Exhibit 2.2
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Agreement and Plan of Merger and Reorganization (this "Agreement")
dated as of December 14, 2001, is by and among Open Solutions Inc. ("OSI"), a
Delaware corporation; OSI Merger Corporation ("Merger Sub"), a Delaware
corporation that is a wholly owned subsidiary of OSI; Imagic Corporation (the
"Company"), a Tennessee corporation; and the stockholders of the Company listed
in the attached signature pages (the "Stockholders").
The parties desire that the Company be merged with and into Merger Sub
(the "Merger") and become a wholly owned subsidiary of OSI, on the terms and
conditions set forth in this Agreement. The parties intend (but no party
represents, warrants, or promises) that the Merger qualify as a "reorganization"
under the provisions of Section 368(a) of the Internal Revenue Code of 1986, as
amended.
The parties agree as follows:
(Certain terms used in this Agreement are defined in Section 10
hereof.)
1. CLOSING. Upon execution and delivery of this Agreement, a
closing (the "Closing") will be held at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
At or before the Closing, Merger Sub and the Company will execute a
certificate of merger and articles of merger (collectively, the "Merger
Certificates") substantially in the form of the attached Exhibits A-1 and A-2,
respectively, and file them with the respective Secretaries of State of Delaware
and Tennessee in order to cause the Merger to be effected in accordance with the
laws of the States of Delaware and Tennessee. The Merger will be effective upon
the filing of the Merger Certificates (the "Effective Time").
At the Closing, each of the parties will also deliver the closing
documents described in the attached Closing Documents Schedule. For all
purposes, all of the document deliveries and other actions to occur at the
Closing will be conclusively presumed to have occurred at the same time,
immediately before the Effective Time. The date on which the Effective Time
occurs is referred to herein as the "Closing Date."
2. EFFECT OF MERGER. At the Effective Time, automatically and
without further action:
2.1. SURVIVING CORPORATION. The Company will be merged with and
into Merger Sub and the separate existence of the Company will cease. Merger Sub
will continue in existence as the surviving corporation in the Merger (the
"Surviving Corporation"). The effect of the Merger will be as provided in the
applicable provisions of this Agreement, the Delaware General Corporation Law,
and the Tennessee Business Corporation Act, including that all of the respective
properties, rights, privileges, powers, and franchises of Merger Sub and the
Company will vest in the Surviving Corporation, and all of the respective debts,
liabilities, and duties of Merger Sub and the Company will become the debts,
liabilities, and duties of the Surviving Corporation.
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2.2. CERTIFICATE OF INCORPORATION AND BY-LAWS. Merger Sub's
certificate of incorporation and by-laws, respectively, as in effect immediately
before the Effective Time, will be the certificate of incorporation and by-laws
of the Surviving Corporation.
2.3. DIRECTORS AND OFFICERS. From and after the Effective Time, the
respective officers and members of the Board of Directors of Merger Sub as of
immediately prior to the Effective Time will continue in office as the officers
and directors of the Surviving Corporation, subject to change from time to time
in accordance with the Delaware General Corporation Law and the Surviving
Corporation's certificate of incorporation and by-laws.
2.4. CONVERSION OF COMPANY'S STOCK. The shares of the Company's
capital stock issued and outstanding immediately before the Effective Time will
be converted into and become the right to receive, subject to Sections 2.5 and 3
hereof, an aggregate of (i) 456,009 shares (the "Consideration Shares") of OSI's
Common Stock, $0.01 par value per share, and (ii) cash in the amount of
$1,807,775 (the "Cash Consideration"; and collectively, the Consideration Shares
and the Cash Consideration, the "Merger Consideration"). Based in part on the
representations and warranties of the Company and the Stockholders set forth in
this Agreement, including representations and warranties with respect to the
capitalization of the Company, each Stockholder will be entitled, subject to
Section 3 hereof, to receive the types and amounts of Merger Consideration
indicated opposite such Stockholder's name in the attached Merger Consideration
Schedule.
2.5. ESCROW. Notwithstanding any other provision hereof, OSI will
withhold a portion of the Merger Consideration and will not deliver it to the
Stockholders but instead will deposit it in escrow pursuant to an escrow
agreement substantially in the form of the attached Exhibit B, with such changes
as the escrow agent (who will be chosen as promptly as practicable after the
Closing and must be mutually satisfactory to OSI and the Stockholders) may
reasonably request to secure the Stockholders' indemnification obligations
hereunder. The Merger Consideration to be withheld and escrowed will be as shown
in the attached Merger Consideration Schedule. OSI will deposit such withheld
Merger Consideration into escrow as promptly as practicable following the
selection of the escrow agent and the execution and delivery of the escrow
agreement by all parties.
Upon the final resolution of each of the following matters, the parties
will cause to be released from escrow and delivered to the Stockholders in
accordance with their respective entitlements thereto, cash in an amount equal
to the excess, if any, of (i) $25,000, over (ii) the aggregate cost, if any, to
the Surviving Corporation of finally resolving and settling the matter at issue:
(1) The dispute with OnTrack referred to in Section 4.16 of the
Company Disclosure Schedule (the "OnTrack Dispute").
(2) The dispute with Bank of Naples referred to in Section 4.16 of
the Company Disclosure Schedule (the "Bank of Naples
Dispute"). .
2.6. REGISTRATION RIGHTS. From and after any time at which OSI
becomes a public company having a class of equity securities registered pursuant
to Section 13 or 15 of the
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Securities Exchange Act of 1934, as amended, if OSI proposes to engage in an
underwritten public offering of shares of Common Stock to be offered for cash
and registered under the Securities Act, OSI will notify the Stockholders who
received Consideration Shares hereunder, and such Stockholders will be entitled
to include their shares in such registration, provided, that (i) the form of
registration statement that OSI proposes to use in connection with such offering
permits the inclusion of such Consideration Shares for the accounts of the
Stockholders, (ii) such Stockholders execute the form of underwriting agreement
executed by OSI in connection with such offering and any other customary
agreements or documents requested by OSI or the underwriters of such offering,
(iii) no Stockholder will be entitled to include shares in such registration or
offering to the extent that this would reduce the number of shares to be
included in such registration or offering for the account of any other
stockholder of OSI having the contractual right to include shares in such
offering (taking into account any limitations on such numbers of shares,
including limitations requested by the underwriters for marketing reasons).
These registration rights will terminate as to any Stockholder when such
Stockholder's Consideration Shares have been resold pursuant to a registration
statement, SEC Rule 144, or any exemption from registration under the Securities
Act pursuant to which the transferee of such securities does not receive
"restricted securities" within the meaning of SEC Rule 144, or when such
Stockholder's Consideration Shares can be resold without volume limitation
pursuant to SEC Rule 144(k).
2.7. CONVERSION OF MERGER SUB'S SHARES. Each share of the common
stock, $0.001 par value per share, of Merger Sub that was issued and outstanding
immediately before the Effective Time will be converted into and become one
share of the common stock, $0.001 par value, of the Surviving Corporation.
3. EXCHANGE OF CERTIFICATES. As of the Effective Time:
(a) Persons who immediately before the Effective Time
were the holders of shares of the Company's capital stock will cease to
be, and will have no rights as, holders of the Company's capital stock,
but instead will have the right to receive Merger Consideration as
provided in this Agreement.
(b) Stock certificates ("Certificates") that formerly
represented shares of the Company's capital stock that have been
converted into the right to receive Merger Consideration will be
conclusively deemed to represent only the right to receive such Merger
Consideration.
(c) The Stockholders will surrender all Certificates to
OSI in exchange for the Merger Consideration into which the shares of
the Company's capital stock formerly represented by such Certificates
have been converted.
Notwithstanding any other provision of this Agreement, no Stockholder
will be entitled to receive any Merger Consideration until such Stockholder has
surrendered to OSI the Certificates formerly representing the shares of the
Company's capital stock that have been converted into the right to receive
Merger Consideration.
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Neither OSI nor the Surviving Corporation nor any other person will be
liable to any holder or former holder of shares of the Company's capital stock
for any shares, or any dividends or other distributions with respect to shares,
properly delivered to a public official pursuant to applicable
abandoned-property, escheat, or similar Laws.
In the event that any Certificate has been lost, stolen, or destroyed,
then upon receipt by the Surviving Corporation of satisfactory evidence of the
loss, theft, or destruction and of the ownership of the Certificate and a
customary indemnification agreement, OSI or its paying agent will deliver the
Merger Consideration deliverable in exchange for that Certificate.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
STOCKHOLDERS.
The Company and the Stockholders hereby represent and warrant to OSI as
follows, subject in each case to such exceptions as are specifically
contemplated by this Agreement or as are set forth in the attached Company
Disclosure Schedule.
Each exception set forth in the Company Disclosure Schedule will be
deemed to qualify each representation and warranty set forth in this Agreement
(i) that is specifically identified in the Company Disclosure Schedule as being
qualified by such exception, or (ii) with respect to which the relevance of such
exception is apparent on the face of the disclosure of such exception set forth
in the Company Disclosure Schedule; provided, in either case, that the relevant
facts are set forth in reasonable detail in the Company Disclosure Schedule.
4.1. INCORPORATION; AUTHORITY. The Company is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Tennessee and has all requisite corporate power and authority to own or lease
and operate its properties and to carry on its business as now conducted. The
Company has delivered to OSI copies of the Company's charter and by-laws, in
each case including any and all amendments thereto and as in full force and
effect.
The Company is qualified to do business as a foreign corporation, and
in good standing, in the jurisdictions referred to in Section 4.1 of the Company
Disclosure Schedule, which are the only jurisdictions in which the natures of
its properties and activities makes such qualification necessary, other than any
jurisdictions in which the failure to be so qualified or in good standing would
not result, in any case or in the aggregate, in a Material Adverse Effect.
4.2. AUTHORIZATION AND ENFORCEABILITY. The Company has all
requisite power and full legal right and authority (including the due and
unanimous approval of all members of its Board of Directors and all of its
stockholders, respectively) to enter into this Agreement, to perform all of its
agreements and obligations hereunder, and to consummate the Merger and the other
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and constitutes its legal, valid, and binding
agreement, enforceable against the Company in accordance with its terms, except
as enforceability may be subject to the effect of any applicable bankruptcy,
insolvency, fraudulent conveyance, moratorium, reorganization, marshaling, or
other similar laws or rules of law affecting creditors' rights and remedies
generally, and to general principles of equity.
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4.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NONCONTRAVENTION,
ETC. Except for the filing of the Merger Certificates, no consent, approval, or
authorization of or registration, designation, declaration, or filing with any
governmental authority, federal or other, or any other person, was or is
required on the part of the Company in connection with the execution, delivery,
and performance of this Agreement or the consummation of the Merger and the
other transactions contemplated hereby. The execution, delivery, and performance
of this Agreement and the consummation of such transactions will not violate any
(i) provision of the Company's charter or by-laws, (ii) Law, or (iii) agreement,
instrument, or other obligation to which the Company is a party or by or to
which the Company or any of its assets is bound or subject.
4.4. CAPITALIZATION. The authorized and outstanding capital stock
and other securities of the Company are as set forth in Section 4.4 of the
Company Disclosure Schedule, and the Company does not have outstanding any other
securities. All of the outstanding shares of capital stock of the Company are
duly authorized, validly issued, fully paid, and non-assessable, were issued in
compliance with all applicable Laws, including securities laws, and all
applicable preemptive or similar rights of any person, and are owned of record,
and to the best of the Company's and the Stockholders' knowledge, beneficially,
by the Stockholders as indicated in the Merger Consideration Schedule. No person
has any valid right to rescind any purchase of the Company's capital stock or
other securities.
There are no outstanding convertible or exchangeable securities,
options, warrants, or other rights to acquire from the Company any capital stock
or other securities, nor any agreements or other obligations to which the
Company is a party or by which it is bound to purchase or sell any capital stock
or other securities.
No stockholder of the Company has or will have any appraisal,
dissenter's, or similar rights by reason of or in connection with the Merger or
the other transactions contemplated hereby.
4.5. SUBSIDIARIES. The Company does not have any subsidiaries or
own any legal or beneficial interests in or to any other business enterprise or
other person, nor is it party to or bound by any agreement, or otherwise
obligated, to acquire any such interest.
4.6. FINANCIAL STATEMENTS. OSI has received copies of the audited
balance sheets of the Company as of December 31 in 1999 and 2000, respectively
and the related audited statements of income, changes in stockholders' equity,
and cash flows for the respective years ended on each of those dates, together
with the related audit reports of ▇▇▇▇▇▇▇▇▇ Black ▇▇▇▇▇▇ & ▇▇▇▇ P.C., the
Company's independent auditors, with respect to such financial statements.
OSI has also received copies of the revised unaudited balance sheet of
the Company as of October 31, 2001 (the "Most Recent Balance Sheet") and the
related unaudited statement of income for the ten-month period ended on that
date.
All of the financial statements referred to in the preceding two
paragraphs were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (in the case of the
interim financial statements referred to in the preceding
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paragraph, subject to the absence of footnotes and to adjustments consisting of
normal year-end accruals, the effect of which absence of year-end accruals, both
individually and in the aggregate, is not material). Each such balance sheet
fairly presents the financial condition of the Company as of its date; and each
such statement of income, changes in stockholders' equity, or cash flows fairly
presents the results of operations, changes in stockholders' equity, or cash
flows, as the case may be, of the Company for the period covered thereby.
All accounts and notes receivable reflected on the Most Recent Balance
Sheet, and all accounts and notes receivable arising subsequent to the date of
the Most Recent Balance Sheet, have arisen in the ordinary course of business,
represent valid obligations owing to the Company, and have been collected or are
collectible in the recorded amounts thereof in accordance with their terms (net
of any allowance for uncollectible accounts reflected in the Most Recent Balance
Sheet).
All of the Company's inventories (i) are of a quality and quantity
sellable in the ordinary course of its business, (ii) reflect write-downs to
realizable values in the case of items that have become obsolete or unsellable
in the ordinary course of the Company's business, and (iii) are valued on the
Company's books and records, and its financial statements, in accordance with
the Company's customary inventory valuation policies and generally accepted
accounting principles, in each case, consistently applied. All purchase
commitments of the Company for inventories do not exceed its normal requirements
and none are at prices materially in excess of current market prices.
4.7. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.7
of the Company Disclosure Schedule, since December 31, 2000, there has not been:
(a) any (i) acquisition (by purchase, lease as lessee, license as
licensee, or otherwise) or disposition (by sale, lease as lessor, license as
licensor, or otherwise) by the Company of any material properties or assets, or
(ii) other transaction by, or any agreement or commitment on the part of, the
Company, other than those in the ordinary course of business that have not
caused and will not cause, either in any case or in the aggregate, a Material
Adverse Effect;
(b) any material change in the condition (financial or otherwise),
properties, assets, liabilities, investments, revenues, expenses, income,
operations, or business of the Company, or, to the Company's knowledge, in any
of its relationships with any suppliers, customers, or other third parties with
whom it has financial, commercial, or other business relationships, other than
changes in the ordinary course of business that have not caused and will not
cause, either in any case or in the aggregate, a Material Adverse Effect;
(c) any transaction by the Company with any of its Affiliates,
other than the payment of compensation and reimbursement of reasonable employee
travel and other business expenses in accordance with existing employment
arrangements and usual past practices;
(d) any damage, destruction, or loss, whether or not covered by
insurance, that, either in any case or in the aggregate, has caused, or could
reasonably be expected to cause, a Material Adverse Effect;
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(e) any declaration, setting aside, or payment of any dividend or
any other distribution (in cash, stock, or property or otherwise) in respect of
any shares of the capital stock or other securities of the Company;
(f) any issuance of any shares of the capital stock or other
securities of the Company, or any direct or indirect redemption, purchase, or
other acquisition by the Company of any shares of its capital stock or other
securities;
(g) any change in the officers, directors, key employees, or
independent contractors of the Company;
(h) any labor trouble or claim of unfair labor practices involving
the Company, any increase in the compensation or other benefits payable or to
become payable by the Company to any of its Affiliates, or to any of the
respective officers, employees, or independent contractors of the Company, or
any bonus payments or arrangements made to or with any of such officers,
employees, or independent contractors;
(i) any forgiveness or cancellation of any debt or claim by the
Company or any waiver by the Company of any right of material value, other than
compromises of accounts receivable in the ordinary course of business;
(j) any incurrence or any payment, discharge, or satisfaction by
the Company of any Indebtedness or any material obligations or material
liabilities, whether absolute, accrued, contingent, or otherwise (including
liabilities, as guarantor or otherwise, with respect to obligations of others),
other than (A) current liabilities included in the Most Recent Balance Sheet,
and (B) current liabilities to persons other than Affiliates of the Company
incurred since the date of such balance sheet in the ordinary course of
business;
(k) any incurrence, discharge, or satisfaction of any Lien (A) by
the Company, or (B) on any of the capital stock, other securities, properties,
or assets owned or leased by the Company;
(l) any change in the financial or tax accounting principles,
practices, or methods of the Company (including with respect to the basis or
method of allocating to the Company any costs of goods or services shared with
or provided by any Affiliate of the Company or any other business enterprise);
or
(m) any agreement, understanding, or commitment by or on behalf of
the Company, or by or on behalf of its respective Affiliates, directors,
officers, employees, agents, or representatives, whether in writing or
otherwise, to do or permit any of the things referred to in this Section 4.7
with respect to the Company.
4.8. PROPERTIES, LEASES, ETC.
(a) TITLE TO PROPERTIES; CONDITION OF PERSONAL PROPERTIES. The
Company has (i) good and marketable title to all of the assets and properties
owned by it, including all assets and properties reflected in the Most Recent
Balance Sheet (in each case excluding any assets and properties sold or
otherwise disposed of to persons other than Affiliates in the ordinary course of
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business since the date of such balance sheet), (ii) good and marketable title
to the lessee interest in all assets and properties leased by it as lessee, and
(iii) full right to hold and use all of the respective assets and properties
used in or necessary to its businesses and operations, in each case all free and
clear of all Liens. All such tangible assets and properties are in good
condition and repair, reasonable wear and tear excepted, and together with such
intangible assets, are adequate and sufficient to carry on its business as
presently conducted and as proposed to be conducted in the near term.
(b) NO OWNED REAL PROPERTIES. The Company does not own, and has
never owned, any real property or any interest (other than a leasehold interest)
in any real property.
(c) LEASED PROPERTIES. Section 4.8(c) of the Company Disclosure
Schedule sets forth a complete and correct description of all leases of real or
personal property under which the Company is lessor or lessee. Complete and
correct copies of all such leases and all amendments, supplements, and
modifications thereto, other than any personal property lease with an annual
rent of less than $5,000 and total remaining rental payments of less than
$10,000, have been delivered to OSI. Each such lease is valid and subsisting and
no event or condition exists that constitutes, or after notice or lapse of time
or both would constitute, a default thereunder by the Company or, to the best of
the Company's knowledge, the other party thereto. The Company's respective
leasehold interests are subject to no Lien, and the Company is in quiet
possession of the properties covered by such leases. No provision of any real
property lease or sublease to which the Company is a party restricts the
Company's right to remove at the end of the applicable lease term any machinery,
equipment, or leasehold improvements. The Company has established adequate
reserves, which are reflected in the Most Recent Balance Sheet, for the
anticipated costs of any property renovation and repairs to their leased
premises required to be performed or paid for by it upon termination of any of
its leases of real property.
4.9. INDEBTEDNESS. The Company has no Indebtedness outstanding
except as described in Section 4.9 of the Company Disclosure Schedule. The
Company is not in default with respect to any outstanding Indebtedness or any
instrument or agreement relating thereto, and no such Indebtedness or any
instrument or agreement relating thereto purports to limit the issuance of any
securities by the Company or its operation of any business. Complete and correct
copies of all instruments and agreements (including all amendments, supplements,
waivers, and consents) relating to any Indebtedness of the Company have been
furnished to OSI.
4.10. ABSENCE OF UNDISCLOSED LIABILITIES. Except to the extent
reflected or reserved against in the Most Recent Balance Sheet, or incurred
after the date of such balance sheet in the ordinary course of business other
than in connection with transactions with Affiliates, the Company has no
material liabilities or obligations of any nature, whether accrued, absolute,
contingent, or otherwise (including liabilities as guarantor or otherwise with
respect to obligations of others) and whether due or to become due, including in
respect of matters that are the subject of other or more specific
representations and warranties set forth in this Agreement.
4.11. INTELLECTUAL PROPERTIES.
(a) Section 4.11 of the Company Disclosure Schedule lists all
patents, patent applications, trademarks, trade names, service marks, logos,
registered copyrights, and
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intellectual property licenses that are used in the businesses of the Company as
now being conducted, other than licenses by the Company as licensee of
off-the-shelf software programs that have not been customized for its use and
that are not incorporated into the Company's products or otherwise distributed
by the Company (collectively, and together with all unregistered copyrights,
technology, know-how, trade secrets, processes, formulas, and techniques that
are material to the Company's businesses, the "Intellectual Properties"). The
Company owns, or is licensed or otherwise has the full and unrestricted
exclusive right to use, all Intellectual Properties without the payment of
royalties or other further consideration, and no other intellectual property
rights, privileges, licenses, contracts, or other agreements, instruments, or
evidences of interests are material to the conduct of the businesses of the
Company.
(b) In any instance where the Company's rights to Intellectual
Properties arise under a license or similar agreement (other than for
off-the-shelf software programs that have not been customized for its use), this
is indicated in Section 4.11 of the Company Disclosure Schedule and such rights
by their terms are licensed exclusively to the Company except as indicated in
Section 4.11 of the Company Disclosure Schedule. No other person has an interest
in or right or license to use any of the Intellectual Properties purported to be
owned by the Company, or to the best of the Company's and the Stockholders'
knowledge, any of the Intellectual Properties that by their terms are
exclusively licensed to the Company. To the best of the Company's and the
Stockholders' knowledge, none of the Intellectual Properties is being infringed
by others, or is subject to any outstanding order, decree, judgment, or
stipulation. No litigation (or other proceedings in or before any court or other
governmental, adjudicatory, arbitral, or administrative body) relating to any of
the Intellectual Properties purported to be owned by the Company, or to the best
of the Company's and the Stockholders' knowledge, any of the Intellectual
Properties that by their terms are exclusively licensed to the Company, is
pending (as evidenced by the Company's receipt of service of process or other
written notice of such pendency), or to the best of the Company's and the
Stockholders' knowledge, threatened, nor, to the best of the Company's and the
Stockholders' knowledge, is there any basis for any such litigation or
proceeding. The Company maintains reasonable security measures for the
preservation of the secrecy and proprietary nature of such of its Intellectual
Properties as constitute trade secrets or other confidential information.
(c) Neither the Company nor, to the best of the Company's and the
Stockholders' knowledge, any current or past employee or contractor of the
Company in connection with his or her employment or contractual relationship
with the Company, has infringed or made unlawful use of, or is infringing or
making unlawful use of, any intellectual property or other proprietary or
confidential information of any other person. To the best of the Company's and
the Stockholders' knowledge, the activities of the Company's current and past
employees and contractors in connection with their employment or contractual
relationships with the Company did not and do not violate any agreements or
arrangements with any former employer or other person. No litigation (or other
proceedings in or before any court or other governmental, adjudicatory,
arbitratory, or administrative body) charging the Company with infringement or
unlawful use of any patent, trademark, service ▇▇▇▇, trade name, logo,
copyright, trade secret, or other proprietary right is pending, or to the best
of the Company's and the Stockholders' knowledge, threatened; nor, to the best
of the Company's and the Stockholders' knowledge, is there any basis for any
such litigation or proceeding.
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(d) To the best of the Company's and the Stockholders' knowledge,
the current employees and contractors of the Company are not obligated under or
bound by any agreement or instrument, or any judgment, decree, or order of any
court of administrative agency, that (i) conflicts or may conflict with their
agreements and obligations to use their best efforts to promote the interests of
the Company, (ii) conflicts or may conflict with the business or operations of
the Company, or (iii) restricts or may restrict the use or disclosure of any
information that may be useful to the Company.
4.12. TAXES.
(a) FILING OF TAX RETURNS AND PAYMENT OF TAXES. The Company has
timely filed all Tax Returns required to be filed by it, each such Tax Return
has been prepared in compliance with all applicable laws and regulations, and
all such Tax Returns are true and accurate in all material respects. All Taxes
due and payable by the Company have been paid, and the Company will not be
liable for any additional Taxes in respect of any taxable period ending on or
before the date of the Closing in an amount that exceeds the corresponding
reserve therefor, if any, reflected in the accounting records of the Company.
OSI has received copies of all Tax Returns filed by or with respect to the
Company, and all relevant documents and information with respect thereto,
including examination reports and statements of deficiencies assessed against or
agreed to by the Company.
(b) AUDIT HISTORY. No taxing authority has ever audited or
notified the Company or any Stockholder of an intention to audit any Tax Return
of the Company.
(c) DEFICIENCIES. No deficiency or proposed adjustment in respect
of Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against the Company.
(d) LIENS. There are no Liens for Taxes on the assets of the
Company.
(e) EXTENSIONS TO STATUTE OF LIMITATIONS FOR ASSESSMENT OF TAXES.
The Company has not consented to extend the time in which any Tax may be
assessed or collected by any taxing authority.
(f) EXTENSIONS OF THE TIME FOR FILING TAX RETURNS. The Company has
not requested or been granted an extension of the time for filing any Tax
Return.
(g) PENDING PROCEEDINGS. There is no action, suit, taxing
authority proceeding, or audit with respect to any Tax now in progress, pending,
or to the best of the Company's and the Stockholders' knowledge, threatened,
against or with respect to (i) the Company, or (ii) any Affiliated Group with
respect to a taxable period during which the Company was a member of such
Affiliated Group.
(h) NO FAILURES TO FILE TAX RETURNS. No claim has ever been made
by a taxing authority in a jurisdiction where the Company does not pay Tax or
file Tax Returns that the Company is or may be subject to Taxes assessed by such
jurisdiction.
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(i) MEMBERSHIP IN AFFILIATED GROUPS, ETC. The Company has never
been a member of any Affiliated Group, or filed or been included in a combined,
consolidated, or unitary Tax Return.
(j) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. The Company
is not a party to or bound by any Tax sharing or allocation agreement or has any
current or potential contractual obligation to indemnify any other person with
respect to Taxes.
(k) WITHHOLDING TAXES. The Company has withheld and paid all Taxes
required to have been withheld or paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other person.
(l) SECTION 341(f) CONSENT. The Company has not filed any consent
under Code Section 341(f) (which section relates to collapsible corporations).
(m) PARACHUTE PAYMENTS. The Company has not made any payment, nor
is it obligated to make any payment nor party to or bound by any agreement that
under any circumstances could obligate it to make any payment that would not be
deductible under Section 280G of the Code.
(n) DISTRIBUTIONS; ACQUISITIONS OF SHARES. The Company has not
made, and will not make, any distributions in respect of its capital stock
(including in redemption of any share of capital stock or as a dividend or other
distribution in respect of any share of capital stock) in contemplation of the
Merger or during the period beginning with the commencement of negotiations
(whether formal or informal) regarding the Merger and ending at the Effective
Time. Neither the Company nor any corporation that is related to the Company
within the meaning of Treas. Reg. Section 1.368-1(e)(3), nor any partnership in
which the Company or any such corporation is a partner, has acquired or will
acquire any shares of the Company's capital stock in contemplation of the Merger
or during the period beginning with the commencement of negotiations (whether
formal or informal) regarding the Merger and ending at the Effective Time.
(o) SALES TAXES, ETC. The Company has duly collected and remitted
to the appropriate taxing authorities all sales, use, transfer, and similar
taxes required to have been collected or remitted by it.
4.13. EMPLOYEE BENEFIT PLANS.
(a) Except as described in Section 4.13 of the Company Disclosure
Schedule, the Company does not now maintain or contribute to, and has not in the
current or preceding six calendar years maintained or contributed to, any
pension, profit-sharing, deferred compensation, bonus, stock option, share
appreciation right, severance, group or individual health, dental, medical, life
insurance, survivor benefit, or similar plan, policy, or arrangement, whether
formal or informal, for the benefit of any director, officer, consultant or
employee, whether active or terminated, of the Company. Each of the arrangements
set forth in Section 4.13 of the Company Disclosure Schedule is hereinafter
referred to as an "Employee Benefit Plan," except that any such arrangement that
is a multi-employer plan will be treated as an Employee Benefit Plan only for
purposes of Sections 4.13(d)(iv), (vi), and (viii) and 4.13(g) below.
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(b) OSI has received copies of each Employee Benefit Plan, and
with respect to each such plan (i) any associated trust, custodial, insurance,
or service agreements, (ii) any annual report, actuarial report, or disclosure
materials (including specifically any summary plan descriptions) submitted to
any governmental agency or distributed to participants or beneficiaries
thereunder in the current or any of the six preceding calendar years, and (iii)
the most recently received Internal Revenue Service ("IRS") determination
letters and any governmental advisory opinions or rulings.
(c) Each Employee Benefit Plan is and has heretofore been
maintained and operated in compliance with the terms of such plan and with the
requirements prescribed (whether as a matter of substantive law or as necessary
to secure favorable tax treatment) by any and all statutes, governmental or
court orders, and governmental rules or regulations in effect from time to time,
including but not limited to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") and the United States Internal Revenue Code of 1986,
as amended (the "Code") and applicable to such plan. Each Employee Benefit Plan
that is intended to qualify under Section 401(a) of the Code and each trust
forming part of an Employee Benefit Plan which is intended to qualify under
Section 501(c)(9) of the Code is specifically so identified in Section 4.13 of
the Company Disclosure Schedule and has been determined by the IRS to be so
qualified, and to the best of the Stockholder's knowledge, nothing has occurred
since the date of the last such determination as to each such plan or trust that
has resulted or is likely to result in the revocation of such determination as
to such plan or trust.
(d) (i) There is no pending, or to the best of the Company's and
the Stockholders' knowledge, threatened, legal action, proceeding, or
investigation, other than routine claims for benefits, concerning any Employee
Benefit Plan, or to the best of the Stockholder's knowledge, any fiduciary or
service provider thereof, and to the best of the Company's and the Stockholders'
knowledge, there is no basis for any such legal action, proceeding, or
investigation.
(ii) No liability (contingent or otherwise) to the Pension
Benefit Guaranty Corporation ("PBGC") or any multi-employer plan has been
incurred by the Company or any of its ERISA affiliates (other than insurance
premiums satisfied in due course).
(iii) No reportable event, or event or condition that
presents a material risk of termination by the PBGC, has occurred with respect
to any Employee Benefit Plan, or any retirement plan of an ERISA affiliate of
the Company, which is subject to Title IV of ERISA.
(i) No Employee Benefit Plan nor any party in interest
with respect thereof, has engaged in a prohibited transaction that could subject
the Company directly or indirectly to liability under Section 409 or 502(i) of
ERISA or Section 4975 of the Code.
(ii) No communication, report, or disclosure has been made
that, at the time made, did not reflect accurately in all material respects the
terms and operations of any Employee Benefit Plan.
(iii) No Employee Benefit Plan provides welfare benefits
subsequent to termination of employment to employees or their beneficiaries
(except to the extent required by applicable state insurance laws and Title I,
Part 6 of ERISA), other than (A) coverage mandated
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by applicable law, (B) benefits the full cost of which is borne by the current
or former employees (or their beneficiaries), and (C) benefits that have already
been satisfied in full.
(iv) No benefits due under any Employee Benefit Plan have
been forfeited subject to the possibility of reinstatement (which possibility
would still exist at or after the Closing) except as required by applicable law.
(v) The Company has not undertaken to maintain any
Employee Benefit Plan for any period of time and each such Plan is terminable at
the sole discretion of the Company, subject only to such constraints as may be
imposed by applicable law.
(e) There is no Employee Benefit Plan for which a separate fund of
assets is or is required to be maintained.
(f) The execution of this Agreement and the consummation of the
transactions contemplated hereby will not result in any payment (whether of
severance pay or otherwise) becoming due to any current or former director,
officer, consultant, or employee of the Company or result in the vesting,
acceleration of payment, or increases in the amount of any benefit payable to or
in respect of any such current or former director, officer, consultant, or
employee.
(g) No Employee Benefit Plan is a multi-employer plan.
(h) For purposes of this Section 4.13, "multi-employer plan,"
"party in interest," "current value," "accrued benefit," "reportable event," and
"benefit liability" have the same meaning assigned such terms under Sections 3,
4043(b) or 4001(a) of ERISA, and "ERISA affiliate" means any entity that under
Section 414 of the Code is treated as a single employer with the Company.
4.14. SAFETY AND ENVIRONMENTAL MATTERS.
(a) None of the plants, offices, or properties in or on which the
Company carries on business nor any of the activities carried on by it are in
violation of any Law relating to health or safety, including the Occupational
Safety and Health Act of 1970, as amended, or to the best of the Company's and
the Stockholders' knowledge (without having undertaken any investigation with
respect thereto), any Law relating to zoning.
(b) Neither the Company, nor to the best of the Company's and the
Stockholders' knowledge, any operator of any real property presently or formerly
owned, leased, or operated by the Company, has violated or allegedly violated,
or is in violation or alleged violation, of any Laws relating to environmental
matters.
4.15. LABOR RELATIONS. The Company is and has been in compliance in
all material respects with all federal and state laws respecting employment and
employment practices, terms and conditions of employment, wages and hours, and
nondiscrimination in employment, and is not and has not been engaged in any
unfair labor practice. There is no charge or proceeding pending, or to the best
of the Company's and the Stockholders' knowledge, threatened, against the
Company alleging unlawful discrimination in employment practices or unfair labor
practice before any court or agency, including the National Labor Relations
Board.
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The employment or contractual relationship of the Company with each of
its current and former employees and contractors of the Company have been and
are "at will," and may be terminated by the Company at any time, for any reason
or no reason, without the Company's payment or providing of any severance or
other benefits except as required by applicable federal and state laws.
4.16. LITIGATION. No litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or regulatory
body, arbitrator, or other person) is pending, or to the best of the Company's
and the Stockholders' knowledge, threatened, against the Company, nor is there
any basis therefor known to the Stockholders.
4.17. CONTRACTS. Section 4.17 of the Company Disclosure Schedule
sets forth a complete and accurate list of all agreements of any kind, written
or oral, that are legally enforceable by or against or otherwise binding on the
Company, other than any agreement that is cancellable at the Company's option,
without penalty, on 30 days' notice or less and which does not by its terms call
for, nor could reasonably be expected to result, in payments to or from the
Company in excess of $5,000. All of such agreements are in full force and
effect, and neither the Company, nor to the best of the Company's and the
Stockholders' knowledge, any other party thereto, is in default under or
material breach thereof, nor does any event or condition exist that after notice
or lapse of time or both could constitute a default thereunder or material
breach thereof on the part of the Company, or to the best of the Company's and
the Stockholders' knowledge, any other party thereto. No approval or consent of
any person that has not already been obtained and is listed in Section 4.17 of
the Company Disclosure Schedule is needed in order that such agreements continue
in full force and effect following the consummation of the Merger and the other
transactions contemplated hereby, and no such agreement includes any provision,
the effect of which may be to terminate (or give rise to a right of termination
under) such contract, to enlarge or accelerate any obligations of the Company
thereunder, or to give additional rights to any other person, as a result of the
consummation of the Merger or the other transactions contemplated hereby. OSI
has received copies of all such agreements, including all amendments,
modifications, and supplements thereto.
4.18. INSURANCE. Section 4.18 of the Company Disclosure Schedule
lists the policies of theft, fire, liability, worker's compensation, life,
property and casualty, and other insurance owned or held by the Company. All
such policies are in full force and effect; are sufficient for compliance by the
Company with all requirements of law and of all contractual obligations of the
Company; are valid, outstanding, and (to the best of the Company's and the
Stockholders' knowledge) enforceable policies and provide that they will remain
in full force and effect through the respective dates set forth in the Company
Disclosure Schedule; and will not in any way be affected by, or terminate or
lapse as a result of the consummation of, the Merger and the other transactions
contemplated by this Agreement.
4.19. BANK ACCOUNTS, SIGNING AUTHORITY, POWERS OF ATTORNEY. Section
4.19 of the Company Disclosure Schedule sets forth a complete and accurate list
of all bank, brokerage, and other accounts, and all safe-deposit boxes, of the
Company, and all persons with signing or other authority to act with respect
thereto or to borrow money or sign notes on behalf of the Company.
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4.20. PERSONNEL. The names and current compensation of each employee
and independent contractor of the Company are as set forth in Section 4.20 of
the Company Disclosure Schedule.
4.21. BROKERS. No finder, broker, agent, or other intermediary has
acted for or on behalf of the Company or the Stockholders in connection with the
negotiation, preparation, execution, or delivery of this Agreement or the
consummation of the Merger or the other transactions contemplated hereby.
4.22. COMPLIANCE WITH OTHER AGREEMENTS, LAWS, ETC. The Company has
complied with, and is in compliance with, (a) all Laws, (b) all unwaived terms
and provisions of all agreements to which the Company is a party, or by which
the Company is bound or to which the Company or any of its properties is
subject, and (c) its charter and by-laws, respectively, each as amended to date.
The Company has not been charged with, or to the best of its knowledge, been
under investigation with respect to, any violation of any provision of any
federal, state, or local law or administrative regulation. The Company has and
maintains (and Section 4.22 of the Company Disclosure Schedule sets forth a list
of) all such licenses, permits, and other authorizations of governmental
authorities as are necessary for or material to the conduct of its businesses or
in connection with the ownership or use of its properties, all of which are in
full force and effect, copies of all of which have previously been delivered to
OSI, and except as described in Section 4.22 of the Company Disclosure Schedule,
none of which will terminate or otherwise be adversely affected as a result of
the consummation of the Merger and the other transactions contemplated hereby.
4.23. SUPPLIERS AND CUSTOMERS. The relationships of the Company with
its suppliers and customers are good commercial working relationships and no
such supplier or customer in the past twelve months has canceled or otherwise
terminated, or threatened to cancel or otherwise to terminate, its relationship
with the Company. Neither the Company nor any of the Stockholders has any
knowledge or reason to believe that any supplier or customer of the Company
intends to cancel or terminate or otherwise substantially to modify its
relationship with the Company or to decrease materially such supplier's
provision of products or services to the Company, or such customer's usage or
purchase of the Company's products or services, as the case may be; and to the
best of the Company's and the Stockholders' knowledge, the consummation of the
Merger and the other transactions contemplated hereby will not adversely affect
the relationship of the Company with any of its suppliers or customers.
4.24. DISCLOSURE. No representation or warranty of the Company or
the Stockholders in this Agreement (including the exhibits and schedules hereto,
but excluding the several representations and warranties of the Stockholders set
forth in Section 5 hereof) or in any other agreement, instrument, certificate,
or other document delivered by any of them in connection with this Agreement,
the Merger, or any of the other transactions contemplated hereby contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not false or misleading.
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5. REPRESENTATIONS OF THE STOCKHOLDERS. Each of the Stockholders,
severally and not jointly, hereby represents and warrants, with respect to
himself, herself, or itself only, as follows:
5.1. AUTHORIZATION AND ENFORCEABILITY. Such Stockholder has all
requisite power and full legal right and authority (including, with respect to
any Stockholder that is not a natural person, due approval of its Board of
Directors and stockholders, or the persons holding similar offices,
respectively) to enter into this Agreement, to perform all of his, her, or its
agreements and obligations hereunder, and to consummate the Merger and the other
transactions contemplated hereby.
5.2. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NONCONTRAVENTION,
ETC. No consent, approval, or authorization of or registration, designation,
declaration, or filing with any governmental authority, federal or other, or any
other person, is required on the part of such Stockholder in connection with the
execution, delivery, and performance of this Agreement or the consummation of
the Merger and the other transactions contemplated hereby. The execution,
delivery, and performance of this Agreement and the consummation of such
transactions will not violate any agreement, instrument, or other obligation to
which such Stockholder is a party or by or to which such Stockholder or any of
his, her, or its assets is bound or subject.
5.3. TITLE TO SHARES, ETC. Such Stockholder owns, as of the date
hereof, and will own, as of the Closing, in each case both of record and
beneficially, the shares of the Company's capital stock indicated opposite such
Stockholder's name in the attached Merger Consideration Schedule, all free and
clear of Liens. Such Stockholder does not own, either legally or beneficially,
any other shares of capital stock or other securities of the Company.
5.4. INVESTMENT REPRESENTATIONS. Each Stockholder who is listed in
the attached Merger Consideration Schedule as receiving Consideration Shares,
severally and not jointly, hereby represents and warrants, with respect to
himself, herself, or itself only, as follows:
(a) ACCREDITATION; INVESTMENT INTENT. Such Stockholder is
acquiring the Consideration Shares for his or her own account, for
investment only, and not with a view to, or for sale in connection
with, any distribution of the Consideration Shares in violation of the
Securities Act, any rule or regulation thereunder, or any applicable
state securities laws.
(b) INFORMATION. Such Stockholder has had the opportunity
to ask questions of and receive answers from the officers of OSI and
has received such other information with respect to OSI's business,
financial condition, affairs, and prospects as he or she has deemed
necessary or desirable in connection with his or her acquisition of
Consideration Shares.
(c) SOPHISTICATION. Such Stockholder has sufficient
experience in business, financial, and investment matters to be able to
evaluate the relative merits and risks involved in his acquisition of
Consideration Shares and to make an informed investment decision with
respect to such acquisition.
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(d) ABILITY TO BEAR RISK. Such Stockholder can afford a
complete loss of his or her investment in Consideration Shares and is
able to bear the economic risk of holding Consideration Shares for an
indefinite period.
(e) RESTRICTED SECURITIES. Such Stockholder understands
that (i) the Consideration Shares have not been registered under the
Securities Act or any other applicable securities laws, and are
"restricted securities" within the meaning of Rule 144 under the
Securities Act, (ii) Consideration Shares cannot be sold, transferred,
or otherwise disposed of unless they are subsequently registered under
the Securities Act and other applicable securities laws, or unless
exemptions from such registration requirements are available, and (iii)
any certificate representing Consideration Shares will bear a
restrictive legend referring to the restrictions on transfer imposed by
applicable securities laws.
5.5. DISCLOSURE. No representation or warranty of such Stockholder
in this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by such
Stockholder in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not false
or misleading.
6. REPRESENTATIONS AND WARRANTIES OF OSI AND MERGER SUB. OSI and
Merger Sub, jointly and severally, hereby represent and warrant to the
Stockholders as follows, subject in each case to such exceptions as are
specifically contemplated by this Agreement or as are set forth in the attached
OSI Disclosure Schedule:
6.1. INCORPORATION; AUTHORITY. Each of OSI and Merger Sub is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as now conducted.
6.2. AUTHORIZATION AND ENFORCEABILITY. Each of OSI and Merger Sub
has all requisite power and full legal right and authority (including due
approval of its Board of Directors) to enter into this Agreement, to perform all
of its agreements and obligations hereunder, and to consummate the Merger and
the other transactions contemplated hereby. This Agreement has been duly
executed and delivered by each of OSI and Merger Sub and constitutes a legal,
valid, and binding obligation of each of them, enforceable against each of them
in accordance with its terms, except as enforceability may be subject to the
effect of any applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, marshaling, or other similar laws or rules of law
affecting creditors' rights and remedies generally, and to general principles of
equity.
6.3. GOVERNMENTAL AND OTHER THIRD-PARTY CONSENTS, NONCONTRAVENTION,
ETC. Except for the filing of the Merger Certificates, no consent, approval, or
authorization of or registration, designation, declaration, or filing with any
governmental authority, federal or other, or any other person, not already made
or obtained, is required on the part of OSI or Merger Sub in connection with
this Agreement, the Merger, or any of the other transactions contemplated
- 18 -
hereby. The execution, delivery, and performance of this Agreement and the
consummation of such transactions will not violate (a) any provision of OSI's or
Merger Sub's Certificate of Incorporation or by-laws, (b) any Law, or (iii) any
agreement, instrument, or other obligation to which OSI or Merger Sub is a party
or by or to which either of them or any of their respective assets is bound or
subject.
6.4. MERGER SUB. Merger Sub has been organized for the specific
purpose of engaging in the Merger and the other transactions contemplated hereby
and has not incurred any material liabilities, conducted any material business,
or entered into any material contracts or commitments, in each case except such
as are in furtherance of or incidental to such transactions.
6.5. BROKERS. No finder, broker, agent, or other intermediary has
acted for or on behalf of OSI or Merger Sub in connection with the negotiation,
preparation, execution, or delivery of this Agreement or the consummation of the
transactions contemplated hereby.
6.6. RELEASE OF GUARANTY. If the Merger is consummated, OSI and the
Surviving Corporation will cause ▇▇▇ ▇▇▇▇▇ ("Black") to be released from his
obligations under the Bank of America guaranty as set forth in Section 4.9 of
the Company Disclosure Schedule within 30 days after the Closing Date; and in
any event will indemnify, defend, and hold harmless Black from and against any
Damages he may incur in respect of those guaranties.
6.7. FINANCIAL STATEMENTS AND RELATED MATTERS. The Stockholders
have received or been given access to copies of the audited consolidated balance
sheet of OSI as of December 31 2000, and the related audited consolidated
statements of income, changes in stockholders' equity, and cash flows for the
year then ended, together with the related audit report of
PricewaterhouseCoopers LLP, the Company's independent auditors, with respect to
such financial statements.
The Stockholders have also received or been given access to copies of
the unaudited consolidated balance sheet of OSI as of October 31, 2001 (the "OSI
Most Recent Balance Sheet"), and the related unaudited statements of income,
changes in stockholders' equity, and cash flows for the ten-month period ended
on that date.
All of the financial statements referred to in the preceding two
paragraphs were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with prior periods (in the case of the
interim financial statements referred to in the preceding paragraph, subject to
the absence of footnotes and to adjustments consisting of normal year-end
accruals, the effect of which absence of year-end accruals, both individually
and in the aggregate, is not material). Each such balance sheet fairly presents
the consolidated financial condition of OSI as of its date; and each such
statement of income, changes in stockholders' equity, or cash flows fairly
presents the consolidated results of operations, changes in stockholders'
equity, or cash flows, as the case may be, of OSI for the period covered
thereby.
Since the date of the OSI Most Recent Balance Sheet, there has not been
any material adverse change in OSI's condition (financial or otherwise),
operations, business, assets, rights, liabilities, obligations, or prospects.
- 19 -
Except to the extent reflected or reserved against in the OSI Most
Recent Balance Sheet, or incurred after the date of such balance sheet in the
ordinary course of business other than in connection with transactions with its
Affiliates, OSI has no material liabilities or obligations of any nature,
whether accrued, absolute, contingent, or otherwise (including liabilities as
guarantor or otherwise with respect to obligations of others) and whether due or
to become due, including in respect of matters that are the subject of other or
more specific representations and warranties set forth in this Agreement.
6.8. TAXES.
(a) FILING OF TAX RETURNS AND PAYMENT OF TAXES. OSI has timely
filed all Tax Returns required to be filed by it, each such Tax Return has been
prepared in compliance with all applicable laws and regulations, and all such
Tax Returns are true and accurate in all material respects. All Taxes due and
payable by OSI have been paid, and OSI will not be liable for any additional
Taxes in respect of any taxable period ending on or before the date of the
Closing in an amount that exceeds the corresponding reserve therefor, if any,
reflected in its accounting records.
(b) AUDIT HISTORY. No taxing authority has ever audited or
notified OSI of an intention to audit any Tax Return of OSI.
(c) DEFICIENCIES. No deficiency or proposed adjustment in respect
of Taxes that has not been settled or otherwise resolved has been asserted or
assessed by any taxing authority against OSI.
(d) LIENS. There are no Liens for Taxes on the assets of OSI.
(e) PENDING PROCEEDINGS. There is no action, suit, taxing
authority proceeding, or audit with respect to any Tax now in progress, pending,
or to the best of OSI's knowledge, threatened, against or with respect to (i)
OSI, or (ii) any Affiliated Group with respect to a taxable period during which
OSI was a member of such Affiliated Group.
(f) NO FAILURES TO FILE TAX RETURNS. No claim has ever been made
by a taxing authority in a jurisdiction where OSI does not pay Tax or file Tax
Returns that OSI is or may be subject to Taxes assessed by such jurisdiction.
(g) TAX SHARING, ALLOCATION, OR INDEMNITY AGREEMENTS. OSI is not a
party to or bound by any Tax sharing or allocation agreement or has any current
or potential contractual obligation to indemnify any other person with respect
to Taxes.
(h) WITHHOLDING TAXES. OSI has withheld and paid all Taxes
required to have been withheld or paid by it in connection with amounts paid or
owing to any employee, creditor, independent contractor, or other person.
6.9. CAPITALIZATION. OSI's authorized and outstanding capital stock
and outstanding stock purchase warrants and stock options are as set forth in
the attached Summary of OSI's Capitalization, and OSI does not have outstanding
any other securities. All of the outstanding shares of OSI's capital stock are
duly authorized, validly issued, fully paid, and non-assessable,
- 20 -
were issued in compliance with all applicable Laws, including securities laws,
and all applicable preemptive or similar rights of any person. No person has any
valid right to rescind any purchase of OSI's capital stock or other securities.
Except as indicated in the attached Summary of OSI's Capitalization,
there are no outstanding convertible or exchangeable securities, options,
warrants, or other rights to acquire from OSI any capital stock or other
securities, nor any agreements or other obligations to which OSI is a party or
by which it is bound to purchase or sell any capital stock or other securities.
There are no outstanding rights to require OSI to repurchase any shares of its
capital stock, other than pursuant to its certificate of incorporation, as
amended and restated and in effect as of the date hereof.
6.10. DISCLOSURE. No representation or warranty of OSI or Merger Sub
in this Agreement (including the exhibits and schedules hereto) or in any other
agreement, instrument, certificate, or other document delivered by OSI or Merger
Sub in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact required to be
stated therein or necessary to make the statements contained therein not false
or misleading.
7. COVENANTS. If the Merger is consummated, then effective as of
the Effective Time, each of the Stockholders, severally and not jointly,
covenants, as to himself, herself, or itself only, as follows; provided, that
Section 7.2 only applies to the following persons, and not to the other
Stockholders, Black, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇▇▇▇ (collectively,
the "Majority Stockholders"); the other provisions of this Section 7 apply to
all of the Stockholders:
7.1. CONFIDENTIAL INFORMATION. Each of the Stockholders will
maintain the confidentiality of all confidential, sensitive, or proprietary
information of the Company and the Surviving Corporation, including with respect
to its businesses, finances, affairs, and technology, which will be and remain
the exclusive property of the Surviving Corporation; and unless previously
authorized in writing by OSI, and except with respect to information that has
otherwise become public through no action or omission on his part, he will not
disclose any such information to any third party, or use it for any purpose
other than (if applicable) in the discharge of his or her employment or
consulting responsibilities in the ordinary course of the Surviving
Corporation's business.
7.2. NON-COMPETITION, ETC. During the Restricted Period, each of
the Majority Stockholders will not engage, directly or indirectly (except as a
stockholder, director, officer, consultant, or employee of OSI or the Surviving
Corporation), in the businesses of software development, service (other than
hardware), and sales for image-based proof of deposit systems, item processing,
and reconciliation for the financial services sector, or in any other business
in which the company was engaged as of the closing date, whether as a
proprietor, equityholder, investor (except as a passive investor holding not
more than 1% of the outstanding capital stock of a publicly held company),
lender, partner, director, officer, employee, consultant, or representative, or
in any other capacity; provided, that this will not prohibit any such person
from serving or acting in any such capacity for a publicly held company that is
engaged in any such business, so long as such person is not involved in any
manner in the development, marketing,
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sales, management, or oversight of such business. Notwithstanding the foregoing,
▇▇▇▇ ▇▇▇▇▇▇▇▇ will be entitled to engage, with respect to Rec-Check, Inc. only,
in such activities relating to the development of software to identify, track
and report (using imaging and also manually) the income and expense coding of
checks and deposits for customers of financial institutions.
7.3. NON-SOLICITATION OF EMPLOYEES, ETC. During the Restricted
Period, the Stockholder will not directly or indirectly recruit, solicit,
induce, or attempt to induce any of the current employees or independent
contractors of OSI or any of its subsidiaries (including the Surviving
Corporation) to terminate their employment or contractual relationship with OSI
or its subsidiary; and the Stockholder will not assist any other person to do
so, or be a proprietor, equityholder, investor (except as a passive investor
holding not more than 1% of the capital stock of a publicly held company),
lender, partner, director, officer, employee, consultant, or representative of
any person who does or attempts to do so.
7.4. NON-SOLICITATION OF CUSTOMERS, SUPPLIERS, ETC. During the
Restricted Period, the Stockholder will not directly or indirectly solicit,
divert, take away, or attempt to divert or take away, from the Surviving
Corporation any of the business or patronage of any customers, clients,
accounts, vendors, or suppliers, who were customers, clients, accounts, vendors,
or suppliers of the Company at any time during the two (2) year period preceding
the Closing, or induce or attempt to induce any such person to reduce the amount
of business it does with the Surviving Corporation; and the Stockholder will not
assist any other person to do so, or be a proprietor, equityholder, investor
(except as a passive investor holding not more than 1% of the capital stock of a
publicly held company), lender, partner, director, officer, employee,
consultant, or representative of any person who does or attempts to do so.
7.5. EQUITABLE REMEDIES. Each Stockholder hereby acknowledges that
any breach by him, her, or it of his, her, or its obligations under this Section
7 would cause substantial and irreparable damage to OSI and the Surviving
Corporation, for which money damages would be an inadequate remedy, and
accordingly, acknowledges and agrees that each of OSI and the Surviving
Corporation will be entitled to an injunction, specific performance, and other
equitable relief to prevent the breach of such obligations (in addition to all
other rights and remedies to which they may be entitled in respect of any such
breach).
7.6. MODIFICATION. In the event that a court of competent
jurisdiction determines that any of the provisions of this Section 7 would be
unenforceable as written because they cover too extensive a geographic area, too
broad a range of activities, or too long a period of time, or otherwise, then
such provisions will automatically be modified to cover the maximum geographic
area, range of activities, and period of time as may be enforceable, and in
addition, such court is hereby expressly authorized so to modify this Agreement
and to enforce it as so modified. No invalidity or unenforceability of any
section of this Agreement or any portion thereof will affect the validity or
enforceability of any other section or of the remainder of such section.
7.7. ASSIGNMENT OF INVENTIONS. Such Stockholder hereby assigns,
transfers, and delivers to the Company all rights, titles, and interests in and
to all inventions, improvements, discoveries, developments, processes, software,
mask works, and works of authorship, whether
- 22 -
patentable or copyrightable or not, and all related intellectual property
rights, that relate to the Company's business as previously or currently
conducted and that were created, made, conceived, or reduced to practice by such
Stockholder or under his, her, or its direction or by him, her, or it jointly
with others, in each case, during the period in which such Stockholder has been
an employee or contractor of the Company up to and including the date of this
Agreement, excluding only such of these things as do not relate in any way to
any business in which the Company has or is engaged (collectively, subject to
such exclusion, all of the foregoing, "Inventions"). If requested by OSI, such
Stockholder will assist it to apply for and obtain any patents or copyright
registrations relating to any Inventions, and will execute and deliver to OSI
all related applications and other documents, all at OSI's expense. Such
Stockholder hereby appoints OS (with power of substitution) as his, her, or its
agent and attorney-in-fact to execute and deliver or file any such document in
his, her, or its name and on his, her, or its behalf. This power of attorney is
irrevocable and coupled with an interest on the part of OSI.
8. RELEASES. If the Merger is effected, then effective as of the
Effective Time, each of the Stockholders, severally and not jointly, for
himself, herself, or itself and his, her, or its heirs, legatees, successors,
and assigns, hereby fully and irrevocably releases, remises, and discharges the
Surviving Corporation from any and all Damages, regardless of whether known,
unknown, or unknowable, and regardless of whether absolute, contingent, or
otherwise, and regardless of whether at law, in equity, or otherwise, without
limitation, whether now existing or arising in the future, in each case to the
extent based on actions, omissions, or events occurring at or before the
Effective Time, including (i) all rights to indemnification or contribution,
including in connection with services rendered to the Company as an officer,
director, employee, or in any other capacity, in respect of the representations,
and other terms of this Agreement, or in respect of the Merger and the other
transactions contemplated by this Agreement), and (ii) all rights with respect
to shares of the Company's capital stock and other equity securities and
options, warrants, and other rights to acquire such shares or securities, but
excluding Damages and rights of indemnification arising expressly under this
Agreement and claims for accrued but unpaid salaries and reimbursable expenses.
Furthermore, if the Merger is effected, then effective as of the Effective Time,
each of the Stockholders, severally and not jointly, hereby irrevocably agrees
not to ▇▇▇, or to commence, maintain, or aid in the prosecution of any
litigation, arbitration, or other action or proceeding against or adverse to the
Surviving Corporation, or otherwise to seek any recourse against the Surviving
Corporation, in respect of any matter hereby released or purported or attempted
to be released.
9. INDEMNIFICATION.
9.1. INDEMNIFICATION BY OSI AND THE SURVIVING CORPORATION. Subject
to the limitations set forth in Section 9.5 hereof, OSI and Merger Sub
(including, if the Merger is consummated, the Surviving Corporation), jointly
and severally, will indemnify, defend, and hold harmless each of the
Stockholders from and against any and all Damages related to or arising,
directly or indirectly, out of or in connection with any breach of any
representation, warranty, covenant, agreement, obligation, or undertaking made
by OSI or Merger Sub in this Agreement (including any schedule or exhibit
hereto), or any other agreement, instrument, certificate, or other document
delivered by or on behalf of either of them in connection with this Agreement,
the Merger, or any of the other transactions contemplated hereby.
- 23 -
9.2. INDEMNIFICATION BY THE STOCKHOLDERS AND THE COMPANY.
(a) PRO RATA INDEMNIFICATION. Subject to the limitations set forth
in Section 9.5 hereof, each of the Stockholders, severally and not jointly, will
indemnify, defend, and hold harmless OSI and Merger Sub (including, if the
Merger is consummated, the Surviving Corporation), from and against such
Stockholder's Pro Rata Portion of any and all Damages related to or arising,
directly or indirectly, out of or in connection with:
(i) any breach of any representation, warranty, covenant,
agreement, obligation, or undertaking made by any Stockholder or the
Company (excluding the several representations, warranties, covenants,
agreements, obligations, and undertakings of the Stockholders set forth
in Sections 5, 7, and 8 hereof) in this Agreement (including any
schedule or exhibit hereto), or any other agreement, instrument,
certificate, or other document delivered by or on behalf of any of them
in connection with this Agreement, the Merger, or any of the other
transactions contemplated hereby;
(ii) any litigation, arbitration, action, suit,
proceeding, or investigation (whether conducted by any judicial or
regulatory body, arbitrator, or other person) currently pending;
(iii) any liability of the Company for Taxes in respect of
any action, omission, transaction, business, or period on or before the
Closing Date, to the extent that such liability exceeds any
corresponding reserve therefor reflected in the Most Recent Balance
Sheet;
(iv) the Bank of Naples Dispute;
(v) the OnTrack Dispute;
(vi) any failure to qualify to do business as a foreign
corporation in any jurisdictions in which the natures of its properties
and activities makes such qualification necessary; or
(vii) the failure to have any persons who have participated
in the creation or development of the Intellectual Properties owned or
purported to be owned by the Company execute and deliver to the Company
effective assignments to the Company of all of their respective rights,
titles, and interests in and to such Intellectual Properties.
For the avoidance of doubt, the matters referred to in the preceding
clauses (ii) through (vii) are indemnifiable regardless of whether disclosed and
regardless of whether a breach of this Agreement.
(b) SEVERAL INDEMNIFICATION. Subject to the limitations set forth
in Section 9.5 hereof, each Stockholder, severally and not jointly, will
indemnify, defend, and hold harmless OSI, and if the Merger is consummated, the
Surviving Corporation, from and against any and all Damages related to or
arising, directly or indirectly, out of or in connection with any breach by such
Stockholder of any several representation, warranty, covenant, agreement,
obligation, or undertaking made by such Stockholder in Sections 5, 7, or 8 of
this Agreement.
- 24 -
9.3. CLAIMS. In the event that any party hereto (the "Indemnified
Party") desires to make a claim against another party hereto (the "Indemnifying
Party," which term includes all indemnifying parties if more than one) in
connection with any third-party litigation, arbitration, action, suit,
proceeding, claim, or demand at any time instituted against or made upon it for
which it may seek indemnification hereunder (a "Third-Party Claim"), the
Indemnified Party will promptly notify the Indemnifying Party of such
Third-Party Claim and of its claims of indemnification with respect thereto,
provided, that failure to give such notice will not relieve the Indemnifying
Party of its indemnification obligations under this section except to the
extent, if any, that the Indemnifying Party has actually been prejudiced
thereby.
Upon receipt of such notice from the Indemnified Party, the
Indemnifying Party will be entitled to participate in the defense of such
Third-Party Claim. If each of the following conditions is satisfied, the
Indemnifying Party may assume the defense of such Third-Party Claim, and in the
case of such an assumption the Indemnifying Party will have the authority to
negotiate, compromise, and settle such Third-Party Claim, provided, that the
Indemnifying Party will not agree to any settlement of such Third-Party Claim
that does not include an unconditional release of all liability of each
Indemnified Party with respect to such Third-Party Claim:
(i) The Indemnifying Party confirms in writing that it is
obligated hereunder to indemnify the Indemnified Party with respect to
such Third-Party Claim and provides assurances and security reasonably
satisfactory to the Indemnified Party to ensure that such
indemnification can and will be paid; and
(ii) The Indemnified Party does not give the Indemnifying
Party written notice, within 20 days after such Indemnified Party's
receipt of the notice required by the preceding clause (i), that the
Indemnified Party's counsel has determined, in its reasonable opinion,
that an irreconcilable conflict of interest make separate
representation by the Indemnified Party's counsel advisable.
The Indemnified Party will retain the right to employ its own counsel
and to participate in the defense of any Third-Party Claim, the defense of which
has been assumed by an Indemnifying Party pursuant hereto, but such Indemnified
Party will bear and will be solely responsible for its own costs and expenses in
connection with such participation.
9.4. PAYMENT OF CLAIMS. In the event of any claims for
indemnification hereunder, the claimant will advise the party or parties who are
required to provide indemnification therefor in writing of the amount and
circumstances surrounding such claim. With respect to liquidated claims, if
within thirty days the other party has not contested such claim in writing, such
other party will pay the full amount thereof within ten days after the
expiration of such period. Any amount payable by an Indemnifying Party in
respect of indemnification pursuant to this Agreement may be set off and
deducted by the Indemnified Party from and against any amounts that may
otherwise be or become payable by such Indemnified Party to such Indemnifying
Party.
To the greatest practicable extent, indemnification payments hereunder
by the Stockholders will be made by paying one-third (1/3) in cash and
two-thirds (2/3) by return of Consideration Shares. For this purpose,
Consideration Shares will be valued at $9.32 per share
- 25 -
(such amount to be proportionately adjusted to reflect stock splits, stock
dividends, reverse stock splits, and similar events affecting OSI's Common Stock
and occurring after the Closing Date).
9.5. LIMITATIONS OF LIABILITY.
(a) DEDUCTIBLE. No Indemnifying Party will be required to
indemnify an Indemnified Party hereunder unless and until such time as the
aggregate amount of Damages for which (i) OSI, and if the Merger is not
consummated, also Merger Sub, or if the Merger is consummated, also the
Surviving Corporation, on the one hand, or (ii) the Stockholders, and if the
Merger is not consummated, the Company, on the other, are otherwise entitled to
indemnification pursuant to this Agreement exceeds $62,500, whereupon such
Indemnified Parties will be entitled to indemnification for the amount by which
all such Damages exceed $62,500; provided, that Damages in respect of Unlimited
Claims will be indemnifiable in full and will not be subject to the limitation
set forth in this Section 9.5(a).
(b) MAXIMUM LIABILITY. If the Merger is consummated, the maximum
liability of any Stockholder for indemnification hereunder will not exceed the
value of the Merger Consideration into which such Stockholder's shares of the
Company's capital stock are converted in the Merger. For this purpose,
Consideration Shares will be valued at $9.32 per share (such amount to be
proportionately adjusted to reflect stock splits, stock dividends, reverse stock
splits, and similar events affecting OSI's Common Stock and occurring after the
Closing Date).
(c) TIME LIMIT. No Indemnifying Party will be liable for
indemnification in respect of any Limited Claim unless a written claim for
indemnification is given by the Indemnified Party to the Indemnifying Party with
respect thereto by (i) with respect to a Majority Stockholder, the fifth
anniversary of the Closing Date, and (ii) with respect to a Minority
Stockholder, the second anniversary of the Closing Date.
Claims for indemnification in respect of Unlimited Claims will not be
subject to any time limits except as may be imposed by applicable law.
10. DEFINITIONS. As used in this Agreement:
All terms are gender-neutral.
Where a term is defined in the singular, its plural has a comparable
meaning, and vice versa (e.g., "Stockholder" means any one of the
"Stockholders").
"Affiliate" means, with respect to any person, any other person (i)
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with that person, or (ii) who is a
family member or relative of any person described in the preceding clause (i).
When used with reference to the Company, the term "Affiliate" includes the
Stockholders and Tecniflex, Inc. ("Tecniflex"), a Tennessee corporation.
"Affiliated Group" has the meaning ascribed to it in Section 1504 of
the Code, and in addition includes any analogous combined, consolidated, or
unitary group, as defined under any applicable state, local, or foreign income
Tax law.
- 26 -
"copy" or "copies" (regardless of whether capitalized) refer to true,
correct, and complete copies of the indicated document, including any and all
related amendments, supplements, waivers, and the like.
"Damages" means all damages, losses, claims, demands, actions, causes
of action, suits, litigations, arbitrations, liabilities, costs, and expenses,
including court costs and the reasonable fees and expenses of legal counsel.
"including" (regardless of whether capitalized) means including without
limitation.
"Indebtedness" means, with respect to the Company, any and all (a)
indebtedness for borrowed money, whether current or funded, or secured or
unsecured, (b) indebtedness for the deferred purchase price of property or
services represented by a note or other security, (c) indebtedness created or
arising under any conditional sale or other title retention agreement (even if
the rights and remedies of the seller or lender under such agreement in the
event of default are limited to repossession or sale of specific property), (d)
indebtedness secured by a purchase money mortgage or other Lien to secure all or
part of the purchase price of property subject to such mortgage or other Lien,
(e) obligations under leases that have been or must be, in accordance with
generally accepted accounting principles, recorded as capital leases, (f)
liability in respect of banker's acceptances or letters of credit, and (g)
indebtedness of any type referred to in clauses (a), (b), (c), (d), (e), or (f)
above that is directly or indirectly guaranteed by the Company or which the
Company has agreed (contingently or otherwise) to purchase or otherwise acquire
or in respect of which such person has otherwise assured a creditor against
loss.
"knowledge" (regardless of whether capitalized) includes both actual
knowledge and (except where specifically stated otherwise) the knowledge that
the indicated person(s) would have after conducting a reasonable investigation.
When used with the respect to the Company, "knowledge" means the actual
knowledge of any of the following persons and (except where specifically stated
otherwise) the knowledge that any of the following persons would have after
conducting a reasonable investigation: ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, Black, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, and ▇▇▇▇ ▇▇▇▇▇.
"Laws" means any and all federal, state, local, municipal,
administrative, foreign, international, multinational, and other statutes,
regulations, laws, ordinances, codes, treaties, rules, judgments, orders,
decrees, injunctions, writs, and awards of any governmental authority, including
legislatures, executives, regulatory and administrative authorities, agencies,
commissions, courts, tribunals, and judicial and arbitral bodies.
"Liens" means any and all liens, claims, mortgages, security interests,
pledges, options, rights of first offer or refusal, charges, encumbrances,
limitations on voting rights, and restrictions on transfer of any kind, except,
in the case of references to securities, those arising under applicable
securities laws solely by reason of the fact that such securities were issued
pursuant to exemptions from registration under such securities laws.
"Limited Claims" means claims for indemnification hereunder, to the
extent that such claims relate to any breach or alleged breach (other than as a
result of fraud or intentional misrepresentation) of any representation or
warranty set forth in any of the following sections of
- 27 -
this Agreement: 4.6 ("Financial Statements"); 4.7 ("Absence of Certain
Changes"); 4.8 ("Properties, Leases, Etc."); 4.14 ("Safety and Environmental
Matters"); 4.15 ("Labor Relations"); 4.16 ("Litigation") (other than to the
extent that Section 4.16 relates to proceedings that are actually pending as of
the Closing Date); 4.17 ("Contracts"), 4.18 ("Insurance"); 4.19 ("Bank Accounts,
Signing Authority, Powers of Attorney"); 4.20 ("Personnel"); 4.22 ("Compliance
with Other Agreements, Laws, Etc."), 4.23 ("Suppliers and Customers"), or (to
the extent that it relates to any of the foregoing representations and
warranties) 4.24 ("Disclosure"), or Section 6.7 ("Financial Statements and
Related Matters") or (to the extent that it relates to the representations or
warranties in Section 6.7) Section 6.10 ("Disclosure").
"Material Adverse Effect" means a material adverse effect on (i) the
Company's condition (financial or otherwise), operations, business, assets,
rights, liabilities, obligations, or prospects, or (ii) the Company's or any
Stockholders' right, power, authority, or ability to consummate the Merger or
the other transactions contemplated by this Agreement.
"Minority Stockholders" means all Stockholders other than the Majority
Stockholders.
"person" (regardless of whether capitalized) means any natural person,
entity, or association, including any corporation, partnership, limited
liability company, government (or agency or subdivision thereof), trust, joint
venture, or proprietorship.
"Pro Rata Portion" means, with respect to a Stockholder, the percentage
indicated opposite such Stockholder's name below:
Name Pro Rata Portion
---- ----------------
Name Pro Rata Portion
---- ----------------
▇▇▇▇ ▇▇▇▇ 34.03%
▇▇▇ ▇▇▇▇▇ 34.88%
▇▇▇▇ ▇▇▇▇▇▇▇▇ 13.88%
▇▇▇▇ ▇▇▇▇▇▇▇▇ 11.74%
▇▇▇▇ ▇▇▇▇▇ 2.32%
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 0.99%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ 0.99%
▇▇▇▇ ▇▇▇▇ 0.33%
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 0.33%
▇▇▇ ▇▇▇▇▇▇▇▇ 0.17%
▇▇▇▇▇ ▇▇▇▇▇ 0.10%
▇▇▇▇▇ ▇▇▇▇▇▇ 0.08%
▇▇▇▇▇ ▇▇▇▇▇ 0.07%
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 0.07%
▇▇▇▇▇▇ ▇▇▇▇▇▇ 0.02%
----
TOTAL: 100%
====
- 28 -
"Restricted Period" means the period beginning on the Closing Date and
ending on (i) with respect to the Majority Stockholders, the fifth anniversary
thereof, and (ii) with respect to the Minority Stockholders, the second
anniversary thereof.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, as in effect as of the relevant
time of reference.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, intangibles, social
security, unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or additions to
tax in respect of the foregoing.
"Tax Return" means any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
"Unlimited Claims" means claims for indemnification hereunder, to the
extent that they are not Limited Claims.
11. GENERAL.
11.1. COOPERATION. Each of the parties will cooperate with the
others and use its best reasonable efforts to prepare all necessary
documentation, to effect all necessary filings, and to obtain all necessary
permits, consents, approvals, and authorizations of all governmental bodies and
other third parties necessary to consummate the transactions contemplated by
this Agreement.
11.2. SURVIVAL OF PROVISIONS. The terms of this Agreement, including
the representations and warranties of the parties, and the provisions of the
other documents executed and delivered in connection with this Agreement, the
Merger, and the other transactions contemplated hereby will be deemed material,
and, notwithstanding any investigation by or on behalf of any other party, will
be deemed to have been relied on by each other party, and will survive the
Closing and the consummation of the Merger and the other transactions
contemplated hereby. Each party represents and warrants that he or it has NOT
relied on any statement made or allegedly made by any other party or his or its
agents or representatives (whether in writing, orally, or otherwise) in
connection with the transactions contemplated hereby other than as set forth in
this Agreement and the other documents executed and delivered in connection with
this Agreement.
11.3. EXPENSES. OSI, on the one hand, and the Stockholders, on the
other, each will be responsible for and will pay all of its or their own
expenses in connection with the negotiation and preparation of this Agreement
and the consummation of the Merger and the other transactions contemplated
hereby; and no expenses in connection with such transactions will be charged by
any Stockholder to the Company.
- 29 -
11.4. BENEFITS OF AGREEMENT; NO ASSIGNMENTS; NO THIRD-PARTY
BENEFICIARIES. This Agreement will bind and inure to the benefit of the parties
hereto and their respective heirs, successors, and permitted assigns. No party
will assign any rights or delegate any obligations hereunder without the consent
of the other parties, and any attempt to do so will be void. Nothing in this
Agreement is intended to or will confer any rights or remedies on any person
other than the parties hereto and their respective heirs, successors, and
permitted assigns.
11.5. ABOUT THIS AGREEMENT. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
will be an original, but all of which together will constitute one and the same
agreement. In pleading or proving this Agreement, it will not be necessary to
produce or account for more than one such counterpart.
The language used in this Agreement is the language chosen by the
parties to express their mutual intent, and no rule of strict construction will
be applied against any party. The captions of sections or subsections of this
Agreement are for reference only and will not affect the interpretation or
construction of this Agreement.
11.6. WAIVERS. No waiver of any breach or default hereunder will be
valid unless in a writing signed by the waiving party. No failure or other delay
by any party exercising any right, power, or privilege hereunder will be or
operate as a waiver thereof, nor will any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power, or privilege.
11.7. ENTIRE AGREEMENT. This Agreement, together with the exhibits
and schedules hereto and the other agreements, instruments, certificates, and
other documents referred to herein as having been or to be executed and
delivered in connection with the transactions contemplated hereby, contains the
entire understanding and agreement among the parties, and supersedes any prior
understandings or agreements among them, or between or among any of them, with
respect to the subject matter hereof.
11.8. NOTICES. All notices, requests, payments, instructions, or
other documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if (i) delivered
personally (effective upon delivery), (ii) mailed by registered or certified
mail, return receipt requested, postage prepaid (effective two business days
after dispatch), (iii) sent by a reputable, established courier service that
guarantees next business day delivery (effective the next business day), or (iv)
sent by telecopier followed within 24 hours by confirmation by one of the
foregoing methods (effective upon receipt of the telecopy in complete, readable
form), addressed as follows (or to such other address as the recipient party may
have furnished to the sending party for the purpose pursuant to this section):
(a) If to OSI, Merger Sub, or the Surviving Corporation, to or in
care of:
Open Solutions Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
- 30 -
with a copy sent at the same time and by the same means to:
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company, prior to the Effective Time, to:
▇▇▇▇▇ ▇▇▇▇▇▇
Imagic Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy sent at the same time and by the same means to:
▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ & Manner, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to any Stockholder, to the address indicated next to such
Stockholder's signature on the signature pages hereto, with a copy sent at the
same time and by the same means to:
▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Telecopier No. (▇▇▇) ▇▇▇-▇▇▇▇
11.9. GOVERNING LAW. This Agreement will be governed by and
interpreted and construed in accordance with the internal laws of the State of
Delaware, as applied to contracts under seal made, and entirely to be performed,
within Delaware, and without reference to principles of conflicts or choice of
laws.
11.10. AMENDMENT OR TERMINATION. This Agreement may be amended,
modified, supplemented, or terminated at any time prior to the Effective Time
(regardless of whether before or after approval of this Agreement or the Merger
by any party or the directors or stockholders of any party) by the written
consent of (i) OSI, (ii) the Company, and (iii) the holders of at least a
majority of the outstanding shares of the Company's Common Stock (as shown in
the attached Merger Consideration Schedule) (provided, that no amendment,
- 31 -
modification, or supplement that materially and adversely affects any one or
more Stockholders, but not all of the Stockholders, will be effective without
the written consent of such materially and adversely affected Stockholder(s).
11.11. WAIVER OF TRIAL BY JURY. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND/OR THE TRANSACTIONS CONTEMPLATED HEREBY.
11.12. INFORMATION RIGHTS. Until the closing of a public offering of
OSI's Common Stock, OSI will provide Black with annual and quarterly financial
statements of OSI as promptly as is reasonably practicable after each such set
of financial statements is prepared and finalized. OSI will answer reasonably
promptly any reasonable questions posed to OSI by Black in connection with the
information contained in such financial statements. Black may provide copies of
such financial statements to the other Stockholders. Each of the Stockholders
will maintain the confidentiality of such financial statements, the information
disclosed therein, and any other information disclosed pursuant to this Section
11.12, whether written or oral, which will be and remain the exclusive property
of OSI; and unless previously authorized in writing by OSI, and except with
respect to information that has otherwise become public through no action or
omission on his part, he will not disclose any such information to any third
party, or use it for any purpose other than monitoring his or her investment in
OSI.
[The rest of this page is intentionally left blank.]
Executed and delivered under seal as of the date first above written.
OSI: OPEN SOLUTIONS INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇.
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Name:
Title:
MERGER SUB: OSI MERGER CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
COMPANY: IMAGIC CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and CEO
STOCKHOLDERS: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBITS AND SCHEDULES
EXHIBITS
A-1 and A-2 Merger Certificates
B Escrow Agreement
C Consulting Agreement with Tecniflex, Inc.
SCHEDULES
Closing Documents Schedule
Merger Consideration Schedule
Company Disclosure Schedule
OSI Disclosure Schedule
Omitted Schedules
Pursuant to Item 601(b)(2) of Regulation S-K promulgated by the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended and the Securities Exchange Act of 1934, Open Solutions Inc.
(the "Company") has, with respect to the Agreement and Plan of Merger and
Reorganization between the Company, OSI Merger Corporation, Imagic Corporation
and the stockholders listed therein dated December 14, 2001, omitted to file the
schedules listed herewith. These schedules will be supplementally furnished to
the Commission upon request.