AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement") is dated
as of September __, 2000 among Vertex Interactive, Inc., a New Jersey
corporation ("Parent"), Rensoft Acquisition Corp., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Merger Sub"), and Renaissance Software,
Inc., a Delaware corporation (the "Company"). Certain capitalized terms used
herein are defined in Section 13.13.
W I T N E S E T H:
WHEREAS, each of the stockholders of the Company owns the
number of shares of capital stock of the Company set forth opposite such
stockholder's name on Exhibit A;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and agreements herein contained and for other good and valuable
consideration, the receipt whereof is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
MERGER
1.1 MERGER. The parties have executed this Agreement for
purposes of setting forth a plan of reorganization under the provisions of
Section 368(a)(1)(A) and (a)(2)(D) of the Code and the rules and regulations
promulgated thereunder. To that end, each of the stockholders of the Company
shall exchange such stockholder's shares of Company Stock by virtue of this plan
of merger for shares of common stock, par value $.005 per share, of Parent (the
"Parent Common"), all in accordance with the terms of this Agreement.
1.2 SURVIVING CORPORATION. At the Effective Date of the Merger
(as defined in Section 1.3), Merger Sub shall be merged (the "Merger") with and
into the Company in accordance with this Agreement and the General Corporation
Law of the State of Delaware (the "GCL"), whereupon the separate existence of
Merger Sub shall cease (except as it may be continued by operation of law), and
the Company shall continue as the surviving corporation under the name
"Renaissance Software, Inc.". The Company, in its capacity as the corporation
surviving the Merger, sometimes is referred to herein as the "Surviving
Corporation".
1.3 CONSUMMATION OF THE MERGER. On the Closing Date (as
defined in Section 4.1), the Company and Merger Sub shall file or cause to be
filed a certificate of merger with the Secretary of State of the State of
Delaware and make all other filings or recordings required by the GCL in
connection with the Merger. The Merger shall be effective at such time as the
certificate of merger is duly filed with the Secretary of State of the State of
Delaware or at such later time, not later than five business days thereafter, as
may (with the consent of Parent
and the Company) be specified in such certificate of merger (the "Effective Date
of the Merger").
1.4 FURTHER ASSURANCES. At and after the Effective Date of the
Merger, the officers and directors of the Surviving Corporation will be
authorized to execute and deliver, in the name and on behalf of the Company or
Merger Sub, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Sub, any other actions
and things to vest, perfect or confirm of record or otherwise in the Surviving
Corporation any and all right, title and interest in, to and under any of the
rights, properties or assets of the Company acquired or to be acquired by Merger
Sub as a result of, or in connection with, the Merger.
ARTICLE II
CERTIFICATES OF INCORPORATION;
BY-LAWS; BOARD OF DIRECTORS; OFFICERS
2.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Merger Sub, as amended by the Certificate of Merger, shall be
the Certificate of Incorporation of the Surviving Corporation until further
amended in accordance with applicable law; provided that such Certificate of
Incorporation shall be amended to change the name of such corporation to
"Renaissance Software, Inc.".
2.2 BY-LAWS. The By-laws of Merger Sub as in effect at the
Effective Date of the Merger shall be the By-laws of the Surviving Corporation
until amended in accordance with applicable law.
2.3 BOARD OF DIRECTORS; OFFICERS. From and after the Effective
Date of the Merger, until their successors shall have been duly elected or
appointed in accordance with applicable law, the officers of the Surviving
Corporation shall be the officers of the Company except that each of Xxxxxxxx
Xxxx and Xxxx Xxxxxxxx shall be joint Chairman, and Xxxxxxx Xxxxx shall be Chief
Financial Officer and Treasurer. The directors of Merger Sub at the Effective
Date of the Merger, which shall include Xxxxx Xxxxxx and Xxxxxx Xxxxxx, shall be
the directors of the Surviving Corporation.
ARTICLE III
CONVERSION OF STOCK
3.1 CONVERSION OF STOCK. On the Effective Date of the Merger,
by virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company or the holder of any of the securities described below:
(a) each share of Company Stock held by the Company as
treasury stock, if any, shall be canceled, without the payment of any
consideration therefor;
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(b) each share of Company Stock which is outstanding shall be
converted into the right to receive 0.85 shares of Parent Common (such number
being referred to as the "Exchange Ratio"); and
(c) each share of Merger Sub Common which is outstanding shall
be canceled and extinguished and converted into one share of Common Stock of the
Surviving Corporation ("Surviving Company Common").
3.2 CLOSING OF COMPANY TRANSFER BOOKS. On the Effective Date
of the Merger, the stock transfer books of the Company shall be closed with
respect to shares of the Company Stock outstanding immediately prior to the
Effective Date of the Merger and no transfer of such shares of the Company Stock
shall thereafter be made on such stock transfer books. If, on or after the
Effective Date of the Merger, valid certificates representing any such shares of
the Company Stock are presented to Parent, they shall be exchanged as provided
in Section 3.3.
3.3 EXCHANGE OF CERTIFICATES. (a) On and after the Effective
Date of the Merger, each holder of shares of Company Stock shall be entitled to
receive a certificate or certificates representing the aggregate number of
shares of Parent Common to which such stockholder is entitled as a holder of the
shares of Company Stock immediately prior to the Effective Date of the Merger
reduced, in the case of each stockholder, by such stockholder's Pro Rata Share
(as defined in Section 13.13) of the Escrow Shares (as defined below) to be
deposited in escrow as set forth below (the amount of Parent Shares to which
such stockholder is so entitled and such stockholder's Pro Rata Share of the
Escrow Shares is set forth in Section 5.2 of the Disclosure Schedule). On the
Effective Date of the Merger, certificates representing 20% of Xxxxxx Xxxxxx'x
and Xxxxx Xxxxxx'x shares and 5% of all other stockholders' shares (the "Escrow
Shares") shall be delivered to the Escrow Agent as provided in the Escrow
Agreement (as both of those terms are defined in Section 9.5).
(b) As soon as reasonably practicable after the Effective Date
of the Merger, Parent shall mail or otherwise deliver to each holder of record
of a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Stock (the "Certificates") whose
shares are converted pursuant to Section 3.1(b) into the right to receive shares
of Parent Common (i) a letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to Parent and shall be in such form and
have such other provisions as Parent may reasonably specify) and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for certificates representing shares of Parent Common. Upon surrender of a
Certificate for cancellation to Parent, together with such letter of transmittal
duly executed and completed in accordance with its terms, the holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of shares of Parent Common which such holder has the
right to receive pursuant to the provisions of this Article III, and the
Certificate so surrendered shall forthwith be canceled. In no event shall the
holder of any Certificate be entitled to receive interest on any funds to be
received in the Merger. In the event of a transfer of ownership of Company Stock
which is not registered in the transfer records of the Company, a certificate
representing that number of shares of Parent Common may be issued to a
transferee if the Certificate representing such Company Stock is presented to
Parent accompanied by all
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documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid.
3.4 NO FRACTIONAL SHARES. No scrip or fractional share
certificates of Parent Common shall be issued as a result of the Merger, but in
lieu of each fractional interest, Parent shall issue one full share of Parent
Common for each fractional share equal to one-half or more of one share, and
each fractional share equal to less than one-half of one share shall be
eliminated.
3.5 STOCK OPTIONS. (a) Subject to the terms and conditions of
the Company's 1998 Renaissance Software, Inc. Employee Stock Option Plan and the
Warrant Agreements between the Company and each of Xxxxxx Xxxxxx and Xxxxx
Xxxxxx (together, the "Company Option Plans") and the stock option agreements
executed and the warrants outstanding pursuant thereto, the Company Option Plans
and each option or warrant to purchase Company Stock granted thereunder that is
outstanding on the Effective Date of the Merger shall be assumed by Parent and
continued in accordance with its respective terms and each such option or
warrant shall become a right to purchase a number of shares of Parent Common, as
more fully described below.
(b) At the Effective Date of the Merger, each outstanding
option or warrant to purchase shares of Company Stock (a "Company Stock Option")
under the Company Option Plans, whether vested or unvested, shall be deemed to
constitute an option to acquire, on the same terms and conditions as were
applicable under such Company Stock Option, a number of shares of Parent Common
equal to the product (rounded down to the nearest whole share) of (i) the number
of shares of Company Stock issuable upon exercise of the option or warrant
immediately prior to the Effective Date of the Merger and (ii) the Exchange
Ratio; and the exercise price per share of Parent Common at which such option or
warrant is exercisable shall be the amount (rounded up to the nearest whole
cent) obtained by dividing (x) the exercise price per share of Company Stock at
which such option or warrant is exercisable immediately prior to the Effective
Date of the Merger by (y) the Exchange Ratio; provided, however, that, in the
case of any Company Stock Option to which Section 421 of the Code applies by
reason of its qualification under any of Sections 422-424 of the Code
("qualified stock options"), the exercise price, the number of shares
purchasable pursuant to such option and the terms and conditions of exercise of
such option shall be determined in order to comply with Section 425(a) of the
Code.
(c) As soon as practicable after the Effective Date of the
Merger, Parent shall deliver to the participants in the Company Option Plans
appropriate notices setting forth such participants' rights pursuant thereto and
that the grants pursuant to the Company Option Plans shall continue in effect on
the same terms and conditions (subject to the adjustments required by this
Section after giving effect to the Merger), and providing for the assumption by
Parent of such participant options. Parent shall comply with the terms of the
Company Option Plans and ensure, to the extent required by, and subject to the
provisions of, the Company Option Plans, that the Company Stock Options which
qualified as qualified stock options prior to the Effective Date of the Merger
continue to qualify as qualified stock options after the Effective Date of the
Merger.
(d) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common for delivery
under the Company Option Plans as
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adjusted in accordance with this Section. Parent shall, within 15 days after
such time as financial results covering at least 30 days of combined operations
of Parent and the Company have been published by Parent in its annual report to
the SEC, file a registration statement on Form S-8 promulgated by the SEC under
the Securities Act (or any successor or other appropriate form) with respect to
the Parent Common subject to the Company Stock Options and shall use its
reasonable best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding. With respect to those individuals who subsequent to the Merger will
be subject to the reporting requirements under Section 16(a) of the Exchange
Act, where applicable, Parent shall administer the Company Option Plans in a
manner that complies with Rule 16b-3 promulgated under the Exchange Act.
ARTICLE IV
CLOSING
4.1 CLOSING. The closing of the transactions contemplated
hereby (the "Closing") shall take place on the first business day (the "Closing
Date") following satisfaction of all of the conditions to closing set forth in
Articles VIII and IX, at the offices of Milbank, Tweed, Xxxxxx & XxXxxx LLP, Xxx
Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other time and such
other location as may be agreed upon by the parties.
4.2 DELIVERIES AT CLOSING.
(a) At the Closing, the Company shall deliver to Parent:
(i) certified copies of the Company's Certificate of
Incorporation, By-laws and corporate resolutions with respect to the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby;
(ii) certificates representing a majority of the issued and
outstanding shares of Company Stock (which shall include a majority of
the issued and outstanding shares of Company Preferred Stock);
(iii) stock powers duly endorsed in blank for the Escrow
Shares;
(iv) such other items as are specified herein.
(b) At the Closing, each of Parent and Merger Sub shall
deliver to the Company:
(i) certified copies of its Certificate of Incorporation,
By-laws and corporate resolutions with respect to the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby; and
(ii) such other items as are specified herein.
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(c) At the Closing, Parent shall deliver to the Escrow Agent,
a certificate or certificates representing the Escrow Shares, accompanied by the
stock powers referred to in Section 4.2(a)(iii); and
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Parent with respect to
the Company as follows:
5.1 CORPORATE EXISTENCE AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware and has full corporate power and authority to carry on its business
as it is now being conducted and to own, lease and operate its properties and
assets. Except as set forth in Section 5.1 of the Disclosure Schedule, the
Company is duly qualified or licensed to do business as a foreign corporation
and is in good standing in every jurisdiction in which the character or location
of the property owned or leased by the Company or the conduct of its business
requires such licensing or qualification, and in which the failure to qualify
would have a material adverse effect on the condition (financial or otherwise),
of the Company. Section 5.1 of the Disclosure Schedule lists all such
jurisdictions. The copies of the Company's Certificate of Incorporation, as
amended to date, and By-laws, as currently in effect and in the form delivered
to Parent, are complete, correct and in full force and effect, and the Company
is not in violation of any of the provisions thereof.
5.2 CAPITALIZATION. The shares described in Section 5.2 of the
Disclosure Schedule represent all of the authorized and issued and outstanding
shares of capital stock of the Company held of record by the stockholders set
forth in such schedule. All issued and outstanding shares of capital stock of
the Company are duly authorized, validly issued, fully paid, nonassessable and
free of rights of refusal; except as disclosed in Section 5.2 of the Disclosure
Schedule, there are no outstanding subscriptions, options, warrants, conversion
or exchange privileges or rights measured by the valuation of capital stock or
by the business of the Company or other rights to purchase or obtain any capital
stock of the Company or any interest in the Company; and, except as disclosed in
Section 5.2 of the Disclosure Schedule, there are no contracts, commitments,
understandings, arrangements or restrictions relating to the issuance, sale,
transfer or purchase by the Company of any shares of its capital stock.
5.3 SUBSIDIARIES. The Company does not have any subsidiaries
nor does it own, directly or indirectly, any capital stock of or other equity
interest in any Person.
5.4 AUTHORIZATION OF COMPANY; ETC. The Company has full power
and authority to enter into this Agreement, and all associated agreements and
documents, and to carry out the transactions contemplated hereby and thereby.
The stockholders and the board of directors of the Company have taken all action
required by law, the Company's Certificate of Incorporation and By-laws, or
otherwise, to authorize the execution, delivery and performance of this
Agreement, and all associated agreements and documents, and the consummation of
the transactions contemplated hereby and thereby. The affirmative votes of the
holders of record of
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(a) a majority of the total outstanding shares of Company Stock and (b) a
majority of the total outstanding shares of Company Preferred Stock with respect
to the adoption of this Agreement, both of which have been obtained by written
consents dated the date hereof (copies of which are attached as Annex I), are
the only votes of the holders of any class or series of the capital stock of the
Company required to adopt this Agreement and approve the Merger and the other
transactions contemplated thereby. This Agreement, and all associated agreements
and documents, has been duly and validly authorized, executed and delivered by
the Company and no other corporate or individual action is necessary. This
Agreement, and all associated agreements and documents, is a valid and binding
obligation of the Company enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally, or by general equitable principles.
5.5 NO VIOLATION; COMPANY. Except as set forth in Section 5.5
of the Disclosure Schedule, neither the execution and delivery of this
Agreement, nor any associated document or agreement by the Company, nor the
performance and the consummation of the transactions contemplated hereby or
thereby, will (a) violate any provisions of the Certificate of Incorporation or
By-laws of the Company, (b) except as would not, individually or in the
aggregate, have a material adverse effect on the Company, violate, or be in
conflict with, or constitute a default (or an event which, with or without due
notice or lapse of time, or both, would constitute a default) under or result in
the modification or termination of, or cause or permit the acceleration of the
maturity of any debt, obligation, contract, commitment or other agreement to
which the Company is a party or by which it or its property is or may be bound
or which affects or relates to its business, (c) result in the creation or
imposition of any mortgage, pledge, lien, security interest, encumbrance,
restriction, charge or limitation of any kind, upon the Company or any of its
assets, or (d) violate any statute or law or any judgment, decree, order,
regulation, or rule of any court or governmental authority.
5.6 CONSENTS AND APPROVALS. Except as set forth in Section 5.6
of the Disclosure Schedule, no consent, approval or authorization of, or
declaration, notice, filing or registration with, any governmental or regulatory
authority or third Person is required to be obtained or made by the Company in
connection with the execution, delivery and performance of this Agreement or any
associated agreement by the Company and the consummation of the transactions
contemplated hereby or thereby. All such consents, approvals, authorizations,
declarations, notices, filings and registrations listed or required to be listed
in Section 5.6 of the Disclosure Schedule will have been duly obtained or made
on or prior to the Closing Date.
5.7 FINANCIAL STATEMENTS. Annexed hereto in Section 5.7 of the
Disclosure Schedule are the unaudited balance sheet of the Company as at
December 31, 1999 (the "Annual Balance Sheet") and unaudited statement of income
and retained earnings and statement of cash flows as at December 31, 1999,
together with notes thereto. The Company has also furnished to Parent the
unaudited balance sheet of the Company as at June 30, 2000 (the "Balance Sheet")
and the unaudited statement of income and retained earnings and statement of
cash flows for the six-month period then ended. All of such financial statements
are in accordance with the books and records of the Company. Except as set forth
in Section 5.7 of the Disclosure Schedule, all of such balance sheets and the
notes thereto are complete and correct and fairly present the assets,
liabilities and financial condition of the Company as at the respective dates
thereof, and the statements of income and retained earnings and the statements
of cash flows for the periods then
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ended, together with the notes to the financial statements, are complete and
correct and fairly present the results of the operations for the periods therein
referred to, all in accordance with generally accepted accounting principles
("GAAP") applied consistently. Section 5.7 of the Disclosure Schedule also sets
forth, by lender, the amount of indebtedness of the Company for borrowed money
(aggregating $1,900,000) as of June 30, 2000, and the repayment terms thereof.
5.8 NO UNDISCLOSED LIABILITIES. The Company does not have any
liabilities or obligations (herein "Liabilities") of any nature (absolute,
accrued, contingent or otherwise, and whether due or to become due) except (i)
Liabilities that are fully reflected or reserved against in the Balance Sheet,
(ii) Liabilities not required to be reflected or reserved against in the Balance
Sheet pursuant to GAAP and (iii) Liabilities incurred in the ordinary course of
business and consistent with past practice since the date of the Balance Sheet.
5.9 ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth in Section 5.9 of the Disclosure Schedule, since the date of the
Annual Balance Sheet, the Company has not:
(a) suffered any material adverse change in its condition
(financial or otherwise), assets, liabilities, reserves, business, operations
or, to the knowledge of the Company, prospects;
(b) paid, discharged or satisfied any material claims,
liabilities or obligations other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of liabilities
or obligations reflected against in the Annual Balance Sheet or incurred in the
ordinary course of business since the date of the Annual Balance Sheet;
(c) permitted or allowed any of its material property or
assets to be subjected to any mortgage, pledge, lien, security interest,
encumbrance, restriction or charge of any kind;
(d) written down the value of any inventory or written off as
uncollectible any notes, lease or accounts receivable;
(e) canceled any debts or waived any claims or rights, waived
any statute of limitation, or sold, transferred, or otherwise disposed of any
material properties or assets, except for a fair consideration in the ordinary
course of business;
(f) except in the ordinary course of business consistent with
past practice, licensed, disposed of or permitted to lapse any rights to the use
of any Intellectual Property (as defined in Section 13.13), or disposed of or
disclosed to any Person any material Intellectual Property not theretofore a
matter of public knowledge;
(g) except in the ordinary course of business consistent with
past practice, granted any general increase in the compensation or benefits of
employees or any increase in the compensation or benefits payable or to become
payable to any employee (including, in each case, any such increase pursuant to
any current or newly adopted bonus, pension, severance, profit-sharing or other
plan, agreement, arrangement or commitment);
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(h) declared, paid or set aside for payment any amounts in the
nature of bonuses to any of its officers or employees;
(i) terminated any employees or officers whose services are
key, individually or in the aggregate, to the Company, or otherwise hired or
terminated employees other than in the ordinary course of business;
(j) made any capital expenditures or commitments or entered
into any capital leases in excess of $25,000 in the aggregate for additions to
property, plant or equipment;
(k) declared, paid or set aside for payment (whether in cash,
assets or stock) any dividend or other distribution in respect of its capital
stock or any other Company securities or redeemed, purchased or otherwise
acquired, directly or indirectly, any shares of capital stock or any other
Company securities or any securities of any Affiliate of the Company;
(l) made any change in any method of accounting or accounting
practice;
(m) paid, loaned or advanced any amount to, or sold,
transferred or leased any properties or assets to, or entered into any agreement
or arrangement with any of its stockholders, officers or directors, or any
Affiliate or Associate of any of its stockholders, officers or directors;
(n) issued, sold, or delivered, or otherwise increased the
amount or number of, shares of its capital stock or options, warrants or rights
to acquire any such capital stock or securities convertible into or exchangeable
for such capital stock;
(o) collected any lease or other payment in advance of the
date that it was due;
(p) delivered any product or service to customers in advance
of the date that it was due;
(q) delayed payment of any accounts payable except in
accordance with past practice;
(r) entered into any other transaction, contract or commitment
other than in the ordinary course of business and other than as contemplated
hereby or described in this Agreement or in its attachments;
(s) granted any right or license with respect to any of its
material property, assets, or business or entered into or canceled any material
licensing or distributorship arrangements;
(t) to the knowledge of the Company, after inquiry,
experienced any theft, damage, destruction or loss (whether or not covered by
insurance) in excess of $5,000 to any of its properties or assets;
(u) experienced any strike or other labor dispute affecting
its business, condition, operations or assets;
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(v) experienced any loss of employees, suppliers, or customers
materially adversely affecting its business, condition, operations, or assets;
or
(w) agreed, whether in writing or otherwise, to take any
action described in this Section 5.9.
5.10 TITLE TO PROPERTIES; ENCUMBRANCES. Except as sold or
disposed of in the ordinary course of business, the Company has good and valid
title to all of the properties and assets reflected in the Balance Sheet and all
the properties and assets purchased or otherwise acquired by the Company since
the date of the Balance Sheet. Except as set forth in Section 5.10 of the
Disclosure Schedule, none of such properties or assets is subject to any
mortgage, pledge, lien, security interest, encumbrance, restriction or
limitation of any kind. The rights, properties and other assets presently owned,
leased or licensed by the Company include all rights, properties and assets
necessary to permit the Company to conduct its business in the same manner as it
has been conducted heretofore.
5.11 PLANT AND EQUIPMENT. The plants, structures and equipment
of the Company (owned or leased) are adequate for the conduct of the business of
the Company as presently conducted. The Company has not received any
notification that it is in violation of any applicable building, zoning,
anti-pollution, environmental, health or other law, ordinance or regulation in
respect of its plants or structures or operations. To the knowledge of the
Company, no such violation exists, and all related material permits, licenses
and other authorizations under such laws have been obtained and are in effect
and complied with.
5.12 LEASES. Section 5.12 of the Disclosure Schedule contains
an accurate and complete list of all leases pursuant to which the Company leases
any real property and any material personal property. All such leases are valid,
binding and enforceable in accordance with their terms, and are in full force
and effect; there are no existing material defaults by the Company or, to the
Company's knowledge, the other party thereunder; no material event of default
has occurred which (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute such a default
thereunder; and all lessors under such leases have consented (where such consent
is necessary) to the consummation of the transactions contemplated by this
Agreement. To the knowledge of the Company, all leased property and improvements
are free of any material defects.
5.13 BANK ACCOUNTS. Section 5.13 of the Disclosure Schedule
sets forth the names and locations of all banks, trust companies, savings and
loan associations and other financial institutions at which the Company
maintains safe deposit boxes or accounts of any nature and the names of all
persons authorized to draw thereon, make withdrawals therefrom or otherwise have
access thereto. As at September 15, 2000, the Company held cash and cash
equivalents aggregating not less than $2,346,581.12 in the form and amounts set
forth next to the name of each financial institution in Section 5.13 of the
Disclosure Schedule.
5.14 LITIGATION. Except as set forth in Section 5.14 of the
Disclosure Schedule, there is no legal, administrative, arbitration or other
proceeding, claim, or action of any nature or investigation pending or to the
knowledge of the Company threatened against or involving the Company or any of
its properties or assets (including without limitation any product liability
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claim for products sold by the Company prior to the date hereof) or which
questions or challenges the Company's participation in the transactions
contemplated by this Agreement or any associated agreements or documents or any
action taken or to be taken by the Company pursuant to this Agreement or any
associated agreements or documents or in connection with the transactions
contemplated hereby or thereby; and the Company does not know or has no reason
to know of any valid basis for any such legal, administrative, arbitration or
other proceeding, claim, or action of any nature or investigation. The Company
is not subject to any judgment, order, injunction or decree entered in any
lawsuit or proceeding which has had a material adverse effect, or which is
expected to have a material adverse effect on the Company's ability to conduct
its business as currently conducted.
5.15 TAXES.
(a) The Company has filed all Tax Returns (or the Tax Returns
have been filed on behalf of the Company) required to be filed by applicable
law. All Tax Returns were true, complete and correct and filed on a timely
basis. The Company has paid all Taxes that are due, or claimed or asserted by
any taxing authority to be due, from the Company for the periods covered by the
Tax Returns.
(b) Except as set forth in Section 5.15(b) of the Disclosure
Schedule, the Company has established on its books and records reserves adequate
to pay all Taxes not yet due and payable. The Company has made available to
Parent complete and accurate copies of all work papers associated with the
calculation of the Company's Tax reserves.
(c) Except as set forth in Section 5.15(c) of the Disclosure
Schedule, there are no tax liens upon the assets of the Company except Liens for
Taxes not yet due.
(d) Except as set forth in Section 5.15(d) of the Disclosure
Schedule, the Company has not requested (and no request has been made on the
Company's behalf) any extension of time within which to file any Tax Return.
(e) Except as set forth in Section 5.15(e) of the Disclosure
Schedule, (i) the Company has not entered into any agreements with any taxing
authority extending the statute of limitations for the assessment of Taxes; (ii)
there are no ongoing audits or administrative proceedings with respect to any
Taxes of the Company; and (iii) no deficiency for any Taxes has been suggested,
proposed, asserted or assessed against the Company that has not been resolved
and paid in full.
(f) Except as set forth in Section 5.15(f) of the Disclosure
Schedule, no audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax Returns of the Company.
(g) Except as set forth in Section 5.15(g) of the Disclosure
Schedule, the Company has not received any written ruling of a taxing authority
relating to Taxes or entered into any written and legally binding agreement with
any taxing authority relating to Taxes.
(h) Except as set forth in Section 5.15(h) of the Disclosure
Schedule, the Company has made available to Parent complete and accurate copies
of all Tax Returns and
11
associated work papers filed by or on behalf of the Company for all taxable
years ending on or prior to the date of this Agreement.
(i) The Company is not party or subject to, or bound by, any
agreements relating to the allocation or sharing of Taxes.
(j) All transactions that could give rise to an understatement
of federal income tax (within the meaning of Code 'SS'6662) by the Company have
been adequately disclosed on the Company's Tax Returns in accordance with Code
'SS' 6662(d)(2)(B).
5.16 BENEFIT PLANS. (a) Except as set forth in Section 5.16 of
the Disclosure Schedule, there are no Plans (as defined in Section 13.13)
maintained or contributed to by the Company under which the Company has any
liability, or in which any employees of the Company participate.
(b) Except as set forth in Section 5.16 of the Disclosure
Schedule, neither the Company nor any Member of the Controlled Group (as defined
in Section 13.13) has ever sponsored or contributed to, or had any liability
with respect to, a defined benefit pension plan subject to Title IV of ERISA,
including a defined benefit pension plan that is a multiemployer plan as
described in Section 3(37) of ERISA, or any Plan subject to Section 302 of ERISA
or Section 412 of the Code.
(c) Except as set forth in Section 5.16 of the Disclosure
Schedule, no employees of the Company participate in any welfare benefit plan
which provides health benefits to an employee after the employee's termination
of employment or retirement except as required under Section 4980B of the Code
and Sections 60l through 608 of ERISA or applicable state law.
(d) To the knowledge of the Company, except as set forth in
Section 5.16 of the Disclosure Schedule, each Plan which is an "employee benefit
plan," as defined in Section 3(3) of ERISA, has been administered in compliance
in all material respects with its terms and the requirements provided by any and
all statutes, orders or governmental rules or regulations applicable to the
Plan, including but not limited to ERISA and the Code. Each Plan and its related
trust that are intended to qualify under Section 401(a) of the Code and Section
501(a) of the Code are so qualified.
(e) To the knowledge of the Company, all reports, forms and
other documents required to be filed with any governmental entity with respect
to any Plan have been timely filed and are accurate.
(f) To the knowledge of the Company, all contributions for all
periods ending prior to the date of this Agreement (including periods from the
first day of the current plan year to the date of this Agreement) have been made
prior to the date of this Agreement by the Company in accordance with past
practice and the recommended contribution in any applicable actuarial report.
(g) With respect to each Plan required to be disclosed in
Section 5.16 of the Disclosure Schedule:
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(i) no prohibited transactions (as defined in Section 406 or
407 of ERISA or Section 4975 of the Code) have occurred for which a
statutory exemption is not available;
(ii) no action or claims (other than routine claims for
benefits made in the ordinary course of Plan administration for which
Plan administrative review procedures have not been exhausted) have
been brought, or are pending, or, to the knowledge of the Company, are
threatened or imminent against or with respect to the Plan, any
employer who is participating (or who has participated) in the Plan or
any fiduciary (as defined in Section 3(21) of ERISA) of the Plan; and
(iii) neither the Company nor any fiduciary has any knowledge
of any facts which could give rise to any such action or claim
described in clause (2), above.
(h) Neither the Company nor any Member of the Controlled Group
has any liability or, to the knowledge of the Company, is threatened with any
liability (whether joint or several) (i) for any excise tax imposed by Sections
4975, 4976, 4977 or 4979 of the Code, or (ii) for a fine under Section 502 of
ERISA, (iii) or for any liability under Section 4062, 4063, 4064, 4069 or 4201
of ERISA, Section 412(c)(11) of the Code or Section 302(c)(11) of ERISA.
(i) All of the Plans listed in Section 5.16 of the Disclosure
Schedule, to the extent applicable, are in compliance with the continuation of
group health coverage provisions contained in Section 4980B of the Code and
Section 601 through 608 of ERISA.
(j) Except as set forth in Section 5.16 of the Disclosure
Schedule, true, correct and complete copies of all documents creating or
evidencing any Plan listed in Section 5.16 of the Disclosure Schedule have been
delivered to Parent, and true, correct and complete copies of all reports, forms
and other documents required to be filed with any governmental entity have been
delivered to Parent.
(k) There are no negotiations, demands or proposals which are
pending or have been made which concern matters now covered, or that would be
covered, by the type of agreements required to be listed in Section 5.16 of the
Disclosure Schedule.
(l) All expenses and liabilities relating to all of the Plans
described in Section 5.16 of the Disclosure Schedule have been, and will on the
date of this Agreement be fully and properly accrued on the books and records of
the Company and its subsidiaries and disclosed to Parent in accordance with GAAP
and in Plan financial statements.
5.17 CONTRACTS AND COMMITMENTS; NO DEFAULT.
(a) Except for contracts, commitments, plans, agreements,
licenses, leases, sales orders, purchase orders and other matters (written or
oral) set forth in Section 5.17 of the Disclosure Schedule:
(i) The Company does not have an employment agreement with any
officer, employee or agent, or any agreement that contains any
severance or termination pay liabilities or obligations, nor is the
Company subject to any liabilities or obligations
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relating to severance, termination or vacation pay (apart from normal
vacation allowances);
(ii) The Company does not have collective bargaining or union
contracts or agreements;
(iii) The Company is not restricted by agreement from carrying
on its business, or any part thereof, anywhere in the world, or from
competing with any Person in a line of business similar to any aspect
of its business, nor is the Company the beneficiary of any agreement
restricting any other Person from carrying on its business, or any part
thereof, or from competing with the Company in any line of business;
(iv) The Company does not have any debt obligation for
borrowed money, including guarantees of or agreements to acquire any
such debt obligation of others;
(v) The Company is not subject to any obligation or
requirement to provide funds to or make any investment (in the form of
a loan, capital contribution or otherwise) in any Person whether under
a loan agreement, note or otherwise;
(vi) The Company is not a party to any agreement, contract,
commitment or loan to which any of its officers, directors or
stockholders or any Affiliate or Associate of the Company is a party;
(vii) The Company is not a party to any purchase or sale
contract or agreement that continues for a period of more than twelve
months (including periods covered by any option to renew by either
party);
(viii) The Company is not a lessor under any lease intended as
security, an owner participant in any leveraged lease transaction or a
party to a vendor arrangement or conditional sales agreement;
(ix) The Company has not given any power of attorney to any
Person for any purpose whatsoever;
(x) To the knowledge of the Company, there are no outstanding
sales or purchase contracts, commitments or proposals of the Company
that will result in any loss upon completion or performance thereof,
after allowance for direct expenses; and
(xi) The Company is not a party to, nor is it subject to, any
other material agreements, contracts, commitments or restrictions.
(b) True and complete copies of all documents (including all
amendments thereto) referred to in Section 5.17(a) have been delivered to
Parent. Section 5.17 of the Disclosure Schedule contains a list of all employees
of the Company and their annual compensation and job descriptions. All
contracts, agreements, commitments or restrictions referred to in Section
5.17(a) are valid and enforceable in accordance with their respective terms. The
Company is not materially in default in the performance of any of its
obligations thereunder; no event has occurred which (whether with or without
notice, lapse of time, or both, or the
14
happening or the occurrence of any other event) would constitute such a default
thereunder; all parties under such contracts and agreements have consented
(where such consent is necessary) to the consummation of the transactions
contemplated by this Agreement; and to the Company's knowledge, all other
parties thereto are not in material default thereunder and have no
counterclaims, offsets and defenses with respect thereto.
5.18 INVENTORY. The Company does not possess or hold and has
not generally possessed or held in the conduct of its business, any inventory.
5.19 ACCOUNTS RECEIVABLE. Except as set forth in Section 5.19
of the Disclosure Schedule, all accounts receivable of the Company, whether or
not reflected in the Balance Sheet, (i) represent sales actually made in the
ordinary course of business, (ii) will be collected in full, without any
set-off, within 180 days after the date hereof and (iii) are valued in
accordance with GAAP.
5.20 CUSTOMERS AND SUPPLIERS. Section 5.20 of the Disclosure
Schedule sets forth for the twelve-month period ended on December 31, 1999 and
the six-month period ended June 30, 2000: (a) a list of the amounts collected
from sales to the top 10 customers of the Company during such periods; and (b) a
list of the amounts paid to the top 5 suppliers of the Company for purchases
during such periods from such suppliers. Since December 31, 1999, there has been
no material adverse change in the business relationship of the Company with any
of the customers or suppliers to whom the amounts set forth in the Section 5.20
of the Disclosure Schedule relate.
5.21 PERMITS AND OTHER OPERATING RIGHTS. Except as set forth
in Section 5.21 of the Disclosure Schedule, the Company does not require the
consent of any third Person to permit it to operate its business in the manner
in which it presently is being conducted, and possess all material permits and
other authorizations from third Persons, including without limitation, federal,
foreign, state and local governmental authorities, presently required by
applicable provisions of law, including statutes, regulations and existing
judicial decisions, and by the property and contract rights of third Persons,
necessary to permit it to operate its business in the manner in which it
presently is being conducted.
5.22 COMPLIANCE WITH LAW. The Company is in material
compliance with all laws, regulations and orders applicable to it and its
properties and assets. Except as set forth in Section 5.22 of the Disclosure
Schedule, the Company has not received any notification that it is in violation
of any such laws, regulations or orders.
5.23 WARRANTY OR OTHER CLAIMS. Except as set forth in Section
5.23 of the Disclosure Schedule, other than for warranty claims in the ordinary
course of business, the Company does not know or has no reason to know of any
existing, threatened, anticipated or contemplated claims or any facts upon which
such a claim could be based, against it, for products which are defective or
fail to meet any product warranties. No claim has been asserted against the
Company for renegotiation or price redetermination of any material business
transaction and the Company does not have knowledge of any facts upon which any
such claim could be based.
15
5.24 INTELLECTUAL PROPERTY. The Company owns, or is licensed
or otherwise has the full right to use, all Intellectual Property material to,
and used in or necessary for the conduct of, its business as heretofore
conducted. Section 5.24 of the Disclosure Schedule contains an accurate and
complete description of all such Intellectual Property used or proposed to be
used by the Company. Except as set forth on Section 5.24 of the Disclosure
Schedule, to the Company's knowledge, the Company has the sole and exclusive
right to use such Intellectual Property and the consummation of the transactions
contemplated hereby will not alter or impair any such rights; no claims have
been asserted by any Person to the use of any such Intellectual Property or
challenging or questioning the validity or effectiveness of any license or
agreement relating to such Intellectual Property, and there is no valid basis
for any such claim; and the use of such Intellectual Property by the Company
does not infringe on the rights of any Person. The Company has full right, title
and interest in and to, pursuant to existing agreements and/or applicable law,
all material Intellectual Property developed by or on behalf of any present or
past employee of the Company while so employed, and all such Intellectual
Property now used or proposed to be used by the Company is the property of the
Company.
5.25 LABOR DIFFICULTIES. The Company is and has been in
material compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting employment
discrimination and occupational safety and health requirements, and there is no
organizational effort being made or threatened involving any employees of the
Company. No actions, claims, proceedings or investigations relating to
employment have been brought, are pending or, to the knowledge of the Company,
are threatened, by or before any governmental agency including, without
limitation, the National Labor Relations Board or the Equal Employment
Opportunity Commission.
5.26 HAZARDOUS MATERIALS. The Company is not in material
violation of any federal, state or local Environmental Laws (as defined in
Section 13.13) applicable to it or its properties, or any material limitations,
restrictions, conditions, standards, obligations or timetables contained in any
Environmental Law or any regulation, code, plan, order, decree, notice or demand
letter issued, entered, promulgated or approved thereunder. No notice or action
alleging such violation is pending or, to the Company's knowledge, threatened,
and no past or present condition or practice of the businesses conducted by the
Company would prevent continued compliance with applicable permits or give rise
to any common law or statutory liability or otherwise form the basis of any
claim, action or proceeding with respect to the Company involving any pollutant
or hazardous or toxic material or waste. The Company has no liability, present
or past, under CERCLA, including, without limitation, as the result of their
ownership or operation of any "facility" as defined in CERCLA, or their
arrangement for disposal, treatment or transport of "hazardous substances," also
as defined in CERCLA.
5.27 INSURANCE. Section 5.27 of the Disclosure Schedule
contains an accurate and complete list of all material policies of or binders
for casualty, liability, worker's compensation and other forms of insurance
owned or held by the Company and its subsidiaries and all pending or anticipated
claims thereunder. All such policies, or binders therefor, are in full force and
effect, all premiums with respect thereto have been paid and no notice of
cancellation or termination has been received with respect to any such policy or
binder. Such policies or binders will remain in full force and effect through
the respective dates set forth in Section 5.27 of the Disclosure Schedule
without the payment of additional premiums, and will
16
not in any way be affected by, or terminate or lapse by reason of, the
transactions contemplated by the Agreement. The Company has not been refused any
insurance with respect to its assets or operations, nor has its coverage been
limited, by any insurance carrier to which it has applied for any such insurance
or with which it has carried insurance during the last five years. The Company
has not received any notification from any insurer, agent or broker denying or
disputing any claim made by the Company, or any coverage for any such claim or
the amount of any claim, and no such denied or disputed claims are pending.
5.28 DISCLOSURE. No representations or warranty of the Company
contained in this Agreement, and no statement contained in any section of the
Disclosure Schedule or any document explicitly listed in the Disclosure Schedule
or otherwise made part of the Disclosure Schedule contains or will contain any
untrue statement of material fact or, when all such representations, warranties
and statements are taken as a whole, omits or will omit to state any material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
5.29 INSIDER INTERESTS. Except as set forth in Section 5.29 of
the Disclosure Schedule, no officer, director or stockholder of the Company has
any interest (other than as a stockholder of the Company) in any property, real
or personal, tangible or intangible, including without limitation, Intellectual
Property used in or pertaining to the business of the Company.
5.30 EMPLOYEES.
(a) Section 5.30 of the Disclosure Schedule discloses all of
the material terms and conditions of employment for each employee of the Company
not generally applicable to all employees of the Company, and, except as
disclosed in Section 5.30 of the Disclosure Schedule, no employee of the Company
is entitled to any benefit not generally applicable to all employees of the
Company.
(b) Except as set forth in Section 5.30 of the Disclosure
Schedule, no "leased employee", as defined in Section 414(n) of the Code,
performs services for the Company.
(c) Except as set forth in Section 5.30 of the Disclosure
Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated by this Agreement will, by virtue
of any plan, contract, agreement or policy (written or oral) adopted by the
Company or entered into between the Company and any employee of the Company, (i)
entitle any current or former employee or current or former officer or director
of the Company to severance pay, unemployment compensation, or any other payment
or benefit, (ii) accelerate the time of payment or vesting, increase the amount
of, or require or result in the funding of any compensation or benefit due any
such current or former employee, officer, or director, or (iii) result in any
prohibited transaction described in Section 406 of ERISA or Section 4975 of the
Code for which an exemption is not available.
17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
6.1 CORPORATE ORGANIZATION; ETC. Each of Parent and Merger Sub
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to carry on its business as it is now being conducted and to own,
lease and operate its properties and assets. Each of Parent and Merger Sub is
duly qualified or licensed to do business as a foreign corporation and is in
good standing in every jurisdiction in which the character or location of the
property owned or leased by it or the conduct of its business requires such
licensing or qualification, and in which the failure to qualify would have a
material adverse effect on the condition (financial or otherwise), of Parent and
Merger Sub, taken as a whole. The copies of each of Parent's and Merger Sub's
Certificate of Incorporation, as amended to date, By-laws, as currently in
effect and in the form delivered to the Company, are complete, correct and in
full force and effect, and neither Parent nor Merger Sub is in violation of any
of the provisions thereof.
6.2 CAPITALIZATION. As of August 25, 2000, the authorized
capital stock of Parent consists of 32,000,000 shares of common stock, par value
$.005 per share, of which 22,590,717 shares are outstanding (not including
3,349,800 reserved for issuance pursuant to stock options), and 2,000,000 shares
of preferred stock, par value $.005 per share, of which no shares are
outstanding. All of the foregoing shares and stock options have been duly
authorized by all necessary corporate action and all outstanding shares are
validly issued, fully paid and nonassessable. The authorized capital stock of
Merger Sub consists of 1000 shares of common stock, par value $.005 per share,
of which 1000 shares are outstanding, all of which are owned by Parent. All of
the foregoing shares have been duly authorized by all necessary corporate action
and all outstanding shares are validly issued, fully paid and nonassessable.
Except as set forth in the SEC Documents (copies of which have previously been
made available to the Company), no subscriptions, options, warrants calls or
rights of any kind to purchase or otherwise acquire, and no securities
convertible into or exchangeable for, capital stock of Parent or Merger Sub are
outstanding.
6.3 AUTHORIZATION; ETC. Each of Parent and Merger Sub has full
corporate power and authority to enter into this Agreement, and all associated
agreements and documents, and to carry out the transactions contemplated hereby
and thereby. The board of directors and stockholders (if applicable) of each of
Parent and Merger Sub have taken all action required by law, its Certificate of
Incorporation and By-laws, or otherwise, to authorize the execution, delivery
and performance of this Agreement, and all associated agreements and documents,
and the consummation of the transactions contemplated hereby and thereby. This
Agreement, and all associated agreements and documents, has been duly and
validly authorized, executed and delivered by Parent and Merger Sub and no other
corporate action is necessary. This Agreement, and all associated agreements and
documents, is a valid and binding obligation of Parent and Merger Sub
enforceable against it in accordance with its terms, except as the same may be
limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws relating to or affecting the rights of creditors generally,
or by general equitable principles.
18
6.4 NO VIOLATION. Neither the execution and delivery of this
Agreement, nor any associated document or agreement, by Parent and Merger Sub,
nor the performance and the consummation of the transactions contemplated hereby
or thereby, will (a) violate any provisions of the Certificate of Incorporation
or By-laws of Parent or Merger Sub, (b) except as would not, individually or in
the aggregate, have a material adverse effect on Parent or Merger Sub, violate,
or be in conflict with, or constitute a default (or an event which, with or
without due notice or lapse of time, or both, would constitute a default) under
or result in the material modification or termination of, or cause or permit the
acceleration of the maturity of any material debt, obligation, contract,
commitment or other agreement to which Parent or Merger Sub is a party or by
which Parent or Merger Sub or its respective property is or may be bound or
which affects or relates to its respective business, (c) result in the creation
or imposition of any material mortgage, pledge, lien, security interest,
encumbrance, restriction, charge or limitation of any kind, upon Parent or
Merger Sub or any of its respective assets, or (d) except as would not,
individually or in the aggregate, have a material adverse effect on Parent or
Merger Sub, violate any statute or law or any judgment, decree, order,
regulation, or rule of any court or governmental authority.
6.5 LITIGATION. There is no legal, administrative, arbitration
or other proceeding, claim, or action of any nature or investigation pending, or
to the knowledge of Parent, threatened against or involving Parent or Merger Sub
or any of their respective properties or assets (a) which questions or
challenges the validity of this Agreement or any associated agreements or
documents or any action taken or to be taken by Parent and Merger Sub pursuant
to this Agreement or any associated agreements or documents or in connection
with the transactions contemplated hereby or thereby, or (b) which is reasonably
expected to have a material adverse effect on Parent.
6.6 CONSENTS AND APPROVALS. Except as contemplated by the
Registration Agreement referred to in Section 8.6, no consent, approval or
authorization of, or declaration, notice, filing or registration with, any
governmental or regulatory authority or third Person is required to be obtained
or made by Parent or Merger Sub in connection with the execution, delivery and
performance of this Agreement or any associated agreement by Parent and Merger
Sub and the consummation of the transactions contemplated hereby or thereby.
6.7 PARENT COMMON STOCK AUTHORIZED. At or before the Effective
Date of the Merger, the shares of Parent Common to be issued to the stockholders
of the Company will have been duly authorized by the board of directors of
Parent and, when so issued, will have been validly issued and will be fully
paid, non-assessable and free of preemptive rights and rights of refusal.
6.8 PARENT SEC DOCUMENTS. Parent has made available to the
Company a copy of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), as the case may be, and the rules and regulations of the SEC thereunder
applicable to such SEC Documents. As of their respective dates, the SEC
Documents did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial
19
statements and unaudited interim financial statements of Parent included in such
SEC Documents have been prepared in accordance with GAAP applied on a consistent
basis (except as may be indicated therein or in the notes thereto and except
with respect to unaudited statements as permitted by Form 10-Q of the SEC) and
fairly present the financial position of Parent and its subsidiaries as at the
dates thereof and the results of their operations and changes in financial
position for the periods then ended, subject, in the case of the unaudited
interim financial statements, to normal year-end and audit adjustments and any
other adjustments described therein.
6.9 ABSENCE OF MATERIAL CHANGES. Except as and to the extent
set forth in Parent's SEC Documents, since the date of the respective SEC
Documents, neither Parent nor Merger Sub has suffered any material adverse
change in its condition (financial or otherwise), assets, liabilities, reserves,
business, operations or prospects.
6.10 COMPLIANCE WITH LAW. Parent and Merger Sub are in
material compliance with all laws, regulations and orders applicable to it and
its properties and assets. Except as set forth in Parent's SEC Documents,
neither Parent nor Merger Sub has received any notification that it is in
violation of any such laws, regulations or orders and no such violation exists.
ARTICLE VII
ADDITIONAL AGREEMENTS OF THE PARTIES
7.1 ACCESS TO INFORMATION. For a period of ten (10) days from
and after the date of this Agreement (the "Inspection Period"), the Company
shall provide to Parent, its employees, agents and representatives
(collectively, "Parent Representatives") and Parent shall provide the Company
and its agents and representatives (collectively, "Company Representatives")
full access during reasonable business hours to all of the Company's and
Parent's, as the case may be, financial statements, records, files, stock books,
minute books, books of account, reports, contracts, commitments, insurance
policies, surety bonds, leases, tax returns and all other data and information
pertinent to its business as Parent or the Company, as the case may be, shall
request for the purpose of investigating the financial status and business of
the Company or Parent, as the case may be (the "Investigation"). During the
Investigation, Parent or the Company, as the case may be, at its expense, may
make copies of such data and information as it or they may deem desirable,
subject to Section 7.3, and unless it is limited or restricted from doing so by
law or regulation.
7.2 CONFIDENTIALITY. Any and all data and information obtained
by Parent or the Company, as the case may be, pursuant to Section 7.1 (the
"Information"), are valuable, special and unique assets of the Company or
Parent, as the case may be. From and after the date hereof and until the Closing
Date or, if this Agreement is terminated prior to the Closing Date, for a period
of one year following the date of such termination, Parent and the Parent
Representatives, and the Company and the Company Representatives, shall treat,
hold and maintain the Information, whether written or oral, and all reports,
notes, evaluations, summaries, analyses, compilations, studies and other
documents prepared with respect thereto, as confidential and shall not disclose
any of such Information to any person or entity for any reason
20
or purpose whatsoever, nor shall they make use of such Information for their own
purposes or for the benefit of any person or entity under any circumstances
other than in connection with Parent's or the Company's consideration of the
transactions contemplated hereby; provided, that these restrictions shall not
apply to such Information (a) which is, at the time of disclosure, in the public
domain (provided that the disclosing party was not responsible, directly or
indirectly, for such information entering the public domain without the
Company's or Parent's, as the case may be, consent), or (b) which was disclosed
to Parent or the Company, as the case may be, by a third party not restricted
from disclosing such Information; and provided further that Parent or the
Company, as the case may be, may disclose Information (a) if required to do so
by the order of a court or other competent authority or under applicable law, or
(b) to its counsel or professional advisors subject to their agreement to
maintain such Information in strict confidence and not to disclose or use such
Information other than in the course of advising Parent or the Company, as the
case may be. In the event that Parent or the Company, as the case may be, is or
are requested or required by a court or other competent authority or under
applicable law to disclose Information, Parent or the Company, as the case may
be, will give the Company or Parent, as the case may be, prompt notice of such
request or requirements to enable the Company or Parent, as the case may be, to
seek an appropriate protective order and will consult and cooperate with the
Company or Parent, as the case may be, such other party in taking steps to
resist or narrow the scope of such request or requirement. The duties and
obligations contained in this Section 7.2 shall supersede any prior agreement,
including that certain Confidentiality Agreement dated June 6, 2000 between
Parent and the Company, and shall survive any termination of this Agreement.
7.3 RETURN OF DOCUMENTS. If this Agreement and the Merger are
terminated prior to Closing for any reason, Parent and the Company, at their
respective expense and promptly after the date of such termination, shall return
to the Company and Parent, as applicable, any and all Information obtained
pursuant to Section 7.1, together with all copies thereof and all notes,
reports, evaluations, analyses, summaries, memoranda, compilations, studies and
other documents prepared with respect thereto or, in the alternative, Parent and
the Company shall destroy all such Information and other data and shall certify
such destruction to the Company and Parent, as applicable in writing. The
obligations set forth in this Section 7.3 shall survive any termination of this
Agreement.
7.4 CONDUCT OF BUSINESS. From and after the date hereof and
until the Closing Date (or the earlier termination of this Agreement), each of
Parent and the Company shall conduct its business only in the ordinary course
consistent with past practice.
7.5 CERTAIN RESTRICTIONS. From and after the date hereof and
until the Closing Date (or the earlier termination of this Agreement), the
Company shall not:
(a) amend its Certificate of Incorporation or By-laws, or take
any action with respect to any such amendment or any recapitalization,
reorganization, liquidation or dissolution; or
(b) take any action, or cause or permit to occur any event,
described in Sections 5.9(a)-(s) and (w).
7.6 PRESS RELEASES. The Company and Parent covenant and agree
with each other that no press release or other public announcement or public
disclosure related to this
21
Agreement, the terms hereof, the transactions contemplated hereby or any
information disclosed in connection herewith will be issued by any party hereto
without the approval of Parent and the Company; provided that if Parent is
unable to obtain the approval of its press release or other public announcement
or public disclosure from the Company and such press release, public
announcement or public disclosure is advised by counsel to be required by
applicable law or the rules of NASDAQ-NMS, then Parent may issue the legally
required press release, public announcement or public disclosure and promptly
furnish the Company with a copy thereof.
7.7 POOLING OF INTERESTS. From and after the date hereof and
until the Effective Date of the Merger, none of Parent, Merger Sub and the
Company or any of their respective affiliates shall take any action that would
jeopardize the treatment of the business combination to be effected by the
Merger as a "pooling of interests" for accounting purposes.
7.8 FULFILLMENT OF CONDITIONS. Each of Parent and the Company
will use its best efforts to take all commercially reasonable steps necessary or
desirable and proceed diligently and in good faith to satisfy each condition to
the obligations of the other party(ies) contained in this Agreement.
ARTICLE VIII
CONDITIONS TO THE COMPANY'S OBLIGATIONS
The obligation of the Company to effect the transactions
contemplated herein shall be subject to the satisfaction, on or before the
Closing Date, of each of the following conditions:
8.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of Parent and Merger Sub contained herein shall be true and
correct, in all material respects, on and as of the Closing Date as though made
on and as of the Closing Date.
8.2 NO PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
Person shall have been instituted or threatened that questions the validity or
legality of the transactions contemplated hereby or that, if successfully
asserted, would have a material adverse effect on the conduct of Parent's
business or its properties and assets taken as a whole.
8.3 CERTIFICATES. Parent and Merger Sub shall have furnished
the Company with such certificates of its officers to evidence compliance with
the conditions set forth in this Article VIII as may be reasonably requested by
the Company.
8.4 CONSENTS. Prior to the Closing, each of Parent and Merger
Sub shall have obtained all necessary approvals and consents required for the
consummation of the transactions contemplated hereby. The costs of obtaining any
such approvals or consents shall be borne by Parent.
8.5 ABSENCE OF ADVERSE CHANGE. From September 30, 1999 to the
date hereof, there will have been no adverse change in Parent's business, its
properties or its assets, or
22
the financial position of Parent as shown in the Quarterly Report (other than
changes occurring in the ordinary course of business) which individually or in
the aggregate will have had a material adverse effect on Parent's business, its
properties or its assets or the financial position of Parent as shown in the
Quarterly Report.
8.6 REGISTRATION AGREEMENT. Parent and each of the
stockholders of the Company listed on Section 8.6 of the Disclosure Schedule
shall have entered into the Registration Agreement, dated as of the Closing
Date, substantially in the form of Exhibit B.
8.7 OPINION OF PARENT'S COUNSEL. Parent shall have delivered
to the Company an opinion of counsel to Parent, dated the Closing Date, in form
and substance reasonably satisfactory to the Company.
ARTICLE IX
CONDITIONS TO PARENT'S AND
MERGER SUB'S OBLIGATIONS
The obligation of Parent and Merger Sub to effect the
transactions contemplated herein shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions:
9.1 REPRESENTATIONS AND WARRANTIES TRUE. The representations
and warranties of the Company contained herein shall be true and correct, in all
material respects, on and as of the Closing Date as though made on and as of the
Closing Date.
9.2 CONSENTS. Prior to the Closing, the Company shall have
obtained all necessary approvals and consents required for the consummation of
the transactions contemplated hereby. The costs of obtaining any such approvals
or consents shall be borne by the Company.
9.3 ABSENCE OF ADVERSE CHANGE. From December 31, 1999 to the
date hereof, there will have been no adverse change in the Company's business,
properties or assets, or the financial position of the Company as shown in the
Annual Balance Sheet (other than changes occurring in the ordinary course of
business or changes disclosed on the Disclosure Schedule) which individually or
in the aggregate will have had a material adverse effect on the Company's
business, properties or assets (taken as a whole) or on the financial position
of the Company as shown in the Annual Balance Sheet.
9.4 NO PROCEEDING OR LITIGATION. No suit, action,
investigation, inquiry or other proceeding by any governmental body or other
Person shall have been instituted or threatened that questions the validity or
legality of the transactions contemplated hereby or that, if successfully
asserted, would otherwise have a material adverse effect on the conduct of the
Company's business or on its properties or assets taken as a whole.
9.5 ESCROW AGREEMENT. Parent, each of the stockholders of the
Company listed on Section 8.6 of the Disclosure Schedule, and United States
Trust Company of New York,
23
as escrow agent (the "Escrow Agent"), shall have executed and delivered an
Escrow Agreement, dated as of the Closing Date, substantially in the form of
Exhibit C (the "Escrow Agreement").
9.6 AFFILIATE AGREEMENTS. Each of the stockholders of the
Company listed on Annex II shall have executed and delivered to Parent a written
agreement substantially in the form of Exhibit D (an "Affiliate Agreement").
9.7 EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Parent and/or
the Surviving Corporation shall have entered into (a) Employment Agreements with
(i) Xxxxxx Xxxxxx, in the form of Exhibit E, and (ii) Xxxxx Xxxxxx, in the form
of Exhibit F, and (b) Non-Competition Agreements with each of Xxxxxx Xxxxxx and
Xxxxx Xxxxxx, substantially in the form of Exhibit G.
9.8 CERTIFICATES. The Company shall have furnished Parent and
Merger Sub with such certificates to evidence compliance with the conditions set
forth in this Article IX as may be reasonably requested by Parent and Merger
Sub.
9.9 OPINION OF THE COMPANY'S COUNSEL. The Company shall have
delivered to Parent and Merger Sub an opinion of Xxxxxxx Xxxxxx & Parent,
counsel to the Company, dated the Closing Date, in form and substance
satisfactory to Parent and Merger Sub.
9.10 STOCK CERTIFICATES. The stockholders of the Company shall
have delivered to Parent and Merger Sub certificates representing a majority of
the issued and outstanding shares of Company Stock (which shall include a
majority of the Company Preferred Stock) for exchange in the Merger.
ARTICLE X
TAX MATTERS
10.1 TRANSFER TAXES. The Company shall pay all sales, use,
transfer, real property transfer, recording, gains, stock transfer and other
similar taxes and fees, including without limitation any Delaware state gains or
transfer taxes (collectively, "Transfer Taxes") arising out of or in connection
with the transactions effected pursuant to this Agreement.
10.2 TAX COOPERATION. After the date hereof, the Company and
Parent will cooperate in the preparation of all Tax Returns and will provide to
each other (or cause to be provided) any records and other information
requested, and will provide access to, and the cooperation of their respective
auditors. The Principal Stockholders and Parent will cooperate with each other
in connection with any Tax investigation, audit or other processing.
24
ARTICLE XI
INDEMNIFICATION
11.1 INDEMNIFICATION. Parent and its subsidiaries, Parent's
Affiliates, their officers, directors and employees, and their successors and
assigns (collectively, "Parent Indemnitees") shall be indemnified, defended and
held harmless from and against any and all losses, claims, demands, liabilities,
damages or deficiencies, costs and expenses, including, without limitation,
interest, penalties and reasonable attorneys' fees and disbursements ("Losses")
in accordance with the terms of this Article XI, to the extent such Losses arise
out of or are incident to any of the following:
(a) any misrepresentation or breach of any warranty made by
the Company in or pursuant to this Agreement;
(b) any of the matters disclosed in Section 5.9(t) (to the
extent not covered by insurance proceeds actually received), 5.14 or 5.16(d) of
the Disclosure Schedule;
(c) any breach of any obligation, agreement, covenant, or
other term or provision hereof to be performed by the Company;
(d) all Taxes of the Company with respect to any taxable
period ending on or before the Effective Date of the Merger, regardless of any
matters relating to Taxes set forth in Section 5.15 of the Disclosure Schedule
other than Taxes that were fully reserved against and reflected on the Balance
Sheet; and
(e) any and all actions, suits, proceedings, investigations,
demands, assessments, judgments, or settlements incident to any of the
foregoing.
11.2 INDEMNIFICATION THRESHOLD. Notwithstanding anything to
the contrary contained in this Agreement, Parent shall not be indemnified under
Section 11.1(a), (b), (c) or (e) for Losses unless and until the aggregate
amount of all Losses asserted by Parent Indemnitees equals or exceeds $500,000,
in which event Parent shall be entitled to reimbursement for the full amount of
such Losses in excess of $500,000. The amount of any indemnity payment due
hereunder shall be reduced by an amount equal to the Tax benefit, if any,
actually recognized by Parent Indemnitees as a result of the Loss in question in
the Tax year in which the Loss occurred.
11.3 NOTICE AND RIGHT TO DEFEND.
(a) In the event that any legal proceeding shall be instituted
or any claim or demand shall be asserted by a third party in respect of which
indemnity may be sought by any party hereto (the "Indemnitee") pursuant to the
provisions of Sections 11.1, the Indemnitee shall with reasonable promptness
after obtaining knowledge of such proceeding, claim, or demand give written
notice thereof to the any other party from which indemnification is being sought
pursuant to Section 11.1 (the "Indemnifying Party"), who shall then have the
right at the option and expense of the Indemnifying Party to be represented by
counsel of the Indemnifying Party's choice in connection with such matter, which
counsel shall be reasonably satisfactory to the Indemnitee, and to defend
against, negotiate, settle, or otherwise deal with any such proceeding,
25
claim, or demand; provided, however, that without the prior written consent of
the Indemnitee (which consent shall not be unreasonably withheld or delayed),
the Indemnifying Party shall not consent to the entry of any judgment in or
agree to any settlement of any such matter; and provided further that the
Indemnitee may retain counsel at the Indemnitee's own expense to represent the
Indemnitee in connection with any such proceeding, claim, or demand. If the
Indemnitee refuses with respect to any such matter to consent to any monetary
aspect of any judgment or settlement favored by the Indemnifying Party and such
matter is later settled for or adjudicated in an amount in excess of the
settlement or judgment amount initially favored by the Indemnifying Party, the
Indemnitee shall be liable to the Indemnifying Party for such excess amount.
Failure by the Indemnifying Party to notify the Indemnitee of the election by
the Indemnifying Party to defend against, negotiate, settle or otherwise deal
with any proceeding, claim, or demand with respect to which indemnity is sought
within 30 days after notice thereof shall have been given by the Indemnitee
shall be deemed a waiver by the Indemnifying Party of the Indemnifying Party's
right to defend against, negotiate, settle or otherwise deal with any such
matter; provided, however, that the Indemnitee may assert the Indemnitee's right
to defend against, settle or otherwise deal with any such matter at any time if
the Indemnifying Party is financially unable to defend against, settle or
otherwise deal with such matter. Such assertion may not be made absent
consultation with and written notice to the Indemnifying Party. If the
Indemnifying Party assumes the defense, negotiation, settlement or disposition
of any such proceeding, claim or demand, the Indemnifying Party shall take or
cause to be taken all steps the Indemnifying Party in good xxxxx xxxxx
appropriate, after consultation with the Indemnitee, to defend, negotiate,
settle or deal with any such proceeding, claim or demand, and the Indemnitee
shall in all events be entitled to indemnity with respect to such matter as and
to the extent provided in this Article XI.
(b) In the event that any legal proceeding shall be instituted
or any claim or demand shall be asserted by a third party in respect of which
indemnity may be sought by the Indemnitee and in the event that the Indemnifying
Party does not elect to defend against, negotiate, settle or otherwise deal with
any such proceeding, claim or demand with respect to which indemnity is sought
or does not take the steps described in the last sentence of paragraph (a)
above, the Indemnitee may defend against, settle, or otherwise deal with any
such proceeding, claim or demand in such manner as it in good xxxxx xxxxx
appropriate, and the Indemnifying Party shall be liable, as and to the extent
provided in this Article XI, for indemnification with respect to such matter
including, without limitation, the cost of such defense.
(c) The parties hereto will cooperate fully with each other in
connection with the defense or settlement of any proceeding, claim or demand by
a third party with respect to which a claim for indemnification is made
hereunder.
11.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
respective representations and warranties of the Company shall survive the
consummation of the transactions contemplated herein and expire on June 30,
2001, provided that the representations and warranties in Sections 5.3, 5.5 and
5.6 shall not expire and shall remain in full force and effect indefinitely. The
representations and warranties of Parent contained herein shall survive the
consummation of the transactions contemplated herein and expire on June 30,
2001, provided that the representations and warranties in Sections 6.3 and 6.7
shall not expire and shall remain in full force and effect indefinitely. Any
claims for indemnification timely asserted under this Article XI shall survive
until such claim is resolved.
26
11.5 ESCROW. At the Closing, Parent shall deliver to the
Escrow Agent share certificates evidencing the Escrow Shares pursuant to the
Escrow Agreement. In the event that Parent becomes entitled to reimbursement for
Losses pursuant to Section 11.1, Parent shall be entitled to receive
reimbursement only from the Escrow Agent, pursuant to the Escrow Agreement, in
the form of Escrow Shares valued (for such purposes only) at the closing price
per share of Parent Common as quoted on NASDAQ-NMS and reported in the Wall
Street Journal on the Effective Date of the Merger.
11.6 ADJUSTMENT TO CONSIDERATION. The amount of any
reimbursement for Losses shall be characterized as an adjustment to the amount
of consideration paid by Parent pursuant to the Merger.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written
agreement of Parent and the Company;
(b) at any time before the Closing, by Parent or the Company,
in the event (i) of a material breach hereof by the non-terminating party if
such non-terminating party fails to cure such breach within five (5) business
days following notification thereof by the terminating party or (ii) upon
notification of the non-terminating party by the terminating party that the
satisfaction of any condition to the terminating party's obligations under this
Agreement becomes impossible or impracticable with the use of commercially
reasonable efforts if the failure of such condition to be satisfied is not
caused by a breach hereof by the terminating party; or
(c) at any time after September 30, 2000 by Parent or the
Company upon notification of the non-terminating party by the terminating party
if the Closing shall not have occurred on or before such date and such failure
to consummate is not caused by a breach of this Agreement by the terminating
party.
12.2 EFFECT OF TERMINATION. If this Agreement is validly
terminated pursuant to Section 12.1, this Agreement will forthwith become null
and void, and there will be no liability or obligation on the part of Parent or
the Company (or any of their respective officers, directors, employees, agents
or other representatives or Affiliates), except as provided in the next
succeeding sentence and except that the provisions with respect to expenses in
Section 13.5 and confidentiality in Sections 7.2 and 7.3 will continue to apply
following any such termination. Notwithstanding any other provision in this
Agreement to the contrary, upon termination of this Agreement pursuant to
Section 12.1(b) or (c), the Company will remain liable to Parent for any willful
breach of this Agreement by the Company existing at the time of such
termination, and Parent will remain liable to the Company for any willful breach
of this Agreement by Parent existing at the time of such termination.
27
ARTICLE XIII
MISCELLANEOUS
13.1 ARBITRATION. The parties to this Agreement agree that any
disputes arising out of, or in connection with, the execution, interpretation,
performance or non-performance of this Agreement (including the validity, scope
and enforceability of this arbitration provision) shall be settled by
arbitration, which shall be conducted in New York, New York pursuant to the then
prevailing rules of the American Arbitration Association ("AAA") by a panel of
three arbitrators of the AAA (the "Board of Arbitration") acceptable to the
Company and Parent. Each of Parent and the Company shall select one (1) member
and the third member shall be selected by mutual agreement of the other members.
If the other members fail to reach agreement on a third member within thirty
(30) days after their selection, the parties shall jointly request the AAA to
designate, in accordance with AAA rules, a third member experienced in
industries in which the Surviving Corporation does business. The parties agree
to facilitate the arbitration by (a) making available to one another and to the
Board of Arbitration for inspection and extraction all documents, books,
records, and personnel under their control or under the control of a person
controlling or controlled by such party if determined by the Board of
Arbitration to be relevant to the dispute, (b) conducting arbitration hearings
to the greatest extent possible on successive business days and (c) using their
best efforts to observe the time periods established by the rules of the AAA or
by the Board of Arbitration for the submission of evidence and briefs. The
decision of the Board of Arbitration shall be final, binding and not subject to
further review, and judgment on the award of the Board of Arbitration may be
entered in and enforced by any court having jurisdiction over the parties or
their assets. If any legal action, arbitration or other proceeding is brought to
interpret or enforce the terms of this Agreement, each party shall bear its own
expense in relation thereto, including but not limited to such party's
attorneys' fees, if any, and the expenses and fees of the member of the Board of
Arbitration appointed by such party, provided, however, that the expenses and
fees of the third member of the Board of Arbitration and any other expenses of
the Board of Arbitration not capable of being attributed to any one member shall
be borne in equal parts by each of the Parent and the Company.
13.2 FINDERS AND BROKERS. Each party hereby represents and
warrants to the others that neither it nor its representatives have made any
arrangements for the payment of any finders' fees, brokerage fees, agents'
commissions, or like payments in connection with the transactions contemplated
hereby. Each party shall indemnify and hold harmless the others from any claim
that is asserted by any Person for a finder's or broker's fee or like payment
with respect to this Agreement arising from any act, representation or promise
of the indemnifying party or its representative.
13.3 AMENDMENT. Subject to applicable law, this Agreement may
only be amended or supplemented by written agreement of Parent and Merger Sub,
the Surviving Corporation and the Company.
13.4 WAIVER OF COMPLIANCE. Any failure of the Company, on the
one hand, or Parent and Merger Sub, on the other, to comply with any provision
of this Agreement may be expressly waived in writing by Parent and Merger Sub or
the Company, respectively, but such waiver or failure to insist upon strict
compliance with such provision shall not operate as a
28
waiver of, or estoppel with respect to, any subsequent or other failure. No
failure to exercise and no delay in exercising any right, remedy, or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, or power provided
herein or by law or in equity. The waiver by any party of the time for
performance of any act or condition hereunder does not constitute a waiver of
the act or condition itself.
13.5 EXPENSES; ATTORNEYS, FEES. Except as otherwise expressly
set forth herein, each party shall pay all expenses incurred by it or on its
behalf in connection with this Agreement or any transaction contemplated hereby.
The Company shall bear all expenses of the Company incurred in connection with
the transactions contemplated by this Agreement up to a maximum of $100,000.
13.6 NOTICES. All notices, demands, and other communications
required or permitted hereunder shall be made in writing and shall be deemed to
have been duly given if delivered by hand, against receipt, or mailed, postage
prepaid, certified or registered mail, return receipt requested, and addressed
as follows:
to the Company at:
Renaissance Software, Inc.
0000 Xxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxx & Parent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Facsimile: (000) 000-0000
to Parent and Merger Sub at:
Vertex Interactive, Inc.
00 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attn: Xxxxxxxx X.X. Xxxx
Facsimile: (000) 000-0000
29
with a copy to:
Milbank, Tweed, Xxxxxx & XxXxxx LLP
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. X'Xxxxxx
Facsimile: (000) 000-0000
Notice of change of address shall be effective only when notice thereof is given
in accordance with this Section. All notices complying with this Section shall
be deemed to have been received on the date of delivery or on the third business
day after mailing.
13.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective heirs,
successors and permitted assigns.
13.8 GOVERNING LAW. The validity, interpretation,
enforceability, and performance of this Agreement shall be governed by and
construed in accordance with the law of the State of New York, without regard to
its rules regarding conflicts of law.
13.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13.10 HEADINGS. The headings of the Sections and Articles of
this Agreement are for reference purposes only and shall not constitute a part
hereof or affect the meaning or interpretation of this Agreement.
13.11 ENTIRE AGREEMENT. This Agreement shall be the final
expression of the parties' agreement with respect to the subject matter hereof
and may not be contradicted by evidence of any prior or contemporaneous
agreement. This Agreement shall constitute the complete and exclusive statement
of its terms and no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Agreement.
13.12 DISCLOSURE SCHEDULE. The Disclosure Schedule shall be
divided into sections corresponding to the sections of this Agreement.
Disclosure in any section of the Disclosure Schedule shall only constitute
disclosure for purposes of the corresponding section of the Agreement and not
for any other purpose.
13.13 CERTAIN DEFINITIONS.
"Affiliate" or "Associate" shall have the meaning assigned
thereto in Rule 405, as presently promulgated under the Securities Act.
"Affiliate Agreement" has the meaning ascribed to it in
Section 9.6.
"Annual Balance Sheet" has the meaning ascribed to it in
Section 5.7.
"Balance Sheet" has the meaning ascribed to it in Section 5.7.
30
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
"Closing" has the meaning ascribed to it in Section 4.1.
"Closing Date" has the meaning ascribed to it in Section 4.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company Common Stock" shall mean the common stock, par value
$.01 per share, of the Company.
"Company Preferred Stock" shall mean collectively (i) the
Series A Company Preferred Stock, (ii) the Series B Company Preferred Stock and
(iii) the Series C Company Preferred Stock.
"Company Representatives" has the meaning ascribed to it in
Section 7.1.
"Company Stock" shall mean collectively (a) the Company Common
Stock, (b) the Series A Company Preferred Stock, (c) the Series B Company
Preferred Stock and (d) the Series C Company Preferred Stock.
"Company Stock Options" has the meaning ascribed to it in
Section 3.5(b).
"Disclosure Schedule" shall mean a schedule delivered by the
Company prior to the execution and delivery of this Agreement, as further
described in Section 13.12.
"Effective Date of the Merger" has the meaning ascribed to it
in Section 1.3.
"Environmental Laws" shall mean all laws and regulations
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic or hazardous substances or wastes
into the environment including, without limitation, ambient air, surface water,
ground water, land surface or subsurface strata, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
"Escrow Agent" has the meaning ascribed to it in Section 9.5.
"Escrow Agreement" has the meaning ascribed to it in Section
9.5.
"Escrow Shares" has the meaning ascribed to it in Section 3.3.
"Exchange Act" has the meaning ascribed to it in Section 6.8.
31
"Exchange Ratio" has the meaning ascribed to it in Section
3.1(b).
"GAAP" has the meaning ascribed to it in Section 5.7.
"GCL" has the meaning ascribed to it in Section 1.2.
"Indemnifying Party" has the meaning ascribed to it in Section
11.3.
"Indemnitee" has the meaning ascribed to it in Section 11.3.
"Inspection Period" has the meaning ascribed to it in Section
7.1.
"Intellectual Property" shall mean all intangible property,
including without limitation all trade names, trademarks, patents, patent
applications, licenses, copyrights, shop rights, technical information,
know-how, proprietary information, processes and trade secrets.
"Liabilities" has the meaning ascribed to it in Section 5.8.
"Losses" has the meaning ascribed to it in Section 11.1.
"Member of the Controlled Group" shall mean each trade or
business, whether or not incorporated, which would be treated as a single
employer with the Company or its subsidiaries under Section 4001 of ERISA or
Section 414(b), (c), (m) or (o) of the Code.
"Merger" has the meaning ascribed to it in Section 1.2.
"NASDAQ-NMS" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Parent Common" has the meaning ascribed to it in Section 1.1.
"Parent Indemnitees" has the meaning ascribed to it in Section
11.1.
"Parent Representatives" has the meaning ascribed to it in
Section 7.1.
"Person" shall include any individual, partnership, joint
venture, corporation, trust, unincorporated organization, any other entity and
any government or any department or agency thereof, whether acting in an
individual, fiduciary, or other capacity.
"Plan" shall mean (i) any "employee benefit plan" within the
meaning of Section 3(3) of ERISA, (ii) any profit sharing, pension, deferred
compensation, bonus, stock option, stock purchase, other stock-based severance,
parachute, change in control, retainer, consulting, health, welfare or incentive
plan, agreement or arrangement, (iii) any plan or policy providing for "fringe
benefits" to employees, including but not limited to vacation, paid holidays,
personal leave, employee discount, educational benefit or similar programs, or
(iv) any employment agreement.
32
"Pro Rata Share" shall mean the pro rata share of the Escrow
Shares of the relevant stockholder of the Company rounded to the nearest whole
number.
"qualified stock options" has the meaning ascribed to it in
Section 3.5(b).
"Quarterly Report" shall mean Parent's Quarterly Report filed
on Form 10-Q for the quarter ended June 30, 2000.
"SEC" shall mean the United States Securities and Exchange
Commission.
"SEC Documents" shall mean Parent's Annual Report on Form 10-K
for the year ended July 31, 1999, Parent's Transition Report on Form 10-K for
the period from August 1, 1999 to September 30, 1999, all Quarterly Reports of
Parent filed on Form 10-Q since September 30, 1999 and Parent's Proxy Statement
for its 1999 Annual Meeting of Stockholders (including, in each case, all
amendments thereto through the date hereof and all documents listed as Exhibits
thereto).
"Series A Company Preferred Stock" shall mean the Series A
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Series B Company Preferred Stock" shall mean the Series B
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Series C Company Preferred Stock" shall mean the Series C
Convertible Preferred Stock, par value $.01 per share, of the Company.
"Surviving Company Common" has the meaning ascribed to it in
Section 3.1(c).
"Surviving Corporation" has the meaning ascribed to it in
Section 1.2.
"Taxes" shall mean any federal, state, county, local or
foreign taxes, charges, fees, levies, other assessments, or withholding taxes or
charges imposed by any governmental entity, and includes any interest and
penalties (civil or criminal) on or additions to any taxes and any expenses
incurred in connection with the determination, settlement or litigation of any
Tax liability.
"Tax Return" shall mean a report, return or other information
(including any amendments) required to be supplied to a governmental entity by
the Company or the Surviving Corporation, as the case may be, and their
subsidiaries with respect to Taxes including, where permitted or required,
combined or consolidated returns for any group of entities that includes the
Company or the Surviving Corporation, as the case may be, or their subsidiaries.
"to the knowledge of the Company" shall mean the actual
knowledge of any of Xxxxxx Xxxxxx and/or Xxxxx Xxxxxx, after due inquiry of all
senior executives of the Company.
"Transfer Taxes" has the meaning ascribed to it in Section
10.1.
33
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
VERTEX INTERACTIVE, INC.
By: /s/ Xxxxxxxx X. X. Xxxxxx
----------------------------
Name:
Title:
RENSOFT ACQUISITION CORP.
By: /s/ Xxxxxxxx X. X. Xxxxxx
----------------------------
Name:
Title:
RENAISSANCE SOFTWARE, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Name:
Title:
34
ANNEXES:
I - Written Consents of Company Stockholders
II - Stockholders Executing Affiliate Agreements
EXHIBITS:
A - Stockholders
B - Registration Agreement
C - Escrow Agreement
D - Form of Affiliate Agreement
E - Employment Agreement (Xxxxxx Xxxxxx)
F - Employment Agreement (Xxxxx Xxxxxx)
G - Form of Non-Competition Agreement (Xxxxxx Xxxxxx and Xxxxx Xxxxxx)
SCHEDULES:
Disclosure Schedule
35
EXHIBIT A
SHARES OWNED/CONVERSION SHARES
RSI COMMON STOCKHOLDERS
Number of Number of Vertex Number of Vertex
Company Shares Number of Vertex Shares Received at Shares Placed in
Stockholder Owned Shares Exchanged Closing Escrow
----------- ----- ---------------- ------- ------
Xxxxxx 2,000 1,700 1,615 85
Breuning 4,000 3,400 3,230 170
Xxxxxxx 5,000 4,250 4,037 000
Xxxxxxxxxxx 666 566 538 28
Day 10,000 8,500 8,075 000
Xxxxxx 20,000 17,000 16,150 850
X. XxXxxx 3,100 2,635 2,503 132
X. XxXxxx 500 425 404 21
Xxxxxx 5,000 4,250 4,037 213
Giosi 1,400 1,190 1,131 59
Xxxxx 1,666 1,416 1,345 71
Helm 4,499 3,824 3,633 000
Xxxxxx 5,000 4,250 4,037 000
Xxxxxxx 500 425 404 21
Margossian 480,000 408,000 387,600 20,400
Xxxxx 55,000 46,750 44,413 2,337
XxXxxxxx 2,666 2,266 2,153 000
Xxxxxx 3,000 2,550 2,423 127
MACG, Inc. 2,000 1,700 1,615 85
O'Reilly 667 567 539 28
Xxxxxxxxx 1,332 1,132 962 170
X. Xxxxxx 429,999 365,499 292,399 73,100
X. Xxxxxx 180,000 153,000 122,400 30,600
Xxxxxxx 8,334 7,084 6,730 354
Xxxxx 2,000 1,700 1,615 85
36
Shears 1,333 1,133 1,076 57
Schaffzin 5,000 4,250 4,037 000
Xxxxxx 1,000 850 808 42
Xxxxxxx 3,500 2,975 2,826 149
Spagnoli 1,000 850 808 42
Xxxxxxxx 1,000 850 808 42
TOTAL: 1,241,162 1,054,987 924,351 130,636
RSI SERIES A CONVERTIBLE PREFERRED STOCKHOLDERS
Number of Number of Vertex Number of Vertex
Company Shares Number of Vertex Shares Received at Shares Placed in
Stockholder Owned Shares Exchanged Closing Escrow
----------- ----- ---------------- ------- ------
Edgewater Private 500,000 425,000 403,750 21,250
Equity Fund II, L.P.
Xxxx Xxxxxxxxx 200,000 170,000 161,500 8,500
Xxxxxxxxxxx Xxx 8,333 7,083 6,729 354
Catsavis and Xxxxxxxxx
Xxxx Xxxxxxxx
Hrisostomoe Xxxxxx and 8,333 7,083 6,729 354
Xxxxx Xxxxxx
Xxxxxxx Xxxxxxx 33,333 28,333 26,916 1,417
JIBS Equities 16,667 14,167 13,459 708
Xxxxxxx Xxxxxxxxxx 16,667 14,167 13,459 708
Penn Footwear 16,667 14,167 13,459 708
Retirement Trust
The Xxxxx Foundation 33,333 28,333 26,916 1,417
Chase 1991 Revocable 16,667 14,167 13,459 708
Trust D/T/D 4/2/91,
Xxxxxx and Xxxxx
Xxxxx, Trustees
Xxxxxxx X. Xxxxxx 10,000 8,500 8,075 425
Xxxxxx Investments 33,333 28,333 26,916 1,417
LLC
Chieftain Corporation 33,333 28,333 26,916 1,417
Xxxx X. Jrause 16,667 14,167 13,459 708
Xxxxx X. Xxxxxxx 8,333 7,083 6,729 354
Xxxxx Xxxxxx 15,000 12,750 12,113 637
00
Xxxx Xxx Xxxxxx Xxxxx 16,667 14,167 13,459 708
Bank, Custodian F/B/O
Xxxxx X. Xxxxxx, XXX
Xxx Xxxxxxxx 16,667 14,167 13,459 708
TOTAL: 1,000,000 850,000 807,502 42,498
RSI SERIES B CONVERTIBLE PREFERRED STOCKHOLDERS
Number of Number of Vertex Number of Vertex
Company Shares Number of Vertex Shares Received at Shares Placed in
Stockholder Owned Shares Exchanged Closing Escrow
----------- ----- ---------------- ------- ------
Edgewater Private 200,000 170,000 161,500 8,500
Equity Fund II, L.P.
Xxxx Xxxxxxxxx 100,000 85,000 80,750 4,250
Chase 1991 Revocable 20,000 17,000 16,150 850
Trust Dated 4/2/91
Xxxxxx and Xxxxx
Xxxxx, Trustees
West Des Moines State 40,000 34,000 32,300 1,700
Bank, Custodian F/B/O
Xxxxx X. Xxxxxx, XXX
Xxxxxx XxXxx Family 40,000 34,000 32,300 1,700
Partnership
TOTAL: 400,000 340,000 323,000 17,000
RSI SERIES C CONVERTIBLE PREFERRED STOCKHOLDERS
Number of Number of Vertex Number of Vertex
Company Shares Number of Vertex Shares Received at Shares Placed in
Stockholder Owned Shares Exchanged Closing Escrow
----------- ----- ---------------- ------- ------
Xxxxxxx Xxxxxxxx 5,000 4,250 4,037 213
Xxxxx X. Xxxxxxx 20,000 17,000 16,150 850
Edgewater Private 100,000 85,000 80,750 4,250
Equity Fund II, L.P.
The High Risk Players 18,182 15,455 14,682 773
Xxxxx Xxxxxxxx 4,000 3,400 3,230 170
Xxxxxx Iskamian 10,000 8,500 8,075 000
Xxxxxx Xxxxx 5,000 4,250 4,037 213
Xxxx Xxxxxxxx 12,000 10,200 9,690 510
Xxxxxx Xxxxxx 20,000 17,000 16,150 850
38
Precor Venture 18,182 15,455 14,682 773
Holdings, L.L.C.
Investor Protection, 72,728 61,819 58,728 3,091
Inc.
New Hope Foundation 54,548 46,366 44,047 2,319
Xxxx Xxxxxxxxx 181,818 154,545 146,818 7,727
Xxxxxx Xxxx 2,000 1,700 1,615 85
Xxxxxx Xxxxxx 18,182 15,455 12,364 3,091
Xxxxx Xxxxxx 36,364 30,909 24,727 6,182
Xxxxxxxx Xxxxxxxxx 40,000 34,000 32,300 1,700
Tax Education Support 54,548 46,366 44,048 2,318
Organization
Xxx Xxxxxxxx 30,000 25,500 24,225 1,275
1520 Partners 54,550 46,368 44,050 2,318
Xxxxxx X. Xxxxxxx 7,250 6,163 5,855 308
Xxx X. Xxxxxx 3,500 2,975 2,826 149
Euro-America II, L.P. 181,818 154,545 146,818 7,727
Tsai Foundation 90,909 77,273 73,409 3,864
Xxxxxx Xxxxxx 18,182 15,455 14,682 773
Xxxxxxxx X. Xxxxx 461,974 392,678 373,044 19,634
Xxxx Xxxxxxxxx 38,182 32,455 30,832 1,623
TOTAL: 1,558,917 1,325,082 1,251,871 73,211
39
