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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
XXXXXX BUSINESS SYSTEMS, INC., a Georgia corporation,
and
AUBIS, L.L.C., a Georgia limited liability company,
and
AUBIS HOSPITALITY SYSTEMS, INC. , a Georgia corporation,
and
AUBIS SYSTEMS INTEGRATION, INC., a Georgia corporation,
and
CERTAIN PERSONS AND AFFILIATES OF AUBIS, L.L.C.
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Dated as of December 13, 1995
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TABLE OF CONTENTS
Page
SECTION 1. DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Merger of Companies into Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effect of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Articles of Incorporation and Bylaws; Directors and Officers. . . . . . . . . . . . . . . . . . . . . 2
1.5 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6 Closing of the Companies' Transfer Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 Exchange of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.9 Further Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT, THE COMPANIES AND THE DESIGNATED PERSONS . . . . . . . . 4
2.1 Due Organization; No Subsidiaries; Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2 Articles of Incorporation and Bylaws; Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Capitalization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.6 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.7 Bank Accounts; Receivables; Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.8 Equipment; Leasehold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.9 Proprietary Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.10 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Compliance with Legal Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Governmental Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.15 Employee and Labor Matters; Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.17 Sale of Products; Performance of Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.18 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.19 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.20 Legal Proceedings; Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.21 Authority; Binding Nature of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.22 Non-Contravention; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.23 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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SECTION 3. REPRESENTATIONS AND WARRANTIES OF XXXXXX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
3.2 Authority; Binding Nature of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
3.3 Valid Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE DESIGNATED PERSONS . . . . . . . . . . . . . 23
4.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.2 Operation of the Companies' Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.3 Notification; Updates to Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.4 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.5 Due Diligence Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 5. CERTAIN COVENANTS OF XXXXXX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Operation of Xxxxxx'x Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.4 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.5 Due Diligence Investigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.1 Filings and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.2 Proxy Statement; Other Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.3 Shareholders' Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.4 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.5 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.6 Employment Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.7 Termination of Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.8 FIRPTA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
6.9 Conversion of Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.4 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.5 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6 Termination of Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.7 FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.8 Rule 506 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.9 No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.10 No Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.11 Xxxxxx Shareholders Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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7.12 Related Party Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
7.13 Investment Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT, THE COMPANIES AND THE DESIGNATED PERSONS. . . 34
8.1 Accuracy of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.2 Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.4 Agreements and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.5 Xxxxxx Shareholder Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.6 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.7 No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.8 No Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.9 Related Party Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Termination Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10. INDEMNIFICATION, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.1 Indemnification by the Parent and the Designated Persons. . . . . . . . . . . . . . . . . . . . . . 37
10.2 Indemnification by Xxxxxx and the Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . 37
10.3 Limitations on Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
10.4 Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 11. REGISTRATION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.1 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
11.2 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Delay of Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
11.4 Amendment of Section 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 12. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.1 Designated Persons' Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
12.4 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.5 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
12.6 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.7 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.8 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.10 Governing Law; Venue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.11 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
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12.12 Remedies Cumulative; Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
12.13 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.14 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.15 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.16 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.17 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
12.18 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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EXHIBITS
Exhibit A - Designated Persons
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Related Party Debt
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AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of December 13, 1995, by and among: XXXXXX BUSINESS
SYSTEMS, INC., a Georgia corporation ("Xxxxxx"); AUBIS, L.L.C., a Georgia
limited liability company ("Parent"); AUBIS HOSPITALITY SYSTEMS, INC. , a
Georgia corporation and a wholly-owned subsidiary of the Parent ("AHS"); AUBIS
SYSTEMS INTEGRATION, INC., a Georgia corporation and a wholly-owned subsidiary
of the Parent ("ASI") (AHS and ASI are hereinafter sometimes referred to
collectively as the "Companies"), and the parties identified on Exhibit A (the
"Designated Persons"). Certain capitalized terms used in this Agreement are
defined in Exhibit B.
RECITALS
X. Xxxxxx, Parent and the Companies intend to
effect a merger of the Companies into Xxxxxx in accordance with this Agreement
and the Georgia Business Corporation Code (the "Merger"). Upon consummation of
the Merger, the Companies will cease to exist, and Xxxxxx will continue to
exist as the surviving corporation of the Merger.
B. It is intended that the Merger qualify as a
tax-free reorganization within the meaning of Section 368(a)(1)(a) of the
Internal Revenue Code of 1986, as amended (the "Code").
C. This Agreement has been adopted and approved
by the respective boards of directors of Xxxxxx, and the Companies and the
members of Parent.
D. The Parent owns a total of (i) 1,126 shares
of the voting common stock, $1.00 par value per share, of AHS, representing
100% of the issued and outstanding stock of AHS, and (ii) 14,288 shares of the
voting common stock, no par value per share, of ASI, representing 100% of the
issued and outstanding stock of ASI (collectively, the "Companies Common
Stock.")
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF COMPANIES INTO XXXXXX. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time
(as defined in Section 1.3), the Companies shall be merged with and into
Xxxxxx, and the separate existence of the Companies shall cease. Xxxxxx will
continue as the surviving corporation in the Merger (the "Surviving
Corporation").
1.2 EFFECT OF MERGER. The Merger shall have the effects
set forth in this Agreement and in the applicable provisions of the Georgia
Business Corporation Code.
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1.3 CLOSING; EFFECTIVE TIME. The consummation of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Xxxxx, Xxxxxxxx & Xxxxxxx, 0000 Xxxxxxxxx Xxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxx 00000, at 10:00 a.m. local time on the first business day
which is two (2) days after the date Xxxxxx'x shareholders shall have approved
the merger, or at such other time and date, as the parties shall designate (the
"Scheduled Closing Time"). (The date on which the Closing actually takes place
is referred to in this Agreement as the "Closing Date.") Contemporaneously
with or as promptly as practicable after the Closing, but in no event later
than one business day after the Closing, properly executed certificates of
merger for the merger of ASI and AHS into Xxxxxx, conforming to the
requirements of the Georgia Business Corporation Code, shall be filed with the
Secretary of State of the State of Georgia. The Merger shall take effect at
the time the last such certificate of merger is filed with the Secretary of
State of the State of Georgia (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. Unless the parties agree otherwise prior to the Effective Time:
(a) the Articles of Incorporation of Xxxxxx shall
continue as the Articles of Incorporation of the Surviving Corporation
and shall be amended and restated as of the Effective Time to:
(i) change the name of the Surviving Corporation
to AUBIS, Inc; and
(ii) increase authorized common stock to
100,000,000 shares;
(b) the Bylaws of Xxxxxx shall continue as the Bylaws of
the Surviving Corporation (provided that any amendments reasonably
required to carry into effect the purposes of this Agreement also may
be made); and
(c) the directors and officers of the Surviving
Corporation immediately after the Effective Time shall be the
individuals identified on Exhibit C.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.7(b), at the Effective Time,
by virtue of the Merger and without any further action on the part of Xxxxxx,
Parent, the Companies or any Designated Person, all of the Companies Common
Stock outstanding immediately prior to the Effective Time shall be canceled
and retired and converted into the right to receive 10,500,000 shares of $.01
par value common stock of Xxxxxx ("Xxxxxx Common Stock") (the "Merger
Consideration").
(b) If any shares of Companies Common Stock outstanding
immediately prior to the Effective Time are unvested or are subject to a
repurchase option, risk of forfeiture or other condition under any restricted
stock purchase agreement or other agreement with the Companies, then the
shares of Xxxxxx Common Stock issued in exchange for such shares of Companies
Common
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Stock will be unvested and subject to the same repurchase option, risk of
forfeiture or other condition, and the certificates representing such shares of
Xxxxxx Common Stock may accordingly be marked with appropriate legends.
1.6 CLOSING OF THE COMPANIES' TRANSFER BOOKS. At the
Effective Time, the holders of certificates representing shares of Companies
Common Stock that were outstanding immediately prior to the Effective Time
shall cease to have any rights as shareholders of the Companies, and the stock
transfer books of the Companies shall be closed with respect to all shares of
such Companies Common Stock outstanding immediately prior to the Effective
Time. No further transfer of any such shares of the Companies' capital stock
shall be made on such stock transfer books after the Effective Time. If,
after the Effective Time, a valid certificate previously representing any of
such shares of Companies Common Stock (a "Company Stock Certificate") is
presented to Xxxxxx, such Company Stock Certificate shall be canceled and
shall be exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At or as soon as practicable following the
Effective Time, each shareholder of record of the Companies shall surrender
its respective Company Stock Certificate(s) to the Surviving Corporation,
together with such transmittal documents as the Surviving Corporation may
reasonably require, and the Surviving Corporation shall deliver to such
shareholders of record of the Companies a certificate or certificates
representing the number of shares of Xxxxxx Common Stock issuable pursuant to
Section 1.5 in respect of the Companies Common Stock represented by the
surrendered Company Stock Certificate(s).
(b) Until surrendered as contemplated by this Section
1.7, each Company Stock Certificate shall be deemed, from and after the
Effective Time, to represent only the right to receive shares of Xxxxxx Common
Stock as contemplated by this Section 1.7. If any Company Stock Certificate
shall have been lost, stolen or destroyed, Xxxxxx may, in its discretion and as
a condition precedent to the issuance of any certificate representing Xxxxxx
Common Stock, require the owner of such lost, stolen or destroyed Company Stock
Certificate to provide an appropriate affidavit and to deliver a bond (in such
sum as Xxxxxx may reasonably direct) as indemnity against any claim that may be
made against Xxxxxx with respect to such Company Stock Certificate.
(c) The shares of Xxxxxx Common Stock to be issued in
the Merger shall be characterized as "restricted securities" for purposes of
Rule 144 under the Securities Act, and each certificate representing any of
such shares shall bear a legend identical or similar in effect to the
following legend (together with any other legend or legends required by
applicable state securities laws or otherwise):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR
UNLESS
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THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT
REQUIRED.
(d) Xxxxxx shall be entitled to deduct and withhold from
any consideration payable or otherwise deliverable to any holder or former
holder of Companies Common Stock pursuant to this Agreement such amounts as
Xxxxxx may be required to deduct or withhold therefrom under the Code or under
any provision of state, local or foreign tax law. To the extent such amounts
are so deducted or withheld, such amounts shall be treated for all purposes
under this Agreement as having been paid to the Person to whom such amounts
would otherwise have been paid.
(e) Xxxxxx shall not be liable to any holder or former
holder of Companies Common Stock for any shares of Xxxxxx Common Stock (or
dividends or distributions with respect thereto), or for any cash amounts,
delivered to any public official pursuant to any applicable abandoned property,
escheat or similar law.
1.8 TAX CONSEQUENCES. For federal income tax purposes,
the Merger is intended to constitute a reorganization within the meaning of
Section 368 of the Code. The parties to this Agreement hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections 1.368-2
(g) and 1.368-3(a) of the United States Treasury Regulations.
1.9 FURTHER ACTION. If, at any time after the Effective
Time, any further action is determined by Xxxxxx to be necessary or desirable
to carry out the purposes of this Agreement or to vest Xxxxxx with full right,
title and possession of and to all rights and property of the Companies, the
officers and directors of Xxxxxx shall be fully authorized (in the name of the
Companies and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT,
THE COMPANIES AND THE DESIGNATED PERSONS
The Companies, the Parent and the Designated Persons jointly
and severally represent and warrant, to and for the benefit of Xxxxxx, as
follows (for purposes of this Section 2, unless the context indicates
otherwise, a reference to the "Companies" in the plural shall mean each of the
Companies individually), as of the date hereof and as of the Closing Date:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Companies are corporations duly organized,
validly existing and in good standing under the laws of the State of Georgia
and have all necessary power and authority: (i) to conduct their businesses
in the manner in which their businesses are currently being conducted and in
the manner in which their businesses are proposed to be conducted; (ii) to own
and use their assets in the manner in which their assets are currently owned
and used and in the manner in which their assets are proposed to be owned and
used; and (iii) to perform their obligations under all Contracts by which they
are bound.
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(b) The Companies have not conducted any business under
or otherwise used, for any purpose or in any jurisdiction, any fictitious
name, assumed name, trade name or other name, other than the names "Aubis
Hospitality Systems, Inc." f/k/a "Wiporwil Systems, Inc." f/d/b/a "Dynamic
Decisions", with respect to AHS, and "Aubis Systems Integration, Inc." f/k/a
"G.E. Random & Associates, Inc." f/d/b/a "Peripheral Design", with respect to
ASI.
(c) The Companies are not and have not been required to
be qualified, authorized, registered or licensed to do business as foreign
corporations in any jurisdiction other than the jurisdictions identified in
Part 2.1(c) of the Disclosure Schedule, except where the failure to be so
qualified, authorized, registered or licensed has not had and will not have a
Material Adverse Effect on the Companies. The Companies are in good standing
as foreign corporations in each of the jurisdictions identified in Part 2.1(c)
of the Disclosure Schedule.
(d) Part 2.1(d) of the Disclosure Schedule accurately
sets forth (i) the names of the members of the Companies' boards of directors,
(ii) the names of the members of each committee of the Companies' boards of
directors, and (iii) the names and titles of the Companies' officers.
(e) Except as set forth in Part 2.1(e) of the Disclosure
Schedule, the Companies have no subsidiaries, and have never owned,
beneficially or otherwise, any shares or other securities of, or any direct or
indirect interest of any nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS.
The Companies have delivered to Xxxxxx accurate and complete copies of: (i)
the Companies' articles of incorporation and bylaws, including all amendments
thereto; (ii) the stock records of the Companies; and (iii) the minutes and
other records of the meetings and other proceedings (including any actions
taken by written consent or otherwise without a meeting) of the shareholders
of the Companies, the boards of directors of the Companies and all committees
of the boards of directors of the Companies. There have been no meetings or
other proceedings or actions of the shareholders of the Companies, the boards
of directors of the Companies or any committee of the boards of directors of
the Companies that are not fully reflected in such minutes or other records.
There has not been any violation of any of the provisions of the Companies'
articles of incorporation or bylaws or of any resolution adopted by the
Companies' shareholders, the Companies' boards of directors or any committee
of the Companies' boards of directors. The books of account, stock records,
minute books and other records of the Companies are accurate, up-to-date and
complete, and have been maintained in accordance with prudent business
practices and all applicable Legal Requirements.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of AHS consists of
100,000 shares of common stock, of which 1,126 shares have been issued and are
outstanding. There are no shares of capital stock held in AHS's treasury.
Part 2.3(a) of the Disclosure Schedule sets forth the names of AHS's
shareholders and the number of shares of AHS common stock owned of record
by each of such
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shareholders. All of the outstanding shares of AHS common stock have been duly
authorized and validly issued, and are fully paid and non-assessable, and none
of such shares is subject to any repurchase option or restriction on transfer.
(b) The authorized capital stock of ASI consists of
100,000 shares of common stock, of which 14,288 shares have been issued and
are outstanding. There are no shares of capital stock held in ASI's treasury.
Part 2.3(b) of the Disclosure Schedule sets forth the names of ASI's
shareholders and the number of shares of ASI common stock owned of record by
each of such shareholders. All of the outstanding shares of ASI common stock
have been duly authorized and validly issued, and are fully paid and
non-assessable, and none of such shares is subject to any repurchase option or
restriction on transfer.
(c) There is no: (i) outstanding subscription, option,
call, warrant or right (whether or not currently exercisable) to acquire, or
otherwise relating to, any shares of the capital stock or other securities of
the Companies; (ii) outstanding security, instrument or obligation that is or
may become convertible into or exchangeable for any shares of the capital
stock or other securities of the Companies; (iii) Contract under which the
Companies are or may become obligated to sell or otherwise issue any shares of
their capital stock or any other securities; or (iv) condition or circumstance
that may give rise to or provide a basis for the assertion of a claim by any
Person to the effect that such Person is entitled to acquire or receive any
shares of capital stock or other securities of the Companies. Except as set
forth in Part 2.3(c) of the Disclosure Schedule, the Companies have never
issued or granted any option, call, warrant or right to acquire, or otherwise
relating to, any shares of their capital stock or other securities.
(d) All outstanding shares of Companies Common Stock
have been issued in compliance with (i) all applicable securities laws and
other applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts.
(e) Except as set forth in Part 2.3(e) of the
Disclosure Schedule, the Companies have never repurchased, redeemed or
otherwise reacquired any shares of capital stock or other securities. All
securities so reacquired by the Companies were reacquired in compliance with
(i) the applicable provisions of the Georgia Business Corporation Code and all
other applicable Legal Requirements, and (ii) any requirements set forth in
applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Companies will within five days after the date
of this Agreement deliver to Xxxxxx the following financial statements and
notes (collectively, the "Company Financial Statements"):
(i) unaudited balance sheets of AHS as
of December 31, 1994 and 1993, and the related unaudited statements of
income of AHS for the years then ended;
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(ii) unaudited balance sheets of ASI as
of June 30, 1995 and 1994, and the related unaudited statements of
income of ASI for the years then ended; and
(iii) the unaudited balance sheet of each
of the Companies as of November 30, 1995 (the "Unaudited Interim
Balance Sheets"), and the related unaudited statement of income of
each of the Companies for the 11 months then ended, with respect to
AHS, and the 11 months then ended, with respect to ASI.
(b) The Company Financial Statements are accurate and
complete in all material respects and present fairly the financial position
of the Companies as of the respective dates thereof and the results of
operations of the Companies for the periods covered thereby subject, in the
case of the Unaudited Interim Balance Sheets, to normal year-end adjustments
which will not, individually or in the aggregate, be material in magnitude.
The Company Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods covered (except that the Company Financial Statements do
not contain footnotes.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5
of the Disclosure Schedule, since November 30, 1995.
(a) there has not been any material adverse change in
the Companies' business, condition, assets, liabilities, operations, financial
performance or prospects, and no event has occurred that will, or could
reasonably be expected to, have a Material Adverse Effect on the Companies;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the
Companies' assets (whether or not covered by insurance);
(c) the Companies have not declared, accrued, set aside
or paid any dividend or made any other distribution in respect of any shares
of capital stock, and have not repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
(d) the Companies have not sold, issued or authorized
the issuance of (i) any capital stock or other security, (ii) any option, call,
warrant or right to acquire, or otherwise relating to, any capital stock or
any other security, or (iii) any instrument convertible into or exchangeable
for any capital stock or other security;
(e) there has been no amendment to the either of the
Companies' articles of incorporation or bylaws, and the Companies have not
effected or been a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) the Companies have not formed any subsidiary or
acquired any equity interest or other interest in any other Entity;
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(g) the Companies have not made any capital expenditure
which exceeds $25,000 in the aggregate;
(h) the Companies have not (i) entered into or permitted
any of the assets owned or used by them to become bound by any Material
Contract (as defined in Section 2.10(a)), or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any Material
Contract to which they are or were party or under which they have or have had
any rights or obligations;
(i) the Companies have not (i) acquired, leased or
licensed any right or other asset from any other Person, (ii) sold or
otherwise disposed of, or leased or licensed, any right or other asset to any
other Person, or (iii) waived or relinquished any right, except for immaterial
rights or other immaterial assets acquired, leased, licensed or disposed of in
the ordinary course of business and consistent with the Companies' past
practices;
(j) the Companies have not written off as uncollectible,
or established any extraordinary reserve with respect to, any account
receivable or other indebtedness;
(k) the Companies have not made any pledge of any of
their assets or otherwise permitted any of their assets to become subject to
any Encumbrance, except for pledges of immaterial assets made in the ordinary
course of business and consistent with the Companies' past practices;
(l) the Companies have not (i) lent money to any Person,
or (ii) incurred or guaranteed any indebtedness for borrowed money;
(m) the Companies have not (i) established, adopted or
amended any Employee Benefit Plan, (ii) paid any bonus or made any
profit-sharing or similar payment to, or increased the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of their directors, officers or employees, or (iii) hired any
new employee;
(n) the Companies have not changed any of their methods
of accounting or accounting practices in any respect;
(o) the Companies have not made any Tax election;
(p) the Companies have not commenced or settled any
Legal Proceeding;
(q) the Companies have not entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with their past practices; and
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(r) the Companies have not agreed or committed to take
any of the actions referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) The Companies own, and have good, valid and
marketable title to, all assets purported to be owned by them, including: (i)
all assets reflected on the Unaudited Interim Balance Sheet; (ii) all assets
referred to in Parts 2.7(b), 2.8 and 2.9 of the Disclosure Schedule and all of
the Companies' rights under the Contracts identified in Part 2.10(a) of the
Disclosure Schedule; and (iii) all other assets reflected in the Companies'
books and records as being owned by the Companies. Except as set forth in
Part 2.6(a) of the Disclosure Schedule, all of said assets are owned by the
Companies free and clear of any liens or other Encumbrances, except for (i)
any lien for current taxes not yet due and payable, and (ii) minor liens that
have arisen in the ordinary course of business and that do not (in any case or
in the aggregate) materially detract from the value of the assets subject
thereto or materially impair the operations of the Companies.
(b) Part 2.6(b) of the Disclosure Schedule identifies
all assets that are being leased or licensed to the Companies.
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides
accurate and complete information with respect to each account maintained by
or for the benefit of the Companies at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an
accurate and complete breakdown and aging of all accounts receivable, notes
receivable and other receivables of the Companies as of November 30, 1995.
Except as set forth in Part 2.7(b) of the Disclosure Schedule, all existing
accounts receivable of the Companies (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since November 30,
1995, and have not yet been collected) represent valid obligations of
customers of the Companies arising from bona fide transactions entered into in
the ordinary course of business.
(c) Part 2.7(c) of the Disclosure Schedule accurately
identifies, and provides an accurate and complete breakdown of the revenues
received from, each customer or other Person for each of the Companies
in the 11-month period, with respect to AHS, and the 11-month period, with
respect to ASI, ended November 30, 1995. The Companies have not received any
notice or other communication indicating that any customer or other Person
identified in Part 2.7(c) of the Disclosure Schedule intends or expects to
cease dealing with the Companies or to reduce the volume of business transacted
by such Person with the Companies below historical levels.
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(d) Part 2.7(d) of the Disclosure Schedule provides an
accurate and complete breakdown of all pending and unfilled orders received by
the Companies for products, systems and services.
2.8 EQUIPMENT; LEASEHOLD.
(a) Part 2.8 of the Disclosure Schedule provides
accurate and complete information with respect to all material items of
equipment, fixtures, leasehold improvements and other tangible assets owned by
or leased to the Companies. The assets identified in Part 2.8 of the
Disclosure Schedule are adequate for the uses to which they are being put, are
in good condition and repair (ordinary wear and tear excepted) and are
adequate for the conduct of the Companies' businesses in the manner in
which such businesses are currently being conducted and in the manner in which
such businesses are proposed to be conducted.
(b) The Companies do not own any real property or
any interest in real property, except for the leasehold(s) created under the
real property lease(s) identified in Part 2.10(a) of the Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth,
with respect to each Company Proprietary Asset that has been registered,
recorded or filed with any Governmental Body or with respect to which an
application has been filed with any Governmental Body, (i) a brief description
of such Company Proprietary Asset, and (ii) the names of the jurisdictions
covered by the applicable registration, recordation, filing or application.
Part 2.9(a)(2) of the Disclosure Schedule identifies and provides a brief
description of all other Company Proprietary Assets owned by the Companies.
Part 2.9(a)(3) of the Disclosure Schedule identifies and provides a brief
description of each Company Proprietary Asset that is owned by any other
Person and that is licensed to or used by the Companies (except for any
Company Proprietary Asset that is licensed to either Company under any third
party software license generally available to the public at a cost of less
than $500). Except as set forth in Part 2.9(a)(4) of the Disclosure Schedule,
each Company has good, valid and marketable title to all of the Proprietary
Assets identified in Parts 2.9(a)(1) and 2.9(a)(2) of the Disclosure Schedule,
free and clear of all liens and other Encumbrances, and has a valid right to
use all Proprietary Assets identified in Part 2.9(a)(3) of the Disclosure
Schedule. Except as set forth in Part 2.9(a)(5) of the Disclosure Schedule,
the Companies are not obligated to make any payment to any Person for the use
of any Company Proprietary Asset. Except as set forth in Part 2.9(a)(6) of
the Disclosure Schedule, the Companies are free to use, modify, copy,
distribute, sell, license or otherwise exploit each of the Company
Proprietary Assets on an exclusive basis.
(b) The Companies have taken all measures and
precautions necessary to protect and maintain the confidentiality and secrecy
of all Company Proprietary Assets (except Company Proprietary Assets whose
value would be unimpaired by public disclosure) and otherwise to maintain and
protect the value of all Company Proprietary Assets. Except as set forth in
Part 2.9(b) of the Disclosure Schedule, the Companies have not disclosed or
delivered or permitted to be
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disclosed or delivered to any Person, and no Person (other than the Companies)
has access to or has any rights with respect to, the source code, or any
portion or aspect of the source code, of any Company Proprietary Asset.
(c) To the knowledge of the Companies, Parent and
the Designated Persons, none of the Companies' Proprietary Assets infringes or
conflicts with any Proprietary Asset owned or used by any other Person. To the
knowledge of the Companies, Parent and the Designated Persons, the Companies
are not infringing, misappropriating or making any unlawful use of, and the
Companies have not at any time infringed, misappropriated or made any unlawful
use of, or received any notice or other communication of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of, any
Proprietary Asset owned or used by any other Person. To the best of the
knowledge of the Companies, the Parent and the Designated Persons, no other
Person is infringing, misappropriating or making any unlawful use of, and no
Proprietary Asset owned or used by any other Person infringes or conflicts
with, any Company Proprietary Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure
Schedule: (i) each Company Proprietary Asset conforms in all material respects
with any specification, documentation, performance standard, representation or
statement made or provided with respect thereto by or on behalf of the
Companies; and (ii) there has not been any material claim by any customer or
other Person alleging that any Company Proprietary Asset does not conform in
all material respects with any specification, documentation, performance
standard, representation or statement made or provided by or on behalf of the
Companies, and, to the best of the knowledge of the Companies, the Parent and
the Designated Persons, there is no basis for any such claim. Except as set
forth in Part 2.9(d) of the Disclosure Schedule, the Companies have
established adequate reserves on the Unaudited Interim Balance Sheet to cover
all costs associated with any obligations that the Companies may have with
respect to the correction or repair of programming errors or other defects
in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Companies to conduct their business
in the manner in which such businesses have been conducted and in the manner
in which such businesses are proposed to be conducted. Except as set forth in
Part 2.9(e) of the Disclosure Schedule, (i) the Companies have not licensed
any of the Company Proprietary Assets to any Person on an exclusive basis, and
(ii) the Companies have not entered into any covenant not to compete or
Contract limiting their ability to exploit fully any of their Proprietary
Assets or to transact business in any market or geographical area or with any
Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure
Schedule, all current employees of the Companies have executed and delivered
to the Companies written agreements (containing no exceptions to or exclusions
from the scope of their coverage) that are substantially identical to the form
of the Confidentiality and Non-Disclosure Agreement attached to the Disclosure
Schedule as Appendices 2.9(f)(1). The Companies have never engaged or
received services from any consultant or independent contractor in connection
with the design or development of any Proprietary Asset. To the knowledge of
the Companies, Parent and the
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Designated Persons, no former employee of the Company has or claims to have
any rights with respect to, or any ownership interest in, any Company
Proprietary Asset.
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies
each Company Contract that constitutes a "Material Contract." For purposes of
this Agreement, each of the following shall be deemed to constitute a
"Material Contract":
(i) any Contract relating to the
employment or engagement of, or the performance of services by, any
employee, consultant or independent contractor;
(ii) any Contract relating to the
acquisition, transfer, use, development, sharing or license of any
technology or any Proprietary Asset;
(iii) any Contract imposing any
restriction on the Companies' right or ability (A) to compete with any
other Person, (B) to acquire any product or other asset or any
services from any other Person, to sell any product or other asset to
or perform any services for any other Person or to transact business
or deal in any other manner with any other Person, or (C) to develop
or distribute any technology;
(iv) any Contract creating or involving
any agency relationship, distribution arrangement or franchise
relationship;
(v) any Contract relating to the
acquisition, issuance or transfer of any securities;
(vi) any Contract creating or relating to
the creation of any Encumbrance with respect to any asset owned or
used by the Companies;
(vii) any Contract involving or
incorporating any guaranty, any pledge, any performance or completion
bond, any indemnity, any right of contribution or any surety
arrangement;
(viii) any Contract creating or relating to
any partnership or joint venture or any sharing of revenues, profits,
losses, costs or liabilities;
(ix) any Contract relating to the
purchase or sale of any product or other asset by or to, or the
performance of any services by or for, any Related Party (as defined
in Section 2.19);
(x) any Contract to which any
Governmental Body is a party or under which any Governmental Body has
any rights or obligations, or involving or directly or
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indirectly benefiting any Governmental Body (including any
subcontract or other Contract between the Company and any contractor
or subcontractor to any Governmental Body);
(xi) any Contract entered into outside
the ordinary course of business or inconsistent with the Companies'
past practices;
(xii) any Contract that has a term of more
than 60 days and that may not be terminated by the Company (without
penalty) within 60 days after the delivery of a termination notice by
the Subject Business; and
(xiii) any Contract that contemplates or
involves (A) the payment or delivery of cash or other consideration in
an amount or having a value in excess of $5,000 in the aggregate, or
(B) the performance of services having a value in excess of $5,000 in
the aggregate.
(b) Except as set forth in Part 2.10(b) of the
Disclosure Schedules, the Companies have delivered to Xxxxxx accurate and
complete copies of all Contracts identified in Part 2.10(a) of the Disclosure
Schedule, including all amendments thereto. Each Contract identified in Part
2.10(a) of the Disclosure Schedule is valid and in full force and effect, and
is enforceable by the Companies in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief
of debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
(c) Except as set forth in Part 2.10(c) of the
Disclosure Schedule:
(i) The Companies have not violated or
breached, or committed any default under, any Company Contract, and,
to the best of the knowledge of the Companies, the Parent and the
Designated Persons, no other Person has violated or breached, or
committed any default under, any Company Contract;
(ii) to the best of the knowledge of the
Companies, the Parent and the Designated Persons, no event has
occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected
to, (A) result in a violation or breach of any of the provisions of
any Company Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Company Contract, (C) give
any Person the right to accelerate the maturity or performance of any
Company Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) since December 31, 1994, the
Companies have not received any notice or other communication
regarding (i) any actual or possible violation or breach of, or
default under, any Company Contract, or (ii) any actual or possible
termination of any Company Contract; and
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(iv) the Companies have not waived any
of their material rights under any Contract.
(d) Except as set forth in Part 2.10(d) of the
Disclosure Schedule, no Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to the Companies under any Company
Contract or any other term or provision of any Company Contract.
(e) The Contracts identified in Part 2.10(a) of the
Disclosure Schedule collectively constitute all of the Material Contracts
necessary to enable the Companies to conduct their businesses in the manner in
which their businesses are currently being conducted and in the manner in which
their businesses are proposed to be conducted.
(f) Part 2.10(f) of the Disclosure Schedule identifies
and provides a brief description of each proposed Contract as to which any
pending bid, offer or proposal has been submitted or received by the Companies.
2.11 LIABILITIES.
(a) The Companies have no accrued, contingent or other
liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles, and whether due or to become due), except for:
(i) liabilities identified as such in the "liabilities" column of the
Unaudited Interim Balance Sheet; (ii) accounts payable or accrued salaries
that have been incurred by the Companies since November 30, 1995 in the
ordinary course of business and consistent with the Companies' past practices;
and (iii) the liabilities identified in Part 2.11(a) of the Disclosure Schedule.
(b) Part 2.11(b) of the Disclosure Schedule provides an
accurate and complete breakdown of (i) all accounts payable of each Company as
of November 30, 1995, and (ii) all notes payable of the Companies and all
indebtedness of the Companies for borrowed money.
(c) Part 2.11(c) of the Disclosure Schedule provides an
accurate and complete breakdown of the Companies' "deferred support revenue"
and all related obligations and other liabilities of the Companies.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Companies
are, and have at all times since December 31, 1994 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have in any individual case or in
the aggregate, a Material Adverse Effect on the Companies. Except as set forth
in Part 2.12 of the Disclosure Schedule, since December 31, 1994, the Companies
have not received any notice or other communication from any Governmental Body
regarding any actual or possible violation of, or failure to comply with, any
Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the
Disclosure Schedule identifies each material Governmental Authorization held by
the Companies, and the Companies have delivered
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to Xxxxxx accurate and complete copies of all Governmental Authorizations
identified in Part 2.13 of the Disclosure Schedule. The Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule are valid
and in full force and effect, and collectively constitute all Governmental
Authorizations necessary to enable the Companies to conduct their businesses
in the manner in which their businesses are currently being conducted and in
the manner in which their businesses are proposed to be conducted. The
Companies are, and at all times since December 31, 1994 have been, in
compliance with the material terms and requirements of the respective
Governmental Authorizations identified in Part 2.13 of the Disclosure
Schedule. Since December 31, 1994, the Companies have not received any notice
or other communication from any Governmental Body regarding (a) any actual or
possible violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) Except as set forth on Part 2.14(a) of the
Disclosure Schedule, all Tax Returns required to be filed by or on behalf of
the Companies with any Governmental Body with respect to any transaction
occurring or any taxable period ending on or before the Closing Date (the
"Company Returns") (i) have been or will be filed when due, and (ii) have been,
or will be when filed, accurately and completely prepared in compliance with
all applicable Legal Requirements. Except as set forth on Part 2.14(a) of the
Disclosure Schedule, all amounts shown on the Company Returns to be due on or
before the Closing Date have been or will be paid on or before the Closing
Date. Except as set forth on Part 2.14(a) of the Disclosure Schedule, the
Companies have delivered to Xxxxxx accurate and complete copies of all Company
Returns for AHS filed since December 31, 1991, and for ASI filed since June
30, 1992.
(b) The Company Financial Statements fully accrue all
actual and contingent liabilities for Taxes with respect to all periods
through the dates thereof in accordance with generally accepted accounting
principles. The Companies will establish, in the ordinary course of business
and consistent with their past practices, reserves adequate for the payment of
all Taxes for the period from November 30, 1995 through the Closing Date, and
the Companies will disclose the dollar amount of such reserves to Xxxxxx on or
prior to the Closing Date.
(c) Each Company Return relating to income Taxes that
has been filed with respect to any period ended on or prior to December 31,
1991 with respect to AHS, and June 30, 1992 with respect to ASI, has either
(i) been examined and audited by all relevant Governmental Bodies, or (ii) by
virtue of the expiration of the limitation period under applicable Legal
Requirements, is no longer subject to examination or audit by any Governmental
Body. Except as set forth in Part 2.14(c) of the Disclosure Schedule, there
has been no examination or audit of any Company Return, and no such examination
or audit has been proposed or scheduled by any Governmental Body. The
Companies have delivered to Xxxxxx accurate and complete copies of all audit
reports and similar documents (to which the Companies have access) relating to
the Company Returns. Except as set forth in Part 2.14(c) of the Disclosure
Schedule, no extension or waiver of
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the limitation period applicable to any of the Company Returns has been
granted (by the Companies or any other Person), and no such extension or
waiver has been requested from the Companies.
(d) Except as set forth in Part 2.14(d) of the
Disclosure Schedule, no claim or Legal Proceeding is pending or has been
threatened against or with respect to the Companies in respect of any Tax.
Except as set forth in Part 2.14(d) of the Disclosure Schedule, there are no
unsatisfied liabilities for Taxes (including liabilities for interest,
additions to tax and penalties thereon and related expenses) with respect to
any notice of deficiency or similar document received by the Companies. There
are no liens for Taxes upon any of the assets of the Companies, except liens
for current Taxes not yet due and payable. The Companies have not entered into
or become bound by any agreement or consent pursuant to Section 341(f) of the
Code. The Companies have not been, and the Companies will not be, required to
include any adjustment in taxable income for any tax period (or portion
thereof) pursuant to Section 481 of 263A of the Code or any comparable
provision under state or foreign Tax laws as a result of transactions or events
occurring, or accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other
Contract covering any employee or independent contractor or former employee or
independent contractor of the Companies that, considered individually or
considered collectively with any other such Contracts, will, or could
reasonably be expected to, give rise directly or indirectly to the payment of
any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. The Companies are not, and have never been, a part to or
bound by any tax indemnity agreement, tax sharing agreement, tax allocation
agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule contains a
list of all salaried employees of the Companies as of the date of this
Agreement, and correctly reflects their salaries, any other compensation
payable to them (including compensation payable pursuant to bonus, deferred
compensation or commission arrangements), their dates of employment and their
positions. The Companies are not a party to any collective bargaining
contract or other Contract with a labor union involving any of its employees.
(b) Part 2.15(b) of the Disclosure Schedule identifies
each employee of the Companies who is not fully available to perform work
because of disability or other leave, and sets forth the basis of such
leave and the anticipated date of return to full service.
(c) Part 2.15(c) of the Disclosure Schedule identifies
each salary, bonus, deferred compensation, incentive compensation, stock
purchase, stock option, severance pay, termination pay, hospitalization,
medical, insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or agreement (individually referred to as a "Plan"
and collectively referred to as the "Plans") sponsored, maintained, contributed
to or required to be contributed to by the Companies for the benefit of any
current or former employee of the Companies.
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(d) The Companies do not maintain, sponsor or contribute
to, and, to the best of the knowledge of the Companies, the Parent and the
Designated Persons, the Companies have not at any time in the past maintained,
sponsored or contributed to, any employee pension benefit plan (as defined in
Section 3(2)) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), whether or not excluded from coverage under specific Titles
or Merger Subtitles of ERISA) for the benefit of employees or former employees
of the Companies (a "Pension Plan").
(e) The Companies do not maintain, sponsor or contribute
to any employee welfare benefit plan (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Merger
Subtitles of ERISA) for the benefit of employees or former employees of the
Companies (a "Welfare Plan") except for those Welfare Plans described in Part
2.15(e) of the Disclosure Schedule, none of which is a multiemployer plan
(within the meaning of Section 3(37) of ERISA).
(f) With respect to each Plan, the Companies have
delivered to Xxxxxx:
(i) an accurate and complete copy of
such Plan (including all amendments thereto);
(ii) an accurate and complete copy of the
annual report (if required under ERISA) with respect to such Plan for
each of 1993 and 1994;
(iii) an accurate and complete copy of (A)
the most recent summary plan description, together with each Summary
of Material Modifications (if required under ERISA) with respect to
such Plan, and (B) each material employee communication relating to
such Plan;
(iv) if such Plan is funded through a
trust or any third party funding vehicle, an accurate and complete
copy of the trust or other funding agreement (including all amendments
thereto) and accurate and complete copies of the most recent financial
statements thereof;
(v) accurate and complete copies of all
Contracts relating to such Plan, including service provider
agreements, insurance contracts, minimum premium contracts, stop-loss
agreements, investment management agreements, subscription and
participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the
most recent determination letter received from the Internal Revenue
Service with respect to such Plan (if such Plan is intended to be
qualified under Section 401(a) of the Code).
(g) The Companies are not required to be, and, to
the best of the knowledge of the Companies, the Parent and the Designated
Persons, the Companies have never been required to
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be, treated as a single employer with any other Person under Section 4001(b)(1)
of ERISA or Section 414(b), (c), (m) or (o) of the Code. The Companies have
never been a member of an "affiliated service group" within the meaning of
Section 414(m) of the Code. To the best of the knowledge of the Companies, the
Parent and the Designated Persons, the Companies have never made a complete or
partial withdrawal from a "multiemployer plan" (as defined in Section 3(37) of
ERISA) resulting in "withdrawal liability" (as defined in Section 4201 of
ERISA), without regard to subsequent reduction or waiver of such liability
under either Section 4207 or 4208 of ERISA.
(h) The Companies do not have any plan or commitment to
create any additional Welfare Plan or any Pension Plan, or to modify or change
any existing Welfare Plan or Pension Plan (other than to comply with
applicable law).
(i) No Welfare Plan provides death, medical or health
benefits (whether or not insured) with respect to any current or former
employee of the Companies after any such employee's termination of service
(other than (i) benefit coverage mandated by applicable law, including coverage
provided pursuant to Section 4980B of the Code, (ii) deferred compensation
benefits accrued as liabilities on the Unaudited Interim Balance Sheet, and
(iii) benefits the full cost of which are borne by current or former employees
of the Companies (or their beneficiaries).
(j) With respect to each of the Welfare Plans
constituting a group health plan within the meaning of Section 4980B(g)(2) of
the Code, the provisions of Section 4980B of the Code ("COBRA") have been
complied with in all material respects.
(k) Each of the Plans has been operated and
administered in all material respects in accordance with applicable Legal
Requirements, including ERISA and the Code.
(l) Each of the Plans intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the
Internal Revenue Service, and neither the Parent, the Companies, nor any of
the Designated Person is aware of any reason why any such determination letter
should be revoked.
(m) Except as set forth in Part 2.15(m) of the
Disclosure Schedule, neither the execution, delivery or performance of this
Agreement, nor the consummation of the Merger or any of the other transactions
contemplated by this Agreement, will result in any bonus payment, golden
parachute payment, severance payment or other payment to any current or former
employee or director of the Companies (whether or not under any Plan), or
materially increase the benefits payable under any Plan, or result in any
acceleration of the time of payment or vesting of any such benefits.
(n) The Companies are in compliance in all material
respects with all applicable Legal Requirements and Contracts relating to
employment, employment practices, employee compensation, wages, bonuses and
terms and conditions of employment.
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(o) The Companies have good labor relations, and
neither the Companies, the Parent nor any of the Designated Persons has any
knowledge of any facts indicating that (i) the consummation of the Merger or
any of the other transactions contemplated by this Agreement will have a
material adverse effect on the Companies' labor relations, or (ii) any of the
Companies' employees intends to terminate his or her employment with the
Companies.
2.16 ENVIRONMENTAL MATTERS. The Companies are and have
at all times been in compliance, in all material respects, with all applicable
Environmental Laws. The Companies possess all permits and other Governmental
Authorizations required under applicable Environmental Laws, and the Companies
are and have at all times been in compliance with the terms and requirements of
all such Governmental Authorizations. The Companies have not received any
notice or other communication (whether from a Governmental Body, citizens
group, employee or otherwise) that alleges that the Companies are not in
compliance with any Environmental Law, and, to the best of the knowledge of the
Companies, the Parent and Designated Persons, there are no circumstances that
could reasonably be expected to prevent or interfere with the Companies'
compliance with any Environmental Law in the future. To the best of the
knowledge of the Companies, the Parent and the Designated Persons, no current
or prior owner of any property leased or controlled by the Companies has
received any notice or other communication (whether from a Governmental Body,
citizens group, employee or otherwise) that alleges that such current or prior
owner or the Companies are not or were not in compliance with any Environmental
Law. All Governmental Authorizations currently held by the Companies pursuant
to Environmental Laws are identified in Part 2.16 of the Disclosure Schedule.
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except in the ordinary course of business in
accordance with past practices, the Companies will not incur or otherwise
become subject to any material liability arising from (i) any product, system,
program, Proprietary Asset or other asset designed, developed, manufactured,
assembled, sold, supplied, installed, repaired, licensed or made available by
the Companies on or prior to the Closing Date, or (ii) any consulting services,
installation services, programming services, repair services, maintenance
services, training services, support services or other services performed by
the Companies on or prior to the Closing Date.
(b) Except as set forth in Part 2.17(b) of the
Disclosure Schedule, no customer or other Person has, at any time since
December 31, 1994, asserted or threatened to assert any claim against the
Companies (other than claims that have been resolved satisfactorily at no
material cost to the Companies) under or based upon (i) any warranty provided
by or on behalf of the Companies, or (ii) any services performed by the
Companies.
2.18 INSURANCE. Part 2.18 of the Disclosure Schedule
provides accurate and complete information with respect to each insurance policy
maintained by, at the expense of or for the benefit of each of the Companies
and with respect to any claims made thereunder. The Companies have delivered
to Xxxxxx accurate and complete copies of the insurance policies identified in
Part 2.18 of the Disclosure Schedule. Each of the insurance policies
identified in Part 2.18 of the Disclosure
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Schedule is in full force and effect. Since December 31, 1994, the Companies
have not received any notice or other communication regarding any actual or
possible (a) cancellation or invalidation of any insurance policy, (b) refusal
of any coverage or rejection of any claim under any insurance policy, or (c)
material adjustment in the amount of the premiums payable with respect to any
insurance policy.
2.19 RELATED PARTY TRANSACTIONS. Except as set forth in
Part 2.19 of the Disclosure Schedule: (a) no Related Party has, and no Related
Party has at any time since December 31, 1994 had, any direct or indirect
interest in any material asset used in or otherwise relating to the business of
the Companies; (b) no Related Party is, or has at any time since December 31,
1994 been, indebted to the Companies; (c) since December 31, 1994, no Related
Party has entered into, or has had any direct or indirect financial interest
in, any material Contract, transaction or business dealing involving the
Companies; (d) no Related Party is competing, or has at any time since December
31, 1994 competed, directly or indirectly, with the Companies; and (e) no
Related Party has any claim or right against the Companies (other than rights
to receive compensation for services performed as an employee of the
Companies). (For purposes of this Section 2.19, each of the following shall be
deemed to be a "Related Party": (i) each of the Designated Persons; (ii) each
individual who is, or who has at any time since December 31, 1992 been, an
officer or director of the Companies; (iii) each individual who is, or who at
any time since December 31, 1992 has been, a member of the immediate family of
any of the individuals referred to in clauses "(i)" and "(ii)" above; and (iv)
any trust or other Entity (other than the Companies) in which any one of the
individuals referred to in clauses "(i)," "(ii)" and "(iii)" above holds (or in
which more than one of such individuals collectively hold), beneficially or
otherwise, a material voting, proprietary or equity interest.)
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.20(a) of the
Disclosure Schedule, there is no pending Legal Proceeding, and, to the best of
the knowledge of the Companies, the Parent and the Designated Persons, no
Person has threatened to commence any Legal Proceeding: (i) that involves the
Companies or any of the assets owned or used by the Companies; or (ii) that
challenges, or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with, the Merger or any of the other
transactions contemplated by this Agreement. To the best of the knowledge of
the Companies, the Parent and the Designated Persons, except as set forth in
Part 2.20(a) of the Disclosure Schedule, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that will, or that could
reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the
Disclosure Schedule, no Legal Proceeding is currently pending against the
Companies.
(c) There is no order, writ, injunction, judgment
or decree to which the Companies, or any of the assets owned or used by the
Companies, are subject. Neither the Designated Persons, the Parent nor the
Companies are is subject to any order, writ, injunction, judgment or decree
that relates to the Companies' business or to any of the assets owned or used
by
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the Companies. To the best of the knowledge of the Companies, the Parent
and the Designated Persons, no officer or other employee of the Companies is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other employee from engaging in or continuing any conduct, activity
or practice relating to the Companies' businesses.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The
Parent, the Designated Persons and the Companies have the absolute and
unrestricted right, power and authority to enter into and to perform their
respective obligations under this Agreement; and the execution, delivery and
performance by Parent and the Companies of this Agreement have been duly
authorized by all necessary action on the part of the Parent, the Companies
and their respective boards of directors and shareholders. This Agreement
constitutes the legal, valid and binding obligation of the Designated Persons,
the Parent and the Companies, enforceable against the Designated Persons, the
Parent and the Companies in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive
relief and other equitable remedies.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in
Part 2.22 of the Disclosure Schedule, neither (i) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in
this Agreement, nor (ii) the consummation of the Merger or any of the other
transactions contemplated by this Agreement, will directly or indirectly (with
or without notice or lapse of time):
(a) contravene, conflict with or result in a violation
of (i) any of the provisions of the Parent's or the Companies' articles of
incorporation or bylaws, or (ii) any resolution adopted by the Parent's or the
Companies' shareholders, the Parent's or the Companies' boards of directors or
any committee of the Parent's or the Companies' boards of directors;
(b) contravene, conflict with or result in a violation
of, or give any Governmental Body or other Person the right to challenge any
of the transactions contemplated by this Agreement or to exercise any remedy
or obtain any relief under, any Legal Requirement or any order, writ,
injunction, judgment or decree to which the Parent or the Companies, or
any of the assets owned or used by the Parent or the Companies, are subject;
(c) contravene, conflict with or result in a violation
of any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by the Companies or that otherwise
relates to the Companies' business or to any of the assets owned or used by the
Companies;
(d) contravene, conflict with or result in a violation
or breach of, or result in a default under, any provision of any Material
Contract, or give any Person the right to (i) declare a default or exercise
any remedy under any Material Contract, (ii) accelerate the maturity or
performance of any Material Contract, or (iii) cancel, terminate or modify
any Material Contract; or
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(e) result in the imposition or creation of any
lien or other Encumbrance upon or with respect to any asset owned or used by
the Companies (except for minor liens that will not, in any case or in the
aggregate, materially detract from the value of the assets subject thereto or
materially impair the operations of the Companies).
Except as set forth in Part 2.22 of the Disclosure Schedule, the Parent and the
Companies are not and will not be required to make any filing with or given any
notice to, or to obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Merger
or any of the other transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the
Disclosure Schedule) does not, and the Parent's and Designated Persons' Closing
Certificate (as defined in Section 7.4(h)) will not, (i) contain any
representation, warranty or information that is false or misleading with
respect to any material fact, or (ii) omit to state any material fact necessary
in order to make the representations, warranties and information contained and
to be contained herein and therein not false or misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF XXXXXX
Xxxxxx represents and warrants to the Companies, the Parent
and the Designated Persons as follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Xxxxxx will deliver to the Companies, within five
(5) days hereof, accurate and complete copies (excluding copies of exhibits)
of each report, registration statement, (on a form other than Form S-8) and
definitive proxy statement filed by Xxxxxx with the SEC between January 1,
1992 and the date of this Agreement (the "Xxxxxx SEC Documents"). As of the
time it was filed with the SEC (or, if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing): (i) each of
the Xxxxxx SEC Documents complied in all material respects with the applicable
requirements of the Securities Act or the Exchange Act (as the case may be);
and (ii) none of the Xxxxxx SEC Documents contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(b) The consolidated financial statements contained in
the Xxxxxx SEC Documents: (i) complied as to form in all material respects
with the published rules and regulations of the SEC applicable thereof; (ii)
were prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods covered, except as may be
indicated in the notes to such financial statements and (in the case of
unaudited statements) as permitted by Form 10-Q of the SEC, and except that
unaudited financial statements may not contain footnotes and are subject to
normal and recurring year-end audit adjustments (which will not, individually
or in the aggregate, be material in magnitude); and (iii) fairly present the
consolidated financial
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position of Xxxxxx as of the respective dates thereof and the consolidated
results of operations of Xxxxxx for the periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Subject to
obtaining the requisite approval of Xxxxxx'x shareholders, Xxxxxx has the
absolute and unrestricted right, power and authority to perform its
obligations under this Agreement; and the execution, delivery and performance
by Xxxxxx of this Agreement have been duly authorized by all necessary action
on the part of Xxxxxx and its board of directors. This Agreement shall
constitute the legal, valid and binding obligation of Xxxxxx, enforceable
against it in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
3.3 VALID ISSUANCE. The Xxxxxx Common Stock to be issued
in the Merger will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
SECTION 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE
DESIGNATED PERSONS
4.1 ACCESS AND INVESTIGATION. During the period from the
date of this Agreement through the Effective Time (the "Pre-Closing Period"),
the Parent and the Companies shall, and shall cause their Representatives to:
(a) provide Xxxxxx and Xxxxxx'x Representatives with reasonable access to the
Companies' Representatives, personnel and assets and to all existing books,
records, Tax Returns, work papers and other documents and information relating
to the Companies; and (b) provide Xxxxxx and Xxxxxx'x Representatives with such
copies of the existing books, records, Tax Returns, work papers and other
documents and information relating to the Companies, and with such additional
financial, operating and other data and information regarding the Companies, as
Xxxxxx may reasonably request. Notwithstanding the provisions of Section
12.17, paragraph 7 of the letter agreement between Parent and Xxxxxx dated
November 16, 1995 ("Letter of Intent") shall remain in effect through the
Closing Date and shall bind Xxxxxx with respect to any Evaluation Material (as
defined in the Letter of Intent) provided to Xxxxxx or its Representatives
during the Pre- Closing Period.
4.2 OPERATION OF THE COMPANIES' BUSINESSES. During the
Pre-Closing Period, unless Xxxxxx otherwise consents in writing:
(a) the Companies shall conduct their businesses and
operations in the ordinary course and in substantially the same manner as such
business and operations have been conducted prior to the date of this Agreement;
(b) the Companies shall use reasonable efforts to
preserve intact their current business organizations, keep available the
services of their current officers and employees and
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maintain their relations and goodwill with all suppliers, customers, landlords,
creditors, employees and other Persons having business relationships with the
Companies;
(c) the Companies shall keep in full force all insurance
policies identified in Part 2.18 of the Disclosure Schedule;
(d) the Companies shall cause their officers to report
regularly to Xxxxxx concerning the status of the Companies' businesses;
(e) the Companies shall not declare, accrue, set aside
or pay any dividend or make any other distribution in respect of any
shares of capital stock, and shall not repurchase, redeem or otherwise
reacquire any shares of capital stock or other securities;
(f) the Companies shall not sell, issue or authorize the
issuance of (i) any capital stock or other security, (ii) any option, call,
warrant or right to acquire, or relating to, any capital stock or other
security, or (iii) any instrument convertible into or exchangeable for
any capital stock or other security;
(g) neither the Companies, the Parent nor any of
the Designated Persons shall amend or permit the adoption of any amendment to
the Companies' articles of incorporation or bylaws, or effect or permit either
of the Companies to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(h) the Companies shall not form any subsidiary or
acquire any equity interest or other interest in any other Entity;
(i) the Companies shall not make any capital
expenditure, except for capital expenditures that, when added to all other
capital expenditures made on behalf of the Companies during the Pre-Closing
Period, do not exceed $30,000 in the aggregate;
(j) the Companies shall not (i) enter into or become
bound by, or permit any of the assets owned or used by them to become bound
by, any Material Contract, or (ii) amend or prematurely terminate, or waive
any material right or remedy under, any Material Contract;
(k) the Companies shall not, other than in the ordinary
course of business consistent with past practice (i) acquire, lease or license
any right or other asset from any other Person, (ii) sell or otherwise dispose
of, or lease or license, any right or other asset to any other Person, or
(iii) waive or relinquish any right, except for immaterial assets acquired,
leased, licensed or disposed of by the Companies pursuant to Contracts that are
not Material Contracts;
(l) the Companies shall not (i) lend money to any
Person, or (ii) incur or guarantee any indebtedness, except that the Companies
may make routine borrowings in the ordinary course of business under their
respective existing lines of credit;
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(m) The Companies shall not (i) establish, adopt
or amend any Employee Benefit Plan (other than the employee retention program
and severance program referred to in Section 6.9), (ii) pay any bonus or make
any profit-sharing or similar payment to, or increase the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees, or (iii) hire any new
employee whose aggregate annual compensation is expected to exceed $35,000;
(n) the Companies shall not change any of their
methods of accounting or accounting practices in any respect, including without
limitation any change with respect to writing off of accounts receivable;
(o) the Companies shall not make any Tax election;
(p) the Companies shall not commence or settle
any Legal Proceeding;
(q) the Companies shall not enter into any material
transaction or take any other material action outside the ordinary course of
business or inconsistent with its past practices; and
(r) the Companies shall not agree or commit to take any
of the actions described in clauses "(e)" through "(q)" of this Section 4.2.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Companies, the
Parent and the Designated Persons shall promptly notify Xxxxxx in writing of:
(i) the discovery by the Companies the
Parent or the Designated Persons of any event, condition, fact or
circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes an inaccuracy in or breach of
any representation or warranty made by the Companies, the Parent or
any of the Designated Persons in this Agreement;
(ii) any event, condition, fact or
circumstance that occurs, arises or exists after the date of this
Agreement and that would cause or constitute an inaccuracy in or
breach of any representation or warranty made by the Companies, the
Parent or any of the Designated Persons in this Agreement if (A) such
representation or warranty had been made as of the time of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, or (B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or
obligation of the Companies, the Parent or any of the Designated
Persons; and
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(iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the
conditions set forth in Section 7 or Section 8 impossible or unlikely.
(b) If any event, condition, fact or circumstance that
is required to be disclosed pursuant to Section 4.3(a) requires any change
in the Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Disclosure Schedule were
dated as of the date of the occurrence, existence or discovery of such event,
condition, fact or circumstance, then the Companies, the Parent or the
Designated Persons shall promptly deliver to Xxxxxx an update to the Disclosure
Schedule specifying such change. Upon receipt of any such updated Disclosure
Schedule from the Companies, the Parent or the Designated Persons, Xxxxxx shall
have the right to terminate this Agreement in accordance with Section 9.1(h) by
giving notice in accordance with Section 9.2 within 7 days following delivery
of such updated Disclosure Schedule to Xxxxxx. If Xxxxxx fails to give such
notice within such 7 day period, the Disclosure Schedule shall be deemed
amended to include the updated information for all purposes hereunder. The
parties acknowledge that as of the date of this Agreement, the Companies have
not yet delivered a complete
4.4 NO NEGOTIATION. During the Pre-Closing Period,
neither the Companies, the Parent nor any of the Designated Persons shall,
directly or indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than Xxxxxx) relating to a possible
Acquisition Transaction;
(b) participate in any discussions or negotiations or
enter into any agreement with, or provide any non-public information to, any
Person (other than Xxxxxx) relating to or in connection with a possible
Acquisition Transaction; or
(c) consider, entertain or accept any proposal or
offer from any Person (other than Xxxxxx) relating to a possible Acquisition
Transaction.
The Parent or the Companies shall promptly notify Xxxxxx in writing of any
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Parent or the Companies or any of the Designated Persons
during the Pre-Closing Period.
4.5 DUE DILIGENCE INVESTIGATION. Within 30 days
following the delivery date of initial due diligence items requested by
Prent from Xxxxxx, the Parent shall complete its due diligence investigation
of Xxxxxx; provided, however, that Parent shall have ten (10) days after such
delivery date toverify that all due diligence items requested from Xxxxxx have
been delivered and if not so delivered, Parent shall notify Xxxxxx of such
additional items required by Parent, and whereupon Parent shall have thirty
(30) days from the delivery date of such additional items requested from
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Xxxxxx to complete its due diligence investigation of Xxxxxx. If such
investigation reveals any fact that Parent determines in its sole discretion
will affect the business, assets or operations of Xxxxxx in a material adverse
manner, then Parent may, within 60 days following the date of this Agreement,
terminate this Agreement pursuant to Section 9.1(i). Parent's due diligence
investigation of Xxxxxx shall not in any case diminish, obviate or otherwise
affect the representations or warranties contained in Section 3. Parent's
failure to terminate this Agreement as provided above in this Section shall
not affect in any way, or be deemed a waiver of, Parent's rights under
Sections 8 or 10 of this Agreement.
SECTION 5. CERTAIN COVENANTS OF XXXXXX
5.1 ACCESS AND INVESTIGATION. During the Pre-Closing
Period, Xxxxxx shall, and shall cause its Representatives to: (a) provide the
Parent and the Parent's Representatives with reasonable access to Xxxxxx'x
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to Xxxxxx; and
(b) provide the Parent and the Parent's Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to Xxxxxx, and with such additional financial, operating
and other data and information regarding Xxxxxx, as the Parent may reasonably
request. Notwithstanding the provisions of Section 12.17, paragraph 7 of the
Letter of Intent shall remain in effect through the Closing Date and shall bind
the Parent, the Companies, and the Designated Persons with respect to any
Evaluation Material (as defined in the Letter of Intent) provided to the Parent,
the Companies or the Designated Persons or their respective Representatives at
any time during the Pre-Closing Period.
5.2 OPERATION OF XXXXXX'X BUSINESS. During the
Pre-Closing Period, unless the Parent otherwise consents in writing:
(a) Xxxxxx shall conduct its business and operations in
the ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) Xxxxxx shall use reasonable efforts to preserve
intact its current business organization, keep available the services of its
current officers and employees and maintain its relations and goodwill with
all suppliers, customers, landlords, creditors, employees and other Persons
having business relationship with Xxxxxx;
(c) Xxxxxx shall keep in full force all its insurance
policies;
(d) Xxxxxx shall cause its officers to report regularly
to Parent concerning the status of Xxxxxx'x business;
(e) Xxxxxx shall not declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of
capital stock, and shall not repurchase, redeem or otherwise reacquire any
shares of capital stock or other securities;
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(f) Except as permitted or contemplated herein, Xxxxxx
shall not sell, issue or authorize the issuance of (i) any capital stock
or other security, (ii) any option, call, warrant or right to acquire, or
relating to, any capital stock or other security, or (iii) any instrument
convertible into or exchangeable for any capital stock or other security;
provided, however, that Xxxxxx may arrange for the private placement of up to
$1 million in debt that is convertible into common stock of Xxxxxx (on the
basis of $1 in debt being convertible to one share of common stock of Xxxxxx)
so long as Parent is afforded the opportunity to participate in any such
private placement if it so elects and so long as no more than 1,000,000 shares
of Xxxxxx common stock are issued upon any such conversion (unless Parent shall
consent otherwise);
(g) Except as permitted or contemplated herein, Xxxxxx
shall not amend or permit the adoption of any amendment to Xxxxxx'x articles
of incorporation or bylaws, or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(h) Xxxxxx shall not form any subsidiary or acquire any
equity interest or other interest in any other Entity;
(i) Xxxxxx shall not make any capital expenditure, except
for capital expenditures that, when added to all other capital expenditures
made on behalf of Xxxxxx during the Pre-Closing Period, do not exceed $30,000
in the aggregate;
(j) Xxxxxx shall not (i) enter into or become bound by,
or permit any of the assets owned or used by it to become bound by, any
Material Contract, or (ii) amend or prematurely terminate, or waive any
material right or remedy under, any Material Contract;
(k) Xxxxxx shall not, other than in the ordinary course
of business consistent with past practice, (i) acquire, lease or license any
right or other asset from any other Person, (ii) sell or otherwise dispose
of, or lease or license, any right or other asset to any other Person or (iii)
waive or relinquish any right, except for immaterial assets acquired, leased,
licensed or disposed of by Xxxxxx pursuant to Contracts that are not Material
Contracts;
(l) Xxxxxx shall not (i) lend money to any Person, or
(ii) incur or guarantee any indebtedness, except that Xxxxxx may make routine
borrowings in the ordinary course of business, under its existing lines of
credit;
(m) Xxxxxx shall not (i) establish, adopt or amend any
Employee Benefit Plan, (ii) pay any bonus or make any profit-sharing or
similar payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hire any new employee whose
aggregate annual compensation is expected to exceed $35,000;
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(n) Xxxxxx shall not change any of its methods of
accounting or accounting practices in any respect;
(o) Xxxxxx shall not make any Tax election;
(p) Xxxxxx shall not commence or settle any Legal
Proceeding;
(q) Xxxxxx shall not enter into any material transaction
or take any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(r) Xxxxxx shall not agree or commit to take any of the
actions described in clauses "(e)" through "(q)" of this Section 5.2.
5.3 NOTIFICATION.
(a) During the Pre-Closing Period, Xxxxxx shall promptly
notify the Parent in writing of:
(i) the discovery by Xxxxxx of any
event, condition, fact or circumstance that occurred or existed on or
prior to the date of this Agreement and that caused or constitutes an
inaccuracy in or breach of any representation or warranty made by
Xxxxxx in this Agreement;
(ii) any event, condition, fact or
circumstance that occurs, arises or exists after the date of this
Agreement and that would cause or constitute an inaccuracy in or
breach of any representation or warranty made by Xxxxxx in this
Agreement if (A) such representation or warranty had been made as of
the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date
of this Agreement;
(iii) any breach of any covenant or
obligation of Xxxxxx; and
(iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the
conditions set forth in Section 7 or Section 8 impossible or unlikely.
5.4 NO NEGOTIATION. During the Pre-Closing Period Xxxxxx
shall not, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than Parent) relating to a possible
Acquisition Transaction;
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(b) participate in any discussions or negotiations or
enter into any agreement with, or provide any non-public information to, any
Person (other than Parent) relating to or in connection with a possible
Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer
from any Person (other than Parent) relating to a possible Acquisition
Transaction;
provided, however, that Xxxxxx may take any of the actions referred to in (a)
through (c) above to the extent Xxxxxx'x Board of Directors in good faith
determines that such action is required in order to discharge the Board of
Directors' fiduciary obligations under the Code, and, if Xxxxxx'x Board of
Directors determines in good faith in the exercise its fiduciary duty that any
such possible Acquisition Transaction would be of greater benefit to Xxxxxx'x
shareholders than the Merger, Xxxxxx may terminate this Agreement in accordance
with Section 9.1(i). In the event of such a termination, Xxxxxx agrees to
reimburse the Companies for their Merger Fees (as defined in Section 12.3).
In addition, if the Acquisition Transaction accepted by Xxxxxx'x Board of
Directors in lieu of the Merger is consummated, and the value of consideration
received by Xxxxxx'x shareholders as a result of such Acquisition Transaction
exceeds $3,000,000, at the closing of such Acquisition Transaction, Xxxxxx
shall pay the Companies 25% of the amount by which such consideration exceeds
$3,000,000. Xxxxxx shall have the option of making such payment in cash or in
the same form of consideration paid to Xxxxxx as a result of such Acquisition
Transaction.
Xxxxxx shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Xxxxxx
during the Pre-Closing Period.
5.5 DUE DILIGENCE INVESTIGATION. Within 30 days following
the date of this Agreement, Xxxxxx shall complete its due diligence
investigation of the Companies. If such investigation reveals facts which
lead Xxxxxx reasonably and in good faith to believe: (i) that the Companies
intentionally withheld or concealed material information requested by Xxxxxx
in connection with such due diligence investigation; (ii) that the
representations and warranties contained in Section 2 are inaccurate in any
material respect; or (iii) that there has been a material adverse change in
the Companies' business, assets, liabilities, operations, financial
performance or prospects since October 31, 1995, then Xxxxxx may, within 45
days following the date of this Agreement, terminate this Agreement pursuant
to Section 9.1(k). Xxxxxx'x due diligence investigation of Parent shall not
in any case diminish, obviate or otherwise affect the representations or
warranties contained in Section 2. Xxxxxx'x failure to terminate this
Agreement as provided above in this Section shall not affect in any way or be
deemed a waiver of Xxxxxx'x rights under Sections 7 or 10 of this Agreement.
Xxxxxx shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Xxxxxx
during the Pre-Closing Period.
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SECTION 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 FILINGS AND CONSENTS. As promptly as practicable
after the execution of this Agreement, each party to this Agreement (a) shall
make all filings (if any) and give all notices (if any) required to be made and
given by such party in connection with the Merger and the other transactions
contemplated by this Agreement, and (b) shall use his, its or their best
efforts to obtain each Consent (if any) required to be obtained (pursuant to
any applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by
this Agreement. The Parent and the Companies shall promptly deliver to Xxxxxx
a copy of each such filing made, each such notice given and each such Consent
obtained by the Companies during the Pre-Closing Period. Xxxxxx shall promptly
deliver to the Parent a copy of each such filing made, each such notice given
and each such consent obtained by Xxxxxx during the Pre-Closing Period.
6.2 PROXY STATEMENT; OTHER FILINGS.
(a) Xxxxxx and the Companies shall prepare, shall file
with the SEC as promptly as practicable and shall use all reasonable efforts
to have cleared by the SEC, a proxy statement with respect to the
Shareholders' Meeting referred to in Section 6.3, the changes in the articles
of incorporation and Bylaws contemplated in Section 1.4 hereof, and the
payment of the Merger Consideration described in Section 1.5. The term "Proxy
Statement" shall mean such proxy statement at the time it initially is mailed
to Xxxxxx'x shareholders and all amendments or supplements thereto duly filed
and similarly mailed. Each of Xxxxxx and the Companies agrees to correct
promptly (but in no event later than the date of the Shareholders' Meeting
referred to in Section 6.3) any information provided by it for use in the
Proxy Statement which contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. Xxxxxx, Parent and the Companies shall cooperate
with each other in the preparation of such Proxy Statement.
(b) As soon as practicable after the date hereof, Xxxxxx
and the Companies shall promptly prepare and file any other filings required
under the Exchange Act, the Securities Act or any other federal or state
securities laws relating to the Merger and the transactions contemplated
herein ("Other Filings").
6.3 SHAREHOLDERS' APPROVALS. Xxxxxx, in accordance with
applicable law, shall promptly submit this Agreement and the transactions
contemplated hereby for the approval of its shareholders at a special meeting
of shareholders (the "Shareholders' Meeting") to be held as soon as
practicable. Subject to the fiduciary duties of the Board of Directors of the
Company under applicable law, Xxxxxx shall use its best efforts to obtain
shareholder approval of this Agreement and the transactions contemplated
hereby.
6.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period,
(a) neither the Parent, the Companies nor any of the Designated Persons shall
(and the Parent and the Companies shall not permit any of their Representatives
to) issue any press release or make any public statement
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regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without Xxxxxx'x prior written
consent, and (b) Xxxxxx will consult with the Companies prior to issuing any
press release or making any public statement regarding the Merger.
6.5 BEST EFFORTS. During the Pre-Closing Period, (a) the
Parent, the Companies and the Designated Persons shall use their reasonable
best efforts to cause the conditions set forth in Section 7 to be satisfied on
a timely basis, and (b) Xxxxxx shall use its reasonable best efforts to cause
the conditions set forth in Section 8 to be satisfied on a timely basis.
6.6 EMPLOYMENT AGREEMENT. At the Closing, each of Xxxxx
Xxxxxx and Xxxx Xxxxxxxx shall execute and deliver to Xxxxxx Employment
Agreements in a form mutually acceptable to Xxxxxx and the respective
individuals entering into such agreements. In addition, the existing
employment agreements with Xxxxx Xxxxxx and Xxxxxx Random shall be terminated
at or prior to Closing at no expense to Xxxxxx or the Companies.
6.7 TERMINATION OF EMPLOYEE PLANS. At the Closing, other
than existing commission arrangements with its employees, the Companies shall
terminate all bonus plans and other benefit plans under which any of its
employees or former employees may have any rights, and shall ensure that no
employee or former employee of the Companies has any rights thereunder and
that any liabilities of the Companies thereunder (including any such
liabilities relating to services performed prior to the Closing) are fully
extinguished at no cost to the Companies. All employees of the Companies will
be included in the benefit plans of Xxxxxx at no transitional cost to such
employees and will thereafter participate in such benefit plans on the same
basis as other employees of Xxxxxx.
6.8 FIRPTA MATTERS. At the Closing, the Companies shall
deliver to Xxxxxx a statement (in such form as may be reasonably requested by
counsel to Xxxxxx) to the effect that neither of the Companies has been a
United States real property holding corporation within the meaning of Code
Section 897(c)(2) during the applicable period specified in Code Section
897(1)(A)(ii).
6.9 CONVERSION OF PREFERRED STOCK. On or prior to the
Closing Date, all outstanding shares of Xxxxxx convertible preferred stock
shall have been converted into common stock of Xxxxxx and such holders will
have no other rights against Xxxxxx other than as a holder of common stock of
Xxxxxx.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXX
The obligations of Xxxxxx to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the
representations and warranties made by the Companies, the Parent and the
Designated Persons in this Agreement and in each of the other agreements and
instruments delivered to Xxxxxx in connection with the transactions
contemplated
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by this Agreement shall have been accurate in all material respects as of the
date of this Agreement, and shall be accurate in all material respects as of
the Closing as if made at the Closing.
7.2 PERFORMANCE OF COVENANTS. Each covenant or
obligation that the Companies, the Parent or any of the Designated Persons is
required to comply with or to perform at or prior to the Closing shall have
been complied with and performed in all respects.
7.3 CONSENTS. All Consents required to be obtained in
connection with the Merger and the other transactions contemplated by this
Agreement (including the Consents identified in Part 2.22 of the Disclosure
Schedule) shall have been obtained and shall be in full force and effect.
7.4 AGREEMENTS AND DOCUMENTS. Xxxxxx shall have received
the following agreements and documents, each of which shall be in full force
and effect:
(a) Employment Agreements executed by Xxxxx Xxxxxx and
Xxxx Xxxxxxxx in a form mutually acceptable to Xxxxxx and the respective
individuals entering into such agreements;
(b) the certificate referred to in Section 6.8, executed
by the Companies;
(c) estoppel certificates from the landlords of the
premises currently leased by the Companies, each dated as of a date not more
than five (5) days prior to the Closing Date and satisfactory in form and
content to Xxxxxx, executed by such Persons as Xxxxxx may reasonably specify;
(d) a legal opinion of Xxxxxxxxxx & Xxxx, dated as of
the Closing Date, in form and substance reasonably satisfactory to Xxxxxx; and
(e) a certificate executed by the Companies, the Parent
and the Designated Persons and containing the representation and warranty of
the Companies, the Parent and each Designated Person that each of the
representations and warranties set forth in Section 2 is accurate in all
material respects as of the Closing Date as if made on the Closing Date and
that the conditions set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5 and 7.12 have
been duly satisfied (the "Companies' Closing Certificate").
7.5 NO MATERIAL ADVERSE CHANGE. There shall have been
no material adverse change in each of the Companies' respective businesses,
condition, assets, liabilities, operations, financial performance or prospects
since the date of this Agreement.
7.6 TERMINATION OF EMPLOYEE PLANS. The Companies shall
have provided Xxxxxx with evidence, satisfactory to Xxxxxx, as to the
termination of the plans referred to in Section 6.9.
7.7 FIRPTA COMPLIANCE. The Companies shall have provided
Xxxxxx with the statement described in Section 6.9.
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7.8 RULE 506. All applicable requirements of Rule 506
under the Securities Act shall have been satisfied.
7.9 NO RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order preventing the consummation
of the Merger shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Merger that makes consummation of the Merger illegal.
7.10 NO LEGAL PROCEEDINGS. No Person shall have commenced
or threatened to commence any Legal Proceeding challenging or seeking the
recovery of a material amount of damages in connection with the Merger.
7.11 XXXXXX SHAREHOLDERS MEETING. The Shareholders of
Xxxxxx shall have approved this Agreement and the transactions contemplated
hereby.
7.12 RELATED PARTY DEBT. All debt obligations of the
Companies to any Related Parties shall have been paid or canceled, except such
obligations referred to on Exhibit D hereof.
7.13 INVESTMENT CERTIFICATION. Xxxxxx shall have received
a written acknowledgment from each of the Designated Persons receiving common
stock of Xxxxxx in connection with the Merger that such Designated Person
intends to accept such common stock for investment purposes, such
acknowledgment to be in a form reasonably acceptable to Xxxxxx.
SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT,
THE COMPANIES AND THE DESIGNATED PERSONS.
The obligations of the Companies, the Parent and the Designated
Persons to effect the Merger and otherwise consummate the transactions
contemplated by this Agreement are subject to the satisfaction, at or prior to
the Closing, of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of the
representations and warranties made by Xxxxxx in this Agreement and in each of
the other agreements and instruments delivered to the Parent in connection with
the transactions contemplated by this Agreement shall have been accurate in all
material respects as of the date of this Agreement, and shall be accurate in
all material respects as of the Closing as if made at the Closing.
8.2 PERFORMANCE OF COVENANTS. All of the covenants and
obligations that Xxxxxx is required to comply with or to perform at or prior to
the Closing shall have been complied with and performed in all respects.
8.3 CONSENTS. All Consents required to be obtained in
connection with the merger and the other transactions contemplated by this
Agreement shall have been obtained and shall be in full force and effect.
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8.4 AGREEMENTS AND DOCUMENTS.
(a) Xxxxxx shall have entered into the Employment
Agreements described in Section 7.4(a);
(b) The employment agreements with Xxxxx Xxxxxx and
Xxxxxx Random shall have been terminated as contemplated in Section 6.6
(c) The Parent shall have received a legal opinion of
Xxxxx, Xxxxxxxx & Xxxxxxx in form and substance reasonably satisfactory to
Parent;
(d) The Parent shall have received a certificate
executed by Xxxxxx, and containing the representation and warranty of Xxxxxx
that each of the representations and warranties set forth in Section 3 is
accurate in all material respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections 8.1, 8.2, 8.3, 8.4
and 8.5 have been duly satisfied (the "Xxxxxx Closing Certificate").
8.5 XXXXXX SHAREHOLDER MEETING. The shareholders of
Xxxxxx shall have approved this Agreement and the transactions contemplated
hereby, and shareholders holding no more than 150,000 shares of Xxxxxx'x
common stock, in the aggregate, shall have asserted dissenters' rights under
applicable law.
8.6 NO MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in Xxxxxx'x business, condition, assets, liabilities,
operations, financial performance or prospects since the date of this
Agreement.
8.7 NO RESTRAINTS. No temporary restraining order,
preliminary or permanent injunction or other order preventing the consummation
of the Merger by the Companies shall have been issued by any court of competent
jurisdiction and remain in effect, and there shall not be any Legal Requirement
enacted or deemed applicable to the Merger that makes consummation of the
Merger by the Companies illegal.
8.8 NO LEGAL PROCEEDINGS. No Person shall have commenced
or threatened to commence any Legal Proceeding challenging or seeking the
recovery of a material amount of damages in connection with the Merger or
seeking to prohibit or limit the exercise by Parent of any material right
pertaining to its ownership of stock of the Surviving Corporation.
8.9 RELATED PARTY DEBT. All debt obligations of Xxxxxx
to any Xxxxxx Related Parties shall have been paid or canceled. For purposes
of this Section 8.9, a "Xxxxxx Related Party" shall mean (i) each individual
who is, or who at any time since December 31, 1992 has been, an officer or
director of Xxxxxx and (ii) each individual who is, or since December 31, 1992
has been, a member of the immediate family of any of the individuals referred
to in clause (i) above; and (iii) any trust or other Entity (other than Xxxxxx)
in which any one of the individuals referred to in clauses (i) (ii)
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or (iii) above holds (or in which more than one of such individuals
collectively hold) beneficially or otherwise, a material voting, proprietary
or equity interest.)
8.10 XXXXXX'X FINANCIAL CONDITION IMMEDIATELY PRIOR TO
CLOSING. Evidence, in form reasonably satisfactory to Parent, is provided that
Xxxxxx, as of December 31, 1995, and without contemplation of the Merger, will
have working capital of no less than $200,000.
SECTION 9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may be terminated
prior to the Closing:
(a) by Xxxxxx if Xxxxxx reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of Xxxxxx to
comply with or perform any covenant or obligation of Xxxxxx set forth in this
Agreement);
(b) by the Parent if the Parent reasonably determines
that the timely satisfaction of any condition set forth in Section 8 has
become impossible (other than as a result of any failure on the part of the
Parent, the Companies or any of the Designated Persons to comply with or
perform any covenant or obligation set forth in this Agreement or in any other
agreement or instrument delivered to Xxxxxx);
(c) by Xxxxxx at or after the Scheduled Closing Time if
any condition set forth in Section 7 has not been satisfied by the Scheduled
Closing Time;
(d) by the Parent at or after the Scheduled Closing Time
if any condition set forth in Section 8 has not been satisfied by the
Scheduled Closing Time;
(e) by Xxxxxx if the Closing has not taken place
on or before April 30, 1996 (other than as a result of any failure on the part
of Xxxxxx to comply with or perform any covenant or obligation of Xxxxxx set
forth in this Agreement);
(f) by the Parent if the Closing has not taken place on
or before April 30, 1996 (other than as a result of the failure on the part of
the Parent, the Companies or any of the Designated Persons to comply with or
perform any covenant or obligation set forth in this Agreement or in any other
agreement or instrument delivered to Xxxxxx);
(g) by either Parent or Xxxxxx at any time during the
period after the Shareholders Meeting and prior to the Closing Date, if
Xxxxxx shareholders shall have perfected dissenters rights in accordance with
O.C.G.A. Section 14-2-1321 with respect to more than 150,000 shares of Xxxxxx
common stock (giving effect to conversion of any shares of preferred stock
convertible into common stock);
(h) by Xxxxxx under the circumstances described in
Section 4.3(b);
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(i) by Parent under the circumstances described in
Section 4.5;
(j) by Xxxxxx under the circumstances described in
Section 5.4;
(k) by Xxxxxx under the circumstances described
in Section 5.5; or
(l) by the mutual consent of Xxxxxx and the Parent.
9.2 TERMINATION PROCEDURES. If Xxxxxx wishes to
terminate this Agreement pursuant to Section 9.1(a), (c), (e), (g), (h), (j)
or (k), Xxxxxx shall deliver to the Parent a written notice stating that
Xxxxxx is terminating this Agreement and setting forth a brief description of
the basis on which Xxxxxx is terminating this Agreement. If the Parent wishes
to terminate this Agreement pursuant to Section 9.1(b), (d), (f), (g) or (i),
the Parent shall deliver to Xxxxxx a written notice stating that the Parent is
terminating this Agreement and setting forth a brief description of the basis
on which the Parent is terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 9.1,all further obligations of the parties under
this Agreement shall terminate; provided, however, that: (a) no party shall be
relieved of any obligation or liability arising from any prior breach by such
party of any provision of this Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Sections 12, as well as paragraph 7 of the Letter of Intent. If Xxxxxx
terminates this Agreement pursuant to Section 9.1(j) it will be liable to the
Companies for the reimbursements and payments described in Section 5.4, in lieu
of any other payments, claims or damages to the Parent, the Companies or the
Designated Persons on account of such termination.
SECTION 10. INDEMNIFICATION, ETC.
10.1 INDEMNIFICATION BY THE PARENT AND THE DESIGNATED
PERSONS. The Parent and the Designated Persons, jointly and severally agree to
indemnify Xxxxxx and the Surviving Corporation, and their respective current
and future officers, directors, employees, affiliates, successors and assigns,
and hold them harmless at all times after the date of this Agreement from and
against and in respect of, any and all liabilities, losses, damages,
settlements, claims, costs and expenses, including without limitation
attorneys' fees, arising out of or due to the breach of any representation,
warranty or covenant of the Parent, the Designated Persons or the Companies set
forth in this Agreement or in any of the exhibits or other documents delivered
pursuant hereto relating to an event or condition that arose prior to February
15, 1995, and any and all actions, suits, proceedings, demands, assessments or
judgments, and costs and expenses, incident to any of the foregoing.
Notwithstanding the foregoing, the Parent and the Designated Persons shall have
an obligation to indemnify Xxxxxx and the Surviving Company for any breach of a
representation or warranty contained in Section 2 of this Agreement if the
event or condition giving rise to such breach arose after February 15, 1995 and
the Parent, the Companies or the Designated Persons had actual knowledge of
such event or condition on or prior to the date of this Agreement.
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10.2 INDEMNIFICATION BY XXXXXX AND THE SURVIVING
CORPORATION. Xxxxxx and, following the Closing, the Surviving Corporation
agrees to indemnify the Parent and its current and future members, officers,
directors, employees, affiliates, successors and assigns, and hold it harmless
at all times after the date of this Agreement from and against and in respect
of any and all liabilities, losses, damages, settlements, claims, costs and
expenses, including, without limitation, attorneys' fees, arising out of or due
to the breach of any representation, warranty or covenant of Xxxxxx set forth
in this Agreement or in any of the exhibits or other documents delivered
pursuant hereto, and any and all actions, suits, proceedings, demands,
assessments or judgments, and costs and expenses, incident to the foregoing.
10.3 LIMITATIONS ON INDEMNIFICATION. Notwithstanding any
provision of this Section 10 to the contrary:
(a) The Parent and the Designated Persons shall not be
liable for payment of any claim for indemnification under Section 10.1 unless
and until the aggregate amount of all indemnifiable claims under Section 10.1
shall exceed $50,000, in which case the Parent and the Designated Persons shall
be liable only for payment of the amount by which such claims exceed such
$50,000 threshold. The total liability of the Parent and the Designated
Persons under Section 10.1 shall not in any event exceed $250,000 in the
aggregate.
(b) Xxxxxx and the Surviving Corporation shall not be
liable for payment of any claim for indemnification under Section 10.2 unless
and until the aggregate amount of indemnifiable claims under Section 10.2 shall
exceed $50,000, in which case Xxxxxx or the Surviving Corporation, as the case
may be, shall be liable only for payment of the amount by which such claims
exceed such $50,000 threshold. The total aggregate liability of Xxxxxx and the
Surviving Shareholder under Section 10.2 shall not in any event exceed $250,000
in the aggregate.
(c) No party shall have any obligation with respect to a
claim pursuant to Sections 10.1 or 10.2 unless the party asserting such claim
shall have delivered a notice of such claim in good faith in accordance with
Section 10.4(a) on or prior to the first day of the twelfth (12th) calendar
month following the Closing Date.
10.4 PROCEDURE.
(a) The Parent and the Designated Persons, on the one
hand, and Xxxxxx, on the other hand, each agree to promptly notify each other
if any of them becomes aware of any liability, loss, damage, settlement, claim,
cost or expense with respect to which indemnity may be asserted under this
Section 10 (hereinafter referred to as a "claim"), provided that failure to
notify the indemnifying party shall not relieve such party from liability
except to the extent such party is prejudiced thereby. Failure to deliver a
notice prior to the date referred to in Section 10.3(c) shall, however,
absolutely bar any claim for indemnity for such claim. The party entitled to
indemnity (the "Indemnitee") shall permit the party responsible for such
indemnity (the "Indemnitor") to assume the defense of any such claim or any
litigation resulting from such claim.
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(b) If the Indemnitor assumes the defense of any such
claim or litigation resulting therefrom, the Indemnitee may participate, at
its expense, in the defense of such claim or litigation provided that the
Indemnitor shall direct and control the defense of such claim or litigation.
Except with the written consent of Indemnitee, which consent shall not be
unreasonably withheld, the Indemnitor shall not, in the defense of such claim
or any litigation resulting therefrom, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the Indemnitee of a
release from all liability in respect of such claim or litigation.
(c) If the Indemnitor shall not assume the defense of
any such claim or litigation resulting therefrom, the Indemnitee may defend
against such claim or litigation in such manner as it may deem appropriate.
The Indemnitee shall not enter into any settlement of such claim or litigation
without the written consent of the Indemnitor, which consent shall not be
unreasonably withheld. The Indemnitor shall promptly reimburse the Indemnitee
from time to time for any and all amounts paid for or incurred by the
Indemnitee and for which the Indemnitor is obligated pursuant to this Section
10, upon submission by the Indemnitee of a statement reflecting the basis upon
which such indemnification is sought and the computation of such amounts.
(d) The Indemnitee shall make available to the
Indemnitor or its Representatives all records and other materials required by
them and in the possession or under control of the Indemnitee, for the use of
the Indemnitor and its Representatives in defending any such claim, and shall
in other respects give reasonable cooperation in such defense.
SECTION 11. REGISTRATION OF SHARES
11.1 REGISTRATION STATEMENT.
(a) After the Closing Date, Xxxxxx shall file with the
SEC a registration statement (the "Registration Statement") with respect to
resales of shares of Xxxxxx Common Stock received in the Merger by each
Participating Holder (as defined in Section 11.1(d)). Xxxxxx shall use
reasonable efforts: (a) to cause the Registration Statement to be declared
effective by the SEC on or before the date 90 days after the Closing Date; and
(b) to cause the Registration Statement to remain effective until the earlier
of (i) the third anniversary of the Closing Date, or (ii) the date on which
the distribution described in the Registration Statement is completed as to
all Participating Holders (as defined in subsection (c) below).
(b) Xxxxxx shall (at its own expense):
(i) prepare and file promptly
with the SEC such amendments to the Registration Statement, and such
supplements to the related prospectus, as may be required in order to
comply with the applicable provisions of the Securities Act,
including, without limitation, to maintain the effectiveness or
currency thereof;
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(ii) furnish to the respective
Participating Holders such numbers of copies of a prospectus
conforming to the requirements of the Securities Act as they may
reasonably request in order to facilitate the disposition of the
shares covered by the Registration Statement; and
(iii) use reasonable efforts to
register and qualify the shares covered by the Registration Statement
under the Securities laws of such states as the respective
Participating Holders may reasonably request, provided, however, that
Xxxxxx shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general
consent to service of process in any of such states.
(c) Notwithstanding anything to the contrary herein, no
Person who receives Xxxxxx Common Stock in the Merger shall have any rights
under this Section 11 unless such Person executes and delivers to Xxxxxx, a
written agreement, reasonably satisfactory in form and content to Xxxxxx,
confirming that such Person wishes to be allowed to sell Xxxxxx Common Stock
pursuant to the Registration Statement and agrees to be bound by the
provisions of this Section 11. (A Person who holds any of the Xxxxxx Common
Stock delivered in the Merger and who executes and delivers such an agreement
is referred to in this Section 11 as a "Participating Holder.") Any
Participating Holder who delivers such an agreement more than 30 days after the
Closing Date may be required to pay, as a condition to exercising rights under
this Section 11, the amount of incremental expenses incurred by Xxxxxx in
complying therewith. No Participating Holder shall sell any Xxxxxx Common
Stock pursuant to the Registration Statement at any time Xxxxxx shall have
furnished written notice that the Registration Statement is not then effective
or the prospectus that forms a part thereof is not current.
(d) Notwithstanding anything to the contrary contained
herein, all of Xxxxxx'x obligations under this Section 11.1 (including its
obligation to file and maintain the effectiveness of the Registration
Statement) shall terminate and expire as of the earliest date on which all of
the shares of Xxxxxx Common Stock issued in the Merger can be sold without any
restrictions as to volume or manner of sale pursuant to subsection (k) of Rule
144 under the Securities Act.
11.2 INDEMNIFICATION.
(a) Xxxxxx agrees to indemnify, to the extent permitted
by law, each Participating Holder against all Damages suffered by such
Participating Holder as a result of any untrue or alleged untrue statement of
material fact contained in the Registration Statement or in the related
prospectus or preliminary prospectus (or in any amendment thereof or
supplement thereto) or as a result of any omission or alleged omission of a
material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such untrue statement or
omission or alleged untrue statement or omission results from or is contained
in any information furnished in writing to Xxxxxx by such Participating Holder
for use therein or results from such Participating Holder's failure to deliver
a copy of a Registration Statement or related prospectus (or any amendment
thereof or supplement thereto) after Xxxxxx has furnished such Participating
Holder with a sufficient number of copies thereof.
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(b) In connection with the Registration Statement, each
Participating Holder (i) shall furnish to Xxxxxx in writing such information
and affidavits as Xxxxxx reasonably requests for use in connection with such
Registration Statement or the related prospectus, and (ii) to the extent
permitted by law, will indemnify Xxxxxx, its directors and officers and each
Person who controls Xxxxxx (within the meaning of the Securities Act) against
all Damages resulting from any untrue or alleged untrue statement of material
fact contained in such Registration Statement or in the related prospectus or
preliminary prospectus (or in any amendment thereof or supplement thereto) or
from any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, but only
to the extent that such untrue statement or omission or alleged untrue
statement or omission results from or is contained in any information or
affidavit furnished in writing by such Participating Holder.
(c) Any Person entitled to indemnification under this
Section 11 will (i) give prompt written notice to the indemnifying party of
any claim with respect to which it seeks indemnification, and (ii) unless in
the indemnified party's reasonable judgment a conflict of interest exists
between the indemnified party and the indemnifying party with respect to such
claim, permit the indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party will not be subject to any liability for any
consent to the entry of any judgment or any settlement made by the indemnified
party without the indemnifying party's consent (but such consent will not be
unreasonably withheld). Any indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will pay the fees and expenses of
only one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified party and any
other indemnified party with respect to such claim (in which case the
indemnifying party will pay the fees and expenses of additional counsel).
11.3 DELAY OF REGISTRATION. For a period not to exceed 90
days, Xxxxxx may delay the filing or effectiveness of the Registration
Statement, or suspend the use of the Registration Statement (and the
Participating Holders hereby agree not to offer or sell any shares of Xxxxxx
Common Stock pursuant to the Registration Statement during such period), at any
time when Xxxxxx, in its reasonable judgment (confirmed in writing if requested
by any Participating Holder), believes:
(a) that the filing of a Registration Statement or the
offering or sale of Xxxxxx Common Stock pursuant thereto, or the making of any
required disclosure in connection therewith, could reasonably be expected to
have a material adverse effect upon (i) a pending or scheduled offering of
Xxxxxx'x securities, (ii) an acquisition, merger, consolidation, joint venture,
equity investment or other potentially significant transaction or event, or
(iii) any negotiations, discussions or proposal with respect to any of the
foregoing; and
(b) that the failure to disclose any material
information with respect to any of the foregoing could result in a violation
of the Securities Act, the Exchange Act or any provision of any state
securities law.
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In the event Xxxxxx reasonably believes that any of the foregoing circumstances
are continuing after such 90-day period, it may, with the consent of the
holders of a majority of the shares of Xxxxxx Common Stock subject (or to be
subject) to the Registration Statement (which consent shall not be unreasonably
withheld) extend such 90-day period for one additional 30-day period.
11.4 AMENDMENT OF SECTION 11. Notwithstanding anything to
the contrary contained in this Agreement, the provisions of this Section 11 may
be amended by Xxxxxx at any time with the consent of the holders of a majority
of the shares of Xxxxxx Common Stock that are at that time subject (or to be
subject) to the Registration Statement.
SECTION 12. MISCELLANEOUS PROVISIONS
12.1 DESIGNATED PERSONS' AGENT. The Designated Persons
hereby irrevocably appoint Xxxx X. Xxxxxxxx as their agent for purposes of
Sections 10 and 12.10(d) (the "Designated Persons' Agent"), and Xxxx X.
Xxxxxxxx hereby accepts this appointment as the Designated Persons' Agent.
Xxxxxx shall be entitled to deal exclusively with the Designated Persons'
Agent on all matters relating to Sections 10 and 12.10(d), and shall be
entitled to rely conclusively (without further evidence of any kind whatsoever)
on any document executed or purported to be executed on behalf of any
Designated Person by the Designated Persons' Agent, and on any other action
taken or purported to be taken on behalf of any Designated Person by the
Designated Persons' Agent, as fully binding upon such Designated Person. If
the Designated Persons' Agent shall die, become disabled or otherwise be unable
to fulfill his responsibilities as agent of the Designated Persons, then the
Designated Persons shall, within ten (10) days after such death or disability,
appoint a successor agent and, immediately thereafter, shall notify Xxxxxx of
the identity of such successor. Any such successor shall become the
"Designated Persons' Agent" for purposes of Sections 10 and 12.10(d). If for
any reason there is no Designated Persons' Agent at any time, all references
herein to the Designated Persons' Agent shall be deemed to refer to the
Designated Persons.
12.2 FURTHER ASSURANCES. Each party hereto shall execute
and cause to be delivered to each other party hereto such instruments and
other documents, and shall take such other actions, as such other party may
reasonably request (prior to, at or after the Closing) for the purpose of
carrying out or evidencing any of the transactions contemplated by this
Agreement.
12.3 FEES AND EXPENSES. Subject to Sections 10 and 5.4,
all fees, costs and expenses (including legal fees and accounting fees) that
have been incurred or that are incurred in the future by such party in
connection with the transactions contemplated by this Agreement, including
all fees, costs and expenses incurred by such party in connection with or by
virtue of (a) any investigation and review conducted by such party of the other
parties' business (and the furnishing of information in connection with such
investigation and review), (b) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule) and all agreements, certificates,
opinions and other instruments and documents delivered or to be delivered in
connection with the transactions contemplated by this Agreement, (c) the
preparation and submission of any filing or notice required to be made or given
in connection with any of the transactions contemplated by this
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Agreement, and the obtaining of any Consent required to be obtained in
connection with any of such transactions, and (d) the consummation of the
Merger (collectively, the "Merger Fees") shall be paid: (i) by Xxxxxx, if
incurred by Xxxxxx; and (ii) by the Companies, if incurred by the Companies,
Parent or the Designated Persons.
12.4 ATTORNEYS' FEES. If any action or proceeding
relating to this Agreement or the enforcement of any provision of this
Agreement is brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
12.5 NOTICES. Any notice or other communication required
or permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery service
or by facsimile) to the address or facsimile telephone number set forth beneath
the name of such party below (or to such other address or facsimile telephone
number as such party shall have specified in a written notice given to the
other parties hereto):
if to Xxxxxx:
Xxxxxx Business Systems, Inc.
000 Xxxxxx 00 Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, President
Facsimile: (000) 000-0000
with a copy to:
Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
if to the Parent:
AUBIS, L.L.C.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxx, Chairman & CEO
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxxxxx & Xxxx
0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx X. Xxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
if to the Companies:
Aubis Hospitality Systems, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Aubis Systems Integration, Inc.
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
if to any of the Designated Persons:
c/o Xxxx X. Xxxxxxxx
000 Xxxxxxx Xxxx Xxxxx
Xxxxx X
Xxxxxxx, Xxxxxxx 00000
Facsimile: (000) 000-0000
12.6 CONFIDENTIALITY. On and at all times after the
Closing Date, the Parent and each Designated Person shall keep confidential,
and shall not use or disclose to any other Person, any non-public document or
other non-public information in the Parent's or such Designated Person's
possession that relates to the business of the Companies or Xxxxxx.
12.7 TIME OF THE ESSENCE. Time is of the essence of this
Agreement.
12.8 HEADINGS. The bold-faced Section headings contained
in this Agreement are for convenience of reference only, shall not be deemed
to be a part of this Agreement and shall not be referred to in connection with
the construction or interpretation of this Agreement.
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12.9 COUNTERPARTS. This Agreement may be executed in
several counterparts, each of which shall constitute an original and all of
which, when taken together, shall constitute one agreement.
12.10 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of Georgia
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating
to this Agreement or the enforcement of any provision of this Agreement may be
brought to otherwise commenced in any state or federal court located in Xxxxxx
County, Georgia. Each party to this Agreement:
(i) expressly and irrevocably
consents and submits to the jurisdiction of each state and federal
court located in Xxxxxx County, Georgia (and each appellate court
located in the State of Georgia) in connection with any such legal
proceeding;
(ii) agrees that each state and
federal court located in Xxxxxx County, Georgia shall be deemed to be
a convenient forum; and
(iii) agrees not to assert (by way
of motion, as a defense or otherwise), in any such legal proceeding
commenced in any state or federal court located in Xxxxxx County,
Georgia, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) The Designated Persons irrevocably constitute and
appoint the Designated Persons' Agent as their agent to receive notices
hereunder and service of process in connection with any legal proceeding
relating to this Agreement or the enforcement of any provision of this
Agreement.
12.11 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon: the Parent, the Companies and their successors and assigns (if
any); the Designated Persons and their respective personal representatives,
executors, administrators, estates, heirs, successors and assigns (if any);
Xxxxxx and its successors and assigns (if any). This Agreement shall inure to
the benefit of: the Parent, the Designated Persons; Xxxxxx; and the respective
successors, heirs personal representatives and assigns (if any) of the
foregoing.
12.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The
rights and remedies of the parties hereto shall be cumulative (and not
alternative). The parties to this Agreement agree that, in the event of any
breach of threatened breach by any party to this Agreement of any covenant,
obligation or other provision set forth in this Agreement for the benefit of
any other party to this
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Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance
or mandamus to enforce the observance and performance of such covenant,
obligation or other provision, and (b) an injunction restraining such breach
or threatened breach.
12.13 WAIVER.
(a) No failure on the part of any party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any party in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
12.14 AMENDMENTS. Subject to Section 11.5, this Agreement
may not be amended, modified, altered or supplemented other than by means of a
written instrument duly executed and delivered on behalf of all of the parties
hereto.
12.15 SEVERABILITY. In the event that any provision of
this Agreement, or the application of any such provision to any Person or set
of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable, shall
not be impaired or otherwise affected and shall continue to be valid and
enforceable to the fullest extent permitted by law.
12.16 PARTIES IN INTEREST. Except for the provisions of
Section 10, none of the provisions of this Agreement is intended to provide
any rights or remedies to any Person other than the parties hereto and their
respective successors, heirs, personal representatives and assigns (if any).
12.17 ENTIRE AGREEMENT. This Agreement and the other
agreements referred to herein set forth the entire understanding of the
parties hereto relating to the subject matter hereof and thereof and supersede
all prior agreements and understandings among or between any of the parties
relating to the subject matter hereof and thereof, including without limitation
the Letter of Intent (other than paragraph 7 thereof, which shall survive to
the extent provided herein).
12.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and
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neuter genders; the feminine gender shall include the masculine and neuter
genders; and the neuter gender shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of
construction to the effect that ambiguities are to be resolved against the
drafting party shall not be applied in the construction or interpretation
of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words
"without limitation."
(d) Except as otherwise indicated, all references in
this Agreement to "Sections" and "Exhibits" are intended to refer to Sections
of this Agreement and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and
delivered as of December 13, 1995.
"XXXXXX"
XXXXXX BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------------
Its: President
-----------------------------------
"PARENT"
AUBIS, L.L.C.,
a Georgia limited liability company
By: /s/ Xxxx X. Xxxxxxxx
-----------------------------------
Its: Managing Member
-----------------------------------
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"COMPANIES"
AUBIS HOSPITALITY SYSTEMS, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Title: CEO & Chairman
---------------------------------
AUBIS SYSTEMS INTEGRATION, INC.,
a Georgia corporation
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Title: CEO & Chairman
---------------------------------
"DESIGNATED PERSONS"
XXXX XXXXXXXX ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx
Its: President
---------------------------------
/s/ Xxxxxx X. Xxxxxx
---------------------------------
Xxxxxx X. Xxxxxx, in his
individual capacity
/s/ Xxxxxx X. Random
---------------------------------
Xxxxxx X. Random, in his
individual capacity
/s/ Xxxx X. Xxxxxxxx
---------------------------------
Xxxx Xxxxxxxx, in his individual
capacity
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EXHIBIT A
Designated Persons
Names
Xxxx Xxxxxxxx Enterprises, Inc.
Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx X. Random
56
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of
all or a material portion of the Companies' businesses or assets;
(b) the issuance, disposition or acquisition of (i) any
capital stock or other equity security of the Companies or Xxxxxx, as
the case may be; (ii) any option, call, warrant or right (whether or
not immediately exercisable) to acquire, or otherwise relating to,
any capital stock or other equity security of the Companies or Xxxxxx,
as the case may be; or (iii) any security, instrument or obligation
that is or may become convertible into or exchangeable for any
capital stock or other equity security of the Companies or Xxxxxx, as
the case may be; or
(c) any merger, consolidation, business combination,
share exchange, reorganization or similar transaction involving the
Companies or Xxxxxx, as the case may be.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger
and Reorganization to which this Exhibit B is attached (including the
Disclosure Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Companies are a party; (b) by which the Companies or any of their
assets are or may become bound or under which the Companies have, or may become
subject to, any obligation; or (c) under which the Companies have or may
acquire any right or interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Companies or otherwise used by
the Companies.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
B-1
57
DAMAGES. "Damages" shall include any loss, damage, injury, decline
in value, lost opportunity, liability, claim, demand, settlement, judgment,
award, fine, penalty, Tax, fee (including reasonable attorneys' fees), charge,
cost (including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to Xxxxxx on behalf of the
Parent, the Companies and the Designated Persons.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge,
hypothecation, charge, mortgage, security interest, encumbrance, claim,
infringement, interference, option, right of first refusal, preemptive right,
community property interest or restriction of any nature (including any
restriction on the voting of any security, any restriction of any nature
(including any restriction on the voting of any security, any restriction on
the transfer of any security or other asset, any restriction on the receipt of
any income derived from any asset, any restriction on the use of any asset and
any restriction on the possession, exercise or transfer of any other attribute
of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ENVIRONMENTAL LAW. "Environmental Law" means any federal, state, local
or foreign Legal Requirement relating to pollution or protection of human
health or the environment (including ambient air, surface water, ground water,
land surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement; or (b) right under any Contract with any
Governmental Body.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry,
audit, examination or investigation commenced, brought, conducted or heard by
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or before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitute, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation,
ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed
to have a "Material Adverse Effect" on the Companies if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Parent's and Designated Persons' Closing Certificate but for the
presence of "Material Adverse Effect" or other materiality qualifications, or
any similar qualifications, in such representations and warranties) would have
a material adverse effect on either of the Companies' business, condition,
assets, liabilities, operations, financial performance or prospects.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental
Concern" include chemicals, pollutants, contaminants, wastes, toxic substances,
asbestos, PCBs, petroleum and petroleum products and any other substance that
is now or in the future regulated by any Environmental Law or that is otherwise
a danger to health, reproduction or the environment.)
PERSON. "Person" shall mean any individual, Entity or Governmental
Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent,
patent application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service xxxx (whether
registered or unregistered), service xxxx application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or
other intellectual property right or intangible asset; or (b) right to use or
exploit any of the foregoing.
REPRESENTATIVES "Representatives" shall mean officers, directors,
employees, agents, attorneys, accounts, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise
tax, capital gains tax, gross receipts tax, value-added tax, surtax, excise
tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax,
business tax, withholding tax or payroll tax), levy, assessment, tariff, duty
(including any customs duty), deficiency or fee, and any related charge or
amount (including any
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fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule,
notice, notification, form, election, certificate or other document or
information filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.
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EXHIBIT C
Directors and Officers of Surviving Corporation After the Merger
Directors
1. Xxxxx Xxxxxx
2. Xxx Xxxxx
3. Xxxx Xxxxxxx
4. Xxxx X. Xxxxxxxx
5. Xxxx Xxxxxx
6. [To be determined by Xxxx X. Xxxxxxxx]
7. [To be mutually agreed upon]
Officers
Xxxx X. Xxxxxxxx - Chairman & CEO
Xxxxx Xxxxxx - President
Xxxx Xxxxxx - Executive Vice President & COO
Xxxxxx Random - Vice President & Chief Technology Officer
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EXHIBIT D
Related Party Debt
(1) Indebtedness payable to AUBIS, L.L.C. in an amount not to exceed
$30,000.
(2) Promissory Notes payable to Xxxxxx X. Xxxxxx in the original amount
of:
Date
----
$10,000 07/15/94
$32,000 08/22/94
$ 5,000 10/06/95
$ 6,000 10/18/94
$ 6,000 11/01/94
-------
Total $59,000
=======
(3) Promissory Note from AHS payable to Xxxxx X. Xxxxxxxxx dated November
17, 1995 in the principal amount of $21,100.
