EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 29, 1997
AMONG
PRINTRAK INTERNATIONAL INC.
A DELAWARE CORPORATION
SUNRISE ACQ. CORP.
A CALIFORNIA CORPORATION
AND
SUNRISE IMAGING
A CALIFORNIA CORPORATION
TABLE OF CONTENTS
PAGE
1. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.1 Surviving Corporation.. . . . . . . . . . . . . . . . . 2
2.2 Articles of Incorporation and Bylaws of SunRise.. . . . 2
2.3 Directors and Officers. . . . . . . . . . . . . . . . . 2
2.4 Common Stock of Merger Sub. . . . . . . . . . . . . . . 2
2.5 Conversion of SunRise Stock.. . . . . . . . . . . . . . 2
2.6 Earn-Out Payments.. . . . . . . . . . . . . . . . . . . 2
2.7 Cancellation of SunRise Stock Options and Warrants. . . 4
2.8 Exchange of Stock Certificates. . . . . . . . . . . . . 4
2.9 Transfer Books. . . . . . . . . . . . . . . . . . . . . 4
2.10 SunRise Dissenting Shares . . . . . . . . . . . . . . . 4
2.11 No Further Ownership Rights in SunRise Common Stock . . 5
2.12 Lost, Stolen or Destroyed Certificates. . . . . . . . . 5
2.13 Escrow Agreement. . . . . . . . . . . . . . . . . . . . 5
2.14 Further Assurances. . . . . . . . . . . . . . . . . . . 5
3. The Closing.. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4. Representations and Warranties of SunRise.. . . . . . . . . . . . 6
4.1 Organization and Existence of SunRise and
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 6
4.2 Authority and Binding Effect. . . . . . . . . . . . . . 7
4.3 Authorized Capital Stock of SunRise.. . . . . . . . . . 7
4.4 No Subsidiaries.. . . . . . . . . . . . . . . . . . . . 7
4.5 SunRise Financial Statements. . . . . . . . . . . . . . 8
4.6 Leases, Title to Properties, Etc. . . . . . . . . . . . 8
4.7 Absence of Certain Events.. . . . . . . . . . . . . . . 9
4.8 Indebtedness. . . . . . . . . . . . . . . . . . . . . . 10
4.9 Guaranties and Suretyship.. . . . . . . . . . . . . . . 10
4.10 Absence of Undisclosed Liabilities. . . . . . . . . . . 11
4.11 Taxes and Tax Returns.. . . . . . . . . . . . . . . . . 11
4.12 Notes and Accounts Receivable.. . . . . . . . . . . . . 12
4.13 Fixed Assets. . . . . . . . . . . . . . . . . . . . . . 12
4.14 Material Contracts. . . . . . . . . . . . . . . . . . . 13
4.15 Intellectual Property.. . . . . . . . . . . . . . . . . 14
4.16 Insurance.. . . . . . . . . . . . . . . . . . . . . . . 14
4.17 Licenses, Permits, Etc. . . . . . . . . . . . . . . . . 15
4.18 Litigation. . . . . . . . . . . . . . . . . . . . . . . 15
4.19 Compliance with Laws. . . . . . . . . . . . . . . . . . 15
4.20 Employees.. . . . . . . . . . . . . . . . . . . . . . . 16
4.21 Employee Benefit Plans. . . . . . . . . . . . . . . . . 16
4.22 Bank Accounts and Powers of Attorney. . . . . . . . . . 17
4.23 Product Warranties and Liabilities. . . . . . . . . . . 17
4.24 Labor Matters.. . . . . . . . . . . . . . . . . . . . . 18
4.25 Questionable Payments.. . . . . . . . . . . . . . . . . 18
4.26 Brokers.. . . . . . . . . . . . . . . . . . . . . . . . 18
4.27 Conflict of Interest. . . . . . . . . . . . . . . . . . 18
4.28 Books and Records.. . . . . . . . . . . . . . . . . . . 18
4.29 Environmental and Safety Matters. . . . . . . . . . . . 18
4.30 Confidentiality.. . . . . . . . . . . . . . . . . . . . 19
4.31 Securities Law Compliance.. . . . . . . . . . . . . . . 19
4.32 Operational Restrictions. . . . . . . . . . . . . . . . 19
4.33 Full Disclosure.. . . . . . . . . . . . . . . . . . . . 19
5. Representations and Warranties of Printrak and Merger Sub.. . . . 20
5.1 Organization and Existence. . . . . . . . . . . . . . . 20
5.2 Authority and Binding Effect. . . . . . . . . . . . . . 20
5.3 Capital Stock of Merger Sub.. . . . . . . . . . . . . . 20
5.4 Investment Intent.. . . . . . . . . . . . . . . . . . . 20
5.5 Brokers.. . . . . . . . . . . . . . . . . . . . . . . . 20
5.6 Full Disclosure.. . . . . . . . . . . . . . . . . . . . 20
6. Covenants of SunRise and Principal Shareholders.. . . . . . . . . 21
6.1 Conduct of Business.. . . . . . . . . . . . . . . . . . 21
6.2 Access to Information.. . . . . . . . . . . . . . . . . 21
6.3 Preservation of Goodwill. . . . . . . . . . . . . . . . 22
6.4 Shareholders' Approval. . . . . . . . . . . . . . . . . 22
6.5 Trade Secrets.. . . . . . . . . . . . . . . . . . . . . 22
6.6 Preparation of Information Statement. . . . . . . . . . 22
6.7 Transaction Expenses. . . . . . . . . . . . . . . . . . 22
6.8 Further Assurances. . . . . . . . . . . . . . . . . . . 22
7. Mutual Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 22
7.1 Public Announcements. . . . . . . . . . . . . . . . . . 22
7.2 Reasonable Efforts to Satisfy Conditions. . . . . . . . 23
8. Conditions to Obligations of SunRise. . . . . . . . . . . . . . . 23
8.1 Printrak's and Merger Sub's Representations and
Warranties True at Closing. . . . . . . . . . . . . . . 23
8.2 Certificates. . . . . . . . . . . . . . . . . . . . . . 23
9. Conditions to Obligations of Printrak and Merger Sub. . . . . . . 24
9.1 SunRise's Representations and Warranties True
at Closing. . . . . . . . . . . . . . . . . . . . . . . 24
9.2 Opinion of SunRise's Counsel. . . . . . . . . . . . . . 24
9.3 No Damage or Destruction. . . . . . . . . . . . . . . . 24
9.4 Certificates. . . . . . . . . . . . . . . . . . . . . . 24
9.5 Release of Liability for Transactions Fees. . . . . . . 25
9.6 Waiver of Right of First Refusal. . . . . . . . . . . . 25
9.7 Cancellation of Warrants and Options. . . . . . . . . . 25
9.8 Assignments of Rights to Technology.. . . . . . . . . . 25
9.9 UCC Termination Statements; Removal of Liens. . . . . . 25
9.10 No Material Adverse Changes.. . . . . . . . . . . . . . 25
9.11 Blue Sky Matters. . . . . . . . . . . . . . . . . . . . 26
9.12 SunRise Shareholders' Approval. . . . . . . . . . . . . 26
9.13 Non-Competition Agreement.. . . . . . . . . . . . . . . 26
9.14 Escrow Agreement. . . . . . . . . . . . . . . . . . . . 26
9.15 Employment Agreement. . . . . . . . . . . . . . . . . . 26
9.16 Resignations. . . . . . . . . . . . . . . . . . . . . . 26
9.17 Consents. . . . . . . . . . . . . . . . . . . . . . . . 26
9.18 Cancellation of Credit Lines. . . . . . . . . . . . . . 26
9.19 Evidence of Payment of Option Exercise Price. . . . . . 26
10. Mutual Conditions to Obligations of Printrak, Merger
Sub and SunRise.. . . . . . . . . . . . . . . . . . . . 26
10.1 Approvals.. . . . . . . . . . . . . . . . . . . . . . . 26
10.2 No Litigation.. . . . . . . . . . . . . . . . . . . . . 27
10.3 Nature of Statements. . . . . . . . . . . . . . . . . . 27
10.4 Survival of Representations and Warranties. . . . . . . 27
11. Indemnity.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1 Indemnification of Printrak.. . . . . . . . . . . . . . 27
11.2 Limitations.. . . . . . . . . . . . . . . . . . . . . . 27
11.3 Indemnification of SunRise. . . . . . . . . . . . . . . 28
11.4 Claims Procedure. . . . . . . . . . . . . . . . . . . . 28
11.5 Treatment of Indemnity Payments.. . . . . . . . . . . . 29
11.6 Agreement of SunRise Indemnitors. . . . . . . . . . . . 29
12. Termination.. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
13. Definitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
13.1 Cross Reference Table.. . . . . . . . . . . . . . . . . 30
13.2 Certain Definitions.. . . . . . . . . . . . . . . . . . 31
14. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . . . . 32
14.1 Notices.. . . . . . . . . . . . . . . . . . . . . . . . 32
14.2 Assignment. . . . . . . . . . . . . . . . . . . . . . . 33
14.3 Successors Bound. . . . . . . . . . . . . . . . . . . . 33
14.4 Captions. . . . . . . . . . . . . . . . . . . . . . . . 33
14.5 Amendment.. . . . . . . . . . . . . . . . . . . . . . . 33
14.6 Entire Agreement. . . . . . . . . . . . . . . . . . . . 33
14.7 Counterparts. . . . . . . . . . . . . . . . . . . . . . 33
14.8 Governing Law.. . . . . . . . . . . . . . . . . . . . . 33
14.9 Attorneys' Fees.. . . . . . . . . . . . . . . . . . . . 33
14.10 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . 33
14.11 Severability. . . . . . . . . . . . . . . . . . . . . . 33
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of August
29, 1997, among Printrak International Inc., a Delaware corporation
("Printrak"), SunRise Acq. Corp., a California corporation and a wholly-owned
subsidiary of Printrak ("Merger Sub"), SunRise Imaging, a California corporation
("SunRise"), and Bram Kool, ▇▇▇▇▇▇ Kool, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
(collectively, the "Principal Shareholders").
R E C I T A L S:
A. Printrak, Merger Sub, SunRise, and their respective Boards of Directors and
the Principal Shareholders deem it advisable to effect a merger pursuant to
which Merger Sub shall be merged with and into SunRise in accordance with the
terms and provisions of this Agreement (the "Merger").
B. As a result of the Merger the shareholders of SunRise (the "SunRise
Shareholders") will receive an aggregate of (i) $10,175,000 in cash (the
"Closing Payment"), less expenses pursuant to Section 6.7 hereto, in exchange
for the issued and outstanding shares of Common Stock of SunRise (the "SunRise
Stock"), and (ii) the Earn-Out Payment, as defined in, determined and payable
pursuant to Section 2.6 below, all as more fully described in and subject to the
specific terms and provisions of this Agreement.
C. The Board of Directors of SunRise has determined that this Agreement and the
transactions contemplated hereby, as well as the Merger Consideration, are fair
to and in the best interests of the SunRise Shareholders.
D. This Agreement sets forth the terms and conditions to which the parties
hereto have agreed and further contemplates the consummation of certain related
transactions hereinafter described.
NOW, THEREFORE, in consideration of the premises and the mutual promises and
covenants of the parties hereto, and subject to the terms and conditions set
forth herein, the parties herein agree as follows:
1. DEFINITIONS. Certain terms are used in this Agreement as specifically
defined herein. Unless elsewhere defined in this Agreement, these definitions
are set forth or referred to in Section 14 of this Agreement. As used in this
Agreement, unless the context requires otherwise, the term "SunRise" shall mean
and refer to SunRise Imaging and its subsidiaries.
2. MERGER. Subject to the terms and conditions of this Agreement, the
parties hereto agree that Merger Sub and SunRise shall execute and file the
Agreement of Merger in substantially the form attached hereto as Exhibit A with
the California Secretary of State, whereupon Merger Sub shall be merged with and
into SunRise and SunRise shall be the surviving corporation in such merger and
shall become a wholly-owned subsidiary of Printrak.
2.1 SURVIVING CORPORATION. Upon the effectiveness of the Agreement
of Merger (hereinafter referred to as the "Effective Time of the Merger"),
Merger Sub shall be merged with and into SunRise and the separate existence of
Merger Sub shall cease. SunRise shall be the corporation surviving the Merger.
2.2 ARTICLES OF INCORPORATION AND BYLAWS OF SUNRISE. The Articles of
Incorporation and Bylaws of Merger Sub at and immediately prior to the Effective
Time of the Merger shall be the Articles of Incorporation and Bylaws of SunRise
following the Effective Time of the Merger.
2.3 DIRECTORS AND OFFICERS. The directors of Merger Sub immediately
prior to the Effective Time of the Merger shall be the initial directors of
SunRise, each to hold office in accordance with the Articles of Incorporation
and Bylaws of SunRise, and the officers of Merger Sub immediately prior to the
Effective Time of the Merger shall be the initial officers of SunRise, in each
case until their respective successors are duly elected or appointed and
qualified.
2.4 COMMON STOCK OF MERGER SUB. Each share of the common stock of
Merger Sub (the "Merger Sub Common Stock") issued and outstanding immediately
prior to the Effective Time of the Merger shall, by virtue of the Merger and
without any action on the part of any holder thereof, be converted into one (1)
share of Common Stock of SunRise.
2.5 CONVERSION OF SUNRISE STOCK. Subject to the other terms of this
Section 2, each share of SunRise Stock outstanding immediately prior to the
Effective Time of the Merger (excluding shares to be cancelled pursuant to
Section 2.7) shall, by virtue of the Merger and without any action on the part
of any holder thereof, be converted into the right to receive an amount of cash
determined by dividing the Closing Payment, less the expenses payable by the
SunRise Shareholders pursuant to Section 6.7, by the total number of shares of
SunRise Stock that are issued and outstanding immediately prior to the Effective
Time of the Merger.
2.6 EARN-OUT PAYMENT.
(a) In addition to the Closing Payment set forth in Section 2.5
above, but subject to certain conditions as set forth below, Printrak shall pay
to the SunRise Shareholders, as an addition to the Closing Payment, an earn-out
payment (the "Earn-Out Payment") based upon SunRise's Revenue level for the
twelve months ended December 31, 1997 (calculated in accordance with generally
accepted accounting principles on an accrual basis). The Closing Payment and
the Earn-Out Payment shall be collectively defined as the "Merger
Consideration." The Earn-Out Payment shall be calculated as follows:
REVENUE EARN-OUT
------------ ------------
$ 11,500,000 no earn-out
$ 11,600,000 $ 50,000
$ 11,700,000 $ 100,000
$ 11,800,000 $ 150,000
$ 11,900,000 $ 300,000
$ 12,000,000 $ 250,000
$ 12,100,000 $ 300,000
$ 12,200,000 $ 350,000
$ 12,300,000 $ 400,000
$ 12,400,000 $ 450,000
$ 12,500,000 $ 500,000
$ 12,600,000 $ 545,000
$ 12,700,000 $ 590,000
$ 12,800,000 $ 635,000
$ 12,900,000 $ 680,000
$ 13,000,000 or more $ 725,000
(b) As used herein, the term "Revenue" shall mean the sale of
all products and post warranty support services recorded in accordance with
generally accepted accounting principles.
(c) As soon as reasonably practicable, but not later than
March 1, 1998, Printrak shall deliver to the Principal Shareholders a
calculation of Revenues for the twelve months ended December 31, 1997,
determined in accordance with generally accepted accounting principles and
consistent with the practices used in preparing the SunRise Financial
Statements (as defined in Section 4.5), certified by Deloitte & Touche LLP or
such other independent certified public accountant as chosen by Printrak (the
"Revenue Calculation"). The cost of such accounting firm shall be borne by
Printrak. The Principal Shareholders shall have fifteen (15) days to review
and approve the Revenue Calculation. If the Principal Shareholders do not
notify Printrak in writing within such fifteen (15) day period that they
dispute any matter set forth in the Revenue Calculation, the Revenue
Calculation shall be deemed to have been accepted by the SunRise Shareholders
and shall be binding upon the SunRise Shareholders and Printrak. If any
disputes arise regarding the Revenue Calculation which the SunRise
Shareholders and Printrak cannot resolve between themselves within fifteen
(15) days, such questions shall be referred to an accounting firm mutually
satisfactory to SunRise and Printrak, which shall be directed to resolve such
questions within seven (7) days thereafter, and whose decision shall be final
and binding on all parties. The cost of such additional accounting firm
shall be borne equally by the SunRise Shareholders and Printrak. Upon any
final determination of the Revenue Calculation pursuant to this Section
2.6(c), Printrak shall promptly pay to each non-dissenting SunRise
Shareholder an amount equal to the Earn-Out Payment (less any amounts payable
to the individuals and entities listed or required to be listed on Schedule
4.26 hereto with respect to the Earn-Out Payment) multiplied by a fraction,
the numerator of which shall be the number of shares of SunRise held by such
shareholder immediately prior to the Effective Date of the Merger and the
denominator of which shall be the number of shares of SunRise held by all
SunRise Shareholders immediately prior to the Effective Time of the Merger.
(d) It is acknowledged that after the Closing Date Printrak shall, in
its sole discretion, have complete control over all strategic and operational
decisions concerning the operation of the Business, including decisions
regarding the design, testing, manufacturing, pricing, warranting, marketing,
advertising and distribution of products in the Business, notwithstanding that
such decisions may or will impact the amount of the Earn-Out Payments. Printrak
agrees to exercise its discretion in making such decisions in good faith and
without regard to any effect such decisions may have on the amount of the
Earn-Out Payments, if any, payable hereunder. In particular, Printrak agrees to
continue to book and ship orders in a manner consistent with generally accepted
accounting principles.
(e) Printrak shall provide to the Principal Shareholders, as
soon as reasonably practicable, but not later than 20 days after the end of each
month ending after the Effective Date of the Merger until November 30, 1997, a
statement setting forth (i) Revenues for such month and (ii) Revenues for the
fiscal year to date. The revenue statements shall be delivered upon receipt by
Printrak of a Confidentiality Agreement executed by each of the Principal
Shareholders in substantially the form of Exhibit B attached hereto.
2.7 CANCELLATION OF SUNRISE STOCK OPTIONS AND WARRANTS. SunRise and
the Principal Shareholders shall take all actions necessary to provide that, on
or prior to the Effective Time of the Merger, each Derivative Security of
SunRise, as defined herein, shall be cancelled. All monetary
or other consideration required to be paid for cancellation of such Derivative
Securities shall be paid by the SunRise Shareholders, and NOT by SunRise.
2.8 EXCHANGE OF STOCK CERTIFICATES. Promptly after the Effective
Time of the Merger, Printrak shall give, or cause to be given, written notice of
the consummation of the Merger to each SunRise Shareholder of record immediately
prior to the Effective Time of the Merger and each SunRise Shareholder may
surrender all certificates representing SunRise Stock, in accordance with the
procedures set forth in the written notice of the consummation of the Merger
delivered by Printrak to each SunRise Shareholder, to Printrak at its principal
executive office. As soon as practicable after such surrender, Printrak shall
cause each such SunRise Shareholder to receive, in exchange for such certificate
or certificates so surrendered, cash in the amount determined above into which
the shares of SunRise Stock so surrendered shall have been converted by the
Merger pursuant to Section 2.5, less any amount to be deducted from such amount
pursuant to contractual arrangements between Printrak or SunRise and such
SunRise Shareholder. Subject to any applicable escheat laws, until so
surrendered and exchanged, each certificate which prior to the Effective Time of
the Merger represented outstanding shares of SunRise Stock shall be deemed to
evidence the right to receive the Closing Payment per share multiplied by the
number of whole shares of SunRise Stock represented thereby less any amount to
be deducted from such amount pursuant to contractual arrangements between
Printrak or SunRise and such SunRise Shareholder. No interest shall be payable
with respect to such payment upon the surrender of certificates which
represented SunRise Stock at the Effective Time of the Merger.
2.9 TRANSFER BOOKS. The stock transfer books of SunRise pertaining
to SunRise Stock outstanding at the Effective Time of the Merger shall be closed
at the Effective Time of the Merger, and thereafter no transfer of any such
shares of SunRise Stock shall be recorded thereon. In the event a transfer of
ownership of shares of SunRise Stock is not recorded on the stock transfer books
of SunRise, an amount of cash equal to the Merger Consideration Per Share,
multiplied by the number of shares represented by such Certificate, without
interest, may be paid to the transferee of such shares of SunRise Stock if the
certificate or certificates representing such shares of SunRise Stock is or are
surrendered to Printrak accompanied by all documents deemed necessary by
Printrak to evidence and effect such transfer of ownership of shares of SunRise
Stock and accompanied by the payment of any applicable stock transfer tax with
respect to such transfer.
2.10 SUNRISE DISSENTING SHARES. SunRise Shareholders holding any
shares of SunRise stock that are eligible to be "Dissenting Shares" within the
meaning of Chapter 13 of the California General Corporation Law (the "Code")
with respect to the Merger and as to which dissenter's rights to require the
purchase of such shares have been properly exercised will be entitled to their
rights under Chapter 13 of the Code with respect to such shares. Shares of
SunRise Stock as to which dissenting shareholders' rights of appraisal have not
been properly perfected within thirty (30) days after the date on which notice
of the approval of the Merger by the outstanding SunRise shares was mailed to
such SunRise Shareholder will be converted as provided in Section 2.5 above.
2.11 NO FURTHER OWNERSHIP RIGHTS IN SUNRISE COMMON STOCK. The Merger
Consideration delivered upon the surrender for exchange of SunRise Stock in
accordance with the terms of this Section 2 shall be deemed to have been issued
in full satisfaction of all rights pertaining to such SunRise Stock.
2.12 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
certificates of SunRise Stock have been lost, stolen or destroyed, Printrak
shall issue in exchange for such lost, stolen or destroyed certificates, upon
the making of an affidavit of that fact by the holder thereof, such Merger
Consideration as may be required pursuant to Section 2.5; provided, however,
that Printrak may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificates to indemnify Printrak against any claim that may be made against
Printrak with respect to alleged lost, stolen or destroyed certificates.
2.13 ESCROW AGREEMENT. Pursuant to an Escrow Agreeement to be entered
into on or before the Closing (as defined in Section 3 below) in substantially
the form of Exhibit C (the "Escrow Agreement"), among Printrak, the Indemnitors,
the Escrow Agent and the Representative (as those terms are defined in the
Escrow Agreement), Printrak will withhold, pro rata, from the amount of cash
that would otherwise be delivered to the SunRise Shareholders in the Merger, ten
percent (10%) of the total Closing Payment payable pursuant to Section 2.5 above
(the "Escrowed Amount") (the withholding of the Closing Payment pursuant to this
Section will be allocated among the SunRise Shareholders that are outstanding
immediately prior to the Effective Time of the Merger, pro rata according to the
number of outstanding shares of SunRise Stock held by each such holder
immediately prior to the Effective Time of the Merger). Immediately upon the
Effective Time of the Merger, Printrak will deposit in an escrow pursuant to the
Escrow Agreement (the "Escrow") cash representing the Escrowed Amount. The
Escrowed Amount and any other property with respect thereto delivered to the
Escrow Agent as provided in the Escrow Agreement will be held as collateral to
secure the indemnification obligations of the SunRise Shareholders under Section
11 hereof in accordance with the Escrow Agreement.
2.14 FURTHER ASSURANCES. SunRise agrees that if, at any time after
the Effective Time of the Merger, Printrak considers or is advised that any
further deeds, assignments or assurances are reasonably necessary or desirable
to be obtained from SunRise or its officers or directors, to consummate the
Merger or to carry out the purposes of this Agreement at or after the Effective
Time of the Merger, then Printrak, SunRise and their respective officers and
directors may execute and deliver all such proper deeds, assignments and
assurances and do all other things necessary or desirable to consummate the
Merger and to carry out the purposes of this Agreement, in the name of SunRise
or otherwise.
3. THE CLOSING. The delivery of the various opinions, certificates,
consents, instruments and documents which this Agreement contemplates (the
"Closing") shall take place at the offices of Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇,
a Professional Corporation, counsel to Printrak, in Newport Beach, California,
on September 8, 1997, or such later date as the parties may mutually agree. The
date of, and the time at which, the Closing takes place is herein referred to as
the "Closing Date." As soon as practicable after the Closing, the appropriate
officers of Printrak, Merger Sub and SunRise shall take all necessary action to
bring about the Effective Time of Merger.
4. REPRESENTATIONS AND WARRANTIES OF SUNRISE. SunRise and the Principal
Shareholders jointly and severally make the representations and warranties set
forth below as of the date of this Agreement and as of the date of the Closing.
Except as otherwise provided to the contrary, each party makes the
representations and warranties without qualification as to knowledge. When a
representation or warranty is made "to the best knowledge of" SunRise, such
knowledge shall be deemed to include, without limitation, the actual knowledge
of the Principal Shareholders and such information that each
such individual should reasonably be expected to have knowledge of by virtue of
his position and relationship with SunRise. When a representation or warranty
is made "to the best knowledge of" the Principal Shareholders, such knowledge
shall be deemed to include, without limitation, the actual knowledge of such
Principal Shareholder and such information that such Principal Shareholders
should reasonably be expected to have knowledge of by virtue of their positions
and relationships with SunRise.
4.1 ORGANIZATION AND EXISTENCE OF SUNRISE AND SUBSIDIARIES.
(a) SunRise is a corporation duly organized, validly existing
and in good standing under the laws of the State of California and has all
requisite corporate power to carry on its business as now conducted and as
presently proposed to be conducted and to enter into and, subject to shareholder
approval, perform its obligations under this Agreement. Except as set forth on
Schedule 4.1, SunRise is qualified to do business as a foreign corporation and
is in good standing in every jurisdiction in which the character or location of
the assets owned by it or the nature of the business transacted by it requires
such qualification where the failure to so qualify would have a Material Adverse
Effect. SunRise has delivered to Printrak true, correct and complete copies of
(a) the Articles of Incorporation (duly certified by the California Secretary of
State), (b) the Bylaws (certified by the Secretary of SunRise), and (c) the
Minute and Stock Books (certified by the Secretary of SunRise) of SunRise.
(b) SunRise Design, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Idaho and
has all requisite corporate power to carry on its business as now conducted and
as presently proposed to be conducted. Except as set forth on Schedule 4.1,
SunRise Design, Inc. is qualified to do business as a foreign corporation and is
in good standing in every jurisdiction in which the character or location of the
assets owned by it or the nature of the business transacted by it requires such
qualification where the failure to so qualify would have a Material Adverse
Effect. SunRise Design, Inc. has delivered to Printrak true, correct and
complete copies of (a) the Articles of Incorporation (duly certified by the
Idaho Secretary of State), (b) the Bylaws (certified by the Secretary of
SunRise), and (c) the Minute and Stock Books (certified by the Secretary of
SunRise Design, Inc.) of SunRise Design, Inc.
(c) SRI Foreign Sales Corporation ("SRI") is a corporation duly
organized, validly existing and in good standing under the laws of Barbados and
has all requisite corporate power to carry on its business as now conducted and
as presently proposed to be conducted. Except as set forth on Schedule 4.1,
SunRise is qualified to do business as a foreign corporation and is in good
standing in every jurisdiction in which the character or location of the assets
owned by it or the nature of the business transacted by it requires such
qualification where the failure to so qualify would have a Material Adverse
Effect. SRI has delivered to Printrak true, correct and complete copies of (a)
the Articles of Incorporation (duly certified by the Secretary of SRI), (b) the
Bylaws (certified by the Secretary of SRI), and (c) the Minute and Stock Books
(certified by the Secretary of SRI) of SRI.
4.2 AUTHORITY AND BINDING EFFECT. Each of the Principal Shareholders
has the full legal right and capacity to execute and deliver this Agreement and
each agreement referenced herein to which he is a party and to consummate the
transactions contemplated by, and comply with his obligations under, such
agreements. SunRise has the full corporate power and authority to execute and
deliver this Agreement and each agreement referenced herein to which it is a
party and to consummate
the transactions contemplated by, and comply with its obligations under, such
agreements. This Agreement and Related Agreements (as defined in Section 13.2)
to which SunRise is a party, and the consummation by SunRise of its obligations
herein and therein, have been duly authorized by all necessary corporate action
of SunRise, other than the approval of its shareholders in accordance with
applicable law. This Agreement has been, and at the Closing each agreement
referenced herein will be, duly executed and delivered by SunRise and, to the
extent he is a party thereto, each Principal Shareholder. This Agreement is,
and when duly executed and delivered at the Closing each agreement referenced
herein will be, the valid and binding agreement of SunRise and/or the Principal
Shareholders, as the case may be, enforceable against SunRise and/or the
Principal Shareholders, as the case may be, in accordance with their respective
terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights
generally and (ii) general principles of equity relating to the availability of
equitable remedies. No further action is required to be taken by SunRise or the
Principal Shareholders, nor is it necessary for either of such parties to obtain
any action, approval or consent by or from any third persons, governmental or
other, to enable each of such parties to enter into or perform their respective
obligations under this Agreement and each agreement referenced herein to which
it is a party, except for the consents of third parties to the assignment and
assumption of the Contracts (as defined in Section 4.14), which shall be
obtained by SunRise on or before the Closing (unless waived in writing by
Printrak, or unless the failure to obtain such consents would not have a
Material Adverse Effect). Such consents are set forth in Schedule 4.2 hereto.
4.3 AUTHORIZED CAPITAL STOCK OF SUNRISE. As of the date hereof, the
authorized capital stock of SunRise consists of 5,000,000 shares of Common
Stock, no par value, of which 3,408,777 shares of Common Stock are validly
issued and outstanding as of the date hereof (subject to increase prior to the
Effective Date of Merger due to the exercise of certain unexercised options and
warrants to purchase SunRise Stock), fully paid and nonassessable and not issued
in violation of the preemptive rights of any person. All of the outstanding
shares of Common Stock of SunRise have been issued in transactions which were
exempt from registration under the Securities Act of 1933, (the "Securities
Act") as amended, and all applicable state securities laws and blue sky acts.
All shares of SunRise Stock which have been reacquired by SunRise have reverted
to the status of authorized but unissued shares and are no longer outstanding.
Schedule 4.3 hereto contains a true, correct and complete list of all
outstanding convertible securities, subscriptions, options, warrants, preemptive
rights or other agreements or commitments obligating SunRise to issue shares of
SunRise Stock or relating to the transfer or registration of SunRise Stock, none
of which have been issued in violation of applicable securities laws or the
preemptive rights of any person. SunRise has complied in all material respects
with all provisions of its stock option plans, including, but not limited to,
providing a copy of such plan to each option holder. Immediately prior to the
Effective Time of the Merger, there shall be no options, warrants or any other
securities convertible into or exchangeable for any shares of SunRise Stock.
4.4 NO SUBSIDIARIES. Except for the following subsidiaries or equity
investments SunRise has no subsidiaries or equity investments in any person:
(a) SunRise Design, Inc., an Idaho corporation; and (b) SRI Foreign Sales
Corporation, a Barbados corporation, both of which are wholly owned subsidiaries
of SunRise.
4.5 SUNRISE FINANCIAL STATEMENTS. SunRise has delivered to Printrak
(a) the balance sheet (hereinafter referred to as the "SunRise Balance Sheet")
of SunRise at December 31, 1996
(hereinafter referred to as the "Balance Sheet Date") and the related statements
of income and shareholders' equity of SunRise for the fiscal year then ended,
together with the related notes thereto, as audited by Coopers & ▇▇▇▇▇▇▇ LLP,
whose unqualified opinion thereon is included therewith; (b) the audited balance
sheets of SunRise at December 31, 1995, and the related statements of income and
shareholders' equity of SunRise for the period then ended, together with the
related notes thereto, as certified by Coopers & ▇▇▇▇▇▇▇ LLP, whose unqualified
opinion thereon is included therewith; and (c) the unaudited balance sheet of
SunRise at June 30, 1997, and the related statements of income and shareholders'
equity for the six (6) month period then ended, certified by the management of
SunRise. Such financial statements are complete and correct in all material
respects and in accordance with the books of account and records of SunRise, and
present fairly the financial position of SunRise at the dates indicated and the
results of its operations and the changes in its financial position for the
periods then ended, in accordance with generally accepted accounting principles
consistently applied, except that interim financial statements are subject to
year end adjustments (which consist only of normal recurring accruals) and do
not have the footnotes required under generally accepted accounting principles.
4.6 LEASES, TITLE TO PROPERTIES, ETC. Attached hereto as Schedule
4.6 is a general description of each parcel of real property owned or leased by
SunRise. Schedule 4.6 hereto also describes each lease agreement under which
SunRise has any leasehold interest in any real property. SunRise is in
possession of all such real properties owned or leased by it and described in
Schedule 4.6 hereto. SunRise has good and marketable title to all properties
and assets owned by it, including those reflected in the SunRise Balance Sheet
(other than properties and assets reflected in the SunRise Balance Sheet which
have since been sold or otherwise disposed of in the Ordinary Course of
Business) and those described in Schedule 4.6 hereto free and clear of all
liens, mortgages, security interests and encumbrances, including any conditional
sale or other title retention agreement (collectively, "Liens"), except:
(a) liens for taxes not yet due and payable;
(b) statutory liens in immaterial amounts which are not yet
delinquent;
(c) minor defects and irregularities in title or encumbrances
which do not impair the use thereof for the purposes for which they are held;
and
(d) as set forth in the SunRise Balance Sheet or in Schedule 4.6
hereto.
The leases set forth in Schedule 4.6 hereto are in full force and effect and
there is no existing default of a material nature under any of such leases on
the part of the lessor or lessee thereunder which default, in any case, could
reasonably be expected to have a Material Adverse Effect. Such leases consist
only of documents described in Schedule 4.6 hereto, complete and correct copies
of which have been provided by SunRise to Printrak. To the best knowledge of
SunRise and the Principal Shareholders, none of the buildings, structures or
appurtenances located upon the real properties described in Schedule 4.6 hereto
or the operation and maintenance thereof as now operated or maintained,
contravenes any zoning ordinance or other administrative regulation (whether or
not permitted because of prior nonconforming use) or violates any restrictive
covenant or any provision of law, the effect of which would materially interfere
with or prevent the continued use of such properties for the purposes for which
they are now being used or would materially adversely affect the value thereof.
The buildings and major items of equipment and machinery reflected on the
SunRise Balance Sheet are generally in such operating condition and repair,
ordinary wear and tear excepted, as is adequate for the conduct of SunRise's
business. SunRise has provided to Printrak a complete
and correct copy of each policy of title insurance pertaining to the real
properties (exclusive of leasehold interests) owned by SunRise, and described in
Schedule 4.6 hereto.
4.7 ABSENCE OF CERTAIN EVENTS. Except as set forth in Schedule 4.7
attached hereto, since the Balance Sheet Date, SunRise has not:
(a) made any changes in its authorized capital or outstanding
securities;
(b) issued, sold, delivered or agreed to issue, sell or deliver
any of its capital stock, bonds or other corporate securities, pursuant to
existing employee stock options, or granted or agreed to grant any options,
warrants or other rights calling for the issuance, sale or delivery thereof;
(c) borrowed or agreed to borrow any funds or incurred, or
become subject to, any obligations or liability (absolute or contingent), except
obligations and liabilities incurred in the Ordinary Course of Business;
(d) paid any obligations or liability (absolute or contingent)
other than current liabilities reflected in or shown on the SunRise Balance
Sheet and current liabilities incurred since the Balance Sheet Date in the
Ordinary Course of Business;
(e) declared or made, or agreed to declare or make, any payment
of dividends or distributions of any assets of any kinds whatsoever in respect
of its capital stock, or purchased, redeemed or otherwise acquired, or agreed to
purchase, redeem or otherwise acquire, any of its outstanding capital stock;
(f) except in the Ordinary Course of Business, sold,
transferred, or otherwise disposed of, or agreed to sell, transfer, or otherwise
dispose of, any of its assets, properties, or rights, or canceled or otherwise
terminated, or agreed to cancel or otherwise terminate, any debts or claims;
(g) except in the Ordinary Course of Business, entered or agreed
to enter into any agreement or arrangement granting any preferential right to
purchase any of its assets, properties, or rights, or requiring the consent of
any party to the transfer and assignment of any such assets, properties, or
rights;
(h) waived any rights of value, without consideration therefor,
which in the aggregate are material considering its business;
(i) made or permitted any amendment or termination of any
non-trade contract, agreement, or license to which it is a party or to which it
or any of its assets or properties are subject, except for amendments or
terminations which were done in the Ordinary Course of Business and which will
not, individually or in the aggregate, have a Material Adverse Effect;
(j) made, directly or indirectly, any accrual or arrangement for
or payment of bonuses or special compensation of any kind or any severance or
termination to pay any of its present or former officers, directors, or
employees, which payments have not been made in full prior to the date hereof,
except for obligations or payments not exceeding $10,000 individually or $50,000
in the aggregate which were made in the Ordinary Course of Business;
(k) increased or agreed to increase the rate of compensation
payable or to become payable by it to any of its officers, directors, or
employees or adopted any new, or made any increase in, any existing, profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan, payment or arrangement made to, for, or with any
of such officers, directors, or employees;
(l) made any capital expenditures (or commitments therefor) in
excess of $25,000 individually or $100,000 in the aggregate;
(m) entered into any other transaction other than in the
Ordinary Course of Business;
(n) experienced any labor trouble or been informed of the loss
of potential loss of any management or technical personnel which has, or can be
anticipated to have, a Material Adverse Effect;
(o) been cited for any material violations of the federal
Occupational Safety Health Act of 1970 or any rules or regulations promulgated
thereunder or any other act, rules or regulations of any other governmental
agency;
(p) suffered any damages, destruction or losses which could
reasonably be expected to have a Material Adverse Effect, or incurred or become
subject to any material claim or liability for any damages or alleged damages
for any actual or alleged negligence or other tort or breach of contract which
could reasonably be expected to have a Material Adverse Effect;
(q) failed to operate the business of SunRise in the ordinary
course so as to use reasonable efforts to preserve the business intact, to keep
available the services of SunRise's employees, and to preserve the goodwill of
SunRise's suppliers, customers and others having business relations with it
except where such failure would not have a Material Adverse Effect;
(r) changed its accounting methods or practices in a manner
materially affecting its assets, liabilities or business; or
(s) experienced a change in SunRise's condition (financial or
otherwise), assets, liabilities, working capital, reserves, earnings or
business, except for changes contemplated hereby or changes which could not
reasonably be expected to have a Material Adverse Effect.
4.8 INDEBTEDNESS. The SunRise Balance Sheet reflects all
indebtedness for borrowed money owed by SunRise or to which any of its assets or
properties are subject, including a description of the terms thereof and all
assets pledged or otherwise subject thereto. A complete and correct copy of
each note, loan, credit or other similar instrument pursuant to which any such
indebtedness for borrowed money was incurred has been delivered to Printrak.
4.9 GUARANTIES AND SURETYSHIP. SunRise is not a party to or bound by
any guaranties, matters of suretyship, and other similar instruments.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
SunRise Balance Sheet or in Schedule 4.10, SunRise does not have any debts,
obligations, liabilities or commitments of
any nature, whether due or to become due, absolute, contingent or otherwise,
that, in accordance with generally accepted accounting principles, are required
to be disclosed in a balance sheet or the footnotes thereto, and are not shown
on the SunRise Balance Sheet delivered pursuant hereto, other than liabilities
incurred after December 31, 1996 in the Ordinary Course of Business and
consistent with past practice. Such post-December 31, 1996 liabilities are not
material in amount and have not had and are not expected to have, individually
or in the aggregate, a Material Adverse Effect. As to each liability, debt,
obligation or commitment, fixed or contingent, that is set forth on Schedule
4.10, SunRise shall provide the following information, in writing as an
attachment to such Schedule: (i) a summary description of the liability, debt,
obligation or commitment, together with copies of all material documentation
relating thereto, the amounts claimed and any other action or relief sought and,
if in connection with a claim, suit or proceeding, the name of the claimant and
all other parties involved therewith and the identity of the court or agency in
which such claim, suit or proceeding is being prosecuted, and (ii) the best
estimate of SunRise and the Principal Shareholders of the maximum amount, if
any, which is likely to become payable with respect to any contingent liability.
For purposes hereof, if no written estimate is provided, such best estimate
shall be deemed to be zero.
4.11 TAXES AND TAX RETURNS.
(a) Except as set forth on Schedule 4.11: (i) SunRise has duly
filed all Tax Returns (as hereinafter defined) which are required by law to be
filed by it on or prior to the date hereof; (ii) SunRise has duly paid all Taxes
(as hereafter defined) due or claimed to be due from it with respect to all
taxable periods or portions of periods ended on or before the date hereof
(whether or not shown on any Tax Return), and there are no assessments or claims
for payment of Taxes now pending or, to the best knowledge of SunRise ,
threatened, nor any audit of the records of SunRise being made or to the best
knowledge of SunRise threatened by any taxing authority for any such periods or
portions thereof; and (iii) to the knowledge of SunRise, there are no facts or
circumstances which could reasonably be expected to constitute a basis for
assessments or claims for the payment of additional Taxes. The amounts set up
as provisions for Taxes, if any, on the most recent balance sheet included in
the Financial Statements are sufficient for the payment of all unpaid Taxes of
SunRise, accrued for or applicable to the periods ended on such date and all
years and periods prior thereto and for which SunRise, at those dates, may have
been liable. True and correct copies of SunRise's three most recently filed tax
returns have been delivered to Printrak. SunRise has properly withheld and
paid, or accrued for payment, when due, to appropriate state and/or federal
authorities, all sales and use taxes, if any, and all amounts required to be
withheld from payments made to its employees, independent contractors,
creditors, shareholders, or other third parties or in connection with stock
options granted by SunRise to any such person and has also paid all employment
taxes as required under applicable laws.
(b) SunRise has not waived any statute of limitation in respect
of any Taxes or assessments by any federal, state, county, local, foreign or
other taxing jurisdiction or agreed to any extension of time with respect to an
assessment or deficiency in any Tax. SunRise has not filed a consent under
Section 341(f) of the Tax Code concerning collapsible corporations.
(c) SunRise has not made any payments, and is not obligated to
make any payments, nor is SunRise a party to any agreement that under any
circumstances could obligate it to make any payments, that would not be
deductible under Section 280G of the Tax Code. SunRise has not been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of
the Tax Code during the applicable period specified in Section 897(c)(1)(A)(ii)
of the Tax Code. SunRise is not a party to any tax allocation or tax sharing
agreement.
(d) Except as set forth on Schedule 4.11, SunRise is not, and
has never been, required to file a consolidated or combined state or federal
income Tax Return with any other person or entity and is not liable for the
Taxes of any person under Treas. Reg. Section 1.1502-6 (or any similar provision
of state, local, or foreign law), as transferee or successor, by contract or
otherwise.
(e) For purposes of this Agreement, the term "Tax" or "Taxes"
means any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Tax Code Section 59A), customs
duties, capital stock, franchise, profits, withholding, social security,
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not.
(f) For purposes of this Agreement, the term "Tax Return" means
any return, declaration, report, claim for refund, or information return or
statement relating to Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
4.12 NOTES AND ACCOUNTS RECEIVABLE. Attached hereto as Schedule 4.12
are (i) an accurate list of all accounts and notes receivable of SunRise,
including any accounts or notes receivable not reflected in the SunRise Balance
Sheet, (ii) an aging of all such accounts and notes receivable showing amounts
due in 30-day aging categories and (iii) an accurate list of all current backlog
of SunRise. All such accounts and notes receivable and work in process on such
listing arose from, and all accounts and notes receivable of SunRise created
between December 31, 1996 and the Closing will have arisen from, the provision
of services or sale of products by SunRise in the Ordinary Course of Business.
Neither SunRise nor any of the Principal Shareholders has received any notice or
knows of any counterclaim or set-off with respect to any such accounts or notes
receivable or work in process, or any facts or circumstances that would be the
basis for any such counterclaim or set-off, which is not reflected or taken into
account in the contractual allowance or bad debt reserves set forth in the
SunRise Balance Sheet. Except to the extent collected since the Balance Sheet
Date, all notes and accounts receivable or work in process reflected on the
SunRise Balance Sheet are, and all notes and accounts receivable or work in
process accruing between the Balance Sheet Date and the Closing Date will be (i)
bona fide claims against debtors for sale or other charges, (ii) subject to no
material expenses, set-offs or counterclaims, and (iii) collected in an amount
equal to the net amount thereof as set forth on the SunRise Balance Sheet within
180 days of the date when due. Set forth on Schedule 4.12 is an accurate list
of all accounts receivable of SunRise subject to any "factoring" or similar
arrangement.
4.13 FIXED ASSETS. Schedule 4.13 is a list of all of the Fixed Assets
used in the Business, other than any Fixed Asset the replacement cost of which
would be less than $500.00 and which is not of material importance to SunRise's
operations. The Fixed Assets are in good working order and condition, ordinary
wear and tear excepted, have been properly maintained, are suitable for the uses
for which they are being utilized in the Business, do not require more than
regularly scheduled maintenance in the ordinary course, consistent with
SunRise's established maintenance policies, to keep them in good operating
condition and comply in all material respects with all requirements under
applicable laws, regulations and licenses which govern the use and operation
thereof.
4.14 MATERIAL CONTRACTS. Except only as to contracts and documents
listed in Schedule 4.14 hereto or any other Schedule attached to this Agreement,
SunRise is not a party to or bound by, and none of its assets and properties are
subject to, any:
(a) contract not made in the Ordinary Course of Business;
(b) employment, consulting, or representation contract;
(c) contract with any labor union or association;
(d) bonus, pension, profit sharing, retirement, stock purchase,
stock option, hospitalization, insurance or other plan or agreement providing
employee benefits;
(e) lease with respect to any property, real or personal,
whether as lessor or lessee, providing for an annual rental in excess of
$10,000;
(f) continuing contract which involves payments by SunRise of in
excess of $10,000 individually or $50,000 in the aggregate;
(g) contract or commitment for any capital expenditures
exceeding $10,000 individually or in the aggregate; or
(h) any executory contract for the provision of services by
SunRise exceeding $50,000 in any year.
A complete and correct copy of each contract listed on Schedule 4.14
hereto or on any other Schedule attached hereto (collectively, the "Contracts")
has been provided to Printrak, and each such contract is in full force and
effect and neither SunRise nor, to the best knowledge of SunRise, any of the
other parties thereto are in default thereunder.
Each of such Contracts so listed, or required to be so listed, is a
valid and binding obligation of SunRise and the other parties thereto,
enforceable in accordance with its terms, except as may be affected by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally and general principles of equity relating to the availability of
equitable remedies. Except as otherwise set forth in Schedule 4.14 hereto,
there have not been any defaults by SunRise or, to the best knowledge of
SunRise, defaults or any claims of default or claims of nonenforceability by the
other party or parties which, individually or in the aggregate, would have a
Material Adverse Effect, and there are no facts or conditions that have occurred
or that are anticipated to occur which, through the passage of time or the
giving of notice, or both, would constitute a default by SunRise, or to the best
knowledge of SunRise, by the other party or parties, under any of such Contracts
which default would have a Material Adverse Effect or would cause a creation of
a lien, security interest or encumbrance which would have a Material Adverse
Effect upon any of the assets of SunRise or otherwise materially and adversely
affect any of the assets of SunRise or the Business.
4.15 INTELLECTUAL PROPERTY. Attached hereto as Schedule 4.15 is an
accurate list and description of all patents, patent applications, patent
licenses, copyrights, copyright licenses, trademarks, trademark applications and
trademark licenses, and other trade secrets, know-how or intellectual property
rights (the "Intellectual Property") owned, held, utilized or applied for by
SunRise. Except as set forth on Schedule 4.15, SunRise owns all Intellectual
Property rights that are required for the conduct of its business as presently
conducted, such rights are sufficient for such conduct of its business as
presently conducted, and no royalties, honoraria, fees or other payments are
payable with respect to such Intellectual Property. Except as set forth in
Schedule 4.15 hereto:
(a) SunRise has not infringed, is not now infringing, and has no
knowledge of any infringement or claimed infringement by SunRise of any patent,
patent right, copyright, trademark, trademark right, trade secret or other
intellectual property right of others;
(b) neither SunRise nor the Principal Shareholders have any
knowledge of any infringement of the patents, patent rights, copyrights,
trademarks, trademark rights, trade secrets, or other intellectual property
rights of, or under license to, SunRise, nor of pending or threatened opposition
proceedings relating to any pending or contemplated patent or trademark
application of SunRise;
(c) neither SunRise nor the Principal Shareholders have any
knowledge of any threatened or contemplated cancellation or revocation of any
agreement granting to SunRise any patent, copyright or trademark license or
right; or
(d) in no instance has the eligibility of any copyright to any
material property included in the Intellectual Property been forfeited to the
public domain by omission of any required notice or any other action.
All personnel, including employees, agents and consultants, who have
contributed to or participated in the conception and development of Intellectual
Property on behalf of SunRise, whether prior or subsequent to the incorporation
of SunRise, either (i) have been party to a "work-for-hire" arrangement or
agreement with SunRise, in accordance with applicable federal and state law,
that has accorded SunRise full, effective, exclusive and original ownership of
all Intellectual Property thereby arising, or (ii) have executed appropriate
instruments of assignment in favor of SunRise as assignee that have conveyed to
SunRise full, effective and exclusive ownership of all Intellectual Property
thereby arising. SunRise has validly and effectively obtained the right and
license to use, copy, modify and distribute any third-party programming and
materials contained in SunRise's software programs and related technical
documentation pursuant to contracts listed on Schedule 4.15. SunRise has no
obligation for royalties, fees, payments or other obligations to any third party
except as expressly set forth in Schedule 4.15. SunRise's software programs and
related technical documentation do not contain derivative works of any
programming or materials not owned in their entirety by SunRise.
4.16 INSURANCE. Schedule 4.16 contains an accurate description
(including liability limits, deductibles and coverage exclusions) of all
policies of fire, general liability, property, worker's compensation, errors and
omissions and other forms of insurance maintained by or on behalf of SunRise in
connection with the business of SunRise. Except as set forth in Schedule 4.16
hereto, all of such policies are now in full force and effect and policies
covering the same risks and in substantially the same amounts have been in full
force and effect continuously since the commencement of business by SunRise.
SunRise has not received any notice of cancellation or material amendment of any
such policies; to the best knowledge of SunRise no coverage thereunder is being
disputed; and all material claims thereunder have been filed in a timely
fashion.
4.17 LICENSES, PERMITS, ETC. Attached hereto as Schedule 4.17 is a
list and description of all material licenses, franchises, permits, easements,
certificates, consents, rights and privileges, and governmental authorizations
(collectively, "Licenses") held by SunRise in connection with the conduct of the
business of SunRise as presently conducted and all such Licenses which are
required to be maintained in connection with the operation of the business of
SunRise as presently conducted but are not so maintained by SunRise. All such
items are in full force and effect and complete and correct copies thereof have
been furnished to Printrak. SunRise is in compliance in all material respects
with all conditions or requirements imposed by or in connection with such
licenses
and permits and with respect to its operation of the Business, and SunRise has
not received any notice, nor does SunRise have any knowledge or reason to
believe, that any governmental authority intends to cancel, terminate or modify
any of such Licenses or Permits or that valid grounds for any such cancellation,
termination or modification currently exist.
4.18 LITIGATION. Except as set forth in Schedule 4.18 hereto, there
is neither (a) any action, suit, proceeding or investigation, nor (b) any
counter or cross-claim in an action brought by or on behalf of SunRise, whether
at law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, that is pending or, to the best knowledge of SunRise,
threatened, against SunRise, which (i) could reasonably be expected to affect
adversely SunRise's ability to perform its obligations under this Agreement or
the Related Agreements or complete any of the transactions contemplated hereby
or thereby, or (ii) involves the reasonable possibility of any judgment or
liability against Printrak, Merger Sub, SunRise or any of the assets of SunRise
prior to or subsequent to the Effective Time of the Merger which could
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Schedule 4.18, neither of SunRise nor any of the Principal Shareholders is
subject to any judgment, order, writ, injunction or decree of any court,
arbitrator or governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over SunRise, any of its assets or the
Business.
4.19 COMPLIANCE WITH LAWS. Since the date of its incorporation
SunRise has complied in all material respects with all applicable foreign,
federal, state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations, including, without limitation, those
imposing taxes, in every applicable jurisdiction, in respect of the ownership of
its assets and properties and the conduct of its business where the effect of
failure to so comply would have a Material Adverse Effect. Except as disclosed
in Schedule 4.19 hereto, and without limiting the generality of this Section
4.19, there are no unresolved (i) proceedings or investigations instituted or,
to the best knowledge of SunRise, threatened, by any such governmental
authorities against SunRise or relating to the business of SunRise, or (ii)
citations issued or, to the best knowledge of SunRise, threatened against
SunRise or the business of SunRise by any governmental authorities, or (iii)
other notices of deficiency or charges of violation brought or, to the best
knowledge of SunRise, threatened against SunRise or the business of SunRise,
including under any federal or state regulation or otherwise, which could have,
individually or in the aggregate, a Material Adverse Effect; and, to the best
knowledge of SunRise, there are no facts or circumstances upon which any such
proceedings, investigations, citations, notices, disallowances or charges may be
instituted, issued or brought hereafter.
4.20 EMPLOYEES. Attached hereto as Schedule 4.20 is a list of the
names and annual rates of salary and other compensation of all the present
officers, directors, employees, and agents of SunRise. Schedule 4.20 hereto
summarizes the bonus, profit sharing, incentive, percentage compensation,
vacation and other like benefits, if any, payable to such officers, directors,
employees, agents and other independent contractors of SunRise as of the date
hereof. Except as set forth on Schedule 4.20 or as expressly contemplated by
this Agreement, SunRise is not a party to any employment agreement, consulting
agreement, or independent contractor agreement, whether written or oral, with
any person. Except as set forth on Schedule 4.20, the transactions contemplated
by this Agreement will not trigger any obligations of SunRise under any
employment, severance or other agreement, whether written or oral, with any of
SunRise's employees, agents or independent contractors, nor will they give rise
to any form of indemnity, claim or right to or of any employee, agent
or independent contractor of SunRise under any agreement, law, rule or
regulation, whether as a change in the condition of employment of such employee,
agent or independent contractor or otherwise. There are no claims, actions,
suits, proceedings, or investigations pending, or to the best knowledge of
SunRise and the Principal Shareholders, threatened against SunRise or any of its
officers, directors, employees, agents or independent contractors in regard to
race, creed, gender, age or other forms of discrimination, sexual harassment,
wrongful discharge, or any other similar allegations which in any such case
could have a Material Adverse Effect on SunRise.
4.21 EMPLOYEE BENEFIT PLANS. Schedule 4.21 hereto contains a complete
list of SunRise's Employee Plans. True, correct and complete copies or
descriptions of such Employee Plans have been delivered to Printrak. For
purposes of this Section 4.21, the term "Employee Plan" includes all present
(including those terminated or transferred within the past five (5) years)
plans, programs, agreements, arrangements, and methods of contribution or
compensation (including all amendments to and components of the same, such as a
trust with respect to a plan) providing any remuneration or benefits, other than
current cash compensation, to any current or former employee of SunRise or to
any other person who provides services to SunRise, whether or not such plan or
plans, programs, agreements, arrangements, and methods of contribution or
compensation are subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and whether or not such plan or plans, programs,
agreements, arrangements and methods of contribution or compensation are
qualified under the Tax Code. The term Employee Plan includes, but is not
limited to, pension, retirement, profit sharing, stock option, stock bonus, and
nonqualified deferred compensation plans and includes any Employee Plan that is
a multiemployer plan as defined in Section 3(37) of ERISA. The term Employee
Plan also includes, but is not limited to, disability, medical, dental, health
insurance, life insurance, incentive plans, vacation benefits, and fringe
benefits. Any and all tax returns, reports, forms or other documents required
to be filed by SunRise under applicable federal, state or local law with respect
to SunRise's Employee Plans have been timely filed and are correct and complete
in all material respects; and any and all amounts due by SunRise to any
governmental agency or entity with respect to the Employee Plans have been
timely and fully paid. Except as set forth in Schedule 4.21, all Employee Plans
are now, and have always been, established, maintained and operated in
accordance with all applicable laws (including, but not limited to, ERISA and
the Tax Code) and all regulations and interpretations thereunder and in
accordance with their plan documents. All communications with respect to each
Employee Plan by any person (including, but not limited, to the members of any
plan committee, all plan fiduciaries, plan administrators, SunRise and its
management, and SunRise's employees) accurately reflect the documents and
operations of each such Employee Plan. Each funded Employee Plan providing for
payment of deferred compensation is and always has been qualified under Section
401 of the Tax Code. The Internal Revenue Service has issued one or more
determination letters with respect to each funded Employee Plan stating that,
from the inception of each such Employee Plan, such Employee Plan has been and
is qualified under Section 401 of the Tax Code and each trust maintained in
connection with each such Employee Plan has been and is exempt under Section 501
of the Tax Code. Except as set forth in Schedule 4.21, there is no unfunded
liability for vested or nonvested benefits under any funded Employee Plan, and
all contributions required to be made to or with respect to each Employee Plan
have been completely and timely paid. All reports, forms and other documents
required to be filed with any governmental entity with respect to any Employee
Plan have been timely filed and, to the best knowledge of SunRise, are accurate.
There have been no filings with respect to any Employee Plan with the Pension
Benefit Guaranty Corporation ("PBGC"). No liability to the PBGC has been
incurred or is expected with respect to any Employee Plan except for insurance
premiums, and all insurance premiums incurred or accrued up to and
including the Closing Date have been or will be timely paid by SunRise. No
amount is, and as of the Closing Date no amount will be, due or owing from
SunRise to any "multiemployer plan" (as defined in Section 3(37) of ERISA) on
account of any withdrawal therefrom. There has been no event or condition, nor
is any event or condition expected, that would present a risk of termination of
any Employee Plan, or which would constitute a "reportable event" within the
meaning of Section 404(3) of ERISA and the regulations and interpretations
thereunder. There has been no merger, consolidation, or transfer of assets or
liabilities (including, but not limited to, a split-up or split-off) with
respect to any Employee Plan. There is and there has been no actual or, to the
best knowledge of SunRise, anticipated, threatened or expected litigation or
arbitration concerning or involving any Employee Plan. No complaints to or by
any governmental entity have been filed or, to the best knowledge of SunRise,
have been threatened or are expected with respect to any Employee Plan. No
Employee Plan or any other person has any liability to any plan participant,
beneficiary or other person under any provision of ERISA, the Tax Code or any
other applicable law by reason of any transaction as described in Section 406 of
ERISA and Section 4975 of the Tax Code with respect to any Employee Plan. No
Employee Plan provides medical benefits to one or more former employees
(including retirees), other than benefits required to be provided under Section
4980B of the Tax Code. There is no contract, agreement or benefit arrangement
covering any employee of Seller which individually or collectively would
constitute an "excess parachute payment" under Section 280G of the Tax Code.
4.22 BANK ACCOUNTS AND POWERS OF ATTORNEY. Attached hereto as
Schedule 4.22 is a list setting forth:
(a) the name of each bank, savings and loan or other financial
institution in which SunRise has any account or safe deposit box, the account
name and number of each such account or safe deposit box, and the names of all
persons authorized to draw thereon or have access thereto; and
(b) the name of each person, corporation, firm association, or
business entity or enterprise holding a general or special power of attorney
from SunRise and a summary of the terms thereof.
4.23 PRODUCT WARRANTIES AND LIABILITIES. Except as set forth on
Schedule 4.23 attached hereto, SunRise has not given or made any express
warranties to third parties with respect to any services performed or products
sold by it, and except for the warranties contained in certain of the contracts
listed in Schedule 4.14. Neither SunRise nor the Principal Shareholders has any
knowledge of any fact or of the occurrence of any event forming the basis of any
present or future claim against SunRise not fully covered by insurance, for
liability on account of products liability or on account of any express or
implied product warranty, except for warranty obligations and product returns in
the Ordinary Course of Business and as set forth on Schedule 4.23.
4.24 LABOR MATTERS. SunRise is not a party to a collective bargaining
agreement with any labor union or association. There are no discussions,
negotiations, demands or proposals which are pending or have been conducted or
made with or by any labor union or association since the incorporation of
SunRise, and there are no pending or threatened labor disputes, strikes, or work
stoppages which may have a Material Adverse Effect. SunRise is in substantial
compliance with all foreign, federal and state laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
and is not engaged in any unfair labor practices.
4.25 QUESTIONABLE PAYMENTS. SunRise has not made, and neither SunRise
nor the Principal Shareholders has any knowledge or information that any
shareholder, officer, director, employee, agent or other representative acting
on its behalf has made, directly or indirectly, any bribes, kickbacks, or
political contributions with corporate funds, payments from corporate funds not
recorded on the books and records of SunRise, payments from corporate funds
which were falsely recorded on the books and records of SunRise, payments from
corporate funds to governmental officials in their individual capacities or
illegal payments from corporate funds to obtain or retain business either within
the United States of America or abroad.
4.26 BROKERS. Except as set forth on Schedule 4.26, SunRise is not a
party to or in any way obligated under any contract or other agreement
regarding, and there are no outstanding claims against it for the payment of,
any broker's or finder's fee in connection with the origin, negotiation,
execution, or performance of this Agreement or the transactions contemplated
hereby.
4.27 CONFLICT OF INTEREST. Except as set forth in Schedule 4.27, no
Principal Shareholder, officer, director, consultant or contractor of SunRise or
any Member of the Immediate Family of any such person:
(a) has any direct or indirect interest in (A) any entity which
does business with SunRise, or (B) any property, asset or right which is used by
SunRise in the conduct of its business;
(b) has any contractual relationship with SunRise other than
with respect to the performance of services as an officer or director; or
(c) has been involved in any transaction with SunRise during the
past three (3) years other than with respect to the performance of service as an
officer or director as to the issuance of securities of SunRise.
4.28 BOOKS AND RECORDS. The books and records of SunRise are in all
material respects complete and correct and have been maintained in accordance
with good business practice and generally accepted accounting principles and
reflect a true record of all meetings or proceedings of its Board of Directors
and shareholders.
4.29 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in
Schedule 4.29, SunRise has complied with, and the operation of the Business is
in compliance with, in all material respects, all federal, state, local and
regional statutes, laws, ordinances, rules, regulations and orders relating to
the protection of human health and safety, natural resources or the environment,
including, but not limited to, air pollution, water pollution, noise control,
on-site or off-site hazardous substance discharge, disposal or recovery, toxic
or hazardous substances, training, information and warning provisions relating
to toxic or hazardous substances, and employee safety relating to or adversely
affecting the Business or SunRise's assets (collectively the "Environmental
Laws"); and no notice of violation of any Environmental Laws or of any permit,
license or other authorization relating thereto has been received, nor is any
such notice pending or, to the best knowledge of SunRise, threatened. Except as
set forth in Schedule 4.29, (i) except in compliance with applicable
Environmental Laws and any licenses or permits relating thereto, there has been
no generation, use treatment, storage, transfer, disposal, release or threatened
release, in, at, under, from, to or into, or on such properties of toxic or
hazardous substances during the ownership or occupancy thereof by SunRise or, to
the best knowledge of SunRise, prior to such ownership or occupancy, and (ii) in
no event has there been any generation, use, treatment, storage, transfer,
disposal, release or threatened release, in, at, under, from, to or into, or on
such properties of toxic or
hazardous substances that has resulted in or is reasonably likely to result in a
Material Adverse Effect. For the purposes of this Section 4.29, "toxic or
hazardous substances" shall include any material, substance or waste that,
because of its quantity, concentration or physical or chemical characteristics,
is deemed under any federal, state, local or regional statute, law, ordinance,
regulation or order, or by any governmental agency pursuant thereto, to pose a
present or potential hazard to human health or safety or the environment,
including, but not limited to, (i) any material, waste or substance which is
defined as a "hazardous substance" pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (42 U.S.C. Section 9601, ET
SEQ.), as amended, and its related state and local counterparts, (ii) asbestos
and asbestos containing materials and polychlorinated biphenyls, and (iii) any
petroleum hydrocarbon including oil, gasoline (refined and unrefined) and their
respective constituents and any wastes associated with the exploration,
development or production of crude oil, nature gas or geothermal energy.
4.30 CONFIDENTIALITY. Except as otherwise indicated on Schedule 4.30,
since the date of incorporation of SunRise, SunRise has taken adequate steps
necessary to maintain the continuing protection of its proprietary, confidential
and trade secret information and Intellectual Property, which protections
include, but are not limited to, having every SunRise employee who has access to
proprietary or confidential information sign a nondisclosure and inventions
assignment agreement, true and correct copies of which have been delivered to
Printrak, containing standard provisions that are adequate to maintain the
confidentiality of SunRise's proprietary, confidential and trade secret
information and Intellectual Property.
4.31 SECURITIES LAW COMPLIANCE. SunRise and the Principal
Shareholders represent and warrant that all communication with respect to the
transaction contemplated hereby among Printrak, SunRise, Merger Sub, the SunRise
Shareholders, the SunRise option holders and warrant holders, and employees and
agents of any of them has been made to or by such parties only within California
and Idaho.
4.32 OPERATIONAL RESTRICTIONS. Neither SunRise nor the Principal
Shareholders are a party to any undisclosed agreement or instrument or subject
to any undisclosed charter or other corporate restriction or any undisclosed
judgment, order, writ, injunction, decree, or order, which materially adversely
affects, or in the future could adversely affect, the Business, or any of the
assets of the Business or the ability of SunRise to consummate the transactions
contemplated by this Agreement.
4.33 FULL DISCLOSURE. All of the representations and warranties made
by SunRise and the Principal Shareholders in this Agreement, and all statements
set forth in the certificates delivered by SunRise at the Closing pursuant to
this Agreement, are true, correct and complete in all material respects and do
not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make such representations, warranties or
statements, in light of the circumstances under which they were made,
misleading.
5. REPRESENTATIONS AND WARRANTIES OF PRINTRAK AND MERGER SUB. Printrak
and Merger Sub, jointly and severally, represent and warrant to and agree with
SunRise that:
5.1 ORGANIZATION AND EXISTENCE. Each of Printrak and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and California, respectively, and has all requisite
corporate power to carry on its business as now conducted and to perform its
obligations under this Agreement.
5.2 AUTHORITY AND BINDING EFFECT. Printrak has the full corporate
power and authority to execute and deliver this Agreement and the Related
Agreements and to consummate the transactions contemplated by, and comply with
its obligations under, such agreements. This Agreement, the Related Agreements
and the consummation by Printrak of its obligation herein and therein, have been
duly authorized by all necessary corporate action of Printrak. This Agreement
has been, and at the Closing each of the Related Agreements will be, the valid
and binding agreement of Printrak, enforceable in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
moratorium or other similar laws affecting creditors' rights generally and (ii)
general principles of equity relating to the availability of equitable remedies.
No further action is required to be taken by Printrak, nor it is necessary for
Printrak to obtain any action, approval or consent by or from any third persons,
governmental or other, to enable Printrak to enter into or perform its
obligations under this Agreement and the Related Agreements. The execution and
delivery of this Agreement and consummation hereof do not and will not violate
any provision of any judicial or governmental decree, order, or judgment or
conflict with, or result in a breach of or constitute a default under, the
Certificates of Incorporation or Bylaws of either Printrak or Merger Sub or any
agreement or instrument to which either of them is a party or by which either is
bound.
5.3 CAPITAL STOCK OF MERGER SUB. The authorized capital stock of
Merger Sub consists of 4,000,000 shares of Common Stock, 4,000,000 of which
shares are validly issued and outstanding, fully paid and nonassessable, and
owned by Printrak as of the date hereof.
5.4 INVESTMENT INTENT. The SunRise Stock to be acquired by Printrak
as a result of the Merger is being and will be acquired by Printrak for its own
account for investment and not with any present intention of distribution
thereof.
5.5 BROKERS. Neither Printrak nor Merger Sub is a party to or in any
way obligated under any contract or other agreement regarding, and there are no
outstanding claims against either of them for the payment of, any broker's or
finder's fee in connection with the origin, negotiation, execution, or
performance of this Agreement or the transactions contemplated hereby.
5.6 FULL DISCLOSURE. All of the representations and warranties made
by Printrak in this Agreement, and all statements set forth in the certificates
delivered by Printrak at the Closing pursuant to this Agreement, are true,
correct and complete in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make such representations, warranties or statements, in light of the
circumstances under which they were made, misleading.
6. COVENANTS OF SUNRISE AND PRINCIPAL SHAREHOLDERS. SunRise and the
Principal Shareholders covenant with Printrak and Merger Sub that:
6.1 CONDUCT OF BUSINESS. Except as specifically contemplated in this
Agreement, from the date of this Agreement to the Effective Time of the Merger,
the business of SunRise will be
operated only in the Ordinary Course of Business, and, in particular, SunRise,
without the prior written consent of Printrak, which will not be unreasonably
withheld, will not:
(a) cancel or permit any insurance of a material nature to lapse
or terminate, unless renewed or replaced by like coverage;
(b) change its Articles of Incorporation or Bylaws;
(c) be in material default under any material contract,
agreement, commitments or undertaking of any kind;
(d) violate or fail to comply with any laws applicable to it or
its properties or business where the effect of the failure to so comply would
have a Material Adverse Effect;
(e) commit any act or permit the occurrence of any event or the
existence of any condition of the type described in clauses (a) through (s) of
Section 4.7;
(f) enter into any contract, agreement or other commitment of
the type described in clauses (a) through (e) and (g) of Section 4.14 hereof;
(g) fail to maintain and repair any material amount of its
assets in accordance with good standards of maintenance and as required in any
leases or other agreements pertaining thereto;
(h) acquire, purchase, or redeem any SunRise Stock;
(i) issue or enter into any subscriptions, options, agreements
or other binding commitments in respect of the issuance, transfer, sale,
registration, or encumbrance of any shares of SunRise Stock; or
(j) cause or voluntarily permit a change in any method of
accounting for tax purposes during or applicable to its current tax year which
would render inaccurate, misleading or incomplete the information concerning
Taxes set forth or referred to in Section 4.11 hereof, or that would have a
Material Adverse Effect for any period prior to the Effective Time of the
Merger.
6.2 ACCESS TO INFORMATION. From and after the date of this
Agreement, SunRise shall give to Printrak, its counsel, accountants, engineers,
and other representatives, reasonable access to all the properties, books,
contracts, commitments and records of SunRise so that Printrak may have the
opportunity to make such investigation as it reasonably deems necessary,
provided that such investigation shall not (i) unreasonably interfere with the
employees, business, or operations of SunRise, or (ii) violate any governmental
regulations or laws or any customers or vendor confidentiality agreements now in
effect and to which SunRise is a party. Any such investigation shall not affect
the representations and warranties of SunRise contained in this Agreement.
6.3 PRESERVATION OF GOODWILL. SunRise will use its best efforts to
preserve its business organization, to keep available to Printrak the services
of the respective officers and employees of SunRise and to preserve for Printrak
the goodwill of all suppliers, customers, and others having business relations
with SunRise.
6.4 SHAREHOLDERS' APPROVAL. This Agreement and the transactions
contemplated hereby have been approved by the Board of Directors of SunRise.
The Board of Directors of SunRise shall solicit the unanimous written consent or
call a special meeting of its shareholders for the purpose of approving the
terms and provisions of this Agreement and the Merger as soon as practicable
after the date hereof. The Board of Directors of SunRise shall recommend that
SunRise's shareholders approve this Agreement and the Merger, and shall endeavor
to secure such approval. The Principal Shareholders shall vote all shares owned
by them in favor of approval of this Agreement and the Merger.
6.5 TRADE SECRETS. From and after the date hereof, SunRise will not
use or divulge to any competitor of SunRise or any unauthorized person, and will
use its best efforts to insure that the employees and agents of SunRise do not
use or divulge, any confidential information, trade secrets, processes, formulas
or know-how relating to the business or properties of SunRise at the date
hereof.
6.6 PREPARATION OF INFORMATION STATEMENT. SunRise will prepare, with
the cooperation of Printrak, an information statement (the "Information
Statement") and notice of shareholders meeting to be distributed to SunRise
Shareholders in connection with a meeting of the SunRise Shareholders to be
called to consider and vote upon the Merger. Except as may be consented to by
Printrak, which consent will not be unreasonably withheld, SunRise agrees not to
publish any communication other than the Information Statement in respect of
this Agreement or the Merger. SunRise agrees to submit to Printrak for its
prior review all proxy soliciting material.
6.7 TRANSACTION EXPENSES. The SunRise Shareholders will pay, on a
pro rata basis according to their ownership of shares, all expenses incurred by
them or SunRise in connection with the negotiation, execution and performance of
this Agreement or any other agreements executed in connection with this
transaction, whether or not the transactions contemplated hereby are
consummated, including the fees and expenses of counsel and brokers, if any, for
SunRise and the SunRise Shareholders, and including any amounts payable pursuant
to Section 9.5. Printrak will pay all fees and expenses incurred by it in
connection with the negotiation, execution and performance of this Agreement or
any other agreement or transaction, whether or not the transactions contemplated
hereby are consummated, including the fees and expenses of counsel and brokers,
if any, for Printrak and Merger Sub.
6.8 FURTHER ASSURANCES. SunRise hereby agrees to execute and deliver
from time to time at the request of Printrak and without consideration such
additional instruments of conveyance and transfer and to take such other actions
as Printrak may reasonably require to more effectively carry out and effectuate
the Merger and the transactions contemplated hereby.
7. MUTUAL COVENANTS. Printrak, Merger Sub, and SunRise covenant and
agree, each with the other, that:
7.1 PUBLIC ANNOUNCEMENTS. Neither Printrak nor SunRise shall make
any public announcement or statement with respect to this Agreement or the
Merger without the prior written consent of the other party; provided, however,
SunRise and Printrak may disclose the existence and terms of this Agreement or
the Merger if, in its judgment, it is required to do so under applicable
securities laws. If any party desires to make a joint announcement or
statement, the parties will consult
with each other and exercise reasonable efforts to agree upon the text of a
joint public announcement or statement to be made by Printrak and SunRise.
7.2 REASONABLE EFFORTS TO SATISFY CONDITIONS. Consistent with
applicable law and with their fiduciary duties to their respective shareholders,
(i) SunRise agrees to use its best efforts to bring about the satisfaction of
the covenants and conditions specified in Sections 6, 7, 9 and 10 hereof, and
(iii) Printrak and Merger Sub agree to use their best efforts to bring about the
satisfaction of the covenants and conditions specified in Sections 7, 8 and 10
hereof.
8. CONDITIONS TO OBLIGATIONS OF SUNRISE. The obligations of SunRise
under this Agreement shall, at the option of SunRise, be subject to the
following conditions:
8.1 PRINTRAK'S AND MERGER SUB'S REPRESENTATIONS AND WARRANTIES TRUE
AT CLOSING. SunRise shall not have discovered any material error, misstatement
or omission in the representations and warranties made by Printrak and Merger
Sub in Section 5 hereof; the representations and warranties made by Printrak and
Merger Sub herein shall be deemed to have been made again at and as of the time
of Closing and shall then be true in all material respects; Printrak and Merger
Sub shall have performed and complied with all agreements and conditions
required by this Agreement to be performed by them at or prior to the Closing;
and SunRise shall have received a certificate, dated the Closing Date, of the
President or a Vice President of each of Printrak and Merger Sub to the effect
set forth in this Section 8.1.
8.2 CERTIFICATES. SunRise shall have received the following
documents:
(a) A Certificate of Good Standing, as of a recent date, from
the California Secretary of State, a Tax Clearance Certificate from the
California Franchise Tax Board and the State Board of Equalization indicating
that Printrak is not delinquent in the payment of income, franchise, sales or
other state taxes or the filing of any tax returns, similar certificates from
the appropriate Delaware agencies and a Certificate of Good Standing, as of a
recent date, from the California Secretary of State, a Tax Clearance Certificate
from the California Franchise Tax Board and the State Board of Equalization
indicating that Merger Sub is not delinquent in the payment of income,
franchise, sales or other state taxes or the filing of any tax returns;
(b) A certificate signed by a duly authorized officer of
Printrak and Merger Sub and dated as of the Closing Date, certifying that (i)
all representations and warranties of such parties were true and correct in all
material respects when made and remain true and correct in all material respects
as of the Closing Date; (ii) all of the respective covenants, agreements,
obligations and conditions of such parties required to have been performed as of
or prior to the Closing have been in all material respects fully performed and
complied with; and (iii) all of the conditions to SunRise's obligations under
this Agreement required to be satisfied by such parties by the Closing Date have
been satisfied and fulfilled in all material respects;
(c) A certificate signed by the Secretary of Printrak and Merger
Sub and dated as of the Closing Date, as to the incumbency of each officer of
Printrak and Merger Sub executing this Agreement and the other agreements being
delivered pursuant hereto, and certifying the effectiveness, accuracy and
completeness of the copies attached to such certificate of resolutions duly
adopted by the Board of Directors of Printrak and Merger Sub authorizing the
execution and delivery of
this Agreement by Printrak and Merger Sub, and the performance by Printrak and
Merger Sub of its obligations hereunder and the consummation of the transactions
contemplated hereby;
9. CONDITIONS TO OBLIGATIONS OF PRINTRAK AND MERGER SUB. The obligations
of Printrak and Merger Sub under this Agreement shall, at the option of Printrak
and Merger Sub, be subject to the following conditions:
9.1 SUNRISE'S REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING.
Printrak and Merger Sub shall have not discovered any material error,
misstatement, or omission in the representations and warranties made by SunRise
in Section 4 hereof; provided, however, that no such representation or warranty
shall be deemed materially incorrect if (i) it results from the consummation of
any transactions specifically permitted or contemplated by this Agreement, (ii)
it is not materially adverse and significant to the business, financial
condition, or operations of SunRise taken as a whole, or (iii) its effect could
not reasonably be expected to have a Material Adverse Effect. SunRise shall
have performed and complied in all material respects with all material
agreements required by this Agreement to be performed or complied with by it at
or prior to the Closing.
9.2 OPINION OF SUNRISE'S COUNSEL. Printrak shall have received an
opinion of Wise & Shepherd, counsel for SunRise, dated the Closing Date,
substantially in the form and to the effect of Exhibit D hereto.
9.3 NO DAMAGE OR DESTRUCTION. Prior to Closing there shall not have
occurred any casualty to any facility, property, or equipment owned or used by
SunRise which could reasonably be expected to have a Material Adverse Effect.
9.4 CERTIFICATES. Printrak shall have received the following
documents:
(a) A Certificate of Good Standing, as of a recent date, from
the California Secretary of State, a Tax Clearance Certificate from the
California Franchise Tax Board and the State Board of Equalization and similar
certificates of the appropriate state agencies of each other state in which
SunRise is qualified to do business, indicating that SunRise is not delinquent
in the payment of income, franchise, sales or other state taxes or the filing of
any tax returns; and a Certificate of Good Standing, as of a recent date, from
the Idaho Secretary of State, a Tax Clearance Certificate from the Idaho
Franchise Tax Board and the State Board of Equalization and similar certificates
of the appropriate state agencies of each other state in which SunRise is
qualified to do business indicating that SunRise Design is not delinquent in the
payment of income, franchise, sales or other state taxes or the filing of any
tax returns;
(b) A certificate signed by a duly authorized officer of SunRise
and by the Principal Shareholders and dated as of the Closing Date, certifying
that (i) all representations and warranties of such parties were true and
correct in all material respects when made and remain true and correct in all
material respects as of the Closing Date; (ii) all of the respective covenants,
agreements, obligations and conditions of such parties required to have been
performed as of or prior to the Closing have been in all material respects fully
performed and complied with; and (iii) all of the conditions to Printrak's
obligations under this Agreement required to be satisfied by such parties by the
Closing Date have been satisfied and fulfilled in all material respects;
(c) A certificate signed by the Secretary of SunRise, and dated
as of the Closing Date, as to the incumbency of each officer of SunRise
executing this Agreement and the other agreements being delivered pursuant
hereto, and certifying the effectiveness, accuracy and completeness of the
copies attached to such certificate of resolutions duly adopted by SunRise's
Board of Directors and all of its shareholders, as the case may be, authorizing
the execution and delivery of this Agreement by SunRise, and the performance by
SunRise of its obligations hereunder and the consummation of the transactions
contemplated hereby;
(d) If available, a Certificate of Release from the appropriate
state Employment Authority of each state in which SunRise and SunRise Design has
employees stating that, as of a date not more than thirty (30) days prior to the
Closing Date, no contributions, interest or penalties are due by SunRise or
SunRise Design to that Employment Authority; and
(e) Consents to the assignment of all agreements, licenses
and/or permits listed or required to be listed on Schedules 4.2 and 4.17 hereto.
9.5 RELEASE OF LIABILITY FOR TRANSACTION FEES. SunRise shall have
delivered or caused to be delivered to Printrak, at least five days before the
Closing, releases from each individual or entity listed on Schedule 4.26. Such
release shall (i) state the amount due upon completion of this transaction; (ii)
acknowledge that such amount shall be paid by the SunRise Shareholders from the
proceeds of this transaction; and (iii) release Printrak and SunRise from any
and all claims relating to non-payment of such amount or any other amounts, and
shall be substantially in the form attached hereto as Exhibit E.
9.6 WAIVER OF RIGHT OF FIRST REFUSAL. SunRise shall have delivered
or caused to be delivered to Printrak, on or before the Closing, a waiver of any
and all existing rights of first refusal to purchase SunRise Stock, executed by
the holder of such rights, substantially in the form attached hereto as Exhibit
F.
9.7 CANCELLATION OF WARRANTS AND OPTIONS. SunRise shall have
delivered to Printrak, at or before the Closing, a statement verifying that such
warrants and options have been cancelled and no additional consideration is due.
9.8 ASSIGNMENTS OF RIGHTS TO TECHNOLOGY. SunRise shall have
delivered or caused to be delivered to Printrak, at or before the Closing,
instruments of assignment or release, in form reasonably acceptable to Printrak
and its counsel, duly executed and delivered by each of the Principal
Shareholders and all employees or consultants who were involved in the
development of SunRise's technology, hired by SunRise prior to its incorporation
date.
9.9 UCC TERMINATION STATEMENTS; REMOVAL OF LIENS. SunRise shall have
delivered or caused to be delivered to Printrak, at or before the Closing, UCC
Termination Statements and such other releases as Printrak may reasonably
request, duly completed and executed by each person having any security
interest, lien, claim or other encumbrances or adverse interests in or on any of
the assets of SunRise listed on Schedule 9.9 hereto, in order to evidence the
termination thereof. SunRise shall have provided evidence satisfactory to
Printrak that all Liens listed on Schedule 4.6 shall have been released by the
holder thereof.
9.10 NO MATERIAL ADVERSE CHANGES. There shall have been no change in
the business, financial condition, or results of operations of SunRise since the
date hereof which has had a Material Adverse Effect or could reasonably be
expected to have a Material Adverse Effect.
9.11 BLUE SKY MATTERS. All state securities law and blue sky act
permits or approvals required to carry out the transactions contemplated hereby
shall have been received.
9.12 SUNRISE SHAREHOLDERS' APPROVAL. At least ninety-five percent
(95%) of the SunRise Shareholders shall have approved the terms and provisions
of this Agreement and of the Merger at the special meeting of SunRise
Shareholders called by SunRise or by written consent pursuant to Section 6.4
hereof in accordance with applicable provisions of the Code and the Articles of
Incorporation and Bylaws of SunRise.
9.13 NON-COMPETITION AGREEMENT. Each of the Principal Shareholders
shall have executed and delivered Non-Competition Agreements, substantially in
the form attached hereto as Exhibit G, to Printrak.
9.14 ESCROW AGREEMENT. At least ninety-five percent (95%) of the
SunRise Shareholders shall have executed and delivered the Escrow Agreement,
substantially in the form attached hereto as Exhibit C, to Printrak.
9.15 EMPLOYMENT AGREEMENT. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
shall have executed and delivered to Printrak an Employment Agreement,
substantially in the form of Exhibit H and Exhibit I, respectively, attached
hereto.
9.16 RESIGNATIONS. Bram Kool and ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall each have
executed and delivered to Printrak a resignation from all positions as a
director or officer of, and as an employee of or consultant to, SunRise and its
subsidiaries substantially in the form of Exhibit J and Exhibit K, respectively,
attached hereto.
9.17 CONSENTS. SunRise shall have received the consent of all third
parties required under the terms of the Contracts in order to consummate the
transactions contemplated by this Agreement, and shall have delivered copies
thereof to Printrak.
9.18 CANCELLATION OF CREDIT LINES. SunRise shall provide Printrak
with evidence at the Closing that any and all lines of credit, loans, or other
financing arrangements have been paid in full and cancelled immediately prior to
the Effective Time of the Merger.
9.19 EVIDENCE OF PAYMENT OF OPTION EXERCISE PRICE. SunRise shall
provide Printrak at the Closing with a listing of all options which were
exercised since June 1, 1997 and evidence of payments made to SunRise pursuant
to the option agreements.
10. MUTUAL CONDITIONS TO OBLIGATIONS OF PRINTRAK, MERGER SUB AND SUNRISE.
The obligations of Printrak, Merger Sub and SunRise under this Agreement shall,
at the option of any of them, be subject to the following conditions.
10.1 APPROVALS. Printrak, Merger Sub and SunRise shall have received
any necessary consents to, or approvals of, the transactions contemplated by
this Agreement of any
governmental agencies and authorities, and such approvals and the transactions
contemplated hereby shall not have been contested by any federal or state
governmental authority by formal proceeding and no party hereto shall have any
knowledge of the existence of any fact or the occurrence of any event forming
the basis for a reasonable and good faith belief that such approvals or the
transactions contemplated hereby will be contested by any federal or state
governmental authority or by any other third party by formal proceeding.
10.2 NO LITIGATION. No material claim, action, suit, proceeding,
litigation, or investigation which challenges the consummation of the
transactions contemplated in this Agreement or which seeks to enjoin any of the
transactions contemplated herein, shall be instituted or threatened against any
party hereto by any governmental authority or by any other third party and no
party hereto shall have any knowledge of the existence of any fact or the
occurrence of any event forming the basis for a reasonable and good faith belief
that any such claim, action, suit, proceeding, litigation, or investigation will
be instituted or threatened against any party hereto.
10.3 NATURE OF STATEMENTS. All covenants, agreements, and statements
contained herein, in any Schedule hereto or in any certificate or other
instrument delivered by or on behalf of SunRise or Printrak and Merger Sub
pursuant to this Agreement or in connection with the transactions contemplated
hereby, shall be deemed representations and warranties by SunRise or Printrak
and Merger Sub, as the case may be.
10.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Except as otherwise
provided in this Agreement, all representations and warranties made in this
Agreement or in any certificate delivered pursuant hereto or otherwise shall
survive the consummation of the transactions contemplated hereby for a period of
eighteen (18) months following the Closing, at which time such representations
and warranties shall be terminated and extinguished (except for the
representations and warranties made in Sections 4.1 and 4.2, which shall not
expire, and the representations and warranties made in Section 4.11, which shall
survive all applicable statutes of limitations and extensions thereof granted by
SunRise), except insofar as the damaged party shall have asserted in writing a
specific claim setting forth the specific facts and circumstances relating
thereto with respect to such representations, warranties, covenants and
agreements prior to the expiration of such rights, in which event the party
liable shall remain liable with respect to such claim.
11. INDEMNITY.
11.1 INDEMNIFICATION OF PRINTRAK. Subject to the limitations
contained in this section, the persons and entities who are holders of
outstanding shares of SunRise Stock immediately prior to the Effective Time of
the Merger (the "SunRise Indemnitors") shall jointly and severally defend,
indemnify and hold harmless Printrak, its officers, directors, shareholders,
employees and agents from and against any and all losses, claims, judgments,
liabilities, demands, charges, suits, penalties, costs or expenses, including
court costs and attorneys' fees ("Claims and Liabilities") with respect to or
arising from (i) the breach of any warranty or any inaccuracy of any
representation made by SunRise or the Principal Shareholders, or (ii) the breach
of any covenant or agreement made by SunRise or the Principal Shareholders in
this Agreement.
11.2 LIMITATIONS. Anything to the contrary notwithstanding, (i)
Printrak shall not be indemnified and held harmless in respect of any Claims and
Liabilities which are covered by insurance
owned by SunRise and assigned to Printrak to the extent that any net loss is
reduced by such insurance, (ii) with the exception of the Principal Shareholders
who may be held severally liable for the total amount of any Claims and
Liabilities (up to the aggregate Merger Consideration received by such Principal
Shareholder), the liability of the SunRise Shareholders shall be limited to such
holder's Pro Rata Share of each Claim and Liability, (iii) the aggregate
liability of each holder of SunRise Stock (including the Principal Shareholders)
shall be limited to an aggregate amount equal to the aggregate Merger
Consideration received by such shareholder pursuant to Section 2.5 and Section
2.6 hereof, and (iv) notwithstanding anything to the contrary contained
elsewhere in this Agreement, the SunRise Indemnitors shall not be obligated to
defend and hold Printrak harmless with respect to (a) the first $100,000 of
Claims and Liabilities arising from any event described in Section 11.1(i) or
11.1(ii) (other than any Claims and Liabilities arising from the breach of any
warranty or any inaccuracy of any representation made by SunRise or the
Principal Shareholders as set forth in Sections 4.11 and 4.20, which shall not
be subject to this limitation) or (b) any claims made by Printrak after the
expiration of the time period referred to in Section 10.4.
11.3 INDEMNIFICATION OF SUNRISE. Printrak shall defend, indemnify and
hold harmless SunRise, and its officers, directors, shareholders, employees and
agents against and in respect to all Claims and Liabilities with respect to or
arising from (i) breach of any warranty or any inaccuracy of any representation
made by Printrak or Merger Sub, or (ii) breach of any covenant or agreement made
by Printrak or Merger Sub in this Agreement.
11.4 CLAIMS PROCEDURE. Promptly after the receipt by any indemnified
party (the "Indemnitee") of notice of the commencement of any action or
proceeding against such Indemnitee, such Indemnitee shall, if a claim with
respect thereto is or may be made against any indemnifying party (the
"Indemnifying Party") pursuant to this Section 11, give such Indemnifying Party
written notice of the commencement of such action or proceeding and give such
Indemnifying Party a copy of such claim and/or process and all legal pleadings
in connection therewith. The failure to give such notice shall not relieve any
Indemnifying Party of any of his or its indemnification obligations contained in
this Section 11, except where, and solely to the extent that, such failure
actually and materially prejudices the rights of such Indemnifying Party. Such
Indemnifying Party shall have, upon request within sixty (60) days after receipt
of such notice, but not in any event after the settlement or compromise of such
claim, the right (but not the duty) to defend, at his or its own expense and by
his or its own counsel, any such matter involving the asserted liability of the
Indemnitee; provided, however, that if the Indemnitee determines that, as a
result of an existing or prospective business relationship between such
Indemnitee or any of its subsidiaries on the one hand and any other party or
parties to such claim on the other hand, or as a result of other reasonable
circumstances, there is a reasonable probability that a claim may materially and
adversely affect him or it, other than solely as a result of money payments
required to be reimbursed in full by such Indemnifying Party under this Section
11, the Indemnitee shall have the right to defend, compromise or settle such
claim or suit; and, provided, further, that such settlement or compromise shall
not, unless consented to in writing by such Indemnifying Party, be conclusive as
to the liability of such Indemnifying Party to the Indemnitee. In any event,
the Indemnitee, such Indemnifying Party and his or its counsel shall cooperate
in the defense against, or compromise of, any such asserted liability, and in
cases where the Indemnifying Party shall have assumed the defense, the
Indemnitee shall have the right to participate in the defense of such asserted
liability at the Indemnitee's own expense. In the event that such Indemnifying
Party shall decline to participate in or assume the defense of such action,
prior to paying or settling any claim against which such Indemnifying Party is,
or may be, obligated under this Section 11 to indemnify an
Indemnitee, the Indemnitee shall first supply such Indemnifying Party with a
copy of a final court judgment or decree holding the Indemnitee liable on such
claim or, failing such judgment or decree, the terms and conditions of the
settlement or compromise of such claim. An Indemnitee's failure to supply such
final court judgment or decree or the terms and conditions of a settlement or
compromise to such Indemnifying Party shall not relieve such Indemnifying Party
of any of his or its indemnification obligations contained in this Section 11,
except where, and solely to the extent that, such failure actually and
materially prejudices the rights of such Indemnifying Party. If the
Indemnifying Party is defending the claim as set forth above, the Indemnifying
Party shall have the right to settle the claim only with the consent of the
Indemnitee; provided, however, that if the Indemnitee shall fail to consent to
the settlement of such a claim by the Indemnifying Party, which settlement (i)
the claimant has indicated it will accept, and (ii) includes an unconditional
release of the Indemnitee and its affiliates by the claimant and imposes no
material restrictions on the future activities of the Indemnitee and its
affiliates, the Indemnifying Party shall have no liability with respect to any
payment required to be made to such claimant in respect of such claim in excess
of the proposed amount of settlement. If the Indemnitee is defending the claim
as set forth above, the Indemnitee shall have the right to settle or compromise
any claim against it after consultation with, but without the prior approval of,
any Indemnifying Party; provided, however, that such settlement or compromise
shall not, unless consented to in writing by such Indemnifying Party, be
conclusive as to the liability of such Indemnifying Party to the Indemnitee.
11.5 TREATMENT OF INDEMNITY PAYMENTS. Any payment made to an
Indemnitee pursuant to Section 11.1 or the Escrow Agreement shall be treated as
a reduction in the consideration paid by Printrak in connection with the Merger.
11.6 AGREEMENT OF SUNRISE INDEMNITORS. By virtue of the approval of
the Merger by the SunRise Shareholders and the acceptance by the SunRise
Indemnitors of the consideration payable by Printrak to the SunRise Indemnitors
upon the Closing and consummation of the Merger as provided herein, the SunRise
Indemntors will, without the need for any further action on their part, have
agreed and consented to (i) their indemnification and other obligations under
this Section 11; (ii) all of the terms and conditions of the Escrow Agreement
and the establishment of the Escrow pursuant to the terms and conditions of this
Agreement and the Escrow Agreement to secure their indemnification obligations
under this Section 11; and (iii) the appointment of the Representative as the
SunRise Indemnitors' representative for purposes of this Section 11 and the
Escrow Agreement and as attorney-in-fact and agent for and on behalf of each
SunRise Indemnitor, and the taking by the Representative of any and all actions
and making of any decisions required or permitted to be taken or made by the
Representative on their behalf under this Section 11 or the Escrow Agreement.
SunRise agrees that, in connection with the solicitation of votes, proxies
and/or consents of SunRise Shareholders for the approval fo the merger, SunRise
will use its best efforts to ensure that each SunRise Shareholder (i) is advised
of the provisions of this Section, and (ii) agrees to be bound by the
provisions of this Section 11 and the Escrow Agreement.
12. TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval by the
shareholders of SunRise and Merger Sub:
(a) by the mutual consent of the respective Boards of Directors
of Printrak, Merger Sub, and SunRise;
(b) by the Board of Directors of Printrak if any condition to
the obligation of Printrak or Merger Sub under this Agreement to be complied
with or performed by SunRise at or before the Closing shall not have been
complied with or performed at the time required for such compliance or
performance and such noncompliance or nonperformance shall not have been waived
by Printrak;
(c) by the Board of Directors of SunRise if any condition to the
obligation of SunRise under this Agreement to be complied with or performed by
Printrak or Merger Sub at or before the Closing shall not have been complied
with or performed at the time required for such compliance or performance and
such noncompliance or nonperformance shall not have been waived by SunRise; or
(d) by the Board of Directors of either SunRise or Printrak if
the Closing shall not have been consummated on or before September 12, 1997
unless such failure has been caused by the breach of this Agreement by the party
securing such termination;
Notice of such termination by any party hereto pursuant to this
Section 13 shall be given as soon as practicable to the other parties hereto.
In the event of a termination of this Agreement pursuant to this Section 12,
this Agreement, and any further obligation of Printrak, SunRise and the
Principal Shareholders under this Agreement, shall terminate without any
obligation or liability of any party to any other parties hereto.
13. DEFINITIONS.
13.1 CROSS REFERENCE TABLE. The following terms defined elsewhere in
this Agreement in the Sections set forth below shall have the respective
meanings therein defined:
TERM DEFINITION
Agreement Preamble
Balance Sheet Date 4.5
Claims and Liabilities 11.1
Closing 3
Closing Date 3
Closing Payment Recitals
Code 2.10
Contracts 4.14
Dissenting Shares 2.10
Earn-Out Payment 2.6
Effective Time of the Merger 2.1
Employee Plan 4.21
Environmental Laws 4.29
ERISA 4.21
Escrow 2.13
Escrow Agreement 2.13
Escrowed Amount 2.13
Exchange Agent 2.8
Indemnifying Party 11.4
Indemnitee 11.4
Information Statement 6.6
Intellectual Property 4.15
Licenses 4.17
Liens 4.6
Merger Recitals
Merger Consideration 2.6
Merger Sub Preamble
Merger Sub Common Stock 2.4
PBGC 4.21
Principal Shareholders Preamble
Printrak Preamble
Revenue 2.6
Revenue Calculation 2.6
Securities Act 4.3
SRI 4.1
SunRise Preamble
SunRise Balance Sheet 4.5
SunRise Convertible Security 13.2
SunRise Indemnitors 11.1
SunRise Shareholders Recitals
SunRise Stock Recitals
SunRise Warrants 13.2
Tax or Taxes 4.11
Tax Return 4.11
To the best knowledge of 4
13.2 CERTAIN DEFINITIONS. The following terms shall have the
following meanings:
(a) GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. The term
"generally accepted accounting principles" shall mean generally accepted
accounting principles, as defined by the Financial Accounting Standards Board as
of the date hereof.
(b) MATERIAL ADVERSE EFFECT. The term "Material Adverse Effect"
shall mean any change in or effect on the business, operations, assets or
condition, financial or otherwise, of SunRise or Printrak, as applicable, which
is materially adverse to SunRise or Printrak and their respective subsidiaries
taken as a whole.
(c) MEMBER OF THE IMMEDIATE FAMILY. The term "Member of the
Immediate Family" shall mean, with respect to any individual, each spouse,
parent, brother, sister or child of such individual, each trust created in whole
or in part for the benefit of the aforementioned and each custodian or guardian
of any property of one or more of the aforementioned.
(d) ORDINARY COURSE OF BUSINESS. The term "Ordinary Course of
Business" shall mean the ordinary course of business consistent with past custom
and practice (including, without limitation, with respect to quantity and
frequency).
(e) RELATED AGREEMENTS. The term "Related Agreements" shall
mean the Agreement of Merger, Escrow Agreement, Employment Agreements,
Assignment of Rights Agreement and Non-Competition Agreements.
(f) SUNRISE DERIVATIVE SECURITIES. The term "SunRise Derivative
Securities" shall mean, collectively, (a) any warrant, option, right or other
security that entitles the holder thereof to purchase or otherwise acquire any
shares of the capital stock of SunRise ("SunRise Warrants"); (b) any notice,
evidence of indebtedness, stock or other security that is convertible into or
exchangeable for any shares of the capital stock of SunRise ("SunRise
Convertible Security"), except for SunRise Stock, (c) any warrant, option, right
or other security that entitles the holder thereof to purchase or otherwise
acquire any SunRise Convertible Security; and (d) any note, evidence of
indebtedness, stock or other security that is convertible into or exchangeable
for any SunRise Warrant.
14. MISCELLANEOUS.
14.1 NOTICES. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
properly given or made on the date personally delivered or on the date mailed,
by first class registered or certified mail with postage prepaid, or transmitted
by facsimile and confirmed, if delivered, mailed, or faxed to the respective
parties hereto at the following addresses:
IF TO PRINTRAK OR MERGER SUB, TO:
Printrak International Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Stradling, Yocca, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
IF TO SUNRISE, TO:
SunRise Imaging
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
Wise & Shepherd, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
Notices to the Principal Shareholders shall be sent to the addresses indicated
in the Escrow Agreement attached hereto as Exhibit C. Any party hereto may
designate a different address by providing written notice of such new address to
the other parties hereto.
14.2 ASSIGNMENT. This Agreement may not be assigned by any party
hereto without the written consent of the other parties hereto.
14.3 SUCCESSORS BOUND. Subject to the provisions of Section 14.2,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
14.4 CAPTIONS. The captions of the sections and paragraphs of this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
14.5 AMENDMENT. This Agreement may be amended only by an instrument
in writing executed by the parties hereto.
14.6 ENTIRE AGREEMENT. This Agreement and the Exhibits, Schedules,
certificates, and documents referred to herein constitute the entire agreement
of the parties hereto, and supersede all prior understandings with respect to
the subject matter hereof, and no representation or warranty not included herein
has been relied upon by any party hereto.
14.7 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which shall constitute the
same instrument.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the laws of the State of California except with respect to
its conflicts of laws rules or provisions.
14.9 ATTORNEYS' FEES. In the event of any dispute, controversy, or
proceeding between the parties concerning this Agreement or the transactions
contemplated hereby, the prevailing party shall be entitled to receive from the
other party its costs and expenses, including attorneys' fees.
14.10 WAIVER. All waivers hereunder must be made in writing, and
failure of any party at any time to require another party's performance of any
obligation under this Agreement shall not affect, limit or waive a party's right
of any time to require strict performance of that obligation thereafter. Any
waiver of any breach of any provision of this Agreement shall not be construed
in any way as a waiver of any continuing or succeeding breach of such provision
or waiver or modification of the provision.
14.11 SEVERABILITY. In the event any court, administrative agency
or other governmental entity with appropriate jurisdiction and authority
determines that any term or part of this Agreement is invalid or unenforceable,
the remainder of this Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties hereto
as of the date first written above.
PRINTRAK INTERNATIONAL INC.
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman, President
and Chief Executive Officer
SUNRISE ACQ. CORP.
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
SUNRISE IMAGING,
a California corporation
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, President
------------------------------------
Bram Kool, Principal Shareholder
------------------------------------
▇▇▇▇▇▇ Kool, Principal Shareholder
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, Principal Shareholder
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇, Principal Shareholder