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EXHIBIT 10.16
AGREEMENT FOR THE PURCHASE
AND SALE OF ASSETS
BETWEEN
AREMISSOFT CORPORATION, A DELAWARE CORPORATION,
AS PURCHASER,
ELTRAX SYSTEMS, INC., A MINNESOTA CORPORATION,
AND ELTRAX HOSPITALITY GROUP, INC., A GEORGIA CORPORATION,
AS SELLER
This Agreement for the Purchase and Sale of Assets (the "Agreement") is
made this 28th day of September, 2000, by and among AremisSoft Corporation (the
"Purchaser"), a Delaware corporation, Eltrax Systems, Inc., a Minnesota
corporation ("ESI"), and Eltrax Hospitality Group, Inc., a Georgia corporation
("EHGI"), and provides for the Purchaser to acquire substantially all of the
assets of EHGI, subject to the liabilities assumed in this Agreement by the
Purchaser and no other liabilities. All references to dollars in this Agreement
refer to United States dollars unless otherwise specified.
WHEREAS, the Purchaser desires to acquire, on the terms and subject to
the conditions reflected below, the business of EHGI insofar as the same is
conducted through the use of the Acquired Assets; and
WHEREAS, ESI and EHGI believe that it is desirable and in their best
interests to sell the Acquired Assets to the Purchaser;
NOW, THEREFORE, the parties to this Agreement for the Purchase and Sale
of Assets do hereby agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the capitalized terms identified below in
this Article I shall have the meanings indicated, and variants and derivatives
of the following terms shall have correlative meanings. To the extent that
certain of the definitions set forth below express agreements between or among
parties to this Agreement, or contain representations or warranties or covenants
of a party, the parties agree to the same by execution of this Agreement. The
parties to this Agreement agree that agreements, representations, warranties,
and covenants expressed in any part or provision of this Agreement shall for all
purposes of this Agreement be treated in the same manner as other such
agreements, representations, warranties, and covenants contained elsewhere in
this Agreement, and the Article or Section of this Agreement within which such
an
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agreement, representation, warranty, or covenant appears shall have no separate
meaning or effect on the same.
1.1 [Omitted]
1.2 Acquired Assets: The assets to be acquired by the Purchaser
pursuant to the terms hereof, as identified on Section 1.2 of the Acquired
Business Disclosure Document attached hereto, including, but not limited to all
Intellectual Property and Software Products used in the Acquired Business, and
all other assets of EHGI, tangible or intangible (including contractual,
warranty, and other rights), the use or value of which is related to the assets
so identified.
1.3 Acquired Business: The businesses in which the Acquired Assets
are utilized, as described on Section 1.3 of the Acquired Business Disclosure
Document attached hereto.
1.4 Acquired Business Balance Sheet: The balance sheet as at July
31, 2000 or, if available prior to the Closing, the balance sheet as at the date
provided for in Section 8.1(15) included in the Unaudited Financial Statements
of the Acquired Business, excluding the Excluded Assets.
1.5 Acquired Business Disclosure Document: The document delivered
by ESI and EGHI to the Purchaser containing certain disclosures relative to this
Agreement, a copy of which is attached to this Agreement as Exhibit 1.5.
1.6 Acquired Facilities: All warehouses, stores, plants,
production facilities, manufacturing facilities, processing facilities,
fixtures, and improvements owned or leased by EHGI or otherwise used in
connection with the operation of the Acquired Business or leased or subleased to
others, but only to the extent that the same consist of Acquired Assets.
1.7 Affiliate: When used with respect to a person, an "affiliate"
of that person is a person Controlling, Controlled by, or under common Control
with that person.
1.8 Agreement: This Agreement for the Purchase and Sale of Assets,
including all of its Schedules and Exhibits specifically referred to in this
Agreement that have been or are to be delivered by a party to this Agreement to
another such party in connection with the Transaction or this Agreement, and
including all duly adopted amendments, modifications, and supplements to or of
this Agreement and such Schedules and Exhibits.
1.9 Assumed Liabilities: The Liabilities of EHGI to be assumed by
the Purchaser pursuant to this Agreement, as specifically identified in Section
1.9 to the Acquired Business Disclosure Document or as described on Section 6.5
below, and no other Liabilities.
1.10 Business Day: Any day that is not a Saturday, Sunday, or a day
on which banks in New York, New York, are authorized to close.
1.11 Closing: The completion of the Transaction, to take place as
described in Article II.
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1.12 Closing Date: The date on which the Closing actually occurs,
as agreed by the parties, but shall not in any event be prior to satisfaction or
waiver of the conditions to Closing set forth in Article VIII hereof.
1.13 Closing Time: The time at which the Closing actually occurs,
which shall take place at 5:00 p.m. eastern daylight time, on the Closing Date,
unless otherwise agreed by the parties.
1.14 Code: The Internal Revenue Code of 1986, as amended and in
effect at the time of execution of the Agreement.
1.15 [Omitted]
1.16 Consideration: The net sum of $7,965,000 to be paid by the
Purchaser to ESI or EHGI at the Closing for the Acquired Assets.
1.17 Control: Generally, the power to direct the affairs of an
Entity by reason of either (i) owning or controlling the right to vote a
sufficient number of shares of voting stock or other voting interest of such
Entity, or (ii) having the right to direct the general management of the affairs
of such Entity by contract or otherwise.
1.18 Counsel to ESI and EHGI: Jaffe, Raitt, Heuer & ▇▇▇▇▇, P.C.,
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1.19 Counsel to the Purchaser: ▇▇▇▇▇▇ Eng ▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
1.20 Entity: A corporation, partnership, sole proprietorship,
joint venture, or other form of organization formed for the conduct of a
business, whether active or passive.
1.21 ERISA: The Employee Retirement Income Security Act of 1974 as
amended and in effect at the time of execution of this Agreement.
1.22 [Omitted]
1.23 Excluded Assets: Notwithstanding the definition of the
Acquired Assets or the Acquired Business, the assets identified in Section 1.23
of the Acquired Business Disclosure Document shall not be deemed part of the
Acquired Assets.
1.24 GAAP: Generally accepted accounting principles, as in effect
in the United States on the date of any statement, report or determination that
purports to be, or is required to be, prepared or made in accordance with "GAAP"
consistently applied throughout the periods to which reference is made.
1.25 HSR Act: The ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
1.26 Intellectual Property: All Software Products (including, but
not limited to, all versions, renewals, modifications and extensions of any
Software Product), patents, patent applications, trade and service marks, trade
and service ▇▇▇▇ registrations, trade names,
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copyrights, licenses, sublicenses, inventions, trade secrets, technology,
know-how, domain names, customer lists, prospect lists and other similar
intangible property.
1.27 Inventories: The stock of raw materials, work-in-process and
finished goods, including but not limited to finished goods purchased for
resale, held by EHGI for manufacturing, assembly, processing, finishing, sale,
or resale to others (including other Subsidiaries or divisions of EHGI), from
time to time in the ordinary course of the business of EHGI in the form in which
such inventories then are held or after manufacturing, assembling, finishing,
processing, incorporating with other goods or items, refining, or the like.
1.28 IRS: The United States Internal Revenue Service.
1.29 Liabilities: At any point in time (the Determination Time),
the obligations of a person or Entity, whether known or unknown, contingent or
absolute, recorded on its books or not, arising or resulting in any way from
facts, events, agreements, obligations or occurrences that existed or transpired
at a prior point in time, or resulted from the passage of time to the
Determination Time.
1.30 Local Counsel: Special counsel retained by the Purchaser, ESI
or EHGI, as the case may be, to advise as to certain matters of state law or
local law in states or localities in which the Purchaser, ESI or EHGI, as the
case may be, desires such Local Counsel.
1.31 Multiemployer Plan: A "multiemployer plan," as defined in
ERISA Section 3(37) or Section 414(f) of the Code, or, in either case, successor
provisions to such provisions adopted by amendments to ERISA or the Code, as the
case may be, and regulations adopted under ERISA or the Code.
1.32 Parent: An Entity which Controls, directly or indirectly, or
through one or more intermediaries, a Subsidiary.
1.33 [Omitted]
1.34 Payables: Liabilities of a party arising from the borrowing of
money or the incurring of obligations for services, merchandise or goods
purchased.
1.35 [Omitted]
1.36 [Omitted]
1.37 Pension Plan: A "pension plan" or "employee pension benefit
plan," as defined in Section 3(2) of ERISA or successor provisions to such
provision adopted by amendments to ERISA or any regulations adopted under ERISA
or the Code.
1.38 [Omitted]
1.39 Projections: The projections of economic results of the
Acquired Business, prepared by ESI or EHGI on a monthly basis through December
31, 2000 and delivered to the Purchaser pursuant to the terms of this Agreement.
Such Projections include, separately and
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consolidated, projected financial results for each separate business operation
of the Acquired Business and for each separate facility of the Acquired
Business.
1.40 Proprietary Rights: Trade secrets, copyrights, patents,
trademarks, service marks, customer lists, and all similar types of intangible
property developed, created or owned by EHGI in connection with the Acquired
Assets, or used by EHGI in connection with its business, whether or not the same
are entitled to legal protection.
1.41 Purchaser: AremisSoft Corporation, a Delaware corporation.
1.42 Receivables: Accounts receivable, notes receivable, and other
obligations appearing as assets on the books of EHGI, and customarily reflected
as assets in balance sheets of entities prepared in accordance with GAAP,
indicating moneys owed to EHGI.
1.43 [Omitted]
1.44 [Omitted]
1.45 Software Products: Any instruction or instructions, in
source-code or object code format, for controlling the operation of any computer
processing unit together with all user documentation related thereto. Software
Products include, but are not limited to, the applications identified on Section
1.45 of the Acquired Business Disclosure Document.
1.46 Subsidiary: With respect to any Entity, another Entity of
which fifty percent (50%) or more of the effective voting power, or the
effective power to elect a majority of the board of' directors or similar
governing body, or fifty percent (50%) or more of the true equity interest; is
owned by such first Entity, directly or indirectly.
1.47 Transaction: The sale of the Acquired Assets, and the
assumption of the Assumed Liabilities, for the Consideration as contemplated by,
and subject to the terms and conditions of, this Agreement.
1.48 Unaudited Financial Statements: The balance sheet as at July
31, 2000 or (if available prior to the Closing) the balance sheet as at the date
provided for in Section 8.1(15), the balance sheet as at December 31, 1999, the
income statement for the period ended July 31, 2000 or (if available prior to
the Closing) for the period ended as of the date provided for in Section
8.1(15), the income statement for the period ended December 31, 1999 and the
related notes provided therewith, for the Acquired Business, excluding therefrom
the Excluded Assets, prepared in accordance with GAAP, other than the
presentation of appropriate footnote disclosure, schedules, the division of
equity and inter-company accounts, as required by GAAP and, in the case of the
December 31, 1999 balance sheet, annual maintenance obligations during 2000 have
been eliminated from deferred revenue accounts.
1.49 Welfare Plan: A "welfare plan" or an "employee welfare benefit
plan," as defined in Section 3(1) of ERISA or successor provisions to such
provision adopted by amendments to ERISA and regulations adopted under ERISA and
the Code.
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ARTICLE II.
THE TRANSACTION
2.1 The Transaction. On the Closing Date, and at the Closing Time,
subject in all instances to each of the terms, conditions, provisions and
limitations contained in this Agreement, EHGI shall, and ESI shall cause EHGI
to, sell, transfer, convey, and assign to the Purchaser, by instruments
reasonably satisfactory in form and substance to the Purchaser and its counsel,
and the Purchaser shall acquire from EHGI, the Acquired Assets, and shall assume
the Assumed Liabilities, and only those Liabilities and no others, in exchange
for the Consideration. ESI and EHGI represent that the Acquired Assets are all
the assets reasonably necessary for the conduct of the Acquired Business in the
ordinary course (exclusive of working capital) in the same manner as that in
which such business has been conducted in the immediate past, including, without
limitation, all Proprietary Rights, Software Products arid Intellectual Property
used in the ordinary conduct of the Acquired Business and all contract,
warranty, and other intangible rights relating to or arising out of such
Acquired Business. ESI and EHGI further represent that all assets and
liabilities of Eltrax International, Inc. of the type included in the Acquired
Assets and Assumed Liabilities, other than the assets to be transferred pursuant
to definitive agreements as provided in Section 11.1 below and shares of any
Subsidiaries of Eltrax International, Inc., have been transferred to EHGI or
will be transferred to EHGI prior to the Closing and are reflected in the
Acquired Business Balance Sheet. Neither the Purchaser nor any of its Affiliates
is assuming, becoming liable for, agreeing to discharge or in any manner
becoming in any way responsible for any of the Liabilities of ESI or EHGI other
than the Assumed Liabilities. Purchaser hereby agrees to pay, perform or
discharge all of the Assumed Liabilities. ESI hereby represents that, prior to
the Closing, neither ESI nor any Affiliate of ESI other than EHGI holds any
right, title or interest to the Acquired Assets and there are no other
agreements, understandings, or arrangements which, as of or after the Closing,
would materially adversely effect the Acquired Assets and the Acquired Business,
the ability of EHGI to sell, transfer, convey and assign the Acquired Assets and
the Acquired Business to the Purchaser or result in the assumption of any
Liabilities by the Purchaser other than the Assumed Liabilities.
2.2 Manner of Payment. Payment of the Consideration by the
Purchaser shall be made in immediately available funds by wire transfer of
federal funds to such account or accounts of ESI or EHGI or of designated
third-parties (it being understood that ESI and EHGI will be using a portion of
the Consideration proceeds to pay amounts owed certain third-parties who have
played legal, financial and other advisory roles in connection with the
Transaction) as shall have been adequately described to the Purchaser in writing
not less than three Business Days prior to the Closing.
2.3 Closing. The Closing hereunder shall simultaneously take place
at the offices of Purchaser, Counsel to the Purchaser, ESI, EHGI, Counsel to ESI
and EHGI, or at such other places as the parties to this Agreement may agree
upon, on the Closing Date.
2.4 Sales and Property Taxes. It being the intent of the parties
that the Transaction be exempt from sales, use and transfer taxes pursuant to
the "Casual Sale" provisions of Section 560-12-1-.07 of the Official Code of
Georgia tax rules and regulations, EHGI shall pay all sales,
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use and transfer taxes, if any, arising from the transfer of the Acquired Assets
and the Acquired Business. Purchaser will not be responsible for any employee
related withholding taxes accrued prior to the Closing, other than those related
to the salaried employees referenced in Section 6.5 below.
ARTICLE III.
ACQUISITION OF FOREIGN OPERATIONS
3.1 Agreement to Acquire Foreign Operations. On or prior to the
Closing Date, ESI shall, and ESI shall cause its Subsidiaries to, sell,
transfer, convey and assign to the Purchaser certain assets and liabilities of
the operations of EHGI currently conducted in the foreign jurisdictions of
Australia (Eltrax (Australia) Pty. Ltd.), Belgium (Eltrax Group, Inc.), Hong
Kong (Eltrax Hospitality Ltd.), Malaysia (Eltrax (Malaysia) SBD. BHD), Norway
(Eltrax Systems Scandinavia AS), Singapore (Eltrax Systems Pte. Ltd.),
Switzerland (Eltrax Holdings, AG and Eltrax AG) and the United Kingdom (Eltrax
UK Limited) (for purposes of this Agreement, the companies identified in this
sentence are referred to as the "Affiliated Sellers"). The Purchaser shall
acquire such assets and liabilities in exchange for aggregate consideration of
$2,035,000 allocated as follows, (i) Australia, $300,000, (ii) Belgium,
$330,000, (iii) Hong Kong, $580,000, (iv) Norway, $235,000, (v) Singapore and
Malaysia, $280,000, (vi) Switzerland, $300,000, and (vii) United Kingdom, $
10,000. This Transaction and the other transactions involving the Affiliated
Sellers (the "Related Transactions") are all interrelated transactions. ESI and
the Purchaser contemplate that in connection with the Related Transactions, the
purchaser may be a wholly-owned (direct or indirect) Subsidiary of the Purchaser
and the seller will be a wholly-owned (direct or indirect) Subsidiary of ESI. In
that event, Purchaser will be jointly and severally liable for the obligations
of its wholly-owned Subsidiary and ESI will be jointly and severally liable for
the obligations of its Subsidiary with respect to the Related Transactions. The
terms of the definitive agreements for the Related Transactions will be, to the
extent possible, identical to those set forth in this Agreement, giving due and
reasonable regard to the nuances of the laws of the various countries in which
the Affiliated Sellers are located. The Purchaser and ESI shall proceed in good
faith to finalize the purchase agreements for the Related Transactions as soon
as is practicable, consistent with the foregoing. The Closing of this
Transaction, and the closings of the Related Transactions, shall be dependent on
one another, such that none of the transactions shall close unless all of them
close, notwithstanding any other provision of this Agreement or of the purchase
agreements for the Related Transactions to the contrary. ESI and the Purchaser
hereby agree that notwithstanding any provision of any agreement relative to the
Related Transactions (including, without limitation, any "integration" clause
included in any such agreement), in the event of a conflict between a provision
of this Agreement and any provision of any agreement relative to the Related
Transactions, the provisions of this Agreement shall control.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser hereby represents and warrants to ESI and EHGI:
4.1 Organization. The Purchaser is a corporation duly organized,
validly existing, and in good standing under the general corporate laws of the
State of Delaware and has the requisite corporate power and authority to carry
on its business as it is now being conducted.
4.2 Authority Relative to This Agreement. The Purchaser has the
requisite corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized and approved by the requisite level of corporate authority of
Purchaser and no other corporate proceedings on the part of the Purchaser are
necessary to approve and adopt this Agreement or to approve the consummation of
the Transactions contemplated hereby, including, without limitation, delivery of
the Consideration. This Agreement has been duly and validly executed and
delivered by the Purchaser and constitutes a valid and binding obligation of the
Purchaser, enforceable in accordance with its terms.
4.3 Absence of Breach; No Consents. The execution, delivery and
performance of this Agreement, and the performance by Purchaser of its
obligations hereunder (except for compliance with the HSR Act, and compliance
with any regulatory or licensing laws applicable to the business of the
Purchaser, all of which, to the extent applicable to Purchaser, will be
satisfied in all material respects prior to the Closing) do not, except as
disclosed in Schedule 4.3, (1) conflict with, and will not result in a breach
of, any of the provisions of the Certificate of Incorporation or Bylaws of'
Purchaser; (2) contravene any law, rule or regulation of any State or
Commonwealth or any political subdivision of the United States, or of any
applicable foreign jurisdiction, or any order, writ, judgment, injunction,
decree, determination, or award affecting or binding upon the Purchaser or any
of its Subsidiaries, in such a manner as to provide a basis for enjoining or
otherwise preventing consummation of the Transaction; (3) conflict with or
result in a breach of or default under any indenture or loan or credit agreement
or any other agreement or instrument to which Purchaser or any of its
Subsidiaries is a party, in such a manner as to provide a basis of enjoining or
otherwise preventing consummation of the Transaction; or (4) require the
authorization, consent, approval or license of any third party of such a nature
that the failure to obtain the same would provide a basis for enjoining or
otherwise preventing consummation of the Transaction.
4.4 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of Purchaser or any of its
Subsidiaries.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ESI AND EHGI
ESI and EHGI, individually and collectively, represent and warrant to
the Purchaser as follows:
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5.1 Organization and Qualification. Each of ESI and EHGI is a
corporation duly organized, validly existing, and in good standing under the
laws of its respective jurisdictions of incorporation and each has the requisite
corporate power and authority to carry on its business as it is now being
conducted. Each of ESI and EHGI is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned or leased by it, or the nature of its activities, is such
that qualification as a foreign corporation in that jurisdiction is required by
law except where the failure to be so qualified would not reasonably be expected
to have a material adverse effect on such Entity's business.
5.2 Authority Relative to This Agreement. This Agreement has been
duly and validly executed and delivered by ESI and EHGI and constitutes a valid
and binding Agreement of ESI and EHGI enforceable in accordance with its terms.
Each of ESI and EHGI has all requisite corporate power and authority to enter
into this Agreement and to carry out the Transaction contemplated hereby, and
its doing so has been duly and sufficiently authorized, subject only to
governmental regulatory approvals as and to the extent specifically set forth
elsewhere in this Agreement.
5.3 Absence of Breach; No Consents. The execution, delivery, and
performance of this Agreement by ESI and EHGI, and the performance by ESI and
EHGI of their respective obligations hereunder, do not, (1) except as identified
in Section 5.3.1 of the Acquired Business Disclosure Document, conflict with or
result in a breach of any of the provisions of the Articles of' Incorporation or
Bylaws of ESI or EHGI; (2) except as identified in Section 5.3.2 of the Acquired
Business Disclosure Document, contravene any law, ordinance, rule, or regulation
of any State or Commonwealth or political subdivision of the United States or of
any applicable foreign jurisdiction (except for the HSR Act and compliance with
regulatory or licensing laws, ordinances, rules or regulations, all of which, to
the extent applicable to ESI or EHGI will be satisfied in all material respects
prior to the Closing), or contravene any order, writ, judgment, injunction,
decree, determination, or award of any court or other authority having
jurisdiction over, or cause the suspension or revocation of any authorization,
consent, approval, or license, presently in effect, which affects or binds, ESI
or EHGI or all or any part of the Acquired Business or any material properties
of the Acquired Business, except in any such case where such contravention,
suspension or revocation will not have a material adverse effect on the
business, condition (financial or otherwise), operations or prospects of the
Acquired Business and will not have a material adverse effect on the validity of
this Agreement or on the validity of the consummation of the Transaction; (3)
except as identified in Section 5.3.3 of the Acquired Business Disclosure
Document, conflict with or result in a material breach of or default under any
material indenture or loan or credit agreement or any other agreement or
instrument to which ESI or EHGI is a party or by which any of the material
properties of the Acquired Business may be affected or bound; (4) except as
identified in Section 5.3.4 of the Acquired Business Disclosure Document,
require the authorization, consent, approval, or license of any third party,
except for those the failure of which to obtain would not reasonably be expected
to have a material adverse effect on the Acquired Business or the Acquired
Assets; or (5) except as
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identified in Section 5.3.5 of the Acquired Business Disclosure Document,
constitute grounds for the loss or suspension of any permits, licenses, or other
authorizations used in the Acquired Business.
5.4 Brokers. No broker, finder, or investment banker is entitled
to any brokerage, finder's, or other fee or commission in connection with this
Agreement or the Transaction or any related transaction based upon any
agreements, written or oral, made by or on behalf of ESI, EHGI or any of their
Subsidiaries. EHGI does not have any obligation to pay finder's or broker's fees
or commissions in connection with the exercise of options to renew or extend
real estate leases to which the EHGI is a party.
5.5 Financial Statements. EHGI has heretofore delivered to the
Purchaser the following:
(1) The Unaudited Financial Statements of the Acquired
Business;
(2) The Projections.
All of the historical financial statements contained in such
documents were prepared from the books and records oil ESI and EHGI. The
Unaudited Financial Statements were prepared in accordance with GAAP (as
qualified in Section 1.48 above). Without limiting the foregoing, as of the
Acquired Business Balance Sheet, EHGI owned each of the assets included in
preparation of the Acquired Business Balance Sheet, and the valuation of such
assets in the Acquired Business Balance Sheet is consistent with GAAP (as
qualified in Section 1.48 above), and EHGI had no Liabilities required to be
included in the Acquired Business Balance Sheet in accordance with GAAP (as
qualified in Section 1.48 above) for which the Acquired Business or any part of
the Acquired Assets is responsible or liable, other than those included in the
Acquired Business Balance Sheet, nor any Liabilities required to be included in
the Acquired Business Balance Sheet in accordance with GAAP (as qualified in
Section 1.48 above) in amounts in excess of the amounts included for them in the
Acquired Business Balance Sheet. The Purchaser acknowledges that projections of
future economic performance are necessarily unreliable and subject to the
occurrence or nonoccurrence of a variety of events, but ESI and EHGI represent
that the Projections have been prepared on the basis of assumptions that are, in
the judgment of ESI and EHGI, reasonable in all respects and are not, to the
knowledge of ESI or EHGI, contrary in any material respect to fact or to events
that have occurred or are presently in existence. From the date hereof through
the Closing Date ESI and EHGI will continue to prepare financial statements for
the Acquired Business on the same basis that they have done so in the past, will
promptly deliver the same to the Purchaser, and agree that from and after such
delivery the foregoing representations will be applicable to each financial
statement so prepared and delivered.
5.6 Absence of Material Differences From the Acquired Business
Disclosure Document. Except as specifically disclosed in the Acquired Business
Disclosure Document in sections corresponding to the subsections below:
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(1) No Undisclosed Liabilities. EHGI has no Liabilities relating
to or affecting the Acquired Business or the Acquired Assets which are not, to
the extent required by GAAP (as qualified in Section 1.48 above), adequately
reflected or reserved against on the face of the Acquired Business Balance
Sheet, except Liabilities incurred since the date of the Acquired Business
Balance Sheet in the ordinary course of business of the Acquired Business and
consistent with past practice. Without limiting the foregoing, (a) EHGI is not
in any default or in breach, in any material respect, under any contract,
license, mortgage, indenture, deed or permit held or affecting the Acquired
Business, (b) there are no leasehold improvements currently due and owing at any
of the Acquired Facilities for which the Acquired Business is or will be
responsible, and (c) there are no deferred rents due to lessors at or with
respect to any of such Acquired Facilities, and (d) the Acquired Business
Disclosure Document sets forth, as a part thereof, each Liability of or
affecting the Acquired Business or the Acquired Assets in an amount in excess of
$10,000 and each person to whom the aggregate amount of such Liabilities is in
excess of $10,000.
(2) No Material Adverse Change, Etc. Since the date of the
Acquired Business Balance Sheet, other than as contemplated or caused by this
Agreement, there has not been (a) any material adverse change in the business,
condition (financial or otherwise), operations, or prospects of the Acquired
Business; (b) any damage, destruction or loss, whether covered by insurance or
not, having a material adverse effect on the business, condition (financial or
otherwise), operations or prospects of the Acquired Business, or materially
adversely affecting the Acquired Assets; (c) any entry into or termination of
any material commitment, contract, agreement or transaction affecting the
Acquired Business or the Acquired Assets (including, without limitation, any
material borrowing or capital expenditure or sale or other disposition of any
material asset or assets) other than this Agreement and agreements executed in
the ordinary course of business; (d) any transfer of or right granted under any
material lease, license, agreement, patent, trademark, trade name or copyright
included among the Acquired Assets; (e) any sale or other disposition of any
asset of the Acquired Business, or any mortgage, pledge or imposition of any
lien or other encumbrance on any asset of the Acquired Business or of any
corporation included in the Acquired Assets, or any agreement relating to any of
the foregoing, other than in the ordinary course of business; or (f) any default
or breach in any material respect under any contract, license or permit held by
or for or affecting the Acquired Business. Since the date of the Acquired
Business Balance Sheet, ESI and EHGI have conducted the Acquired Business
businesses only in the ordinary and usual course, and without limiting the
foregoing, no changes have been made in (a) executive compensation levels, or
(b) the manner in which other employees of EHGI are compensated, or (c)
supplemental benefits provided to any such executives or other employees of
EHGI, or (d) inventory levels of the Acquired Business in relation to sales
levels, except, in any such case, in the ordinary course of business and, in any
event, without material adverse effect on the business, condition (financial or
otherwise), operations, or prospects of the Acquired Business.
(3) Taxes. ESI and EHGI have properly filed or caused to be filed
(or obtained proper extensions in respect of) all federal, state, local, and
foreign income and other tax returns, reports, and declarations that are
required by applicable law to be filed by them and that relate to or in any way
affect the Acquired Business or the Acquired Assets except for those the failure
of
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which to file would not have an adverse effect on the Acquired Business or the
Acquired Assets, and have paid, or will pay when due all federal, state, local,
and foreign income and other taxes properly due (including any amounts deferred
as a result of an extension or otherwise) for the periods covered by such
returns, reports, and declarations.
(4) Litigation. (a) No material investigation or review by any
governmental entity with respect to the Acquired Business or any of the Acquired
Assets or the use thereof is, to the best of the knowledge of ESI and EHGI,
pending or threatened (other than inspections and reviews customarily made of
businesses such as the Acquired Business), nor has any governmental entity
indicated an intention to conduct the same, and (b) there is no action, suit or
proceeding pending or, to the best of the knowledge of ESI and EHGI, threatened
against or affecting the Acquired Business or the Acquired Assets at law or in
equity, or before any federal, state, municipal, or other governmental
department, commission, board, bureau, agency, or instrumentality.
(5) Employees, Etc. There are no collective bargaining, bonus,
profit sharing, compensation, or other plans, agreements, trusts, funds, or
arrangements maintained by EHGI for the benefit of directors, officers or
employees of EHGI and there are no employment, consulting, severance, or
indemnification arrangements, agreements, or understandings between EHGI, on the
one hand, and any current or former directors, officers or other employees of
EHGI, on the other hand. The Acquired Business Disclosure Document identifies
each person whose annualized income from EHGI, on the date of the Acquired
Business Balance Sheet, exceeded or would exceed on an annualized basis, or
whose income from EHGI in the fiscal year begun immediately thereafter is at a
rate exceeding, $50,000 per annum. EHGI is not, and following the Closing will
not be, bound by any express or implied contract or agreement to employ,
directly or as a consultant or otherwise, any person for any specific period of
time or until any specific age except as specified in agreements in writing
identified in the Acquired Business Disclosure Document or executed pursuant to
the provisions hereof.
(6) Compliance With Laws. The Acquired Business and each of the
Acquired Assets is in substantial compliance with all, and neither ESI nor EHGI
have received notice of any violation of any, laws or regulations applicable to
EHGI or the operations of the Acquired Business, including, without limitation,
the laws and regulations relevant to the use or utilization of premises, or with
respect to which compliance is a condition of engaging in any aspect of the
business of the Acquired Business, except to the extent the failure of which any
of the foregoing to be true would not have a material adverse effect on the
Acquired Business or the Acquired Assets. The Acquired Business has all permits,
licenses, zoning rights, and other governmental authorizations necessary to
conduct its business as presently conducted, except to the extent the failure of
the Acquired Business to have any of the foregoing would not have a material
adverse effect on the Acquired Business or the Acquired Assets. All such
permits, licenses, zoning rights, and other governmental authorizations will, as
a part and consequence of the Transactions, be transferred to the Purchaser at
the Closing.
(7) Ownership of Assets. EHGI has (or as of the Closing will have)
good, marketable and insurable title, or valid, effective and continuing
leasehold rights (including licenses) in the
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case of leased or licensed property, to all real property (as to which, in the
case of owned property, such title is fee simple) and all personal property
owned or leased by it and comprising a part of the Acquired Assets or the
Acquired Business, or used by it in the conduct of the Acquired Business in such
a manner as to create the reasonable appearance or reasonable expectations that
the same is owned or leased by it; such ownership or leasehold rights are, or at
the Closing will be, free and clear of all liens, claims, encumbrances and
charges (other than those customarily held by a lessor or licensor in a lease or
license of real property), except liens for taxes not yet due and minor
imperfections of title and encumbrances, if any, which, singularly or in the
aggregate, are not substantial in amount and do not materially-detract from the
value of the property subject thereto or materially impair the use thereof, no
other person has any ownership or similar right in, or contractual or other
right to acquire any such right in, any of such assets; and such ownership or
leasehold rights will be conveyed to the Purchaser at the Closing pursuant to
the Transaction. ESI and EHGI do not know of any potential action by any party,
governmental or other, and no proceedings with respect thereto have been
instituted of which ESI or EHGI has notice, that would materially affect EHGI's
ability to use and to utilize each of such assets in the business of the
Acquired Business. Neither ESI nor EHGI has received any default notices from
any mortgagee regarding any leased properties of the Acquired Business or any
leasehold interests which comprise any part of the Acquired Assets. Section
5.6(7) of the Acquired Business Disclosure Document contains a reasonably
detailed listing, as of the date specified therein, of all Acquired Assets
including, but not limited to, (a) accounts receivable as provided in clause
(13) below, (b) miscellaneous current assets in excess of $10,000, (c) prepaid
expenses in excess of $10,000, (d) Software Products, (e) real property, and (f)
gross aggregate additions for each of the past four years by location of (i)
buildings and improvements, (ii) leasehold improvements, and (iii) automobiles
and trucks.
(8) Proprietary Rights, Software Products and Intellectual
Property. EHGI possesses full ownership of, or adequate and enforceable
exclusive long-term licenses or other exclusive rights to use (without payment),
all Proprietary Rights, Software Products and Intellectual Property used in the
Acquired Business or utilized in connection with the Acquired Assets, and all
such ownership, license or other rights shall be conveyed to the Purchaser at
the Closing pursuant to the Transaction; neither ESI nor EHGI has received any
notice of conflict which asserts the rights of others with respect thereto, and
EHGI has, in all material respects, performed all of the obligations required to
be performed by it, and is not in default in any material respect, under any
agreement relating to any such Proprietary Rights, Software Products and
Intellectual Property.
(9) Trade Names. The Acquired Business Disclosure Document
identities each trade name, fictitious business name, or other similar name
under which ESI or EHGI has conducted any part of the Acquired Business or in
which ESI or EHGI has utilized any of the Acquired Assets during the five (5)
years preceding the date of this Agreement.
(10) Subsidiaries, Etc. No Subsidiary of ESI or EHGI (other than
EHGI), directly or indirectly, owns any of the Acquired Assets or conducts any
part of the Acquired Business. EHGI is not a partner of or joint venturer with
any other person or Entity in relation to any of the Acquired Assets or any
portion of the Acquired Business.
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(11) Employee Benefit Plans. EHGI does not maintain or contribute
to any Pension Plan or any Welfare Plan, nor is EHGI presently, nor has it been
within the last six years, a participating employer in any Multi-employer Plan
affecting, in any case, employees of EHGI.
(12) Facilities. To ESI and EHGI's knowledge (as applied to all of
the following), the Acquired Facilities are (as to physical plant and structure)
structurally sound and none of the Acquired Facilities, nor any of the vehicles
or other equipment used by EHGI in connection with the Acquired Business has any
material defects and all of them are in all material respects in good operating
condition and repair and are adequate for the uses to which they are being
utilized; none of such Acquired Facilities, vehicles or other equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs (normal wear and tear excepted) which are not material in nature or
cost. EHGI is not in any material breach, violation or default of any lease
affecting the Acquired Business or the Acquired Assets with respect to, or as a
result of which, the other party, whether lessor, lessee, sublessor, or
sublessee thereto, has the right to terminate the same and neither ESI nor EHGI
have received notice of any claim or assertion that it is or may be in any such
breach, violation or default.
(13) Accounts Receivable. All accounts receivable of EHGI reflected
in the Acquired Business Balance Sheet represent transactions in the ordinary
course of business, and are collectible, net of any reserves. As of the date
specified therein, the Acquired Business Disclosure Document specifically
identifies (a) the aging of Receivables, (b) each Receivable in excess of $
10,000, (c) each Receivable in an amount in excess of $5,000 that is more than
90 days past due, and (d) each Receivable from a person or Entity from whom the
aggregate of such Receivables exceeds $10,000.
(14) Inventories. All Inventories of EHGI reflected in the Acquired
Business Balance Sheet are of quality and quantity usable and salable in the
ordinary course of business except for obsolete items and items of
below-standard quality, all of which, in the aggregate, are immaterial in
amount. Items included in EHGI's Inventories are carried on the books of EHGI,
and are valued on the Acquired Business Balance Sheet consistent with GAAP (as
qualified in Section 1.48 above).
(15) Contracts. The Acquired Assets and the Acquired Business are
not affected by any contracts, agreements or understandings, whether express or
implied, written or verbal, provided, however, that the Acquired Assets or the
Acquired Business may be affected by, and the Acquired Business Disclosure
Document need not identify, any such contracts, agreements, or understandings
that fall into one of the following categories: (a) those that are terminable on
notice of less than thirty-two (32) days and do not involve payments or
obligations of more than $10,000 In any period of thirty-one (31) days or less
(on termination or otherwise); or (b) those that involve aggregate payment or
obligation remaining unpaid as of the date of the Agreement of less than
$10,000. All items excluded in (b) above represent, in the aggregate, less than
$100,000. Neither ESI nor EHGI is a party to any executory contract to sell or
transfer any part of any leasehold interest included in the Acquired Assets or
utilized by the Acquired Business. True and accurate copies of all leases of
properties included in the Acquired Assets or utilized by
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the Acquired Business, including all amendments, supplements, extensions and
modifications thereof, have heretofore been delivered to the Purchaser by EHGI.
(16) Accounts Payable. The accounts payable reflected on the
Acquired Business Balance Sheet do, and those reflected in the most recent
balance sheet included in the Unaudited Financial Statements do, and those
reflected on the books of EHGI at the time of the Closing will, reflect all
amounts owed by EHGI in respect of trade accounts due and other Payables of the
Acquired Business or relating to the Acquired Assets, and the actual Liability
of EHGI in respect of such obligations was not, and will not be, on any of such
dates, in excess of the amounts so reflected on the balance sheets or the books
of the Acquired Business, as the case may be.
(17) Labor Matters. To the best of the knowledge of ESI and EHGI,
there are no activities or controversies, including without limitation, any
labor organizing activities, election petitions or proceedings, proceedings
preparatory thereto, unfair labor practice complaints, labor strikes, disputes,
slowdowns, or work stoppages, pending or, threatened, affecting the employees of
EHGI.
(18) [Omitted]
(19) Title to and Utilization of Real Properties and Leasehold
Estates. Except as disclosed in the Acquired Business Disclosure Document, EHGI
owns fee, simple or a valid leasehold interest in, all real property included in
the Acquired Assets and has the unbridled right to use the same (other than
those customarily held by a lessor or licensor in a lease or license of real
property), and is not aware of any claim, notice or threat to the effect that
its right to own and use such property is subject in any way to any challenge,
claim, assertion of rights, proceedings toward condemnation or confiscation, in
whole or in part, or is otherwise subject to challenge. To ESI and EHGI's
knowledge, each parcel of real property the ownership of, or leasehold interest
in, which is included among the Acquired Assets is free of any and all hazardous
wastes, toxic substances, or other types of contamination in quantities or
conditions requiring remediation, and EHGI is not subject to any Liability
resulting from or related to any such wastes, substances or contaminants in
connection with any such property.
5.7 Full Disclosure. The documents, certificates, and other
writings furnished or to be furnished by or on behalf of ESI and/or EHGI to the
Purchaser pursuant to the provisions of this Agreement, taken together in the
aggregate, do not and will not contain any untrue statements of a material fact,
or omit to state any material fact necessary to make the statements made, in the
light of the circumstances under which they are made, not misleading.
5.8 Actions Since Balance Sheet Date. Except as set forth on the
Acquired Business Disclosure Document, since the date of the Acquired Business
Balance Sheet, neither ESI nor EHGI has taken any actions that would be
prohibited under the provisions of this Agreement (without the prior consent of
the Purchaser) after the date of this Agreement.
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ARTICLE VI
COVENANTS OF THE PURCHASER
6.1 Affirmative Covenants. From the date hereof through the
Closing Date, the Purchaser will use commercially reasonable efforts to satisfy
the conditions to Closing set forth in this Agreement and otherwise to ensure
the prompt and expedient consummation of the Transaction substantially as
contemplated by this Agreement, and will use commercially reasonable efforts to
cause the Transaction to be consummated, provided in all instances that the
representations and warranties of ESI and EHGI in this Agreement are and remain
true and accurate in all material respects and that the covenants and agreements
of ESI and EHGI in this Agreement are honored and that the conditions to the
obligations of the Purchaser set forth in this Agreement are not incapable of
satisfaction.
6.2 Cooperation. The Purchaser shall reasonably cooperate with ESI
and EHGI and its counsel, accountants and agents in every way in carrying out
the Transactions contemplated herein, and in delivering all documents and
instruments deemed reasonably necessary or useful by EHGI.
6.3 Expenses. Whether or not the Transaction is consummated, all
costs and expenses incurred by the Purchaser in connection with the preparation
of this Agreement and in preparation for the Transactions contemplated hereby
shall be paid by the Purchaser.
6.4 Publicity. Prior to the Closing any written news releases by
the Purchaser pertaining to this Agreement or the Transaction shall be submitted
to ESI for review and approval prior to release by the Purchaser, and shall be
released only in a form approved by ESI, provided, however, that (1) such
approval shall not be unreasonably withheld, and (2) such review and approval
shall not be required of releases by the Purchaser if prior review and approval
would prevent the timely and accurate dissemination of such press release as
required to comply, in the judgment of counsel, with any applicable law, rule or
policy.
6.5 Offers of Employment. Subject to the terms and conditions of
this Agreement, promptly after the Closing, Purchaser shall offer employment to
all employees of EHGI other than those set forth in Schedule 6.5, on terms and
conditions acceptable to Purchaser. Purchaser shall not be liable for any
liabilities associated with any employee terminated by ESI or EHGI.
Notwithstanding the foregoing, the Purchaser shall assume responsibility for
compensation for all employees of EHGI, other than those indicated in Schedule
6.5, accrued after the last payroll period immediately prior to the Closing to
the extent consistent with the historical payroll practices of EHGI and the
Acquired Business. The Purchaser shall not assume responsibility for any
scheduled or unscheduled payroll payments due the employees of the Acquired
Business indicated on Schedule 6.5 for any form of compensation which may be
accrued by such employees. The Purchaser will include in its offers of
employment to all employees, other than those indicated in Schedule 6.5, the
same number of days of vacation accrued by such employees, as employees of EHGI,
as of the Closing Date if, and only if, EHGI is not required by law to pay such
accrued vacation to the employees upon their termination by EHGI (assuming that
Purchaser makes the offers of employment contemplated in this Section 6.5). The
Purchaser
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will not be liable, in any manner, for any payments or other compensation which
may be required to be paid to such employees upon their termination by EHGI
pursuant to any federal, state or local law or rule.
6.6 Cooperation. Purchaser acknowledges that post-Closing, ESI
intends to cause EHGI to be dissolved, its assets liquidated and its affairs
wound up. Purchaser will reasonably cooperate with ESI, EHGI and their
respective counsel, accountants, agents and representatives in every way in that
regard and in executing and delivering all documents and instruments deemed
reasonably necessary or useful by ESI or EHGI in that regard. Without limiting
the foregoing, Purchaser shall use its best efforts to cause those employees of
EHGI who currently are officers of EHGI and who become employed by Purchaser to
remain as officers of EHGI, without compensation, and shall use its best efforts
to cause such employees to execute and deliver, on behalf of EHGI, the documents
and instruments contemplated in the immediately preceding sentence and to
otherwise further the dissolution, liquidation and winding up of EHGI, as
directed by ESI; provided, however, that Purchaser shall not be required to take
any action which may expose Purchaser or any of its officers, directors,
employees or agents to any liability in connection with such action. EHGI shall
reimburse Purchaser for any and all reasonable out-of-pocket expenses which it
incurs and pays in connection with it duties and obligations under this Section
6.6, but EHGI shall not be required to reimburse Purchaser for the time spent by
its employees in furtherance of such duties and obligations. Purchaser shall use
its best efforts to retain, and on request, shall provide ESI and EHGI with
access to or copies of, all documents which ESI and/or EHGI may reasonably
request in connection with the dissolution, liquidation and winding up of EHGI
or in preparing and filing any and all tax returns and financial statements for
any periods ending on or prior to December 31, 2000, or in connection with any
audit activities in respect of any periods ending on or prior to December 31,
2000.
ARTICLE VII
COVENANTS OF ESI AND EHGI
7.1 Affirmative Covenants. From the date hereof through the
Closing Date, ESI and EHGI will take every action reasonably required of it to
satisfy the conditions to Closing set forth in this Agreement and otherwise to
ensure the prompt and expedient consummation of the Transaction substantially as
contemplated hereby, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the
representations and warranties of the Purchaser in this Agreement are and remain
true and accurate and that the covenants and agreements of the purchaser in his
Agreement are honored and that the conditions to the obligations of ESI and EHGI
set forth in this Agreement are not incapable of satisfaction.
7.2 Employment Contracts. Pending the Closing, and effective upon
the consummation of the Transaction, ESI and EHGI will reasonably cooperate with
the Purchaser's efforts to have executed one (1) year employment contracts
between the Purchaser and each of the persons identified on Schedule 7.2, at an
annual salary equal to that set forth for such individual in such schedule; such
contracts shall provide that the Acquired Business may
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terminate them at any time for cause, or without cause may terminate them upon
sixty (60) days prior written notice.
7.3 Covenant Not to Compete. ESI and EHGI will execute a five (5)
year noncompetition agreement with the Purchaser to preclude ESI and EHGI from
engaging in any business competitive with that of the Acquired Business,
directly or indirectly, alone or in collaboration with others, except with the
written consent of the Purchaser or as a shareholder of less than one percent
(1%) of the common stock of a publicly held company engaged in one or more of
such businesses and with such other terms as are mutually acceptable to ESI,
EHGI and Purchaser.
7.4 Access and Information. Subject to the terms and conditions of
the existing confidentiality agreement between ESI and the Purchaser (the terms
and conditions of which are incorporated herein by reference), between the date
of this Agreement and the Closing Date ESI and EHGI shall afford to the
Purchaser and to the Purchaser's accountants, counsel, and other representatives
reasonable access during normal business hours throughout the period prior to
the Closing to all of its and its Subsidiaries properties, books, contracts,
commitments, records (including, but not limited to, tax returns), and personnel
relating to the Acquired Assets or the Acquired Business and, during such
period, shall furnish promptly to the Purchaser (1) all written communications
to its directors or to its shareholders generally relating to the Acquired
Assets or the Acquired Business, (2) internal monthly financial statements of
the Acquired Business when and as available, and (3) all other information
relating to the Acquired Assets or the Acquired Business as the Purchaser may
reasonably request, but no investigation pursuant to this Section 7.4 shall
affect any representations or warranties of ESI or EHGI , or the conditions to
the obligations of the Purchaser to consummate the Transaction contained in this
Agreement. Purchaser and its representatives shall use their best efforts to
assert their rights hereunder in such a manner as to minimize interference with
the business of ESI and EHGI.
7.5 No Solicitation. Until the Closing Date or the termination of
this Agreement in accordance with its terms, ESI and EHGI, and those acting on
behalf of any of them will not, and ESI and EHGI will use its best efforts to
cause its officers, employees, agents, and representatives (including any
investment banker) to not, directly or indirectly, solicit, encourage, or
initiate any discussions with, or negotiate or otherwise deal with, or provide
any information to, any person or Entity other than the Purchaser and its
officers, employees, and agents, in relation to the Acquired Assets or the
Acquired Business. ESI or EHGI will notify the Purchaser immediately upon
receipt of an inquiry, offer or proposal relating to any of the foregoing. None
of the foregoing shall prohibit providing information to others in a manner in
keeping with the ordinary conduct of the ESI or EHGI's business, or providing
information to government authorities.
7.6 Conduct of Business Pending The Transactions. ESI and EHGI
covenant and agree with the Purchaser that, prior to the consummation of the
Transaction or the termination of this Agreement pursuant to its terms, unless
the Purchaser shall otherwise consent in writing, which consent shall not be
unreasonably withheld or delayed, and except as otherwise contemplated by this
Agreement or disclosed in the Acquired Business Disclosure Document, ESI and
EHGI will comply with each of the following:
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(1) The Acquired Business, and the other businesses that
relate to, use or affect the Acquired Assets, if any, will be conducted
only in the ordinary and usual course, ESI and EHGI shall use
reasonable efforts to keep intact the business organization and good
will of the Acquired Business, keep available the services of the
employees of EHGI whose principal activities relate to the Acquired
Business and maintain relationships, in a manner reasonably consistent
with historical practices, with suppliers, lenders, creditors,
distributors, employees, customers and others having business or
financial relationships with the Acquired Business, and it shall
immediately notify the Purchaser of any event or occurrence or
emergency material to and not in the ordinary and usual course of
business of, the Acquired Business or affecting any material part of
the Acquired Assets, or any of its Subsidiaries.
(2) [Omitted]
(3) [Omitted]
(4) They shall not create, incur or assume any long-term
or short-term indebtedness for money borrowed or make any capital
expenditures or commitment for capital expenditures, affecting the
Acquired Business or any of the Acquired Assets, except in the ordinary
course of business and consistent with past practice;
(5) They shall not (a) adopt, enter into, or amend an
bonus, profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance, termination,
or other employee benefit plan, agreement trust fund or arrangement for
the benefit or welfare of any employees of the Acquired Business, or
(b) agree to any material (in relation to historical compensation)
increase in the compensation payable or to become payable to, or any
increase in the contractual term of employment of, any such employee
except, with respect to employees who are not officers or directors, in
the ordinary course of business and consistent with past practice.
(6) They shall not sell, lease, mortgage, encumber, or
otherwise dispose of or grant any interest in any of the Acquired
Assets except for sales, encumbrances and other dispositions or grants
in the ordinary course of business of the Acquired Business and
consistent with past practice and except for liens for taxes not yet
due or liens or encumbrances that are not material in amount or effect
and do not impair the use of the property, or as specifically provided
for or permitted in this Agreement.
(7) They shall not enter into, or terminate, any material
contact, agreement, commitment, or understanding relating to or
affecting the Acquired Assets or the Acquired Business.
(8) They shall not enter into any agreement, commitment,
or understanding, whether in writing or otherwise, with respect to any
of the matters referred to in subparagraphs (1) through (7) above.
(9) EHGI will, and ESI will cause EHGI to, continue to
properly and promptly file when due (or obtain proper extensions with
respect to) all federal, state, local, foreign, and other tax returns,
reports, and declarations required to be filed by it relating
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to the Acquired Assets or the Acquired Business, and will pay when due,
all taxes and governmental charges due (including any amounts deferred
as a result of an extension or otherwise) from or payable by it
relating to the Acquired Assets or the Acquired Business.
(10) ESI and EHGI will comply in all material respects
with all laws and regulations applicable to the operations of the
Acquired Business and the utilization of the Acquired Assets.
(11) ESI and EHGI will maintain in full force and effect
insurance coverage relating to the Acquired Assets or the Acquired
Business of a type and amount consistent with past practice, but not
less than that presently in effect.
7.7 Cooperation. ESI and EHGI will reasonably cooperate with the
Purchaser and its counsel, accountants, and agents in every way in carrying out
the transactions contemplated by this Agreement and in delivering all documents
and instruments deemed reasonably necessary or useful by the Purchaser.
7.8 Expenses. Whether or not the Transaction is consummated, all
costs and expenses incurred by ESI and EHGI in connection with the preparation
of this Agreement and in preparation for the Transaction and in connection with
the Closing of the Transaction contemplated hereby shall be paid by ESI and
EHGI.
7.9 Publicity. Prior to the Closing any written news releases by
ESI or EHGI pertaining to this Agreement or the Transaction shall be submitted
to the Purchaser for review and approval prior to release by ESI or EHGI, and
shall be released only in a form approved by the Purchaser, provided, however,
that (1) approval shall not be unreasonably withheld and (2) such review and
approval shall not be required of releases by ESI or EHGI if prior review and
approval would prevent the timely and accurate dissemination of such press
release as required to comply, in he judgment of counsel, with any applicable
law, rule or policy.
7.10 Updating the Exhibits and Disclosure Documents. ESI or EHGI
shall notify the Purchaser of any changes additions, or events which may cause
any change in or addition to the Acquired Business Disclosure Document or any
Schedules delivered by them under this Agreement promptly after the occurrence
of the same and again at the Closing by delivery of appropriate updates to the
Acquired Business Disclosure Document and to all such Schedules. No such
notification made pursuant to this Section shall be deemed to cure any breach of
any representation or warranty made in this Agreement unless the Purchaser
specifically agrees hereto in writing nor shall any such notification be
considered to constitute or give rise to a waiver by the Purchaser of any
condition set forth in this Agreement.
7.11 Payment of Unassumed Liabilities. EHGI agrees to promptly pay
when due, or otherwise to discharge, without cost or expense to the Purchaser,
each and every Liability of EHGI relating to the Acquired Business other than
the Assumed Liabilities.
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ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to Obligation of Purchaser. The obligation of the
Purchaser to effect the Transaction shall be subject to the fulfillment at or
prior to the Closing of the following conditions, unless Purchaser shall waive
such fulfillment:
(1) This Agreement and the Transaction contemplated
hereby shall have received those approvals, consents, authorizations,
and waivers from governmental and other regulatory agencies and other
third parties (including lenders, holders of debt securities and
lessors), identified in the attached Schedule 8.1(1) (including the
expiration of any applicable waiting period under the HSR Act).
(2) There shall not be in effect a preliminary or
permanent injunction or other order by any federal or state court or
other authority which prohibits the consummation of the Transaction.
(3) ESI and EHGI shall have performed in all material
respects each of its agreements and obligations contained in this
Agreement and required to be performed on or prior to the Closing and
shall have complied with all material requirements, rules, and
regulations of all regulatory authorities having jurisdiction relating
to the Transaction.
(4) No material adverse change shall have taken place in
the business, condition (financial or otherwise) operations, or
prospects of the Acquired Business or the Acquired Assets since the
date of the Acquired Business Balance Sheet other than those, if any,
that result from the changes permitted by, and transactions
contemplated by, this Agreement.
(5) The representations and warranties of ESI and EHGI
set forth in this Agreement shall be true in all material respects as
of the date of this Agreement or, except in such respects as, in the
reasonable judgment of the Purchaser, do not materially and adversely
affect the business, condition (financial or otherwise), operations, or
prospects of the Acquired Business or the Acquired Assets, as of the
Closing Time as if made as of such time.
(6) The Purchaser shall have received from ESI and EHGI
an officer's certificate, executed by the Chief Executive Officer of
ESI and the President of EHGI (in their capacities as such) dated the
Closing Date, as to the satisfaction of the conditions in paragraphs
(3), (4), and (5) above and including, as exhibits, copies of all
authorizing board and, where necessary, shareholder resolutions and
true and complete copies of their charter documents.
(7) The Purchaser shall have received, on and as of the
Closing Date, an opinion of Counsel to ESI and EHGI or Local Counsel to
ESI and EHGI, as appropriate, each addressed to Purchaser, directly,
substantially in the form as attached hereto as Exhibit 8.1(7).
(8) [Omitted]
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(9) Purchaser shall have received from EHGI a ▇▇▇▇ of
Sale or such other or additional documents sufficient to transfer title
to the Acquired Assets to the Purchaser and the delivery of all
Software Products and Intellectual Property, in each case reasonably
satisfactory in form and substance to the Purchaser and its counsel.
(10) Purchaser shall have received a release, reasonably
satisfactory in form and substance to the Purchaser and its counsel,
from PNC Bank, NA, releasing any and all liens and encumbrances it may
have on the Acquired Assets or the Acquired Business.
(11) All conditions to the closing of all of the
agreements relative to the Related Transactions, as described in
Section 3.1 above, have been satisfied or waived, it being an express
requirement that all of the agreements described in Section 3.1 above
close on the same day, adjusted for the appropriate time zones for each
jurisdiction.
(12) The agreement for marketing, distributing,
maintaining and supporting the Software Product commonly referred to as
"Squirrel," substantially in the form and substance as Exhibit 8.1(12)
attached hereto, are executed and delivered to Purchaser.
(13) The agreement for marketing, distributing,
maintaining and supporting the Software Product commonly referred to as
"Senercom," substantially in the form and substance as Exhibit 8.1(13)
attached hereto, are executed and delivered to Purchaser.
(14) The employment agreements between the Purchaser and
the persons identified on Schedule 7.2 have been executed and delivered
by the parties.
(15) ESI and EHGI will use commercially reasonable efforts
to make available to the Purchaser prior to Closing an updated
unaudited balance sheet and income statement with related notes and
schedules as of the end of the month immediately prior to the Closing
Date. If those updated financial statements are produced, they shall,
for purposes of the definition of "Unaudited Financial Statements,"
replace and supersede the balance sheet as at July 31, 2000 and the
income statement for the period ended July 31, 2000, in their entirety,
for all purposes relevant to this Agreement.
(16) The agreements relative to the Related Transactions,
as provided in Section 3.1 above, are executed and delivered to
Purchaser.
8.2 Conditions to Obligation of ESI and EHGI. The obligation of
ESI and EHGI to effect the Transaction shall be subject to the fulfillment at or
prior to the Closing of the following conditions, unless ESI and EHGI shall
waive such fulfillment:
(1) This Agreement and the Transaction contemplated
hereby shall have received those approvals, consents, authorizations,
and waivers from governmental and other regulatory agencies and other
third parties (including lenders, holders of debt securities and
lessors) as identified on Schedule 8.1(1) (including the expiration of
any applicable waiting period under the HSR Act).
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(2) There shall not be in effect a preliminary or
permanent injunction or other order by any federal or state authority
which prohibits the consummation of the Transaction.
(3) The Purchaser shall have performed in all material
respects each of its agreements and obligations contained in this
Agreement required to be performed on or prior to the Closing and shall
have complied with all material requirements, rules and regulations of
all regulatory authorities having jurisdiction relating to the
Transaction.
(4) The representation and warranties of the Purchaser
set forth in this Agreement shall be true in all material respects as
of the date of this Agreement and, except in such respects as do not
materially and adversely affect the business of the Purchaser and is
Subsidiaries, taken as a whole, as of the Closing Time as if made as of
such time.
(5) EHGI shall have received from the Purchaser an
officers' certificate executed by the Chief Executive Officer and the
Chief Financial Officer of the Purchaser (in their capacities as such),
dated the Closing Date, as to the satisfaction of the conditions of
paragraphs (3) and (4) above and including, as exhibits, copies of all
authorizing board and, where necessary, shareholder resolutions and
true and complete copies of its charter documents.
(6) ESI and EHGI shall have received, on and as of the
Closing Date, an opinion of Counsel to the Purchaser addressed to ESI
and EHGI, substantially in the form as attached hereto as Exhibit
8.2(6).
(7) EHGI shall have received from the Purchaser evidence
satisfactory to the EHGI and its counsel that the Consideration has
been, or is in the process of being, delivered in the form of
immediately available funds via wire transfer or other means acceptable
to EHGI.
(8) The License Agreement for the limited use of the
"System Software", as defined in the Amended and Restated Preferred
Vendor Agreement dated May 15, 1992 between Holiday Inns, Inc. and
Encore Systems, Inc., as amended (the "Holiday Inn Contract"), for
purposes of the performance of EHGI's rights and obligations under the
Holiday Inn Contract, substantially in the form and substance as
Exhibit 8.2(8) attached hereto, is executed and delivered to EHGI.
(9) EHGI shall have received from Purchaser an Assumption
of Liabilities Agreement relating to the Assumed Liabilities,
substantially in the form and substance as Exhibit 8.2(9) attached
hereto.
(10) The agreements relative to the Related Transactions,
as provided in Section 3.1 above, are executed and delivered to ESI.
(11) All other conditions to the closing of all of the
agreements relative to the Related Transactions, as described in
Section 3.1 above, have been satisfied or waived, it being an express
requirement that all of the agreements described in Section 3.1 above,
close on the same day, adjusted for the appropriate time zones for each
jurisdiction.
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ARTICLE IX
TERMINATION, AMENDMENT, WAIVER
9.1 Termination. This Agreement and the Transaction may terminated
at any time prior to the Closing, whether before or after any necessary
shareholders approval:
(1) By mutual consent of the Purchaser and ESI and EHGI;
(2) By the Purchaser or ESI and EHGI upon the material
breach of this Agreement by the other; or
(3) By either the Purchaser or ESI and EHGI, upon written
notice to the other, if the conditions to such party's obligations to
consummate the Transaction, in the case of Purchaser, as provided in
Section 8.1, or, in the case of ESI and EHGI, as provided in Section
8.2, were not, or cannot reasonably be, satisfied on or before October
26, 2000. unless the failure of condition is the result of the material
breach of this Agreement by the party seeking to terminate this
Agreement.
9.2 Amendment. This Agreement may be amended by ESI, EHGI and the
Purchaser by action taken at any time. This Agreement may not be amended except
by an instrument in writing signed on behalf of ESI, EHGI and the Purchaser.
9.3 Waiver. At any time prior to the Closing Date, the Purchaser,
ESI or EHGI, by action taken by their respective Boards of Directors, may, but
shall not be obligated to, (1) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (2) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto, or (3) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
9.4 Relief. In the event of liability on the part of ESI or EHGI
to the Purchaser in accordance with the provisions of this Agreement prior to
the Closing, the parties recognize and acknowledge that monetary measures of
damages will not reasonably be calculable and that specific performance and
injunctive relief should therefore be available to the Purchaser.
ARTICLE X
INDEMNITY
10.1 Indemnification of Purchaser. ESI and EHGI hereby agree to
jointly and severally indemnify, defend and hold harmless, the Purchaser and its
officers, directors, shareholders, managers, members, employees, independent
contractors, agents, successors and assigns (collectively, the "Purchaser
Parties"), for, from and against any and all liabilities, losses, costs or
expenses which any of the Purchaser Parties may suffer or for which any of the
Purchaser Parties may become liable and which are based on, the result of, arise
out of or are otherwise related to any of the following:
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(1) any inaccuracy or misrepresentation in, or breach of
any representation or warranty of ESI or EHGI
contained in this Agreement, any of the documents or
agreements executed in connection with this Agreement
(collectively, the "Attendant Documents") or any
certificate, schedule, list or other instrument to be
furnished by ESI or EHGI to the Purchaser pursuant to
this Agreement or any of the Attendant Documents;
(2) any breach or failure of ESI or EHGI to perform any
covenant or agreement required to be performed by ESI
or EHGI pursuant to this Agreement or any of the
Attendant Documents including, without limitation,
EHGI's obligations to pay the unassumed Liabilities
under Section 7.11 above;
(3) any and all actions, suits, proceedings, demands,
assessments, judgments, costs and expenses, including
reasonable attorneys' fees and consultants' fees
(collectively, the "Related Expenses"), incident to
any of the foregoing.
10.2 Indemnification of ESI and EHGI. Purchaser hereby agrees to
indemnify, defend and hold harmless, ESI, EHGI and their respective officers,
directors, shareholders, managers, members, employees, independent contractors,
agents, successors and assigns (collectively, the "Seller Parties"), for, from
and against any and all liabilities, losses, costs or expenses which any of the
Seller Parties may suffer or for which any of the Seller Parties may become
liable and which are based on, the result of, arise out of or are otherwise
related to any of the following:
(1) any inaccuracy or misrepresentation in, or breach of
any representation or warranty of the Purchaser
contained in this Agreement, any of the Attendant
Documents or any certificate, schedule, list or other
instrument to be furnished by the Purchaser to ESI or
EHGI pursuant to this Agreement or any of the
Attendant Documents,
(2) any breach or failure of the Purchaser to perform any
covenant or agreement required to be performed by the
Purchaser pursuant to this Agreement or any of the
Attendant Documents including, without limitation,
Purchaser's obligations to pay the Assumed
Liabilities under Section 2.1 above;
(3) any and all Related Expenses incident to any of the
foregoing.
10.3 Remedies Not Exclusive. The Purchaser Parties and the Seller
Parties shall be entitled to exercise and resort to all rights and remedies for
misrepresentation or breach as are afforded at law or in equity, including,
without limitation, rescission, specific performance or such other non-monetary
remedies and relief as may be afforded under this Agreement or by a court of
competent jurisdiction. Neither the existence or exercise of any specific
remedies is intended to be exclusive or impair or otherwise adversely affect in
any manner whatsoever any rights, remedies or relief otherwise available, and
each and every right and remedy will be cumulative and in addition to every
other right and remedy provided in this Agreement or by law. Notwithstanding the
foregoing, other than actions for fraud or other intentional torts, the
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remedies set forth in this Article 10 shall be the Purchaser Parties' and the
Seller Parties' sole and exclusive remedies relative to the recovery of economic
or monetary damages.
10.4 Procedures. If any proceedings are instituted or any claim or
demand is asserted by any person not a party to this Agreement in respect of
which any of the Purchaser Parties or the Seller Parties may seek
indemnification pursuant to this Section 10, the indemnified party shall
promptly cause written notice (the "Notice") of the assertion of any such claim
or demand to be made to the indemnifying party; provided, however, that the
failure of the indemnified party to give prompt Notice shall not relieve the
indemnifying party of its obligations hereunder unless, and only to the extent
that, such failure caused the damages for which the indemnifying party is
obligated to be greater than they would have been had the indemnified party
given the indemnifying party prompt Notice hereunder. Except as otherwise
provided herein, the indemnifying party shall have the right, at its option and
expense, to defend against, negotiate, or settle any such claim or demand, and
if the indemnifying party exercises that option, the indemnifying party shall
not be liable for the fees and expenses incurred after the date the indemnifying
party notifies the indemnified party of such exercise by a counsel employed by
the indemnified party. An indemnifying party may not settle any such claim or
demand without the written consent (which consent shall not be unreasonably
withheld, conditioned or delayed) of the indemnified party unless such
settlement requires no more than a monetary payment for which the indemnified
party is fully indemnified or involves other matters not binding upon the
indemnified party. An indemnifying party shall not be liable for any settlement
of any such claim or demand effected without its prior written consent (which
consent shall not be unreasonably withheld, conditioned or delayed). In the
event that the indemnifying party shall fail to respond within ten (10) days
after the giving of the Notice, then the indemnified party may retain counsel
and conduct the defense thereof as it may, in its sole discretion, deem proper,
at the sole cost and expense of the indemnifying party. The parties agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such legal proceeding, claim or demand.
10.5 Cooperation. The Purchaser shall, and shall cause its
accountants, counsel, employees and other representatives to, reasonably
cooperate with ESI and EHGI in connection with any and all disputes which may
arise in connection with any and all Liabilities other than the Assumed
Liabilities (the "Excluded Liabilities"). ESI and EHGI shall, and shall cause
its accountants, counsel, employees and other representatives to, reasonably
cooperate with the Purchaser in connection with any and all disputes which may
arise in connection with any and all of the Assumed Liabilities. Without
limiting the generality of the foregoing, the Purchaser shall cause its
accountants, counsel, employees and other representatives, to make available to
ESI or EHGI, their employees, work papers, documents and other information and
materials reasonably requested by ESI or EHGI in connection with the Excluded
Liabilities and ESI and EHGI shall cause its respective accountants, counsel,
employees and other representatives, to make available to the Purchaser, its
employees, work papers, documents and other information and materials reasonably
requested by the Purchaser in connection with the Assumed Liabilities. The party
requesting cooperation (ESI and EHGI in connection with the Excluded Liabilities
or the Purchaser in connection with the Assumed Liabilities) shall pay all
out-of-pocket expenses reasonably incurred and paid by the cooperating party to
third parties in connection with such
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cooperative efforts; provided, however, that the party requesting cooperation
shall not be obligated to reimburse the cooperating party for the time spent by
any of their or their Affiliates' employees' time spent in connection with such
cooperative efforts.
10.6 Initial Limitation. Other than the rights to defend and hold
harmless with respect to third party claims, neither Party (defined below) shall
have any liability for indemnification pursuant to Section 10.1 and Section
10.2, above, until the aggregate amount of all losses suffered by the Party
seeking indemnification with respect to such matters exceeds the sum of
$100,000; provided, however, that this limitation shall not apply to breaches by
EHGI of its obligations under Section 7.11 above or Purchaser of its obligations
to pay the Assumed Liabilities. For purposes of this Section 10.6 and Section
10.7 below, Purchaser, on the one hand, and ESI and EHGI, collectively, on the
other hand, shall each constitute a "Party."
10.7 Aggregate Limitation. The aggregate liability, for either
Party, for indemnification pursuant to Section 10.1 or Section 10.2, above,
shall not exceed the sum of $10,000,000; provided, however, that this limitation
shall not apply to breaches by EHGI of its obligations under Section 7.11 above
or Purchaser of its obligations to pay the Assumed Liabilities.
10.8 Available Insurance Limitation. The amount of any recovery for
indemnification pursuant to Section 10.1 or Section 10.2, above, shall be
determined after taking into account all amounts to which the indemnified party
is entitled and actually receives under the provisions of all insurance policies
with third parties (i.e. actual insurance policies and not self-insurance or
retention programs) subject to offset for any increase in premiums attributable
to such losses or payments made in respect of such losses. The parties agree to
use reasonable efforts to collect amounts available under any such insurance
policies.
10.9 Balance Sheet Adjustment Limitation. With respect to any claim
of indemnification related to any breach of Sections 5.5, 5.6(l), 5.6(13),
and/or 5.6(14) or any other representation or warranty concerning the Unaudited
Financial Statements, the amount of any recovery by the Purchaser Parties for
indemnification pursuant to Section 10.1, above, as a result of any breach of
Sections 5.5, 5.6(l), 5.6(13), and/or 5.6(14) or any other representation or
warranty concerning the Unaudited Financial Statements, shall be reduced by any
Balance Sheet Gains (defined below). Upon any such claim for recovery, or upon
the reasonable request of ESI or EHGI after a claim has been made by Purchaser
hereunder, Purchaser shall deliver to ESI or EHGI a report identifying Balance
Sheet Gains or will represent in writing that there are no Balance Sheet Gains.
For purposes of this Agreement, the term "Balance Sheet Gains" means any
realization with respect to any current asset in excess of its value as
reflected on the Acquired Business Balance Sheet (as adjusted to account for any
ordinary course changes thereto through the Closing Date), or any positive
realization with respect to any Liability reflected on the Acquired Business
Balance Sheet (as adjusted to account for any ordinary course changes thereto
through the Closing Date) (in that the Purchaser is actually responsible for any
amount less than that reflected thereon).
10.10 Application of Indemnification Provisions. The parties agree
that the limitations of the indemnification provisions contained in Sections
10.6, 10.7, 10.8 and 10.9 above do not apply to the parties' rights and
obligations to defend and hold harmless with regard to third party
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claims, pursuant to Sections 10.1 and 10.2 above, and shall apply on a
collective basis to all agreements for indemnification including those to be
entered into in respect of each of the Related Transactions, pursuant to Section
3.1 above. For example, a claim for indemnification as a result of a balance
sheet adjustment, pursuant to Section 10.9 above, shall be determined after
taking into account any positive adjustments to the Acquired Business Balance
Sheet or to the balance sheets of any foreign jurisdiction entities (as set
forth in Section 3.1 above) and shall similarly be accompanied by the report or
representation contemplated in Section 10.9 above. The parties further agree
that the Purchaser's right to put any Receivables back to ESI or EHGI, as and to
the extent provided in Section 11.1 below, shall be determined on a collective
basis, taking into consideration all receivables of EHGI and all of the foreign
entities identified in Section 3.1 above, the Purchaser's or its Affiliates'
collection efforts, and the aggregate reserves of EHGI and all of the foreign
entities identified in Section 3.1 above.
ARTICLE XI
GENERAL PROVISIONS
11.1 Collection of Accounts Receivable. Upon and after the Closing,
the Purchaser shall have the right and authority to collect all Receivables
transferred to Purchaser pursuant to this Agreement and to endorse the name of
EHGI on any checks received on account of any such Receivables. ESI and EHGI
shall promptly transfer and deliver to Purchaser any cash, checks or other
property which ESI and EHGI may receive in respect of such accounts after the
Closing Date. ESI and EHGI will cooperate with Purchaser, at its reasonable
request, on and after the Closing Date in endeavoring to collect all Receivables
transferred to Purchaser by furnishing, at Purchaser's cost and expense, such
information, testimony and other assistance as Purchaser may reasonably require
in connection with collection of such accounts. Payments received from customers
in respect of any Receivables shall be applied to the oldest outstanding
Receivable from such customer, unless such customer, acting on its own volition,
specifically identifies such payment to a particular Receivable, in which case
such payment shall be applied to the specified Receivable. Purchaser hereby
agrees not to coerce or suggest, directly or indirectly, in any way, to any
customer that they identify any payment to a particular Receivable, and in the
event of any such coercion or suggestion Purchaser agrees to make a credit to
ESI or EHGI, for any Receivables put to ESI or EHGI as provided below, in an
amount equal to five times the amount of that Receivable. Purchaser shall use
commercially reasonable efforts to collect the Receivables (but shall not be
obligated hereunder to bring any action to collect any Receivables) but if it
shall fall to collect the full amount of any such Receivable within 180 days
after the Closing Date, Purchaser shall have the right to put such Receivable to
EHGI (or ESI, if EHGI is no longer in existence), whereupon ESI or EHGI (as
applicable) shall repurchase such Receivable from Purchaser at the face amount
thereof; provided, however, that ESI or EHGI (as applicable) shall not have any
obligation to repurchase any Receivables until the aggregate amount of
Receivables which Purchaser has a right to, and has elected to, put to ESI or
EHGI (as applicable) exceeds the amount of any reserve for such Receivables as
of the Closing Date and then only to the extent of such excess. Any such put
right must be exercised on or before 360 days after the Closing Date unless
extended in writing by ESI. Notwithstanding the foregoing, Purchaser shall not
have the
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right to put to ESI or EHGI (as applicable) any Receivable which Purchaser has
compromised or settled or agreed to accept payment at less than the face amount
thereof in full satisfaction thereof or otherwise given a credit in respect
thereof. Upon a put of a receivable to ESI or EHGI, Purchaser will cooperate
with ESI or EHGI, at its reasonable request, in endeavoring to collect all
Receivables put to ESI or EHGI by furnishing, at ESI or EHGI's cost and expense,
such information, testimony and other assistance as ESI or EHGI may reasonably
require in connection with collection of such accounts.
11.2 Maintenance and Support of Performer. After the Closing, upon
a sale by Purchaser of the Software Product commonly referred to as "Performer"
and the entering into of an agreement for its maintenance and support, Purchaser
and ESI agree that Purchaser shall subcontract with ESI, or any Subsidiary of
ESI as designated by ESI, for purposes of providing such maintenance and
support. The terms and conditions shall be substantially similar to those
currently utilized by EHGI for the maintenance and support of Performer;
provided, however, that ESI shall be responsible for invoicing and collecting
all maintenance and support fees generated thereunder. Notwithstanding the
foregoing, Purchaser shall be responsible for the management of the Performer
customer accounts. On or before the 15th day of each month, ESI shall deliver to
Purchaser an amount equal to 15% of all such fees which ESI collected during the
previous month. Upon 90 days written notice, either ESI or Purchaser shall have
the right to terminate their obligations hereunder. Upon a termination,
Purchaser and ESI shall use commercially reasonable efforts to complete the
invoicing, collection and division of all previously accrued maintenance and
support fees generated from the subcontracting of such services by Purchaser to
ESI.
11.3 Asset Acquisition Statement. Prior to the Closing, the parties
agree to jointly prepare and file the Asset Acquisition Statement on Form 8594,
as required by the Internal Revenue Service, and to use commercially reasonable
methods to determine the allocation of the Consideration to be disclosed
therein.
11.4 Arbitration. In the event that there shall be a dispute
arising out of or relating to this Agreement, the Transaction, any document
referred to herein or centrally related to the subject matter hereof, or the
subject matter of any of the same, the parties agree that such dispute shall be
submitted to binding arbitration in Los Angeles County, California, under the
auspices of, and pursuant to the rules of, the American Arbitration Association
as then in effect, or such other procedures as the parties may agree to at the
time, before an arbitrator selected pursuant to the rules of the American
Arbitration Association. Any award issued as a result of such arbitration shall
be final and binding between the parties, and shall be enforceable by an court
having jurisdiction over the party against whom enforcement is sought.
11.5 Notices. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed given if and when
delivered personally or three (3) business days following mailing by registered
or certified mail (return receipt requested) to the parties at the following
addresses or at such other address for a party as shall be specified by like
notice given.
If to the Purchaser:
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AremisSoft Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Roys Poyiadjis, CEO
with a required copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ Eng Linn & ▇▇▇▇▇▇▇▇
3 ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to ESI or EHGI:
Eltrax Systems, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Chairman
with a required copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Jaffe, Raitt, Heuer & ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
11.6 Interpretation. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7 Survival of Representations, Warranties, Etc. The
representations, warranties, covenants, and agreements of the parties contained
herein shall survive the Closing and any investigation of the other party made
prior thereto. Representations and warranties shall so survive for a period of
three (3) years from the Closing, except for those contained in Sections 4.1,
4.2, 4.3, 5.1, 5.2 and 5.3 which shall survive indefinitely, and for those
contained in Section 5.5 which shall survive until March 31, 2001.
11.8 Miscellaneous. This Agreement and the existing confidentiality
agreement referenced in Section 7.4 constitute the entire agreement and
supersedes all of the prior agreements and understandings, both written and
oral, between the parties, with respect to the subject matter hereof, except as
specifically provided otherwise or referred to herein, so that no such external
or separate agreements relating to the subject matter of this Agreement (1)
shall have any effect or be binding, unless the same is referred to specifically
in this Agreement or is executed by the parties after the date hereof, (2) is
not intended to confer upon any other person any rights or remedies hereunder;
(3) shall not be assigned by operation of law or otherwise
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except for assignments of all or any part of the rights of the Purchaser
hereunder, which may be freely assigned by the Purchaser so long as the
obligations of the Purchaser under this Agreement remain obligations of, or
their performance is unconditionally guaranteed (which must be a guaranty of
performance, and not just collection, with no duty on the part of ESI or EHGI to
pursue the assignee first, and which guarantee must be approved by ESI in
advance, which approval will not be unreasonably withheld) by, the Purchaser;
and (4) shall be governed in all respects, including validity, interpretation
and effect, by the internal laws of the State of California, without regard to
the principles of conflict of laws thereof. It is acknowledged and understood by
ESI and EHGI that Purchaser may assign it rights, but not its obligations,
hereunder, after execution and prior to the Closing, to one or more wholly-owned
(direct or indirect) Subsidiaries of Purchaser. This Agreement may be executed
in two or more counterparts which together shall constitute a single agreement
and facsimile signatures shall have equal dignity with original signatures for
all purposes.
11.9 Certain Exhibits. The parties acknowledge that they have not
yet finalized the documents to be attached to this Agreement as Exhibits 8.1(7),
8.1(12), 8.1(13), 8.2(6) and 8.2(9) but they agree that they shall endeavor in
good faith to do so by the close of business on October 5, 2000. Each party's
approval of those documents prior to the Closing shall be an additional
condition precedent to its obligations to consummate the Transaction.
[INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement
for the Purchase and Sale of Assets to be signed on September 28, 2000 by their
respective officers thereunto duly authorized.
The Purchaser:
AremisSoft Corporation
By: /s/ Roys Poyiadjis
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Roys Poyiadjis, CEO
ESI:
Eltrax Systems, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, Chairman
EHG:
Eltrax Hospitality Group, Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇
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