AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter the "Agreement"), made and
entered into on February 2, 1998 by and between PROFORMIX SOFTWARE, INC., a
Delaware corporation authorized to do business in the State of New Jersey with
offices located at 00 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter
referred to as "SOFTWARE"), a wholly owned subsidiary of PROFORMIX SYSTEMS,
INC., a Delaware corporation authorized to do business in the State if New
Jersey with offices located at 00 Xxxxxxx Xxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000
(hereinafter referred to as "PROFORMIX"); ROLINA CORPORATION, a New Jersey
corporation with offices located at 0 Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxxxx
00000 hereinafter referred to as ("ROLINA") and XXXXXX X. XXXXXX, residing at 0
Xxxxxxxxx Xxxxxxx, Xxxxxxx, Xxx Xxxxxx 00000, the owner of 100% of all of the
issued and outstanding shares of stock of ROLINA, (hereinafter "SHAREHOLDER").
WHEREAS, SHAREHOLDER and ROLINA desire to merge ROLINA into SOFTWARE
whereupon SOFTWARE shall be the surviving constituent corporation in accordance
with the terms and conditions hereinafter set forth; and
WHEREAS, SOFTWARE, desires to merge ROLINA into itself in accordance with
the terms and conditions hereinafter set forth; and
WHEREAS, SOFTWARE and XXXXXX xxxx it advisable that ROLINA be merged into
SOFTWARE pursuant to this Agreement and in accordance with the applicable
statutes of the States of New Jersey and Delaware.
NOW THEREFORE, in consideration of the covenants set forth herein, it is
agreed as follows:
ARTICLE 1
MERGER CONSIDERATION AND SHARE CONVERSION
1.1 Merger. Upon the Closing contemplated herein and the filing of the
certificates of merger, ROLINA shall be merged with and into SOFTWARE. Upon the
filings of the certificates of merger, the separate corporate existence of
ROLINA shall cease and SOFTWARE shall become the owner, without other transfer,
of all of the rights and property of both corporations and shall become subject
to all of the debts and liabilities of both corporations in the same manner as
if SOFTWARE had itself incurred them. The Certificate of Incorporation and
Bylaws of SOFTWARE, as in effect immediately prior to the Closing hereof, shall
continue in full force and effect.
1.2 Terms of Transaction. On the basis of the representations,
warranties, covenants and agreements contained herein, and subject to the terms
and conditions of this Agreement:
(a) All the shares of ROLINA issued and outstanding immediately
prior to the Closing hereof (exclusive of shares held in the treasury of
ROLINA, which shares shall be canceled upon the Closing hereof) shall,
without any action on the part of ROLINA, SOFTWARE or any holder of such
shares, be converted by the merger into the amount of shares of stock of
PROFORMIX and cash as set forth in (c) hereinafter.
(b) None of the issued shares of SOFTWARE shall be converted as a
result of the merger, but all such shares shall remain issued shares of
capital stock of SOFTWARE.
SHAREHOLDER shall surrender to SOFTWARE at the Closing (as hereinafter
defined) all of his 500
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shares of stock representing 100% of the issued and outstanding shares of stock
in ROLINA (the "Shares") in accordance with this Agreement. SHAREHOLDER shall
surrender to SOFTWARE, or its designees, at the Closing, certificates
representing the Shares duly endorsed in blank or accompanied by such stock
powers of authority duly endorsed in blank as may be reasonably required, in
each case in proper form for cancellation, with signature guaranteed as
reasonably requested by SOFTWARE.
(c) In consideration for and conversion of the Shares, SOFTWARE
shall cause shares of Common Stock of PROFORMIX, to be issued to
SHAREHOLDER in conversion of the Shares and shall pay funds to be
delivered to SHAREHOLDER as follows:
(i) SOFTWARE shall deliver to SHAREHOLDER at Closing the sum
of $150,000.00 which amount shall be reduced by the amount of
liabilities to be paid by SOFTWARE set forth on Schedules 3.6 A
through F hereof;
(ii) SOFTWARE shall deliver to SHAREHOLDER at Closing 155,556
restricted shares of Proformix Systems Inc.'s Common Stock. These
shares shall be restricted as to any sale, transfer or other
disposition for a period of twenty-four (24) months from the date of
Closing as such term is hereinafter defined. Furthermore,
SHAREHOLDER shall have the limited and non-transferable right to
"put" or sell any and all of such shares back to PROFORMIX at a
predetermined price of $2.41 per share (subject to subsequent
adjustments along with other current common shareholders of
PROFORMIX). The foregoing right to so sell back shares totaling, in
all events, not more than 155,556 shares shall be exercisable at any
time commencing twenty-four (24) months after the Closing and shall
cease ninety (90) days thereafter. Any exercise of such right by
SHAREHOLDER shall be accompanied by a written notice of exercise
delivered by SHAREHOLDER to PROFORMIX during the foregoing recited
exercise period stating the number of shares which SHAREHOLDER elect
to so sell to PROFORMIX. Upon timely receipt of such notice from
SHAREHOLDER, PROFORMIX shall have a period of sixty (60) days within
which to deliver payment as aforesaid against the tender of such
shares with properly endorsed stock powers as PROFORMIX may direct.
In no event shall the full exercise of the "put" by SHAREHOLDER
result in net proceeds to SHAREHOLDER of more than $375,000.
Notwithstanding anything contained herein to the contrary, the
foregoing 155,556 shares assume a total four million shares of
PROFORMIX stock as being issued and outstanding. Therefore, except
with respect to the foregoing "put", said 155,556 shares shall not
be subject to any dilution unless and until the total number of
issued and outstanding PROFORMIX shares shall exceed six million, at
which time all of the foregoing shares shall be subject to dilution
and adjustment similarly affecting all other common shareholders of
the Company who have no anti-dilution provisions protecting their
shares. The foregoing computations of four million or six million
shares are calculated on the total number of PROFORMIX shares issued
and outstanding, assuming on a fully diluted basis and to account
for the possible exercises of all options, warrants, conversion
rights or such other rights as may require the issuance of Proformix
shares, providing such options, warrants, conversion rights or such
other rights are "in the money" as that term is used within the
traded stock market. The term "in the money" shall, for the purposes
of this Agreement, be defined as an option, warrant or other right
issued and outstanding where the exercise price is equal to or less
than the bid market price as established by the market or exchange
where PROFORMIX common stock is traded. For purposes of the
foregoing anti-dilution provision, any additional shares required to
be issued to SHAREHOLDER pursuant to the foregoing provision shall
be calculated quarterly and credited or debited to a liability
account on the books of PROFORMIX until the earlier of (I) the
termination of SHAREHOLDER's employment, (ii) the total amount of
common shares and "in the money" options equal 6.6 million shares,
or (iii) February 1, 2005
(iii) SOFTWARE shall deliver to SHAREHOLDER, four (4) months
from the date of Closing, the sum of $125,000.00; and
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(iv) SOFTWARE shall deliver to SHAREHOLDER, eight (8) months
from the date of Closing, the sum of $100,000.00.
(d) To secure SHAREHOLDER with respect to the payment obligations in
(iii) and (iv) above and the common stock put option in (ii) , SOFTWARE
shall execute and deliver at Closing a security agreement granting
SHAREHOLDER a lien on certain software products commonly known as
ErgoSentry and Surveyor. PROFORMIX shall have thirty (30) days to cure any
default in the foregoing payment obligations. Thereafter, SHAREHOLDER may
exercise his rights under the security agreement, in which event there
shall be an offset for the then existing value of the secured software
products as established by an appraiser that is mutually acceptable to
SHAREHOLDER and SOFTWARE. In the event the parties cannot agree upon an
appraiser within sixty (60) days of SHAREHOLDER exercising his rights
under the security agreement, then the parties hereto shall submit the
matter to binding arbitration through the American Arbitration
Association. In all events the provisions contained in Section 9.2 hereof
shall in any case, survive any termination hereof.
ARTICLE 2
CLOSING
2.1 The Closing contemplated by Article I of this Agreement shall be held
at the offices of SOFTWARE within three (3) business days following the
satisfaction and/or waiver of the conditions set forth in Article 8 of this
Agreement, or at such other time and place as is agreed upon by the parties (the
"Closing"). SOFTWARE shall immediately thereafter cause the filing of the
Certificates of Merger with the appropriate offices of the States of New Jersey
and Delaware.
2.2 After the Closing and from time to time thereafter, the remaining
parties to this Agreement shall execute such additional instruments and take
such other action as may reasonably be required in order to effectuate the
merger contemplated by this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF XXXXXX
XXXXXX and the SHAREHOLDER, jointly and severally, represent and warrant
to SOFTWARE as follows:
3.1 Organization and Standing. ROLINA is a corporation duly organized,
validly existing and in good standing under the laws of the State of New Jersey
and has all requisite power, qualification and authority to own, lease and
operate its properties and assets and carry on its business as and in the places
where such properties and assets are now owned, leased or operated or such
business is now being conducted. ROLINA has not formally qualified as a foreign
entity doing business in another jurisdiction. However, ROLINA has no knowledge
that its failure to qualify or to be formally recognized to be in good standing
in another jurisdiction would have an adverse effect on its financial condition,
the conduct of its business or the ownership of its assets. Annexed hereto as
Schedule 3.1 are true, complete and correct copies of ROLINA's certificate of
incorporation, by-laws and all amendments thereto, as presently in effect, all
corporate minutes of Board and Shareholder Meetings and the stock ledger and
minute books of ROLINA.
3.2 Authorization. ROLINA and the SHAREHOLDER have the requisite power and
authority to execute, deliver and perform this Agreement. All necessary
proceedings of ROLINA have been duly taken to authorize the execution, delivery
and performance of this Agreement. This Agreement has been duly authorized,
executed and delivered by ROLINA and the SHAREHOLDER and constitutes the legal
valid and binding obligation of ROLINA and the SHAREHOLDER, and is enforceable
as to them in accordance with the terms
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hereof.
3.3 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or other
tribunal is required by ROLINA and/or the SHAREHOLDER, for the execution,
delivery and/or performance of this Agreement. No consent of any party to any
contract, agreement, instrument, lease, license, arrangement, or understanding
to which ROLINA and/or the SHAREHOLDER is a party, or to which they or any of
their respective properties or assets are subject, is required for the
execution, delivery and/or performance of this Agreement (except as to any such
consent referred to on Schedule 3.3 annexed hereto, which consents will be
delivered to SOFTWARE prior to the Closing). The execution, delivery and
performance of this Agreement will not (i) violate, result in a breach of,
conflict with, or entitle any party to terminate or call a default under any
term of any contract, agreement, instrument, lease, license, arrangement, or
understanding whereby ROLINA and/or the SHAREHOLDER is a party to or (ii)
violate or result in a breach of any term of the Certificate of Incorporation
(or other charter document) or by-laws of ROLINA; (iii) violate, result in a
breach of, or conflict with any law, rule, regulation, order, judgment, decree
or agreement binding on ROLINA and/or any of the SHAREHOLDER or to which any of
its or his operations, business, properties or assets are subject; and/or (iv)
cause or give any person grounds to cause (with or without notice, the passage
of time, or both), the maturity of any liability or obligation of ROLINA and/or
any of the SHAREHOLDER to be accelerated or will increase any such liability or
obligation.
3.4 Capitalization.
The authorized capital stock of ROLINA consists of 1,000 shares of common
stock with no par value, of which 500 shares are outstanding, (the "Shares").
Each of the Shares are validly authorized, validly issued and fully paid and
non-assessable, have not been issued and are not owned or held in violation of
any preemptive right of stockholders. Except as set forth in Schedule 3.3, the
Shares are owned of record and beneficially by the SHAREHOLDER, free and clear
of all liens, charges, encumbrances, pledges, conditional sales agreements
and/or security interests of any kinds (collectively the "Encumbrances").
3.5 Lack of Commitment to Issue Securities. There is not presently
outstanding nor is there any commitment, plan, or arrangement to issue, any
options, warrants or other rights calling for the issuance of any shares of
common or preferred stock of ROLINA or any other security or other instrument
convertible into, exercisable for or exchangeable for securities of ROLINA.
3.6 Financial Condition. Annexed hereto as Schedule "3.6" are true and
complete copies of (i) the balance sheet of ROLINA for the fiscal year ended
December 31, 1997 and the related statement of income prepared by ROLINA and
certified by SHAREHOLDER to comply with the requirements of this Section 3.6
(collectively the "Financial Statements") and the unaudited balance sheet of
ROLINA as of January 15, 1998 and the related unaudited statement of income,
together with Schedules attached thereto for: Accounts Receivable; Prepaid
Expenses; Furniture, Fixtures and Equipment; Other Assets; Accounts Payable; and
Other Liabilities, respectively referred to as Schedules 3.6 A through F, with
all related notes thereto (collectively referred to herein as the "Interim
Financial Statements"). The Financial Statements and the Interim Financial
Statements (i) were prepared in accordance with the books of account and other
financial records of ROLINA (ii) present fairly the financial condition ROLINA
as of the dates thereof and for the periods covered thereby (iii) have been
prepared in accordance with Generally Accepted Accounting Principles ("GAAP")
applied on a basis consistent with the past practices of ROLINA and (iv) include
all adjustments (consisting only of normal recurring accruals) that are
necessary for a fair presentation of the financial conditions of ROLINA, as of
the dates thereof or for the periods covered thereby.
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3.7 Lack of Material Changes. Except as set forth on Schedule 3.7 annexed
hereto, since January 15, 1998 (the most recent interim financial statement
date):
(a) There has not been any change having a "material adverse effect"
on ROLINA. The term "material adverse effect", as used in this Agreement,
means any circumstance, change, event, transaction, loss, failure, effect
or other occurrence that is, or is reasonably likely to be materially
adverse to the business, operations, properties (including any intangible
properties), condition (financial or otherwise) assets, liabilities,
results of operations or projects of ROLINA.
(b) ROLINA has not authorized, declared, paid, or effected any
dividend or liquidating or other distribution in respect of its capital
stock or any direct or indirect redemption, purchase, or other acquisition
of any such stock.
(c) The operations and business of ROLINA have been conducted in all
respects only in the ordinary course except for its recent merger with
Trillion, Inc., a New Jersey corporation.
(d) ROLINA has not mortgaged, pledged or subjected to lien or other
encumbrances any of its assets, except as set forth in Schedule 3.3.
(e) ROLINA has not suffered an extraordinary loss (whether or not
covered by insurance) or waived any right of substantial value.
(f) ROLINA has not sold or transferred any of its assets having a
book value of $5,000 or more or canceled any debts or claims, except, in
each case, in the ordinary course of business, except for the reduction of
a claim by Xxxxx X. Xxxxx.
(g) ROLINA has not issued any common stock, preferred stock, capital
stock, bonds, warrants, options, rights or any other form of corporate
securities, except as relates to its formation and merger with Trillion,
Inc.
(h) There has not been any strike, lockout, labor trouble or any
similar event or condition of any character which would have a material
adverse effect on ROLINA.
(i) There has not been any increase in the compensation payable or
to become payable by ROLINA to any of its respective officers, employees
or agents, or any known payment or arrangement made to or with any such
persons.
(j) ROLINA has not made any change in the method of accounting or
accounting practice or policy used by ROLINA, other than changes required
by GAAP.
(k) ROLINA has not made any material changes in the customary
methods of operations of ROLINA, including practice and policies relating
to purchasing, inventory, marketing, selling or pricing.
(l) ROLINA has not merged with, been merged with or entered into a
consolidation with or acquired (by purchase, merger, consolidation, stock
acquisition or otherwise) a substantial portion of the assets of any
entity or otherwise acquired assets other than in the ordinary course,
except as may be specifically set forth herein and further set forth in
detail in the Financial Statements with notes thereto which include its
merger with Trillion, Inc.
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(m) ROLINA has not agreed, whether in writing or otherwise, to
engage in any of the acts specified in this Article 3.7, except for those
contemplated by this Agreement.
(n) There is no fact known to ROLINA and/or SHAREHOLDER which will
have a material adverse effect or in the near future (as far as ROLINA or
SHAREHOLDER can foresee) may have a material adverse effect on the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of ROLINA which has not been disclosed to
SOFTWARE in this Agreement; provided, however, that ROLINA and SHAREHOLDER
express no opinion as to political or economic matters of general
applicability.
3.8 Absence of Undisclosed Liabilities. (i) Except as set forth on
Schedule 3.8 annexed hereto, ROLINA does not have any liabilities or obligations
of any nature (whether absolute, accrued, contingent, or otherwise) including
without limitation liabilities for federal, state, local, or foreign taxes,
liabilities to customers or suppliers, direct or indirect claims, losses,
damages, deficiencies (including deferred income tax and other net tax
deficiencies), costs, expenses, obligations guarantees, or responsibilities,
whether accrued, absolute, or contingent, known or unknown, fixed or unfixed,
liquidated or unliquidated, secured or unsecured, (hereinafter collectively
referred to as "Liabilities").
3.9 Taxes. The term "Tax" or "Taxes" as used in this Agreement means all
income, gross receipts, sales, use, transfer, employment, franchise, profits,
property, excise or other similar taxes, estimated import duties, fees, stamp
taxes and duties, value added taxes, assessments or charges of any kind
whatsoever (whether payable directly or by withholding), together with any
interest and penalties, additions to tax or additional amounts imposed by any
taxing authority with respect thereto.
(a) Except as set forth in Schedule 3.9(a) annexed hereto (i)(A) all
material returns and reports in respect of federal, local, state and/or local
Taxes ("Tax Returns" or "Return") required to be filed with respect to ROLINA
have been timely filed; (B) all Taxes shown to be payable on such Returns or
otherwise due, and all assessments of Tax made against ROLINA with respect to
such Returns, have been paid; (C) all such Returns are true, correct, and
complete in all material respects, and (D) no adjustment relating to such
Returns has been proposed formally or informally by any Tax authority and, to
the best knowledge of ROLINA, no basis exists for any such adjustment; (ii)
there is no pending or, to the best knowledge of ROLINA, threatened actions or
proceedings for the assessment or collection of Taxes against ROLINA; (iii)
there are no Tax liens on any assets of ROLINA; (iv) there are no outstanding
waivers or agreements extending the statute of limitations with respect to any
Tax to which ROLINA may be subject; (v) there are no outstanding requests for
information made by a taxing authority to ROLINA; (vi) ROLINA has not been
advised by any taxing authority of any proposed reassessments of the value (or
other Tax base) of any property owned by ROLINA that could increase the amount
of property Tax to which ROLINA would be subject; (vii) ROLINA has made all
payments of estimated Taxes required to be made under the Internal Revenue Code
of 1986, as amended (the "Code") and all state or local Tax provisions; (viii)
all Taxes required to be withheld, collected or deposited, as the case may be,
and, to the extent required, have been paid to the relevant taxing authority,
and (iv) no power of attorney that is currently in force has been granted with
respect to any matter relating to Taxes that could affect ROLINA. SHAREHOLDER
shall be responsible, at his sole cost and expense, for the preparation and
filing of all ROLINA tax return and the payment of all taxes, penalties and
interest thereon for and through the period ending upon the period ending
December 31, 1997.
(b) Schedule 3.9(b) annexed hereto (i) lists by type all income, franchise
and other material Tax Return (federal, state, local, and foreign filed with
respect to ROLINA for taxable periods since ROLINA's inception; (ii) indicated
for which jurisdictions Returns have been filed on a combined basis for taxable
periods since ROLINA's inception, and the companies joining in such Returns, if
any; (iii) indicates the most recent income, franchise, or other material Tax
Return for each relevant jurisdiction for which an audit has been
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completed or the statute of limitations has lapsed, and (iv) indicated all Tax
Returns that currently are the subject of audit.
(c) Schedule 3.9(c) annexed hereto (i) lists the amount and expiration
dates of any net operating loss, net capital loss, unused business credit,
unused foreign tax credit, or excess charitable contribution allocable to ROLINA
as of its year end.
(d) Reserves and allowances have been provided on the Financial Statements
and the Interim Financial Statements that are adequate to satisfy all
Liabilities for Taxes relating to ROLINA for periods through the date of such
financial statements (without regard to the materiality thereof).
(e) To the extent that they exist, ROLINA has delivered or made available
to SOFTWARE correct and complete copies of all federal, state and local tax
returns of ROLINA since it's inception and forward, and correct and complete
copies (or summaries) of all examination reports, correspondence with taxing
authorities, statements of deficiencies assessed against or agreed to by ROLINA
since its inception and any formal or informal tax sharing arrangements to which
ROLINA is a party.
3.10 Litigation and Claims.
(a) There is no litigation, arbitration, claim, governmental,
administrative, regulatory or other proceeding or investigation (formal or
informal) pending, or to the best of ROLINA's knowledge threatened, or in the
process (or any basis therefore known to ROLINA or SHAREHOLDER) with respect to
ROLINA, any transaction in ROLINA's securities, the transactions contemplated by
this Agreement, or any of ROLINA's business, properties, or assets except as
described on Schedule 3.10(a) annexed hereto. To the best of SHAREHOLDER' and
ROLINA's knowledge, they is not in violation of, or in default with respect to,
any law, rule, regulation, order, judgment, decree or agreement; nor is any
action required to be taken in order to avoid such violation or default. Except
as set forth on Schedule 3.10(a) annexed hereto, there are no citations, fines
or penalties heretofore asserted against ROLINA under any federal, state or
local laws which bind unpaid or which otherwise bind the assets of ROLINA.
(b) Annexed hereto as Schedule 3.10(b) are true and complete copies of all
pleadings, orders and other relevant documents regarding all matters identified
on Schedule 3.10(a).
3.11 Assets. Attached hereto as Schedule 3.11 is a true and complete list
of all assets of ROLINA whether fixed or otherwise, and all inventory items with
a book value of Two Thousand Five Hundred Dollars ($2,500.00) or more.
3.12 Title to Assets. ROLINA has good and marketable titles to all its
Assets, including but not limited to certain ergonomic software marketed under
the trade names of Ergo Sentry and Surveyor, (except as described more
particularly on Schedule 3.12 annexed hereto and such real and other properties
and assets as are held pursuant to leases as described on Schedule 3.15 annexed
hereto) free and clear of all liens, mortgages, security interests, pledges,
charges, conditional sales agreements and security investments, and encumbrances
(except as are listed in Schedule 3.22 and Schedule 3.3 attached hereto).
3.13 Lack of Restrictions. ROLINA does not own, lease or use any real
property and therefore there are no restrictions upon ROLINA with respect to the
same.
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3.14 Contracts and other Instruments.
(a) Schedule 3.14 accurately and completely details all contracts,
licenses, instruments, powers of attorney and agreements to which ROLINA is a
party, directly or indirectly, including but not limited to, all license
agreements (except license agreements granted as part of sales of the ErgoSentry
and Surveyor products); supply agreements; manufacturer agreements; price
protection agreements; distributorship agreements; OEM agreements; partnership
agreements; dealership agreements; fiduciary agreements; agency agreements;
marketing agreements; commission agreements (except for verbal revocable
arrangements); sales license agreements; bank credit agreements; factoring
agreements; loan agreements; indentures; promissory notes; guarantees;
undertakings; other evidences of indebtedness; letters of credit; joint venture
agreements; agreements of acquisition or merger or combination with any other
company, corporation or business signed within the last three years; employment
agreements; labor agreements; salesmen Commission agreements; independent
contractor agreements; sales or purchase agreements for a term in excess of one
year which have an aggregate sale or purchase price in excess of $5,000.00;
contracts, agreements, arrangements, or understandings with SHAREHOLDER, any
director, officer, or employee, any relatives or affiliate of ROLINA or of any
such director, officer, or employee, or any other corporation or enterprise in
which ROLINA, any such director, officer, or employee, or any such relative or
affiliate then had or now has a 5% or greater equity or voting or other
substantial interest; government contracts; franchise agreements; management
agreements; advisory agreements; consulting agreements; advertising agreements;
construction agreements; warehousing agreements; engineering agreements; design
agreements; major utility agreements, any other agreements which are material to
ROLINA; and any other agreements which involve the payment of in excess of
$5,000 prior to the date it can be terminated without penalty or premium; (all
of which contracts, licenses, instruments, powers of attorney and agreements are
hereinafter referred to collectively as the "Contracts").
(b) To the best of SHAREHOLDER'S and ROLINA's knowledge, it is not nor
does it expect to be in the future, in violation or breach of, or in default
with respect to complying with, any material provision of any such Contract
thereof, and each such Contract, is in full force and effect and is the legal,
valid, and binding obligation of the parties thereto and is enforceable as to
them in accordance with their respective terms. Neither ROLINA, nor any other
party to any such Contract has given notice of termination or taken any action
inconsistent with the continuance thereof. The execution, delivery, and
performance of this Agreement will not prejudice any such Contract. ROLINA
and/or SHAREHOLDER are not a party to or bound by any other contract, agreement,
instrument, lease, license, arrangement, or understanding, or subject to any
charter or other restriction, which has had or may in the future have a material
adverse effect on the financial condition, results of operations, business
properties, assets, liabilities, or future prospects of ROLINA.
3.15 Leases. ROLINA is not a party to any leases or subleases.
3.16 Capital Projects. As of the date of this Agreement, ROLINA has not
undertaken any capital projects the cost of completion of which would exceed
$5,000.
3.17 Environmental Laws
(a) (i) To the best of ROLINA's knowledge, the assets utilized by ROLINA
have, and continue to be, owned and operated by it in material compliance with
all applicable Environmental Laws.
(ii) ROLINA has not received notice of any pending or threatened claims,
complaints or requests for information with respect to any alleged violation of
any environmental Laws.
(iii) There have been no material releases, as defined under any
Environmental laws, or
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Hazardous Substancfes, by ROLINA
(iv) ROLINA has not received notice of pending or threatened claims
whether or not the subject of any indemnity, under any Environmental Law or
involving any hazardous Substances.
(b) As used in the preceding paragraph and elsewhere in this Agreement the
following terms shall have the following meaning:
(i) Environmental Laws means any federal, state or local statute, code,
ordinance, rule, regulation, permit, consent, approval, license, judgment,
order, writ, judicial decision, decree, agency interpretation, injunction or
other authorization or requirement whenever promulgated, issued, or modified,
relating to:
(A) emissions, discharges, spills, release or threatened releases of
pollutants, contaminants, Hazardous Substances, materials containing Hazardous
Substances, or hazardous or toxic materials or wastes into ambient air, surface
water, groundwater, watercourses, publicly or privately owned treatment works,
drains, sewer systems, wetlands, septic systems or onto land;
(B) the use, treatment, storage, disposal, handling, manufacturing,
transportation, or shipment of Hazardous Substances, materials containing
Hazardous Substances or hazardous and/or toxic wastes, material, products or
by-products (or of equipment or apparatus containing Hazardous Substances) as
defined in or regulated under the following statutes and their implementing
regulations: the Hazardous Materials Transportation Act, 49 U.S.C. ss.ss.1801 et
seq., the Resource Conservation and Recovery Act, 42 U.S.C, ss.ss.6901 et seq.,
the Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. ss.ss.960l et seq. ("CERCLA"), The Clean Water Act, 33 U.S.C. ss.ss.1251
et seq., The Clean Air Act, 42 U.S.C. ss.ss.7401 et seq., and/or the Toxic
Substances Control Act, 15 U.S.C. ss.ss.2601 et seq., each as amended from time
to time.
(ii) Hazardous Substances means (A) hazardous materials, hazardous wastes
and hazardous substances as defined or regulated under any Environmental Laws,
(B) any mixtures, blends, compounds or liquids containing any hazardous
substances in any proportions, (C) petroleum and petroleum products including
crude oil and any fractions thereof, (D) asbestos and/or any material which
contains any hydrated mineral silicates, whether friable or non-friable, (E)
PCBs, or PCB containing materials or fluids, (V) any other hazardous
radioactive, toxic or noxious substance, material, pollutant, or solid, liquid
or gaseous waste, and (G) any substance with respect to which a federal, state
or local agency requires environmental investigation, monitoring or remediation.
(iii) CERCLA has the meaning specified in the definition of "Environmental
Laws".
(iv) CERCLIS means the Comprehensive Environmental Responsive,
Compensation and Liability Information System, 42 U.S.C. ss.9616(a).
3.18 Compliance with Laws. Annexed hereto as Schedule 3.18 is a list of
all permits, licenses, orders, certificates, and approvals (collectively
"Licenses") of all federal, state or local governmental regulatory bodies
required for ROLINA to conduct its business as presently conducted; all such
Licenses, are in full force and effect and no suspension or cancellation of any
of them is pending or threatened; and none of such Licenses, will be adversely
affected by the consummation of the transaction contemplated by this Agreement.
3.19 ERISA Matters and Employees. ROLINA does not have, nor does it
contribute to any pension, profit sharing, option, other incentive plan, or any
other type of employee benefit plan (as defined in Section 3(3)
9
of the Employee Retirement Income Security Act of 1974), or any obligation to or
customary arrangement with employees for bonuses, incentive compensation, or
severance pay. Annexed hereto as Schedule 3.19 is a list detailing the name and
current salary (or rate of pay) and other compensation now paid by ROLINA to
each employee whose total annual compensation is $25,000 or more, including a
description of any increase scheduled to be effective after the date of this
Agreement.
3.20 Insurance. Schedule 3.20 attached hereto and made a part hereof is a
complete and correct list of all insurance policies, of any kind held by ROLINA.
Each such policy is valid and enforceable; all premiums and other payments due
from ROLINA on account of any such policy have been paid and there is no act or
failure to act which has or might cause any such policy to he canceled or
terminated.
3.21 Labor Disputes. Except as set forth on Schedule 3.21 annexed hereto,
ROLINA is not a party to any union representation or labor contract. ROLINA has
not received any notice from any labor union or group of employees that such
union or group represents or believes or claims it represents or intends to
represent any of their employees; no strike or work interruption by any of their
employees is planned, under consideration, threatened or imminent; and ROLINA
has not made any loan or given any-thing of value, directly or indirectly, to
any officer, official, agent or representative of any labor union or group of
employees. ROLINA is not delinquent in payments to any of its employees for any
wages, salaries, commissions, bonuses or other direct compensation for any
services performed by them to the date hereof or amounts required to be
reimbursed to such employees. In the event of termination of the employment of
any said employees, ROLINA will not by reason of anything done prior to the
Closing be liable to any of said employees for "severance pay" or any other
payments except as set forth in Schedule 3.21. To the best of ROLINA's
knowledge, ROLINA is in compliance with all Federal, state and local laws and
regulations respecting labor, employment and wages and hours; and there is no
unfair labor practice complaint against them pending before the National Labor
Relations Board or any comparable state or local agency.
3.22 Liens on Assets. Except as set forth on Schedule 3.22 and Schedule
3.3 attached hereto ROLINA has good and marketable title to all of their
respective Assets and such Assets are not subject to any mortgages, pledges,
liens, conditional sales agreements, encumbrances and security interests or
claims of any kind.
3.23 Condition of Tangible Assets. As of the Closing, ROLINA's Tangible
Assets will be in normal, operating and useable condition, in a state of good
maintenance and repair subject to ordinary wear and tear and scheduled
maintenance items, taking into consideration the age and utilization thereof and
conform to all applicable ordinances, regulations and other laws including those
relating to building and zoning and environmental protection and occupational
safety and health.
3.24 Validity of Contemplated Transactions . The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby (a) have been duly approved by the unanimous consent of
SHAREHOLDER and the Board of Directors of ROLINA; (b) do not and will not
contravene, violate and/or result in a breach or default under any provision of
the Articles of Incorporation or by-laws of ROLINA which are in effect; (c) do
not violate, are not in conflict with, and do not constitute a default under, or
cause the acceleration of any payments pursuant to, or otherwise impair the good
standing, validity, or effectiveness of any agreement, contract, license,
indenture, instrument, lease, or mortgage, or subject SHAREHOLDER or ROLINA or
any of its Assets to any indenture, mortgage, contract, commitment, or
agreement, other than this Agreement, to which they are a party or by which any
of the Assets are bound except as set forth in Schedule 3.3; and (d) do not
violate any material provision of law, rule, regulation, order, permit, or
license to which ROLINA is subject.
10
3.25 Directors and Officers. A true and complete list as of the date of
this Agreement indicating ROLINA's directors and officers, each of whom has been
duly elected is as follows:
NAME POSITION
Xxxxxx X. Xxxxxx, Director and President
Xxxxxxxx X. Xxxxxx, Secretary
3.26 Patents, Trademarks, Et Cetera. Schedule 3.26 accurately sets forth
all patents, patent applications, trademarks, trademark applications,
copyrights, copyright applications, trade names, service marks, franchises, or
other intangible property or assets (all of the foregoing being herein called
"Intangibles"), owned by, licensed by and/or pending on behalf of ROLINA. All
Intangibles which are validly and completely owned by ROLINA are Assets and are
specified as such on Schedule 3.26 and all Intangibles are in good standing and
uncontested. Schedule 3.26 accurately sets forth with respect to Intangibles
owned by ROLINA, where appropriate, a statement of cost, book value and reserve
for depreciation of each item for financial reporting purposes, and with respect
to Intangibles licensed by ROLINA from or to a third party, a detailed
description of such license. Neither SHAREHOLDER nor any employee of ROLINA, any
relative or affiliate of SHAREHOLDER, any director, officer, or employee of the
foregoing, or any such relative or affiliate had or now has any equity or voting
or other substantial interest in or possesses any intangible which relates to
the business of ROLINA. There is no right under any Intangible necessary to the
business of ROLINA as presently conducted or as it contemplates conducting,
except such as are so designated in Schedule 3.26. ROLINA has not infringed, is
infringing, or has received notice of infringement with asserted Intangibles of
others. There is no infringement by others of Intangibles of ROLINA. There is no
Intangible of others which may materially adversely affect the financial
condition, results of operations, business, properties, assets, liabilities, or
future prospects of ROLINA.
3.27 Accounts and Notes Receivable. Except as set forth on Schedule 3.27,
to the best of ROLINA's knowledge, all accounts and notes receivable reflected
on the Financial Statements and the Interim Financial Statements annexed hereto
as Schedule 3.6 constitute valid and binding obligations, have been collected or
are and will be good and collectible, in each case at the aggregate recorded
amounts thereof without right of recourse, defense, deduction, return of goods,
counterclaim, offset, or set off on the part of the obligor, and, if not
collected, can reasonably be anticipated to be paid within 60 days of the date
incurred.
3.28 Inventories. All inventories of ROLINA are good and marketable on a
normal basis in the existing product lines of ROLINA.
3.29 Customer, Supplier, Franchisees. Schedule 3.29 attached hereto lists
the names and addresses of all of material customers, suppliers and franchisees
of ROLINA. None of such suppliers, customers, and/or franchisees has asserted
any claim against or threatened to terminate its relationship with ROLINA.
Except as set forth in Schedule 3.14(b) annexed hereto ROLINA does not have any
direct involvement, interest in or affiliation with any customer, supplier or
franchisee of ROLINA.
3.30 Bank Accounts. Schedule 3.30 annexed hereto lists the names and
address of every bank and other financial institution in which ROLINA maintains
an account (whether checking, savings or otherwise), lock box or safe deposit
box, and the account numbers and names of persons having signing authority or
other access thereof.
3.31 Veracity of Statements. Neither this Agreement nor the
representations and warranties by ROLINA and/or SHAREHOLDER contained herein or
in any documents, instruments, certificates or schedules
11
furnished pursuant hereto or in connection with the transactions contemplated
hereby contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements or facts contained herein and
therein not misleading. There is no fact which has a material effect, or in the
future may have a material adverse effect (to the knowledge of ROLINA and/or
SHAREHOLDER) on the business, operations, affairs, condition or prospects of
ROLINA, its assets, or its business, which has not been set forth in this
Agreement, provided however that ROLINA and/or SHAREHOLDER expresses no opinion
as to political or economic matters of general applicability.
3.32 SHAREHOLDER Suitability Standards and Additional Representations.
SHAREHOLDER hereby represents, warrants and agrees as follows:
(a) He has the right, power and authority to enter into this Agreement.
(b) He is the sole party in interest with respect to his interest in
ROLINA and has all legal, beneficial and equitable rights in such interest.
(c) He is sufficiently experienced in financial matters generally and this
type of investment in particular to be able to evaluate the merits and risks
involved in this transaction and he along with his financial and legal advisors
have been provided with ample opportunity to ask questions of and receive
answers from SOFTWARE and/or PROFORMIX and have been provided with ample
opportunity to request and have received copies for review of any documents
which he and/or they deem relevant with respect to his investment decision
herein and that he has not relied upon any oral representations in the making of
his investment decision herein.
(d) He understands that his right to transfer all or any portion of his
interest in PROFORMIX upon the consummation of the contemplated transaction
hereunder is restricted by the terms and provisions of this Agreement and that
no market for his PROFORMIX shares may develop, and that he must therefore be
prepared to bear the economic risks of his investment in PROFORMIX for an
indefinite period of time.
(e) He is "Accredited" as such term is defined under the rules promulgated
pursuant to the Securities Act of 1933, as amended.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SOFTWARE
4. SOFTWARE hereby represents and warrants to ROLINA and SHAREHOLDER as
follows:
4.1 Organization and Standing.
SOFTWARE is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power,
qualification and authority, corporate or otherwise, to own, lease and/or
operate its properties and assets and carry on its business as and in the places
where such properties and assets are now owned, leased or operated or such
business is now being conducted. SOFTWARE is in good standing in each and every
jurisdiction where its failure to qualify or to be in good standing would have
an adverse effect on its financial condition, the conduct of its business or the
ownership of its assets. The foregoing representations are likewise true of
SOFTWARE's parent, PROFORMIX, of which SOFTWARE is a wholly owned subsidiary.
12
4.2 Authorization. SOFTWARE has all requisite power and authority to
execute, deliver and perform this Agreement. All necessary corporate proceedings
of SOFTWARE have been duly taken to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly authorized, executed
and delivered by SOFTWARE, constitutes the legal valid and binding obligation of
SOFTWARE, and is enforceable as to it in accordance with the terms hereof.
4.3 Legality of Shares to be Issued. The shares of common stock of
PROFORMIX to be delivered to SHAREHOLDER pursuant to this Agreement, when so
delivered in accordance with this Agreement will be fully paid, nonassessable
and shall be duly and validly authorized and issued.
4.4 No Covenant as to Tax Consequences. It is expressly understood and
agreed that neither SOFTWARE, PROFORMIX, nor its officers or agents has made any
warranty or agreement, express or implied, as to the tax consequences of the
transactions contemplated by this Agreement or the tax consequences of any
action pursuant to or growing out of this Agreement.
4.3 No Further Action Needed. No consent, authorization, approval, order,
license, certificate, or permit of or from, or declaration or filing with, any
federal, state, local or other governmental authority or any court or other
tribunal is required by SOFTWARE, for the execution, delivery and/or performance
of this Agreement. No consent of any party to any contract, agreement,
instrument, lease, license, arrangement, or understanding to which SOFTWARE is a
party or to which it or any of its properties or assets are subject, is required
for the execution, delivery and/or performance of this Agreement except as to
any such consents referred to on Schedule 4.3 annexed hereto, which consents
will be delivered to SOFTWARE prior to the Closing. The execution, delivery and
performance of this Agreement will not (i) violate, result in a breach of,
conflict with, or entitle any party to terminate or call a default under any
term of any contract, agreement, instrument, lease, license, arrangement, or
understanding whereby SOFTWARE is a party to, or (ii) violate, result in a
breach of, or conflict with SOFTWARE's certificate of incorporation, any law,
rule, regulation, order, judgment, or decree binding on SOFTWARE or to which any
of its or his/her operations, business, properties or assets are subject; and/or
(iii) cause or give any person grounds to cause (with or without notice, the
passage of time, or both), the maturity of any liability or obligation of
SOFTWARE to be accelerated or will increase any such liability or obligation.
4.6 Veracity of Statements. Neither this Agreement nor the representations
and warranties by SOFTWARE contained herein or in any documents, instruments,
certificates or schedules furnished pursuant hereto or in connection with the
transactions contemplated hereby contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements or facts
contained herein and therein not misleading. There is no fact which adversely
affects, or in the future may have a material adverse effect (to the knowledge
of SOFTWARE) on the business, operations, affairs, condition or prospects of
SOFTWARE, its assets and/or business, which has not been set forth in this
Agreement, provided however that SOFTWARE expresses no opinion as to political
or economical matters of general applicability.
4.7 PROFORMIX Current in Reporting Obligations. PROFORMIX is a "Reporting
"Company" and as such, is required to file periodic reports with the Securities
and Exchange Commission ("SEC") pursuant to Section 15 of the Securities
Exchange Act of 1934. SOFTWARE is a wholly owned subsidiary of PROFORMIX.
PROFORMIX is current with respect to the filing of such reports, has received no
comments from the SEC relating thereto and knows of no proceeding or
investigation pending against it at the instance of the SEC, the NASD or any
other federal or state agency or self-regulating body. PROFORMIX is not aware of
any respect in which any previously filed report is materially inaccurate or
incomplete.
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ARTICLE 5
PRE-CLOSING
5. Pre-Closing. The obligations of the parties to Close hereunder is
conditioned upon compliance with the requirements of Articles 6,7,8 and 9
hereof.
ARTICLE 6
COVENANTS OF ROLINA AND SHAREHOLDER
6. ROLINA and SHAREHOLDER, jointly and severally, covenant to SOFTWARE as
follows:
6.1 The representations and warranties of ROLINA and SHAREHOLDER
contained in this Agreement and in the schedules hereto shall be true and
correct in all respects as of the Closing. ROLINA and SHAREHOLDER shall give
SOFTWARE prompt notice of any change in any of the information contained in the
representations and warranties of ROLINA and SHAREHOLDER, the schedules hereto
or the documents furnished by ROLINA and/or SHAREHOLDER in connection herewith
which occurs prior to the Closing. Upon the happening of any occurrence or event
prior to the Closing, which shall have a material adverse effect upon the
business or assets of ROLINA, SOFTWARE shall have the right to terminate this
Agreement by written notice to and upon such termination, no party shall have
any further liability or obligation under this Agreement.
6.2 ROLINA shall, at or prior to the Closing, prepare and present to
SOFTWARE unanimous Consents of SHAREHOLDER and ROLINA's board evidencing the
approval of this Agreement and the transactions contemplated hereby.
6.3 ROLINA will, prior to the Closing, comply with all laws affecting
operation of its business, will not operate the said business other than in the
ordinary course, and will give notice to SOFTWARE of any event or circumstance
not in the ordinary course which materially affect ROLINA or its Assets.
6.4 ROLINA and SHAREHOLDER shall use their best efforts to take or cause
to be taken all action and do or cause to be done all things necessary, proper
or advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, to obtain all consents, approvals and
authorizations of third parties, to make all filings with and give all notices
to third parties which may be necessary or required in order to effectuate the
transactions contemplated hereby.
6.5 ROLINA and SHAREHOLDER will cause ROLINA to conduct ROLINA's affairs
so that at the Closing no representation or warranty contained in this
agreement, will be inaccurate, no covenant, commitment or agreement of ROLINA
and/or SHAREHOLDER will be breached, and no condition in this Agreement will
remain unfulfilled by reason of the actions or omissions of ROLINA and/or
SHAREHOLDER. Except as otherwise requested by SOFTWARE in writing, ROLINA and/or
SHAREHOLDER will, use their respective best efforts to preserve the business
operation of ROLINA intact, to keep available the services of their present
personnel, to preserve in full force and effect the Contracts, and Leases and to
preserve the goodwill of ROLINA's suppliers, customers, and others having
business relations with them. Unless this Agreement is rightfully terminated,
ROLINA and SHAREHOLDER will cause ROLINA to conduct its business and operation
in all respects only in the ordinary course.
6.6 ROLINA and SHAREHOLDER shall make available for inspection all of its
books, records,
14
documents and assets, and will otherwise afford to SOFTWARE and its
representatives reasonable access to all documentation, contracts, agreements,
patents, patent applications and all other information concerning the business,
financial and legal conditions of ROLINA for the purpose of conducting due
diligence investigation thereof, SOFTWARE agrees that all information so
provided and marked as "Confidential" will be treated as such, that SOFTWARE
will not make any use of such information, other than for the purpose of
consummating the transactions in this Agreement, unless the same was previously
in SOFTWARE's possession, or became available to SOFTWARE through
non-confidential means or shall otherwise come into the public domain.
6.7 ROLINA will not engage in any of the acts set forth in Article 3.7 or
enter into any agreement, whether in writing or otherwise, to engage in any of
the acts specified in Article 3.7.
ARTICLE 7
COVENANTS OF SOFTWARE
7. SOFTWARE covenants to ROLINA and SHAREHOLDER as follows:
7.1 The representations and warranties of SOFTWARE contained in this
Agreement and in the schedules hereto shall be true and correct in all respects
as of the Closing. The SOFTWARE shall give ROLINA and SHAREHOLDER prompt notice
of any change in any of the information contained in the representations and
warranties of the SOFTWARE and the schedules hereto or the documents furnished
by the SOFTWARE in connection herewith which occurs prior to the Closing. Upon
the happening of any occurrence or event prior to the Closing, which shall have
a material adverse effect upon the business or assets of the SOFTWARE, ROLINA
and SHAREHOLDER shall have the right to terminate this Agreement by written
notice to and upon such termination, no party shall have any further liability
or obligation under this agreement.
7.2 SOFTWARE shall, at or prior to the Closing Date, prepare and present
to ROLINA and SHAREHOLDER, the Consent of a majority of its Directors evidencing
the approval of this Agreement and the transactions contemplated hereby.
7.3 SOFTWARE shall use its best efforts to take or cause to be taken all
action and do or cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, including, without
limitation, to obtain all consents, approvals and authorizations of third
parties, to make all filings with and give all notices to third parties which
may be necessary or required in order to effectuate the transactions
contemplated hereby.
7.4 SOFTWARE shall cause PROFORMIX after the execution hereof to keep
available for issuance from PROFORMIX's authorized but unissued shares of common
stock that number of shares of common stock which are necessary to lawfully
issue shares of it's Common stock to SHAREHOLDER pursuant to Article 1 hereof.
ARTICLE 8
CONDITIONS OF CLOSING
8.1 The obligation of SOFTWARE to close hereunder shall be subject to the
fulfillment and satisfaction, prior to or at the Closing, of the following
conditions or the written waiver thereof by SOFTWARE:
(a) Pre-Closing. All of the commitments set forth in Article 5 of this
Agreement shall be consummated.
15
(b) Representations and Warranties. The representation and warranties of
ROLINA and SHAREHOLDER in this Agreement shall be true and correct in all
material respects when made and shall be true and correct in all material
respects on and as of the Closing.
(c) Delivery of Officers' and SHAREHOLDER's Certificate. SOFTWARE shall
have received Certificates certifying that each of the warranties and
representations set forth in this Agreement by ROLINA and SHAREHOLDER are true
and accurate as of the date of the Closing and that no event or occurrence has
transpired as of the Closing which has or will have a material adverse effect
upon ROLINA's business or the Assets being acquired.
(d) Compliance with Agreement. ROLINA and SHAREHOLDER shall have performed
and complied with all of its covenants and obligations under this Agreement and
have delivered all Shares, securities, binding commitments and other documents
and materials required hereunder to SOFTWARE.
(e) Absence of Suit. No action, suit or proceedings before any court or
any governmental or regulatory authority shall have been commenced or threatened
and, no investigation by any governmental or regulatory authority shall have
been commenced, against ROLINA or SHAREHOLDER, seeking to restrain, prevent or
change the transactions contemplated hereby, or questioning the validity or
legality of any such transactions, or seeking damages in connection with any of
such transactions.
(f) Receipt of Approvals. Etc. All approvals, consents and/or waivers for
ROLINA and/or SHAREHOLDER that are necessary to effect the transactions
contemplated hereby shall have been received.
(g) Legal Opinion. SOFTWARE shall have received an opinion of counsel for
ROLINA and SHAREHOLDER in a form reasonably satisfactory to SOFTWARE.
(h) Proceedings and Instruments Satisfactory Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as SOFTWARE may reasonably request shall
have been delivered to SOFTWARE.
(i) Completion of Software. All software modules, including but not
limited to all source codes, documentation and all other appropriate and related
requirements which SOFTWARE may reasonably require of an early stage software
business shall be completed before and delivered to SOFTWARE at Closing to the
satisfaction of SOFTWARE.
8.2 The obligation of ROLINA and SHAREHOLDER to close hereunder shall be
subject to the fulfillment and satisfaction, prior to or at the Closing, of the
following conditions by SOFTWARE or the written waiver thereof by ROLINA and
SHAREHOLDER:
(a) Pre-Closing. All of the commitments set forth in Article 5 of this
Agreement shall be consummated.
(b) Representations and Warranties. The representation and warranties of
SOFTWARE in this Agreement shall be true and correct in all material respects
when made and shall be true and correct in all material respects on and as of
the Closing.
(c) Delivery of Officers' Certificate. SOFTWARE shall deliver to ROLINA
and SHAREHOLDER a certificate certifying that each of the warranties and
representations of SOFTWARE set forth in this Agreement is true and accurate as
of the date of the Closing and that no event or occurrence has transpired as of
the Closing
16
which has or will have a material adverse effect upon the business or assets of
SOFTWARE.
(d) Compliance with Agreement. SOFTWARE shall have performed and complied
with all of its obligations under this Agreement and delivered all shares,
securities and binding commitments required hereunder.
(e) Absence of Suit. No action or lawsuit shall have been commenced
against SOFTWARE, seeking to restrain, prevent or change the transactions
contemplated hereby, or questioning the validity or legality of any such
transactions, or seeking damages in connection with any of such transactions.
(f) Receipt of Approvals, Etc. All approvals, consents and/or waivers for
SOFTWARE that are necessary to effect the transactions contemplated hereby shall
have been received.
(g) Legal Opinion. ROLINA and SHAREHOLDER shall have received an opinion
of counsel for SOFTWARE in a form reasonably satisfactory to them.
(h) Proceedings and Instruments Satisfactory; Certificates. All
proceedings, corporate or otherwise, to be taken in connection with the
transactions contemplated by this Agreement shall have occurred and all
appropriate documents incident thereto as `ROLINA and SHAREHOLDER may reasonably
request shall have been delivered to ROLINA and SHAREHOLDER.
ARTICLE 9
INDEMNIFICATION
9.1 By SOFTWARE . SOFTWARE shall defend and promptly indemnify ROLINA and
SHAREHOLDER and save and hold them harmless from, against, for and in respect of
and shall pay any and all damages, losses, obligations, liabilities, claims,
encumbrances, deficiencies, costs and expenses, including without limitation,
reasonable attorneys' fees and other costs and expenses incident to any suit,
action, investigation, claim or proceeding suffered, sustained, incurred or
required to be paid by them by reason of (i) any breach or failure of observance
or performance of any representation, warranty, covenant, agreement or
commitment made by SOFTWARE hereunder or relating hereto or as a result of any
such representation, warranty, covenant, agreement or commitment being untrue or
incorrect in any material respect; and/or (ii) any and all actions, suits,
investigations, proceedings, demands, assessments, audits, judgments and claims
arising out of any of the foregoing or from any material misrepresentation or
omission from any schedule to this Agreement, certificates, financial statements
or from any document furnished or required to be furnished hereunder; and
9.2 By ROLINA and SHAREHOLDER. ROLINA and SHAREHOLDER, jointly and
severally, shall defend and promptly indemnify the SOFTWARE and its respective
officers and directors, and save and hold them harmless from, against, for and
in respect of and shall pay any and all damages, losses, obligations,
liabilities, claims, encumbrances, deficiencies, costs and expenses, including
without limitation, reasonable attorneys' fees and other costs and expenses
incident to any suit, action, investigation, claim or proceeding suffered,
sustained, incurred or required to be paid by the SOFTWARE by reason of (a) any
breach or failure of observance or performance of any representation, warranty,
covenant, agreement or commitment made by ROLINA and/or SHAREHOLDER hereunder or
relating hereto or as a result of any such misrepresentation, warranty,
covenant, agreement or commitment being untrue or incorrect in any respect;
and/or (b) the existence of any obligation or liability of ROLINA which were not
disclosed to the SOFTWARE in accordance with this Agreement; and/or (c) any and
all actions, suits, investigations, proceedings, demands, assessments, audits,
judgments and claims arising out of any of the foregoing or from any
misrepresentation or omission from any
17
schedule to this Agreement, certificates, financial statements or from any
document furnished or required to be furnished hereunder. Notwithstanding
anything contained in any agreement to the contrary, SHAREHOLDER hereby
specifically represents and agrees that SOFTWARE shall have assignable rights of
"set-off" against SHAREHOLDER in any contemporaneous or subsequent agreement
entered into by and between SHAREHOLDER, SOFTWARE and/or PROFORMIX to the extent
of any breach hereof in which case any amounts otherwise due SHAREHOLDER under
any such agreements may be reduced by the amounts hereinabove indemnified
against.
ARTICLE 10
BROKERAGE EXPENSES
10.1 Brokers. The parties covenant and represent to each other that they
had no dealings with any broker or finder in connection with this Agreement or
the transactions contemplated hereby.
10.2 Expenses. Except as otherwise provided herein, the parties agree to
bear their expenses individually, each in respect of all expenses of any
character incurred by it in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE 11
SECURITIES ACT PROVISION
11.1 Restrictions on Disposition of Shares. SHAREHOLDER covenants that the
shares of PROFORMIX common stock to be received in accordance with the
provisions of Article 1 hereof will not be disposed of except (i) pursuant to an
effective registration statement under the Securities Act of 1933, as amended
(the "Act"), or (ii) in any other transaction which, in the opinion of PROFORMIX
counsel, is exempt from registration under the Act or the rules and regulations
of the Securities and Exchange Commission ("SEC") thereunder. In order to
effectuate the covenants of this sub-section 11.1, an appropriate legend will be
placed upon each of the certificates of stock at the time of distribution of
such shares pursuant to this Agreement, and stop transfer instructions shall be
placed with the transfer agent for such shares.
11.2 Notice of Limitation Upon Disposition. SHAREHOLDER is aware that the
shares of PROFORMIX common stock distributed to him pursuant to this Agreement
will not have been registered under the Act and, therefore, under current
interpretations and applicable rules, unless an exception from the registration
provisions of the Act is legally available to the holder thereof, such shares
must be retained for a period of at least one year, and at the expiration of
such period, sales of such shares may be confined to brokerage transactions of
limited amounts requiring certain notification filings with the SEC and such
disposition may be available only if PROFORMIX is current in its filings with
the SEC under the Act, or other public disclosure requirements, and other
limitations imposed by the Act.
11.3 Evidence of Compliance with Private Offering Exemption. SHAREHOLDER
will agree to provide such reasonable evidence as counsel for PROFORMIX may
request in order to evidence the private offering nature of the distribution of
the shares of PROFORMIX stock received pursuant to this Agreement.
11.4 Inclusion in Registration of other Securities. If after Closing
PROFORMIX shall determine to register on an appropriate form under the
Securities Act of 1933, as amended (the "Act") (other than Form S-4 or S-8 or
other form dealing with comparable types of transactions) any shares of common
stock of PROFORMIX, SOFTWARE shall, at least 45 days prior to the filing of each
such registration statement, give SHAREHOLDER written notice of such proposed
registration and upon written notice given by
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SHAREHOLDER shall include or cause to be included in each such registration
statement such shares of PROFORMIX common stock issued to SHAREHOLDER as part of
the within merger as SHAREHOLDER may request. Should the percentage of holdings
permitted to be registered by or for other selling shareholders be less than
twenty percent, then SHARHOLDER'S percentage for inclusion shall be likewise so
limited. Notwithstanding anything contained elsewhere herein to the contrary,
SHAREHOLDER agrees that in all event said shares shall despite any registration
thereof, be restricted from any sale or disposition for a period of twenty-four
(24) months from the date of closing and acknowledges that appropriate legends
will be placed upon such shares reflecting the foregoing restrictions.
(a) PROFORMIX's Obligations in Registration. In the event SHAREHOLDER
elects to participate in an offering by including his shares in a registration
statement, PROFORMIX shall:
(i) Notify SHAREHOLDER as to the filing thereof and of all amendments or
supplements thereto filed prior to the effective date thereof;
(ii) Comply with all applicable rules and regulations of the Securities
and Exchange Commission (the "Commission") and, use its best efforts to cause
such registration statement to become effective at the earliest possible date
after the filing thereof;
(iii) Notify SHAREHOLDER immediately, and confirm in writing, (1) when the
registration statement becomes effective, (2) of the issuance by the Commission
of any stop order or of the initiation, or the threatening, of any proceedings
for that purpose, (3) of the receipt by PROFORMIX. of any notification with
respect to the suspension of qualification of SHAREHOLDER's Common Stock for
sale in any jurisdiction or of the initiation, or the threatening, of any
proceedings for that purpose and (4) of the receipt of any comments, or requests
of additional information, from the Commission or any state regulatory
authority. If the Commission or any state regulatory authority shall enter such
a stop order or order suspending qualification at any' time, PROFORMIX will make
every reasonable effort to obtain the lifting of such order as promptly as
practicable;
(iv) During the time when a prospectus is required to be delivered under
the Act, use its best efforts to comply with all requirements imposed upon it by
the Act, as hereafter amended, and by the rules and regulations promulgated
thereunder, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in SHAREHOLDER'S Stock, If at any time when
a prospectus relating to the SHAREHOLDER'S Stock is required to be delivered
under the Act any event shall have occurred as a result of which, in the opinion
of counsel for PROFORMIX or SHAREHOLDER'S counsel, the prospectus relating to
PROFORMIX's Stock as then amended or supplemented includes an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend such prospectus to comply with the Act, PROFORMIX will
promptly notify SHAREHOLDER in writing of such fact and promptly prepare and
file with the Commission, at its expense, an appropriate amendment or
supplement;
(v) Endeavor in good faith, in cooperation with SHAREHOLDER, at or prior
to the time the registration statement becomes effective, to qualify the
SHAREHOLDER'S stock for offering and sale under the securities laws relating to
the offering or sale of SHAREHOLDER'S Stock in such jurisdictions as SHAREHOLDER
may reasonably designate and to continue the qualifications in effect so long as
required for purposes of the sale of the SHAREHOLDER'S Stock; provided that no
such qualification shall be required in any jurisdiction where, as a result
thereof, PROFORMIX would be subject to service of general process. In each
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jurisdiction where such qualification shall be effected, PROFORMIX will, unless
SHAREHOLDER agrees that such action is not at the time necessary or advisable,
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction. For the purposes of this paragraph, "good
faith" is defined as the same standard of care and degree of effort as PROFORMIX
will use to qualify its securities other than the Shareholders's Stock;
(vi) Furnish to SHAREHOLDER as soon as available, copies of any such
registration statement and each preliminary or final prospectus, or supplement
or amendment prepared pursuant thereto):
(vii) Make such representations and warranties to any underwriter of
SHAREHOLDER'S Stock, and use its best efforts to cause PROFORMIX's counsel to
render such opinions to such underwriter as such underwriter may reasonably
request; and
(viii) Pay all costs and expenses incident to the performance of
PROFORMIX's obligations under this Agreement, including, without limitation, the
fees and disbursements of PROFORMIX's auditors, engineers and legal counsel, and
of legal counsel responsible for qualifying the SHAREHOLDER 's stock under blue
sky laws, all filing fees and printing expenses, all expenses in connection with
the transfer and delivery of the SHAREHOLDER's Stock, and all expenses in
connection with the qualification of the SHAREHOLDER 's Stock under blue sky
laws.
(b) Agreement by SHAREHOLDER. In connection with the filing of a
registration statement pursuant to this Agreement, if SHAREHOLDER participates
in the offering by including SHAREHOLDER 's shares, SHAREHOLDER agrees:
(i) To furnish PROFORMIX all material information requested by PROFORMIX
concerning SHAREHOLDER and SHAREHOLDER's holdings of securities of PROFORMIX and
the proposed method of sale or other disposition of SHAREHOLDER's Stock and such
other information and undertakings as shall be reasonably required in connection
with the preparation and filing of any such registration statement covering all
or a part of SHAREHOLDER's Stock and in order to ensure full compliance with the
Act; and
11.4 (ii) To cooperate in good faith with PROFORMIX and its underwriters,
if any, in connection with such registration, including placing the shares of
SHAREHOLDER'S Stock to be included in such registration statement in escrow or
custody to facilitate the sale and distribution thereof.
ARTICLE 12
MISCELLANEOUS PROVISIONS
12.1 Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof. The representations,
warranties, covenants and agreements set forth in this Agreement and in any
financial statements, schedules or exhibits delivered pursuant hereto constitute
all the representations, warranties, covenants and agreements of the parties
hereto and upon which the parties have relied. Except as may be specifically
provided herein, no change, modification, amendment, addition or termination of
this Agreement or any part thereof shall be valid unless in writing and signed
by or on behalf of the party to he charged therewith.
12.2 Survival of Covenants. etc. All warranties, representations,
covenants and indemnifications set forth herein shall survive the Closing of
this Agreement.
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12.3 Notices. Any and all notices or other communications or deliveries
required or permitted to be given or made pursuant to any of the provisions of
this Agreement shall be deemed to have been duly given or made for all purposes
if sent by Federal Express delivery or by certified or registered mail, return
receipt requested and postage prepaid or hand delivered to the respective
parties at the addresses hereinbefore given or such other addresses as shall be
provided hereafter by a party hereto to the other in accordance with the notice
provisions hereof.
12.4 Waiver. No waiver of the provisions hereof shall be effective unless
in writing and signed by the party to be charged with such waiver. No waiver
shall be deemed a continuing waiver or waiver in respect of any subsequent
breach or default, either of a similar or different nature, unless expressly so
stated in writing.
12.5 Governing Law. This Agreement shall be governed, interpreted and
construed in accordance with the laws of the State of New Jersey applicable to
contracts to be performed entirely within that State. Should any clause, section
or part of this Agreement be held or declared to be void or illegal for any
reason, all other clauses, sections or parts of this Agreement which can be
affected without such illegal clause, section or part shall nevertheless
continue in full force and effect.
12.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns or heirs and personal representatives.
12.7 Captions. The headings, captions or titles of paragraphs under
sections or subsections of this Agreement are for convenience and reference only
and do not in any way modify, interpret or construe the intent of the parties or
effect any of the provisions of this Agreement.
12.8 Time Periods. Any time period provided for herein which shall end or
expire on a Saturday, Sunday. or legal holiday shall be deemed extended to the
next full business day thereafter.
12.9 Counterparts. This Agreement may be executed in one or more
counterparts and/or facsimile copies hereof, each of which shall be deemed to be
an original, but all of which shall constitute one and the same Agreement.
12.10 Confidentiality. Neither this Agreement nor any memorandum of this
Agreement shall be recorded amongst the Public Records of any State or County.
The parties hereto agree to keep this Agreement confidential, as well as any
information or document obtained by either party in connection with this
transaction, except to the extent disclosure is required to or by any government
agency or regulatory or quasi-regulatory body.
12.11 Joint Draftsmanship. The preparation of this Agreement has been a
joint effort of the parties and this Agreement shall not, solely as a matter of
judicial construction, be construed more severely against one of the parties
than the other.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed on the date and year first above written.
PROFORMIX SOFTWARE, INC.
(SEAL)
ATTEST:
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
/s/ Xxxxx Xxxxxx Xxxxxxx X. Xxxxxx, Chairman
-----------------------
Xxxxx Xxxxxx, Secretary
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ROLINA CORPORATION
(SEAL)
ATTEST: By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, President
/s/ Xxxxxxxx X. Xxxxxx
-----------------------------
Xxxxxxxx X. Xxxxxx, Secretary
ADOPTION AND APPROVAL OF THIS
MERGER AGREEMENT ONLY AS THE
SOLE SHAREHOLDER OF
PROFORMIX SOFTWARE, INC.
BY:PROFORMIX SYSTEMS, INC.
(SEAL)
ATTEST: By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------
Xxxxxxx X. Xxxxxx, Chairman
/s/ Xxxxx Xxxxxx
-----------------------
Xxxxx Xxxxxx, Secretary
SHAREHOLDER:
/s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx
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