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AGREEMENT AND PLAN OF MERGER
AMONG
THE BISYS GROUP, INC.,
BI-GREEN ACQUISITION CORP.,
GREENWAY CORPORATION
AND
THE SHAREHOLDERS OF GREENWAY CORPORATION NAMED HEREIN
DATED AS OF AUGUST 21, 1998
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TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER................................................ 2
SECTION 1.01 The Merger................................................ 2
SECTION 1.02 Effect Of the Merger...................................... 2
SECTION 1.03 Consummation of the Merger................................ 2
SECTION 1.04 Charter; By-Laws; Directors and Officers.................. 3
SECTION 1.05 Further Assurances........................................ 3
ARTICLE II CONVERSION OF SECURITIES.................................. 4
SECTION 2.01 Conversion of Securities of the Company................... 4
SECTION 2.02 Company Options and Committed Options..................... 5
SECTION 2.03 Acquisition Common Stock.................................. 7
SECTION 2.04 Exchange of Certificates.................................. 7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE PRINCIPAL SHAREHOLDERS.................... 9
SECTION 3.01 Authority Relative to Agreement........................... 9
SECTION 3.02 Shareholders' Agreements.................................. 9
SECTION 3.03 Organization, Standing and Qualification.................. 9
SECTION 3.04 Stock of the Company; Company Options;
Committed Options......................................... 9
SECTION 3.05 Subsidiaries.............................................. 10
SECTION 3.06 Articles of Incorporation and By-Laws..................... 10
SECTION 3.07 Execution and Performance of Agreement;
Validity and Binding Nature............................... 11
SECTION 3.08 Financial Statements...................................... 11
SECTION 3.09 Intellectual Rights....................................... 12
SECTION 3.10 Contract Parties.......................................... 12
SECTION 3.11 Major Suppliers........................................... 13
SECTION 3.12 Employment, Deferred Compensation
or Similar Agreements; Collective
Bargaining Agreements; Employee
Benefit Plans............................................. 13
SECTION 3.13 Inventory................................................. 14
SECTION 3.14 Real Estate Owned and Leased.............................. 14
SECTION 3.15 Title to and Condition of Personal Property............... 15
SECTION 3.16 Accounts Receivable....................................... 15
SECTION 3.17 Consignment and Return Items.............................. 15
SECTION 3.18 Taxes..................................................... 15
SECTION 3.19 Litigation................................................ 16
SECTION 3.20 Material Contracts........................................ 16
SECTION 3.21 Labor Relations........................................... 17
SECTION 3.22 Insurance................................................. 17
SECTION 3.23 Absence of Changes........................................ 17
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SECTION 3.24 Compliance with Laws; Governmental
Authorizations............................................ 18
SECTION 3.25 Officers, Directors and Depositories...................... 18
SECTION 3.26 Environmental Matters..................................... 18
SECTION 3.27 Third Party and Governmental Consents..................... 19
SECTION 3.28 Licenses and Permits...................................... 19
SECTION 3.29 Software.................................................. 19
SECTION 3.30 Absence of Undisclosed Liabilities........................ 21
SECTION 3.31 Loans to or from Officers, Directors,
Shareholders or Employees................................. 21
SECTION 3.32 Service Warranties; Contract Losses....................... 21
SECTION 3.33 Backlog................................................... 21
SECTION 3.34 Representations and Warranties True;
No Misleading Statements.................................. 22
ARTICLE IV ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL SHAREHOLDERS............................ 22
SECTION 4.01 Authority and Capacity Relative to Agreement.............. 22
SECTION 4.02 Execution and Performance of Agreement;
Validity and Binding Nature............................... 22
SECTION 4.03 Stock of the Company...................................... 23
SECTION 4.04 Additional Representations and Covenants
of Principal Shareholders................................. 23
SECTION 4.05 Representations and Warranties True;
No Misleading Statements.................................. 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT.................. 27
SECTION 5.01 Organization and Qualification............................ 27
SECTION 5.02 Subsidiaries.............................................. 27
SECTION 5.03 Capitalization............................................ 28
SECTION 5.04 Authority Relative to Agreement........................... 28
SECTION 5.05 Non-Contravention......................................... 28
SECTION 5.06 Information Statement..................................... 29
SECTION 5.07 Financial Statements...................................... 29
SECTION 5.08 Absence of Certain Changes or Events...................... 29
SECTION 5.09 Governmental Consents..................................... 30
SECTION 5.10 Compliance with Laws...................................... 30
SECTION 5.11 Representations and Warranties True;
No Misleading Statements.................................. 30
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF ACQUISITION............. 31
SECTION 6.01 Organization and Qualification............................ 31
SECTION 6.02 Capitalization............................................ 31
SECTION 6.03 Authority Relative to Agreement........................... 31
SECTION 6.04 Non-Contravention......................................... 32
SECTION 6.05 Governmental Consents..................................... 32
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SECTION 6.06 Other Matters............................................. 32
SECTION 6.07 Representations and Warranties True;
No Misleading Statements.................................. 32
ARTICLE VII COVENANTS................................................. 33
SECTION 7.01 Conduct of the Company's Business......................... 33
SECTION 7.02 Certain Covenants of Parent............................... 35
SECTION 7.03 Access to Information..................................... 35
SECTION 7.04 Further Assurances........................................ 36
SECTION 7.05 Inquiries and Negotiations;
Third Party Acquisitions.................................. 36
SECTION 7.06 Employment and Non-Competition Agreements;
Employee Stock Options.................................... 37
SECTION 7.07 Notification of Certain Matters........................... 37
SECTION 7.08 Indemnification........................................... 38
SECTION 7.09 Confidentiality........................................... 40
SECTION 7.10 Covenants of Principal Shareholders....................... 41
SECTION 7.11 Transfer Restrictions After the Effective
Time...................................................... 42
SECTION 7.12 Registration Rights Agreements............................ 42
SECTION 7.13 Exercise of Company Options............................... 42
SECTION 7.14 Assignment of Medical Business............................ 42
SECTION 7.15 Right of First Refusal.................................... 43
SECTION 7.16 License of Greenway Name.................................. 43
ARTICLE VIII CONDITIONS TO THE MERGER.................................. 43
SECTION 8.01 Conditions to Each Party's Obligation
to Effect the Merger...................................... 43
SECTION 8.02 Conditions to the Obligation of the
Company to Effect the Merger.............................. 44
SECTION 8.03 Conditions to the Obligation of Parent
and Acquisition to Effect the Merger...................... 44
ARTICLE IX TERMINATION AND ABANDONMENT............................... 46
SECTION 9.01 Termination and Abandonment............................... 46
SECTION 9.02 Effect of Termination..................................... 47
ARTICLE X MISCELLANEOUS............................................. 47
SECTION 10.01 Survival of Representations and Warranties................ 47
SECTION 10.02 Expenses, Etc............................................. 47
SECTION 10.03 Publicity................................................. 48
SECTION 10.04 Execution in Counterparts................................. 48
SECTION 10.05 Notices................................................... 48
SECTION 10.06 Waivers................................................... 49
SECTION 10.07 Entire Agreement.......................................... 49
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SECTION 10.08 Applicable Law............................................ 50
SECTION 10.09 Binding Effect, Benefits.................................. 50
SECTION 10.10 Assignability............................................. 50
SECTION 10.11 Amendments................................................ 50
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INDEX TO SCHEDULES AND EXHIBITS
Schedule Description
- -------- -----------
2.04(a) Other Shareholders
3.02 Shareholders Agreements
3.03 States and Jurisdictions in which the Company is Qualified to
do Business
3.04(a) Stock Ownership of Company Common Stock
3.04(b) Company Options
3.04(c) Committed Options
3.05 Subsidiaries
3.06 Articles of Incorporation and By-Laws of the Company
3.09(a) Intellectual Rights
3.09(b) Infringements With Respect to Intellectual Rights
3.10 Contract Parties
3.11 Major Suppliers
3.12(a) Employment Contracts and Deferred Compensation Agreements
3.12(b) Employee Benefit Plans
3.12(c) Multi-Employer Plans
3.14(a) Real Estate Owned
3.14(b) Real Estate Leases
3.15 Liens on Personal Property
3.16 Accounts Receivable
3.17 Consignment and Return Items
3.18 Tax Audits
3.19 Litigation
3.20 Material Contracts
3.22 Insurance
3.23 Employee Bonuses Paid After July 31, 1998
3.25 Officers, Directors and Depositories
3.27 Consents
3.28 Licenses
3.29 Software
3.33 Backlog
4.04(e) Accredited Investors
4.04(m) Beneficial Interests
7.06(a) Employee Stock Option Grants Pursuant to Employment Agreements
7.14 The Medical Business
8.03(e) Continuing Employees
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Exhibit Section Ref. Description
- ------- ------------ -----------
A 4.04(e) Form of Accredited Investor
Certificate
B 7.12 Registration Rights Agreement
C 7.17 License Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of August 21,
1998, among THE BISYS GROUP, INC., a Delaware corporation, with an address at
150 Clove Road, Little Falls, New Jersey 07424 ("Parent"), BI-GREEN ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of Parent, with an
address at 150 Clove Road, Little Falls, New Jersey 07424 ("Acquisition"),
GREENWAY CORPORATION, a Georgia corporation, with an address at 121 Greenway
Boulevard, Carrollton, Georgia 30117 (the "Company") and the shareholders of the
Company identified on the signature pages hereof (all such shareholders being
collectively referred to herein from time to time as the "Principal
Shareholders"). The Company and Acquisition are hereinafter sometimes referred
to as the "Constituent Corporations" and the Company as the "Surviving
Corporation."
WHEREAS, the Company is engaged in the design, development,
installation and service of digital check imaging software for the banking
industry, including the provision of software consulting, hardware, set-up and
support services in connection therewith;
WHEREAS, Parent, Acquisition and the Company desire that Acquisition
merge with and into the Company (the "Merger"), upon the terms and conditions
set forth herein and in accordance with the General Corporation Law of the State
of Delaware (the "Delaware GCL") and the Georgia Business Corporation Code (the
"GBCC"), with the result that the Company shall continue as the surviving
corporation and the separate existence of Acquisition (except as it may be
continued by operation of law) shall cease;
WHEREAS, Parent, Acquisition and the Company desire that upon the
Merger, at the Effective Time (as hereinafter defined), all outstanding shares
of the capital stock of the Company be converted into the right to receive fully
paid and nonassessable shares of Common Stock, $.02 par value, of Parent
("Parent Common Stock") and the outstanding shares of Acquisition be converted
into the right to receive fully paid and nonassessable shares of Common Stock,
$1.00 par value, of the Surviving Corporation, as hereinafter provided;
WHEREAS, Parent, Acquisition and the Company desire that, immediately
after the Effective Time and solely as a result of the Merger, Parent will own
all the issued and outstanding shares of the capital stock of the Surviving
Corporation;
WHEREAS, for federal income tax purposes, it is intended that the
Merger qualify as a reorganization within the meaning of
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Section 368 of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, the respective Boards of Directors of the Company, Acquisition
and Parent have approved the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the parties hereto hereby agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, in accordance with this Agreement, the
Delaware GCL and the GBCC, Acquisition shall be merged with and into the
Company, the separate existence of Acquisition (except as it may be continued by
operation of law) shall cease, and the Company shall continue as the surviving
corporation under the corporate name of "Greenway Corporation" unless and until
the Articles of Incorporation (hereinafter defined) shall be further amended to
change the name of the Surviving Corporation.
SECTION 1.02 Effect Of the Merger. Upon the effectiveness of the
Merger, the Surviving Corporation shall succeed to and assume all the rights and
obligations of the Company and Acquisition in accordance with the Delaware GCL
and the GBCC and the Merger shall otherwise have the effects set forth in
Section 14-2-1106 of the GBCC.
SECTION 1.03 Consummation of the Merger. As soon as practicable after
the satisfaction or waiver of the conditions to the obligations of the parties
to effect the Merger set forth herein, provided that this Agreement has not been
terminated previously, the parties hereto will cause the Merger to be
consummated by filing (a) with the Secretary of State of the State of Delaware a
properly executed certificate of merger in accordance with the Delaware GCL, and
(b) with the Secretary of State of the State of Georgia a properly executed
certificate of merger in accordance with the GBCC. The Merger shall be effective
upon filing of such certificates or on such later date as may be specified
therein, but in no event shall such certificates be delivered for filing more
than three (3) Business Days (hereinafter defined) after satisfaction of all of
the conditions set forth in Article VIII hereof, including, without limitation,
approval of the Merger by the holders of at least 85%
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of the outstanding shares of Company Common Stock (the time of such
effectiveness being the "Effective Time"). For purposes of this Agreement, the
term "Business Day" shall mean a day of the year on which national banks are
open for business in the State of Delaware and are not required or authorized to
close.
SECTION 1.04 Charter; By-Laws; Directors and Officers. Immediately
after the Effective Time, the Certificate of Incorporation of the Company shall
be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with the provisions thereof and as provided by
the GBCC. As of the Effective Time, the By-Laws of the Surviving Corporation
shall be the By-Laws of the Company as in effect immediately prior to the
Effective Time, until thereafter amended in accordance with the provisions
thereof and the Certificate of Incorporation of the Surviving Corporation and as
provided by the GBCC. The initial directors and officers of the Surviving
Corporation shall be the directors and officers set forth below, in each case
until their respective successors are duly elected and qualified.
Directors: Lynn J. Mangum
Dennis R. Sheehan
Officers: Lynn J. Mangum - Chairman
Tedd Wilson - President
Dennis R. Sheehan - Executive Vice President
and Treasurer
Neil P. Marcous - Executive Vice President
W. Thomas Green, Jr. - Executive Vice
President
Manny Enriquez - Executive Vice President
Mark J. Rybarczyk - Senior Vice President
W.T. Green, III - Senior Vice President
Melinda Jenkins - Senior Vice President
Brad Tuggle - Vice President
Kevin J. Dell - Vice President and Secretary
Edward S. Forman - Assistant Secretary
SECTION 1.05 Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (i) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation, its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets of
either of the Constituent Corporations,
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or (ii) otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall be
authorized to execute and deliver, in the name and on behalf of either of the
Constituent Corporations, all such deeds, bills of sale, assignments and
assurances and do, in the name and on behalf of such Constituent Corporation,
all such other acts and things necessary, desirable or proper to vest, perfect
or confirm its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of such Constituent
Corporation and otherwise to carry out the purposes of this Agreement.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Securities of the Company. By virtue of the
Merger and without any action on the part of the holders of the common stock,
$1.00 par value, of the Company ("Company Common Stock"), at the Effective Time
all outstanding shares of the Company Common Stock (subject to Section 2.04(c)
hereof) shall be converted into the right to receive fully paid and
nonassessable shares of Parent Common Stock on the following basis:
(a) Net Merger Price. The aggregate consideration to be paid in
connection with the Merger shall be paid in the form of Parent Common Stock
valued, as set forth below, at Forty-Seven Million Five Hundred Thousand Dollars
($47,500,000) less the ascribed value (as set forth in Section 2.02(d) below) of
(i) the outstanding Company Options (hereinafter defined) and (ii) the Committed
Options (hereinafter defined), which Company Options and Committed Options shall
be converted to options to purchase Parent Common Stock pursuant to the terms
hereof as of the Effective Time (the "Net Merger Price"). The Net Merger Price
shall be divided by the average of the closing price per share of Parent Common
Stock (the "Average Price") as reported by the National Association of
Securities Dealers Inc. Automated Quotation System ("NASDAQ") for each trading
day during the period commencing July 1, 1998 and ending the date hereof in
order to determine, subject to Section 2.01(b) below, the number of shares of
Parent Common Stock into which the outstanding shares of Company Common Stock
shall be converted in the Merger (the "Aggregate Parent Common Stock
Consideration") provided, however, that in the event the Average Price, as
calculated pursuant to the terms hereof, is less than $37.50 then the Average
Price for purposes of this Agreement shall be deemed to be $37.50, and in the
event the Average Price as calculated pursuant to the terms hereof is greater
than $47.50 then the
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Average Price for purposes of this Agreement shall be deemed to be $47.50.
(b) Exchange Value. Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (excluding any such shares
held in the treasury of the Company, which shall be cancelled as provided in
paragraph (d) below) (such shares being referred to herein as the "Exchange
Shares") shall be converted into the right to receive the number of shares of
Parent Common Stock (the "Exchange Value"), determined by dividing the Aggregate
Parent Common Stock Consideration by the aggregate number of Exchange Shares.
(c) Capital Changes. If, prior to the Effective Time, Parent should
split or combine the outstanding shares of Parent Common Stock, or pay a stock
dividend or other stock distribution in Parent Common Stock, then the
determination of the Exchange Value shall be appropriately adjusted to reflect
such split, combination, dividend or other distribution.
(d) Treasury Shares. Each share of capital stock that is held in the
treasury of the Company shall be cancelled and retired as of the Effective Time
and no capital stock of Parent, cash or other consideration shall be paid or
delivered in exchange therefor.
SECTION 2.02 Company Options and Committed Options.
(a) Each stock option to purchase shares of Company Common Stock
outstanding immediately prior to the Effective Time (each, a "Company Option"),
whether or not then exercisable or vested, shall, at and after the Effective
Time, remain outstanding and shall be converted, subject to the terms of Section
2.02(d) below, into and become the right to purchase, subject to the
satisfaction of the vesting provisions and other terms of such Company Option,
that number of shares of Parent Common Stock (a "Parent Stock Option") as shall
equal the number of shares of Company Common Stock subject to such Company
Option immediately prior to such conversion multiplied by the Exchange Value and
rounded to the nearest whole share of Parent Common Stock. Parent shall assume,
as of the Effective Time, all obligations and liabilities with respect to the
Company Options.
(b) Each Committed Option shall be deemed granted immediately prior to
the Effective Time by the Company to the respective holder thereof, at an option
exercise price of $10.00 per share of Company Common Stock, shall be fully
vested and exercisable after the Effective Time and shall be subject to such
other terms and conditions as are acceptable to Parent. Each Committed Option
shall be converted, at and after the Effective
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Time, subject to the terms of Section 2.02(d) below, into and become the right
to purchase, subject to such terms as are acceptable to Parent, that number of
shares of Parent Common Stock (a "Committed Parent Option") as shall equal the
number of shares of Company Common Stock subject to such Committed Option
immediately prior to such conversion multiplied by the Exchange Value and
rounded to the nearest whole share of Parent Common Stock. Parent shall assume,
as of the Effective Time, all obligations and liabilities with respect to the
Committed Options.
(c) Notwithstanding anything herein or pursuant to the terms of the
Company Options or the Committed Options to the contrary, (i) the exercise price
applicable to each Company Option shall, upon conversion to a Parent Stock
Option, be adjusted so that the option exercise price applicable upon such
conversion to a Parent Stock Option shall be an exercise price per share of
Parent Common Stock calculated by dividing (x) the aggregate exercise price for
all shares of Company Common Stock subject to such Company Options immediately
prior to such conversion by (y) the number of shares of Parent Common Stock
subject to such Parent Stock Options immediately after such conversion and
rounded down to the nearest $.01; and (ii) the exercise price applicable to each
Committed Option shall, upon conversion to a Committed Parent Option, be
adjusted so that the option exercise price applicable upon such conversion to a
Committed Parent Option shall be an exercise price per share of Parent Common
Stock calculated by dividing (x) the aggregate exercise price for all shares of
Company Common Stock subject to Committed Options immediately prior to such
conversion by (y) the number of shares of Parent Common Stock subject to such
Committed Parent Options immediately after such conversion and rounded down to
the nearest $.01.
(d) The ascribed value of the Company Options and the Committed Options
for purposes of Section 2.01(a) shall be the product obtained by multiplying (A)
Forty-Seven Million Five Hundred Thousand Dollars ($47,500,000) by (B) a
fraction, the numerator of which is (i) the number of shares of Company Common
Stock subject to Company Options outstanding immediately prior to the Effective
Time plus the number of shares of Company Common Stock subject to Committed
Options immediately prior to the Effective Time (the "Number of Option Shares"),
and the denominator of which is (ii) the number of shares of Company Common
Stock outstanding immediately prior to the Effective Time plus (iii) the Number
of Option Shares.
(e) Parent shall take such action as is necessary so as to enable
holders of Company Options and Committed Options to receive registered shares of
Parent Common Stock upon exercise of
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any such Parent Stock Options and Committed Parent Options, respectively, in
accordance with their terms, from and after the Effective Time.
SECTION 2.03 Acquisition Common Stock. At the Effective Time, each
share of common stock, $.01 par value, of Acquisition issued and outstanding
immediately prior to the Effective Time shall be converted into the right to
receive one (1) share of the common stock, $1.00 par value, of the Surviving
Corporation, which shall constitute all of the issued and outstanding shares of
the Surviving Corporation after the Effective Time.
SECTION 2.04 Exchange of Certificates. (a) Promptly after the Effective
Time, each of the shareholders of the Company (the "Shareholders") shall deliver
to Parent the certificate or certificates representing their shares of Company
Common Stock (each, a "Certificate") in form sufficient for transfer and
cancellation pursuant thereto. As a condition to the issuance of Parent Common
Stock hereunder, each Shareholder who is not a party to this Agreement, as
identified on Schedule 2.04(a) attached hereto (the "Other Shareholders"), shall
submit the Certificate (or Certificates) for such shares to Parent together with
a transmittal letter, in form and substance satisfactory to Parent, containing
such investment representations and warranties and covenants, respectively,
consistent with Section 4.04 hereof (other than Section 4.04(e) and 4.04(l)) and
Section 7.11 hereof respectively, of this Agreement as shall reasonably be
required by Parent (the "Transmittal Letter"). The approval of the Merger by
each Shareholder in accordance with Section 8.03(f) and/or the surrender by such
Shareholder of Certificate(s) of Company Common Stock for cancellation and
exchange shall be deemed an agreement by such Shareholder to be bound by the
terms of Section 7.08 hereof. Upon surrender of a Certificate for cancellation
to Parent in form sufficient for transfer and cancellation pursuant hereto and
delivery to Parent of such other documents as may reasonably be required by
Parent, the Shareholder surrendering such Certificate, along with a Transmittal
Letter, if applicable, shall be entitled to receive in exchange therefor (x) a
certificate evidencing that number of whole shares of Parent Common Stock which
such holder has the right to receive in respect of the shares of Company Common
Stock formerly evidenced by such Certificate (after taking into account all
shares of Company Common Stock then held of record by such holder) and (y) a
check representing the amount of cash in lieu of fractional shares of Parent
Common Stock, if any, and unpaid dividends or other distributions, if any, to
which such holder is entitled pursuant to the provisions of this Section 2.04,
after giving effect to any applicable withholding tax, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
the cash in lieu of fractional shares and
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unpaid dividends and distributions, if any, payable to the Shareholders.
(b) No dividends or other distributions declared after the Effective
Time with respect to Parent Common Stock shall be paid with respect to any
shares of Company Common Stock represented by a Certificate until such
Certificate is surrendered for exchange as provided herein. After surrender of
any such Certificate, there shall be paid to the holder of the certificate
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
declared with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any applicable withholding taxes thereon, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to the date of such surrender and
with a payment date subsequent to the date of such surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
applicable withholding taxes thereon.
(c) No certificates or scrip representing fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of Certificates,
and such fractional share interests will not entitle the owner thereof to vote
or to any rights of a shareholder of Parent. Each holder of shares of Company
Common Stock who would otherwise have been entitled to receive in the Merger a
fraction of a share of Parent Common Stock (after taking into account all
certificates surrendered by such holder) shall be entitled to receive, in lieu
thereof, a check in an amount (without interest) equal to such fractional part
of a share of Parent Common Stock multiplied by the Average Price.
(d) From and after the date of this Agreement, the stock transfer books
of the Company shall be closed, and there shall be no further registrations of
transfers of shares of Company Common Stock on the records of the Company,
except pursuant to the valid exercise of stock options granted under the
Company's stock option plans described in Schedule 3.04(b) hereto.
(e) In the event that any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting of a bond in such reasonable amount as the
Surviving Corporation may direct, Parent shall issue in exchange for such
Certificate the shares of Parent Common Stock and, if any, cash in lieu of
fractional shares and unpaid dividends and
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distributions on shares of Parent Common Stock deliverable in respect thereof as
provided herein.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE PRINCIPAL SHAREHOLDERS
The Company and each Principal Shareholder, jointly and severally,
hereby represent and warrant to Parent and Acquisition, knowing and intending
that each of Parent and Acquisition is relying hereon in entering into the
transactions contemplated hereby, as follows. For purposes of the
representations and warranties set forth in this Article III, all references to
the Company shall be deemed to exclude the Medical Business (as hereinafter
defined).
SECTION 3.01 Authority Relative to Agreement. The Company has all
requisite power and authority to enter into and to perform its obligations
hereunder. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company, except for approval by the Shareholders,
are necessary to authorize this Agreement and the transactions contemplated
hereby.
SECTION 3.02 Shareholders' Agreements. Except as otherwise set forth in
Schedule 3.02, the Shareholders are not parties to any shareholders' agreement,
buy-sell agreement or similar agreement or arrangement.
SECTION 3.03 Organization, Standing and Qualification. The Company is a
corporation, duly organized, validly existing and in good standing under the
laws of the State of Georgia and has the corporate power and lawful authority to
own and hold its properties and conduct its business as now owned, held and
conducted in its state of incorporation and the states in which it has qualified
to do business. The Company is qualified and in good standing in all states (or
other jurisdictions) in which such qualification is required by reason of the
nature or extent of business conducted by the Company or such subsidiary
therein, except where the failure to be so qualified would not have a Material
Adverse Effect on the Company, and all of such states (and jurisdictions) are
specified in Schedule 3.03 attached hereto.
SECTION 3.04 Stock of the Company; Company Options; Committed Options.
(a) The authorized capital stock of the Company consists in its entirety of One
Million (1,000,000) shares of Company Common Stock, of which 542,276 shares are
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validly issued and outstanding, fully paid and nonassessable. The number of
shares of Company Common Stock owned of record by each Shareholder is set forth
on Schedule 3.04(a) hereto, and said shares of Company Common Stock represent,
collectively, all of the issued and/or outstanding shares of capital stock (or
other equity interests) in the Company.
(b) The Company Options, and the names of the respective
option holders, are set forth on Schedule 3.04(b) hereto. Except for the Company
Options and the Committed Options and as otherwise set forth in Schedule
3.04(b), the Company does not have any outstanding obligations, options or
rights entitling others to acquire shares of capital stock of the Company, or
any outstanding securities, options or other instruments convertible into shares
of capital stock of the Company.
(c) The Company has (1) under its Discretionary (Management)
Plan (the "Discretionary Plan"), authorized the granting of stock options to
purchase up to 50,000 shares of Company Common Stock, of which options 17,500
have not yet been granted as of the date hereof ("Remaining Discretionary
Options") and (2) under its Employee Plan (the "Employee Plan"), authorized the
granting of stock options to purchase up to 40,000 shares of Company Common
Stock, of which options 26,625 have not yet been granted as of the date hereof
("Remaining Employee Options", and together with the Remaining Discretionary
Options, herein referred to as the "Remaining Options"). Of the Remaining
Options, 20,280 options shall have been granted immediately prior to the
Effective Time (the "Remaining Granted Options"). In addition, options to
purchase 8,204 shares of Company Common Stock have been subscribed for and paid
for under the Company's Employee Stock Purchase Plan (the "Employee Purchase
Plan") with respect to the period ending on the date hereof (the "Subscribed
Options", and together with the Remaining Granted Options, herein referred to as
the "Committed Options"). Schedule 3.04(c) identifies the persons who shall be
the respective holders of the Remaining Granted Options immediately prior to the
Effective Time and the persons participating in the Employee Purchase Plan as of
the date hereof, along with the aggregate number of shares of Company Common
Stock for which such participants are eligible as of the date hereof pursuant to
the Employee Purchase Plan.
SECTION 3.05 Subsidiaries. There is no corporation, partnership, joint
venture, or other entity in which the Company has, directly or indirectly, any
investment or to which the Company has made an advance of cash, other than as
listed on Schedule 3.05 attached hereto. The Company is not under any obligation
to acquire any securities from any person or entity.
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SECTION 3.06 Articles of Incorporation and By-Laws. True and complete
copies of the Company's Articles of Incorporation and By-Laws (together with any
amendments thereto) are attached hereto as Schedule 3.06.
SECTION 3.07 Execution and Performance of Agreement; Validity and
Binding Nature. The execution and delivery of this Agreement and the performance
by the Company of the terms of this Agreement and the transactions contemplated
hereby, will not result in a material breach of any of the terms of, or
constitute a violation of or default under, the Articles of Incorporation or
By-Laws of the Company or result in a material breach of any of the terms of, or
constitute a material violation or a material default under, any statute or
contract, indenture or other instrument by which the Company or any of its
properties are bound, and, except as provided in Section 3.27 hereof, no
consent, approval, authorization or order of any court or governmental authority
is required in connection with the execution and delivery of this Agreement by
the Company and the performance by the Company of the terms of this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by the Company. This Agreement is, and the documents and
agreements executed and delivered by the Company pursuant to the terms hereof,
when duly executed and delivered by all parties whose execution and delivery
thereof is required, will be legal, valid, and binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
general application affecting the rights of creditors generally or by general
principles of equity.
SECTION 3.08 Financial Statements. The Company has delivered to Parent
the unaudited balance sheet of the Company as of July 31, 1998 (the "Balance
Sheet") and the audited balance sheets of the Company as of July 31, 1997 and
1996, respectively, and the related statements of income and retained earnings,
cash flows and stockholders' equity for the fiscal years then ended, and notes
thereto (in the case of the 1997 and 1996 financial statements, as audited by
Arthur Andersen L.L.P.) (the Balance Sheet and said related financial statements
and notes thereto for such three years hereinafter referred to collectively as
the "Financial Statements"). Each of the Financial Statements (a) is true and
correct and has been prepared from the books and records of the Company, (b) has
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis with prior periods covered thereby and
(c) presents fairly in all material respects the financial position of the
Company as of the respective date and the results of the Company's operations
and cash flow for such periods. All prepaid
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expenses included therein as assets represent payments theretofore made by the
Company, the benefit and advantage of which may be obtained and enjoyed by the
Surviving Corporation. The books and records of the Company have been kept, and
will be kept to the Effective Time, in reasonable detail and in accordance with
the same accounting principles heretofore used, consistently applied, and will
fairly and accurately reflect in all material respects to the Effective Time all
of the transactions of the Company, and are and will be complete and correct.
SECTION 3.09 Intellectual Rights. (a) Schedule 3.09(a) attached hereto
contains a complete and correct list and accurate description of all trademarks,
trade names, service marks, logos and other identifying symbols, names or marks,
copyrights, inventions, processes, designs, formulas, trade secrets, patents,
patent applications and other intellectual and/or proprietary rights or
interests (collectively, "Intellectual Rights") (i) owned by the Company, free
and clear of all licenses, liens, charges or encumbrances, except as specified
in such Schedule, or (ii) licensed to the Company under valid and enforceable
agreements, in each case exclusive of the Software (hereinafter defined)
identified on Schedule 3.29 hereof. The Company is the exclusive owner of all
right, title and interest in the trademark "Prime Image" and is the exclusive
owner of the corporate name "Greenway Corporation" in the State of Georgia. The
Company has used prior to the date hereof the tradename "Greenway" in the
ordinary and regular course of its business. Upon consummation of the Merger,
the Surviving Corporation shall have the absolute right to use and authorize
others to use all of the Intellectual Rights, free from any claim, security
interest or other lien whatsoever, except for such claims which would not (1)
materially interfere with such use and/or authorization of others to use the
Intellectual Rights, or (2) cause the Company to incur additional costs.
(b) To the best knowledge of the Company and the Principal
Shareholders, there are no infirmities concerning the validity of any of the
Intellectual Rights. The Company owns, or possesses adequate rights to use, all
Intellectual Rights necessary for the conduct of its business. To the best
knowledge of the Company and the Principal Shareholders, except as disclosed on
Schedule 3.09(b), there are no infringements by any third parties upon any
Intellectual Rights or any conflict with or infringement of asserted rights of
others with respect to same.
SECTION 3.10 Contract Parties. Schedule 3.10 contains the names and
business addresses of the customers of the Company with respect to which the
Company presently has contracts or arrangements to provide services and/or to
license its software
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products (collectively, the "Contract Parties"), all of which are material to
the operation of the Company's business. Schedule 3.20 identifies the respective
contracts or arrangements the Company has entered into with respect to the
Contract Parties, true and complete copies of which have been heretofore
delivered to Parent. No Contract Party listed in Schedule 3.10 has expressed to
the Company or to any Principal Shareholder its intention to cancel or otherwise
terminate its relationship with the Company, and, to the best knowledge of the
Company and each Principal Shareholder, all of such contracts will continue in
full force and effect after the Effective Time and a continuing relationship
with each such Contract Party is not in jeopardy.
SECTION 3.11 Major Suppliers. Schedule 3.11 contains the names and
business addresses of all of the major suppliers of the Company. Except as
disclosed on Schedule 3.11, the Company has no other suppliers which are
material to the Company's business as presently conducted. No supplier listed in
Schedule 3.11 has expressed to the Company or to any Principal Shareholder its
intention to cancel or otherwise terminate its relationship with the Company,
and, to the best knowledge of the Company and each Principal Shareholder, a
continuing relationship with each such supplier is not in jeopardy.
SECTION 3.12 Employment, Deferred Compensation or Similar Agreements;
Collective Bargaining Agreements; Employee Benefit Plans.
(a) Except as disclosed in Schedule 3.12(a), the Company is
not a party to any agreement or employment contract or deferred compensation or
similar arrangement with any of its employees or former employees. There are no
collective bargaining agreements covering any employees of the Company. The
business of the Company is not affected by any present strike or other labor
disturbance involving the Company's employees nor, to the best knowledge of the
Company or any Principal Shareholder, is any union attempting to represent, as
collective bargaining agent, any person employed by the Company.
(b) Except as disclosed in Schedule 3.12(b), the Company does
not sponsor or maintain and is not otherwise a party to or liable under any
plan, program, fund or arrangement (whether or not qualified for Federal income
tax purposes), whether benefiting a single individual or multiple individuals,
and whether funded or not, that is an "employee pension benefit plan," or an
"employee welfare benefit plan," as such terms are defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any incentive
or other benefit arrangement for its employees, their dependents and
beneficiaries.
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(c) Except as disclosed in Schedule 3.12(c) hereto, the
Company has not and does not contribute to any multi-employer plan (as defined
in Section 3(37) of ERISA), has not incurred any liability under Section 4201 of
ERISA for any complete or partial withdrawal from any multi-employer plan and
has not assumed any such liability by any prior owner of any of its assets or
properties.
(d) Each employee pension benefit plan maintained by the
Company and listed on Schedule 3.12(b) complies in all material respects with
the requirements of ERISA. No "reportable event" within the meaning of Section
403 of ERISA has occurred with respect to any such plan and Seller has not
engaged in any "prohibited transaction" within the meaning of Section 406(a) or
(b) of ERISA or of Section 4975(c) of the Code, with respect to any such plan;
and no such plan has been terminated in accordance with the procedures set forth
in Section 4041 or 4042 of ERISA.
(e) No liability has been incurred by the Company for any tax
imposed by Section 4975 of the Code with respect to any plan described in
Schedule 3.12(b). The Company has, and shall have, for all periods ending on or
prior to the Effective Time, administered each employee pension benefit plan and
each employee welfare benefit plan described in Schedule 3.12(b) in all material
respects in compliance with the reporting, disclosure and all other requirements
applicable thereto under ERISA, the Code or any other applicable law.
SECTION 3.13 Inventory. The value shown for inventory on the Balance
Sheet fairly presents in all material respects the Company's inventory as of the
date of the Balance Sheet in accordance with GAAP at the lower of cost or market
value thereof based on the specific identification method of inventory
valuation, and all inventory acquired since that date has been reflected on the
Company's books pursuant to such method, subject to adjustments in accordance
with GAAP consistently applied. The inventory of the Company is in good and
merchantable condition and includes no obsolete items. No write-downs of the
Company's inventory have occurred since August, 1998. The Company does not
currently use, nor has it within the past five (5) years used, the FIFO or LIFO
method of inventory valuation.
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SECTION 3.14 Real Estate Owned and Leased.
(a) Schedule 3.14(a) contains a true and correct list of all
real estate owned by the Company. All such real estate is owned in fee simple,
free and clear of all liens and encumbrances, except (i) those described in
Schedule 3.14(a), and (ii) liens of current taxes not yet due and payable.
(b) Schedule 3.14(b) contains a true and correct list and
brief description (including all material terms) of all leases, subleases or
other agreements under which the Company is lessee or subtenant or lessor or
sublessor of real estate.
(c) All such owned or leased real estate (and improvements
thereon) is in good operating condition and repair, subject to ordinary wear and
tear, and conforms in all material respects with all applicable building,
zoning, planning, environmental and other regulations, ordinances or laws, and
the Company has the right to use all real estate necessary to the conduct of its
business as currently conducted.
SECTION 3.15 Title to and Condition of Personal Property. The Company
has merchantable title to all personal property reflected in the Balance Sheet
or acquired subsequent to the date of the Balance Sheet (other than inventory
disposed of since that date in the ordinary course of business), and such
personal property is free and clear of all liens and encumbrances, except as
described on Schedule 3.15 hereto. All of the personal property owned by the
Company is, to the best knowledge of the Company and each Principal Shareholder,
in good operating condition and repair, subject to ordinary wear and tear. The
Company owns or has the right to use all such properties necessary to the
conduct of its business as currently conducted. The Medical Business is not a
material part of the business of the Company as presently conducted.
SECTION 3.16 Accounts Receivable. Except as disclosed in Schedule 3.16,
the accounts receivable of the Company reflected in the Balance Sheet or
acquired by the Company subsequent to the date of the Balance Sheet (a) are
true, bona fide accounts receivable of the Company, created in the ordinary
course of business; (b) have been collected or are fully collectible in amounts
not less than the aggregate amount thereof, net of reserves established
therefor, on the books of the Company and reflected in the Balance Sheet; (c)
are not subject to any offsets, credits or counterclaims; and (d) have not at
any time been placed for collection with any attorney, collection agency or
similar individual or firm.
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SECTION 3.17 Consignment and Return Items. Except as reflected in the
Balance Sheet or incurred since the date of the Balance Sheet in the ordinary
course of business and consistent with past practices and disclosed in Schedule
3.17, the Company has no obligation (other than warranty obligations) to accept
a return for credit of any products shipped to customers or distributors or
others prior to the date hereof or to be shipped prior to the Effective Time.
SECTION 3.18 Taxes. The Company has properly completed and filed all
federal, state, county, municipal and other tax returns, reports and
declarations which are required to be filed by it and has paid or accrued on its
financial statements all taxes, penalties and interest which have become (or may
hereafter become) due pursuant thereto or which became (or may hereafter become)
due pursuant to assessments. The Company has not received any notice of
deficiency or assessment of additional taxes, and no tax audits are in process.
The last years for which the federal or state income taxes or other taxes of the
Company have been examined are set forth on Schedule 3.18 hereto. The Company
has not granted any waiver of any statute of limitation with respect to, or any
extension of a period for the assessment of, any federal, state, county,
municipal or other tax. The accruals and reserves for taxes reflected in the
Balance Sheet are adequate to cover all taxes (including interest and penalties,
if any, thereon) due and payable or accrued in accordance with generally
accepted accounting principles as a result of the operations of the Company for
all periods prior to the date of the Balance Sheet. The Company has not filed an
election under Section 1362(a) of the Code to be taxed as an S Corporation.
SECTION 3.19 Litigation. Except as disclosed in Schedule 3.19, there is
no litigation, investigation or proceeding pending or, to the best knowledge of
the Company and the Principal Shareholders, threatened, involving the Company or
any of its properties. There are no outstanding orders, writs, injunctions or
decrees of any court, governmental agency or arbitration tribunal materially
affecting or materially limiting the conduct of the business of the Company.
SECTION 3.20 Material Contracts. Except as disclosed in Schedule 3.20
and any other Schedule hereto, the Company is not a party to, and none of its
properties are bound by, any of the following types of contracts or commitments,
written or oral: (i) mortgages, indentures, security agreements and other
agreements and instruments relating to the borrowing of money or extension of
credit or imposition of an encumbrance on any of the assets of the Company; (ii)
agreements with any labor union or other collective bargaining unit; (iii) bonus
or compensation
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agreements (including deferred compensation agreements) which have not been
incurred in the ordinary course of business of the Company consistent with past
practices; (iv) profit-sharing, stock option, pension, or retirement agreements,
trusts, or funds for the benefit of employees; (v) sales agency, manufacturer's
representative, distributorship or supply agreements; (vi) other contracts and
commitments which in any case involve payments or receipts of more than $25,000;
(vii) any contract for the purchase, sale or lease of real or personal property
either as lessor or lessee, which in any case involves payment in excess of
$25,000; (viii) any contract with any officer, director or with any employee of
the Company (other than agreements relating to current wage or salary payments
terminable by the Company on notice of thirty (30) days or less); (ix) any
contract or promissory note or other instrument with any Affiliate (as
hereinafter defined) of the Company; or (x) any guarantee or obligation to
provide funds or assume the debt of any person or entity. The Company has
delivered to Parent complete and correct copies of all written contracts and
commitments, together with all amendments thereto, and accurate descriptions of
all oral agreements, described in Schedule 3.20 or any other Schedule hereto.
The Company is not in material default with respect to any such contract, and,
to the best knowledge of the Company and the Principal Shareholders, no other
party to any such contract is in material default with respect thereto and all
of such contracts will continue in full force and effect after the Effective
Time. For purposes of this Agreement, "Affiliate" of the Company means (i) any
individual person, corporation, partnership, trust or other entity in control
of, controlled by or under common control with the Company, and (ii) any
officer, director, trustee, general partner or employee of any corporation,
partnership, trust or other entity in control of, controlled by or under common
control with the Company, and Schedule 3.20 discloses all Affiliates of the
Company.
SECTION 3.21 Labor Relations. Except as disclosed in Schedule 3.19, the
Company, in the conduct of its affairs, has complied in all material respects
with all applicable laws (including, without limitation, labor and tax laws),
and regulations relating to the hiring and employment of employees and
independent contractors, including, without limitation, those related to
discrimination, wages, hours, collective bargaining, employee pension and
welfare benefit plans, and the payment of (and withholding for) income, Social
Security and other taxes, and the Company is not liable for any penalties or
damages for failure to comply with any of the foregoing. There are no unfair
labor practice claims or charges pending or, to the best knowledge of the
Company and the Principal Shareholders, threatened, involving the Company.
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SECTION 3.22 Insurance. Schedule 3.22 hereto contains a list and
description (including the name of the insurer, coverage and expiration date) of
all insurance policies maintained by the Company. Schedule 3.22 further lists
all claims presently pending or, to the best knowledge of the Company and the
Principal Shareholders, threatened which are covered by such policies. The
Company has not received notice of cancellation or non-renewal of any of such
policies.
SECTION 3.23 Absence of Changes. Except as herein otherwise disclosed,
since July 31, 1998 the Company has conducted its business in the regular and
ordinary course and has not (i) undergone any materially adverse change in its
condition (financial or otherwise), assets, liabilities, business, or
operations, (ii) declared, set aside, made or paid any cash or stock dividend or
distribution or purchased, issued or sold any shares of its capital stock or
securities convertible into or exchangeable for any shares of its capital stock
or granted any stock options or rights to acquire any shares of its capital
stock, except as disclosed in Schedule 3.04(c), (iii) incurred any indebtedness
for borrowed money or issued or sold any debt securities, (iv) instituted any
increase in the compensation payable or to become payable to any officers or
employees, except as disclosed in Schedule 3.23 with regard to bonuses accrued
prior to July 31, 1998 and paid thereafter to certain employees in the ordinary
course of business and consistent with prior practice, or any changes in
personnel policies or employees benefits, or (v) made any payment to any
Shareholder except for payments described in a Schedule hereto and regular
salary and ordinary and necessary business expenses.
SECTION 3.24 Compliance with Laws; Governmental Authorizations. The
Company is in compliance in all material respects with all statutes, laws,
ordinances, rules, regulations, judgments, orders, decrees, governmental permits
and other governmental authorizations or approvals applicable to it or any of
its properties, and all governmental authorizations or approvals necessary in
any material respect for the conduct of the business of the Company have been
duly and lawfully obtained and are in full force and effect, except where the
failure to obtain any such authorization or approval would not have a Material
Adverse Effect on the Company. There are no proceedings pending or, to the best
knowledge of the Company and the Principal Shareholders, threatened, which may
result in the revocation, cancellation or suspension, or any materially adverse
modification, of any thereof.
SECTION 3.25 Officers, Directors and Depositories. Schedule 3.25 hereto
contains the names of all the officers and directors of the Company and the
names of all depositories of its
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funds and the names of the officers and other persons empowered to sign
instruments withdrawing funds from said depositories.
SECTION 3.26 Environmental Matters.
(a) No governmental agency has asserted any claim or, to the
best knowledge of the Company and the Principal Shareholders, threatened to
assert any claim against the Company in respect of its business, any assets
owned or leased by it, real properties leased by it, or the condition, use or
operation thereof by the Company, arising out of any Federal, state or local
law, rule, regulation or directive pertaining to the environment.
(b) There are nowhere on any real property owned by the
Company, and, to the best knowledge of the Company and the Principal
Shareholders, there are nowhere on any real property leased, used or otherwise
under the control of the Company, any deposits, dumps, or tanks of toxic or
other poisonous, dangerous or noxious waste, fluids, solvents, chemicals or
effluents, except for such chemicals, fuels and fluids as are properly and
safely stored, identified, labeled and maintained in accordance with applicable
industrial standards and all governmental or other laws or regulations relating
thereto. The Company does not discharge from any real property owned, leased,
used or otherwise under its control, whether by effluent, emission or other
means, any noxious, toxic, hazardous or deleterious matter or gases. All
discharges of waste material and other substances from the Company's operating
facilities are in full compliance with applicable law and covered by valid
permits and licenses, where required.
SECTION 3.27 Third Party and Governmental Consents. Except as disclosed
in Schedule 3.27 hereto, no consent, authorization, approval, order, license,
certificate or permit of or from, or registration, declaration or filing with,
any governmental authority or any court or other tribunal or any other person,
firm or entity, nor under any contract, indenture, mortgage, lease, license or
other agreement or instrument to which the Company or any of the Shareholders is
a party or by which the Company or any of the Shareholders or any of its or his
assets or properties is subject or bound, is required by or with respect to the
Company or any of its Shareholders in connection with the execution, delivery or
performance of this Agreement or of any other agreement, document or instrument
to be executed and delivered by the Company or the Shareholders pursuant hereto
or in connection herewith or the consummation of the transactions contemplated
hereby.
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SECTION 3.28 Licenses and Permits. The Company has obtained all
consents, approvals, waivers and permits required in connection with the
ownership of the assets of the Company and the operation of the Company's
business as presently and heretofore conducted (herein collectively referred to
as the "Licenses"), except where the failure to obtain any such consents,
approvals, waivers and/or permits would not have a Material Adverse Effect on
the Company. The Licenses are listed on Schedule 3.28 attached hereto. No other
licenses or permits are required to conduct or operate the Company's business as
presently conducted, except where the failure to obtain any such consents,
approvals, waivers and/or permits would not have a Material Adverse Effect on
the Company.
SECTION 3.29 Software.
(a) Schedule 3.29 hereto contains a true, complete and
accurate list and description of (i) all computer software and related programs
owned by the Company including all software, source codes and object codes and
(ii) all computer software and related programs licensed by the Company for use
in connection with the Company's business (other than off-the-shelf software
licensed to the Company which is not material to the Company's business or the
services provided by the Company) (collectively, the "Software"). The Company
either owns or has a valid license to use and resell all of the Software, and
upon consummation of the Merger, the Surviving Corporation shall have the
absolute right to use and authorize others to use all of the Software, free from
any claim, security interest or other lien or encumbrance whatsoever, except as
set forth on Schedule 3.29 and except for such claims which would not (1)
materially interfere with such use and/or authorization of others to use the
Software or (2) cause the Company to incur additional costs. The Company is the
exclusive licensee of the Software indicated on Schedule 3.29 as being
exclusively licensed by the Company. The Software constitutes the only computer
software or programs necessary for the operation of the Company's business and
the provision of services provided by the Company.
(b) The Company has provided to Parent true and complete
copies of all licenses, leases, contracts and other written instruments relating
to any Software and/or source codes thereof which are not owned by the Company
(collectively, the "Software Contracts"), all of which are legally valid and
binding and enforceable in accordance with their respective terms. Neither the
Company nor, to the best knowledge of the Company and the Principal
Shareholders, any other party thereto is in violation of any material term or
provision of any Software Contract. The use of the Software by the Company does
not, and upon consummation of the Merger the use of the Software by the
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Surviving Corporation will not, in any manner infringe upon any rights of any
third parties. The use of any source codes related to Software which is not
owned by the Company and the exercise of the Company's rights in and to such
source codes, as provided in any of the Software Contracts, does not, and upon
consummation of the Merger the use of any such source codes and exercise of such
rights by the Surviving Corporation will not, in any manner infringe upon the
rights of any third parties.
(c) All source codes relating to the Software which is owned
by the Company (the "Owned Source Codes") are in the possession of the Company
and its escrow agent, Tisinger, Tisinger, Vance & Greer, P.C., and constitute
trade secret information of the Company, and no third party has any present
right, title, interest or license, and the Company has not granted any such
right, title, interest or license with respect to the future, with respect to
any of the Owned Source Codes under any circumstances whatsoever. The Company
has delivered to Parent a true and complete copy of the form of escrow agreement
utilized in connection with the Owned Source Codes. Upon consummation of the
Merger, the Surviving Corporation shall own and have possession of, and shall
have the absolute right to use, the Owned Source Codes, free from any claim,
security interest or other lien or encumbrance whatsoever.
(d) The Company owns in respect of all Software owned by the
Company and has possession of, and the Surviving Corporation will own in respect
of all Software owned by the Company and have possession of immediately after
the Effective Time, adequate documentation, including, without limitation,
documentation of source codes, object codes and engineering change notices,
reflecting the current versions of all Software owned by the Company so as to
enable the Surviving Corporation to conduct fully after the Effective Time the
business conducted by the Company prior to Effective Date in the same manner as
theretofore conducted.
SECTION 3.30 Absence of Undisclosed Liabilities. Except as and to the
extent disclosed in or accrued on the Financial Statements, there exist no
material liabilities or obligations of any nature whatsoever (whether absolute,
contingent or otherwise, matured or unmatured) in respect of the Company's
business or assets of the type customarily reflected in financial statements
prepared in accordance with GAAP. None of the Principal Shareholders knows or
has any reasonable grounds to know after due inquiry of any basis for assertion
against the Company of any claim or liability of any nature in any amount not
fully disclosed in the Financial Statements.
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SECTION 3.31 Loans to or from Officers, Directors,
Shareholders or Employees. The Company does not have outstanding any loans,
advances or other indebtedness incurred by any present or former director,
officer, Shareholder or employee of the Company or any member of their
respective families, and there are no loans or advances made to the Company by
or indebtedness incurred by the Company to any present or former director,
officer, Shareholder or employee of the Company or any member of their
respective families.
SECTION 3.32 Service Warranties; Contract Losses. Adequate
provision in accordance with GAAP has been made in the Financial Statements for
claims under warranties provided for in all contracts with Contract Parties. The
Financial Statements adequately reflect the known and anticipated losses, if
any, for any outstanding and uncompleted contracts with Contract Parties, and
there are no such known or anticipated losses that are not so reflected in the
Financial Statements.
SECTION 3.33 Backlog. Schedule 3.33 discloses the backlog of
services to be provided by the Company pursuant to each contract with a Contract
Party, the reasonably anticipated value of such services and the date by which
performance by the Company of each such contract is reasonably anticipated to be
completed.
SECTION 3.34 Representations and Warranties True; No
Misleading Statements. All of the representations and warranties set forth in
this Article III shall be true and correct as of the Effective Time as if made
at that time. The representations and warranties made herein and in any
Schedule, list or other document specifically referred to herein and delivered
by the Company or the Shareholders pursuant hereto, and all information provided
by the Company for inclusion in the Merger Information (hereinafter defined),
taken as a whole, do not contain any untrue statements of a material fact or
omit to state a material fact necessary in order to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE IV
ADDITIONAL REPRESENTATIONS AND WARRANTIES
OF THE PRINCIPAL SHAREHOLDERS
Each Principal Shareholder hereby represents and warrants to
Parent and Acquisition, as to itself, severally and not jointly, as follows,
knowing and intending that each of Parent and Acquisition is relying hereon in
entering into the transactions contemplated hereby, as follows. For purposes of
the representations and warranties set forth in this Article IV,
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all references to the Company shall be deemed to exclude the Medical Business.
SECTION 4.01 Authority and Capacity Relative to Agreement.
Such Principal Shareholder has all requisite power, authority and legal capacity
to enter into and perform each of its obligations hereunder.
SECTION 4.02 Execution and Performance of Agreement; Validity
and Binding Nature. The execution and delivery of this Agreement, and the
performance by such Principal Shareholder of the terms of this Agreement and the
transactions contemplated hereby, will not result in a material breach of any of
the terms of, or constitute a violation or default under, the Articles or
Certificate of Incorporation or By-Laws, or result in a material breach of any
of the terms of, or constitute a material violation or material default under,
any partnership agreement or other constituent instrument of such Principal
Shareholder, if an entity, or any statute or contract, indenture or other
instrument by which such Principal Shareholder or any of its respective
properties are bound, and no consent, approval, authorization or order of any
court or governmental authority is required in connection with the execution and
delivery of this Agreement by such Principal Shareholder and the performance by
such Principal Shareholder of the terms of this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed and delivered by such
Principal Shareholder and, together with the other documents and agreements to
be executed by all parties whose execution and delivery thereof is required,
constitutes the legal, valid and binding obligations of such Principal
Shareholder, enforceable against such Principal Shareholder in accordance with
their respective terms, except to the extent that enforceability may be limited
by bankruptcy, receivership, moratorium, conservatorship, reorganization or
other laws of general application affecting the rights of creditors generally or
by general principles of equity. Such Shareholder has the legal right and
authority to vote the shares of Company Common Stock held of record by it in
favor of the execution, delivery and performance of this Agreement and the
consummation of the Merger in accordance with the provisions hereof.
SECTION 4.03 Stock of the Company. The number of shares of
Company Common Stock and Company Options, as applicable, beneficially owned by
such Principal Shareholder is as identified on Schedule 3.04(a) and Schedule
3.04(b), respectively, opposite the respective Principal Shareholder's name. The
shares of Company Common Stock and Company Options, as applicable, beneficially
owned by such Principal Shareholder are owned free and clear of all liens,
claims, options, encumbrances or restrictions whatsoever. Such Principal
Shareholder has the
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full legal right and power and all authorizations and approvals required by law
or otherwise to sell, transfer and deliver such shares as contemplated hereunder
and to make the representations, warranties and agreements set forth in this
Agreement. Except with respect to the shares of the Company Common Stock and the
Company Options, as applicable, identified on Schedule 3.04(a) and Schedule
3.04(b), respectively, opposite the respective Principal Shareholder's name, and
any Committed Options such Principal Shareholder may receive immediately prior
to the Effective Time, such Principal Shareholder has no outstanding claim
against the Company or any right whatsoever with respect to any shares of the
capital stock of the Company, including without limitation any other option,
warrant or other right to acquire shares of the capital stock of the Company or
any securities, options or other instruments convertible or exchangeable into
shares of capital stock of the Company. Except as set forth in Schedule 3.02, no
Shareholder is a party to any shareholders agreement, buy-sell agreement or
similar agreement or arrangement with respect to the Company Common Stock or
other equity interest in the Company.
SECTION 4.04 Additional Representations and Covenants of
Principal Shareholders.
(a) Each Principal Shareholder understands that the issuance
of the shares of Parent Common Stock pursuant to this Agreement is intended to
be exempt from registration under the Securities Act of 1933, as amended (the
"Securities Act") by virtue of Section 4(2) based, in part, upon the
representations, warranties and agreements of such Principal Shareholder
contained in this Agreement.
(b) Each Principal Shareholder understands that neither the
Securities and Exchange Commission (the "SEC") nor any state securities
commission has approved the Parent Common Stock or passed upon or endorsed the
merits of an investment therein or confirmed the accuracy or adequacy of any
information provided by Parent to the Shareholders or the accuracy or adequacy
of any of the representations, warranties and agreements of Parent contained
herein.
(c) Except as contemplated pursuant to Section 7.12 hereof,
such Principal Shareholder is acquiring Parent Common Stock solely for its own
account for investment and not with a view to resale or distribution thereof, in
whole or in part. Such Principal Shareholder has no agreement or arrangement,
formal or informal, written or oral, with any person to sell or transfer or
otherwise dispose of all or any part of the Parent Common Stock, and has no
present plans to enter into any such agreement or arrangement.
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(d) Such Principal Shareholder did not become aware of the
offer and sale of Parent Common Stock through or as a result of any form of
general solicitation or general advertising including, without limitation, any
article, notice, advertisement or other communication published in any
newspaper, magazine or other media in connection with the offer and sale of
Parent Common Stock contemplated hereby and is not purchasing Parent Common
Stock through or as a result of any seminar or meeting to which such Principal
Shareholder was invited.
(e) Such Principal Shareholder, if listed on Schedule 4.04(e)
hereof, meets the requirements of at least one of the categories of an
"accredited investor", as defined in Rule 501(a) promulgated under the
Securities Act and as set forth in the form of Accredited Investor Certification
attached hereto as Exhibit A. In connection with the closing of the transactions
contemplated by this Agreement, the Principal Shareholders listed on Schedule
4.04(e) shall certify to Parent, in the form of the certification set forth in
Exhibit A, as to which category (or categories) of accredited investor is
applicable to such Principal Shareholder.
(f) Such Principal Shareholder, or such Principal Shareholder
together with its purchaser representative, if any, has such knowledge and
experience in financial, tax, and business matters in general, and investments
in securities in particular, so as to enable such Principal Shareholder to
evaluate the merits and risks of an investment in Parent Common Stock and to
make an informed investment decision with respect thereto.
(g) Such Principal Shareholder recognizes that it must bear
the substantial economic risks of the investment in Parent Common Stock
indefinitely, because none of the Parent Common Stock may be sold, transferred,
hypothecated or otherwise disposed of unless such Parent Common Stock is
registered under the Securities Act and applicable state securities laws or an
exemption from such registration is available. Such Principal Shareholder
understands that legends shall be placed on the certificates representing Parent
Common Stock issuable stating that the shares represented thereby have not been
registered under the Securities Act or applicable state securities laws, and
appropriate notations thereof will be made in Parent's stock books.
(h) Such Principal Shareholder has adequate means of providing
for its current financial needs and foreseeable contingencies and has no need
for liquidity of its investment in Parent Common Stock for an indefinite period
of time. Such Principal Shareholder's overall commitment to investments which
are not readily marketable is not excessive in view of its net
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worth and financial circumstances and the purchase of the Parent Common Stock
will not cause such commitment to become excessive.
(i) Such Principal Shareholder is not relying on Parent or any
of its employees or agents with respect to the legal, tax, economic and related
considerations of an investment in Parent Common Stock, other than as expressly
contained in the representations and warranties of Parent contained in Article V
hereof and in the Information Statement (hereinafter defined).
(j) Such Principal Shareholder, or such Principal Shareholder
together with its purchaser representative, if any, (i) have had the opportunity
to obtain all information requested by them for the purposes of verifying the
information contained in the Information Statement (hereinafter defined) or for
any other purpose related hereto and (ii) have had the opportunity to meet with
representatives of Parent and to have them answer any questions and provide such
additional information regarding the terms and conditions of the transactions
contemplated hereby, the information set forth in said Information Statement and
the business and prospects of Parent deemed relevant by such Principal
Shareholder or such Principal Shareholder together with its purchaser
representative, all of which questions have been answered and all of which
requested information has been provided to the full satisfaction of such
Principal Shareholder or such Principal Shareholder together with its purchaser
representative. Such Principal Shareholder is aware that an investment in Parent
Common Stock is speculative and involves significant risks, including, among
other things, the risk of the loss of such Principal Shareholder's entire
investment in Parent Common Stock.
(k) In evaluating the suitability of an investment in Parent,
and in deciding to enter into this Agreement, such Principal Shareholder has not
relied upon any representation or other information (whether oral or written)
other than as set forth in the representations and warranties of Parent
contained in Article V of this Agreement and in the Information Statement. No
oral or written representations have been made, or oral or written information
furnished, to such Principal Shareholder or such Principal Shareholder together
with its purchaser representative in connection with the offer and sale of
Parent Common Stock that are in any way inconsistent with the representations
and warranties of Parent contained herein or any of the information contained in
the Information Statement.
(l) All information, including, without limitation, financial
information and financial statements, provided by the Company or any Principal
Shareholder for insertion in the Information Statement does not contain any
untrue statement of a material fact or omit to state a material fact required to
be
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stated therein or necessary in order to make the statements therein, in the
light of the circumstances in which they were made, not misleading, it being
understood and acknowledged that such information has not been independently
verified by Parent or Acquisition.
(m) Except as described in Schedule 4.04(m) hereto, such
Principal Shareholder has no beneficial interest, directly or indirectly, in any
person, firm, corporation, partnership or other entity which is or within the
past two years has been a supplier of any goods or services to the Company,
including, without limitation, any Major Supplier, or from which the Company has
received fees, including, without limitation, any Contract Party, other than as
the beneficial owner of 1% or less of the voting securities of a publicly held
corporation. The nature and amount of any such beneficial interest is disclosed
in Schedule 4.04(m).
(n) Such Principal Shareholder is familiar with the business,
historical financial performance and prospects of the Company, including the
risks associated therewith. None of the information provided by such Principal
Shareholder for insertion in the Information Statement contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances in which they were made, not misleading.
(o) Such Principal Shareholder, if an individual person, is
not required to obtain any spousal consent in connection with the transactions
contemplated hereby.
(p) Such Principal Shareholder hereby represents that it will
pay its own expenses, if any, incurred in connection with the Merger and will
not pay expenses, if any, incurred by the Company, Parent, or Acquisition in
connection with the Merger.
SECTION 4.05 Representations and Warranties True; No Misleading
Statements. All of the representations and warranties set forth in this Article
IV shall be true and correct as of the Effective Time as if made at that time.
The representations and warranties made in this Article IV or other document
specifically referred to in this Article IV and delivered by such Principal
Shareholder pursuant hereto do not contain any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company and each Principal
Shareholder as follows:
SECTION 5.01 Organization and Qualification. Parent 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 assets and to carry on its business as it
is now being conducted. Parent is duly qualified as a foreign corporation to do
business, and is in good standing, in each jurisdiction in which the character
of its properties owned or leased or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect (as hereinafter defined) on Parent. As used
herein, "Material Adverse Effect" shall mean, with respect to any party, a
material adverse effect on the assets, financial condition, operating results or
business of such party and its subsidiaries, taken as a whole.
SECTION 5.02 Subsidiaries. Each subsidiary of Parent is a corporation
duly organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and to carry on its
business as it is now being conducted. Each such subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on Parent.
All of the outstanding shares of capital stock of Parent's subsidiaries are
validly issued, fully paid and nonassessable and are owned by Parent or by a
wholly-owned subsidiary of Parent.
SECTION 5.03 Capitalization. The authorized capital stock of Parent
consists of 80,000,000 shares of Parent Common Stock, and, as of June 30, 1998,
26,670,325 shares of Parent Common Stock were issued and outstanding, all of
which were validly issued and are fully paid and nonassessable. Except as
contemplated hereby and except for options and stock purchase rights outstanding
under Parent's employee stock purchase and stock option plans, and rights
outstanding under the Rights Agreement dated May 7, 1997 between Parent and Bank
of New York, as rights agents, no subscription, warrant, option, convertible
security, stock appreciation or other right (contingent or other) to purchase or
acquire any shares of any class of capital stock
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of Parent is authorized or outstanding and there is not any agreement of Parent
to issue any shares, warrants, options or other such rights or to distribute to
holders of any class of its capital stock any evidences of indebtedness or
assets. Parent does not have any obligation (contingent or other) to purchase,
redeem or otherwise acquire any shares of its capital stock or any interest
therein or to pay any dividend or make any other distribution in respect
thereof. At the Effective Time, Parent will have sufficient authorized but
unissued shares of Parent Common Stock available for issuance in accordance with
Article II hereof.
SECTION 5.04 Authority Relative to Agreement. Parent has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution and delivery of this Agreement by Parent
and the consummation by Parent of the transactions contemplated hereby have been
duly authorized by the Board of Directors of Parent, and no other corporate
proceedings on the part of Parent are necessary to authorize this Agreement and
the transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and constitutes the legal, valid and binding obligation of
Parent, enforceable against Parent in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, receivership,
moratorium, conservatorship, reorganization or other laws of general application
affecting the rights of creditors generally or by general principles of equity.
SECTION 5.05 Non-Contravention. The execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby will not (i) conflict with any provision of the Certificate
of Incorporation or By-Laws of Parent or any of its subsidiaries or (ii) result
(with the giving of notice or the lapse of time or both) in any violation of or
default or loss of a benefit under, or permit the acceleration of any obligation
under, any mortgage, indenture, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Parent or any of its subsidiaries or
any of their respective properties.
SECTION 5.06 Information Statement. Following the execution and
delivery of this Agreement, Parent shall deliver to each Shareholder a copy of
the Confidential Information Statement, including exhibits thereto, prepared in
connection with the transactions contemplated hereby (the "Information
Statement"). The Information Statement will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under
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which they were made, not misleading, except as may be contained in information
provided by the Company or any Shareholder for insertion therein.
SECTION 5.07 Financial Statements. The consolidated financial
statements of Parent included in the Information Statement have been prepared in
accordance with GAAP consistently applied and consistent with prior periods,
subject, in the case of unaudited interim consolidated financial statements, to
year-end adjustments (which consist of normal recurring accruals) and the
absence of certain footnote disclosures. The consolidated balance sheets of
Parent included in the Information Statement fairly present in all material
respects the financial position of Parent and its subsidiaries as of their
respective dates, and the related consolidated statements of operations,
shareholders' equity and cash flows included in the Information Statement fairly
present in all material respects the results of operations of Parent and its
subsidiaries for the respective periods then ended, subject, in the case of
unaudited interim financial statements, to year-end adjustments (which consist
of normal recurring accruals) and the absence of certain footnote disclosures.
SECTION 5.08 Absence of Certain Changes or Events. Except as
contemplated hereby and except for the issuance of Parent Common Stock pursuant
to employee benefit plans of Parent described in Section 5.03 above, since June
30, 1998, Parent has not (i) issued any Parent Common Stock or securities or
obligations convertible into or exchangeable for Parent Common Stock, (ii)
incurred any material liabilities (absolute or contingent), except in the
ordinary course of business or (iii) suffered any Material Adverse Effect with
respect to Parent and its consolidated subsidiaries taken as a whole.
SECTION 5.09 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign governmental or regulatory authority is required to be
made or obtained by Parent in connection with the execution and delivery of this
Agreement by Parent or the consummation by Parent of the transactions
contemplated hereby, except for (i) filings pursuant to the Securities Act and
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations promulgated by the SEC thereunder, if applicable, (ii)
filings with state securities agencies under state securities or blue sky laws,
if applicable, (iii) the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the Delaware GCL, (iv) the
filing of a Certificate of Merger with the Secretary of State of the State of
Georgia in accordance with the GBCC, (v) any licenses, permits,
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franchises or other governmental authorizations pertaining to the business of
the Company and its subsidiaries that are required as a result of the
consummation of the transactions contemplated hereby and (vi) such consents,
approvals, orders or authorizations which, if not obtained, or registrations,
declarations or filings which, if not made, would not materially adversely
affect the ability of Parent to consummate the transactions contemplated hereby
or to conduct the business of the Company and its subsidiaries, if any, after
the Effective Time.
SECTION 5.10 Compliance with Laws. Each of Parent and its subsidiaries
is in compliance in all material respects with all statutes, laws, ordinances,
rules, regulations, judgments, orders, decrees, governmental permits and other
governmental authorizations or approvals applicable to it or any of its
properties, and all governmental authorizations or approvals necessary in any
material respect for the conduct of the business of each of Parent and its
subsidiaries have been duly and lawfully obtained and are in full force and
effect, except where the failure to obtain any such authorization or approval
would not have a Material Adverse Effect on Parent. There are no proceedings
pending or, to the best knowledge of Parent threatened, which may result in the
revocation, cancellation or suspension, or any materially adverse modification,
of any thereof.
SECTION 5.11 Representations and Warranties True; No Misleading
Statements. All of the representations and warranties set forth in this Article
V shall be true and correct as of the Effective Time as if made at that time.
The representations and warranties made herein and in any Schedule, list or
other document specifically referred to herein and delivered by Parent pursuant
hereto, and all information provided by Parent for inclusion in the Information
Statement, taken as a whole, do not contain any untrue statements of a material
fact or omit to state a material fact necessary in order to make the statements
herein or therein, in light of the circumstances under which they were made, not
misleading.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF ACQUISITION
Acquisition represents and warrants to the Company and each Principal
Shareholder as follows:
SECTION 6.01 Organization and Qualification. Acquisition 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 assets and to carry on its business
as it is now being conducted. Acquisition is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction in
which the character of its properties owned or leased or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the financial condition,
operating results or business of Acquisition.
SECTION 6.02 Capitalization. The authorized capital stock of
Acquisition consists of 100 shares of common stock, $.01 par value. As of the
date hereof, 100 shares of such common stock are validly issued and outstanding,
fully paid and nonassessable and are owned of record and beneficially by Parent,
and no shares of such common stock are held in the treasury of Acquisition.
Acquisition has no commitments to issue or sell any shares of such common stock
or any securities or obligations convertible into or exchangeable for, or giving
any person any right to subscribe for or acquire from Acquisition, any shares of
such common stock, and no securities or obligations evidencing any such rights
are outstanding.
SECTION 6.03 Authority Relative to Agreement. Acquisition has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby have been duly authorized by the Board of Directors of
Acquisition and by Parent as its sole stockholder, and no other corporate
proceedings on the part of Acquisition are necessary to authorize this Agreement
and the transactions contemplated hereby. This Agreement has been duly executed
and delivered by Acquisition and constitutes the legal, valid and binding
obligation of Acquisition, enforceable against Acquisition in accordance with
its terms except to the extent that enforceability may be limited by bankruptcy,
receivership, moratorium, conservatorship, reorganization or other laws of
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general application affecting the rights of creditors generally or by principals
of equity.
SECTION 6.04 Non-Contravention. The execution and delivery of this
Agreement by Acquisition and the consummation by Acquisition of the transactions
contemplated hereby will not (i) conflict with any provision of the Certificate
of Incorporation or By-Laws of Acquisition or (ii) result (with the giving of
notice or the lapse of time or both) in any violation of or default or loss of a
benefit under, or permit the acceleration of any obligation under, any mortgage,
indenture, lease, agreement, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Acquisition or its properties, other
than any such violation, default, loss or acceleration that would not Materially
Adversely Affect the ability of Acquisition to consummate the transactions
contemplated hereby.
SECTION 6.05 Governmental Consents. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign governmental or regulatory authority is required to be
made or obtained by Acquisition in connection with the execution and delivery of
this Agreement by Acquisition or the consummation by Acquisition of the
transactions contemplated hereby, except for (i) the filing of a certificate of
merger with the Secretary of State of the State of Delaware in accordance with
the Delaware GCL and the Secretary of State of the State of Georgia in
accordance with the GBCC, (ii) any licenses, permits, franchises or other
governmental authorizations pertaining to the business of Acquisition that are
required as a result of the consummation of the transactions contemplated hereby
and (iii) such consents, approvals, orders or authorizations which if not
obtained, or registrations, declarations or filings which if not made, would not
Materially Adversely Affect the ability of Acquisition to consummate the
transactions contemplated hereby.
SECTION 6.06 Other Matters. Acquisition has been formed for the sole
purpose of effecting the Merger and, except as contemplated by this Agreement,
Acquisition has not conducted any business activities and does not have any
material liabilities or obligations.
SECTION 6.07 Representations and Warranties True; No Misleading
Statements. All of the representations and warranties set forth in this Article
VI shall be true and correct as of the Effective Time as if made at that time.
The representations and warranties made herein and in any Schedule, list or
other document specifically referred to herein and delivered by Acquisition
pursuant hereto, and all information provided by Acquisition for inclusion in
the Merger Information, taken as a whole, do not
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contain any untrue statements of a material fact or omit to state a material
fact necessary in order to make the statements herein or therein, in light of
the circumstances under which they were made, not misleading.
ARTICLE VII
COVENANTS
SECTION 7.01 Conduct of the Company's Business. The Company and each
Principal Shareholder covenants and agrees that, prior to the Effective Time,
unless Parent shall otherwise consent in writing or as otherwise expressly
contemplated by this Agreement:
(a) the business of the Company shall be conducted only in,
and the Company shall not take any action, except in the ordinary
course of business and consistent with past practice, except as
otherwise herein provided in connection with the Medical Business; and
(b) the Company shall not, directly or indirectly, do any of
the following:
(i) sell, pledge, dispose of or encumber any assets of the Company or
any of its subsidiaries, except inventory and immaterial assets in the
ordinary course of business and except for the Medical Business; (ii)
amend or propose to amend its Certificate of Incorporation or By-Laws;
(iii) split, combine or reclassify any outstanding shares of its
capital stock, or declare, set aside or pay any dividend payable in
cash, stock, property or otherwise with respect to such shares, except
with respect to Medical Corp.; (iv) redeem, purchase, acquire or offer
to acquire (or permit any of its subsidiaries to redeem, purchase,
acquire or offer to acquire) any shares of its capital stock of any
class; or (v) enter into any contract, agreement, commitment or
arrangement with respect to any of the matters set forth in this
paragraph (b);
(c) the Company shall not (i) issue, sell, pledge or dispose
of, or agree to issue, sell, pledge or dispose of, any additional
shares of, or securities convertible or exchangeable for, or any
options, warrants or rights of any kind to acquire any shares of, its
capital stock of any class or other property or assets except in
connection with the exercise of Company Options in accordance with
their terms and the granting of the Committed Options; (ii) acquire (by
merger, consolidation or acquisition of stock or assets) any
corporation, partnership or other business
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organization or division thereof, except for Medical Corp; (iii) incur
any indebtedness for borrowed money or issue any debt securities in
excess of $5,000 in the aggregate; (iv) enter into or modify any
contract, lease, agreement or commitment, except in the ordinary course
of business and consistent with past practice; (v) terminate, modify,
assign, waive, release or relinquish any contract rights or amend any
rights or claims not in the ordinary course of business or (vi) settle
or compromise any claim, action, suit or proceeding pending or
threatened against the Company, or, if the Company may be liable or
obligated to provide indemnification, against the Company's directors
or officers, before any court, governmental agency or arbitrator;
provided that nothing herein shall require any action that might impair
or otherwise affect the obligation of any insurance carrier under any
insurance policy maintained by the Company;
(d) other than as contemplated by the terms of this Agreement,
the Company shall not grant any increase in the salary or other
compensation of its employees, except pursuant to the terms of
employment agreements in effect on the date hereof and listed on a
Schedule hereto, or grant any bonus to any employee or enter into any
employment agreement or make any loan to or enter into any material
transaction of any other nature with any employee of the Company or
Medical Corp.;
(e) the Company shall not take any action to institute any new
severance or termination pay practices with respect to any directors,
officers or employees of the Company or to increase the benefits
payable under its severance or termination pay practices;
(f) the Company shall not adopt or amend, in any respect,
except as contemplated hereby or as may be required by applicable law
or regulation, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare
of any directors, officers or employees;
(g) the Company shall use its best efforts, to the extent not
prohibited by the foregoing provisions of this Section 7.01, to
maintain its relationships with the Contract Parties, and if and as
reasonably requested by Parent or Acquisition, (i) the Company shall
use its best efforts to make reasonable arrangements for
representatives of Parent or Acquisition to meet with the Contract
Parties
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and suppliers of the Company, as designated by Parent, in order to
ensure that the Company's relationships with the Contract Parties and
major suppliers of the Company will remain in force under substantially
the same terms following the Effective Time as are in effect on the
date hereof, and (ii) the Company shall schedule, and the management of
the Company shall participate in, meetings of representatives of Parent
or Acquisition with employees of the Company;
(h) The Company and the other parties thereto shall terminate,
effective as of the Effective Time, each of the agreements disclosed in
Schedule 3.02 to which they are parties;
(i) The Company shall terminate, effective as of the Effective
Time, the Discretionary Plan and the Employee Plan, and shall
terminate, effective as of the date hereof, the Employee Purchase Plan
and shall refund to the employee-participants in the Employee Purchase
Plan in accordance with the provisions thereof the employee
contributions held in such plan as of the date hereof;
(j) The Company shall, no later than September 18, 1998, hold
a shareholders' meeting for the purposes of (i) authorizing and
approving the consummation of the Merger in accordance with the
provisions hereof (ii) amending the Company's By-Laws to delete Article
V, Section 1, and Article V, Section 3, thereof; and
(k) The Company shall use good faith efforts, dedicating all
resources required, to complete the Merger so that the Effective Time
shall occur not later than September 30, 1998.
SECTION 7.02 Certain Covenants of Parent. (a) Parent covenants and
agrees that, prior to the Effective Time, unless the Company shall otherwise
consent in writing or as otherwise expressly contemplated by this Agreement,
Parent shall not, and shall not permit any of its subsidiaries to, amend its
Certificate of Incorporation or By-Laws in a manner that could reasonably be
expected to be materially adverse to the Principal Shareholders.
(b) Parent shall use good faith efforts, dedicating all resources
required, to complete the Merger so that the Effective Time shall occur not
later than September 30, 1998.
SECTION 7.03 Access to Information. (a) The Company shall, and shall
cause its subsidiaries, officers, directors, employees, representatives and
agents to, afford, from the date
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hereof to the Effective Time, the officers, employees, representatives and
agents of Parent reasonable access during regular business hours to its
officers, employees, agents, properties, books, records and workpapers, and
shall furnish Parent all financial, operating and other information and data as
Parent, through its officers, employees or agents, may reasonably request.
(b) Parent shall, and shall cause its subsidiaries, officers,
directors, employees, representatives and agents to, afford, from the date
hereof to the Effective Time, the officers, employees, representatives and
agents of the Company reasonable access during regular business hours to its
officers, employees, agents, properties, books, records and workpapers, and
shall furnish the Company all financial, operating and other information and
data as the Company, through its officers, employees or agents, may reasonably
request.
(c) No investigation pursuant to this Section 7.03 shall affect, add to
or subtract from any representations or warranties of the parties hereto or the
conditions to the obligations of the parties hereto to effect the Merger. As a
result of its investigations, Parent has no actual knowledge that any
representation or warranty of the Company or the Principal Shareholders set
forth herein is inaccurate in any material respect.
SECTION 7.04 Further Assurances. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including, without limitation, using all reasonable efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings; provided that the foregoing shall not require Parent
to agree to make, or to permit the Company to make, any divestiture of a
significant asset in order to obtain any waiver, consent or approval.
SECTION 7.05 Inquiries and Negotiations; Third Party Acquisitions.
Neither the Company nor any of its subsidiaries, nor any of their respective
affiliates, shareholders, directors, officers, employees, representatives or
agents, shall, directly or indirectly, (i) solicit or initiate any discussions,
submissions of proposals or offers or negotiations with, or (ii) participate in
any negotiations or discussions with, or provide any information or data of any
nature whatsoever to, or otherwise cooperate in any other way with, or assist or
participate in, facilitate or encourage any effort or attempt by, any person,
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other than Parent and its affiliates, representatives and agents, concerning any
merger, consolidation, sale of substantial assets, sale of shares of capital
stock or other securities, recapitalization, debt restructuring or similar
transaction involving the Company or any subsidiary, or any division of the
Company or any subsidiary. The Company shall immediately notify Parent if any
proposal, offer, inquiry or other contact is received by, any information is
requested from, or any discussions or negotiations are sought to be initiated or
continued with, the Company in respect of any such transaction, and shall, in
any such notice to Parent, indicate the identity of the offeror and the terms
and conditions of any proposals or offers or the nature of any inquiries or
contacts, and thereafter shall keep Parent informed of the status and terms of
any such proposals or offers. The Company shall not release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company is a party.
SECTION 7.06 Employment and Non-Competition Agreements; Employee Stock
Options. (a) At or prior to the Effective Time, Parent and the Surviving
Corporation, on the one hand, and each of W. Thomas Green, Jr., W.T. Green, III,
Manny Enriquez, Brad Tuggle and Melinda Jenkins, shall enter into, effective as
of the Effective Time, two-year employment agreements (the "Employment
Agreements") and ten-year Non-Competition and Confidentiality Agreements (the
"Noncompete Agreements") for the benefit of Parent and the Surviving
Corporation, upon terms which are mutually agreeable to Parent and the
respective employees. The Employment Agreements shall include, without
limitation, grants by Parent to such employees of options to purchase Parent
Common Stock ("Employee Stock Options") in accordance with Schedule 7.06(a)
hereto, for an aggregate Carrying Value (as hereinafter defined) equal to Six
Million Dollars ($6,000,000), all in accordance with the terms of Parent's stock
option plans in effect at the Effective Time.
(b) In addition, at the Effective Time, Parent shall grant to certain
other employees of the Surviving Corporation, as determined by Parent in its
sole discretion after discussion with the Company, Employee Stock Options for an
aggregate Carrying Value of One Million Five Hundred Thousand Dollars
($1,500,000), all in accordance with the terms of Parent's stock option plans in
effect at the Effective Time.
(c) For purposes of this Section 7.06, "Carrying Value" shall be deemed
to mean the per share fair market value of Parent Common Stock, as of the date
of grant, multiplied by the number of shares of Parent Common Stock issuable
upon exercise of such Employee Stock Options.
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SECTION 7.07 Notification of Certain Matters. The Company shall give
prompt notice to Parent and Acquisition, and Parent and Acquisition shall give
prompt notice to the Company, of (i) the occurrence, or failure to occur, of any
event that such party believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time and (ii) any material failure of the Company, Parent or
Acquisition, as the case may be, or any officer, director, employee or agent
thereof, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder; provided, however, that failure to
give such notice shall not constitute a waiver of any defense that may be
validly asserted.
SECTION 7.08 Indemnification. (a) Indemnifiable Breaches. Each
Shareholder shall be severally liable to, and shall severally indemnify,
protect, defend and hold harmless Parent and its successors and the Surviving
Corporation and its successors, pursuant to the terms of this Section 7.08,
against any and all claims, damages, liabilities and expenses (including
reasonable attorneys' fees) (collectively, "Damages") sustained by Parent or the
Surviving Corporation, in excess of insurance proceeds actually received by
Parent or the Surviving Corporation, resulting from or in connection with (1)
the breach of any representation, warranty, covenant or other agreement made by
the Company or any Shareholder in or pursuant to this Agreement or any other
agreement or instrument executed and delivered by or on behalf of the Company
and/or such Shareholder pursuant hereto or in connection herewith, (2) the
private offering and sale of Company Common Stock prior to the Effective Time,
including, without limitation, the right of any investor therein to subscribe
for or purchase additional securities of the Company, (3) any obligations and/or
liabilities of Service Supply Company of Tallapoosa, Inc., Greenway Systems,
Inc. and Service Supply Company of Carrollton, Inc. (collectively, the
"Predecessor Corporations") and (4) any and all obligations and/or liabilities
arising out of the conduct of the Medical Business prior to or following the
Effective Time (such breaches, failures, obligations and liabilities being
hereinafter referred to individually as an "Indemnifiable Breach" and
collectively as "Indemnifiable Breaches"); provided, however, that, except as
otherwise set forth in the last sentence of this Section 7.08(a), no Shareholder
shall be required to pay Parent and/or the Surviving Corporation, as the case
may be, pursuant to this Section 7.08, (i) subject to clause (iii) below, with
respect to any one or group of related Indemnifiable Breaches, an amount in
excess of such Shareholder's Percentage Share (as hereinafter defined) of
Damages in connection with such Indemnifiable Breach or group of related
Indemnifiable Breaches; (ii) subject to
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clause (iii) below, with respect to all Indemnifiable Breaches, an amount in
excess of such Shareholder's Percentage Share of the aggregate amount of all
Damages resulting from all Indemnifiable Breaches; and (iii) in any event, in
the aggregate, an amount in excess of the dollar value equivalent of Parent
Common Stock, valued at the Average Price, received by such Shareholder upon
consummation of the Merger pursuant to the terms hereof (the "Cap"). For
purposes of this Agreement, each "Shareholder's Percentage Share" shall mean the
percentage determined by dividing (x) the number of shares of Parent Common
Stock issuable to such Shareholder in the Merger by (y) the total number of
shares of Parent Common Stock issuable to all Shareholders in the Merger. The
indemnification obligations of the Shareholders under this Section 7.08 shall
apply to Damages sustained by Parent and/or the Surviving Corporation in respect
of Indemnifiable Breaches if and when the aggregate amount of such Damages in
respect of such Indemnifiable Breaches, excluding any Damages that are
reimbursed through insurance proceeds which proceeds are actually received by
Parent or the Surviving Corporation in connection therewith, exceeds One Hundred
and Fifty Thousand Dollars ($150,000.00) (the "Basket") and in the event the
aggregate amount of the Damages sustained by Parent and/or the Surviving
Corporation in respect of Indemnifiable Breaches exceeds the Basket, the
indemnification obligations of the Shareholders under this Section 7.08 shall
apply to all Damages actually sustained by Parent and/or the Surviving
Corporation in respect of Indemnifiable Breaches. For purposes of this Section
7.08, Indemnifiable Breaches shall be deemed to be a group of related
Indemnifiable Breaches if they pertain to obligations of the Company or any
Shareholder to a single party or group of affiliated parties or obligations of a
single party or group of affiliated parties to the Company or any Shareholder,
they pertain to the same or similar transactions or they involve the same or
similar legal or factual issues. Notwithstanding anything herein to the
contrary, neither the Basket nor the Cap shall apply with respect to
Indemnifiable Breaches described in clause (4) above, for which each Shareholder
shall be responsible for such Shareholder's Percentage Share regardless of the
amount of the Damages and regardless of whether the Basket has been met.
(b) Satisfaction of Claims. Subject to the terms of the second sentence
of Section 7.08(d) below, any Shareholder shall be permitted to satisfy such
Shareholder's indemnification obligation(s) under this Section 7.08 in cash or
by delivering to Parent or the Surviving Corporation, as the case may be, shares
of Parent Common Stock in an amount equal to such Shareholder's liability based
on a per share value equal to the Average Price.
(c) Indemnification by Parent. Parent and Acquisition shall be jointly
and severally liable to, and shall jointly and
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severally indemnify, protect, defend and hold harmless each Shareholder and its
respective successors against any and all Damages sustained by such Shareholder,
resulting from or in connection with the breach of any representation, warranty,
covenant or other agreement made by Parent or Acquisition in or pursuant to this
Agreement or any other agreement or instrument executed and delivered by or on
behalf of Parent and/or Acquisition pursuant hereto or in connection herewith
and any obligations or liabilities relating to the operations of the Surviving
Corporation after the Effective Time.
(d) The remedies of Parent and the Surviving Corporation set forth in
this Agreement and any additional equitable remedies to which either might
entitled are the exclusive remedies of Parent and the Surviving Corporation
hereunder. In the event Parent and/or the Surviving Corporation becomes entitled
to any sums under the terms hereof, Parent and/or the Surviving Corporation
shall have the right to set off such liabilities of any Shareholder against any
existing or future liabilities of Parent or the Surviving Corporation to such
Shareholder before any such Shareholder is permitted to satisfy its
indemnification obligation(s) by delivering shares of Parent Common Stock in
lieu of cash, pursuant to Section 7.08(b) above.
(e) The terms of this Section 7.08 are intended to benefit Parent
and/or the Surviving Corporation and shall survive the consummation of the
Merger and the Effective Time for a period of two (2) years after the Effective
Time (the "Indemnification Termination Date") provided, however, that (i) any
claims made on or prior to the Indemnification Termination Date shall survive
until final resolution thereof and (ii) the indemnification obligations of the
Principal Shareholders for any breach of the representations and warranties set
forth in Sections 3.18 and/or 3.26 hereof and for any obligations and/or
liabilities of the Predecessor Corporations shall survive for the period of the
applicable statute of limitations.
SECTION 7.09 Confidentiality. Except as otherwise provided in that
certain Non-Disclosure Agreement dated April 2, 1998 between the Company and
Parent with regard to information about the Company, including the Addendum
adding the Tower Group as a party thereto (the "Non-Disclosure Agreement"),
Parent and Acquisition, on the one hand, and the Company and the Principal
Shareholders, on the other, shall hold, and shall use their respective best
efforts to cause their respective officers, directors, employees, consultants,
advisors and agents to hold, in confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of law, all
confidential documents and information concerning the other parties furnished to
such party in connection with the
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transactions contemplated by this Agreement, except to the extent that such
information can be shown to have been (i) previously known on a nonconfidential
basis by such party; (ii) in the public domain through no fault of such party;
(iii) later lawfully acquired by such party from sources other than the other
parties; or (iv) independently developed by such party without the use of such
information, provided that each party may disclose such information to its
affiliates and its affiliates' officers, directors, employees, consultants,
advisors and agents, lenders and other investors in connection with the
transactions contemplated by this Agreement so long as such persons are informed
by such party of the confidential nature of such information and are directed by
such party to treat such information confidentially. If the transactions
contemplated by this Agreement are abandoned, such confidentiality shall be
maintained and each party shall, and shall use its best efforts to cause its
respective officers, directors, employees, consultants, advisors and agents to,
upon request, destroy or deliver to the other party(s) all documents and other
materials, and all copies thereof, obtained by such party or on its behalf from
the other party(s) in connection with this Agreement that are subject to such
confidentiality. The terms of this Section 7.09 shall survive indefinitely.
SECTION 7.10 Covenants of Principal Shareholders. (a) Each Principal
Shareholder hereby agrees not to:
(i) sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, any shares of Company Common Stock
owned by such Shareholder, other than as provided herein;
(ii) grant any proxies or enter into a voting agreement or
other arrangement with respect to any shares of Company Common Stock
owned by such Shareholder, other than as provided herein; or
(iii) deposit any shares of Company Common Stock owned by such
Shareholder into a voting trust.
(b) Each Principal Shareholder hereby agrees not to take any action
that would make any representation or warranty herein of such Principal
Shareholder untrue or incorrect in any material respect or that would have the
effect of preventing or disabling such Principal Shareholder from performing its
obligations under this Agreement.
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(c) Each Principal Shareholder hereby waives any and all dissenter's
rights with respect to Company Common Stock granted pursuant to Article 13 of
the GBCC.
(d) Each Principal Shareholder hereby agrees to surrender the
Certificate(s) owned by such Principal Shareholder in exchange for certificates
representing shares of Parent Common Stock and cash, if applicable, within one
(1) business day after the Effective Time.
(e) Each Principal Shareholder hereby agrees that it will vote all of
its shares of Company Common Stock in favor of the Merger and in favor of the
amendment to the Company's By-Laws referred to in Section 7.01(j) hereof.
SECTION 7.11 Transfer Restrictions After the Effective Time. Each
Principal Shareholder hereby agrees that, from and after the Effective Time,
such Principal Shareholder shall not offer, sell, or otherwise dispose of the
shares of Parent Common Stock received by such Principal Shareholder in
connection with the Merger other than (i) pursuant to an effective registration
statement under the Securities Act, or (ii) otherwise pursuant to an exemption
from the registration requirements of the Securities Act.
SECTION 7.12 Registration Rights Agreements. Each Shareholder who
receives Parent Common Stock in connection with the Merger shall be entitled to
certain registration rights, as provided in the registration rights agreement in
the form of Exhibit B hereto (the "Registration Rights Agreement"), provided
such Shareholder executes and delivers to Parent a Registration Rights Agreement
and delivers such further information as shall be required by Parent in
connection with any registration statement provided for therein.
SECTION 7.13 Exercise of Company Options. The Company and each
Principal Shareholder shall use their respective best efforts to cause each
holder of Company Options on and after the date hereof to refrain from
exercising any such Company Options prior to the Effective Time.
SECTION 7.14 Assignment of Medical Business. The parties hereto agree
that, prior to the Effective Time, the Company shall duly incorporate, under the
laws of the State of Georgia, a corporation with the corporate name "Greenway
Medical Corporation" ("Medical Corp."), for the purpose of acquiring from the
Company, prior to the Effective Time, the assets and related agreements of the
Company identified on Schedule 7.14 hereto (collectively, the "Medical
Business"), provided, however, that such assets shall not include any software
or source codes used by the Company outside
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of the Medical Business, which software and source codes shall, if used in the
Medical Business, be licensed by the Company to Medical Corp. on terms and
conditions acceptable to Parent. The Medical Business shall be assigned,
conveyed and transferred to Medical Corp., prior to the Effective Time, in
consideration of One Dollar and other good and valuable consideration, and the
Company shall declare and pay to the Shareholders, prior to the Effective Time,
a dividend of one share of the capital stock of Medical Corp. for each share of
Company Common Stock outstanding immediately prior to the Effective Time.
SECTION 7.15 Right of First Refusal. The parties hereto agree that,
effective as of the Effective Time, the Principal Shareholders shall cause
Medical Corp. to grant to the Surviving Corporation a right of first refusal,
pursuant to a written agreement in form and substance satisfactory to the
Surviving Corporation, effective for a seven and one-half (7 1/2) year period
from and after the Effective Time, with respect to the proposed sale and
purchase of substantially all of the assets or all or substantially all of the
stock, or any similar transaction involving all or substantially all of the
assets, stock and/or business of Medical Corp., pursuant to a bona fide written
offer, upon terms and conditions to be mutually agreed upon by Parent and the
Principal Shareholders on or prior to the Effective Time (the "Right of First
Refusal").
SECTION 7.16 License of Greenway Name. Parent agrees to cause Surviving
Corporation, effective as of the Effective Time, to grant to (a) Medical Corp. a
non-exclusive, perpetual, royalty-free license to use the tradename "Greenway"
solely in conjunction with the operation of the Medical Business by Medical
Corp., the operation of which Medical Business shall not be limited
geographically by the terms hereof, including the right to name the Medical
Corp. "Greenway Medical Corporation", substantially in the form of the License
Agreement attached hereto as Exhibit C and (b) W.T. Green, Jr. and the members
of his immediate family, the right to use the name "Greenway" for such
non-financial, non-bank related commercial business reasons, as may be approved
by the Surviving Corporation in advance in writing from time to time, including
without limitation the right to use the name "Greenway" for such non-financial,
non-bank related commercial business reasons in an area encompassed within a
fifty (50) mile radius of Carrollton, Georgia.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to
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effect the Merger shall be subject to the fulfillment at or prior to the
Effective Time of the condition that no preliminary or permanent injunction or
other order, decree or ruling issued by any court of competent jurisdiction nor
any statute, rule, regulation or order entered, promulgated or enacted by any
governmental, regulatory or administrative agency or authority shall be in
effect that would prevent the consummation of the Merger as contemplated hereby.
SECTION 8.02 Conditions to the Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following additional
conditions:
(a) each of Parent and Acquisition shall have performed and
complied in all material respects with all obligations and agreements
required to be performed and complied with by it under this Agreement
at or prior to the Effective Time;
(b) the representations and warranties of Parent and
Acquisition contained in this Agreement shall be true and correct in
all material respects at and as of the Effective Time as if made at and
as of such date, except as otherwise contemplated or permitted by this
Agreement;
(c) the Company shall have received a certificate from the
Chief Executive Officer of Parent, dated as of the Effective Time, to
the effect that the conditions set forth in paragraphs (a) and (b)
above have been satisfied;
(d) The Merger shall have been approved by Shareholders in
accordance with the requirements of the GBCC;
(e) the Company shall have received the opinion of Shanley &
Fisher, P.C., counsel to Parent and Acquisition, in a form to be
mutually agreed upon by the parties hereto and their respective
counsel; and
(f) Parent and/or the Surviving Corporation shall have
executed and delivered to Medical Corp. the License Agreement.
SECTION 8.03 Conditions to the Obligation of Parent and Acquisition to
Effect the Merger. The obligation of Parent and Acquisition to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
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(a) the Company and the Principal Shareholders, respectively,
shall have performed and complied in all material respects with all
obligations and agreements required to be performed and complied with
by them, respectively, under this Agreement at or prior to the
Effective Time;
(b) the representations and warranties of the Company and the
Principal Shareholders contained in this Agreement shall be true and
correct in all material respects at and as of the Effective Time as if
made at and as of such date, except as otherwise contemplated or
permitted by this Agreement;
(c) Parent shall have received a certificate from the
President of the Company, dated as of the Effective Time, to the effect
that the conditions set forth in paragraphs (a) and (b) above have been
satisfied;
(d) W. Thomas Green Jr., W. T. Green, III, Manny Enriquez,
Brad Tuggle and Melinda Jenkins shall have executed and delivered to
Parent their respective Employment Agreement and Noncompete Agreement;
(e) Parent shall have received reasonable assurance that all
relationships with Contract Parties and major suppliers of the Company
shall remain in force after the Effective Time upon substantially the
same terms in effect prior to the Merger and that the employees
identified on Schedule 8.03(e) shall continue their employment with the
Surviving Corporation after the Effective Time;
(f) Parent shall have received evidence of the approval of the
Merger by the holders of at least 85% percent of the outstanding shares
of Company Common Stock and each Principal Shareholder who is an
accredited investor shall have executed and delivered an Accredited
Investor Certification in the form of Exhibit A attached hereto;
(g) Parent shall have received and have available, for
issuance pursuant to the terms hereof, treasury stock repurchased by
Parent, representing a number of shares of Parent Common Stock at least
equal to the Aggregate Parent Common Stock Consideration as
contemplated hereby;
(h) Parent and Acquisition shall have received the opinion of
Tisinger, Tisinger, Vance & Greer, P.C., counsel to the Company and the
Principal Shareholders, in a form to be mutually agreed upon by the
parties hereto and their respective counsel;
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(i) The Surviving Corporation and Medical Corp. shall have
entered into a written agreement relating to the Right of First Refusal
contemplated by Section 7.16 hereof;
(j) Parent shall have determined, in its good faith judgment,
that the business of the Company shall have been operated, from July
31, 1998 through the Effective Time, except as otherwise specifically
permitted by the terms hereof, in the normal and ordinary course
including, without limitation, that no dividends shall have been
declared and/or issued by the Company, except with regard to Medical
Corp., and no stock options or bonuses granted, declared or issued for
the officers or employees of the Company, except as contemplated by
this Agreement, and that the Company and the Principal Shareholders
shall have used their reasonable good faith efforts to preserve the
goodwill of the business of the Company and to maintain and keep the
assets intact and that no additional liabilities have been incurred,
other than in the normal course of business;
(k) The Company's By-Laws shall have been validly amended to
delete Article V, Section 1, and Article V, Section 3, thereof;
(l) Parent shall have received duly executed resignation
letters from all of the officers and directors of the Company; and
(m) The Company shall have assigned and conveyed the Medical
Business to Medical Corp. and distributed to the Shareholders all of
the equity interest in Medical Corp. and Medical Corp. shall have
ceased to be a subsidiary of the Company.
ARTICLE IX
TERMINATION AND ABANDONMENT
SECTION 9.01 Termination and Abandonment. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time:
(a) by mutual action of the Boards of Directors of
Parent and the Company;
(b) by the Company, if all of the conditions set
forth in Section 8.03 shall have been complied with and
performed and one or more of the conditions set forth in
Sections 8.01 or 8.02 shall not have been complied with or
performed in any material respect and such
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noncompliance or nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by
Parent and/or Acquisition on or before September 30, 1998 (the
"Drop Dead Date"), subject in such event to the Company's
right to extend the Drop Dead Date for up to two successive
thirty (30) day periods; or
(c) by Parent or Acquisition, if all of the
conditions set forth in Section 8.02 shall have been complied
with and performed and one or more of the conditions set forth
in Sections 8.01 or 8.03 shall not have been complied with or
performed in any material respect and such noncompliance or
nonperformance shall not have been cured or eliminated (or by
its nature cannot be cured or eliminated) by the Company on or
before the Drop Dead Date, subject in such event to Parent's
and Acquisition's right to extend the Drop Dead Date for up to
two successive thirty (30) day periods.
SECTION 9.02 Effect of Termination. Except as provided in Section 7.09
with respect to confidentiality and in Section 10.02 hereof with respect to
expenses and certain indemnities, in the event of the termination of this
Agreement and the abandonment of the Merger pursuant to Section 9.01, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to any other party hereto or its shareholders or
directors or officers in respect thereof, except that nothing herein shall
relieve any party from liability for any willful breach hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Survival of Representations and Warranties. The
representations and warranties in this Agreement and in any instrument delivered
pursuant hereto shall survive the Effective Time for a period of two (2) years
from the Effective Time, provided that (i) the representations and warranties
set forth in Sections 3.18 and 3.26 shall survive for the applicable statute of
limitations periods and (ii) this Section 10.01 shall not limit any other
covenant or agreement of the parties that by its terms contemplates performances
beyond such two (2) year period.
SECTION 10.02 Expenses, Etc. (a) Whether or not the transactions
contemplated by this Agreement are consummated, neither the Company and the
Shareholders, on the one hand, and Parent and Acquisition, on the other hand,
shall have any
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obligation to pay any of the fees and expenses of the other incident to the
negotiation, preparation and execution of this Agreement, including, without
limitations, the fees and expenses of counsel, accountants, investment bankers
and other experts, and Parent shall pay all such fees and expenses incurred by
Acquisition, provided that if this Agreement shall have been terminated as a
result of the willful and material misrepresentations by a party or the willful
and material breach by a party of any of its covenants and agreements contained
herein, such party shall pay the costs and expenses incurred by the other
parties in connection with this Agreement.
(b) No person or entity is entitled to receive from the
Company or Parent any investment banking, brokerage or finder's fee or fees for
financial consulting or advisory services or other fees in connection with this
Agreement or the transactions contemplated hereby. The Principal Shareholders,
on the one hand, and Parent and Acquisition, on the other hand, shall indemnify
the other and hold it harmless from and against any claims for finders' fees or
brokerage commissions, in relation to or in connection with such transactions as
a result of any agreement or understanding between such indemnifying party and
any third party.
SECTION 10.03 Publicity. The Company, the Principal Shareholders and
Parent agree that they will not issue any press release or make any other public
announcement concerning this Agreement or the transactions contemplated hereby
without the prior consent of the other party, except that the Company or Parent
may make such public disclosure that it believes in good faith to be required by
law (in which event such party shall consult with the other prior to making such
disclosure).
SECTION 10.04 Execution in Counterparts. For the convenience of the
parties, this Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
SECTION 10.05 Notices. All notices that are required or may be given
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or national
overnight courier service, transmitted by telecopy or mailed by registered or
certified mail, postage prepaid, as follows:
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If to Parent and/or Acquisition, to:
The BISYS Group, Inc.
Overlook at Great Notch
150 Clove Road
Little Falls, New Jersey 07424
Attention: Mr. Lynn J. Mangum
Chairman and Chief Executive Officer
with a copy to:
Shanley & Fisher, P.C.
131 Madison Avenue
Morristown, New Jersey 07962
Attention: Stewart E. Lavey, Esq.
If to the Company and/or the Principal Shareholders, to:
Greenway Corporation
121 Greenway Blvd.
Carrollton, Georgia 30117
Attention: Mr. W. Thomas Green, Jr.
with a copy to:
Tisinger, Tisinger, Vance & Greer, P.C.
100 Wagon Yard Plaza, P.O. Box 2069
Carrollton, Georgia 30117
Attention: J. Thomas Vance, Esq.
or such other address or addresses as any party hereto shall have designated by
notice in writing to the other parties hereto.
SECTION 10.06 Waivers. The Company, on the one hand, and Parent and
Acquisition, on the other hand, may, by written notice to the other, (i) extend
the time for the performance of any of the obligations or other actions of the
other under this Agreement; (ii) waive any inaccuracies in the representations
or warranties of the other contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive compliance with any of the
conditions of the other contained in this Agreement; or (iv) waive performance
of any of the obligations of the other under this Agreement. Except as provided
in the preceding sentence, no action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or agreements
contained in this Agreement. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
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SECTION 10.07 Entire Agreement. This Agreement, its Schedules, the
documents executed at the Effective Time in connection herewith and the
Non-Disclosure Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by any party that is not
embodied in this Agreement or such other documents, and none of the parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
SECTION 10.08 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without regard
to principles of conflict of laws.
SECTION 10.09 Binding Effect, Benefits. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
permitted successors and assigns. Notwithstanding anything contained in this
Agreement to the contrary, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement; provided, however, that the
provisions of Section 6.08 hereof shall accrue to the benefit of, and shall be
enforceable by, each of the current and former directors and officers of the
Company.
SECTION 10.10 Assignability. Neither this Agreement nor any of the
parties' rights hereunder shall be assignable by any party hereto without the
prior written consent of the other parties hereto.
SECTION 10.11 Amendments. This Agreement may be modified, amended or
supplemented at any time by action of the respective Boards of Directors of the
Company, Parent and Acquisition, and the Shareholders. Without limiting the
generality of the foregoing, this Agreement may only be amended, varied or
supplemented by an instrument in writing, signed by the parties hereto.
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59
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Merger as of the day and year first above written.
THE BISYS GROUP, INC.
By: /s/ Lynn J. Mangum
------------------------------------
Lynn J. Mangum
Chairman
BI-GREEN ACQUISITION CORP.
By: /s/ Lynn J. Mangum
------------------------------------
Lynn J. Mangum
Chairman
GREENWAY CORPORATION
By: /s/ W.T. Green, Jr.
------------------------------------
W.T. Green, Jr.
Chairman and Chief Executive
Officer
Number of
Shares of Company
Common Stock Owned: PRINCIPAL SHAREHOLDERS:
- -------------------
67,031 /s/ W.T. Green, Jr.
----------------------------------------
W.T. Green, Jr.
GREENWAY CORPORATION
121 Greenway Parkway
Carrollton, Georgia 30117
18,259 /s/ Elizabeth J. Green
----------------------------------------
Elizabeth J. Green
194 Bonner Road
Carrollton, Georgia 30117
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60
18,259 /s/ W.T. Green, III
----------------------------------------
W.T. Green, III
GREENWAY CORPORATION
121 Greenway Parkway
Carrollton, Georgia 30117
18,259 /s/ Elizabeth H. Green
----------------------------------------
Elizabeth H. Green
194 Bonner Road
Carrollton, Georgia 30117
18,259 /s/ W.T. Green, Jr.
----------------------------------------
Andrew J. Green (by WTG, Jr.)
194 Bonner Road
Carrollton, Georgia 30117
90,000 W.T. Green, Jr. Family Limited
Partnership
By: /s/ W.T. Green, Jr.
------------------------------------
Mr. W.T. Green, Jr.
Title:
Attn: Mr. W.T. Green, Jr.
194 Bonner Road
Carrollton, Georgia 30117
12,500 Service Supply of Douglasville, Inc.
By: /s/ W.T. Green, Jr.
----------------------------------------
W.T. Green, Jr.
Title:
194 Bonner Road
Carrollton, Georgia 30117
25,000 BFG Investments, LLC
By: /s/ Robert B. Braden
----------------------------------------
Mr. Robert B. Braden
Title: Member
BFG INVESTMENTS LLC
9321 Ponce de Leon Avenue, N.E.
Atlanta, Georgia 30306
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61
4,166 /s/ Manny Enriquez
----------------------------------------
Manny Enriquez
GREENWAY CORPORATION
121 Greenway Parkway
Carrollton, Georgia 30117
10,000 /s/ Dale May
----------------------------------------
Dale May
ADVANCED DATA SYSTEMS
P.O. Box 733
Jonesboro, Arkansas 72401
50,000 L. Richard Plunkett Family Partnership
By: /s/ L. Richard Plunkett,
M.G. Partner
------------------------------------
Name:
Title:
100 Colony Square, Suite 860
Atlanta, Georgia 30361
20,000 /s/ Thomas T. Richards
----------------------------------------
Thomas T. Richards
110 Ole Hickory Trail
Carrollton, Georgia 30117
20,000 /s/ J. Thomas Vance
----------------------------------------
J. Thomas Vance
P.O. Box 2069
Carrollton, Georgia 30117
27,959 Wilks Investments, L.P.
By: /s/ Van C. Wilks
------------------------------------
Van C. Wilks, General Partner
By: /s/ Kitty G. Wilks
------------------------------------
Kitty G. Wilks, General Partner
204 Habersham Place
Carrollton, Georgia 30117
5,000 /s/ Earl Dolive
----------------------------------------
Earl Dolive
GENUINE PARTS COMPANY
2999 Circle 75 Parkway
Atlanta, Georgia 30339
54
62
INDEX TO DEFINED TERMS
Term Section Reference
---- -----------------
"Accredited Investor Certification" 4.04(e)
"Acquisition" Recitals
"Affiliate" 3.20
"Aggregate Parent Common Stock
Consideration" 2.01(a)
"Agreement" Recitals
"Average Price" 2.01(a)
"Balance Sheet" 3.08
"Basket" 7.08(a)
"Business Day" 1.03
"Cap" 7.08(a)
"Carrying Value" 7.06(c)
"Certificate" 2.04
"Code" Recitals
"Committed Options" 3.04(c)
"Committed Parent Option" 2.02(b)
"Company" Recitals
"Company Common Stock" 2.01
"Company Option" 2.02(a)
"Constituent Corporations" Recitals
"Contract Parties" 3.10
"Damages" 7.08(a)
"Delaware GCL" Recitals
"Discretionary Plan" 3.04(c)
"Drop Dead Date" 9.01(b)
"Effective Time" 1.03
"Employee Plan" 3.04(c)
"Employee Purchase Plan" 3.04(c)
"Employee Stock Options" 7.06(a)
"Employment Agreements" 7.06(a)
"ERISA" 3.12(b)
"Exchange Act" 5.09
"Exchange Shares" 2.01(b)
"Exchange Value" 2.01(b)
"Financial Statements" 3.08
"GAAP" 3.08
"GBCC" Recitals
"Indemnification Termination Date" 7.08(e)
"Indemnifiable Breaches" 7.08(a)
"Information Statement" 5.06
"Intellectual Rights" 3.09
"Licenses" 3.28
"Material Adverse Effect" 5.01
"Medical Business" 7.14
"Medical Corp." 7.14
"Merger" Recitals
63
"NASDAQ" 2.01(a)
"Net Merger Price" 2.01(a)
"Non-Compete Agreements" 7.06(a)
"Non-Disclosure Agreement" 7.09
"Number of Option Shares" 2.02(d)
"Other Shareholders" 2.04(a)
"Owned Source Codes" 3.29(c)
"Parent" Recitals
"Parent Common Stock" Recitals
"Parent Stock Option" 2.02(a)
"Predecessor Corporations" 7.08(a)
"Principal Shareholders" Recitals
"Registration Rights Agreement" 7.12
"Remaining Discretionary Options" 3.04(c)
"Remaining Employee Options" 3.04(c)
"Remaining Granted Options" 3.04(c)
"Remaining Options" 3.04(c)
"Right of First Refusal" 7.15
"SEC" 4.04(b)
"Securities Act" 4.04(a)
"Shareholders" 2.04(a)
"Shareholder's Percentage Share" 7.08(a)
"Software" 3.29(a)
"Software Contracts" 3.29(b)
"Subscribed Options" 3.04(c)
"Surviving Corporation" Recitals
"Transmittal Letter" 2.04(a)
64
EXHIBIT A
ACCREDITED INVESTOR CERTIFICATION
________________, a shareholder (the "Shareholder") of
Greenway Corporation (the "Company"), hereby certifies to The BISYS Group, Inc.
("Parent") that it is an "accredited investor", as defined in Rule 501(a) of
Regulation D promulgated under the Securities Act of 1933, as amended, and that
Shareholder is in the category (or categories) of "accredited investor"
indicated below:
_____ (i) Shareholder is a corporation, partnership or trust, which corporation,
partnership or trust has total assets in excess of $5,000,000 and was not formed
for the specific purpose of acquiring common stock, $.02 par value, of Parent
("Parent Common Stock");
_____ (ii) Shareholder is a natural person who has had individual income of more
than $200,000 in each of the most recent two years (or joint income with his or
her spouse in excess of $300,000 in each of the most recent two years) and
reasonably expects to reach that same income level for the current year; or
_____ (iii) Shareholder is a natural person whose individual net worth (i.e.,
total assets in excess of total liabilities), or joint net worth with his or her
spouse, exceeds $1,000,000.
IN WITNESS WHEREOF, the undersigned has signed this
Certification as of September __, 1998.
________________________________________