AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
October 1, 1996, is by and among JUDGE IMAGING SYSTEMS, INC., a Delaware
corporation ("JIS"), THE JUDGE GROUP, INC., a Pennsylvania corporation ("Judge,"
formerly Judge, Inc.), and JUDGE ACQUISITION, INC., a Delaware corporation and a
wholly-owned subsidiary of Judge ("Acquisition").
BACKGROUND
The respective boards of directors of JIS, Judge and Acquisition have
each approved the acquisition of JIS by Judge through a merger (the "Merger") of
JIS with and into Acquisition (JIS and Acquisition being sometimes hereinafter
together referred to as the "Constituent Corporations"), upon the terms and
subject to the conditions hereinafter set forth, in which outstanding shares of
JIS Common Stock, par value $.01 per share ("JIS Common Shares"), and JIS Series
A Convertible Preferred Stock, par value $.01 per share ("JIS Series A Preferred
Shares") will be converted into and become shares of Judge Common Stock, par
value $.01 per share ("Judge Common Shares").
TERMS
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto, intending to be legally bound, hereby
agree as follows:
SECTION 1
THE MERGER
1.1 The Merger. At the Effective Time (as hereinafter defined), JIS shall be
merged with and into Acquisition pursuant to this Agreement, the separate
corporate existence of JIS shall cease (except as it may be continued by
operation of law) and Acquisition shall continue as the surviving corporation
under the corporate name "Judge Imaging Systems, Inc.," all upon the terms and
subject to the conditions provided for in this Agreement and pursuant to the
Delaware General Corporation Law (the "DGCL"). Acquisition, as it exists from
and after the Effective Time, is sometimes hereinafter referred to as the
"Surviving Corporation."
1.1.1 Effect of the Merger. The Merger shall have the effects specified
in Sections 259, 260 and 261 of the DGCL. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time, except as otherwise
provided herein, all the property, rights, privileges, powers and franchises of
Acquisition and JIS shall vest in the Surviving Corporation, and all debts,
liabilities and duties of Acquisition and JIS shall become the debts,
liabilities and duties of the Surviving Corporation.
1.1.2 Certificate of Incorporation. At the Effective Time, the
Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Acquisition as in effect immediately prior to
the Effective Time, continuing until thereafter amended in accordance with the
provisions therein and as provided by the DGCL, except that as of the Effective
Time, the following provision of the Certificate of Incorporation of the
Surviving Corporation shall be amended in its entirety to read as follows:
"1. The name of the corporation is Judge Imaging Systems, Inc."
1.1.3 Bylaws. At the Effective Time, the Bylaws of the Surviving
Corporation shall be the Bylaws of Acquisition as in effect immediately prior to
the Effective Time, continuing until thereafter amended in accordance with its
terms and the Certificate of Incorporation of the Surviving Corporation and as
provided by the DGCL.
1.1.4 Directors and Officers. The persons who are the directors and
officers of JIS at the Effective Time shall become the directors and officers of
the Surviving Corporation at the Effective Time. Such persons shall hold such
positions as directors and officers until their successors are elected or
appointed in accordance with the Certificate of Incorporation and the Bylaws of
the Surviving Corporation.
1.1.5 Tax-Free Reorganization. The parties intend that the Merger
qualify as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "Code").
1.2 Closing and Effective Time. Subject to the Merger receiving the Requisite
Stockholder Approval of JIS stockholders pursuant to Section 5.2 and subject to
the provisions of this Agreement, the parties shall hold a closing (the
"Closing") on either (i) the later of (A) the first business day following the
meeting of the stockholders of JIS to consider and vote upon the Merger or (B)
the business day on which the last of the conditions set forth in Section 6 to
be fulfilled prior to the Closing is fulfilled or waived, or (ii) such other
date as the parties hereto may agree (the "Closing Date"), at 10:00 A.M. (local
time) at the offices of Drinker Xxxxxx & Xxxxx, Berwyn, Pennsylvania, or at such
other time or place as the parties hereto may agree. On the Closing Date, the
parties shall effect the Merger by filing a Certificate of Merger (the
"Certificate of Merger") with the Secretary of State of the State of Delaware in
accordance with the provisions of the DGCL. The Merger shall become effective at
the time of the filing of the Certificate of Merger or at such later time on the
Closing Date as may be specified in the filing with the Secretary of State of
the State of Delaware (the "Effective Time"). As a result of the Merger, the
Surviving Corporation shall become a wholly-owned subsidiary of Judge at the
Effective Time.
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SECTION 2
CONVERSION OF SHARES AND OTHER MATTERS
2.1 Cancellation of Securities. At the Effective Time, by virtue of the Merger
and without any action on the part of Judge, Acquisition, JIS or any holder of
any shares of capital stock of JIS (the "JIS Stock"):
2.1.1 Cancellation of Treasury Stock. Each JIS Common Share and each
share of any class or series of JIS Preferred Shares ("JIS Preferred Shares")
which may be held in the treasury of JIS immediately prior to the Effective Time
shall be canceled and shall cease to exist at and after the Effective Time
without payment of any consideration therefor.
2.1.2 Cancellation of JIS Series B Preferred Shares. Each share of JIS
Series B Preferred Shares, par value $.01 per share ("JIS Series B Preferred
Shares"), issued and outstanding immediately prior to the Effective Time shall
cease to the outstanding and shall automatically be canceled and retired at the
Effective Time of the Merger.
2.1.3 Cancellation of JIS Options; No Convertible Securities. All
options and warrants, if any, to purchase JIS Common Shares that have been
issued by JIS and that are outstanding immediately prior to the Effective Time
shall be canceled and shall cease to exist at and after the Effective Time and
no capital stock of the Surviving Corporation or Judge, cash or other
consideration shall be paid or delivered in exchange therefor or in exercise
thereof in connection with the Merger. At the Effective Time, other than as
described in Section 2.2 with respect to the conversion of JIS capital stock in
the Merger, and Section 2.4 with respect to shares held by Dissenters (as
hereinafter defined), there shall not be any other securities, rights, warrants
or other instruments originally issued by JIS which, after consummation of the
Merger, would be convertible into or exercisable for securities of the Surviving
Corporation or Judge.
2.1.4 Cancellation of JIS Common Shares owned by Judge. Each JIS Common
Share owned by Judge immediately prior to the Effective Time shall be canceled
and shall cease to exist at and after the Effective Time without payment of any
consideration therefor.
2.2 Conversion of JIS Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Judge, Acquisition, JIS or any
holder of any JIS Stock, except as provided in Sections 2.1 (with respect to
shares held by Judge) and 2.4 (with respect to shares held by Dissenters), each
remaining outstanding JIS Common Share and JIS Series A Preferred Share (and
together with JIS Common Shares, "JIS Shares") shall be converted (subject to
the provisions set forth in Section 2.3 regarding fractional share interests) as
follows:
2.2.1 Each such JIS Common Share shall be converted into that number of
Judge Common Shares equal to $2.50 divided by the offering price to the public
(the "IPO Offering Price") of Judge Common Shares registered under the
Securities Act of 1933, as amended (the "1933 Act"), on a registration statement
(the "IPO Registration Statement") on Form S-1 filed
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with the Securities and Exchange Commission (the "SEC") and declared effective
by the SEC prior to the Effective Time; and
2.2.2 Each such JIS Series A Preferred Share shall be converted into
that number of Judge Common Shares obtained by (i) dividing $2.50 by the IPO
Offering Price, and (ii) multiplying the quotient so obtained by the number of
JIS Common Shares issuable upon the conversion of such JIS Series A Preferred
Share immediately prior to the Effective Time. On the date hereof, such
conversion ratio is one JIS Common Share per one JIS Series A Preferred Share so
converted.
2.2.3 The Judge Common Shares to be issued in the Merger pursuant to
this Section 2.2 are referred to herein as the "Merger Shares."
2.3 No Fractional Shares. No fractional Judge Common Shares will be issued in
the Merger and each holder of outstanding JIS Shares immediately prior to the
Effective Time excluding Dissenters (the "JIS Holders") will receive cash in
lieu of any fraction of a Judge Common Share otherwise issuable to such person
in an amount equal to such fraction multiplied by the IPO Offering Price of
Judge Common Shares.
2.4 Dissenting Shares. Notwithstanding anything herein to the contrary, JIS
Common Shares and JIS Preferred Shares that are outstanding immediately prior to
the Effective Time and that are held by stockholders, if any, who shall have
performed all such acts as are required to perfect appraisal rights pursuant to
Section 262 of the DGCL (a "Dissenter") shall be converted into the right to
receive the consideration payable in respect thereof in accordance with the
DGCL, unless such holder loses the status and rights of a Dissenter after the
Effective Time. Any such payment shall be made by JIS. If after the Effective
Time such holder loses the status and rights of a Dissenter, the JIS Shares held
by such holder shall be treated as if they had been converted as of the
Effective Time into the right to receive such holder's allocable portion of the
Merger Shares. JIS shall promptly provide Judge with copies of any written
demand for payment received by JIS from a Dissenter, and Judge shall have the
right to participate in all negotiations and proceedings with respect to any
such demand. JIS shall not, except with the prior written consent of Judge, make
any payment with respect to, or settle or offer to settle, any such demand.
2.5 Exchange Procedure.
2.5.1 Exchange Agent. As of the Effective Time, Judge shall deposit
with a bank, trust company, transfer agent or other person designated by Judge,
which may be Judge itself (the "Exchange Agent"), for the benefit of each holder
of an outstanding certificate or certificates (the "JIS Certificates") which
prior thereto represented JIS Shares, for exchange in accordance with this
Section 2.5, certificates representing the Merger Shares.
2.5.2 Surrender of Certificates. As promptly as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of an outstanding
certificate or certificates
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which prior thereto represented JIS Shares (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
JIS Certificates shall pass, only upon delivery of the JIS Certificates to the
Exchange Agent and shall be in such form and have such other provisions as Judge
and JIS may reasonably specify), and (ii) instructions for use in effecting the
surrender of the JIS Certificates in exchange for certificates representing
Judge Common Shares and any cash in lieu of any fractional Judge Common Shares.
Such holder shall upon such surrender receive in exchange therefor a certificate
or certificates representing the number of whole Judge Common Shares into which
such JIS Shares shall have been converted. Until so surrendered and exchanged,
each outstanding certificate which, prior to the Effective Time, represented JIS
Shares shall, upon and after the Effective Time, be deemed for all purposes
(other than to the extent provided in the following sentence) to evidence
ownership of the number of whole Judge Common Shares into which such JIS Shares
have been converted. Dividends, if any, payable after the Effective Time to
holders of Judge Common Shares shall, at Judge's option, be withheld from
holders of certificates formerly representing JIS Shares until such certificates
(or lost share affidavits reasonably acceptable in form and substance to Judge)
are surrendered for exchange in accordance with this Section 2.5 and, if so
withheld, shall then be paid without interest thereon.
2.5.3 Unsurrendered Certificates. In the event that any certificates
formerly representing JIS Shares (or lost share affidavits reasonably acceptable
in form and substance to Judge) are not surrendered for exchange by the first
anniversary of the Effective Time (the "Unsurrendered Certificates"), those
certificates representing Judge Common Shares corresponding to such
Unsurrendered Certificates then held by the Exchange Agent shall be delivered to
Judge, upon demand, and any stockholders of JIS who have not previously complied
with this Section 2.5 shall thereafter look only to Judge for payment of their
claim for Judge Common Shares and any cash in lieu of fractional Judge Common
Shares.
SECTION 3
MATTERS PRIOR TO CLOSING
3.1 Conversion Transactions. Prior to the Effective Time, (i) the Convertible
Senior Subordinated Promissory Notes of Judge (the "Lore Notes"), issued by
Judge pursuant to a 10% Convertible Senior Subordinated Note Purchase Agreement
(the "Purchase Agreement"), dated July 1994, which Lore Notes are convertible
into Judge Common Shares, shall be fully converted into Judge Common Shares, and
(ii) an option held by Xxxxxxx Xxxxx (the "Sozzi Option") to purchase 25,000 JIS
Common Shares at an exercise price of $1.33 per share, shall be exercised on a
"cashless exercise" basis for 11,700 JIS Common Shares. The transactions
contemplated in this Section 3.1 are referred to as the Conversion Transactions.
In the event that the Conversion Transactions are not consummated prior to
Closing, this Agreement shall terminate and the Merger shall be abandoned
without any action on the part of Judge, Acquisition or JIS.
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3.2 Public Offering. Judge intends to make an offering of its Judge Common
Shares to the public, underwritten on a firm commitment basis by a managing
underwriter selected by Judge (the "Public Offering"), pursuant to the IPO
Registration Statement. In the event that the Public Offering is not consummated
at a price and on terms satisfactory to Judge, in its sole discretion, prior to
or simultaneously with the Closing, this Agreement shall terminate and the
Merger shall be abandoned without any action on the part of Judge, Acquisition
or JIS.
SECTION 4
MUTUAL REPRESENTATIONS AND WARRANTIES
Judge and Acquisition hereby represent and warrant to JIS, and JIS
hereby represents and warrants to Judge, that, as of the date hereof and as of
the Closing Date, except as set forth in a Disclosure Schedule delivered by such
party contemporaneously with the execution of this Agreement:
4.1 Organization and Qualification. In the case of Judge and Acquisition, each
of Judge and Acquisition is a corporation duly organized, validly existing and
in good standing under the laws of the state in which it is incorporated, having
full power and authority to carry on its business as it has been and is now
being conducted and to own, lease and operate its assets and properties. In the
case of JIS, JIS is a corporation duly organized, validly subsisting and in good
standing under the laws of the State of Delaware, having full power and
authority to carry on its business as it has been and is now being conducted and
to own, lease and operate its assets and properties. In the case of each party,
as of the Effective Time, it will be duly qualified to do business and will be
in good standing in every jurisdiction in which such qualification is required,
all of which jurisdictions are disclosed in its Disclosure Schedule. Except for
the entities listed in its Disclosure Schedule (its "Subsidiaries"), it has no
subsidiaries and no stock or other equity or ownership interest (whether
controlling or not) in any corporation, association, partnership, joint venture
or other entity. Each of its Subsidiaries is duly organized, validly existing
and in good standing under the laws of such Subsidiary's respective jurisdiction
of incorporation set forth in its Disclosure Schedule and will be duly qualified
and in good standing in every jurisdiction in which such qualification is
required, all of which jurisdictions are disclosed in its Disclosure Schedule.
4.2 Capitalization.
4.2.1 In the case of Judge, its authorized capital stock immediately
prior to the Effective Time shall consist of 50,000,000 Judge Common Shares and
10,000,000 shares of preferred stock ("Judge Preferred Shares"). After the
consummation of the Conversion Transactions and immediately before the Effective
Time of the Merger and the consummation of the Public Offering, there will be
outstanding 9,113,739 Judge Common Shares and no Judge Preferred Shares.
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4.2.2 In the case of JIS, its authorized capital stock consists of
10,000,000 JIS Common Shares and 5,000,000 JIS Preferred Shares, of which
1,125,000 shares are designated as JIS Series A Preferred Shares, 1,500 shares
are designated as JIS Series B Preferred Shares and the remainder are unissued
shares of "blank check" preferred stock. As of the date of this Agreement, there
are outstanding 3,980,141 JIS Common Shares, not including the exercise of the
Sozzi Option as described in Section 3.1, 822,628 JIS Series A Preferred Shares
and 1,500 JIS Series B Preferred Shares.
4.2.3 In the case of either party, all of its outstanding shares of
capital stock have been duly authorized and validly issued, are fully paid and
nonassessable, were not issued in violation of the terms of any contract,
agreement or commitment binding upon it, and were issued in compliance with all
of its applicable charter documents and all applicable federal and state
statutes, laws, regulations and rules (the "Laws"). Except as set forth in its
Disclosure Schedule, there are, and have been, no preemptive rights with respect
to the issuance of its shares of capital stock. Its Disclosure Schedule lists
all agreements, contracts or arrangements to which it is a party or of which it
is aware regarding (i) the registration of transactions in its capital stock
under any securities law, or (ii) any voting or transfer arrangements with
respect to any of its shares of capital stock.
4.3 Options and Additional Rights.
4.3.1 Except for the options and warrants described in Section 3.1 or
in its Disclosure Schedule in response to this Section 4.3.1 and any convertible
securities described in Sections 4.2 or 3.1 of this Agreement, (i) there are not
outstanding any contracts, agreements, subscriptions, options, warrants,
commitments or rights of any character to purchase or otherwise acquire, or any
stock appreciation or similar rights measured by the value of, any shares of its
capital stock or other securities, including without limitation convertible or
exchangeable securities, and (ii) it is not party to any agreement the benefits
of which (including without limitation severance benefits) are contingent, or
the terms of which are materially altered, upon the occurrence of a transaction
involving it of the nature of any of the transactions contemplated by this
Agreement. Its Disclosure Schedule accurately sets forth as of the date of this
Agreement all outstanding warrants, and all outstanding options granted by it,
vested or unvested, together with the identity of the optionees or warrant
holders, the vesting schedule for such options or warrants, if any, the exercise
price and the date on which such options or warrants were granted.
4.3.2 Except as otherwise provided in this Agreement, consummation of
the transactions contemplated hereby will not obligate it to issue any
additional equity interest in it, to declare any dividend or make any
distributions of any property or assets, or to redeem, purchase, acquire or
offer to acquire any shares of its capital stock.
4.4 Subsidiaries. Its Disclosure Schedule sets forth a description of all
of the issued and outstanding equity securities of each of its Subsidiaries. It
owns of record and beneficially all of the issued and outstanding capital stock
of each of its Subsidiaries, free and clear of any
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mortgage, lien, security interest, pledge, encumbrance, restriction on
transferability, defect of title, charge or claim of any nature whatsoever
("Liens"). "Group" with respect to a designated party means the designated party
and each of its Subsidiaries, as a whole and individually with respect to each
of them.
4.5 Authority and Binding Effect. It has all requisite power and authority to
execute and deliver this Agreement and, upon receipt of its Requisite
Stockholder Approval (as hereinafter defined), to perform the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated will not contravene or
violate its Certificate or Articles of Incorporation or Bylaws. This Agreement
has been duly and validly executed and delivered by it and, subject to obtaining
its Requisite Stockholder Approval, constitutes the legal, valid and binding
obligation of it, enforceable against it in accordance with its terms, except to
the extent that enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to or affecting the
enforcement of creditors' rights generally and by principles of equity regarding
the availability of remedies. "Requisite Stockholder Approval" means, (i) in the
case of Judge, the approval of this Agreement and the Merger and the issuance of
the Merger Shares by the affirmative vote of a majority of the votes cast by all
Judge stockholders entitled to vote thereat, and, (ii) in the case of JIS, the
approval of this Agreement and the Merger (A) by the holders of a majority of
the outstanding JIS Common Shares and JIS Series A Preferred Shares (with each
JIS Series A Preferred Share being entitled to the number of votes equal to the
number of JIS Common Shares into which each JIS Series A Preferred Share could
be converted on the record date for the vote) voting together as a single class,
and (B) separately by the holders of a majority of the outstanding JIS Series A
Preferred Shares voting together as a class.
4.6 Validity of Contemplated Transactions. Neither the execution and delivery of
this Agreement by it nor the consummation of the transactions contemplated
hereby will (i) contravene or violate, any federal, state or local statute, law,
ordinance, regulation, order or rule ("Regulation") or any judgment, decree,
injunction, order or ruling of any court or governmental or regulatory authority
which is applicable to its Group; (ii) result in a default or loss of a benefit
under, or permit the acceleration of any obligation under, or require the
consent or approval of any party to, any contract, agreement, commitment,
permit, concession, franchise, license or authorization applicable to its Group,
or (iii) require its Group to notify or obtain any license, permit, approval or
authorization from any governmental or regulatory authority or, except as set
forth in its Disclosure Schedule, other person or entity; except for (A) its
Requisite Stockholder Approval, (B) in the case of Judge, the effective
registration under the 1933 Act, and all requisite compliance with state
securities or "blue-sky" laws in connection with the issuance of Judge Common
Shares in the Merger, (C) in the case of JIS, filings pursuant to the 1933 Act
and the Securities Exchange Act of 1934, as amended (the "1934 Act"), (D) the
filing of the Certificate of Merger and (E) in the case of (i) or (ii) above,
for any violation or default which, individually or in the aggregate, would not
have a Material Adverse Effect (as defined below). For purposes of this
Agreement, "Material Adverse Effect" means a material adverse effect on the
business, assets, financial condition or results of operations of its Group.
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4.7 Issuance of Judge Common Shares. In the case of Judge only, upon receipt of
its Requisite Stockholder Approval, the Merger Shares will be duly authorized
and, when issued in accordance with this Agreement, will be validly issued and
outstanding, fully paid and nonassessable Judge Common Shares.
4.8 Corporate Records. The minute books of its Group are current and contain
correct and complete copies of all of the charter documents of its Group,
including all amendments thereto and restatements thereof, and of all minutes of
meetings, resolutions and other actions and proceedings of its stockholders and
board of directors and all committees thereof, duly signed by the Secretary or
an Assistant Secretary, and in the case of written consents, all directors or
all stockholders. The stock record books of its Group are current, correct and
complete and reflect the issuance of all of the issued and outstanding shares of
its capital stock as of the date hereof.
4.9 Financial Statements; Reports.
4.9.1 Financial Statements. In the case of JIS, it has delivered to
Judge, and in the case of Judge, it has delivered to JIS, (i) its consolidated
balance sheets at December 31, 1995 and 1994, (ii) its related statements of
operations, changes in stockholders' equity and cash flows for the three years
then ended, and (iii) all related notes and schedules, all of which (the
"Year-End Financial Statements") have been audited by an independent public
accountant. JIS has also delivered to Judge, and Judge has delivered to JIS, (i)
its consolidated balance sheet at June 30, 1996, and (ii) its related statements
of operations, changes in stockholders' equity and cash flows for the six months
then ended (the "Interim Financial Statements") which have been audited by an
independent public accountant. The Year-End Financial Statements were prepared
in accordance with generally accepted accounting principles consistently applied
("GAAP") and, subject to any qualifications set forth in the applicable notes
and schedules, fairly present the financial position and results of operations
of its Group at December 31, 1995 and 1994 and for each of the years in the
three-year period ended December 31, 1995. The Interim Financial Statements have
been prepared in accordance with GAAP and, subject to any qualifications set
forth in the applicable notes and schedules, and subject to normal recurring
audit adjustments, fairly present the financial position and results of
operations of its Group at June 30, 1996 and for the six months then ended. All
Liabilities (as hereinafter defined) of its Group at December 31, 1995 and June
30, 1996, required to be reflected or reserved for by GAAP are fully reflected
or reserved for in the balance sheet included in the Year-End Financial
Statements and the Interim Financial Statements, respectively.
4.9.2 Reports. JIS has filed on a timely basis (i) all forms, reports,
statements and other documents required to be filed with (A) the SEC, including
without limitation (1) all Annual Reports on Form 10-KSB, (2) all Quarterly
Reports on Form 10-QSB, (3) all proxy statements relating to meetings of
shareholders (whether annual or special), (4) all Current Reports on Form 8-K
and (5) all other reports, schedules, registration statements or other documents
(collectively referred to as the "SEC Reports"), and (B) any applicable state
securities
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authorities and (ii) all forms, reports, statements and other documents required
to be filed with any other Regulatory Body, (all such forms, reports, statements
and other documents in clauses (i) and (ii) of this Section 4.9.2 being referred
to herein, collectively, as the "Reports"). The Reports (i) were prepared in all
material respects in accordance with the requirements of applicable law
(including, with respect to the SEC Reports, the 1933 Act or the 1934 Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such SEC Reports) and (ii) did not at the time they were filed contain any
untrue statement of a material fact or omit 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.
4.10 Books of Account. The books of account of its Group fairly reflect, in
accordance with GAAP, (i) all transactions relating to its Group and (ii) all
items of income and expense, assets and liabilities and accruals relating to its
Group. Its Group has not engaged in any transaction, maintained any bank account
or used any corporate funds except for transactions, bank accounts and funds
which have been and are reflected in the normally maintained books and records
of its Group.
4.11 Taxes. (i) All reports, returns, statements and other similar filings
required to be filed by it (the "Tax Returns") with respect to any Taxes (as
defined below) have been timely filed with the appropriate governmental agencies
in all jurisdictions in which such Tax Returns are required to be filed, and all
such Tax Returns correctly reflect the liability of it for Taxes for the
periods, properties or events covered thereby; (ii) all Taxes payable with
respect to the Tax Returns referred to in the preceding clause have been paid;
(iii) no deficiency in respect of any Taxes which has been assessed against it
remains unpaid and it has no knowledge of any unassessed Tax deficiencies or of
audits or investigations pending or threatened against it with respect to any
Taxes; (iv) no claim has ever been made by any Tax authority in a jurisdiction
in which its Group does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction; and (v) there are no Liens for Taxes upon any
asset of its Group except for Liens for current Taxes not yet due. For purposes
of this Agreement, "Taxes" means any taxes, duties, assessments, fees, levies,
or similar governmental charges, together with any interest, penalties, and
additions to tax, imposed by any taxing authority, wherever located (i.e.
whether federal, state, local, municipal, or foreign), including, without
limitation, all net income, gross income, gross receipts, net receipts, sales,
use, transfer, franchise, privilege, profits, social security, disability,
withholding, payroll, unemployment, employment, excise, severance, property,
windfall profits, value added, ad valorem, occupation, or any other similar
governmental charge or imposition.
4.12 Absence of Undisclosed Liabilities. Its Group has no Liabilities, except as
set forth in its balance sheet at June 30, 1996, or in the case of JIS, its SEC
Reports, or in its Disclosure Schedule and except for those Liabilities arising
and outstanding since June 30, 1996 in the ordinary course of business of its
Group in accordance with past practice or related to the actions and
transactions contemplated hereby or under any contract which is disclosed in its
Disclosure Schedule. "Liability" means any material liability, indebtedness,
obligation, expense, claim,
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deficiency, guaranty or endorsement of or by any person (other than endorsements
of notes, bills and checks presented to banks for collection or deposit in the
ordinary course of business) of any type, whether accrued, absolute, contingent,
matured, unmatured or other.
4.13 Title to Assets. Its Group owns outright and has good and marketable title
to all of the assets of its Group reflected on the balance sheets included in
its Financial Statements disclosed in Section 4.9, free and clear of all Liens,
except liens reflected in its Financial Statements, liens for current taxes not
yet delinquent, liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen, laborers,
materialmen, and the like, liens in respect of pledges or deposits under
workers' compensation laws or similar legislation, and minor defects in title,
none of which, individually or in the aggregate, materially interferes with the
use of such property.
4.14 Intellectual Property. Except as disclosed in its Disclosure Schedule, its
Group has either (i) sufficient title and ownership of all patents, trademarks,
service marks, trade names, copyrights, trade secrets, information, proprietary
rights and processes (collectively, "Intellectual Property"), necessary for its
business and operations (as now conducted and as proposed to be conducted)
without any conflict with or infringement of the right of others, or (ii) where
it does not own the necessary Intellectual Property, it has acquired rights to
use such Intellectual Property under licenses granted to its Group by the owner
of such Intellectual Property.
4.15 Contracts. Except as disclosed in the Disclosure Schedule, all material
contracts, agreements, commitments, leases, mortgages, instruments or other
documents ("Contracts") to which its Group is a party are valid, binding and
enforceable in accordance with their respective terms, except to the extent that
enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or affecting the enforcement of
creditors' rights generally and by principles of equity regarding the
availability of remedies. Its Group has fulfilled, or taken all action necessary
to enable it to fulfill when due, all of its obligations under each of such
Contracts.
4.16 Compliance with Regulations and Court Orders. Its Group is not in violation
of, and the assets of its Group have not been used or operated by its Group or
any other person or entity in violation of, any Regulation or Court Order (as
hereinafter defined), except for such violations as do not subject its Group to
significant penalties or the compliance with which would not have a Material
Adverse Effect on its Group. All Court Orders to which its Group is a party or
subject to are listed in its Disclosure Schedule. Its Group has made all filings
or notifications and has obtained all licenses required to be made or obtained
by its Group under any Regulation applicable to its Group or its business or
assets. "Court Order" means any judgment, decree, injunction, order or ruling of
any Regulatory Body that is binding on the designated party, its Subsidiaries or
their properties under applicable law. "Regulatory Body" means any court or
governmental department, commission, board, bureau, agency, instrumentality, or
body, federal, state or local, domestic or foreign.
-11-
4.17 Environmental Matters. Except as set forth on its Disclosure Schedule,
to its knowledge:
4.17.1 Its Group has been and are in material compliance with all
applicable federal, state and local law or regulation concerning or relating to
industrial hygiene or the protection of health and/or the environment (the
"Environmental Laws");
4.17.2 There are no conditions on, about, beneath or arising from any
properties owned or leased by its Group which would give rise to any liability
under any applicable Environmental Law or which would require any Response,
Removal or Remedial Action, as such terms are defined in Section 101 of the
Comprehensive Environmental, Compensation and Liability Act, 42 U.S.C.
(section) 9601 et seq. (1995), as amended, by such party;
4.17.3 Its Group has obtained and possesses all permits, licenses,
approvals and other authorizations necessary under any applicable Environmental
Law for the operation of its business except as would not have a Material
Adverse Effect;
4.17.4 Its Group has not received any notification of a release or
threat of a release of any substance regulated under any of the Environmental
Laws ("Hazardous Substance") at any site or location owned or operated by that
party; and
4.17.5 Its Group has not disposed of, transported or caused to be
transported any Hazardous Substance on or to any on-site or off-site location
which location currently is the subject of a federal, state or local enforcement
action or other investigation or for which claims have been asserted against
such party for clean-up costs, remedial work or damages to natural resources.
4.18 Litigation. Except as set forth in the Disclosure Schedule, there is no
Litigation (as hereinafter defined) pending or, to its knowledge, threatened
against its Group or its business or assets, and no event known to its Group has
occurred and no claim has been asserted against its Group that might result in
Litigation against its Group or its business or assets; and to, the best of its
Group's knowledge, there is no reasonable basis for any such claim. "Litigation"
means any lawsuit, action, arbitration, administrative or other proceeding,
criminal prosecution or governmental investigation or inquiry involving or
affecting the designated party or any of its Subsidiaries, the business, the
assets or any Contracts to which the designated party or any of its Subsidiaries
is a party or by which they or any of their assets or business may he bound or
affected.
4.19 Insurance. Except as set forth in the Disclosure Schedule, it is presently
insured, and has been insured against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. The policies of fire, theft, liability and other insurance
maintained with respect to the assets or business of each Company provide
adequate coverage against loss.
-12-
4.20 Employee Benefit Plans. Except as described in the Disclosure Schedule, its
Group does not maintain or contribute to any employee pension benefit plan
("Pension Plan"), as defined in section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), any employee welfare benefit plan,
as defined in section 3(1) of ERISA, or any other plan or arrangement providing
compensation or benefits to its employees or former employees (collectively
"Benefit Plans"). To the knowledge of its Group, each Benefit Plan maintained by
its Group has been administered in compliance with its terms and is in
compliance with the applicable provisions of ERISA, the Code and other
applicable Laws. To the knowledge of its Group, its Group knows of no inquiries
or proceedings pending or threatened by any governmental department or agency,
or by any participant or beneficiary, with respect to any Benefit Plan now or
formerly maintained by its Group or to which it has contributed. Its Group has
made or provided for all contributions to Benefit Plans required by the terms of
such Benefit Plans or applicable Laws. Its Group has never contributed or been
required to contribute to any multiemployer plan, as defined in section 3(37) of
ERISA. Other than required "COBRA" coverage, its Group has never provided health
or life insurance coverage to former employees. Its Group has never maintained a
Pension Plan which was a defined benefit plan.
4.21 Registration Statement; Etc. None of the information supplied or to be
supplied by its Group for inclusion or incorporation by reference in (i) the
registration statement on Form S-4 to be filed by Judge with the SEC in
connection with the issuance of Judge Common Shares in the Merger will, at the
time it is filed with the Commission or at the time it becomes effective under
the 1933 Act, or at the Effective Time of the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading, or
(ii) the proxy statement forming a part of the Registration Statement used by
JIS to solicit proxies for the purpose of obtaining its Requisite Stockholder
Approval (the "Proxy Statement"), will, when mailed and at all times through the
date of the JIS stockholders' meeting disclosed in Section 5.2 contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein, or necessary to make the statements therein, not
misleading. All documents that each Company is responsible for filing with the
SEC or any Regulatory Body in connection with the transactions contemplated
hereby will comply as to form in all material respects with the provisions of
applicable law, including applicable provisions of the 1933 Act, the 1934 Act
and the rules and regulations thereunder.
4.22 Subsequent Events. Except as set forth in its Disclosure Statement and
except for the transactions contemplated hereby, since June 30, 1996 (i) there
has been no actual or threatened change in the business of its Group or, to the
best of its Group's knowledge, any event, condition or state of facts, in either
case that is material and adverse to its Group or its business or assets, (ii)
it has not declared, set aside or made payment of any dividend or distribution
of assets to the holders of any class or series of capital stock , nor has it
repurchased or redeemed any shares of its capital stock, (iii) its Group has
conducted its business only in the ordinary course consistent with past
practice, and (iv) there has not occurred any of the events described in Section
5.5 hereof.
-13-
4.23 Intentionally omitted.
4.24 Fairness Opinion. In the case of JIS only, JIS has been advised in writing
by Xxxxxx Xxxxxxxxxx Xxxxx Inc. ("Janney") that the consideration to be received
by the stockholders of JIS in the Merger (the "Merger Consideration") taken as a
whole is fair to such stockholders from a financial point of view.
4.25 Section 203 of the DGCL Not Applicable. In the case of JIS only, the
provisions of Section 203 of the DGCL will not, prior to the termination of this
Agreement, apply to this Agreement or to the transactions contemplated hereby.
4.26 Broker's and Finder's Fee. No person acting on behalf of it or under its
authority is or will be entitled to any broker's or finder's fee or any other
commission or similar fee directly or indirectly in connection with the
completion of the Merger, other than the fees payable to Janney for its services
in issuing its opinion disclosed in Section 4.24.
SECTION 5
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Registration Statement and Proxy Statement. Judge and JIS shall, in
compliance with the 1934 Act, prepare as promptly as practicable the Proxy
Statement to be used by JIS to solicit the approval of its stockholders of this
Agreement and the Merger. Judge, in cooperation with and with the assistance of
JIS, shall promptly prepare and cause to be filed with the SEC its Registration
Statement on Form S-4 in compliance with the 1933 Act. The Registration
Statement shall register the issuance of the Merger Shares. Judge and JIS shall
use their best efforts to cause such Registration Statement to be declared
effective as promptly as practicable. JIS shall furnish to Judge all information
concerning its Group and the stockholders of JIS as may be reasonably requested
in connection with such filing. Judge shall take any action required to be taken
under any applicable state securities or "blue-sky" laws in connection with the
issuance of Judge Shares in the Merger. If requested by Judge, JIS shall use its
best efforts to cause to be delivered to Judge a letter of Xxxxxxx Xxxxxx LLP,
JIS's auditors, dated a date within two business days before the date on which
the Registration Statement shall become effective and addressed to Judge in form
and substance reasonably satisfactory to Judge and customary in scope and in
substance for letters delivered by independent public accountants in connection
with registration statements similar to the Registration Statement.
5.2 Stockholder Meeting. Each of JIS and Judge shall, as soon as practicable and
in accordance with applicable law, call and hold a stockholders' meeting to
obtain its Requisite Stockholder Approval. Subject to its fiduciary obligations,
the board of directors of each party will unanimously recommend to its
stockholders approval of the Merger and this Agreement and each party shall take
all such actions consistent with the fiduciary obligations of such boards to
obtain such approvals as promptly as practicable, including without limitation
in the case of JIS the solicitation of proxies by means of the Proxy Statement.
-14-
5.3 Regulatory and Contract Approvals. Each of Judge and JIS shall use their
best efforts to obtain as soon as practicable all approvals, consents and
permits from all Regulatory Bodies and all consents required under the terms of
any Contract which are required in connection with the consummation of the
Merger.
5.4 Access to Information. From the date of this Agreement to the Closing Date,
each party will give to the other party and its officers, employees, counsel,
accountants and other representatives free and full access to and the right to
inspect, during normal business hours, all of the assets, records, Contracts and
other documents relating to its business as the other party may reasonably
request. Neither party will use such information for purposes other than in
connection with the Merger and each party will otherwise hold such information
in confidence until such time as such information otherwise becomes publicly
available, and in the event of termination of this Agreement for any reason will
promptly return, or cause to be returned, to the other party all nonpublic
documents obtained from the other party, and any copies made of such documents.
5.5 Conduct of Business Pending Closing. Until the Closing Date, except as set
forth in its Disclosure Schedule and except for the proposed acquisition of
Berkeley Associates Corporation and Systems Automation, Inc. by Judge or as may
be approved by the parties in writing or otherwise expressly provided in this
Agreement, each of JIS and Judge shall operate its businesses only in the
ordinary course and in substantially the same manner as it has been operated in
the past.
5.6 Indemnification. If the Merger is completed, all rights to indemnification
(including advancement of expenses) existing on the date hereof in favor of the
present or former officers and directors of JIS with respect to actions taken in
their capacities as directors or officers of JIS prior to the Effective Time as
provided in the Certificate of Incorporation of JIS, the Bylaws of JIS or any
indemnification agreements, prior to the Effective Time, shall survive the
Merger and continue in full force and effect as obligations of the Surviving
Corporation, the performance of which Judge hereby guarantees.
5.7 Public Announcements. JIS and Judge shall cooperate with each other in
releasing information concerning this Agreement and the transactions
contemplated herein. Where practicable each of the parties shall furnish to the
other drafts of all releases prior to publication. Nothing contained herein
shall prevent either party at any time from furnishing any information to any
governmental agency or from issuing any release where it reasonably believes it
is legally required to do so.
5.8 No Solicitation. JIS shall cause its officers, employees, representatives
and agents not to, directly or indirectly, continue, encourage, solicit,
initiate or (except as may be reasonably required to satisfy the fiduciary
duties of its board of directors) participate in discussions or negotiations
with, or provide any nonpublic information to, any person other than the other
party or its affiliates or any group in which the other party or its affiliates
participates, concerning any sale of assets (other than in the ordinary course
of its business consistent with past practice) or
-15-
shares of capital stock, or any merger, consolidation, recapitalization,
liquidation or similar transaction (collectively, an "Acquisition Transaction").
JIS will promptly communicate to Judge the terms of any inquiry or proposal
which it may receive in respect of an Acquisition Transaction. Judge's
notification under this Section 5.9 shall include the identity of the person
making such proposal, the terms of such proposal and any other information with
respect thereto as Judge may reasonably request.
5.9 Notification of Certain Matters. JIS shall give prompt notice to Judge and
Acquisition, and Judge and Acquisition shall give prompt notice to JIS, of (i)
the occurrence, or failure to occur, of any event which such party believes
would likely cause any of its representations or warranties contained in this
Agreement to be untrue or inaccurate in any material respect at any time from
the date of this Agreement to the Effective Time and (ii) any material failure
of JIS, Judge or Acquisition, as the case may be, or any officer, director,
employee or agent thereof, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder.
5.10 Rule 145 Affiliates.
5.10.1 Promptly following the execution of this Agreement, JIS shall
identify in a letter to Judge all persons who might, at the time of its
stockholders' meeting at which the Merger is to be voted upon by its
stockholders, be deemed to be an affiliate of JIS within the meaning of Rule 145
("Rule 145 Affiliate").
5.10.2 JIS shall use all reasonable efforts to deliver to Judge as soon
as practicable and in any case prior to the Effective Time an agreement signed
by each such Rule 145 Affiliate of JIS regarding compliance with Rule 145, which
agreement (the "Affiliate Agreements") shall be in substantially the form of
Exhibit 5.10.2.
5.10.3 Judge shall be entitled to place legends on the certificates
evidencing Judge Common Shares to be received by such Rule 145 Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for Judge Common Shares, consistent with the
terms of such Affiliate Agreements, whether or not such Affiliate Agreements are
actually delivered to Judge.
SECTION 6
CONDITIONS TO THE MERGER
Subject to waiver as set forth in Section 7.7, the obligations of each
party under this Agreement are subject to the fulfillment prior to or at the
Closing of each of the following conditions:
6.1 Stockholder Approval. This Agreement shall have been adopted at or
prior to the Effective Time (i) by the Requisite Stockholder Approval of JIS in
accordance with the DGCL
-16-
and Dissenters, if any, shall not hold in the aggregate ten percent (10%) or
more of the shares of JIS Common Shares and JIS Series A Preferred Shares
outstanding immediately prior to the Effective Time (assuming the conversion of
the JIS Series A Preferred Shares into JIS Common Shares immediately prior to
the Effective Time), and (ii) by the Requisite Stockholder Approval of Judge.
6.2 Representations True at Closing. The representations and warranties of the
other party set forth in Section 4 shall be true and correct in all material
respects on the Closing Date with the same effect if made at that time.
6.3 Performance. The other party shall have performed and satisfied all
agreements and conditions which it is required by this Agreement to perform or
satisfy prior to or on the Closing Date.
6.4 Certificates. The other party shall have provided a certificate signed in
its name by its chief executive officer and chief financial officer, dated the
Closing Date, certifying in such detail as may be reasonably requested that each
of its conditions described in Section 6.2 and 6.3 has been fulfilled by the
other party. The other party shall have provided a certificate signed by its
secretary, dated the Closing Date, certifying that its Certificate of
Incorporation, or its Articles of Incorporation, as the case may be, and Bylaws
are true, correct and complete as of the Closing Date and further certifying
that the resolutions adopted by its board of directors and stockholders attached
thereto in connection with the transactions contemplated hereby are true,
correct and complete.
6.5 Tax Opinion. Judge and JIS shall have received from Drinker Xxxxxx & Xxxxx a
written opinion, in form and substance reasonably satisfactory to them, to the
effect that the Merger, when effected in accordance with this Agreement, will
qualify as a reorganization under Section 368(a) of the Code and Judge, JIS and
Acquisition will constitute parties to such reorganization.
6.6 Litigation Affecting Closing. No Court Order shall have been issued or
entered which would be violated by the completion of the Merger, and no person
who or which is not a party to this Agreement shall have commenced any
Litigation seeking to restrain or prohibit, or to obtain substantial damages in
connection with, this Agreement or the transactions contemplated by this
Agreement which, in each case, would or is reasonably likely to result in a
Material Adverse Effect to a party.
6.7 Material Adverse Effect. From the date hereof to the Closing Date, no party
hereto shall have suffered a Material Adverse Effect in any way, including,
without limitation, by fire, casualty, act of God or otherwise and there shall
be no conditions existing or threatened that might reasonably be expected to
have a Material Adverse Effect on such party.
6.8 Registration Statement. The Registration Statement shall have been
declared effective by the SEC. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the SEC and no proceedings
for that purpose shall have been initiated or
-17-
threatened by the SEC, and all approvals, consents, permits, licenses or
qualifications from authorities administering the securities or "blue-sky" laws
of any state having jurisdiction required for the consummation of the Merger
shall have been obtained and shall be effective.
6.9 Affiliate Agreements. Judge shall have received from each Rule 145
Affiliate an executed Affiliate Agreement in form satisfactory to Judge.
6.10 Conversion Transactions. The Conversion Transactions shall have been
consummated.
6.11 Public Offering. The managing underwriter of the Public Offering shall
have advised the parties that the Public Offering will be completed immediately
following the Effective Time of the Merger.
6.12 Regulatory Compliance, Approvals and Consents. Each party shall have
complied with all Regulations applicable to the Merger, and all approvals
required under any Regulations to carry out the Merger and consents required to
be obtained in connection with the Merger in order to avoid a default under any
Contract to or by which the other party is a party or may be bound shall have
been obtained on terms reasonably satisfactory to each party.
6.13 Stock Exchange Listing. Judge shall have applied for the inclusion of
the Merger Shares on The Nasdaq National Market.
SECTION 7
TERMINATION AND ABANDONMENT
7.1 Termination by Mutual Consent. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the filing of the Certificate of
Merger, before or after obtaining the Requisite Stockholder Approvals, by the
mutual consent of JIS, Judge and Acquisition, by action of their respective
boards of directors.
7.2 Termination by JIS, Judge or Acquisition. This Agreement may be terminated
and the Merger may be abandoned by action of either the board of directors of
JIS or the boards of directors of, Judge and Acquisition if (i) the Merger shall
not have been consummated on or before March 31, 1997, or such later date as may
be mutually agreed to by the parties hereto, provided that the party seeking to
terminate this Agreement is not otherwise in breach in any material respect of
any of its obligations hereunder or (ii) any court of competent jurisdiction
shall have issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the Merger and such order,
decree, ruling or other action shall have become final and nonappealable.
7.3 Termination by JIS. This Agreement may be terminated and the Merger may be
abandoned by action of the board of directors of JIS if (i) Judge or Acquisition
shall have failed to comply in any material respect with any of the covenants or
agreements contained in this
-18-
Agreement to be complied with or performed by it at or prior to the Effective
Time and such failure has not been cured within 30 days after receipt of notice
thereof, or (ii) the board of directors of Judge shall not recommend to its
stockholders the approval of this Agreement, or shall withdraw or modify in a
manner adverse to JIS its approval or recommendation of the Merger.
7.4 Termination by Judge and Acquisition. This Agreement may be terminated and
the Merger may be abandoned by action of the boards of directors of Judge and
Acquisition if (i) JIS shall have failed to comply in any material respect with
any of the covenants or agreements contained in this Agreement to be complied
with or performed by it at or prior to the Effective Time and such failure has
not been cured within 30 days after receipt of notice thereof, or (ii) the board
of directors of JIS shall not recommend to its stockholders the approval of this
Agreement, or shall withdraw or modify in a manner adverse to Judge or
Acquisition its approval or recommendation of the Merger.
7.5 Effect of Termination. Except as provided in Section 5.4 hereof with respect
to information obtained in connection with the transactions contemplated hereby,
in the event of the termination of this Agreement, and the abandonment of the
Merger, this Agreement shall thereafter become void and have no effect, and no
party thereto shall have any liability to any other party hereto or its
stockholders or directors or officers in respect thereof, and each party shall
be responsible for its own costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby, except that nothing herein
shall relieve any party from liability for any willful breach hereof.
7.6 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto, except as set forth in
Section 7.7.
7.7 Waiver. Any time prior to the Effective Time, any party hereto may (i) in
the case of Judge or Acquisition, extend the time for the performance of any of
the obligations or other acts of JIS or waive compliance with any of the
agreements of JIS or with any conditions to the respective obligations of Judge
or Acquisition, or (ii) in the case of JIS, extend the time for the performance
of any of the obligations or other acts of Judge or Acquisition, or waive
compliance with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid if set forth in
an instrument in writing signed on behalf of such party by a duly authorized
officer.
-19-
SECTION 8
MISCELLANEOUS
8.1 Notices. Any notices or other communications required or permitted hereunder
shall be sufficiently given if sent by facsimile transmission, registered or
certified mail, postage prepaid, or Federal Express or similar overnight
delivery addressed, in the case of JIS, to it at
Judge Imaging Systems, Inc.
Xxx Xxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Judge, Jr.
Facsimile No. 000-000-0000
or, in the case of Judge and Acquisition, to them at:
The Judge Group, Inc.
Xxx Xxxx Xxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000
Attention: Xxxxxx X. Judge, Jr.
Facsimile No. 000-000-0000
or such other address as shall be furnished in writing by any party to the
others prior to the giving of the applicable notice or communication.
8.2 Counterparts. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
8.3 Headings. The headings herein are for convenience of reference only, do not
constitute a part of this Agreement, and shall not be deemed to limit or affect
any of the provisions of this Agreement.
8.4 No Survival of Representations or Warranties. None of the representations
and warranties included or provided for herein or in any schedule or certificate
or other document delivered pursuant to this Agreement shall survive
consummation of the Merger.
8.5 Entire Agreement. This Agreement, which includes the Exhibits and Disclosure
Schedules hereto constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, among the parties, with
respect to the subject matter of this Agreement.
8.6 Cooperation. Subject to the terms and conditions of this Agreement,
each of the parties hereto shall use its reasonable best efforts to take, or
cause to be taken, such action, to execute
-20-
and deliver, or cause to be executed and delivered, such governmental
notifications and additional documents and instruments and to do, or cause to be
done, all things necessary, proper or advisable under the provisions of this
Agreement and under applicable law to consummate and make effective the
transactions contemplated by this Agreement, and neither JIS nor Judge shall
take any action in conflict with or contrary to the stated intention of JIS and
Judge that the Merger qualify as a tax-free reorganization pursuant to Section
368(a) of the Code.
8.7 No Third Party Rights. Nothing in this Agreement, express or implied, is
intended to confer upon any other person, other than the persons indemnified
under Section 5.6, any rights or remedies under or by reason of this Agreement.
8.8 No Assignment. This Agreement shall not be assigned, by operation of law
or otherwise.
8.9 Governing Law. This Agreement shall be governed in all respects, including
without limitation, validity, interpretation and effect, by the laws of the
Commonwealth of Pennsylvania, applicable to contracts made and to be performed
in such Commonwealth.
-21-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
JUDGE IMAGING SYSTEMS, INC.
By:_______________________________
Name: Xxxxxx X. Judge, Jr.
Title: President
THE JUDGE GROUP, INC.
By:_______________________________
Name: Xxxxxx X. Judge, Jr.
Title: Chief Executive Officer
JUDGE ACQUISITION, INC.
By:_______________________________
Name: Xxxxxx X. Judge, Jr.
Title: Chief Executive Officer
-22-
DRAFT 101896
THE JUDGE GROUP, INC.
Disclosure Schedule
-------------------
Schedule 4.1 - Organization and Qualification
===================================================================================================================================
Corporation State of Shares Par Value Shares Issued States in which
Incorpor- Authorized Per Share and Outstanding It is Qualified
ation to do Business
-----------------------------------------------------------------------------------------------------------------------------------
Judge Acquisition, Inc.* DE 1,000 $.01 1,000
-----------------------------------------------------------------------------------------------------------------------------------
Judge Technical Services, PA 10,000,000 $.005 1,000
Inc.*
-----------------------------------------------------------------------------------------------------------------------------------
Judge Inc. of New Jersey* NJ 1,000 no par 100
value
-----------------------------------------------------------------------------------------------------------------------------------
Judge Electronic Services FL 1,000 $1.00 1,000
of Florida, Inc.
-----------------------------------------------------------------------------------------------------------------------------------
Judge Hospitality, Inc. PA
(inactive)*
-----------------------------------------------------------------------------------------------------------------------------------
Judge Electronic Services MA
of Boston, Inc. (inactive)*
-----------------------------------------------------------------------------------------------------------------------------------
Judge, Inc. of Delaware, DE
Inc. (inactive)*
-----------------------------------------------------------------------------------------------------------------------------------
Berkeley Associates CA 3,000 no par 2,075
Corporation* value
-----------------------------------------------------------------------------------------------------------------------------------
Judge Technical Services NJ 1,000 no par 500
of New Jersey, Inc.** value
-----------------------------------------------------------------------------------------------------------------------------------
Judge Professional PA 10,000,000 $.005 160,000
Services, Inc.**
===================================================================================================================================
* Wholly-owned subsidiaries of Judge.
** Wholly-owned subsidiaries of Judge Technical.
Schedule 4.2 - Capitalization
1. 10% Convertible Senior Subordinated Note Purchase Agreement dated July 1994.
2. Amended Articles and Bylaws of Judge, filed with the Secretary of State
of the Commonwealth of Pennsylvania on September 23, 1996, regarding the
Business Combination Prohibition with an Interested Shareholder or Affiliate.
3. Stock Purchase Agreement, dated September 26, 1996, by and among Xxxxx Xxxxx
and Xxxxxxx X. XxXxxxxx, The Berkeley Associates Corporation and Judge, Inc.
4. Transfer of 3,845 Judge Common Shares owned by Xxxxxxx X. Xxxx to Xxxxxxx
Xxxx Descendants' Trust on September 25, 1996.
5. All of the executive officers, directors and certain shareholders of Judge
have agreed not to sell, otherwise dispose of or pledge any Judge Common Shares
for 180 days (1 year for Xxxxxx X. Judge, Jr.) after the effective time of the
IPO Registration Statement without the prior written consent of Janney.
Schedule 4.3 - Options and Additional Rights
None.
Schedule 4.4 - Subsidiaries
See Schedule 4.1.
Schedule 4.6 - Validity of Contemplated Transactions.
1. 10% Convertible Senior Subordinated Note Purchase Agreement dated July 1994.
2. Third Amended and Restated Loan and Security Agreement (the "Loan and
Security Agreement"), dated September 3, 1996, among Judge, Inc., Judge
Technical Services, Inc., Judge Professional Services, Inc., Judge Imaging
Systems, Inc., Judge Electronic Services of Florida, Inc., Judge, Inc. of New
Jersey, Judge Technical Services of New Jersey, Inc. and Midlantic Bank, N.A.
3. Business Loan Agreement between Sterling Bank and Judge Technical Services,
Inc.
Schedule 4.12 - Undisclosed Liabilities
1. Judge guarantees the loan of Judge Technical under the Business Loan
Agreement between Sterling Bank and Judge Technical.
2. As of June 30, 1996, Judge owed approximately $115,000 to Xxxxxx X. Judge,
Jr. This loan does not have formal repayment terms and bears interest at
various rates (from prime plus 1% to a fixed rate of 12%). Judge pays the
interest related to these loans directly to the commercial banks from which
Mr. Judge borrowed the same amount.
3. As of August 31, 1996, Mr. Judge owed Judge $287,505.
4. As of June 30, 1996, Judge had advanced $106,000 to Judge Financial
Services, a personal financial advisory company, which is owned by Xxxxxx Judge,
Xxxxxx X. Judge's brother. This advance does not bear interest, and does not
have formal repayment terms.
[5. As of June 30, 1996, Judge owed approximately $58,000 to Xxxxxxxx
Xxxxxxx.]
6. See Schedule 4.18.
Judge - 2
Schedule 4.14 - Intellectual Property
Judge(TM) is a common law trademark.
Schedule 4.15 - Contracts
None.
Schedule 4.16 - Compliance with Regulations and Court Orders
1. During 1994, Judge Technical entered into an agreement with the IRS
regarding the payment of approximately $882,000 of past-due payroll taxes. Judge
Technical was disputing certain related penalty and interest amounts related to
such past-due payroll taxes. Subsequent to June 30, 1996, Judge Technical
entered into a tentative settlement agreement with the IRS. In July 1996, the
remaining liability existing at that time was paid in full.
Schedule 4.17 - Environmental Matters
None.
Schedule 4.18 - Litigation
See Attachment 4.18.
Schedule 4.19 - Insurance
None.
Schedule 4.20 - Employee Benefit Plans
1. Judge, Inc. 401(k) Profit Sharing Plan and Trust Agreement.
2. The Judge Group, Inc. 1996 Incentive Stock Option and Non-Qualified Stock
Option Plan for Key Employees and Non-Employee Directors.
3. [Pre-Tax Contributions for Medical Expenses.]
Judge - 3
Schedule 4.22 - Subsequent Events
1. Judge Technical reached a settlement agreement with the IRS regarding past
due payroll taxes and related interest and penalties (see Schedule 4.16).
2. Judge Technical reached an agreement with a former minority shareholder
to settle at less than face value the remaining balances on certain notes
payable.
3. The Judge Group, Inc. 1996 Incentive Stock Option and Non-Qualified Stock
Option Plan for Key Employees and Non-Employee Directors.
4. Judge Initial Public Offering.
a. By a letter dated June 12, 1996, Judge engaged Xxxxxx Xxxxxxxxxx
Xxxxx Inc. to assist it in a public offering of its common stock.
b. Part of the proceeds from the IPO may be used for future
acquisitions. Other than as disclosed in the Merger Agreement or in the
Schedules, Judge is not currently engaged in any acquisition negotiations.
5. A Warrant held by The Gemstone Group, Inc. to purchase 3,265 Judge Common
Shares at a purchase price of $.005 per share was exercised on September 27,
1996.
6. Loan and Security Agreement.
a. At June 30, 1996, Judge was in violation of certain covenants
under the Loan and Security Agreement. Midlantic Bank waived compliance by
Judge of such covenants.
b. Midlantic Bank also extended the maturity date of the line from
May 31, 1997 to May 31, 1998, modified certain financial covenants, and the
maximum permitted borrowings were increased.
7. All key employees of Judge have executed confidentiality and one-year
post-termination non-competition agreements.
8. At June 30, 1996, Judge was in violation of certain covenants under the
Lore Notes. The note holders have waived compliance by Judge with such
covenants.
9. Judge Corporate Reorganization (Judge became a holding company for its
operating subsidiaries).
a. As of September 4, 1996, the Judge Board has approved (i) the
statutory short form merger of Judge Inc. of New Jersey and Judge Electronics of
Florida, Inc. with and into Judge and (ii) the dissolution of Judge Hospitality,
Inc., Judge Electronic Services of Boston, Inc. and Judge, Inc. of
Delaware, Inc.
b. As of September 14, 1996, the Judge Technical Board has approved
the merger of Judge Technical Services of New Jersey, Inc. and Judge
Professional Services, Inc. with and into Judge Technical.
c. As filed with the Secretary of State of the Commonwealth of
Pennsylvania on September 23, 1996, (a) Judge, Inc. changed its name to The
Judge Group, Inc., (b) Judge modified its capital structure and effected a 52.6
for 1.0 stock split, and (c) Judge amended and restated its articles of
incorporation and by-laws.
d. As filed with the Secretary of State of the Commonwealth of
Pennsylvania on September 27, 1996, Judge, Inc., a wholly-owned subsidiary of
Judge ("Subsidiary"), was formed to which Judge, pursuant to a Contribution
Agreement, dated as of September 27,
Judge - 4
1996, between Judge and Subsidiary, contributed, assigned and transferred
substantially all of its assets and certain of its liabilities to Subsidiary.
10. Stock Purchase Agreement, dated September 26, 1996, by and among Xxxxx
Xxxxx and Xxxxxxx X. XxXxxxxx, The Berkeley Associates Corporation and Judge.
11. Asset Purchase Agreement, dated September 30, 1996, by and among
Systems Automation, Inc. and Judge.
Judge - 5
JUDGE IMAGING SYSTEMS, INC.
Disclosure Schedule
-------------------
Schedule 4.1 - Organization and Qualification
1. JIS is qualified to do business in New Jersey.
2. JIS has no subsidiaries.
Schedule 4.2 - Capitalization
1. JIS Series A Preferred Shares - registration rights and preemptive rights.
2. Transfer on August 30, 1996 by Xxxxxx X. Judge, Jr. of 1,486,021 JIS
Common Shares and 27,628 JIS Series A Preferred Shares to Takema Ltd., L.P.
3. Transfer on August 30, 1996 by Xxxxxxx X. Xxxx of 176,289 JIS Common
Shares to Xxxxxxx Xxxx Descendants' Trust.
Schedule 4.3 - Options and Additional Rights
1. Xxxxxxx Xxxxx has an option, granted on February 29, 1996, to purchase
25,000 JIS Common Shares at $1.33. Such option is currently exercisable. Such
option terminates on ______________.
Schedule 4.4 - Subsidiaries
None.
Schedule 4.6 - Validity of Contemplated Transactions.
1. Third Amended and Restated Loan and Security Agreement, dated September 3,
1996, among Judge, Inc., Judge Technical Services, Inc., Judge Professional
Services, Inc., Judge Imaging Systems, Inc., Judge Electronic Services of
Florida, Inc., Judge, Inc. of New Jersey, Judge Technical Services of
New Jersey, Inc. and Midlantic Bank, N.A.
2. Business Loan Agreement between Sterling Bank and Judge Technical
Services, Inc.
Schedule 4.12 - Undisclosed Liabilities
See Schedule 4.18.
Schedule 4.14 - Intellectual Property
MENTOR(TM) is a common law trade xxxx.
Schedule 4.15 - Contracts
None.
Schedule 4.16 - Compliance with Regulations and Court Orders
None.
Schedule 4.17 - Environmental Matters
None.
Schedule 4.18 - Litigation
See Attachment 4.18.
Schedule 4.19 - Insurance
None.
Schedule 4.20 - Employee Benefit Plans
1. 401(k) Plan.
Schedule 4.22 - Subsequent Events
1. All key employees of JIS have executed confidentiality and one-year
post-termination non-competition agreements.
2. Loan and Security Agreement.
a. At June 30, 1996, JIS was in violation of certain covenants
under the Loan and Security Agreement. Midlantic Bank waived compliance by JIS
of such covenants.
JIS - 2
b. Midlantic Bank also extended the maturity date of the line from May
31, 1997 to May 31, 1998, modified certain financial covenants, and the maximum
permitted borrowings were increased.
JIS - 3
