EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, INC.,
GO ACQUISITION CORP.,
GENISYS OPERATION, INC.
AND
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
AND
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇
AS OF JANUARY 29, 1999
TABLE OF CONTENTS
PAGE
ARTICLE I PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . . . . .2
1.01 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.02 Fractional Shares. . . . . . . . . . . . . . . . . . . . . . .2
1.03 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . .2
1.04 Effects of the Merger. . . . . . . . . . . . . . . . . . . . .2
1.05 Further Assurances . . . . . . . . . . . . . . . . . . . . . .3
1.06 Tax-free Reorganization. . . . . . . . . . . . . . . . . . . .3
1.07 Pooling of Interests . . . . . . . . . . . . . . . . . . . . .3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE GENISYS SHAREHOLDERS . .3
2.01 Organization and Good Standing . . . . . . . . . . . . . . . .3
2.02 Power, Authorization and Validity. . . . . . . . . . . . . . .4
2.03 Capitalization . . . . . . . . . . . . . . . . . . . . . . . .4
2.04 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .5
2.05 No Violation of Existing Agreements. . . . . . . . . . . . . .5
2.06 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . .5
2.07 Genisys Financial Statements . . . . . . . . . . . . . . . . .5
2.08 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . .6
2.09 Title to Properties. . . . . . . . . . . . . . . . . . . . . .8
2.10 Absence of Certain Changes . . . . . . . . . . . . . . . . . .8
2.11 Agreements and Commitments . . . . . . . . . . . . . . . . . 10
2.12 Intellectual Property. . . . . . . . . . . . . . . . . . . . 11
2.13 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 11
2.14 Certain Transactions and Agreements. . . . . . . . . . . . . 12
2.15 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.16 Corporate Documents. . . . . . . . . . . . . . . . . . . . . 14
2.17 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.18 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.19 Books and Records. . . . . . . . . . . . . . . . . . . . . . 14
2.20 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 15
i
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.21 Environmental Matters. . . . . . . . . . . . . . . . . . . . 15
2.22 Government Contracts . . . . . . . . . . . . . . . . . . . . 16
2.23 Sale of Genisys. . . . . . . . . . . . . . . . . . . . . . . 16
2.24 Product Liability and Warranty Proceedings . . . . . . . . . 16
2.25 WARN Compliance. . . . . . . . . . . . . . . . . . . . . . . 16
2.26 ADA Compliance . . . . . . . . . . . . . . . . . . . . . . . 16
2.27 Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . 16
2.28 Accounts Receivable. . . . . . . . . . . . . . . . . . . . . 17
2.29 Interests in Customers, Suppliers, Etc . . . . . . . . . . . 18
2.30 Business Relations . . . . . . . . . . . . . . . . . . . . . 18
2.31 Bank Accounts and Powers of Attorney . . . . . . . . . . . . 18
ARTICLE III INVESTMENT REPRESENTATIONS . . . . . . . . . . . . . . . . . 18
3.01 Information Delivered. . . . . . . . . . . . . . . . . . . . 18
3.02 Accredited Investors . . . . . . . . . . . . . . . . . . . . 19
3.03 Investment Purposes. . . . . . . . . . . . . . . . . . . . . 19
3.04 Stock Ownership. . . . . . . . . . . . . . . . . . . . . . . 19
3.05 Waiver of Preemptive Rights. . . . . . . . . . . . . . . . . 19
3.06 No Disposal of Shares. . . . . . . . . . . . . . . . . . . . 20
3.07 No Claims. . . . . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. . . . . 20
4.01 Organization and Good Standing . . . . . . . . . . . . . . . 20
4.02 Power, Authorization and Validity. . . . . . . . . . . . . . 20
4.03 Capitalization . . . . . . . . . . . . . . . . . . . . . . . 21
4.04 No Violation of Existing Agreements. . . . . . . . . . . . . 21
4.05 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.06 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock . . . . . . . . . . . . . . . 21
4.07 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.08 Information Delivered. . . . . . . . . . . . . . . . . . . . 22
4.09 Compliance with Laws . . . . . . . . . . . . . . . . . . . . 22
ii
TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V CLOSING MATTERS. . . . . . . . . . . . . . . . . . . . . . . 22
5.01 The Closing. . . . . . . . . . . . . . . . . . . . . . . . . 22
5.02 Exchange of Certificates . . . . . . . . . . . . . . . . . . 22
ARTICLE VI CONDITIONS TO OBLIGATIONS OF GENISYS AND THE GENISYS
SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . 23
6.01 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 23
6.02 Opinion of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Counsel . . . . . . . . . . . 23
6.03 Tax Opinion of Genisys' Counsel. . . . . . . . . . . . . . . 23
6.04 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 24
6.05 Certain Agreements . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VII CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ . . . . . . . 24
7.01 Compliance with Law. . . . . . . . . . . . . . . . . . . . . 24
7.02 Opinion of Genisys' Counsel. . . . . . . . . . . . . . . . . 24
7.03 Tax Opinion of Counsel to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. . . . . . . . . 24
7.04 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . 24
7.05 Documents. . . . . . . . . . . . . . . . . . . . . . . . . . 25
7.06 Pooling Opinion. . . . . . . . . . . . . . . . . . . . . . . 25
7.07 Certain Agreements . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VIII TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . 25
8.01 Termination. . . . . . . . . . . . . . . . . . . . . . . . . 25
8.02 Certain Continuing Obligations . . . . . . . . . . . . . . . 25
ARTICLE IX SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES,
CONTINUING COVENANTS . . . . . . . . . . . . . . . . . . . . 25
9.01 Survival of Representations. . . . . . . . . . . . . . . . . 25
9.02 Genisys Agreement to Indemnify . . . . . . . . . . . . . . . 26
9.03 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Agreement to Indemnify . . . . . . . . . . 29
9.04 [Intentionally left blank] . . . . . . . . . . . . . . . . . 31
9.05 Certain Agreements . . . . . . . . . . . . . . . . . . . . . 31
9.06 Regulatory Approvals by Genisys Shareholders . . . . . . . . 31
9.07 Genisys Affiliate Agreements . . . . . . . . . . . . . . . . 31
9.08 Regulatory Approvals by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. . . . . . . . . . 31
iii
TABLE OF CONTENTS
(CONTINUED)
PAGE
9.09 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Affiliate Agreements . . . . . . . . . . . 31
9.10 Registration Rights. . . . . . . . . . . . . . . . . . . . . 32
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 35
10.01 Governing Law; Specific Performance; Dispute Resolution. . . 35
10.02 Assignment; Binding Upon Successors and Assigns. . . . . . . 36
10.03 Severability . . . . . . . . . . . . . . . . . . . . . . . . 36
10.04 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 37
10.05 Other Remedies . . . . . . . . . . . . . . . . . . . . . . . 37
10.06 Amendment and Waivers. . . . . . . . . . . . . . . . . . . . 37
10.07 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.08 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.09 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
10.10 Construction of Agreement; Knowledge . . . . . . . . . . . . 39
10.11 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . 39
10.12 Further Assurances . . . . . . . . . . . . . . . . . . . . . 39
10.13 Absence of Third Party Beneficiary Rights. . . . . . . . . . 39
10.14 Public Announcement. . . . . . . . . . . . . . . . . . . . . 40
10.15 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 40
10.16 Time is of the Essence . . . . . . . . . . . . . . . . . . . 40
10.17 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 41
10.18 Termination of Shareholders Agreement; Waiver of
Preemptive Rights. . . . . . . . . . . . . . . . . . . . . . 41
iv
Schedules
Schedule 2.01 Organization and Good Standing
Schedule 2.04 Subsidiaries
Schedule 2.05 No Violation of Existing Agreements
Schedule 2.06 Litigation
Schedule 2.07 Genisys Financial Statements
Schedule 2.08 Taxes
Schedule 2.09 Title to Properties
Schedule 2.10 Absence of Certain Changes
Schedule 2.10(i) Changes in Management and Key Personnel
Schedule 2.11 Agreements and Commitments
Schedule 2.12 Intellectual Property
Schedule 2.13 Compliance with Laws
Schedule 2.14 Certain Transactions and Agreements
Schedule 2.15(a) Employees
Schedule 2.15(c) Benefit Plans
Schedule 2.15(e) Affiliate Transactions
Schedule 2.15(f) Employees, Officers and Consultants
Schedule 2.15(g) Benefit Plan Contributions
Schedule 2.22 Government Contracts
Schedule 2.20 Insurance
Schedule 2.26 ADA
Schedule 2.27 Year 2000
Schedule 2.28 Accounts Receivable
Schedule 2.30 Business Relations
Schedule 2.31 Bank Accounts and Powers of Attorney
Schedule 3.04 Stock Ownership
Schedule 4.02(b) Consents
Schedule 4.04 No Violation of Existing Agreements
(i)
EXHIBITS
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Exhibit A-1 Articles of Merger
Exhibit A-2 Composition of Directors and Officers of Surviving Corporation
Exhibits B-1 and B-2 Employment Agreements
Exhibit C Noncompetition Agreement
Exhibit D Form of Escrow Agreement
Exhibit E Senior Staff Confidentiality and Intellectual Property
Ownership Agreement
Exhibit F Genisys Affiliate Agreement
Exhibit G ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Affiliate Agreement
Exhibit H Opinion of ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
Exhibit I Tax Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Exhibit J Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
Exhibit K Tax Opinion of ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP
Exhibit L Pooling Opinion of Ernst & Young LLP
Exhibit 1.01(a) Shares to be Issued
(ii)
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT") is entered into as
of January 29, 1999, among ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc., a Delaware corporation
("▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇"), GO Acquisition Corp., a Texas corporation and a wholly
owned subsidiary of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ("NEWCO"), Genisys Operation, Inc., a
Texas corporation ("GENISYS"), and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇ (collectively, the
"GENISYS SHAREHOLDERS").
RECITALS
A. The parties intend that, subject to the terms and conditions hereinafter
set forth, Newco will merge with and into Genisys (the "MERGER"). Genisys
will be the surviving corporation (the "SURVIVING CORPORATION") and will
become a wholly owned subsidiary of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. The merger will
occur in accordance with the terms of this Agreement and Plan of Merger and
the applicable provisions of the laws of the State of Texas. Upon the
Merger, all outstanding Common Stock of Genisys will be converted into
Common Stock of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and all outstanding Common Stock of Newco
will be converted into Common Stock of Genisys, in each case in the manner
and on the basis determined herein and as provided in this Agreement and
Plan of Merger.
B. The Merger is intended to be treated as a "pooling of interests" for
accounting purposes and a tax-free reorganization pursuant to the
provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Internal
Revenue Code of 1986, as amended (the "CODE").
C. Concurrently with the execution and delivery of this Agreement, the Genisys
Shareholders are executing and delivering to Genisys' Secretary their
unanimous written consents, as all of Genisys' shareholders, to the Merger,
this Agreement, the Articles of Merger as set forth in substantially the
form attached hereto as EXHIBIT A-1 (the "Articles of Merger") and the
transactions provided for herein.
D. Concurrently with the execution and delivery of this Agreement: each of the
Genisys Shareholders is entering into with ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (1) an
Employment Agreement in the form of either EXHIBIT B-1 OR B-2, (2) a
Noncompetition Agreement in the form of EXHIBIT C, (3) an Escrow Agreement
in the form of EXHIBIT D, (4) a Confidentiality and Intellectual Property
Ownership Agreement in the form of EXHIBIT E and (5) a Genisys Affiliate
Agreement substantially in the form of EXHIBIT F.
E. Concurrently with the execution and delivery of this Agreement
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is entering into (1) an Employment Agreement in the form
of either EXHIBIT B-1 OR B-2 with each of the Genisys Shareholders and (2)
a ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Affiliate Agreement in the form of EXHIBIT G.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Genisys, the Genisys Shareholders and Newco
contained herein, the parties agree as follows:
AGREEMENT AND PLAN OF MERGER - Page 1
ARTICLE I
PLAN OF MERGER
1.01 THE MERGER. The Articles of Merger will be filed with the
Secretary of State of the State of Texas as soon as practicable after the
execution and delivery of this Agreement and all other agreements and
documents contemplated hereby (hereinafter the "CLOSING"). The effective
time of the Merger as specified in the Articles of Merger (the "EFFECTIVE
TIME") will occur on or before January 29, 1999 or on such other date as the
parties may mutually agree upon. Newco will be merged with and into Genisys
pursuant to this Agreement and Plan of Merger and in accordance with
applicable provisions of the laws of the State of Texas as follows:
(a) CONVERSION OF SHARES. The shares of Genisys Common Stock, $.01
par value per share (the "GENISYS COMMON STOCK"), that are issued and
outstanding immediately prior to the Effective Time will by virtue of the
Merger and at the Effective Time, and without further action on the part of
any holder thereof, be converted into 1,240,000 fully paid and
nonassessable shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock, $.01 par value per
share (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMMON STOCK") all as contemplated by Exhibit
1.01 hereto.
(b) GENISYS TREASURY STOCK. All shares of Genisys Common Stock that
are held by Genisys as treasury stock shall be cancelled and retired and no
shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock shall be delivered or paid in
exchange therefor.
1.02 FRACTIONAL SHARES. No fractional shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Common Stock will be issued in connection with the Merger, but in lieu
thereof, the holder of any shares of Genisys Common Stock who would otherwise
be entitled to receive a fraction of a share of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock would receive from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, promptly after the Effective
Time, an amount of cash equal to $7.00 multiplied by the fraction of a share
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock to which such holder would otherwise be
entitled.
1.03 ESCROW AGREEMENT. Pursuant to the Escrow Agreement in the form of
EXHIBIT D (the "ESCROW AGREEMENT"), ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will withhold from the
shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock that would otherwise be delivered to
the Genisys Shareholders, approximately (but no more than) 124,000 shares of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock, being approximately (but no more than) 10% of
the total number of shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock issuable to such
shareholders in the Merger. On the Closing Date, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will
deposit or cause to be deposited in escrow pursuant to the Escrow Agreement
certificates representing the shares thus withheld (the "ESCROW SHARES") as
collateral for the indemnification obligations of the Genisys Shareholders
under Section 9.02, pending the release of the Escrow Shares from escrow
pursuant to the Escrow Agreement.
1.04 EFFECTS OF THE MERGER. At the Effective Time: (a) the separate
existence of Newco will cease and Newco will be merged with and into Genisys
and Genisys will be the surviving corporation pursuant to the terms of this
Agreement, (b) the Articles of Incorporation and Bylaws of Newco will become
the Articles of Incorporation and Bylaws of the Surviving Corporation, (c)
each share of Newco Common Stock outstanding immediately prior to the
Effective Time will continue to be an identical outstanding share of the
Surviving Corporation,
AGREEMENT AND PLAN OF MERGER - Page 2
(d) the composition of the Board of Directors of Genisys shall be as set
forth in EXHIBIT A-2, (e) the officers of Genisys shall be the persons set
forth in EXHIBIT A-2 and (f) the Merger will, at and after the Effective
Time, have all of the effects provided by applicable law.
1.05 FURTHER ASSURANCES. Genisys agrees that if, at any time after the
Effective Time, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ considers or is advised that any further
deeds, assignments or assurances are reasonably necessary or desirable to
vest, perfect or confirm in the Surviving Corporation title to any property
or rights of Genisys, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and any of its officers are hereby
authorized by Genisys to execute and deliver all such proper deeds,
assignments and assurances and do all other things reasonably necessary or
desirable to vest, perfect or confirm title to such property or rights in the
Surviving Corporation and otherwise to carry out the purposes of this
Agreement, in the name of Genisys or otherwise.
1.06 TAX-FREE REORGANIZATION. The parties intend to adopt this
Agreement as a tax-free plan of reorganization and to consummate the Merger
in accordance with the provisions of Section 368(a)(1)(A) and 368(a)(2)(E) of
the Code. The shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock issued in the Merger
will be issued solely in exchange for the issued and outstanding shares of
Genisys Common Stock pursuant to this Agreement, and no other transaction
other than the Merger represents, provides for or is intended to be an
adjustment to the consideration paid for Genisys Common Stock. Except for
cash paid in lieu of fractional shares, no consideration that could
constitute "other property" within the meaning of Section 356 of the Code
will be paid by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for shares of Genisys Common Stock in the
Merger. In addition, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ represents that it presently intends,
and that at the Effective Time it will intend, to continue Genisys' historic
business or use a significant portion of Genisys' business assets in a
business.
1.07 POOLING OF INTERESTS. The parties intend that the Merger be
treated as a "pooling of interests" for accounting purposes.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE GENISYS SHAREHOLDERS
Subject to the provisions and limitations of Article IX hereof, each of
the Genisys Shareholders hereby severally represents and warrants (in the
proportion by which his shares of Genisys Common Stock bears to the total
number of outstanding shares of Genisys Common Stock) that:
2.01 ORGANIZATION AND GOOD STANDING. Genisys is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Texas and has the corporate power and authority to own, operate and lease
its properties and to carry on its business as now conducted.
Genisys is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction listed in SCHEDULE 2.01, which is each
jurisdiction in which the ownership of its properties, the employment of its
personnel or the conduct of its business requires it to be so qualified,
except where the failure to so qualify would not have a material adverse
effect on Genisys, its assets, properties or financial condition.
AGREEMENT AND PLAN OF MERGER - Page 3
2.02 POWER, AUTHORIZATION AND VALIDITY.
(a) Genisys has the corporate right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement
and all agreements to which Genisys is or will be a party as contemplated
by this Agreement (the "GENISYS ANCILLARY AGREEMENTS"). The execution,
delivery and performance of this Agreement and the Genisys Ancillary
Agreements have been duly and validly approved by Genisys Board of
Directors and the Genisys Shareholders, as required by applicable law.
(b) No filing, authorization or approval, governmental or otherwise,
is necessary to enable Genisys to enter into, and to perform its
obligations under, this Agreement and the Genisys Ancillary Agreements,
except for (i) the filing of the Articles of Merger with the Secretary of
State of the State of Texas (which filing has been authorized by all
necessary corporate approvals), and (ii) consents required under material
contracts disclosed in SCHEDULE 2.05 as exceptions to the representation
made in the last sentence of Section 2.05.
(c) This Agreement and the Genisys Ancillary Agreements are, or when
executed and delivered by Genisys will be, valid and binding obligations of
Genisys, enforceable against Genisys in accordance with their respective
terms, except as to the effect, if any, of (i) applicable bankruptcy and
other similar laws affecting the rights of creditors generally, and
(ii) rules of law governing specific performance, injunctive relief and
other equitable remedies and (iii) any rights to indemnification being
limited under applicable securities laws; provided, however, that the
Genisys Ancillary Agreements will not be effective until the earlier of the
date set forth therein or the Effective Time.
2.03 CAPITALIZATION.
(a) AUTHORIZED/OUTSTANDING CAPITAL STOCK. The authorized capital
stock of Genisys consists of 1,000,000 shares of Genisys Common Stock, $.01
par value per share, of which 122,000 shares are issued and outstanding as
of this date and as of the Closing Date, and all of which issued and
outstanding shares are held of record and owned by the Genisys
Shareholders. Genisys has no authorized or issued shares of Preferred
Stock. All issued and outstanding shares of Genisys Common Stock have been
duly authorized and validly issued, are fully paid and nonassessable, are
not subject to any right of rescission and have been offered, issued, sold
and delivered by Genisys in compliance with all registration or
qualification requirements (or applicable exemptions therefrom) of
applicable federal and state securities laws.
(b) OPTIONS/RIGHTS. There are no stock appreciation rights, options,
warrants, conversion privileges or preemptive or other rights or agreements
outstanding to purchase or otherwise acquire any of Genisys' authorized but
unissued capital stock, there are no options, warrants, conversion
privileges or preemptive or other rights or agreements to which Genisys is
a party involving the purchase or other acquisition of any share of Genisys
capital stock, and there is no liability for dividends accrued but unpaid;
and there are no voting agreements, rights of first refusal or other
restrictions (other than normal restrictions on transfer under applicable
federal and State of Texas securities laws) applicable to any of Genisys'
outstanding securities.
AGREEMENT AND PLAN OF MERGER - Page 4
2.04 SUBSIDIARIES. Except as disclosed on SCHEDULE 2.04, Genisys does
not have any subsidiaries or any equity interests, direct or indirect, in any
corporation, partnership, joint venture or other business entity.
2.05 NO VIOLATION OF EXISTING AGREEMENTS. Neither the execution and
delivery of this Agreement or any Genisys Ancillary Agreement, nor the
consummation of the transactions provided for herein or therein, will
conflict with, or (with or without notice or lapse of time, or both) result
in a termination, breach, impairment or violation of, (a) any provision of
the Articles of Incorporation or Bylaws of Genisys, as currently in effect,
(b) any material instrument or contract to which Genisys is a party or by
which Genisys is bound, or (c) any federal, state, local or foreign judgment,
writ, decree, order, statute, rule or regulation applicable to and that would
have a material adverse effect on Genisys or its assets or properties. The
consummation of the Merger by Genisys will not require the consent of any
third party and will not have a material adverse effect upon any such rights,
licenses, franchises, leases or agreements pursuant to the terms of those
agreements, other than as set forth in SCHEDULE 2.05.
2.06 LITIGATION. Except as set forth in SCHEDULE 2.06, there is no
action, proceeding or investigation pending or, to the knowledge of Genisys
or the Genisys Shareholders, threatened against Genisys before any court or
administrative agency. Except as set forth on SCHEDULE 2.06, no person,
firm, corporation or entity has a claim against Genisys (or a successor in
interest to Genisys) based upon: (a) ownership or rights to ownership of any
shares of Genisys Common Stock, (b) any rights as a Genisys securities
holder, including, without limitation, any option or other right to acquire
any Genisys securities, any preemptive rights or any rights to notice or to
vote, or (c) any rights under any agreement between Genisys and any Genisys
securities holder or former Genisys securities holder in such holder's
capacity as such.
2.07 GENISYS FINANCIAL STATEMENTS. Genisys has delivered to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ the financial information (the "Genisys Financial Data"),
in computer file form, prepared and used by Genisys in the ordinary course of
busines to compile its financial statements as of and for the fiscal periods
from August 1, 1995 through December 31, 1998 as further described in
SCHEDULE 2.07 (the "GENISYS FINANCIAL STATEMENTS"). Genisys Financial Data
has been prepared on a cash basis and, in all material respects, (a) is in
accordance with the books and records of Genisys and (b) fairly and
accurately represents the financial condition of Genisys at the dates
specified therein and the results of operations for the respective periods
specified therein. Except as set forth in SCHEDULE 2.07, Genisys has no
material debt, liability or obligation of any nature, whether accrued,
absolute, contingent or otherwise, and whether due or to become due, that is
not reflected or disclosed in the Genisys Financial Data, except for (i)
those that are not required to be reported in accordance with generally
accepted accounting principles and (ii) those that may have been incurred
after December 31, 1998 (the "BALANCE SHEET DATE") in the ordinary course of
its business.
The Genisys Financial Data reflects all material transactions of the
business of Genisys during the periods covered thereby consistent with the
basis of accounting historically used by Genisys, and all documentation that
is necessary to support such transactions has been made, and after the
Closing (to the extent such documentation is not in the possession of Genisys
as of the Closing) will be, available to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.
AGREEMENT AND PLAN OF MERGER - Page 5
2.08 TAX MATTERS. Except as disclosed in SCHEDULE 2.08:
(a) RETURNS AND REPORTS. (i) All Tax Returns required to be filed
with any Taxing Authority in any jurisdiction by or for Genisys on or
before the Closing Date have been duly and timely filed, or extensions of
time within which to file such Tax Returns have been obtained; and (ii) all
such Tax Returns are true, correct and complete in all material respects.
(b) PAYMENT. (i) Genisys has timely paid or has made adequate
provision for the payment of all Taxes for which Genisys is or may become
liable for payment, insofar as such Taxes are, were or will be due and
payable on or prior to the Closing Date; (ii) all Tax deficiencies assessed
against Genisys as a result of any examination of Tax Returns of Genisys
have been paid or are being contested in good faith; and (iii) Genisys is
not the subject of, nor has it been notified that is the subject of, any
investigation, assessment, adjustment, audit or other proceeding proposing
any deficiency in respect of any Tax, and to the knowledge of Genisys and
the Genisys Shareholders, no investigation, assessment, adjustment, or
audit has been threatened.
(c) TAXES. Genisys has made adequate provisions on the Genisys
Financial Statements for all Taxes payable by Genisys for any period for
which no Tax Return has yet been filed or for which Tax Returns have been
filed but payment of the Tax shown to be due thereon is not yet due.
(d) EXTENSIONS. No agreements, waivers, or other arrangements exist
providing for an extension of time or statutory periods of limitation with
respect to payment by, or assessment against, Genisys of any Tax and no
request for any such arrangements, waivers, or other agreements have been
made; furthermore, no unrevoked power of attorney with respect to any Tax
has been executed or filed with the Internal Revenue Service or any other
Taxing Authority.
(e) PROCEEDINGS. No suit, actions, claims, or proceedings have been
asserted as of the date hereof against Genisys in respect of any Tax.
(f) SECTION 341(f) ELECTION. No election under Section 341(f) of the
Code has been or will be filed by or on behalf of Genisys.
(g) TAX LIENS. There are no Tax liens as of the date hereof upon any
of the assets or properties of Genisys except for statutory liens for Taxes
not yet due or delinquent.
(h) WITHHOLDING. The amounts of Taxes withheld by or on behalf of
Genisys with respect to all amounts paid to employees of Genisys or
creditors or other parties for all periods ending on or before the Closing
Date have been proper and accurate in all material respects, and all
deposits required with respect to amounts paid to such employees, creditors
or other parties have been made in compliance in all material respects with
the provisions of all applicable Tax laws.
(i) TAX SHARING AGREEMENTS. Genisys is not party to, nor has any
obligations under, any tax sharing or similar agreement or arrangement
other than among themselves (all of which have been disclosed to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇).
AGREEMENT AND PLAN OF MERGER - Page 6
(j) RECORDS. Genisys has made available for inspection by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇: (i) complete and correct copies of all Tax Returns of
Genisys that have been required to be filed for taxable periods ending with
or within the last five calendar years and for such longer period as
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has requested in writing not to exceed the period of the
relevant statute of limitations; (ii) complete and correct copies of all
ruling requests, private letter rulings, revenue agent reports, information
document requests and responses thereto, notices of proposed deficiencies,
deficiency notices, applications for changes in method of accounting,
protests, petitions, closing agreements, settlement agreements and any
similar documents submitted by, received by or agreed to by or on behalf of
Genisys and relating to taxable periods ending with or within the last five
calendar years and for such longer period as ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has
requested in writing, not to exceed the period of the relevant statute of
limitations; and (iii) copies of all record retention agreements currently
in effect between Genisys with any Taxing Authority.
(k) ACCOUNTING METHODS. (i) Genisys has not agreed to make any
adjustment by reason of a change in its accounting method that would affect
the taxable income or deductions of Genisys for any period following the
Closing Date; (ii) except as a result of its utilization of this cash
method of reporting, Genisys will not be required to include in a taxable
period on or after the Closing Date taxable income attributable to income
that economically accrued in a taxable period ending on or before the
Closing Date; and (iii) Genisys is not required to include income in any
amount under Section 481 of the Code (or any comparable provisions of
state, local or foreign law), by reason of a change in accounting methods
or otherwise, as a result of actions taken prior to the Closing Date.
(l) TRANSFER PRICING AGREEMENTS. There are no transfer pricing
agreements made by Genisys with any Taxing Authority.
(m) EXCESS PARACHUTE PAYMENTS. Genisys is not a party to any
agreement, contract, arrangement or plan that would result, separately or
in the aggregate, in the payment of any "excess parachute payments" within
the meaning of Section 280G of the Code.
(n) CONTROLLED FOREIGN CORPORATION. Genisys does not own any interest
in any "controlled foreign corporation" (within the meaning of Section 957
of the Code), "passive foreign investment company" (within the meaning of
Section 1297 of the Code) or other entity the income of which is required
to be included in the income of Genisys whether or not distributed.
(o) UNITED STATES REAL PROPERTY HOLDING COMPANY. Genisys is not, and
has not been during the five-year period ending on the Closing Date, a
"United States real property holding corporation" within the meaning of
Section 897 of the Code.
(p) Notwithstanding any provision to the contrary in Article II of
this Agreement, the representations and warranties contained in Article II
of this Agreement shall not apply to any Taxes resulting from or
attributable to the use by Genisys of the cash method of accounting.
(q) For the purposes of this Section 2.08 the following terms shall
have the meanings set forth below:
AGREEMENT AND PLAN OF MERGER - Page 7
"TAX" or "TAXES" means all taxes, charges, fees, levies or other
assessments, including, without limitation, any net income tax or franchise
tax based on net income, any alternative or add-on minimum taxes, any gross
income, gross receipts, premium, sales, use, ad valorem, value added,
transfer, profits, license, social security, Medicare, payroll, employment,
excise, severance, stamp, occupation, property, environmental or windfall
profit tax, custom duty or other tax, governmental fee or other like
assessment, together with any interest, penalty, addition to tax or
additional amount imposed by any Taxing Authority.
"TAX RETURN" or "TAX RETURNS" shall mean all returns, declarations of
estimated tax payments, reports, forms, estimates, information returns,
statements and other documentation, including any related or supporting
information filed with respect to any of the foregoing, maintained, filed
or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
"TAXING AUTHORITY" shall mean any domestic, foreign, federal, national,
state, provincial, county or municipal or other local government, any
subdivision, agency, commission or authority thereof, or any
quasigovernmental body exercising any Taxing Authority or any other
authority exercising Tax regulatory authority.
2.09 TITLE TO PROPERTIES. Genisys has good and valid title to all of
its assets as shown on the balance sheet as of the Balance Sheet Date derived
from the Genisys Financial Data, free and clear of all liens, charges or
encumbrances (other than for Taxes not yet due and payable and Permitted
Liens (as defined below)), other than such material assets set forth on
SCHEDULE 2.09 as were sold by Genisys in the ordinary course of business
since the Balance Sheet Date or which are subject to capitalized leases.
"PERMITTED LIENS" means any lien, mortgage, encumbrance or restriction that
is reflected in Genisys Financial Statements and is not in excess of $10,000
and which does not materially detract from the value or materially interfere
with the use, as currently used, of the properties subject thereto or
affected thereby or otherwise materially impair the business operations being
conducted thereon. There are no UCC financing statements of record naming
Genisys as debtor. The machinery and equipment included in such assets are
in good condition and repair, normal wear and tear excepted, and all leases
of real or personal property to which Genisys is a party are fully effective
and afford Genisys peaceful and undisturbed possession of the subject matter
of the lease. Genisys is not in violation of any material zoning, building,
safety or environmental ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties, and
Genisys has not received any notice of such violation with which it has not
complied or had waived.
2.10 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, except
as set forth in SCHEDULE 2.10, there has not been with respect to Genisys:
(a) any change in the financial condition, properties, assets,
liabilities business, results of operations or prospects of Genisys, which
change by itself or in conjunction with all other such changes, whether or
not arising in the ordinary course of business, has had or can reasonably
be expected to have a material adverse effect on Genisys;
(b) any contingent liability incurred by Genisys as guarantor or
surety with respect to the obligations of others;
AGREEMENT AND PLAN OF MERGER - Page 8
(c) any material mortgage, encumbrance or lien placed on any of the
properties of Genisys;
(d) any material obligation or liability incurred by Genisys other
than in the ordinary course of business;
(e) any purchase or sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of
the properties or assets of Genisys other than in the ordinary course of
business;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the properties, assets or
business of Genisys;
(g) any declaration, setting aside or payment of any dividend on, or
the making of any other distribution in respect of, the capital stock of
Genisys, any split, stock dividend, combination or recapitalization of the
capital stock of Genisys or any direct or indirect redemption, purchase or
other acquisition by Genisys of the capital stock of Genisys;
(h) any material labor dispute or claim of material unfair labor
practices, any change in the compensation payable or to become payable to
any of Genisys' officers, employees or agents earning compensation at an
anticipated annual rate in excess of $50,000, or any bonus payment or
arrangement made to or with any of such officers, employees or agents; or
any change in the compensation payable or to become payable to any of
Genisys' other officers, employees or agents other than normal annual
compensation increases in accordance with past practices or any bonus
payment or arrangement made to or with any of such other officers,
employees or agents other than normal bonuses or other arrangements made in
accordance with past practices;
(i) any material change with respect to the management, supervisory,
development or other key personnel of Genisys (the management, supervisory,
development and other key personnel of Genisys being listed on
SCHEDULE 2.10(i));
(j) any payment or discharge of a material lien or liability thereof,
which lien or liability was not either (i) shown on the balance sheet as of
the Balance Sheet Date included in Genisys Financial Statements or
(ii) incurred in the ordinary course of business after the Balance Sheet
Date; or
(k) any obligation, or material liability incurred by Genisys to any
of its officers, directors or shareholders, or any loans or advances made
to any of its officers, directors, shareholders or affiliate except normal
compensation and expense allowances payable to officers.
2.11 AGREEMENTS AND COMMITMENTS. Except as set forth in SCHEDULE 2.11,
or as listed in SCHEDULE 2.12, SCHEDULE 2.15(c) or SCHEDULE 2.15(f) as
required by Section 2.12, Section 2.15(c) or Section 2.15(f), respectively,
Genisys is not a party or subject to any oral or written agreement,
obligation or commitment that is material to Genisys, its financial
condition, business or prospects or which is described below:
AGREEMENT AND PLAN OF MERGER - Page 9
(a) Any contract, commitment, letter agreement, quotation or purchase
order providing for payments by or to Genisys in an aggregate amount of
(i) $10,000 or more in the ordinary course of business or (ii) $10,000 or
more not in the ordinary course of business;
(b) Any license agreement as licensor (except for any nonexclusive
software license granted by Genisys to end-user customers where the form of
the license, excluding standard immaterial deviations, has been provided to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇);
(c) Any agreement by Genisys to encumber, transfer or sell rights in
or with respect to any Genisys Intellectual Property (as defined in
Section 2.12);
(d) Any agreement for the sale or lease of real or personal property
involving more than $10,000 per year;
(e) Any dealer, distributor, sales representative, original equipment
manufacturer, value added remarketer or other agreement for the
distribution of Genisys' products;
(f) Any franchise agreement or financing statement;
(g) Any stock redemption or purchase agreement;
(h) Any joint venture contract or arrangement or any other agreement
that involves a sharing of profits with other persons;
(i) Any instrument evidencing indebtedness for borrowed money by way
of direct loan, sale of debt securities, purchase money obligations,
conditional sale, guarantee or otherwise, except for trade indebtedness or
any advance to any employee of Genisys incurred or made in the ordinary
course of business, and except as disclosed in Genisys Financial
Statements; or
(j) Any contract containing covenants purporting to limit Genisys'
freedom to compete in any line of business in any geographic area.
All agreements, obligations and commitments listed in SCHEDULE 2.11,
SCHEDULE 2.12, SCHEDULE 2.15(c), or SCHEDULE 2.15(f) as required by
Section 2.11, Section 2.12, Section 2.15(c) or Section 2.15(f), as the
case may be, are valid and in full force and effect in all material
respects, and except as expressly noted in writing, a true and complete
copy of each has been delivered or been made available to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
or its counsel. Except as noted on SCHEDULE 2.11 neither Genisys nor, to
the knowledge of Genisys or the Genisys Shareholders, any other party is in
breach of or default under any material terms of any such agreement,
obligation or commitment. Genisys is not a party to any contract or
arrangement that it reasonably expects will have a material adverse effect
on its business or prospects.
2.12 INTELLECTUAL PROPERTY. Genisys owns all right, title and interest
in, or has the right to use, all domestic and foreign patent applications,
patents, patent licenses, trademark applications, trademarks, service marks,
trade names, copyrights applications, copyrights, trade secrets, know-how,
technology, material software licenses and other intellectual property and
AGREEMENT AND PLAN OF MERGER - Page 10
proprietary rights used in or reasonably necessary to the conduct of its
business as presently conducted and the business of the development,
production, marketing, licensing and sale of commercial products using such
intellectual property and proprietary rights ("GENISYS INTELLECTUAL
PROPERTY"). Genisys has taken reasonable measures to protect all Genisys
Intellectual Property, and, except as set forth on SCHEDULE 2.12, neither
Genisys nor any Genisys Shareholder has any knowledge of any infringement of
any Genisys Intellectual Property by any third party. As to the third party
products listed on Schedule 2.12 (the "GENISYS THIRD PARTY PRODUCTS"),
Genisys has obtained appropriate licensing rights to the same and the use by
Genisys of Genisys Third Party Products does not infringe the rights of
Genisys' licensors. Set forth on SCHEDULE 2.12 delivered to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ herewith is a true and complete list of all copyright and
trademark registrations (and any applications therefor) and all patents (and
any applications therefor) for Genisys Intellectual Property owned by
Genisys. Neither Genisys nor any Genisys Shareholder has any knowledge of
any material loss, cancellation, termination of expiration of any such
registration or patent except as set forth on SCHEDULE 2.12. To the
knowledge of Genisys or the Genisys Shareholders, the business of Genisys as
conducted as of the date hereof, including (without limitation) the business
of development, production, marketing, licensing and sale of commercial
products using Genisys Intellectual Property and proprietary rights, does not
infringe or violate any of the patents, trademarks, service marks,
tradenames, copyrights, trade secrets, proprietary rights or other
intellectual property of any other person, and Genisys has not received any
written or oral claim or notice of infringement or potential infringement of
the intellectual property of any other person or entity. With respect to
Genisys Third Party Products, Genisys has obtained appropriate licensing
rights to such Genisys Third Party Products and the use by Genisys of Genisys
Third Party Products does not infringe the rights of Genisys' licensors.
Genisys has the right to manufacture all of its products and the right to use
all of its registered user lists, and to the knowledge of Genisys or the
Genisys Shareholders, is not using any confidential information or trade
secrets of any former employer of any past or present employees.
2.13 COMPLIANCE WITH LAWS. Except as set forth in Schedule 2.13,
Genisys has complied and is and will be at the Closing Date in full
compliance with all material laws, ordinances, regulations and rules, and all
orders, writs, injunctions, awards, judgements and decrees (collectively,
"Laws"), applicable to Genisys or to the assets, properties and business of
Genisys, including, without limitation (a) all applicable federal and state
securities laws and regulations, (b) all applicable federal state and local
Laws, pertaining to (i) the sale, licensing, leasing, ownership or management
of Genisys' owned, leased or licensed real or personal property, products or
technical data, (ii) employment or employment practices, terms and conditions
of employment or wages and hours, or (iii) safety, health, fire prevention,
environmental protection (including toxic waste disposal and related matters
described in Section 2.21), building standards, zoning or other similar
matters, (c) the Export Administration Act and regulations promulgated
thereunder or other laws, regulations, rules, orders, writs, injunctions,
judgements or decrees applicable to the export or re-export of controlled
commodities or technical data, or (d) the Immigration Reform and Control Act;
provided, however, that this Section 2.13 shall not apply to any Law to the
extent Genisys and the Genisys Shareholders have provided a representation
and warranty elsewhere in this Agreement as to past and present compliance by
Genisys with such Law. Genisys has received all material permits and
approvals from and has made all material filings with third parties,
including government agencies and authorities, that are necessary to the
conduct of its business as presently conducted.
AGREEMENT AND PLAN OF MERGER - Page 11
2.14 CERTAIN TRANSACTIONS AND AGREEMENTS. No person who is an officer
or director of Genisys, or a member of any officer's or director's immediate
family, has any direct or indirect ownership interest in any firm or
corporation that competes with Genisys or ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (except with
respect to any interest in less than 1% of the outstanding voting shares of
any corporation the stock of which is publicly traded). Except as set forth
in SCHEDULE 2.14, no person who is an officer or director of Genisys, or any
member of any officer's or director's immediate family, is directly or
indirectly interested in any material contract or informal arrangement with
Genisys, except for compensation for services as an officer, director or
employee of Genisys and except for the normal rights of a shareholder.
Except at set forth in SCHEDULE 2.14, none of such officers or directors or
family members has any interest in any property, real or personal, tangible
or intangible, including, without limitation, inventions, patents,
copyrights, trademarks, trade names or trade secrets, used in the business of
Genisys, except for the normal rights of a shareholder.
2.15 EMPLOYEES.
(a) Except as set forth in SCHEDULE 2.15(a), Genisys has no
employment contract or material consulting agreement currently in effect
that is not terminable at will without penalty or payment of compensation
by Genisys.
(b) Genisys (i) has never been and is not now subject to a union
organizing effort, (ii) is not subject to any collective bargaining
agreement with respect to any of its employees, (iii) is not subject to any
other contract, written or oral, with any trade or labor union, employees'
association or similar organization, and (iv) to the knowledge of Genisys
or the Genisys Shareholders, has no material current labor dispute.
Neither Genisys nor any Genisys Shareholder has any knowledge of any facts
indicating that the consummation of the transactions provided for herein
will have a material adverse effect on its labor relations, and neither
Genisys nor any Genisys Shareholder has any knowledge that any of its key
development employees (each of whom is listed on SCHEDULE 2.10(i)) intends
to leave its employ.
(c) SCHEDULE 2.15(c) delivered by Genisys to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
herewith contains a list of all pension, retirement, disability, medical,
dental or other health plans, life insurance or other death benefit plans,
profit sharing, deferred compensation agreements, stock, option, bonus or
other incentive plans, vacation, sick, holiday or other paid leave plans,
severance plans or other similar employee benefits plan maintained,
contributed to, or required to be contributed to, by Genisys or any ERISA
Affiliate (as defined herein) for the benefit of any Genisys employee,
former employee or retired employee (the "EMPLOYEE PLANS"), including
without limitation all "employee benefit plans" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). "ERISA Affiliate" as used in this Section 2.15 shall mean any
other person or entity under common control with Genisys within the meaning
of Section 414(b), (c), (m) or (o) of the Code and the regulations
thereunder. Genisys does not now, nor has it ever, maintained,
participated in, or contributed to, any Employee Plan which is subject to
Part 3 of Subtitle B of Title I of ERISA, Title IV of ERISA, Section 412 of
the Code, or any multiemployer plan as defined in Section 3(37) of ERISA.
Genisys has delivered true and complete copies of all the Employee Plans,
together with the most recent summary plan descriptions, if any, required
under ERISA, and the three most recent annual reports (Forms 5500 and all
schedules thereto), if any,
AGREEMENT AND PLAN OF MERGER - Page 12
required under ERISA, to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. Each of the Employee Plans,
and its operation and administration, is in material compliance with all
applicable, federal, state, local and other governmental laws and
ordinances, orders, rules and regulations, including the requirements of
ERISA and the Code. Except as set forth in SCHEDULE 2.15(c), any such
Employee Plans that are employee pension benefit plans (as defined in
Section 3(2) of ERISA) which are intended to qualify under Section 401(a)
of the Code have received favorable determination letters that such plans
satisfy the qualification requirements of the Tax Reform Act of 1986. In
addition, to Genisys' knowledge, no "prohibited transaction," within the
meaning of Section 406 of ERISA or Section 4975 of the Code, has occurred
with respect to any Employee Plan. The group health plans as defined in
Section 4980B(g) of the Code that benefit employees of Genisys are in
material compliance with the continuation coverage requirements of Section
4980B of the Code. To the knowledge of the Genisys Shareholders, there
are no outstanding violations of Section 4980B of the Code with respect to
any Employee Plan, covered employees or qualified beneficiaries. No
Employee Plan provides life insurance, medical or other medical benefits to
any employee upon his or her retirement or termination of employment for
any reason, except as may be required by statute. Except as set forth in
SCHEDULE 2.15(c) (which does not identify any individual by name, Social
Security number or in any other manner), no employee of Genisys and no
person subject to any Genisys health plan has made medical claims during
the twelve months preceding the date hereof for $25,000 or in the
aggregate, or, to the knowledge of Genisys or the Genisys Shareholders,
has any catastrophic illness.
(d) To the knowledge of Genisys or the Genisys Shareholders, no
employee of Genisys is in material violation of (i) any term of any
employment contract, patent disclosure agreement or noncompetition
agreement or (ii) any other contract or agreement, or any restrictive
covenant, relating to the right of any such employee to be employed by
Genisys or to use trade secrets or proprietary information of others. To
the knowledge of Genisys or the Genisys Shareholders, the employment of any
employee of Genisys does not of itself subject Genisys to any liability to
any third party.
(e) Except as set forth in SCHEDULE 2.15(e), Genisys is not a party
to any (i) agreement with any executive officer or other key employee of
Genisys (A) the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving Genisys
in the nature of any of the transactions contemplated by this Agreement, or
any other business combination transaction, (B) providing any term of
employment or compensation guarantee, or (C) providing severance benefits
or other benefits after the termination of employment of such employee
regardless of the reason for such termination of employment or
(ii) agreement or plan, including, without limitation, any stock option
plan, stock appreciation rights plan or stock purchase plan, any of the
benefits of which will be materially increased, or the vesting of benefits
of which will be materially accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(f) A list of all employees, officers and development consultants of
Genisys and their current compensation and benefits or related agreements
with employer as of the date of this Agreement is set forth on
SCHEDULE 2.15(f).
AGREEMENT AND PLAN OF MERGER - Page 13
(g) Except as set forth in SCHEDULE 2.15(g), all contributions due
from Genisys with respect to any of the Employee Plans have been made or
accrued on Genisys' financial statements, and no further contributions will
be due or will have accrued thereunder as of the Closing Date.
2.16 CORPORATE DOCUMENTS. Genisys has made available to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for examination all documents and information listed in
SCHEDULES 2.01 through 2.22 or other exhibits called for by this Agreement
that have been requested by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ legal counsel or accountants,
including, without limitation, the following: (a) copies of Genisys'
Articles of Incorporation and Bylaws as currently in effect; (b) Genisys'
minute book containing all records of all proceedings, consents, actions and
meetings of Genisys' directors and shareholders; (c) Genisys' stock ledger,
journal and other records reflecting all stock issuances and transfers; and
(d) all permits, orders and consents issued by any regulatory agency with
respect to Genisys, or any securities of Genisys, and all applications for
such permits, orders and consents.
2.17 NO BROKERS. Genisys is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transaction provided for herein.
2.18 DISCLOSURE. The representations and warranties contained in this
Agreement and the schedules thereto delivered to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ by Genisys
or the Genisys Shareholders or both under this Agreement, taken together, do
not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein and
therein, in light of the circumstances under which such statements were made,
not misleading.
2.19 BOOKS AND RECORDS. The books, records and accounts of Genisys (a)
are in all material respects true and complete, (b) have been maintained in
accordance with reasonable business practices on a basis consistent with
prior years, (c) are stated in reasonable detail and accurately and fairly
reflect the transactions and disposition of the assets of Genisys in all
material respects, and (d) accurately and fairly reflect in all material
respects the basis for Genisys Financial Statements.
2.20 INSURANCE. Genisys maintains fire and casualty, workers
compensation, general liability, "key man" and other insurance policies as
listed on SCHEDULE 2.20. Neither Genisys nor any Genisys Shareholder has any
knowledge that any such insurance policy will not be renewed in the normal
course.
2.21 ENVIRONMENTAL MATTERS.
(a) During the period that Genisys has leased the premises currently
occupied by it and those premises occupied by it since the date of its
incorporation, there have been no disposals, releases or threatened
releases of Hazardous Materials (as defined below) from or any presence
thereof on any such premises that would have a material adverse effect upon
the business or financial statements of Genisys. There is no presence,
disposals, releases or threatened releases of Hazardous Materials on or
from any of such premises, which may have occurred prior to Genisys having
taken possession of any of such premises that would have a material adverse
effect upon the business or financial statements of Genisys. For purposes
of this Agreement, the terms "DISPOSAL," "RELEASE,"
AGREEMENT AND PLAN OF MERGER - Page 14
and "THREATENED RELEASE" have the definitions assigned thereto by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"). For the
purposes of this Section 2.21, "HAZARDOUS MATERIALS" mean any hazardous or
toxic substance, material or waste which is or becomes prior to the Closing
Date (as defined in Section 5.01) regulated under, or defined as a
"hazardous substance," "pollutant," "contaminant," "toxic chemical,"
"hazardous material," "toxic substance" or "hazardous chemical" under (i)
CERCLA; (ii) the Emergency Planning and Community Right-to-Know Act, 42
U.S.C. Section 11001 ET SEQ.; (iii) the Hazardous Material Transportation
Act, 49 U.S.C. Section 1801, ET SEQ.; (iv) the Toxic Substances Control
Act, 15 U.S.C. Section 2601 ET SEQ.; (v) the Occupational Safety and
Health Act of 1970, 29 U.S.C. Section 651 ET SEQ.; (vi) regulations
promulgated under any of the above statutes; or (vii) any applicable state
or local statute, ordinance, rule or regulation that has a scope or
purpose similar to those identified above.
(b) None of the premises currently leased by Genisys or any premises
previously occupied by Genisys is in material violation of any federal,
state or local law, ordinance, regulation or order relating to industrial
hygiene or to the environmental conditions in such premises.
(c) During the time that Genisys has leased the premises currently
occupied by it or any premises previously occupied by Genisys, neither
Genisys nor, to the knowledge of Genisys or the Genisys Shareholders, any
third party, has used, generated, manufactured or stored in such premises
or transported to or from such premises any Hazardous Materials that would
have a material adverse effect upon the business or financial statements of
Genisys.
(d) During the time that Genisys has leased the premises currently
occupied by it or any premises previously occupied by Genisys, there has
been no litigation, proceeding or administrative action brought or
threatened in writing against Genisys by, or any settlement reached by
Genisys with, any party or parties alleging the presence, disposal, release
or threatened release of any Hazardous Materials on, from or under any of
such premises.
(e) During the period that Genisys has leased the premises currently
occupied by it or any premises previously occupied by Genisys, no Hazardous
Materials have been transported from such premises to any site or facility
now listed or proposed for listing on the National Priorities List, at 40
C.F.R. Part 300, or any list with a similar scope or purpose published by
any state authority.
2.22 GOVERNMENT CONTRACTS. Except as set forth on SCHEDULE 2.22,
Genisys has no business contracts with any independent or executive agency,
division, subdivision, audit group or procuring office of the federal
government or of a state government, including any prime contractor of the
federal government and any higher level subcontractor of a prime contractor
of the federal government, and including any employees or agents thereof, in
each case acting in such capacity.
2.23 SALE OF GENISYS. Other than the transactions contemplated by this
Agreement, there are currently, and within the past ninety (90) days there
have been, no discussions to which Genisys is a party relating to (a) sale of
all or a material portion of Genisys' assets or (b) any
AGREEMENT AND PLAN OF MERGER - Page 15
merger, consolidation, liquidation, dissolution or similar transaction
involving Genisys or in which Genisys issues more than 20% of outstanding
Genisys Common Stock or in which Genisys is required to obtain the approval
of its shareholders.
2.24 PRODUCT LIABILITY AND WARRANTY PROCEEDINGS. No product liability,
warranty or similar actions, suits or proceedings have been asserted against
Genisys since the Balance Sheet Date other than as set forth in Genisys
Financial Statements.
2.25 WARN COMPLIANCE. Since the Balance Sheet Date, Genisys has not
incurred any liability or obligation under the Worker Adjustment and
Retraining Notification Act or similar state laws. Genisys has not laid off
more than ten percent (10%) of its employees at any single site of employment
in any ninety (90) day period during the period from October 31, 1998 through
the Closing Date. It shall be the obligation of Genisys and the Genisys
Shareholders to provide any notice required by said Act by reason of the
provisions, execution or operation of this Agreement.
2.26 ADA COMPLIANCE. Genisys has complied and is in material
compliance with the provisions of the Americans with Disabilities Act (the
"ADA").
2.27 YEAR 2000 COMPLIANCE. Except as set forth in SCHEDULE 2.27, each
automated, computerized and/or software system or program (each a "System")
licensed, marketed, sold or used by Genisys as of the Closing Date is
designed to be used prior to, during and after September 9, 1999 and the
calendar year 2000 A.D., including leap years, and each System will operate
during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data
which represents or references different centuries or more than one century
("Year 2000 Compliant"). Without limiting the generality of the foregoing,
each of the Genisys Shareholders further represents and warrants that:
(a) Each System will not abnormally end or provide invalid or
incorrect results as a result of date data, specifically including data
which represents or references different centuries or more than one
century;
(b) Each System has been designed to ensure that it is Year 2000
Compliant, including, but not limited to, date data recognition,
calculations which accommodate same century and multi-century formulas and
date values and date data interface values that reflect the century;
(c) Each System will manage and manipulate data involving dates,
including single century formulas and multi-century formulas, and will not
cause an abnormally ending scenario or result within the application or
generate incorrect values or invalid results involving such dates;
(d) Each System provides that all date-related user interface
functionalities include the indication of century;
(e) All date processing by the System shall be stored and interpreted
according to one of the following methods: (i) field expansion format; (ii)
century indicator; (iii) converting to packed or binary fields; or (iv)
industry standard date windowing techniques; and
AGREEMENT AND PLAN OF MERGER - Page 16
(f) Each System will continue to be Year 2000 Compliant.
Notwithstanding the preceding provisions of this Section, to the extent any
such System of Genisys must perform with third-party systems or products
collectively as an unified information processing system, each System will
properly exchange date/time data among such other systems and programs to
accurately receive, provide and process date/time data (including, but not
limited to, calculating, comparing and sequencing) both before and after
September 9, 1999 and from, into and between the years 1999 and 2000, and
leap year calculations and will not malfunction, cease to function or provide
invalid or incorrect results as a result of date/time data; provided that any
third-party system or product functions in accordance with the provisions
hereof. Genisys has, prior to the Closing Date, submitted or made available
to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ each such System licensed, marketed, sold or used by
Genisys for testing under ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Year 2000 Test Procedure, or
any comparable test procedure approved by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.
2.28 ACCOUNTS RECEIVABLE. Except for those maintenance contracts as
disclosed in Schedule 2.28, a nonmaterial portion of which are not renewed in
accordance with Genisys' ordinary course of business, the accounts receivable
set forth in the Genisys Financial Data and those accounts receivable
accruing through the Closing Date represent valid and bona fide sales to
third parties incurred in the ordinary course of business, subject to no
defenses, set-offs or counterclaims other than those resulting from
applicable insolvency laws.
2.29 INTERESTS IN CUSTOMERS, SUPPLIERS, ETC. No shareholder, officer,
director or Affiliate of Genisys possesses, directly or indirectly, any
financial interest in, or is a director, officer, employee or Affiliate of,
any corporation, firm, association or business organization that is a client,
supplier, customer, lessor, lessee or competitor of Genisys. Ownership of
securities of a corporation whose securities are registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), not in
excess of one percent (1%) of any class of such securities shall not be
deemed to be a financial interest for purposes of this Section 2.29.
2.30 BUSINESS RELATIONS. SCHEDULE 2.30 contains an accurate list of
all significant customers of Genisys (I.E., those customers representing 5%
or more of Genisys' revenues for the 24 months ended October 31, 1998 or who
have paid to Genisys $200,000.00 or more over any two consecutive fiscal
quarters in the two years ended October 31, 1998). Except as set forth in
SCHEDULE 2.30, to the knowledge of Genisys or the Genisys Shareholders, no
customer or supplier of Genisys will cease to do business with Genisys after
the consummation of the transactions contemplated hereby, which cessation
would have a material adverse effect on the business, operations or financial
condition of Genisys. Except as set forth in SCHEDULE 2.30, since December
31, 1997, Genisys has not experienced any difficulties in obtaining any
inventory items necessary to the operation of its business, and no such
shortage of supply of inventory items is pending or threatened. Genisys is
not required to provide any bonding or other financial security arrangements
in any amount in connection with any transactions with any of its customers
or suppliers.
2.31 BANK ACCOUNTS AND POWERS OF ATTORNEY. SCHEDULE 2.31 sets forth
each bank, savings institution and other financial institution with which
Genisys has an account or safe deposit box and the names of all persons
authorized to draw thereon or to have access thereto. Each person holding a
power of attorney or similar grant of authority on behalf of Genisys is
identified on SCHEDULE 2.31. Except as disclosed on such Schedule, Genisys
has not given any
AGREEMENT AND PLAN OF MERGER - Page 17
revocable or irrevocable powers of attorney to any person, firm, corporation
or organization relating to its business for any purpose whatsoever.
ARTICLE III
INVESTMENT REPRESENTATIONS
Each Genisys Shareholder severally represents and warrants (in the proportion
by which his shares of Genisys Common Stock bears to the total number of
outstanding shares of Genisys Common Stock) to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ as of the
date of this Agreement that:
3.01 INFORMATION DELIVERED. Such Genisys Shareholder (a) has received
from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ copies of the Registration Statement, as amended (the
"REGISTRATION STATEMENT"), on Form S-1 (File No. 333-48399) declared
effective by the Securities and Exchange Commission (the "SEC") on May 19,
1998 and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Reports (the "REPORTS") on Form 10-Q for the
fiscal quarters ended April 30, 1998, July 31, 1998, and October 31, 1998
(the Registration Statement and the Reports collectively referred to herein
as the "CA SEC DOCUMENTS") and (b) has had the opportunity to ask questions
of and receive answers from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ concerning the terms and
conditions of this Agreement and to obtain from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ any
additional information that ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ possesses or can acquire
without unreasonable effort or expense necessary to verify the accuracy of
the information described in the CA SEC Documents.
3.02 ACCREDITED INVESTORS. Such Genisys Shareholder (a) is an
"accredited investor" as that term is defined under Regulation D under the
Securities Act of 1933, as amended (the "1933 ACT"), and has such knowledge
and experience in financial and business matters that such Genisys
Shareholder is capable of evaluating the merits and risks of an investment in
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Common Stock, (b) fully understands the nature, scope and
duration of the limitations on transfer of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Common Stock
received hereunder, described in this Agreement and (c) can bear the economic
risk of an investment in the shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Common Stock and
can afford a complete loss of such investment.
3.03 INVESTMENT PURPOSES. Such Genisys Shareholder further represents,
warrants, acknowledges and agrees that (a) he is acquiring the shares of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ Common Stock under this Agreement for his own account, as
principal and not on behalf of other persons, and for investment and not with
a view to the resale or distribution of all or any part of such shares except
as contemplated by Section 9.10 or otherwise in accordance with applicable
securities laws, (b) he will not sell or otherwise transfer such shares
unless, in the opinion of counsel who is reasonably satisfactory to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, the transfer can be made without violating the
registration provisions of the 1933 Act and the rules and regulations
thereunder, unless such sale or transfer is under an effective registration
statement, and (c) the certificate representing such shares will also bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE WERE NOT ISSUED IN A
TRANSACTION REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), OR ANY APPLICABLE STATE SECURITIES LAWS. THE
SHARES REPRESENTED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD OR TRANSFERRED
AGREEMENT AND PLAN OF MERGER - Page 18
UNLESS SUCH SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR, IN THE OPINION OF COUNSEL TO THE ISSUER, IS EXEMPT FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS.
3.04 STOCK OWNERSHIP. Such Genisys Shareholder has the full legal
right, power and authority to enter into this Agreement. Such Genisys
Shareholder owns beneficially (subject only to any community property
interest of his spouse) and of record the shares of Genisys Common Stock set
forth opposite such Genisys Shareholder's name on SCHEDULE 3.04 and such
shares of Genisys Common Stock, together with the other shares of Genisys
Common Stock set forth on SCHEDULE 3.04, constitute all of the outstanding
shares of capital stock of Genisys, and, except as set forth on SCHEDULE 3.04
hereof, such shares of Genisys Common Stock owned by such Genisys Shareholder
are owned free and clear of all Liens other than standard state and federal
securities laws private offering restrictions. Such Genisys Shareholder has
owned Genisys Common Stock since the date set forth on SCHEDULE 3.04.
3.05 WAIVER OF PREEMPTIVE RIGHTS. Other than as contemplated by this
Agreement or any agreement to be executed in connection with this Agreement,
such Genisys Shareholder has no, or hereby waives, any preemptive or other
right to acquire shares of Genisys Common Stock or ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock that the Genisys Shareholder has or may have had other than rights of
the Genisys Shareholder to acquire ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock pursuant to
(i) this Agreement or (ii) any option granted by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇.
3.06 NO DISPOSAL OF SHARES. Such Genisys Shareholder represents that
there is no current plan or intention by such Genisys Shareholder to sell,
exchange or otherwise dispose of any of the shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Common Stock received by such Genisys Shareholder in the Merger as of the
Effective Time of the Merger. Shares of Genisys Common Stock and shares of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock held by the Genisys Shareholder and otherwise
sold, redeemed, or disposed of prior to or subsequent to the Closing Date
will be considered in making this representation.
3.07 NO CLAIMS. Such Genisys Shareholder has no claims against
Genisys. Notwithstanding any other provisions of this Agreement, the
provisions of the last sentence of Section 9.02(b) shall not apply to the
breach of Section 3.07.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ hereby represents and warrants that, except as
set forth in the Schedules provided by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ attached to this
Agreement:
4.01 ORGANIZATION AND GOOD STANDING. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted and as proposed to be conducted.
AGREEMENT AND PLAN OF MERGER - Page 19
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which the
ownership of its properties, the employment of its personnel or the conduct
of its business requires it to be so qualified, except where the failure to
so qualify would not have a material adverse effect on ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, its
assets, properties or financial condition.
4.02 POWER, AUTHORIZATION AND VALIDITY.
(a) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has the corporate right, power, legal capacity
and authority to enter into and perform its obligations under this
Agreement and all agreements to which ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is or will be a
party as contemplated by this Agreement (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ANCILLARY
AGREEMENTS"). The execution, delivery and performance of this Agreement
and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Ancillary Agreements have been duly and validly
approved by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Board of Directors as required by
applicable law.
(b) No filing, authorization or approval, governmental or otherwise,
is necessary to enable ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to enter into, and to perform its
obligations under, this Agreement and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Ancillary
Agreements, except for (i) the filing of the Articles of Merger with the
Secretary of State of the State of Texas (which filing has been authorized
by all necessary corporate action) and (ii) consents disclosed in SCHEDULE
4.02(b).
(c) This Agreement and the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Ancillary Agreements
are, or when executed and delivered by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will be, valid and
binding obligations of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, enforceable against
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in accordance with their respective terms, except as to
the effect, if any, of (i) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, (ii) rules of law governing
specific performance, injunctive relief and other equitable remedies, and
(iii) any rights to indemnification being limited under applicable
securities laws; provided, however, that the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Ancillary
Agreements will not be effective until the earlier of the date set forth
therein or the Effective Time.
4.03 CAPITALIZATION. The authorized capital stock of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
is as set forth in the CA SEC Documents. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has no issued and
outstanding shares of Preferred Stock. All issued and outstanding shares of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock have been duly authorized and validly issued,
are fully paid and nonassessable, are not subject to any right of rescission
and have been offered, issued, sold and delivered by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in
compliance with all registration or qualification requirements (or applicable
exemptions therefrom) of applicable federal and state securities laws.
4.04 NO VIOLATION OF EXISTING AGREEMENTS. Neither the execution and
delivery of this Agreement or any ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Ancillary Agreement, nor
the consummation of the transactions provided for herein or therein, will
conflict with, or (with or without notice or lapse of time, or both) result
in a termination, breach, impairment or violation of, (a) any provision of
the Certificate of Incorporation or Bylaws of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, as currently
in effect, (b) any material instrument or contract to which ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
is a party or by which ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is bound, or (c) any federal, state,
local or foreign judgment, writ, decree, order, statute, rule or regulation
applicable to and that would have a material adverse effect on
▇▇▇▇▇▇▇▇-
AGREEMENT AND PLAN OF MERGER - Page 20
Antinori or its assets or properties. The consummation by Newco of the
Merger will not require the consent of any third party and will not have a
material adverse effect upon any rights, licenses, franchises, leases or
agreements of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or Newco pursuant to the terms of those
agreements, other than as set forth in SCHEDULE 4.04.
4.05 NO BROKERS. Except for fees and expenses of BancBoston ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ is not obligated for the payment of fees or
expenses of any investment banker, broker or finder in connection with the
origin, negotiation or execution of this Agreement or in connection with any
transaction provided for herein.
4.06 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ COMMON STOCK. The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock to be delivered to the Genisys Shareholders at the Closing Date shall
constitute valid and legally issued shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, fully paid
and nonassessable, and except as set forth in this Agreement (a) will be
owned free and clear of all Liens created by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, and (b)
subject to registration of such shares with the SEC and holding periods
established by SEC rule (or state securities law or rule), will be legally
equivalent in all respects to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock issued and
outstanding as of the date hereof.
4.07 DISCLOSURE. The representations and warranties contained in this
Agreement and the schedules to this Agreement delivered by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
to Genisys and the Genisys Shareholders under this Agreement and each CA SEC
Document as of the date of each such document, taken together, do not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained herein and therein, in
light of the circumstances under which such statements were made, not
misleading.
4.08 INFORMATION DELIVERED. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (a) has delivered to the
Genisys Shareholders copies of the CA SEC Documents and (b) has provided the
Genisys Shareholders the opportunity to ask questions of and receive answers
from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ concerning the terms and conditions of this Agreement
and to obtain from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ any additional information that
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ possesses or can acquire without unreasonable effort or
expense necessary to verify the accuracy of the information described in the
CA SEC Documents.
4.09 COMPLIANCE WITH LAWS. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has complied and is in
full compliance with all material Laws applicable to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or to
the assets, properties and business of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
has received all material permits and approvals from and has made all
material filings with third parties, including government agencies and
authorities, that are necessary to the conduct of its business as presently
conducted.
AGREEMENT AND PLAN OF MERGER - Page 21
ARTICLE V
CLOSING MATTERS
5.01 THE CLOSING. Subject to termination of this Agreement as provided
in Article VIII, the closing of the transactions provided for herein (the
"CLOSING") will take place at the office of ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at 11:00 a.m., Dallas, Texas
time on or before January 29, 1999, or as Genisys and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ may
mutually select (the "CLOSING DATE"). Prior to or concurrently with the
Closing, the Articles of Merger and such other documents as may be required
to effectuate the Merger will be filed in the offices of the Texas Secretary
of State. Accordingly, the Merger will become effective at the Effective
Time.
5.02 EXCHANGE OF CERTIFICATES.
(a) As of the Effective Time, all shares of Genisys Common Stock that
are outstanding immediately prior thereto will, by virtue of the Merger and
without further action, cease to exist, and all such shares will be
converted into the right to receive from ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ the number of
shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock determined as set forth in
Section 1.01, subject to Sections 1.02 and 1.03, as identified on EXHIBIT
1.01(a).
(b) At and after the Effective Time, each certificate representing
outstanding shares of Genisys Common Stock will represent the number of
shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock into which such shares of Genisys
Common Stock have been converted, and such shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Common Stock will be deemed registered in the name of the holder of such
certificate. Upon the Effective Time, the holder of shares of Genisys
Common Stock will surrender (a) the certificates of such shares (the
"GENISYS CERTIFICATES") to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for cancellation or (b) an
affidavit of lost (or non-issued) certificate and agreement to indemnify in
form satisfactory to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (an "AFFIDAVIT"). As soon as
practicable after the Effective Time and receipt of Genisys Certificates
and of any Affidavits, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will issue to such surrendering
holder certificate(s) for the number of shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common
Stock to which such holder is entitled pursuant to Section 1.01, less the
shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock deposited into escrow pursuant to
Section 1.02, and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will distribute any cash payable under
Section 1.02.
(c) All shares of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock (and, if applicable,
cash in lieu of fractional shares) delivered upon the surrender of Genisys
Certificates in accordance with the terms hereof will be delivered to the
registered holder or placed in escrow with Escrow Agent, as applicable.
After the Effective Time, there will be no further registration of
transfers of the shares of Genisys Common Stock on the stock transfer books
of Genisys. If, after the Effective Time, Genisys Certificates are
presented for transfer or for any other reason, they will be canceled and
exchanged and certificates therefor will be delivered or placed in escrow
as provided in this Section 5.02.
(d) Until certificates representing Genisys Common Stock outstanding
prior to the Merger are surrendered pursuant to Section 5.02(b) above,
such certificates will be
AGREEMENT AND PLAN OF MERGER - Page 22
deemed, for all purposes, to evidence ownership of (i) the number of shares
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock into which the shares of Genisys Common
Stock will have been converted, subject to the obligation to place a
portion thereof in escrow as required hereby, and (ii) if applicable, cash
in lieu of fractional shares.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF GENISYS AND THE GENISYS SHAREHOLDERS
The obligations of Genisys hereunder are subject to the
fulfillment or satisfaction as of the Closing of each of the following
conditions (any one or more of which may be waived by Genisys and the Genisys
Shareholders):
6.01 COMPLIANCE WITH LAW. There shall be no order, decree, or ruling
by any court or governmental agency or threat thereof, or any other fact or
circumstance that would prohibit or render illegal the transactions provided
for in this Agreement.
6.02 OPINION OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ COUNSEL. The Genisys Shareholders
shall have received from ▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, an opinion substantially in the form of EXHIBIT H.
6.03 TAX OPINION OF GENISYS' COUNSEL. The Genisys Shareholders shall
have received from ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to Genisys, an opinion
substantially in the form of EXHIBIT I relating to the status of the
transaction contemplated by this Agreement as a tax-free plan of
reorganization in accordance with the provisions of Section 368(a)(1)(A) and
368(a)(2)(E) of the Code. In rendering such opinion, such counsel may
require and, to the extent such counsel deems necessary or appropriate, may
rely upon representations made in certificates of officers of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Newco, Genisys and the Genisys Shareholders.
6.04 NO LITIGATION. No litigation or proceeding shall be pending that
will have the probable effect of enjoining or preventing the consummation of
any of the transactions provided for in this Agreement. No litigation or
proceeding shall be pending which could reasonably be expected to have a
material adverse effect on the financial condition or results of operations
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ that has not previously been disclosed to Genisys herein.
6.05 CERTAIN AGREEMENTS. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have confirmed its
execution and delivery to the Genisys Shareholders of, and the enforceability
against it of, the various agreements and documents specified in RECITAL E as
executed and delivered by it.
6.06 POOLING OPINION. Genisys shall have received from Ernst & Young,
LLP an opinion, in the form of EXHIBIT L, that each of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇,
Newco and Genisys qualifies as an entity that may be a party to a business
combination for which the pooling of interests method of accounting would be
available.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ AND NEWCO
AGREEMENT AND PLAN OF MERGER - Page 23
The obligations of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and Newco hereunder are
subject to the fulfillment or satisfaction as of the Closing of each of the
following conditions (any one or more of which may be waived by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇):
7.01 COMPLIANCE WITH LAW. There shall be no order, decree, or ruling
by any court or governmental agency or threat thereof, or any other fact or
circumstance that would prohibit or render illegal the transactions provided
for in this Agreement.
7.02 OPINION OF GENISYS' COUNSEL. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have
received from ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to Genisys and the Genisys
Shareholders, an opinion substantially in the form of EXHIBIT J.
7.03 TAX OPINION OF COUNSEL TO ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
shall have received from ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP, counsel to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, an opinion substantially in the form of EXHIBIT K relating
to the status of the transaction contemplated by this Agreement as a tax-free
plan of reorganization in accordance with the provisions of Section
368(a)(1)(A) and 368(a)(2)(E) of the Code. In rendering such opinion, such
counsel may require and, to the extent such counsel deems necessary or
appropriate, may rely upon representations made in certificates of officers
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Newco, Genisys and the Genisys Shareholders.
7.04 NO LITIGATION. No litigation or proceeding shall be pending that
will have the probable effect of enjoining or preventing the consummation of
any of the transactions provided for in this Agreement. No litigation or
proceeding shall be pending which could reasonably be expected to have a
material adverse effect on the financial condition or results of operations
of Genisys that has not previously been disclosed to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ herein.
7.05 DOCUMENTS. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have received all written
consents, assignments, waivers, authorizations or other certificates
reasonably deemed necessary by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ legal counsel to provide
for the continuation in full force and effect of any and all material
contracts and leases of Genisys and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and for
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to consummate the transactions contemplated hereby.
7.06 POOLING OPINION. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have received from Ernst
& Young, LLP an opinion, in the form of EXHIBIT L, that each of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Newco and Genisys qualifies as an entity that may be a
party to a business combination for which the pooling of interests method of
accounting would be available.
7.07 CERTAIN AGREEMENTS. Each individual identified in RECITAL D shall
have confirmed his execution and delivery to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of, and the
enforceability against him of, the various agreements and documents specified
in such recital as executed and delivered by him.
ARTICLE VIII
TERMINATION OF AGREEMENT
8.01 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time:
AGREEMENT AND PLAN OF MERGER - Page 24
(a) by the mutual written consent of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and Genisys;
(b) by any party, if a permanent injunction or other order by any
federal or state court that would make illegal or otherwise restrain or
prohibit the consummation of the Merger will have been issued and will have
become final and nonappealable.
Any termination of this Agreement under this Section 8.01 will be
effective by the delivery of written notice of the terminating party to the
other parties.
8.02 CERTAIN CONTINUING OBLIGATIONS. Following any termination of this
Agreement pursuant to this Article VIII, the parties will continue to perform
their respective obligations under Article IX but will not be required to
continue to perform their other covenants under this Agreement.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, INDEMNIFICATION AND REMEDIES, CONTINUING COVENANTS
9.01 SURVIVAL OF REPRESENTATIONS.
(a) GENISYS' REPRESENTATIONS. All representations and warranties of
Genisys contained in Articles II and III of this Agreement (other than the
representations and warranties contained in Sections 2.07, 2.08, 2.19 and
2.27) (the "General Representations") will remain operative and in full
force and effect (but only as of the date of Closing) for a period of six
(6) months after the Closing, regardless of any investigation made by or on
behalf of the parties to this Agreement. The representations and warranties
contained in Sections 2.07, 2.08, 2.19 and 2.27 (the "Special
Representations") will remain operative and in full force and effect (but
only as of the date of Closing) for a period of one (1) year after the
Closing, regardless of any investigation made by or on behalf of the
parties to this Agreement. Notwithstanding the preceding provisions of this
Section 9.01(a), any act or omission constituting fraud shall have no limit
as to time.
(b) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ REPRESENTATIONS. All representations and
warranties of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ contained in Article IV of this Agreement
will remain operative and in full force and effect (but only as of the date
of Closing) for a period of one (1) year after the Closing, regardless of
any investigation made by or on behalf of the parties to this Agreement
other than any act or omission constituting fraud, which shall have no
limitation as to time.
9.02 GENISYS AGREEMENT TO INDEMNIFY.
(a) THE GENISYS SHAREHOLDERS INDEMNITY. Subject to the limitations
set forth in Section 9.02(b), the Genisys Shareholders will indemnify and
hold harmless ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and its respective officers, directors,
agents and employees, and each person, if any, who controls or may control
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (hereinafter in this Section 9.02 referred to
individually as an "INDEMNIFIED PERSON" and collectively as "INDEMNIFIED
AGREEMENT AND PLAN OF MERGER - Page 25
PERSONS") from and against any and all claims, demands, actions, causes of
action, losses, costs, damages, liabilities and expenses including, without
limitation, reasonable legal fees, net of any recoveries under insurance
policies or tax savings known to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ at the time of making of
claim hereunder, arising out of any misrepresentation or breach of or
default in connection with any of the representations, warranties and
covenants given or made by Genisys or the Genisys Shareholders in this
Agreement or any certificate, document or instrument delivered by or on
behalf of Genisys or by the Genisys Shareholders pursuant hereto (hereafter
in this Section 9.02 referred to as "▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ DAMAGES").
(b) GENISYS ESCROW SHARES; GENISYS INDEMNIFICATION LIMITATIONS. In
seeking indemnification for ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages under this
Section 9.02 following the Closing, the Indemnified Persons shall exercise
their remedies:
(1) subject to subsection 9.02(b)(3), for purposes of General
Representations, solely with respect to one-half (1/2) of (i) the Escrow
Shares deposited in escrow as of the Closing (or an amount equal thereto in
the case of stock splits, stock dividends, reverse stock splits or reverse
stock dividends) and (ii) any other assets deposited in escrow pursuant to
the Escrow Agreement; and
(2) for purposes of Special Representations, solely with respect to
an amount equal to all of (i) the Escrow Shares deposited in escrow as of
the Closing (or an amount equal thereto in the case of stock splits, stock
dividends, reverse stock splits or reverse stock dividends) and (ii) any
other assets deposited in escrow pursuant to the Escrow Agreement; and
(3) in the event of a breach of any of the representations and
warranties contained in the first paragraph of Section 2.01, the first
sentence of Section 2.09 and Sections 2.02(a), 2.03, and 3.04 the
Indemnified Persons shall be entitled to collect ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages
from the Genisys Shareholders in addition to any Escrow Shares.
(4) Notwithstanding any provisions of this Section 9.02(b), there
shall be no limit as to amount or the source of such amounts in the case of
any act or omission constituting fraud against the Genisys Shareholders.
Except for the breach of Section 3.07 or of any covenant of the
Genisys Shareholders in Articles IX or X, the indemnification provided for
in Section 9.02(a) will not apply unless and until the aggregate
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages for which one or more Indemnified Persons seeks
indemnification under Section 9.02(a) exceeds $100,000, in which event the
indemnification provided for in Section 9.02(a) will include all
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages in excess of such sum. The provisions of this
Section 9.02 shall be the sole remedy for breach of Articles II and III.
The remedies for breach of representations and warranties by the Genisys
Shareholders hereunder shall exist for no more than one (1) year after the
Closing Date, except for acts constituting fraud.
(c) DEFENSE OF CLAIMS. Promptly after the receipt by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of notice or discovery of any claim, damage or legal
action or proceeding giving rise to
AGREEMENT AND PLAN OF MERGER - Page 26
indemnification rights under this Section 9.02, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will
give the Genisys Shareholders and, if applicable, the Escrow Agent (as
such term is defined in the Escrow Agreement) written notice of such
claim, damage, legal action or proceeding (for purposes of this Section
9.02, a "Claim") in accordance with Section 9.02 of this Agreement. Within
seven days of delivery of such written notice, all (but not less than all)
of the Genisys Shareholders may, with ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ written consent,
which shall not be unreasonably withheld, at the expense of the Genisys
Shareholders, elect to take all necessary steps properly to contest any
Claim involving third parties or to prosecute or defend such Claim to
conclusion or settlement. If the Genisys Shareholders make the foregoing
election, then the Genisys Shareholders will take all necessary steps to
contest any such Claim or to prosecute or defend such Claim to conclusion
or settlement, and will notify ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of the progress of any
such Claim, will permit ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, at its expense, to participate
in such prosecution or defense (PROVIDED, HOWEVER, that if a conflict of
interest exists which would make it inappropriate, in the reasonable
opinion of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, for the same counsel to represent both
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and the Genisys Shareholders in the resolution of such
Claim, then ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ may retain separate counsel, the fees and
expenses of which shall not be borne by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ but shall
instead be borne by the Genisys Shareholders) and will provide
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ with reasonable access to all relevant information and
documents relating to the Claim and the Genisys Shareholders' prosecution
or defense thereof. If any Genisys Shareholder does not make such
election, then ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall be free to handle the prosecution
or defense of any such Claim, will take all necessary steps to contest any
such Claim involving third parties or to prosecute or defend such Claim to
conclusion or settlement, will notify the Genisys Shareholders of the
progress of any such Claim, and will permit the Genisys Shareholders, at
the expense of the Genisys Shareholders (which expense shall be paid for
from sources other than the Escrow Shares), to participate in such
prosecution or defense and will provide the Genisys Shareholders with
reasonable access to all relevant information and documents relating to
the Claim and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ prosecution or defense thereof. In
either case, the party not in control of a Claim will fully cooperate, and
will cause its counsel, if any, to fully cooperate, with the other party
in the conduct of the prosecution or defense of such Claim. Neither party
will compromise or settle any such Claim without the written consent of
either ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (if the Genisys Shareholders defend the Claim) or
the Genisys Shareholders (if ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ defends the Claim), such
consent not to be unreasonably withheld. For purposes of any Claims
arising out of or relating to Section 9.02 and payable in accordance with
the Escrow Agreement, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall act as Representative of the
Genisys Shareholders, and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ is duly authorized to be such
Representative and may bind the Genisys Shareholders for such purposes.
(d) NOTICE OF CLAIMS. Any written notice of a Claim required under
this Section 9.02 (for purposes of this Section 9.02, a "Notice of Claim")
will be in writing and will contain the following information to the extent
reasonably available to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇:
(1) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ good faith estimate of the reasonably
foreseeable maximum amount of the alleged ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages
(which amount may be the amount of damages claimed by a third party
plaintiff in an action brought against ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or Genisys);
and
AGREEMENT AND PLAN OF MERGER - Page 27
(2) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the alleged ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Damages based on ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ good faith belief thereof and
the basis under this Agreement for such Claim, including, without
limitation, the identity and address of any third-party claimant (to
the extent reasonably available to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇) and copies of
any formal demand or complaint.
(e) REPRESENTATIVE. For purposes of Claims under Section 9.02 that
are payable under the Escrow Agreement, the Genisys Shareholders hereby
consent to the appointment of the Representative, as representative of the
Genisys Shareholders, and as the attorney-in-fact for and on behalf of each
Genisys Shareholder, and, subject to the express limitation set forth
below, the taking by the Representative of any and all actions and the
making of any decisions required or permitted to be taken by the
Representative for Claims under Section 9.02 that are payable under the
Escrow Agreement, including, without limitation, the exercise of the power
to (i) authorize delivery to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of the Escrow Shares, or any
portion thereof, in satisfaction of any Claims, (ii) agree to, negotiate,
enter into settlements and compromises of, and demand arbitration and
comply with orders of courts and awards of arbitrators with respect to any
Claims, (iii) resolve any Claims, and (iv) take all actions necessary in
the judgment of the Representative for the accomplishment of the foregoing
and all of the other terms, conditions and limitations of this Agreement
and the Escrow Agreement. The Representative will have unlimited authority
and power to act on behalf of each Genisys Shareholder with respect to
Claims under Section 9.02 that are payable under the Escrow Agreement and
the disposition, settlement or other handling of all Claims, rights or
obligations arising under Section 9.02 that are payable under the Escrow
Agreement so long as all Genisys Shareholders are treated in the same
manner. The Genisys Shareholders will be bound by all actions taken by the
Representative in connection with Claims under Section 9.02 that are
payable under the Escrow Agreement, and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will be entitled
to rely on any action or decision of the Representative. In performing the
functions specified in Section 9.02 and the Escrow Agreement, the
Representative will not be liable to the Genisys Shareholders in the
absence of gross negligence or willful misconduct. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ hereby
accepts the position of Representative subject to the right to resign as
set forth below. The Representative may resign from such position,
effective upon a new representative being appointed in writing by Genisys
Shareholders who beneficially own a majority of the Escrow Shares. The
Representative will not be entitled to receive any compensation from
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or the Genisys Shareholders in connection with this
Agreement or the Escrow Agreement. Any out-of-pocket costs and expenses
reasonably incurred by the Representative in connection with actions taken
pursuant to the terms of Section 9.02 and the Escrow Agreement will be paid
(but not out of the Escrow Shares) by the Genisys Shareholders to the
Representative in proportion to their percentage interests in the Escrow
Shares as set forth on ATTACHMENT A to the Escrow Agreement.
9.03 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ AGREEMENT TO INDEMNIFY.
(a) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ INDEMNITY. Subject to the limitations set
forth in Section 9.03(b), ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will indemnify and hold
harmless the Genisys Shareholders (hereinafter in this Section 9.03
referred to individually as an "INDEMNIFIED PERSON" and collectively as
"INDEMNIFIED PERSONS") from and against any and all claims,
AGREEMENT AND PLAN OF MERGER - Page 28
demands, actions, causes of action, losses, costs, damages, liabilities and
expenses including, without limitation, reasonable legal fees, net of any
recoveries under insurance policies or tax savings known to any Genisys
Shareholder at the time of making of claim hereunder, arising out of any
misrepresentation or breach of or default in connection with any of the
representations, warranties and covenants given or made by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in this Agreement or any certificate, document or
instrument delivered by or on behalf of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ pursuant hereto
(hereafter in this Section 9.03 referred to as "GENISYS DAMAGES").
(b) ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ INDEMNIFICATION LIMITATIONS. Except for the
breach of any covenant of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in Articles IX or X, the
indemnification provided for in Section 9.02(b) will not apply unless and
until the aggregate Genisys Damages for which one or more Indemnified
Persons seeks indemnification under Section 9.03(a) exceeds $100,000, in
which event the indemnification provided for in Section 9.03(a) will
include all Genisys Damages in excess of such sum. The provisions of this
Section 9.03 shall be the sole remedy against ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for breach
of Article IV.
(c) DEFENSE OF CLAIMS. Promptly after the receipt by any Genisys
Shareholder of notice or discovery of any claim, damage or legal action or
proceeding giving rise to indemnification rights under this Section 9.03,
such Genisys Shareholder will give ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ written notice of such
claim, damage, legal action or proceeding (for purposes of this Section
9.03, a "Claim") in accordance with this Section 9.03. Within seven days of
delivery of such written notice, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ may, with such Genisys
Shareholder's written consent, which shall not be unreasonably withheld, at
the expense of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, elect to take all necessary steps
properly to contest any Claim involving third parties or to prosecute or
defend such Claim to conclusion or settlement. If ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ makes
the foregoing election, then ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will take all necessary
steps to contest any such Claim or to prosecute or defend such Claim to
conclusion or settlement, and will notify such Genisys Shareholder of the
progress of any such Claim, will permit such Genisys Shareholder, at its
expense, to participate in such prosecution or defense (PROVIDED, HOWEVER,
that if a conflict of interest exists which would make it inappropriate, in
the reasonable opinion of such Genisys Shareholder, for the same counsel to
represent both such Genisys Shareholder and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in the
resolution of such Claim, then such Genisys Shareholder may retain separate
counsel, and the fees and expenses of one such counsel for all applicable
Genisys Shareholders shall be borne by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ rather than by any
such Genisys Shareholder) and will provide such Genisys Shareholder with
reasonable access to all relevant information and documents relating to the
Claim and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ prosecution or defense thereof. If
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ does not make such election, then such Genisys
Shareholder shall be free to handle the prosecution or defense of any such
Claim, will take all necessary steps to contest any such Claim involving
third parties or to prosecute or defend such Claim to conclusion or
settlement, will notify ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of the progress of any such
Claim, and will permit ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, at the expense of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, to participate in such prosecution or defense and will
provide ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ with reasonable access to all relevant
information and documents relating to the Claim and such Genisys
Shareholder's prosecution or defense thereof. In either case, the party
not in control of a Claim will fully cooperate with, and will cause its
counsel, if any, to fully cooperate with, the other party in the conduct of
the prosecution or defense of such Claim. Neither party will compromise or
settle any such Claim
AGREEMENT AND PLAN OF MERGER - Page 29
without the written consent of either such Genisys Shareholder (if
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ defends the Claim) or ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (if such
Genisys Shareholder defends the Claim), such consent not to be
unreasonably withheld.
(d) NOTICE OF CLAIMS. Any written notice of a Claim required under
this Section 9.03 (for purposes of this Section 9.03, a "Notice of Claim")
will be in writing and will contain the following information to the extent
reasonably available to such Genisys Shareholder:
(1) such Genisys Shareholder's good faith estimate of the
reasonably foreseeable maximum amount of the alleged Genisys Damages
(which amount may be the amount of damages claimed by a third party
plaintiff in an action brought against such Genisys Shareholder); and
(2) A brief description in reasonable detail of the facts,
circumstances or events giving rise to the alleged Genisys Damages
based on such Genisys Shareholder's good faith belief thereof and the
basis under this Agreement for such Claim, including, without
limitation, the identity and address of any third-party claimant (to
the extent reasonably available to such Genisys Shareholder) and
copies of any formal demand or complaint.
9.04 [Intentionally left blank]
9.05 CERTAIN AGREEMENTS. The Genisys Shareholders will use all
reasonable efforts to cause all present employees of Genisys to execute
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ forms of assignments of copyright and other intellectual
property rights, noncompetition and trade secret agreements and
confidentiality agreements.
9.06 REGULATORY APPROVALS BY GENISYS SHAREHOLDERS. The Genisys
Shareholders will execute and file, or join in the execution and filing, of
any application or other document that may be necessary in order to obtain
the authorization, approval or consent of any governmental body, federal,
state, local or foreign, which may be reasonably required, or which
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ may reasonably request, in connection with the consummation
of the transactions provided for in this Agreement. The Genisys Shareholders
will use all reasonable efforts to obtain or assist ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in
obtaining all such authorizations, approvals and consents.
9.07 GENISYS AFFILIATE AGREEMENTS. To facilitate the treatment of the
Merger for accounting purposes as a "pooling of interests," Genisys will use
all reasonable efforts to cause each of its affiliates to execute and deliver
to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, on or prior to Closing, a written agreement (the
"GENISYS AFFILIATE AGREEMENT") in substantially the form of EXHIBIT F
providing that such person has not within the 30-day period prior to the
Effective Time, and will not until after such time as ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has
published (within the meaning of Accounting Series Release No. 135, as
amended, of the Commission) financial results covering at least 30 days of
combined operations of Genisys and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, sell, transfer, pledge,
hypothecate or otherwise dispose of, or reduce the undersigned's interest in
or risk relating to, any shares of Genisys Common Stock or ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Common Stock, in either case except to the extent permitted by, and in
accordance with, the Commission's Accounting Series Release 135 and Staff
Accounting Bulletins 65 and 76, if and to the extent such release and
buildings remain in full force and effect at the relevant time.
AGREEMENT AND PLAN OF MERGER - Page 30
9.08 REGULATORY APPROVALS BY ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will
execute and file, or join in the execution and filing, of any application or
other document that may be necessary in order to obtain the authorization,
approval or consent of any governmental body, federal, state, local or
foreign, which may be reasonably required, or which Genisys may reasonably
request, in connection with the consummation of the transactions provided for
in this Agreement. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will use all reasonable efforts to
obtain or assist Genisys in obtaining all such authorizations, approvals and
consents.
9.09 ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ AFFILIATE AGREEMENTS. To facilitate the
treatment of the Merger for accounting purposes as a "pooling of interests,"
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will use all reasonable efforts to cause each of its
officers and directors that are affiliates to execute and deliver to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, on or prior to Closing, a written agreement (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ AFFILIATE AGREEMENT") in substantially the form of EXHIBIT
G providing that such person has not within the 30-day period prior to the
Effective Time, and will not until after such time as ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ has
published (within the meaning of Accounting Series Release No. 135, as
amended, of the Commission) financial results covering at least 30 days of
combined operations of Genisys and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, sell, transfer, pledge,
hypothecate or otherwise dispose of, or reduce the undersigned's interest in
or risk relating to, any shares of Genisys Common Stock or ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
Common Stock, in either case except to the extent permitted by, and in
accordance with, the Commission's Accounting Series Release 135 and Staff
Accounting Bulletins 65 and 76, if and to the extent such release and
buildings remain in full force and effect at the relevant time.
9.10 REGISTRATION RIGHTS.
(a) Subject to Section 9.10(b), ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall use its
reasonable best efforts to register with the SEC and under applicable state
securities laws the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock issued in connection
with this Agreement (including without limitation the Escrow Shares) (the
"REGISTRABLE SECURITIES") within six (6) months after the Closing Date and
shall use its reasonable best efforts to maintain the continued
effectiveness of such registration statement for 180 days after the date
such registration statement is declared effective by the SEC.
Notwithstanding the preceding sentence, if ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ furnishes to
the Genisys Shareholders a certificate signed by its Chief Executive
Officer stating that in the good faith judgment of the Board of Directors
of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, it would be seriously detrimental to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and its stockholders for such registration statement to
be effected at such time, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ shall have the right to defer
effecting such registration for a period of not more than 120 days after
such 180-day period; PROVIDED that such right to delay a request shall be
exercised by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ not more than once and if ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇
undertakes a primary registration in connection with the issuance of its
Common Stock following such a delay, the Registrable Securities shall be
included therein subject to Section 9.10(b).
(b) Notwithstanding any other provision of this Section, if a
registration pursuant to this Section involves a firm commitment,
underwritten offering of the securities so being registered and if the
managing underwriter of such offering informs ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and each
holder of Registrable Securities by letter of its belief that marketing
factors require a limitation of the number of Registrable Securities to be
AGREEMENT AND PLAN OF MERGER - Page 31
included in the registration and underwriting, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ may limit
the number of Registrable Securities to be included in the registration and
underwriting, with first priority being given to securities proposed to be
issued by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, second priority being given to holders of
Registrable Securities, on a pro rata basis based on amount of Registrable
Securities issued to such Genisys Shareholder in proportion to the amount
of Registrable Securities issued hereunder among the holders of Registrable
Securities, and third priority being given to other selling shareholders,
if any.
(c) It is a condition precedent to the obligations of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ to take any action pursuant to this Section hereof with
respect to the Registrable Shares of any Shareholder that such Shareholder
shall furnish to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ such information regarding himself, the
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock owned by him and the intended method of
disposition of such securities as shall be required to effect the
registration of such person's Registrable Shares and be required to effect
the registration of such person's Registrable Shares and as may be required
from time to time to keep such registration current.
(d) Except as otherwise provided, all expenses incurred by or on
behalf of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in connection with registrations, filings or
qualifications pursuant to this Section hereof, including without
limitation all registration, filing and qualification fees, the fees and
expenses incurred in connection with the listing of the Registrable Shares
to be registered on each security exchange on which shares of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock are then listed, printer's and accounting
fees, and fees and disbursements of counsel for ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, shall be
borne by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇; provided that in no event shall
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ be obligated to bear underwriting, brokerage or related
fees, discounts or commissions or the fees or expenses of counsel or
advisors to the Genisys Shareholder.
(e) Each of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and the Genisys Shareholders shall
agree to such other reasonable and customary arrangements, undertakings and
indemnifications with respect to the registration of the Registrable Shares
as may be requested by any of them (or by any underwriter to the extent
Registrable Shares are offered or sold by means of a firm commitment
underwriting), but shall not be obligated to enter into any underwriting
arrangements. Without limiting the foregoing:
(1) To the extent permitted by law, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will
indemnify and hold harmless each holder of Registrable Securities
(each a "Holder"), the partners, officers, directors and legal
counsel of each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation") by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a
AGREEMENT AND PLAN OF MERGER - Page 32
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or (iii) any violation or
alleged violation by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such
registration statement; and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will reimburse each
such Holder, partner, officer or director, underwriter or controlling
person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this Section 9.10(e)(1) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, which consent shall not be unreasonably withheld,
nor shall ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ be liable in any such case for any such
loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and
in conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(2) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the
securities as to which such registration qualifications or compliance
is being effected, indemnify and hold harmless ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇,
each of its directors, its officers, and legal counsel and each
person, if any, who controls ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ within the meaning of
the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other
Holder's partners, directors or officers or any person who controls
such Holder, against any losses, claims, damages or liabilities
(joint or several) to which ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or any such director,
officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder
may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages
or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Holder under an instrument
duly executed by such Holder (or its counsel) and stated to be
specifically for use in connection with such registration; and each
such Holder will reimburse any legal or other expenses reasonably
incurred by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection
with investigating or defending any such loss, claim, damage,
liability or action if it is judicially determined that there was
such a Violation; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 9.10(e)(2) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; PROVIDED FURTHER, that in
no event shall any indemnity under this Section 9.10(e)(2) exceed the
net proceeds from the offering received by such Holder.
AGREEMENT AND PLAN OF MERGER - Page 33
(3) If the indemnification provided for in this Section 9.10(e)
is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the Violation(s)
that resulted in such loss, claim, damage or liability, as well as
any other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(4) The obligations of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and Holders under this
Section 9.10 shall survive completion of any offering of Registrable
Securities in a registration statement. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment
or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to
such Indemnified Party of a release from all liability in respect to
such claim or litigation.
ARTICLE X
MISCELLANEOUS
10.01 GOVERNING LAW; SPECIFIC PERFORMANCE; DISPUTE RESOLUTION. The laws of
the State of Texas (without regard to its choice of law principles that might
apply the law of another jurisdiction) will govern the validity of this
Agreement, the construction of its terms, and the interpretation and enforcement
of the rights and duties of the parties. Notwithstanding any other provision of
this Agreement, it is understood and agreed that the remedy of indemnity
payments and other remedies at law would be inadequate in the case of any breach
of the covenants contained herein and each party agrees that any other party
shall be entitled to equitable relief, including the remedy of specific
performance, without posting of bond or other security, with respect to any
breach or attempted breach of such covenants. Any dispute hereunder ("DISPUTE")
shall be settled by arbitration in Dallas, Texas and, except as herein
specifically stated, in accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA RULES") then in effect. However, in all
events, these arbitration provisions shall govern over any conflicting rules
that may now or hereafter be contained in the AAA Rules. Any judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
over the subject matter thereof. The arbitrator shall have the authority to
grant any equitable and legal remedies that would be available in any judicial
proceeding instituted to resolve a Dispute.
(a) COMPENSATION OF ARBITRATOR. Any such arbitration will be
conducted before a single arbitrator who will be compensated for his or her
services at a rate to be
AGREEMENT AND PLAN OF MERGER - Page 34
determined by the parties or by the American Arbitration Association, but
based upon a reasonable hourly or daily consulting rate for the arbitrator
if the parties are not able to agree upon his or her rate of compensation.
(b) SELECTION OF ARBITRATOR. The American Arbitration Association
will have the authority to select an arbitrator from a list of arbitrators
who are lawyers familiar with Texas contract law and experienced in mergers
and acquisitions; provided, however, that such lawyers cannot work for a
firm then performing services for either party, that each party will have
the opportunity to make such reasonable objection to any of the arbitrators
listed as such party may wish and that the American Arbitration Association
will select the arbitrator from the list of arbitrators as to whom neither
party makes any such objection. If the foregoing procedure is not
followed, each party will choose one person from the list of arbitrators
provided by the American Arbitration Association (provided that such person
does not have a conflict of interest), and the two persons so selected will
select from the list provided by the American Arbitration Association the
person who will act as the arbitrator.
(c) PAYMENT OF COSTS. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and the Genisys Shareholders
will each pay 50% of the initial compensation to be paid to the arbitrator
in any such arbitration and 50% of the costs of transcripts and other
normal and regular expenses of the arbitration proceedings; provided,
however, that the prevailing party in any arbitration will be entitled to
an award of attorneys' fees and costs, and all costs of arbitration,
including those provided for above, will be paid by the non-prevailing
party, and the arbitrator will be authorized to make such determinations.
(d) BURDEN OF PROOF. For any Dispute submitted to arbitration, the
burden of proof will be as it would be if the claim were litigated in a
Texas judicial proceeding.
(e) AWARD. Upon the conclusion of any arbitration proceedings
hereunder, the arbitrator will render findings of fact and conclusions of
law and a written opinion setting forth the basis and reasons for any
decision reached and will deliver such documents to each party to this
Agreement along with a signed copy of the award.
(f) TERMS OF ARBITRATION. The arbitrator chosen in accordance with
these provisions will not have the power to alter, amend or otherwise
affect the terms of these arbitration provisions or the provisions of this
Agreement.
(g) EXCLUSIVE REMEDY. Except as specifically otherwise provided in
this Agreement, arbitration will be the sole and exclusive remedy of the
parties for any Dispute arising out of this Agreement.
10.02 ASSIGNMENT; BINDING UPON SUCCESSORS AND ASSIGNS. No party may
assign any of its rights or obligations hereunder without the prior written
consent of the other party. This Agreement will be binding upon and inure to
the benefit of the parties and their respective successors and permitted
assigns.
10.03 SEVERABILITY. If any provision of this Agreement, or the
application thereof, is for any reason held to any extent to be invalid or
unenforceable, then the remainder of this Agreement and application of such
provision to other persons or circumstances will be
AGREEMENT AND PLAN OF MERGER - Page 35
interpreted so as reasonably to effect the intent of the parties. The
parties further agree to replace such unenforceable provision of this
Agreement with valid and enforceable provisions that will achieve, to the
extent possible, the economic, business and other purposes of the invalid or
unenforceable provisions.
10.04 COUNTERPARTS. This Agreement may be executed in counterparts,
each of which will be an original as regards any party whose signature
appears thereon and all of which together will constitute one and the same
instrument. This Agreement will become binding when one or more counterparts
hereof, individually or taken together, bear the signatures of all parties
reflected hereon as signatories.
10.05 OTHER REMEDIES. Except as otherwise provided herein, any and all
remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby or by law on such
party, and the exercise of any one remedy will not preclude the exercise of
any other.
10.06 AMENDMENT AND WAIVERS. Any term or provision of this Agreement
may be amended, and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively), only by a writing signed by the party to be bound thereby.
The waiver by a party of any breach hereof or default in the performance
hereof will not be deemed to constitute a waiver of any other default of any
succeeding breach or default. This Agreement may be amended by the parties
at any time.
10.07 NO WAIVER. The failure of any party to enforce any of the
provisions hereof will not be construed to be a waiver of the right of such
party thereafter to enforce such provisions. The waiver by any party of the
right to enforce any of the provisions hereof on any occasion will not be
construed to be a waiver of the right of such party to enforce such
provisions on any other occasion.
10.08 EXPENSES. Unless otherwise provided in the Agreement, each party
will bear its respective expenses and fees of its own accountants, attorneys,
investment bankers and other professionals incurred with respect to this
Agreement and the transactions contemplated hereby. If the Merger is
consummated, Genisys will pay at or immediately before the Closing the
reasonable accounting and attorneys' fees and expenses and other fees and
expenses incurred by Genisys in connection with the Merger. Genisys will not
incur in connection with the Merger (and its related transactions,
preparations and negotiations) expenses for fees and expenses of lawyers,
accountants and other professionals in excess of $65,000 except in amounts
mutually agreed between Genisys and ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, unless any such fees
or expenses incurred by Genisys in excess of the mutually agreed upon amount
are paid by the Genisys Shareholders on or before the Closing (and if such
payment is not made on or before the Closing, then Genisys may (but shall not
be obligated to) pay such excess fees or expenses, in which event Genisys
will be entitled to be reimbursed by the Genisys Shareholders for such
payment and, if not so reimbursed, Genisys will be entitled to treat the
amount of payment as ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Damages recoverable under Section 9.02
(without regard to the $100,000 minimum specified in Section 9.02) and the
Escrow Agreement).
10.09 NOTICES. Any notice or other communication required or permitted
to be given under this Agreement will be in writing, will be delivered
personally or by facsimile, mail or express delivery, postage prepaid, and
will be deemed given upon actual delivery or, if mailed by
AGREEMENT AND PLAN OF MERGER - Page 36
registered or certified mail, on the third business day following deposit in
the mails, addressed as follows:
(i) If to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇:
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Genisys or the Genisys Shareholders:
Genisys Operation, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER - Page 37
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the party in question may have furnished to the
other party by written notice given in accordance with this Section 10.09.
10.10 CONSTRUCTION OF AGREEMENT; KNOWLEDGE. The language hereof will
not be construed for or against either party. A reference to a section,
schedule or exhibit refers to a section in, or a schedule or an exhibit to,
this Agreement, unless otherwise explicitly set forth. The titles and
headings in this Agreement are for reference purposes only and will not in
any manner limit the construction of this Agreement. For the purposes of
such construction, this Agreement will be considered as a whole. References
in this Agreement to the knowledge of Genisys (or similar phrases) refer to
the actual knowledge of any one or more of the officers and directors of
Genisys and any of the Genisys Shareholders, each after due inquiry of its
internal records or publicly available information; references in this
Agreement to the knowledge of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ (or similar phrases) refer to
the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ or ▇▇▇ ▇▇▇ after due inquiry of its
internal records or publicly available information.
10.11 NO JOINT VENTURE. Nothing contained in this Agreement will be
deemed or construed as creating a joint venture or partnership among the
parties. No party is by virtue of this Agreement authorized as an agent,
employee or legal representative of any other party. No party will have the
power to control the activities and operations of any other, and the parties'
status is, and at all times, will continue to be, that of independent
contractors with respect to each other. No party will have any power or
authority to bind or commit any other. No party will hold itself out as
having any authority or relationship in contravention of this Section 10.11.
10.12 FURTHER ASSURANCES. Each party agrees to cooperate fully with the
other party and to execute such further instruments, documents and agreements
and to give such further written assurances as may be reasonably requested by
the other party to evidence and reflect the transactions provided for herein
and to carry into effect the intent of this Agreement.
10.13 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provisions of this
Agreement are intended, nor will be interpreted, to provide or create any
third party beneficiary rights or any other rights of any kind in any client,
customer, affiliate, partner or employee of any party or any other person or
entity, unless specifically provided otherwise herein, and, except as so
provided, all provisions hereof will be personal solely among the parties to
this Agreement.
AGREEMENT AND PLAN OF MERGER - Page 38
10.14 PUBLIC ANNOUNCEMENT. ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ and Genisys will issue a
press release approved by both parties announcing the Merger as soon as
practicable following the execution of this Agreement.
10.15 CONFIDENTIALITY. Except as expressly authorized by
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ in writing, Genisys and each Genisys Shareholder will not
directly or indirectly divulge to any person or entity or use any
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Confidential Information, except as required for the
performance of its duties under this Agreement. Except as expressly
authorized by Genisys in writing, ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ will not directly or
indirectly divulge to any person or entity or use any Genisys Confidential
Information, except as required for the performance of its duties under this
Agreement. As used herein, "▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ CONFIDENTIAL INFORMATION"
consists of (a) any information designated by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ as
confidential whether developed by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ or disclosed to
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ by a third party, (b) the source code to any
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ software, and any trade secrets relating to any of the
foregoing and (c) any information relating to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇'▇ product
plans, product designs, product costs, product prices, product names,
finances, marketing plans, business opportunities, personnel, research
development or know-how. As used herein, "GENISYS CONFIDENTIAL INFORMATION"
consists of (x) any information designated by Genisys as confidential whether
developed by Genisys or disclosed to Genisys by a third party, (y) the source
code to any Genisys software, and any trade secrets related to any of the
foregoing and (z) any information relating to Genisys product plans, product
designs, product costs, product prices, product names, finances, marketing
plans, business opportunities, personnel, research, development or know-how.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ CONFIDENTIAL INFORMATION" and "GENISYS CONFIDENTIAL
INFORMATION" also include the terms and conditions of this Agreement, except
as disclosed in accordance with Section 10.14. The foregoing restriction
will apply to information about a party whether or not it was obtained from
such party's employees, acquired or developed by the other party during such
other party's performance under this Agreement, or otherwise learned. The
foregoing restrictions will not apply to information that (i) has become
publicly known through no wrongful act of the receiving party, (ii) has been
rightfully received from a third party authorized by the party which is the
owner, creator or compiler to make such disclosure without restriction, (iii)
has been approved or released by written authorization of the party which is
the owner, creator or compiler, or (iv) is being or has therefore been
disclosed pursuant to a valid court order after a reasonable attempt has been
made to notify the party which is the owner, creator or compiler.
Following any termination of this Agreement pursuant to Article VIII,
each party agrees that for a period of two years commencing January 31, 1999,
such party will not initiate discussions with respect to prospective
employment of the other party's employees.
10.16 TIME IS OF THE ESSENCE. The parties acknowledge and agree that
time is of the essence in connection with the execution, delivery and
performance of this Agreement, and that they will each use their best efforts
to satisfy all the conditions to Closing on or before January 31, 1999.
10.17 ENTIRE AGREEMENT. This Agreement, the schedules and exhibits
hereto constitute the entire understanding and agreement of the parties
hereto with respect to the subject matter hereof and supersede all prior and
contemporaneous agreements or understandings, inducements or conditions,
express or implied, written or oral, among the parties with respect to the
subject matter hereof (including, without limitation, that certain letter of
intent among them dated as of
AGREEMENT AND PLAN OF MERGER - Page 39
November 18, 1998). The express terms hereof control and supersede any
course of performance or usage of trade inconsistent with any of the terms
hereof.
10.18 TERMINATION OF SHAREHOLDERS AGREEMENT; WAIVER OF PREEMPTIVE
RIGHTS. Each of Genisys, the Genisys Shareholders and the other parties to
that certain Shareholders Agreement effective as of April 10, 1998 hereby
terminates such agreement without further obligation or liability and each of
the Genisys Shareholders and each of their respective spouses hereby waives
any preemptive or other right to acquire shares of Genisys Common Stock or
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Common Stock that such person currently has or may have had
in the past.
[INTENTIONALLY LEFT BLANK]
AGREEMENT AND PLAN OF MERGER - Page 40
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, INC. GENISYS OPERATION, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------- -----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------- -----------------------
Title: President Title: President
----------------------- ----------------------
GO ACQUISITION CORP.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇ THE GENISYS SHAREHOLDERS
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇
-----------------------
Title: Vice President
----------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ spouse
------------------------------------------
Spouse of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ spouse
------------------------------------------
Spouse of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ spouse
------------------------------------------
Spouse of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (by power of attorney)
------------------------------------------
Spouse of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇
/s/ spouse
------------------------------------------
Spouse of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇
AGREEMENT AND PLAN OF MERGER - Page 41
