an Agreement and Plan of Merger dated as of January 29, 1997
(the "AGREEMENT") pursuant to which Antinori will merge with and into such
wholly-owned subsidiary of Xxxxxxxx, with Xxxxxxxx surviving the merger, such
that Antinori will become a wholly-owned subsidiary of Xxxxxxxx. Capitalized
terms used in this Agreement and not otherwise defined herein have the
meanings given them in the Agreement. A copy of the Agreement has been
delivered to Escrow Agent.
B. Pursuant to the Agreement, an aggregate of 514,614 shares of
Xxxxxxxx Class A Voting Common Stock, no par value ("XXXXXXXX COMMON STOCK"),
are to be issued in the Merger to the Holders.
C. The Agreement provides for shares equaling approximately (and less
than) 5% of the shares of Xxxxxxxx Common Stock that are issued in the Merger
(the "ESCROW SHARES") to be deducted from the shares of Xxxxxxxx Common Stock
issued to the Holders and placed in an escrow account (the "ESCROW ACCOUNT")
to secure certain indemnification obligations of the Holders to Xxxxxxxx and
the other Indemnified Persons (as defined in Section 10.2 of the Agreement)
under the Agreement on the terms and conditions set forth herein. The Escrow
Shares required to be deposited in the Escrow Account pursuant to this
Agreement are described on ATTACHMENT A.
D. The parties desire to establish the terms and conditions pursuant
to which the Escrow Shares will be deposited, held in, and disbursed from the
Escrow Account.
NOW, THEREFORE, the parties agree as follows:
1. ESCROW AND INDEMNIFICATION.
Page 1
(a) ESCROW OF SHARES. Promptly after the Effective Time of the
Merger, Xxxxxxxx will deposit the Escrow Shares with Escrow Agent, who will
hold them in escrow as collateral for the indemnification obligations of the
Holders under Section 10.2 of the Agreement until such time as such Escrow
Shares are released pursuant to this Agreement. The Escrow Shares include
any "ADDITIONAL ESCROW SHARES" as that term is defined in Section 2(b) of
this Agreement. Escrow Agent agrees to accept delivery of the Escrow Shares
and to hold the Escrow Shares in escrow subject to the terms and conditions
of this Agreement.
(b) INDEMNIFICATION. Xxxxxxxx and the other Indemnified Persons
are indemnified pursuant to the terms of Section 10.2 of the Agreement (which
terms are incorporated herein by reference) from and against any Xxxxxxxx
Damages, subject to the limitations set forth in Section 10.2 of the
Agreement and in this Agreement. (For purposes of this Agreement, references
to Xxxxxxxx will include all other Indemnified Persons, as applicable.) A
number of Shares equalling approximately (and less than) 5% of the shares of
Xxxxxxxx Common Stock that are issued in the Merger to the Holders (the
"ESCROW SHARES") will be security for this indemnity obligation, subject to
the limitations, and in the manner provided, in Sections 10.2 of the
Agreement and this Agreement. Xxxxxx X. Xxxxxxxx shall act as Representative
of the Holders for purposes of this Agreement, is duly authorized to be such
Representative and may bind the Holders. Promptly after the receipt by
Xxxxxxxx of notice or discovery of any claim, damage or legal action or
proceeding giving rise to indemnification rights under Section 10.2 of the
Agreement, Xxxxxxxx will give the Representative and Escrow Agent written
notice of such claim, damage, legal action or proceeding (a "CLAIM") in
accordance with Section 3 of this Agreement. Within seven days of delivery of
such written notice, the Representative may, with Xxxxxxxx'x written consent,
which shall not be unreasonably withheld, at the expense of the Holders,
elect to take all necessary steps properly to contest any Claim involving
third parties or to prosecute or defend such Claim to conclusion or
settlement. If the Representative makes the foregoing election, then the
Representative will take all necessary steps to contest any such Claim or to
prosecute or defend such Claim to conclusion or settlement, and will notify
Xxxxxxxx of the progress of any such Claim, will permit Xxxxxxxx, at its
expense, to participate in such prosecution or defense (PROVIDED, HOWEVER,
that if a conflict of interest exists which would make it inappropriate, in
the reasonable opinion of Xxxxxxxx, for the same counsel to represent both
Xxxxxxxx and the Holders in the resolution of such Claim, then Xxxxxxxx may
retain separate counsel, the fees and expenses of which shall not be borne by
Xxxxxxxx but shall instead be borne by the Holders) and will provide Xxxxxxxx
with reasonable access to all relevant information and documents relating to
the Claim and the Representative's prosecution or defense thereof. If the
Representative does not make such election, then Xxxxxxxx shall be
Page 2
free to handle the prosecution or defense of any such Claim, will take all
necessary steps to contest any such Claim involving third parties or to
prosecute or defend such Claim to conclusion or settlement, will notify the
Representative of the progress of any such Claim, and will permit the
Representative, at the expense of the Holders, to participate in such
prosecution or defense and will provide the Representative with reasonable
access to all relevant information and documents relating to the Claim and
Xxxxxxxx'x prosecution or defense thereof. In either case, the party not in
control of a Claim will cooperate with the other party in the conduct of the
prosecution or defense of such Claim. Neither party will compromise or settle
any such Claim without the written consent of either Xxxxxxxx (if the
Representative defends the Claim) or the Representative (if Xxxxxxxx defends
the Claim), such consent not to be unreasonably withheld.
(c) LIMITATION ON LIABILITY. The maximum liability of a Holder
under Section 10.2 of the Agreement and under this Agreement, and Xxxxxxxx'x
sole and exclusive remedy under Section 10.2 of the Agreement and under this
Agreement, will be the number of Escrow Shares set forth next to each such
Holder's name on ATTACHMENT A; provided, however, that the foregoing
limitation on liability shall not apply in respect of Xxxxxx X. Xxxxxxxx'x
indemnity obligations resulting from fraud or intentional and willful
misrepresentation or intentional and willful concealment.
2. DEPOSIT OF ESCROW SHARES; RELEASE FROM ESCROW.
(a) DELIVERY OF ESCROW SHARES. On the Closing Date, the Escrow
Shares allocable to a Holder (the "INITIAL ESCROW SHARES") will be delivered
by Xxxxxxxx to Escrow Agent in the form of duly authorized stock certificates
issued in the respective names of the Holder thereof together with endorsed
stock powers. On the Closing Date, each of the Holders will deliver to
Xxxxxxxx a duly endorsed stock power in the form of ATTACHMENT B. If
Xxxxxxxx issues any Additional Escrow Shares (as defined below), then such
shares will be issued and delivered to Escrow Agent in the same manner as the
Escrow Shares delivered on the Closing Date.
(b) DIVIDENDS, VOTING AND RIGHTS OF OWNERSHIP. Except for
tax-free dividends paid in stock declared with respect to the Escrow Shares
pursuant to Section 305(a) of the Code ("ADDITIONAL ESCROW SHARES") and
returns of capital, any cash dividends, dividends payable in securities or
other distributions made in respect of the Escrow Shares will be distributed
by Xxxxxxxx to each Holder. The Holder will have the right to vote the
Escrow Shares deposited in the Escrow Account for the account of such Holder
so long as such Escrow Shares are held in escrow, and Xxxxxxxx will take all
reasonable steps necessary to allow the exercise of such rights. While the
Escrow Shares remain in Escrow Agent's possession pursuant to this Agreement,
the Holder will retain and will be able to exercise all other incidents of
Page 3
ownership of said Escrow Shares that are not inconsistent with the terms and
conditions of this Agreement.
(c) DISTRIBUTIONS TO HOLDERS. On or before January 31, 1998
(the "FINAL RELEASE DATE"), Escrow Agent will release from escrow to each
Holder such Holder's Escrow Shares, plus that portion of all Additional
Escrow Shares related to the Escrow Shares, less (A) any Escrow Shares
delivered to Xxxxxxxx in accordance with Section 4 in satisfaction of Claims
by Xxxxxxxx pursuant to Section 1(b) and (B) any Escrow Shares subject to
delivery to Xxxxxxxx in accordance with Section 4 with respect to any then
pending but unresolved Claims of Xxxxxxxx pursuant to Section 1(b). Any
Escrow Shares held as a result of clause (B) will be released to the Holder
or released to Xxxxxxxx for cancellation (as appropriate) promptly upon
resolution of each specific Claim involved.
(d) RELEASE OF SHARES. The Escrow Shares will be held by Escrow
Agent until required to be released pursuant to Section 2(c) above. Within
five business days after the applicable release condition is met, Escrow
Agent will deliver to the Holders the requisite number of Escrow Shares to be
released on such date as identified by Xxxxxxxx and the Representative to
Escrow Agent in writing. Such delivery will be in the form of stock
certificate(s) issued in the names of such Holders. Xxxxxxxx and the
Representative undertake to deliver a timely notice to Escrow Agent
identifying the number of Escrow Shares to be released within such five-day
period. Xxxxxxxx will take such action as may be necessary to cause stock
certificates to be issued in the names of the Holders. Escrow Agent will have
such stock certificates in its possession no later than three business days
prior to the day on which Escrow Agent is to deliver such certificates to the
Holders. Certificates representing Escrow Shares will bear a legend
indicating that they are subject to resale restrictions. Cash will be paid
in lieu of fractions of Escrow Shares in an amount equal to the product
determined by multiplying such fraction by the per share value of Xxxxxxxx
Common Stock as stated in Section 1.2 of the Agreement. Within five business
days after written request from the Representative, Xxxxxxxx will submit a
certified schedule of the cash amounts payable for fractional shares and will
deposit with Escrow Agent sufficient funds to pay such cash amounts for
fractional shares.
(e) NO ENCUMBRANCE. No Escrow Shares or any beneficial interest
therein may be pledged, sold, assigned or transferred, including by operation
of law, by a Holder or be taken or reached by any legal or equitable process
in satisfaction of any debt or other liability of the Holder (other than such
Holder's obligations under Section 10.2 of the Agreement), prior to the
delivery to such Holder of the Escrow Shares by Escrow Agent.
(f) POWER TO TRANSFER ESCROW SHARES. Escrow Agent is
Page 4
hereby granted the power to effect any transfer of Escrow Shares contemplated
by this Agreement. Xxxxxxxx will cooperate with Escrow Agent in promptly
issuing stock certificates to effect such transfers.
3. NOTICE OF CLAIM.
(a) Each notice of a Claim by Xxxxxxxx pursuant to Section 1(b)
(the "NOTICE OF CLAIM") will be in writing and will contain the following
information to the extent reasonably available to Xxxxxxxx:
(i) Xxxxxxxx'x good faith estimate of the reasonably
foreseeable maximum amount of the alleged Xxxxxxxx Damages (which amount may
be the amount of damages claimed by a third party plaintiff in an action
brought against Xxxxxxxx or Antinori based on alleged facts, which if true,
would constitute a breach of Antinori's representations and warranties); and
(ii) A brief description in reasonable detail of the
facts, circumstances or events giving rise to the alleged Xxxxxxxx Damages
based on Xxxxxxxx'x good faith belief thereof, including, without limitation,
the identity and address of any third-party claimant (to the extent
reasonably available to Xxxxxxxx) and copies of any formal demand or
complaint.
(b) Escrow Agent will not transfer any of the Escrow Shares held
in the Escrow Account to Xxxxxxxx pursuant to a Notice of Claim until such
Notice of Claim has been resolved in accordance with Section 4.
4. RESOLUTION OF NOTICE OF CLAIM AND TRANSFER OF ESCROW SHARES. Any
Notice of Claim received by the Representative and Escrow Agent pursuant to
Section 3, or any notice of a claim received by the Representative and Escrow
Agent pursuant to Section 1(c) (a "LIQUIDATED DAMAGES CLAIM"), will be
resolved as follows:
(a) UNCONTESTED CLAIMS. If the Representative does not contest
a Notice of Claim or a Liquidated Damages Claim in writing to Escrow Agent
and Xxxxxxxx and the Representative does not pay the amount demanded within
15 calendar days after the Notice of Claim or the Liquidated Damages Claim is
delivered pursuant to Section 4(b) below, then Escrow Agent will immediately
transfer to Xxxxxxxx for cancellation that number of the Escrow Shares having
a value (determined pursuant to Section 4(c)) equal to the amount of Xxxxxxxx
Damages specified in the Notice of Claim, or the amount of the Liquidated
Damages (in the case of a Liquidated Damages Claim), which number will be
allocated among the Holders in proportion to their percentage interests in
the Escrow Shares set forth on ATTACHMENT A, and will notify the
Representative of such transfer.
Page 5
(b) CONTESTED CLAIMS. To recover Claims under this Escrow it
will not be necessary to institute an arbitration proceeding pursuant to
Section 11.1 of the Agreement; the arbitrator hereunder being authorized to
determine the existence of Claims, as well as the amount of Xxxxxxxx Damages
(in the case of a Claim under Section 1(b) above) associated therewith. If
the Representative gives written notice contesting all, or a portion of, a
Notice of Claim or Liquidated Damages Claim to Xxxxxxxx and Escrow Agent (a
"CONTESTED CLAIM") within the 15-day period provided above, then matters that
are subject to a third party claim brought against Xxxxxxxx or Antinori in
litigation or an arbitration proceeding will await the final decision, award
or settlement of such litigation or arbitration proceeding, while matters
that arise between Xxxxxxxx on the one hand and Antinori on the other hand
("ARBITRABLE CLAIMS"), will be settled by binding arbitration. Any portion
of the Notice of Claim that is not contested will be resolved as set forth
above in Section 4(a). The final decision of the arbitrator will be
furnished to Escrow Agent, the Representative and Xxxxxxxx in writing and
will constitute a conclusive determination of the issue in question, binding
upon the Holders and Xxxxxxxx. After notice that the Notice of Claim is
contested by the Representative, Escrow Agent will continue to hold in the
Escrow Account Escrow Shares having a value (determined pursuant to Section
4(c)) sufficient to cover such Claim (notwithstanding the expiration of the
Final Release Date) until (i) execution of a settlement agreement by Xxxxxxxx
and the Representative setting forth a resolution of the Notice of Claim, or
(ii) receipt of a copy of the final award of the arbitrator.
(i) ARBITRATION. Any contested Claim shall be settled
by arbitration in Dallas, Texas, and, except as herein specifically stated,
in accordance with the commercial arbitration rules of the American
Arbitration Association ("AAA RULES") then in effect. However, in all
events, these arbitration provisions shall govern over any conflicting rules
that may now or hereafter be contained in the AAA Rules. Any judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction over the subject matter thereof.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration
will be conducted before a single arbitrator who will be compensated for his
or her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon a reasonable hourly or daily
consulting rate for the arbitrator if the parties are not able to agree upon
his or her rate of compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
lawyers who are familiar with Texas contract law and experienced in mergers
and acquisitions; provided, however, that such lawyers cannot work for a firm
then
Page 6
performing services for either party, that each party will have the
opportunity to make such reasonable objection to any of the arbitrators
listed as such party may wish and that the American Arbitration Association
will select the arbitrator from the list of arbitrators as to whom neither
party makes any such objection. If the foregoing procedure is not followed,
then each party will choose one person from the list of arbitrators provided
by the American Arbitration Association (provided that such person does not
have a conflict of interest), and the two persons so selected will select
from the list provided by the American Arbitration Association the person who
will act as the arbitrator.
(iv) PAYMENT OF COSTS. Xxxxxxxx and the Holders will
each pay 50% of the initial compensation to be paid to the arbitrator in any
such arbitration and 50% of the costs of transcripts and other normal and
regular expenses of the arbitration proceedings; provided, however, that the
prevailing party in any arbitration will be entitled to an award of
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the non-prevailing party, and the
arbitrator will be authorized to make such determinations. At Xxxxxxxx'x
option, the Holders' liability for such fees and costs and costs of
arbitration may be paid by Xxxxxxxx and recovered by Xxxxxxxx as a Claim
hereunder out of the Escrow Shares.
(v) BURDEN OF PROOF. For any Arbitrable Claim submitted
to arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any arbitration
proceedings hereunder, the arbitrator will render findings of fact and
conclusions of law and a written opinion setting forth the basis and reasons
for any decision reached and will deliver such documents to each party to
this Agreement along with a signed copy of the award. In the case of an
award pursuant to a Liquidated Damages Claim, the amount of the award will be
equal to the Liquidated Damages plus costs of arbitration as provided above.
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement or the Agreement.
(viii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement or the Agreement, arbitration will be the sole and
exclusive remedy of the parties for any Arbitrable Claim arising out of this
Agreement.
(c) DETERMINATION OF AMOUNT OF CLAIMS. Any amount owed to
Xxxxxxxx hereunder, determined pursuant to Section 4(a) or
Page 7
(b) above, will be immediately payable to Xxxxxxxx out of the Escrow Shares
then held by Escrow Agent on a pro rata basis among the Holders at a per
share value for all Escrow Shares equal to $23.83.
(d) NO EXHAUSTION OF REMEDIES. Xxxxxxxx need not exhaust any
other remedies that may be available to it but may proceed directly in
accordance with the provisions of this Agreement. Xxxxxxxx may institute
Claims against the Escrow Shares and in satisfaction thereof may recover
Escrow Shares, in accordance with the terms of this Agreement, without making
any other Claims directly against the Holders and without rescinding or
attempting to rescind the transactions consummated pursuant to the Agreement.
The assertion of any single Claim for indemnification hereunder will not xxx
Xxxxxxxx from asserting other Claims hereunder.
5. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) Escrow Agent will incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it to be
genuine and duly authorized, nor for any other action or inaction, except its
own willful misconduct or gross negligence. Escrow Agent shall have no duty
to inquire into or investigate the validity, accuracy or content or any
document delivered to it. Escrow Agent will not be responsible for the
validity or sufficiency of this Agreement. In all questions arising under
this Agreement, Escrow Agent may rely on the advice or opinion of counsel,
and for anything done, omitted or suffered in good faith by Escrow Agent
based on such advice, Escrow Agent will not be liable to anyone. Escrow
Agent will not be required to take any action hereunder involving its expense
unless the payment of such expense is made or provided for in a manner
satisfactory to it.
(b) If conflicting demands are made or conflicting notices are
served upon Escrow Agent with respect to the Escrow Account, then Escrow
Agent will have the absolute right, at Escrow Agent's election, to do either
or both of the following: (i) resign so a successor can be appointed
pursuant to Section 9 or (ii) file a suit in interpleader and obtain an order
from a court of competent jurisdiction requiring the parties to interplead
and litigate in such court their several claims and rights among themselves.
If such interpleader suit is brought, then Escrow Agent will thereby be fully
released and discharged from all further obligations imposed upon it under
this Agreement, and Xxxxxxxx and the Holders will each pay Escrow Agent 50%
percent of all costs, expenses and reasonable attorney's fees expended or
incurred by Escrow Agent pursuant to the exercise of Escrow Agent's rights
under this Section 5 (such costs, fees and expenses being treated as
extraordinary fees and expenses for the purposes of Section 8); provided,
however, that Xxxxxxxx and the Holders
Page 8
shall be entitled to reimbursement from the Holders and Xxxxxxxx,
respectively, of any extraordinary fees and expenses of Escrow Agent paid by
Xxxxxxxx and the Holders, respectively, if Xxxxxxxx or the Holders,
respectively, prevails in the resolution of such claims and rights, in
accordance with Section 8.
(c) Each party hereto other than Escrow Agent, jointly and
severally (each an "INDEMNIFYING PARTY" and together the "INDEMNIFYING
PARTIES"), hereby covenants and agrees to reimburse, indemnify and hold
harmless Escrow Agent, Escrow Agent's officers, directors, employees, counsel
and agents (severally and collectively, "ESCROW AGENT"), from and against any
loss, damage, liability or loss suffered, incurred by, or asserted against
Escrow Agent (including amounts paid in settlement of any action, suit,
proceeding, or claim brought or threatened to be brought and including
reasonable expenses of legal counsel) arising out of, in connection with or
based upon any act or omission by Escrow Agent (and/or any of its officers,
directors, employees, counsel or agents) relating in any way to this
Agreement or Escrow Agent's services hereunder. This indemnity shall exclude
gross negligence and willful misconduct on Escrow Agent's part. Anything in
this Agreement to the contrary notwithstanding, Escrow Agent shall not be
liable for special, indirect or consequential loss or damage of any kind
(including but not limited to lost profits), even if Escrow Agent has been
advised of the likelihood of such loss or damage and regardless of the form
of action.
(d) Each Indemnifying Party may participate at its own expense
in the defense of any claim or action that may be asserted against Escrow
Agent, and if the Indemnifying Parties so elect, the Indemnifying Parties may
assume the defense of such claim or action; PROVIDED, HOWEVER, that if a
conflict of interest exists that would make it inappropriate, in the sole
discretion of Escrow Agent, for the same counsel to represent both Escrow
Agent and the Indemnifying Parties, then Escrow Agent's retention of separate
counsel shall be reimbursable as herein above provided. Escrow Agent's right
to indemnification hereunder shall survive Escrow Agent's resignation or
removal as Escrow Agent and shall survive the termination of this Agreement
by lapse of time or otherwise.
(e) Escrow Agent hereby warrants that Escrow Agent will notify
each Indemnifying Party by letter, or by telephone or telecopy confirmed by
letter, of any receipt by Escrow Agent of a written assertion of a claim
against Escrow Agent, or any action commenced against Escrow Agent, within
three business days after Escrow Agent's receipt of written notice of such
claim. However, Escrow Agent's failure to notify each Indemnifying Party
shall not operate to relieve an Indemnifying Party from any liability that it
may have on account of this Section 5 unless such failure prejudices such
Indemnifying Party's rights.
(f) Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder
Page 9
either directly or by or through its agents or attorneys. Nothing in this
Agreement shall be deemed to impose upon Escrow Agent any duty to qualify to
do business or to act as a fiduciary or otherwise in any jurisdiction other
than the State of Texas.
6. NOTICES. All notices, instructions and other communications
required or permitted to be given hereunder or necessary or convenient in
connection herewith shall be in writing and will be deemed delivered (i) when
personally served or when delivered by facsimile (to the facsimile number of
the person to whom notice is given), (ii) the first business day following
the date of deposit with an overnight courier service or (iii) on the earlier
of actual receipt or the third business day following the date on which the
notice is deposited in the United States Mail, first class certified, postage
prepaid, addressed as follows:
(a) If to Escrow Agent:
U.S. Trust Company of Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
(b) If to Xxxxxxxx:
The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
(c) If to the Representative:
Xxxxxx X. Xxxxxxxx
000 00xx Xxxxxx #00
Xxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx
Page 10
A Limited Liability Partnership
0000 Xxxxxxxxx Xxxx, X.X., Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 6.
7. GENERAL.
(a) GOVERNING LAW, ASSIGNS. The laws of the State of Texas
(without regard to its choice of law principles that might apply the law of
another jurisdiction) will govern the validity of this Agreement, the
construction of its terms, and the interpretation and enforcement of the
rights and duties of the parties. This Agreement will be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.
(b) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
name appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
all parties reflected hereon as signatories.
(c) ENTIRE AGREEMENT. Except as otherwise set forth in the
Agreement, this Agreement constitute the entire understanding and agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.
(d) WAIVERS. No waiver by any party of any condition or of any
breach of any provision of this Agreement will be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, will be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) TAX IDENTIFICATION NUMBERS. Each party, other than Escrow
Agent, shall provide Escrow Agent with its Tax Identification Number (TIN) as
assigned by the Internal Revenue Service.
8. EXPENSES OF ESCROW AGENT. All fees and expenses of Escrow Agent
incurred in the ordinary course of performing its responsibilities hereunder
will be paid 50% by Xxxxxxxx and 50% by
Page 11
the Holders, upon receipt of a written invoice from Escrow Agent. Any
extraordinary fees and expenses, including without limitation any fees or
expenses (including the fees or expenses of counsel to Escrow Agent) incurred
by Escrow Agent in connection with a dispute over the distribution of Escrow
Shares or the validity of a Notice of Claim, will be paid 50% by Xxxxxxxx and
50% by the Holders upon receipt of a written invoice by Escrow Agent;
provided, however, that Xxxxxxxx and the Holders shall be entitled to
reimbursement from the Holders and Xxxxxxxx, respectively, of any
extraordinary fees and expenses of Escrow Agent paid by Xxxxxxxx and the
Holders, respectively, if Xxxxxxxx or the Holders, respectively, prevails in
such dispute.
9. SUCCESSOR ESCROW AGENT. If Escrow Agent becomes unavailable or
unwilling to continue in its capacity herewith, then Escrow Agent may resign
and be discharged from its duties or obligations hereunder by giving notice
of its resignation to the parties to this Agreement, specifying a date not
less than ten days following such notice date of when such resignation will
take effect. Xxxxxxxx will designate a successor Escrow Agent prior to the
expiration of such ten-day period by giving written notice to Escrow Agent
and the Representative. Xxxxxxxx may appoint an successor Escrow Agent
without the consent of the Representative so long as such successor is a bank
or trust company that, together with any parent, has assets of at least $100
million, and may appoint any other successor Escrow Agent with the consent of
the Representative, which will not be unreasonably withheld. Escrow Agent
will promptly transfer the Escrow Shares to such designated successor.
10. LIMITATION OF RESPONSIBILITY. Escrow Agent's duties are limited
to those set forth in this Agreement, and Escrow Agent, acting as such under
this Agreement, is not charged with knowledge of any duties or
responsibilities under any other document or agreement, including, without
limitation, the Agreement. Escrow Agent shall not be responsible for the
validity, binding effect, execution or sufficiency of this Escrow Agreement
or of any agreement amendatory or supplemental hereto.
11. AMENDMENT. This Agreement may be amended by the written agreement
of Xxxxxxxx, Escrow Agent and the Representative, provided that, if Escrow
Agent does not agree to an amendment agreed upon by Xxxxxxxx and the
Representative, then Escrow Agent will resign and Xxxxxxxx will appoint a
successor Escrow Agent in accordance with Section 9. No amendment of the
Agreement shall increase Escrow Agent's responsibilities or liability
hereunder without Escrow Agent's written agreement.
12. HOLDER'S REPRESENTATIVE. For purposes of this Agreement, the
Holders hereby consent to the appointment of the Representative, as
representative of the Holders, and as the attorney-in-fact for and on behalf
of each Holder, and, subject to the express limitation set forth below, the
taking by the
Page 12
Representative of any and all actions and the making of any decisions
required or permitted to be taken by the Representative under this Agreement,
including, without limitation, the exercise of the power to (i) authorize
delivery to Xxxxxxxx of the Escrow Shares, or any portion thereof, in
satisfaction of any Claims, (ii) agree to, negotiate, enter into settlements
and compromises of, and demand arbitration and comply with orders of courts
and awards of arbitrators with respect to any Claims, (iii) resolve any
Claims, and (iv) take all actions necessary in the judgment of the
Representative for the accomplishment of the foregoing and all of the other
terms, conditions and limitations of this Agreement. The Representative will
have unlimited authority and power to act on behalf of each Holder with
respect to this Agreement and the disposition, settlement or other handling
of all Claims, rights or obligations arising under this Agreement so long as
all Holders are treated in the same manner. The Holders will be bound by all
actions taken by the Representative in connection with this Agreement, and
Xxxxxxxx will be entitled to rely on any action or decision of the
Representative. In performing the functions specified in this Agreement, the
Representative will not be liable to the Holders in the absence of gross
negligence or willful misconduct. The Representative may resign from such
position, effective upon a new representative being appointed in writing by
Holders who beneficially own a majority of the Escrow Shares. The
Representative will not be entitled to receive any compensation from Xxxxxxxx
or the Holders in connection with this Agreement. Any out-of-pocket costs
and expenses reasonably incurred by the Representative in connection with
actions taken pursuant to the terms of this Agreement will be paid by the
Holders to the Representative in proportion to their percentage interests in
the Escrow Shares as set forth on ATTACHMENT A.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
THE XXXXXXXX GROUP, INC. REPRESENTATIVE:
By: /s/ X. X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxxxx
--------------------------------- -------------------------------------
X. X. Xxxxxxxx, Chief Executive XXXXXX X. XXXXXXXX
Officer
Page 13
ESCROW AGENT: HOLDERS:
U.S. TRUST COMPANY OF TEXAS, N.A. /s/ XXXXXX X. XXXXXXXX
-------------------------------------
XXXXXX X. XXXXXXXX
By:
---------------------------------
Authorized Signatory
/s/ XXXXX XXXXXXXX
-------------------------------------
XXXXX XXXXXXXX
/s/ XXXXXXX XXXXXX
-------------------------------------
XXXXXXX XXXXXX
Page 14
ATTACHMENT A
Total
Antinori Xxxxxxxx Escrow
Holder Shares Shares Shares
------ -------- -------- ------
Xxxxxx X. Xxxxxxxx 898,990 458,007 22,873
Xxxxx Xxxxxxxx 101,010 51,461 2,570
Xxxxxxx Xxxxxx 10,101 5,146 257
1,010,101 514,614 25,700
--------- ------- ------
--------- ------- ------
Page 15
ATTACHMENT B
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE
In connection with the merger of Antinori Software, Inc. ("ANTINORI")
with a wholly-owned subsidiary of The Xxxxxxxx Group, Inc. ("XXXXXXXX"), the
undersigned is receiving shares of Xxxxxxxx Class A Voting Common Stock, no
par value, in respect of the shares of Antinori Common Stock held by the
undersigned prior to such merger.
FOR VALUE RECEIVED, and pursuant to certain Agreement and Plan of Merger
dated as of January 29, 1997 among Antinori, such subsidiary and Xxxxxxxx
(the "AGREEMENT") and that certain Escrow Agreement dated as of January 31,
1997 executed in connection therewith (the "ESCROW AGREEMENT"), the
undersigned hereby assigns and transfer unto U.S. Trust Company of Texas,
N.A., as Escrow Agent ("ESCROW AGENT") pursuant to the Escrow Agreement and
the Agreement shares (the "SHARES") of the Class A Voting Common
Stock of Xxxxxxxx.
The undersigned does hereby irrevocably constitute Escrow Agent, as
attorney-in-fact, with full power of substitution and re-substitution, to
hold such Shares in escrow and to transfer such shares on the books of
Xxxxxxxx if all or a portion of the Shares are retained by Xxxxxxxx in
accordance with the Escrow Agreement in satisfaction of the undersigned's
indemnification obligations under the Agreement. The undersigned hereby
acknowledges that the Shares will be held in escrow until required to be
released pursuant to the Escrow Agreement and that the number of Shares
released from escrow will be equal to the number of Shares listed above less
any amount retained in satisfaction of Claims as set forth in the Agreement.
Dated: January 31, 1997.
------------------------------------------
Name:
-------------------------------------
Escrow Agreement - Page 1
EXHIBIT D-2
ESCROW AGREEMENT
This Escrow Agreement (this "AGREEMENT") is entered into as of January
31, 1997, among The Xxxxxxxx Group, Inc., a Texas corporation (the
"COMPANY"), X.X. Xxxxxxxx ("HOLDER"), the principal shareholder of the
Company, and U.S. Trust Company of Texas, N.A. ("ESCROW AGENT").
RECITALS
X. Xxxxxxxx Software, Inc., a Georgia corporation ("ANTINORI"), the
Company and a wholly-owned subsidiary of the Company have entered into an
Agreement and Plan of Merger dated as of January 29, 1997 (the "AGREEMENT"),
pursuant to which Antinori will merge with and into such wholly-owned
subsidiary, with Antinori surviving the merger, such that Antinori will
become a wholly-owned subsidiary of the Company. Capitalized terms used in
this Agreement and not otherwise defined herein have the meanings given them
in the Agreement. A copy of the Agreement has been delivered to Escrow Agent.
B. Pursuant to the Agreement, an aggregate of 514,614 shares of the
Company's Class A Voting Common Stock, no par value ("THE COMPANY COMMON
STOCK"), are to be issued in the Merger to the shareholders of Antinori.
C. The Agreement provides for Holder to place 25,700 shares of
Company Common Stock, being a number of shares equaling approximately (and
less than) 5% of the shares of the Company Common Stock that are issued in
the Merger (the "ESCROW SHARES"), in an escrow account (the "ESCROW ACCOUNT")
to secure certain indemnification obligations of Holder to the Company and
the other Indemnified Persons (as defined in Section 10.3 of the Agreement)
under the Agreement on the terms and conditions set forth herein.
D. The parties desire to establish the terms and conditions pursuant
to which the Escrow Shares will be deposited, held in, and disbursed from the
Escrow Account.
NOW, THEREFORE, the parties agree as follows:
1. ESCROW AND INDEMNIFICATION.
(a) ESCROW OF SHARES. Promptly after the Effective Time of the
Merger, Holder will deposit the Escrow Shares with Escrow Agent, who will
hold them in escrow as collateral for the indemnification obligations of
Holder under Section 10.3 of the Agreement until such time as such Escrow
Shares are released
ESCROW AGREEMENT - Page 1
pursuant to this Agreement. The Escrow Shares include any "ADDITIONAL ESCROW
SHARES" as that term is defined in Section 2(b) of this Agreement. Escrow
Agent agrees to accept delivery of the Escrow Shares and to hold the Escrow
Shares in escrow subject to the terms and conditions of this Agreement.
(b) INDEMNIFICATION. The Company and the other Indemnified
Persons are indemnified pursuant to the terms of Section 10.3 of the
Agreement (which terms are incorporated herein by reference) from and against
any Antinori Damages, subject to the limitations set forth in Section 10.3 of
the Agreement and in this Agreement. (For purposes of this Agreement,
references to the Company will include all other Indemnified Persons, as
applicable.) 25,700 shares of the Company Common Stock held by Holder (the
"ESCROW SHARES") will be security for this indemnity obligation, subject to
the limitations, and in the manner provided, in Sections 10.3 of the
Agreement and this Agreement. Promptly after the receipt by the Company of
notice or discovery of any claim, damage or legal action or proceeding giving
rise to indemnification rights under Section 10.3 of the Agreement, the
Company will give Holder and Escrow Agent written notice of such claim,
damage, legal action or proceeding (a "CLAIM") in accordance with Section 3
of this Agreement. Within seven days of delivery of such written notice,
Holder may, with the Company's written consent, which shall not be
unreasonably withheld, at the expense of Holder, elect to take all necessary
steps properly to contest any Claim involving third parties or to prosecute
or defend such Claim to conclusion or settlement. If Holder makes the
foregoing election, then the Holder will take all necessary steps to contest
any such Claim or to prosecute or defend such Claim to conclusion or
settlement, and will notify the Company of the progress of any such Claim,
will permit the Company, at its expense, to participate in such prosecution
or defense (PROVIDED, HOWEVER, that if a conflict of interest exists which
would make it inappropriate, in the reasonable opinion of the Company, for
the same counsel to represent both the Company and Holder in the resolution
of such Claim, then the Company may retain separate counsel, the fees and
expenses of which shall not be borne by the Company but shall instead be
borne by Holder) and will provide the Company with reasonable access to all
relevant information and documents relating to the Claim and Holder's
prosecution or defense thereof. If Holder does not make such election, then
the Company shall be free to handle the prosecution or defense of any such
Claim, will take all necessary steps to contest any such Claim involving
third parties or to prosecute or defend such Claim to conclusion or
settlement, will notify Holder of the progress of any such Claim, and will
permit Holder, at his expense, to participate in such prosecution or defense
and will provide Holder with reasonable access to all relevant information
and documents relating to the Claim and the Company's prosecution or defense
thereof. In either case, the party not in control of a Claim will cooperate
with the other party in the conduct of the prosecution or defense of such
Claim. Neither party will compromise or settle any such Claim without the
written consent of either the Company (if Holder defends the Claim) or Holder
(if the Company defends
ESCROW AGREEMENT - Page 2
the Claim), such consent not to be unreasonably withheld.
(c) LIMITATION ON LIABILITY. The maximum liability of a Holder
under Section 10.3 of the Agreement and under this Agreement, and the
Company's sole and exclusive remedy under Section 10.3 of the Agreement and
under this Agreement, will be the 25,700 Escrow Shares; provided, however,
that the foregoing limitation on liability shall not apply in respect of
Holder's indemnity obligations resulting from fraud or intentional and
willful misrepresentation or intentional and willful concealment.
2. DEPOSIT OF ESCROW SHARES; RELEASE FROM ESCROW.
(a) DELIVERY OF ESCROW SHARES. On the Closing Date, the Escrow
Shares (the "INITIAL ESCROW SHARES") will be delivered by the Company to
Escrow Agent in the form of duly authorized stock certificate(s) issued in
the respective names of Holder together with endorsed stock power(s). On the
Closing Date, Holder will deliver to the Company a duly endorsed stock power
in the form of ATTACHMENT A. If the Company issues any Additional Escrow
Shares (as defined below), then such shares will be issued and delivered to
Escrow Agent in the same manner as the Escrow Shares delivered on the Closing
Date.
(b) DIVIDENDS, VOTING AND RIGHTS OF OWNERSHIP. Except for
tax-free dividends paid in stock declared with respect to the Escrow Shares
pursuant to Section 305(a) of the Code ("ADDITIONAL ESCROW SHARES") and
returns of capital, any cash dividends, dividends payable in securities or
other distributions made in respect of the Escrow Shares will be distributed
by the Company to Holder. Holder will have the right to vote the Escrow
Shares deposited in the Escrow Account for the account of Holder so long as
such Escrow Shares are held in escrow, and the Company will take all
reasonable steps necessary to allow the exercise of such rights. While the
Escrow Shares remain in Escrow Agent's possession pursuant to this Agreement,
Holder will retain and will be able to exercise all other incidents of
ownership of said Escrow Shares that are not inconsistent with the terms and
conditions of this Agreement.
(c) DISTRIBUTIONS TO HOLDER. On or before January 31, 1998 (the
"FINAL RELEASE DATE"), Escrow Agent will release from escrow to Holder the
Escrow Shares, plus that portion of all Additional Escrow Shares related to
the Escrow Shares, less (A) any Escrow Shares delivered to the Company in
accordance with Section 4 in satisfaction of Claims by the Company pursuant
to Section 1(b) and (B) any Escrow Shares subject to delivery to the Company
in accordance with Section 4 with respect to any then pending but unresolved
Claims of the Company pursuant to Section 1(b). Any Escrow Shares held as a
result of clause (B) will be released to Holder or released to the Company
for cancellation (as appropriate) promptly upon resolution of each specific
Claim involved.
(d) RELEASE OF SHARES. The Escrow Shares will be held
ESCROW AGREEMENT - Page 3
by Escrow Agent until required to be released pursuant to Section 2(c) above.
Within five business days after the applicable release condition is met,
Escrow Agent will deliver to Holder the requisite number of Escrow Shares to
be released on such date as identified by the Company and Holder to Escrow
Agent in writing. Such delivery will be in the form of stock certificate(s)
issued in the names of Holder. The Company and Holder undertake to deliver a
timely notice to Escrow Agent identifying the number of Escrow Shares to be
released within such five-day period. The Company will take such action as
may be necessary to cause stock certificates to be issued in the names of
Holder. Escrow Agent will have such stock certificates in its possession no
later than three business days prior to the day on which Escrow Agent is to
deliver such certificates to Holder. Certificates representing Escrow Shares
will bear a legend indicating that they are subject to resale restrictions.
Cash will be paid in lieu of fractions of Escrow Shares in an amount equal to
the product determined by multiplying such fraction by the per share value of
the Company Common Stock as stated in Section 1.2 of the Agreement. Within
five business days after written request from Holder, the Company will submit
a certified schedule of the cash amounts payable for fractional shares and
will deposit with Escrow Agent sufficient funds to pay such cash amounts for
fractional shares.
(e) NO ENCUMBRANCE. No Escrow Shares or any beneficial interest
therein may be pledged, sold, assigned or transferred, including by operation
of law, by Holder or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of Holder (other than Holder's
obligations under Section 10.3 of the Agreement), prior to the delivery to
Holder of the Escrow Shares by Escrow Agent.
(f) POWER TO TRANSFER ESCROW SHARES. Escrow Agent is hereby
granted the power to effect any transfer of Escrow Shares contemplated by
this Agreement. The Company will cooperate with Escrow Agent in promptly
issuing stock certificates to effect such transfers.
3. NOTICE OF CLAIM.
(a) Each notice of a Claim by the Company pursuant to Section
1(b) (the "NOTICE OF CLAIM") will be in writing and will contain the
following information to the extent reasonably available to the Company:
(i) The Company's good faith estimate of the reasonably
foreseeable maximum amount of the alleged Antinori Damages (which amount may
be the amount of damages claimed by a third party plaintiff in an action
brought against the Company based on alleged facts, which if true, would
constitute a breach of the Company's representations and warranties); and
(ii) A brief description in reasonable detail of the
facts, circumstances or events giving rise to the alleged Antinori Damages
based on the Company's good faith belief thereof,
ESCROW AGREEMENT - Page 4
including, without limitation, the identity and address of any third-party
claimant (to the extent reasonably available to the Company) and copies of
any formal demand or complaint.
(b) Escrow Agent will not transfer any of the Escrow Shares held
in the Escrow Account to the Company pursuant to a Notice of Claim until such
Notice of Claim has been resolved in accordance with Section 4.
4. RESOLUTION OF NOTICE OF CLAIM AND TRANSFER OF ESCROW SHARES. Any
Notice of Claim received by Holder and Escrow Agent pursuant to Section 3, or
any notice of a claim received by Holder and Escrow Agent pursuant to Section
1(c) (a "LIQUIDATED DAMAGES CLAIM"), will be resolved as follows:
(a) UNCONTESTED CLAIMS. If Holder does not contest a Notice of
Claim or a Liquidated Damages Claim in writing to Escrow Agent and the
Company and Holder does not pay the amount demanded within 15 calendar days
after the Notice of Claim or the Liquidated Damages Claim is delivered
pursuant to Section 4(b) below, then Escrow Agent will immediately transfer
to the Company for cancellation that number of the Escrow Shares having a
value (determined pursuant to Section 4(c)) equal to the amount of the
Company Damages specified in the Notice of Claim, or the amount of the
Liquidated Damages (in the case of a Liquidated Damages Claim), and will
notify Holder of such transfer.
(b) CONTESTED CLAIMS. To recover Claims under this Escrow it
will not be necessary to institute an arbitration proceeding pursuant to
Section 11.1 of the Agreement; the arbitrator hereunder being authorized to
determine the existence of Claims, as well as the amount of the Company
Damages (in the case of a Claim under Section 1(b) above) associated
therewith. If Holder gives written notice contesting all, or a portion of, a
Notice of Claim or Liquidated Damages Claim to the Company and Escrow Agent
(a "CONTESTED CLAIM") within the 15-day period provided above, then matters
that are subject to a third party claim brought against the Company in
litigation or an arbitration proceeding will await the final decision, award
or settlement of such litigation or arbitration proceeding, while matters
that arise between the Company on the one hand and Antinori on the other hand
("ARBITRABLE CLAIMS"), will be settled by binding arbitration. Any portion
of the Notice of Claim that is not contested will be resolved as set forth
above in Section 4(a). The final decision of the arbitrator will be
furnished to Escrow Agent, Holder and the Company in writing and will
constitute a conclusive determination of the issue in question, binding upon
Holder and the Company. After notice that the Notice of Claim is contested
by Holder, Escrow Agent will continue to hold in the Escrow Account Escrow
Shares having a value (determined pursuant to Section 4(c)) sufficient to
cover such Claim (notwithstanding the expiration of the Final Release Date)
until (i) execution of a settlement agreement by the Company and Holder
setting forth a resolution of the Notice of Claim, or (ii) receipt of a copy
of the final award of the arbitrator.
ESCROW AGREEMENT - Page 5
(i) ARBITRATION. Any contested Claim shall be settled
by arbitration in Dallas, Texas, and, except as herein specifically stated,
in accordance with the commercial arbitration rules of the American
Arbitration Association ("AAA RULES") then in effect. However, in all
events, these arbitration provisions shall govern over any conflicting rules
that may now or hereafter be contained in the AAA Rules. Any judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction over the subject matter thereof.
(ii) COMPENSATION OF ARBITRATOR. Any such arbitration
will be conducted before a single arbitrator who will be compensated for his
or her services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon a reasonable hourly or daily
consulting rate for the arbitrator if the parties are not able to agree upon
his or her rate of compensation.
(iii) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
lawyers who are familiar with Texas contract law and experienced in mergers
and acquisitions; provided, however, that such lawyers cannot work for a firm
then performing services for either party, that each party will have the
opportunity to make such reasonable objection to any of the arbitrators
listed as such party may wish and that the American Arbitration Association
will select the arbitrator from the list of arbitrators as to whom neither
party makes any such objection. If the foregoing procedure is not followed,
then each party will choose one person from the list of arbitrators provided
by the American Arbitration Association (provided that such person does not
have a conflict of interest), and the two persons so selected will select
from the list provided by the American Arbitration Association the person who
will act as the arbitrator.
(iv) PAYMENT OF COSTS. The Company and Holder will each
pay 50% of the initial compensation to be paid to the arbitrator in any such
arbitration and 50% of the costs of transcripts and other normal and regular
expenses of the arbitration proceedings; provided, however, that the
prevailing party in any arbitration will be entitled to an award of
attorneys' fees and costs, and all costs of arbitration, including those
provided for above, will be paid by the non-prevailing party, and the
arbitrator will be authorized to make such determinations. At the Company's
option, Holder's liability for such fees and costs and costs of arbitration
may be paid by the Company and recovered by the Company as a Claim hereunder
out of the Escrow Shares.
(v) BURDEN OF PROOF. For any Arbitrable Claim submitted
to arbitration, the burden of proof will be as it would be if the claim were
litigated in a Texas judicial proceeding.
(vi) AWARD. Upon the conclusion of any
ESCROW AGREEMENT - Page 6
arbitration proceedings hereunder, the arbitrator will render findings of
fact and conclusions of law and a written opinion setting forth the basis and
reasons for any decision reached and will deliver such documents to each
party to this Agreement along with a signed copy of the award. In the case
of an award pursuant to a Liquidated Damages Claim, the amount of the award
will be equal to the Liquidated Damages plus costs of arbitration as provided
above.
(vii) TERMS OF ARBITRATION. The arbitrator chosen in
accordance with these provisions will not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or the provisions
of this Agreement or the Agreement.
(viii) EXCLUSIVE REMEDY. Except as specifically otherwise
provided in this Agreement or the Agreement, arbitration will be the sole and
exclusive remedy of the parties for any Arbitrable Claim arising out of this
Agreement.
(c) DETERMINATION OF AMOUNT OF CLAIMS. Any amount owed to the
Company hereunder, determined pursuant to Section 4(a) or (b) above, will be
immediately payable to the Company out of the Escrow Shares then held by
Escrow Agent at a per share value for all Escrow Shares equal to $23.83.
(d) NO EXHAUSTION OF REMEDIES. The Company need not exhaust any
other remedies that may be available to it but may proceed directly in
accordance with the provisions of this Agreement. The Company may institute
Claims against the Escrow Shares and in satisfaction thereof may recover
Escrow Shares, in accordance with the terms of this Agreement, without making
any other Claims directly against Holder and without rescinding or attempting
to rescind the transactions consummated pursuant to the Agreement. The
assertion of any single Claim for indemnification hereunder will not bar the
Company from asserting other Claims hereunder.
ESCROW AGREEMENT - Page 7
5. LIMITATION OF ESCROW AGENT'S LIABILITY.
(a) Escrow Agent will incur no liability with respect to any
action taken or suffered by it in reliance upon any notice, direction,
instruction, consent, statement or other document believed by it to be
genuine and duly authorized, nor for any other action or inaction, except its
own willful misconduct or gross negligence. Escrow Agent shall have no duty
to inquire into or investigate the validity, accuracy or content or any
document delivered to it. Escrow Agent will not be responsible for the
validity or sufficiency of this Agreement. In all questions arising under
this Agreement, Escrow Agent may rely on the advice or opinion of counsel,
and for anything done, omitted or suffered in good faith by Escrow Agent
based on such advice, Escrow Agent will not be liable to anyone. Escrow
Agent will not be required to take any action hereunder involving its expense
unless the payment of such expense is made or provided for in a manner
satisfactory to it.
(b) If conflicting demands are made or conflicting notices are
served upon Escrow Agent with respect to the Escrow Account, then Escrow
Agent will have the absolute right, at Escrow Agent's election, to do either
or both of the following: (i) resign so a successor can be appointed
pursuant to Section 9 or (ii) file a suit in interpleader and obtain an order
from a court of competent jurisdiction requiring the parties to interplead
and litigate in such court their several claims and rights among themselves.
If such interpleader suit is brought, then Escrow Agent will thereby be fully
released and discharged from all further obligations imposed upon it under
this Agreement, and the Company and Holder will each pay Escrow Agent 50%
percent of all costs, expenses and reasonable attorney's fees expended or
incurred by Escrow Agent pursuant to the exercise of Escrow Agent's rights
under this Section 5 (such costs, fees and expenses being treated as
extraordinary fees and expenses for the purposes of Section 8); provided,
however, that the Company and Holder shall be entitled to reimbursement from
Holder and the Company, respectively, of any extraordinary fees and expenses
of Escrow Agent paid by the Company and Holder, respectively, if the Company
or Holder, respectively, prevails in the resolution of such claims and
rights, in accordance with Section 8.
(c) Each party hereto other than Escrow Agent, jointly and
severally (each an "INDEMNIFYING PARTY" and together the "INDEMNIFYING
PARTIES"), hereby covenants and agrees to reimburse, indemnify and hold
harmless Escrow Agent, Escrow Agent's officers, directors, employees, counsel
and agents (severally and collectively, "ESCROW AGENT"), from and against any
loss, damage, liability or loss suffered, incurred by, or asserted against
Escrow Agent (including amounts paid in settlement of any action, suit,
proceeding, or claim brought or threatened to be brought and including
reasonable expenses of legal counsel) arising out of, in connection with or
based upon any act or omission by Escrow Agent (and/or any of its officers,
directors, employees, counsel or agents) relating in any way to this
Agreement or Escrow Agent's
ESCROW AGREEMENT - Page 8
services hereunder. This indemnity shall exclude gross negligence and
willful misconduct on Escrow Agent's part. Anything in this Agreement to the
contrary notwithstanding, Escrow Agent shall not be liable for special,
indirect or consequential loss or damage of any kind (including but not
limited to lost profits), even if Escrow Agent has been advised of the
likelihood of such loss or damage and regardless of the form of action.
(d) Each Indemnifying Party may participate at its own expense
in the defense of any claim or action that may be asserted against Escrow
Agent, and if the Indemnifying Parties so elect, the Indemnifying Parties may
assume the defense of such claim or action; PROVIDED, HOWEVER, that if a
conflict of interest exists that would make it inappropriate, in the sole
discretion of Escrow Agent, for the same counsel to represent both Escrow
Agent and the Indemnifying Parties, then Escrow Agent's retention of separate
counsel shall be reimbursable as herein above provided. Escrow Agent's right
to indemnification hereunder shall survive Escrow Agent's resignation or
removal as Escrow Agent and shall survive the termination of this Agreement
by lapse of time or otherwise.
(e) Escrow Agent hereby warrants that Escrow Agent will notify
each Indemnifying Party by letter, or by telephone or telecopy confirmed by
letter, of any receipt by Escrow Agent of a written assertion of a claim
against Escrow Agent, or any action commenced against Escrow Agent, within
three business days after Escrow Agent's receipt of written notice of such
claim. However, Escrow Agent's failure to notify each Indemnifying Party
shall not operate to relieve an Indemnifying Party from any liability that it
may have on account of this Section 5 unless such failure prejudices such
Indemnifying Party's rights.
(f) Escrow Agent may execute any of its powers or
responsibilities hereunder and exercise any rights hereunder either directly
or by or through its agents or attorneys. Nothing in this Agreement shall be
deemed to impose upon Escrow Agent any duty to qualify to do business or to
act as a fiduciary or otherwise in any jurisdiction other than the State of
Texas.
6. NOTICES. All notices, instructions and other communications
required or permitted to be given hereunder or necessary or convenient in
connection herewith shall be in writing and will be deemed delivered (i) when
personally served or when delivered by facsimile (to the facsimile number of
the person to whom notice is given), (ii) the first business day following
the date of deposit with an overnight courier service or (iii) on the earlier
of actual receipt or the third business day following the date on which the
notice is deposited in the United States Mail, first class certified, postage
prepaid, addressed as follows:
ESCROW AGREEMENT - Page 9
(a) If to Escrow Agent:
U.S. Trust Company of Texas, N.A.
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Phone: 000-000-0000
Fax: 000-000-0000
(b) If to the Company:
The Xxxxxxxx Group, Inc.
00000 Xxxxx Xxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: X. X. Xxxxxxxx, Chief Executive Officer
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxx Xxxxxxx Rain Xxxxxxx
(A Professional Corporation)
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
ESCROW AGREEMENT - Page 10
(c) If to Holder:
X.X. Xxxxxxxx
0000 Xxxxxxxx
Xxxxxx, Xxxxx 00000
Phone: (000) 000-0000
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 6.
7. GENERAL.
(a) GOVERNING LAW, ASSIGNS. The laws of the State of Texas
(without regard to its choice of law principles that might apply the law of
another jurisdiction) will govern the validity of this Agreement, the
construction of its terms, and the interpretation and enforcement of the
rights and duties of the parties. This Agreement will be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns.
(b) COUNTERPARTS. This Agreement may be executed in
counterparts, each of which will be an original as regards any party whose
name appears thereon and all of which together will constitute one and the
same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, bear the signatures of
all parties reflected hereon as signatories.
(c) ENTIRE AGREEMENT. Except as otherwise set forth in the
Agreement, this Agreement constitute the entire understanding and agreement
of the parties with respect to the subject matter of this Agreement and
supersedes all prior agreements or understandings, written or oral, between
the parties with respect to the subject matter hereof.
(d) WAIVERS. No waiver by any party of any condition or of any
breach of any provision of this Agreement will be effective unless in
writing. No waiver by any party of any such condition or breach, in any one
instance, will be deemed to be a further or continuing waiver of any such
condition or breach or a waiver of any other condition or breach of any other
provision contained herein.
(e) TAX IDENTIFICATION NUMBERS. Each party, other than Escrow
Agent, shall provide Escrow Agent with its Tax Identification Number (TIN) as
assigned by the Internal Revenue Service.
ESCROW AGREEMENT - Page 11
8. EXPENSES OF ESCROW AGENT. All fees and expenses of Escrow Agent
incurred in the ordinary course of performing its responsibilities hereunder
will be paid 50% by the Company and 50% by Holder, upon receipt of a written
invoice from Escrow Agent. Any extraordinary fees and expenses, including
without limitation any fees or expenses (including the fees or expenses of
counsel to Escrow Agent) incurred by Escrow Agent in connection with a
dispute over the distribution of Escrow Shares or the validity of a Notice of
Claim, will be paid 50% by the Company and 50% by Holder upon receipt of a
written invoice by Escrow Agent; provided, however, that the Company and
Holder shall be entitled to reimbursement from Holder and the Company,
respectively, of any extraordinary fees and expenses of Escrow Agent paid by
the Company and Holder, respectively, if the Company or Holder, respectively,
prevails in such dispute.
9. SUCCESSOR ESCROW AGENT. If Escrow Agent becomes unavailable or
unwilling to continue in its capacity herewith, then Escrow Agent may resign
and be discharged from its duties or obligations hereunder by giving notice
of its resignation to the parties to this Agreement, specifying a date not
less than ten days following such notice date of when such resignation will
take effect. The Company will designate a successor Escrow Agent prior to the
expiration of such ten-day period by giving written notice to Escrow Agent
and Holder. The Company may appoint an successor Escrow Agent without the
consent of Holder so long as such successor is a bank or trust company that,
together with any parent, has assets of at least $100 million, and may
appoint any other successor Escrow Agent with the consent of Holder, which
will not be unreasonably withheld. Escrow Agent will promptly transfer the
Escrow Shares to such designated successor.
10. LIMITATION OF RESPONSIBILITY. Escrow Agent's duties are limited
to those set forth in this Agreement, and Escrow Agent, acting as such under
this Agreement, is not charged with knowledge of any duties or
responsibilities under any other document or agreement, including, without
limitation, the Agreement. Escrow Agent shall not be responsible for the
validity, binding effect, execution or sufficiency of this Escrow Agreement
or of any agreement amendatory or supplemental hereto.
11. AMENDMENT. This Agreement may be amended by the written agreement
of the Company, Escrow Agent and Holder, provided that, if Escrow Agent does
not agree to an amendment agreed upon by the Company and Holder, then Escrow
Agent will resign and the Company will appoint a successor Escrow Agent in
accordance with Section 9. No amendment of the Agreement shall increase
Escrow Agent's responsibilities or liability hereunder without Escrow Agent's
written agreement.
ESCROW AGREEMENT - Page 12
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the day and year first above written.
THE COMPANY: HOLDER
THE XXXXXXXX GROUP, INC.
By: /s/ Xxxxx Xxxx /s/ X.X. Xxxxxxxx
---------------------------------- ----------------------------------
Xxxxx Xxxx, Senior Vice President X.X. XXXXXXXX
ESCROW AGENT:
U.S. TRUST COMPANY OF TEXAS, N.A.
By:
---------------------------------
Authorized Signatory
ESCROW AGREEMENT - Page 13
ATTACHMENT A
STOCK POWER AND ASSIGNMENT
SEPARATE FROM CERTIFICATE
In connection with the merger of Antinori Software, Inc. ("ANTINORI")
with a wholly-owned subsidiary of The Xxxxxxxx Group, Inc. ("THE COMPANY"),
the undersigned is receiving shares of the Company Class A Voting Common
Stock, no par value, in respect of the shares of Antinori Common Stock held
by the undersigned prior to such merger.
FOR VALUE RECEIVED, and pursuant to certain Agreement and Plan of Merger
dated as of January 22, 1997 among Antinori, such subsidiary and the Company
(the "AGREEMENT") and that certain Escrow Agreement dated as of January 31,
1997 executed in connection therewith (the "ESCROW AGREEMENT"), the
undersigned hereby assigns and transfer unto U.S. Trust Company of Texas,
N.A., as Escrow Agent ("ESCROW AGENT") pursuant to the Escrow Agreement and
the Agreement shares (the "SHARES") of the Class A Voting Common
Stock of the Company.
The undersigned does hereby irrevocably constitute Escrow Agent, as
attorney-in-fact, with full power of substitution and re-substitution, to
hold such Shares in escrow and to transfer such shares on the books of the
Company if all or a portion of the Shares are retained by the Company in
accordance with the Escrow Agreement in satisfaction of the undersigned's
indemnification obligations under the Agreement. The undersigned hereby
acknowledges that the Shares will be held in escrow until required to be
released pursuant to the Escrow Agreement and that the number of Shares
released from escrow will be equal to the number of Shares listed above less
any amount retained in satisfaction of Claims as set forth in the Agreement.
Dated: January 31, 1997.
-----------------------------------------
Name:
------------------------------------
ESCROW AGREEMENT - Page 14
EXHIBITS E-1 AND E-2
CERTIFICATE OF ANTINORI SOFTWARE, INC.
(RE TAX-FREE REORGANIZATION)
Antinori Software, Inc., a Georgia corporation ("ANTINORI"), hereby
represents, in connection with the proposed merger (the "MERGER") of CAG
Newco, Inc., a Texas corporation and a wholly-owned subsidiary of The
Xxxxxxxx Group, Inc., also a Texas corporation ("XXXXXXXX"), into Antinori
and related transactions set forth under that certain Agreement and Plan of
Merger dated January 29, 1997 among Xxxxxxxx, Xxxxxxxx and CAG Newco, Inc.
(the "AGREEMENT"), with Antinori surviving the Merger and becoming a
wholly-owned subsidiary of Xxxxxxxx, that the following statements are true
as of the date of this certificate is executed and that the statements will
be true as of the effective date of the Merger unless the undersigned
provides a written statement to the contrary prior to the effective date of
the Merger:
X. Xxxxxxxx'x principal reasons for participating in the Merger are
bona fide business reasons.
B. The total fair market value of all consideration other than
Xxxxxxxx Class A Voting Common Stock, no par value (the "XXXXXXXX COMMON
STOCK"), received by Antinori's shareholders in exchange for their Antinori
Common Stock in the Merger (including, without limitation, cash paid in lieu
of a fractional shares) will be less than ten percent (10%) of the aggregate
fair market value of Antinori Common Stock outstanding immediately prior to
the Merger.
C. The payment of cash by Xxxxxxxx in lieu of issuing fractional
shares of Xxxxxxxx Common Stock does not represent separately bargained for
consideration.
D. Except with respect to payments of cash in lieu of fractional
shares of Xxxxxxxx Common Stock, one hundred percent (100%) of the Antinori
Common Stock outstanding immediately prior to the Merger will be exchanged
solely for Xxxxxxxx Common Stock. Thus, except as set forth in the preceding
sentence, Antinori intends that no consideration be paid or received
(directly or indirectly, actually or constructively) for Antinori Common
Stock other than Xxxxxxxx Common Stock.
E. To the best knowledge of Antinori there is no plan or intention on
the part of the Antinori shareholders (a "PLAN") to sell, exchange, transfer,
distribute, pledge, or otherwise dispose of (a "SALE") (a) shares of the
Xxxxxxxx Common Stock to be issued to Antinori shareholders in the Merger,
which shares would have an aggregate fair market value, as of the Effective
Time (as defined in the Agreement) of the Merger, in excess of fifty percent
(50%) of the aggregate fair market value, immediately prior to the Merger, of
all outstanding shares of Antinori Common Stock, or (b) more than fifty
percent (50%) of the shares of Xxxxxxxx Common Stock to be received in
exchange for Antinori Common Stock in the Merger. For purposes of this
representation, shares of Antinori Common Stock (or the portion thereof) (i)
with respect to which Antinori shareholders received consideration in the
Merger other than Xxxxxxxx Common Stock (including, without limitation, cash
received in lieu of fractional shares of Xxxxxxxx Common Stock) and/or (ii)
with respect to which a Sale occurs during the period ending at the Effective
Time of the Merger and beginning with the commencement of negotiations
(whether formal or informal) between Antinori and Xxxxxxxx regarding the
Merger (the "Pre-Merger Period"), shall be considered shares of outstanding
Antinori Common Stock exchanged for Xxxxxxxx Common Stock in the Merger and
then disposed of pursuant to a Plan.
X. Xxxxxxxx has not disposed of any assets (other than in the
ordinary course of business) or, except for a dividend consistent with past
practice, all or a portion of the proceeds of which will be used to discharge
tax liabilities resulting from share ownership, declared a dividend as part
of or in contemplation of the Merger except in accordance with and as
required by Antinori's Article of Incorporation.
G. The liabilities, if any, of Antinori assumed by operation of law
by CAG Newco,
Page 1
Inc., and the liabilities, if any, to which the transferred assets of
Antinori are subject, were incurred by Antinori in the ordinary course of
business or to provide working capital.
H. No intercorporate indebtedness exists between Xxxxxxxx and
Xxxxxxxx that was issued or acquired at a discount or which will be settled
at a discount.
I. During the Pre-Merger Period, no indebtedness or other obligation
of Antinori has been or will be guaranteed by any shareholder of Antinori (or
any person or entity related to a shareholder of Antinori).
X. Xxxxxxxx will pay its own expenses, if any, incurred in connection
with the Merger; provided, however that to the extent any expenses relating
to the Merger (or the "plan of reorganization" within the meaning of Treas.
Reg. Section 1.368-1(c) with respect to the Merger) are funded directly or
indirectly by a party other than the incurring party, then such expenses will
be within the guidelines established in Rev. Rul. 73-54. 1973-1 C.B. 187.
K. To the best knowledge of the management of Antinori, neither
Xxxxxxxx nor CAG Newco, Inc. will assume any liabilities of any Antinori
shareholder in connection with the Merger.
X. Xxxxxxxx is not an investment company as defined in Section
368(a)(2)(F) of the Internal Revenue Code of 1986, as amended.
M. The fair market value of the assets of Antinori transferred to CAG
Newco, Inc. will equal or exceed the sum of the liabilities assumed by CAG
Newco, Inc., plus the amount of liability, if any, to which the transferred
assets are subject.
N. The terms of the Agreement and all other agreements entered into
pursuant thereto are the product of arm's-length negotiations.
O. None of the compensation payments received by any shareholder of
Antinori will be separate consideration for, or allocable to, any of their
shares of Antinori Common Stock. None of the shares of Xxxxxxxx Common Stock
received by any shareholder of Antinori will be separate consideration for,
or allocable to, any employment agreement, consulting agreement, any
covenants not to compete or otherwise for the performance of services; and
the compensation paid to any shareholder of Antinori will be for services
actually rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
Dated: January 31, 1997 ANTINORI SOFTWARE, INC.
By: /S/ XXXXXX X. XXXXXXXX
-------------------------------------
Page 2
Xxxxxx X. Xxxxxxxx
Chairman of the Board
Page 3
CERTIFICATE OF THE XXXXXXXX GROUP, INC.
(RE TAX-FREE REORGANIZATION)
The Xxxxxxxx Group, Inc., a Texas corporation ("XXXXXXXX"), hereby
represents, in connection with the proposed merger (the "MERGER") of CAG
Newco, Inc., a Texas corporation and a wholly-owned subsidiary of Xxxxxxxx,
into Antinori Software, Inc., a Georgia corporation ("ANTINORI"), and related
transactions as set forth under that certain Agreement and Plan of Merger
dated January 29, 1997 among Xxxxxxxx, Xxxxxxxx and CAG Newco, Inc. (the
"AGREEMENT"), with Antinori surviving the Merger and becoming a wholly-owned
subsidiary of Xxxxxxxx, that the following statements are true as of the date
of this certificate is executed and that the statements will be true as of
the effective date of the Merger unless the undersigned provides a written
statement to the contrary prior to the effective date of the Merger:
A. CAG Newco, Inc. will be merged with and into Antinori in
accordance with the relevant merger provisions of Georgia and Texas
corporation law, and the shareholders of Antinori will receive solely
Xxxxxxxx Class A Voting Common Stock, no par value (the "XXXXXXXX COMMON
STOCK") (except for cash received in lieu of fractional shares), in
consideration therefor.
Page 1
X. Xxxxxxxx'x and CAG Newco, Inc.'s principal reasons for
participating in the Merger are bona fide business reasons.
X. Xxxxxxxx does not own, directly or indirectly, nor has it owned
during the past five years, directly or indirectly, any capital stock of
Antinori.
X. Xxxxxxxx has not disposed of any assets or declared a special
dividend as part of the Merger.
E. Following the Merger, Xxxxxxxx will cause Antinori to continue
Antinori's historic business or Carreker will use a significant portion of
Antinori's business assets in a business.
F. Carreker has no present plan or intention to sell or otherwise
dispose of, or to cause Antinori to sell or otherwise dispose of, any of the
assets acquired in the Merger (except for dispositions made in the ordinary
course of business) or transfers described in Section 368(a)(2)(C) of the
Internal Revenue Code of 1986, as amended (the "CODE").
G. Except for the possible reacquisition of shares pursuant to the
provisions of an escrow agreement, Carreker has no present plan or intention
to redeem or otherwise reacquire any of its stock to be issued in the Merger.
H. Carreker presently intends to continue to be a duly organized
corporation, validly existing, licensed and in good standing under the laws
of the State of Texas prior to and following the effective date of the Merger.
I. Carreker will pay its own expenses, if any, incurred in connection
with the Merger.
J. Carreker is not an investment company as defined in Section
368(a)(2)(F) of the Code.
K. No shareholder of Antinori is acting as an agent for Carreker in
connection with the Merger or approval thereof.
L. The payment of cash by Carreker in lieu of issuing fractional
shares of Carreker Common Stock is solely for the purpose of avoiding the
expense and inconvenience to Carreker of issuing fractional shares and does
not represent separately bargained for consideration. The Carreker
fractional share interests to which each Antinori shareholder may be entitled
in the Merger will be aggregated so that no Antinori shareholder will receive
cash in an amount which would equal or exceed, in the aggregate, the value of
one whole share of Carreker Common Stock.
M. Except with respect to payments in cash in lieu of fractional
shares of Carreker voting Common Stock, one hundred percent (100%) of the
Antinori Common Stock outstanding
Page 2
immediately prior to the Merger will be exchanged solely for Carreker Common
Stock. Thus, except as set forth in the preceding sentence, Carreker
intends that no consideration be paid or received (directly or indirectly,
actually or constructively) for Antinori Common Stock other than Carreker
Common Stock.
N. The total fair market value of all consideration other than
Carreker Common Stock received by Antinori shareholders in exchange for their
Antinori Common Stock in the Merger (including, without limitation, cash paid
in lieu of fractional shares) will be less than ten percent (10%) of the
aggregate fair market value of Antinori Common Stock outstanding immediately
prior to the Merger. In addition, the total cash consideration that will be
paid in the Merger to Antinori shareholders in lieu of fractional shares of
Carreker Common Stock will not exceed one percent (1%) of the total
consideration that will be issued in the Merger to the Antinori shareholders
in exchange for their shares of Antinori Common Stock.
O. Carreker will pay separately its own expenses in connection with
the Merger as contemplated by the Agreement; provided, however, that to the
extent any expenses relating to the Merger (or the "plan of reorganization"
within the meaning of Treas. Reg. Section 1.368-1(c) with respect to the
Merger) are funded directly or indirectly by a party other than the incurring
party, such expenses will be within the guidelines established in Rev. Rul.
73-54. 1973-1 C.B. 187.
P. No intercorporate indebtedness exists between Carreker and
Antinori that was issued, acquired, or will be settled at a discount, and
neither Carreker nor CAG Newco, Inc. will assume any liabilities of any
Antinori shareholder in connection with the Merger.
Q. The terms of the Agreement and all other agreements entered into
pursuant thereto are the product of arm's-length negotiations.
R. None of the compensation payments that might be received by any
shareholder of Antinori will be separate consideration for, or allocable to,
any of their shares of Antinori Common Stock; none of the shares of Carreker
Common Stock to be received by any shareholder of Antinori will be separate
consideration for, or allocable to, any employment agreement, consulting
agreement or any covenants not to compete; and the compensation which might
be paid to any shareholder of Antinori will be for the services actually
rendered and will be commensurate with amounts paid to third parties
bargaining at arm's-length for similar services.
Dated: January 31, 1997 THE CARREKER GROUP, INC.
By: /S/ J.D. CARREKER
----------------------------
J.D. Carreker
Executive Officer
Page 3
EXHIBIT F
INTELLECTUAL PROPERTY RIGHTS AGREEMENT
This Intellectual Property Rights Agreement (this "IP AGREEMENT") is
entered into and made effective as of January 31, 1997 among Antinori
Software, Inc., a Georgia corporation ("ANTINORI"), The Carreker Group, Inc.,
a Texas corporation ("CARREKER"), and Ronald R. Antinori ("EMPLOYEE").
RECITALS
A. Carreker, Antinori and CAG Newco, Inc., a Texas corporation and a
wholly-owned subsidiary of Carreker, have entered into an Agreement and Plan
of Merger dated January 29, 1997 (the "AGREEMENT"), pursuant to which CAG
Newco, Inc. will be merged into Antinori, with Antinori surviving the merger
and becoming a wholly-owned subsidiary of Carreker.
B. Employee is a developer or co-developer of, and/or a contributor
or collaborator to, the software listed on Exhibit A (the "SOFTWARE") and
Employee will become an employee of Carreker upon consummation of the merger
contemplated by the Agreement.
C. The parties desire to ensure that all the intellectual property
rights in and to the Software are vested in Antinori prior to the Closing (as
defined in the Agreement).
D. The parties further desire to ensure that all intellectual
property rights in and to all inventions, software programs or otherwise
which Employee may develop during the term of his/her employment with
Carreker are vested in Carreker.
NOW, THEREFORE, in consideration of the above premises and as an
inducement to Carreker to enter into the Agreement with Antinori, the parties
agree as follows:
INTELLECTUAL PROPERTY RIGHTS AGREEMENT - Page 1
1. ASSIGNMENT. Employee hereby irrevocably assigns to Antinori all
of Employee's right, title and interest in and to all Software, computer
software programs and documentation that have been or are used, marketed or
licensed by Antinori on or before the effective date of this IP Agreement,
including but not limited to the Software listed on EXHIBIT A attached
hereto, and all intellectual property rights therein, including all source
code, object code, patents, patent rights, patent applications, copyrights
(including moral rights), copyright registrations, trade secrets, rights of
priority, technology, know-how, trademarks and service marks and all goodwill
related thereto, trademark and service mark registrations, related goodwill
and confidential and proprietary information related thereto (collectively,
the "INTELLECTUAL PROPERTY RIGHTS"), including, but not limited to the right
to secure renewals, reissuances and extensions of the foregoing.
2. PROPERTY RIGHTS. Employee hereby agrees to promptly from time to
time fully inform and disclose to Carreker all inventions, computer software
programs, designs, improvements, discoveries or otherwise that Employee may
develop during the term of his/her employment with Carreker which pertain or
relate to the business of Carreker or Antinori, or to any experimental work
carried on by Carreker or Antinori, whether conceived by Employee alone or
otherwise and whether conceived during regular working hours or otherwise.
Employee further acknowledges and agrees that all such inventions, computer
software program, designs, improvements and discoveries and all the
Intellectual Property Rights therein belong solely to and are the exclusive
property of Carreker.
3. RECORDATION OR REGISTRATION. Employee hereby agrees to assist
Antinori, Carreker and any of their successor corporations, for no additional
consideration, in any recordation or registration of any Intellectual
Property Rights or of this IP Agreement by executing, acknowledging and
delivering any documents that may be necessary to protect, preserve or
perfect rights of Antinori and/or Carreker provided for herein.
4. REPRESENTATION AND WARRANTIES. Employee represents and warrants
to Carreker that (a) except for a grant of rights to Antinori, Employee has
not previously granted and will not grant or attempt to grant any rights in
the Intellectual Property Rights in the Software or any derivative work based
on the Intellectual Property Rights in the Software to any third party; and
(b) Employee has full power to enter into this IP Agreement, to carry out
Employee's obligations under this IP Agreement and to grant the rights
granted to Carreker hereunder.
5. NO MODIFICATION. This IP Agreement may not be modified except by
actual written consent of the parties. This IP
INTELLECTUAL PROPERTY RIGHTS AGREEMENT - Page 2
Agreement will not be effective if the Agreement is terminated in accordance
with its terms.
6. GOVERNING LAW. The laws of the State of Texas (without regard to
its choice of law principles that might apply the law of another
jurisdiction) will govern the validity of this IP Agreement, the construction
of its terms, and the interpretation and enforcement of the rights and duties
of the parties.
IN WITNESS WHEREOF, the parties have executed this IP Agreement to be
effective as of the date first above written.
THE CARREKER GROUP, INC. ANTINORI SOFTWARE, INC.
By: By:
----------------------------- --------------------------------
J.D. Carreker Ronald R. Antinori
Chief Executive Officer Chairman of the Board
EMPLOYEE
----------------------------
Name: Ronald R. Antinori
INTELLECTUAL PROPERTY RIGHTS AGREEMENT - Page 3
EXHIBIT G
TO: The Carreker Group, Inc.
14001 North Dallas Parkway,
Suite 1100
Dallas, Texas 75240
Antinori Software, Inc.
400 Colony Square,
Suite 450
Atlanta, Georgia 30326
ANTINORI AFFILIATE AGREEMENT
This Antinori Affiliate Agreement (this "AGREEMENT") is being delivered
concurrently with the execution and delivery of that certain Agreement and Plan
of Merger dated as of January 29, 1997 (the "MERGER AGREEMENT") among The
Carreker Group, Inc., a Texas corporation ("CARREKER"), Antinori Software, Inc.,
a Georgia corporation ("ANTINORI"), and CAG Newco, Inc., a Texas corporation and
a wholly-owned subsidiary of Carreker. The Merger Agreement provides for the
merger ("MERGER") of CAG Newco, Inc. with and into Antinori in a transaction in
which each share of Antinori Common Stock, par value $.01 per share ("ANTINORI
COMMON STOCK"), will be converted into Carreker Class A Voting Common Stock, no
par value ("CARREKER COMMON STOCK"), as described in the Merger Agreement.
Unless otherwise defined herein, capitalized terms used in this Agreement have
the meanings given to them in the Merger Agreement.
The undersigned understands that, because the Merger will be accounted for
as a "pooling-of-interests," shares of Carreker Common Stock which the
undersigned may acquire hereafter may only be disposed of in conformity with the
limitations described herein.
The undersigned has been informed that the treatment of the Merger as a
pooling-of-interests for financial accounting purposes may depend upon the
accuracy of certain of the representations and warranties and the compliance
with certain of the agreements set forth in this Agreement. The undersigned
further understands that the representations, warranties and agreements set
forth herein will be relied upon by Carreker, Carreker's shareholders, Antinori,
Antinori's shareholders and Carreker's and Antinori's respective counsel and
accounting firms, for accounting purposes, for federal income tax purposes, for
securities law compliance purposes and for other purposes material to the Merger
Agreement and the consummation of the Merger.
G. The undersigned represents, warrants and agrees as follows:
1. The undersigned has full power to execute this Agreement and
to make the representations, warranties and agreements herein and to perform the
undersigned's obligations hereunder.
2. The undersigned is the beneficial owner of no shares of
Antinori Common Stock. Except as may be indicated on the last page of this
Agreement, the undersigned does not
Page 1
beneficially own any shares of Antinori Common Stock, or any options,
warrants or other rights to acquire shares of Antinori Common Stock or other
equity securities of Antinori (the "ANTINORI SECURITIES"). At the date of
this Agreement, the Antinori Securities are, and at all times until the
"EXPIRATION DATE" (as defined below), the Antinori Securities will be, free
and clear of any liens, claims, options, charges or other encumbrances,
except for the rights and obligations created under the Escrow Agreement and
except as may be indicated on the last page of this Agreement. As used
herein, the term "Termination Date" means the earliest to occur of (i) the
distribution to shareholders of record of Carreker of the first financial
statements of Carreker that include at least 30 days combined operating
results of Carreker and Antinori, or (ii) such time as the Merger Agreement
may be terminated in accordance with its terms.
3. The undersigned has no present intention or plan to sell,
exchange or otherwise dispose of Carreker Common Stock to be received by the
undersigned.
4. The undersigned is an officer of Antinori and has been
actively involved in the development and marketing of Antinori's products. The
undersigned is a knowledgeable and sophisticated investor, capable by virtue of
his educational, business and financial background to assess the risks and
merits of investments in Carreker Common Stock. The undersigned has had the
opportunity to ask questions of and receive full answers from Carreker as to all
matters deemed pertinent by the undersigned to his decision to enter into this
Agreement and to consent to the Merger and the Merger Agreement, and he has
obtained all documents from Carreker that he has requested with respect to such
matters. The undersigned has not obtained from Carreker or relied upon any
information or documents that are inconsistent with the representations and
covenants made by Carreker in the Merger Agreement. The undersigned will hold
options to purchase shares of Carreker Common Stock (such options and shares
being the "RESTRICTED SECURITIES") for the undersigned's own account, for
investment and not with a view to resale or other disposition.
H. The undersigned agrees as follows:
1. At any time prior to the Expiration Date, without the prior
written consent of Carreker, the undersigned will not sell, transfer, encumber
or dispose of, or offer to sell, transfer, encumber or dispose of, (i) any of
the Antinori Securities or (ii) any shares of Antinori Common Stock that the
undersigned purchases or otherwise acquires after the execution of this
Agreement and prior to the Expiration Date (the "NEW ANTINORI SECURITIES"). All
New Antinori Securities will be subject to the terms of this Agreement to the
same extent and in the same manner as they were Antinori Securities.
2. Until the Expiration Date, the undersigned will vote any New
Antinori Securities in any vote of the share of Antinori Common Stock, with
respect to the matters referred to in (i) or (ii) immediately below and in every
written consent as a Antinori shareholder solicited with respect to any of the
matters referred to in (i) or (ii) immediately below, as follows: (i) in favor
of approval of the Merger Agreement and the Merger and (ii) against approval of
any proposal that might be in opposition to or in competition with consummation
of the Merger. The undersigned will not, directly or indirectly, solicit,
facilitate or encourage any offer from any person or entity
Page 2
concerning the possible disposition of all or any portion of Antinori's
business, assets or capital stock by merger, sale or other means in
contravention of the Merger Agreement.
3. The undersigned will not, and will not permit any entity under
the undersigned's control to, (i) solicit support in opposition to or in
competition with the consummation of the Merger or otherwise encourage or assist
any person or entity in taking or planning any action that would compete with,
restrain or otherwise serve to interfere with or inhibit the timely consummation
of the Merger in accordance with the terms of the Merger Agreement; or (ii)
initiate a Antinori shareholder vote or action by consent of any Antinori
shareholder in opposition to or in competition with the consummation of the
Merger.
4. The undersigned hereby (i) grants any consent or waivers that
are reasonably required, under the terms of any agreement to which the
undersigned and Antinori (or the undersigned, Antinori and another or others)
are parties, for the consummation of the Merger; and (ii) subject to his Letter
Agreement dated October 24, 1996 and Amendment to Letter Agreement dated
January 31, 1997, waives, effective as of the Effective Time, any liquidation,
redemption, anti-dilution, registration rights, information rights, rights of
first refusal, co-sale or other similar rights under terms of the Articles of
Incorporation of Antinori or any agreement with Antinori or its security holders
in effect immediately prior to the Effective Time with respect to the Antinori
Securities.
5. The undersigned will execute and deliver any additional
documents reasonably necessary or desirable, in the opinion of Antinori or
Carreker, to carry out the intent of this Agreement.
I. The undersigned understands that (a) in addition to the restrictions
imposed under this Agreement, the Restricted Securities have not been registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), or
registered or qualified under applicable state securities laws, in reliance upon
the exemptions from the registration or qualification requirements of the
Securities Act of 1933 and such state securities laws, and (b) as a result, the
Restricted Securities may not be offered, resold or otherwise transferred
without registration under the Securities Act and registration and qualification
under applicable state securities laws unless the offer, resale or other
transfer is exempt from the registration or qualification requirements of the
Securities Act and such state securities laws. The undersigned acknowledges
that, unless registered under the Securities Act, the Restricted Securities may
not be publicly resold except in compliance with Rule 144 or another exemption
from such registration, and that Rule 144 is not presently and for the
foreseeable future will not be available to permit the Restricted Securities to
be resold.
J. The undersigned understands that there will be placed on the
certificates evidencing the Restricted Securities that are shares, among other
legends, legends stating in substance:
"THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR HYPOTHECATED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED HOLDER
THEREOF AND
Page 3
CARREKER-ANTINORI GROUP, INC. (THE "COMPANY"). A COPY OF SUCH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED ONLY IN ACCORDANCE WITH (A) AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER APPLICABLE
STATE SECURITIES LAWS OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF
SUCH ACT AND LAWS. THE COMPANY MAY REQUIRE AN OPINION OF LEGAL COUNSEL, IN FORM
AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT SUCH EXEMPTIONS
ARE AVAILABLE."
After release of the distribution described in Section 2(i), certificates
evidencing the Restricted Securities that are shares delivered at or after the
Effective Time may, at the undersigned's election, be surrendered for
cancellation and reissuance without the first of the above legends. Carreker
agrees that the second legend above will be removed promptly if the provisions
of this Agreement, the Securities Act and applicable state law are otherwise
complied with.
K. The undersigned hereby agrees to, and agrees to be bound by, the
indemnification obligations provided for in Section 10.2 of the Merger Agreement
as if the undersigned were a party to the Merger Agreement.
L. If any provision of this Agreement (or of the Merger Agreement or
the Escrow Agreement), or the application thereof, is for any reason held to any
extent to be invalid or unenforceable, then the remainder of this Agreement (or
of such of the Merger Agreement or the Escrow Agreement) and application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties. The parties further agree to replace such
unenforceable provision of this Agreement with a valid and enforceable
provisions that will achieve, to the extent possible, the economic, business and
other purposes of the invalid or unenforceable provisions.
M. This Agreement will be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns, but, except as
otherwise specifically provided herein, neither this Agreement nor any of the
rights, interests or obligations of the parties hereto may be assigned by any of
the parties without prior written consent of the others.
N. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
O. The undersigned acknowledges that Carreker and Antinori will each be
irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the undersigned set forth
herein. Therefore, it is agreed that, in addition to any other remedies which
may be available to Carreker and Antinori upon any such violation, Carreker and
Antinori will have the right to enforce such covenants and agreements by
specific performance,
Page 4
injunctive relief or by any other means available at law or in equity.
P. The laws of the State of Texas (without regard to its choice of law
principles that might apply the law of another jurisdiction) will govern the
validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties.
Q. This Agreement contains the entire understanding of the parties with
respect to the subject matter hereof, and supersedes all prior negotiations and
understandings between the parties with respect to such subject matter.
R. The failure of any party to enforce any of the provisions of this
Agreement will not be construed to be a waiver of the right of such party
thereafter to enforce such provisions. The waiver by any party of the right to
enforce any of the provisions of this Agreement on any occasion will not be
construed to be a waiver of the right of such party to enforce such provisions
on any other occasion.
S. This Agreement may be executed in counterparts, each of which will
be an original as regards any party whose name appears thereon and all of which
together will constitute one and the same instrument. This Agreement will
become binding when one or more counterparts hereof, individually or taken
together, bear the signatures of all parties reflected hereon as signatories.
Number of shares of Antinori Common Stock
beneficially owned by the undersigned:
-----------------------------------------
Date: January ___, 1997
Very truly yours,
-----------------------------------------
-----------------------------------------
Agreed to and accepted:
THE CARREKER GROUP, INC.
By:
-------------------------
J.D. Carreker,
Chief Executive Officer
ANTINORI SOFTWARE, INC.
By:
------------------------
Ron Antinori,
Chairman of the Board
Page 5
Antinori Software, Inc.
400 Colony Square,
Suite 450
Atlanta, Georgia 30326
ANTINORI AFFILIATE AGREEMENT
This Antinori Affiliate Agreement (this "AGREEMENT") is being delivered
concurrently with the execution and delivery of that certain Agreement and
Plan of Merger dated as of January 29, 1997 (the "MERGER AGREEMENT") among
The Carreker Group, Inc., a Texas corporation ("CARREKER"), Antinori
Software, Inc., a Georgia corporation ("ANTINORI"), and CAG Newco, Inc., a
Texas corporation and a wholly-owned subsidiary of Carreker. The Merger
Agreement provides for the merger ("MERGER") of CAG Newco, Inc. with and into
Antinori in a transaction in which each share of Antinori Common Stock, par
value $.01 per share ("ANTINORI COMMON STOCK"), will be converted into
Carreker Class A Voting Common Stock, no par value ("CARREKER COMMON STOCK"),
as described in the Merger Agreement. Unless otherwise defined herein,
capitalized terms used in this Agreement have the meanings given to them in
the Merger Agreement.
The undersigned understands that, because the Merger will be accounted
for as a "pooling-of-interests" and because the shares of Carreker Common
Stock to be received by the undersigned in the Merger will not be registered
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), such
shares and any shares of Carreker Common Stock which the undersigned may
acquire hereafter may only be disposed of in conformity with the limitations
described herein.
The undersigned has been informed that the treatment of the Merger as a
pooling-of-interests for financial accounting purposes may depend upon the
accuracy of certain of the representations and warranties and the compliance
with certain of the agreements set forth in this Agreement. The undersigned
further understands that the representations, warranties and agreements set
forth herein will be relied upon by Carreker, Carreker's shareholders,
Antinori, Antinori's shareholders and Carreker's and Antinori's respective
counsel and accounting firms, for accounting purposes, for federal income tax
purposes, for securities law compliance purposes and for other purposes
material to the Merger Agreement
ANTINORI AFFILIATE AGREEMENT - Page 1
and the consummation of the Merger.
ANTINORI AFFILIATE AGREEMENT - Page 2
T. The undersigned represents, warrants and agrees as follows:
1. The undersigned has full power to execute this Agreement and
to make the representations, warranties and agreements herein and to perform
the undersigned's obligations hereunder.
2. The undersigned is the beneficial owner of the shares of
Antinori Common Stock indicated on the last page of this Agreement (the
"ANTINORI SECURITIES"). Except for the Antinori Securities and except as may
be indicated on the last page of this Agreement, the undersigned does not
beneficially own any shares of Antinori Common Stock, or any options,
warrants or other rights to acquire shares of Antinori Common Stock or other
equity securities of Antinori. At the date of this Agreement, the Antinori
Securities are, and at all times until the "EXPIRATION DATE" (as defined
below), the Antinori Securities will be, free and clear of any liens, claims,
options, charges or other encumbrances, except for the rights and obligations
created under the Escrow Agreement and except as may be indicated on the last
page of this Agreement. As used herein, the term "EXPIRATION DATE" means the
earliest to occur of (i) the distribution to shareholders of record of
Carreker of the first financial statements of Carreker that include at least
30 days combined operating results of Carreker and Antinori, or (ii) such
time as the Merger Agreement may be terminated in accordance with its terms.
3. The undersigned has no present intention or plan to sell,
exchange or otherwise dispose of Carreker Common Stock to be received by the
undersigned in the Merger such that the undersigned would retain a continuing
interest through stock ownership in Carreker that is equal in value, as of
the Effective Time, to less than fifty percent (50%) of the value of all
formerly outstanding stock of Antinori that was held by the undersigned. For
purposes of this representation, shares of Antinori Common Stock (or the
portion thereof) (i) with respect to which a Antinori shareholder received
consideration in the Merger other than Carreker Common Stock (including,
without limitation, cash received pursuant to any exercise of dissenters'
rights) and/or (ii) with respect to which a sale occurs during the pre-Merger
period shall be considered shares of outstanding Antinori Common Stock
exchanged for Carreker Common Stock in the Merger and
ANTINORI AFFILIATE AGREEMENT - Page 3
then disposed of pursuant to a plan.
4. Pursuant to the Merger, the undersigned will receive no
consideration, directly or indirectly, actually or constructively, for the
undersigned's shares of Antinori Common Stock other than shares of Carreker
Common Stock and cash for any fractional shares.
ANTINORI AFFILIATE AGREEMENT - Page 4
5. The undersigned is a shareholder and officer of Antinori and
has been actively involved in the development and marketing of Antinori's
products. The undersigned is a knowledgeable and sophisticated investor,
capable by virtue of his educational, business and financial background to
assess the risks and merits of investments in Carreker Common Stock. The
undersigned has had the opportunity to ask questions of and receive full
answers from Carreker as to all matters deemed pertinent by the undersigned
to his decision to enter into this Agreement and to consent to the Merger and
the Merger Agreement, and he has obtained all documents from Carreker that he
has requested with respect to such matters. The undersigned has not obtained
from Carreker or relied upon any information or documents that are
inconsistent with the representations and covenants made by Carreker in the
Merger Agreement. The undersigned will acquire the shares of Carreker Common
Stock to be issued to the undersigned in the Merger (the "RESTRICTED
SECURITIES") for the undersigned's own account, for investment and not with a
view to resale or other disposition.
U. The undersigned agrees as follows:
1. At any time prior to the Expiration Date, without the prior
written consent of Carreker, the undersigned will not sell, transfer,
encumber or dispose of, or offer to sell, transfer, encumber or dispose of,
(i) any of the Antinori Securities or (ii) any shares of Antinori Common
Stock that the undersigned purchases or otherwise acquires after the
execution of this Agreement and prior to the Expiration Date (the "NEW
ANTINORI SECURITIES"). All New Antinori Securities will be subject to the
terms of this Agreement to the same extent and in the same manner as they
were Antinori Securities.
2. Until the Expiration Date, the undersigned will vote the
Antinori Securities and any New Antinori Securities in any vote of the share
of Antinori Common Stock, with respect to the matters referred to in (i) or
(ii) immediately below and in every written consent as a Antinori shareholder
solicited with respect to any of the matters referred to in (i) or (ii)
immediately below, as follows: (i) in favor of approval of the Merger
Agreement and the Merger and (ii) against approval of any proposal that might
be in opposition to or in competition with consummation of the Merger. The
undersigned will not, directly or
ANTINORI AFFILIATE AGREEMENT - Page 5
indirectly, solicit, facilitate or encourage any offer from any person or
entity concerning the possible disposition of all or any portion of
Antinori's business, assets or capital stock by merger, sale or other means
in contravention of the Merger Agreement.
3. The undersigned will not, and will not permit any entity
under the undersigned's control to, (i) solicit support in opposition to or
in competition with the consummation of the Merger or otherwise encourage or
assist any person or entity in taking or planning any action that would
compete with, restrain or otherwise serve to interfere with or inhibit the
timely consummation of the Merger in accordance with the terms of the Merger
Agreement; or (ii) initiate a Antinori shareholder vote or action by consent
of any Antinori shareholder in opposition to or in competition with the
consummation of the Merger.
4. The undersigned hereby (i) grants any consent or waivers
that are reasonably required, under the terms of any agreement to which the
undersigned and Antinori (or the undersigned, Antinori and another or others)
are parties, for the consummation of the Merger; and (ii) waives, effective
as of the Effective Time, any liquidation, redemption, anti-dilution,
registration rights, information rights, rights of first refusal, co-sale or
other similar rights under terms of the Articles of Incorporation of Antinori
or any agreement with Antinori or its security holders in effect immediately
prior to the Effective Time with respect to the Antinori Securities.
5. The undersigned will execute and deliver any additional
documents reasonably necessary or desirable, in the opinion of Antinori or
Carreker, to carry out the intent of this Agreement.
V. The undersigned understands that (a) in addition to the
restrictions imposed under this Agreement, the Restricted Securities have not
been registered under the Securities Act or registered or qualified under
applicable state securities laws, in reliance upon the exemptions from the
registration or qualification requirements of the Securities Act of 1933 and
such state securities laws, and (b) as a result, the Restricted Securities
may not be offered, resold or otherwise transferred without registration
under the Securities Act and registration and qualification under applicable
state securities laws unless the offer, resale or other transfer is exempt
from the registration or
ANTINORI AFFILIATE AGREEMENT - Page 6
qualification requirements of the Securities Act and such state securities
laws. The undersigned acknowledges that, unless registered under the
Securities Act, the Restricted Securities may not be publicly resold except
in compliance with Rule 144 or another exemption from such registration, and
that Rule 144 is not presently and for the foreseeable future will not be
available to permit the Restricted Securities to be resold.
W. The undersigned understands that there will be placed on the
certificates evidencing the Restricted Securities, among other legends,
legends stating in substance:
"THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR HYPOTHECATED
ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE REGISTERED
HOLDER THEREOF AND CARREKER-ANTINORI GROUP, INC. (THE "COMPANY"). A COPY OF
SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
THE SECURITIES REPRESENTED HEREBY MAY BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED ONLY IN ACCORDANCE WITH (A) AN EFFECTIVE
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND UNDER
APPLICABLE STATE SECURITIES LAWS OR (B) EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF SUCH ACT AND LAWS. THE COMPANY MAY REQUIRE AN OPINION OF
LEGAL COUNSEL, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT SUCH EXEMPTIONS ARE AVAILABLE."
After release of the distribution described in Section 2(i),
certificates evidencing the Restricted Securities delivered at or after the
Effective Time may, at the undersigned's election, be surrendered for
cancellation and reissuance without the first of the above legends. Carreker
agrees that the second legend above will be removed promptly if the
provisions of this Agreement, the Securities Act and applicable state law are
otherwise complied with.
X. The undersigned hereby agrees to, and agrees to be bound by, the
indemnification obligations provided for in Section 10.2 of the Merger
Agreement as if the undersigned were a party to the Merger Agreement.
Y. If any provision of this Agreement (or of the Merger Agreement or
the Escrow Agreement), or the application thereof, is for any reason held to
any extent to be invalid or unenforceable,
ANTINORI AFFILIATE AGREEMENT - Page 7
then the remainder of this Agreement (or of such of the Merger Agreement or
the Escrow Agreement) and application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of
the parties. The parties further agree to replace such unenforceable
provision of this Agreement with a valid and enforceable provisions that will
achieve, to the extent possible, the economic, business and other purposes of
the invalid or unenforceable provisions.
Z. This Agreement will be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns, but,
except as otherwise specifically provided herein, neither this Agreement nor
any of the rights, interests or obligations of the parties hereto may be
assigned by any of the parties without prior written consent of the others.
AA. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written agreement
executed by the parties hereto.
ANTINORI AFFILIATE AGREEMENT - Page 8
BB. The undersigned acknowledges that Carreker and Antinori will each
be irreparably harmed and that there will be no adequate remedy at law for a
violation of any of the covenants or agreements of the undersigned set forth
herein. Therefore, it is agreed that, in addition to any other remedies
which may be available to Carreker and Antinori upon any such violation,
Carreker and Antinori will have the right to enforce such covenants and
agreements by specific performance, injunctive relief or by any other means
available at law or in equity.
CC. The laws of the State of Texas (without regard to its choice of
law principles that might apply the law of another jurisdiction) will govern
the validity of this Agreement, the construction of its terms, and the
interpretation and enforcement of the rights and duties of the parties.
DD. This Agreement contains the entire understanding of the parties
with respect to the subject matter hereof, and supersedes all prior
negotiations and understandings between the parties with respect to such
subject matter.
L. The failure of any party to enforce any of the provisions of this
Agreement will not be construed to be a waiver of the right of such party
thereafter to enforce such provisions. The waiver by any party of the right
to enforce any of the provisions of this Agreement on any occasion will not
be construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
ANTINORI AFFILIATE AGREEMENT - Page 9
M. This Agreement may be executed in counterparts, each of which will
be an original as regards any party whose name appears thereon and all of
which together will constitute one and the same instrument. This Agreement
will become binding when one or more counterparts hereof, individually or
taken together, bear the signatures of all parties reflected hereon as
signatories.
Number of shares of Antinori Common Stock
beneficially owned by the undersigned (1):
------------------------------------------
Date: January 31, 1997
Very truly yours,
------------------------------------------
Ronald R. Antinori
Agreed to and accepted:
THE CARREKER GROUP, INC.
By:
----------------------------
J.D. Carreker, Chief
Executive Officer
ANTINORI SOFTWARE, INC.
By:
----------------------------
Ron Antinori, Chairman
of the Board
-----------
(1) 51,462 shares of Carreker are subject to a purchase option in favor of
Lawrence Duckworth.
ANTINORI AFFILIATE AGREEMENT - Page 10
EXHIBIT H
EXHIBIT H
TO: The Carreker Group, Inc.
14001 North Dallas Parkway,
Suite 1100
Dallas, Texas 75240
CARREKER AFFILIATE AGREEMENT
This Carreker Affiliate Agreement (this "AGREEMENT") is being delivered
in connection with the execution and delivery of that certain Agreement and
Plan of Merger dated as of January 29, 1997 (the "MERGER AGREEMENT"), among
The Carreker Group, Inc., a Texas corporation ("CARREKER"), Antinori
Software, Inc., a Georgia corporation ("ANTINORI"), and CAG Newco, Inc., a
Texas corporation and a wholly-owned subsidiary of Carreker. The Merger
Agreement provides for the merger (the "MERGER") of CAG Newco, Inc. with and
into Antinori in a transaction in which each share of Antinori Common Stock,
par value $.01 per share, will be converted into shares of Carreker Class A
Voting Common Stock, no par value ("CARREKER CLASS A STOCK").
The undersigned understands that, since the Merger will be accounted for
as a "pooling-of-interests," the shares of Carreker Class A Stock which the
undersigned holds or may hereafter acquire may be disposed of only in
conformity with the limitations described herein. The undersigned has been
informed that the treatment of the Merger as a pooling-of-interests for
financial accounting purposes is dependent upon the accuracy of certain of
the representations and warranties and the compliance with certain of the
agreements set forth herein. The undersigned further understands that the
representations, warranties and agreements set forth herein will be relied
upon by Carreker and its counsel and accounting firm.
1. The undersigned represents, warrants and agrees as follows:
(a) The undersigned has full power to execute this Agreement and
to make the representations, warranties and agreements herein and to perform
the undersigned's obligations hereunder.
Page 1
(b) The undersigned is the beneficial owner of (and has sole or
shared voting or investment power with respect to) all the shares of Carreker
Class A Stock and options to purchase shares of Carreker Class B Non-Voting
Common Stock as indicated on the last page hereof (collectively, and together
with any such shares acquired after the date hereof, the "CARREKER
SECURITIES"). Except for the Carreker Securities, the undersigned does not
beneficially own any shares of Carreker Class A Stock or any other equity
securities of Carreker or any options, warrants or other rights to acquire
shares of Carreker Class A Stock or other equity securities of Carreker.
(c) The undersigned will not sell, transfer, encumber, or
otherwise dispose of any of the Carreker Securities or offer or agree to
sell, transfer, encumber, or otherwise dispose of, or in any other way reduce
the undersigned's risk of ownership or investments in, any of such Carreker
Securities from and after the date hereof until Carreker shall have
distributed to its shareholders of record its first financial statements that
include at least 30 days of combined operating results of Carreker and
Antinori; provided, however, that nothing in this paragraph will be deemed to
prohibit charitable contributions of such securities without consideration to
transferees who agree to all of the restrictions in this Agreement and
provided further that, if the Merger Agreement should be terminated in
accordance with its terms prior to the effectiveness of the Merger, the
undersigned will have no obligations under this Agreement from and after the
date of such termination.
2. This Agreement will be binding upon and enforceable against
administrators, executors, representatives, heirs, legatees and devisees of
the undersigned and any pledgee holding Carreker Securities as collateral. If
the Merger Agreement is terminated in accordance with its terms prior to the
effectiveness of the Merger, then this Agreement will automatically terminate.
Number of shares of Carreker Class A Stock
(and options to purchase shares of Carreker
Class B Non-Voting Common Stock) beneficially
owned by the undersigned:
Page 2
--------------------------------------------
Date: January ____, 1997 Very truly yours,
--------------------------------------------
Name:
---------------------------------------
Title (if applicable):
----------------------
Agreed to and accepted:
THE CARREKER GROUP, INC.
By:
------------------------------------------
J.D. Carreker, Chief Executive Officer
Page 3
EXHIBIT I
January 31, 1997
Antinori Software, Inc.
400 Colony Square, Suite 450
Peachtree Street NE
Atlanta, Georgia 30326
Attention: Ronald R. Antinori, Chairman of the Board
Re: Agreement and Plan of Merger dated as of January 29, 1997 among The
Carreker Group, Inc., CAG Newco, Inc. and Antinori Software, Inc.
Ladies and Gentlemen:
We have acted as counsel to The Carreker Group, Inc., a Texas
corporation (the "Company"), and J.D. Carreker ("Carreker") in connection
with the preparation of that certain Agreement and Plan of Merger (the
"Agreement") between the Company, CAG Newco, Inc., a Texas corporation
("Newco"), and Antinori Software, Inc. ("ASI"). As such, we have
participated in the closing of the merger of Newco with and into the Company
and the receipt of shares of the Company by the shareholders of ASI (the
"Transaction"). This opinion is rendered pursuant to Section 7.4 of the
Agreement.
The various documents and agreements executed and delivered pursuant to
the Agreement and in connection with the consummation of the Transaction are
sometimes referred to herein as the Transaction Documents. To the extent not
otherwise defined herein, defined terms have the meaning ascribed to them in
the Agreement.
This opinion is governed by, and is to be interpreted in accordance
with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business
Law (1991). As a consequence, it is subject to the assumptions,
qualifications (including the General Qualifications), exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord. This opinion should be read in
conjunction therewith.
In the capacity described above, we have considered such matters of law
and of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of
the Company, certificates of officers and representatives of the Company,
certificates of public officials and such other documents as we have deemed
appropriate as a basis for the opinions hereinafter set forth.
Page 1
The opinions set forth herein are limited to the laws of The State of
Texas and applicable federal laws as applied therein.
Based upon the foregoing, it is our opinion that:
(1) The Company was duly organized as a corporation, and is existing
and in good standing under the laws of the State of Texas.
(2) The Company has the corporate power to execute and deliver the
Agreement and the other Transaction Documents, to perform its obligations
thereunder, to own and use its assets and to conduct its business.
(3) The Company has duly authorized the execution and delivery of the
Agreement and all performance by the Company thereunder. The Company and
Carreker have duly executed and delivered the Agreement and the other
Transaction Documents to which each is a party.
(4) The execution and delivery by the Company and Carreker of the
Transaction Documents to which each is a party do not, and performance by the
Company and Carreker of their respective obligations under the Agreement and
the other Transaction Documents will not, result in any:
(i) violation of the Company's articles of incorporation or bylaws;
(ii) violation of any existing federal or state constitution, law,
statute, regulation or rule to which the Company or its assets or
Carreker is subject;
(iii) breach of or default under any material written agreements;
(iv) creation or imposition of a contractual lien or security interest
in, on or against the assets of the Company under any material
written agreements; or
(v) violation of any judicial or administrative decree, writ, judgment
or order to which, to our knowledge, the Company or its assets or
Carreker is subject.
With your permission we have assumed that the term "material written
agreements" used in clauses (iii) and (iv) above includes only those
agreements identified in ATTACHMENT 1 to this letter.
(5) Other than the filing of the Articles of Merger with the Secretary
of State of The
Page 3
State of Texas, no consent, approval, authorization or other action by, or
filing with, any governmental authority of the United States of America or
The State of Texas is required for the Company's execution and delivery of
the Agreement and consummation of the Transaction.
(6) The Transaction Documents are enforceable against the Company and
Carreker, respectively, as applicable.
(7) The Company's authorized shares consist of 12,000,000 shares of
Class A Voting Common Stock, 500,000 shares of Class B Non-Voting Common
Stock, and 5,000,000 shares of Preferred Stock, each no par value, of which
961,071 shares of Class A Voting Common Stock and 3,167 shares of Class B
Non-Voting Common Stock are issued and outstanding as of the Closing Date and
are held of record as set forth in SCHEDULE 3.3 to the Agreement. Except as
disclosed on the Schedules to the Agreement, as of the Closing Date, to our
knowledge there are no other options, warrants, or other agreements pursuant
to which any other person could acquire shares or other any interest in the
shares of the Company.
(8) The shares of Class A Voting Common Stock of the Company to be
issued in the Merger have been duly authorized and upon their issuance will
be validly issued, fully paid and nonassessable.
Based upon the limitations and qualifications set forth above, we also
confirm to you that:
(1) To our knowledge, no litigation or other proceeding against the
Company or any of its property is pending or overtly threatened by a written
communication to the Company.
(2) The Company is incorporated under the laws of The State of Texas,
but is not qualified to conduct business in any state other than The State of
Texas.
In addition to other limitations noted in the Accord, the enforceability
of the Transaction Documents may be limited by:
(i) the possible unenforceability of waivers or advance consents that
have the effect of waiving statutes of limitation, marshalling of
assets or similar requirements, or, as to the jurisdiction of
courts, the venue of actions, the right to jury trial, or in
certain cases, notices;
Page 4
(ii) the possible unenforceability of provisions that waivers or
consents by a party may not be given effect unless in writing or in
compliance with particular requirements or that a person's course
of dealing, course of performance, or the like or failure or delay
in taking actions may not constitute a waiver of related rights or
provisions or that one or more waivers may not, under certain
circumstances, constitute a waiver of other matters of the same
kind;
(iii) the effect of course of dealing, course of performance, or the like
that would modify the terms of an agreement or the respective
rights or obligations of the parties under an agreement;
(iv) the possible unenforceability of provisions that enumerated
remedies are non-exclusive or that a party has the right to pursue
multiple remedies without regard to other remedies elected or that
all remedies are cumulative;
(v) the possible unenforceability of provisions that determination by a
party or a party's designee are conclusive;
(vi) the possible unenforceability of provisions that the provisions of
an agreement are severable in all circumstances;
(vii) the effect of laws requiring mitigation of damages;
(viii) the possible unenforceability of provisions permitting the
exercise, under certain circumstances, of rights without notice or
without providing opportunity to cure failures to perform;
(ix) the effect of agreements as to rights of setoff otherwise than in
accordance with applicable law; and
(x) the possible unenforceability of any covenant not to compete set
forth in the Transaction Documents if its limitations as to time,
geographical area and scope of activity to be restrained are not
reasonable or impose a greater restraint than is necessary to
protect the goodwill or other business interest of the Company.
Page 5
This opinion is provided to you for your exclusive use solely in
connection with the Transaction, and may not be relied upon by any other
person or for any other purpose without our prior written consent.
Very truly yours,
LOCKE PURNELL RAIN HARRELL
(A Professional Corporation)
By:
--------------------------------
Russell F. Coleman
Page 6
EXHIBIT J
January 31, 1997
The Carreker Group, Inc.
Attn: J. D. Carreker, Chief Executive Officer
Suite 1100
14001 North Dallas Parkway
Dallas, Texas 75240
Locke Purnell Rain Harrell
(A Professional Corporation)
Attn: Russell F. Coleman
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201-6776
Re: Agreement and Plan of Merger between The Carreker Group, Inc., CAG
Newco, Inc. and Antinori Software, Inc. dated as of January 30, 1997
Ladies and Gentlemen:
We have acted as counsel to Antinori Software, Inc., a Georgia
corporation, and Ronald R. Antinori, its controlling shareholder, in
connection with the preparation of the Agreement and Plan of Merger (the
"Agreement") between The Carreker Group, Inc. ("Carreker"), CAG Newco, Inc.
("Newco") and Antinori Software, Inc. ("ASI") and have participated in the
closing of the merger of Newco with and into ASI and the receipt of shares of
Carreker by the existing shareholders (the "Shareholders") of ASI ("the
Transaction"). This opinion letter is rendered pursuant to Section 8.4 of
the Agreement.
The various documents and agreements executed and delivered pursuant to
the Agreement and in connection with the consummation of the Transaction are
sometimes referred to herein as the Transaction Documents. To the extent not
otherwise defined herein, defined terms have the meaning ascribed to them in
the Agreement.
This Opinion Letter is governed by, and is to be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section
of Business Law (1991). As a consequence, it is subject to the assumptions,
qualifications (including the General Qualifications), exceptions,
definitions, limitations on coverage and other limitations, all as more
particularly described in the Accord. This Opinion Letter should be read in
conjunction therewith.
In the capacity described above, we have considered such matters of law and
of fact, including the examination of originals or copies, certified or
otherwise identified to our satisfaction, of such records and documents of ASI,
certificates of officers and representatives of ASI, certificates of public
officials and such other documents as we have deemed appropriate as a basis for
the opinions hereinafter set forth.
The opinions set forth herein are limited to the laws of the State of
Georgia and applicable federal laws as applied therein. To the extent that any
document or agreement is governed by the laws of the State of Texas, we have
assumed at your request and with your permission, that the laws of the State of
Georgia are identical to, the laws of the State of Texas.
Based upon the foregoing, it is our opinion that:
Page 1
(1) ASI was duly organized as a corporation, and is existing and in
good standing, under the laws of the State of Georgia.
(2) ASI has the corporate power to execute and deliver the Agreement
and other Transaction Documents, to perform its obligations thereunder, to
own and use its assets and to conduct its business.
(3) ASI has duly authorized the execution and delivery of the
Agreement and all performance by ASI thereunder and ASI and the Shareholders
have duly executed and delivered the Agreement and the other Transaction
Documents to which each is a party.
(4) The execution and delivery by ASI and the Shareholders of the
Transaction Documents do not, and performance by ASI and the Shareholders of
their respective obligations under the Agreement and the Transaction
Documents will not result in any:
(i) violation of ASI's articles of incorporation or bylaws;
(ii) violation of any existing federal or state constitution,
statute, regulation, rule, order, or law to which ASI or its assets or the
Shareholders are subject;
(iii) breach of or default under any material written agreements;
(iv) creation or imposition of a contractual lien or security
interest in, on or against the assets of ASI under any material written
agreement; or
(v) violation of any judicial or administrative decree, writ
judgment or order to which, to our knowledge, ASI or its assets or the
Shareholders are subject.
With your permission we have assumed that the term "material written
agreements" used in clauses (iii) and (iv) above includes only those
agreements identified in the Schedules delivered pursuant to the Agreement.
(5) Other than the filing of the Certificate of Merger with the
Secretary of State of Georgia, no consent, approval, authorization or other
action by, or filing with, any governmental authority of the United States or
the State of Georgia is required for ASI's execution and delivery of the
Agreement and consummation of the Transaction.
(6) The Transaction Documents are enforceable against ASI and the
Shareholders respectively as applicable.
Page 2
(7) ASI's authorized shares consist of 10,000,000 shares of Common
Stock one cent ($.01) par value per share of which 1,010,101 shares were
issued and outstanding and are owned of record by the persons identified in
Schedule 2.3 to the Agreement. The outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable. Except
for a certain agreement between Lawrence D. Duckworth and Ronald R. Antinori
dated October 24, 1995 with respect to options on certain shares of ASI held
by Ronald R. Antinori, as amended to apply to certain of the shares of
Carreker issued to Ronald R. Antinori in the merger, as of the closing, to
our knowledge there are no other options, warrants, or other agreements
pursuant to which any other person could acquire shares or other any interest
in the shares of ASI.
(8) Immediately prior to the consummation of the Transaction, the
Shareholders were the sole registered owners of the shares of ASI. Following
the consummation of the Transaction, Carreker is the sole registered owner of
all shares of ASI.
Based upon the limitations and qualifications set forth above, we also
confirm to you that:
(1) To our knowledge, no litigation or other proceeding against ASI
or any of its property is pending or overtly threatened by a written
communication to ASI.
(2) ASI is incorporated under the laws of the State of Georgia, but
is not qualified to conduct business in any state other than the State of
Georgia.
In addition to other limitations noted in the Accord, the enforceability
of the Transaction Documents may be limited by:
(i) the possible unenforceability of waivers or advance consents that
have the effect of waiving statutes of limitation, marshalling of assets or
similar requirements, or, as to the jurisdiction of courts, the venue of
actions, the right to jury trial, or in certain cases, notices;
(ii) the possible unenforceability of provisions that waivers or
consents by a party may not be given effect unless in writing or in
compliance with particular requirements or that a person's course of dealing,
course of performance, or the like or failure or delay in taking actions may
not constitute a waiver of related rights or provisions or that one or more
waivers may not, under certain circumstances, constitute a waiver of other
matters of the same kind;
(iii) the effect of course of dealing, course of performance, or the
like that would modify the terms of an agreement or the respective rights or
obligations of the parties under an agreement;
(iv) the possible unenforceability of provisions that enumerated
remedies are non-exclusive or that a party has the right to pursue multiple
remedies without regard to other
Page 3
remedies elected or that all remedies are cumulative;
(v) the effect of O.C.G.A. Section 13-1-11 on provisions relating to
attorneys' fees;
(vi) the possible unenforceability of provisions that determination by
a party or a party's designee are conclusive;
(vii) the possible unenforceability of provisions permitting
modifications of an agreement only in writing;
(viii) the possible unenforceability of provisions that the provisions
of an agreement are severable in all circumstances;
(ix) the effect of laws requiring mitigation of damages;
(x) the possible unenforceability of provisions permitting the
exercise, under certain circumstances, of rights without notice or without
providing opportunity to cure failures to perform;
(xi) the effect of agreements as to rights of setoff otherwise than in
accordance with applicable law; and
(xii) the possible unenforceability of any covenant not to compete set
forth in the Transaction Documents if its limitations as to time,
geographical area and scope of activity to be restrained are not reasonable
or impose a greater restraint than is necessary to protect the goodwill or
other business interest of Carreker.
This opinion letter is provided to you for your exclusive use solely in
connection with the Transaction, and may not be relied upon by any other
person or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, MANNING & MARTIN
a Limited Liability Partnership
By:
---------------------------------
Charles R. Beaudrot, Jr., Partner
Page 4
EXHIBIT K
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") is made as of January 31,
1997, among The Carreker Group, Inc., a Texas corporation (the "Company"),
J.D. Carreker ("Carreker") and Ronald R. Antinori ("Antinori"), Susan Antinori,
Lawrence D. Duckworth and Michael Israel (together with Antinori, the "Antinori
Shareholders" and, together with Carreker, the "Shareholders").
RECITALS
A. This Agreement is entered into in connection with and is ancillary
to an Agreement and Plan of Merger (the "Merger Agreement") dated as of
January 29, 1997, among the Company, CAG Newco, Inc., a Texas corporation and
a wholly-owned subsidiary of the Company, and Antinori Software, Inc., a
Georgia corporation, pursuant to which such subsidiary is to merge with and
into Antinori Software, Inc., such that Antinori Software, Inc. will become a
wholly-owned subsidiary of the Company (the "Merger").
B. In the Merger all of the ASI Shareholders, other than Lawrence D.
Duckworth, will receives shares of Class A Voting Common Stock of the Company.
In connection with the Merger, Lawrence D. Duckworth will receive options to
purchase shares of Class B Non-Voting Common Stock of the Company.
C. The parties deem it in their best interests and in the best interest
of the Company to restrict the sale, assignment, transfer, encumbrance, or other
transfer of shares of capital stock of the Company owned by the Shareholders,
and to provide for certain rights and obligations in respect thereto as
hereinafter provided.
NOW, THEREFORE, in consideration of the above premises and of the mutual
agreements and understandings set forth herein, the parties hereby agree as
follows:
I. DEFINITIONS
1.1 DEFINITIONS. When used in this Agreement, the following terms shall
have the respective meanings set forth below:
"Affiliate" means, when used with respect to a specified Person, any Person
that (a) directly or indirectly controls, is controlled by or is under common
control with such specified Person, (b) owns or controls 10% or more of the
outstanding voting equity interests of such Person, (c) is an
Page 1
officer, director, trustee, manager, administrator, representative or agent
of, or owns or controls 10% or more of the outstanding voting equity
interests of, a Person described in clause (a) or (b) of this sentence. As
used in this definition, the term "control" means possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of a Person through an ownership of equity interests, contract,
voting trust or otherwise.
"Commission" means the United States Securities and Exchange Commission, or
a successor commission or agency.
"Person" means an individual, partnership, limited partnership, limited
liability company, foreign limited liability company, trust, corporation,
association, enterprise, custodian, trustee, executor, administrator, nominee,
entity in a representative capacity or other enterprise.
"Qualified Public Offering" means a registered public offering under the
Securities Act of capital stock of the Company, which public offering is made
pursuant to a Registration Statement on Form S-1 (or Form SB-1) or a successor
form and which yields gross proceeds of at least $15 million and results in at
least beneficial 250 holders of capital stock of the Company.
"Registration Statement" means any registration statement of the Company
under the Securities Act that covers any of the Registrable Shares pursuant to
the provisions of this Agreement, including the related prospectus, all
amendments and supplements to such registration statement (including
post-effective amendments), all exhibits and all material incorporated by
reference or deemed incorporated by reference in such registration statement.
"Rule 144" means Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means shares of the Class A Voting Common Stock and the Class B
Non-Voting Common Stock of the Company, or any shares received in exchange
therefor in connection with a recapitalization of the Company.
"Transfer" means any sale, assignment, hypothecation, gift, inter vivos
transfer, pledge, mortgage, or other encumbrance, or any other transfer, whether
voluntary or involuntary. Notwithstanding the foregoing, any transfer that
might otherwise be deemed to result from the merger or consolidation of the
Company with or into another entity or any recapitalization of the Shares shall
not be deemed to constitute a "Transfer" for purposes of this Agreement.
Page 2
"Underwritten offering" means a registration in which securities of the
Company are sold to an underwriter for reoffering to the public.
1.2 SHARES SUBJECT TO AGREEMENT. This Agreement shall apply to all
Shares now owned by each of the Shareholders and to all Shares that may
hereafter be acquired by any of the Shareholders (including, without limitation,
pursuant to the exercise of a stock option or options), whether such Shares
constitute separate property or community property of any of the individual
Shareholders, and regardless of the capacity in which title to such Shares is
held or taken. Without limiting the foregoing, this Agreement shall apply to
all Shares held in either of the two escrows established pursuant to the Merger
Agreement. This Agreement shall also apply to all Shares to which the spouse of
any Shareholder is entitled by virtue of any community property or any other
law.
II. RESTRICTIONS ON TRANSFER OF SHARES
II.1. RESTRICTIONS ON TRANSFER.
(a) The Shareholders shall not make any Transfer of any Shares,
or any right or interest therein, except as provided in this Article II.
(b) Anything in this Agreement to the contrary notwithstanding,
no Transfer of any Shares otherwise permitted or required by this Agreement
shall be made unless such Transfer is in compliance with federal and state
securities laws, including, without limitation, the Securities Act. In
connection with any Transfer or proposed Transfer of Shares, if requested by the
Company before such Transfer, the Shareholder proposing to effect such Transfer
shall provide to the Company either (i) a written opinion of legal counsel who
shall be reasonably satisfactory to the Company, addressed to the Company and
reasonably satisfactory in form and substance to the Company, to the effect that
the proposed Transfer of the Shares may be effected without registration under
the Securities Act and applicable state securities laws, or (ii) a "no-action"
letter from the staff of the Commission to the effect that the proposed Transfer
of such Shares without registration under the Securities Act would not result in
a recommendation by the staff that action be taken in respect thereof.
(c) Anything in this Agreement to the contrary notwithstanding,
unless otherwise agreed to in writing by the Company and the Shareholders, no
Transfer of Shares otherwise permitted or required by this Agreement shall be
effective unless and until the transferee shall execute and deliver to the
Company an agreement in a form satisfactory to the Company in which such
transferee agrees in writing to be bound by this Agreement and to observe and
comply with this Agreement and with all obligations and restrictions imposed on
the Shareholders hereby.
Page 3
Each person to whom a Transfer of Shares is permitted by this Agreement who
receives a Transfer of Shares during the period when this Agreement is in
effect, and who so agrees in writing to be bound by the provisions hereof,
shall thereafter become a "Shareholder" for all purposes of this Agreement.
(d) Transfers of the Shares may only be made in strict compliance
with all applicable terms of this Agreement. Any purported Transfer of the
Shares that does not comply with all applicable provisions of this Agreement
shall be null and void and of no force or effect, and the Company shall not
recognize nor will be bound by any such purported Transfer and shall not effect
any such purported Transfer on its stock transfer books.
(e) Any offer to Transfer Shares by a Shareholder shall be deemed
to include an offer to sell all Shares or interest therein (including community
property interest) owned by or for the benefit of the spouse of the Shareholder,
whether or not stated in the offer. By executing this Agreement, a
Shareholder's spouse hereby agrees to be bound by all terms and provisions of
this Agreement.
(f) Any Transfer of Shares by a Shareholder to his or her
immediate family (i.e., the spouse, children, parents or siblings of the
Shareholder), or to a trust for the benefit of the Shareholder or his or her
immediate family, shall not be prohibited under this Agreement, provided each
such transferee receives the Shares subject to the terms and provisions of this
Agreement as a Shareholder as provided in Section 2.1(c) above.
2.2 RIGHT OF FIRST REFUSAL.
(a) If any Shareholder proposes to Transfer any Shares owned by
him to a third party (a "Proposed Transfer"), then such Shareholder (the
"Offering Shareholder") shall first offer such Shares to the Company by sending
a written offer (the "Offer") to the Company, and by sending a copy of the Offer
to each other Shareholder, in each case as provided in Section 6.1. The Offer
shall set forth (i) the number of Shares subject to the Proposed Transfer (the
"Offered Shares"), (ii) a description of the Proposed Transfer, (iii) the
identity of each prospective purchaser (the "Transferee"), and (iv) any and all
other material terms (the "Terms") of the Proposed Transfer, including without
limitation, the purchase price per Offered Share offered by the Transferee, the
manner in which such purchase price shall be paid and the description of any
non-cash consideration.
(b) Within fifteen (15) business days after receipt of the Offer
(the "Offer Date") the Company may elect to purchase all, but not less than all,
of the Offered Shares. The Company shall exercise its election to purchase the
Offered Shares by giving written notice to the Offering Shareholder specifying a
date for the closing of the purchase, which date shall not be more than forty
(40) days after the Offer Date.
Page 4
(c) The Company, if it elects to accept the Offer, shall purchase
the Offered Shares at the price and upon the Terms set forth in the Offer. At
the closing of such purchase, the Company shall deliver the consideration for
the Offered Shares and the Offering Shareholder shall deliver to the Company
stock certificates representing the Offered Shares duly endorsed in blank or
accompanied by appropriate stock powers duly executed in blank.
(d) If the Offered Shares are not purchased by the Company
pursuant to this Section 2.2, then the Offering Shareholder shall comply with
the provisions of Section 2.3. If the Offering Shareholder does not consummate
the sale of the Offered Shares to the Transferee within ninety (90) days after
the Offer Date, then the Offered Shares shall again become subject to all of the
restrictions of this Agreement.
(e) The right of first refusal established pursuant to this
Section 2.2 shall not apply to a Transfer of Shares by Antinori to Lawrence D.
Duckworth pursuant to Section 2 of that Amendment to Letter Agreement dated as
of even date herewith between them.
2.3 RIGHT OF PARTICIPATION IN SALES.
(a) If the Offered Shares are not purchased by the Company
pursuant to Section 2.2 above, then all Shareholders other than the Offering
Shareholder (each, a "Non-offering Shareholder," and together, the "Non-offering
Shareholders") shall be entitled to participate in the Proposed Transfer in the
manner and to the extent set forth in this Section 2.3. Each Non-offering
Shareholder who desires to participate in the Proposed Transfer shall give
written notice of such desire to the Offering Shareholder within twenty (20)
business days following the Offer Date. Each Non-offering Shareholder who gives
such notice shall be entitled to sell in the Proposed Transfer, in accordance
with the Terms, a portion of the Shares then held by the Non-offering
Shareholder as described in subsection (b) below. The Offering Shareholder
shall assign so much of his or her interest in any instrument or agreement
governing the Proposed Transfer as each electing Non-offering Shareholder shall
be entitled to and shall request hereunder, and each Non-offering Shareholder
shall assume such part of the obligations of the Offering Shareholder under such
instrument or agreement as it shall relate to the sale of securities by the
Offering Shareholder.
(b) Each Non-offering Shareholder may sell up to a Pro Rata
portion of the Offered Shares in the Proposed Transfer if the same are not sold
pursuant to Section 2.2. As to a Non-offering Shareholder, "Pro Rata" means in
the proportion of the number of Shares owned by such Non-offering Shareholder
bears to the aggregate number of Shares owned by all Shareholders as of the
Offer Date; provided, however, that if Carreker is the Offering Shareholder,
then as to a Non-offering Shareholder "Pro Rata" means in the proportion of the
number of Shares owned by such Non-offering Shareholder bears to the aggregate
number of Shares owned as of the Offer Date
Page 5
by all Shareholders and David Sias (if David Sias elects to exercise his
right to sell Shares in the Proposed Transfer pursuant to the provisions of
that certain Stock Purchase Agreement dated as of November 5, 1993 among the
Company, David Sias and Carreker).
(c) To the extent that a Non-offering Shareholder who is
otherwise entitled to does not elect to sell all of his or her Pro Rata portion
of the Offered Shares in the Proposed Transfer pursuant to this Section 2.3,
then the Offering Shareholder may sell the Offered Shares (less that number of
Shares sold in the Proposed Transfer by Non-offering Shareholders, if any) to
the Transferee in accordance with the Terms for a period of ninety (90) days
following the Offer Date. If the Offering Shareholder fails to make any such
sale within ninety (90) days after the Offer Date, then such Offered Shares
shall again become subject to all of the restrictions of this Agreement.
(d) The right of participation established by this Section 2.3
shall not apply in respect of the redemption by the Company of Shares held by a
Shareholder out of either of the two escrows established pursuant to the Merger
Agreement.
III. REGISTRATION RIGHTS
III.1. DEMAND REGISTRATION.
(a) At any time from and after one year after the closing of a
Qualified Public Offering, Shareholders holding not less than fifty percent
(50%), on a fully-diluted basis, of the capital stock of the Company entitled to
vote in the election of directors (the "Selling Shareholders") may by written
notice (a "Demand Notice") to the Company require the registration under the
Securities Act of all or part of the Shares held by the Selling Shareholders (a
"Demand Registration"); provided, however, that the amount of Shares to be
offered for sale under a Demand Registration (the "Registrable Shares") shall
have either a fair market value of $10 million or more. The Company shall not
be obligated to effect more than two (2) Demand Registrations under this Section
3.1, plus two (2) Demand Registrations as to which the Demand Notice is given by
Selling Shareholders that include Antinori (on behalf of the ASI Shareholders,
as provided in Section 3.1(h)). No Demand Notice may be given prior to six
months after the effective date of the immediately preceding Demand
Registration.
(b) Demand Registrations shall be on such appropriate
registration form of the Commission (i) as shall be selected by the Company and
as shall be reasonably acceptable to the Selling Shareholders and (ii) as shall
permit the Transfer of the Registrable Shares in accordance with the intended
method of Transfer specified by the Selling Shareholders in their Demand Notice.
(c) The Company will file a Registration Statement relating to
any Demand
Page 6
Registration within sixty (60) days of the date of the applicable Demand
Notice and will use all reasonable efforts to cause the same to be declared
effective by the Commission within one hundred twenty (120) days of the date
of such Demand Notice. If any Demand Registration is requested to be
effected as a "shelf" registration, then the Company will keep the
Registration Statement filed in respect thereof effective for a period of up
to four (4) months from the date on which the Commission declares such
Registration Statement effective, or such shorter period that will terminate
when all Registrable Shares covered by such Registration Statement have been
sold pursuant to such Registration Statement.
(d) A registration requested pursuant to this Section 3.1 will
not count as a Demand Registration (i) unless a Registration Statement with
respect thereto has become effective, (ii) if after such Registration Statement
has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Commission or other governmental
agency or court not due to any fault of the Selling Shareholders, (iii) if,
solely due to the fault of the Company, the conditions to closing specified in
the purchase agreement or underwriting agreement entered into in connection with
such registration are not satisfied, or (iv) if the Registration Statement is
withdrawn because the Selling Shareholders determine, with the Company's prior
written consent, that the price to be received in connection with the offering
of the Registrable Shares is inadequate. Subject to the provision relating to
the payment of costs and expenses set forth in Section 3.5, the Company agrees
to withdraw any Registration Statement filed pursuant to this Section 3.1 upon
the request of the Selling Shareholders who gave a Demand Notice in respect of
same.
(e) If the offering of Registrable Shares pursuant to a Demand
Registration is to be an underwritten offering, then the Selling Shareholders
shall select the managing underwriters in connection with such offering and any
additional investment bankers to be used in connection with the offering,
subject to the approval of the Company, which shall not be unreasonably
withheld.
(f) If the managing underwriter or underwriters of an
underwritten offering to which such Demand Registration relates advises the
Selling Shareholders that the total amount of Registrable Shares intended to be
included in such Demand Registration is in the aggregate such as to materially
and adversely affect the success of such offering, then the number of
Registrable Shares to be included in such Demand Registration will, if
necessary, be reduced and there will be included in such underwritten offering
the number of Registrable Shares that, in the opinion of such managing
underwriter or underwriters, can be sold without materially and adversely
affecting the success of such offering, allocated PRO RATA among the Selling
Shareholders on the basis of the amount of Registrable Shares requested to be
included therein by each such Selling Shareholder.
(g) The Company will be entitled to postpone the filing of any
Demand Registration for a reasonable period of time not in excess of 120
calendar days, if the Company
Page 7
determines, in the good faith exercise of the business judgment of its board
of directors, that such registration and offering could materially interfere
with BONA FIDE financing plans of the Company or would require disclosure of
information the premature disclosure of which could adversely affect the
Company. If the Company postpones the filing of a Registration Statement,
then it will promptly notify the Selling Shareholders in writing when the
events or circumstances permitting such postponement have ended.
(h) For purposes of this Section 3.1, the ASI Shareholders
hereby irrevocably consent to the appointment of Antinori, as representative of
the ASI Shareholders, and as attorney-in-fact for and on behalf of each ASI
Shareholder, for purposes of giving a Demand Notice.
III.2. INCIDENTAL REGISTRATION.
(a) If the Company proposes to file a Registration Statement
under the Securities Act on Form S-1, S-2 or S-3 (or any successor form)
relating to any offering of Shares to be offered for its own account for cash
(other than a Demand Registration or a Registration Statement filed in
connection with an exchange offer or offering of securities solely to the
Company's existing shareholders), then the Company shall (i) provide prompt
written notice of the proposed offering to the Shareholders, include in such
written notice a description of the intended method of distribution, and
(ii) use all reasonable efforts to register pursuant to such Registration
Statement (an "Incidental Registration") such number of Shares ("Registrable
Shares") as shall be specified in a written request by a Shareholder (each, a
"Selling Shareholder") made within ten (10) days after such written notice from
the Company, subject to subsection (b) below.
(b) Notwithstanding any other provision of this Section 4.2, if
a registration pursuant to this Section 4.2 involves a firm commitment,
underwritten offering of the securities so being registered, and if the managing
underwriter of such offering informs the Company and the Selling Shareholders by
letter of its belief that marketing factors require a limitation of the number
of shares to be underwritten, then the Company may limit the number of
Registrable Shares to be included in the registration and underwriting, with
first priority being given to Shares proposed to be issued by the Company, and
second priority being given to Shares proposed to be sold by a Selling
Shareholder, and, if more than one Selling Shareholder exists, then by the
Selling Shareholders on a pro rata basis (determined by the inclusion of any
Shares held by David Sias, in the manner provided in Section 2.3(b), if J.D.
Carreker is a Selling Shareholder and if David Sias elects to exercise his right
to sell Shares in the Proposed Transfer pursuant to the provisions of that
certain Stock Purchase Agreement dated as of November 5, 1993 among the Company,
David Sias and Carreker).
(c) Notwithstanding the foregoing, if, at any time after giving
written notice to the Selling Shareholders of its proposal to file a
Registration Statement pursuant to subsection (a)
Page 8
above and prior to the effective date of such Registration Statement, the
Company shall determine for any reason not to register the Shares proposed to
be covered thereby, then the Company may, at its election, give written
notice of such determination to the Selling Shareholders and thereupon shall
be relieved of its obligation to register any Registrable Shares in
connection with such registration (but not from its obligation to pay certain
expenses in connection therewith as provided in Section 3.5), without
prejudice, however, to the rights the Shareholders otherwise may have to
request that such registration be effected under Section 3.1. No
registration effected under this Section shall relieve the Company of its
obligation to effect any Demand Registration under Section 3.1
III.3. COOPERATION. Each Selling Shareholder hereby agrees to cooperate
and provide all information necessary to assure that any Registration Statement
required hereunder shall be filed promptly and be declared effective by the
Commission as soon as reasonably practicable after the filing thereof.
III.4. RESTRICTIONS ON PUBLIC SALE BY SHAREHOLDERS. Each Shareholder
agrees not to effect any public sale or distribution of the Registrable Shares,
including a sale pursuant to Rule 144 under the Securities Act, during the
twenty (20) days prior to, and during the one hundred eighty (180) day period
beginning on, the effective date of a Registration Statement (except as part of
such registration) if and to the extent requested by the Company in the case of
a non-underwritten offering or if and to the extent requested by the managing
underwriter in the case of an underwritten offering.
III.5. REGISTRATION EXPENSES. In connection with each Demand
Registration and each Incidental Registration, the Company shall, except as
otherwise specifically provided, pay all expenses incurred in connection with
such registration, including without limitation (a) filing fees with the
Commission; (b) fees and expenses of compliance with the securities or "blue
sky" laws in connection with "blue sky" registrations or qualifications of the
Registrable Shares, (c) preparation and printing expenses, (d) fees and expenses
of counsel and independent certified public accountants for the Company;
(e) fees and expenses of one counsel for the Selling Shareholders, which counsel
shall be designated by the Selling Shareholders in the written notice sent to
the Company requesting the Demand Registration or Incidental Registration and
shall be subject to the approval by the Company, and (g) fees and expenses of
any additional experts retained by the Company in connection with such
registration. The Selling Shareholders shall pay any underwriting discounts or
commissions or brokers' fees or commissions attributable to the sale of the
Registrable Shares. Notwithstanding the foregoing, if the Selling Shareholders
request the Company to withdraw a Registration Statement for a Demand
Registration that has become effective, then the Selling Shareholders agree to
reimburse the Company an amount equal to fifty percent (50%) of the total fees
and expenses incurred by the Company up to the time of the withdrawal.
Page 9
III.6. INDEMNIFICATION BY THE COMPANY. The Company agrees to, and hereby
does, indemnify and hold harmless each Selling Shareholder from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or prospectus relating to the Registrable Shares or any amendment or
supplement thereto, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or when necessary to make
the statements therein not misleading, and will reimburse each Selling
Shareholder for any legal or other out-of-pocket expenses reasonably incurred in
connection with investigating or defending any such losses, claims, damages or
liabilities (or any proceeding in respect thereof), except insofar as such
losses, claims, damages or liabilities are caused by such untrue statement or
omission or alleged untrue statement or omission based upon and in conformity
with information furnished to the Company by or on behalf of the Selling
Shareholder expressly for use therein.
III.7. INDEMNIFICATION BY THE SELLING SHAREHOLDERS. Each Selling
Shareholder severally, but not jointly, agrees to and hereby does, indemnify and
hold harmless the Company, its officers and directors, and each person, if any,
who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended,
to the same extent as the foregoing indemnity from the Company to the Selling
Shareholders, but only with reference to information furnished by or on behalf
of such Selling Shareholders, expressly for use in any Registration Statement or
prospectus relating to the Registrable Shares, or any amendment or supplement
thereto.
III.8. ASSIGNMENT. Subject to the provisions of this Agreement, the
right to cause the Company to register Registrable Shares under this Article may
be assigned to any assignee of Registrable Shares or transferred to any
successor of the Shareholders.
III.9. CROW FAMILY HOLDINGS, L.P. Notwithstanding anything herein to the
contrary, Article III of this Agreement shall be subject to and construed so as
to give effect to and not create any conflict with, Section 9 (captioned "Right
of Inclusion") of that certain Stock Purchase Agreement dated as of January 10,
1997 by and between Crow Family Partnership, L.P. and The Carreker Group, Inc.
III.10. CESSATION OF STATUS AS REGISTRABLE SHARES. Notwithstanding any
provision herein to the contrary, Shares shall cease to be Registrable Shares
(a) if they are effectively registered under the Securities Act and disposed
of in accordance with the Registration Statement wherein they are registered,
(b) if they are saleable by the Shareholder thereof pursuant to Rule 144(k),
or (c) they are distributed to the public by the Shareholder thereof pursuant
to Rule 144.
Page 10
IV. GOVERNANCE
IV.1. BOARD REPRESENTATION. The board of directors of the Company will
be comprised of such number of directors as is determined by the board of
directors or otherwise as provided in the constituent documents of the Company.
At each annual shareholders meeting of the Company, and at each special
shareholders meeting of the Company called for the purpose of electing directors
of the Company, and at any time at which shareholders of the Company shall have
the right to, or shall, vote for directors of the Company, then, and in each
event, the Shareholders hereby agree to vote all Shares owned by them for the
nomination and election of a board of directors that will include the following:
(i) Antinori and one other individual designated by him;
(ii) Carreker and three other individuals designated by him; and
(iii) one individual designated by Science Applications International
Corporation ("SAIC") (or such greater number of individuals as SAIC shall be
entitled to designate pursuant to that certain Shareholders Agreement dated as
of October 10, 1996 among the Company, Carreker and SAIC).
Notwithstanding any other provision of this Agreement, however, no Shareholder
will be required to cause the election of any designee, or to support the
continued service of any director, if the board of directors of the Company
determines in good faith, based as to legal matters on the advice of counsel,
that the election or continued service of such designee would be inconsistent
with the fiduciary duty owed by the board of directors of the Company to the
shareholders of the Company, provided, however, that the foregoing shall not
detract from the right of an individual who designated such designee to nominate
another designee for such position.
In addition, if a person entitled to designate another person for election
as a director of the Company desires to cause his designee to be removed from
the board of directors of the Company, then the Shareholders hereby agree to, if
necessary, but subject to all applicable requirements of law, use their best
efforts to take or cause to be taken all such action as may be required to
remove such designee from the board of directors of the Company.
IV.2. CASH SALES OF STOCK TO AFFILIATES. The Shareholders hereby agree
to use their best efforts to cause the Company to amend its Bylaws to require an
affirmative vote of at least the Requisite Number of directors to approve an
issuance for cash of new shares of capital stock of the Company to an Affiliate;
provided, however, that such amendment shall not require such affirmative vote
to approve the issuance of capital stock upon the exercise of a stock option or
options or to approve the grant of a stock option or options. The Requisite
Number as used herein shall mean the total number of directors of the Company
then constituting its board of directors,
Page 11
less two. This Section 4.2 shall not apply in respect of sale of capital
stock to Science Applications International Corporation resulting from its
exercise of its contractual preemptive right as set forth in Section 2.1
(captioned "SAIC Right of First Refusal on Future Securities") of that
certain Shareholder Agreement among the Company, Carreker and Science
Applications International Corporation, as the same may be amended from time
to time.
V. TERMINATION OF PROVISIONS
V.1. TERMINATION. Except for the provisions of Article II and Article
IV, which shall terminate immediately prior to the first consummation of a
Qualified Public Offering (and to which Article II shall not apply in respect of
a Qualified Public Offering), this Agreement shall remain in effect until
terminated by the agreement of the Company, Antinori (acting as representative
and attorney-in-fact for the ASI Shareholders) and Carreker. This Agreement
shall also terminate upon the closing of the sale of all or substantially all of
the assets of the Company, the consolidation or merger of the Company in which
the Company is not the surviving corporation or the liquidation of the Company
in accordance with the Texas Business Corporation Act.
VI. MISCELLANEOUS
VI.1. NOTICES. Any and all notices permitted or required to be given
under this Agreement must be in writing. Notices will be deemed given (i) when
personally received or when sent by facsimile transmission (to the receiving
party's facsimile number), (ii) on the first business day after having been sent
by commercial overnight courier with written verification of receipt, or
(iii) on the third business day after having been sent by registered or
certified mail from a location on the United States mainland, return receipt
requested, postage prepaid, whichever occurs first, at the address set forth
below or at any new address, notice of which will have been given in accordance
with this Section 6.1:
(i) If to the Company: The Carreker Group, Inc.
14001 North Dallas Parkway, Suite 1100
Dallas, Texas 75240
Attention: J.D. Carreker, Chief Executive Officer
Phone: (972) 458-1981
Fax: (972) 458-2567
with a copy to:
Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Page 12
Dallas, Texas 75201
Attention: Russell F. Coleman
Phone: (214) 740-8686
Fax: (214) 740-8800
(ii) If to an ASI Shareholder: c/o Ronald R. Antinori
238 15th Street, #12
Atlanta, Georgia 30309
Phone: (404) 876-2762
with a copy to:
Morris, Manning & Martin
A Limited Liability Partnership
3343 Peachtree Road, N.E., Suite 1600
Atlanta, Georgia 30326
Attention: Charles R. Beaudrot, Jr.
Phone: (404) 233-7000
Fax: (404) 365-9532
(iii) If to Carreker: J.D. Carreker
4321 Overhill
Dallas, Texas 75205
Phone: (214) 528-8303
with a copy to:
Locke Purnell Rain Harrell
(A Professional Corporation)
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
Attention: Russell F. Coleman
Phone: (214) 740-8686
Fax: (214) 740-8800
VI.2. AMENDMENTS. This Agreement, including any attachments, contains
the entire agreement and supersedes and replaces all prior agreement by and
among the Company and the Shareholders regarding its subject matter. This
Agreement may not be changed or modified in whole or in part except by a writing
signed by the party against whom enforcement of the change or modification is
sought. Notwithstanding the prior sentence, Sections 3.1 and Section 4.1 may be
Page 13
amended by Antinori and Carreker only, without the consent or agreement of any
other Shareholder.
VI.3. SUCCESSORS AND ASSIGNS. Except as provided in Section 3.8, this
Agreement will not be assignable by any party without the prior written consent
of all other parties.
VI.4. GOVERNING LAW. The laws of the State of Texas (without regard to
its choice of law principles that might apply the law of another jurisdiction)
will govern the validity of this Agreement, the construction of its terms, and
the interpretation and enforcement of the rights and duties of the parties.
VI.5. NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such provisions
on any other occasion.
VI.6. SEVERABILITY. The parties hereto recognize that the limitations
contained in this Agreement are reasonably and properly required for the
adequate protection of their interests. If for any reason a court of competent
jurisdiction or an arbitrator in a binding arbitration proceeding finds any
provision of this Agreement, or the application thereof, to be unenforceable,
then the remaining provisions of this Agreement will be interpreted so as best
to reasonably effect the intent of the parties. The parties further agree that
the court or arbitrator shall replace any such invalid or unenforceable
provisions with valid and enforceable provisions designed to achieve, to the
extent possible, the business purposes and intent of such unenforceable
provisions.
VI.7. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose signature appears
thereon and all of which together will constitute one and the same instrument.
This Agreement will become binding when one or more counterparts hereof,
individually or taken together, bear the signatures of both parties reflected
hereon as signatories.
Page 14
VI.8. DISPUTE RESOLUTION.
(a) ARBITRATION OF DISPUTES. Any dispute under this Agreement
shall be resolved by arbitration in Dallas, Texas and, except as herein
specifically stated, in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA RULES") then in effect. However, in all
events, these arbitration provisions shall govern over any conflicting rules
that may now or hereafter be contained in the AAA Rules. Any judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
over the subject matter thereof. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve such dispute.
(b) COMPENSATION OF ARBITRATOR. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be determined by the parties or by the American
Arbitration Association, but based upon reasonable hourly or daily consulting
rates for the arbitrator if the parties are not able to agree upon his or her
rate of compensation.
(c) SELECTION OF ARBITRATOR. The American Arbitration
Association will have the authority to select an arbitrator from a list of
arbitrators who are lawyers familiar with Texas corporation law and Texas
contract law; provided, however, that such lawyers cannot work for a firm then
performing services for either party, that each party will have the opportunity
to make such reasonable objection to any of the arbitrators listed as such party
may wish and that the American Arbitration Association will select the
arbitrator from the list of arbitrators as to whom neither party makes any such
objection. If the foregoing procedure is not followed, then each party will
choose one person from the list of arbitrators provided by the American
Arbitration Association (provided that such person does not have a conflict of
interest), and the two persons so selected will select from the list provided by
the American Arbitration Association the person who will act as the arbitrator.
(d) PAYMENT OF COSTS. The parties to the arbitration will each
pay an equal share of the initial compensation to be paid to the arbitrator in
any such arbitration and of the costs of transcripts and other normal and
regular expenses of the arbitration proceedings; provided, however, that the
prevailing party in any arbitration will be entitled to an award of attorneys'
fees and costs, and all costs of arbitration, including those provided for
above, will be paid by the non-prevailing party or parties, and the arbitrator
will be authorized to make such determinations.
(e) BURDEN OF PROOF. For any dispute submitted to arbitration,
the burden of proof will be as it would be if the claim were litigated in a
Texas judicial proceeding.
Page 15
(f) AWARD. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of law
and a written opinion setting forth the basis and reasons for any decision
reached and will deliver such documents to each party to this Agreement along
with a signed copy of the award.
(g) TERMS OF ARBITRATION. The arbitrator chosen in accordance
with these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
(h) NATURE OF REMEDY. Except as specifically otherwise provided
in this Agreement, arbitration will be the sole and exclusive remedy of the
parties for any dispute arising out of this Agreement.
(i) EQUITABLE REMEDY. Notwithstanding the provisions of this
Section 6.8 and the arbitration provided for herein, actions initiated or
maintained by the parties for injunctive or similar equitable relief may not be
subject to arbitration and may be brought by the parties in any court that has
jurisdiction, and should the party bringing any such action prevail, all costs
and expenses (including legal fees) shall be borne by the party against whom
such action was brought.
VI.9. LEGEND. A legend referring to the restrictions imposed by this
Agreement and otherwise complying with Article 2.30 of the Texas Business
Corporation Act may be placed upon any certificate issued to evidence Shares.
[THE BALANCE OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
Page 16
IN WITNESS WHEREOF, the parties have executed this Agreement to be
effective as of the date first set forth above.
THE CARREKER GROUP, INC. SHAREHOLDERS
By:
--------------------------- -----------------------------------
J.D. Carreker J.D. Carreker
Chairman and Chief Executive Officer
-----------------------------------
Name: Connie Carreker
Spouse of J.D. Carreker
-----------------------------------
Ronald R. Antinori
-----------------------------------
Name: Susan Antinori
Spouse of Ronald R. Antinori
-----------------------------------
Susan Antinori
-----------------------------------
Name: Ronald R. Antinori
Spouse of Susan Antinori
-----------------------------------
Lawrence D. Duckworth
-----------------------------------
Name: Sharon Duckworth
Spouse of Lawrence D. Duckworth
-----------------------------------
Michael Israel
Page 17
EXHIBITS L-1, L-2, L-3, L-4, L-5 AND L-6
EXHIBIT L-1
THE CARREKER GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
(CLASS B NON-VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this ________ day of January, 1997
by and among The Carreker Group, Inc., a Texas corporation (the "Company") and
Lawrence D. Duckworth ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has adopted,
and the shareholders of the Company have approved, The Carreker Group, Inc.
Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock options by
the Compensation Committee of the Board or any successor committee thereto (the
"Committee") to officers and key employees of the Company or any subsidiary of
the Company and its subsidiaries to purchase shares of the Company's Class B
Non-Voting Common Stock, no par value (the "Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is eligible
for a grant of incentive stock options under the Plan, and has determined that
it would be in the best interest of the Company to grant the incentive stock
option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an option
(the "Option") to purchase 15,720 shares of Stock (the "Option Shares") at a
price of $19.07 per share (the "Exercise Price"), representing the Fair Market
Value per Share (or, if Employee is the owner of stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, or its parent or subsidiary corporation, if any, 110% of the Fair
Market Value per
Page 1
Share) as of the Date of Grant as determined by the Committee in accordance
with the Plan. The Option is intended by the parties hereto to be, and shall
be treated as, an incentive stock option (as such term is defined under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code")).
2. VESTING. The Option shall vest and become exercisable during the
two-year period following the date hereof (herein the "Vesting Period") as
follows:
(a) The Option shall be immediately vested and exercisable with
respect to one-third (1/3) of the Option Shares on the date hereof;
(b) The Option shall vest and shall be exercisable with respect to
an additional one-third (1/3) of the Option Shares on the first anniversary date
of this Agreement, provided Employee is employed by the Company or one of its
subsidiaries as of such date and has been continuously employed during the term
of this Agreement, and further provided that the Option has not otherwise
terminated in accordance with the terms of Section 4 hereof; and
(c) The Option shall vest and shall be exercisable with respect to
the remaining one-third (1/3) of the Option Shares on the second anniversary
date of this Agreement, provided Employee is employed by the Company or one of
its subsidiaries as of such date and has been continuously employed by the
Company or one of its subsidiaries during the term of this Agreement, and
further provided that the Option has not otherwise terminated in accordance with
the terms of Section 4 hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the Company
written notice (the "Notice") of intent to exercise. The Notice shall specify
the number of Option Shares to be exercised (which shall be an amount no less
than 50 shares or the number of shares as to which the Option is then
exercisable, if less than 50) and the date of the proposed exercise thereof (the
"Exercise Date"), which date shall be at least ten (10) but no more than thirty
(30) calendar days after the giving of such notice unless an earlier time shall
have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of
Page 2
the Exercise Price shall be made on or before the Exercise Date in cash or
certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an agreement restricting the
transferability of the Option Shares substantially in the form of Exhibit A
attached hereto (the "Right of First Refusal Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon full
payment for such Option Shares. Such certificate or certificates shall bear a
restrictive legend in the form set forth in the Transfer Restriction Agreement.
The obligation of the Company to deliver the Option Shares shall, however, be
subject to the condition that if at any time the Committee shall determine in
its discretion that the listing, registration or qualification of the Option or
the Option Shares upon any securities exchange or under any state or federal
law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition of, or in connection with, the Option or
the issuance or purchase of Stock thereunder, the Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Transfer Restriction Agreement, the Employee's right to purchase such Option
Shares may be terminated by the Company upon written notice to Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void on the earliest to occur of the following
dates as follows:
(a) the tenth (10th) anniversary date of the date hereof, or, if
Employee is the owner of stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or its parent or
subsidiary corporation, if any, the fifth (5th) anniversary date of the date
hereof (the "Expiration Date");
(b) in the event Employee's employment with the Company or any
subsidiary is terminated, other than by reason of death or Disability (as
defined below) or termination for Cause (as defined below), then (i) this Option
shall continue to vest
Page 3
and shall be exercisable as though Employee's employment with the Company
continued for a period of two (2) years following the date of termination of
employment, and (ii) this Option shall terminate and shall no longer be
exercisable after the passage of two (2) years from the date of termination
of employment, but in no event later than the Expiration Date (and further
provided that in the event this Option is exercised following the expiration
of three (3) months from the date of termination of employment, the portion
of this Option so exercised will be treated as a non-qualified option as
required by the Code). In such a case, the Employee's only rights hereunder
shall be those which have been properly exercised prior to the termination or
earlier expiration of this Option;
(c) in the event Employee's employment with the Company or any
subsidiary is terminated for Cause (as defined below), then no further
installments of this Option shall vest or otherwise become exercisable, if such
termination occurs during the Vesting Period, and this Option shall terminate
and shall no longer be exercisable effective on the date of such termination.
For purposes hereof, the term "Cause" shall mean conduct involving one or more
of the following as determined by the Committee in its reasonable discretion:
(i) the substantial and continuing failure of the Employee, after notice
thereof, to render services to the Company or any subsidiary in accordance with
the terms or requirements of the Employee's employment with the Company or any
subsidiary; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or
breach of fiduciary duty to the Company or any subsidiary; (iii) the commission
of an act of embezzlement or fraud; (iv) deliberate disregard of the rules or
policies of the Company which results in direct or indirect loss, damage or
injury to the Company or any subsidiary; (v) the unauthorized disclosure of any
trade secret or confidential information of the Company or any subsidiary; or
(vi) the commission of an act which constitutes unfair competition with the
Company or any subsidiary or which induces any customer or supplier to break a
contract with the Company or any subsidiary;
(d) in the event Employee dies while employed with the Company or
any subsidiary, this Option may be exercised, to the extent vested on the date
of his death, by the Employee's executor, estate, personal representative or
beneficiary, as the case may be, and to whom this Option is transferred by
operation of law, at any time within one (1) year after the date of death, but
not later than the Expiration Date. Following the expiration of such one-year
period, this Option shall terminate;
(e) in the event Employee's employment with the Company or any
subsidiary is terminated by reason of his Disability (which shall mean
"permanent and total disability" as
Page 4
defined in Section 22(e)(3) of the Code, or any successor statute), this
Option may be exercised, to the extent vested on the date of such Disability,
at any time within one (1) year after the date of such Disability, but not
later than Expiration Date. Following the expiration of such one-year
period, this Option shall terminate;
(f) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(g) the date the Company gives written notice to Employee of
Employee's failure to pay the Exercise Price as provided in Section 3(e) hereof.
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event of
a reorganization, recapitalization, change of shares, stock split, spin-off,
stock dividend, reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of capital stock of the Company, the Committee shall make such
adjustment as it deems appropriate in the number and kind of shares of Stock
subject to the Option or in the Exercise Price; PROVIDED HOWEVER, that no such
adjustment shall give the Employee any additional benefits under the Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of this
Agreement during the term hereof and prior to the termination of the Option in
accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section 6,
the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary of
another corporation), (b) a dissolution of the Company, (c) a transfer of all or
substantially all of the assets or shares of stock of the Company in one
transaction or a series of related transactions to one or more other persons or
entities, or (d) a distribution of the Company's equity securities to the public
pursuant to a registration statement filed under the Securities Act of 1933, as
amended, or any successor statute (any such transaction being referred to herein
as a "Capital Transaction"), then the Company shall provide Employee with thirty
(30) days advance written notice of such transaction and Employee, without the
necessity of any further action by the Committee, shall be entitled to purchase,
prior to the effective date of such Capital Transaction and in addition to the
number of Option Shares which Employee shall be entitled to purchase as
determined under Section 2 hereof, the number of remaining Option Shares which
have not then become vested. The unexercised portion of the Option shall be
deemed cancelled and terminated as of the effective date
Page 5
of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir, personal
representative or other person shall be, or shall have any of the rights and
privileges of, a shareholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable except,
in case of the death of the Employee, by will or the laws of descent and
distribution, nor shall the Option be subject to attachment, execution or other
similar process. In the event of (a) any attempt by Employee to alienate,
assign, pledge, hypothecate or otherwise dispose of the Option, except as
provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Company may terminate
the Option by notice to the Employee and it shall thereupon become null and
void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor its
exercise shall be construed as granting to the Employee any right with respect
to continuance of employment. Except as may otherwise be limited by a written
agreement between the Company or one of its subsidiaries, as the case may be,
and the Employee, the right of the Company (or one of its subsidiaries) to
terminate the Employee's employment at any time is specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i) if
the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change in
the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth in
the preceding sentence, the consent of Employee shall be required in order to
amend any other provision of this Agreement. Notwithstanding the foregoing, the
Committee may, in its sole discretion, accelerate the exercisability of the
Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee
Page 6
shall be addressed to Employee at the current address shown on the payroll
records of the Company. Any notice shall be deemed to be duly given if and
when properly addressed and posted by registered or certified mail, postage
prepaid.
Page 7
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and conditions set forth in this Agreement are in
conflict or are inconsistent with the terms of the Plan, the terms of the Plan
shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as the
corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof (including but not limited to that certain agreement dated
October 24, 1995 between Antinori Software, Inc. and Employee, which is hereby
terminated effective as of the date hereof).
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
18. GEORGIA SECURITIES ACT. THESE SECURITIES HAVE BEEN ISSUED OR SOLD
IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES
ACT OF 1973 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
Employee acknowledges that the foregoing does not preclude the Company from
relying on other applicable exemptions from registration under the Georgia
Securities Act.
Page 8
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE CARREKER GROUP, INC.
By:
------------------------------ ----------------------------------
Its:
-------------------------------
EMPLOYEE
------------------------------ --------------------------------------
Lawrence D. Duckworth
Page 9
EXHIBIT L-2
THE CARREKER GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
(CLASS B NON-VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this ________ day of January, 1997
by and among The Carreker Group, Inc., a Texas corporation (the "Company") and
Michael Israel ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has adopted,
and the shareholders of the Company have approved, The Carreker Group, Inc.
Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock options by
the Compensation Committee of the Board or any successor committee thereto (the
"Committee") to officers and key employees of the Company or any subsidiary of
the Company and its subsidiaries to purchase shares of the Company's Class B
Non-Voting Common Stock, no par value (the "Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is eligible
for a grant of incentive stock options under the Plan, and has determined that
it would be in the best interest of the Company to grant the incentive stock
option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an option
(the "Option") to purchase 15,720 shares of Stock (the "Option Shares") at a
price of $19.07 per share (the "Exercise Price"), representing the Fair Market
Value per Share (or, if Employee is the owner of stock possessing more than 10
percent of the total combined voting power of all classes of stock of the
Company, or its parent or subsidiary corporation, if any, 110% of the Fair
Market Value per Share) as of the Date of Grant as determined by the Committee
in accordance with the Plan. The Option is intended by the parties hereto to
be, and shall be treated as, an incentive stock option (as such term is defined
under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code")).
1
2. VESTING. The Option shall vest and become exercisable during the
two-year period following the date hereof (herein the "Vesting Period") as
follows:
(a) The Option shall be immediately vested and exercisable with
respect to one-third (1/3) of the Option Shares on the date hereof;
(b) The Option shall vest and shall be exercisable with respect to
an additional one-third (1/3) of the Option Shares on the first anniversary date
of this Agreement, provided Employee is employed by the Company or one of its
subsidiaries as of such date and has been continuously employed during the term
of this Agreement, and further provided that the Option has not otherwise
terminated in accordance with the terms of Section 4 hereof; and
(c) The Option shall vest and shall be exercisable with respect to
the remaining one-third (1/3) of the Option Shares on the second anniversary
date of this Agreement, provided Employee is employed by the Company or one of
its subsidiaries as of such date and has been continuously employed by the
Company or one of its subsidiaries during the term of this Agreement, and
further provided that the Option has not otherwise terminated in accordance with
the terms of Section 4 hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the Company
written notice (the "Notice") of intent to exercise. The Notice shall specify
the number of Option Shares to be exercised (which shall be an amount no less
than 50 shares or the number of shares as to which the Option is then
exercisable, if less than 50) and the date of the proposed exercise thereof (the
"Exercise Date"), which date shall be at least ten (10) but no more than thirty
(30) calendar days after the giving of such notice unless an earlier time shall
have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of the Exercise
Price shall be made on or before the Exercise Date in cash or certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an
2
agreement restricting the transferability of the Option Shares substantially
in the form of Exhibit A attached hereto (the "Right of First Refusal
Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon full
payment for such Option Shares. Such certificate or certificates shall bear a
restrictive legend in the form set forth in the Right of First Refusal
Agreement. The obligation of the Company to deliver the Option Shares shall,
however, be subject to the condition that if at any time the Committee shall
determine in its discretion that the listing, registration or qualification of
the Option or the Option Shares upon any securities exchange or under any state
or federal law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the Option
or the issuance or purchase of Stock thereunder, the Option may not be exercised
in whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Right of First Refusal Agreement, the Employee's right to purchase such
Option Shares may be terminated by the Company upon written notice to Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised, shall
terminate and become null and void on the earliest to occur of the following
dates as follows:
(a) the tenth (10th) anniversary date of the date hereof, or, if
Employee is the owner of stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or its parent or
subsidiary corporation, if any, the fifth (5th) anniversary date of the date
hereof (the "Expiration Date");
(b) in the event Employee's employment with the Company or any
subsidiary is terminated, other than by reason of death or Disability (as
defined below) or termination for Cause (as defined below), then (i) this Option
shall continue to vest and shall be exercisable as though Employee's employment
with the Company continued for a period of two (2) years following the date
3
of termination of employment, and (ii) this Option shall terminate and shall
no longer be exercisable after the passage of two (2) years from the date of
termination of employment, but in no event later than the Expiration Date
(and further provided that in the event this Option is exercised following
the expiration of three (3) months from the date of termination of
employment, the portion of this Option so exercised will be treated as a
non-qualified option as required by the Code). In such a case, the
Employee's only rights hereunder shall be those which have been properly
exercised prior to the termination or earlier expiration of this Option;
(c) in the event Employee's employment with the Company or any
subsidiary is terminated for Cause (as defined below), then no further
installments of this Option shall vest or otherwise become exercisable, if such
termination occurs during the Vesting Period, and this Option shall terminate
and shall no longer be exercisable effective on the date of such termination.
For purposes hereof, the term "Cause" shall mean conduct involving one or more
of the following as determined by the Committee in its reasonable discretion:
(i) the substantial and continuing failure of the Employee, after notice
thereof, to render services to the Company or any subsidiary in accordance with
the terms or requirements of the Employee's employment with the Company or any
subsidiary; (ii) disloyalty, gross negligence, willful misconduct, dishonesty or
breach of fiduciary duty to the Company or any subsidiary; (iii) the commission
of an act of embezzlement or fraud; (iv) deliberate disregard of the rules or
policies of the Company which results in direct or indirect loss, damage or
injury to the Company or any subsidiary; (v) the unauthorized disclosure of any
trade secret or confidential information of the Company or any subsidiary; or
(vi) the commission of an act which constitutes unfair competition with the
Company or any subsidiary or which induces any customer or supplier to break a
contract with the Company or any subsidiary;
(d) in the event Employee dies while employed with the Company or
any subsidiary, this Option may be exercised, to the extent vested on the date
of his death, by the Employee's executor, estate, personal representative or
beneficiary, as the case may be, and to whom this Option is transferred by
operation of law, at any time within one (1) year after the date of death, but
not later than the Expiration Date. Following the expiration of such one-year
period, this Option shall terminate;
(e) in the event Employee's employment with the Company or any
subsidiary is terminated by reason of his
4
Disability (which shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code, or any successor statute), this Option may be
exercised, to the extent vested on the date of such Disability, at any time
within one (1) year after the date of such Disability, but not later than
Expiration Date. Following the expiration of such one-year period, this
Option shall terminate;
(f) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(g) the date the Company gives written notice to Employee of
Employee's failure to pay the Exercise Price as provided in Section 3(e) hereof.
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event of
a reorganization, recapitalization, change of shares, stock split, spin-off,
stock dividend, reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of capital stock of the Company, the Committee shall make such
adjustment as it deems appropriate in the number and kind of shares of Stock
subject to the Option or in the Exercise Price; PROVIDED HOWEVER, that no such
adjustment shall give the Employee any additional benefits under the Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of this
Agreement during the term hereof and prior to the termination of the Option in
accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section 6,
the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary of
another corporation), (b) a dissolution of the Company, (c) a transfer of all or
substantially all of the assets or shares of stock of the Company in one
transaction or a series of related transactions to one or more other persons or
entities, or (d) a distribution of the Company's equity securities to the public
pursuant to a registration statement filed under the Securities Act of 1933, as
amended, or any successor statute (any such transaction being referred to herein
as a "Capital Transaction"), then the Company shall provide Employee with thirty
(30) days advance written notice of such transaction and Employee, without the
necessity of any further action by the Committee, shall be entitled to purchase,
prior to the effective date of such Capital Transaction and in addition to the
number of Option Shares
5
which Employee shall be entitled to purchase as determined under Section 2
hereof, the number of remaining Option Shares which have not then become
vested. The unexercised portion of the Option shall be deemed cancelled and
terminated as of the effective date of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir, personal
representative or other person shall be, or shall have any of the rights and
privileges of, a shareholder of the Company with respect to any shares of Stock
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date of exercise of the Option.
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable except,
in case of the death of the Employee, by will or the laws of descent and
distribution, nor shall the Option be subject to attachment, execution or other
similar process. In the event of (a) any attempt by Employee to alienate,
assign, pledge, hypothecate or otherwise dispose of the Option, except as
provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Company may terminate
the Option by notice to the Employee and it shall thereupon become null and
void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor its
exercise shall be construed as granting to the Employee any right with respect
to continuance of employment. Except as may otherwise be limited by a written
agreement between the Company or one of its subsidiaries, as the case may be,
and the Employee, the right of the Company (or one of its subsidiaries) to
terminate the Employee's employment at any time is specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i) if
the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change in
the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth in
the preceding sentence, the consent of Employee shall be required in order to
6
amend any other provision of this Agreement. Notwithstanding the foregoing, the
Committee may, in its sole discretion, accelerate the exercisability of the
Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee shall be addressed to Employee at the
current address shown on the payroll records of the Company. Any notice shall
be deemed to be duly given if and when properly addressed and posted by
registered or certified mail, postage prepaid.
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and conditions set forth in this Agreement are in
conflict or are inconsistent with the terms of the Plan, the terms of the Plan
shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as the
corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to the
subject matter hereof (including but not limited to those certain letter
agreements dated December 20, 1994 and September 13, 1996 between Antinori
Software, Inc. and Employee, which are hereby terminated effective as of the
date hereof).
7
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
18. GEORGIA SECURITIES ACT. THESE SECURITIES HAVE BEEN ISSUED OR SOLD
IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA SECURITIES
ACT OF 1973 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS
EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
Employee acknowledges that the foregoing does not preclude the Company from
relying on other applicable exemptions from registration under the Georgia
Securities Act.
8
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE CARREKER GROUP, INC.
By:
--------------------------------
Its:
-----------------------------
EMPLOYEE
------------------------------------
Michael Israel
9
Exhibit L-3
THE CARREKER GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
INCENTIVE STOCK OPTION AGREEMENT
(CLASS B NON-VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this __________ day of January,
1997 by and among The Carreker Group, Inc., a Texas corporation (the
"Company") and Ruth McCullough ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted, and the shareholders of the Company have approved, The Carreker
Group, Inc. Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock options
by the Compensation Committee of the Board or any successor committee thereto
(the "Committee") to officers and key employees of the Company or any
subsidiary of the Company and its subsidiaries to purchase shares of the
Company's Class B Non-Voting Common Stock, no par value (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is
eligible for a grant of incentive stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
incentive stock option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an
option (the "Option") to purchase 1,300 shares of Stock (the "Option Shares")
at a price of $19.07 per share (the "Exercise Price"), representing the Fair
Market Value per Share (or, if Employee is the owner of stock possessing more
than 10 percent of the total combined voting power of all classes of stock of
the Company, or its parent or subsidiary corporation, if any, 110% of the
Fair Market Value per Share) as of the Date of Grant as determined by the
Committee in accordance with the Plan. The Option is intended by the parties
hereto to be, and shall be treated as, an incentive stock option (as such
term is defined under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")).
1
2. VESTING. The Option shall be immediately vested and exercisable
with respect to all of the Option Shares on the date hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the
Company written notice (the "Notice") of intent to exercise. The Notice
shall specify the number of Option Shares to be exercised (which shall be an
amount no less than 50 shares or the number of shares as to which the Option
is then exercisable, if less than 50) and the date of the proposed exercise
thereof (the "Exercise Date"), which date shall be at least ten (10) but no
more than thirty (30) calendar days after the giving of such notice unless an
earlier time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of the
Exercise Price shall be made on or before the Exercise Date in cash or
certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an agreement restricting the
transferability of the Option Shares substantially in the form of Exhibit A
attached hereto (the "Right of First Refusal Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon
full payment for such Option Shares. Such certificate or certificates shall
bear a restrictive legend in the form set forth in the Right of First Refusal
Agreement. The obligation of the Company to deliver the Option Shares shall,
however, be subject to the condition that if at any time the Committee shall
determine in its discretion that the listing, registration or qualification
of the Option or the Option Shares upon any securities exchange or under any
state or federal law, or the consent or approval of any governmental
regulatory body, is necessary or desirable as a condition of, or in
connection with, the Option or the issuance or purchase of Stock thereunder,
the Option may not be exercised in whole or in part unless such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not
2
acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Right of First Refusal Agreement, the Employee's right to purchase such
Option Shares may be terminated by the Company upon written notice to
Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised,
shall terminate and become null and void on the earliest to occur of the
following dates as follows:
(a) the tenth (10th) anniversary date of the date hereof, or, if
Employee is the owner of stock possessing more than 10 percent of the total
combined voting power of all classes of stock of the Company, or its parent
or subsidiary corporation, if any, the fifth (5th) anniversary date of the
date hereof (the "Expiration Date");
(b) in the event Employee's employment with the Company or any
subsidiary is terminated, other than by reason of death or Disability (as
defined below) or termination for Cause (as defined below), then (i) this
Option shall continue to vest and shall be exercisable as though Employee's
employment with the Company continued for a period of two (2) years following
the date of termination of employment, and (ii) this Option shall terminate
and shall no longer be exercisable after the passage of two (2) years from
the date of termination of employment, but in no event later than the
Expiration Date (and further provided that in the event this Option is
exercised following the expiration of three (3) months from the date of
termination of employment, the portion of this Option so exercised will be
treated as a non-qualified option as required by the Code). In such a case,
the Employee's only rights hereunder shall be those which have been properly
exercised prior to the termination or earlier expiration of this Option;
(c) in the event Employee's employment with the Company or any
subsidiary is terminated for Cause (as defined below), then no further
installments of this Option shall vest or otherwise become exercisable, if
such termination occurs during the Vesting Period, and this Option shall
terminate and shall no longer be exercisable effective on the date of such
termination. For purposes hereof, the term "Cause" shall mean conduct
involving one or more of the following as determined by the Committee in its
reasonable discretion: (i) the substantial and continuing failure
3
of the Employee, after notice thereof, to render services to the Company or
any subsidiary in accordance with the terms or requirements of the Employee's
employment with the Company or any subsidiary; (ii) disloyalty, gross
negligence, willful misconduct, dishonesty or breach of fiduciary duty to the
Company or any subsidiary; (iii) the commission of an act of embezzlement or
fraud; (iv) deliberate disregard of the rules or policies of the Company
which results in direct or indirect loss, damage or injury to the Company or
any subsidiary; (v) the unauthorized disclosure of any trade secret or
confidential information of the Company or any subsidiary; or (vi) the
commission of an act which constitutes unfair competition with the Company or
any subsidiary or which induces any customer or supplier to break a contract
with the Company or any subsidiary;
(d) in the event Employee dies while employed with the Company
or any subsidiary, this Option may be exercised, to the extent vested on the
date of his death, by the Employee's executor, estate, personal
representative or beneficiary, as the case may be, and to whom this Option is
transferred by operation of law, at any time within one (1) year after the
date of death, but not later than the Expiration Date. Following the
expiration of such one-year period, this Option shall terminate;
(e) in the event Employee's employment with the Company or any
subsidiary is terminated by reason of his Disability (which shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code,
or any successor statute), this Option may be exercised, to the extent vested
on the date of such Disability, at any time within one (1) year after the
date of such Disability, but not later than Expiration Date. Following the
expiration of such one-year period, this Option shall terminate;
(f) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(g) the date the Company gives written notice to Employee of
Employee's failure to pay the Exercise Price as provided in Section 3(e)
hereof.
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event
of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Committee
shall make
4
such adjustment as it deems appropriate in the number and kind of shares of
Stock subject to the Option or in the Exercise Price; PROVIDED HOWEVER, that
no such adjustment shall give the Employee any additional benefits under the
Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of
this Agreement during the term hereof and prior to the termination of the
Option in accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section
6, the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary
of another corporation), (b) a dissolution of the Company, (c) a transfer of
all or substantially all of the assets or shares of stock of the Company in
one transaction or a series of related transactions to one or more other
persons or entities, or (d) a distribution of the Company's equity securities
to the public pursuant to a registration statement filed under the Securities
Act of 1933, as amended, or any successor statute (any such transaction being
referred to herein as a "Capital Transaction"), then the Company shall
provide Employee with thirty (30) days advance written notice of such
transaction and Employee, without the necessity of any further action by the
Committee, shall be entitled to purchase, prior to the effective date of such
Capital Transaction and in addition to the number of Option Shares which
Employee shall be entitled to purchase as determined under Section 2 hereof,
the number of remaining Option Shares which have not then become vested. The
unexercised portion of the Option shall be deemed cancelled and terminated as
of the effective date of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir,
personal representative or other person shall be, or shall have any of the
rights and privileges of, a shareholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable
except, in case of the death of the Employee, by will or the laws of descent
and distribution, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by Employee to
alienate, assign, pledge, hypothecate or otherwise dispose of the
5
Option, except as provided for herein, or (b) the levy of any attachment,
execution or similar process upon the rights or interest hereby conferred,
the Company may terminate the Option by notice to the Employee and it shall
thereupon become null and void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor
its exercise shall be construed as granting to the Employee any right with
respect to continuance of employment. Except as may otherwise be limited by
a written agreement between the Company or one of its subsidiaries, as the
case may be, and the Employee, the right of the Company (or one of its
subsidiaries) to terminate the Employee's employment at any time is
specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i)
if the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change
in the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth
in the preceding sentence, the consent of Employee shall be required in order
to amend any other provision of this Agreement. Notwithstanding the
foregoing, the Committee may, in its sole discretion, accelerate the
exercisability of the Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee shall be addressed to Employee at the
current address shown on the payroll records of the Company. Any notice
shall be deemed to be duly given if and when properly addressed and posted by
registered or certified mail, postage prepaid.
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and
6
conditions set forth in this Agreement are in conflict or are inconsistent
with the terms of the Plan, the terms of the Plan shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as
the corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to the subject matter hereof (including but not limited to those certain
letter agreements dated December 20, 1994 and September 13, 1996 between
Antinori Software, Inc. and Employee, which are hereby terminated effective
as of the date hereof).
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE CARREKER GROUP, INC.
By:
--------------------------------
Its:
-----------------------------
EMPLOYEE
-----------------------------------
Ruth McCullough
7
EXHIBIT L-4
THE CARREKER GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
(CLASS A VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this _____________ day of
January, 1997 by and among The Carreker Group, Inc., a Texas corporation (the
"Company") and Frank Basset ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted, and the shareholders of the Company have approved, The Carreker
Group, Inc. Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of non-qualified stock
options by the Compensation Committee of the Board or any successor committee
thereto (the "Committee") to officers and key employees of the Company or any
subsidiary of the Company and its subsidiaries to purchase shares of the
Company's Class A Voting Common Stock, no par value (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is
eligible for a grant of non-qualified stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
non-qualified stock option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an
option (the "Option") to purchase 5,146 shares of Stock (the "Option Shares")
at a price of $17.53 per share (the "Exercise Price"). The Option is not
intended by the parties hereto to be, and shall not be treated as, an
incentive stock option (as such term is defined under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")).
2. VESTING. The Option shall vest and become exercisable during the
period commencing on the date hereof and ending on April 1, 1999 (herein the
"Vesting Period") as follows:
(a) The Option shall vest and shall become exercisable with
respect to one-third (1/3) of the Option Shares on April 1, 1997, provided
Employee is employed by the Company or one of its subsidiaries as of such
date and has been continuously employed during the term of this Agreement,
and further provided that the Option has not otherwise terminated in
accordance with the terms of Section 4 hereof;
1
(b) The Option shall vest and shall be exercisable with respect
to an additional one-third (1/3) of the Option Shares on April 1, 1998,
provided Employee is employed by the Company or one of its subsidiaries as of
such date and has been continuously employed during the term of this
Agreement, and further provided that the Option has not otherwise terminated
in accordance with the terms of Section 4 hereof; and
(c) The Option shall vest and shall be exercisable with respect
to the remaining one-third (1/3) of the Option Shares on April 1, 1999,
provided Employee is employed by the Company or one of its subsidiaries as of
such date and has been continuously employed by the Company or one of its
subsidiaries during the term of this Agreement, and further provided that the
Option has not otherwise terminated in accordance with the terms of Section 4
hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the
Company written notice (the "Notice") of intent to exercise. The Notice
shall specify the number of Option Shares to be exercised (which shall be an
amount no less than 50 shares or the number of shares as to which the Option
is then exercisable, if less than 50) and the date of the proposed exercise
thereof (the "Exercise Date"), which date shall be at least ten (10) but no
more than thirty (30) calendar days after the giving of such notice unless an
earlier time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of the
Exercise Price shall be made on or before the Exercise Date in cash or
certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an agreement restricting the
transferability of the Option Shares substantially in the form of Exhibit A
attached hereto (the "Right of First Refusal Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon
full payment for such Option Shares.
2
Such certificate or certificates shall bear a restrictive legend in the form
set forth in the Right of First Refusal Agreement. The obligation of the
Company to deliver the Option Shares shall, however, be subject to the
condition that if at any time the Committee shall determine in its discretion
that the listing, registration or qualification of the Option or the Option
Shares upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory body, is necessary or
desirable as a condition of, or in connection with, the Option or the
issuance or purchase of Stock thereunder, the Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Right of First Refusal Agreement, the Employee's right to purchase such
Option Shares may be terminated by the Company upon written notice to
Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised,
shall terminate and become null and void on the earliest to occur of the
following dates as follows:
(a) the tenth (10th) anniversary date of the date hereof (the
"Expiration Date");
(b) the date Employee ceases for any reason to be employed by
the Company or one of its subsidiaries, other than by reason of death or
Disability (as defined below). For purposes hereof, a transfer of Employee's
employment between the Company and any subsidiary of the Company, or between
any subsidiaries of the Company, shall not be deemed to be a termination of
the Employee's employment.
(c) in the event Employee dies while employed with the Company
or any subsidiary, this Option may be exercised, to the extent vested on the
date of his death, by the Employee's executor, estate, personal
representative or beneficiary, as the case may be, and to whom this Option is
transferred by operation of law, at any time within one (1) year after the
date of death, but not later than the Expiration Date. Following the
expiration of such one-year period, this Option shall terminate;
(d) in the event Employee's employment with the
3
Company or any subsidiary is terminated by reason of his Disability (which
shall mean "permanent and total disability" as defined in Section 22(e)(3) of
the Code, or any successor statute), this Option may be exercised, to the
extent vested on the date of such Disability, at any time within one (1) year
after the date of such Disability, but not later than Expiration Date.
Following the expiration of such one-year period, this Option shall terminate;
(e) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(f) the date the Company gives written notice to Employee of
Employee's failure to pay the Exercise Price as provided in Section 3(e)
hereof.
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event
of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Committee
shall make such adjustment as it deems appropriate in the number and kind of
shares of Stock subject to the Option or in the Exercise Price; PROVIDED
HOWEVER, that no such adjustment shall give the Employee any additional
benefits under the Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of
this Agreement during the term hereof and prior to the termination of the
Option in accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section
6, the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary
of another corporation), (b) a dissolution of the Company, (c) a transfer of
all or substantially all of the assets or shares of stock of the Company in
one transaction or a series of related transactions to one or more other
persons or entities, or (d) a distribution of the Company's equity securities
to the public pursuant to a registration statement filed under the Securities
Act of 1933, as amended, or any successor statute (any such transaction being
referred to herein as a "Capital Transaction"), then the Company shall
provide Employee with thirty (30) days advance written notice of such
transaction and Employee, without the necessity of any further action by the
Committee, shall be entitled to purchase, prior to the effective date of such
4
Capital Transaction and in addition to the number of Option Shares which
Employee shall be entitled to purchase as determined under Section 2 hereof,
the number of remaining Option Shares which have not then become vested. The
unexercised portion of the Option shall be deemed cancelled and terminated as
of the effective date of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir,
personal representative or other person shall be, or shall have any of the
rights and privileges of, a shareholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable
except, in case of the death of the Employee, by will or the laws of descent
and distribution, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by Employee to
alienate, assign, pledge, hypothecate or otherwise dispose of the Option,
except as provided for herein, or (b) the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Company
may terminate the Option by notice to the Employee and it shall thereupon
become null and void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor
its exercise shall be construed as granting to the Employee any right with
respect to continuance of employment. Except as may otherwise be limited by
a written agreement between the Company or one of its subsidiaries, as the
case may be, and the Employee, the right of the Company (or one of its
subsidiaries) to terminate the Employee's employment at any time is
specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i)
if the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change
in the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth
in the preceding
5
sentence, the consent of Employee shall be required in order to amend any
other provision of this Agreement. Notwithstanding the foregoing, the
Committee may, in its sole discretion, accelerate the exercisability of the
Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee shall be addressed to Employee at the
current address shown on the payroll records of the Company. Any notice
shall be deemed to be duly given if and when properly addressed and posted by
registered or certified mail, postage prepaid.
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and conditions set forth in this Agreement are in
conflict or are inconsistent with the terms of the Plan, the terms of the
Plan shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as
the corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to the subject matter hereof (including but not limited to that certain
agreement dated March 8, 1996 between Antinori Software, Inc. and Employee,
which is hereby terminated effective as of the date hereof).
6
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE CARREKER GROUP, INC.
By:
----------------------------------
Its:
-------------------------------
EMPLOYEE
-------------------------------------
Frank Basset
7
EXHIBIT L-5
THE CARREKER GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
(CLASS B NON-VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this __________ day of January,
1997 by and among The Carreker Group, Inc., a Texas corporation (the
"Company") and Lawrence D. Duckworth ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted, and the shareholders of the Company have approved, The Carreker
Group, Inc. Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of non-qualified stock
options by the Compensation Committee of the Board or any successor committee
thereto (the "Committee") to officers and key employees of the Company or any
subsidiary of the Company and its subsidiaries to purchase shares of the
Company's Class B Non-Voting Common Stock, no par value (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is
eligible for a grant of non-qualified stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
non-qualified stock option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an
option (the "Option") to purchase 17,580 shares of Stock (the "Option
Shares") at a price of $19.07 per share (the "Exercise Price"). The Option
is not intended by the parties hereto to be, and shall not be treated as, an
incentive stock option (as such term is defined under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")).
2. VESTING. The Option shall vest and become exercisable during the
two-year period following the date hereof (herein the "Vesting Period") as
follows:
(a) The Option shall be immediately vested and exercisable with
respect to one-third (1/3) of the Option Shares on the date hereof;
1
(b) The Option shall vest and shall be exercisable with respect
to an additional one-third (1/3) of the Option Shares on the first
anniversary date of this Agreement, provided Employee is employed by the
Company or one of its subsidiaries as of such date and has been continuously
employed during the term of this Agreement, and further provided that the
Option has not otherwise terminated in accordance with the terms of Section 4
hereof; and
(c) The Option shall vest and shall be exercisable with respect
to the remaining one-third (1/3) of the Option Shares on the second
anniversary date of this Agreement, provided Employee is employed by the
Company or one of its subsidiaries as of such date and has been continuously
employed by the Company or one of its subsidiaries during the term of this
Agreement, and further provided that the Option has not otherwise terminated
in accordance with the terms of Section 4 hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the
Company written notice (the "Notice") of intent to exercise. The Notice
shall specify the number of Option Shares to be exercised (which shall be an
amount no less than 50 shares or the number of shares as to which the Option
is then exercisable, if less than 50) and the date of the proposed exercise
thereof (the "Exercise Date"), which date shall be at least ten (10) but no
more than thirty (30) calendar days after the giving of such notice unless an
earlier time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of the
Exercise Price shall be made on or before the Exercise Date in cash or
certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an agreement restricting the
transferability of the Option Shares substantially in the form of Exhibit A
attached hereto (the "Right of First Refusal Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon
full payment for such Option Shares. Such certificate or certificates shall
bear a restrictive legend
2
in the form set forth in the Right of First Refusal Agreement. The
obligation of the Company to deliver the Option Shares shall, however, be
subject to the condition that if at any time the Committee shall determine in
its discretion that the listing, registration or qualification of the Option
or the Option Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the
Option or the issuance or purchase of Stock thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Right of First Refusal Agreement, the Employee's right to purchase such
Option Shares may be terminated by the Company upon written notice to
Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised,
shall terminate and become null and void on the earliest to occur of the
following dates as follows:
(a) the tenth (10th) anniversary date of the date hereof (the
"Expiration Date");
(b) in the event Employee's employment with the Company or any
subsidiary is terminated, other than by reason of death or Disability (as
defined below) or termination for Cause (as defined below), then (i) this
Option shall continue to vest and shall be exercisable as though Employee's
employment with the Company continued for a period of two (2) years following
the date of termination of employment, and (ii) this Option shall terminate
and shall no longer be exercisable after the passage of two (2) years from
the date of termination of employment, but in no event later than the
Expiration Date. In such a case, the Employee's only rights hereunder shall
be those which have been properly exercised prior to the termination or
earlier expiration of this Option;
(c) in the event Employee's employment with the Company or any
subsidiary is terminated for Cause (as defined below), then no further
installments of this Option shall vest or otherwise become exercisable, if
such termination occurs during the Vesting Period, and this Option shall
terminate and shall no
3
longer be exercisable effective on the date of such termination. For purposes
hereof, the term "Cause" shall mean conduct involving one or more of the
following as determined by the Committee in its reasonable discretion: (i)
the substantial and continuing failure of the Employee, after notice thereof,
to render services to the Company or any subsidiary in accordance with the
terms or requirements of the Employee's employment with the Company or any
subsidiary; (ii) disloyalty, gross negligence, willful misconduct, dishonesty
or breach of fiduciary duty to the Company or any subsidiary; (iii) the
commission of an act of embezzlement or fraud; (iv) deliberate disregard of
the rules or policies of the Company which results in direct or indirect
loss, damage or injury to the Company or any subsidiary; (v) the unauthorized
disclosure of any trade secret or confidential information of the Company or
any subsidiary; or (vi) the commission of an act which constitutes unfair
competition with the Company or any subsidiary or which induces any customer
or supplier to break a contract with the Company or any subsidiary;
(d) in the event Employee dies while employed with the Company
or any subsidiary, this Option may be exercised by the Employee's executor,
estate, personal representative or beneficiary, as the case may be, and to
whom this Option is transferred by operation of law, at any time within two
(2) years after the date of death, but not later than the Expiration Date.
This Option shall continue to vest following the date of death of Employee as
though Employee were employed by the Company for a period of two (2) years
following the date of death. Following the expiration of such two-year
period, this Option shall terminate;
(e) in the event Employee's employment with the Company or any
subsidiary is terminated by reason of his Disability (which shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code,
or any successor statute), this Option may be exercised at any time within
two (2) years after the date of such Disability, but not later than
Expiration Date. This Option shall continue to vest following the date of
Disability of Employee as though Employee were employed by the Company for a
period of two (2) years following the date of Disability. Following the
expiration of such two-year period, this Option shall terminate;
(f) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(g) the date the Company gives written notice to
4
Employee of Employee's failure to pay the Exercise Price as provided in
Section 3(e) hereof.
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event
of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Committee
shall make such adjustment as it deems appropriate in the number and kind of
shares of Stock subject to the Option or in the Exercise Price; PROVIDED
HOWEVER, that no such adjustment shall give the Employee any additional
benefits under the Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of
this Agreement during the term hereof and prior to the termination of the
Option in accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section
6, the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary
of another corporation), (b) a dissolution of the Company, (c) a transfer of
all or substantially all of the assets or shares of stock of the Company in
one transaction or a series of related transactions to one or more other
persons or entities, or (d) a distribution of the Company's equity securities
to the public pursuant to a registration statement filed under the Securities
Act of 1933, as amended, or any successor statute (any such transaction being
referred to herein as a "Capital Transaction"), then the Company shall
provide Employee with thirty (30) days advance written notice of such
transaction and Employee, without the necessity of any further action by the
Committee, shall be entitled to purchase, prior to the effective date of such
Capital Transaction and in addition to the number of Option Shares which
Employee shall be entitled to purchase as determined under Section 2 hereof,
the number of remaining Option Shares which have not then become vested. The
unexercised portion of the Option shall be deemed cancelled and terminated as
of the effective date of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir,
personal representative or other person shall be, or shall have any of the
rights and privileges of, a shareholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
5
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the Option shall not be transferable
except, in case of the death of the Employee, by will or the laws of descent
and distribution, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by Employee to
alienate, assign, pledge, hypothecate or otherwise dispose of the Option,
except as provided for herein, or (b) the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Company
may terminate the Option by notice to the Employee and it shall thereupon
become null and void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor
its exercise shall be construed as granting to the Employee any right with
respect to continuance of employment. Except as may otherwise be limited by
a written agreement between the Company or one of its subsidiaries, as the
case may be, and the Employee, the right of the Company (or one of its
subsidiaries) to terminate the Employee's employment at any time is
specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i)
if the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change
in the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth
in the preceding sentence, the consent of Employee shall be required in order
to amend any other provision of this Agreement. Notwithstanding the
foregoing, the Committee may, in its sole discretion, accelerate the
exercisability of the Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee shall be addressed to Employee at the
current address shown on the payroll records of the Company. Any notice
shall be deemed to be duly given if and when properly addressed and posted by
registered or certified mail, postage prepaid.
6
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and conditions set forth in this Agreement are in
conflict or are inconsistent with the terms of the Plan, the terms of the
Plan shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as
the corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to the subject matter hereof (including but not limited to that certain
agreement dated October 24, 1995 between Antinori Software, Inc. and
Employee, which is hereby terminated effective as of the date hereof).
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
18. GEORGIA SECURITIES ACT. THESE SECURITIES HAVE BEEN ISSUED OR SOLD
IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT. Employee acknowledges that the foregoing does
not preclude the Company from relying on other applicable exemptions from
registration under the Georgia Securities Act.
7
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE XXXXXXXX GROUP, INC.
By:
---------------------------------
Its:
------------------------------
EMPLOYEE
------------------------------------
Xxxxxxxx X. Xxxxxxxxx
8
EXHIBIT L-6
THE XXXXXXXX GROUP, INC.
1994 LONG TERM INCENTIVE PLAN
NON-QUALIFIED STOCK OPTION AGREEMENT
(CLASS B NON-VOTING COMMON STOCK)
This Agreement ("Agreement") is dated this ___________ day of January,
1997 by and among The Xxxxxxxx Group, Inc., a Texas corporation (the
"Company") and Xxxxxxx Xxxxxx ("Employee").
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted, and the shareholders of the Company have approved, The Xxxxxxxx
Group, Inc. Amended and Restated 1994 Long Term Incentive Plan (the "Plan");
WHEREAS, the Plan provides for the granting of non-qualified stock
options by the Compensation Committee of the Board or any successor committee
thereto (the "Committee") to officers and key employees of the Company or any
subsidiary of the Company and its subsidiaries to purchase shares of the
Company's Class B Non-Voting Common Stock, no par value (the "Stock"), in
accordance with the terms and provisions thereof; and
WHEREAS, the Committee considers Employee to be a person who is
eligible for a grant of non-qualified stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
non-qualified stock option described herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree
as follows:
1. GRANT OF OPTION. Subject to the terms and conditions
hereinafter set forth, the Company, with the approval and at the direction of
the Committee, hereby grants to the Employee, as of the date hereof, an
option (the "Option") to purchase 7,380 shares of Stock (the "Option Shares")
at a price of $19.07 per share (the "Exercise Price"). The Option is not
intended by the parties hereto to be, and shall not be treated as, an
incentive stock option (as such term is defined under Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code")).
1
2. VESTING. The Option shall vest and become exercisable during the
two-year period following the date hereof (herein the "Vesting Period") as
follows:
(a) The Option shall be immediately vested and exercisable with
respect to one-third (1/3) of the Option Shares on the date hereof;
(b) The Option shall vest and shall be exercisable with respect
to an additional one-third (1/3) of the Option Shares on the first
anniversary date of this Agreement, provided Employee is employed by the
Company or one of its subsidiaries as of such date and has been continuously
employed during the term of this Agreement, and further provided that the
Option has not otherwise terminated in accordance with the terms of Section 4
hereof; and
(c) The Option shall vest and shall be exercisable with respect
to the remaining one-third (1/3) of the Option Shares on the second
anniversary date of this Agreement, provided Employee is employed by the
Company or one of its subsidiaries as of such date and has been continuously
employed by the Company or one of its subsidiaries during the term of this
Agreement, and further provided that the Option has not otherwise terminated
in accordance with the terms of Section 4 hereof.
3. EXERCISE OF OPTION. The Option, to the extent vested, may be
exercised as follows:
(a) The Employee may exercise the Option with respect to all or
any part of the Option Shares then vested by giving the Secretary of the
Company written notice (the "Notice") of intent to exercise. The Notice
shall specify the number of Option Shares to be exercised (which shall be an
amount no less than 50 shares or the number of shares as to which the Option
is then exercisable, if less than 50) and the date of the proposed exercise
thereof (the "Exercise Date"), which date shall be at least ten (10) but no
more than thirty (30) calendar days after the giving of such notice unless an
earlier time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Employee of the
Exercise Price shall be made on or before the Exercise Date in cash or
certified check.
(c) On or before the Exercise Date, Employee and his spouse, if
any, shall execute and deliver to the Company an agreement restricting the
transferability of the Option Shares substantially in the form of Exhibit A
attached hereto (the "Right of First Refusal Agreement");
(d) On the Exercise Date or as soon thereafter as practicable
thereafter, the Company shall cause to be delivered to the Employee a
certificate or certificates for the Option Shares then being purchased upon
full payment for such Option Shares. Such certificate or certificates shall
bear a restrictive legend in the form set forth in the Right of First Refusal
Agreement.
2
The obligation of the Company to deliver the Option Shares shall, however, be
subject to the condition that if at any time the Committee shall determine in
its discretion that the listing, registration or qualification of the Option
or the Option Shares upon any securities exchange or under any state or
federal law, or the consent or approval of any governmental regulatory body,
is necessary or desirable as a condition of, or in connection with, the
Option or the issuance or purchase of Stock thereunder, the Option may not be
exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained free
of any conditions not acceptable to the Committee.
(e) If Employee fails to pay the Exercise Price by the Exercise
Date for any of the Option Shares specified in the Notice or fails to deliver
the Right of First Refusal Agreement, the Employee's right to purchase such
Option Shares may be terminated by the Company upon written notice to
Employee.
4. TERMINATION OF OPTION. The Option, and all rights hereunder with
respect thereto, to the extent such rights shall not have been exercised,
shall terminate and become null and void on the earliest to occur of the
following dates as follows:
(a) the tenth (10th) anniversary date of the date hereof (the
"Expiration Date");
(b) in the event Employee's employment with the Company or any
subsidiary is terminated, other than by reason of death or Disability (as
defined below) or termination for Cause (as defined below), then (i) this
Option shall continue to vest and shall be exercisable as though Employee's
employment with the Company continued for a period of two (2) years following
the date of termination of employment, and (ii) this Option shall terminate
and shall no longer be exercisable after the passage of two (2) years from
the date of termination of employment, but in no event later than the
Expiration Date. In such a case, the Employee's only rights hereunder shall
be those which have been properly exercised prior to the termination or
earlier expiration of this Option;
(c) in the event Employee's employment with the Company or any
subsidiary is terminated for Cause (as defined below), then no further
installments of this Option shall vest or otherwise become exercisable, if
such termination occurs during the Vesting Period, and this Option shall
terminate and shall no longer be exercisable effective on the date of such
termination. For purposes hereof, the term "Cause" shall mean conduct
involving
3
one or more of the following as determined by the Committee in its reasonable
discretion: (i) the substantial and continuing failure of the Employee, after
notice thereof, to render services to the Company or any subsidiary in
accordance with the terms or requirements of the Employee's employment with
the Company or any subsidiary; (ii) disloyalty, gross negligence, willful
misconduct, dishonesty or breach of fiduciary duty to the Company or any
subsidiary; (iii) the commission of an act of embezzlement or fraud; (iv)
deliberate disregard of the rules or policies of the Company which results in
direct or indirect loss, damage or injury to the Company or any subsidiary;
(v) the unauthorized disclosure of any trade secret or confidential
information of the Company or any subsidiary; or (vi) the commission of an
act which constitutes unfair competition with the Company or any subsidiary
or which induces any customer or supplier to break a contract with the
Company or any subsidiary;
(d) in the event Employee dies while employed with the Company
or any subsidiary, this Option may be exercised, by the Employee's executor,
estate, personal representative or beneficiary, as the case may be, and to
whom this Option is transferred by operation of law, at any time within two
(2) years after the date of death, but not later than the Expiration Date.
This Option shall continue to vest following the date of death of Employee as
though Employee were employed by the Company for a period of two (2) years
following the date of death. Following the expiration of such two-year
period, this Option shall terminate;
(e) in the event Employee's employment with the Company or any
subsidiary is terminated by reason of his Disability (which shall mean
"permanent and total disability" as defined in Section 22(e)(3) of the Code,
or any successor statute), this Option may be exercised at any time within
two (2) years after the date of such Disability, but not later than
Expiration Date. This Option shall continue to vest following the date of
Disability of Employee as though Employee were employed by the Company for a
period of two (2) years following the date of Disability. Following the
expiration of such two-year period, this Option shall terminate;
(f) the closing date of any Capital Transaction (as defined in
Section 6 hereof); or
(g) the date the Company gives written notice to Employee of
Employee's failure to pay the Exercise Price as provided in Section 3(e)
hereof.
4
5. ADJUSTMENT OF AND CHANGES IN STOCK OF THE COMPANY. In the event
of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Committee
shall make such adjustment as it deems appropriate in the number and kind of
shares of Stock subject to the Option or in the Exercise Price; PROVIDED
HOWEVER, that no such adjustment shall give the Employee any additional
benefits under the Option.
6. CAPITAL TRANSACTIONS. In the event that following the date of
this Agreement during the term hereof and prior to the termination of the
Option in accordance with Section 4 hereof, there shall occur (a) a merger or
consolidation of the Company with or into another corporation in which the
Company shall not be the surviving corporation (for purposes of this Section
6, the Company shall not be deemed the surviving corporation in any such
transaction if, as the result thereof, it becomes a wholly-owned subsidiary
of another corporation), (b) a dissolution of the Company, (c) a transfer of
all or substantially all of the assets or shares of stock of the Company in
one transaction or a series of related transactions to one or more other
persons or entities, or (d) a distribution of the Company's equity securities
to the public pursuant to a registration statement filed under the Securities
Act of 1933, as amended, or any successor statute (any such transaction being
referred to herein as a "Capital Transaction"), then the Company shall
provide Employee with thirty (30) days advance written notice of such
transaction and Employee, without the necessity of any further action by the
Committee, shall be entitled to purchase, prior to the effective date of such
Capital Transaction and in addition to the number of Option Shares which
Employee shall be entitled to purchase as determined under Section 2 hereof,
the number of remaining Option Shares which have not then become vested. The
unexercised portion of the Option shall be deemed cancelled and terminated as
of the effective date of such transaction.
7. RIGHTS OF SHAREHOLDER. Neither the Employee nor any heir,
personal representative or other person shall be, or shall have any of the
rights and privileges of, a shareholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option, in
whole or in part, prior to the date of exercise of the Option.
8. TRANSFERABILITY OF OPTION. During Employee's lifetime, the Option
hereunder shall be exercisable only by the Employee or any guardian or legal
representative of the Employee, and the
5
Option shall not be transferable except, in case of the death of the
Employee, by will or the laws of descent and distribution, nor shall the
Option be subject to attachment, execution or other similar process. In the
event of (a) any attempt by Employee to alienate, assign, pledge, hypothecate
or otherwise dispose of the Option, except as provided for herein, or (b) the
levy of any attachment, execution or similar process upon the rights or
interest hereby conferred, the Company may terminate the Option by notice to
the Employee and it shall thereupon become null and void.
9. EMPLOYMENT NOT AFFECTED. Neither the granting of the Option nor
its exercise shall be construed as granting to the Employee any right with
respect to continuance of employment. Except as may otherwise be limited by
a written agreement between the Company or one of its subsidiaries, as the
case may be, and the Employee, the right of the Company (or one of its
subsidiaries) to terminate the Employee's employment at any time is
specifically reserved.
10. AMENDMENT OF OPTION. The Option and this Agreement may be amended
by the Board or the Committee at any time without the consent of Employee (i)
if the Board or the Committee determines, in its sole discretion, that the
amendment is necessary or advisable in the light of any addition to or change
in the Code or in the regulations issued thereunder, or any federal or state
securities law or other law or regulation, which change occurs after the date
hereof and by its terms applies to the Option; or (ii) in order to make the
adjustments set forth in Section 5 hereof. Other than the matters set forth
in the preceding sentence, the consent of Employee shall be required in order
to amend any other provision of this Agreement. Notwithstanding the
foregoing, the Committee may, in its sole discretion, accelerate the
exercisability of the Option at any time.
11. NOTICES. Any notice to the Company provided for in this Agreement
shall be addressed to it in care of its Secretary at the Company's executive
offices. Any notice to the Employee shall be addressed to Employee at the
current address shown on the payroll records of the Company. Any notice
shall be deemed to be duly given if and when properly addressed and posted by
registered or certified mail, postage prepaid.
12. INCORPORATION OF PLAN BY REFERENCE. The Option is granted pursuant
to the terms of the Plan, the terms of which are incorporated herein by
reference, and the Option shall in all respects be interpreted in accordance
with the Plan. The Committee shall interpret and construe the Plan and this
6
Agreement, and its interpretations and determinations shall be conclusive and
binding on the parties hereto and any other person claiming an interest
hereunder, with respect to any issue arising hereunder or thereunder. In the
event any of the terms and conditions set forth in this Agreement are in
conflict or are inconsistent with the terms of the Plan, the terms of the
Plan shall control.
13. GOVERNING LAW. The validity, construction, interpretation and
effect of this instrument shall exclusively be governed by and determined in
accordance with the law of the State of Texas.
14. CAPITALIZED TERMS. Unless otherwise defined herein, each
capitalized term appearing in this Agreement shall have the same meaning as
the corresponding term in the Plan.
15. BINDING EFFECT. This Agreement shall be binding upon the parties
hereto, together with their respective executors, administrators, successors,
personal representatives, heirs and assigns.
16. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating
to the subject matter hereof (including but not limited to those certain
letter agreements dated December 20, 1994 and September 13, 1996 between
Antinori Software, Inc. and Employee, which are hereby terminated effective
as of the date hereof).
17. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one instrument.
18. GEORGIA SECURITIES ACT. THESE SECURITIES HAVE BEEN ISSUED OR SOLD
IN RELIANCE ON PARAGRAPH (13) OF CODE SECTION 10-5-9 OF THE GEORGIA
SECURITIES ACT OF 1973 AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN A
TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR PURSUANT TO AN EFFECTIVE
REGISTRATION UNDER SUCH ACT. Employee acknowledges that the foregoing does
not preclude the Company from relying on other applicable exemptions from
registration under the Georgia Securities Act.
7
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
THE XXXXXXXX GROUP, INC.
By:
---------------------------------
Its:
------------------------------
EMPLOYEE
------------------------------------
Xxxxxxx Xxxxxx
8
EXHIBIT M
X.X. XXXXXXXX EMPLOYEE CONFIDENTIALITY AGREEMENT
The undersigned employee (the "Employee") of X. X. Xxxxxxxx and Associates,
Inc. (the "Company") as a condition of employment or continued employment,
enters into this Agreement with the Company for the acknowledged purpose of
protecting the Company against acts by the undersigned or others that would
adversely affect the best interests of the Company or its customers or the
ability of the Employee to carry on a satisfying professional relationship
with X. X. Xxxxxxxx and Associates, Inc. To that end, this Agreement
identifies basic obligations which are binding during the Employee's term of
employment with the Company and, where applicable, beyond the termination of
such employment.
BASIC OBLIGATION
The Employee accepts the following obligations:
a. Employee will perform assigned duties and abide by the published and
unpublished policies of the Company.
b. Employee understands and acknowledges that X. X. Xxxxxxxx and Associates,
Inc., in its business activities, has developed and uses commercially
valuable technical and nontechnical information, and to guard the
legitimate interest of the company, it is necessary for the Company to
protect certain of the information as confidential.
c. In consideration of employment or continued employment by Company and as
a material inducement to the Company to pay Employee compensation for
services, Employee agrees that confidential information of a special and
unique nature and value relating to such matters as X. X. Xxxxxxxx and
Associates, Inc.'s trade secrets, computer programs, system documentation
manuals, confidential reports and other proprietary materials is regarded
by the Company as exceptionally valuable and that its use and disclosure
must be carefully and continuously controlled. The Employee agrees to
deliver all such items in Employee's possession to the Company at any
time during employment and will do so upon termination of employment.
d. Employee will never, without Company's prior written consent, disclose to
or use for the benefit of any person, corporation or other entity, any
files, trade secrets or other confidential information concerning the
business, clients, methods, operations, financing, services or any trade
secret or confidential information of X. X. Xxxxxxxx and Associates, Inc.
CONFIDENTIAL INFORMATION
Trade secrets and confidential information shall mean all information
pertaining to the prior,
current, or contracted business of the Company or any other information not
known to the general public.
Without limitation, Employee agrees that the following constitutes trade
secret and proprietary information:
a. All information pertaining to any customer of the Company, concerning
prior, current or future research or development activities.
b. All information which the Employee has reasonable basis to know was
accepted by the Company from any third party under any obligation of
confidentiality.
c. All computer programs, system documentation, manuals and other materials
or technical know-how developed, owned or used by the Company.
INVENTIONS - COPYRIGHTS
Employee assigned to Company, Employee's entire right, title and interest in
any and all inventions, improvements, discoveries, processes, programs,
systems, writings or ideas, whether or not subject to copyright, patent or
trademark protections which was (or, in the future, may be) conceived,
developed, discovered or made while in the employ of Company (whether or not
during regular hours of work or on the Company's promises), which relates in
any manner or is capable of being used in the existing or contemplated
business of the Company. Employee shall fully disclose same to the President
of the Company, instruments which Company shall deem necessary to apply for
or obtain ownership rights or protection for Company's interest therein.
POTENTIAL CONFLICTS OF INTEREST
a. Hold an interest in (as owner, stockholder, partner, lender, or other
investor, director, officer, contractor or consultant) any business
activity that is competitive with the existing or contemplated business
of the Company or which will interfere with the Employee's ability to
perform assigned duties for the Company.
b. Solicit for Employee's own benefit or organization, other than on behalf
of the Company, the employment or services of any Company employee.
c. Solicit for Employee's own benefit or organization, any employee of a
customer of X. X. Xxxxxxxx and Associates, Inc.
d. Solicit for Employee's own benefit or organization, any business or
customer of Company or any contemplated business or potential customer of
the Company.
Additionally, Employee agrees to inform Company of any interest of Employee
(as owner, stockholder, partner, investor, officer, director or otherwise) in
any business from which the Company buys or obtains services or products or
sells services or provides products. This Agreement shall not apply to the
ownership of an Employee of less than one percent (1%) of the outstanding
securities of any class of corporations that are listed on a National
Securities Exchange or traded over-the-counter.
GENERAL
The Employee recognizes that the Company would be irreparably damaged by
violation of the Agreement, and this Agreement shall be governed and
construed by the laws of the State of Texas and shall be binding on Employee.
It is agreed that this Agreement may be modified or amended only by a
written instrument executed by the Company and Employee.
The Employee understands that this Agreement shall be effective when signed
by both Company and Employee.
ACCEPTED AND AGREED
/s/ X.X. Xxxxxxxx /s/ X.X. Xxxxxxxx
------------------------------- -----------------------------------
Employee X. X. Xxxxxxxx and Associates, Inc.
Date 1/31/97 Date 1/31/97
-------------------------- ------------------------------
