<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
FISHER BUSINESS SYSTEMS, INC.
------------------------------------------------
(Name of Registrant as Specified in Its Charter)
NOT APPLICABLE
-------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[x] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
Common Stock
2) Aggregate number of securities to which transaction applies:
AUBIS Hospitality Systems, Inc. - 1,126 shares of Common Stock
AUBIS Systems Integration, Inc. - 14,288 shares of Common Stock
HALIS Software, Inc. - 1,000 shares of Common Stock
Advanced Custom Computer Solutions, Inc. - 500 shares of Common
Stock
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
AUBIS Hospitality Systems, Inc. - $375/(1)/
AUBIS Systems Integration, Inc. - $33,596/(2)/
HALIS Software, Inc. - $15,015/(3)/
Advanced Custom Computer Solutions, Inc. - $167/(4)/
4) Proposed maximum aggregate value of transactions: $49,153
5) Total fee paid: $125
[x] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:_____________________________________________
2) Form, Schedule or Registration Statement No.:_______________________
3) Filing Party:_______________________________________________________
4) Date Filed:________________________________________________________
____________________
/(1)/ Represents one-third of the par value of outstanding securities at
December 31, 1995. There is no market for these securities and the issuer
has an accumulated deficit.
/(2)/ Represents one-third of the stated value of outstanding securities at
December 31, 1995. There is no market for these securities and the issuer
has an accumulated deficit.
/(3)/ Represents the total stockholder's equity of the issuer. There is no
market for these securities.
/(4)/ Represents one-third of the stated value of outstanding securities at
June 30, 1996. There is no market for these securities and the issuer has
an accumulated deficit.
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
1950 SPECTRUM CIRCLE, SUITE 400
MARIETTA, GEORGIA 30067
November 4, 1996
Dear Stockholder:
You are cordially invited to attend an Annual Meeting of Stockholders
(the "Annual Meeting") of Fisher Business Systems, Inc. ("Fisher") to be
held on Monday, November 18, 1996 at the offices of Smith, Gambrell &
Russell, 3343 Peachtree Road, N.E., Suite 1800, Atlanta, Georgia 30326,
commencing at 9:00 a.m. local time. At this important meeting you will be
asked to consider and vote upon a proposal to amend Fisher's Articles of
Incorporation to increase the number of authorized shares of Fisher Common
Stock from 10,000,000 shares to 100,000,000 shares (the "Common Stock
Amendment"). Fisher intends to use the additional authorized shares to
embark upon a strategy of strategic acquisitions to position Fisher to be a
leading information technology company in the healthcare industry.
In furtherance of this strategy, Fisher has entered into an Amended
and Restated Agreement and Plan of Merger and Reorganization, dated as of
December 13, 1995 and amended and restated as of March 29, 1996 and as
further amended on September 27, 1996 (the "AUBIS Agreement"), among Fisher
and AUBIS, L.L.C. ("AUBIS") and its affiliates, providing for the
acquisition by Fisher of two wholly-owned subsidiaries of AUBIS, AUBIS
Hospitality Systems, Inc. ("AHS") and AUBIS Systems Integration, Inc.
("ASI") (such transaction referred to herein as the "AUBIS Transaction").
In addition, Fisher has entered into a Stock Purchase Agreement, dated as
of March 29, 1996 and amended as of September 27, 1996 (the "HALIS
Agreement"), between Fisher and HALIS, L.L.C. ("HALIS") and its affiliates,
providing for the acquisition by Fisher of HALIS Software, Inc. ("HSI"), a
wholly-owned subsidiary of HALIS (such transaction referred to herein as
the "HALIS Transaction"). Fisher has also entered into an Agreement and
Plan of Merger and Reorganization, dated as of May 23, 1996 and amended as
of September 11, 1996 and as further amended on October 31, 1996, to
acquire Advanced Custom Computer Solutions, Inc. ("ACCS") (such transaction
referred to herein as the "ACCS Transaction"). The AUBIS, HALIS and ACCS
Transactions are collectively referred to herein as the "Transactions."
Upon consummation of the Transactions, AHS, ASI, HSI and ACCS will be
wholly-owned subsidiaries of Fisher and Fisher's corporate name will be
changed to HALIS, Inc.
Under the terms of the AUBIS, HALIS and ACCS Agreements, an aggregate
of 15,750,000 shares of Fisher Common Stock will be issued by Fisher. As a
result, upon consummation of the Transactions, AUBIS, HALIS and the
shareholders of ACCS will own approximately 43%, 22% and 3%, respectively,
of the shares of Fisher Common Stock to be outstanding after consummation
of these transactions. Paul W. Harrison, who will serve as Chairman of the
Board and Chief Executive Officer of Fisher upon consummation of the
Transactions, beneficially owns and/or has the power to vote (by virtue of
his position as the managing member of AUBIS and HALIS) all 15,000,000
shares of Fisher Common Stock to be issued in the AUBIS and HALIS
Transactions and will, after consummation of the Transactions, have
effective control of Fisher.
Based on the average of the closing bid and ask price of Fisher Common
Stock as of October 30, 1996 ($2.03 per share) and the number of shares of
Fisher Common Stock proposed to be issued in connection with the
Transactions, the value of the AUBIS, HALIS and ACCS Transactions is
approximately $20.3 million, $10.15 million and $1.52 million,
respectively. On that date, approximately 61% of the outstanding shares of
Fisher Common Stock was held by nonaffiliates of Fisher. Upon consummation
of the Transactions, such nonaffiliates will own approximately 20% of the
outstanding shares of Fisher Common Stock.
<PAGE>
Although the consummation of each Transaction is subject to approval
of the Common Stock Amendment proposal by the shareholders of Fisher,
shareholder approval of the Transactions is not otherwise required under
Georgia law. Given the relative size of the Transactions and their impact
on the future business and strategic direction of Fisher, however, the
Board of Directors of Fisher is seeking ratification of the Transactions by
Fisher's shareholders at the Annual Meeting. Shareholder ratification of
the AUBIS and HALIS Transactions is a condition precedent to the obligation
of the parties to consummate each of these Transactions. If shareholder
ratification of these Transactions is not obtained, however, this condition
to closing will likely be waived by the parties. Consequently, if the
Common Stock Amendment is approved, but shareholder ratification of the
Transactions is not obtained, the parties will likely elect to consummate
the Transactions if all other conditions are met or waived.
Upon consummation of the Transactions, Fisher will be a technology
company that manufactures application software and delivers systems
integration services to the healthcare market. Fisher's mission is to be
the leading healthcare information systems company in delivering integrated
software applications and support services to the healthcare industry.
At the Annual Meeting, you will also be asked to elect directors of
Fisher for the ensuing year and to approve the 1996 Stock Option Plan of
Fisher.
Enclosed is the (i) Notice of Annual Meeting, (ii) Proxy Statement and
(iii) proxy for the Annual Meeting. Please review carefully the Proxy
Statement which describes in more detail the matters to be acted upon at
the Annual Meeting, including the Common Stock Amendment proposal and the
proposal to ratify the Transactions.
FISHER'S BOARD OF DIRECTORS BELIEVES THE PROPOSALS ARE IN THE BEST
INTERESTS OF FISHER'S STOCKHOLDERS, HAS UNANIMOUSLY APPROVED EACH OF THE
PROPOSALS AND RECOMMENDS THAT STOCKHOLDERS VOTE FOR APPROVAL OF THE
PROPOSALS.
YOUR VOTE IS IMPORTANT! The affirmative vote of the holders of a
majority of the outstanding shares of Fisher Common Stock is necessary to
approve the Common Stock Amendment proposal and the proposal to ratify the
Transactions, while the affirmative vote of the holders of a majority of
the shares of Fisher Common Stock present and voting at the Annual Meeting
is necessary to elect each of the directors and to approve the 1996 Stock
Option Plan. As of the date hereof, Fisher's directors and executive
officers have indicated that they intend to vote their shares for each
proposal. These persons beneficially own approximately 39% of Fisher's
outstanding shares. Whether or not you plan to attend the Annual Meeting,
please complete, sign and date the enclosed proxy and return it in the
enclosed postage prepaid envelope. If you attend the meeting, you may vote
in person if you wish, even though you previously have returned your proxy
card. Your prompt action will be greatly appreciated.
Very truly yours,
/s/ Larry Fisher
--------------------------
LARRY FISHER
Chairman of the Board
-2-
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 18, 1996
To the Stockholders of
Fisher Business Systems, Inc.
Notice is hereby given that the Annual Meeting of Stockholders (the
"Annual Meeting") of Fisher Business Systems, Inc. ("Fisher"), will be held
at the offices of Smith, Gambrell & Russell, 3343 Peachtree Road, N.E.,
Suite 1800, Atlanta, Georgia 30326 on Monday, November 18, 1996, at 9:00
a.m., local time, for the following purposes:
(1) To approve an amendment to the Articles of Incorporation of Fisher
to increase the number of authorized shares of Common Stock from 10,000,000
shares to 100,000,000 shares (the "Common Stock Amendment");
(2) To consider and vote upon a proposal to ratify:
(a) the merger of AUBIS Hospitality Systems, Inc. and AUBIS
Systems Integration, Inc. (collectively, the "AUBIS Subsidiaries"),
each a wholly-owned subsidiary of AUBIS, L.L.C. ("AUBIS"), with and
into two wholly-owned subsidiaries of Fisher (the "Fisher
Subsidiaries") and the Amended and Restated Agreement and Plan of
Merger and Reorganization, dated December 13, 1995 and amended and
restated as of March 29, 1996 and as further amended on September 27,
1996 (the "AUBIS Agreement"), among AUBIS, the AUBIS Subsidiaries,
certain affiliates of AUBIS, Fisher and the Fisher Subsidiaries,
pursuant to which the AUBIS Subsidiaries will be merged into the
Fisher Subsidiaries, and in which AUBIS will receive 10,000,000 shares
of Fisher Common Stock (the "AUBIS Transaction");
(b) the acquisition of HALIS Software, Inc. ("HSI"), a wholly-
owned subsidiary of HALIS, L.L.C. ("HALIS"), and the Stock Purchase
Agreement, dated March 29, 1996 and amended as of September 27, 1996
(the "HALIS Agreement"), between Fisher and HALIS and its affiliates,
pursuant to which HSI will become a wholly-owned subsidiary of Fisher,
and in which HALIS will receive 5,000,000 shares of Fisher Common
Stock (the "HALIS Transaction"); and
(c) the merger of Advanced Custom Computer Solutions, Inc.
("ACCS") with and into ACC Acquisition Co., a wholly-owned subsidiary
of Fisher, and the Agreement and Plan of Merger and Reorganization,
dated May 23, 1996 and amended as of September 11, 1996 and as further
amended on October 31, 1996, (the "ACCS Agreement"), among ACCS,
certain affiliates of ACCS, Fisher and ACC Acquisition Co., pursuant
to which ACCS will be merged into ACC Acquisition Co. and in which the
shareholders of ACCS will receive 750,000 shares of Fisher Common
Stock (the "ACCS Transaction");
(3) To elect four (4) directors to constitute the Board of Directors
of Fisher, to serve for a term of one year and until their successors are
elected and qualified;
(4) To approve the adoption of the 1996 Stock Option Plan of Fisher;
and
(5) To transact such other business incidental to the conduct of the
Annual Meeting as may properly come before the Annual Meeting or any
adjournments or postponements thereof.
Although the consummation of each Transaction is subject to approval
of the Common Stock Amendment by the shareholders of Fisher, shareholder
approval of these transactions is not otherwise required under Georgia law.
Given the relative size of the Transactions and their impact on the future
business of Fisher, however, the Board of Directors of Fisher is seeking
ratification of the Transactions by Fisher's shareholders at the Annual
Meeting. Shareholder ratification of the AUBIS and HALIS Transactions is a
condition precedent to the obligation of the parties to consummate each of
these Transactions. If shareholder ratification of these Transactions is
not obtained, however, this condition to closing will likely be waived by
the parties. Consequently, if the Common Stock Amendment is approved, but
shareholder ratification of the Transactions is not obtained, the parties
will likely elect to consummate the Transactions if all other conditions
are met or waived.
<PAGE>
No independent financial advisor has been or will be retained by
Fisher to evaluate the fairness of the Transactions to the stockholders of
Fisher from a financial point of view.
The AUBIS, HALIS and ACCS Agreements are more completely described in
the accompanying Proxy Statement. A copy of the AUBIS, HALIS and ACCS
Agreements are attached as Appendix A, B and C, respectively, to the
accompanying Proxy Statement.
Only holders of record of Fisher Common Stock, as indicated on the
stock transfer books of Fisher at the close of business on October 15,
1996, will be entitled to notice of, and to vote at, the Annual Meeting or
any adjournments or postponements thereof. THE AFFIRMATIVE VOTE OF THE
HOLDERS OF A MAJORITY OF THE OUTSTANDING SHARES OF FISHER COMMON STOCK IS
REQUIRED FOR APPROVAL OF THE COMMON STOCK AMENDMENT AND THE PROPOSAL TO
RATIFY THE AUBIS, HALIS AND ACCS TRANSACTIONS, WHILE THE AFFIRMATIVE VOTE
OF A MAJORITY OF THE SHARES OF FISHER COMMON STOCK PRESENT AND VOTING AT
THE ANNUAL MEETING IS NECESSARY TO ELECT DIRECTORS AND TO APPROVE THE 1996
STOCK OPTION PLAN. As of the date hereof, Fisher's directors and executive
officers have indicated that they intend to vote their shares for each
proposal. These persons beneficially own approximately 39% of Fisher's
outstanding shares of Common Stock.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING IN PERSON, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN
THE ENCLOSED POSTAGE PREPAID ENVELOPE. YOUR PROXY MAY BE REVOKED AT ANY
TIME BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER DATED PROXY WITH
RESPECT TO THE SAME SHARES, BY FILING WITH THE SECRETARY OF FISHER A
WRITTEN REVOCATION BEARING A LATER DATE, OR BY ATTENDING AND VOTING AT THE
ANNUAL MEETING.
By Order of the Board of Directors
/s/ Larry Fisher
----------------------
LARRY FISHER
Chairman of the Board
Atlanta, Georgia
November 4, 1996
+------------------------------------------------------------+
| WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE |
| COMPLETE, SIGN, DATE, AND RETURN THE ENCLOSED PROXY CARD. |
+------------------------------------------------------------+
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
PROXY STATEMENT
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD NOVEMBER 18, 1996
Fisher Business Systems, Inc., a Georgia corporation ("Fisher"), is
furnishing this Proxy Statement to its stockholders in connection with the
solicitation of proxies by the Board of Directors of Fisher for use at its
Annual Meeting of Stockholders to be held at 9:00 a.m. on November 18, 1996
at the offices of Smith, Gambrell & Russell, 3343 Peachtree Road, N.E.,
Suite 1800, Atlanta, Georgia 30326, and at any adjournments or
postponements thereof (the "Annual Meeting").
At the Annual Meeting, Fisher stockholders will consider and vote upon
a proposal to amend Fisher's Articles of Incorporation to increase the
number of authorized shares of Fisher Common Stock from 10,000,000 shares
to 100,000,000 shares (the "Common Stock Amendment"). Fisher intends to
use the additional authorized shares to embark upon a strategy of strategic
acquisitions to position Fisher to be a leading information technology
company in the healthcare industry. In furtherance of this strategy,
Fisher has agreed to merge AUBIS Hospitality Systems, Inc. ("AHS") and
AUBIS Systems Integration, Inc. ("ASI") (collectively, the "AUBIS
Subsidiaries"), each a wholly-owned subsidiary of AUBIS, L.L.C. ("AUBIS"),
with and into two wholly-owned subsidiaries of Fisher (the "Fisher
Subsidiaries"), pursuant to the Amended and Restated Agreement and Plan of
Merger and Reorganization, dated December 13, 1995 and amended and restated
as of March 29, 1996 and as further amended on September 27, 1996 (the
"AUBIS Agreement"), among AUBIS, the AUBIS Subsidiaries, certain affiliates
of AUBIS, Fisher and the Fisher Subsidiaries, in which AUBIS will receive
10,000,000 shares of Fisher Common Stock (such transaction referred to
herein as the "AUBIS Transaction"). In addition, Fisher has entered into a
Stock Purchase Agreement, dated as of March 29, 1996 and amended as of
September 27, 1996 (the "HALIS Agreement"), between Fisher and HALIS,
L.L.C. ("HALIS") and its affiliates, providing for the acquisition by
Fisher of HALIS Software, Inc. ("HSI"), a wholly-owned subsidiary of HALIS,
in which HALIS will receive 5,000,000 shares of Fisher Common Stock (such
transaction referred to herein as the "HALIS Transaction"). Fisher has also
entered into an Agreement and Plan of Merger and Reorganization, dated as
of May 23, 1996 and amended as of September 11, 1996 and as further amended
on October 31, 1996, to acquire Advanced Custom Computer Solutions, Inc.
("ACCS") in exchange for 750,000 shares of Fisher Common Stock (such
transaction referred to herein as the "ACCS Transaction"). The AUBIS,
HALIS and ACCS Transactions are collectively referred to herein as the
"Transactions." Upon consummation of the Transactions, AHS, ASI, HSI and
ACCS will be wholly-owned subsidiaries of Fisher and Fisher's corporate
name will be changed to HALIS, Inc.
Under the terms of the AUBIS, HALIS and ACCS Agreements, an aggregate
of up to 15,750,000 shares of Fisher Common Stock will be issued. As a
result, upon consummation of the Transactions, AUBIS, HALIS and the
shareholders of ACCS will own approximately 43%, 22% and 3%, respectively,
of the shares of Fisher Common Stock to be outstanding upon consummation of
the Transactions. Paul W. Harrison, who will serve as Chairman of the
Board and Chief Executive Officer of Fisher upon consummation of the
Transactions, beneficially owns and/or has the power to vote (by virtue of
his positions as the President and managing member of AUBIS and HALIS) all
15,000,000 shares of Fisher Common Stock to be issued in the AUBIS and
HALIS Transactions. As a result, Mr. Harrison will be able to elect
Fisher's directors, determine the outcome of most corporate actions
requiring shareholder approval and otherwise control the business of
Fisher. See "TERMS OF THE TRANSACTIONS - Management and Operations of
Fisher After the Transactions."
Based on the average of the closing bid and ask price of Fisher Common
Stock as of October 30, 1996 ($2.03 per share) and the number of shares of
Fisher Common Stock proposed to be issued in connection with the
Transactions, the value of the AUBIS, HALIS and ACCS Transactions is
approximately $20.3 million, $10.15 million and $1.52 million,
respectively. On that date, approximately 61% of the outstanding shares of
Fisher Common Stock was held by nonaffiliates of Fisher. Upon consummation
of the Transactions, such nonaffiliates will own approximately 20% of the
outstanding shares of Fisher Common Stock.
<PAGE>
Under the terms of the AUBIS Agreement, Fisher may be obligated to pay
to AUBIS a break-up fee in the event the AUBIS Agreement is terminated by
Fisher as a result of Fisher entering into an acquisition transaction with
another party. See "TERMS OF THE TRANSACTIONS -- The AUBIS Agreement."
Although the consummation of each Transaction is subject to approval
of the Common Stock Amendment by the shareholders of Fisher, shareholder
approval of these transactions is not otherwise required under Georgia law.
Given the relative size of the Transactions and their impact on the future
business and strategic direction of Fisher, however, the Board of Directors
of Fisher is seeking ratification of the Transactions by Fisher's
shareholders at the Annual Meeting. Shareholder ratification of AUBIS and
HALIS Transactions is a condition precedent to the obligation of the
parties to consummate each of these Transactions. If shareholder
ratification of these Transactions is not obtained, however, this condition
to closing will likely be waived by the parties. Consequently, if the
Common Stock Amendment is approved, but shareholder ratification of the
Transactions is not obtained, the parties will likely elect to consummate
the Transactions if all other conditions are met or waived.
No independent financial advisor has been or will be retained by
Fisher to evaluate the fairness of the Transactions to the stockholders of
Fisher from a financial point of view.
FAILURE TO APPROVE THE COMMON STOCK AMENDMENT WILL RESULT IN THE
TERMINATION OF THE AUBIS, HALIS AND ACCS AGREEMENTS, AS SUFFICIENT SHARES
OF FISHER COMMON STOCK WILL NOT THEN BE AVAILABLE TO CONSUMMATE ANY OF THE
TRANSACTIONS.
Upon consummation of the Transactions, Fisher will be a technology
company that manufactures application software and delivers systems
integration services to the healthcare market. Fisher's mission is to be
the leading healthcare information systems company in delivering integrated
software applications and support services to the healthcare industry.
At the Annual Meeting, you will also be asked to elect directors of
Fisher for the ensuing year and to approve the 1996 Stock Option Plan of
Fisher.
Fisher's Board of Directors believes the proposals to be voted upon at
the Annual Meeting are in the best interests of Fisher's stockholders, has
unanimously approved each of the proposals and recommends that stockholders
vote for approval of the proposals. The affirmative vote of the holders of
a majority of the outstanding shares of Fisher Common Stock is necessary to
approve the Common Stock Amendment and the proposal to ratify the
Transactions, while the affirmative vote of the holders of a majority of
the shares of Fisher Common Stock present and voting at the Annual Meeting
is necessary to elect each of the directors and to approve the 1996 Stock
Option Plan. As of the date hereof, Fisher's directors and executive
officers have indicated that they intend to vote their shares for each
proposal. These persons beneficially own approximately 39% of Fisher's
outstanding shares.
FOR CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN EVALUATING THE
COMMON STOCK AMENDMENT AND THE TRANSACTIONS, SEE "RISK FACTORS."
This Proxy Statement and the accompanying form of proxy are first
being mailed to Fisher stockholders on or about November 4, 1996.
The date of this Proxy Statement is November 4, 1996
-2-
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SUMMARY....................................................................... 7
General.................................................................... 7
The Parties................................................................ 8
Annual Meeting of Fisher Stockholders...................................... 8
Terms of the Transactions.................................................. 10
Selected Historical Financial Data of Fisher............................... 13
Selected Historical Combined Financial Data of the AUBIS Subsidiaries...... 14
Selected Historical Combined Financial Data of HSI......................... 15
Selected Historical Financial Data of ACCS................................. 16
Selected Unaudited Pro Forma Combined Condensed Financial Data............. 17
Market Price and Dividend Information...................................... 17
INTRODUCTION.................................................................. 19
ANNUAL MEETING................................................................ 19
Date, Time and Place....................................................... 19
Purpose of Meeting......................................................... 19
Record Date; Shares Entitled to Vote....................................... 19
Quorum; Vote Required...................................................... 19
Voting and Solicitation of Proxies......................................... 20
Revocation of Proxies...................................................... 20
PROPOSAL TO APPROVE COMMON STOCK AMENDMENT.................................... 21
BACKGROUND OF AND REASONS FOR THE TRANSACTIONS................................ 22
Background of the Transactions............................................. 22
Fisher's Reasons for the Transactions...................................... 24
AUBIS', HALIS' and ACCS' Reasons for the Transactions...................... 25
Recommendation of Fisher Board of Directors................................ 26
Management and Operations of Fisher After the Transactions................. 26
TERMS OF THE TRANSACTIONS..................................................... 32
General.................................................................... 32
The AUBIS Agreement........................................................ 32
The HALIS Agreement........................................................ 38
The ACCS Agreement......................................................... 42
Effective Time of the Transactions......................................... 45
Resale of Fisher Common Stock Issued in the Transactions; Affiliates....... 46
Expenses and Fees.......................................................... 46
Accounting Treatment....................................................... 46
Certain Federal Income Tax Consequences.................................... 46
RISK FACTORS.................................................................. 47
INFORMATION REGARDING FISHER.................................................. 49
General.................................................................... 49
Background................................................................. 50
</TABLE>
-3-
<PAGE>
<TABLE>
<S>........................................................................... <C>
Consolidation Strategy..................................................... 51
Products................................................................... 52
Customer Support, Warranty and Education................................... 53
Marketing.................................................................. 53
Competition................................................................ 53
Customers.................................................................. 54
Product Protection......................................................... 54
Backlog.................................................................... 54
Employees.................................................................. 54
Properties................................................................. 55
Legal Proceedings.......................................................... 55
INFORMATION REGARDING AUBIS................................................... 55
General.................................................................... 55
AUBIS Systems Integration, Inc............................................. 55
AUBIS Hospitality Systems, Inc............................................. 55
Background................................................................. 56
Products................................................................... 57
Competition................................................................ 57
Customers.................................................................. 57
Employees.................................................................. 57
Properties................................................................. 57
Legal Proceedings.......................................................... 57
INFORMATION REGARDING HALIS................................................... 58
General.................................................................... 58
Background................................................................. 58
Products................................................................... 59
Competition................................................................ 60
Customers.................................................................. 60
Employees.................................................................. 60
Properties................................................................. 60
Proprietary Property....................................................... 60
Legal Proceedings.......................................................... 61
INFORMATION REGARDING ACCS.................................................... 61
General.................................................................... 61
Products................................................................... 62
Competition................................................................ 62
Customers.................................................................. 62
Employees.................................................................. 62
Properties................................................................. 62
Legal Proceedings.......................................................... 62
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION.................. 63
Unaudited Pro Forma Condensed Consolidated Balance Sheet................... 64
Unaudited Pro Forma Condensed Consolidated Statement of Operations......... 65
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements... 66
</TABLE>
-4-
<PAGE>
<TABLE>
<S>........................................................................... <C>
FISHER MANAGEMENT'S DISCUSSION AND ANALYSIS................................... 68
Financial Condition........................................................ 68
Results of Operations...................................................... 68
Liquidity and Capital Resources............................................ 69
AUBIS MANAGEMENT'S DISCUSSION AND ANALYSIS.................................... 70
Financial Condition........................................................ 70
Results of Operations...................................................... 71
Liquidity and Capital Resources............................................ 72
HALIS MANAGEMENT'S DISCUSSION AND ANALYSIS.................................... 73
Financial Condition........................................................ 73
Results of Operations...................................................... 73
Liquidity and Capital Resources............................................ 74
ACCS MANAGEMENT'S DISCUSSION AND ANALYSIS..................................... 74
Financial Condition........................................................ 74
Results of Operations...................................................... 74
Liquidity and Capital Resources............................................ 75
ELECTION OF DIRECTORS......................................................... 75
Board Committees and Attendance............................................ 76
Compliance with Section 16(a) of the Securities Exchange Act of 1934....... 77
FISHER EXECUTIVE COMPENSATION................................................. 77
Director's Fees............................................................ 77
Employment Agreement....................................................... 78
Stock Options.............................................................. 78
CERTAIN TRANSACTIONS.......................................................... 79
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT OF FISHER....... 80
PROPOSAL TO APPROVE 1996 STOCK OPTION PLAN.................................... 81
Description of 1996 Plan................................................... 82
Federal Income Tax Consequences............................................ 84
ANNUAL REPORT ON FORM 10-KSB.................................................. 86
INDEPENDENT AUDITORS.......................................................... 86
PROPOSALS BY FISHER STOCKHOLDERS.............................................. 86
OTHER MATTERS................................................................. 86
INDEX TO FINANCIAL STATEMENTS................................................. F-1
</TABLE>
-5-
<PAGE>
APPENDIX A - Amended and Restated Agreement and Plan of Merger and
Reorganization, dated as of December 13, 1995 and amended and
restated as of March 29, 1996 and as further amended on
September 27, 1996, among Fisher Business Systems, Inc., AUBIS,
L.L.C., AUBIS Hospitality Systems, Inc., AUBIS Systems
Integration, Inc. and certain persons and affiliates of AUBIS,
L.L. C.
APPENDIX B - Stock Purchase Agreement, dated as of March 29, 1996 and amended
as of September 27, 1996, between Fisher Business Systems, Inc.,
HALIS, L.L.C., Paul W. Harrison and James Askew.
APPENDIX C - Agreement and Plan of Merger and Reorganization, dated as of May
23, 1996 and amended as of September 11, 1996 and as further
amended on October 31, 1996, among Fisher Business Systems, Inc.,
ACC Acquisition Co., Advanced Custom Computer Solutions, Inc. and
the shareholders of Advanced Custom Computer Solutions, Inc.
APPENDIX D - 1996 Stock Option Plan of Fisher
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SUMMARY
Certain significant matters discussed in this Proxy Statement are
summarized below. This summary is not intended to be complete and is
qualified in all respects by reference to the more detailed information
contained elsewhere in this Proxy Statement and in the Appendices hereto.
GENERAL
This Proxy Statement relates to a proposal by the Board of Directors of
Fisher Business Systems, Inc., a Georgia corporation ("Fisher"), to
increase the number of authorized shares of its $.01 par value common stock
(the "Common Stock") from 10,000,000 shares to 100,000,000 shares (the
"Common Stock Amendment"). Fisher intends to use the additional authorized
shares to embark upon a strategy of strategic acquisitions to position
Fisher to be a leading information technology company in the healthcare
industry. In furtherance of this strategy, Fisher has agreed to merge two
wholly-owned subsidiaries of AUBIS, L.L.C. ("AUBIS"), with and into two
wholly-owned subsidiaries of Fisher (the "Fisher Subsidiaries") pursuant to
the Amended and Restated Agreement and Plan of Merger and Reorganization,
dated December 13, 1995 and amended and restated as of March 29, 1996 and
as further amended on September 27, 1996 (the "AUBIS Agreement"), among
AUBIS, its subsidiaries, certain of its affiliates, Fisher and the Fisher
Subsidiaries. Under the terms of the AUBIS Agreement, AUBIS Hospitality
Systems, Inc. ("AHS") and AUBIS Systems Integration, Inc. ("ASI")
(collectively, the "AUBIS Subsidiaries") will be merged with and into the
Fisher Subsidiaries, with AUBIS receiving 10,000,000 shares of Fisher
Common Stock (such transaction referred to as the "AUBIS Transaction"). In
addition, Fisher has entered into a Stock Purchase Agreement, dated as of
March 29, 1996 and amended as of September 27, 1996 (the "HALIS
Agreement"), between Fisher and HALIS, L.L.C. ("HALIS") and its affiliates,
providing for the acquisition by Fisher of HALIS Software, Inc. ("HSI"), a
wholly-owned subsidiary of HALIS, with HALIS receiving 5,000,000 shares of
Fisher Common Stock (such transaction referred to herein as the "HALIS
Transaction"). Fisher has also entered into an Agreement and Plan of
Merger and Reorganization, dated as of May 23, 1996 and amended as of
September 11, 1996 and as further amended on October 31, 1996, to acquire
Advanced Custom Computer Solutions, Inc. ("ACCS") in exchange for 750,000
shares of Fisher Common Stock (such transaction referred to herein as the
"ACCS Transaction"). The AUBIS, HALIS and ACCS Transactions are
collectively referred to herein as the "Transactions." Upon consummation
of the Transactions, AHS, ASI, HSI and ACCS will be wholly-owned
subsidiaries of Fisher and Fisher's corporate name will be changed to
HALIS, Inc. See "TERMS OF THE TRANSACTIONS."
Under the terms of the AUBIS, HALIS and ACCS Agreements, an aggregate of
15,750,000 shares of Fisher Common Stock will be issued. As a result, upon
consummation of the Transactions, AUBIS, HALIS and the shareholders of ACCS
will own approximately 43%, 22% and 3%, respectively, of the shares of
Fisher Common Stock to be outstanding after consummation of the
Transactions. Paul W. Harrison, who will serve as Chairman of the Board
and Chief Executive Officer of Fisher upon consummation of the
Transactions, beneficially owns and/or has the power to vote (by virtue of
his positions as the President and managing member of AUBIS and HALIS) all
15,000,000 shares of Fisher Common Stock to be issued in the AUBIS and
HALIS Transactions. As a result, Mr. Harrison will be able to elect
Fisher's directors, determine the outcome of most corporate actions
requiring shareholder approval and otherwise control the business of
Fisher. See "BACKGROUND OF AND REASONS FOR THE TRANSACTIONS - Management
and Operations of Fisher After the Transactions."
Based on the average of the closing bid and ask price of Fisher Common
Stock as of October 30, 1996 ($2.03 per share) and the number of shares of
Fisher Common Stock proposed to be issued in connection with the
Transactions, the value of the AUBIS, HALIS and ACCS Transactions is
approximately $20.3 million, $10.15 million and $1.52 million,
respectively. On that date, approximately 61% of the outstanding shares of
Fisher Common Stock was held by nonaffiliates of Fisher. Upon consummation
of the Transactions, such nonaffiliates will own approximately 20% of the
outstanding shares of Fisher Common Stock.
Although the consummation of the Transactions are each subject to
approval of the Common Stock Amendment by the shareholders of Fisher,
shareholder approval of the Transactions is not otherwise required under
Georgia law. Given the relative size of the Transactions and their impact
on the future business and strategic direction of Fisher, however, the
Board of Directors of Fisher is seeking ratification of the Transactions by
Fisher's
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shareholders at the Annual Meeting. Shareholder ratification of the AUBIS
and HALIS Transactions is a condition precedent to the obligation of the
parties to consummate each of these Transactions. If shareholder
ratification of these Transactions is not obtained, however, this condition
to closing will likely be waived by the parties. Consequently, if the
Common Stock Amendment is approved, but shareholder ratification of the
Transactions is not obtained, the parties will likely elect to consummate
the Transactions if all other conditions are met or waived.
Upon consummation of the Transactions, Fisher will be a technology
company that manufactures application software and delivers systems
integration services to the healthcare market. Fisher's mission is to be
the leading healthcare information systems company in delivering integrated
software applications and support services to the healthcare industry.
At the Annual Meeting, you will also be asked to elect directors of
Fisher for the ensuing year and to approve the 1996 Stock Option Plan of
Fisher.
THE PARTIES
FISHER BUSINESS SYSTEMS, INC...... Fisher has developed and currently supports
proprietary computer software for use in a
variety of food service establishments. The
mailing address of its principal executive
offices is 1950 Spectrum Circle, Suite 400,
Marietta, Georgia 30067, and its telephone
number is (770) 857-4461. See "INFORMATION
REGARDING FISHER."
AUBIS, L.L.C...................... AUBIS, through its wholly-owned subsidiaries,
AUBIS Hospitality Systems, Inc. ("AHS") and
AUBIS Systems Integration, Inc. ("ASI"), is a
supplier of network integration products and
services to the healthcare industry, as well
as network integration products and services
to the healthcare and a variety of other
industries. The mailing address of its
principal executive offices is 3390 Peachtree
Road, N.E., Suite 1000, Lenox Towers,
Atlanta, Georgia 30326, and its telephone
number is (404) 364-6555. See "INFORMATION
REGARDING AUBIS."
HALIS, L.L.C...................... HALIS, through its wholly-owned subsidiary,
HALIS Software, Inc. ("HSI"), is a supplier
of healthcare systems to managed healthcare
markets and to medical practices and related
point of service markets. The mailing address
of its principal executive offices is 200
Hembree Park Drive, Suite K, Roswell, Georgia
30076, and its telephone number is (770) 667-
1667. See "INFORMATION REGARDING HALIS."
ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC................... ACCS is a supplier of software and related
services to the healthcare industry. The
mailing address of its principal executive
offices is 1000 Abernathy Road, Suite 1040,
Atlanta, Georgia 30328, and its telephone
number is (770) 481-7275.
ANNUAL MEETING OF FISHER STOCKHOLDERS
DATE, TIME AND PLACE OF THE
ANNUAL MEETING.................. The Annual Meeting of Fisher stockholders is
to be held on Monday, November 18, 1996 at
9:00 a.m., local time, at the offices of
Smith, Gambrell & Russell, 3343 Peachtree
Road,
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N.E., Suite 1800, Atlanta, Georgia 30326
(together with any adjournments or
postponements thereof, the "Annual Meeting").
See "ANNUAL MEETING --Date, Time and Place."
PURPOSE OF THE ANNUAL MEETING.... The purpose of the Annual Meeting is to
consider and vote upon the Common Stock
Amendment, the proposal to ratify the
Transactions, the election of directors of
Fisher and the proposal to approve Fisher's
1996 Stock Option Plan. See "ANNUAL MEETING --
Purpose of Meeting."
RECORD DATE...................... Only holders of record of shares of Fisher
Common Stock at the close of business on
October 15, 1996 (the "Record Date") are
entitled to notice of and to vote at the
Annual Meeting. On that date, 7,450,046 shares
of Fisher Common Stock were outstanding and
entitled to vote. See "ANNUAL MEETING --
Shares Entitled to Vote."
VOTE REQUIRED.................... The affirmative vote of the holders of a
majority of the outstanding shares of Fisher
Common Stock is required for approval of the
Common Stock Amendment. The affirmative vote
of the holders of a majority of the shares of
Fisher Common Stock present and voting at the
Annual Meeting is necessary to elect each of
the directors and approve the 1996 Stock
Option Plan. Although the consummation of each
of the Transactions is subject to approval of
the Common Stock Amendment by the shareholders
of Fisher, shareholder approval of the
Transactions is not otherwise required under
Georgia law. Given the relative size of the
Transactions and their impact on the future
business and strategic direction of Fisher,
however, the Board of Directors of Fisher is
seeking ratification of the Transactions by
Fisher's shareholders at the Annual Meeting.
Directors and executive officers of Fisher
beneficially owned as of October 15, 1996
2,885,800 shares of Fisher Common Stock
(approximately 39% of the shares then
outstanding). All directors and executive
officers of Fisher have indicated that they
intend to vote all shares of Fisher Common
Stock over which they have voting power in
favor of each of the proposals. See "ANNUAL
MEETING -- Quorum; Vote Required."
RECOMMENDATION OF THE FISHER
BOARD OF DIRECTORS.............. The Board of Directors of Fisher believes that
the Common Stock Amendment, the Transactions
and the 1996 Stock Option Plan are in the best
interests of Fisher and its stockholders and
has approved the Common Stock Amendment, the
Transactions and the 1996 Stock Option Plan.
The Board of Directors of Fisher unanimously
recommends that Fisher stockholders approve
the Common Stock Amendment, ratify the
Transactions and approve the 1996 Stock Option
Plan. The Board of Directors' recommendation
is based upon a number of factors discussed in
this Proxy Statement. See "PROPOSAL TO APPROVE
COMMON STOCK AMENDMENT," "BACKGROUND OF AND
REASONS FOR THE TRANSACTIONS --
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Fisher's Reasons for the Transactions," "--
Recommendation of the Fisher Board of
Directors" and "PROPOSAL TO APPROVE 1996 STOCK
OPTION PLAN."
TERMS OF THE TRANSACTIONS
GENERAL.......................... Upon consummation of the Transactions, AHS,
ASI, HSI and ACCS will be wholly-owned
subsidiaries of Fisher, and the corporate name
of Fisher will be changed to HALIS, Inc.
Fisher's current stockholders will remain
stockholders of Fisher and each share of
Fisher Common Stock outstanding immediately
prior to the consummation of the Transactions
will remain outstanding and unchanged as a
result of these transactions. Upon
consummation of the Transactions, AUBIS, HALIS
and the shareholders of ACCS will collectively
own approximately 68% of the outstanding
Common Stock of Fisher and the current
shareholders of Fisher will own approximately
32% of the outstanding Common Stock of Fisher.
See "TERMS OF THE TRANSACTIONS."
MANAGEMENT AND OPERATIONS OF FISHER
AFTER THE TRANSACTIONS.......... Following consummation of the Transactions, it
is expected that the Board of Directors of
Fisher will be comprised of seven (7) persons,
including the four nominees for election at
the Annual Meeting (Larry Fisher, Jeffrey C.
Brenner, Paul W. Harrison and Nate Lipson),
one person to be nominated by Mr. Harrison,
and two persons to be jointly nominated by
Messrs. Fisher and Harrison after consummation
of the Transactions.
The executive officers of the combined
companies will be as follows: Paul W.
Harrison -Chairman of the Board and Chief
Executive Officer; and Larry Fisher -
President and Chief Operating Officer.
Following the Transactions, Fisher will market
its products and services to the healthcare
industry, and will market its network
integration products and services to a variety
of industries. Fisher intends to use its
current software and its newly acquired (from
AUBIS) networking and software development
expertise to expand its set of products and
services to the healthcare industry. Upon
consummation of the Transactions, Fisher will
be a technology company that manufactures
application software and delivers systems
integration services to the healthcare market.
Fisher's mission is to be the leading
healthcare information systems company in
delivering integrated software applications
and support services to the healthcare
industry. This will represent a new business
direction for Fisher. There can be no
assurance, however, that the combined
companies will be able to achieve or sustain
profitability in the future. See "BACKGROUND
OF AND REASONS FOR THE TRANSACTIONS--
Management and Operations of Fisher After the
Transactions" and "RISK FACTORS."
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INTERESTS OF CERTAIN PERSONS IN
THE TRANSACTIONS................ Upon consummation of the Transactions, Paul W.
Harrison will serve as Chairman of the Board
and Chief Executive Officer of Fisher pursuant
to a three year employment agreement. In
addition, options to purchase 1,400,000 shares
of Fisher Common Stock have been granted to
Mr. Harrison, which options become exercisable
upon consummation of the HALIS Transaction.
See "BACKGROUND OF AND REASONS FOR THE
TRANSACTIONS --Management and Operations of
Fisher After the Transactions."
EFFECTIVE TIME OF THE
TRANSACTIONS.................... If the Common Stock Amendment is approved and
the Transactions are ratified by the requisite
vote of Fisher stockholders and the other
conditions to the Transactions are satisfied
or waived, the AUBIS and ACCS Transactions
will be consummated and become effective on
the date and at the time of the filing of
Certificates of Merger with the Secretary of
State of the State of Georgia and the HALIS
Transaction will become effective immediately
thereafter (the "Effective Time"). Assuming
all other conditions of the Transactions are
satisfied or waived, the Transactions are
expected to become effective promptly after
approval of the Common Stock Amendment by the
Fisher stockholders. See "TERMS OF THE
TRANSACTIONS-- Effective Time of the
Transactions."
CONDITIONS OF THE
TRANSACTIONS; TERMINATION....... The consummation of the Transactions is
conditioned upon the fulfillment or waiver of
certain conditions set forth in the AUBIS,
HALIS and ACCS Agreements, including, among
other things, ratification of the Transactions
by the Fisher stockholders and the absence of
any material adverse change in the business of
Fisher, AUBIS, HALIS or ACCS. See "TERMS OF
THE TRANSACTIONS." The AUBIS, HALIS and ACCS
Agreements may be terminated (i) by either
party if the Transactions have not been
consummated on or before November 30, 1996
(December 31, 1996 with respect to the ACCS
Transaction), (ii) by mutual consent of the
parties, or (iii) by one or both of the
parties in certain other situations. See
"TERMS OF THE TRANSACTIONS."
APPRAISAL RIGHTS................. Holders of record of Fisher Common Stock will
not have any dissenters' or appraisal rights
as a result of the matters to be voted upon at
the Annual Meeting.
EFFECT OF THE TRANSACTIONS ON
RIGHTS OF FISHER SHAREHOLDERS... Upon consummation of the Transactions,
Fisher's current shareholders will remain as
shareholders of Fisher. AUBIS and HALIS will,
as a result of the transactions, own
collectively approximately 65% of the then
issued and outstanding shares of Fisher Common
Stock. As a result, Paul W. Harrison, who
controls AUBIS and HALIS, will be able to
elect Fisher's directors, determine the
outcome of most corporate actions requiring
shareholder approval and
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otherwise control the business of Fisher. See
"TERMS OF THE TRANSACTIONS -- Management and
Operations of Fisher After the Transactions."
CERTAIN FEDERAL INCOME TAX
CONSEQUENCES.................... It is expected that the Transactions will each
constitute a tax-free reorganization for
federal income tax purposes. See "TERMS OF THE
TRANSACTIONS - Certain Federal Income Tax
Consequences."
RISK FACTORS..................... Shareholders of Fisher should carefully
consider the matters set forth under "RISK
FACTORS." Factors to be considered, among
other things, include the ability of Fisher to
integrate its acquired business and to manage
its growth, dependence on senior management,
the ability of Fisher to succeed in the
healthcare marketplace and the availability of
sufficient financing.
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SELECTED HISTORICAL FINANCIAL DATA OF FISHER
The following table sets forth selected historical financial data of
Fisher for the periods indicated, derived from the financial statements of
Fisher. The selected financial data for the six month periods ended July
31, 1995 and 1996 are derived from the unaudited financial statements of
Fisher. The unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which Fisher considers necessary
for a fair presentation of the financial condition and results of
operations for these periods. Operating results for the six months ended
July 31, 1996 are not necessarily indicative of the results that may be
expected for the entire eleven month period ending December 31, 1996.
Fisher has changed its year end to December 31, effective December 31,
1996. The selected financial data should be read in conjunction with
"FISHER MANAGEMENT'S DISCUSSION AND ANALYSIS" and Fisher's financial
statements and notes thereto included elsewhere in this Proxy Statement.
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED FOR THE YEARS
JULY 31, ENDED JANUARY 31
-------------- ----------------------------------------------
1996 1995 1996 1995 1994 1993 1992
------ ------ -------- -------- ------- ------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Revenues/(1)/........ $ 238 $ 373 $ 733 $ 1,262 $5,339 $7,173 $ 5,759
Income (Loss) Before
Extraordinary Item........ (189) (35) (199) (1,279) (530) (416) (1,884)
Net Income (Loss).......... (111) (35) 44 (1,279) (530) (416) (1,884)
Net Income (Loss)
Applicable to Common
Stockholders............. (111) (35) 44 (1,189) (667) (416) (1,884)
Weighted Average
Shares Outstanding........ 7,450 3,803 6,849 3,032 2,802 1,252 1,002
PER COMMON SHARE:
Income (Loss) Per
Share Before
Extraordinary Item........ $ (.03) $ (.01) $ (.03) $ (.39) $ (.24) $ (.33) $ (1.88)
Net Income (Loss) per
Common Share.............. $ (.02) (.01) .01 (.39) (.24) (.33) (1.88)
Cash Dividends............. -- -- -- -- -- -- --
Book Value (Period End).... (.06) (.06) (.06) (.42) (.02) .21 .68
</TABLE>
<TABLE>
<CAPTION>
AS OF JANUARY 31
AS OF --------------------------------------------
JULY 31, 1996 1996 1995 1994 1993 1992
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
(IN THOUSANDS)
BALANCE SHEET DATA:
Total Assets.................. $1,234 $ 288 $ 142 $1,853 $1,731 $3,006
Long-Term Debt................ -- -- -- -- -- --
Stockholders' Equity
(Deficit)................... (412) (301) (1,294) (52) 477 686
</TABLE>
_____________________
/(1)/ The reduction in revenues over the past three years is primarily
attributable to the loss of Fisher's client/server business in fiscal 1995
and Fisher's inability to fund research and development and marketing in
order to maintain the competitiveness of its software. See "FISHER
MANAGEMENT'S DISCUSSION AND ANALYSIS."
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SELECTED HISTORICAL COMBINED FINANCIAL DATA OF THE AUBIS SUBSIDIARIES
The following table sets forth selected historical combined financial
data of the AUBIS Subsidiaries for the periods indicated, derived from the
combined financial statements of the AUBIS Subsidiaries. The selected
financial data for the six month periods ended June 30, 1995 and 1996 are
derived from the unaudited combined financial statements of the AUBIS
Subsidiaries. The unaudited combined financial statements include all
adjustments, consisting of normal recurring accruals, which the AUBIS
Subsidiaries consider necessary for a fair presentation of the financial
condition and results of operations for these periods. Operating results
for the six months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the entire year ending December 31,
1996. The selected combined financial data should be read in conjunction
with "AUBIS MANAGEMENT'S DISCUSSION AND ANALYSIS" and the combined
financial statements and notes thereto of the AUBIS Subsidiaries included
elsewhere in this Proxy Statement.
<TABLE>
<CAPTION>
FOR THE SIX FOR THE YEARS
MONTHS ENDED JUNE 30, ENDED DECEMBER 31,
--------------------- ----------------------
1996 1995 1995 1994
------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
System sales and services/(1)/.......... $1,302 $1,968 $3,252 $2,600
Operating income (loss)................. 37 57 (291) (428)
Net income (loss)....................... (5) 45 (382) (436)
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1996 DECEMBER 31, 1995
------------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets............................ $ 683 $ 579
Long-term debt.......................... --- 100
Stockholders' deficit................... (855) (851)
</TABLE>
/(1)/ Includes revenues of approximately $1.9 million and $1.4 million for
1995 and 1994, respectively, from sales of restaurant systems of third
party vendors and related services. AUBIS was notified in December 1995
that, effective January 1, 1996, a significant dealership contract was not
being renewed. In March 1996, as a result of the loss of this dealership
relationship, AHS discontinued being a reseller of restaurant systems and
significantly reduced the number of its personnel. See "INFORMATION
REGARDING AUBIS" and Note J to the Combined Financial Statements of the
AUBIS Subsidiaries.
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SELECTED HISTORICAL COMBINED FINANCIAL DATA OF HSI
The following table sets forth selected historical combined
financial data of HSI and Pro Health Solutions, Inc. ("PSI") for the
periods indicated, derived from the combined financial statements of HSI
and PSI. As of December 31, 1995, HSI and PSI were both wholly-owned
subsidiaries by HALIS. Subsequent to year-end, however, PSI was merged
into HSI. As a result, HSI and PSI are collectively referred to herein as
"HSI." The selected financial data for the six month periods ended June
30, 1995 and 1996 are derived from the unaudited combined financial
statements of HSI. The unaudited combined financial statements include all
adjustments, consisting of normal recurring accruals, which HSI considers
necessary for a fair presentation of the financial condition and results of
operations for these periods. Operating results for the six months ended
June 30, 1996 are not necessarily indicative of the results that may be
expected for the entire year ending December 31, 1996. The selected
combined financial data should be read in conjunction with "HALIS
MANAGEMENT'S DISCUSSION AND ANALYSIS" and the combined financial statements
and notes thereto of HSI included elsewhere in this Proxy Statement.
<TABLE>
<CAPTION>
FOR THE SIX
MONTHS ENDED JUNE 30,
--------------------- FOR THE YEAR
1996 1995 ENDED DECEMBER 31, 1995
------ ------ -----------------------
(IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues............................... $ --/(1)/ $242 $ 331
Operating income (loss)................ (334) 92 10
Net income (loss)...................... (325) 92 10
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1996 DECEMBER 31, 1995
------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets........................... $ 54 $ 67
Long-term debt......................... -- --
Stockholders' equity (deficit)......... (319) 15
</TABLE>
_________________
/(1)/ No revenues were recorded by HSI for the six months ended June 30,
1996 due to the termination of the Partners in Prevention Program and the
Managed Care Guide. During the six month period, HSI focused its efforts
on research and development of the HALIS Healthcare Program. See "HALIS
MANAGEMENT'S DISCUSSION AND ANALYSIS."
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SELECTED HISTORICAL FINANCIAL DATA OF ACCS
The following table sets forth selected historical financial data of
ACCS for the periods indicated, derived from the financial statements of
ACCS. The selected financial data for the three month periods ended June
30, 1995 and 1996 are derived from the unaudited financial statements of
ACCS. The unaudited financial statements include all adjustments,
consisting of normal recurring accruals, which ACCS considers necessary for
a fair presentation of the financial condition and results of operations
for these periods. Operating results for the three months ended June 30,
1996 are not necessarily indicative of the results that may be expected for
the entire year ending March 31, 1997. The selected financial data should
be read in conjunction with "ACCS MANAGEMENT'S DISCUSSION AND ANALYSIS" and
the financial statements and notes thereto of ACCS included elsewhere in
this Proxy Statement.
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEARS
MONTHS ENDED JUNE 30, ENDED MARCH 31,
--------------------- ----------------------
1996 1995 1995 1994
------ ------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
System sales and services............... $ 116 $ 815 $2,799 $2,032
Operating income (loss)................. (73) 15 30 (42)
Net income (loss)....................... (73) 15 12 (42)
</TABLE>
<TABLE>
<CAPTION>
AS OF AS OF
JUNE 30, 1996 MARCH 31, 1995
------------------- -----------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Total assets............................ $ 168 $ 291
Long-term debt.......................... --- ---
Stockholders' deficit................... (103) (30)
</TABLE>
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SELECTED UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL DATA
The unaudited pro forma combined selected financial data gives
effect to the Transactions by (i) combining the balance sheet data for
Fisher as of July 31, 1996 and the AUBIS Subsidiaries, HSI and ACCS as of
June 30, 1996, as if the Transactions had occurred on June 30, 1996 using
the purchase method of accounting and (ii) by combining the income
statement data for Fisher for the year ended January 31, 1996 and for the
six months ended July 31, 1996, the AUBIS Subsidiaries and HSI for the year
ended December 31, 1995 and for the six months ended June 30, 1996 and ACCS
for the year ended March 31, 1996 and for the six months ended June 30,
1996 as if the Transactions had occurred on January 1, 1995. The unaudited
pro forma combined selected financial data utilize the assumptions set
forth under "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION."
The unaudited pro forma combined selected financial data are not
necessarily indicative of the actual or future operating results or
financial position that would have occurred or will occur upon consummation
of the Transactions. See "UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION" and the financial statements of Fisher, the AUBIS
Subsidiaries, HSI and ACCS included herein.
<TABLE>
<CAPTION>
YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
------------------ -----------------
<S> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
INCOME STATEMENT DATA:
Total revenues................................. $7,114 $ 1,861
Net loss....................................... (735) (817)
PER COMMON SHARE DATA:
Net loss....................................... $ (0.3) $ (0.4)
Cash dividends................................. -- --
BALANCE SHEET DATA (PERIOD END):
Total assets............................................................... $ 678
Long-term debt less current portion........................................ --
Convertible debt........................................................... (1,240)
Stockholders' equity (deficit)............................................. (2,029)
Book value per share....................................................... (.09)
</TABLE>
MARKET PRICE AND DIVIDEND INFORMATION
On October 30, 1992, Fisher's Common Stock ceased quotation on
the Nasdaq Market. Price information on Fisher's Common Stock is now
available on the Nasdaq "Bulletin Board." The trading symbol for the
Common Stock is "FBUSC." There is no established public trading market for
the member interests of either AUBIS or HALIS or for the Common Stock of
ACCS.
Fisher has not paid any dividends and does not expect to do so in
the foreseeable future. Although the payment of dividends rests with the
discretion of the Board of Directors, Fisher intends to employ its
earnings, if any, to finance its ongoing operations and to further develop
its business. Neither AHS nor ASI has paid any dividends or made any
distributions to AUBIS. HSI has not paid any dividends or made any
distributions to HALIS. Neither AUBIS, HALIS nor ACCS has paid any
dividends or made any distributions to its members or shareholders, as the
case may be.
As of October 1, 1996, there were eight members of AUBIS, eight
members of HALIS, two shareholders of ACCS and 141 holders of record of
Fisher Common Stock, although Fisher believes that there are more than 300
beneficial holders of its Common Stock.
On November 17, 1995, the last full day of trading immediately
preceding the public announcement that Fisher and AUBIS had entered into a
non-binding Letter of Intent with respect to the AUBIS Transaction, the
average of the closing bid and ask price of Fisher Common Stock was $1.19
per share. On December 13, 1995,
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the last full day of trading immediately preceding the public announcement
of the execution of the AUBIS Agreement, the average of the closing bid and
ask price of Fisher Common Stock was $2.38 per share. On October 30, 1996,
the average of the closing bid and ask price of Fisher Common Stock was
$2.03 per share.
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INTRODUCTION
This Proxy Statement is being furnished to Fisher stockholders in
connection with the solicitation of proxies by the Board of Directors of
Fisher for use at the Annual Meeting. This Proxy Statement is being mailed
to Fisher stockholders commencing on or about November 4, 1996.
All information contained in this Proxy Statement relating to AUBIS,
AHS and ASI has been furnished by AUBIS, and Fisher is relying upon the
accuracy of that information. All information contained in this Proxy
Statement relating to HALIS and HSI has been furnished by HALIS, and Fisher
is relying upon the accuracy of that information. All information
contained in this Proxy Statement relating to ACCS has been furnished by
ACCS and Fisher is relying upon the accuracy of that information. All
information contained in this Proxy Statement relating to Fisher has been
furnished by Fisher.
ANNUAL MEETING
DATE, TIME AND PLACE
The Annual Meeting will be held on November 18, 1996, at 9:00 a.m.,
local time, at the offices of Smith, Gambrell & Russell, 3343 Peachtree
Road, N.E., Suite 1800, Atlanta, Georgia 30326.
PURPOSE OF MEETING
The purpose of the Annual Meeting is to consider and vote upon the
Common Stock Amendment, the ratification of the Transactions, the election
of directors of Fisher and the proposal to adopt the 1996 Stock Option Plan
of Fisher.
RECORD DATE; SHARES ENTITLED TO VOTE
The close of business on October 15, 1996 has been fixed as the Record
Date for determination of the holders of Fisher Common Stock who are
entitled to notice of, and to vote at, the Annual Meeting. As of the
Record Date, there were 7,450,046 shares of Fisher Common Stock
outstanding. The holders of record on the Record Date of shares of Fisher
Common Stock are entitled to one vote per share on each matter submitted to
a vote at the Annual Meeting.
QUORUM; VOTE REQUIRED
The presence in person or by proxy of the holders of a majority of the
outstanding shares of Fisher Common Stock is necessary to constitute a
quorum for the transaction of business at the Annual Meeting. Under the
Georgia Code, the affirmative vote of the holders of a majority of the
outstanding shares of Fisher Common Stock is required for approval of the
Common Stock Amendment. The affirmative vote of the holders of a majority
of the shares of Fisher Common Stock present and voting at the Annual
Meeting is necessary to elect each of the directors and approve the 1996
Stock Option Plan. Although the consummation of each of the Transactions
is subject to approval of the Common Stock Amendment by the shareholders of
Fisher, shareholder approval of the Transactions is not otherwise required
under Georgia law. Given the relative size of the Transactions and their
impact on the future business of Fisher, however, the Board of Directors of
Fisher is seeking ratification of the Transactions by Fisher's shareholders
at the Annual Meeting.
On October 15, 1996, 2,885,800 shares of Fisher Common Stock
(representing approximately 39% of the outstanding shares of Fisher Common
Stock) were beneficially owned by directors and executive officers of
Fisher. All directors and executive officers of Fisher have indicated that
they intend to vote all shares of Fisher Common Stock over which they have
voting power in favor of each of the proposals presented at the Annual
Meeting.
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<PAGE>
VOTING AND SOLICITATION OF PROXIES
Proxies for use at the Annual Meeting accompany copies of this Proxy
Statement delivered to record holders of Fisher Common Stock. A Fisher
stockholder may use his proxy if he is unable to attend the Annual Meeting
in person or wishes to have his shares voted by proxy even if he does
attend the Annual Meeting. Fisher stockholders are requested to complete,
sign, date and return promptly the enclosed proxy in the postage prepaid
envelope provided for this purpose, regardless of whether they plan to
attend the Annual Meeting, to ensure that their shares are voted. Shares
of Fisher Common Stock represented by properly executed proxies received at
or prior to the Annual Meeting and which have not been revoked will be
voted at the Annual Meeting and will be voted in accordance with the
instructions contained in such proxies. All shares of Fisher Common Stock
represented by properly executed proxies for which no instruction is given
will be voted at the Annual Meeting in favor of the Common Stock Amendment,
the proposal to ratify the Transactions, the election of the nominees named
herein to constitute the Board of Directors of Fisher and the 1996 Stock
Option Plan.
If a quorum is not obtained, or if fewer shares of Fisher Common Stock
are voted in favor of approval of the Common Stock Amendment, the proposal
to ratify the Transactions and/or the 1996 Stock Option Plan than the
number required for approval, it is expected that the Annual Meeting will
be postponed or adjourned for the purpose of allowing additional time for
obtaining additional proxies or votes, and, at any subsequent reconvening
of the Annual Meeting, all proxies will be voted in the same manner as such
proxies would have been voted at the original convening of the meeting
(except for any proxies which have theretofore effectively been revoked),
notwithstanding that they might have been effectively voted on the same or
any other matter at a previous meeting.
The Board of Directors does not know of any other matters which are to
come before the Annual Meeting. If any other matters are properly presented
at the Annual Meeting for consideration, the persons named in the enclosed
form of proxy and acting thereunder will have discretion to vote on such
matters in accordance with their best judgment unless authority therefor is
withheld on the enclosed proxy card. Such discretionary matters may
include motions to adjourn the meeting for the purpose of further
soliciting proxies in favor of the Common Stock Amendment, the proposal to
ratify the Transactions and/or the 1996 Stock Option Plan.
Fisher will bear the cost of the solicitation of proxies from its
stockholders. In addition to solicitation by mail, directors, officers and
employees of Fisher and AUBIS may solicit proxies by telephone, telegram or
otherwise. The directors, officers and employees of Fisher and AUBIS will
not be additionally compensated for such solicitation but may be reimbursed
for out-of-pocket expenses incurred in connection therewith. Fisher may
also employ a proxy solicitation firm at customary fees to assist it in the
solicitation effort. Brokerage firms, fiduciaries and other custodians who
forward soliciting material to the beneficial owners of shares of Fisher
Common Stock held by them will be reimbursed for their reasonable expenses
incurred in forwarding such material.
REVOCATION OF PROXIES
A stockholder may revoke a proxy by submitting at any time prior to
the vote at the Annual Meeting a later dated proxy with respect to the same
shares, by delivering written notice of revocation to the Secretary of
Fisher at any time prior to such vote or by attending the Annual Meeting
and voting in person. Mere attendance at the Annual Meeting will not in
and of itself revoke a proxy. Abstentions and broker non-votes will not be
counted as votes either in favor of or against the election of directors or
the adoption of the 1996 Stock Option Plan. BECAUSE APPROVAL OF THE COMMON
STOCK AMENDMENT AND THE PROPOSAL TO RATIFY THE TRANSACTIONS EACH REQUIRES
THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF SHARES OUTSTANDING, A
STOCKHOLDER WHO FAILS TO RETURN A PROXY OR WHO ABSTAINS FROM VOTING ON THE
TRANSACTIONS IN HIS PROXY OR AT THE ANNUAL MEETING WILL HAVE FUNCTIONALLY
VOTED AGAINST APPROVAL OF THE COMMON STOCK AMENDMENT AND THE PROPOSAL TO
RATIFY THE TRANSACTIONS.
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PROPOSAL TO APPROVE COMMON STOCK AMENDMENT
A condition precedent to the consummation of the Transactions is an
amendment to Article V of Fisher's Articles of Incorporation, as amended
(the "Articles of Incorporation"), to increase the number of authorized
shares of Common Stock of Fisher from 10,000,000 shares to 100,000,000
shares (the "Common Stock Amendment"). In connection therewith, the
following resolution will be introduced at the Annual Meeting:
RESOLVED: That the first paragraph of Article V of the Articles of
Incorporation, as heretofore added to or amended, is hereby amended to read
as follows:
"The authorized capital stock of the Corporation shall be
$1,500,000, which shall consist of 100,000,000 shares of Common Stock
with a par value of $.01 per share and 5,000,000 shares of preferred
stock with a par value of $.10 per share."
Because Fisher does not have sufficient uncommitted authorized but
unissued shares of Common Stock to consummate either the AUBIS, the HALIS
or the ACCS Transactions without approval of the proposed increase in the
number of authorized shares of Common Stock, such proposed increase is
necessary in order to consummate the Transactions, which the Fisher Board
believes is in the best interests of Fisher shareholders. See "BACKGROUND
OF AND REASONS FOR THE TRANSACTIONS." In addition, Fisher's Board of
Directors believes that the proposed increase in the number of authorized
shares of Common Stock will provide flexibility needed to meet corporate
objectives and to implement Fisher's strategic plan and is in the best
interests of Fisher and its shareholders. See "INFORMATION REGARDING FISHER
- Consolidation Strategy." The increase in the number of authorized
shares of Common Stock will, if approved by the requisite vote of Fisher
shareholders, be adopted by Fisher regardless of whether the Transactions
are consummated. The stockholders of Fisher do not have preemptive rights.
The Board of Directors recommends that shareholders approve the Common
Stock Amendment because it considers the proposal to be in the best long-
term and short-term interests of Fisher, its shareholders and its other
constituencies. The proposed increase in the number of shares of
authorized Common Stock will ensure that sufficient shares of Common Stock
are available for issuance pursuant to the terms of the AUBIS, HALIS and
ACCS Agreements and will ensure that additional shares of Common Stock will
be available, if needed, for issuance in connection with any possible
future transactions approved by the Board of Directors, including, among
others, stock splits, stock dividends, acquisitions, financings and other
corporate purposes. See "INFORMATION REGARDING FISHER - Consolidation
Strategy." In addition, the proposed increase in the number of authorized
shares of Common Stock will ensure that sufficient shares are available:
(i) for issuance in a private placement of up to 5,000,000 shares of common
stock and 1,666,667 common stock purchase warrants (the "Private
Placement") currently being conducted by Fisher (See "BACKGROUND OF AND
REASONS FOR THE TRANSACTIONS -Management and Operations of Fisher After the
Transactions") and (ii) for grant pursuant to Fisher's 1996 Stock Option
Plan. (See "PROPOSAL TO APPROVE 1996 STOCK OPTION PLAN.")
Net proceeds from the Private Placement will total approximately $5.45
million if the maximum offering is achieved and will be utilized, upon
consummation of the Transactions, to expand Fisher's sales and marketing
efforts, enhance Fisher's software products, support the growth of its
administrative infrastructure, acquire selected software and service
companies and system integration companies and for general corporate
purposes.
The Board of Directors believes that the availability of the
additional shares of Common Stock for such purposes without delay or the
necessity for a special shareholders' meeting (except as may be required by
applicable law or regulatory authorities or by the rules of any stock
exchange on which Fisher's securities may then be listed) will be
beneficial to Fisher by providing it with the flexibility required to
consider and respond to future business opportunities and needs as they
arise. The availability of additional authorized shares of Common Stock
will also enable Fisher to act promptly when the Board of Directors
determines that the issuance of additional shares of Common Stock is
advisable. It is possible that shares of Common Stock may be issued at a
time and under
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circumstances that may increase or decrease earnings per share and increase
or decrease the book value per share of shares presently held.
Although Fisher may issue shares of Common Stock in connection with
future acquisitions and Fisher may require additional capital or other
financing to fund its operations and continued growth, other than the
shares of Common Stock to be issued in connection with the Transactions,
the Private Placement and the 1996 Stock Option Plan, Fisher does not have
any immediate agreements, arrangements, commitments or understandings with
respect to the issuance of any of the additional shares of Common Stock
which would be authorized by the proposal to increase the number of
authorized shares.
On October 15, 1996, 7,450,046 shares of Common Stock were issued and
outstanding. Upon consummation of the Transactions, 23,200,046 shares of
Common Stock will be issued and outstanding (27,840,386 shares on a fully
diluted basis assuming the exercise of all outstanding stock options and
the conversion of Fisher's outstanding convertible notes).
It should be noted that the availability of additional shares could
render more difficult or discourage a takeover attempt. For example,
additional shares of Common Stock could be issued and sold to purchasers
who oppose a takeover bid which is not in the best long-term and short-term
interests of Fisher, its shareholders and its other constituencies or could
be issued to increase the aggregate number of outstanding shares of Common
Stock and thereby dilute the interest of parties attempting to obtain
control of Fisher. In connection with any issuance of shares of Common
Stock, the Board of Directors is required to determine that such issuance
would be in the best long-term and short-term interests of Fisher, its
shareholders and its other constituencies. The Board of Directors is
presently unaware of any specific effort, other than the Transactions, to
accumulate the shares of Common Stock of Fisher or obtain control of
Fisher.
The approval of the holders of a majority of the issued and
outstanding shares of Common Stock of Fisher is required for the adoption
of the Common Stock Amendment. Failure to approve this proposal will
result in the termination of the AUBIS, HALIS and ACCS Agreements, as
sufficient shares of Fisher Common Stock will not then be available to
consummate any of the Transactions. See "BACKGROUND OF AND REASONS FOR THE
TRANSACTIONS." THE BOARD OF DIRECTORS RECOMMENDS THAT FISHER'S
SHAREHOLDERS APPROVE THE COMMON STOCK AMENDMENT.
BACKGROUND OF AND REASONS FOR THE TRANSACTIONS
BACKGROUND OF THE TRANSACTIONS
The proposed transactions with AUBIS, HALIS and ACCS are the
culmination of a lengthy process during which Fisher has worked to identify
one or more strategic partners which could (i) provide an increased
distribution for Fisher's products, (ii) augment Fisher's technical
resources in order to facilitate Fisher's success with large clients, and
(iii) expand Fisher's business into new markets, such as the healthcare
industry. The Board of Directors of Fisher believes that the Transactions
will permit Fisher to achieve these goals.
In its Annual Report on Form 10-K for the year ended January 31, 1995,
Fisher indicated that unless a strategic partner could be found, Fisher
was unlikely to be able to continue operations. In mid-1995, Fisher
completed a private placement of Common Stock, which raised $800,000 and
provided interim funding for the period of time which Fisher believed to be
necessary for the process of identifying, qualifying, and negotiating an
acceptable deal with a suitable partner.
In August 1995, Fisher entered into a Finder's Fee Agreement with
Penny Sellers, pursuant to which Ms. Sellers will receive a commission
equal to 10% of the amount of any equity investments in Fisher or software
licensing fees paid to Fisher in respect of transactions introduced to
Fisher by Ms. Sellers. The compensation
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<PAGE>
payable to Ms. Sellers pursuant to the Finder's Fee Agreement is limited to
$500,000. In late August 1995, Ms. Sellers introduced Fisher to the
principals of AUBIS. See "INFORMATION REGARDING FISHER-Background."
The initial meeting between principals of Fisher and AUBIS occurred
during late August 1995. At that meeting, a general discussion of the
history and plans of each company took place. There were several potential
relationships which seemed to warrant further investigation. In September
1995, subsequent meetings identified three possible relationships which
could benefit both companies: (i) use of AUBIS' technical resources to
assist Fisher; (ii) placement of Fisher's products into the AUBIS
distribution channel; and (iii) a merger of the two companies.
Each company undertook to evaluate the possible relationships and to
prioritize them separately based on their merits. Both companies concluded
that a merger would provide maximum leverage to both companies to achieve
their individual business goals. The addition of Fisher's products would
give AUBIS additional product diversity in its current and proposed
geographical markets. The presence of AUBIS' technical staff would enable
Fisher to compete in large account situations and reengineer the Fisher
product for the healthcare market. In addition, the merged entities would
be more easily able to acquire additional products and service offerings to
build a more complete folio of solutions for the combined prospect and
customer base.
In October 1995, general parameters for such a merger were discussed,
and on November 18, 1995, a Letter of Intent was signed by both parties.
Beginning in late November 1995 and continuing into December 1995, counsel
for and principals of both companies met to review each of the business and
legal issues which had to be resolved in order to move ahead. The AUBIS
Agreement was subsequently prepared and executed on December 13, 1995. On
March 26, 1996, the AUBIS Agreement was amended and restated to, among
other things, provide for the merger of the AUBIS Subsidiaries into the
Fisher Subsidiaries, rather than merge the AUBIS Subsidiaries directly into
Fisher.
In anticipation of the consummation of the AUBIS Transaction, Fisher
entered into a management agreement with AUBIS pursuant to which AUBIS
provided management services to Fisher in an effort to begin the process of
effecting an orderly transition of the AUBIS Subsidiaries to Fisher. This
management agreement was terminated on June 1, 1996. The management
agreement provided for a monthly management fee of $10,000 payable to
AUBIS.
Once Fisher's Board of Directors committed to the AUBIS Transaction,
discussions commenced between Larry Fisher, the Chairman of the Board of
Fisher, and Paul Harrison, the managing member of AUBIS, with regard to
strategically positioning Fisher in the healthcare information systems
market. Mr. Harrison has had past success in developing information
systems for managed healthcare. Using the advanced artificially
intelligent technology ("MERAD") developed by Mr. Harrison, Mr. Harrison
has been developing a managed healthcare information system through HALIS
and its subsidiary, HSI. Fisher and Mr. Harrison believe that by utilizing
Mr. Harrison's expertise and familiarity with the healthcare industry and
the MERAD technology, a similar information and database manager can be
developed that would enable Fisher to enhance and modify its hospitality
products while expanding Fisher into the healthcare information systems
market.
Discussions commenced in December 1995 about the possibility of Fisher
acquiring the MERAD technology and the managed healthcare system being
developed by HSI. These discussions culminated in the execution of the
HALIS Agreement on March 29, 1996 and the execution of a letter of intent
between Fisher and Paul Harrison Enterprises, Inc. (the owner of the MERAD
technology) whereby Fisher will acquire a perpetual, non-exclusive license
to utilize the MERAD technology for a license fee of 10% of future revenues
generated from the MERAD technology by Fisher. MERAD is an artificially
intelligent technology utilized to develop application software. Through
the use of artificial intelligence, MERAD can substantially decrease the
development time necessary to create and debug application software. See
"INFORMATION REGARDING FISHER-Background" for a more complete description
of the MERAD technology.
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<PAGE>
In March 1996 Fisher initiated discussions with ACCS, a supplier of
software and services to the healthcare industry. ACCS offered similar
capabilities to those of AHS in the areas of sales, marketing and customer
support. See "INFORMATION REGARDING ACCS." These discussions culminated in
the execution of the ACCS Agreement on May 23, 1996. As a result of the
financial performance of ACCS during the first half of 1996, the ACCS
Agreement was amended in September 1966 to, among other things, decrease
the purchase price to be paid by Fisher to 750,000 shares of Fisher Common
Stock. The ACCS Agreement was further amended on October 31, 1996 to
extend the date by which the ACCS Agreement shall be consummated (from
October 31, 1996 to December 31, 1996).
Prior to the execution of the AUBIS, HALIS and ACCS Agreements, Fisher
had been totally focused on the food service industry, supplying software
and services to various restaurant and hotel operations. Fisher had
developed a proprietary set of restaurant software, but had not been able
to sustain profitability on a consistent basis.
Initially, Fisher's new focus was to expand its capabilities by adding
systems integration services to its restaurant offerings, and to use the
local presence of AHS to increase its software revenues. At the same time,
Fisher began to establish itself in a second, more lucrative, vertical
market, healthcare, by adding the HALIS software to its set of offerings.
The systems integration services which ASI offers are needed by both
vertical markets, and are a necessary component of any successful vertical
market software company in today's market. In addition, Fisher's food
service software can be used in the healthcare market for food service and
nutrition applications.
As Fisher presented its plan to prospective customers and discussed it
with management of AUBIS, HALIS and ACCS, it became apparent that the best
opportunity to increase shareholder value of the combined companies was to
focus solely on the healthcare market, which management believes to be one
of the fastest growing vertical markets in the United States. To
accomplish this, Fisher in the first quarter of 1996 began to limit its
efforts in food service to the support and provision of additional systems
to its existing customer base and a select group of prospects which had
already been identified. The AHS business unit was eliminated, and
appropriate personnel from both Fisher and AHS were transferred to ASI and
HSI.
As a result of Fisher's new focus and the elimination of the AHS
business unit, the AUBIS Agreement was amended on September 27, 1996 to
reduce the purchase price for AUBIS by 500,000 shares to 10,000,000 shares
of Fisher Common Stock. The AUBIS Agreement was also amended at that time
to extend the date by which the AUBIS Transaction shall be consummated
(from June 30, 1996 to November 30, 1996). The HALIS Agreement was
likewise amended to extend the consummation date of this transaction to
November 30, 1996.
The Transactions will require Fisher to issue up to an aggregate of
15,750,000 shares of Fisher Common Stock. The consideration to be paid by
Fisher in the Transactions was determined through negotiations between
management of Fisher and each of AUBIS, HALIS and ACCS and was not based
upon any independent appraisal or valuation of either Fisher, the AUBIS
Subsidiaries, HSI or ACCS. Among the factors considered in making such
determination were prevailing market conditions and general economic
conditions, the revenues and earnings of the parties in recent periods, the
relative experience of management of each of the parties, estimates of the
business potential of the combined companies, the present state of
development of each company and other factors deemed relevant. Fisher has
not obtained an opinion of an independent financial advisor as to the
fairness of the Transactions to the shareholders of Fisher from a financial
point of view.
FISHER'S REASONS FOR THE TRANSACTIONS
Due to the downturn in its restaurant software business, Fisher has
been unable to commit sufficient resources to continue research and
development of its products to keep pace in the hospitality market place.
As a result, the market has not been receptive to its products because
Fisher's competitors have been able to provide enhancements that are being
demanded by hospitality customers. In 1995, Fisher's Board of Directors
concluded that Fisher was in need of a significant shift in its strategic
plan to continue in operation. This resulted in the
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development of a strategic plan to acquire additional software applications
for its hospitality business, while expanding into the healthcare
information systems market. The Transactions represent the first steps in
implementing this new strategic plan. Prior to the execution of the AUBIS,
HALIS and ACCS Agreements, Fisher had been totally focused on the food
service industry, supplying software and services to various restaurant and
hotel operations. Fisher had developed a proprietary set of restaurant
software, but had not been able to sustain profitability on a consistent
basis. Management believes that if the Transactions are not consummated,
Fisher will be unable effectively to enter the healthcare information
systems market and will be unable to upgrade and market in a timely manner
its restaurant software to customers in its traditional hospitality market.
Moreover, Fisher's prospects for obtaining additional capital will be
severely impaired or eliminated without a viable plan for achieving
profitability. As a consequence, if the Transactions are not consummated,
the Board of Directors of Fisher believes that Fisher will have no other
choice but to cease operations.
Fisher's Board of Directors believes that the presence of AUBIS' and
HALIS' software development expertise will enable Fisher to modify and
enhance its products and hopefully will increase the acceptance of Fisher's
products and services in the healthcare industry. Fisher's Board of
Directors believes that the healthcare information systems market has
significantly more long-term potential than the hospitality market.
Accordingly, Fisher has developed a new strategic plan of diversifying into
the healthcare information systems market. Each of the Transactions is
part of Fisher's new strategic plan. By acquiring the AUBIS Subsidiaries
and HSI, Fisher would acquire software networking and systems development
expertise (particularly in the healthcare industry), a new customer base,
and the expertise of Mr. Harrison and his staff in developing information
and healthcare systems to diversify its product lines. By acquiring ACCS,
Fisher would acquire a healthcare customer base and a sales and marketing
force with which to pursue the healthcare information systems market.
After the Transactions, Fisher will be in a position to offer information
and database products to the healthcare market, while utilizing the
networking and system building expertise acquired from ASI to provide value
added integration and networking services (ASI already provides these
services to healthcare clients).
Paul Harrison brings a strong record in building technology companies.
Fisher's Board of Directors believes that the best opportunity for
shareholders to enhance their investment in Fisher will be through a
successful acquisition strategy that, with Mr. Harrison's assistance, will
enable Fisher to expand into the healthcare information system industry.
Management of Fisher believes that the combination of these five companies
(Fisher, ASI, AHS, HSI, and ACCS), along with the license for the MERAD
technology, provide a nucleus from which the vertical healthcare
information market could be addressed. Upon consummation of the
Transactions, management believes that Fisher will be well positioned to
produce new software products for special segments of the healthcare market
using its advanced database technology and its industry knowledge obtained
from AUBIS and HALIS personnel. See "-Management and Operation of Fisher
After the Transactions."
While Fisher's Board of Directors believes the strategic plan that it
is undertaking, through the consummation of the Transactions, will be
successful and in the best interest of Fisher's shareholders, no assurances
can be given to shareholders that Fisher indeed will be successful and that
shareholder value will be enhanced. Risk factors that shareholders should
consider in evaluating all of the proposals include, among others, (i)
timely completion of modifications and enhancements of Fisher's healthcare
products, (ii) continued working capital availability while such products
are being developed, (iii) continued availability of Messrs. Fisher and
Harrison (each will be subject to a three year employment agreement), (iv)
acceptance of Fisher's products by customers in the healthcare market, and
(v) availability of working capital for operations and acquisitions over
the next 12 to 15 months. See "RISK FACTORS."
AUBIS', HALIS' AND ACCS' REASONS FOR THE TRANSACTIONS
AUBIS and HALIS. AUBIS and HALIS have stated their intention to
---------------
become one of the top healthcare technology companies in the industry.
Management of AUBIS and HALIS believe that the combined companies will
offer an attractive platform to capture market share in this industry,
utilizing an information database manager. Additionally, ASI's networking
integration solutions are installed in both hospitality and healthcare, and
AUBIS
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believes that there is significant potential to continue to expand its
networking offerings and services to the healthcare industry.
HSI has been a development company for a relatively short time but has
moved quickly in the development of prototype managed healthcare system.
In order for the healthcare system to reach the next level of commercial
exploitation, HSI requires funding. Fisher's public company status offers
a means for the combined companies to access the capital markets to fund
the development of its products.
Additionally, because Mr. Harrison is actively involved in both HALIS
and AUBIS, the merger with Fisher serves as a means to fulfill the
strategic plan envisioned by Mr. Harrison (and shared by management of
Fisher) of using software technology to build superior information and
database systems in the healthcare industry. Mr. Harrison will serve as
Chairman of the Board and Chief Executive Officer of Fisher upon
consummation of the Transactions. See "-Management and Operations of
Fisher After the Transactions."
ACCS. As a reseller of third party healthcare systems software, ACCS
----
has experienced several limitations to growth under its present
relationship with its software provider. For instance, ACCS is not in
control of the development of additional functionality of the software it
resells. Moreover, it has no rights to specify features and functions
which need to be added to make the software more competitive. In addition,
the particular software ACCS licenses for distribution is limited in its
range of potential users. ACCS does not consider the software to be a
competitive system for larger group practices or managed care entities such
as hospitals, clinics, HMO's, PPO's and MSO's. Management of ACCS believes
that the merger with Fisher will expand its markets, increase the
functionality of its products and enable it to offer system integration
services to a wider range of customers.
RECOMMENDATION OF FISHER BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF FISHER UNANIMOUSLY RECOMMENDS THAT THE
FISHER STOCKHOLDERS VOTE TO RATIFY THE TRANSACTIONS IN ACCORDANCE WITH THE
TERMS OF THE AUBIS, HALIS AND ACCS AGREEMENTS.
MANAGEMENT AND OPERATIONS OF FISHER AFTER THE TRANSACTIONS
MANAGEMENT
Under the terms of the AUBIS and ACCS Agreements, the directors and
executive officers of Fisher upon consummation of the Transactions will be
as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Paul W. Harrison 41 Chairman of the Board and
Chief Executive Officer
Larry Fisher 52 President, Chief Operating
Officer and Director
Jeffrey C. Brenner 47 Director
Nate Lipson 68 Director
</TABLE>
In addition, three additional directors will be appointed by the Board
of Directors of Fisher following the consummation of the Transactions, one
nominee to be selected by Mr. Harrison and the other two nominees to be
mutually agreed upon by Messrs. Fisher and Harrison. See "ELECTION OF
DIRECTORS."
PAUL W. HARRISON has been the managing member of AUBIS since February
1995, a director of AHS since June 1994 and a director of ASI since January
1995. Mr. Harrison has also served as President of PHE since May 1990.
From July 1993 to December 1994, Mr. Harrison was employed as an executive
advisor of HBO &
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Company of Georgia, Inc., a software company in the healthcare information
industry. Mr. Harrison served as President and Chief Executive Officer of
Biven Software, Inc., a software technology company specializing in
business and healthcare applications, from 1991 to June 1993, when it was
acquired by HBO & Company of Georgia, Inc. Mr. Harrison also served as
President of SOTRISS Corp., a software technology company specializing in
insurance and healthcare applications, from 1986 to 1989, when it was
acquired by Lincoln National Information Services, Inc. ("Lincoln
National"). Thereafter, Mr. Harrison continued his employment as President
and Chief Executive Officer of SOTRISS, a subsidiary of Lincoln National,
until 1991. Mr. Harrison will serve as Chairman of the Board and Chief
Executive Officer of Fisher after the Transactions are consummated. Mr.
Harrison is a director nominee of Fisher. See "ELECTION OF DIRECTORS."
LARRY FISHER, the founder of Fisher, has served as a director since
its organization in 1979, as President, Chief Executive Officer, and
Treasurer since 1979 and as Chairman of the Board since 1992. Prior to
1979, Mr. Fisher was employed by IBM for 11 years in several executive
sales and marketing positions. In his last such position, Mr. Fisher was
responsible for creating, implementing and monitoring national marketing
programs for the retail and hospitality industries. Mr. Fisher will serve
as President, Chief Operating Officer and a director of Fisher after the
Transactions are consummated.
JEFFREY C. BRENNER has served as a director of Fisher since May 1995
and will continue as a director of Fisher upon consummation of the
Transactions. Mr. Brenner is currently a private investor. From 1987 to
1991, Mr. Brenner served as President and Chairman of the Board of Tech
Time, Inc., a time and attendance software/services company.
NATE LIPSON is a member of AUBIS and has served as a director of AHS
and ASI since December 1995. Mr. Lipson is currently a private investor,
and has had various ownership and management interests in companies doing
business in the hospitality and carpet industries for more than the past
five years. Mr. Lipson is a director nominee of Fisher. See "ELECTION OF
DIRECTORS."
EMPLOYMENT AGREEMENTS
Upon consummation of the Transactions, Fisher will enter into an
Employment Agreement with Paul W. Harrison, pursuant to which Mr. Harrison
will serve as Chairman of the Board and Chief Executive Officer of Fisher.
The Employment Agreement is for a term of three years, expiring on the
third anniversary of the effective date of the Transactions, and provides
for an annual base salary of $200,000 plus incentive bonus payments. In
addition, the Employment Agreement provides for Mr. Harrison to receive
options to purchase shares of Common Stock of Fisher in the discretion of
the Board of Directors. The Employment Agreement provides for certain
severance payments to be paid to Mr. Harrison in the event of a change in
control of Fisher or a significant change in Mr. Harrison's operational
duties. In the event of a change in control, Mr. Harrison will be entitled
to terminate his employment with Fisher and to receive three times the sum
of his annual base salary and the cost for one year of all additional
benefits provided to Mr. Harrison under the Employment Agreement. In
addition, in the event Mr. Harrison terminates his employment under certain
stated conditions or is terminated by Fisher without cause, he will receive
the greater of one year's annual base salary or an amount equal to the base
salary which would otherwise be payable to Mr. Harrison for the remaining
term of his Employment Agreement. Any such severance payment may, at the
option of Fisher, be paid to Mr. Harrison in equal monthly installments or
in a lump sum at a discounted present value. The Employment Agreement
contains non-compete and non-solicitation provisions, effective through the
actual date of termination of the Employment Agreement and for a period of
two years thereafter.
In consideration of services rendered by Paul Harrison to Fisher in
anticipation of the consummation of the Transactions, Fisher on June 7,
1996 granted to Mr. Harrison an option to purchase 1,400,000 shares of
Fisher Common Stock, which options become exercisable upon consummation of
the HALIS Transaction. The option terminates on June 7, 2006 and is
exercisable at a price of $1.125 per share (which represents the fair
market value of the Fisher Common Stock on the date of grant); provided,
however, that if the HALIS Transaction is not
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consummated on or before December 31, 1996, the option terminates. If
exercised, such option will represent approximately 5.7% of the shares of
Common Stock of Fisher to be outstanding upon consummation of the
Transactions.
Fisher currently has an employment agreement with Larry Fisher which
will continue in effect after consummation of the Transactions. Upon
consummation of the Transactions, Mr. Fisher will relinquish his titles as
Chairman of the Board and Chief Executive Officer of Fisher, but will
continue to serve as its President and Chief Operating Officer. See
"INFORMATION REGARDING FISHER-Employment Agreement."
OPERATIONS
General. Upon consummation of the Transactions, the AUBIS
-------
Subsidiaries, HSI and ACCS will be wholly-owned subsidiaries of Fisher and
Fisher's corporate name will be changed to HALIS, Inc. (hereinafter
referred to as the "Combined Company"). Concurrently with the consummation
of the Transactions, the Combined Company will contribute substantially all
of Fisher's assets (including the MERAD license) to one of its operating
subsidiaries. As a result, all of the Combined Company's business
operations will be conducted through its operating subsidiaries.
Upon consummation of the Transactions, the Combined Company will be a
technology company that manufactures application software and delivers
systems integration services to the healthcare market. The Combined
Company's mission is to be the leading healthcare information systems
company in delivering integrated software applications and support services
to the healthcare industry.
Management of Fisher believes that the combination of these five
companies (Fisher, the AUBIS Subsidiaries, HSI and ACCS), along with the
license for the advanced database software, provide a nucleus from which
the healthcare market can be addressed. As a result, the Combined Company
will be a healthcare technology company which offers a state of the art set
of applications for the healthcare marketplace.
The Combined Company plans to initially focus on the point-of-
service system business in the healthcare industry (doctor practices, HMO's
and other managed care organizations). Management believes that, upon
consummation of the Transactions, the Combined Company will be well
positioned to produce new software products for special segments of the
healthcare market using its advanced database technology (known as the
"HALIS Healthcare Enterprise System" or "HES") and its industry knowledge
obtained from HSI personnel. HSI's product development team includes four
persons who collectively have over 75 years of programming and related
expertise, including substantial experience developing and servicing
healthcare related hardware and software. Management believes that the cost
to produce and support all of the Combined Company's products will be less
than other companies in the marketplace due to the flexibility of the
Combined Company's technology and the fact that the Combined Company has no
"legacy" systems to maintain, enhance, or otherwise invest in. Management
believes that the flexibility of the Combined Company's healthcare software
will allow the Combined Company to keep up with the user's demands for
updates to health plan changes, management contract revisions, availability
of new pharmaceutical products, and changes in insurance plans and
practices.
The Combined Company's strategy is to use its superior software
technology to produce lower cost applications software without compromising
margins, to provide full service to augment its software products, and to
build superior distribution channels through a combination of replicating
its Atlanta model to other key cities (that is, providing in other cities a
sales and support operation which can provide the HALIS software and
related technical services to customers), consolidating healthcare
information systems distribution and service companies into the Combined
Company as independent business units, and through supplying the
distribution companies with the Combined Company's superior healthcare
software products. The Combined Company will manage its operations through
a combination of corporate headquarters in Atlanta, Georgia and through
strategically located independent business units that can be managed as
profit and loss centers, and that can focus on sales and service in
different geographical areas.
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The Combined Company's strategic plan is a significant shift in
Fisher's present business direction. As a result of the Transactions, the
Combined Company anticipates positioning itself to capture a portion of the
healthcare information systems network and integration markets. There can
be no assurance, however, that the Combined Company will be successful in
this endeavor or that it will be able to achieve or sustain profitability
in the future. See "RISK FACTORS."
Until such time as the new healthcare software is accepted in the
marketplace and generates revenues sufficient to support the operations of
the Combined Company, operations will be financed from the proceeds of a
private placement of Common Stock of Fisher. Fisher has engaged
Attkisson, Carter & Akers Incorporated, a licensed broker-dealer, to offer
and sell, on a best-efforts basis, up to 5,000,000 shares of Common Stock
at a price of $1.20 per share. For each three (3) shares of Common Stock
sold in the offering, Fisher will also issue a warrant to purchase one
share of Fisher Common Stock (up to a maximum of 1,666,667 warrants),
exercisable at a price of $1.75 per share. It is a condition to the
closing of this private placement that the Common Stock Amendment be
approved by the shareholders of Fisher and that the Transactions be
consummated.
If the minimum offering of $1,200,000 is not attained, the
Combined Company may not have sufficient capital to support its operations
and successfully develop and market its new healthcare software. See "RISK
FACTORS." If the offering is successful, the net proceeds ($5,450,000, if
the maximum offering is attained) will be utilized to expand the Combined
Company's sales and marketing efforts, enhance the Combined Company's
software products, support the growth of the Combined Company's
administrative infrastructure by hiring additional administrative and
support personnel, to acquire selected healthcare software and service
companies and systems integration companies and for general corporate
purposes. Management estimates that the maximum net proceeds from the
offering will be sufficient to support the operations of the Combined
Company through the end of 1997, at which time it is anticipated that cash
flow from operations will be sufficient to support operations. See "FISHER
MANAGEMENT'S DISCUSSION AND ANALYSIS."
Immediately following the Transactions, AUBIS and HALIS will
collectively own a majority of the authorized and issued common stock of
the Combined Company. Paul W. Harrison, who will serve as Chairman of the
Board and Chief Executive Officer of the Combined Company upon consummation
of the Transactions, will beneficially owns and/or have the power to vote
(by virtue of his positions as the President and managing member of AUBIS
and HALIS) all 15,000,000 shares of Fisher Common Stock to be issued in the
AUBIS and HALIS Transactions. As a result, Mr. Harrison will be able to
elect the Combined Company's directors, determine the outcome of most
corporate actions requiring shareholder approval and otherwise to control
the business of the Combined Company.
The Articles of Incorporation of Fisher will be amended to change
the name of the Combined Company to HALIS, Inc. The name change will not
affect in any way the validity or transferability of stock certificates
presently outstanding, or the capital structure of Fisher. Fisher
shareholders will not be required to surrender for exchange any
certificates presently held by them. Fisher shareholders desiring to
exchange Fisher stock certificates for stock certificates with the new
corporate name may do so, however, by mailing their Fisher stock
certificates with an appropriate written request to Fisher's transfer
agent, at the following address: SunTrust Bank, Atlanta, 58 Edgewood
Avenue, Room 225, Atlanta, Georgia 30303.
Sales and Marketing. The healthcare industry has evolved into
-------------------
integrated healthcare delivery centers ("IHDC's") that merge the key
components of what has previously been very fragmented and costly
healthcare segments. These IHDC's (also referred to as HMO's and PHO's) are
bringing together various segments such as HMO's/PPO's and managed care
plans, hospitals, doctors and group practices, home health and long term
care, pharmacies, labs, outpatient surgery clinics, and other specialty
healthcare providers to lower costs, improve quality and to respond to the
changing needs of the consumer and the organizations that pay for
healthcare.
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The Combined Company plans to focus on the systems business in
the healthcare (doctor practices, HMO's, home health, hospitals, etc.)
industry. The Combined Company will market to healthcare management
companies (MSO's, PHO's, etc.) who will then help market and sign-up the
healthcare point-of-event organizations. For example, in the healthcare
industry, the Combined Company would provide an information management
system to the managed care organizations to help manage the networks of
medical practices involved.
The Combined Company will also be positioned to produce new
software products for special segments of the healthcare markets very
rapidly and at a much lower cost than the competition. The Combined Company
also plans to capitalize on the consumer's demand for more software updates
to keep up with health plan changes, more convenience through ease of use
and fewer actions to take, better prices and value, and better support
services.
The healthcare information systems market is fragmented except
for the hospital segment, which is dominated by three or four major players
including HBO & Company and Shared Medical Systems. The emerging managed
care market has no leader and has no dominant player. Management believes
that the Combined Company will be in an excellent position to gain a
significant share of this market because, to the knowledge of management,
no other supplier offers the flexibility and functionality of the HALIS
Healthcare Enterprise System.
Although the primary focus of the Combined Company will be the
healthcare information systems industry, it will, from time to time, take
on projects in other industry segments to keep its technical resources
productive. It is anticipated, however, that by the end of 1997, the
Combined Company will derive the majority of its business from healthcare.
Upon consummation of the Transactions, ACCS will assume a role in
the sales and marketing of the HALIS software and services. In the United
States, there are over 600,000 healthcare and related companies,
approximately 100,000 of which are candidates for the HALIS software.
Management believes that the current market for the HALIS software and
related services is approximately $5 billion annually. ACCS has already
begun to sell HALIS products (in beta form) to its existing customer base
to replace its current, less function rich software. In addition, ACCS has
begun to sell the HALIS managed care system (in beta form) to ACCS
prospects whose needs exceed the capabilities of the prior ACCS software
offerings. These sales are under a license agreement between ACCS and HSI.
The Combined Company will utilize the sales and service
capability of ASI to sell and implement services contracts in the
healthcare industry with and without the sale of the HALIS Healthcare
Enterprise System. In addition to the HALIS Healthcare Enterprise System,
the Combined Company will utilize the Fisher Restaurant Management
System(R) as part of its food/nutrition system to be offered to the
healthcare industry.
Upon consummation of the Transactions, ACCS' customers, the vast
majority of which are medical billing centers, will be given the
opportunity to choose one of the following options: (i) pay a fee of
$2,895 to receive a copy of the HALIS Healthcare Enterprise System for
their billing center, and become a HALIS reseller; (ii) pay a fee of $1,495
to receive a copy of the HALIS Healthcare Enterprise System to replace
their current software; or (iii) pay a fee of between $495 and $995 to
continue to receive telephone support for their current software.
Products. The Combined Company's primary products are derived
--------
from one integrated healthcare software program referred to as the HALIS
Healthcare Enterprise System (HES). The four products currently derived
or anticipated to be derived from HES are:
1. Managed Care (available now)
2. Practice Management (available now)
3. Hospital (available 1997)
4. Home Health (available 1997)
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<PAGE>
Management is not aware of any integrated software program available
to meet the needs of the IHDC's and the healthcare consumer, except through
antiquated, fragmented software programs that do not integrate. Each one
of the market segments (hospitals, HMO's, doctor practices, etc.) requires
a different software program, and in most cases, each segment of healthcare
requires several software programs -- a hospital requires a
registration/admissions program, a medical records program, a billing
program, etc. -- all separate and fragmental because they are not
integrated. As the IHDC's develop, they are faced with buying not only
five or more software programs to manage a hospital, but another ten or
more programs to handle the doctors' practices, managed care, and other
healthcare segments which need to be integrated into a single program.
In order to make it easier for healthcare organizations (even self-
funded employers) to transition to the Combined Company's software
products, the Combined Company will allow each organization to use the
segment(s) (e.g., group practices) it currently needs and to access through
menus and icons additional segment(s) (e.g., managed care and HMO's/PPO's)
later.
The users would not be penalized by forcing them to pay for all the
pieces and parts of ten or more programs/systems. They simply would pay
for one program license based on the number of workstations connected to
the program, and upgrade fees for added sites as their needs grow. In
addition to the flexible pricing HALIS will offer, the program maintenance
costs will be dramatically reduced as a consequence of dealing with just
one program.
The Combined Company will also allow the buyer of its healthcare
program to tailor the program to the needs of each installation beyond
what, to the knowledge of management, any other program or system can do.
For example, the Combined Company will allow any buyer to modify its
program to handle any health plan or contract that is negotiated. Virtually
all other programs are rigid and only allow certain provisions to be
changed, therefore forcing most organizations to process their health plans
and contracts manually.
The Combined Company believes that the HALIS Healthcare Enterprise
System products will be competitively priced and superior in function to
the competing products on the market today. A managed care system will
typically have a license fee of $100,000 to $250,000 per networked database
site (server), and a workstation price of $1,000 per workstation (client).
This pricing schedule allows virtually any healthcare organization to
license a copy of the HALIS software for an initial fee, and subsequently
add workstations with additional license fees to the Combined Company, as
well as an on-going annual support fee of approximately 20% of the initial
software license fee. Although users of the HALIS Healthcare Enterprise
System will receive a perpetual license, updates and support for the HALIS
Healthcare Enterprise System will be billed separately under a services
agreement with the user.
There are several characteristics which distinguish HALIS Healthcare
Enterprise System from that of its competitors. They include:
(i) Top Down Design -- HALIS has created a model of the healthcare
industry and designed the Healthcare Enterprise System to meet the changing
needs of that model. Most other systems were developed as individual
applications (billing, admissions, eligibility, etc.) and then interfaced
to form a total system.
(ii) Single Database Design -- The HALIS Healthcare Enterprise System
has been designed to utilize a consistent database design which allows all
applications to utilize the same database structure, while distributing the
actual database over several computers if necessary. Thus there is no
interfacing of myriad applications. All applications are part of a single
program, not up to 189 different programs, as in many systems.
(iii) Advanced Multi-Media Database -- The Combined Company will
utilize an advanced multi-media database which uses artificial
intelligence, has an IEEE standard 'front end' which will allow it to run
on a variety of systems, and has an ODBC complaint 'back end' which allows
it to work with most major databases such as Oracle and Sybase.
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<PAGE>
(iv) Automated Install -- The HALIS Healthcare Enterprise System has
an automated installation program which makes it possible for the user to
become operational and ready to enter data in a matter of minutes.
The Combined Company intends to achieve a revenue stream from its
support and maintenance activities which, within a period of two to three
years, is expected to be sufficient to cover the fixed costs of the
Combined Company. Typically, a healthcare organization will need one or
more of the following services: network consultation and selection; network
installation and training; post-software installation training; project
management for rollout of healthcare systems; hardware procurement; and/or
selection of client/server configurations, distributed processing.
Management believes that the Combined Company will have sufficient
product line to enter the healthcare market immediately upon consummation
of the Transactions. As discussed above, the Combined Company will augment
its product line in 1997 to include hospital, home health and
food/nutrition programs currently in development. Additional technical
resources may be needed in 1997, however, to develop and implement fully
these new programs.
HALIS software is anticipated to have a life cycle in excess of ten
years. Most systems currently being utilized in the healthcare industry
are five to ten years old. It is primarily because of the changes to the
industry itself that management believes the Combined Company's products
will enjoy a high degree of acceptance. The healthcare industry now needs,
and, to the knowledge of management, does not have from any vendor,
offerings comparable to the HALIS software.
The Combined Company will manage its operations through a combination
of corporate headquarters in Atlanta, Georgia and through strategically
located independent business units that can be managed as profit and loss
centers, and that can focus on sales and service in different geographical
areas.
TERMS OF THE TRANSACTIONS
The descriptions of the AUBIS, HALIS and ACCS Agreements set forth in
this Section do not purport to be complete and are qualified in their
entirety by reference to the AUBIS, HALIS and ACCS Agreements, which are
attached as Appendix A, B and C, respectively, to this Proxy Statement and
are incorporated by reference herein. Reference is made to the AUBIS, HALIS
and ACCS Agreements for the definition of such capitalized terms used
herein for which no definition is provided. ALL FISHER STOCKHOLDERS ARE
URGED TO READ EACH OF THE AUBIS, HALIS AND ACCS AGREEMENTS IN THEIR
ENTIRETY.
GENERAL
Although the consummation of each of the Transactions is subject to
approval of the Common Stock Amendment by the shareholders of Fisher,
shareholder approval of these transactions is not otherwise required under
Georgia law. Given the relative size of the Transactions and their impact
on the future business of Fisher, however, the Board of Directors of Fisher
is seeking ratification of the Transactions by Fisher's shareholders at the
Annual Meeting. Shareholder ratification of the AUBIS and HALIS
Transactions is a condition precedent to the obligation of the parties to
consummate each of these Transactions. If shareholder ratification of
these Transactions is not obtained, however, this condition to closing will
likely be waived by the parties. Consequently, if the Common Stock
Amendment is approved, but shareholder ratification of the Transactions is
not obtained, the parties will likely elect to consummate the Transactions
if all other conditions are met or waived.
THE AUBIS AGREEMENT
General. The AUBIS Agreement provides that, subject to the
--------
satisfaction or waiver of certain conditions (including, among other
things, approval of the Common Stock Amendment and ratification of the
Transactions by Fisher's stockholders), the AUBIS Subsidiaries will be
merged into the Fisher Subsidiaries. Upon consummation
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of the AUBIS Transaction, the separate corporate existence of the AUBIS
Subsidiaries will cease. The Fisher Subsidiaries will continue as the
surviving corporations. As a result of the AUBIS Transaction, all of the
Common Stock of the AUBIS Subsidiaries outstanding immediately prior to the
Effective Time will be canceled and retired and converted into the right to
receive 10,000,000 shares of Common Stock of Fisher.
Conduct of Fisher's Business Pending the AUBIS Transaction. In
-----------------------------------------------------------
Section 5.2 of the AUBIS Agreement, Fisher has agreed that, during the
period from the date of the AUBIS Agreement through the Effective Time (the
"Pre-Closing Period"), unless AUBIS otherwise consents in writing, Fisher,
among other things: (i) shall conduct its business and operations in the
ordinary course and in substantially the same manner as such business and
operations have been previously conducted; (ii) shall use reasonable
efforts to preserve intact its current business organization, keep
available the services of its current officers and employees and maintain
its relations and goodwill with all suppliers, customers, landlords,
creditors, employees and other Persons having a business relationship with
Fisher; (iii) shall keep in full force all its insurance policies; (iv)
shall cause its officers to report regularly to AUBIS concerning the status
of its business; (v) shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase, redeem or otherwise reacquire any shares
of capital stock or other securities; (vi) shall not, except as otherwise
permitted or contemplated in the AUBIS Agreement, sell, issue or authorize
the issuance of (a) any capital stock or other security, (b) any option,
call, warrant or right to acquire, or relating to, any capital stock or
other security, or (c) any instrument convertible into or exchangeable for
any capital stock or other security; provided, however, that Fisher may
arrange for the private placement of up to 5,000,000 shares of Common Stock
of Fisher and 1,666,667 Common Stock Purchase Warrants of Fisher and up to
$1.5 million in debt that is convertible into Common Stock of Fisher (on
the basis of $1 in debt being convertible to one share of Common Stock of
Fisher) so long as AUBIS is afforded the opportunity to participate in any
such private placement if it so elects and so long as no more than
1,500,000 shares of Fisher Common Stock are issued upon any such conversion
(unless AUBIS shall consent otherwise); (vii) except as permitted or
contemplated in the AUBIS Agreement, shall not amend or permit the adoption
of any amendment to Fisher's articles of incorporation or bylaws, become a
party to any recapitalization, reclassification of shares, stock split,
reverse stock split or similar transaction or become a party to any
Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction; (viii) shall not
form any subsidiary or acquire any equity interest or other interest in any
other Entity other than the Fisher Subsidiaries; (ix) shall not make any
capital expenditure, except for capital expenditures that, when added to
all other capital expenditures made on behalf of Fisher during the Pre-
Closing Period, do not exceed $30,000 in the aggregate; (x) shall not (a)
enter into or become bound by, or permit any of the assets owned or used by
it to become bound by, any Material Contract, or (b) amend or prematurely
terminate, or waive any material right or remedy under, any Material
Contract; (xi) shall not, other than in the ordinary course of business
consistent with past practice, (a) acquire, lease or license any right or
other asset from any other Person, (b) sell or otherwise dispose of, or
lease or license, any right or other asset to any other Person or (c) waive
or relinquish any right, except for immaterial assets acquired, leased,
licensed or disposed of by Fisher pursuant to Contracts that are not
Material Contracts; (xii) shall not (a) lend money to any Person, or (b)
incur or guarantee any indebtedness, except that Fisher may make routine
borrowings in the ordinary course of business, under its existing lines of
credit; (xiii) shall not (a) establish, adopt or amend any Employee Benefit
Plan, (b) pay any bonus or make any profit-sharing or similar payment to,
or increase the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors,
officers or employees, or (c) hire any new employee whose aggregate annual
compensation is expected to exceed $35,000; (xiv) shall not change any of
its methods of accounting or accounting practices in any respect; (xv)
shall not make any Tax election; (xvi) shall not commence or settle any
Legal Proceeding; (xvii) shall not enter into any material transaction or
take any other material action outside the ordinary course of business or
inconsistent with its past practices; (xviii) shall not agree or commit to
take any of the actions described in the above clauses "(v)" through
"(xvii)"; and (xix) shall cause its officers, directors, employees, agents,
attorneys, accountants, advisers and representatives (collectively referred
to as "Representatives") to: (a) provide AUBIS and AUBIS' Representatives
with reasonable access to Fisher's Representatives, personnel and assets
and to all existing books, records, Tax Returns, work papers and other
documents and information relating to Fisher or the Fisher Subsidiaries;
and (b) provide AUBIS and AUBIS' Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to Fisher or the
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Fisher Subsidiaries, and with such additional financial, operating and
other data and information regarding Fisher or the Fisher Subsidiaries, as
AUBIS may reasonably request.
No Solicitation of Alternative Transactions. Pursuant to Section
--------------------------------------------
5.4 of the AUBIS Agreement, Fisher has agreed that, during the Pre-Closing
Period, it will not, directly or indirectly, (a) solicit or encourage the
initiation of any inquiry, proposal or offer from any Person (other than
AUBIS) relating to a possible Acquisition Transaction; (b) participate in
any discussions or negotiations or enter into any agreement with, or
provide any non-public information to, any Person (other than AUBIS)
relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any Person
(other than AUBIS) relating to a possible Acquisition Transaction;
provided, however, that Fisher may take any of the actions referred to in
(a) through (c) above to the extent Fisher's Board of Directors in good
faith determines that such action is required in order to discharge the
Board of Directors' fiduciary obligations under the Georgia Code, and, if
Fisher's Board of Directors determines in good faith in the exercise its
fiduciary duty that any such possible Acquisition Transaction would be of
greater benefit to Fisher's shareholders than the AUBIS Transaction, Fisher
may terminate this AUBIS Agreement in accordance with the terms of the
AUBIS Agreement. In the event of such a termination, Fisher has agreed to
reimburse the AUBIS Subsidiaries for their Merger Fees. In addition, if
the Acquisition Transaction accepted by Fisher's Board of Directors in lieu
of the AUBIS Transaction is consummated, and the value of consideration
received by Fisher's shareholders as a result of such Acquisition
Transaction exceeds $3,000,000, at the closing of such Acquisition
Transaction, Fisher shall pay the AUBIS Subsidiaries 25% of the amount by
which such consideration exceeds $3,000,000. Fisher shall have the option
of making such payment in cash or in the same form of consideration paid to
Fisher shareholders as a result of such Acquisition Transaction. Fisher
shall promptly notify AUBIS in writing of any inquiry, proposal or offer
relating to a possible Acquisition Transaction that is received by Fisher
during the Pre-Closing Period.
Conduct of AUBIS' Business Pending the AUBIS Transaction. In
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Section 4.2 of the AUBIS Agreement, AUBIS agrees that, during the Pre-
Closing Period, unless Fisher otherwise consents in writing, the AUBIS
Subsidiaries, among other things: (i) shall conduct their businesses and
operations in the ordinary course and in substantially the same manner as
such business and operations were conducted prior to the date of the AUBIS
Agreement; (ii) shall use reasonable efforts to preserve intact their
current business organizations, keep available the services of their
current officers and employees and maintain their relations and goodwill
with all suppliers, customers, landlords, creditors, employees and other
Persons having business relationships with the AUBIS Subsidiaries; (iii)
shall keep in full force all insurance policies identified in the AUBIS
Agreement; (iv) shall cause their officers to report regularly to Fisher
concerning the status of the AUBIS Subsidiaries' businesses; (v) shall not
declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, and shall not
repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities; (vi) shall not sell, issue or authorize the issuance of
(a) any capital stock or other security, (b) any option, call, warrant or
right to acquire, or relating to, any capital stock or other security, or
(c) any instrument convertible into or exchangeable for any capital stock
or other security; (vii) neither the AUBIS Subsidiaries, AUBIS nor any of
the Designated Persons shall amend or permit the adoption of any amendment
to the AUBIS Subsidiary's articles of incorporation or bylaws, or effect
or permit either of the AUBIS Subsidiaries to become a party to any
Acquisition Transaction, recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction; (viii) shall not
form any subsidiary or acquire any equity interest or other interest in any
other Entity; (ix) shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures
made on behalf of the AUBIS Subsidiaries during the Pre-Closing Period, do
not exceed $30,000 in the aggregate; (x) shall not (a) enter into or become
bound by, or permit any of the assets owned or used by them to become bound
by, any Material Contract, or (b) amend or prematurely terminate, or waive
any material right or remedy under, any Material Contract; (xi) shall not,
other than in the ordinary course of business consistent with past practice
(a) acquire, lease or license any right or other asset from any other
Person, (b) sell or otherwise dispose of, or lease or license, any right or
other asset to any other Person, or (c) waive or relinquish any right,
except for immaterial assets acquired, leased, licensed or disposed of by
the AUBIS Subsidiaries pursuant to Contracts that are not Material
Contracts; (xii) shall not (a) lend money to any Person, or (b) incur or
guarantee any indebtedness, except that the AUBIS Subsidiaries may make
routine borrowings in the ordinary course of business under their
respective
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existing lines of credit; (xiii) shall not (a) establish, adopt or amend
any Employee Benefit Plan (other than the employee retention program and
severance program referred to in Section 6.9 of the AUBIS Agreement), (b)
pay any bonus or make any profit-sharing or similar payment to, or increase
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (c) hire any new employee whose aggregate annual compensation
is expected to exceed $35,000; (xiv) shall not change any of their methods
of accounting or accounting practices in any respect, including without
limitation any change with respect to writing off of accounts receivable;
(xv) shall not make any Tax election; (xvi) shall not commence or settle
any Legal Proceeding; (xvii) shall not enter into any material transaction
or take any other material action outside the ordinary course of business
or inconsistent with its past practices; (xviii) shall not agree or commit
to take any of the actions described in clauses "(v)" through "(xvii)"; and
(xix) AUBIS and the AUBIS Subsidiaries shall, and shall cause their
Representatives to (a) provide Fisher and Fisher's Representatives with
reasonable access to the AUBIS Subsidiaries' Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to the Subsidiaries; and (b)
provide Fisher and Fisher's Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to the AUBIS Subsidiaries, and with such additional
financial, operating and
other data and information regarding the AUBIS Subsidiaries, as Fisher may
reasonably request.
No Solicitation of Alternative Transactions. Pursuant to Section
--------------------------------------------
4.4 of the AUBIS Agreement, AUBIS agreed that during the Pre-Closing
Period, neither it, the AUBIS Subsidiaries, nor any of the Designated
Persons shall, directly or indirectly: (a) solicit or encourage the
initiation of any inquiry, proposal or offer from any Person (other than
Fisher) relating to a possible Acquisition Transaction; (b) participate in
any discussions or negotiations or enter into any agreement with, or
provide any non-public information to, any Person (other than Fisher)
relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain, or accept any proposal or offer from any Person
(other than Fisher) relating to a possible Acquisition Transaction. AUBIS
or the AUBIS Subsidiaries shall promptly notify Fisher in writing of any
inquiry, proposal or offer relating to a possible Acquisition Transaction
that is received by AUBIS or the Subsidiaries or any of the Designated
Persons during the Pre-Closing Period.
Conditions to the AUBIS Transaction; Waiver of Conditions. Under
----------------------------------------------------------
Section 7 of the AUBIS Agreement, the obligation of Fisher to consummate
the AUBIS Transaction is subject to the satisfaction, at or prior to the
Closing, of the following additional conditions: (i) each of the
representations and warranties made by the AUBIS Subsidiaries, AUBIS and
the Designated Persons in the AUBIS Agreement and in each of the other
agreements and instruments delivered to Fisher in connection with the
transactions contemplated by the AUBIS Agreement shall have been accurate
in all material respects as of the date of the AUBIS Agreement, and shall
be accurate in all material respects as of the Closing as if made at the
Closing; (ii) each covenant or obligation that the AUBIS Subsidiaries,
AUBIS or any of the Designated Persons is required to comply with or to
perform at or prior to the Closing shall have been complied with and
performed in all respects; (iii) all Consents required to be obtained in
connection with the AUBIS Transaction and the other transactions
contemplated by the AUBIS Agreement shall have been obtained and shall be
in full force and effect; (iv) Fisher shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Employment Agreements executed by Larry Fisher and Paul Harrison in a
form mutually acceptable to Fisher and the respective individuals entering
into such agreements; (b) a certificate referred to in Section 6.8 of the
AUBIS Agreement, executed by the AUBIS Subsidiaries, stating that neither
of the AUBIS Subsidiaries has been a United States real property holding
corporation within the meaning of Code Section 897(c)(2); (c) estoppel
certificates from the landlords of the premises currently leased by the
AUBIS Subsidiaries, each dated as of a date not more than five (5) days
prior to the Closing Date and satisfactory in form and content to Fisher,
executed by such Persons as Fisher may reasonably specify; (d) a legal
opinion of Kilpatrick & Cody, dated as of the Closing Date, in form and
substance reasonably satisfactory to Fisher; and (e) a certificate executed
by the AUBIS Subsidiaries, AUBIS and the Designated Persons and containing
the representation and warranty of the AUBIS Subsidiaries, AUBIS and each
Designated Person that each of the representations and warranties set forth
in the AUBIS Agreement is accurate in all material respects as of the
Closing Date as if made on the Closing Date and that the conditions set
forth in clauses (i), (ii), (iii), (iv), (v) and (xii) of this paragraph
have been duly satisfied; (v) there shall have been no material adverse
change in each of the AUBIS Subsidiaries' respective businesses,
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condition, assets, liabilities, operations, financial performance or
prospects since the date of the AUBIS Agreement; (vi) the AUBIS
Subsidiaries shall have provided Fisher with evidence, satisfactory to
Fisher, as to the termination of the Employee Plans referred to in Section
6.7 of the AUBIS Agreement; (vii) the AUBIS Subsidiaries shall have
provided Fisher with the statement described in Section 6.8 of the AUBIS
Agreement; (viii) all applicable requirements of Rule 506 under the
Securities Act shall have been satisfied; (ix) no temporary restraining
order, preliminary or permanent injunction or other order preventing the
consummation of the AUBIS Transaction shall have been issued by any court
of competent jurisdiction and remain in effect, and there shall not be any
Legal Requirement enacted or deemed applicable to the AUBIS Transaction
that makes consummation of the AUBIS Transaction illegal; (x) no Person
shall have commenced or threatened to commence any Legal Proceeding
challenging or seeking the recovery of a material amount of damages in
connection with the AUBIS Transaction; (xi) the Shareholders of Fisher
shall have approved the amendment to Fisher's Articles of Incorporation
increasing the authorized common stock to 100,000,000 shares, ratified the
HALIS Agreement and ratified the AUBIS Agreement and the transactions
contemplated by the AUBIS Agreement; (xii) all debt obligations of the
Companies to any Related Parties specified in the AUBIS Agreement shall
have been paid or canceled; (xiii) Fisher shall have received a written
acknowledgment from each of the Designated Persons receiving Common Stock
of Fisher in connection with the AUBIS Transaction that such Designated
Person intends to accept such Common Stock for investment purposes, such
acknowledgment to be in a form reasonably acceptable to Fisher; and (xiv)
all conditions to the closing of the HALIS Transaction shall have been
satisfied or waived prior to Closing.
Under Section 8 of the AUBIS Agreement, the obligation of AUBIS, AUBIS
Subsidiaries, and the Designated Persons to consummate the AUBIS
Transaction is subject to the satisfaction, at or prior to the Closing, of
the following additional conditions: (i) each of the representations and
warranties made by Fisher in the AUBIS Agreement and in each of the other
agreements and instruments delivered to AUBIS in connection with the
transactions contemplated by the AUBIS Agreement shall have been accurate
in all material respects as of the date of the AUBIS Agreement, and shall
be accurate in all material respects as of the Closing as if made at the
Closing; (ii) all of the covenants and obligations that Fisher is required
to comply with or to perform at or prior to the Closing shall have been
complied with and performed in all respects; (iii) all Consents required to
be obtained in connection with the AUBIS Transaction and the other
transactions contemplated by the AUBIS Agreement shall have been obtained
and shall be in full force and effect; (iv) (a) Fisher shall have entered
into the Employment Agreements executed by Larry Fisher and Paul Harrison;
(b) the employment agreements with Larry Fisher and Gordon Random shall
have been terminated as contemplated in Section 6.6 of the AUBIS Agreement;
(c) AUBIS shall have received a legal opinion of Smith, Gambrell & Russell
in form and substance reasonably satisfactory to AUBIS; (d) AUBIS shall
have received a certificate executed by Fisher, and containing the
representation and warranty of Fisher that each of the representations and
warranties set forth in Section 3 of the AUBIS Agreement is accurate in all
material respects as of the Closing Date as if made on the Closing Date and
that the conditions set forth in clauses (i), (ii), (iii), (iv) and (v) of
this paragraph have been duly satisfied; (v) the shareholders of Fisher
shall have approved the amendment to Fisher's Articles of Incorporation
increasing the authorized common stock to 100,000,000 shares, ratified the
HALIS Agreement and ratified the AUBIS Agreement and the transactions
contemplated hereby; (vi) there shall have been no material adverse change
in Fisher's business, condition, assets, liabilities, operations, financial
performance or prospects since the date of the AUBIS Agreement; (vii) no
temporary restraining order, preliminary or permanent injunction or other
order preventing the consummation of the AUBIS Transaction by the AUBIS
Subsidiaries shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Legal Requirement enacted
or deemed applicable to the AUBIS Transaction that makes consummation of
the AUBIS Transaction by the AUBIS Subsidiaries illegal; (viii) no Person
shall have commenced or threatened to commence any Legal Proceeding
challenging or seeking the recovery of a material amount of damages in
connection with the AUBIS Transaction or seeking to prohibit or limit the
exercise by AUBIS of any material right pertaining to its ownership of
stock of the surviving corporation; (ix) all debt obligations of Fisher to
any Fisher Related Parties shall have been paid or canceled; (x) evidence,
in form reasonably satisfactory to AUBIS, is provided that Fisher and the
Fisher Subsidiaries, as of December 31, 1995, and without contemplation of
the AUBIS Transaction, had working capital on a consolidated basis of no
less than $200,000; (xi) all conditions to the closing of the HALIS
Transaction shall have been satisfied or waived prior to Closing; and (xii)
Fisher shall have obtained a consent and waiver from CompuCom whereby
CompuCom consents to Fisher marketing its
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products and services to the hospitality and healthcare industries and
marketing its network integration products and services to a variety of
industries in all geographic areas.
Representations and Warranties Contained in the AUBIS Agreement.
----------------------------------------------------------------
The AUBIS Agreement contains various representations and warranties of the
parties thereto. Section 2 of the AUBIS Agreement includes representations
and warranties by AUBIS, the AUBIS Subsidiaries and the Designated Persons
as to: (i) corporate organization, good standing and absence of undisclosed
subsidiaries; (ii) authorization, execution, delivery and binding effect of
the AUBIS Agreement; (iii) the AUBIS Subsidiaries' capitalization; (iv)
delivery of accurate and complete copies of the AUBIS Subsidiaries'
articles of incorporation, bylaws and other corporate records; (v) the
delivery and accuracy of the AUBIS Subsidiaries' financial statements; (vi)
the absence (except as specified) of certain material adverse changes since
December 31, 1995; (vii) the good, valid and marketable title to all assets
of the AUBIS Subsidiaries disclosed in the AUBIS Agreement; (viii) the
accuracy of information provided with respect to the AUBIS Subsidiaries'
bank accounts, accounts receivables, and revenues received from each of its
customers for the year ended December 31, 1995; (ix) payment of all
applicable Taxes, filing of all Tax Returns and the absence (except as
specified) of any claim or legal proceeding with respect to the AUBIS
Subsidiaries of any Tax; (x) the liabilities, accounts payable and all
other obligations of the AUBIS Subsidiaries; (xi) the delivery of accurate
copies of all disclosed Material Contracts to Fisher and the enforceability
(except as specified) of all Material Contracts; (xii) the accuracy of
information provided with respect to all material items of equipment,
fixtures, leasehold improvements and other tangible assets owned by or
leased by the AUBIS Subsidiaries; (xiii) the accuracy of information
provided with respect to any Proprietary Asset owned by or licensed to the
AUBIS Subsidiaries or otherwise used by the AUBIS Subsidiaries, the valid
and marketable title (except as specified) of such Proprietary Assets, the
measures taken to protect the Proprietary Assets, the AUBIS Subsidiaries'
right to use, modify, copy, distribute, sell, license or otherwise exploit
such Proprietary Assets, and the absence of infringement or conflict with
any Proprietary Asset owned or used by any other Person; (xiv) the
compliance with all applicable Legal Requirements; (xv) the compliance with
all Governmental Authorizations disclosed in the AUBIS Agreement and
necessary to enable the AUBIS Subsidiaries to conduct their business; (xvi)
employee and labor matters of the AUBIS Subsidiaries, the benefit plans
sponsored, maintained, contributed to or required to be contributed to by
the AUBIS Subsidiaries for the benefit of any current or former employee of
the AUBIS Subsidiaries and the AUBIS Subsidiaries' compliance with
applicable Legal Requirements and Contracts relating to employment,
employment practices, employee compensation, wages, business and terms and
conditions of employment; (xvii) the compliance, in all material respects,
with all Environmental Laws; (xviii) the absence of the AUBIS Subsidiaries'
exposure to any material liability arising from the sale of products or the
performance of services; (xix) the effectiveness of insurance policies;
(xx) the absence (except as specified) of Related Party transactions; (xxi)
the absence (except as specified) of any Legal Proceeding that involve the
AUBIS Subsidiaries' assets or that challenges or may have an effect on the
AUBIS Transaction or any other transaction contemplated by the AUBIS
Agreement and the absence of any order, writ, injunction, judgement or
decree that relates to the AUBIS Subsidiaries' business or to any assets
owned or used by the AUBIS Subsidiaries; (xxii) the absence (except as
specified) of any right of any Governmental Body or other Person to
challenge the AUBIS Agreement, the AUBIS Agreement's non-contravention of
any charter or by-law provisions, of any Governmental Authorization held by
the AUBIS Subsidiaries or of any Material Contract and the absence of the
need (except as specified) to make any filings or give any notices to or
obtain any Consents; and (xxiii) the absence of any false representation,
warranty or information and the full disclosure of all material facts.
Section 3 of the AUBIS Agreement includes representations and
warranties by Fisher as to: (i) the accuracy of Fisher's financial
statements and its filings with the Commission; (ii) authorization,
execution, delivery and binding effect of the AUBIS Agreement; (iii) the
validity of the Fisher Common Stock to be issued in the AUBIS Transaction;
and (iv) the organization and good standing of the Fisher Subsidiaries and
the authorization of the Mergers by the Fisher Subsidiaries, their
respective boards of directors and Fisher as the sole shareholder.
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<PAGE>
Amendment or Termination of the AUBIS Agreement. Section 12.14 of
------------------------------------------------
the AUBIS Agreement provides that the AUBIS Agreement may be amended,
altered or supplemented by means of a written instrument duly executed and
delivered on behalf of all the parties to the AUBIS Agreement.
Under Section 9 of the AUBIS Agreement, the AUBIS Agreement may be
terminated and the AUBIS Transaction contemplated thereby may be abandoned
at any time prior to the Closing: (i) by Fisher if Fisher reasonably
determines that the timely satisfaction of any condition set forth in
Section 7 of the AUBIS Agreement has become impossible (other than as a
result of any failure on the part of Fisher to comply with or perform any
covenant or obligation of Fisher set forth in the AUBIS Agreement); (ii) by
AUBIS if AUBIS reasonably determines that the timely satisfaction of any
condition set forth in Section 8 of the AUBIS Agreement has become
impossible (other than as a result of any failure on the part of AUBIS, the
AUBIS Subsidiaries or any of the Designated Persons to comply with or
perform any covenant or obligation set forth in the AUBIS Agreement or in
any other agreement or instrument delivered to Fisher); (iii) by Fisher at
or after the Scheduled Closing Time if any condition precedent set forth in
Section 7 of the AUBIS Agreement has not been satisfied by the Scheduled
Closing Time; (iv) by AUBIS at or after the Scheduled Closing Time if any
condition precedent set forth in Section 8 of the AUBIS Agreement has not
been satisfied by the Scheduled Closing Time; (v) by Fisher if the Closing
has not taken place on or before November 30, 1996 (other than as a result
of any failure on the part of Fisher to comply with or perform any covenant
or obligation of Fisher set forth in the AUBIS Agreement); (vi) by AUBIS if
the Closing has not taken place on or before November 30, 1996 (other than
as a result of the failure on the part of AUBIS, the AUBIS Subsidiaries or
any of the Designated Persons to comply with or perform any covenant or
obligation set forth in the AUBIS Agreement or in any other agreement or
instrument delivered to Fisher); (vii) by Fisher under the circumstances
described in Section 4.3(b) of the AUBIS Agreement that requires any
changes to be made to the Disclosure Schedule; (vii) by AUBIS under the
circumstances described in Section 4.5 of the AUBIS Agreement where AUBIS'
due diligence investigation reveals any fact that AUBIS determines in its
sole discretion will affect the business, assets or operations of Fisher in
a material adverse manner; (ix) by Fisher under the circumstances described
in Section 5.4 of the AUBIS Agreement where Fisher's Board of Directors
determines in good faith that an alternative Acquisition Transaction would
be a greater benefit to Fisher's Shareholders than the AUBIS Transaction;
(x) by Fisher under the circumstances described in Section 5.5 of the AUBIS
Agreement where following its due diligence investigation, Fisher
reasonably and in good faith believes (a) that the AUBIS Subsidiaries
intentionally withheld or concealed material information requested by
Fisher in connection with such due diligence investigation; (b) that the
representations and warranties contained in Section 2 of the AUBIS
Agreement are inaccurate in any material respect; or (c) that there has
been a material adverse change in the Subsidiaries' business, assets,
liabilities, operations, financial performance or prospects since December
31, 1995; or (xi) by the mutual consent of Fisher and AUBIS.
In the event of termination of the AUBIS Agreement, all further
obligations of the parties under the AUBIS Agreement shall terminate;
provided, however, that: (a) no party shall be relieved of any obligation
or liability arising from any prior breach by such party of any provision
of the AUBIS Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Sections 12 of
the AUBIS Agreement, as well as paragraph 7 of the Letter of Intent. If
Fisher terminates the AUBIS Agreement pursuant to clause (x) above, it will
be liable to the AUBIS Subsidiaries for the reimbursements and payments
described in Section 5.4 of the AUBIS Agreement, in lieu of any other
payments, claims or damages to AUBIS, the AUBIS Subsidiaries or the
Designated Persons on account of such termination.
THE HALIS AGREEMENT
General. The HALIS Agreement provides that, subject to the
-------
satisfaction or waiver of certain conditions (including, among other
things, approval of the Common Stock Amendment and ratification of the
Transactions by Fisher's shareholders), Fisher will acquire all the issued
and outstanding shares of common stock of HSI. As a result, HSI will
become a wholly-owned subsidiary of Fisher and HALIS will receive 5,000,000
shares of Common Stock of Fisher.
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Conduct of HALIS' Business Pending the HALIS Transaction. In
---------------------------------------------------------
Section 4.1 of the HALIS Agreement, HALIS agrees that, during the pre-
closing period, unless Fisher otherwise consents in writing, HSI, among
other things shall: (i) conduct its business in the ordinary course and in
substantially the same manner as such business was conducted prior to the
date of the HALIS Agreement; (ii) use reasonable efforts to preserve its
current business organizations intact, retain the services of its current
officers, key employees, purchasing and sales personnel and representatives
and maintain favorable relations with its employees, suppliers, customers,
and others having business relationships with HSI; (iii) use its reasonable
best efforts to comply with all laws, ordinances and regulations applicable
to it in the conduct of its business; (iv) not enter into, amend in any
material respect or terminate any lease, contract or agreement; (v) conduct
its business in such a manner that the representations and warranties made
by HALIS in the HALIS Agreement shall continue to be true and correct on
and as of the Closing Date as if made on and as of the Closing Date; and
(vi) cause HSI to furnish Fisher and Fisher's employees and representatives
with all information and copies of documents concerning the affairs of HSI
as may be reasonably requested. In addition, neither HALIS nor the
Principals shall take any action to directly or indirectly encourage,
initiate or engage in discussions or negotiations with, or provide any
information to, any corporation, partnership, person, or other entity or
group, other than Fisher, concerning the merger of HSI with any other
entity, the purchase and sale of the assets and properties of HSI, the
purchase and sale of the Stock, or any transactions similar to the
foregoing involving either HALIS or HSI.
Conditions to the HALIS Transaction; Waiver of Conditions. Under
----------------------------------------------------------
Article V of the HALIS Agreement, the obligation of Fisher to consummate
the HALIS Transaction is subject to the satisfaction, at or prior to the
Closing Date, of the following additional conditions: (i) each of the
representations and warranties made by HALIS and the Principals in the
HALIS Agreement shall have been accurate in all material respects as of the
Closing Date; (ii) each covenant or agreement that HALIS or any of the
Principals is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all material
respects; (iii) all consents, permits, waivers and approvals from third
parties and all permits and approvals from any governmental or regulatory
body required to be obtained in connection with the HALIS Transaction
shall have been obtained; (iv) Fisher shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) estoppel certificates from parties to any or all of the leases,
purchase options and options to sell as Fisher may reasonably request; (b)
a legal opinion of Kilpatrick & Cody, dated as of the Closing Date, in form
and substance reasonably satisfactory to Fisher; (c) a certificate executed
by HALIS containing the representation and warranty of HALIS and the
Principals that each of the representations and warranties set forth in the
HALIS Agreement is accurate in all material respects as of the Closing Date
as if made on the Closing Date; (d) a certificate executed by HALIS
certifying that the total combined revenues of HSI and ProHealth Solutions,
Inc. for the period January 1, 1995 through December 31, 1995, shall have
been at least $300,000 as determined by Habif, Arogeti & Wynne, P.C.; (e) a
certificate executed by HALIS certifying that there has been no material
adverse change in HSI's assets or liabilities, business or condition, or
employees or customers regardless of reason; (f) HSI's minute books, stock
certificate books, corporate seals, books of account and all books, papers,
records, correspondence and instruments of, or relating to, HSI and its
business; and (g) all certified resolutions, certificates, documents or
instruments with resect to HSI's corporate existence and authority as
Fisher may request; (v) no action, suit or proceeding shall have been
instituted before any court or governmental or regulatory body, or
instituted or threatened by any governmental or regulatory body, to
restrain, modify or prevent the carrying out of the transactions
contemplated by the HALIS Agreement or to seek damages or discovery order
in connection with such transactions, or that has or could reasonably be
expected to have, in the opinion of Fisher, a materially adverse effect on
the assets, properties, business, operations or financial condition of HSI;
(vi) at or prior to Closing, HALIS and the Principals shall, and shall
cause each Affiliate of HALIS and the Principals to, pay to HSI any amounts
owed by such person to HSI and any amounts owed by HALIS or the Principals
or any such Affiliate to any other person if such indebtedness is
guaranteed by, or secured by any of the assets or properties of, HSI; (vii)
any and all indebtedness (except as specified) of HSI to HALIS or the
Principals, and any Affiliate of HALIS or the Principals and any director,
officer or employee of any of the foregoing shall be repaid or contributed
to the capital of HSI as of the Closing Date; (viii) HALIS shall have paid,
or caused to be paid, all stock transfer and other taxes required to be
paid in connection with the sale and delivery to Fisher of the Stock, and
shall have caused all appropriate stock transfer tax stamps to be affixed
to the certificates representing the Stock; (ix) HALIS and each of the
Principals shall have executed and
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delivered to HSI a Non-Competition Agreement; (x) HALIS shall have executed
and delivered to HSI a Subscription Agreement; (xi) Fisher's shareholders
shall have (a) approved an amendment to the Fisher Articles of
Incorporation authorizing a sufficient number of additional shares of
Fisher's Common Stock to enable Fisher to pay the Purchase Price, (b)
ratified the HALIS Transaction; and (c) ratified the AUBIS Agreement and
the transactions contemplated therein; and (xiii) all of the conditions to
the Closing required pursuant to the AUBIS Agreement shall have been
satisfied or waived prior to Closing.
Under Article VI of the HALIS Agreement, the obligation of HALIS and
the Principals to consummate the HALIS Transaction is subject to the
satisfaction, at or prior to the Closing Date, of the following additional
conditions: (i) each of the representations and warranties made by Fisher
in the HALIS Agreement shall have been accurate in all material respects as
of the Closing Date; (ii) all of the covenants and agreements that Fisher
is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all material respects; (iii) all
permits and approvals to be obtained from any governmental or regulatory
body required for the lawful consummation of the Closing shall have been
obtained; (iv) (a) HALIS shall have received a legal opinion of Smith,
Gambrell & Russell; (b) HALIS shall have received a certificate executed by
an executive officer of Fisher certifying that each of the representations
and warranties set forth in the HALIS Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date; (c) HALIS
shall have received certified resolutions, certificates, documents or
instruments with respect to Fisher's corporate existence and authority as
HALIS' counsel may reasonably request; and (d) HALIS shall have received a
copy of the resolutions duly adopted by the board of directors of Fisher,
authorizing and approving the execution and delivery by Fisher of the HALIS
Agreement, and the consummation by Fisher of the transactions contemplated
hereby; (v) the shareholders of Fisher shall have ratified the HALIS
Agreement; (vi) the Fisher shareholders shall have approved an amendment to
the Fisher Articles of Incorporation authorizing a sufficient number of
additional shares of Fisher's Common Stock to enable Fisher to pay the
Purchase Price; (vii) the Fisher shareholders shall have ratified the AUBIS
Agreement; (viii) all of the conditions to the Closing required pursuant to
the AUBIS Agreement shall have been satisfied or waived prior to Closing;
and (ix) no action, suit or proceeding shall have been instituted before
any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated by the HALIS Agreement, or to
seek damages or a discovery order in connection with such transaction, or
that has or could reasonably be expected to have, in the opinion of HALIS,
a materially adverse effect on the assets, properties, business, operations
or financial condition of Fisher.
Representations and Warranties Contained in the HALIS Agreement.
----------------------------------------------------------------
The HALIS Agreement contains various representations and warranties of the
parties thereto. Article II of the HALIS Agreement includes
representations and warranties by HALIS and the Principals as to: (i)
corporate organization, good standing, the power and authority to carry on
its business as now being conducted, the qualification or authorization to
transact business in all jurisdictions as is required by law and the
absence of undisclosed subsidiaries; (ii) authorization, execution,
delivery and binding effect of the HALIS Agreement; (iii) HSI's
capitalization; (iv) the absence of any outstanding right, subscription,
warrant, conversion right, call, unsatisfied pre-emptive right, commitment,
option or shareholders' agreement, voting trust or similar agreement which
may affect HALIS' rights and obligations with respect to the Stock; (v) the
accuracy of HSI's articles of incorporation, bylaws and other corporate
records; (vi) the delivery and accuracy of HSI's financial statements;
(vii) the absence (except as specified) of certain material adverse
changes; (viii) the good, valid and marketable title to the Stock; (ix)
payment of all applicable taxes, filing of all Tax Returns and the absence
(except as specified) of any examination or investigation with respect to
HSI of any Tax; (x) the absence (except as specified) of undisclosed
liabilities; (xi) the delivery of accurate copies of all contracts and
agreements to Fisher and the enforceability (except as specified) of all
contracts and agreements to which HSI is a party or by or to which it or
its assets or properties are bound or subject or are necessary for HSI to
conduct its business; (xii) the accuracy of information provided with
respect to all HSI's Fixed Assets; (xiii) the good, valid and marketable
title (except as specified) to all of its material properties and assets
(tangible and intangible); (xiv) the accuracy of information provided with
respect to any Intellectual Property owned or licensed by HSI or otherwise
used by HSI, HSI's right to use such Intellectual Property, and the absence
(except as specified) of infringement with respect to Intellectual
Property; (xv) the accuracy of the corporate minute books,
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stock certificate books, stock registers and other corporate records of
HSI; (xvi) the compliance with any applicable order, judgment, injunction,
award or decree of any court or governmental or regulatory body or agency,
or arbitration tribunal and (except as specified) the compliance with any
federal, state, local or foreign law, ordinance, rule, or regulation
applicable to the business of HSI; (xvii) employee and labor matters of
HSI, the benefit Plans sponsored, maintained, contributed to or required to
be contributed to by HSI for the benefit of any current or former employees
of HSI and HSI's compliance with applicable law relating to employment and
employment practices, terms and conditions of employment and wages and
hours; (xviii) the compliance, in all material respects, with all
Environmental Laws and (except as specified) the absence of having ever
generated, transported, used, stored, treated, disposed of, or managed any
Hazardous Waste, or having spilled, released or disposed of any Hazardous
Material; (xix) the effectiveness and enforceability of insurance policies;
(xx) the absence (except as specified) of transactions with Affiliates of
HSI, HALIS or the Principals; (xxi) the absence (except as specified) of
any litigation that involves HSI's assets or that challenges or may
adversely affect the right or ability of HSI to carry on its business as
now conducted, or which could adversely affect the condition of HSI and the
absence of any order, writ, injunction, judgement or decree that could
adversely affect HSI's business practices, operations or its ability to
acquire any property or conduct business in any area; (xxii) the absence
(except as specified) of certain recent developments which may affect HSI's
business or operation; (xxiii) the Software which has been designed for use
by HSI or as to which HSI claims any proprietary rights, HSI's exclusive
ownership, possession and control over such Software and the measures taken
to protect such Software; (xxiv) the enforceability of all real property
leases binding HSI or to which HSI is a party, HSI's performance of its
obligations under such leases and the absence of any real property that is
owned by HSI; (xxv) the accuracy of all accounts and notes receivable
reflected on the Financial Statements; (xxvi) the accuracy of information
provided with respect to HSI's suppliers and customers; (xxvii) the name
and total compensation of each of HSI's officers and directors and each
employee, consultant, agent or other representative of HSI whose annual
compensation exceeds $25,000; (xxviii) the absence of certain restrictive
documents which may adversely affect the business of HSI, or would prevent
the consummation of the HALIS Transaction or the continued operation of HSI
or which would restrict the ability of HSI to acquire any property or
conduct business in any area; (xxix) the possession of all necessary
Permits required for HSI to carry on its business; (xxx) the accuracy of
information provided with respect to HSI's bank accounts and persons
holding powers of attorney for HSI; and (xxxi) the absence of any untrue
information and the full disclosure of all material facts. In addition,
HALIS warranted that it was an accredited investor acquiring Fisher's
Common Stock for investment based on the understanding that the Common
Stock has not been registered under federal or state securities laws and
that it has had the opportunity to review certain disclosure documents that
Fisher previously filed with the Commission.
Article III of the HALIS Agreement includes representations and
warranties by Fisher as to: (i) corporate organization and good standing;
(ii) delivery of accurate and complete copies of Fisher's Articles of
Incorporation, Bylaws and other corporate records; (iii) purchase of the
Stock by Fisher for investment purposes; (iv) the absence of any legal
proceedings which may materially adversely affect Fisher's financial
condition or its right to conduct its business as presently conducted; (v)
the capitalization of Fisher; (vi) absence of certain material adverse
changes since December 31, 1995; (vii) the accuracy of Fisher's financial
statements and its filings with the Commission; (viii) authorization,
execution, delivery and binding effect of the HALIS Agreement; and (ix) the
validity of the Fisher Common Stock to be issued in the HALIS Transaction.
Amendment or Termination of HALIS Agreement. Section 12.6 of the
-------------------------------------------
HALIS Agreement provides that the HALIS Agreement may be amended, altered
or supplemented by means of a written instrument duly executed and
delivered on behalf of all the parties to the HALIS Agreement.
Under Article IX of the HALIS Agreement, the HALIS Agreement may be
terminated and the HALIS Transaction contemplated thereby may be abandoned
at any time prior to Closing: (i) at the election of HALIS, if any one or
more of the conditions to the obligations of HALIS to close has not been
fulfilled as of the Closing Date, or if Fisher has breached any
representation, warranty, covenant or agreement contained in the HALIS
Agreement; (ii) at the election of Fisher, if any one or more of the
conditions to its obligations to close has not been fulfilled as of the
Closing Date, or if HALIS or the Principals have breached any
representation, warranty, covenant
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or agreement contained in the HALIS Agreement; (iii) at the election of
HALIS or Fisher, if any legal proceeding is commenced or threatened by any
governmental or regulatory body or other person directed against the
consumma tion of the Closing or any other transaction contemplated under
the HALIS Agreement and either HALIS or Fisher, as the case may be,
reasonably and in good faith deem it impractical or inadvisable to proceed
in view of such legal proceeding or threat thereof; (iv) at any time on or
prior to the Closing Date, by mutual written consent of the parties to the
HALIS Agreement; or (v) at any time after November 30, 1996, at the
election of either Fisher or HALIS.
In the event of termination of the HALIS Agreement, all further
obligations of the parties under the HALIS Agreement shall terminate except
for the obligations under Section 4.4 of the HALIS Agreement relating to
the obligation of Fisher to keep certain information confidential, Section
11.4 of the HALIS Agreement (relating to expenses), Section 11.1 of the
HALIS Agreement (relating to publicity), and Section 11.5 of the HALIS
Agreement (relating to indemnification of brokerage). None of the parties
to the HALIS Agreement shall have any liability in respect of such
termination except that any party shall be liable to the extent that
failure to satisfy the conditions of Article V, VI or VII of the HALIS
Agreement results from such party acting in bad faith or from the
intentional or willful violation of the representations, warranties,
covenants or agreements of such party under the HALIS Agreement.
THE ACCS AGREEMENT
General. The ACCS Agreement provides that, subject to the
--------
satisfaction or waiver of certain conditions (including, among other
things, approval of the Common Stock Amendment by Fisher's stockholders),
ACCS will be merged into ACC Acquisition Co., a newly organized Fisher
subsidiary. Upon consummation of the ACCS Transaction, the separate
corporate existence of ACCS will cease. ACC Acquisition Co. will continue
as the surviving corporation. As a result of the ACCS Transaction, all of
the Common Stock of ACCS outstanding immediately prior to the Effective
Time will be canceled and retired and converted into the right to receive
750,000 shares of Common Stock of Fisher. In addition, on the Closing
Date, Fisher will grant options to purchase an aggregate of 100,000 shares
of Fisher Common Stock, exercisable for a term expiring in ten years, at a
price equal to the fair market value of Fisher Common Stock on the Closing
Date. Not later than two days prior to the Closing Date, ACCS will notify
Fisher of those employees of ACCS who will receive said option grants,
indicating the number of options which each recipient is to receive.
Conduct of ACCS' Business Pending the ACCS Transaction. In Section
-------------------------------------------------------
4.2 of the ACCS Agreement, ACCS agrees that, during the Pre-Closing Period,
unless Fisher otherwise consents in writing, ACCS, among other things: (i)
shall conduct its business and operations in the ordinary course and in
substantially the same manner as such business and operations have been
conducted prior to the date of this Agreement; (ii) shall use reasonable
efforts to preserve intact its current business organizations, keep
available the services of its current officers and employees and maintain
its relations and goodwill with all suppliers, customers, landlords,
creditors, employees and other Persons having business relationships with
ACCS; (iii) shall keep in full force all insurance policies identified in
the Disclosure Schedule; (iv) shall cause its officers to report regularly
to Fisher concerning the status of ACCS's business; (v) shall not declare,
accrue, set aside or pay any dividend or make any other distribution in
respect of any shares of capital stock, and shall not repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities; (vi)
shall not sell, issue or authorize the issuance of (a) any capital stock or
other security, (b) any option, call, warrant or right to acquire, or
relating to, any capital stock or other security, or (c) any instrument
convertible into or exchangeable for any capital stock or other security;
(vii) neither ACCS, nor any of the Shareholders shall amend or permit the
adoption of any amendment to ACCS's articles of incorporation or bylaws, or
effect or permit ACCS to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock
split or similar transaction; (viii) shall not form any subsidiary or
acquire any equity interest or other interest in any other Entity; (ix)
shall not make any capital expenditure, except for capital expenditures
that, when added to all other capital expenditures made on behalf of ACCS
during the Pre-Closing Period, do not exceed $25,000 in the aggregate; (x)
shall not (a) enter into or become bound by, or permit any of the assets
owned or used by it to become bound by, any Material Contract, or (b) amend
or prematurely terminate,
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or waive any material right or remedy under, any Material Contract; (xi)
shall not, other than in the ordinary course of business consistent with
past practice (a) acquire, lease or license any right or other asset from
any other Person, (b) sell or otherwise dispose of, or lease or license,
any right or other asset to any other Person, or (c) waive or relinquish
any right, except for immaterial assets acquired, leased, licensed or
disposed of by ACCS pursuant to Contracts that are not Material Contracts;
(xii) shall not (a) lend money to any Person, or (b) incur or guarantee any
indebtedness, except that ACCS may make routine borrowings in the ordinary
course of business under its respective existing lines of credit; (xiii)
shall not (a) establish, adopt or amend any Employee Benefit Plan, (b) pay
any bonus or make any profit-sharing or similar payment to, or increase the
amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (c) hire any new employee whose aggregate annual compensation
is expected to exceed $25,000; (xiv) shall not change any of its methods of
accounting or accounting practices in any respect; (xv) shall not make any
Tax election; (xvi) shall not commence or settle any Legal Proceeding;
(xvii) shall not enter into any material transaction or take any other
material action outside the ordinary course of business or inconsistent
with its past practices; and (xviii) shall not agree or commit to take any
of the actions described in clauses "(v)" through "(xvii)".
No Solicitation of Alternative Transactions. Pursuant to Section
--------------------------------------------
4.4 of the ACCS Agreement, ACCS agrees that during the Pre-Closing Period,
neither it nor any of the Shareholders shall, directly or indirectly: (a)
solicit or encourage the initiation of any inquiry, proposal or offer from
any Person (other than Fisher) relating to a possible Acquisition
Transaction; (b) participate in any discussions or negotiations or enter
into any agreement with, or provide any non-public information to, any
Person (other than Fisher) relating to or in connection with a possible
Acquisition Transaction; or (c) consider, entertain or accept any proposal
or offer from any Person (other than Fisher) relating to a possible
Acquisition Transaction. ACCS shall promptly notify Fisher in writing of
any inquiry, proposal or offer relating to a possible Acquisition
Transaction that is received by ACCS or any of the Shareholders during the
Pre-Closing Period.
Conditions to the ACCS Transaction; Waiver of Conditions. Under
---------------------------------------------------------
Section 6 of the ACCS Agreement, the obligation of Fisher to consummate the
ACCS Transaction is subject to the satisfaction, at or prior to the
Closing, of the following conditions: (i) each of the representations and
warranties made by ACCS and the Shareholders in the ACCS Agreement and in
each of the other agreements and instruments delivered to Fisher in
connection with the transactions contemplated by the ACCS Agreement shall
have been accurate in all respects as of the date of the ACCS Agreement,
and shall be accurate in all respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time (without giving effect to any update
to the Disclosure Schedule); (ii) each covenant or obligation that ACCS or
any of the Shareholders is required to comply with or to perform at or
prior to the Closing shall have been complied with and performed in all
respects; (iii) all Consents required to be obtained in connection with the
ACCS Transaction and the other transactions contemplated by the ACCS
Agreement shall have been obtained and shall be in full force and effect;
(iv) Fisher shall have received the following agreements and documents,
each of which shall be in full force and effect: (a) Employment Agreements
and Noncompetition Agreements, executed by each of the Shareholders; (b) a
Release, executed by each of the Shareholders; (c) estoppel certificates
executed by lessors of properties being leased by ACCS; (d) a legal opinion
of DeLong, Caldwell & Wisebram, dated as of the Closing Date, satisfactory
in form and substance to Fisher and its counsel; (e) a certificate executed
by ACCS and the Shareholders and containing the representation and warranty
of ACCS and each Shareholder that each of the representations and
warranties set forth in the ACCS Agreement is accurate in all material
respects as of the Closing Date as if made on the Closing Date and that the
conditions set forth in the ACCS Agreement have been duly satisfied; and
(f) the Escrow Agreement, executed by ACCS; (v) there shall have been no
material adverse change in ACCS's business, condition, assets, liabilities,
operations, financial performance or prospects since the date of the ACCS
Agreement; (vi) ACCS shall have provided Fisher with evidence, satisfactory
to Fisher, as to the termination of its employee benefit plans; (vii) all
applicable requirements of Rule 506 under the Securities Act shall have
been satisfied; (viii) no temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the ACCS
Transaction shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Legal Requirement enacted
or deemed applicable to the ACCS Transaction that makes consummation of the
ACCS
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Transaction illegal; (ix) no Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a
material amount of damages in connection with the ACCS Transaction or
seeking to prohibit or limit the exercise by ACCS of any material right
pertaining to its ownership of stock of the Surviving Corporation; (x) the
Articles of Incorporation of Fisher shall have been amended to increase the
number of authorized shares of Fisher common stock to 100,000,000; and (xi)
Fisher shall have completed its due diligence investigation of ACCS and
shall have been satisfied with the results thereof.
Under Section 8 of the ACCS Agreement, the obligations of ACCS and the
Shareholders to effect the ACCS Transaction and otherwise consummate the
transactions contemplated by the ACCS Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions: (i)
each of the representations and warranties made by Fisher and the
Subsidiary in the ACCS Agreement and in each of the other agreements and
instruments delivered to ACCS in connection with the transactions
contemplated by the ACCS Agreement shall have been accurate in all respects
as of the date of the ACCS Agreement, and shall be accurate in all respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time;
(ii) all of the covenants and obligations that Fisher is required to comply
with or to perform at or prior to the Closing shall have been complied with
and performed in all respects; (iii) all Consents required to be obtained
in connection with the ACCS Transaction and the other transactions
contemplated by the ACCS Agreement shall have been obtained and shall be in
full force and effect; (iv) (a) Fisher and the Subsidiary shall have
entered into the Employment Agreements described in the ACCS Agreement;
(b) ACCS shall have received a legal opinion of Smith, Gambrell & Russell
in form and substance satisfactory to ACCS and its counsel; (c) ACCS shall
have received a certificate executed by Fisher and the Subsidiary, and
containing the representation and warranty of Fisher and the Subsidiary
that each of the representations and warranties set forth in the ACCS
Agreement are accurate in all material respects as of the Closing Date as
if made on the Closing Date and that the conditions set forth in the ACCS
Agreement have been duly satisfied; (d) Fisher and the Subsidiary shall
have executed the Escrow Agreement; (v) no temporary restraining order,
preliminary or permanent injunction or other order preventing the
consummation of the ACCS Transaction by ACCS shall have been issued by any
court of competent jurisdiction and remain in effect, and there shall not
be any Legal Requirement enacted or deemed applicable to the ACCS
Transaction that makes consummation of the ACCS Transaction by ACCS
illegal; and (vi) the Articles of Incorporation of Fisher shall have been
amended to increase the number of authorized shares of Fisher common stock
to 100,000,000.
Representations and Warranties Contained in the ACCS Agreement. The
---------------------------------------------------------------
ACCS Agreement contains various representations and warranties of the
parties thereto. Section 2 of the ACCS Agreement includes representations
and warranties by ACCS and the Shareholders as to: (i) corporate
organization, good standing and absence of undisclosed subsidiaries; (ii)
authorization, execution, delivery and binding effect of the ACCS
Agreement; (iii) ACCS's capitalization; (iv) delivery of accurate and
complete copies of ACCS's Articles of Incorporation, Bylaws and other
corporate records; (v) the delivery and accuracy of ACCS' financial
statements; (vi) the absence (except as specified) of certain material
adverse changes since March 31, 1996; (vii) the good, valid and marketable
title to all assets of ACCS disclosed in the ACCS Agreement; (viii) the
accuracy of information provided with respect to the ACCS' bank accounts,
accounts receivables, and revenues received from each of its customers as
of March 31, 1996; (ix) payment of all applicable Taxes, filing of all Tax
Returns and the absence (except as specified) of any claim or legal
proceeding with respect to ACCS of any Tax; (x) the liabilities, accounts
payable and all other obligations of ACCS; (xi) the delivery of accurate
copies of all disclosed Material Contracts to Fisher and the enforceability
(except as specified) of all Material Contracts; (xii) the accuracy of
information provided with respect to all material items of equipment,
fixtures, leasehold improvements and other tangible assets owned by or
leased by ACCS; (xiii) the accuracy of information provided with respect to
any Proprietary Asset owned by or licensed to ACCS or otherwise used by
ACCS, the valid and marketable title (except as specified) of such
Proprietary Assets, the measures taken to protect the Proprietary Assets,
ACCS's right to use, modify, copy, distribute, sell, license or otherwise
exploit such Proprietary Assets, and the absence of infringement or
conflict with any Proprietary Asset owned or used by any other Person;
(xiv) the compliance with all applicable Legal Requirements; (xv) the
compliance with all Governmental Authorizations disclosed in the ACCS
Agreement and necessary to enable ACCS to conduct its business; (xvi)
employee and labor matters of ACCS, the benefit plans sponsored,
maintained, contributed to or required to be contributed to by ACCS for the
benefit of any current or
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former employee of ACCS and ACCS's compliance with applicable Legal
Requirements and Contracts relating to employment, employment practices,
employee compensation, wages, business and terms and conditions of
employment; (xvii) the compliance, in all material respects, with all
Environmental Laws; (xviii) the absence of ACCS's exposure to any material
liability arising from the sale of products or the performance of services;
(xix) the effectiveness of insurance policies; (xx) the absence (except as
specified) of Related Party transactions; (xxi) the absence (except as
specified) of any Legal Proceeding that involves ACCS's assets or that
challenges or may have an effect on the ACCS Transaction or any other
transaction contemplated by the ACCS Agreement and the absence of any
order, writ, injunction, judgement or decree that relates to ACCS' business
or to any assets owned or used by ACCS; (xxii) the absence (except as
specified) of any right of any Governmental Body or other Person to
challenge the ACCS Agreement, the ACCS Agreement's non-contravention of any
charter or by-law provisions, of any Governmental Authorization held by
ACCS or of any Material Contract and the absence of the need (except as
specified) to make any filings or give any notices to or obtain any
Consents; and (xxiii) the absence of any false representation, warranty or
information and the full disclosure of all material facts.
Section 3 of the ACCS Agreement includes representations and
warranties by Fisher as to: (i) the accuracy of Fisher's financial
statements and its filings with the Commission; (ii) authorization,
execution, delivery and binding effect of the ACCS Agreement; and (iii) the
validity of the Fisher Common Stock to be issued in the ACCS Transaction.
Termination of the ACCS Agreement. Under Section 8 of the ACCS
----------------------------------
Agreement, the ACCS Agreement may be terminated and the ACCS Transaction
contemplated thereby may be abandoned at any time prior to the Closing:
(i) by Fisher if Fisher reasonably determines that the timely satisfaction
of any condition set forth in Section 6 of the ACCS Agreement has become
impossible (other than as a result of any failure on the part of Fisher to
comply with or perform any covenant or obligation of Fisher set forth in
the ACCS Agreement); (ii) by ACCS if ACCS reasonably determines that the
timely satisfaction of any condition set forth in Section 7 has become
impossible (other than as a result of any failure on the part of ACCS or
any of the Shareholders to comply with or perform any covenant or
obligation set forth in the ACCS Agreement or in any other agreement or
instrument delivered to Fisher); (iii) by Fisher at or after the Scheduled
Closing Time if any condition set forth in Section 6 of the ACCS Agreement
has not been satisfied by the Scheduled Closing Time; (iv) by ACCS at or
after the Scheduled Closing Time if any condition set forth in Section 7 of
the ACCS Agreement has not been satisfied by the Scheduled Closing Time;
(v) by Fisher if the Closing has not taken place on or before December 31,
1996 (other than as a result of any failure on the part of Fisher to comply
with or perform any covenant or obligation of Fisher set forth in the ACCS
Agreement); (vi) by ACCS if the Closing has not taken place on or before
December 31, 1996 (other than as a result of the failure on the part of
ACCS or any of the Shareholders to comply with or perform any covenant or
obligation set forth in the ACCS Agreement or in any other agreement or
instrument delivered to Fisher); (vii) by the mutual consent of Fisher and
ACCS; or (viii) by Fisher under the circumstances described in Section
4.3(b) of the ACCS Agreement.
If the ACCS Agreement is terminated pursuant to Section 8.1, all
further obligations of the parties under the ACCS Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or liability arising from any prior breach by such party of any
provision of the ACCS Agreement; (b) the parties shall, in all events,
remain bound by and continue to be subject to the provisions set forth in
Section 11 of the ACCS Agreement.
EFFECTIVE TIME OF THE TRANSACTIONS
The consummation of the transactions contemplated by the AUBIS, HALIS
and ACCS Agreements (the "Closing") shall take place on the first business
day which is two (2) days after the date Fisher's shareholders shall have
approved the Common Stock Amendment and ratified the Transactions, or at
such other time and date, as the parties shall designate (the "Scheduled
Closing Time"). (The date on which the Closing actually takes place is
referred to as the "Closing Date.") Immediately following the Closing, the
AUBIS and ACCS Transactions will be consummated and become effective at the
time the certificates of merger are filed with the Secretary of State of
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the State of Georgia and the HALIS Transaction will become effective
immediately thereafter (the "Effective Time"). It is presently
contemplated that the Effective Time will occur promptly after obtaining
the necessary approval of Fisher shareholders.
RESALE OF FISHER COMMON STOCK ISSUED IN THE TRANSACTIONS; AFFILIATES
The Fisher Common Stock to be issued to AUBIS, HALIS and the
shareholders of ACCS in connection with the Transactions will be
"restricted securities" under the Securities Act, and unless registered,
AUBIS, HALIS and the shareholders of ACCS will be required to hold such
securities for a two-year period. Neither AUBIS, HALIS nor any member of
AUBIS or HALIS who receives a distribution in Fisher Common Stock nor any
shareholder of ACCS (a "Participating Holder") may sell their shares of
Fisher Common Stock acquired in connection with the Transactions, except
pursuant to an effective registration statement under the Securities Act
covering such shares, or in compliance with Rule 145 promulgated under the
Securities Act or another applicable exemption from the registration
requirements of the Securities Act. Fisher has agreed to file with the
SEC, after the Closing Date, a registration statement (the "Registration
Statement") with respect to resales of shares of Fisher Common Stock
received in the Transactions by any Participating Holder. In addition,
Fisher will use reasonable efforts: (a) to cause the Registration Statement
to be declared effective by the SEC on or before the date 90 days after the
Closing Date; and (b) to cause the Registration Statement to remain
effective until the earlier of (i) the third anniversary of the Closing
Date, or (ii) the date on which the distribution described in the
Registration Statement is completed as to all Participating Holders.
EXPENSES AND FEES
Whether or not the Transactions are consummated, each party to the
AUBIS, HALIS and ACCS Agreements will pay its own costs and expenses in
connection therewith.
ACCOUNTING TREATMENT
Fisher intends to account for the AUBIS and HALIS Transactions as a
reverse purchase for accounting and financial reporting purposes. Under
this method of accounting, AUBIS and HALIS will be treated as the acquiring
entities. As a result, the historical pre-merger financial statements of
the combined company will be those of AUBIS and HALIS, rather than Fisher.
Fisher intends to account for the ACCS Transaction as a purchase for
accounting and financial reporting purposes.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material federal income tax
consequences of the Transactions. This discussion is based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
the United States Department of the Treasury Regulations thereunder and
rulings and court decisions as of the date hereof, all of which are subject
to change, possibly retroactive. The discussion is included for general
information purposes only, applies only to stockholders of AUBIS, HALIS and
ACCS (collectively referred to herein as the "Merging Companies"), if any,
who hold their stock as a capital asset, and may not apply to Merging
Company stockholders, if any, who received their stock upon the exercise of
employee stock options or otherwise as compensation. Neither Fisher nor
any of the Merging Companies has requested a ruling from the Internal
Revenue Service (the "Service") or an opinion of legal counsel, as to the
qualification of the Merger as a tax-free reorganization and certain other
federal income tax consequences of the Merger and related transactions.
Fisher believes that each of the Transactions will qualify as a tax-
free reorganization within the meaning of Section 368(a) of the Code.
Among other things, qualification as a tax-free reorganization is based on
Merging Company stockholders maintaining sufficient equity ownership
interest in Fisher after the Transactions. The Service takes the position
for purposes of issuing an advance ruling on reorganizations, that the
stockholders of an acquired corporation (i.e., a Merging Company) must
maintain a continuing equity ownership interest in the acquiring
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corporation (i.e., Fisher) equal, in terms of value, to at least 50% of
their interest in such acquired corporation. Moreover, shares of Merging
Company Common Stock and Fisher Common Stock held by Merging Company
stockholders and otherwise sold, redeemed or disposed of prior or
subsequent to the Effective Time are taken into account. In addition,
management of Fisher has no plan or intention to cause Fisher to redeem or
otherwise reacquire the shares of Fisher Common Stock issued in the
Transactions. In addition to the foregoing requirements certain additional
matters must be true with respect to the Transactions. Fisher and each of
the Merging Companies believe that these additional factual matters will be
satisfied.
Assuming each Transaction is treated as a reorganization as defined in
Section 368(a) of the Code, the following will be the material federal
income tax consequences to the Merging Company stockholders:
(i) No gain or loss will be recognized for federal income tax purposes
by Merging Company stockholders upon the exchange of their shares of
Merging Company Common Stock for shares of Fisher Common Stock.
(ii) The basis of the shares of Fisher Common Stock to be received by
Merging Company stockholders will be the same as the basis of the Merging
Company Common Stock surrendered in exchange therefor.
(iii) The holding period of the Fisher Common Stock to be received by
Merging Company stockholders will include the period during which the
shares of Merging Company Common Stock surrendered in exchange therefor had
been held, provided such shares were held by such stockholders as a capital
asset at the Effective Time.
Because Fisher's shareholders will not receive cash or other
consideration in connection with the Transactions, the Transactions are
not taxable events for Fisher's shareholders.
As of January 31, 1996, Fisher had net operating loss carryforwards,
for income tax purposes, of $8,363,295 available to reduce taxable income.
Fisher also has research and development tax credits of $18,322 available
to reduce income taxes. As a result of the Transactions, Fisher will
experience a change in control, as defined under Section 382 of the Code.
As a result, the utilization of the net operating loss carryforwards will
be limited to approximately $518,000 annually. The net operating loss
carryforwards will begin to expire in 1999 and through 2013.
BECAUSE CERTAIN TAX CONSEQUENCES OF THE TRANSACTIONS MAY VARY
DEPENDING UPON THE PARTICULAR CIRCUMSTANCES OF EACH STOCKHOLDER AND OTHER
FACTORS, EACH HOLDER OF MERGING COMPANY COMMON STOCK IS URGED TO CONSULT
SUCH HOLDER'S OWN TAX ADVISOR TO DETERMINE THE PARTICULAR TAX CONSEQUENCES
TO SUCH HOLDER OF THE TRANSACTIONS (INCLUDING THE APPLICATION AND EFFECT OF
FOREIGN, STATE AND LOCAL INCOME AND OTHER TAX LAWS).
RISK FACTORS
In addition to the other information contained in this Proxy
Statement, the following factors should be considered carefully by
shareholders of Fisher in evaluating the Common Stock Amendment and the
Transactions:
Acquisitions and Integration. An important element of Fisher's
----------------------------
business strategy is to expand through acquisitions. Fisher's future
success is dependent upon its ability to finance and effectively integrate
acquired businesses with Fisher's operations. Although Fisher believes
that it will be able to effect such integration, there can be no assurance
that AUBIS, HALIS and ACCS or future acquisitions will be successfully
integrated or that
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any such acquisition will otherwise be successful. In addition, the
financial performance of Fisher is now and will continue to be subject to
various risks associated with the acquisition of businesses, including the
financial effects associated with the integration of such businesses.
There can be no assurance that Fisher's acquisition strategy will be
successful. Without a successful acquisition strategy, Fisher believes
that its prospects for revenue growth are reduced.
Limited History of AUBIS, HALIS and ACCS. AUBIS, HALIS and ACCS each
----------------------------------------
have limited operating histories. As a consequence, there can be no
certainty regarding Fisher's ability to achieve or sustain profitability in
the future. Whether or not Fisher is able to operate profitably, Fisher
will require additional capital to finance its operations. There is no
assurance that such financing can be obtained when needed or on terms
acceptable to Fisher.
Healthcare Industry and Marketing Changes. The healthcare industry is
-----------------------------------------
subject to changing political, economic and regulatory influences that may
affect the procurement practices and other operational aspects of the
healthcare Industry. During the past several years, the healthcare
industry has been subject to an increase in governmental regulation of,
among other things, reimbursement rates and certain capital expenditures.
A number of lawmakers have announced that they intend to propose programs
to reform the U.S. healthcare system. These programs may contain proposals
to increase governmental involvement in healthcare, lower reimbursement
rates and otherwise change the operating environment for Fisher's
customers. Cost containment measures instituted by healthcare providers
could result in greater selectivity in the allocation of capital funds,
which could have an adverse effect on Fisher's ability to sell its products
and services. Fisher cannot predict with any certainty what effect, if
any, such proposals or healthcare reforms might have on its business,
financial condition or results of operations.
In addition, the healthcare industry is currently undergoing
significant consolidation of healthcare providers resulting in a smaller
number of larger healthcare delivery enterprises. The changing industry
profile produced by this consolidation could have an adverse impact on
Fisher's margins and revenues due to increased competition.
Control by Paul Harrison. Upon consummation of the Transactions, Paul
------------------------
Harrison will exercise voting control over approximately 65% of the
outstanding shares of Common Stock of the combined company. As a result,
Mr. Harrison will be able to elect the directors of the combined company,
determine the outcome of most corporate actions requiring shareholder
approval and otherwise to control the business of the combined company.
Upon consummation of the Transactions, the stock ownership of nonaffiliates
will decrease from approximately 61% of the outstanding shares of Fisher
Common Stock to approximately 20% of the outstanding shares of Fisher
Common Stock.
Technological Change; Proprietary Technology. Future advances in the
--------------------------------------------
healthcare information systems industry could lead to new technologies,
products or services that are competitive with the products and services
offered by Fisher. Fisher's success will depend, in part, on its ability
to be responsive to technological developments and challenges. Such
technological advances could also lower the cost of such products and
services or otherwise result in competitive pricing pressures, which could
have an adverse effect on Fisher. To remain competitive in the evolving
healthcare information systems marketplace, Fisher must develop new
products on a timely basis. The failure to develop competitive products or
to introduce new products on a timely basis could have an adverse effect on
Fisher's future financial performance.
Protection of Proprietary Information. Fisher does not have any
-------------------------------------
patents or registered copyrights and does not anticipate obtaining any
patents or registered copyrights in the near future. Fisher treats its
software and related technical data as confidential and relies on internal
nondisclosure safeguards, including confidentiality agreements with
employees, and on laws protecting trade secrets, to protect what it regards
as proprietary information. Competitors and customers may nevertheless be
able to copy certain functional aspects of Fisher's products. In addition,
under the terms of certain agreements by which Fisher licenses its software
for inclusion in software systems marketed by other manufacturers, Fisher
has been required to place in escrow the source code for the
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licensed software. In the event of a default by Fisher in its performance
under such agreements, the licensee would be entitled to receive and retain
such source code for its own use.
Competition. The healthcare information industry is highly
-----------
competitive and subject to continual change in the manner in which products
and services are marketed and vendors are selected by customers. The
primary competitive factors are scope and quality of products and service
and support capabilities. Certain current and potential competitors have
greater resources than Fisher.
No Anticipated Dividends. Fisher has never paid cash dividends on its
------------------------
Common Stock and has no plans to pay cash dividends in the foreseeable
future. The policy of Fisher's Board of Directors is to retain all
available earnings for use in the operation and expansion of Fisher's
business.
Volatility of Stock Price. The market price of the Fisher Common
-------------------------
Stock may be subject to significant fluctuations in response to Fisher's
operating results and other factors, and there can be no assurance that the
market price of the Fisher Common Stock will not decline below the current
market price. In addition, the stock market has from time to time
experienced extreme price and volume fluctuations, particularly in the high
technology sector, which have often been unrelated to the operating
performance of particular companies. Such fluctuations and factors such as
announcements of technological innovations or new products by Fisher or its
competitors or third parties, as well as market conditions in the computer
software or hardware industries and healthcare reform measures, may have a
significant effect on the market price of Fisher's Common Stock.
Over the past twelve months, Fisher's stock price has exhibited
considerable volatility. Since September 1995, the bid price of Fisher's
Common Stock has ranged from a low of $.75 per share to a high of $2.25 per
share. Management believes that this volatility is due to market
uncertainty as to the status of Fisher's acquisition strategy. Because of
the delays in consummating the Transactions, the market's positive
reactions to Fisher's press releases announcing the execution of definitive
agreements with AUBIS, HALIS and ACCS has been tempered by long periods of
inaction on those proposals. Although there can be no assurance that such
volatility will not continue upon consummation of the Transactions,
management belies that the factors underlying Fisher's existing price
volatility will be minimized.
INFORMATION REGARDING FISHER
GENERAL
Fisher designs, develops, markets, licenses and supports proprietary
computer software for use in a variety of food service establishments,
including the vertical market consisting of large restaurant chains.
Fisher's Fisher Restaurant Management System(R) is a fully integrated
restaurant system. Utilizing the capability of enhanced personal computers
in a networking environment, the Fisher Restaurant Management System(R) is
designed to permit the integrated operation of both point-of-sale
transaction functions and management reporting functions. Fisher's
restaurant software is designed to operate on IBM-compatible hardware, and
Fisher markets its software systems as a hardware independent solution.
Fisher will install its software on the customer's hardware of choice.
Fisher's point-of-sale software system was introduced in September
1986 and was combined with Fisher's previously developed financial and
accounting software to form the Fisher's first generation Fisher Restaurant
Management System(R). The Fisher Restaurant Management System(R) was first
developed on an enhanced IBM PC Model AT, but was modified in 1987 to run
on the IBM Personal System/2 ("PS/2"). The Fisher Restaurant Management
System(R) is presently installed in approximately 1,500 restaurants. See
"-Products."
The second generation of the Fisher Restaurant Management System(R) is
a color touch screen system designed as an open system utilizing a popular
fourth generation programming language and a full function relational
database. This modular software system operates on a standard personal
computer network and embraces the business needs of restaurant servers,
bartenders, cashiers and managers, as well as the corporate information
needs
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of the larger chain restaurant organizations. The software modules include
server entry, time and attendance, and corporate communication.
Due to the limited resources to apply toward research and development
over the past few years, however, Fisher has been unable to incorporate
certain modifications and enhancements that are needed to allow Fisher to
effectively compete in the fine dining market. As a result, Fisher made
only a few new system sales during the fiscal year ended January 31, 1996.
BACKGROUND
Fisher was organized in 1979 by Larry Fisher, its Chairman, Treasurer
and a principal shareholder, to provide vertical software applications for
potential business users of IBM minicomputers. The initial applications
provided by Fisher consisted principally of business management software
directed at a variety of different businesses, including pharmacies,
supermarkets and general retail, as well as restaurants.
Spurred by the introduction of the IBM Personal Computer, or "PC," and
a concurrent capital infusion from minority investors, Fisher developed its
own proprietary PC-based business applications software in 1984. At the
same time, Fisher's previously diffuse marketing approach was restructured
to focus on its most successful market niche - the restaurant industry.
From this reorientation was developed the initial version of the Back
Office System for restaurants. The Back Office System was marketed as a
financial and inventory management system that readily communicated with,
and complemented the data-gathering function provided by, intelligent-
terminal point-of-sale systems sold by such manufacturers as NCR
Corporation, Sweda International, Inc. and DTS/Datachecker.
In 1986, Fisher undertook to develop an integrated restaurant system
that would eliminate the inherent inefficiencies of separate computers for
"front office" point-of-sale and "back office" accounting control
functions. Utilizing the capability of an enhanced IBM PC Model AT to run
multiple terminals in a networking environment, coupled with the
availability of a new type of low-cost IBM CRT terminal, Fisher's Server
Entry System was designed to permit the integrated and simultaneous
operation of both point-of-sale transaction functions and accounting
functions using the same central processing unit. The integration of the
Server Entry System with the existing Back Office System produced the
current Fisher Restaurant Management System(R), which was introduced in
September 1986.
In July 1990, Fisher began the task of designing and developing its
next generation product. During fiscal 1993, Fisher placed 16 pilot
systems of its next generation restaurant management system with eight
regional and national multi-store organizations for evaluation. On March
31, 1993, Fisher announced its first sale of this new product to Friendly
Ice Cream Corporation of Wilbraham, Massachusetts.
Due to a downturn in its business, Fisher has been unable to commit
sufficient resources to continue research and development of its products
to keep pace in the hospitality market place. As a result, the market has
not been receptive to its products because Fisher's competitors have been
able to provide enhancements that are being demanded by hospitality
customers. In 1995, Fisher's Board of Directors concluded that Fisher
needed a significant shift in its strategic plan if it is to continue in
operation. As a consequence, Fisher developed a strategy to grow its
business through the acquisition of select software companies in the
hospitality and healthcare markets. See "- Consolidation Strategy."
Pursuant to this strategy, Fisher entered into the AUBIS Agreement in
December 1995 and entered into the HALIS and ACCS Agreements in March 1996.
See "BACKGROUND OF AND REASONS FOR THE TRANSACTIONS" and "TERMS OF THE
TRANSACTIONS."
Fisher has also entered into a letter of intent to license a
proprietary technology asset ("MERAD") from Paul Harrison Enterprises, Inc.
("PHE"), whereby Fisher will acquire a perpetual, non-exclusive license to
utilize the MERAD technology for a license fee of 10% of gross revenues
generated from the MERAD technology and any derivatives thereof by Fisher
or any of its affiliates. PHE acquired MERAD from Paul Harrison in July
1995.
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Mr. Harrison conceived and developed the initial algorithms forming the
basis of the operation of MERAD. MERAD is an artificially intelligent
technology utilizing advanced computer languages as its platform. MERAD is
a tool that is utilized to develop application software. Through the use
of artificial intelligence, MERAD can substantially decrease the
development time necessary to create and debug application software. MERAD
is still in a demonstration form and is being beta site tested through HSI.
Fisher will utilize the MERAD technology to develop healthcare software
systems. Consummation of the MERAD transaction is subject to the
negotiation of a definitive license agreement and consummation of the
Transactions. It is anticipated that the MERAD license will be executed on
the date of consummation of the Transactions.
When PHE acquired rights in MERAD from Mr. Harrison, Mr. Harrison
retained a perpetual royalty free license to MERAD and any enhancements and
derivatives thereof (excluding any application software developed utilizing
MERAD). On October 1, 1995, PHE licensed MERAD, in its then partially
completed state, to HALIS in order for HALIS to develop proprietary
healthcare software (the "License"). As part of the License, HALIS agreed
to continue developing MERAD and to be a beta site to test MERAD's
capabilities and functionality. HALIS agreed that any enhancements and
modifications to MERAD become the sole and exclusive proprietary property
of PHE, subject to HALIS's rights to use the same under its License. With
the exception of certain licenses to use MERAD, PHE has exclusive ownership
rights to MERAD.
In August 1995, Fisher entered into a Finder's Fee Agreement with
Penny Sellers, pursuant to which Ms. Sellers will receive a commission
equal to 10% of the amount of any equity investments in Fisher or software
licensing fees paid to Fisher in respect of transactions introduced to
Fisher by Ms. Sellers. The compensation payable to Ms. Sellers pursuant to
the Finder's Fee Agreement is limited to $500,000. In late August 1995,
Ms. Sellers introduced Fisher to the principals of AUBIS. To date, Fisher
has paid $19,350 to Ms. Sellers, which represents 10% of the investment
made by the principals of AUBIS in Fisher's recently completed notes
offering and 10% of the amounts received by Fisher from the sale of Fisher
Restaurant Management Systems by AHS.
Ms. Sellers, however, has claimed that the notes offering would not
have been successful but for her introduction of Mr. Harrison to Fisher.
As a result, Ms. Sellers has made a claim for 10% of all amounts raised in
the notes offering. Ms. Sellers has also made a claim to 10% of all future
proceeds raised by Fisher (up to the $500,000 maximum compensation).
Finally, Ms. Sellers has made a claim for 10% of the value of the AUBIS and
HALIS Transactions. Ms. Sellers has not filed suit with respect to these
claims. Management of Fisher believes that these claims are outside the
scope of the Finder's Fee Agreement and intends vigorously to contest them.
CONSOLIDATION STRATEGY
Fisher's management believes that the opportunity exists to
consolidate the operations of a number of software companies which
presently serve the healthcare market. By combining certain of the areas
of each business, namely support, administration, and sales, management
believes that new products can be added which can be sold to the existing
customer base and new customer bases will be acquired into which the
existing products and services can be sold.
In addition, there are companies that provide goods and services to
the healthcare industry such as electronic data interchange (EDI),
electronic cash management, credit and processing services and other
business applications. These companies may also be candidates within the
consolidation strategy.
This consolidation strategy is similar to that successfully
implemented in the telephone long distance market in the 1980s. The high
degree of fragmentation in the software industry lends itself to this
consolidation strategy. For many of these companies, even though they are
successful, their founders/shareholders face liquidity challenges as they
are too small to go public and, in a private transaction for cash, they
might not be able to realize the same value as if they were part of a
larger company. The key to success will be in selectively identifying
those companies which have the right mix of product, customer base and
personnel. The proposed Transactions are the
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first step in Fisher's implementation of this strategy. See "BACKGROUND OF
AND REASONS FOR THE TRANSACTIONS."
Upon consummation of the Transactions, Fisher will be a technology
company that manufacturers application software and delivers systems
integration services to the healthcare market. Fisher's mission is to be
the leading healthcare information systems company in delivering integrated
software applications and support services to the healthcare industry.
The success of Fisher's strategic plan and consolidation strategy will
be dependent, among other things, upon Fisher's ability to raise
significant capital to enable Fisher to actively seek acquisition targets.
In March 1996, Fisher retained the services of the investment banking firm,
Feltman & Co. ("Feltman"), for purposes of advising Fisher in its
negotiations with one or more investors which may purchase Fisher capital
stock or debt instruments. Fisher agreed to compensate Feltman with a non-
refundable retainer of $25,000 (to be credited against commissions earned)
and a commission equal to 8% of the amount of funds raised with their
assistance. The arrangement with Feltman expired on April 30, 1996 without
any sales being made by Feltman. Fisher is obligated to Feltman for the
full commission with respect to any transaction that is consummated within
one year of such termination with any party with which discussions relating
to such transaction were held during the period of Feltman's engagement.
In September 1996, Fisher engaged Attkisson, Carter & Akers
Incorporated, a licensed broker-dealer, to offer and sell, on a best-
efforts basis, up to 5,000,000 shares of Common Stock at a price of $1.20
per share. For each three (3) shares of Common Stock sold in the
offering, Fisher will also issue a warrant to purchase one share of Fisher
Common Stock, exercisable at a price of $1.75 per share. It is a condition
to the closing of this private placement that the Common Stock Amendment be
approved by the shareholders of Fisher and the Transactions consummated. If
the minimum offering of $1,200,000 is not attained, Fisher may not have
sufficient capital to support its operations and successfully develop and
market its new healthcare software. See "RISK FACTORS." If the offering
is successful, the net proceeds ($5,450,000, if the maximum offering is
attained) will be utilized to expand Fisher's sales and marketing efforts,
enhance Fisher's software products, support the growth of Fisher's
administrative infrastructure by hiring additional administrative and
support personnel, to acquire selected healthcare software and service
companies and systems integration companies and for general corporate
purposes.
PRODUCTS
Fisher's principal products are the Fisher Restaurant Management
System(R) and implementation support services for the food service vertical
market. The second generation of the Fisher Restaurant Management
System(R) is a color touch screen system designed as an open system
utilizing a popular fourth generation programming language and a full
function relational database. This modular software system operates on a
standard personal computer network and embraces the business needs of
restaurant servers, bartenders, cashiers and managers, as well as the
corporate information needs of the larger chain restaurant organizations.
The software modules include server entry, time and attendance, and
corporate communication. Presently, the Fisher Restaurant Management
System(R) is in need of certain modifications and enhancements to make it
competitive. These modifications and enhancements are currently in
development and Fisher anticipates such enhancements and modifications to
be completed by mid to late 1996.
To enhance customer satisfaction, Fisher also provides implementation
support services to its food service customers. These services include
product installation, staff training, system integration, software
modification, help desk telephone support, hardware acquisition, and system
staging and testing.
For a discussion of the products to be offered by Fisher upon
consummation of the Transactions, see "BACKGROUND OF AND REASONS FOR THE
TRANSACTIONS - Management and Operation of Fisher After the Transactions."
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CUSTOMER SUPPORT, WARRANTY AND EDUCATION
In conjunction with installation of a system, Fisher provides on-site
training for the customer's management, supervisory and financial personnel
designed to provide instruction in the use and operation of the system.
The amount of on-site training varies with the size of the customer's
operation and complexity of the system being installed. Training is
invoiced as a separately itemized fee as a part of any customer's licensing
of the Fisher Restaurant Management System(R).
Fisher provides ongoing customer support in the form of software
updates, when published, and telephone consultations with Fisher customer
support personnel concerning software operational problems and general
advice regarding use of Fisher's systems. A separate fee is also charged
for this customer support on an annual basis.
Fisher warrants to its customers that Fisher's software systems will
perform the applications set forth in the agreement pursuant to which the
software is licensed. In the event the software does not perform as
specified, Fisher's warranty obligation is ordinarily limited to correction
of errors in the software, generally for a one-year period from the date of
installation. Fisher has not incurred, and does not anticipate that it
will incur, significant expenses in connection with the fulfillment of its
warranty obligations.
MARKETING
Fisher generally licenses its software products to the end user
pursuant to nonexclusive, nontransferable licenses granted for a one-time
license fee payment. Fisher markets its Fisher Restaurant Management
System(R) through direct sales.
COMPETITION
Fisher believes its present competition in the hospitality industry
includes other independent software suppliers that sell programs for point-
of-sale functions or cross industry technical services or both. Fisher
believes that there are at least six companies currently offering "front
office" software packages similar to Fisher's Server Entry System.
A number of significantly larger companies in the computer industry,
including IBM and NCR Corporation, are in the restaurant software market.
Fisher believes that the major competitive factors in marketing
computerized restaurant management and operations systems are maintenance,
support, price, reliability, simplicity and flexibility of the software in
adapting to operational changes and the dynamic need for management
information, and speed of operations processing.
The point of sale industry is evolving from proprietary hardware
systems to open, software based systems. Primary hardware suppliers include
AT&T (NCR), IBM, Digital Equipment Corporation, and Micros. Point of sale
software is generally supplied by small companies with revenues between $1
million and $10 million. These include Progressive Software, Infogenesis
and Compris.
Competition in the healthcare information services industry is intense
and includes healthcare software companies such as HBO & Company, service
bureaus and general computer software and services companies that also
offer system integration services.
For a discussion of the characteristics of Fisher's products after
consummation of the Transactions, see "BACKGROUND OF AND REASONS FOR THE
TRANSACTIONS-Management and Operations of Fisher After the Transactions."
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CUSTOMERS
During fiscal 1996, Fisher provided support services for its Fisher
Restaurant Management System(R) to approximately 100 customers in the
hospitality industry, none of which accounted for more than 10% of Fisher's
revenues for the year.
PRODUCT PROTECTION
Fisher regards its software as proprietary and protects it with common
law copyrights, trade secret law and internal nondisclosure safeguards.
Restrictions on disclosure and transferability are incorporated into its
software license agreements, and each copy of the software contains
copyright notices, both internally (flashed on the terminal screen at
commencement of the program) and externally (labeled on each disc
containing the software). Most of Fisher's customers are provided only
object code versions of the software, as further protection against
pirating, although a few select customers also receive source code.
Despite these protections, it may be possible for Fisher's competitors or
users to copy all or portions of Fisher's proprietary software or to obtain
information which Fisher regards as trade secrets. Fisher has not patented
its software and has not federally registered any copyrights with respect
thereto, and reliance on common law copyright and trade secret protection
affords somewhat limited practical protection.
Fisher has registered with the U.S. Patent and Trademark Office the
trademark Fisher Business Systems FBS\ (on the Principal Register) and the
service mark Fisher Restaurant Management System(R) (on the Supplemental
Register).
Fisher has independently developed its software products. However,
there can be no assurance that claims will not be asserted against Fisher
that its software codes, concepts, ideas and documentation infringe on the
proprietary rights of others in software they developed. As of September
15, 1996, there were no actions claiming patent infringement pending
against Fisher.
BACKLOG
Fisher typically licenses a multi-store chain to use its software for
up to a specified number of locations. Fisher's backlog therefore consists
of a schedule of services to be performed in conjunction with each license.
If Fisher is supplying hardware, typical lead times are between 30 and 45
days. There is currently no backlog of orders for the Fisher Restaurant
Management System(R).
EMPLOYEES
As of September 1, 1996, Fisher had eight full-time employees,
including one in senior management. Fisher also utilizes contract personnel
for support services, installations of additional Fisher systems and
programming. In an effort to reduce costs over the past year, the number
of employees has been substantially reduced, leaving Fisher with
substantially diminished capabilities in the areas of product development
and quality control.
Competition for qualified personnel in the software industry is
intense. Fisher's ability to attract and retain qualified personnel has
been substantially diminished by its weakened financial condition. There
can be no assurance that Fisher will be able to attract or retain qualified
personnel in the future.
None of Fisher's employees is subject to a collective bargaining
agreement, and Fisher considers its employee relations to be good. Fisher
requires all employees to sign an agreement in which they undertake not to
disclose Fisher's trade secrets to others during the period of, or after
termination of, their employment.
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PROPERTIES
Fisher's corporate headquarters are located in 2,500 square feet of
office space in Atlanta, Georgia. In anticipation of the consummation of
the Transactions, the office space is being shared by Fisher with AHS and
ASI pursuant to a 12-month lease at a monthly rental of $3,000.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Fisher is a
party or to which its properties are subject; nor are there any material
proceedings known to Fisher to be contemplated by any governmental
authority; nor are there any material proceedings known to Fisher, pending
or contemplated, in which any director, officer or affiliate or any
principal security holder of Fisher, or any associate of any of the
foregoing is a party or has an interest adverse to Fisher.
See "- Background" for a discussion of a claim by Penny Sellers for
payment of commissions by Fisher pursuant to a Finder's Fee Agreement.
INFORMATION REGARDING AUBIS
GENERAL
AUBIS operates through its two wholly-owned subsidiaries, ASI and AHS.
Through these companies, AUBIS combines information technology, systems
integration and software development expertise into an integrated team to
support its current customer base and to focus on the expanding healthcare
marketplace.
AUBIS SYSTEMS INTEGRATION, INC.
ASI, formerly known as G.E. Random & Associates d/b/a Peripheral
Design, has provided value added computer services, network solutions,
connectivity solutions and system integration, principally to Atlanta-area
businesses, since 1985. ASI provides microcomputers, peripherals, on-site
and depot maintenance, network design, network installation, cable plant
design and installation, and network consulting in the southeastern United
States. Its trained technical staff has experience in computer system
integration, network configuration and network implementation. ASI has
certified network engineers on staff for LAN and WAN network services. ASI
sells, services and supports many major brands of computers, peripherals
and networks. ASI support services include on-site hardware maintenance as
well as network support programs.
ASI offers local area network design and installation, wide area
network design and installation, cable plant design, installation and
management, network management systems and network trouble shooting,
protocol debugging and performance analysis.
AUBIS HOSPITALITY SYSTEMS, INC.
AHS, formerly known as Wiporwil Systems, Inc., has provided value
added sales and services in the southeastern United States to individuals,
franchisees, management companies and national chains in the restaurant
industry since 1992. Through 1995, AHS has been a restaurant software
distributor providing sales and support primarily for the Squirrel POS
(fine dining) and Comptrex POS (fast food) product lines. The operations
of AHS were discontinued during the second quarter of 1996 due to the loss
of certain of its supplier relationships. See "-Background."
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BACKGROUND
AUBIS was organized as a Georgia limited liability company in February
1995 to acquire an interest in AHS and ASI. Paul W. Harrison has acted as
the managing member of AUBIS since its inception.
AHS was started by William Gray, a former employee of Sulcus
Hospitality Systems, Inc., the owner and distributor of the Squirrel POS
System. Mr. Gray was knowledgeable of the Squirrel POS system and assisted
AHS in becoming one of Sulcus's largest distributors. In February 1993,
Nate Lipson acquired a minority ownership interest in AHS. In June 1994,
Mr. Harrison, through PHE, an investment company he controls, acquired a
minority interest in AHS. Mr. Lipson and Mr. Harrison organized AUBIS in
February 1995 to hold their interests in AHS and to acquire the remaining
outstanding interests of the other shareholders. As a consequence of these
acquisitions, some of the former minority shareholders of AHS own a
minority interest in AUBIS.
ASI was founded by Gordon Random and Marvin Wallace to address a
growing need for qualified network and integration support at a time when
the applications of PC-based computer systems were beginning to expand
tremendously. In January 1995, Mr. Harrison, through PHE, an investment
company he controls, and Mr. Lipson each acquired a minority interest in
ASI. In February 1995, these interests were contributed to AUBIS. In
March 1995, the remaining outstanding shareholder interests of ASI were
acquired by AUBIS from Mr. Wallace and Mr. Random, who each now hold a
minority interest in AUBIS.
Subsequent to the announcement of the AUBIS Transaction in December
1995, Sulcus Hospitality, Inc. informed AHS that it would not renew its
dealership contract effective as of January 1, 1996. As a consequence, AHS
is no longer entitled to sell the Squirrel Restaurant System (fine dining).
In 1994 and 1995 this line of business generated approximately $1.50
million and $1.75 million in revenues to AHS, respectively. This
represents approximately 99% of AHS' total revenue for 1994 and 89% of
AHS's total revenue for 1995.
Prior to January 1996, AHS was the exclusive distributor of the
Comptrex POS Restaurant System (fast food) in the northern half of the
state of Georgia and other surrounding territories. In an effort to
replace the anticipated reduction in revenues from the loss of the Squirrel
product line, AHS acquired the business of JMJ Development, Inc. d/b/a
Quick Service Consulting, a Georgia corporation ("QSC"). QSC was a
distributor of the Comptrex product line that had southern Georgia and
other surrounding areas as its exclusive territory. Through this
acquisition, AHS significantly increased the size of the territory in which
it could sell the Comptrex product line to include all of the State of
Georgia and a 50-mile radius outside its borders, acquired an existing
customer base, and brought in two new employees who have a experience in
selling the Comptrex products.
As an additional measure to offset lost revenues from the Squirrel
product line, AHS began to distribute the Fisher Restaurant Management
System(R) (fine dining). In order to allow AHS to staff up for the
distribution and marketing of the Fisher Restaurant Management System(R),
Fisher advanced AHS $80,000 pursuant to a marketing agreement entered into
in February 1996, which is to be repaid out of gross sales commissions to
be earned by AHS on the sale of such systems.
Although AHS had taken the above measures in an effort to replace the
loss in revenue, AHS experienced a severe cash drain caused by the loss of
Squirrel business and slower than expected sales of the Comptrex and Fisher
products. This caused AUBIS' management to reevaluate the focus of AHS'
business which has been primarily directed to small independent restaurant
operators that required a substantial staff to provide support services.
In the second quarter of 1996, management of AUBIS discontinued the
business of AHS and, in anticipation of the consummation of the
Transactions, decided to direct its resources to providing software and
systems integration services to the healthcare market through ASI and its
relationships with Fisher and HALIS.
During the audit of its books and records for the year ended December
31, 1995, AUBIS discovered apparent improprieties and misappropriations of
its assets and business that it believes were caused by one of its
employees. This individual is no longer employed by AUBIS. An
investigation into these allegations has
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determined losses of $97,123. Management of AUBIS has taken measures to
prevent any such misappropriation of assets in the future. See "AUBIS
MANAGEMENT'S DISCUSSION AND ANALYSIS."
PRODUCTS
ASI currently sells microcomputers, peripherals, on-site and depot
maintenance, network design, network installation, cable plant design and
installation and network consulting in the southeastern United States and
plans to continue this business and expand its system integration efforts.
COMPETITION
ASI competes in a market which has hundreds of participants ranging
from individually owned and operated providers to larger corporate
providers such as AT&T and IBM. ASI's ability to compete in the small to
medium sized business market is based on its ability to provide value-added
expertise at a competitive price. ASI currently has a substantial customer
base and hopes to continue to expand this base in the hospitality,
healthcare and other industries.
CUSTOMERS
ASI's major customers include: Canada Life Insurance; Kurt Salmas and
Associates; Piedmont, Olson and Heasly; U.S. Franchise, Inc.; Buckhead Life
Restaurant Group; and many smaller businesses in the southeastern United
States.
EMPLOYEES
As of July 31, 1996, ASI had 14 full-time employees, including two in
senior management, two sales employees, two financial and administrative
employees, and eight support staff employees. Each employee has a direct
role in customer support and general relations. None of ASI's employees is
subject to a collective bargaining agreement. ASI considers its
relationship with its employees to be good. ASI requires all employees to
sign an agreement in which they agree not to disclose any of ASI's trade
secrets to others during the term, or after termination, of their
employment. As a result of the discontinuance of its operations, AHS no
longer employs any personnel.
PROPERTIES
AUBIS' headquarters is located at Lenox Towers, 3390 Peachtree Road,
N.E., Suite 1000, Atlanta, Georgia 30326. AHS is located in 3,200 square
feet of Class B office park space at 2028 Powers Ferry Road, Suite 190,
Atlanta, Georgia 30339. ASI is currently sharing office space with Fisher
in Atlanta, Georgia. See "INFORMATION REGARDING FISHER-Properties."
LEGAL PROCEEDINGS
Other than as set forth below, there are no material legal proceedings
pending to which AUBIS is a party or to which its properties are subject;
nor are there any material proceedings known to AUBIS, pending or
contemplated, in which any directors, officers or affiliates of AUBIS, or
any associate of any of the foregoing is a party or has an interest adverse
to AUBIS.
In September 1995, an action was filed against AHS in the State Court
of Cobb County, Georgia by a freight company on open account alleging a
claim of approximately $6,000. A judgment relating to the matter has been
entered against AHS for this amount, which AHS plans to satisfy in the
ordinary course.
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INFORMATION REGARDING HALIS
GENERAL
HALIS was organized in October 1995 as a Georgia limited liability
company, and through its wholly owned subsidiary, HALIS Software, Inc., a
Georgia corporation ("HSI"), is engaged in developing and marketing
advanced healthcare information systems to managed care organizations and
their various points of service such as physicians, hospitals and
laboratories.
BACKGROUND
In July 1995, Paul Harrison contemplated the design of an advanced
healthcare informational data base system for a managed care environment
that would compete in the emerging healthcare information systems industry.
Mr. Harrison has significant experience in developing relational and object
oriented informational systems in the healthcare and insurance industries.
See "ELECTION OF DIRECTORS - Paul W. Harrison." In order to effectuate
this goal, Mr. Harrison, with the assistance of Paul Harrison Enterprises,
Inc., an investment company that he controls ("PHE"), organized HALIS. HSI
was subsequently incorporated in October 1995 as a wholly-owned subsidiary
of HALIS. In January 1996, HALIS transferred to HSI (i) a "prototype
healthcare information system" that was in the early stages of its
development and (ii) a license to use advanced computer technology known as
"MERAD" which HALIS had licensed from PHE. Under the MERAD license, HSI
can utilize MERAD technology to continue the development of healthcare
information systems, and is authorized to modify and enhance the MERAD
technology. The MERAD license provides that any enhancements and
modifications to the MERAD technology become the proprietary property of
PHE subject to HSI's right to use such technology pursuant to the terms of
the license.
The "prototype healthcare information system" is now the HALIS
Healthcare Enterprise software program/system (the "HALIS Program"). The
HALIS Program has been used to create two software products, with several
more in development. See "- Products."
ProHealth Solutions, Inc. ("ProHealth") was incorporated in December
1994 and commenced business operations in January 1995. ProHealth was
originally created for the purpose of engaging in the business of providing
software and services to managed care organizations in the area of
preventive care. In December 1995, HALIS acquired 100% of the issued and
outstanding capital stock of ProHealth. In March 1996, ProHealth was
merged with and into HSI, with HSI continuing as the surviving entity. As
a consequence, the business, assets and liabilities of HSI and ProHealth
have been combined and continue as those of HSI.
ProHealth owned a database program that contained medical protocols,
which were to be used by healthcare organizations to administer
preventative care measures. The program was called Partners in Prevention
and was used under contract by Prudential. ProHealth had intended to sell
that program to others but was unsuccessful. After ProHealth was acquired
by HALIS, HALIS management decided that the program was inadequate and was
unsuitable to market as a stand alone product and it was therefore
discontinued. HALIS attempted to incorporate the program into its own
software but again found it to be inadequate for real commercial
application. The information (medical protocols) contained in the database
and used by the program do, however, have some value, and can be used as a
small set of information in the HALIS Program. HALIS intends to extract
and use the information that is of value and discard the Partners in
Prevention software program. The Partners in Prevention program generated
revenues of approximately $314,000 in 1995, representing 94% of the total
revenues of ProHealth. No revenues have been generated by the Partners in
Prevention program in 1996.
ProHealth also owned the Managed Care Guide, which is a booklet
containing demographic data about doctors and other health care
professionals. The booklet served as a directory that could be used for
referring patients to specialists. For example, the booklet might provide
data about where to go for diabetes and tell if the specialist was in the
approved network of doctors under a managed care contract. HALIS plans to
discontinue the
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Managed Care Guide in its present form, but plans to reproduce the same
type of information in its own healthcare program. Management believes
that the information is of good value as part of the HALIS Program, but is
of little value as a separate and stand-alone paper-based Managed Care
Guide. The Managed Care Guide generated revenues of approximately $50,000
in 1995, representing 6% of the total revenues of ProHealth. No revenues
have been generated by the Managed Care Guide in 1996.
HSI plans to continue developing the HALIS Program as well as continue
to modify and enhance the MERAD technology. It is HSI's goal to be a
leading provider of advanced healthcare information systems. In order to
achieve this goal, however, HSI is in need of working capital which could
be applied to its research and development efforts. In that regard,
because Mr. Harrison, who controlled AUBIS, was already committed with
Fisher to proceed with the AUBIS Transaction, Mr. Harrison commenced
discussions with Fisher about the acquisition of HSI. The Board of
Directors of Fisher evaluated the long-term strategic plan envisioned by
Mr. Harrison, which would transform Fisher into a high technology based
company in the healthcare and hospitality information system markets using
an advanced database platform based on the MERAD technology. On January
25, 1996, a letter of intent was executed between HALIS, HSI and Fisher
which culminated in a stock purchase agreement being executed on March 26,
1996. See "TERMS OF THE TRANSACTIONS -- The HALIS Agreement.
PRODUCTS
Prior to its acquisition and subsequent merger into HSI, ProHealth
developed and marketed a proactive preventive care data collection system
called Partners In Prevention. ProHealth (now HSI) acts as a service
bureau and utilizes the program to enable a managed care organization to
improve its HEDIS (Health Employer Data Information Set) performance
scores, improve the level of preventive care services provided to their
members, and to collect important and meaningful data for reporting to the
National Committee on Quality Assurance.
ProHealth has also developed and marketed the Managed Care Guide,
which is a tool to help primary care physicians and their staff manage the
referral and authorization process for their patients which is required by
managed care plans.
The HALIS Program will provide a comprehensive information system for
managed care organizations and provides both point of service and a managed
care organization functionality. The system addresses the healthcare
providers needs by integrating all of the primary applications in a common,
multi-media database utilizing an object-relational data management
approach. This data management technology allows processing to occur
within the database itself, and eliminates the need for costly off-site
edits and rewrites. Applications can easily be modified to reflect day-to-
day changes in health plans, diagnostics, and other coding methodologies
which occur in every managed care organization. This enhanced feature will
save time, money and provide flexibility needed to manage change. The
software will enable the managed care organization to manage its business
and patient care through data transfers between various points of service
and a central management point. This will allow a physician provider the
flexibility to observe the patients' plan and benefits immediately without
making separate inquiries of the managed care organization. The system
will tabulate in an on-line mode and keep track of patient deductibles and
co-pays.
The HALIS Program has been used to create two software products, with
several more in development. The two products are referred to as the
Healthcare Practice System and the Managed Care System. Both of these
products are currently being marketed and sold in an as is form. To date,
five companies have purchased and/or are using the two products in a beta-
test arrangement. It is anticipated that both products will be ready for
full commercial deployment by the first quarter of 1997. See "BACKGROUND
OF AND REASONS FOR THE TRANSACTIONS - Management and Operations of Fisher
After the Transactions."
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COMPETITION
Prior to 1995, there were no other similar products to the Partners In
Prevention program being offered by competitors. However, recently other
software developers have entered the market.
HSI believes that there presently is no direct competition for the
Managed Care Guide, and it currently exists as the only comprehensive
guide available to the managed care industry.
Competition in the healthcare information services industry is intense
and includes healthcare software companies such as HBO & Company, service
bureaus and general computer software and services companies that also
offer system integration services.
CUSTOMERS
HSI's major customer for the Partners In Prevention program has been
Prudential Health Care Systems of Georgia ("Prudential"). Prudential has
recently notified HSI that it does not intend to honor the balance of its
contract, which has two years remaining. Prudential is not honoring the
balance of its contract for two reasons. First, the Partners in Prevention
Program was inadequate to meet Prudential's needs. Second, Prudential has
decided to cancel the project that utilizes Partners in Prevention. Lost
revenues to HSI as a result of the termination of the contract by
Prudential is approximately $270,000.
The major client for the Managed Care Guide has been Hoechst Marion
Roussel ("HMR"), an international pharmaceutical company. A contract is
currently in force with HMR that provides HMR a right of first refusal to
distribute the Managed Care Guide in all major markets in the United
States. The impact upon HSI of HMR's right of first refusal concerning the
Managed Care Guide on a historical basis has been immaterial. HSI has not
focused on the Managed Care Guide as a product in itself and only plans to
incorporate the generic information used to produce the Guide. HSI did not
expect to generate revenues from the Managed Care Guide as a separate
product.
The projected impact HMR will have on HSI in general is negligible
because HSI does not plan to market the Managed Care Guide as a product in
itself. HSI plans to only use generic information (public domain type of
information) available to incorporate in the HALIS Program. In addition,
HSI believes that HMR will not exercise its right of first refusal and
would free HSI to distribute (if HSI chose to do so) the Managed Care Guide
through other organizations. If HMR does exercise its right of first
refusal, HSI will receive revenues it would otherwise not generate on its
own.
EMPLOYEES
As of July 31, 1996, HSI had only two full-time employees of which one
is in executive management and the other is in administration. In
addition, HSI utilizes the services of independent contractors on an "as
needed" basis to assist in the development of its software.
PROPERTIES
HSI's headquarters is located at 200 Hembree Park Drive, Suite K,
Roswell, Georgia 30076. Management believes that this 3,600 square foot
facility is adequate to meet HSI's needs until the first quarter of 1997.
At that time, HSI may require additional space to accommodate additional
sales and customer service personnel.
PROPRIETARY PROPERTY
HSI regards its software as proprietary and protects it with common
law copyrights, trade secret law, and internal non-disclosure safeguards.
Presently, none of HSI's software is in the possession or control of any
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customers. HSI has not developed any of its software through the use of
employees, but, rather, has developed all of its software products through
the use of independent consultants. All consultants who have worked on the
healthcare information system have executed contractor agreements whereby
such contractor agrees to maintain information relating to the software in
confidence and to assign any rights that the contractor may acquire, by
operation of law, to HSI. All contractors that were involved in the
development of the Partners In Prevention program have assigned to HSI any
rights they might have had, by operation of law or otherwise, in the
Partners In Prevention program. As a result, HSI is the exclusive owner
of all of such rights. All copyrights related to the Managed Care Guide
belong to, and are the exclusive property of, HSI. HSI has not sought
federal copyright protection of any of its products and is relying solely
upon common law copyright protections.
HSI is presently seeking federal protection of the following
trademarks which are in various levels of completion: Managed Care Guide,
Partners In Prevention and Preventive Care Partnership. No federal
registrations have yet been obtained with regard to any of these
trademarks. HSI plans to seek federal copyright protection on the HALIS
Program.
LEGAL PROCEEDINGS
There are no material pending legal proceedings to which HALIS or HSI
is a party or to which their properties are subject; nor are there any
material proceedings known to HALIS or HSI to be contemplated by any
governmental authority; nor are there any material proceedings known to
HALIS or HSI, pending or contemplated, in which any director, officer or
affiliate or any principal security holder of HALIS or HSI, or any
associate of any of the foregoing is a party or has an interest adverse to
HALIS or HSI.
INFORMATION REGARDING ACCS
GENERAL
ACCS, a Georgia corporation, was founded in April 1994 by Wayne and
Charlotte Surman as a distributor of third party software to the healthcare
industry. ACCS distributes the Fox MedPro and Fox DentPro software
developed by Alamo Systems primarily to medical billing centers. ACCS
began with six employees, all of whom were involved in the sales and
support of the third party software.
ACCS has concentrated its sales and marketing efforts primarily on the
`business opportunity' marketplace, as opposed to direct marketing to
physicians. ACCS and its commission-only representatives attend business
opportunity trade shows and demonstrate the ACCS third party medical
billing software to prospective customers. Individual follow up sessions
are then held during or immediately after each show with the qualified
prospects to sell them a license for ACCS' third party software.
The billing center pays between $3,500 and $7,000 for the billing
software marketed by ACCS. This price includes training at the ACCS
offices in Atlanta, during which the billing center is allowed to receive a
refund if it determines that it is unlikely to be able to successfully use
the software or provide the billing service. During 1994 (ACCS' first year
of operation), approximately $2 million of such licenses were sold, and in
1995, approximately $3 million were sold. In each case, the marketing
company, which was a `commission only' representative, received between 60%
and 67% of the revenue generated from sales which it brought in, with ACCS
receiving the balance of the revenue. In addition, ACCS generates sales
by attending certain of these business opportunity shows itself.
ACCS pays Alamo Software approximately $100,000 per year for the
license to resell its software. This fee entitles ACCS to sell an
unlimited number of licenses in those states for which the licenses had
been granted. ACCS' license with Alamo Software currently covers 38 states
and is renewable annually.
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ACCS charges its customers approximately $500 per year for support of
the software which it provides. This fee includes telephone support to the
users, as well as the distribution of software upgrades.
PRODUCTS
ACCS distributes the Fox MedPro and Fox DentPro healthcare billing
software developed by Alamo Systems. In addition, ACCS has begun to sell
the HALIS managed care system to ACCS prospects whose needs exceeded the
capabilities of the Alamo Systems software. See "INFORMATION REGARDING
HALIS - Products" for a description of the HALIS managed care system.
COMPETITION
ACCS currently competes with other third party resellers, as well as
software manufacturers who directly market their software products.
Competition for sales, however, focuses on the software product itself.
The Alamo software currently being distributed by ACCS competes with over a
dozen other healthcare practice management systems.
CUSTOMERS
ACCS focuses on the medical billing application of healthcare, and
primarily markets its third party software to startup medical billing
centers. These centers were usually home businesses which were operated on
a part time basis or an a full time basis by the spouse of an otherwise
full time employee of a different business. These small billing centers
purchase a license to ACCS' third party software and then call on
physicians and dentists in their local area to solicit their medical
billing business. The medical billing center offers to take over the
submission of claims and manage the collection of receivables for the
practice. A typical commission for this service is 8% to 10% of the amount
billed and collected. As of July 31, 1996, ACCS had sold over 700 systems,
principally to medical billing centers.
EMPLOYEES
As of July 31, 1996, ACCS had six full time employees, including one
in senior management. ACCS also utilizes independent sales representatives
to market, on a commission basis, its third party software. None of ACCS'
employees is subject to a collective bargaining agreement and management
considers its employee relations to be good.
PROPERTIES
ACCS' headquarters is located in a 3,800 square foot facility located
at 1000 Abernathy Road, Suite 1040, Atlanta, Georgia 30328. ACCS is
currently leasing this space pursuant to a sublease which expires in
December 1996.
LEGAL PROCEEDINGS
Except as set forth below, there are no material pending legal
proceedings to which ACCS is a party or to which its properties are
subject; nor are there any material proceedings known to ACCS to be
contemplated by any governmental authority; nor are there any material
proceedings known to ACCS, pending or contemplated, in which any director,
officer or affiliate or any principal security holder of ACCS, or any
associate of any of the foregoing is a party or has an interest adverse to
ACCS.
In early 1996, ACCS initiated suit against Aqua Group, Ltd. ("Aqua")
for breach of fiduciary duty in connection with the sale of software
products by Aqua on behalf of ACCS. Aqua subsequently counterclaimed,
seeking remedy of an unspecified amount of commissions from ACCS. ACCS
denies any liability with respect to these claims and intends to vigorously
defend them.
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UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet of HALIS,
Inc. gives effect to the following transactions as if they occurred on June 30,
1996: the reverse acquisition of Fisher Business Systems, Inc. (Fisher) by AUBIS
Hospitality Systems, Inc., AUBIS Systems Integration, Inc., Halis Software, Inc.
and ProHealth Solutions, Inc. (collectively the Predecessor) and the acquisition
of Advanced Custom Computer Solutions, Inc. (ACCS) by Fisher. The Unaudited Pro
Forma Condensed Consolidated Statement of Operations for HALIS, Inc. for the
year ended December 31, 1995 and the six months ended June 30, 1996 gives
retroactive effect to the prior transactions as if they had occurred January 1,
1995. The Unaudited Pro Forma Condensed Consolidated Financial Statements do not
purport to be indicative of the actual financial position or the results of
operations of HALIS, Inc. had the acquisition been completed and should be read
in conjunction with the audited financial statements of Fisher and ACCS and the
Predecessor and the related notes thereto appearing elsewhere herein.
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
<TABLE>
<CAPTION>
Advanced
Fisher Custom
Business Computer
Predecessor Systems, Inc. Solutions, Inc.
June 30, 1996 July 31, 1996 June 30, 1996 Adjustments Pro Forma
------------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Current assets $ 343,569 $ 67,334 $ 96,478 $ $ 507,381
Notes receivable from
Predecessor 971,551 (a) (971,551) -
Property and equipment 37,342 37,707 64,162 139,211
Other assets 24,180 7,255 31,435
Deferred merger costs 331,547 157,160 (b) (488,707) -
------------- ------------- --------------- ------------ ------------
Total assets $ 736,638 $ 1,233,752 $ 167,895 $ (1,460,258) $ 678,027
============= ============= =============== ============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities $ 1,911,134 $ 405,797 $ 271,193 (a) $ (971,551) $ 1,466,573
(d) (150,000)
Convertible promissory
notes 1,240,000 1,240,000
------------- ------------- --------------- ------------ ------------
Total liabilities 1,911,134 1,645,797 271,193 (1,121,551) 2,706,573
Stockholders' deficit
- ---------------------
Net stockholder's deficit (1,174,496) (103,298)(c) 1,277,794 -
Common stock, par
value $.01 50,195 (c) 181,805 232,000
Additional paid-in capital 8,509,986 (c) 404,982 9,064,968
(d) 150,000
Accumulated deficit (8,965,476) (c) (1,864,581) (11,318,764)
(b) (488,707)
Less: Treasury stock at
cost (6,750) (6,750)
------------- ------------- --------------- ------------ ------------
Total stockholders' deficit (1,174,496) (412,045) (103,298) (338,707) (2,028,546)
------------- ------------- --------------- ------------ ------------
Total liabilities and
stockholders' deficit $ 736,638 $ 1,233,752 $ 167,895 $ 1,460,258 $ 678,027
============= ============= =============== ============ ============
Common stock issued
and outstanding (c) 7,450,046 15,750,000 23,200,046
============= ============ ============
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Advanced
Fisher Custom
Business Computer
Predecessor System, Inc. Solutions, Inc.
Year Ended Year Ended Year Ended
December 31, 1995 January 31, 1996 March 31, 1996 Adjustments Pro Forma
----------------- ---------------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Systems sales and services $3,582,896 $ 732,549 $2,798,872 $ - $ 7,114,317
- ------------------------- ---------- ---------- ---------- --------- -----------
Costs and expenses
- -----------------
Cost of goods sold 2,613,259 246,992 1,885,004 4,745,255
Research and development
Selling, general and administrative 1,249,790 684,981 884,229(e) 123,021 2,942,021
---------- ---------- ---------- --------- -----------
3,863,049 931,973 2,769,233 123,021 7,687,276
---------- ---------- ---------- --------- -----------
Operating income (loss) (280,153) (199,424) 29,639 (123,021) (572,959)
- ---------------------- ---------- ---------- ---------- --------- -----------
Other income (expense)
- ----------------------
Gain on asset disposal 6,385 6,385
Rental income 21,350 21,350
Interest expense (22,798) (f) (86,800) (94,598)
(g) 15,000
Interest income 1,394 1,394
Other income 315 315
Loss from misappropriation (97,123) (97,123)
---------- ---------- ---------- --------- -----------
(90,477) (71,800) (162,277)
---------- ---------- ---------- --------- -----------
Income (Loss) before
income taxes (370,630) (199,424) 29,639 (194,821) (735,236)
Provision for income taxes 2,308 - 18,135(i) (20,443) -0-
- -------------------------- ---------- ---------- ---------- --------- -----------
Net income (loss) $ (372,938) $ (199,424) $ 11,504 $(174,378) $ (735,236)
========== ========== ========== ========= ===========
Net loss per share $ (.03) $ (.03)
========== ===========
Shares outstanding(j) 7,450,046 23,200,046
========== ===========
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements.
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<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Advanced
Fisher Custom
Business Computer
Predecessor Systems, Inc. Solutions, Inc.
Six Months Ended Six Months Ended Six Months Ended
June 30, 1996 July 31, 1996 June 30, 1996 Adjustments Pro Forma
------------- ------------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Systems sales and services $ 1,302,224 $ 238,116 $ 320,300 $ - $ 1,860,640
------------- ------------- --------------- ------------ ------------
Costs and expenses
- ------------------
Cost of goods sold 815,734 73,428 119,638 1,008,800
Research and development 126,923 126,923
Selling, general, and
administrative 657,076 323,864 458,684 (e) 9,194 1,448,818
------------- ------------- --------------- ------------ ------------
1,599,733 397,292 578,322 9,194 2,584,541
------------- ------------- --------------- ------------ ------------
Operating loss
- -------------- (297,509) (159,176) (258,022) (9,194) (723,901)
------------- ------------- --------------- ------------ ------------
Other income (expense)
Gain (Loss) on asset disposal (27,528) (27,528)
Rental income 7,700 7,700
Interest expense (14,166) (f) (29,238) (35,904)
(g) 7,500
Other income (7,500) (7,500)
Miscellaneous expense (30,210) (30,210)
------------- ------------- --------------- ------------ ------------
(41,494) (30,210) - (21,738) 93,442
------------- ------------- --------------- ------------ ------------
Loss before income taxes (339,003) (189,386) (258,022) (30,932) (817,343)
------------- ------------- --------------- ------------ ------------
Provision for income taxes - - (51,754)(i) 51,754 -0-
------------- ------------- --------------- ------------ ------------
Net loss $ (339,003) $ (189,386) $ (206,268) $ (82,686) $ (817,343)
============= ============= =============== ============ ============
Net loss per share $ (.03) $ (.04)
============= ============
Shares outstanding (j) $ 7,450,046 $ 23,200,046
============= ============
</TABLE>
See notes to unaudited pro forma condensed consolidated financial statements
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED
PRO FORMA FINANCIAL STATEMENTS
Balance Sheet - June 30, 1996:
- -----------------------------
(a) To record the elimination of intercompany advances from Fisher to the
Predecessor.
(b) To write off the deferred merger costs.
(c) To record the issuance by Fisher of 750,000 shares of common stock to the
shareholders of ACCS in exchange for 100% of the outstanding stock of ACCS
in a transaction accounted for at the historical cost to ACCS.
To record the issuance by Fisher of 15,000,000 shares of common stock to the
shareholders of the Predecessor in exchange for 100% of the outstanding
stock of the Predecessor in a transaction accounted for as the reverse
acquisition of Fisher by the Predecessor.
To adjust pro forma common stock issued and outstanding to 23,200,046
shares, consisting of 7,450,046 (per Fisher July 31, 1996 10Q) plus the
additional shares issued in the acquisitions.
(d) To record the satisfaction of $150,000 of a note payable due to a related
party through the transfer of certain shares among the shareholders of the
Predecessor.
Statement of Operations:
- -----------------------
For the year ended December 31, 1995 and for the six months ended June 30, 1996:
- -------------------------------------------------------------------------------
(e) To adjust selling, general, and administrative expenses to reflect a new
employment contract to be entered into with an officer in conjunction with
the merger. The adjustment is the difference between the amount of the
employment contract and management fee expense to an affiliate of the
officer, which terminated June 1, 1996.
(f) To adjust interest expense to reflect interest on convertible promissory
notes, issued during the six month period ended July 31, 1996, in the amount
of $1,240,000 at 7%.
(g) To adjust interest expense to reflect the satisfaction of related party debt
upon consummation of the merger. See note (d) above.
(h) Pro Forma shares outstanding include 23,200,046 shares which are the
7,450,046 shares of Fisher outstanding at July 31, 1996, plus the 750,000
shares to be issued to the shareholders of ACCS and 15,000,000 shares to be
issued to the Parent of the Predecessor.
(i) Because of significant operating losses, no tax benefit is attributed to
entries (e) through (g) and the provision for income taxes is adjusted to
zero.
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FISHER
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the
financial statements of Fisher contained elsewhere in this Proxy Statement.
FINANCIAL CONDITION
Total assets increased $946,218 or 229% from January 31, 1996 due
primarily to an increase in note receivable of 971,551. The increase in
accounts receivable results primarily from the advance by Fisher of
$971,551 to AUBIS and HALIS during the period to support their operations.
AUBIS's cash needs result, in part, from the loss of a significant supplier
and customer of AHS. This supplier accounted for approximately 54% of the
total revenues of the AUBIS Subsidiaries for the year ended December 31,
1995. Fisher was able to fund these advances to AUBIS and HALIS from the
proceeds of its private placement of 7.0% Convertible Promissory Notes due
January 15, 1998. See "- Liquidity and Capital Resources."
In an effort to continue to resolve its liquidity problems, Fisher
successfully renegotiated terms with many of its vendors which resulted in
reductions of vendor payables of $243,838 during fiscal 1996 and $78,230
during the six months ended July 31, 1996. The vendor renegotiations were
conducted periodically on a vendor-by-vendor basis over a period of time
beginning the fourth quarter of fiscal 1994 and ending the first quarter of
fiscal 1997. No unresolved items are outstanding concerning Fisher's
liability for the debts. Management does not believe that these debt
restructurings will have a material adverse impact on the continued
availability of vendor credits.
Fisher has changed its fiscal year end from July 31 to December 31,
effective December 31, 1996.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JULY 31, 1996 COMPARED TO SIX MONTHS ENDED JULY 31, 1995
Revenues for the six months ended July 31, 1996 were $238,116, a
decrease of $134,956, or 36%, from the prior period revenues of $373,072.
The decrease in revenues is primarily attributable to a reduction in
software sales. During the six months ended July 31, 1996, approximately
85% of Fisher's revenues were from support services and approximately 15%
were from system sales. The increased percentage of revenues from services
is a result of Fisher's inability to sell its restaurant software.
Selling, general and administrative expenses were $323,864 for the six
months ended July 31, 1996, compared to $297,687 for the prior year period.
The increase was largely due to activities relating to the proposed
Transactions.
Fisher recorded a net loss of $111,156 for the six months ended July
31, 1996, as compared to a net loss of $34,549 for the prior year period.
The net loss for the 1996 period was higher as a result of lower revenues,
coupled with higher selling, general and administrative expenses relating
to the Transactions. The net loss for the six months ended July 31, 1996
would have been greater, but for a benefit of $78,230 of extraordinary
income from debt restructuring.
FISCAL YEAR ENDED JANUARY 31, 1996 COMPARED WITH FISCAL YEAR ENDED JANUARY
31, 1995
Revenues for the year ended January 31, 1996 (fiscal 1996) were
$732,549, a decrease of $529,642, or 42%, from the prior year revenues of
$1,262,191. The decrease in revenues is primarily attributable to the fact
that substantially all (approximately 85%) of Fisher's revenues in fiscal
1996 were derived from support services for its Fisher Restaurant
Management System(R), rather than from sales of systems. System sales
accounted for approximately 15% of Fisher's total revenues in fiscal 1996.
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The allowance for possible losses on accounts receivable decreased to
$3,000 during fiscal 1996, as compared to $40,000 for the previous year, as
a result of the significant decrease in accounts receivable during the
period.
Selling, general and administrative expenses were $681,981 for fiscal
1996, compared to $1,945,088 for the prior year. The decrease of
$1,263,107, or 65%, was largely due to reduction in personnel during the
period.
Fisher capitalizes software development costs in accordance with the
Statement of Financial Accounting Standards No. 86. Based on the ongoing
reassessment of recoverability of capitalized software development cost,
and the limited future revenues derived from such costs, during the fourth
quarter of 1995, Fisher recorded a charge of $193,720 to fully amortize
software development costs.
Fisher recorded net income for fiscal 1996 of $44,414, as compared to
a net loss of $1,188,870 for the prior year. The improvement in net income
is primarily the result of significant reductions in operating expenses, as
well as a benefit of $243,838 from debt restructuring.
FISCAL YEAR ENDED JANUARY 31, 1995 COMPARED WITH FISCAL YEAR ENDED JANUARY
31, 1994
Revenues for the year January 31, 1995 (fiscal 1995) were $1,262,191,
a decrease of $4,076,853, or 76%, from the prior year revenues of
$5,339,044. The decrease in revenues is primarily attributable to the loss
of Fisher's client/server service business and Fisher's focus on
opportunities for the sale of higher margin software and software services.
Approximately 80% of Fisher's revenues were from support services and
approximately 20% of its revenues were from system sales during fiscal
1995.
Fisher did not incur any research and development expenses in fiscal
1995. Research and development expenses for the prior year were $695,561.
The elimination of these expenses relates directly to the maturation of
Fisher's current product.
The allowance for possible losses on accounts receivable decreased to
$40,000 during fiscal 1995, as compared to $230,476 for the previous year,
as a result of the significant decrease in accounts receivable during the
period.
Selling, general and administrative expenses were $1,945,088 for
fiscal 1995 compared to $2,725,354 for the prior year. The decrease of
$780,266, or 29%, was largely due to reduction in personnel during the
period.
Interest expense decreased significantly as Fisher's line of credit
has expired. A replacement facility has not been obtained by Fisher.
Fisher recorded a net loss for fiscal 1995 of $1,278,918, as compared
to a net loss of $530,378 for the prior year. The increase in the net loss
was primarily due to the loss of Fisher's client/server services
businesses.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1996, Fisher had working capital of $633,088, compared to
a deficit of $379,492 at January 31, 1996. The increase in working capital
is principally due to proceeds from the private placement of Notes
completed in the first half of fiscal 1997. With the departure in January
1994 of substantially all of the former Blue Mountain employees, Fisher
lost its ability to provide client/server services to its customers,
including MCI. Accordingly, Fisher's revenues and cash flow for the last
two fiscal years has been materially adversely affected by the loss of
revenues from its former client/server business. Until such time as the
Transactions can be consummated, Fisher's revenue will be limited to
revenue from support contracts with existing customers and sales of its
software and services.
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Pending completion of the Transactions and the conversion of Fisher's
business to that of a provider of software applications and technology
services to the healthcare industry, Fisher has instituted stringent
measures designed to reduce expenses as much as possible consistent with
providing the level of services required by its customers, including a
reduction of the number of personnel. Fisher presently employs eight
people.
In the first half of fiscal 1997, Fisher completed an offering of
$1,470,000 of 7.0% Convertible Promissory Notes due January 15, 1998 (the
"Notes"). Interest on the Notes is payable quarterly by Fisher and the
principal thereof (plus any accrued interest) may, at the option of the
holder, be converted into shares of Fisher Common Stock at a conversion
price of $1.00 per share. Any such conversion must be made on or before
January 15, 1998. Approximately $972,720 of the proceeds of this offering
have been advanced to AUBIS and HALIS to support their operations (which
advances have been accounted for as notes receivable from affiliates),
while the balance of the proceeds from the sale of the Notes have been
utilized to expand Fisher's sales and marketing capabilities in
anticipation of the Transactions.
The advances to AUBIS and HALIS bear interest at rates ranging from
10% to 12% and are due and payable on the first anniversary of the date of
the advance. The advance of funds to AUBIS and HALIS are evidenced by
demand notes and secured by a security interest in the outstanding common
stock of HSI. If the Transactions are not consummated, it is the intention
of Fisher to demand repayment of all outstanding amounts owed by AUBIS and
HALIS. If AUBIS and HALIS are unable to repay the advances, it is Fisher's
intent to foreclose on the collateral. These advances are accounted for by
Fisher as notes receivable from affiliates.
In anticipation of the consummation of the Transactions, Fisher has
commenced a private placement of common stock. Shares are being offered on
a best-efforts basis through a registered broker-dealer. Consummation of
the Transactions and attainment of subscriptions to purchase not less than
$1,200,000 in this offering are conditions to closing of this offering. If
successful, the net proceeds of the offering will be utilized by Fisher
subsequent to the consummation of the Transactions to expand its sales and
marketing efforts, enhance its software products, support the growth of its
administrative infrastructure, acquire selected healthcare software and
service companies and system integration companies and for general
corporate purposes.
AUBIS
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the
combined financial statements of AHS and ASI contained elsewhere in this
Proxy Statement.
FINANCIAL CONDITION
The AUBIS Subsidiaries had combined total assets at June 30, 1996 of
$682,574 which was an increase of $103,912, or 18% over its assets at
December 31, 1995, which were $578,662. This increase was primarily due to
capitalization of accrued expenses associated with the proposed merger with
Fisher (including legal, audit and accounting estimated at $331,574 at June
30, 1996) and an increase in trade accounts receivable of $107,884 due to
increased sales of system integration services and the timing of the
collection of such receivables. At June 30, 1996, the AUBIS Subsidiaries
had a working capital deficit of $1,200,553, compared to a working capital
deficit of $943,984 at December 31, 1995. This increase in the deficit is
attributable to the increase in notes payable to Fisher. As a consequence
of its financial condition, the AUBIS Subsidiaries' independent certified
public accountants have given the companies a going concern opinion. If
significant capital or new business is not obtained by the AUBIS
Subsidiaries in the near future, there is the possibility that all or part
of the AUBIS Subsidiaries' business is in danger of not being continued.
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RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Revenues for the six months ended June 30, 1996 were $1,302,224, a
decrease of $665,870, or 33.8% over the revenues of $1,968,094 from the
prior year period. The decrease in revenues is primarily attributable to
the discontinuance of the operations of AHS during the first half of 1996.
Cost of goods sold for the six months ended June 30, 1996 were $815,734, a
decrease of $726,000, or 47.1% from the prior year period cost of
$1,541,734. During the six months ended June 30, 1996, gross margins
improved to 37.4% from 21.7% for the prior year period, primarily due to a
greater proportion of revenues being derived from services rather than
system sales.
Selling, general and administrative expenses were $449,729 for the six
months ended June 30, 1996, an increase of $80,239, or 21.7% over the prior
year period. The increase was primarily due to an increase in expenses
incurred in anticipation of the consummation of the AUBIS Transaction.
The AUBIS subsidiaries recorded other net expenses of $41,494 for the
six months ended June 30, 1996, as compared to other net expenses of
$11,596 for the prior year period, an increase of $29,898. This increase
was primarily due to loss on the sale of certain assets related to the
hospitality business of AHS and interest on the advances made to the AUBIS
Subsidiaries by Fisher.
The AUBIS Subsidiaries' combined net loss for the six months ended
June 30, 1996 was $4,733, as compared to net income of $45,274 for the
prior year period. The net loss was primarily attributable to increases in
selling, general and administrative expenses (particularly as a percentage
of revenues) and a loss of $27,528 on the disposition of certain assets
related to the hospitality business of AHS.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues for the year ended December 31, 1995 were $3,251,665, an
increase of $652,093, or 25% greater than the prior period revenues of
$2,599,572. The increase in revenues is primarily attributable to an
expansion of the business under new management and a decision to add new
product lines, particularly in the fast food segment of the market to
complement AHS' products in the fine dining segment of the market.
Cost of goods sold for the year ended December 31, 1995 were
$2,541,429, an increase of $456,139, or 2.2% over the prior period costs of
$2,085,290. During the fiscal year ended December 31, 1995, gross margins
have improved from 19.8% to 21.9%, primarily due to new management's
aggressive efforts to improve profitability through the increase in the
price of its products while remaining competitive.
Selling, general and administrative expenses were $1,000,818 for the
year ended December 31, 1995, an increase of $58,220, or 6.1% over the
previous fiscal year. The increase was primarily due to replacement of
personnel, inefficiencies caused by the relocation of ASI to AHS' offices,
and the payment of management fees to AUBIS.
The AUBIS Subsidiaries recorded other net expenses of $91,871 for the
year ended December 31, 1995 as compared to other net expenses of $7,267
for the prior fiscal year, an increase of $84,604. This increase was
primarily due to a loss of approximately $97,000 from the misappropriation
of assets by one of its employees, which was partially offset by an
increase in rental income from subleasing the office space previously
occupied by ASI.
In response to the misappropriation of assets by a former employee,
management of AUBIS has implemented a new computerized accounting system
which will provide senior management with current financial
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data. In addition, AUBIS has established a reporting process, whereby
daily and weekly cash flow data is reported directly to senior management.
As of October 25, 1996, AUBIS had a federal and state payroll taxes
and sales taxes liability of approximately $175,000. AUBIS is current in
its 1996 federal payroll tax obligations. The Internal Revenue Service has
notified AUBIS that it may file a Notice of Federal Tax Lien or levy the
accounts of the AUBIS Subsidiaries if past due payroll taxes are not paid.
In June 1996, the IRS levied on $24,000 in the bank account of ASI. AUBIS
is in negotiation with the Internal Revenue Service and the various state
taxing authorities in an effort to resolve these tax liabilities. AUBIS
anticipates paying these tax liabilities in full by December 31, 1996.
The AUBIS Subsidiaries combined net loss for the year ended December
31, 1995 was $382,453, as compared to a net loss of $435,583 for the year
ended December 31, 1994. The improvement of $53,130 or approximately 12%
would have been greater (i.e., $150,253) except for the loss caused by the
misappropriation and was a result of new management's efforts to increase
margins. See "INFORMATION REGARDING AUBIS -Background."
LIQUIDITY AND CAPITAL RESOURCES
As of a result of the announcement of the AUBIS Transaction, a
significant supplier and customer of AHS has canceled its distribution
agreement effective as of December 31, 1995. See "INFORMATION REGARDING
AUBIS - Background." This supplier accounted for approximately $1.75
million, or 53.8%, of the AUBIS Subsidiaries' revenue for the year ended
December 31, 1995 and approximately $1.5 million or 57.7% of the AUBIS
Subsidiaries' revenues for the year ended December 31, 1994. To offset
this anticipated loss of revenue, AHS had attempted to increase its sales
force with respect to selling its other product lines in the fast food
segment of the market and attempted during the first quarter of 1996 to
sell the Fisher Restaurant Management System(R) in the fine dining segment
of the market. In March 1996, AUBIS Subsidiaries' management made a
strategic decision to discontinue the resale of third party products by AHS
in the hospitality market, and the related support services provided by AHS
to the customers thereof. This line of business accounted for
approximately $1.9 million and $1.4 million of the AUBIS Subsidiaries
revenues in 1995 and 1994, or 58% and 54% of total revenues, respectively.
Although AHS had taken the above measures in an effort to replace the
loss in revenue, AHS experienced a severe cash drain caused by the loss of
Squirrel business and slower than expected sales of the Comptrex and Fisher
products. This caused AUBIS' management to reevaluate the focus of AHS'
business which has been primarily directed to small independent restaurant
operators that required a substantial staff to provide support services.
In the second quarter of 1996, management of AUBIS discontinued the
business of AHS and, in anticipation of the consummation of the
Transactions, decided to direct its resources to providing software and
systems integration services to the healthcare market through ASI and its
relationships with Fisher and HALIS.
In order to fund its cash needs, the AUBIS Subsidiaries were advanced
$258,469 by Fisher during the six months ended June 30, 1996. These
advances bear interest at rates ranging from 10% to 12% and are due and
payable on the first anniversary of the date of the advance.
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HALIS
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the
combined financial statements of HSI contained elsewhere in this Proxy
Statement.
FINANCIAL CONDITION
At June 30, 1996 HSI had total assets of $54,064, which consisted
primarily of equipment and capitalized intangible costs. Subsequent to
year end, HALIS transferred the prototype healthcare software to HSI and
assigned to it HALIS' rights under a certain license agreement to utilize
the MERAD technology. At June 30, 1996, current liabilities were $373,319
consisting primarily of notes payable to Fisher, trade payables, income tax
payable and accrued salary. Significant cash resources will be needed
during the next twelve months to advance the development of the healthcare
information system to put it in a demonstrable form suitable for beta site
testing.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
During the six months ended June 30, 1996, HALIS had no revenues.
This compares with revenues of $241,919 during the six months ended June
30, 1995. The decrease in revenues is due to the termination of the
Partners in Prevention Program and the Managed Care Guide, as discussed
below.
During the six months ended June 30, 1996, HALIS focused its efforts
on research and development of the HALIS Healthcare Program. Research and
development costs for the six month period totalled $126,923, as compared
to none for the prior year period. Selling, general and administrative
expenses for the six months ended June 30, 1996 totalled $207,347, an
increase of $70,378, or 51.4% from the prior year period. The increase in
selling, general and administrative expenses was due to costs associated
with the marketing of new products and expenses incurred in anticipation of
the consummation of the HALIS Transaction.
As a result of the costs and expenses incurred by HALIS during the
period, coupled with its lack of revenues, HALIS suffered a net loss of
$324,755 for the six months ended June 30, 1996. This compares to net
income of $92,086 during the six months ended June 30, 1995.
YEAR ENDED DECEMBER 31, 1995
Revenues for the year ended December 31, 1995 were $331,231, which
consisted primarily of service fees received from one customer for services
utilizing the Partners In Prevention program, and from one customer with
regard to the utilization of the Managed Care Guide in the State of
Georgia. No revenues have been generated as of or subsequent to year end
from the healthcare information system.
Costs and expenses for the year ended December 31, 1995 totaled
$320,802, which consisted primarily of production costs related to the
Partners In Prevention program and the Managed Care Guide, and selling
and administrative expenses. Net income for the year totaled $9,515.
HSI's major customer for the Partners In Prevention program has been
Prudential Health Care Systems of Georgia ("Prudential"). Prudential has
recently notified HSI that it does not intend to honor the balance of its
contract, which has two years remaining. Prudential is not honoring the
balance of its contract for two reasons. First, the Partners in Prevention
Program was inadequate to meet Prudential's needs. Second, Prudential has
decided to cancel the project that utilizes Partners in Prevention. Lost
revenues to HSI as a result of the termination of the contract by
Prudential is approximately $270,000.
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The major client for the Managed Care Guide has been Hoechst Marion
Roussel ("HMR"), an international pharmaceutical company. A contract is
currently in force with HMR that provides HMR a right of first refusal to
distribute the Managed Care Guide in all major markets in the United
States. The impact upon HSI of HMR's right of first refusal concerning the
Managed Care Guide on a historical basis has been immaterial. HSI has not
focused on the Managed Care Guide as a product in itself and only plans to
incorporate the generic information used to produce the Guide. HSI did not
expect to generate revenues from the Managed Care Guide as a separate
product.
The projected impact HMR will have on HSI in general is negligible
because HSI does not plan to market the Managed Care Guide as a product in
itself. HSI plans to only use generic information (public domain type of
information) available to incorporate in the HALIS Program. In addition,
HSI believes that HMR will not exercise its right of first refusal and
would free HSI to distribute (if HSI chose to do so) the Managed Care Guide
through other organizations. If HMR does exercise its right of first
refusal, HSI will receive revenues it would otherwise not generate on its
own.
No other contacts contain unilateral customer cancellation features.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, HALIS had cash and cash equivalents of $1,027.
Because HALIS did not recognize any revenue during the six months ended
June 30, 1996, its research and development efforts have been funded from
cash advances by Fisher. During the six months ended June 30, 1996, HALIS
was advanced $320,123 by Fisher in order to fund its cash needs. These
advances bear interest at rates ranging from 10% to 12% and are due and
payable on the first anniversary of the date of the advance. Although
HALIS began selling its HALIS Healthcare Enterprise System in the third
quarter of 1996, HALIS continues to be dependent upon advances by Fisher to
fund its operations.
ACCS MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion should be read in conjunction with the
financial statements of ACCS contained elsewhere in this Proxy Statement.
FINANCIAL CONDITION
ACCS had total assets at June 30, 1996 of $167,895, which was a
decrease of $123,258, or 42.3% over its assets at March 31, 1996, which
were $291,153. This decrease was primarily due to a decrease in cash on
hand of $107,766 during the period utilized to fund operations. At June
30, 1996, ACCS had a working capital deficit of $174,715, compared to a
working capital deficit of $109,292 at March 31, 1996. This increase in
the deficit is primarily attributable to the decrease in cash on hand,
partially offset by a decrease in accrued expenses and deferred revenue.
As a consequence of its financial condition, ACCS's independent certified
public accountants have given the Company a going concern opinion. If
significant capital or new business is not obtained by ACCS in the near
future, there is a possibility that all or a part of ACCS's business is in
danger of not being continued.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30,
1995
Revenues for the three months ended June 30, 1996 were $116,235, a
decrease of $698,994, or 85.7% over the prior year period revenues of
$815,229. The decrease in revenues is primarily attributable to a decrease
in
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software sales during the first quarter of fiscal 1997 as ACCS transitions
from the sale of Alamo Systems to the sale of the HALIS Healthcare
Enterprise System. Costs associated with licensing fees and commissions
for the three months ended June 30, 1996 were $18,411, a decrease of
$609,945, or 97.1% over the prior period licensing fees and commissions of
$628,356. The decrease in cost of licensing fees and commissions is due to
reduced sales during the fiscal 1997 period.
Selling, general and administrative expenses totalled $170,894 for the
three months ended June 30, 1996, reflecting little change over the prior
year period.
The net loss for the three months ended June 30, 1996 was $73,070, as
compared to net income of $14,839 for the three months ended June 30, 1995.
Net income decreased principally as a result of the decrease in software
sales and services revenue during the fiscal 1997 period.
YEAR ENDED MARCH 31, 1996 COMPARED TO YEAR ENDED MARCH 31, 1995
Revenues for the year ended March 31, 1996 were $2,798,872, an
increase of $766,677, or 37.7% over the prior year period revenues of
$2,032,195. The increase in revenues is primarily attributable to an
increase in software sales during fiscal 1996. Costs associated with
licensing fees and commissions for the year ended March 31, 1996 were
$1,885,004, an increase of $323,891, or 20.7% over the prior period
licensing fees and commissions of $1,561,113. The increase in cost of
licensing fees and commissions is due to the acquisition of licenses to
sell in more territories.
Selling, general and administrative expenses totalled $884,229 for the
year ended March 31, 1996, an increase of $370,915, or 72.3% over the prior
year period. The increase was primarily due to the employment of direct
sales personnel in lieu of commission-only sales representatives.
Net income for the year ended March 31, 1996 was $11,504, as compared
to a net loss of $42,232 for the year ended March 31, 1995. Net income
improved principally as a result of the increase in software sales and
services revenue during fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, ACCS had cash and cash equivalents of $53,959.
Because ACCS is transitioning from the sale of Alamo systems to the sale of
the HALIS Healthcare Enterprise System, revenues have declined sharply
during the current fiscal year. Management of ACCS believes that its cash
reserves will be sufficient to fund the operations of ACCS until it
completes its transition to HALIS System sales.
ELECTION OF DIRECTORS
The Board of Directors of Fisher consists of three directors.
Fisher's Bylaws provide that the Board of Directors shall consist of not
less than three nor more than seven members, the precise number to be
determined from time to time by the Board of Directors. The number of
directors has been set at four by the Board. The Board of Directors
recommends the election of the four nominees listed below.
Each of the nominees has consented to being named in this Proxy
Statement and to serve as a director of Fisher if elected. In the event
that any nominee withdraws or for any reason is not able to serve as a
director, the proxy will be voted for such other person as may be
designated by the Board of Directors, but in no event will the proxy be
voted for more than four nominees. The affirmative vote of a majority of
all votes cast at the meeting by the holders of the Common Stock is
required for the election of the four nominees standing for election.
Except with respect to Messrs. Harrison and Lipson, who will decline to
serve as directors of Fisher in the event the
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Transactions are not consummated, management of Fisher has no reason to
believe that any nominee will not serve if elected.
Each of the following persons has been nominated by management for
election to the Board of Directors of Fisher to serve for a term of one
year and until their successors are elected and qualified:
LARRY FISHER, age 52, the founder of Fisher, has served as a director
since its organization in 1979, as President, Chief Executive Officer, and
Treasurer since 1979 and as Chairman of the Board since December 1992.
Prior to 1979, Mr. Fisher was employed by IBM for 11 years in several
executive sales and marketing positions. In his last such position, Mr.
Fisher was responsible for creating, implementing and monitoring national
marketing programs for the retail and hospitality industries.
PAUL W. HARRISON, age 41, has been the managing member of AUBIS since
February 1995, a director of AHS since June 1994 and a director of ASI
since January 1995. Mr. Harrison has also served as President of PHE since
May 1990. From July 1993 to December 1994, Mr. Harrison was employed as an
executive advisor of HBO & Company of Georgia, Inc., a software company in
the healthcare information industry. Mr. Harrison served as President and
Chief Executive Officer of Biven Software, Inc., a software technology
company specializing in business and healthcare applications, from 1991 to
June 1993, when it was acquired by HBO & Company of Georgia, Inc. Mr.
Harrison also served as President of SOTRISS Corp., a software technology
company specializing in insurance and healthcare applications, from 1986 to
1989, when it was acquired by Lincoln National Information Services, Inc.
("Lincoln National"). Thereafter, Mr. Harrison continued his employment as
President and Chief Executive Officer of SOTRISS, a subsidiary of Lincoln
National, until 1991. Mr. Harrison will serve as Chairman of the Board and
Chief Executive Officer of Fisher after the Transactions are consummated.
JEFFREY C. BRENNER, age 46, has served as a director of Fisher since
May 1995. Mr. Brenner is currently a private investor. From 1987 to 1991,
Mr. Brenner served as President and Chairman of the Board of Tech Time,
Inc., a time and attendance software/services company.
NATE LIPSON, age 68, is a member of AUBIS and has served as a director
of AHS and ASI since December 1995. Mr. Lipson is currently a private
investor, and has had various ownership and management interests in
companies doing business in the hospitality and carpet industries for more
than the past five years.
The AUBIS Agreement requires that three additional directors will be
appointed by the Board of Directors of Fisher, one nominee to be selected
by Mr. Harrison and the other two nominees to be jointly selected by
Messrs. Fisher and Harrison. It is anticipated that such board members
will be identified and elected as soon as practicable after consummation of
the Transactions. Members of the Board of Directors are elected annually
to serve until the next annual meeting of shareholders or until their
successors are elected and qualified.
There are no family relationships between any director or executive
officer or any other director or executive officer of Fisher.
BOARD COMMITTEES AND ATTENDANCE
The Board of Directors of Fisher held five meetings during the fiscal
year ended January 31, 1996 ("fiscal 1996"). With the exception of James
F. Lyon, each director attended at least 75% of the meetings held by the
Board of Directors and the committees on which he served. During fiscal
1996, the Board had a Stock Option Committee to administer Fisher's stock
option plans and grant options thereunder. The Stock Option Committee did
not hold any meetings during fiscal 1996. Fisher does not currently have
any directors eligible to serve on the Stock Option Committee. Upon
consummation of the Transactions, it is anticipated that Nate Lipson and
Jeffrey Brenner will serve on the Stock Option Committee. The functions of
audit, compensation and nominating committees or other standing committees
performing similar functions are reserved to the entire Board of Directors.
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<PAGE>
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires Fisher's
directors, executive officers and persons who own more than 10% of the
outstanding Common Stock of Fisher, to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of
Fisher held by such persons. Officers, directors and greater than 10%
shareholders are also required to furnish Fisher with copies of all forms
they file under this regulation. To Fisher's knowledge, based solely on a
review of the copies of such reports furnished to Fisher and
representations that no other reports were required, during fiscal 1996,
all Section 16(a) filing requirements applicable to its officers, directors
and greater than 10% shareholders were complied with except as follows:
Larry Fisher (failed to file on a timely basis two reports relating to a
total of two transactions); and Jeffrey C. Brenner (failed to file on a
timely basis two reports relating to a total of four transactions).
FISHER EXECUTIVE COMPENSATION
The following table sets forth certain summary information concerning
compensation paid, accrued or deferred by Fisher to or on behalf of
Fisher's Chief Executive Officer (hereinafter referred to as the "Named
Executive Officer") for the fiscal years ended January 31, 1996, 1995 and
1994. The Named Executive Officer was the only executive officer to
receive total compensation in excess of $100,000 during the last fiscal
year.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
---------------------------------------- ------------
OTHER
NAME AND FISCAL ANNUAL STOCK
PRINCIPAL POSITION/(1)/ YEAR SALARY BONUS COMPENSATION OPTION
- ------------------ ------ ------ ------- ------------ ------
<S> <C> <C> <C> <C> <C>
Larry Fisher. . . . . . . 1996 $150,000 $18,000 (1) 650,000
Chairman of the 1995 150,000 - (1) -
Board, President and 1994 150,000 37,500 (1) 42,000
Chief Executive
Officer
- ------------
</TABLE>
(1) Fisher pays for an automobile allowance for Mr. Fisher, as well as
certain other perquisites. The aggregate amounts of these benefits do
not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus during the past fiscal year for the Named Executive Officer.
DIRECTOR'S FEES
Fisher does not presently pay any fees to directors but does reimburse
directors for reasonable out-of-pocket expenses incurred in connection with
attendance of meetings of the Board of Directors. Fisher has granted
certain non-qualified stock options to its non-employee directors and in
April 1996, the Board of Directors of Fisher adopted a 1996 Stock Option
Plan pursuant to which each of Fisher's outside directors will receive an
automatic annual grant of options to purchase 10,000 shares of Fisher
Common Stock on the second Tuesday in June of each year during the term of
the Plan. The 1996 Stock Option Plan is subject to approval of the
shareholders of Fisher. See "PROPOSAL TO APPROVE 1996 STOCK OPTION PLAN."
-77-
<PAGE>
EMPLOYMENT AGREEMENT
Fisher has entered into an Employment Agreement with Larry Fisher,
pursuant to which Mr. Fisher serves as Chairman of the Board, President and
Chief Executive Officer of Fisher. The Employment Agreement was amended in
February 1996 in contemplation of the AUBIS Transaction. Upon consummation of
the AUBIS Transaction, Mr. Fisher will relinquish his titles as Chairman of
the Board and Chief Executive Officer of Fisher, but will continue to serve
as its President and Chief Operating Officer. The Employment Agreement, as
amended, is for a term of three years, expiring on December 31, 1998, and
provides for an annual base salary of $175,000 plus incentive bonus payments.
In addition, the Employment Agreement provides for Mr. Fisher to receive
options to purchase shares of Fisher Common Stock in the discretion of the
Board of Directors. The Employment Agreement provides for certain severance
payments to be paid to Mr. Fisher in the event of a change in control of
Fisher (exclusive of the Transactions) or a significant change in Mr.
Fisher's operational duties. In the event of a change in control, Mr. Fisher
will be entitled to terminate his employment with Fisher and to receive two
times his annual base salary plus twice the cost for one year of all
additional benefits provided to Mr. Fisher under the Employment Agreement. In
addition, in the event Mr. Fisher terminates his employment under certain
stated conditions or is terminated by Fisher without cause, he will receive
the greater of one year's annual base salary or an amount equal to the base
salary which would otherwise be payable to Mr. Fisher for the remaining term
of his Employment Agreement. Any such severance payments may, at the option
of Fisher, be paid to Mr. Fisher in equal monthly installments or in a lump
sum at a discounted present value. The Employment Agreement contains non-
compete and non-solicitation provisions, effective through the actual date of
termination of the Employment Agreement and for a period of two years
thereafter.
STOCK OPTIONS
The following table provides certain information concerning individual
grants of stock options made during the fiscal year ended January 31, 1996 to
the Named Executive Officer:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------
% OF TOTAL OPTIONS
OPTIONS GRANTED TO EXERCISE OR
GRANTED EMPLOYEES IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR ($ PER SHARE) DATE
- ---- ------- --------------------- --------------- ----------
<S> <C> <C> <C> <C>
Larry Fisher 650,000/(1)/ 100% $.25 5/04/05
- -----------
</TABLE>
/(1)/ Consists entirely of non-qualified stock options granted to Mr.
Fisher pursuant to his employment agreement.
-78-
<PAGE>
The following table provides certain information concerning the value of
unexercised options held by the Named Executive Officer as of January 31,
1996. No stock options were exercised by the Named Executive Officer
during fiscal 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT YEAR-END AT YEAR-END
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE/(1)/
---- ------------------------- ------------------------------
Larry Fisher 750,000 / 0 $1,572,500/ $0
----------------
/(1)/ Dollar values calculated by determining the difference between the
estimated fair market value of Fisher's Common Stock at January 31,
1996 ($2.38) and the exercise price of such options.
CERTAIN TRANSACTIONS
In connection with the Transactions, Fisher will issue 10,000,000
shares of Fisher Common Stock to AUBIS and 5,000,000 shares of Fisher
Common Stock to HALIS. See "TERMS OF THE TRANSACTIONS." Paul W. Harrison,
a director nominee of Fisher, serves as the managing member of both AUBIS
and HALIS and beneficially owns approximately 25% and 54% respectively, of
the two companies.
In January 1996, Fisher entered into a letter of intent to
license a proprietary technology asset ("MERAD") from Paul Harrison
Enterprises, Inc. ("PHE"), Fisher is obligated to pay a license fee 10% of
the gross revenues generated from the MERAD technology and any derivations
thereof by Fisher or any of its affiliates. It is anticipated that this
transaction will be consummated on the consummation date of the
Transactions. Mr. Harrison serves as the President of PHE and beneficially
owns 53.3% of this company.
In February 1996, Fisher entered into a Management Agreement with
AUBIS pursuant to which Mr. Harrison provides management services to Fisher
in an effort to begin the process of effecting an orderly transition of the
AUBIS Subsidiaries to Fisher. The Management Agreement was terminated on
June 1, 1996. Management fees totaling $50,000 were paid by Fisher to AUBIS
pursuant to this agreement.
In February 1996, Fisher entered into a Marketing Agreement with
AHS pursuant to which AHS distributes the Fisher Restaurant Management
System. Pursuant to this agreement, Fisher has advanced AHS $80,000,
which is to be repaid out of gross sales commissions to be earned by AHS
from the sale of such systems. AHS is a wholly-owned subsidiary of AUBIS,
which is controlled by Mr. Harrison.
During a portion of fiscal 1995, the Company's headquarters were
located in 13,000 square feet of office space in a modern office building
located in Marietta, Georgia. The office space was leased under an
agreement for a term of 5 1/2 years expiring in 1993, for an effective
annual base rent of approximately $174,000. This office building is owned
by Merchant's Station Limited Partnership, a Georgia limited partnership in
which the Company owned a 10% limited partner interest. The lease
agreement between the Company and the partnership was negotiated on terms
which are at least as favorable to the Company as might be obtained by an
unaffiliated third party in similar circumstances.
Because of recent personnel reductions, and in an effort to
reduce costs, the Company agreed with representatives of Merchant's Station
Limited Partnership to reduce to approximately 3,000 square feet the amount
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<PAGE>
of space leased by the Company, which lowered its effective annual base
rent to approximately $60,000, effective July 1, 1994. As a condition to
such agreement for reduction with Merchant's Station Limited Partnership,
the Company transferred its 10% ownership interest back to Merchant's
Station Limited Partnership without further consideration. The Company
vacated this space in August 1994 and has no further obligation to
Merchant's Station Limited Partnership.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT OF FISHER
The following table sets forth information regarding the
beneficial ownership of Fisher Common Stock, as of October 15, 1996, by
(i) those persons or entities known by management of Fisher to own
beneficially more than 5% of Fisher Common Stock, (ii) each of the
directors and director nominees of Fisher, and (iii) all directors and
executive officers of Fisher as a group. Unless otherwise indicated in the
footnotes to the table, the persons or entities listed below have sole
voting and investment power with respect to the shares of Fisher Common
Stock shown as beneficially owned by them.
<TABLE>
<CAPTION>
PERCENT
SHARES OF OF CLASS
COMMON STOCK ---------------------------------
NAME OF BENEFICIALLY PRIOR TO AFTER
BENEFICIAL OWNER OWNED/(1)/ TRANSACTIONS TRANSACTIONS/(2)/
- ---------------- --------------- ------------- ------------------
<S> <C> <C> <C>
Larry Fisher...................... 1,678,500/(3)/ 20.3% 10.0%
Jeffrey C. Brenner................ 1,925,800/(4)/ 25.5 8.3
James F. Lyon..................... 182,800/(5)/ 2.5 *
Paul W. Harrison.................. 90,000/(6)(7)/ 1.2 66.8
Nate Lipson....................... 90,000/(6)/ 1.2 *
Joe Arnold........................ 533,333/(8)/ 7.2 2.3
Ronald G. Brenner................. 500,000/(9)/ 6.7 2.2
K. Brett Thackston................ 543,175/(10)/ 7.3 2.3
Broadland Capital Partners, L.P... 543,175/(11)/ 7.3 2.3
Directors and executive officers
as a group (3 persons)/(12)/.... 3,787,100 45.3 79.2
</TABLE>
* Less than 1% of outstanding shares.
______________________________
(1) "Beneficial Ownership" includes shares for which an individual,
directly or indirectly, has or shares voting or investment power or
both and also includes options which are exercisable within sixty days
of the date of this Proxy Statement. All of the listed persons have
sole voting and investment power over the shares listed opposite their
names unless otherwise indicated in the notes below. Beneficial
ownership as reported in the above table has been determined in
accordance with Rule 13d-3 of the Securities Exchange Act of
-80-
<PAGE>
1934. The percentages are based upon 7,450,046 shares outstanding, except
for certain parties who hold presently exercisable options and convertible
securities to purchase shares. The percentages for those parties who hold
presently exercisable options or convertible securities are based upon the
sum of 7,450,046 shares plus the number of shares subject to presently
exercisable options or convertible securities held by them, as indicated in
the following notes.
(2) Gives effect to the issuance of 15,750,000 shares of Fisher Common
Stock upon consummation of the Transactions and the vesting of options to
purchase 1,400,000 shares of Common Stock granted to Paul Harrison and
options to purchase 800,000 shares of Common Stock to Larry Fisher.
(3) Includes 750,000 shares subject to presently exercisable stock options
and 50,000 shares of Common Stock issuable upon the conversion of
outstanding convertible promissory notes. Includes 751,500 shares owned
individually by Mr. Fisher and 127,000 shares held as custodian for a minor
child. In addition, Mr. Fisher has been granted an option to purchase
800,000 shares of Common Stock, exercisable at a price of $1.125 per share
upon approval of the 1996 Stock Option Plan by the shareholders of Fisher
at the 1996 Annual Meeting of Shareholders. Mr. Fisher's business address
is 1950 Spectrum Circle, Suite 400, Marietta, Georgia 30067.
(4) Includes 100,800 shares subject to presently exercisable stock options.
Mr. Brenner's address is 3581 Sarasota Golf Club Boulevard, Sarasota,
Florida 34240.
(5) Includes 800 shares subject to presently exercisable stock options.
(6) Consists of shares of Common Stock issuable upon the conversion of
outstanding convertible promissory notes.
(7) Upon consummation of the Transactions, Mr. Harrison will also
beneficially own all 15,000,000 shares of Fisher Common Stock issued in the
AUBIS and HALIS Transactions. In addition, Mr. Harrison has been granted
an option to purchase 1,400,000 shares of Common Stock, exercisable at a
price of $1.125 per share upon consummation of the Transactions.
(8) Mr. Arnold's address is 7117 Harborside 1, Hilton Head, South Carolina
29928.
(9) Mr. Brenner's address is 8403 Estero Boulevard, #302, Fort Myers Beach,
Florida 33931.
(10) Mr. Thackston's address is 4605 Whitewater Creek Road, Atlanta,
Georgia 30327.
(11) Broadland Capital Partners, L.P.'s address is P.O. Box 2527, Ponte
Vedra Beach, Florida 32044.
(12) The percentage outstanding upon consummation of the Transactions
includes shares owned or to be owned by Paul Harrison and Nate Lipson,
director nominees of Fisher, and excludes shares owned by James F. Lyon,
who is not standing for re-election to the Board of Directors of Fisher.
PROPOSAL TO APPROVE 1996 STOCK OPTION PLAN
On April 24, 1996, the Board of Directors of Fisher adopted a
1996 Stock Option Plan (the "1996 Plan") for eligible officers, directors
and key employees of Fisher and recommends that the shareholders vote for
approval of the 1996 Plan, which provides for the grant of both incentive
and non-qualified stock options. The purpose of the 1996 Plan is to
encourage and enable eligible directors, officers and key employees of
Fisher and its subsidiaries to acquire proprietary interests in Fisher and
its subsidiaries through the ownership of common stock of Fisher and to
provide motivation for participating directors, officers and key employees
to remain in the employ of and to give
-81-
<PAGE>
greater effort on behalf of Fisher. The 1996 Plan is intended to replace
the 1986 Incentive Stock Option Plan and the 1988 Non-Qualified Stock
Option Plan of Fisher. The 1986 Incentive Stock Option Plan expired on
January 29, 1996 and the 1988 Non-Qualified Stock Option Plan was
terminated by the Board of Directors on April 24, 1996. Stock options
currently outstanding under each of these plans will remain outstanding in
accordance with the terms of such plans and the respective stock option
agreements thereunder. A copy of the 1996 Plan is attached hereto as
Appendix D.
To date, options to purchase 800,000 shares of Fisher Common
Stock have been granted pursuant to the 1996 Plan to Larry Fisher at an
exercise price of $1.125 per share. These options become exercisable upon
approval of the 1996 Plan by the shareholders of Fisher at the 1996 Annual
Meeting of Shareholders. In addition, options to purchase an aggregate of
30,000 shares of Fisher Common Stock have been granted to Fisher's outside
directors pursuant to the automatic grant provisions of the 1996 Plan. The
grant of these options is subject to approval of the 1996 Plan by the
shareholders of Fisher at the 1996 Annual Meeting of Shareholders.
DESCRIPTION OF 1996 PLAN
Effective Date. The effective date of the 1996 Plan is April 24,
--------------
1996. The 1996 Plan shall remain in effect until all shares subject to or
which may become subject to the 1996 Plan shall have been purchased
pursuant to options granted under the 1996 Plan, provided that options
under the 1996 Plan must be granted within ten (10) years from the
effective date.
Shares Subject to the 1996 Plan. The shares of Fisher's common
-------------------------------
stock available for issuance under the 1996 Plan may, at the election of
the Board of Directors, be either treasury shares or shares originally
issued for such purpose. The maximum number of shares which shall be
reserved and made available for sale under the 1996 Plan shall be
3,000,000. Any shares subject to an option which for any reason expires or
is terminated may again be subject to an option under the 1996 Plan.
Persons Eligible to Participate in the 1996 Plan. Under the 1996
------------------------------------------------
Plan, options may be granted only to officers, directors and key employees
of Fisher.
Administration of the 1996 Plan. The 1996 Plan shall be
-------------------------------
administered by the Board of Directors or by a committee comprised of no
fewer than two (2) members appointed by the Board of Directors of Fisher
from among its members (the "Committee"). Members of the Committee shall
be "disinterested persons" as such term is defined under Rule 16b-3 under
the Securities Exchange Act of 1934, as amended. Subject to the provisions
of the 1996 Plan, the Board of Directors or the Committee has the authority
to determine the employees to whom options shall be granted and to
determine exercise prices, vesting requirements, the term of and the number
of shares covered by each option.
Exercise Price, Terms of Exercise and Payment for Shares. Each
--------------------------------------------------------
option granted under the 1996 Plan will be represented by an Option
Agreement which shall set forth the terms particular to that option,
including the number of shares covered by the option, the exercise price,
the term of the option and any vesting requirements.
The exercise price of options granted under the 1996 Plan will be
determined by the Committee, but in no event shall be less than 100% of the
Average Market Price of the common stock on the date of the grant of the
option. The term Average Market Price is defined in the 1996 Plan to be
the average of the high bid and low ask prices as of the close of business
for Fisher's shares of common stock in the over-the-counter market, as
reported by the National Association of Securities Dealers, Inc., Automated
Quotation System (or other national quotation service). If Fisher's common
stock is registered on a national securities exchange, then Average Market
Price shall mean the closing price of Fisher's common stock on such
national securities exchange. If Fisher's Common Stock is not traded in
the organized markets, then the price shall be the fair market value of the
common stock as determined in good faith by the Board of Directors or the
Committee, but in no case less than the par value of such stock.
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<PAGE>
Options may be exercised in whole or in part by the optionee, but
in no event later than ten (10) years from the date of the grant. Any
incentive stock option granted under the 1996 Plan to an individual who
owns more than 10% of the total combined voting power of all classes of
stock of Fisher or a subsidiary may not be purchased at a price less than
110% of the market price on the day the option is granted, and no such
option may be exercised more than five (5) years from the date of grant.
The purchase price for the shares shall be paid in cash or shares of common
stock of Fisher, or a combination of both. Upon payment, Fisher will
deliver stock certificates for such shares to the optionee.
Automatic Grant of Options to Non-Employee Directors. The 1996
-----------------------------------------------------
Plan grants to non-employee directors of Fisher, without necessity of
action by the Board of Directors or the Stock Option Committee, as the case
may be, an annual option to purchase 10,000 shares of Common Stock on the
second Tuesday in June of each year at an exercise price equal to the fair
market value of such stock on the date of grant. In addition, all new non-
employee directors of Fisher will receive a one-time grant of an option to
purchase 10,000 shares of Common Stock at an exercise price equal to the
fair market value of such stock on the date of grant. Such options are
exercisable from the date of grant and thereafter until the date which is
the tenth anniversary of the date of grant, unless earlier terminated in
accordance with the provisions of the 1996 Plan. Options granted to non-
employee directors under the 1996 Plan conform in all respects to the terms
of the 1996 Plan.
Termination of Service. In the event that a holder of an option
----------------------
granted under the 1996 Plan ceases to be a director or employee of Fisher
or any subsidiary of Fisher for any reason other than his death or total
and permanent disability, any option or unexercised portion thereof, which
is otherwise exercisable on the date of such termination, shall expire
three (3) months from the date of such termination. Any options which are
not exercisable on the date of such termination shall immediately
terminate.
Upon the death or total and permanent disability of the holder of
an option, any option or unexercised portion thereof which is otherwise
exercisable shall expire within one year of the date of such death or
disability. Any options which were not exercisable on the date of such
death or disability shall be immediately exercisable for a period of one
year.
Options granted under the 1996 Plan are exercisable during the
lifetime of the optionee only by the optionee. All options granted under
the 1996 Plan are non-transferable except by will or under the laws of
descent and distribution.
Reorganization and Recapitalization. In case Fisher is merged or
-----------------------------------
consolidated with another corporation and Fisher is not the survivor, or in
case Fisher is acquired by another corporation, or in case of a separation,
reorganization, recapitalization or liquidation of Fisher, the Board of
Directors of Fisher shall either make appropriate provision for the
protection of any outstanding options, including without limitation the
substitution of appropriate stock of Fisher or of the merged, consolidated
or otherwise reorganized corporation which will be issuable in respect of
the shares of the Common Stock of Fisher, or upon written notice to the
optionee, provide that the option must be exercised within 60 days or it
will be terminated.
In the event that dividends are payable in Common Stock of Fisher
or in the event there are splits, subdivisions or combinations of shares of
Common Stock of Fisher, the number of shares available under the 1996 Plan
will be increased or decreased proportionately, as the case may be, and the
number of shares deliverable upon the exercise thereafter of any option
theretofore granted will be increased or decreased proportionately, as the
case may be, without change in the aggregate purchase price.
Limitation on Number of Shares That May be Purchased. For
----------------------------------------------------
options granted under the 1996 Plan, the aggregate fair market value
(determined at the time the option was granted) of the shares with respect
to which incentive stock options are exercisable for the first time by an
optionee during any calendar year shall not exceed $100,000.
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<PAGE>
Amendment and Termination of the 1996 Plan. With respect to any
------------------------------------------
shares of stock at the time not subject to options, the Board of Directors
may at any time and from time to time, terminate, modify or amend the 1996
Plan in any respect, except that no such modification or amendment shall be
made absent the approval of the shareholders of Fisher to: (i) increase
the maximum number of shares for which options may be granted under the
1996 Plan; (ii) reduce the option price or waiting period; (iii) extend the
period during which options may be granted or exercised; (iv) change the
class of employees eligible for incentive stock options; (v) otherwise
materially modify the requirements as to eligibility for participation in
the 1996 Plan; or (vi) otherwise materially increase the benefits accruing
to participants under the 1996 Plan.
With the consent of the affected optionee, the Board of Directors
or the Committee may amend outstanding option agreements in a manner
consistent with the 1996 Plan.
FEDERAL INCOME TAX CONSEQUENCES
Incentive Stock Options. All incentive stock options granted or
-----------------------
to be granted under the 1996 Plan which are designated as incentive stock
options are intended to be incentive stock options as defined in Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
Under the provisions of Section 422 of the Code, neither the
holder of an incentive stock option nor Fisher will recognize income, gain,
deduction or loss upon the grant or exercise of an incentive stock option.
An optionee will be taxed only when the stock acquired upon exercise of his
incentive stock option is sold or otherwise disposed of in a taxable
transaction. If at the time of such sale or disposition the optionee has
held the shares for the required holding period (two years from the date
the option was granted and one year from the date of the transfer of the
shares to the optionee), the optionee will recognize long-term capital gain
or loss, as the case may be, based upon the difference between his exercise
price and the net proceeds of the sale. However, if the optionee disposes
of the shares before the end of such holding period, the optionee will
recognize ordinary income on such disposition in an amount equal to the
lesser of:
(a) gain on the sale or other disposition; or
(b) the amount by which the fair market value of the shares on
the date of exercise exceeded the option exercise price, with any excess
gain being capital gain, long-term or short-term, depending on whether or
not the shares had previously been held for more than one year on the date
of sale or other taxable disposition.
The foregoing discussion and the reference to capital gain or
loss treatment therein assume that the option shares are a capital asset in
the hands of the optionee. A sale or other disposition which results in
the recognition of ordinary income to the optionee will also result in a
corresponding income tax deduction for Fisher.
The 1996 Plan permits an optionee to pay all or part of the
purchase price for shares acquired pursuant to exercise of an incentive
stock option by transferring to Fisher other shares of Fisher's common
stock owned by the optionee. Section 422 of the Code provides that an
option will continue to be treated as an incentive stock option even if an
optionee exercises such incentive stock option with previously acquired
stock of the corporation granting the option. Accordingly, except as noted
below with respect to certain "statutory option stock," an optionee who
exercises an incentive stock option in whole or in part by transferring to
Fisher shares of Fisher's common stock will recognize no gain or loss upon
such exercise. The optionee's basis in the shares so acquired will be
equal to the optionee's cost basis in the shares surrendered (plus, in the
case of payment of the purchase price in a combination of cash and
surrendered shares, the amount of any cash paid).
Section 424(c)(3) of the Code provides that if "statutory option
stock" is transferred in connection with the exercise of an incentive stock
option, and if the holding period requirements under Section 422(a)(1) of
the Code are not met with respect to such statutory option stock before
such transfer, then ordinary income will be recognized
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<PAGE>
as a result of the transfer of statutory option stock. However, the
incentive stock option stock acquired through the exchange of statutory
option stock will still qualify for favorable tax treatment under Section
422 of the Code.
Incentive stock options offer two principal tax benefits: (1)
the possibility of converting ordinary income into capital gain to the
extent of the excess of fair market value over option price at the time of
exercise, and (2) the deferral of recognition of gain until disposition of
the stock acquired upon the exercise of the option.
At present, the maximum tax rate on capital gains is 28%, while
the maximum tax rate on ordinary income is 39.6%. Thus, the conversion of
ordinary income into capital gain produces some tax benefit for certain
taxpayers. However, the benefit of income deferral generally provided by
incentive stock options is reduced for some taxpayers since the excess of
the fair market value of shares acquired through the exercise of an
incentive stock option over the exercise price is taken into account in
computing an individual taxpayer's alternative minimum taxable income.
Thus, the exercise of an incentive stock option could result in the
imposition of an alternative minimum tax liability.
In general, an option granted under the 1996 Plan which is
designated as an incentive stock option will be taxed as described above.
However, in some circumstances an option which is designated as an
incentive stock option will be treated as a non-qualified stock option and
the holder taxed accordingly. For example, a change in the terms of an
option which gives the employee additional benefits may be treated as the
grant of a new option. Unless all the criteria for treatment as an
incentive stock option are met on the date the "new option" is considered
granted (such as the requirement that the exercise price of the option be
not less than the fair market value of the stock as of the date of the
grant), the option will be treated and taxed as a non-qualified stock
option.
Non-Qualified Stock Options. All options granted or to be
---------------------------
granted under the 1996 Plan which do not qualify as incentive stock options
are non-statutory options not entitled to special tax treatment under
Section 422 of the Code.
A participant in the 1996 Plan will recognize taxable income upon
the grant of a non-qualified stock option only if such option has a readily
ascertainable fair market value as of the date of the grant. In such a
case, the recipient will recognize taxable ordinary income in an amount
equal to the excess of the fair market value of the option as of such date
over the price, if any, paid for such option. No income would then be
recognized on the exercise of the option, and when the shares obtained
through the exercise of the option are disposed of in a taxable
transaction, the resulting gain or loss would be capital gain or loss
(assuming the shares are a capital asset in the hands of the optionee).
However, under the applicable Treasury Regulations, the non-qualified stock
options issued under the 1996 Plan will not have a readily ascertainable
fair market value unless at the time such options are granted similar
options of Fisher are actively traded on an established market. Fisher
presently has no such actively traded options.
Upon the exercise of a non-statutory option not having a readily
ascertainable fair market value, the optionee recognizes ordinary income in
an amount equal to the excess of the fair market value of the shares on the
date of exercise over the option exercise price for those shares. Fisher
is not entitled to an income tax deduction with respect to the grant of a
non-statutory stock option or the sale of stock acquired pursuant thereto.
Fisher generally is permitted a deduction equal to the amount of ordinary
income the optionee is required to recognize as a result of the exercise of
a non-statutory stock option.
The 1996 Plan permits the Committee to allow an optionee to pay
all or part of the purchase price for shares acquired pursuant to an
exercise of a non-statutory option by transferring to Fisher other shares
of Fisher's Common Stock owned by the optionee. If an optionee exchanges
previously acquired Common Stock pursuant to the exercise of a non-
qualified stock option, the Internal Revenue Service has ruled that the
optionee will not be taxed on the unrealized appreciation of the shares
surrendered in the exchange. In other words, the optionee is not taxed on
the difference between his or her cost basis for the old shares and their
fair market value on the date of
-85-
<PAGE>
the exchange, even though the previously acquired shares are valued at the
current market price for purposes of paying all or part of the option
price.
General. The 1996 Plan is not qualified under Section 401(a) of
-------
the Code and is not subject to the provisions of the Employee Retirement
Income Security Act of 1974.
The preceding discussion is based upon federal tax laws and
regulations in effect on the date of this proxy statement, which are
subject to change, and upon an interpretation of the statutory provisions
of the Code, its legislative history and related income tax regulations.
Furthermore, the foregoing is only a general discussion of the federal
income tax consequences of the 1996 Plan and does not purport to be a
complete description of all federal income tax aspects of the 1996 Plan.
Option holders may also be subject to state and local taxes in connection
with the grant or exercise of options granted under the 1996 Plan and the
sale or other disposition of shares acquired upon exercise of the options.
Each employee receiving a grant of options should consult with his or her
personal tax advisor regarding federal, state and local consequences of
participating in the 1996 Plan.
The approval of the holders of a majority of the shares of Fisher
Common Stock present and voting at the Annual Meeting is necessary to
approve the 1996 Plan. THE BOARD OF DIRECTORS RECOMMENDS THAT FISHER'S
SHAREHOLDERS APPROVE THE 1996 PLAN.
ANNUAL REPORT ON FORM 10-KSB
Fisher's Annual Report on Form 10-KSB for the fiscal year ended
January 31, 1996, as filed with the Securities and Exchange Commission, is
available to shareholders who make written request therefor to Fisher at
1950 Spectrum Circle, Suite 400, Marietta, Georgia 30067. Copies of
exhibits and basic documents filed with that report or referenced therein
will be furnished to shareholders of record upon request.
INDEPENDENT AUDITORS
BDO Seidman has served as independent auditors of Fisher for the
fiscal year ended January 31, 1996. Representatives of BDO Seidman are
expected to be present at the shareholders' meeting and will have the
opportunity to make a statement if they desire to do so and to respond to
appropriate questions. Fisher has not selected its independent accountants
for the eleven months ending December 31, 1996.
PROPOSALS BY FISHER STOCKHOLDERS
Any proposal to be presented at Fisher's 1997 Annual Meeting of
Shareholders must be received at the principal executive offices of Fisher
not later than January 15, 1997, directed to the attention of Larry Fisher,
President, for consideration for inclusion in Fisher's proxy statement and
form of proxy relating to that meeting. Any such proposals must comply in
all respects with the rules and regulations of the Securities and Exchange
Commission.
OTHER MATTERS
The Board of Directors of Fisher is not aware of any matter to be
presented for action at the Annual Meeting other than the approval and
adoption of the Proposals. If any other matter comes before the Annual
Meeting, it is the intention of the persons named in the accompanying proxy
to vote on such matter in accordance with their best judgment unless
authority therefor is withheld on the enclosed proxy card. Such
discretionary matters may include motions to adjourn the meeting for the
purpose of further soliciting proxies in favor of the Proposals.
-86-
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
FISHER BUSINESS SYSTEMS, INC.
- -----------------------------
Report of Independent Certified Public Accountants................................ F-3
Balance Sheets - January 31, 1996 and 1995........................................ F-4
Statements of Operations - Years ended January 31, 1996, 1995 and 1994 F-6
Statements of Stockholders' Deficit - Years ended January 31, 1996,
1995 and 1994............................................................... F-7
Statements of Cash Flows - Years ended January 31, 1996, 1995 and 1994............ F-9
Summary of Accounting Policies.................................................... F-11
Notes to Financial Statements..................................................... F-14
Condensed Balance Sheet - July 31, 1996 (unaudited)............................... F-24
Condensed Statements of Operations - Six months ended
July 31, 1996 and 1995 (unaudited)........................................... F-26
Condensed Statements of Cash Flow - Six months ended
July 31, 1996 and 1995 (unaudited)........................................... F-27
Notes to Condensed Financial Statements........................................... F-28
AUBIS HOSPITALITY SYSTEMS, INC. AND AUBIS SYSTEMS INTEGRATION, INC.
- -------------------------------------------------------------------
Report of Habif, Arogeti & Wynne, P.C., Independent Certified Public Accountants.. F-29
Combined Balance Sheet at December 31, 1995 and June 30, 1996 (unaudited)......... F-30
Combined Statements of Operations for the years ended December 31, 1995 and 1994
and for the six months ended June 30, 1996 and 1995 (unaudited).............. F-31
Combined Statements of Changes in Stockholders' Deficit for the years ended
December 31, 1995 and 1994 and for the six months ended
June 30, 1996 and 1995 (unaudited).......................................... F-32
Combined Statements of Cash Flows for the years ended December 31, 1995 and 1994
and for the six months ended June 30, 1996 and 1995 (unaudited).............. F-33
Notes to Combined Financial Statements............................................ F-34
HALIS SOFTWARE, INC. AND PRO HEALTH SOLUTIONS, INC.
- ---------------------------------------------------
Report of Habif, Arogeti & Wynne, P.C., Independent Certified Public Accountants.. F-41
Combined Balance Sheet at December 31, 1995 and June 30, 1996 (unaudited)......... F-42
Combined Statement of Income (Loss) for the year ended December 31, 1995
and for the six months ended June 30, 1996 and 1995 (unaudited).............. F-43
Combined Statement of Changes in Stockholders' Equity for the year ended
December 31, 1995 and for the six months ended June 10, 1996................. F-44
Combined Statement of Cash Flows for the year ended December 31, 1995
and for the six months ended June 30, 1996 and 1995 (unaudited).............. F-45
Notes to Combined Financial Statements............................................ F-46
</TABLE>
F-1
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
- ----------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Independent Auditor's Report...................................................... F-51
Balance Sheet at March 31, 1996 and June 30, 1996 (unaudited)..................... F-52
Statement of Operations for the years ended March 31, 1996 and 1995
and for the three months ended June 30, 1996 and 1995 (unaudited)............ F-53
Statement of Stockholder's Deficit for the years ended March 31, 1996 and 1995
and for the three months ended June 30, 1996 (unaudited)..................... F-54
Statement of Cash Flow for the years ended March 31, 1996 and 1995
and for the three months ended June 30, 1996 and 1995 (unaudited)............ F-55
Notes to Financial Statements..................................................... F-56
</TABLE>
F-2
<PAGE>
Report of Independent Certified Public Accountants
Board of Directors
Fisher Business Systems, Inc.
Atlanta, Georgia
We have audited the accompanying balance sheets of Fisher Business Systems,
Inc. as of January 31, 1996 and 1995, and the related statements of
operations, stockholders' deficit and cash flows for each of the three years
in the period ended January 31, 1996. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fisher Business Systems,
Inc. at January 31, 1996 and 1995, and the results of its operations and its
cash flows for each of the three years in the period ended January 31, 1996
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has had recurring losses and has a working
capital deficit and a net capital deficit that raise substantial doubt about
its ability to continue as a going concern. Management's plans in regard to
these matters are also described in Note 1. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ BDO SEIDMAN, LLP
Atlanta, Georgia
February 22, 1996, except for Note 9,
which is as of March 29, 1996
F-3
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
January 31, 1996 1995
- ----------------------------------------------------------------------
ASSETS
CURRENT
<S> <C> <C>
Cash and cash equivalents $177,649 $ 69,219
Certificates of deposit - 36,586
Accounts receivable, less allowance for possible
losses of $3,000 in 1995 3,028 10,860
Other current assets 8,254 4,064
- ----------------------------------------------------------------------
Total current assets 188,931 120,729
- ----------------------------------------------------------------------
EQUIPMENT AND FURNITURE
Computer equipment 143,550 140,445
Office furniture and fixtures 64,930 64,930
- ----------------------------------------------------------------------
208,480 205,375
Less accumulated depreciation 197,048 184,023
- ----------------------------------------------------------------------
Net equipment and furniture 11,432 21,352
- ----------------------------------------------------------------------
NET INVESTMENT IN SALES TYPE LEASE (Note 6) 31,484 -
OTHER ASSETS (Note 7) 55,687 -
- ----------------------------------------------------------------------
$287,534 $142,081
- ----------------------------------------------------------------------
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
FISHER BUSINESS SYSTEMS,INC
BALANCE SHEETS
- ------------------------------------------------------------------------------------
January 31, 1996 1995
- ------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT
Accounts payable and accrued expenses $ 360,018 $ 733,793
Deferred revenue 228,405 362,048
Redeemable stock and settlement agreement (Note 4) - 199,875
- ------------------------------------------------------------------------------------
Total current liabilities 588,423 1,295,716
REDEEMABLE STOCK AND SETTLEMENT AGREEMENT (Note 4) - 140,000
- ------------------------------------------------------------------------------------
Total liabilities 588,423 1,435,716
- ------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES (Notes 1 and 4)
STOCKHOLDERS' DEFICIT (Notes 3 and 7)
Convertible preferred stock, $.10 par - shares authorized,
5,000,000;1,500,000 and -0- outstanding 150,000 -
Common stock, $.01 par - shares authorized, 10,000,000;
4,869,504 and 3,003,171 outstanding 48,695 27,532
Additional paid-in capital 8,508,986 7,731,817
Accumulated deficit (9,001,820) (9,046,234)
- ------------------------------------------------------------------------------------
(294,139) (1,286,885)
Treasury stock, at cost, 1,600 shares (6,750) (6,750)
- ------------------------------------------------------------------------------------
Total stockholders' deficit (300,889) (1,293,635)
- ------------------------------------------------------------------------------------
$ 287,534 $ 142,081
- ------------------------------------------------------------------------------------
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
FISHER BUSINESS SYSTEMS,INC
STATEMENT OF OPERATIONS
Years ended January 31, 1996 1995 1994
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
SYSTEM SALES AND SERVICES $ 732,549 $ 1,262,191 $5,339,044
- --------------------------------------------------------------------------------------
COSTS AND EXPENSES
Cost of goods sold 246,992 441,485 1,931,245
Research and development - - 695,561
Allowance for possible losses on accounts
receivable 3,000 40,000 230,476
Selling, general and administrative 681,981 1,945,088 2,725,354
- --------------------------------------------------------------------------------------
Total costs and expenses 931,973 2,426,573 5,582,636
- --------------------------------------------------------------------------------------
Operating loss (199,424) (1,164,382) (243,592)
- --------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Loss on disposal of assets - (115,969) (130,974)
Investment income - 1,433 8,346
Interest expense - - (164,158)
- --------------------------------------------------------------------------------------
Total other income (expense) - (114,536) (286,786)
- --------------------------------------------------------------------------------------
LOSS BEFORE EXTRAORDINARY ITEM AND
REDEEMABLE STOCK (199,424) (1,278,918) (530,378)
EXTRAORDINARY INCOME FROM DEBT
RESTRUCTURING (Note 1) 243,838 - -
- --------------------------------------------------------------------------------------
NET INCOME (LOSS) 44,414 (1,278,918) (530,378)
REVERSAL (ACCRETION) OF REDEEMABLE
STOCK (Note 4) - 90,048 (136,320)
- --------------------------------------------------------------------------------------
NET INCOME (LOSS) APPLICABLE TO COMMON
STOCK $ 44,414 $(1,188,870) $ (666,698)
- --------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE
Loss before extraordinary item and
redeemable stock $ (.03) $(.39) $(.24)
Extraordinary item .04 - -
- ---------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE $ .01 $(.39) $(.24)
- ---------------------------------------------------------------------------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 6,849,254 3,032,212 2,801,664
- ---------------------------------------------------------------------------------------
See accompanying summary of accounting policies and notes to financial statements.
</TABLE>
F-6
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Preferred Stock Common Stock
-------------------- ----------------------
Shares Amount Shares Amount
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, at January 31, 1993 - $ - 2,253,171 $22,532
Issuance of common stock
upon acquisition - - 800,000/(A)/ 5,500
Net loss before accretion of
redeemable stock - - - -
Accretion of redeemable stock - - - -
- ----------------------------------------------------------------------------------------------------
BALANCE, at January 31, 1994 - - 3,053,171 28,032
Net loss before reversal of
redeemable stock - - - -
Repurchase and retirement of
common stock - - (300,000) (3,000)
Issuance of common stock pursuant
to settlement agreement - - 250,000 2,500
Reversal of redeemable stock - - - -
- ----------------------------------------------------------------------------------------------------
BALANCE, at January 31, 1995 - - 3,003,171 27,532
Issuance of common stock
in private offerings - - 2,033,333 20,333
Issuance of preferred stock
in private offerings 1,500,000 150,000 - -
Repurchase and retirement of
common stock (Note 4) - - (167,000) (1,670)
Net income before reversal of
redeemable stock - - - -
Contribution attributable to
redeemable stock (Note 4) - - - 2,500
- ----------------------------------------------------------------------------------------------------
BALANCE, at January 31, 1996 1,500,000 $150,000 4,869,504 $48,695
- ----------------------------------------------------------------------------------------------------
(A) Includes 250,000 shares subject to redemption agreement.
</TABLE>
F-7
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
YEARS ENDED JANUARY 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
Additional Total
paid-in Accumulated Treasury stockholders'
capital deficit stock deficit
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
$ 7,652,317 $(7,190,666) $(6,750) $ 477,433
132,000 - - 137,500
- (530,378) - (530,378)
- (136,320) - (136,320)
- -------------------------------------------------------------------------------
7,784,317 (7,857,364) (6,750) (51,765)
- (1,278,918) - (1,278,918)
(52,500) - - (55,500)
- - - 2,500
- 90,048 - 90,048
- -------------------------------------------------------------------------------
7,731,817 (9,046,234) (6,750) (1,293,635)
479,669 - - 500,002
150,000 - - 300,000
- - - (1,670)
- 44,414 - 44,414
147,500 - - 150,000
- -------------------------------------------------------------------------------
$8,508,986 $(9,001,820) $(6,750) $ (300,889)
- -------------------------------------------------------------------------------
</TABLE>
See accompanying summary of accounting policies and notes to financial
statements.
F-8
<PAGE>
<TABLE>
<CAPTION>
FISHER BUSINESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------------------
Years ended January 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income (loss) before redeemable stock $ 44,414 $(1,278,918) $(530,378)
Adjustments to reconcile net income (loss) to
cash provided by (used for) operating activities:
Depreciation 13,025 120,169 194,344
Extraordinary item (243,838)
Amortization - 317,016 595,866
Allowance for losses on accounts receivable 3,000 40,000 230,476
Loss on disposal of assets - 115,969 130,974
Changes in operating assets and liabilities
affecting operations:
Accounts receivable 4,832 699,334 (585,490)
Inventories - 66,899 129,771
Other current assets (4,190) 168,198 102,502
Accounts payable and accrued expenses (119,052) 224,033 47,798
Accrued compensation and benefits (10,885) (28,028) 1,191
Deferred revenue (133,643) (164,681) (260,662)
Customer deposits - - (23,822)
- --------------------------------------------------------------------------------------------
Cash provided by (used for) operating activities (373,165) 279,991 32,570
- --------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net purchases of equipment and furniture (3,103) - (33,616)
Proceeds from sale of Blue Mountain Software - 250,000 -
Proceeds upon maturity of certificates of deposit 36,580 (1,118) 19,245
Additions to capitalized software
development costs - - (430,917)
Investment in sales-type lease (31,484) - -
Acquisition cash - - 12,030
Other assets (55,687) - -
- --------------------------------------------------------------------------------------------
Cash provided by (used for) investing activities (53,688) 248,882 (433,258)
- --------------------------------------------------------------------------------------------
</TABLE>
F-9
<PAGE>
<TABLE>
<CAPTION>
FISHER BUSINESS SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
- -------------------------------------------------------------------------------------------
Years ended January 31, 1996 1995 1994
- --------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
<S> <C> <C> <C>
Payments on line-of-credit - (410,484) -
Proceeds from sale of preferred stock 300,000 - -
Proceeds from sale of common stock 500,002 2,500 -
Retirement of stock (1,670) (55,500) -
Net borrowings on line of credit - - 251,484
Redeemable stock and settlement agreement (189,877) - -
- --------------------------------------------------------------------------------------------
Cash provided by (used for) financing activities 608,455 (463,484) 251,484
- --------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 108,430 65,389 (149,204)
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, beginning of year 69,219 3,830 153,034
- --------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, end of year $ 177,649 $ 69,219 $ 3,830
- --------------------------------------------------------------------------------------------
See accompanying summary of accounting polices and notes to financial statements.
</TABLE>
F-10
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
BUSINESS Fisher Business Systems, Inc., d/b/a "Fisher Restaurant
Systems" (the Company), primarily designs, develops,
markets, licenses and supports proprietary computer
software for use in operating and managing restaurants.
BASIS OF PRESENTATION The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that
affect reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the
date of the financial statements and the reported
amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
CASH EQUIVALENTS The Company considers all highly liquid investments
with a maturity of three months or less when purchased
to be cash equivalents.
REVENUES Revenues are recognized as follows:
Licensing and sales-type/
leasing agreements - Upon shipment of the software to
the customer when no further
obligations remain to consummate
sale and collection of the
related receivable is deemed
probable.
Support Contracts - Monthly, upon contract
effective date, over the life
of the contract.
Installation,
training - When provided to the
and education customer.
Hardware - Upon shipment of the computer
equipment to the customer.
EQUIPMENT AND Equipment and furniture are stated at cost.
FURNITURE Depreciation is computed using the straight-line method
based on the estimated useful lives of the assets,
generally three to five years. For income tax
purposes, depreciation is computed on accelerated
methods.
</TABLE>
F-11
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SOFTWARE DEVELOPMENT The Company capitalizes software development costs in
COSTS accordance with the Statement of Financial Accounting
Standards No. 86. Capitalization of software
development costs begins upon the establishment of
technological feasibility and the ongoing assessment of
recoverability of capitalized software development
costs require considerable judgment by management with
respect to certain external factors, including, but not
limited to, anticipated future revenues, estimated
economic life and changes in software and hardware
technologies. Amortization of capitalized software
development costs, totalled $0 in 1996, $317,016 in
1995, and $528,404 in 1994. Amortization of capitalized
software development costs is provided on a product-by-
product basis at the greater of the amount computed
using (a) the ratio of current revenues for a product
to the total of current and anticipated future revenues
or (b) the straight-line method over the remaining
estimated economic life of the product. Generally, an
original estimated economic life of three years is
assigned to capitalized software development costs.
Based on the ongoing reassessment of recoverability of
capitalized software development cost, and the limited
future revenues derived from such costs, during the
fourth quarter of 1995, the Company recorded a charge
of $193,720 to fully amortize software development
costs.
INCOME (LOSS) PER Net income (loss) per share has been computed for each
COMMON SHARE fiscal year on the basis of the weighted average number
of common shares outstanding. Additionally, in
computing loss per common share, the Company has
adjusted the income (loss) before extraordinary item
and the net loss by the amount of the accretion
credited or charged to its accumulated deficit. Common
share equivalents (options) have not been considered in
1995 and 1994 because their effect is anti-dilutive.
TAXES ON INCOME Income taxes are based on income (loss) for financial
reporting purposes and reflect a current tax liability
(asset) for the estimated taxes payable (recoverable)
in the current year tax return and changes in deferred
taxes. Deferred tax liabilities or assets are
recognized for the estimated tax effects of temporary
differences between financial reporting and taxable
income (loss) and for loss carryforwards based on
enacted tax laws and rates. A valuation allowance is
used to reduce deferred tax assets to the amount that
is more likely than not to be realized (Note 5).
</TABLE>
F-12
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FAIR VALUE OF The Company's principal financial instruments, as
FINANCIAL STATEMENTS contemplated under SFAS No. 107, are represented by its
investment in sales type lease and warrants. The
Company's investment in sales type lease bears interest
at a rate which the Company believes represent current
market rates, that is, rates at which the Company
currently renew or extends funds, accordingly, carrying
value is deemed to approximate fair value.
In addition, at January 31, 1996, the Company had
1,450,000 of stock purchase warrants outstanding with
an estimated fair market value of $2,719,000.
</TABLE>
F-13
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
SUMMARY OF ACCOUNTING POLICIES
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
1. GOING CONCERN The Company's continued existence is dependent upon
the success of its plans to resolve its liquidity
problems by broadening its customer base, thereby
increasing revenues, and by obtaining additional
equity capital, debt financing and/or merger. In an
effort to continue to resolve its liquidity
problems, the Company successfully renegotiated
terms with many of its vendors which resulted in
reductions of vendor payables of $243,838. The
vendor renegotiations were conducted periodically
on a vendor-by-vendor basis over a period of time
beginning the fourth quarter of fiscal 1994 and
ending the first quarter of fiscal 1996. In
addition, during 1995, the Company completed
private placements of its preferred and common
stock which resulted in proceeds of $800,000.
Furthermore, the Company is in the process of
completing a private placement of 7% convertible
promissory notes which has resulted in proceeds of
$675,000 to date. The promissory notes are
convertible on the basis of $1 in debt being
converted to one share of common stock. In
addition, the Company has entered into an agreement
and plan of merger and reorganization with AUBIS,
LLC and HALIS, LLC. Under the terms of the merger
agreement, the shareholders of AUBIS and HALIS will
exchange 100% of their issued and outstanding
shares for 10,500,000 and 5,000,000 shares,
respectively, in the Company in a tax free
exchange. The merger is contingent upon the
approval of the Company's shareholders (see
Note 9).
2. ACQUISITION AND On February 1, 1993, the Company acquired all of
SALE OF BLUE MOUNTAIN the outstanding common stock of Blue Mountain
Software, Inc. in exchange for 800,000 unregistered
shares of the Company's common stock. Additionally,
two of Blue Mountain Software stockholders were
each granted options to purchase 150,000 shares of
the Company's common stock at an exercise price of
$.50 per share. The acquisition has been accounted
for as a purchase, and accordingly, the purchase
price based upon the estimated fair value of the
Company's stock issued in the transaction has been
allocated to the net assets acquired. The aggregate
consideration given in the transaction was
$431,104.
On March 25, 1994, substantially all of the assets,
which included all software object libraries,
customer lists and intellectual property related to
Blue Mountain Software, Inc. were sold for $250,000
to a Company whose chairman also serves as a
director of the Company.
</TABLE>
F-14
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
3. STOCKHOLDERS' ISSUANCES
DEFICIT
In fiscal 1995, the Company completed private placements
of 2,033,333 shares of common stock and 1,500,000 shares
of Class A Convertible Preferred Stock, resulting in
proceeds of $800,002. The preferred and common stock have
not been registered under the Federal Securities Act of
1933 or the Georgia Securities Act of 1973, and as such
there are certain restrictions on their transferability.
The preferred shares may be issued in series, and each
series may have voting rights, preferences, conversion
rights or restrictions as determined by the Board of
Directors prior to issuance. Subsequent to year end, the
preferred shares were converted into 1,500,000 shares of
common stock.
During 1995, the Company issued 1,450,000 of warrants
which entitled the holders to purchase shares of common
stock at $.25 per share. The Company received notice in
January 1996 that the warrants would be exercised.
STOCK OPTION PLANS
The Company had an incentive stock option plan and a non-
qualified stock option plan. The incentive stock option
plan, for key employees and officers, has reserved 60,400
shares of common stock for issuance thereunder. The terms
of exercise may vary with each individual grant, as
determined by the Board of Directors. Options are not
exercisable until at least one year after the date of
grant and expire if not exercised within ten years of date
of grant. Options may not be granted at less than the
market price of the common stock at date of grant. The
incentive stock option plan expired at January 29, 1996.
</TABLE>
F-15
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Incentive stock option activity for each of the three years in
the period ended January 31, 1996 is as follows:
Number Exercise
Options Price
-----------------------------------------------------------
<S> <C> <C>
Outstanding, January 31, 1993 153,275 $.50
Awarded 295,300 $.50
Canceled (333,295) $.50
-----------------------------------------------------------
Outstanding, January 31, 1994 115,280 $.50
Canceled (54,880) $.50
-----------------------------------------------------------
Outstanding, January 31, 1995
and 1996 60,400 $.50
-----------------------------------------------------------
Exercisable, January 31, 1996 60,400 $.50
-----------------------------------------------------------
The non-qualified stock option plan, is for key employees,
directors and officers of the Company. Under this plan the
options may be exercisable immediately after grant, although
the terms of exercise may vary with each individual grant, as
determined by the Board of Directors. In addition, the options
expire 10 years after the date of grant and may not be granted
at less than the market price of the common stock at date of
grant. The Plan also provides for automatic annual grants to
non-employee directors.
</TABLE>
F-16
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Non-qualified stock option plan and other non-qualified
options activity for each of the three years in the period
ended January 31, 1996 is as follows:
<TABLE>
<S> <C> <C> <C>
Number of Exercise
Options Price
--------------------------------------------------------------
Outstanding, January 31, 1993 16,060 $1.25 - $20.00
Awarded 281,065 $ .50
Canceled (151,700) $ .50
--------------------------------------------------------------
Outstanding, January 31, 1994 145,425 $ .50 - $20.00
Awarded 4,700 $ .50
Cancelled (90,185) $ .50 - $13.12
--------------------------------------------------------------
Outstanding, January 31, 1995 59,940 $ .50 - $20.00
Awarded 750,000 $ .25 - .87
--------------------------------------------------------------
Outstanding, January 31, 1996 809,940 $ .25 - $20.00
--------------------------------------------------------------
In the event an employee or officer terminates employment, all
unexercisable options under either plan are canceled and
exercisable options expire after 90 days. In the event a non-
employee director resigns, all unexercisable options under the
non-qualified stock option plan are canceled and exercisable
options expire after three years.
The Financial Accounting Standards Board (FASB) issued SFAS
No. 123, "Accounting for Stock-Based Compensation" (SFAS No.
123), which the Company is required to adopt in the fiscal
year ended January 31, 1997. SFAS No. 123 requires companies
to estimate the value of all stock-based compensation using a
recognized pricing model. Companies have the option of
recognizing this value as an expense or disclosing its effects
on net income. The Company's management has not yet determined
its method of adoption or the financial statement impact of
adopting SFAS No. 123.
</TABLE>
F-17
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. COMMITMENTS In connection with the merger of Blue Mountain Software, in
February 1, 1993, the Company entered into a Stock
Repurchase Agreement ("Agreement") with one of the Blue
Mountain Software stockholders, involving 250,000 shares of
the Company's common stock. Due to its repurchase
obligation, the 250,000 shares covered by the agreement
have been recorded as redeemable stock. The aggregate
repurchase obligation due under the Agreement was
originally $510,000. However, the Company determined the
discounted value of the underlying shares of common stock
to be $293,604 on February 1, 1993, based on a risk
adjusted rate of return of 30%. The difference in the
original valuation and aggregate obligation of $216,396 was
being accreted over the duration of the agreement and a
corresponding amount charged against the Company's
accumulated deficit.
On August 8, 1994, the Company entered into a Mutual
General Release and Settlement Agreement ( the "Settlement
Agreement") with the former shareholder of Blue Mountain (
the "Plaintiff") settling certain litigation that had been
filed against the Company by the Plaintiff claiming damages
for breach of a stock repurchase agreement and an
employment agreement with the Company. Pursuant to the
Settlement Agreement, the Company resumed payments under
the employment agreement, issued 250,000 shares of the
Company's common stock to the Plaintiff, and agreed to the
entry of a judgment against the Company in the amount of
$357,500, which the Plaintiff agreed not to enforce so long
as the Company timely made all payments under the
employment agreement and the Plaintiff received $250,000
from the Company or its designee no later than February 1,
1995.
The Settlement Agreement was amended on February 27, 1995
("Amended Settlement Agreement"). Pursuant to the Amended
Settlement Agreement, the Company resumed payments under
the employment agreement, and agreed to the entry of a
judgment against the Company in the amount of $339,875.
Under the judgment, the Company was required to redeem
300,000 shares of common stock held by the Plaintiff in the
amount of $268,000. The remaining portion of the judgment
represented the amount owed under the employment agreement.
Under the terms of the Amended Settlement Agreement, the
Company was required to redeem 21,000 shares from the
Plaintiff in the amount of $15,000 no later than March 1,
1995 and an additional 21,000 shares at a total price of
$15,000 on April 1, 1995. The Company was also required to
repurchase 133,000
F-18
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
shares in the amount of $98,000 no later than May 1, 1995
and repurchase 125,000 shares for $140,000 no later than
February 1, 1996.
On September 15, 1995, the plaintiff's shares of the
Company's stock were purchased by a director of the
Company, and in connection therewith, the plaintiff
released the Company from all obligations, including those
under the Mutual General Release and Settlement Agreement.
Accordingly, the Company reclassified the $147,500
remaining redeemable stock balance as contributed capital.
EMPLOYEE BENEFIT PLAN
The Company sponsors a 401(K) retirement savings plan for
all employees who meet certain eligibility requirements.
Employees may contribute to the plan up to 20% of their
salary or the maximum allowed by the IRS. The Company may
elect to make matching and/or discretionary contributions.
Employee contributions are immediately 100% vested while
Company contributions are subject to a six year vesting
schedule. For the years ended January 31, 1996, 1995 and
1994, the Company made no contributions to the plan.
EMPLOYMENT AGREEMENT
The Company has a three year employment agreement with its
president which expires December 31, 1998. The agreement
provides for an annual base salary of $175,000 plus
incentive bonus payments. In addition, the employment
agreement provides for the granting of stock options at the
discretion of the Board of Directors.
5. INCOME The sources of temporary differences and their effect on
TAXES the net deferred taxes are as follows:
January 31, 1996 1995
----------------------------------------------------------
Net operating loss $ 3,384,454 $ 3,188,000
carryforwards
Deferred revenue differences 80,186 144,000
Other basis differences - 1,200
Less valuation allowance (3,464,640) (3,334,200)
----------------------------------------------------------
$ - $ -
----------------------------------------------------------
F-19
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Differences between the effective income tax rate and the
statutory federal income tax rate were primarily the result
of the valuation allowance which fully reserved the net
deferred tax asset which arose from the tax loss
carryforwards and other temporary differences generated
during the years ended January 31, 1996, 1995 and 1994. At
January 31, 1996 the Company has approximately $8,500,000
of net operating loss carryforwards available to offset
future tax liabilities. The contemplated acquisition
transactions described in Note 9 could result in certain
limitations on the utilization of the net operating loss
carryforwards.
These losses expire as follows:
Year Amount
-----------------------------------------------------------
2000 $ 148,000
2001 111,000
2002 246,000
2003 1,224,000
2004 1,571,000
2005 781,000
2006 1,700,000
2007 870,000
2008 265,000
2009 1,054,000
2010 491,000
----------------------------------------------------------
$ 8,461,000
----------------------------------------------------------
6. SALES-TYPE LEASE The Company is lessor under terms of a thirty six month
sales-type lease involving a restaurant computer system.
The Company's net investment in this lease at January 31,
1996, is comprised of the following:
Minimum lease payments receivable $34,947
Less unearned income (3,463)
----------------------------------------------------------
Net investment in sales type lease $31,484
----------------------------------------------------------
F-20
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Future minimum payments to be received under sales
type lease are as follows:
Year Amount
---------------------------------------------------
1997 $ 13,980
1998 13,980
1999 6,987
---------------------------------------------------
Total $ 34,947
---------------------------------------------------
7. OTHER ASSETS Prior to year end, in connection with the
acquisition of AUBIS, LLC (see Note 9), the Company
advanced to AUBIS $20,000 for operations. In
addition, the Company has capitalized $35,687 in
costs associated with the proposed acquisition of
AUBIS. Subsequent to year end the Company advanced
to AUBIS an additional $163,000. The amount funded
to AUBIS will be forgiven upon the completion of
the merger.
8. SUPPLEMENTAL Supplemental information required by Statement of
DISCLOSURE OF Financial Accounting Standards No. 95, relative to
CASH FLOW the statements of cash flows, is as follows:
INFORMATION
1996 1995 1994
--------------------------------------------------
Interest paid $ - $9,504 $142,902
--------------------------------------------------
As discussed in Note 2, on February 2, 1993, the
Company acquired all of the outstanding common
stock of Blue Mountain Software, Inc. in exchange
for 800,000 unregistered shares of Fisher's common
stock in a non-cash transaction. The acquired
assets included $12,030 in cash.
9. SUBSEQUENT EVENTS The Company is in the process of completing a
private placement of 7.0% convertible promissory
notes due January 15, 1998 (the "Notes"). The Notes
are convertible into Fisher common stock at the
option of the holder at a conversion price of $1.00
per share. Proceeds from the sale of the Notes will
be utilized to expand Fisher's sales and marketing
capabilities in the areas of its business. The
Company has received proceeds of $675,000 to date
from this placement.
F-21
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Fisher has agreed to merge AUBIS Hospitality
Systems, Inc. ("AHS") and AUBIS Systems
Integration, Inc. ("ASI") (collectively, the "AUBIS
Subsidiaries"), each a wholly-owned subsidiary of
AUBIS, L.L.C. ("AUBIS") with and into two newly
formed wholly-owned subsidiaries of Fisher
(collectively, the "Fisher Subsidiaries"), pursuant
to the Amended and Restated Agreement and Plan of
Merger and Reorganization, dated December 13, 1995
and amended and restated as of March 29, 1996 (the
"AUBIS Agreement"), among AUBIS, the AUBIS
Subsidiaries, certain affiliates of AUBIS, Fisher
and the Fisher Subsidiaries, in which AUBIS will
receive 10,500,000 shares of Fisher Common Stock
("AUBIS Transaction"). In addition, Fisher has
entered into a Stock Purchase Agreement, dated as
of March 29, 1996, between Fisher and HALIS, L.L.C.
("HALIS"), an entity controlled by the benefical
shareholder of AUBIS, and its affiliates, providing
for the acquisition by Fisher of HALIS Software,
Inc. ("HSI"), a wholly-owned subsidiary of HALIS,
in which HALIS will receive 5,000,000 shares of
Fisher Common Stock ("HALIS Transaction"). The
AUBIS and HALIS transactions are subject to
shareholder approval, and upon consummation of
these Transactions, AHS, ASI and HSI will be
wholly-owned subsidiaries of Fisher and Fisher's
corporate name will be changed to AUBIS, Inc.
Under the terms of the AUBIS and HALIS Agreements,
an aggregate of 15,500,000 shares of Fisher Common
stock will be issued. As a result, upon
consummation of the these transactions, AUBIS and
HALIS will own approximately 46% and 22%,
respectively, of the shares of Fisher Common Stock
to be outstanding upon consummation of these
Transactions. In connection with these transactions
the Company has proposed to its stockholders that
the Articles of Incorporation be amended to
increase the number of authorized shares from
10,000,000 shares to 100,000,000 shares.
In February 1996, the Company entered into a
Management Agreement with the beneficial
shareholder of AUBIS and HALIS in which the
shareholder will provide management services to the
Company in exchange for a monthly payment of
$10,000.
F-22
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company has entered into a letter of intent to
lease a proprietary technology asset ("MERAD") from
Paul Harrison Enterprises, Inc. (PHE"), pursuant to
which the Company is obligated to pay to PHE a
license fee of 10% of the gross revenues generated
from the MERAD technology. It is anticipated that
this transaction will be consummated concurrently
with the AUBIS and HALIS transactions. PHE is also
the shareholder of AUBIS and HALIS.
10. MAJOR CUSTOMERS For the year ended January 31, 1996, the Company
had no significant concentration of sales. For year
ended January 31, 1995, sales to one customer,
Friendly's Ice Cream, totalled approximately
$378,000, and accounted for 30% of the Company's
sales. There were no other significant
concentration of sales for the year ended January
31, 1995. For year ended January 31, 1994, sales to
three customers; MCI, Digital Equipment and
Friendly's Ice Cream, totalled approximately
$1,533,000, $762,000 and $833,000, respectively and
in the aggregate accounted for 58% of the Company's
sales.
F-23
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
ASSETS
July 31
1996
-----------
Current Assets
Cash and cash equivalents $ 37,379
Notes receivable-affiliates (Note C) 971,551
Accounts receivable - net 29,355
Other current assets 0
----------
Total current assets 1,038,885
----------
Equipment, Furniture and Vehicles
Computer equipment 174,835
Office furniture and fixtures 64,930
----------
239,765
----------
Less accumulated depreciation 202,058
----------
Net equipment, furniture and vehicles 37,707
----------
Net investment in sales type lease
Other 157,160
----------
Total Assets $1,233,752
==========
See notes to condensed financial statements.
F-24
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
CONDENSED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND SHAREHOLDERS' DEFICIT July 31
1996
-----------
Current Liabilities
Accounts payable and accrued expenses $ 302,159
Deferred revenue 103,638
-----------
Total current liabilities 405,797
-----------
Convertible promissory notes (Note D) 1,240,000
-----------
Shareholders deficit
Preferred stock, par value $.10, authorized
5,000,000 shares, zero and 1,500,000 issued 0
Common stock, par value $.01, authorized
10,000,000 shares 50,195
Additional paid-in-capital 8,509,986
Accumulated deficit (8,965,476)
Less treasury stock at cost (6,750)
-----------
Total shareholders' deficit (412,045)
-----------
Total liabilities and shareholders' deficit $ 1,233,752
===========
See notes to condensed financial statements.
F-25
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six Months Ended July 31 1996 1995
---------- ----------
Revenues $ 238,116 $ 373,072
Cost of Goods Sold 73,428 127,145
---------- ----------
Gross Margin 164,688 245,927
---------- ----------
Expense
Selling, general and administrative 323,864 297,687
Miscellaneous expense (income) 30,210 (17,211)
---------- ----------
Total expenses 354,074 280,476
---------- ----------
Net loss from operations before extraordinary
Item (189,386) (34,549)
Extraordinary income from debt restructuring 78,230 0
---------- ----------
Net Loss $ (111,156) $ (34,549)
========== ==========
Loss Per Share of Common Stock $ (0.02) $ (0.01)
========== ==========
Weighted Average Shares Outstanding 7,450,046 3,803,171
========== ==========
See Notes to condensed financial statements
F-26
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended July 31, 1996 1995
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (111,156) $ (34,549)
Adjustments to reconcile net income to net
cash provided (used for) operating activities:
Depreciation and amortization 5,010 6,012
Changes in operating assets and liabilities
affecting operations:
Accounts receivable (26,327) (48,084)
Accounts receivable - affiliates (971,551) 0
Certificate of deposit 0 36,586
Other current assets 8,254 (684)
Accounts payable and accrued expenses (57,859) (116,808)
Accrued compensation and benefits 0 (7,506)
Deferred revenue (124,767) (128,550)
------------- -------------
Net cash provided by (used for) operating activities (1,278,396) (293,583)
------------- -------------
Cash Flow From Investing Activities
Net sale (purchases) of equipment and furniture (31,285) 0
Repurchase of redeemable stock 0 (170,578)
Organization costs (101,473) 0
Proceed from sales type lease 31,484 0
------------- -------------
Net cash provided by (used for) investing activities (101,274) (170,578)
------------- -------------
Cash Flows From Financing Activities
Net proceeds from private placement 1,240,000 0
Proceeds from sale of preferred stock 0 300,000
Proceeds from sale of common stock 0 300,000
------------- -------------
Net cash provided by (used for) financing activities 1,240,000 600,000
------------- -------------
(Decrease) Increase in cash and cash equivalents (139,670) 135,839
Cash and Cash Equivalents, at beginning of period 177,649 69,219
------------- -------------
Cash and Cash Equivalents, at end of period $ 37,979 $ 205,058
============= =============
</TABLE>
See Notes to condensed financial statements
F-27
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
JULY 31, 1996
Note A - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. These statements should be read in conjunction
with Form 10-KSB for the fiscal year ended January 31, 1996. In the opinion
of management, all adjustments considered necessary for a fair presentation
have been made and are of a normal recurring nature. Operating results for
the six month period ended July 31, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996.
Note B - Net Loss Per Share of Common Stock
Loss per share of the fiscal periods ended July 31, 1996 and 1995 has been
computed on the weighted average number of shares outstanding. The effects of
common share equivalents have been considered using the treasury stock
method. However, the effects are not material and antidilutive, and they have
been excluded from the calculation.
Note C - Notes Receivable
In connection with its agreement and plan of merger and reorganization with
AUBIS, LLC ("AUBIS") and HALIS, LLC ("HALIS"), the Company has advanced AUBIS
and HALIS $971,551. These notes bear interest at rates ranging from 10% to
12% and are due and payable on the first anniversary of the date of the
advance.
Note D - Convertible Promissory Notes
During the quarter ended April 30, 1996, the Company commenced a private
placement of 7% convertible promissory notes which are due January 15, 1998.
Proceeds from the private placement totalled $1,240,000 at quarter end.
F-28
<PAGE>
[LETTERHEAD OF HABIF, AROGETI & WYNNE, P.C. APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
of AUBIS Hospitality Systems, Inc.,
and AUBIS Systems Integration, Inc.
We have audited the accompanying combined balance sheet of AUBIS HOSPITALITY
SYSTEMS, INC. AND ITS SUBSIDIARIES (AHS) and AUBIS SYSTEMS INTEGRATION, INC.
(ASI) as of December 31, 1995, and the related combined statements of
operations, stockholders' deficit and cash flows for the years ended December
31, 1995 and 1994. These combined financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of AUBIS Hospitality
Systems, Inc. and its subsidiaries and AUBIS Systems Integration, Inc. at
December 31, 1995, and the results of their operations and their cash flows for
the years ended December 31, 1995 and 1994 in conformity with generally accepted
accounting principles.
The accompanying combined financial statements have been prepared assuming that
the Companies will continue as a going concern. As discussed in Note B to the
combined financial statements, the Companies have had recurring losses, a
working capital deficit and a capital deficit. These conditions raise
substantial doubt about their ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note B. The
combined financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Habif, Arogeti & Wynne, P.C.
- --------------------------------
Atlanta, Georgia
February 9, 1996
F-29
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
------
(Unaudited)
December June
31, 1995 30, 1996
-------- -----------
<S> <C> <C>
Current assets
- --------------
Cash $ 112,252 $ 4,672
Receivables, less allowance for possible
losses of $53,400 142,325 250,209
Receivables - related party 69,771 69,068
Inventories 55,847 10,000
Other current assets 4,991 3,313
----------- -----------
Total current assets 385,186 337,262
----------- -----------
Property and equipment, at cost
- ----------------------
Computer equipment 83,419 57,897
Office furniture and fixtures 17,478 23,171
----------- -----------
100,897 81,068
Less accumulated depreciation (69,629) (67,303)
----------- -----------
31,268 13,765
----------- -----------
Other assets
- ------------
Deferred merger costs 162,208 331,547
----------- -----------
$ 578,662 $ 682,574
=========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities
- -------------------
Accounts payable and accrued expenses $ 751,435 $ 504,003
Accrued expenses - related party 55,863 58,266
Notes payable - affiliates 458,469
Deferred revenue and customer deposits 88,818 21,081
Current portion of long-term debt - related party 50,000 150,000
Notes payable 16,088 11,015
Notes payable - related party 95,100 124,000
Payroll and sales tax payable 271,866 210,981
----------- -----------
Total current liabilities 1,329,170 1,537,815
----------- -----------
Long-term debt, net of current portion - related party 100,000 -0-
- ------------------------------------------------------ ----------- -----------
Commitments and contingencies (Note G)
- -----------------------------
Stockholders' deficit
- ---------------------
Common stock - AHS, Inc., $1.00 par value, 1,000,000
shares authorized; 1,126 issued and outstanding 1,126 1,126
Common stock - ASI, Inc., no par value, 100,000
shares authorized; 14,288 issued and outstanding 100,787 100,787
Additional paid-in capital 478,874 478,874
Accumulated deficit (1,431,295) (1,436,028)
----------- -----------
(850,508) (855,241)
----------- -----------
$ 578,662 $ 682,574
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-30
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the year ended For the six months ended
December 31, June 30,
------------------------- -------------------------
1995 1994 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Systems sales and services $ 3,251,665 $ 2,599,572 $ 1,302,224 $ 1,968,094
- --------------------------- ----------- ----------- ----------- -----------
Costs and expenses
- ------------------
Cost of goods sold 2,541,429 2,085,290 815,734 1,541,734
Selling, general, and
administrative 1,000,818 942,598 449,729 369,490
----------- ----------- ----------- -----------
3,542,247 3,027,888 1,265,463 1,911,224
----------- ----------- ----------- -----------
Operating income (loss) (290,582) (428,316) 36,761 56,870
- ----------------------- ----------- ----------- ----------- -----------
Other income (expense)
- ----------------------
Gain (Loss) on assets
disposal 6,385 -0- (27,528) -0-
Rental income 21,350 8,000 7,700 -0-
Interest expense (22,798) (21,304) (14,166) (11,596)
Other income (expense) 315 6,037 (7,500) -0-
Loss from misappropriation (97,123) -0- -0- -0-
----------- ----------- ----------- -----------
(91,871) (7,267) (41,494) (11,596)
----------- ----------- ----------- -----------
Income (Loss) before
income
taxes (382,453) (435,583) (4,733) 45,274
Income taxes -0- -0- -0- -0-
- ------------ ----------- ----------- ----------- -----------
Net income (loss) $ (382,453) $ (435,583) $ (4,733) $ 45,274
=========== =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-31
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
COMBINED STATEMENTS OF STOCKHOLDERS' DEFICIT
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
AHS, Inc. ASI, Inc.
Common stock Common stock Additional Total
-------------------------- -------------------- paid-in Accumulated Stockholders'
Shares Amount Shares Amount capital Deficit Deficit
------------ ------------ ------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,126 $1,126 10,000 $ 50,787 $323,874 $(1,048,842) $(673,055)
Issuance of common stock 4,288 50,000 155,000 205,000
Net loss (382,453) (382,453)
----- ------ ------ -------- -------- ----------- ---------
Balance, December 31, 1995 1,126 1,126 14,288 100,787 478,874 (1,431,295) (850,508)
Net loss - six months ended
June 30, 1996 (unaudited) (4,733) (4,733)
----- ------ ------ -------- -------- ----------- ---------
Balance, June 30, 1996
(Unaudited) 1,126 $1,126 14,288 $100,787 $478,874 $(1,436,028) $(855,241)
===== ====== ====== ======== ======== =========== =========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-32
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the year ended For the six months
December 31, ended June 30,
---------------------- ----------------------
1995 1994 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Cash flows from operating activities
- ------------------------------------
Net income (loss) $(382,453) $(435,583) $ (4,733) $ 45,274
--------- --------- --------- ---------
Adjustments to reconcile net income
(loss) to cash provided (used) by
operating activities
Depreciation 13,268 24,795 6,000 10,558
Allowance for loss on accounts
receivable 18,000 400 -0- 21,845
Gain (Loss) on disposal of assets (6,385) -0- 27,528 -0-
Changes in operating assets and
liabilities affecting operations
Decrease (Increase) in accounts
receivable 22,841 (29,454) (107,884) (126,382)
Decrease (Increase) in
receivables - related party (8,048) 29,466 703 (8,834)
Decrease (Increase) in inventories (6,196) (20,651) 700 (95,153)
Decrease (Increase) in other
assets (750) 892 1,678 (18,409)
Increase (Decrease) in accounts
payable and accrued
expenses 154,802 205,128 (261,990) 60,060
Increase in accrued expenses -
related party 51,545 11,000 5,966 -0-
Increase (Decrease) in deferred
revenues 48,266 7,228 (79,862) 37,371
Increase (Decrease) in payroll
taxes payable 150,569 557 (60,886) 47,401
--------- --------- --------- ---------
Total adjustments 437,912 229,361 (468,047) (71,543)
--------- --------- --------- ---------
Net cash provided (used)
by operating activities 55,459 (206,222) (472,780) (26,269)
--------- --------- --------- ---------
Cash flows from investing activities
- ------------------------------------
Purchase of equipment and furniture (22,015) (2,043) (5,693) (16,952)
Deferred merger costs (162,208) -0- (169,339) -0-
Insurance recovery from equipment loss 30,677 -0- 5,024 -0-
Proceeds from sale of maintenance contracts -0- -0- 47,912 -0-
--------- --------- --------- ---------
Net cash used by investing activities (153,546) (2,043) (122,096) (16,952)
--------- --------- --------- ---------
Cash flows from financing activities
- ------------------------------------
Issuance of common stock 205,000 125,000 -0- 50,000
Net payments on notes payable (17,912) (16,000) (5,072) (7,137)
Proceeds from notes payable - affiliates -0- -0- 458,469 -0-
Proceeds from issuance of notes payable -
related party 11,020 79,081 (16,101) -0-
Proceeds from issuance of long-term debt -
related party -0- 16,694 50,000 24,461
--------- --------- --------- ---------
Net cash provided by financing
activities 198,108 204,775 487,296 67,324
--------- --------- --------- ---------
Net increase (decrease) in cash 100,021 (3,490) (107,580) 24,103
Cash, beginning of period 12,231 15,721 112,252 12,231
--------- --------- --------- ---------
Cash, end of period $ 112,252 $ 12,231 $ 4,672 $ 36,334
========= ========= ========= =========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-33
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting:
-------------------
These financial statements are the combined statements of AUBIS Hospitality
Systems, Inc. (AHS) and AUBIS Systems Integration, Inc. (ASI) (the
Companies). On February 15, 1995, the majority shareholders contributed
their shares of AHS and ASI to AUBIS, LLC (the "Parent"). On March 1, 1995,
the remaining shareholders contributed their shares to the Parent, thereby
making the Companies 100% owned by the Parent. Material intercompany
transactions and balances have been eliminated.
The Parent and the Companies signed a merger agreement with Fisher Business
Systems, Inc. (Fisher), whereby the Companies will be merged into Fisher in
a transaction to be accounted for as a reverse acquisition of Fisher by the
Companies (Note C) and Halis Software, Inc. (Halis). Halis and AUBIS are
under common control.
AUBIS Hospitality Systems, Inc and Subsidiaries:
-----------------------------------------------
AUBIS Hospitality Systems, Inc. (AHS) f/k/a Wiporwil Systems, Inc., EZ/POS,
Inc. and Inventory Xpress, Inc., its subsidiaries, provide sales and
services in the southeastern United States to individual, franchisee,
management companies and national chains in the restaurant industry. AHS's
technical staff has extensive experience in computer based systems for
restaurant point of sale and back office applications, restaurant management
and systems development.
AUBIS Systems Integration, Inc.:
-------------------------------
AUBIS Systems Integration, Inc. (ASI) f/k/a G.E. Random and Associates,
Inc., d/b/a Peripheral Design provides computer services, network solutions,
connectivity solutions and system integration to businesses. ASI sells,
services and supports many major brands of computers, peripherals and
networks. ASI's sales and services include computer system integration,
network configuration, and network implementation. ASI's support services
include on-site hardware maintenance as well as network support programs.
Revenue:
-------
Revenue is recognized as follows:
Support contracts - Ratably over the life of the contract from the
effective date.
Installation, training
and education - When the services are provided.
Hardware - In accordance with SOP91-1, revenue is
recognized upon shipment of the computer
equipment to the customer, provided no
significant obligations remain and collection of
resulting receivable is deemed probable.
F-34
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
------------------------------------------
Use of Estimates:
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures.
Fair Value of Financial Instruments:
-----------------------------------
The Companies have a number of financial instruments, none of which are held
for trading purposes. The Companies estimate that the fair value of all
financial instruments at December 31, 1995, does not differ materially from
the aggregate carrying values of their financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been
determined by the Companies using available market information and
appropriate valuation methodologies. Considerable judgment is necessarily
required in interpreting market data to develop the estimates of fair value,
and, accordingly, the estimates are not necessarily indicative of the
amounts that the Companies could realize in a current market exchange.
Inventory:
---------
Inventory is recorded on the first-in, first-out method at the lower-of-cost
or market.
Property and Equipment:
----------------------
Property and equipment is carried at cost. Depreciation is computed using
the accelerated method based on estimated useful lives of the assets,
generally three to seven years. For income tax purposes, depreciation is
calculated on accelerated methods.
Deferred Merger Costs:
---------------------
Deferred merger costs will be capitalized as part of the deemed cost of
Fisher which will be allocated to Fisher's net assets in accordance with
their relative fair values (Note C).
Income Taxes:
------------
Income taxes are based on loss for financial reporting purposes and reflect
a current liability (asset) for the estimated taxes payable (recoverable) in
the current year tax return and changes in deferred taxes. Deferred tax
liabilities and assets are recognized for the estimated tax effects of
temporary differences between financial reporting and taxable income (loss)
for the loss carryforwards based on enacted tax laws and rates. A valuation
allowance is used to reduce deferred tax assets to the amount that is more
likely than not to be realized (Note H).
F-35
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Continued)
------------------------------------------
Interim Financial Statements
----------------------------
The accompanying financial statements as of June 30, 1996 and for the six
months ended June 30, 1996 and June 30, 1995 are unaudited but, in the
opinion of management of AHS and ASI, reflect all adjustments (consisting
only of normal and recurring adjustments) necessary for a fair presentation.
The results of operations for the six month period are not necessarily
indicative of the results that may be expected for the full year ending
December 31, 1996.
B. GOING CONCERN:
-------------
These financial statements are presented on the basis that the Companies are
going concerns. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. The accompanying financial statements show a loss
from the combined results of operations of $382,453 and $435,583 for the
years ended December 31, 1995 and 1994, respectively. The Companies have a
combined stockholders' deficit of $850,508 and $855,241 as of December 31,
1995 and 1994, respectively, and current liabilities exceed current assets
by $943,984 and $1,050,553 as of December 31, 1995 and 1994, respectively.
The Parent has funded the operations of the Companies when necessary,
however, there is no commitment from the Parent to continue to fund
deficits, if any. The Parent and the Companies have entered into a merger
agreement, as discussed in Note C.
C. MERGER AND REORGANIZATION:
-------------------------
The Parent and the Companies entered into an amended and restated agreement
and plan of merger and reorganization with Fisher on December 13, 1995 and
amended the plan on September 27, 1996. Under the terms of the merger
agreement, the Parent will exchange 100% of the issued and outstanding
shares of the Companies for 10,000,000 shares in Fisher in a tax free
exchange. The consummation of the merger is subject to the satisfaction of
certain closing conditions, including the approval of the merger by the
shareholders of Fisher. Fisher's auditors' report for its year ended January
31, 1995 contained an explanatory paragraph relating to its ability to
continue as a going concern.
D. LONG-TERM DEBT - RELATED PARTY:
------------------------------
A member of the parent - $150,000 installment note modified March 1, 1995
with annual payments of $50,000 plus interest at 10% per annum, unsecured.
As of December 31, 1995, the following amounts were payable:
$150,000
Less current portion (50,000)
--------
$100,000
========
F-36
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
D. LONG-TERM DEBT - RELATED PARTY: (Continued)
------------------------------
Maturities of long-term debt - related party as of December 31, 1995 are as
follows:
1996 $ 50,000
1997 50,000
1998 50,000
--------
$150,000
========
As of March 22, 1996, the Parent has agreed to satisfy the entire debt.
E. NOTES PAYABLE:
-------------
The Companies have the following unsecured notes payable:
MicroAge Technologies - Unsecured note payable in the original amount of
$10,240, at 14% per annum, with monthly payments in the amount of $1,350,
which include interest. Note is due June 1, 1996. Balance due at December
31, 1995 and June 30, 1996 was $7,765.
SunTrust Bank - note payable in the original amount of $16,000, at 10.65% per
annum, with monthly payments of $814, which include interest. Note is due
September 4, 1996. Balance due at December 31, 1995 and June 30, 1996 was
$8,323 and $3,250, respectively. Guaranteed by a member of the parent.
F. NOTES PAYABLE - RELATED PARTIES:
-------------------------------
The Companies have the following unsecured notes payable to members of the
Parent as of December 31, 1995 and June 30, 1996:
Notes payable in the amount of $59,000, due on demand. Interest is at 12% per
annum.
Non-interest bearing note payable in the amount of $6,000, past due as of
January 15, 1996.
Notes payable in the amount of $21,100 and $-0- as of December 31, 1995 and
June 30, 1996, respectively. Interest is at 12% per annum.
Note payable in the amount of $9,000, past due as of January 15, 1996.
Note payable in the amount of $50,000 as of June 30, 1996. Interest is at
prime rate plus 1% per annum. Past due as of April, 1996.
F-37
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
G. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Concentration of Credit Risk:
----------------------------
The Companies do not have a secured interest in their accounts receivable;
however, they do have legal recourse for defaulted amounts.
Payroll and Sales Taxes:
-----------------------
The Company is delinquent in paying certain federal and state payroll taxes
and sales taxes.
The Internal Revenue Service has written the Companies indicating that it may
file a Notice of Federal Tax Lien or levy the Companies' assets if past due
payroll taxes are not paid.
Operating Leases:
----------------
The Companies lease office space and equipment under several operating lease
agreements. Rent expense for the office space and equipment was $70,859 and
$54,905 for the years ended December 31, 1995 and 1994, respectively.
At December 31, 1995, minimum future lease payments under non-cancelable
leases having remaining terms in excess of one year are as follows:
December 31, Amount
------------ -------
1996 $35,484
1997 14,980
1998 4,728
1999 4,728
2000 3,152
-------
$63,072
=======
Threatened Litigation
---------------------
A customer has threatened AHS with litigation for breach of contract and for
violation of warranties relating to a system sale. AHS and its legal counsel
are not aware of any lawsuit that has commenced by the customer and AHS does
not believe there is any basis for the claim.
F-38
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
H. INCOME TAXES:
------------
The sources of temporary differences and their effect on the net deferred
taxes are as follows for the years ended December 31, 1995 and 1994:
Net operating loss carryforwards $ 480,000
Other temporary differences 12,400
Less valuation allowance (492,400)
---------
$ -0-
=========
The valuation allowance fully reserves the net deferred tax asset which arose
from the tax loss carryforwards and other temporary differences generated.
At December 31, 1995, the Companies have approximately $1,300,000 of net
operating loss carryforwards available to offset future tax liabilities.
These losses begin to expire in 2004. The losses available annually are
limited under Internal Revenue Code, Section 382, as a result of certain
changes in ownership of both corporations.
I. RELATED PARTY TRANSACTIONS:
--------------------------
The Companies entered into a management agreement on March 1, 1995, with the
Parent, for 2% of the Companies' revenue or $7,000 per month, whichever is
greater. Manage-ment fee expense during the year ended December 31, 1995
totalled $76,979 and $35,000 for the six months ended June 30, 1996,
respectively. Interest expenses to related parties for the years ended
December 31, 1995 and 1994 were $21,332 and $14,381, respectively, and
$14,166 for the six months ended June 30, 1996.
J. ECONOMIC DEPENDENCY:
-------------------
AHS purchased a significant portion of its products from Sulcus, also known
as Sulcus Hospitality Group, Sulcus Computer Corporation, and Squirrel
Companies, Inc. (Sulcus). Sales generated from Sulcus products and services
were approximately $1,750,000 and $1,500,000 in 1995 and 1994, respectively.
Although AHS has re-sold and serviced primarily Sulcus products, the
Companies are planning on selling new software being developed by the future
merged group (Note C).
F-39
<PAGE>
AUBIS HOSPITALITY SYSTEMS, INC. AND SUBSIDIARIES
AND AUBIS SYSTEMS INTEGRATION, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30, 1996 and
the six months ended June 30, 1996 and 1995)
K. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
------------------------------------------------
Supplemental information required by Statement of Financial Accounting
Standards No. 95, relative to the statement of cash flows, is as follows:
1995 1994
-------- --------
Taxes paid $ -0- $ -0-
Interest paid 6,145 5,603
The following non-cash transactions occurred for the year ended 1995:
Employee advances were increased by transferring fixed assets valued at
$11,500 to those employees.
L. SUBSEQUENT EVENTS:
-----------------
Effective January 1, 1996, Sulcus will cease business activities with the
Companies due to the upcoming merger with Fisher. Sulcus will accept new
orders placed for current customer prospects until March 30, 1996, and will
allow the Companies to continue to service Sulcus systems under contracts
directly with the Companies' customers (Note J).
A Member of the Parent provided the Companies with a 60 day loan in the
amount of $100,000 at prime plus 1% in February 1996.
M. LOSS FROM MISAPPROPRIATION:
--------------------------
During the year ended December 31, 1995, a former employee misappropriated
$97,123 from the Companies.
N. NOTES PAYABLE - AFFILIATE:
--------------------------
In connection with its agreement and plan of merger and reorganization with
Fisher (Note C), the Company was advanced $458,469. These notes bear interest
at rates ranging from 10 to 12 percent and are due and payable on the first
anniversary of the date of the advance.
F-40
<PAGE>
[LETTERHEAD OF HABIF, AROGETI & WYNNE, P.C. APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
of Halis Software, Inc.
and ProHealth Solutions, Inc.
We have audited the accompanying combined balance sheet of HALIS SOFTWARE, INC.
and PROHEALTH SOLUTIONS, INC. as of December 31, 1995, and the related combined
statements of income, stockholders' equity and cash flows for the year ended
December 31, 1995. These combined financial statements are the responsibility
of the Companies' management. Our responsibility is to express an opinion on
these combined financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the combined financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the combined financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of HALIS SOFTWARE, INC.
and PROHEALTH SOLUTIONS, INC. at December 31, 1995, and the results of their
operations and their cash flows for the year ended December 31, 1995 in
conformity with generally accepted accounting principles.
/s/ Habif, Arogeti & Wynne, P.C.
- ---------------------------------
Atlanta, Georgia
February 15, 1996
F-41
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
COMBINED BALANCE SHEET
ASSETS
------
<TABLE>
<CAPTION>
(Unaudited)
December June
31, 1995 30, 1996
--------- --------
<S> <C> <C>
Current assets
- --------------
Cash $ 16,399 $ 1,207
Accounts receivable -
Prepaid expenses 366 -
Deferred income taxes 4,600 4,600
Due from shareholder 500 500
--------- -------
Total current assets 21,865 6,307
--------- -------
Property and equipment, at cost
- ----------------------
Office equipment 4,106 4,105
Computer equipment 18,170 19,729
Office furniture and fixtures 8,207 8,206
--------- -------
30,483 32,040
Less accumulated depreciation (5,628) (8,463)
--------- -------
24,855 23,577
--------- -------
Other assets
- ------------
Deferred merger costs 7,500 7,500
Deposits 8,609 13,076
Intangible assets, net accumulated amortization 4,117 3,604
--------- -------
20,226 24,180
--------- -------
$ 66,946 $ 54,064
========= ========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
---------------------------------------------
<TABLE>
<CAPTION>
Current liabilities
- -------------------
<S> <C> <C>
Accounts payable and accrued expenses $ 8,100 $ 14,983
Deferred revenue -
Notes payable - affiliates 320,123
Other current liabilities 690
Income tax payable 6,908 -
Accrued salary - officer 36,923 37,523
------- --------
Total current liabilities 51,931 373,319
------- --------
Stockholders' equity (deficit)
- ------------------------------
Common stock - ProHealth Solutions, Inc.,
$1.00 par value, 100,000 shares
authorized; 5,000 issued and outstanding 5,000 -
Common stock - Halis Software, Inc., no par
value, 10,000 shares authorized; 1,000
issued and outstanding 500 500
Additional paid-in-capital 5,000
Retained earnings (deficit) 9,515 (324,755)
------- --------
15,015 (319,255)
------- --------
$66,946 $ 54,064
======= ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-42
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
COMBINED STATEMENT OF INCOME (LOSS)
<TABLE>
<CAPTION>
(Unaudited)
For the Six Months Ended
Year Ended June 30,
December ------------------------
31, 1995 1 9 9 6 1 9 9 5
---------- ------- -------
<S> <C> <C> <C>
Revenues $331,231 $ - $241,919
- -------- -------- -------- --------
Costs and expenses
- ------------------
Cost of sales 71,830 - 13,240
Research and development 126,923
Selling, general, and
administrative 248,972 207,347 136,969
-------- ------- --------
320,802 334,270 150,209
-------- ------- --------
Operating income (loss) 10,429 (334,270) 91,710
- ----------------------
Other income 1,394 - 376
- ------------ -------- ------- --------
Income (Loss) before
income taxes 11,823 (334,270) 92,086
Income taxes 2,308 - -
- ------------ -------- ------- --------
Net income (loss) $ 9,515 $(324,270) $ 92,086
======== ========= ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-43
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
ProHealth Halis Additional Total
Solutions, Inc. Software, Inc Paid-In Retained Stockholders'
Shares Amount Shares Amount Capital Earnings (Deficit) Equity (Deficit)
------ ------- ------ ------- --------- ------------------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995 -0- $ -0- -0- $ -0- $ -0- $ -0- $ -0-
Issuance of common stock 5,000 5,000 1,000 500 -0- -0- 5,500
Net income 9,515 9,515
------- -------- ------ ------- -------- --------- ----------
Balance, December 31, 1995 5,000 5,000 1,000 500 -0- 9,515 15,015
Net loss - six months
ended June 30, 1996
(unaudited) (334,270) (334,270)
Merger of Pro Health
Solutions, Inc. into
Halis Software, Inc.
(Unaudited) (5,000) (5,000) 5,000 -0-
------- -------- ------ ------- -------- --------- ----------
Balances, June 30, 1996
(Unaudited) -0- $ -0- 1,000 $500 $5,000 $(324,755) $(319,255)
======= ======== ====== ======= ======== ========= ==========
</TABLE>
F-44
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Six Months Ended
Year Ended June 30,
December -------------------------
31, 1995 1 9 9 6 1 9 9 5
----------- ---------- ---------
<S> <C> <C> <C>
Cash flow from operating activities
- -----------------------------------
Net income (loss) $ 9,515 $(334,270) $ 92,086
-------- --------- --------
Adjustments to reconcile net income (loss) to
net cash provided by operating activities
Depreciation 5,628 2,835 3,743
Amortization 1,030 515 259
Deferred income taxes ( 4,600) -
Changes in assets and liabilities
Increase in accounts receivable (25,000)
Increase (Decrease) in prepaid expenses ( 366) 366
Increase in deposits ( 8,609) ( 4,467) ( 7,537)
Increase in intangible assets ( 5,147) - ( 5,147)
Increase in accounts payable and accrued
expenses 8,100 6,883 326
Increase in other current liabilities 690
Increase in deferred revenue 55,586
Increase (Decrease) in income tax payable 6,908 ( 6,908)
Increase in accrued salary - officer 36,923 600 13,424
-------- --------- --------
Total adjustments 39,867 514 35,654
-------- --------- --------
Net cash provided (used) by
operating activities 49,382 (333,756) 127,740
-------- -------- --------
Cash flows from investing activities
- ------------------------------------
Purchase of equipment and furniture (30,483) ( 1,559) ( 29,425)
Deferred merger costs ( 7,500) - -
-------- --------- --------
Net cash used by investing activities (37,983) ( 1,559) ( 29,425)
-------- --------- --------
Cash flows from financing activities
- ------------------------------------
Proceeds from note payable - 320,123 -
Issuance of common stock 5,000 - 5,000
-------- --------- --------
Net cash provided by financing activities 5,000 320,123 5,000
-------- --------- --------
Net increase (decrease) in cash 16,399 ( 15,192) 103,315
Cash, beginning of period - 16,399 -
-------- --------- --------
Cash, end of period $ 16,399 $ 1,207 $103,315
======== ========= ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-45
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995
[Unaudited with respect to June 30,1996 and the six months
ended June 30,1996 and 1995]
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting:
-------------------
These financial statements are the combined statements of Halis Software,
Inc. [HSI] and ProHealth Solutions, Inc. [PHSI] [the Companies]. PHSI was
incorporated on December 5, 1994 and began operations in January 1995. The
ownership of PHSI was restructured on December 29, 1995 when the
shareholders contributed 100% of their shares to Halis, L.L.C. [Parent]. HSI
was incorporated on October 24, 1995 and is owned 100% by the Parent.
Financial information of HSI is presented from the date of incorporation
through December 31, 1995. The only transaction that occurred is the
issuance of common stock.
Effective March 8, 1996, PHSI and HSI merged with HSI as the surviving
entity.
The Parent and HSI have signed a letter of intent with Fisher Business
Systems, Inc. [Fisher] to merge, whereby HSI will be merged into Fisher in a
transaction to be accounted for as a reverse acquisition of Fisher by HSI
[Note B] and AUBIS Hospitality Systems, Inc. and AUBIS Systems Integration,
Inc. (collectively AUBIS). AUBIS and HSI are under common control.
ProHealth Solutions, Inc.:
-------------------------
ProHealth Solutions, Inc. [PHSI] provides a turnkey preventive care data
collection system for managed care organizations.
Halis Software, Inc.:
--------------------
Halis Software, Inc. was organized to provide a comprehensive information
solution, which includes an advanced healthcare systems technology and
solutions for healthcare companies.
Halis Software, Inc. plans to integrate all of the primary applications in a
common, multimedia database which uses the emerging object-relational data
management approach.
Use of Estimates:
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures.
F-46
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
[CONTINUED]
DECEMBER 31, 1995
[Unaudited with respect to June 30,1996 and the six months
ended June 30,1996 and 1995]
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: [Continued]
------------------------------------------
Fair Value of Financial Instruments:
-----------------------------------
The Company has a number of financial instruments, none of which are held
for trading purposes. The Company estimates that the fair value of all
financial instruments at December 31, 1995 does not differ materially from
the aggregate carrying values of its financial instruments recorded in the
accompanying balance sheet. The estimated fair value amounts have been
determined by the Company using available market information and appropriate
valuation methodologies. Considerable judgment is necessarily required in
interpreting market data to develop the estimates of fair value, and,
accordingly, the estimates are not necessarily indicative of the amounts
that the Company could realize in a current market exchange.
Property and Equipment:
----------------------
Property and equipment is carried at cost. Expenditures for maintenance and
repairs are expensed currently, while renewals and betterments that
materially extend the life of an asset are capitalized. The cost of assets
sold, retired, or otherwise disposed of, and the related allowance for
depreciation, are eliminated from the accounts, and any resulting gain or
loss is included in operations.
Depreciation is provided using the straight-line method based on the
estimated useful lives of the assets, generally five to seven years. For
income tax purposes, depreciation is calculated on accelerated methods.
Amortization:
------------
Intangible assets are being amortized over 60 months.
Deferred Merger Costs:
---------------------
Deferred merger costs will be capitalized as part of the deemed cost of
Fisher which will be allocated to Fisher's net assets in accordance with
their relative fair values [Note B].
Income Taxes:
------------
Income taxes are based on income for financial reporting purposes and
reflect a current liability for the estimated taxes payable in the current
year tax return and changes in deferred taxes. Deferred tax liabilities and
assets are recognized for the estimated tax effects of temporary differences
between financial reporting and taxable income for the loss carryforwards
based on enacted tax laws and rates.
F-47
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
[CONTINUED]
DECEMBER 31, 1995
[Unaudited with respect to June 30,1996 and the six months
ended June 30,1996 and 1995]
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: [Continued]
------------------------------------------
Product Development and Engineering:
-----------------------------------
Product development and engineering costs, other than capitalized software
costs, are charged to operations when incurred.
Software Development Costs:
--------------------------
The Company accounts for software development costs in accordance with
Statement of Financial Accounting Standard No. 86. The cost of establishing
the technological feasibility of new products or product enhancements is
expensed as incurred as research and development cost. The costs incurred
subsequent to the establishment of the technological feasibility of the
product and prior to its general release are capitalized. Capitalized costs
are amortized on a product-by-product basis using the greater of (a) the
ratio that current revenues for a product bear to the total current and
anticipated future revenues or (b) the straight-line method over the
remaining estimated useful life of the product (five years).
Interim Financial Statements:
----------------------------
The accompanying financial statements as of June 30, 1996 and for the six
months ended June 30, 1996 and June 30, 1995 are unaudited but, in the
opinion of management of Halis Software, Inc. and ProHealth Solutions, Inc.,
reflect all adjustments (consisting only of normal and recurring
adjustments) necessary for a fair presentation. The results of operations
for the six-month period are not necessarily indicative of the results that
may be expected for the full year ending December 31, 1996.
B. MERGER AND REORGANIZATION:
-------------------------
The Parent and HSI signed a letter of intent January 25, 1996 and entered
into an agreement and plan of merger and reorganization dated May 23, 1996
to merge with Fisher. Under the terms of the merger, the Parent will
exchange 100% of the issued and outstanding shares of HSI for 5,000,000
shares in Fisher, in a tax free exchange. The consummation of the merger
will be subject to the satisfaction of certain closing conditions, including
the approval of the merger by the shareholders of Fisher. Fisher's auditors'
report for its year ended January 31, 1995 contained an explanatory
paragraph relating to its ability to continue as a going concern.
F-48
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1995
(Unaudited with respect to June 30,1996 and the six months
ended June 30,1996 and 1995)
C. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Operating Leases:
----------------
The Companies lease office space and equipment under several operating lease
agreements. Rent expense for the office space and equipment was $24,855 for
the year ended December 31, 1995.
At December 31, 1995, minimum future lease payments under non-cancelable
leases having remaining terms in excess of one year are as follows:
December 31, Amount
----------- ------
1996 $30,724
1997 31,241
1998 5,157
-------
$67,122
=======
D. INCOME TAXES:
-------------
The components of income taxes are as follows:
Amount
-------
Federal income tax liability $ 4,934
State income tax liability 1,974
Deferred income tax benefit (4,600)
-------
$ 2,308
=======
The sources of temporary differences and their effect on the net deferred
tax benefit are as follows:
Amount
-------
Accrued officer salary $ 7,414
Depreciation ( 2,814)
--------
$ 4,600
========
E. MAJOR CUSTOMERS:
---------------
Revenue from Marion Merrell Dow and The Prudential Health Care System in the
amounts of $50,000 and $272,506, respectively, comprised 97.4% of the
Companies' revenues for the year ended December 31, 1995.
F-49
<PAGE>
HALIS SOFTWARE, INC.
AND
PROHEALTH SOLUTIONS, INC.
NOTES TO COMBINED FINANCIAL STATEMENTS
[CONTINUED]
DECEMBER 31, 1995
[Unaudited with respect to June 30,1996 and the six months
ended June 30,1996 and 1995]
F. SUBSEQUENT EVENTS:
-----------------
PHSI and HSI have agreed to merge into HSI. Subsequent to this merger, HSI
will merge with Fisher [See Note B].
G. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
------------------------------------------------
Supplemental information required by Statement of Financial Accounting
Standards No. 95, relative to the statement of cash flows, is as follows.
The following non-cash transactions occurred for the year ended December 31,
1995:
HSI issued 500 shares of no par common stock in exchange for a receivable
from the Parent in the amount of $500.
H. NOTES PAYABLE - AFFILIATES:
--------------------------
In connection with its agreement and plan of merger and reorganization with
Fisher [Note B], the Company was advanced $320,123. These notes bear
interest at rates ranging from 10% to 12% and are due and payable on the
first anniversary of the date of the advance.
F-50
<PAGE>
[LETTERHEAD OF HABIF, AROGETI & WYNNE, P.C. APPEARS HERE]
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
Advanced Custom Computer Solutions, Inc.
We have audited the accompanying balance sheet of ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC. as of March 31, 1996, and the related statements of operations,
stockholders' deficit and cash flows for the years ended March 31, 1996 and
1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC. at March 31, 1996, and the results of its operations and its
cash flows for the years ended March 31, 1996 and 1995 in conformity with
generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note D to the
financial statements, the Company experienced significant losses in the final
quarter of the fiscal year ended March 31, 1996, and, presently, its current
liabilities exceed its current assets. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
regarding those matters are also described in Note D. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/ HABIF, AROGETI & WYNNE, P.C.
Atlanta, Georgia
July 3, 1996, except as to Note B
which is as of September 11, 1996
F-51
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
BALANCE SHEET
ASSETS
------
<TABLE>
<CAPTION>
(Unaudited)
March June
30, 1996 31, 1996
---------- ---------
<S> <C> <C>
Current assets
- --------------
Cash $ 161,725 $ 53,959
Accounts receivable 11,732 20,530
Prepaid expenses 32,176 19,783
Receivable - related party 6,456 2,206
--------- --------
Total current assets 212,089 96,478
--------- --------
Property and equipment, at cost
- ----------------------
Computer software 18,296 18,296
Computer equipment 47,784 48,434
Office equipment 19,082 19,082
Office furniture 33,801 33,801
--------- --------
118,963 119,613
Less accumulated depreciation (47,451) (55,451)
--------- --------
71,512 64,162
--------- --------
Other assets
- ------------
Deposits 3,345 3,345
Organization costs, net of accumulated
amortization 265 243
Vendor fees, net of accumulated
amortization 3,942 3,667
--------- --------
7,552 7,255
--------- --------
$ 291,153 $167,895
========= ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
Current liabilities
- -------------------
Accounts payable $ 6,509 $ 11,314
Accrued expenses 220,974 195,203
Deferred revenue 90,723 57,970
Payroll and sales taxes payable 3,175 6,706
-------- ---------
Total current liabilities 321,381 271,193
-------- ---------
Stockholders' deficit
- ---------------------
Common stock - $1.00 par value,
1,000,000 shares authorized; 500
issued and outstanding 500 500
Accumulated deficit (30,728) (103,798)
(30,228) (103,298)
-------- ---------
$291,153 $ 167,895
======== =========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-52
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited)
For the Three Months
Years Ended March 31, Ended June 30,
1996 1995 1996 1995
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Software sales and services $2,798,872 $2,032,195 $116,235 $815,229
---------- ---------- -------- --------
Costs and expenses
- ------------------
Licensing fees and commissions 1,885,004 1,561,113 18,411 628,356
Selling, general, and administrative 884,229 513,314 170,894 172,034
---------- ---------- -------- --------
2,769,233 2,074,427 189,305 800,390
---------- ---------- -------- --------
Income (Loss) before income taxes 29,639 (42,232) (73,070) 14,839
Income taxes (benefit) 18,135 - -0- -
- --------------------- ---------- ---------- -------- --------
Net income (loss) $ 11,504 $ (42,232) $(73,070) $ 14,839
========== ========== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-53
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
STATEMENT OF STOCKHOLDER'S DEFICIT
FOR THE YEAR ENDED MARCH 31, 1996
<TABLE>
<S> <C>
Balance - April 1, 1995 $ (42,232)
Net income 11,504
-------
Balance - March 31, 1996 (30,728)
Net income - three months ended June 30, 1996
(Unaudited) (73,070)
-------
Balance - June 30, 1996 (Unaudited) $(103,798)
=======
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-54
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
For the Three Months
Years Ended March 31, Ended June 30,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities
- ------------------------------------
Net income (loss) $ 11,504 $(42,232) $(73,070) $ 14,909
-------- -------- -------- --------
Adjustments to reconcile net income
(loss) to net cash provided (used)
by operating activities
Depreciation and amortization 32,785 16,401 8,000 7,900
Changes in assets and liabilities
Decrease (Increase) in accounts receivable (11,732) - (8,798) -0-
Decrease (Increase) in prepaid expenses 12,382 (44,558) 12,393 (987)
Decrease (Increase) in receivables-
related party (4,186) (2,270) 4,250 64
Decrease (Increase) in deposits - (3,345) - 731
Increase (Decrease) in accounts payable (6,712) 13,221 4,805 (12,088)
Increase (Decrease) in accrued expenses 208,130 12,844 (25,771) 66,226
Increase (Decrease) in deferred revenue (94,648) 185,371 (32,753) (17,018)
Increase (Decrease) in payroll and
sales taxes payable 2,052 1,123 3,531 5,373
-------- -------- -------- --------
Total adjustments 138,071 178,787 (34,343) 50,201
-------- -------- -------- --------
Net cash provided (used) by operating
activities 149,575 136,555 (107,413) 65,110
-------- -------- -------- --------
Cash flows from investing activities
- ------------------------------------
Purchase of equipment and furniture (33,502) (85,461) (650) (15,070)
Organization costs - (442) (22) 23
Vendor fees - (5,500) 275 (458)
-------- -------- -------- --------
Net cash used by investing activities (33,502) (91,403) (353) (15,505)
-------- -------- -------- --------
Cash flow from financing activities
- -----------------------------------
Issuance of common stock - 500 - -0-
-------- -------- -------- --------
Net increase (decrease) in cash 116,073 45,652 (107,766) 49,605
Cash, beginning of period 45,652 - 161,725 45,651
-------- -------- -------- --------
Cash, end of period $161,725 $ 45,652 $ 53,959 $ 95,256
======== ======== ======== ========
</TABLE>
The accompanying notes to financial statements are an integral part hereof.
F-55
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1995
[Unaudited with respect to June 30,1996 and the three months
ended June 30,1996 and 1995]
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Basis of Accounting:
-------------------
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC. [the "Company"] is engaged in the
production, acquisition, selling, importing, exporting and distribution of
computer software. The Company specializes in software for medical and dental
billing companies. The Company provides training for the software and offers
a service contract which includes technical phone support and software
updates.
The Company signed a merger agreement with Fisher Business Systems, Inc.
[Fisher], whereby the Company will be merged into Fisher in a transaction to
be accounted for as a purchase of the Company by Fisher.
Revenue:
-------
Revenue on software licenses is recognized in accordance with SOP 91-1. When
the product is shipped, no significant obligations remain on the contract, and
collection of the resulting receivable is deemed probable, then revenue is
recognized. Service agreement revenues are deferred at the time of receipt
and are recognized as revenue over the term of the contract on a straight line
basis.
Use of Estimates:
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures.
Fair Value of Financial Instruments:
-----------------------------------
The Company has a number of financial instruments, none of which are held for
trading purposes. The Company estimates that the fair value of all financial
instruments at March 31, 1996 does not differ materially from the aggregate
carrying values of its financial instruments recorded in the accompanying
balance sheet. The estimated fair value amounts have been determined by the
Company using available market information and appropriate valuation
methodologies. Considerable judgment is necessarily required in interpreting
market data to develop the estimates of fair value, and, accordingly, the
estimates are not necessarily indicative of the amounts that the Company could
realize in a current market exchange.
F-56
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS [CONTINUED]
MARCH 31, 1996 AND 1995
[Unaudited with respect to June 30,1996 and the three months
ended June 30,1996 and 1995]
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: [Continued]
------------------------------------------
Property and Equipment:
----------------------
Property and equipment is carried at cost. Expenditures for maintenance and
repairs are expensed currently, while renewals and betterments that materially
extend the life of an asset are capitalized. The cost of assets sold,
retired, or otherwise disposed of, and the related allowance for depreciation,
are eliminated from the accounts, and any resulting gain or loss is included
in operations.
Depreciation is provided using the straight-line method based on the estimated
useful lives of the assets which are as follows:
Computer software 3 years
Computer equipment 5 years
Office equipment 5 years
Office furniture 7 years
Depreciation expense was $31,597 and $15,854 for the years ended March 31,
1996 and 1995, respectively.
Organizational Costs and Vendor Fees:
------------------------------------
These costs are being amortized on a straight-line basis over a 5 year period.
Income Taxes:
------------
Income taxes are based on income [loss] for financial reporting purposes and
reflect a current liability for the estimated taxes payable [recoverable] in
the current year tax return and changes in deferred taxes. Deferred tax
liabilities and assets are recognized for the estimated tax effects of
temporary differences between financial reporting and taxable income [loss].
Interim Financial Statements:
----------------------------
The accompanying financial statements as of June 30, 1996 and for the three
months ended June 30, 1996 and June 30, 1995 are unaudited but, in the opinion
of management of Advanced Custom Computer Solutions, Inc., reflect all
adjustments (consisting only of normal and recurring adjustments) necessary
for a fair presentation. The results of operations for the six month period
are not necessarily indicative of the results that may be expected for the
full year ending March 31, 1997.
F-57
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS [CONTINUED]
MARCH 31, 1996 AND 1995
[Unaudited with respect to June 30,1996 and the three months
ended June 30,1996 and 1995]
B. MERGER AND REORGANIZATION:
-------------------------
The Company entered into an agreement and plan of merger and reorganization
with Fisher on May 23, 1996 and amended the plan on September 11, 1996. Under
the terms of the merger agreement and amendment, the shareholders of the
Company will exchange 100% of the issued and outstanding shares of the Company
for 750,000 shares in Fisher to be delivered to shareholders at closing in a
tax-free exchange. In additional, on the closing date, Fisher shall grant
options to the shareholders of the Company to purchase an aggregate of 100,000
shares of Fisher common stock, exercisable for a term expiring in ten years,
at a price equal to the fair market value of Fisher common stock on the
closing date. The consummation of the merger is subject to the satisfaction
of certain closing conditions, including the approval of the merger by the
shareholders of Fisher. Fisher's auditors' report for its year ended January
31, 1996 contained an explanatory paragraph relating to its ability to
continue as a going concern.
C. ECONOMIC DEPENDENCIES
---------------------
The Company sold only one type of software which accounted for all of its
revenues. The Company purchases licenses to sell the software, by state, for
a one year period. The Company is beginning to sell the software being
developed by the future merged group [Note H].
D. COMMITMENTS AND CONTINGENCIES:
-----------------------------
The Company does not have a secured interest in its accounts receivable;
however, it does have legal recourse for defaulted amounts.
The Company maintains all of its cash deposits at one financial depository
institution. The amount of the accounting loss due to credit risk the Company
would incur if the financial depository institution failed would be the cash
deposits in excess of the $100,000 amount per depositor that is federally
insured. The amount at risk is $113,026 at March 31,1996.
Litigation:
----------
The Company has legal action pending against the Aqua Group, Ltd., et al
[Aqua] for breach of fiduciary responsibility. Aqua has counterclaimed,
seeking the recovery of commissions of an unspecified amount. The Company
believes it has accrued the balance due to Aqua.
Operating Leases:
----------------
The Company subleases office space under an operating lease agreement. Rent
expense for the office space was $74,825 and $38,258 for the years ended March
31, 1996 and March 31, 1995, respectively.
F-58
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS [CONTINUED]
MARCH 31, 1996 AND 1995
[Unaudited with respect to June 30,1996 and the three months
ended June 30,1996 and 1995]
D. COMMITMENTS AND CONTINGENCIES: [Continued]
-----------------------------
Operating Leases: [Continued]
----------------
At March 31,1996, minimum future lease payments under non-cancelable leases
having original terms in excess of one year are $54,120 for the year ended
March 31, 1997.
Going Concern:
-------------
The Company incurred significant losses in the final quarter of the fiscal
year ended March 31, 1996 and for the three months ended June 30, 1996. As of
March 31, 1996 and June 30, 1996, the Company's current liabilities exceeded
its current assets by approximately $109,000 and $174,000, respectively.
These factors create an uncertainty about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
Management is currently implementing a plan to make the Company more
profitable. The Company has entered into an Agreement and Plan of Merger and
Reorganization [Note B] and is planning on selling new software being
developed by the future merged group [Note C].
E. RELATED PARTY TRANSACTIONS:
--------------------------
The Company leases office furniture and equipment from a company that is owned
solely by the shareholders of the Company. Rent expense for the years ended
March 31, 1996 and 1995 was $15,470 and $-0-, respectively.
The Company paid management fees to a corporation owned solely by the
shareholder of the Company of $10,000 and $-0- in the years ended March 31,
1996 and 1995, respectively.
The Company wrote off worthless notes receivable from a corporation whose 50%
shareholder is a brother of the Company's president, in the amount of $25,000
and $40,000 for the years ended March 31, 1996 and 1995, respectively.
F-59
<PAGE>
ADVANCED CUSTOM COMPUTER SOLUTIONS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
MARCH 31, 1996 AND 1995
(Unaudited with respect to June 30,1996 and the three months
ended June 30,1996 and 1995)
F. INCOME TAXES:
------------
The source of temporary differences and their effect on the net deferred taxes
are as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Temporary differences $ 12,631 $ 15,781
Less valuation allowance (12,631) (15,781)
-------- --------
$ -0- $ -0-
======== ========
</TABLE>
The valuation allowance fully reserves the net deferred tax asset which arose
from temporary differences generated.
G. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
------------------------------------------------
Supplemental information required by Statement of Financial Accounting
Standards No. 95, relative to the statement of cash flows, is as follows:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Taxes paid $ -0- $ -0-
Interest paid -0- -0-
</TABLE>
H. SUBSEQUENT EVENTS:
-----------------
After the year ended March 31, 1996, the Company stopped renewing the
individual state contracts to sell software (Note C). The Company began
marketing a software product produced by another company which has also
entered into a merger agreement with Fisher (Note B).
I. ADVERTISING COSTS:
-----------------
The advertising costs were $70,718 and $50,279 for the years ended March 31,
1996 and 1995, respectively.
F-60
<PAGE>
APPENDIX A
================================================================================
AMENDED AND RESTATED AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION
among:
FISHER BUSINESS SYSTEMS, INC., a Georgia corporation,
and
AUBIS, L.L.C., a Georgia limited liability company,
and
AUBIS HOSPITALITY SYSTEMS, INC. , a Georgia corporation,
and
AUBIS SYSTEMS INTEGRATION, INC., a Georgia corporation,
and
CERTAIN PERSONS AND AFFILIATES OF AUBIS, L.L.C.
_________________________
Originally Dated as of December 13, 1995
Amended and Restated as of March 29, 1996
_________________________
===============================================================================
A-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
Section 1. DESCRIPTION OF TRANSACTION.................................. A-7
1.1 Merger of Companies into Merger Subs........................ A-7
1.2 Effect of Mergers........................................... A-7
1.3 Closing; Effective Time..................................... A-7
1.4 Articles of Incorporation and Bylaws;
Directors and Officers..................................... A-7
1.5 Conversion of Shares........................................ A-8
1.6 Closing of the Companies' Transfer Books.................... A-8
1.7 Exchange of Certificates.................................... A-8
1.8 Tax Consequences............................................ A-9
1.9 Further Action.............................................. A-9
Section 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT, THE
COMPANIES AND THE DESIGNATED PERSONS....................... A-9
2.1 Due Organization; No Subsidiaries; Etc...................... A-9
2.2 Articles of Incorporation and Bylaws; Records............... A-10
2.3 Capitalization, Etc......................................... A-10
2.4 Financial Statements........................................ A-11
2.5 Absence of Changes.......................................... A-11
2.6 Title to Assets............................................. A-12
2.7 Bank Accounts; Receivables; Customers....................... A-12
2.8 Equipment; Leasehold........................................ A-13
2.9 Proprietary Assets.......................................... A-13
2.10 Contracts................................................... A-14
2.11 Liabilities................................................. A-16
2.12 Compliance with Legal Requirements.......................... A-16
2.13 Governmental Authorizations................................. A-16
2.14 Tax Matters................................................. A-17
2.15 Employee and Labor Matters; Benefit Plans................... A-18
2.16 Environmental Matters....................................... A-20
2.17 Sale of Products; Performance of Services................... A-20
2.18 Insurance................................................... A-20
2.19 Related Party Transactions.................................. A-20
2.20 Legal Proceedings; Orders................................... A-21
2.21 Authority; Binding Nature of Agreement...................... A-21
2.22 Non-Contravention; Consents................................. A-21
2.23 Full Disclosure............................................. A-22
Section 3. REPRESENTATIONS AND WARRANTIES OF FISHER.................... A-22
3.1 SEC Filings; Financial Statements........................... A-22
3.2 Authority; Binding Nature of Agreement...................... A-22
3.3 Valid Issuance.............................................. A-23
3.4 Merger Subs................................................. A-23
Section 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE
DESIGNATED PERSONS......................................... A-23
4.1 Access and Investigation.................................... A-23
4.2 Operation of the Companies' Business........................ A-23
4.3 Notification; Updates to Disclosure Schedule................ A-24
</TABLE>
A-2
<PAGE>
<TABLE>
<C> <S> <C>
4.4 No Negotiation.............................................. A-25
4.5 Due Diligence Investigation................................. A-25
Section 5. CERTAIN COVENANTS OF FISHER................................. A-26
5.1 Access and Investigation.................................... A-26
5.2 Operation of Fisher's Business.............................. A-26
5.3 Notification................................................ A-27
5.4 No Negotiation.............................................. A-27
5.5 Due Diligence Investigation................................. A-28
Section 6. ADDITIONAL COVENANTS OF THE PARTIES......................... A-28
6.1 Filings and Consents........................................ A-28
6.2 Proxy Statement; Other Filings.............................. A-29
6.3 Shareholders' Approvals..................................... A-29
6.4 Public Announcements........................................ A-29
6.5 Best Efforts................................................ A-29
6.6 Employment Agreement........................................ A-29
6.7 Termination of Employee Plans............................... A-29
6.8 FIRPTA Matters.............................................. A-29
6.9 Conversion of Preferred Stock............................... A-30
Section 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF FISHER............... A-30
7.1 Accuracy of Representations................................. A-30
7.2 Performance of Covenants.................................... A-30
7.3 Consents.................................................... A-30
7.4 Agreements and Documents.................................... A-30
7.5 No Material Adverse Change.................................. A-30
7.6 Termination of Employee Plans............................... A-30
7.7 FIRPTA Compliance........................................... A-31
7.8 Rule 506.................................................... A-31
7.9 No Restraints............................................... A-31
7.10 No Legal Proceedings........................................ A-31
7.11 Fisher Shareholders Meeting................................. A-31
7.12 Related Party Debt.......................................... A-31
7.13 Investment Certification.................................... A-31
7.14 HALIS Acquisition........................................... A-31
Section 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT,
THE COMPANIES AND THE DESIGNATED PERSONS................... A-31
8.1 Accuracy of Representations................................. A-31
8.2 Performance of Covenants.................................... A-31
8.3 Consents.................................................... A-31
8.4 Agreements and Documents.................................... A-32
8.5 Fisher Shareholder Meeting.................................. A-32
8.6 No Material Adverse Change.................................. A-32
8.7 No Restraints............................................... A-32
8.8 No Legal Proceedings........................................ A-32
8.9 Related Party Debt.......................................... A-32
8.10 Fisher's Financial Condition Immediately Prior to Closing... A-32
8.11 HALIS Acquisition........................................... A-32
8.12 Compucom Waiver............................................. A-32
</TABLE>
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Section 9. TERMINATION........................................... A-33
9.1 Termination Events.................................... A-33
9.2 Termination Procedures................................ A-33
9.3 Effect of Termination................................. A-33
Section 10. INDEMNIFICATION, ETC.................................. A-33
10.1 Indemnification by the Parent and the
Designated Persons.................................... A-34
10.2 Indemnification by Fisher and the
Surviving Corporation................................. A-34
10.3 Limitations on Indemnification........................ A-34
10.4 Procedure............................................. A-34
Section 11. REGISTRATION OF SHARES................................ A-35
11.1 Registration Statement................................ A-35
11.2 Indemnification....................................... A-36
11.3 Delay of Registration................................. A-36
11.4 Amendment of Section 11............................... A-37
Section 12. MISCELLANEOUS PROVISIONS.............................. A-37
12.1 Designated Persons' Agent............................. A-37
12.2 Further Assurances.................................... A-37
12.3 Fees and Expenses..................................... A-37
12.4 Attorneys' Fees....................................... A-38
12.5 Notices............................................... A-38
12.6 Confidentiality....................................... A-39
12.7 Time of the Essence................................... A-39
12.8 Headings.............................................. A-39
12.9 Counterparts.......................................... A-39
12.10 Governing Law; Venue.................................. A-39
12.11 Successors and Assigns................................ A-40
12.12 Remedies Cumulative; Specific Performance............. A-40
12.13 Waiver................................................ A-40
12.14 Amendments............................................ A-40
12.15 Severability.......................................... A-40
12.16 Parties in Interest................................... A-40
12.17 Entire Agreement...................................... A-41
12.18 Construction.......................................... A-41
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EXHIBITS
Exhibit A - Designated Persons
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Related Party Debt
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<PAGE>
AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION ("Agreement") is made and entered into as of March 29, 1996, by
and among: FISHER BUSINESS SYSTEMS, INC., a Georgia corporation ("Fisher");
AUBIS, L.L.C., a Georgia limited liability company ("Parent"); AUBIS HOSPITALITY
SYSTEMS, INC. , a Georgia corporation and a wholly-owned subsidiary of the
Parent ("AHS"); AUBIS SYSTEMS INTEGRATION, INC., a Georgia corporation and a
wholly-owned subsidiary of the Parent ("ASI") (AHS and ASI are hereinafter
sometimes referred to collectively as the "Companies"), and the parties
identified on Exhibit A (the "Designated Persons"). Certain capitalized terms
used in this Agreement are defined in Exhibit B.
RECITALS
A. Fisher, Parent and the Companies entered into an Agreement and
Plan of Merger and Reorganization dated as of December 13, 1995 (the "Original
Agreement") which contemplated a merger of the Companies into Fisher in
accordance with the Georgia Business Corporation Code, in which Fisher would
continue to exist as the surviving corporation of such merger.
B. The parties have subsequently agreed that it is in their mutual
best interest to restructure the transactions contemplated in the Original
Agreement as two separate mergers of the Companies into two newly created wholly
owned subsidiaries of Fisher.
C. The parties wish to amend and restate the Original Agreement to
reflect the revised structure of the mergers and to incorporate certain
additional terms as provided herein.
D. It is intended that the mergers continue to qualify as a tax-free
reorganization within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended (the "Code").
E. This Amended and Restated Agreement has been adopted and approved
by the respective boards of directors of Fisher, and the Companies and the
members of Parent.
F. The Parent owns a total of (i) 1,126 shares of the voting common
stock, $1.00 par value per share, of AHS, representing 100% of the issued and
outstanding stock of AHS, and (ii) 14,288 shares of the voting common stock, no
par value per share, of ASI, representing 100% of the issued and outstanding
stock of ASI (collectively, the "Companies Common Stock.")
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AGREEMENT
The parties to this Agreement agree as follows:
Section 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF COMPANIES INTO MERGER SUBS. Prior to the Closing, Fisher
shall cause to be incorporated and organized two wholly owned subsidiaries of
Fisher (collectively, the "Merger Subs", or each individually, a "Merger Sub").
Prior to the Closing, Fisher shall transfer to one or both of the Merger Subs
certain of Fisher's assets, and one or both of the Merger Subs shall assume
substantially all of Fisher's liabilities, all in a manner that is reasonably
satisfactory in form and substance to Parent. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3) AHS shall be merged into one of the Merger Subs and ASI shall be
merged into the other Merger Sub, and the separate existence of the Companies
shall cease (the two mergers of the respective Companies into the respective
Merger Subs shall be referred to hereinafter as the "Mergers"). The respective
Merger Subs shall be the surviving corporations in the Mergers (the "Surviving
Corporations").
1.2 EFFECT OF MERGERS. The Mergers shall have the effects set forth in
this Agreement and in the applicable provisions of the Georgia Business
Corporation Code. Prior to closing, Fisher shall cause the Merger Subs to enter
into this Agreement by addendum whereby each of the Merger Subs adopts the terms
and conditions of the Mergers contained herein.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Smith, Gambrell & Russell, 3343 Peachtree Road, Suite 1800, Atlanta, Georgia
30326, at 10:00 a.m. local time on the first business day which is two (2) days
after the date Fisher's shareholders shall have ratified the Mergers, or at such
other time and date as the parties shall designate (the "Scheduled Closing
Time"). (The date on which the Closing actually takes place is referred to in
this Agreement as the "Closing Date.") Contemporaneously with or as promptly as
practicable after the Closing, but in no event later than one business day after
the Closing, properly executed certificates of merger for the mergers of ASI and
AHS into the respective Merger Subs, conforming to the requirements of the
Georgia Business Corporation Code, shall be filed with the Secretary of State of
the State of Georgia. The Mergers shall take effect at the time the last such
certificates of merger are filed with the Secretary of State of the State of
Georgia (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless the parties agree otherwise prior to the Effective Time:
(a) the Articles of Incorporation of the respective Merger Subs shall
continue as the Articles of Incorporation of the Surviving Corporations;
(b) the respective Bylaws of the Merger Subs shall continue as the
respective Bylaws of the Surviving Corporations (provided that any
amendments reasonably required to carry into effect the purposes of this
Agreement also may be made);
(c) simultaneously with the Closing, the Articles of Incorporation of
Fisher shall be amended and restated to:
(i) change the name of Fisher to AUBIS, Inc; and
(ii) increase authorized common stock to 100,000,000 shares;
(d) the directors and officers of Fisher and the Surviving Corporations
immediately after the Effective Time shall be the individuals identified on
Exhibit C; and
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(e) immediately following the Closing, Fisher's Board of Directors
shall cause the number of seats on such Board to increase from 5 members to 7
members. As soon as practicable after the Closing, Fisher's Board of Directors
shall elect two members to fill the newly created vacancies, one of whom shall
be a mutual nominee of Larry Fisher and Paul Harrison, the other of whom shall
be a nominee of Paul Harrison.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.7(b), at the Effective Time, by virtue of the
Mergers and without any further action on the part of Fisher, Parent, the
Companies, the Merger Subs or any Designated Person, all of the Companies Common
Stock outstanding immediately prior to the Effective Time shall be canceled and
retired and converted into the right to receive 10,500,000 shares of $.01 par
value common stock of Fisher ("Fisher Common Stock") (the "Merger
Consideration").
(b) If any shares of Companies Common Stock outstanding immediately
prior to the Effective Time are unvested or are subject to a repurchase option,
risk of forfeiture or other condition under any restricted stock purchase
agreement or other agreement with the Companies, then the shares of Fisher
Common Stock issued in exchange for such shares of Companies Common Stock will
be unvested and subject to the same repurchase option, risk of forfeiture or
other condition, and the certificates representing such shares of Fisher Common
Stock may accordingly be marked with appropriate legends.
1.6 CLOSING OF THE COMPANIES' TRANSFER BOOKS. At the Effective Time, the
holders of certificates representing shares of Companies Common Stock that were
outstanding immediately prior to the Effective Time shall cease to have any
rights as shareholders of the Companies, and the stock transfer books of the
Companies shall be closed with respect to all shares of such Companies Common
Stock outstanding immediately prior to the Effective Time. No further transfer
of any such shares of the Companies' capital stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any of such shares of Companies Common Stock
(a "Company Stock Certificate") is presented to Fisher, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At or as soon as practicable following the Effective Time, each
shareholder of record of the Companies shall surrender its respective Company
Stock Certificate(s) to the Fisher, together with such transmittal documents as
Fisher may reasonably require, and Fisher shall deliver to such shareholders of
record of the Companies a certificate or certificates representing the number of
shares of Fisher Common Stock issuable pursuant to Section 1.5 in respect of the
Companies Common Stock represented by the surrendered Company Stock
Certificate(s).
(b) Until surrendered as contemplated by this Section 1.7, each Company
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive shares of Fisher Common Stock as
contemplated by this Section 1.7. If any Company Stock Certificate shall have
been lost, stolen or destroyed, Fisher may, in its discretion and as a condition
precedent to the issuance of any certificate representing Fisher Common Stock,
require the owner of such lost, stolen or destroyed Company Stock Certificate to
provide an appropriate affidavit and to deliver a bond (in such sum as Fisher
may reasonably direct) as indemnity against any claim that may be made against
Fisher with respect to such Company Stock Certificate.
(c) The shares of Fisher Common Stock to be issued in the Mergers shall
be characterized as "restricted securities" for purposes of Rule 144 under the
Securities Act, and each certificate representing any of such shares shall bear
a legend identical or similar in effect to the following legend (together with
any other legend or legends required by applicable state securities laws or
otherwise):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
A-8
<PAGE>
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(d) Fisher shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
Companies Common Stock pursuant to this Agreement such amounts as Fisher may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
(e) Fisher shall not be liable to any holder or former holder of
Companies Common Stock for any shares of Fisher Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 TAX CONSEQUENCES. For federal income tax purposes, the Mergers are
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.9 FURTHER ACTION. If, at any time after the Effective Time, any further
action is determined by Fisher to be necessary or desirable to carry out the
purposes of this Agreement or to vest the Merger Subs with full right, title and
possession of and to all rights and property of the Companies, the officers and
directors of Fisher shall be fully authorized (in the name of the Companies and
otherwise) to take such action.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE PARENT, THE COMPANIES AND
THE DESIGNATED PERSONS
The Companies, the Parent and the Designated Persons jointly and
severally represent and warrant, to and for the benefit of Fisher and the Merger
Subs, as follows (for purposes of this Section 2, unless the context indicates
otherwise, a reference to the "Companies" in the plural shall mean each of the
Companies individually), as of the date hereof and as of the Closing Date:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) The Companies are corporations duly organized, validly existing
and in good standing under the laws of the State of Georgia and have all
necessary power and authority: (i) to conduct their businesses in the manner in
which their businesses are currently being conducted and in the manner in which
their businesses are proposed to be conducted; (ii) to own and use their assets
in the manner in which their assets are currently owned and used and in the
manner in which their assets are proposed to be owned and used; and (iii) to
perform their obligations under all Contracts by which they are bound.
(b) The Companies have not conducted any business under or otherwise
used, for any purpose or in any jurisdiction, any fictitious name, assumed name,
trade name or other name, other than the names "AUBIS Hospitality Systems, Inc."
f/k/a "Wiporwil Systems, Inc." f/d/b/a "Dynamic Decisions", with respect to AHS,
and "AUBIS Systems Integration, Inc." f/k/a "G.E. Random & Associates, Inc."
f/d/b/a "Peripheral Design", with respect to ASI.
(c) The Companies are not and have not been required to be qualified,
authorized, registered or licensed to do business as foreign corporations in any
jurisdiction other than the jurisdictions identified in Part 2.1(c) of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on the Companies. The Companies are in good standing as foreign corporations in
each of the jurisdictions identified in Part 2.1(c) of the Disclosure Schedule.
A-9
<PAGE>
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of the Companies' boards of directors, (ii) the names
of the members of each committee of the Companies' boards of directors, and
(iii) the names and titles of the Companies' officers.
(e) Except as set forth in Part 2.1(e) of the Disclosure Schedule, the
Companies have no subsidiaries, and have never owned, beneficially or otherwise,
any shares or other securities of, or any direct or indirect interest of any
nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. The Companies have
delivered to Fisher accurate and complete copies of: (i) the Companies'
articles of incorporation and bylaws, including all amendments thereto; (ii) the
stock records of the Companies; and (iii) the minutes and other records of the
meetings and other proceedings (including any actions taken by written consent
or otherwise without a meeting) of the shareholders of the Companies, the boards
of directors of the Companies and all committees of the boards of directors of
the Companies. There have been no meetings or other proceedings or actions of
the shareholders of the Companies, the boards of directors of the Companies or
any committee of the boards of directors of the Companies that are not fully
reflected in such minutes or other records. There has not been any violation of
any of the provisions of the Companies' articles of incorporation or bylaws or
of any resolution adopted by the Companies' shareholders, the Companies' boards
of directors or any committee of the Companies' boards of directors. The books
of account, stock records, minute books and other records of the Companies are
accurate, up-to-date and complete, and have been maintained in accordance with
prudent business practices and all applicable Legal Requirements.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of AHS consists of 100,000 shares of
common stock, of which 1,126 shares have been issued and are outstanding. There
are no shares of capital stock held in AHS's treasury. Part 2.3(a) of the
Disclosure Schedule sets forth the names of AHS's shareholders and the number of
shares of AHS common stock owned of record by each of such shareholders. All of
the outstanding shares of AHS common stock have been duly authorized and validly
issued, and are fully paid and non-assessable, and none of such shares is
subject to any repurchase option or restriction on transfer.
(b) The authorized capital stock of ASI consists of 100,000 shares of
common stock, of which 14,288 shares have been issued and are outstanding.
There are no shares of capital stock held in ASI's treasury. Part 2.3(b) of the
Disclosure Schedule sets forth the names of ASI's shareholders and the number of
shares of ASI common stock owned of record by each of such shareholders. All of
the outstanding shares of ASI common stock have been duly authorized and validly
issued, and are fully paid and non-assessable, and none of such shares is
subject to any repurchase option or restriction on transfer.
(c) There is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire, or otherwise
relating to, any shares of the capital stock or other securities of the
Companies; (ii) outstanding security, instrument or obligation that is or may
become convertible into or exchangeable for any shares of the capital stock or
other securities of the Companies; (iii) Contract under which the Companies are
or may become obligated to sell or otherwise issue any shares of their capital
stock or any other securities; or (iv) condition or circumstance that may give
rise to or provide a basis for the assertion of a claim by any Person to the
effect that such Person is entitled to acquire or receive any shares of capital
stock or other securities of the Companies. Except as set forth in Part 2.3(c)
of the Disclosure Schedule, the Companies have never issued or granted any
option, call, warrant or right to acquire, or otherwise relating to, any shares
of their capital stock or other securities.
(d) All outstanding shares of Companies Common Stock have been issued
in compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(e) Except as set forth in Part 2.3(e) of the Disclosure Schedule, the
Companies have never repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities. All securities so
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<PAGE>
reacquired by the Companies were reacquired in compliance with (i) the
applicable provisions of the Georgia Business Corporation Code and all other
applicable Legal Requirements, and (ii) any requirements set forth in applicable
Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Companies will within five days after the restatement date of
this Agreement deliver to Fisher the audited combined balance sheets of AHS and
ASI as of December 31, 1995 and the related audited combined statements of
income of AHS for the year then ended and the accompanying report of Habif,
Arogetti & Wynne, P.C., independent certified public accountants to the
Companies (collectively, the "Company Financial Statements").
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of the Companies as
of the respective dates thereof and the results of operations of the Companies
for the periods covered thereby. The Company Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except that the Company
Financial Statements do not contain footnotes.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Disclosure
Schedule, since December 31, 1995.
(a) there has not been any material adverse change in the Companies'
business, condition, assets, liabilities, operations, financial performance or
prospects, and no event has occurred that will, or could reasonably be expected
to, have a Material Adverse Effect on the Companies;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of the Companies' assets (whether
or not covered by insurance);
(c) the Companies have not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of capital
stock, and have not repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) the Companies have not sold, issued or authorized the issuance of
(i) any capital stock or other security, (ii) any option, call, warrant or right
to acquire, or otherwise relating to, any capital stock or any other security,
or (iii) any instrument convertible into or exchangeable for any capital stock
or other security;
(e) there has been no amendment to the either of the Companies'
articles of incorporation or bylaws, and the Companies have not effected or been
a party to any Acquisition Transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar transaction;
(f) the Companies have not formed any subsidiary or acquired any equity
interest or other interest in any other Entity;
(g) the Companies have not made any capital expenditure which exceeds
$25,000 in the aggregate;
(h) the Companies have not (i) entered into or permitted any of the
assets owned or used by them to become bound by any Material Contract (as
defined in Section 2.10(a)), or (ii) amended or prematurely terminated, or
waived any material right or remedy under, any Material Contract to which they
are or were party or under which they have or have had any rights or
obligations;
(i) the Companies have not (i) acquired, leased or licensed any right
or other asset from any other Person, (ii) sold or otherwise disposed of, or
leased or licensed, any right or other asset to any other Person, or
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<PAGE>
(iii) waived or relinquished any right, except for immaterial rights or other
immaterial assets acquired, leased, licensed or disposed of in the ordinary
course of business and consistent with the Companies' past practices;
(j) the Companies have not written off as uncollectible, or established
any extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) the Companies have not made any pledge of any of their assets or
otherwise permitted any of their assets to become subject to any Encumbrance,
except for pledges of immaterial assets made in the ordinary course of business
and consistent with the Companies' past practices;
(l) the Companies have not (i) lent money to any Person, or (ii)
incurred or guaranteed any indebtedness for borrowed money;
(m) the Companies have not (i) established, adopted or amended any
Employee Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar
payment to, or increased the amount of the wages, salary, commissions, fringe
benefits or other compensation or remuneration payable to, any of their
directors, officers or employees, or (iii) hired any new employee;
(n) the Companies have not changed any of their methods of accounting
or accounting practices in any respect;
(o) the Companies have not made any Tax election;
(p) the Companies have not commenced or settled any Legal Proceeding;
(q) the Companies have not entered into any material transaction or
taken any other material action outside the ordinary course of business or
inconsistent with their past practices; and
(r) the Companies have not agreed or committed to take any of the
actions referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) The Companies own, and have good, valid and marketable title to,
all assets purported to be owned by them, including: (i) all assets reflected on
the Unaudited Interim Balance Sheet; (ii) all assets referred to in Parts
2.7(b), 2.8 and 2.9 of the Disclosure Schedule and all of the Companies' rights
under the Contracts identified in Part 2.10(a) of the Disclosure Schedule; and
(iii) all other assets reflected in the Companies' books and records as being
owned by the Companies. Except as set forth in Part 2.6(a) of the Disclosure
Schedule, all of said assets are owned by the Companies free and clear of any
liens or other Encumbrances, except for (i) any lien for current taxes not yet
due and payable, and (ii) minor liens that have arisen in the ordinary course of
business and that do not (in any case or in the aggregate) materially detract
from the value of the assets subject thereto or materially impair the operations
of the Companies.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets that
are being leased or licensed to the Companies.
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate and
complete information with respect to each account maintained by or for the
benefit of the Companies at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Companies as of December 31, 1995.
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Except as set forth in Part 2.7(b) of the Disclosure Schedule, all existing
accounts receivable of the Companies (including those accounts receivable
reflected on the Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since December 31,
1995, and have not yet been collected) represent valid obligations of customers
of the Companies arising from bona fide transactions entered into in the
ordinary course of business.
(c) Part 2.7(c) of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other Person for each of the Companies for the year ended December
31, 1995. The Companies have not received any notice or other communication
indicating that any customer or other Person identified in Part 2.7(c) of the
Disclosure Schedule intends or expects to cease dealing with the Companies or to
reduce the volume of business transacted by such Person with the Companies below
historical levels.
(d) Part 2.7(d) of the Disclosure Schedule provides an accurate and
complete breakdown of all pending and unfilled orders received by the Companies
for products, systems and services.
2.8 EQUIPMENT; LEASEHOLD.
(a) Part 2.8 of the Disclosure Schedule provides accurate and complete
information with respect to all material items of equipment, fixtures, leasehold
improvements and other tangible assets owned by or leased to the Companies. The
assets identified in Part 2.8 of the Disclosure Schedule are adequate for the
uses to which they are being put, are in good condition and repair (ordinary
wear and tear excepted) and are adequate for the conduct of the Companies'
businesses in the manner in which such businesses are currently being conducted
and in the manner in which such businesses are proposed to be conducted.
(b) The Companies do not own any real property or any interest in real
property, except for the leasehold(s) created under the real property lease(s)
identified in Part 2.10(a) of the Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth, with respect
to each Company Proprietary Asset that has been registered, recorded or filed
with any Governmental Body or with respect to which an application has been
filed with any Governmental Body, (i) a brief description of such Company
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration, recordation, filing or application. Part 2.9(a)(2) of
the Disclosure Schedule identifies and provides a brief description of all other
Company Proprietary Assets owned by the Companies. Part 2.9(a)(3) of the
Disclosure Schedule identifies and provides a brief description of each Company
Proprietary Asset that is owned by any other Person and that is licensed to or
used by the Companies (except for any Company Proprietary Asset that is licensed
to either Company under any third party software license generally available to
the public at a cost of less than $500). Except as set forth in Part 2.9(a)(4)
of the Disclosure Schedule, each Company has good, valid and marketable title to
all of the Proprietary Assets identified in Parts 2.9(a)(1) and 2.9(a)(2) of the
Disclosure Schedule, free and clear of all liens and other Encumbrances, and has
a valid right to use all Proprietary Assets identified in Part 2.9(a)(3) of the
Disclosure Schedule. Except as set forth in Part 2.9(a)(5) of the Disclosure
Schedule, the Companies are not obligated to make any payment to any Person for
the use of any Company Proprietary Asset. Except as set forth in Part 2.9(a)(6)
of the Disclosure Schedule, the Companies are free to use, modify, copy,
distribute, sell, license or otherwise exploit each of the Company Proprietary
Assets on an exclusive basis.
(b) The Companies have taken all measures and precautions necessary to
protect and maintain the confidentiality and secrecy of all Company Proprietary
Assets (except Company Proprietary Assets whose value would be unimpaired by
public disclosure) and otherwise to maintain and protect the value of all
Company Proprietary Assets. Except as set forth in Part 2.9(b) of the
Disclosure Schedule, the Companies have not disclosed or delivered or permitted
to be disclosed or delivered to any Person, and no Person (other than the
Companies) has access to or has any rights with respect to, the source code, or
any portion or aspect of the source code, of any Company Proprietary Asset.
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(c) To the knowledge of the Companies, Parent and the Designated
Persons, none of the Companies' Proprietary Assets infringes or conflicts with
any Proprietary Asset owned or used by any other Person. To the knowledge of the
Companies, Parent and the Designated Persons, the Companies are not infringing,
misappropriating or making any unlawful use of, and the Companies have not at
any time infringed, misappropriated or made any unlawful use of, or received any
notice or other communication of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the best of the knowledge of the Companies, the
Parent and the Designated Persons, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Company Proprietary
Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule: (i)
each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of the Companies; and (ii)
there has not been any material claim by any customer or other Person alleging
that any Company Proprietary Asset does not conform in all material respects
with any specification, documentation, performance standard, representation or
statement made or provided by or on behalf of the Companies, and, to the best of
the knowledge of the Companies, the Parent and the Designated Persons, there is
no basis for any such claim. Except as set forth in Part 2.9(d) of the
Disclosure Schedule, the Companies have established adequate reserves on the
Unaudited Interim Balance Sheet to cover all costs associated with any
obligations that the Companies may have with respect to the correction or repair
of programming errors or other defects in the Company Proprietary Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable the Companies to conduct their business in the manner
in which such businesses have been conducted and in the manner in which such
businesses are proposed to be conducted. Except as set forth in Part 2.9(e) of
the Disclosure Schedule, (i) the Companies have not licensed any of the Company
Proprietary Assets to any Person on an exclusive basis, and (ii) the Companies
have not entered into any covenant not to compete or Contract limiting their
ability to exploit fully any of their Proprietary Assets or to transact business
in any market or geographical area or with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule, all
current employees of the Companies have executed and delivered to the Companies
written agreements (containing no exceptions to or exclusions from the scope of
their coverage) that are substantially identical to the form of the
Confidentiality and Non-Disclosure Agreement attached to the Disclosure Schedule
as Appendices 2.9(f)(1). The Companies have never engaged or received services
from any consultant or independent contractor in connection with the design or
development of any Proprietary Asset. To the knowledge of the Companies, Parent
and the Designated Persons, no former employee of the Company has or claims to
have any rights with respect to, or any ownership interest in, any Company
Proprietary Asset.
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies each Company
Contract that constitutes a "Material Contract." For purposes of this
Agreement, each of the following shall be deemed to constitute a "Material
Contract":
(i) any Contract relating to the employment or engagement of, or the
performance of services by, any employee, consultant or
independent contractor;
(ii) any Contract relating to the acquisition, transfer, use,
development, sharing or license of any technology or any
Proprietary Asset;
(iii) any Contract imposing any restriction on the Companies' right or
ability (A) to compete with any other Person, (B) to acquire any
product or other asset or any services from any other Person, to
sell any product or other asset to or perform any services for
any other Person or to transact business or deal in any other
manner with any other Person, or (C) to develop or distribute any
technology;
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(iv) any Contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(v) any Contract relating to the acquisition, issuance or
transfer of any securities;
(vi) any Contract creating or relating to the creation of any
Encumbrance with respect to any asset owned or used by the
Companies;
(vii) any Contract involving or incorporating any guaranty, any
pledge, any performance or completion bond, any indemnity,
any right of contribution or any surety arrangement;
(viii) any Contract creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses,
costs or liabilities;
(ix) any Contract relating to the purchase or sale of any
product or other asset by or to, or the performance of any
services by or for, any Related Party (as defined in
Section 2.19);
(x) any Contract to which any Governmental Body is a party or
under which any Governmental Body has any rights or
obligations, or involving or directly or indirectly
benefiting any Governmental Body (including any subcontract
or other Contract between the Company and any contractor or
subcontractor to any Governmental Body);
(xi) any Contract entered into outside the ordinary course of
business or inconsistent with the Companies' past
practices;
(xii) any Contract that has a term of more than 60 days and that
may not be terminated by the Company (without penalty)
within 60 days after the delivery of a termination notice
by the Subject Business; and
(xiii) any Contract that contemplates or involves (A) the payment
or delivery of cash or other consideration in an amount or
having a value in excess of $5,000 in the aggregate, or (B)
the performance of services having a value in excess of
$5,000 in the aggregate.
(b) Except as set forth in Part 2.10(b) of the Disclosure Schedule,
the Companies have delivered to Fisher accurate and complete copies of all
Contracts identified in Part 2.10(a) of the Disclosure Schedule, including all
amendments thereto. Each Contract identified in Part 2.10(a) of the Disclosure
Schedule is valid and in full force and effect, and is enforceable by the
Companies in accordance with its terms, subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies.
(c) Except as set forth in Part 2.10(c) of the Disclosure Schedule:
(i) The Companies have not violated or breached, or committed
any default under, any Company Contract, and, to the best
of the knowledge of the Companies, the Parent and the
Designated Persons, no other Person has violated or
breached, or committed any default under, any Company
Contract;
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(ii) to the best of the knowledge of the Companies, the Parent
and the Designated Persons, no event has occurred, and no
circumstance or condition exists, that (with or without
notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach of any of
the provisions of any Company Contract, (B) give any Person
the right to declare a default or exercise any remedy under
any Company Contract, (C) give any Person the right to
accelerate the maturity or performance of any Company
Contract, or (D) give any Person the right to cancel,
terminate or modify any Company Contract;
(iii) since December 31, 1994, the Companies have not received
any notice or other communication regarding (i) any actual
or possible violation or breach of, or default under, any
Company Contract, or (ii) any actual or possible
termination of any Company Contract; and
(iv) the Companies have not waived any of their material rights
under any Contract.
(d) Except as set forth in Part 2.10(d) of the Disclosure Schedule, no
Person is renegotiating, or has the right to renegotiate, any amount paid or
payable to the Companies under any Company Contract or any other term or
provision of any Company Contract.
(e) The Contracts identified in Part 2.10(a) of the Disclosure Schedule
collectively constitute all of the Material Contracts necessary to enable the
Companies to conduct their businesses in the manner in which their businesses
are currently being conducted and in the manner in which their businesses are
proposed to be conducted.
(f) Part 2.10(f) of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract as to which any pending bid, offer
or proposal has been submitted or received by the Companies.
2.11 LIABILITIES.
(a) The Companies have no accrued, contingent or other liabilities of
any nature, either matured or unmatured (whether or not required to be reflected
in financial statements in accordance with generally accepted accounting
principles, and whether due or to become due), except for: (i) liabilities
identified as such in the "liabilities" column of the Unaudited Interim Balance
Sheet; (ii) accounts payable or accrued salaries that have been incurred by the
Companies since December 31, 1995 in the ordinary course of business and
consistent with the Companies' past practices; and (iii) the liabilities
identified in Part 2.11(a) of the Disclosure Schedule.
(b) Part 2.11(b) of the Disclosure Schedule provides an accurate and
complete breakdown of (i) all accounts payable of each Company as of February
29, 1996, and (ii) all notes payable of the Companies and all indebtedness of
the Companies for borrowed money.
(c) Part 2.11(c) of the Disclosure Schedule provides an accurate and
complete breakdown of the Companies' "deferred support revenue" as of December
31, 1995 and all related obligations and other liabilities of the Companies.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. The Companies are, and have at all
times since December 31, 1994 been, in compliance with all applicable Legal
Requirements, except where the failure to comply with such Legal Requirements
has not had and will not have in any individual case or in the aggregate, a
Material Adverse Effect on the Companies. Except as set forth in Part 2.12 of
the Disclosure Schedule, since December 31, 1994, the Companies have not
received any notice or other communication from any Governmental Body regarding
any actual or possible violation of, or failure to comply with, any Legal
Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by the Companies, and
the Companies have delivered to Fisher accurate and complete
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copies of all Governmental Authorizations identified in Part 2.13 of the
Disclosure Schedule. The Governmental Authorizations identified in Part 2.13 of
the Disclosure Schedule are valid and in full force and effect, and collectively
constitute all Governmental Authorizations necessary to enable the Companies to
conduct their businesses in the manner in which their businesses are currently
being conducted and in the manner in which their businesses are proposed to be
conducted. The Companies are, and at all times since December 31, 1994 have
been, in compliance with the material terms and requirements of the respective
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule.
Since December 31, 1994, the Companies have not received any notice or other
communication from any Governmental Body regarding (a) any actual or possible
violation of or failure to comply with any term or requirement of any
Governmental Authorization, or (b) any actual or possible revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization.
2.14 TAX MATTERS.
(a) Except as set forth on Part 2.14(a) of the Disclosure Schedule, all
Tax Returns required to be filed by or on behalf of the Companies with any
Governmental Body with respect to any transaction occurring or any taxable
period ending on or before the Closing Date (the "Company Returns") (i) have
been or will be filed when due, and (ii) have been, or will be when filed,
accurately and completely prepared in compliance with all applicable Legal
Requirements. Except as set forth on Part 2.14(a) of the Disclosure Schedule,
all amounts shown on the Company Returns to be due on or before the Closing Date
have been or will be paid on or before the Closing Date. Except as set forth on
Part 2.14(a) of the Disclosure Schedule, the Companies have delivered to Fisher
accurate and complete copies of all Company Returns for AHS filed since December
31, 1991, and for ASI filed since June 30, 1992.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. The
Companies will establish, in the ordinary course of business and consistent with
their past practices, reserves adequate for the payment of all Taxes for the
period from November 30, 1995 through the Closing Date, and the Companies will
disclose the dollar amount of such reserves to Fisher on or prior to the Closing
Date.
(c) Each Company Return relating to income Taxes that has been filed
with respect to any period ended on or prior to December 31, 1991 with respect
to AHS, and June 30, 1992 with respect to ASI, has either (i) been examined and
audited by all relevant Governmental Bodies, or (ii) by virtue of the expiration
of the limitation period under applicable Legal Requirements, is no longer
subject to examination or audit by any Governmental Body. Except as set forth
in Part 2.14(c) of the Disclosure Schedule, there has been no examination or
audit of any Company Return, and no such examination or audit has been proposed
or scheduled by any Governmental Body. The Companies have delivered to Fisher
accurate and complete copies of all audit reports and similar documents (to
which the Companies have access) relating to the Company Returns. Except as set
forth in Part 2.14(c) of the Disclosure Schedule, no extension or waiver of the
limitation period applicable to any of the Company Returns has been granted (by
the Companies or any other Person), and no such extension or waiver has been
requested from the Companies.
(d) Except as set forth in Part 2.14(d) of the Disclosure Schedule, no
claim or Legal Proceeding is pending or has been threatened against or with
respect to the Companies in respect of any Tax. Except as set forth in Part
2.14(d) of the Disclosure Schedule, there are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Companies. There are no liens for Taxes upon
any of the assets of the Companies, except liens for current Taxes not yet due
and payable. The Companies have not entered into or become bound by any
agreement or consent pursuant to Section 341(f) of the Code. The Companies have
not been, and the Companies will not be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
of 263A of the Code or any comparable provision under state or foreign Tax laws
as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract covering
any employee or independent contractor or former employee or independent
contractor of the Companies that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or
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indirectly to the payment of any amount that would not be deductible pursuant to
Section 280G or Section 162 of the Code. The Companies are not, and have never
been, a part to or bound by any tax indemnity agreement, tax sharing agreement,
tax allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule contains a list of all
salaried employees of the Companies as of the date of this Agreement, and
correctly reflects their salaries, any other compensation payable to them
(including compensation payable pursuant to bonus, deferred compensation or
commission arrangements), their dates of employment and their positions. The
Companies are not a party to any collective bargaining contract or other
Contract with a labor union involving any of its employees.
(b) Part 2.15(b) of the Disclosure Schedule identifies each employee of
the Companies who is not fully available to perform work because of disability
or other leave, and sets forth the basis of such leave and the anticipated date
of return to full service.
(c) Part 2.15(c) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program or agreement (individually referred to as a "Plan" and collectively
referred to as the "Plans") sponsored, maintained, contributed to or required to
be contributed to by the Companies for the benefit of any current or former
employee of the Companies.
(d) The Companies do not maintain, sponsor or contribute to, and, to
the best of the knowledge of the Companies, the Parent and the Designated
Persons, the Companies have not at any time in the past maintained, sponsored or
contributed to, any employee pension benefit plan (as defined in Section 3(2))
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
whether or not excluded from coverage under specific Titles or Merger Subtitles
of ERISA) for the benefit of employees or former employees of the Companies (a
"Pension Plan").
(e) The Companies do not maintain, sponsor or contribute to any
employee welfare benefit plan (as defined in Section 3(1) of ERISA, whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA)
for the benefit of employees or former employees of the Companies (a "Welfare
Plan") except for those Welfare Plans described in Part 2.15(e) of the
Disclosure Schedule, none of which is a multiemployer plan (within the meaning
of Section 3(37) of ERISA).
(f) With respect to each Plan, the Companies have delivered to Fisher:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report (if
required under ERISA) with respect to such Plan for each of
1993 and 1994;
(iii) an accurate and complete copy of (A) the most recent summary
plan description, together with each Summary of Material
Modifications (if required under ERISA) with respect to such
Plan, and (B) each material employee communication relating
to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust
or other funding agreement (including all amendments thereto)
and accurate and complete copies of the most recent financial
statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance
contracts, minimum premium contracts,
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stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping
agreements; and
(vi) an accurate and complete copy of the most recent determination
letter received from the Internal Revenue Service with respect
to such Plan (if such Plan is intended to be qualified under
Section 401(a) of the Code).
(g) The Companies are not required to be, and, to the best of the
knowledge of the Companies, the Parent and the Designated Persons, the Companies
have never been required to be, treated as a single employer with any other
Person under Section 4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of
the Code. The Companies have never been a member of an "affiliated service
group" within the meaning of Section 414(m) of the Code. To the best of the
knowledge of the Companies, the Parent and the Designated Persons, the Companies
have never made a complete or partial withdrawal from a "multiemployer plan" (as
defined in Section 3(37) of ERISA) resulting in "withdrawal liability" (as
defined in Section 4201 of ERISA), without regard to subsequent reduction or
waiver of such liability under either Section 4207 or 4208 of ERISA.
(h) The Companies do not have any plan or commitment to create any
additional Welfare Plan or any Pension Plan, or to modify or change any existing
Welfare Plan or Pension Plan (other than to comply with applicable law).
(i) No Welfare Plan provides death, medical or health benefits (whether
or not insured) with respect to any current or former employee of the Companies
after any such employee's termination of service (other than (i) benefit
coverage mandated by applicable law, including coverage provided pursuant to
Section 4980B of the Code, (ii) deferred compensation benefits accrued as
liabilities on the Unaudited Interim Balance Sheet, and (iii) benefits the full
cost of which are borne by current or former employees of the Companies (or
their beneficiaries).
(j) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(k) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
ERISA and the Code.
(l) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and neither the Parent, the Companies, nor any of the Designated Person
is aware of any reason why any such determination letter should be revoked.
(m) Except as set forth in Part 2.15(m) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Mergers or any of the other transactions contemplated by
this Agreement, will result in any bonus payment, golden parachute payment,
severance payment or other payment to any current or former employee or director
of the Companies (whether or not under any Plan), or materially increase the
benefits payable under any Plan, or result in any acceleration of the time of
payment or vesting of any such benefits.
(n) The Companies are in compliance in all material respects with all
applicable Legal Requirements and Contracts relating to employment, employment
practices, employee compensation, wages, bonuses and terms and conditions of
employment.
(o) The Companies have good labor relations, and neither the Companies,
the Parent nor any of the Designated Persons has any knowledge of any facts
indicating that (i) the consummation of the Mergers or any of the other
transactions contemplated by this Agreement will have a material adverse effect
on the Companies' labor relations, or (ii) any of the Companies' employees
intends to terminate his or her employment with the Companies.
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2.16 ENVIRONMENTAL MATTERS. The Companies are and have at all times
been in compliance, in all material respects, with all applicable Environmental
Laws. The Companies possess all permits and other Governmental Authorizations
required under applicable Environmental Laws, and the Companies are and have at
all times been in compliance with the terms and requirements of all such
Governmental Authorizations. The Companies have not received any notice or
other communication (whether from a Governmental Body, citizens group, employee
or otherwise) that alleges that the Companies are not in compliance with any
Environmental Law, and, to the best of the knowledge of the Companies, the
Parent and Designated Persons, there are no circumstances that could reasonably
be expected to prevent or interfere with the Companies' compliance with any
Environmental Law in the future. To the best of the knowledge of the Companies,
the Parent and the Designated Persons, no current or prior owner of any property
leased or controlled by the Companies has received any notice or other
communication (whether from a Governmental Body, citizens group, employee or
otherwise) that alleges that such current or prior owner or the Companies are
not or were not in compliance with any Environmental Law. All Governmental
Authorizations currently held by the Companies pursuant to Environmental Laws
are identified in Part 2.16 of the Disclosure Schedule.
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except in the ordinary course of business in accordance with past
practices, the Companies will not incur or otherwise become subject to any
material liability arising from (i) any product, system, program, Proprietary
Asset or other asset designed, developed, manufactured, assembled, sold,
supplied, installed, repaired, licensed or made available by the Companies on or
prior to the Closing Date, or (ii) any consulting services, installation
services, programming services, repair services, maintenance services, training
services, support services or other services performed by the Companies on or
prior to the Closing Date.
(b) Except as set forth in Part 2.17(b) of the Disclosure Schedule, no
customer or other Person has, at any time since December 31, 1994, asserted or
threatened to assert any claim against the Companies (other than claims that
have been resolved satisfactorily at no material cost to the Companies) under or
based upon (i) any warranty provided by or on behalf of the Companies, or (ii)
any services performed by the Companies.
2.18 INSURANCE. Part 2.18 of the Disclosure Schedule provides accurate and
complete information with respect to each insurance policy maintained by, at the
expense of or for the benefit of each of the Companies and with respect to any
claims made thereunder. The Companies have delivered to Fisher accurate and
complete copies of the insurance policies identified in Part 2.18 of the
Disclosure Schedule. Each of the insurance policies identified in Part 2.18 of
the Disclosure Schedule is in full force and effect. Since December 31, 1994,
the Companies have not received any notice or other communication regarding any
actual or possible (a) cancellation or invalidation of any insurance policy, (b)
refusal of any coverage or rejection of any claim under any insurance policy, or
(c) material adjustment in the amount of the premiums payable with respect to
any insurance policy.
2.19 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.19 of the
Disclosure Schedule: (a) no Related Party has, and no Related Party has at any
time since December 31, 1994 had, any direct or indirect interest in any
material asset used in or otherwise relating to the business of the Companies;
(b) no Related Party is, or has at any time since December 31, 1994 been,
indebted to the Companies; (c) since December 31, 1994, no Related Party has
entered into, or has had any direct or indirect financial interest in, any
material Contract, transaction or business dealing involving the Companies; (d)
no Related Party is competing, or has at any time since December 31, 1994
competed, directly or indirectly, with the Companies; and (e) no Related Party
has any claim or right against the Companies (other than rights to receive
compensation for services performed as an employee of the Companies). (For
purposes of this Section 2.19, each of the following shall be deemed to be a
"Related Party": (i) each of the Designated Persons; (ii) each individual who
is, or who has at any time since December 31, 1992 been, an officer or director
of the Companies; (iii) each individual who is, or who at any time since
December 31, 1992 has been, a member of the immediate family of any of the
individuals referred to in clauses "(i)" and "(ii)" above; and (iv) any trust or
other Entity (other than the Companies) in which any one of the individuals
referred to in clauses "(i)," "(ii)" and "(iii)" above holds (or in which more
than one of such individuals collectively hold), beneficially or otherwise, a
material voting, proprietary or equity interest.)
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2.20 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.20(a) of the Disclosure Schedule,
there is no pending Legal Proceeding, and, to the best of the knowledge of the
Companies, the Parent and the Designated Persons, no Person has threatened to
commence any Legal Proceeding: (i) that involves the Companies or any of the
assets owned or used by the Companies; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, the Mergers or any of the other transactions contemplated by this
Agreement. To the best of the knowledge of the Companies, the Parent and the
Designated Persons, except as set forth in Part 2.20(a) of the Disclosure
Schedule, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that will, or that could reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the Disclosure Schedule, no
Legal Proceeding is currently pending against the Companies.
(c) There is no order, writ, injunction, judgment or decree to which
the Companies, or any of the assets owned or used by the Companies, are subject.
Neither the Designated Persons, the Parent nor the Companies are is subject to
any order, writ, injunction, judgment or decree that relates to the Companies'
business or to any of the assets owned or used by the Companies. To the best of
the knowledge of the Companies, the Parent and the Designated Persons, no
officer or other employee of the Companies is subject to any order, writ,
injunction, judgment or decree that prohibits such officer or other employee
from engaging in or continuing any conduct, activity or practice relating to the
Companies' businesses.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The Parent, the Designated
Persons and the Companies have the absolute and unrestricted right, power and
authority to enter into and to perform their respective obligations under this
Agreement; and the execution, delivery and performance by Parent and the
Companies of this Agreement have been duly authorized by all necessary action on
the part of the Parent, the Companies and their respective boards of directors
and shareholders. This Agreement constitutes the legal, valid and binding
obligation of the Designated Persons, the Parent and the Companies, enforceable
against the Designated Persons, the Parent and the Companies in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.22 of the
Disclosure Schedule, neither (i) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (ii)
the consummation of the Mergers or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the Parent's or the Companies' articles of incorporation or
bylaws, or (ii) any resolution adopted by the Parent's or the Companies'
shareholders, the Parent's or the Companies' boards of directors or any
committee of the Parent's or the Companies' boards of directors;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated by this Agreement or to exercise any remedy or obtain any relief
under, any Legal Requirement or any order, writ, injunction, judgment or decree
to which the Parent or the Companies, or any of the assets owned or used by the
Parent or the Companies, are subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by the Companies or that otherwise relates to the Companies'
business or to any of the assets owned or used by the Companies;
(d) contravene, conflict with or result in a violation or breach of, or
result in a default under, any provision of any Material Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
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Material Contract, (ii) accelerate the maturity or performance of any Material
Contract, or (iii) cancel, terminate or modify any Material Contract; or
(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by the Companies
(except for minor liens that will not, in any case or in the aggregate,
materially detract from the value of the assets subject thereto or materially
impair the operations of the Companies).
Except as set forth in Part 2.22 of the Disclosure Schedule, the Parent and the
Companies are not and will not be required to make any filing with or given any
notice to, or to obtain any Consent from, any Person in connection with (x) the
execution, delivery or performance of this Agreement or any of the other
agreements referred to in this Agreement, or (y) the consummation of the Mergers
or any of the other transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the Disclosure Schedule)
does not, and the Parent's and Designated Persons' Closing Certificate (as
defined in Section 7.4(h)) will not, (i) contain any representation, warranty or
information that is false or misleading with respect to any material fact, or
(ii) omit to state any material fact necessary in order to make the
representations, warranties and information contained and to be contained herein
and therein not false or misleading.
Section 3. REPRESENTATIONS AND WARRANTIES OF FISHER
Fisher represents and warrants to the Companies, the Parent and the
Designated Persons as follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Fisher will deliver to the Companies, within five (5) days hereof,
accurate and complete copies (excluding copies of exhibits) of each report,
registration statement, (on a form other than Form S-8) and definitive proxy
statement filed by Fisher with the SEC between January 1, 1992 and the date of
this Agreement (the "Fisher SEC Documents"). As of the time it was filed with
the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Fisher SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Fisher SEC Documents contained any untrue statement of a material fact or
omitted 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
which they were made, not misleading.
(b) The consolidated financial statements contained in the Fisher SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereof; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such financial statements and (in the case of unaudited statements) as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to normal and recurring year-end audit
adjustments (which will not, individually or in the aggregate, be material in
magnitude); and (iii) fairly present the consolidated financial position of
Fisher as of the respective dates thereof and the consolidated results of
operations of Fisher for the periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Subject to obtaining the
requisite approval of Fisher's shareholders with respect to the amendment to
Fisher's Articles of Incorporation described in Section 1.4(c)(iii) hereof,
Fisher has the absolute and unrestricted right, power and authority to perform
its obligations under this Agreement; and the execution, delivery and
performance by Fisher of this Agreement have been duly authorized by all
necessary action on the part of Fisher and its board of directors. This
Agreement shall constitute the legal, valid and binding obligation of Fisher,
enforceable against it in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
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3.3 VALID ISSUANCE. The Fisher Common Stock to be issued in the Mergers
will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.4 MERGER SUBS. The Merger Subs shall, prior to Closing, have been duly
organized, validly existing and in good standing under the laws of Georgia.
Fisher shall be the sole shareholder of the Merger Subs. Prior to the Closing,
the Mergers shall have been authorized by all necessary action of the part of
Merger Subs, their respective boards of directors and Fisher as sole
shareholder.
Section 4. CERTAIN COVENANTS OF THE COMPANIES, THE PARENT AND THE DESIGNATED
PERSONS
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), the Parent and
the Companies shall, and shall cause their Representatives to: (a) provide
Fisher and Fisher's Representatives with reasonable access to the Companies'
Representatives, personnel and assets and to all existing books, records, Tax
Returns, work papers and other documents and information relating to the
Companies; and (b) provide Fisher and Fisher's Representatives with such copies
of the existing books, records, Tax Returns, work papers and other documents and
information relating to the Companies, and with such additional financial,
operating and other data and information regarding the Companies, as Fisher may
reasonably request. Notwithstanding the provisions of Section 12.17, paragraph 7
of the letter agreement between Parent and Fisher dated November 16, 1995
("Letter of Intent") shall remain in effect through the Closing Date and shall
bind Fisher with respect to any Evaluation Material (as defined in the Letter of
Intent) provided to Fisher or its Representatives during the Pre-Closing Period.
4.2 OPERATION OF THE COMPANIES' BUSINESSES. During the Pre-Closing Period,
unless Fisher otherwise consents in writing:
(a) the Companies shall conduct their businesses and operations in the
ordinary course and in substantially the same manner as such business and
operations have been conducted prior to the date of this Agreement;
(b) the Companies shall use reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and maintain their relations and goodwill with all
suppliers, customers, landlords, creditors, employees and other Persons having
business relationships with the Companies;
(c) the Companies shall keep in full force all insurance policies
identified in Part 2.18 of the Disclosure Schedule;
(d) the Companies shall cause their officers to report regularly to
Fisher concerning the status of the Companies' businesses;
(e) the Companies shall not declare, accrue, set aside or pay any
dividend or make any other distribution in respect of any shares of capital
stock, and shall not repurchase, redeem or otherwise reacquire any shares of
capital stock or other securities;
(f) the Companies shall not sell, issue or authorize the issuance of
(i) any capital stock or other security, (ii) any option, call, warrant or right
to acquire, or relating to, any capital stock or other security, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
(g) neither the Companies, the Parent nor any of the Designated Persons
shall amend or permit the adoption of any amendment to the Companies' articles
of incorporation or bylaws, or effect or permit either of the Companies to
become a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
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(h) the Companies shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(i) the Companies shall not make any capital expenditure, except for
capital expenditures that, when added to all other capital expenditures made on
behalf of the Companies during the Pre-Closing Period, do not exceed $30,000 in
the aggregate;
(j) the Companies shall not (i) enter into or become bound by, or
permit any of the assets owned or used by them to become bound by, any Material
Contract, or (ii) amend or prematurely terminate, or waive any material right or
remedy under, any Material Contract;
(k) the Companies shall not, other than in the ordinary course of
business consistent with past practice (i) acquire, lease or license any right
or other asset from any other Person, (ii) sell or otherwise dispose of, or
lease or license, any right or other asset to any other Person, or (iii) waive
or relinquish any right, except for immaterial assets acquired, leased, licensed
or disposed of by the Companies pursuant to Contracts that are not Material
Contracts;
(l) the Companies shall not (i) lend money to any Person, or (ii) incur
or guarantee any indebtedness, except that the Companies may make routine
borrowings in the ordinary course of business under their respective existing
lines of credit;
(m) The Companies shall not (i) establish, adopt or amend any Employee
Benefit Plan (other than the employee retention program and severance program
referred to in Section 6.9), (ii) pay any bonus or make any profit-sharing or
similar payment to, or increase the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, or (iii) hire any new employee whose aggregate
annual compensation is expected to exceed $35,000;
(n) the Companies shall not change any of their methods of accounting
or accounting practices in any respect, including without limitation any change
with respect to writing off of accounts receivable;
(o) the Companies shall not make any Tax election;
(p) the Companies shall not commence or settle any Legal Proceeding;
(q) the Companies shall not enter into any material transaction or take
any other material action outside the ordinary course of business or
inconsistent with its past practices; and
(r) the Companies shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" of this Section 4.2.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Companies, the Parent and the
Designated Persons shall promptly notify Fisher in writing of:
(i) the discovery by the Companies, the Parent or the Designated
Persons of any event, condition, fact or circumstance that
occurred or existed on or prior to the date of this Agreement
and that caused or constitutes an inaccuracy in or breach of
any representation or warranty made by the Companies, the
Parent or any of the Designated Persons in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that
would cause or constitute an inaccuracy in or breach of any
representation or warranty made by the Companies, the Parent
or any of the
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Designated Persons in this Agreement if (A) such
representation or warranty had been made as of the time of
the occurrence, existence or discovery of such event,
condition, fact or circumstance, or (B) such event,
condition, fact or circumstance had occurred, arisen or
existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the Companies,
the Parent or any of the Designated Persons; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in
Section 7 or Section 8 impossible or unlikely.
(b) Within 10 days following the restatement date of this Agreement,
the Companies shall deliver a final amended and restated Disclosure Schedule
(subject to updates as provided below). To the extent such amended and restated
Disclosure Schedule contains information not previously reflected on the
original Disclosure Schedule or updates thereof subsequently delivered to
Fisher, Fisher shall have the option to terminate this Agreement by giving
notice within 7 days as described in this paragraph. If any event, condition,
fact or circumstance that is required to be disclosed pursuant to Section 4.3(a)
requires any change in the Disclosure Schedule, or if any such event, condition,
fact or circumstance would require such a change assuming the Disclosure
Schedule were dated as of the date of the occurrence, existence or discovery of
such event, condition, fact or circumstance, then the Companies, the Parent or
the Designated Persons shall promptly deliver to Fisher an update to the
Disclosure Schedule specifying such change. Upon receipt of any such updated
Disclosure Schedule from the Companies, the Parent or the Designated Persons,
Fisher shall have the right to terminate this Agreement in accordance with
Section 9.1(h) by giving notice in accordance with Section 9.2 within 7 days
following delivery of such updated Disclosure Schedule to Fisher. If Fisher
fails to give such notice within such 7 day period, the Disclosure Schedule
shall be deemed amended to include the updated information for all purposes
hereunder.
4.4 NO NEGOTIATION. During the Pre-Closing Period, neither the Companies,
the Parent nor any of the Designated Persons shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Fisher) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Fisher) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any Person
(other than Fisher) relating to a possible Acquisition Transaction.
The Parent or the Companies shall promptly notify Fisher in writing of any
inquiry, proposal or offer relating to a possible Acquisition Transaction that
is received by the Parent or the Companies or any of the Designated Persons
during the Pre-Closing Period.
4.5 DUE DILIGENCE INVESTIGATION. Within 10 days following the restatement
date of this Agreement, the Parent shall complete its due diligence
investigation of Fisher. If such investigation reveals any fact that Parent
determines in its sole discretion will affect the business, assets or operations
of Fisher in a material adverse manner, then Parent may, within 20 days
following the restatement date of this Agreement, terminate this Agreement
pursuant to Section 9.1(i). Parent's due diligence investigation of Fisher
shall not in any case diminish, obviate or otherwise affect the representations
or warranties contained in Section 3. Parent's failure to terminate this
Agreement as provided above in this Section shall not affect in any way, or be
deemed a waiver of, Parent's rights under Sections 8 or 10 of this Agreement.
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Section 5. CERTAIN COVENANTS OF FISHER
5.1 ACCESS AND INVESTIGATION. During the Pre-Closing Period, Fisher shall,
and shall cause its Representatives to: (a) provide the Parent and the Parent's
Representatives with reasonable access to Fisher's Representatives, personnel
and assets and to all existing books, records, Tax Returns, work papers and
other documents and information relating to Fisher or the Merger Subs; and (b)
provide the Parent and the Parent's Representatives with such copies of the
existing books, records, Tax Returns, work papers and other documents and
information relating to Fisher or the Merger Subs, and with such additional
financial, operating and other data and information regarding Fisher or the
Merger Subs, as the Parent may reasonably request. Notwithstanding the
provisions of Section 12.17, paragraph 7 of the Letter of Intent shall remain in
effect through the Closing Date and shall bind the Parent, the Companies, and
the Designated Persons with respect to any Evaluation Material (as defined in
the Letter of Intent) provided to the Parent, the Companies or the Designated
Persons or their respective Representatives at any time during the Pre-Closing
Period.
5.2 OPERATION OF FISHER'S BUSINESS. During the Pre-Closing Period, unless
the Parent otherwise consents in writing:
(a) Fisher shall conduct its business and operations in the ordinary
course and in substantially the same manner as such business and operations have
been conducted prior to the date of this Agreement;
(b) Fisher shall use reasonable efforts to preserve intact its current
business organization, keep available the services of its current officers and
employees and maintain its relations and goodwill with all suppliers, customers,
landlords, creditors, employees and other Persons having business relationship
with Fisher;
(c) Fisher shall keep in full force all its insurance policies;
(d) Fisher shall cause its officers to report regularly to Parent
concerning the status of Fisher's business;
(e) Fisher shall not declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, and shall
not repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities;
(f) Except as permitted or contemplated herein, Fisher shall not sell,
issue or authorize the issuance of (i) any capital stock or other security, (ii)
any option, call, warrant or right to acquire, or relating to, any capital stock
or other security, or (iii) any instrument convertible into or exchangeable for
any capital stock or other security; provided, however, that Fisher may arrange
for the private placement of up to $1.2 million in debt that is convertible into
common stock of Fisher (on the basis of $1 in debt being convertible to one
share of common stock of Fisher) so long as Parent is afforded the opportunity
to participate in any such private placement if it so elects and so long as no
more than 1,200,000 shares of Fisher common stock are issued upon any such
conversion (unless Parent shall consent otherwise);
(g) Except as permitted or contemplated herein, Fisher shall not amend
or permit the adoption of any amendment to Fisher's articles of incorporation or
bylaws, or become a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(h) Fisher shall not form any subsidiary or acquire any equity interest
or other interest in any other Entity other than the Merger Subs;
(i) Fisher shall not make any capital expenditure, except for capital
expenditures that, when added to all other capital expenditures made on behalf
of Fisher during the Pre-Closing Period, do not exceed $30,000 in the aggregate;
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(j) Fisher shall not (i) enter into or become bound by, or permit any
of the assets owned or used by it to become bound by, any Material Contract, or
(ii) amend or prematurely terminate, or waive any material right or remedy
under, any Material Contract;
(k) Fisher shall not, other than in the ordinary course of business
consistent with past practice, (i) acquire, lease or license any right or other
asset from any other Person, (ii) sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person or (iii) waive or
relinquish any right, except for immaterial assets acquired, leased, licensed or
disposed of by Fisher pursuant to Contracts that are not Material Contracts;
(l) Fisher shall not (i) lend money to any Person, or (ii) incur or
guarantee any indebtedness, except that Fisher may make routine borrowings in
the ordinary course of business, under its existing lines of credit;
(m) Fisher shall not (i) establish, adopt or amend any Employee Benefit
Plan, (ii) pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (iii) hire any new employee whose aggregate annual compensation is
expected to exceed $35,000;
(n) Fisher shall not change any of its methods of accounting or
accounting practices in any respect;
(o) Fisher shall not make any Tax election;
(p) Fisher shall not commence or settle any Legal Proceeding;
(q) Fisher shall not enter into any material transaction or take any
other material action outside the ordinary course of business or inconsistent
with its past practices; and
(r) Fisher shall not agree or commit to take any of the actions
described in clauses "(e)" through "(q)" of this Section 5.2.
5.3 NOTIFICATION.
(a) During the Pre-Closing Period, Fisher shall promptly notify the
Parent in writing of:
(i) the discovery by Fisher of any event, condition, fact or
circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes an
inaccuracy in or breach of any representation or warranty
made by Fisher in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that
would cause or constitute an inaccuracy in or breach of any
representation or warranty made by Fisher in this Agreement
if (A) such representation or warranty had been made as of
the time of the occurrence, existence or discovery of such
event, condition, fact or circumstance, or (B) such event,
condition, fact or circumstance had occurred, arisen or
existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of Fisher; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in
Section 7 or Section 8 impossible or unlikely.
5.4 NO NEGOTIATION. During the Pre-Closing Period Fisher shall not,
directly or indirectly:
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(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Parent) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Parent) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any Person
(other than Parent) relating to a possible Acquisition Transaction;
provided, however, that Fisher may take any of the actions referred to in (a)
through (c) above to the extent Fisher's Board of Directors in good faith
determines that such action is required in order to discharge the Board of
Directors' fiduciary obligations under the Code, and, if Fisher's Board of
Directors determines in good faith in the exercise its fiduciary duty that any
such possible Acquisition Transaction would be of greater benefit to Fisher's
shareholders than the Mergers, Fisher may terminate this Agreement in accordance
with Section 9.1(i). In the event of such a termination, Fisher agrees to
reimburse the Companies for their Merger Fees (as defined in Section 12.3).
In addition, if the Acquisition Transaction accepted by Fisher's Board of
Directors in lieu of the Mergers are consummated, and the value of consideration
received by Fisher's shareholders as a result of such Acquisition Transaction
exceeds $3,000,000, at the closing of such Acquisition Transaction, Fisher shall
pay the Companies 25% of the amount by which such consideration exceeds
$3,000,000. Fisher shall have the option of making such payment in cash or in
the same form of consideration paid to Fisher shareholders as a result of such
Acquisition Transaction.
Fisher shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Fisher
during the Pre-Closing Period.
5.5 DUE DILIGENCE INVESTIGATION. Within 10 days following the restatement
date of this Agreement, Fisher shall complete its due diligence investigation of
the Companies. If such investigation reveals facts which lead Fisher reasonably
and in good faith to believe: (i) that the Companies intentionally withheld or
concealed material information requested by Fisher in connection with such due
diligence investigation; (ii) that the representations and warranties contained
in Section 2 are inaccurate in any material respect; or (iii) that there has
been a material adverse change in the Companies' business, assets, liabilities,
operations, financial performance or prospects since December 31, 1995, then
Fisher may, within 20 days following the date of this Agreement, terminate this
Agreement pursuant to Section 9.1(k). Fisher's due diligence investigation of
Parent shall not in any case diminish, obviate or otherwise affect the
representations or warranties contained in Section 2. Fisher's failure to
terminate this Agreement as provided above in this Section shall not affect in
any way or be deemed a waiver of Fisher's rights under Sections 7 or 10 of this
Agreement.
Fisher shall promptly notify the Parent in writing of any inquiry, proposal or
offer relating to a possible Acquisition Transaction that is received by Fisher
during the Pre-Closing Period.
Section 6. ADDITIONAL COVENANTS OF THE PARTIES
6.1 FILINGS AND CONSENTS. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Mergers and the other transactions contemplated by this
Agreement, and (b) shall use his, its or their best efforts to obtain each
Consent (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Mergers or any of the other transactions contemplated by this Agreement. The
Parent and the Companies shall promptly deliver to Fisher a copy of each such
filing made, each such notice given and each such Consent obtained by the
Companies during the Pre-Closing Period. Fisher shall promptly deliver to the
Parent a copy of each such filing made, each such notice given and each such
consent obtained by Fisher during the Pre-Closing Period.
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6.2 PROXY STATEMENT; OTHER FILINGS.
(a) Fisher and the Companies shall prepare, shall file with the SEC as
promptly as practicable and shall use all reasonable efforts to have cleared by
the SEC, a proxy statement with respect to the Shareholders' Meeting referred to
in Section 6.3, the changes in the articles of incorporation and Bylaws
contemplated in Section 1.4 hereof, the transfer of Fisher assets and
liabilities to the respective Merger Subs as contemplated in Section 1.1 hereof
and the payment of the Merger Consideration described in Section 1.5. The term
"Proxy Statement" shall mean such proxy statement at the time it initially is
mailed to Fisher's shareholders and all amendments or supplements thereto duly
filed and similarly mailed. Each of Fisher and the Companies agrees to correct
promptly (but in no event later than the date of the Shareholders' Meeting
referred to in Section 6.3) any information provided by it for use in the Proxy
Statement which contains any untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Fisher, Parent and the Companies shall cooperate with each
other in the preparation of such Proxy Statement.
(b) As soon as practicable after the date hereof, Fisher and the
Companies shall promptly prepare and file any other filings required under the
Exchange Act, the Securities Act or any other federal or state securities laws
relating to the Mergers and the transactions contemplated herein ("Other
Filings").
6.3 SHAREHOLDERS' APPROVALS. Fisher, in accordance with applicable law,
shall promptly (i) submit for approval by its shareholders the amendment to
Fisher's Articles of Incorporation described in Section 1.4(c)(iii) hereof, and
(ii) submit this Agreement and the transactions contemplated hereby for the
ratification of its shareholders; each to occur at an annual meeting of
shareholders (the "Shareholders' Meeting") to be held as soon as practicable.
Subject to the fiduciary duties of the Board of Directors of the Company under
applicable law, Fisher shall use its best efforts to obtain shareholder approval
and ratification.
6.4 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) neither the
Parent, the Companies nor any of the Designated Persons shall (and the Parent
and the Companies shall not permit any of their Representatives to) issue any
press release or make any public statement regarding this Agreement or the
Mergers, or regarding any of the other transactions contemplated by this
Agreement, without Fisher's prior written consent, and (b) Fisher will consult
with the Companies prior to issuing any press release or making any public
statement regarding the Mergers.
6.5 BEST EFFORTS. During the Pre-Closing Period, (a) the Parent, the
Companies and the Designated Persons shall use their reasonable best efforts to
cause the conditions set forth in Section 7 to be satisfied on a timely basis,
and (b) Fisher shall use its reasonable best efforts to cause the conditions set
forth in Section 8 to be satisfied on a timely basis.
6.6 EMPLOYMENT AGREEMENT. At the Closing, each of Larry Fisher and Paul
Harrison shall execute and deliver to Fisher Employment Agreements in a form
mutually acceptable to Fisher and the respective individuals entering into such
agreements. In addition, the existing employment agreements with Larry Fisher
and Gordon Random shall be terminated at or prior to Closing at no expense to
Fisher or the Companies.
6.7 TERMINATION OF EMPLOYEE PLANS. At the Closing, other than existing
commission arrangements with its employees, the Companies shall terminate all
bonus plans and other benefit plans under which any of its employees or former
employees may have any rights, and shall ensure that no employee or former
employee of the Companies has any rights thereunder and that any liabilities of
the Companies thereunder (including any such liabilities relating to services
performed prior to the Closing) are fully extinguished at no cost to the
Companies. All employees of the Companies will be included in the benefit plans
of Fisher at no transitional cost to such employees and will thereafter
participate in such benefit plans on the same basis as other employees of
Fisher.
6.8 FIRPTA MATTERS. At the Closing, the Companies shall deliver to Fisher
a statement (in such form as may be reasonably requested by counsel to Fisher)
to the effect that neither of the Companies has been a United States
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real property holding corporation within the meaning of Code (S) 897(c)(2)
during the applicable period specified in Code (S) 897(1)(A)(ii).
6.9 CONVERSION OF PREFERRED STOCK. On or prior to the Closing Date, all
outstanding shares of Fisher convertible preferred stock shall have been
converted into common stock of Fisher and such holders will have no other rights
against Fisher other than as a holder of common stock of Fisher.
Section 7. CONDITIONS PRECEDENT TO OBLIGATIONS OF FISHER
The obligations of Fisher to effect the Mergers and otherwise consummate the
transactions contemplated by this Agreement are subject to the satisfaction, at
or prior to the Closing, of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Companies, the Parent and the Designated Persons in this
Agreement and in each of the other agreements and instruments delivered to
Fisher in connection with the transactions contemplated by this Agreement shall
have been accurate in all material respects as of the date of this Agreement,
and shall be accurate in all material respects as of the Closing as if made at
the Closing.
7.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that the
Companies, the Parent or any of the Designated Persons is required to comply
with or to perform at or prior to the Closing shall have been complied with and
performed in all respects.
7.3 CONSENTS. All Consents required to be obtained in connection with the
Mergers and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.22 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
7.4 AGREEMENTS AND DOCUMENTS. Fisher shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) Employment Agreements executed by Larry Fisher and Paul Harrison in
a form mutually acceptable to Fisher and the respective individuals entering
into such agreements;
(b) the certificate referred to in Section 6.8, executed by the
Companies;
(c) estoppel certificates from the landlords of the premises currently
leased by the Companies, each dated as of a date not more than five (5) days
prior to the Closing Date and satisfactory in form and content to Fisher,
executed by such Persons as Fisher may reasonably specify;
(d) a legal opinion of Kilpatrick & Cody, dated as of the Closing Date,
in form and substance reasonably satisfactory to Fisher; and
(e) a certificate executed by the Companies, the Parent and the
Designated Persons and containing the representation and warranty of the
Companies, the Parent and each Designated Person that each of the
representations and warranties set forth in Section 2 is accurate in all
material respects as of the Closing Date as if made on the Closing Date and that
the conditions set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5 and 7.12 have been
duly satisfied (the "Companies' Closing Certificate").
7.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in each of the Companies' respective businesses, condition, assets,
liabilities, operations, financial performance or prospects since the date of
this Agreement.
7.6 TERMINATION OF EMPLOYEE PLANS. The Companies shall have provided
Fisher with evidence, satisfactory to Fisher, as to the termination of the plans
referred to in Section 6.9.
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7.7 FIRPTA COMPLIANCE. The Companies shall have provided Fisher with the
statement described in Section 6.9.
7.8 RULE 506. All applicable requirements of Rule 506 under the Securities
Act shall have been satisfied.
7.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Mergers
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Mergers that makes consummation of the Mergers illegal.
7.10 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Mergers.
7.11 FISHER SHAREHOLDERS MEETING. The Shareholders of Fisher shall have:
(i) approved the amendment to Fisher's Articles of Incorporation described in
Section 1.4(c)(iii) hereof; (ii) ratified this Agreement and the transactions
contemplated hereby; and (iii) ratified the acquisition by Fisher of all of the
outstanding capital stock of HALIS Software, Inc. pursuant to terms of that
certain Stock Purchase Agreement dated March 29, 1996 by and among Fisher, HALIS
L.L.C., Paul W. Harrison and James Askew (the "HALIS Acquisition").
7.12 RELATED PARTY DEBT. All debt obligations of the Companies to any
Related Parties shall have been paid or canceled, except such obligations
referred to on Exhibit D hereof.
7.13 INVESTMENT CERTIFICATION. Fisher shall have received a written
acknowledgment from each of the Designated Persons receiving common stock of
Fisher in connection with the Mergers that such Designated Person intends to
accept such common stock for investment purposes, such acknowledgment to be in a
form reasonably acceptable to Fisher.
7.14 HALIS ACQUISITION. All conditions to closing for the HALIS Acquisition
pursuant to the Stock Purchase Agreement described in Section 7.11(iii) shall
have been satisfied or waived prior to Closing.
Section 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARENT, THE
COMPANIES AND THE DESIGNATED PERSONS.
The obligations of the Companies, the Parent and the Designated Persons to
effect the Mergers and otherwise consummate the transactions contemplated by
this Agreement are subject to the satisfaction, at or prior to the Closing, of
the following conditions:
8.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Fisher in this Agreement and in each of the other agreements
and instruments delivered to the Parent in connection with the transactions
contemplated by this Agreement shall have been accurate in all material respects
as of the date of this Agreement, and shall be accurate in all material respects
as of the Closing as if made at the Closing.
8.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Fisher is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all respects.
8.3 CONSENTS. All Consents required to be obtained in connection with the
merger and the other transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
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8.4 AGREEMENTS AND DOCUMENTS.
(a) Fisher shall have entered into the Employment Agreements described
in Section 7.4(a);
(b) The employment agreements with Larry Fisher and Gordon Random shall
have been terminated as contemplated in Section 6.6
(c) The Parent shall have received a legal opinion of Smith, Gambrell &
Russell in form and substance reasonably satisfactory to Parent;
(d) The Parent shall have received a certificate executed by Fisher,
and containing the representation and warranty of Fisher that each of the
representations and warranties set forth in Section 3 is accurate in all
material respects as of the Closing Date as if made on the Closing Date and that
the conditions set forth in Sections 8.1, 8.2, 8.3, 8.4 and 8.5 have been duly
satisfied (the "Fisher Closing Certificate").
8.5 FISHER SHAREHOLDER MEETING. The shareholders of Fisher shall have:
(i) approved the amendment to Fisher's Articles of Incorporation described in
Section 1.4(c)(iii) hereof; (ii) ratified this Agreement and the transactions
contemplated hereby; and (iii) ratified the HALIS Acquisition.
8.6 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in Fisher's business, condition, assets, liabilities, operations,
financial performance or prospects since the date of this Agreement.
8.7 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Mergers
by the Companies shall have been issued by any court of competent jurisdiction
and remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Mergers that makes consummation of the Mergers by the
Companies illegal.
8.8 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Mergers or seeking to prohibit or limit
the exercise by Parent of any material right pertaining to its ownership of
stock of Fisher.
8.9 RELATED PARTY DEBT. All debt obligations of Fisher to any Fisher
Related Parties shall have been paid or canceled. For purposes of this Section
8.9, a "Fisher Related Party" shall mean (i) each individual who is, or who at
any time since December 31, 1992 has been, an officer or director of Fisher and
(ii) each individual who is, or since December 31, 1992 has been, a member of
the immediate family of any of the individuals referred to in clause (i) above;
and (iii) any trust or other Entity (other than Fisher) in which any one of the
individuals referred to in clauses (i) (ii) or (iii) above holds (or in which
more than one of such individuals collectively hold) beneficially or otherwise,
a material voting, proprietary or equity interest.)
8.10 FISHER'S FINANCIAL CONDITION IMMEDIATELY PRIOR TO CLOSING. Evidence,
in form reasonably satisfactory to Parent, is provided that Fisher, as of
December 31, 1995, and without contemplation of the Mergers, had working capital
of no less than $200,000.
8.11 HALIS ACQUISITION. All conditions to the closing of the HALIS
Acquisition pursuant to the Stock Purchase Agreement described in Section
7.11(iii) shall have been satisfied or waived prior to Closing.
8.12 COMPUCOM WAIVER. Fisher shall have obtained a Consent and Waiver, in
form and substance reasonably acceptable to the Companies, from Compucom
Acquisition Corp. ("Compucom") whereby Compucom consents to Fisher and the
Surviving Corporations marketing their products and services to the hospitality
and healthcare industries and marketing their network integration products and
services to a variety of industries in all geographic areas; and whereby
Compucom waives its rights under Section 1 of the Non-Competition Agreement
between Compucom and Fisher dated March 25, 1994 with respect to the foregoing
activities.
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Section 9. TERMINATION
9.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Fisher if Fisher reasonably determines that the timely
satisfaction of any condition set forth in Section 7 has become impossible
(other than as a result of any failure on the part of Fisher to comply with or
perform any covenant or obligation of Fisher set forth in this Agreement);
(b) by the Parent if the Parent reasonably determines that the timely
satisfaction of any condition set forth in Section 8 has become impossible
(other than as a result of any failure on the part of the Parent, the Companies
or any of the Designated Persons to comply with or perform any covenant or
obligation set forth in this Agreement or in any other agreement or instrument
delivered to Fisher);
(c) by Fisher at or after the Scheduled Closing Time if any condition
set forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(d) by the Parent at or after the Scheduled Closing Time if any
condition set forth in Section 8 has not been satisfied by the Scheduled Closing
Time;
(e) by Fisher if the Closing has not taken place on or before June 30,
1996 (other than as a result of any failure on the part of Fisher to comply with
or perform any covenant or obligation of Fisher set forth in this Agreement);
(f) by the Parent if the Closing has not taken place on or before June
30, 1996 (other than as a result of the failure on the part of the Parent, the
Companies or any of the Designated Persons to comply with or perform any
covenant or obligation set forth in this Agreement or in any other agreement or
instrument delivered to Fisher);
(g) by Fisher under the circumstances described in Section 4.3(b);
(h) by Parent under the circumstances described in Section 4.5;
(i) by Fisher under the circumstances described in Section 5.4;
(j) by Fisher under the circumstances described in Section 5.5; or
(k) by the mutual consent of Fisher and the Parent.
9.2 TERMINATION PROCEDURES. If Fisher wishes to terminate this Agreement
pursuant to Section 9.1(a), (c), (e), (g), (i) or (j), Fisher shall deliver to
the Parent a written notice stating that Fisher is terminating this Agreement
and setting forth a brief description of the basis on which Fisher is
terminating this Agreement. If the Parent wishes to terminate this Agreement
pursuant to Section 9.1(b), (d), (f), or (h), the Parent shall deliver to Fisher
a written notice stating that the Parent is terminating this Agreement and
setting forth a brief description of the basis on which the Parent is
terminating this Agreement.
9.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 9.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or liability arising from any prior breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Sections 12, as
well as paragraph 7 of the Letter of Intent. If Fisher terminates this
Agreement pursuant to Section 9.1(i) it will be liable to the Companies for the
reimbursements and payments described in Section 5.4, in lieu of any other
payments, claims or damages to the Parent, the Companies or the Designated
Persons on account of such termination.
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Section 10. INDEMNIFICATION, ETC.
10.1 INDEMNIFICATION BY THE PARENT AND THE DESIGNATED PERSONS. The Parent
and the Designated Persons, jointly and severally agree to indemnify Fisher and
the Surviving Corporations, and their respective current and future officers,
directors, employees, affiliates, successors and assigns, and hold them harmless
at all times after the date of this Agreement from and against and in respect
of, any and all liabilities, losses, damages, settlements, claims, costs and
expenses, including without limitation attorneys' fees, arising out of or due to
the breach of any representation, warranty or covenant of the Parent, the
Designated Persons or the Companies set forth in this Agreement or in any of the
exhibits or other documents delivered pursuant hereto relating to an event or
condition that arose prior to February 15, 1995, and any and all actions, suits,
proceedings, demands, assessments or judgments, and costs and expenses, incident
to any of the foregoing. Notwithstanding the foregoing, the Parent and the
Designated Persons shall have an obligation to indemnify Fisher and the
Surviving Corporations for any breach of a representation or warranty contained
in Section 2 of this Agreement if the event or condition giving rise to such
breach arose after February 15, 1995 and the Parent, the Companies or the
Designated Persons had actual knowledge of such event or condition on or prior
to the date of this Agreement.
10.2 INDEMNIFICATION BY FISHER AND THE SURVIVING CORPORATION. Fisher and
the Surviving Corporations agrees to indemnify the Parent and its current and
future members, officers, directors, employees, affiliates, successors and
assigns, and hold it harmless at all times after the date of this Agreement from
and against and in respect of any and all liabilities, losses, damages,
settlements, claims, costs and expenses, including, without limitation,
attorneys' fees, arising out of or due to the breach of any representation,
warranty or covenant of Fisher set forth in this Agreement or in any of the
exhibits or other documents delivered pursuant hereto, and any and all actions,
suits, proceedings, demands, assessments or judgments, and costs and expenses,
incident to the foregoing.
10.3 LIMITATIONS ON INDEMNIFICATION. Notwithstanding any provision of this
Section 10 to the contrary:
(a) The Parent and the Designated Persons shall not be liable for
payment of any claim for indemnification under Section 10.1 unless and until the
aggregate amount of all indemnifiable claims under Section 10.1 shall exceed
$50,000, in which case the Parent and the Designated Persons shall be liable
only for payment of the amount by which such claims exceed such $50,000
threshold. The total liability of the Parent and the Designated Persons under
Section 10.1 shall not in any event exceed $250,000 in the aggregate.
(b) Fisher and the Surviving Corporations shall not be liable for
payment of any claim for indemnification under Section 10.2 unless and until the
aggregate amount of indemnifiable claims under Section 10.2 shall exceed
$50,000, in which case Fisher or the Surviving Corporations, shall be liable
only for payment of the amount by which such claims exceed such $50,000
threshold. The total aggregate liability of Fisher and the Surviving
Corporations under Section 10.2 shall not in any event exceed $250,000 in the
aggregate.
(c) No party shall have any obligation with respect to a claim pursuant
to Sections 10.1 or 10.2 unless the party asserting such claim shall have
delivered a notice of such claim in good faith in accordance with Section
10.4(a) on or prior to the first day of the twelfth (12th) calendar month
following the Closing Date.
10.4 PROCEDURE.
(a) The Parent and the Designated Persons, on the one hand, and Fisher
and the Surviving Corporations, on the other hand, each agree to promptly notify
each other if any of them becomes aware of any liability, loss, damage,
settlement, claim, cost or expense with respect to which indemnity may be
asserted under this Section 10 (hereinafter referred to as a "claim"), provided
that failure to notify the indemnifying party shall not relieve such party from
liability except to the extent such party is prejudiced thereby. Failure to
deliver a notice prior to the date referred to in Section 10.3(c) shall,
however, absolutely bar any claim for indemnity for such claim. The party
entitled to indemnity (the "Indemnitee") shall permit the party responsible for
such indemnity (the "Indemnitor") to assume the defense of any such claim or any
litigation resulting from such claim.
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(b) If the Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, the Indemnitee may participate, at its expense,
in the defense of such claim or litigation provided that the Indemnitor shall
direct and control the defense of such claim or litigation. Except with the
written consent of Indemnitee, which consent shall not be unreasonably withheld,
the Indemnitor shall not, in the defense of such claim or any litigation
resulting therefrom, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnitee of a release from all liability
in respect of such claim or litigation.
(c) If the Indemnitor shall not assume the defense of any such claim or
litigation resulting therefrom, the Indemnitee may defend against such claim or
litigation in such manner as it may deem appropriate. The Indemnitee shall not
enter into any settlement of such claim or litigation without the written
consent of the Indemnitor, which consent shall not be unreasonably withheld.
The Indemnitor shall promptly reimburse the Indemnitee from time to time for any
and all amounts paid for or incurred by the Indemnitee and for which the
Indemnitor is obligated pursuant to this Section 10, upon submission by the
Indemnitee of a statement reflecting the basis upon which such indemnification
is sought and the computation of such amounts.
(d) The Indemnitee shall make available to the Indemnitor or its
Representatives all records and other materials required by them and in the
possession or under control of the Indemnitee, for the use of the Indemnitor and
its Representatives in defending any such claim, and shall in other respects
give reasonable cooperation in such defense.
Section 11. REGISTRATION OF SHARES
11.1 REGISTRATION STATEMENT.
(a) After the Closing Date, Fisher shall file with the SEC a
registration statement (the "Registration Statement") with respect to resales of
shares of Fisher Common Stock received in the Mergers by each Participating
Holder (as defined in Section 11.1(d)). Fisher shall use reasonable efforts:
(a) to cause the Registration Statement to be declared effective by the SEC on
or before the date 90 days after the Closing Date; and (b) to cause the
Registration Statement to remain effective until the earlier of (i) the third
anniversary of the Closing Date, or (ii) the date on which the distribution
described in the Registration Statement is completed as to all Participating
Holders (as defined in subsection (c) below).
(b) Fisher shall (at its own expense):
(i) prepare and file promptly with the SEC such amendments to the
Registration Statement, and such supplements to the related
prospectus, as may be required in order to comply with the
applicable provisions of the Securities Act, including,
without limitation, to maintain the effectiveness or currency
thereof;
(ii) furnish to the respective Participating Holders such numbers
of copies of a prospectus conforming to the requirements of
the Securities Act as they may reasonably request in order to
facilitate the disposition of the shares covered by the
Registration Statement; and
(iii) use reasonable efforts to register and qualify the shares
covered by the Registration Statement under the Securities
laws of such states as the respective Participating Holders
may reasonably request, provided, however, that Fisher shall
not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general
consent to service of process in any of such states.
(c) Notwithstanding anything to the contrary herein, no Person who
receives Fisher Common Stock in the Mergers shall have any rights under this
Section 11 unless such Person executes and delivers to Fisher, a
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written agreement, reasonably satisfactory in form and content to Fisher,
confirming that such Person wishes to be allowed to sell Fisher Common Stock
pursuant to the Registration Statement and agrees to be bound by the provisions
of this Section 11. (A Person who holds any of the Fisher Common Stock
delivered in the Mergers and who executes and delivers such an agreement is
referred to in this Section 11 as a "Participating Holder.") Any Participating
Holder who delivers such an agreement more than 30 days after the Closing Date
may be required to pay, as a condition to exercising rights under this Section
11, the amount of incremental expenses incurred by Fisher in complying
therewith. No Participating Holder shall sell any Fisher Common Stock pursuant
to the Registration Statement at any time Fisher shall have furnished written
notice that the Registration Statement is not then effective or the prospectus
that forms a part thereof is not current.
(d) Notwithstanding anything to the contrary contained herein, all of
Fisher's obligations under this Section 11.1 (including its obligation to file
and maintain the effectiveness of the Registration Statement) shall terminate
and expire as of the earliest date on which all of the shares of Fisher Common
Stock issued in the Mergers can be sold without any restrictions as to volume or
manner of sale pursuant to subsection (k) of Rule 144 under the Securities Act.
11.2 INDEMNIFICATION.
(a) Fisher agrees to indemnify, to the extent permitted by law, each
Participating Holder against all Damages suffered by such Participating Holder
as a result of any untrue or alleged untrue statement of material fact contained
in the Registration Statement or in the related prospectus or preliminary
prospectus (or in any amendment thereof or supplement thereto) or as a result of
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such untrue statement or omission or alleged untrue statement or
omission results from or is contained in any information furnished in writing to
Fisher by such Participating Holder for use therein or results from such
Participating Holder's failure to deliver a copy of a Registration Statement or
related prospectus (or any amendment thereof or supplement thereto) after Fisher
has furnished such Participating Holder with a sufficient number of copies
thereof.
(b) In connection with the Registration Statement, each Participating
Holder (i) shall furnish to Fisher in writing such information and affidavits as
Fisher reasonably requests for use in connection with such Registration
Statement or the related prospectus, and (ii) to the extent permitted by law,
will indemnify Fisher, its directors and officers and each Person who controls
Fisher (within the meaning of the Securities Act) against all Damages resulting
from any untrue or alleged untrue statement of material fact contained in such
Registration Statement or in the related prospectus or preliminary prospectus
(or in any amendment thereof or supplement thereto) or from any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission or alleged untrue statement or omission results
from or is contained in any information or affidavit furnished in writing by
such Participating Holder.
(c) Any Person entitled to indemnification under this Section 11 will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (ii) unless in the indemnified
party's reasonable judgment a conflict of interest exists between the
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). Any indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will pay the fees and expenses of
only one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified party and any other
indemnified party with respect to such claim (in which case the indemnifying
party will pay the fees and expenses of additional counsel).
11.3 DELAY OF REGISTRATION. For a period not to exceed 90 days, Fisher may
delay the filing or effectiveness of the Registration Statement, or suspend the
use of the Registration Statement (and the Participating Holders hereby agree
not to offer or sell any shares of Fisher Common Stock pursuant to the
Registration Statement during such period),
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at any time when Fisher, in its reasonable judgment (confirmed in writing if
requested by any Participating Holder), believes:
(a) that the filing of a Registration Statement or the offering or sale
of Fisher Common Stock pursuant thereto, or the making of any required
disclosure in connection therewith, could reasonably be expected to have a
material adverse effect upon (i) a pending or scheduled offering of Fisher's
securities, (ii) an acquisition, merger, consolidation, joint venture, equity
investment or other potentially significant transaction or event, or (iii) any
negotiations, discussions or proposal with respect to any of the foregoing; and
(b) that the failure to disclose any material information with respect
to any of the foregoing could result in a violation of the Securities Act, the
Exchange Act or any provision of any state securities law.
In the event Fisher reasonably believes that any of the foregoing circumstances
are continuing after such 90-day period, it may, with the consent of the holders
of a majority of the shares of Fisher Common Stock subject (or to be subject) to
the Registration Statement (which consent shall not be unreasonably withheld)
extend such 90-day period for one additional 30-day period.
11.4 AMENDMENT OF SECTION 11. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this Section 11 may be amended by
Fisher at any time with the consent of the holders of a majority of the shares
of Fisher Common Stock that are at that time subject (or to be subject) to the
Registration Statement.
Section 12. MISCELLANEOUS PROVISIONS
12.1 DESIGNATED PERSONS' AGENT. The Designated Persons hereby irrevocably
appoint Paul W. Harrison as their agent for purposes of Sections 10 and 12.10(d)
(the "Designated Persons' Agent"), and Paul W. Harrison hereby accepts this
appointment as the Designated Persons' Agent. Fisher shall be entitled to deal
exclusively with the Designated Persons' Agent on all matters relating to
Sections 10 and 12.10(d), and shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or purported
to be executed on behalf of any Designated Person by the Designated Persons'
Agent, and on any other action taken or purported to be taken on behalf of any
Designated Person by the Designated Persons' Agent, as fully binding upon such
Designated Person. If the Designated Persons' Agent shall die, become disabled
or otherwise be unable to fulfill his responsibilities as agent of the
Designated Persons, then the Designated Persons shall, within ten (10) days
after such death or disability, appoint a successor agent and, immediately
thereafter, shall notify Fisher of the identity of such successor. Any such
successor shall become the "Designated Persons' Agent" for purposes of Sections
10 and 12.10(d). If for any reason there is no Designated Persons' Agent at any
time, all references herein to the Designated Persons' Agent shall be deemed to
refer to the Designated Persons.
12.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
12.3 FEES AND EXPENSES. Subject to Sections 10 and 5.4, all fees, costs and
expenses (including legal fees and accounting fees) that have been incurred or
that are incurred in the future by such party in connection with the
transactions contemplated by this Agreement, including all fees, costs and
expenses incurred by such party in connection with or by virtue of (a) any
investigation and review conducted by such party of the other parties' business
(and the furnishing of information in connection with such investigation and
review), (b) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule) and all agreements, certificates, opinions
and other instruments and documents delivered or to be delivered in connection
with the transactions contemplated by this Agreement, (c) the preparation and
submission of any filing or notice required to be made or given in connection
with any of the transactions contemplated by this Agreement, and the obtaining
of any Consent required to be obtained in connection with any of such
transactions, and (d) the consummation of the Mergers (collectively, the "Merger
Fees") shall be paid: (i) by Fisher,
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if incurred by Fisher or the Merger Subs; and (ii) by the Companies, if incurred
by the Companies, Parent or the Designated Persons.
12.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
12.5 NOTICES. Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Fisher:
Fisher Business Systems, Inc.
1950 Spectrum Circle
Suite 400
Marietta, Georgia 30067
Attention: Larry Fisher, President
Facsimile: (404) 992-3404
with a copy to:
Smith, Gambrell & Russell
3343 Peachtree Road, N.E.
Suite 1800
Atlanta, Georgia 30326-1010
Attn: William L. Meyer, Esq.
Facsimile: (404) 264-2652
if to the Parent:
AUBIS, L.L.C.
200 Hembree Park Drive
Suite K
Roswell, Georgia 30076
Attn: Paul Harrison, Chairman & CEO
Facsimile: (770) 667-2129
with a copy to:
Kilpatrick & Cody
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30309-4530
Attn: Brian L. Schleicher, Esq.
Facsimile: (404) 815-6555
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if to the Companies:
AUBIS Hospitality Systems, Inc.
200 Hembree Park Drive
Suite K
Roswell, Georgia 30076
Attn: Paul W. Harrison
Facsimile: (770) 667-2129
AUBIS Systems Integration, Inc.
200 Hembree Park Drive
Suite K
Roswell, Georgia 30076
Attn: Paul W. Harrison
Facsimile: (770) 667-2129
if to any of the Designated Persons:
c/o Paul W. Harrison
200 Hembree Park Drive
Suite K
Roswell, Georgia 30076
Facsimile: (770) 667-2129
12.6 CONFIDENTIALITY. On and at all times after the Closing Date, the
Parent and each Designated Person shall keep confidential, and shall not use or
disclose to any other Person, any non-public document or other non-public
information in the Parent's or such Designated Person's possession that relates
to the business of the Companies or Fisher.
12.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
12.8 HEADINGS. The bold-faced Section headings contained in this Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
12.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
12.10 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and governed
in all respects by, the internal laws of the State of Georgia (without giving
effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
to otherwise commenced in any state or federal court located in Fulton County,
Georgia. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in
Fulton County, Georgia (and each appellate court located in
the State of Georgia) in connection with any such legal
proceeding;
(ii) agrees that each state and federal court located in Fulton
County, Georgia shall be deemed to be a convenient forum;
and
A-39
<PAGE>
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any
state or federal court located in Fulton County, Georgia, any
claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Agreement or the subject
matter of this Agreement may not be enforced in or by such
court.
(c) The Designated Persons irrevocably constitute and appoint the
Designated Persons' Agent as their agent to receive notices hereunder and
service of process in connection with any legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement.
12.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Parent, the Companies and their successors and assigns (if any); the Designated
Persons and their respective personal representatives, executors,
administrators, estates, heirs, successors and assigns (if any); Fisher and its
successors and assigns (if any). This Agreement shall inure to the benefit of:
the Parent, the Designated Persons; Fisher; and the respective successors, heirs
personal representatives and assigns (if any) of the foregoing.
12.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and
remedies of the parties hereto shall be cumulative (and not alternative). The
parties to this Agreement agree that, in the event of any breach of threatened
breach by any party to this Agreement of any covenant, obligation or other
provision set forth in this Agreement for the benefit of any other party to this
Agreement, such other party shall be entitled (in addition to any other remedy
that may be available to it) to (a) a decree or order of specific performance or
mandamus to enforce the observance and performance of such covenant, obligation
or other provision, and (b) an injunction restraining such breach or threatened
breach.
12.13 WAIVER.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
12.14 AMENDMENTS. Subject to Section 11.4, this Agreement may not be
amended, modified, altered or supplemented other than by means of a written
instrument duly executed and delivered on behalf of all of the parties hereto.
12.15 SEVERABILITY. In the event that any provision of this Agreement,
or the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
12.16 PARTIES IN INTEREST. Except for the provisions of Section 10,
none of the provisions of this Agreement is intended to provide any rights or
remedies to any Person other than the parties hereto and their respective
successors, heirs, personal representatives and assigns (if any).
A-40
<PAGE>
12.17 ENTIRE AGREEMENT. This Agreement and the other agreements
referred to herein set forth the entire understanding of the parties hereto
relating to the subject matter hereof and thereof and supersede all prior
agreements and understandings among or between any of the parties relating to
the subject matter hereof and thereof, including without limitation the Letter
of Intent (other than paragraph 7 thereof, which shall survive to the extent
provided herein).
12.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including," and
variations thereof, shall not be deemed to be terms of limitation, but rather
shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
The parties hereto have caused this Amended and Restated Agreement to be
restated, executed and delivered as of March 29, 1996.
"FISHER"
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Larry Fisher
-------------------------------------
Its: President
------------------------------------
"PARENT"
AUBIS, L.L.C.,
a Georgia limited liability company
By: /s/ Paul W. Harrison
-------------------------------------
Its: Managing Member
------------------------------------
"COMPANIES"
AUBIS HOSPITALITY SYSTEMS, INC.,
a Georgia corporation
By: /s/ Paul W. Harrison
-------------------------------------
Title: President
----------------------------------
A-41
<PAGE>
AUBIS SYSTEMS INTEGRATION, INC.,
a Georgia corporation
By: /s/ Paul W. Harrison
-------------------------------------
Title: President
----------------------------------
"DESIGNATED PERSONS"
PAUL HARRISON ENTERPRISES, INC.
By: /s/ Paul Harrison
-------------------------------------
Paul Harrison
Its: President
------------------------------------
/s/ Nathan L. Lipson
----------------------------------------
Nathan L. Lipson, in his
individual capacity
/s/ Gordon E. Random
----------------------------------------
Gordon E. Random, in his
individual capacity
/s/ Paul Harrison
----------------------------------------
Paul Harrison, in his
individual capacity
A-42
<PAGE>
EXHIBIT A
Designated Persons
Names
-----
Paul Harrison Enterprises, Inc.
Paul Harrison
Nathan L. Lipson
Gordon E. Random
A-43
<PAGE>
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a material
portion of the Companies' businesses or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock or
other equity security of the Companies, Fisher or the Merger Subs, as the case
may be; (ii) any option, call, warrant or right (whether or not immediately
exercisable) to acquire, or otherwise relating to, any capital stock or other
equity security of the Companies, Fisher or the Merger Subs, as the case may be;
or (iii) any security, instrument or obligation that is or may become
convertible into or exchangeable for any capital stock or other equity security
of the Companies, Fisher or the Merger Subs, as the case may be; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving the Companies, Fisher or the
Merger Subs, as the case may be.
AGREEMENT. "Agreement" shall mean the Amended and Restated Agreement and
Plan of Merger and Reorganization to which this Exhibit B is attached (including
the Disclosure Schedule), as it may be further amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which the Companies are a party; (b) by which the Companies or any of their
assets are or may become bound or under which the Companies have, or may become
subject to, any obligation; or (c) under which the Companies have or may acquire
any right or interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to the Companies or otherwise used by the
Companies.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Fisher on behalf of the Parent,
the Companies and the Designated Persons.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction of any nature (including any restriction
on the voting of any security, any restriction on the transfer of any security
or other
A-44
<PAGE>
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
ENVIRONMENTAL LAW. "Environmental Law" means any federal, state, local or
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitute, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on the Companies if such violation or other
matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement or
in the Parent's and Designated Persons' Closing Certificate but for the presence
of "Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) would have a material
adverse effect on either of the Companies' business, condition, assets,
liabilities, operations, financial performance or prospects.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental Concern"
include chemicals, pollutants, contaminants, wastes, toxic substances, asbestos,
PCBs, petroleum and petroleum products and any other substance that is now or in
the future regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset; or (b) right to use or exploit
any of the foregoing.
REPRESENTATIVES "Representatives" shall mean officers, directors,
employees, agents, attorneys, accounts, advisors and representatives.
A-45
<PAGE>
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any related charge or amount
(including any fine, penalty or interest), imposed, assessed or collected by or
under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
A-46
<PAGE>
EXHIBIT C
Directors and Officers of Fisher and Surviving Corporations After the Mergers
A. FISHER
------
Directors
---------
1. Larry Fisher
2. Jeff Brenner
3. Paul W. Harrison
4. Nate Lipson
5. [To be determined by Paul W. Harrison]
6. [To be determined mutually by Pual W. Harrison and Larry Fisher]
7. [To be determined mutually by Paul W. Harrison and Larry Fisher]
Officers
--------
Paul W. Harrison - Chairman & CEO
Larry Fisher - President & COO
B. SURVIVING CORPORATION #1 (AHS MERGER SUB)
Directors
---------
Paul W. Harrison
Larry Fisher
Nate Lipson
Officers
--------
Paul W. Harrison - Chairman and Chief Executive Officer
C. SURVIVING CORPORATION #2 (ASI MERGER SUB)
Directors
---------
Paul W. Harrison
Larry Fisher
Nate Lipson
Officers
--------
Paul W. Harrison - Chairman and Chief Executive Officer
A-47
<PAGE>
EXHIBIT D
Related Party Debt
(1) Indebtedness payable to AUBIS, L.L.C. in an amount not to exceed $107,500.
(2) Promissory Notes payable to Nathan I. Lipson in the original amount of:
<TABLE>
<CAPTION>
Date
--------
<S> <C>
$ 10,000 07/15/94
$ 32,000 08/22/94
$ 5,000 10/06/95
$ 6,000 10/18/94
$ 6,000 11/01/94
$ 6,000 12/15/95
$100,000 02/08/96
--------
Total $165,000
========
</TABLE>
(3) Promissory Note from AHS payable to Debbi L. Blackburn dated November 17,
1995 in the principal amount of $21,100 as replaced by that certain
Promissory Note dated March 28, 1996 in the original principal amount of
$37,527.15.
(4) Promissory Note from AHS payable to Paul W. Harrison in the original amount
of $9,000 dated December 19, 1995.
A-48
<PAGE>
FIRST AMENDMENT TO AMENDED
AND RESTATED AGREEMENT AND PLAN OF MERGER
This First Amendment to Amended and Restated Agreement and Plan of
Merger is entered into as of September 27, 1996 by and among Fisher Business
Systems, Inc., a Georgia corporation ("Fisher"), Aubis, L.L.C., a Georgia
limited liability company ("Parent"), Aubis Hospitality Systems, inc., a Georgia
corporation and wholly-owned subsidiary of the Parent, ("AHS"); Aubis Systems
Integration, Inc., a Georgia corporation and a wholly-owned subsidiary of the
Parent ("ASI") (AHS and ASI are hereinafter sometimes referred to collectively
as the "Companies"), Paul Harrison Enterprises, Inc., a Georgia corporation,
Nathan Lipson, Gordon Random and Paul Harrison, all individual residents of
Georgia.
A. The parties hereto entered into an Agreement and Plan of Merger
and Reorganization as of December 31, 1995, which was amended and restated in an
Amended and Restated Agreement and Plan of Merger and Reorganization as of March
29, 1996 (such agreement, as amended and restated, shall be referred to
hereinafter as the "Original Agreement").
B. The parties wish to amend the Original Agreement as provided
herein.
A G R E E M E N T
The parties hereby amend the Original Agreement as follows:
1. All capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Original Agreement.
2. Section 1.4(e) of the Original Agreement is hereby deleted and the
following new Section 1.4(e) is hereby substituted in its place:
"(e) Immediately following the Closing, Fisher's Board of Directors
shall cause the number of seats on such Board to increase from four members to
seven members. As soon as practicable after the Closing, Fisher's Board of
Directors shall elect three members to fill the newly created vacancies, two of
whom shall be mutual nominees of Larry Fisher and Paul Harrison, the other of
whom shall be a nominee of Paul Harrison."
3. FAAC shall be added as a party to the Original Agreement and shall
be the Merger Sub referred to therein.
4. Section 1.5(a), fourth line, of the Original Agreement is hereby
amended by changing "10,500,000" to "10,000,000."
5. Section 9.1(f) is hereby amended by changing "June 30, 1996" to
"November 30, 1996."
6. AUBIS hereby consents to the offer and sale by Fisher of (i) up to
$1.5 million in debt that is convertible into common stock of Fisher (on the
basis of $1.00 in debt being convertible to one share of Common Stock of Fisher)
so long as AUBIS is afforded the opportunity to participate in such offering if
it so elects and so long as no more than 1,500,000 shares of Fisher Common Stock
are issued upon any such conversion, and (ii) up to 5,000,000 shares of Fisher
Common Stock and 1,666,667 Common Stock Purchase Warrants. This consent is
intended to modify, and is not in addition to, the permitted offerings set
forth in Section 5.2(f) of the Original Agreement.
Except as expressly amended hereby, the Original Agreement shall
continue in full force and effect.
A-49
<PAGE>
The parties have caused this First Amendment to be executed and
delivered as of the date first stated above.
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Larry Fisher
-------------------------------------
Its: Chairman
------------------------------------
AUBIS, L.L.C., a Georgia
limited liability company
By: /s/ Paul W. Harrison
-------------------------------------
Its: Managing Member
------------------------------------
AUBIS HOSPITALITY SYSTEMS, INC.,
a Georgia corporation
By: /s/ Paul W. Harrison
-------------------------------------
Its: President
------------------------------------
AUBIS SYSTEMS INTEGRATION, INC.,
a Georgia corporation
By: /s/ Paul W. Harrison
-------------------------------------
Its: President
------------------------------------
PAUL HARRISON ENTERPRISES, INC.,
a Georgia corporation
By: /s/ Paul W. Harrison
-------------------------------------
Its: President
------------------------------------
/s/ Nathan Lipson (SEAL)
----------------------------------
NATHAN LIPSON
/s/ Gordon Random (SEAL)
----------------------------------
GORDON RANDOM
/s/ Paul Harrison (SEAL)
----------------------------------
PAUL HARRISON
All individual residents of
the State of Georgia
A-50
<PAGE>
APPENDIX B
STOCK PURCHASE AGREEMENT
BETWEEN
FISHER BUSINESS SYSTEMS, INC.
AS BUYER
AND
HALIS, L.L.C.
AS SELLER
AND
PAUL W. HARRISON AND
JAMES ASKEW
AS SIGNIFICANT MEMBERS OF SELLER
FOR THE PURCHASE AND
SALE OF ALL ISSUED AND OUTSTANDING
CAPITAL STOCK OF
HALIS SOFTWARE, INC.
DATED AS OF MARCH 29, 1996
B-1
<PAGE>
TABLE OF CONTENTS
-----------------
Page
ARTICLE I SALE OF STOCK
1.1 Sale of Stock...................................... B-6
1.2 Purchase Price..................................... B-6
1.3 Closing of Purchase and Sale....................... B-6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLER
2.1 Due Incorporation and Qualification................ B-7
2.2 Outstanding Capital Stock.......................... B-7
2.3 Options or Other Rights............................ B-7
2.4 Title To Stock..................................... B-7
2.5 Subsidiaries and Investments....................... B-7
2.6 Articles of Incorporation and By-Laws.............. B-7
2.7 Books and Records.................................. B-8
2.8 Authority of Seller and the Company................ B-8
2.9 Financial Statements............................... B-8
2.10 No Undisclosed Liabilities......................... B-9
2.11 Recent Developments................................ B-9
2.12 Litigation......................................... B-9
2.13 Taxes.............................................. B-9
2.14 Title to Properties; Assets Complete.............. B-10
2.15 Compliance with Laws.............................. B-10
2.16 Contracts and Other Agreements.................... B-10
2.17 Software.......................................... B-12
2.18 Leases............................................ B-12
2.19 Accounts and Notes Receivable..................... B-12
2.20 Fixed Assets...................................... B-13
2.21 Trade Name and Other Intangibles.................. B-13
2.22 Suppliers and Customers........................... B-13
2.23 Labor Relations; Employees........................ B-13
2.24 Employee Benefit Plans............................ B-14
2.25 Insurance......................................... B-15
2.26 Environmental Matters............................. B-15
2.27 Officers, Directors and Key Employees............. B-16
2.28 Restrictive Documents............................. B-16
2.29 Franchises and Licenses........................... B-16
2.30 Transactions with Affiliated Parties.............. B-16
2.31 Bank Accounts and Powers of Attorney.............. B-16
2.32 Absence of Changes................................ B-16
2.33 Disclosure........................................ B-17
2.34 Broker's or Finder's Fees......................... B-17
2.35 Copies of Documents............................... B-17
ARTICLE III REPRESENTATIONS OF BUYER
3.1 Incorporation and Qualification................... B-17
3.2 Articles of Incorporation and By-Laws............. B-17
3.3 Authority of Buyer................................ B-17
3.4 Securities Compliance............................. B-18
3.5 Pending Actions................................... B-19
3.6 Capital Stock..................................... B-19
B-2
<PAGE>
3.7 Absence of Changes................................... B-19
3.8 Accuracy of SEC Documents............................ B-19
3.9 Broker's or Finder's Fees............................ B-19
ARTICLE IV COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
4.1 Operation in Ordinary Course......................... B-20
4.2 Notice of Events..................................... B-20
4.3 Exclusive Dealing.................................... B-20
4.4 Examinations and Investigations...................... B-20
4.5 Affiliate Indebtedness Owed to the Company........... B-21
4.6 Affiliate Indebtedness Owed by the Company........... B-21
ARTICLE V CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER
TO CLOSE
5.1 Representations and Covenants........................ B-21
5.2 Litigation........................................... B-21
5.3 Net Worth and Cash of the Company.................... B-21
5.4 Governmental Permits and Approvals................... B-22
5.5 Third Party Consents................................. B-22
5.6 Transfer Taxes....................................... B-22
5.7 Estoppel Certificates................................ B-22
5.8 No Material Adverse Change........................... B-22
5.9 Books and Records.................................... B-22
5.10 Good Standing Certificates, Etc...................... B-22
5.11 Non-Compete Agreements............................... B-22
5.12 Subscription Agreement............................... B-22
5.13 Authorization of Shares.............................. B-22
5.14 Ratification of Agreement............................ B-22
5.15 Closing of AUBIS Acquisition......................... B-22
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER
TO CLOSE
6.1 Representations and Covenants........................ B-23
6.2 Litigation........................................... B-23
6.3 Governmental Permits and Approvals................... B-23
6.4 Resolutions.......................................... B-23
6.5 Good Standing Certificates, etc...................... B-23
6.6 Authorization of Shares.............................. B-23
6.7 Ratification of Agreement............................ B-23
6.8 Closing of AUBIS Acquisition......................... B-23
ARTICLE VII ACTIONS TO BE TAKEN AT THE CLOSING
7.1 Stock Certificates................................... B-23
7.2 Purchase Price....................................... B-24
7.3 Opinion of Counsel to the Sellers.................... B-24
7.4 Opinion of Counsel to the Buyer...................... B-24
7.5 Resignations of Directors and Officers............... B-24
7.6 Closing Certificate of the Seller.................... B-24
7.7 Closing Certificate of the Buyer..................... B-24
7.8 Other Documents and Certificates..................... B-24
7.9 Election of Board of Directors....................... B-24
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNIFICATION
8.1 Survival of Representations and Warranties........... B-24
B-3
<PAGE>
8.2 Seller's and Principals' Indemnity Agreement.............. B-24
8.3 Buyer's Indemnity Agreement............................... B-25
8.4 Indemnification Procedure................................. B-26
8.5 Set-off................................................... B-26
8.6 Limitations on Liability of Seller and Principals......... B-26
ARTICLE IX TERMINATION OF AGREEMENT
9.1 Termination............................................... B-26
9.2 Survival.................................................. B-27
ARTICLE X REPRESENTATIONS AND WARRANTIES OF SELLER IN CONNECTION
WITH OFFER OF BUYER'S STOCK
10.1 Accredited Investor....................................... B-27
10.2 Acquisition for Investment................................ B-27
10.3 Unregistered Securities................................... B-27
10.4 Disclosure................................................ B-28
ARTICLE XI REGISTRATION OF SHARES
11.1 Registration Statement.................................... B-28
11.2 Indemnification........................................... B-29
11.3 Delay of Registration..................................... B-29
11.4 Amendment of Section 11................................... B-30
ARTICLE XII MISCELLANEOUS
12.1 Publicity................................................. B-30
12.2 Knowledge................................................. B-30
12.3 Gender.................................................... B-30
12.4 Expenses.................................................. B-30
12.5 Brokerage Commissions and Finder's Fees................... B-30
12.6 Entire Agreement.......................................... B-31
12.7 Waivers and Consents...................................... B-31
12.8 Notices................................................... B-31
12.9 Rights of Third Parties................................... B-31
12.10 Headings.................................................. B-32
12.11 Governing Law............................................. B-32
12.12 Jurisdiction.............................................. B-32
12.13 Parties in Interest....................................... B-32
12.14 Counterparts.............................................. B-32
12.15 Severability.............................................. B-32
12.16 Arbitration............................................... B-32
LIST OF SCHEDULES
-----------------
Schedule 2.1 - Due Incorporation and Qualification
Schedule 2.2 - Outstanding Capital Stock
Schedule 2.6 - Articles of Incorporation and By-Laws
Schedule 2.8 - Consents Required for Seller
Schedule 2.9 - Financial Statements
Schedule 2.11 - Recent Developments
Schedule 2.12 - Litigation
Schedule 2.13 - Taxes
B-4
<PAGE>
Schedule 2.15 - Compliance with Laws
Schedule 2.16 - Contracts and Other Agreements
Schedule 2.18 - Leases
Schedule 2.19 - Accounts Receivable
Schedule 2.20 - Fixed Assets
Schedule 2.21 - Trade Names and Other Intangibles
Schedule 2.22 - Suppliers and Customers
Schedule 2.24 - Employee Benefit Plans
Schedule 2.25 - Insurance
Schedule 2.26 - Officers, Directors and Key Employees
Schedule 2.29 - Franchises and Licenses
Schedule 2.30 - Transactions with Affiliated Parties
Schedule 2.31 - Bank Accounts and Powers of Attorney
B-5
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of the 29th day of March, 1996, by and
among FISHER BUSINESS SYSTEMS, INC., a Georgia corporation ("Buyer"), HALIS,
L.L.C., a Georgia limited liability company ("Seller"), the owner of all the
issued and outstanding shares of capital stock of HALIS SOFTWARE, INC., a
Georgia corporation (the "Company"), and Paul W. Harrison and James E. Askew,
the significant members of Seller (the "Principals").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, the Company is the surviving corporation of a merger effected on
March 7, 1996, between ProHealth Solutions, Inc. ("PSI") and HALIS Software,
Inc. ("HSI"), both Georgia corporations;
WHEREAS, Seller owns all 1,000 shares of common stock, no par value, of the
Company, being all of the issued and outstanding shares of the capital stock of
the Company (the "Stock");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, the Stock
pursuant to this Agreement;
WHEREAS, it is the intention of the parties hereto that upon consummation
of the purchase and sale of the Stock pursuant to this Agreement, Buyer shall
own all of the issued and outstanding shares of capital stock of the Company;
and
WHEREAS, the Principals collectively are the direct or indirect owners of a
controlling membership interest of the Seller and are entering into this
Agreement as joint and several obligors with Seller to induce the Buyer to
purchase the stock from Seller;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto covenant and agree as follows:
ARTICLE I
SALE OF STOCK
-------------
1.1 Sale of Stock. Subject to the terms and conditions of this Agreement,
-------------
and on the basis of the representations and warranties hereinafter set forth, at
the Closing (as hereinafter defined), Seller agrees to sell, assign, transfer
and deliver the Stock to Buyer, and Buyer agrees to purchase the Stock from
Seller. The certificates representing the Stock shall be duly endorsed in
blank, or accompanied by stock powers duly executed in blank by Seller, with all
necessary transfer tax and other revenue stamps, acquired at the Seller's
expense, affixed and canceled. Seller agrees at any time after Closing, without
further compensation, to cure any deficiencies with respect to the endorsements
of the certificates representing the Stock, or with respect to the stock power
accompanying any such certificates, and to take any other actions necessary to
fully and completely transfer ownership of the Stock to Buyer free and clear of
all liens, encumbrances, equities, restrictions, claims and obligations.
1.2 Purchase Price. In full consideration for the purchase by Buyer of
--------------
the Stock, Buyer shall pay to Seller 5,000,000 shares of the Buyer's Common
Stock, $.01 par value, to be issued to Seller at Closing.
1.3 Closing of Purchase and Sale. The closing of the purchase and sale
----------------------------
provided for herein (the "Closing") shall take place at the offices of Smith,
Gambrell & Russell, Suite 1800, 3343 Peachtree Road, N.E., Atlanta, Georgia
B-6
<PAGE>
30326, beginning at 10:00 A.M. on the first business day which is two (2) days
after the date of Buyer's shareholders shall have ratified the transactions
described herein, or at such other time and place as the parties shall mutually
agree upon (the "Closing Date"), provided the conditions noted in Articles V, VI
and VII have been satisfied or waived prior to such date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
--------------------------------------------
As an inducement to Buyer to enter into this Agreement and to consummate
the transactions contemplated hereby, and with the knowledge that Buyer shall
rely thereon, the Seller and Principals, jointly and severally, represent and
warrant to Buyer the following (both as of the Closing Date and as of the date
hereof):
2.1 Due Incorporation 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 carry on
its business as now being conducted, and to own or lease and operate its
properties and assets as now owned, leased or operated by it. The Company is
duly qualified or otherwise authorized as a foreign corporation to transact
business and is in good standing in each jurisdiction set forth on Schedule 2.1
of the Disclosure Schedule, which are the only jurisdictions in which such
qualification or authorization is required by law. Except as set forth on
Schedule 2.1 of the Disclosure Schedule, the Company does not file and is not
required to file franchise, income or other tax returns in any other
jurisdiction based upon the ownership or use of property therein or the conduct
of business or derivation of income therefrom. The Company does not own or
lease property or maintain any resident employee in any jurisdiction other than
the jurisdictions set forth on Schedule 2.1 of the Disclosure Schedule.
2.2 Outstanding Capital Stock. The title, par value, number of authorized
-------------------------
shares and number of issued and outstanding shares of each class of capital
stock of the Company are set forth on Schedule 2.2 of the Disclosure Schedule.
No other class of capital stock of the Company is authorized or outstanding.
All of the issued and outstanding shares of the Stock are duly authorized and
are validly issued, fully paid and non-assessable.
2.3 Options or Other Rights. There is no outstanding right, subscription,
-----------------------
warrant, conversion right, call, unsatisfied preemptive right, commitment,
option or other agreement or right of any kind pursuant to which any person or
entity has the right or option to purchase or otherwise to receive from the
Company or Seller any shares of the Stock or any shares of the capital stock or
any other security of the Company and there is no outstanding security of any
kind convertible into or redeemable or exchangeable for any shares of the
capital stock or any other security of the Company. There is no shareholders'
agreement, voting trust or similar agreement or arrangement to which the Company
or Seller is a party which affects or restricts in any way the Seller's rights
and obligations with respect to the Stock.
2.4 Title To Stock. The Seller beneficially and of record owns, and has
--------------
full power and authority to convey free and clear of all liens, encumbrances,
equities, restrictions, claims and obligations of every kind, all of the shares
of Stock and, upon delivery of and payment for such Stock as herein provided,
Buyer will acquire good and marketable title thereto, free and clear of all
liens, encumbrances, equities, restrictions, claims and obligations of every
kind.
2.5 Subsidiaries and Investments. The Company has no subsidiaries and
----------------------------
does not own, directly or indirectly, any capital stock or other equity or
ownership or proprietary interest in, or have any investment in, any other
corporation, partnership, association, trust, joint venture or other entity.
2.6 Articles of Incorporation and By-Laws. Schedule 2.6 of the Disclosure
-------------------------------------
Schedule contains true and complete copies of the Articles of Incorporation of
the Company, including all amendments thereto (certified by the Secretary of
State of its jurisdiction of incorporation), and By-laws of the Company,
including all amendments thereto (certified by its corporate secretary), as in
effect on the date hereof, and such By-Laws and Articles of Incorporation will
not be amended, rescinded or otherwise modified between the date hereof and the
Closing Date.
B-7
<PAGE>
2.7 Books and Records. The corporate minute books, stock certificate
-----------------
books, stock registers and other corporate records of the Company are true,
correct and complete in all material respects, and the signatures appearing on
all documents contained therein are the true signatures of the persons
purporting to have signed the same. The corporate minute books of the Company
contain true and complete records of all meetings, and consents in lieu of
meetings, of the Board of Directors and Stockholders of the Company since its
incorporation. All actions reflected in said books and records were duly and
validly taken in compliance with the laws of the state of incorporation of the
Company. None of the Company's records, systems, controls, data or information
are recorded, stored, maintained or operated by, or otherwise are wholly or
partly dependent upon or held by, any person or entity or media (including any
electronic, mechanical or photographic process) which are not under the
exclusive ownership and direct control of the Company including all means of
access.
2.8 Authority of Seller and the Company. The Seller and each Principal
-----------------------------------
has full power and legal capacity to execute and deliver this Agreement and the
other agreements required to be executed and delivered by such Seller or such
Principal hereunder (this Agreement and such other agreements being herein
called the "Seller Documents") and to carry out the transactions contemplated
hereby. The Seller Documents are valid and binding agreements of Seller and
each Principal enforceable against Seller and such Principal in accordance with
their respective terms. Except as described in Schedule 2.8 of the Disclosure
Schedule, no consent, authorization or approval of, or declaration, filing or
registration with, any governmental or regulatory authority, or any consent,
authorization or approval of any other third party, is necessary in order to
enable Seller or either Principal to enter into and perform such Seller's or
Principal's obligations under the Seller Documents, and neither the execution
and delivery of the Seller Documents nor the consummation of the transactions
contemplated thereby will:
(i) conflict with, require any consent under, result in the violation
of, or constitute a breach of any provision of the Articles of Incorporation or
By-Laws of the Company or the Operating Agreement or other constitutional
documents of Seller;
(ii) conflict with, require any consent under, result in the violation
of, constitute a breach of, or accelerate the performance required on the part
of the Seller, either Principal or the Company by the terms of, any evidence of
indebtedness or agreement to which the Company, the Seller or any Principal is a
party, in each case with or without notice or lapse of time or both, including
any mortgage or deed of trust or other agreement creating a lien, charge or
encumbrance to which any property of the Company or the Stock is subject, or
permit the termination of any such agreement by another person;
(iii) result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon, or restriction on the use of, any
property or assets of the Company or the Stock under any agreement or commitment
to which the Company or Seller is bound;
(iv) accelerate, or constitute an event entitling, or which would, on
notice or lapse of time or both, entitle the holder of any indebtedness of the
Company or the Seller to accelerate the maturity of any such indebtedness;
(v) conflict with or result in the breach or violation of any writ,
judgment, order, injunction, decree or award of any court or governmental body
or agency or arbitration tribunal that is binding on the Company or the Seller;
(vi) constitute a violation by the Company or the Seller of any
statute, law or regulation of any jurisdiction; or
(vii) violate or cause any revocation of or limitation on any
Permit (as defined in Section 2.29 hereof).
2.9 Financial Statements. Seller and the Company have heretofore
--------------------
furnished Buyer with (i) true and complete copies of the combined balance sheets
and related statements of income and stockholders equity and statement of cash
flow of PSI and HSI for the fiscal year ended on December 31, 1995, together
with the accompanying notes
B-8
<PAGE>
thereto and the reports thereon, audited by the Company's certified public
accountants, Habif, Arogeti and Wynne, P.C.; and (ii) unaudited balance sheets
of the Company as of January 31, 1996 (the "Balance Sheet Date") and the related
unaudited statements of income and retained earnings for the Company for the
period then ended (hereinafter, the financial statements referred to in
subsections (i) and (ii), together with the footnotes and supporting schedules
thereto, are referred to as the "Financial Statements"). Copies of such
Financial Statements have been attached as Schedule 2.9 of the Disclosure
Schedule. Such Financial Statements, including the footnotes thereto, have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods indicated. The Financial Statements
fairly present the financial condition of the Company at the dates thereof and,
except as indicated therein, to the knowledge of Seller or the Principals
reflect all claims against, and all debts and liabilities of, the Company, fixed
or contingent, as at the dates thereof, and the related statements of income and
shareholders equity and changes in cash flow, fairly present the results of the
operations of the Company and the changes in its financial position for the
periods indicated.
2.10 No Undisclosed Liabilities. Except as reflected and reserved
--------------------------
against in the Financial Statements, to the knowledge of Seller or the
Principals as of the Balance Sheet Date the Company did not have any liabilities
or obliga tions (whether long term or current and whether accrued, absolute or
contingent) and, except for liabilities and obligations incurred since the
Balance Sheet Date in the ordinary course of business and disclosed to Buyer in
writing as of the Closing Date, to the knowledge of Seller or the Principals the
Company will not have any liabilities or obligations (whether long term or
current and whether accrued, absolute or contingent) which, individually or in
the aggregate, are material.
2.11 Recent Developments. Except as described on Schedule 2.11 annexed
-------------------
hereto, since the Balance Sheet Date there has not been, and to the knowledge of
Seller or the Principals no fact or condition exists, which might reasonably be
expected to cause (i) any adverse change in the assets or liabilities, business,
results of operations, condition (financial or otherwise) or prospects of the
Company, other than immaterial changes in the ordinary course of business, (ii)
any notice of termination of any material agreement given by a third party to
the Company or any relinquishment by the Company of any rights of material
value, or any material adverse change in the relations of the Company with its
key employees, lessors, customers, suppliers, or others having business
relations with the Company, (iii) any claim against the Company for, or any
liability incurred by the Company in respect of, any damages or alleged damages
for any actual or alleged negligence or other tort, breach of contract or
violation of property rights in excess of $10,000, or (iv) any capital
expenditure or commitment therefor by the Company in excess of $10,000, (v) any
indebtedness incurred by the Company for borrowed money which would result in
the Company being indebted at the Closing Date in an amount exceeding its
indebtedness for borrowed money on the Balance Sheet Date or any commitment of
the Company to borrow or lend money, (vi) any increase in the compensation paid
or payable, to any of the Company's employees other than normal merit increases
consistent with past Company practice which do not exceed 5% of the applicable
employee's previous compensation, (vii) any change in the Company's accounting
methods, principles, or practices, (viii) any change in the capital stock of the
Company or any dividend paid or declared with respect to such capital stock, or
(ix) any other event or circumstance which has materially and adversely affected
the business of the Company or the operation thereof.
2.12 Litigation. Except as described in Schedule 2.12 of the Disclosure
----------
Schedule, there is no action, suit, proceeding at law or in equity by any person
or entity, or any arbitration, or any administrative or other proceeding by or
before any governmental or other instrumentality or agency, pending, or, to the
knowledge of Seller or the Principals, threatened, against or affecting the
Company or any of its properties, assets or rights which could adversely affect
the right or ability of the Company to carry on its business as now conducted,
or which could adversely affect the condition, financial or otherwise, or
properties of the Company, and neither the Seller nor the Principals know of any
valid basis for any such action, proceeding or investigation. The Company is
not subject to any judgment, order, award or decree entered in any lawsuit or
proceeding which may have an adverse effect on any of its operations, business
practices or on its ability to acquire any property or conduct business in any
area.
2.13 Taxes. The Company has filed or caused to be filed, within the
-----
times and in the manner prescribed by law, all federal, state, local, foreign
and other income, estimated, import, sales, use, license, franchise, gross
receipts, excise, real and personal property, employment and payroll-related,
and other tax returns and tax reports ("Tax Returns")
B-9
<PAGE>
which are required to be filed by, or with respect to, the business and assets
of the Company. Such Tax Returns are true, correct and complete, reflect
accurately all liability for taxes of the Company for the periods covered
thereby and all amounts shown as owing thereon or otherwise due from or payable
by the Company have been fully paid or adequately disclosed and fully provided
for by adequate reserves on the books and on the Financial Statements of the
Company and as of the Closing Date all Tax Returns required to be filed by the
Company prior to such date will have been filed and all amounts shown as owing
thereon will have been paid or disclosed to Buyer in writing. Except as
described in Schedule 2.13 of the Disclosure Schedule, there has been no prior
examination of any Tax Return of the Company and no such examination or
investigation is in progress, and the Company has no knowledge or any events or
circumstances which could lead to an examination or investigation of any Tax
Return. Except as described on Schedule 2.13, there are no outstanding
agreements or waivers in effect with respect to any Tax Returns including any
agreements or waivers extending the statutory period of limitation applicable to
any Tax Return or permitting the deferral of the assessment or payment of any
taxes now due to be paid or assessed to any future period.
2.14 Title to Properties; Assets Complete. The Company has good, valid
------------------------------------
and marketable title to all of its material properties and assets (tangible and
intangible), including without limitation, all properties and assets shown on
the Financial Statements as of the Balance Sheet Date and all properties and
assets purchased or acquired by the Company since the Balance Sheet Date; in
each case subject to no encumbrance, lien, charge or other restriction of any
kind, except for (i) liens reflected on the Financial Statements (ii) liens for
current taxes, assessments or governmental charges or levies on property not yet
due or delinquent and (iii) liens described on Schedule 2.14 of the Disclosure
Schedule (liens of the type described in (i), (ii) and (iii) above being
sometimes described as "Permitted Liens"). Except for software licenses
described in Schedule 2.16 of the Disclosure Schedule, or leases or real and
personal property described in Schedules 2.16 and 2.18 of the Disclosure
Schedule, the Company owns outright, and is in exclusive possession of, all
assets, properties or rights currently used in the business of the Company.
2.15 Compliance with Laws. The Company is not in violation of any
--------------------
applicable order, judgment, injunction, award or decree of any court or
governmental or regulatory body or agency, or arbitration tribunal. Except as
described on Schedule 2.15 of the Disclosure Schedule, the Company is not in
violation of any federal, state, local or foreign law, ordinance, rule,
directive, or regulation, or any other requirement of any governmental or
regulatory body or agency, court or arbitrator applicable to the business of the
Company. Without limiting the generality of the fore going, except as described
on Schedule 2.15 of the Disclosure Schedule, (i) there is not pending, or to the
knowledge of the Sellers or the Principals threatened, any notification of any
governmental or regulatory body, agency or authority that the Company is not in
compliance with applicable laws and regulations respecting employment and
employment practices, occupational safety and health laws and regulations, and
laws or regulations relating to the quality of the environment neither the
Seller nor the Principals know of any basis therefor, and (ii) the Company has
not received any such notification of past violations of such laws or
regulations that can reasonably be expected to result in future claims against
the Company, and neither the Sellers nor the Principals know of any basis
therefor.
2.16 Contracts and Other Agreements. Schedule 2.16 of the Disclosure
------------------------------
Schedule contains a complete and accurate list of all of the following contracts
and other agreements to which the Company is a party or by or to which it or its
assets or properties are bound or subject or which are necessary for the Company
to conduct its business as presently conducted:
(i) contracts and other agreements with any current or former officer,
director, employee, consultant, agent or other representative or with any
person or entity in which any of the foregoing has an interest, including
any "Affiliate" or "Associate" of such person or entity, as such terms
are defined in the Securities Act of 1933 and the rules and regulations
published thereunder;
(ii) contracts and other agreements with any labor union or association
representing any employee;
(iii) contracts and other agreements for the supply to any person of all or a
portion of such person's requirements of any product or service sold by
the Company;
B-10
<PAGE>
(iv) contracts and other agreements for the sale of any of its assets or
properties other than in the ordinary course of business or for the
grant to any person of any preferential rights to purchase any of its
assets or properties;
(v) joint venture and partnership agreements;
(vi) contracts or other agreements under which the Company agrees to
indemnify any party or to share tax liability of any party;
(vii) contracts or other agreements of guaranty or relating to matters of
suretyship to which the Company is a party or by which its assets or
properties are subject or bound,
(viii) contracts and other agreements calling for an aggregate price or fee, or
payments in any one year, of more than $10,000 excluding purchase or
sales orders entered into by the Company as a purchaser or a seller in
the ordinary course of business;
(ix) contracts and other agreements that cannot be cancelled without
liability, premium or penalty upon thirty (30) days' notice;
(x) contracts and other agreements with customers or suppliers for the
sharing of fees, the rebating of charges or other similar arrangements;
(xi) contracts and other agreements containing obligations or liabilities of
any kind to holders of the Company's securities as such (including,
without limitation, an obligation to register any of such securities
under any federal or state securities laws);
(xii) contracts and other agreements containing covenants of the Company not
to compete in any line of business or with any person in any
geographical area or covenants of any other person or entity not to
compete with the Company in any line of business or in any geographical
area;
(xiii) contracts and other agreements relating to the acquisition by the
Company of any operating business or the capital stock of any other
person, corporation or other entity;
(xiv) contracts or agreements relating to or affecting any trade name,
trademark, service mark, patent rights, copyright, know-how, software or
other intellectual property owned, licensed or used by the Company in
the course of its business, including without limitation all contracts
and agreements relating to the development and use of software;
(xv) contracts and other agreements requiring the payment to any person of a
royalty, override or similar commission or fee;
(xvi) contracts and other agreements relating to the borrowing of money by the
Company or subjecting any assets or properties of the Company to
security interests, liens or other liabilities or obligations;
(xvii) any agreement, contract or commitment which might reasonably be expected
to have a potential adverse impact on the business or operations of the
Company;
(xviii) any contract or other agreement not made in the ordinary course of
business; or
(xix) any other material contract or other agreement whether or not made in
the ordinary course of business.
There have been delivered or made available to the Buyer true and complete
copies of all of the written contracts and other agreements described on
Schedule 2.16. All of such contracts and other agreements are valid and binding
upon the Company in accordance with their terms, and the Company has performed
in all respects all contractual obligations
B-11
<PAGE>
required to be performed by it to date and is not in default under any such
contracts and has not taken any action which constitutes or with notice or lapse
of time or both would constitute a default under such contracts. To the
knowledge of the Seller, and the Principals, no other party to any such contract
is in default in the performance of its obligations thereunder or has taken any
action which constitutes, or with notice or lapse of time or both would
constitute, a breach or anticipatory breach thereof. Except as separately
identified on Schedule 2.16, no approval or consent of any person is needed in
order that the contracts and other agreements set forth on Schedule 2.16 or on
any other Schedule continue in full force and effect following the consummation
of the transactions contemplated by this Agreement. As used in this Agreement,
the term "contract" or "agreement" includes any written or oral agreement,
commitment, understanding or arrangement to which the Company is a party with
respect to the business of the Company or by which the Company's assets are
bound.
2.17 Software. Schedule 2.17 of the Disclosure Schedule contains a
--------
complete list of all computer software which is material to the Company's
business and which has been designed specifically for use by the Company or as
to which the Company claims any proprietary rights (the "Software"). Schedule
2.17 lists all employees and independent contractors who participated materially
in the creation or material modification of the Software. Except as described
in Schedule 2.17, the Company is the exclusive owner of all patents, copyrights,
trademarks, intellectual property rights, trade secrets and other proprietary
information, processes, and formulae used in connection with the Software. All
work performed by employees, independent contractors or others in connection
with the Software on behalf of the Company has been either (i) pursuant to a
"work-for-hire" arrangement or agreement with the Company in accordance with
applicable state and federal law, that has accorded the Company full, effective,
exclusive and original ownership of all tangible and intangible property arising
thereby or (ii) subject to an executed instrument of assignment in favor of the
Company that has conveyed to the Company full, effective and exclusive ownership
of all tangible and intangible property arising in connection with the work
performed. Except as described in Schedule 2.17, the Company has exclusive
ownership, possession and control of all source codes, system documentation,
statements of principles of operation, and schematics for all the Software that
may be necessary to render such materials understandable and usable by a trained
computer programmer. Except as described in Schedule 2.17, the Company has
taken adequate measures consistent with industry practice to safeguard the
confidentiality of any confidential information or trade secrets relating to the
Software.
2.18 Leases. Schedule 2.18 of the Disclosure Schedule contains a
------
complete and accurate list of any real property lease binding the Company or to
which the Company is a party. Each such lease is in full force and effect, and
the Company has fully performed in all material respects all obligations on its
part to be performed to date under said leases. The Company is current with
respect to the payment of all rents and other charges due thereunder and its use
and occupancy of the premises which are the subject matter of such leases does
not violate any of the terms of such leases, is in conformity with all
applicable building, zoning, health, fire, safety and other laws, ordinances,
codes and regulations and is not violative of the conditions of any of the
Company's policies of insurance. All of the buildings, structures and
appurtenances situated on such leased premises are, and as of the Closing Date,
will be, in good operating condition and state of maintenance and repair and
will be adequate and suitable for the purposes for which they are presently
being or are intended to be used, and the Company has adequate rights of ingress
and egress and utility services for the operation of the Company's business in
the ordinary course. No lessor or landlord under any lease is in default in the
performance of its obligations thereunder and the Company has not received
notice from any such lessor or landlord of its intention to exercise any option
thereunder which would adversely affect or terminate the Company's use or
occupancy of the demised premises under such lease. Except as specifically
disclosed in Schedule 2.18, all of the leases permit the consummation of the
transactions contemplated hereby without modification of the terms thereof and
without the consent of the applicable lessor or landlord. The Company does not
own any real property and has never owned any real property.
2.19 Accounts and Notes Receivable. All accounts and notes receivable
-----------------------------
reflected on the Financial Statements, and all accounts and notes receivable
arising subsequent to the Balance Sheet Date, have arisen in the ordinary course
of business of the Company, represent valid obligations due to the Company. To
the knowledge of Seller and Principals, none of such notes and accounts
receivable or other debts is or will at the Closing Date be subject to any
counterclaim or set-off, or is or at the Closing will be subject to any lien,
claim, encumbrance, charge or restriction
B-12
<PAGE>
whatsoever. There has been no material change since the Balance Sheet Date in
the amount of accounts receivable or other debts due the Company or the reserves
for bad debts relating thereto from that reflected in the Financial Statements.
2.20 Fixed Assets. Schedule 2.20 of the Disclosure Schedule contains a
------------
complete and accurate list of all machinery, equipment, tools, furniture,
leasehold improvements, trade fixtures, vehicles, structures, or any related
capitalized items and other tangible property material to the operation of the
business of the Company (the "Fixed Assets") and all such Fixed Assets are
reflected in the Financial Statements (except any such tangible property
acquired since the Balance Sheet Date by the Company). Since the Balance Sheet
Date the Company has not disposed of any Fixed Assets except in the ordinary
course of the Company's business. The Fixed Assets are in good operating
condition and repair, subject to normal wear and tear from normal use thereof,
and the Company has not received notice that any of the Fixed Assets or the
Company's use thereof is in violation of any existing law or any building,
zoning, health, fire, safety or other ordinance, code or regulation.
2.21 Trade Name and Other Intangibles. Schedule 2.21 of the Disclosure
--------------------------------
Schedule contains a complete and accurate list of all patents, patent rights,
licenses, methodologies, know-how, trademarks, trademark rights, trade names,
trade name rights, service marks, service mark rights, copyrights or similar
rights ("Intellectual Property") which are either (i) wholly or partly owned or
licensed by the Company, or (ii) used in the conduct of the business of the
Company. Except as described on Schedule 2.21 of the Disclosure Schedule, no
person or entity, other than the Company, has any rights under or in respect of,
and to the knowledge of the Sellers and the Company, no person is infringing or
otherwise acting adversely with respect to, the Company's rights under or in
respect of the Intellectual Property, and the Company is the exclusive owner of
such rights and there is no claim for damages or any proceeding pending or to
the knowledge of Seller or the Principals threatened, with respect thereto. The
Company is not infringing or otherwise acting adversely to the right of any
person under or in respect to Intellectual Property, and there is no claim for
damages or any proceeding pending, or to the knowledge of Seller or the
Principals threatened, with respect thereto.
2.22 Suppliers and Customers. Schedule 2.22 of the Disclosure Schedule
-----------------------
contains a complete and accurate list of (i) any licensor or supplier from whom
the Company purchased or to which the Company paid $15,000 or more during the
last fiscal year of the Company and the amount paid by the Company to such
suppliers, and (ii) any customer or client which purchased during the last
fiscal year of the Company $10,000 or more in services from the Company. The
Company enjoys good relations with all customers listed on Schedule 2.22, and no
customer listed on Schedule 2.22 has notified the Company or the Sellers of such
customer's intention to terminate or materially reduce use of the Company's
services, and neither the Seller or principals have any reason to believe any
such customer is likely to terminate the services of the Company on account of
the transactions contemplated hereunder.
2.23 Labor Relations; Employees. Other than amounts which have not yet
--------------------------
become payable in accordance with the Company's customary practices, which will
be paid in a timely manner, (a) the Company has paid in full to its full and
part-time employees all wages, salaries, commissions, bonuses and other direct
compensation for all services performed by them to date, and (b) the Company has
paid, or will pay in a timely manner, all severance pay, if any, and benefits,
FICA, withholding taxes and vacation pay, if any, for all of its employees and
is not subject to any claim for non-payment or non-performance of any of the
foregoing. The Company is in compliance with all federal, state and local laws
and regulations respecting employment and employment practices, terms and
conditions of employment and wages and hours. The Company has not improperly
characterized as an independent contractor or consultant, any individual who
should have been treated as an employee of the Company for tax withholding or
any other purpose. There is no unfair labor practice complaint against the
Company pending before the National Labor Relations Board or any comparable
state or local agency. There is no labor strike, dispute, slowdown or stoppage
pending, or to the knowledge of the Seller or the Principals, threatened,
against or involving the Company. No grievance which might have an adverse
effect on the Company or the conduct of its business or proceeding alleging
discriminatory practices or sexual harassment is pending and no claim therefor
has been asserted. No collective bargaining representative is certified to
represent any group of employees of the Company under the Labor-Management
Relations Act of 1947; no petition for election of a collective bargaining
representative for all or any portion of the business of the Company is pending
or in respect of any other group of employees; neither the Seller nor the
Principals are aware of any organizational effort or campaign by any labor union
that affects or might affect employment of any employee of the Company; and the
Company is not a party to any collective bargaining agreement with respect to
any of its employees.
B-13
<PAGE>
2.24 Employee Benefit Plans. Except as described on Schedule 2.24 of the
----------------------
Disclosure Schedule, the Company is neither a party to, nor makes or is required
to make employer contributions to, nor has any current or future obligation or
liability with respect to, any pension, profit sharing, retirement, deferred
compensation, bonus, stock purchase, severance, hospitalization, medical
insurance, life insurance, vacation policy or other employee benefit plan or
program providing benefits for its current or former employees, other than
salaries or cash wages for straight time, overtime or shift differential (a
"Plan"). Except as described on Schedule 2.24, the Company has complied with
all of its obligations under each Plan and, to the knowledge of the Seller and
the Principals, all other parties have complied with all of their respective
obligations under each Plan. The Company has made or provided for all payments
due under or with respect to each Plan up to and including the Closing Date, and
all amounts properly accrued up to and including the Closing Date as liabilities
of the Company under each Plan have been recorded on the books of the Company.
Except as described on Schedule 2.24, no Plan is a "multiemployer plan" (within
the meaning of section 3(37) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) and except as so set forth, the Company has not
made, or has been required to make, any contributions to any "multiemployer
plan" within the last five (5) years. Except as described on Schedule 2.24, no
Plan listed on Schedule 2.24 (other than any "multiemployer plan") is subject to
Title IV of ERISA.
Each Plan listed on Schedule 2.24 has received a determination letter from
the Internal Revenue Service to the effect that it qualified under section
401(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that
each trust established under such Plan is exempt from taxation under section
501(a) of the Code, and nothing has occurred which would cause the loss of such
qualifications or exemptions. No "reportable event" (within the meaning of
section 4043(b) of ERISA) has occurred with respect to any pension plan that is
subject to Title IV of ERISA maintained by any trade or business (whether or not
incorporated) that is under common control with the Company, within the meaning
of section 414(c) of the Code and the regulations thereunder (hereinafter any
such plan shall be referred to as an "Affiliate Plan" and any such trade or
business shall be referred to as an "ERISA Affiliate"), and no "reportable
event" will occur with respect to any Plan or Affiliate Plan as a result of any
transaction contemplated by this Agreement.
The Company would not be subject to any withdrawal liability with respect
to any "multiemployer plan" listed on Schedule 2.24 if the Company were to
withdraw from any such plan as of the date hereof. Except as described on
Schedule 2.24, the Company has satisfied all material reporting and disclosure
requirements and all other requirements applicable to it under the Code or
ERISA, and the Department of Labor and the Internal Revenue Service regulations
promulgated thereunder, with respect to the Plans. Neither the Company, nor, to
the knowledge of the Company, Seller and the Principals, any other "party in
interest" or "disqualified person" (within the meaning of section 3(14) of ERISA
or section 4975(e)(2) of the Code, respectively) with respect to any Plan has
engaged in any "prohibited transaction" (within the meaning of section 406 of
ERISA or section 4975 of the Code) which could subject any Plan, the Buyer, the
Company or any trustee, administrator or other fiduciary of any Plan, to any
penalty or excise tax imposed on prohibited transactions by section 502(i) of
ERISA or section 4975 of the Code. There are no material actions, suits or
claims pending (other than routine claims for benefits) or, except as described
on Schedule 2.24, to the knowledge of the Seller or the Principals, threatened,
against any Plan or against the assets of any Plan. No Plan which is subject to
Part III of Subtitle B of Title I of ERISA or section 412 of the Code has
incurred any "accumulated funding deficiency" (as defined in ERISA), whether or
not waived. Except as described on Schedule 2.24, no Plan or Affiliate Plan
that is or was subject to Title IV of ERISA has been terminated and, to the
knowledge of the Seller and the Principals, no proceeding has been initiated to
terminate any such Plan or Affiliate Plan. None of the Company, any ERISA
Affiliates, or the Seller have incurred, nor reasonably expects to incur as a
result of any event occurring on or prior to the Closing Date, any liability to
the Pension Benefit Guaranty Corporation (except for required premium payments,
none of which payments are overdue) or any withdrawal liability under Title IV
of ERISA.
With respect to each Plan that is an "employee benefit plan," within the
meaning of Section 3(3) of ERISA, true and complete copies of (i) the documents
embodying the Plan, any related trust and all amendments thereto, (ii) the
summary plan description and all modifications thereto, (iii) the last filed
Annual Report (Form 5500 Series) and Schedules A and B thereto, (iv) the most
recent Internal Revenue Service determination letter, if applicable, (v) the
most recent actuarial valuation report, if any, and (vi) the most recent annual
and periodic financial statements, have been delivered or made available to the
Buyer and are correct in all material respects.
B-14
<PAGE>
2.25 Insurance. Schedule 2.25 of the Disclosure Schedule contains a list
---------
and brief description (specifying the insurer, the policy number or covering
note number with respect to binders and the amount of any deductible, describing
each pending claim thereunder of more than $10,000, setting forth the aggregate
amounts paid out under each such policy through the date hereof and the
aggregate limit, if any, of the insurer's liability thereunder) of all policies
or binders of fire, liability, product liability, workmen's compensation,
vehicular, unemployment and other insurance held by or on behalf of the Company.
Such policies and binders are valid and enforceable in accordance with their
terms, are in full force and effect, and insure against risks and liabilities to
the extent and in the manner reasonably determined by the Company to be
appropriate and sufficient and are adequate to protect the Company and its
assets and properties. The Company has paid all premiums due thereon and is not
in default with respect to any provision contained in any such policy or binder
and has not failed to give any notice or present any claim under any such policy
or binder in due and timely fashion. Except for claims described on Schedule
2.25, there are no outstanding unpaid claims under any such policy or binder.
The Company has received no notice of cancellation or non-renewal of any such
policy or binder. None of the policies listed on Schedule 2.25 provides that
premiums paid in respect of the periods prior to the Closing Date may be
adjusted or recomputed based on claims-paying experience of such policies or
otherwise. The Company has received no notice from any of its insurance
carriers that any insurance premiums will be increased in the future or that any
insurance coverage listed on Schedule 2.25 will not be available in the future
on the same terms as now in effect.
2.26 Environmental Matters.
---------------------
(a) Except as described in Schedule 2.26 of the Disclosure Schedule,
(i) the Company has never generated, transported, used, stored, treated,
disposed of, or managed any Hazardous Waste (as defined below); (ii) to the
knowledge of Seller and Principals, no Hazardous Material (as defined below) has
ever been or is threatened to be spilled, released, or disposed of at any site
presently or formerly owned, operated, leased or used by the Company, or has
ever come to be located in the soil or groundwater at any such site; (iii) no
Hazardous Material has ever been transported by or at the direction of the
Company from any site presently or formerly owned, operated, leased, or used by
the Company for treatment, storage, or disposal at any other place; to the
knowledge of Seller and Principals, the Company does not presently own, operate,
lease, or use, nor has it previously owned, operated, leased, or used any site
on which underground storage tanks are or were located; and (iv) to the
knowledge of Seller and Principals, no lien has ever been imposed by any
governmental agency on any property, facility, machinery, or equipment owned,
operated, leased, or used by the Company in connection with the presence of any
Hazardous Material.
(b) The Company has no liability under, nor has it ever violated, any
Environmental Law (as defined below); to the knowledge of Seller and the
Principals, the Company, any property owned, operated, leased, or used by the
Company, and any facilities and operations thereon are presently in compliance
with all applicable Environmental Laws; the Company has never entered into or
has been subject to any judgment, consent decree, compliance order, or
administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law; and nether the Seller nor the Principals has knowledge or
reason to know that any of the items enumerated in the immediately preceding
clause of this paragraph will be forthcoming.
(c) Except as described in Schedule 2.26, to the knowledge of Seller
and Principals, no site currently owned, operated, leased, or used by the
Company contains any asbestos or asbestos-containing material, any
polychlorinated biphenyls (PCBs) or equipment containing PCBs, any underground
storage tanks, or any urea formaldehyde foam insulation.
(d) The Company has provided to Buyer copies of all documents,
records, and information available to the Company concerning any environmental
or health and safety matter relevant to the Company, whether generated by the
Company or others, including, without limitation, environmental audits,
environmental risk assessments, site assessments, documentation regarding off-
site disposal of Hazardous Materials, spill control plans, and reports,
correspondence, permits, licenses, approvals, consents, and other authorizations
related to environmental or health and safety matters issued by any governmental
agency.
B-15
<PAGE>
(e) For purposes of this Agreement, (i) "Hazardous Material" shall
mean and include any hazardous waste, hazardous material, hazardous substance,
petroleum product, oil, toxic substance, pollutant, contaminant, or other
substance which may pose a threat to the environment or to human health or
safety, as defined or regulated under any Environmental Law; (ii) "Hazardous
Waste" shall mean and include any hazardous waste as defined or regulated under
any Environmental Law; (iii) "Environmental Law" shall mean any environmental or
health and safety-related law, regulation, rule, ordinance, or by-law at the
foreign, federal, state, or local level, whether existing as of the date hereof,
previously enforced, or subsequently enacted, and (iv) "the Company" shall mean
and include the Company and all other entities for whose conduct the Company is
or may be held responsible under any Environmental Law.
2.27 Officers, Directors and Key Employees. Schedule 2.27 of the
-------------------------------------
Disclosure Schedule describes the name and total annual compensation (and
benefit costs) from the Company of each officer and director of the Company and
of each other employee, consultant, agent or other representative of the Company
whose current annual rate of compen sation exceeds $25,000. The Company has not
made a commitment or agreement to increase the compensation or to modify the
conditions or terms of employment of any such person. None of such persons has
communicated to the Company or to any of its officers or directors that such
person intends to cancel or otherwise terminate such person's relationship with
the Company as a result of the consummation of the transactions contemplated
hereby.
2.28 Restrictive Documents. Neither the Company nor the Seller is
---------------------
subject to, or a party to, any charter, by-law, mortgage, lien, lease, license,
permit, agreement, contract, instrument, law, rule, ordinance, regulation,
order, judgment or decree, or any other restriction of any kind, which adversely
affects the business practices, operations or condition of the Company or any of
its assets or property, or which would prevent consummation of the transactions
contemplated by this Agreement, compliance by the Seller with the terms,
conditions and provisions hereof, or the continued operation of the Company's
business after the date hereof or the Closing Date on substantially the same
basis as heretofore operated or which would restrict the ability of the Company
to acquire any property or conduct business in any area.
2.29 Franchises and Licenses. The Company possesses all franchises,
-----------------------
concessions, permits, licenses, orders, and other governmental authorizations
and approvals ("Permits") required to permit the Company to carry on its
business as it is presently being conducted. All such Permits described on
Schedule 2.29 of the Disclosure Schedule, are in the name of the Company and are
in full force and effect, and no modification, termination, suspension or
cancellation of any of them is threatened. Except as described in Schedule 2.29
all such Permits permit the consummation of the transactions contemplated hereby
without modification thereof and without the consent of the issuing authority.
2.30 Transactions with Affiliated Parties. Except as described on
------------------------------------
Schedule 2.30 of the Disclosure Schedule no Affiliate of the Company or any
Seller or Principal (i) has any ownership interest, directly or indirectly, in
any competitor, supplier or customer of the Company, (ii) has any outstanding
loan to or receivable in either event to or from the Company, or (iii) is a
party to or has any interest in any contract or agreement with the Company.
2.31 Bank Accounts and Powers of Attorney. Schedule 2.31 of the
------------------------------------
Disclosure Schedule contains an accurate and complete list showing (i) the name
and address of each bank in which the Company has an account or safe deposit
box, the number of any such account or any such box and the names of all persons
authorized to draw thereon or to have access thereto, and (ii) the names of all
persons, if any, holding powers of attorney from the Company and a summary
statement of the terms thereof.
2.32 Absence of Changes. Since the Balance Sheet Date, except as
------------------
expressly contemplated hereby or disclosed in Schedule 2.32 of the Disclosure
Schedule, the Company has not (i) incurred any liability or obligation of any
nature (whether accrued, absolute, contingent or otherwise), except in the
ordinary course of business, (ii) permitted any of its assets to be subjected to
any mortgage, pledge, lien, security interest, encumbrance, restriction or
charge of any kind, (iii) sold, transferred or otherwise disposed of any assets
except product inventory sold in the ordinary course of business, (iv) made any
capital expenditure or commitment therefor, (v) declared or paid any dividend or
made any distribution on any shares of its capital stock, or redeemed, purchased
or otherwise acquired any shares of its capital
B-16
<PAGE>
stock or granted or cancelled any option, warrant or other right to purchase or
acquire any such shares, (vi) made any bonus or profit sharing distribution or
similar payment of any kind, (vii) increased its indebtedness for borrowed
money, or made any loan to any person, (viii) except in the ordinary course of
business, consistent with past practices of the Company, made or permitted any
amendment or termination of any contract, agreement or license to which the
Company is a party or by which it or any of its assets and properties are
subject or bound, (ix) entered into any agreement or arrangement granting any
preferential rights to purchase any of the Company's assets or properties or
requiring the consent of any party to the transfer and assignment of any of the
Company's assets or properties, (x) written off as uncollectible any notes or
accounts receivable, except write-offs in the ordinary course of business
charged to applicable reserves, none of which individually or in the aggregate
is material to the Company, (xi) granted any increase in the rate of wages,
salaries, bonuses or other remuneration of any executive employee or other
employees, except in the ordinary course of business, (xii) cancelled or waived
any claims or rights of substantial value, (xiii) made any change in any method
of accounting or auditing practice, (xiv) otherwise conducted its business or
entered into any transaction, except in the usual and ordinary manner and in the
ordinary course of its business, or (xv) agreed, whether or not in writing, to
do any of the foregoing.
2.33 Disclosure. Neither this Agreement, nor any Schedule, Exhibit or
----------
certificate delivered in accordance with the terms hereof by or on behalf of the
Seller or the Principals, or by any of the Company's directors or officers, in
connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit any statement of
a material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact known to the Seller or the Principals
which materially and adversely affects the business, prospects (financial or
otherwise) or financial condition of the Company or its respective properties or
assets, which has not been set forth in this Agreement or in the Schedules or
Exhibits or certificates furnished in connection with the transactions
contemplated by this Agreement. Notwithstanding the foregoing, Seller and
Principals may update the Disclosure Schedule prior to Closing in accordance
with Section 4.2 hereof.
2.34 Broker's or Finder's Fees. No agent, broker, person or firm acting
-------------------------
on behalf of Sellers or the Company is, or will be, entitled to any commission
or broker's or finder's fees from any of the parties hereto, or from any person
controlling, controlled by or under common control with any of the parties
hereto, in connection with any of the transactions contemplated herein.
2.35 Copies of Documents. The Seller and/or the Principals have caused
-------------------
to be made available for inspection and copying by Buyer and its advisors, true,
complete and correct copies of all documents referred to in this Article or in
any Schedule furnished by the Seller to the Buyer.
ARTICLE III
REPRESENTATIONS OF BUYER
------------------------
3.1 Incorporation and Qualification. Buyer 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 carry on its
business as now being conducted, and to own, lease and operate its properties
and assets as now owned, leased or operated by it.
3.2 Articles of Incorporation and By-Laws. Schedule 3.2 of the Disclosure
-------------------------------------
Schedule contains true and complete copies of the Articles of Incorporation of
the Buyer, including all amendments thereto (certified by the Secretary of State
of its jurisdiction of incorporation), and By-Laws of the Company, including all
amendments thereto (certified by its corporate Secretary), as in effect on the
date hereof and such By-Laws and Articles of Incorporation will not be amended,
rescinded or otherwise modified between the date hereof and the Closing Date.
3.3 Authority of Buyer. Buyer has full power and legal capacity to
------------------
execute and deliver this Agreement and the other agreements required to be
executed and delivered by Buyer hereunder (this Agreement and such other
agreements being herein called the "Buyer Documents") and to carry out the
transactions contemplated hereby. The execution, delivery and performance of
the Buyer Documents by Buyer have been duly authorized by all necessary
B-17
<PAGE>
action on the part of Buyer. The Buyer Documents are valid and binding
agreements of Buyer enforceable against Buyer in accordance with their
respective terms. Except as set forth in Schedule 3.3 of the Disclosure
Schedule, no consent, authorization or approval of, or declaration, filing or
registration with, any governmental or regulatory authority, or any consent,
authorization or approval of any third party, is necessary in order to enable
Buyer to enter into and perform Buyer's obligations under the Buyer Documents,
and not at the execution and delivery of the Buyer Documents nor the
consummation of the transactions contemplated thereby will:
(a) conflict with, require any consent under, result in the violation
of, or constitute a breach of any provision of the Articles of Incorporation or
By-Laws of the Buyer;
(b) conflict with, require any consent under, result in the violation
of, constitute a breach of, or accelerate the performance required on the part
of Buyer by the terms of, any evidence of indebtedness or agreement to which the
Buyer is a party, in each case with or without notice for lapse of time or both,
including any mortgage or deed of trust or other agreement creating a lien,
charge or encumbrance to which any property of the Buyer is subject, or permit
the termination of any such agreement by another person;
(c) result in the creation of imposition of any security interest,
lien, charge or other encumbrance upon, or restriction on the use of, any
property or assets of the Buyer under any agreement or commitment to which the
Buyer is bound;
(d) accelerate, constitute an event entitling, or which would, on
notice or lapse of time or both, entitle the holder of any indebtedness of the
Buyer to accelerate the maturity of such indebtedness;
(e) conflict with or result in the breach of or violation of any writ,
judgment, order, injunction, decree or award of any court of governmental body
or agency or arbitration tribunal that is binding on the Buyer;
(f) constitute a violation by the Buyer of any statute, law, or
regulation of any jurisdiction.
3.4 Securities Compliance.
---------------------
(a) Buyer is acquiring the Stock solely for Buyer's own account for
investment purposes and not with a view to or an interest in participating,
directly or indirectly, in the resale thereof. Buyer's principal place of
business is located in the State of Georgia. Buyer acknowledges that all Stock
acquired by Buyer will be sold to Buyer without registration and reliance upon
certain exemptions under the federal Securities Act of 1933 as amended, in
reliance upon certain exemptions from registration requirements and under
applicable state securities laws. Buyer will make no transfer or assignment of
any of the stock except in compliance with the Securities Act of 1933, as
amended, and any other applicable securities laws, or pursuant to applicable
exemptions from the aforementioned laws.
(b) Neither the Seller nor any person acting on its behalf has offered
the Stock to Buyer by means of general or public solicitation or general or
public advertising, such as newspaper or magazine advertisements, by broadcast
media, or at any seminar or meeting whose attendees were solicited by such
means.
(c) Buyer consents, agrees and acknowledges that the certificate or
certificates representing the Stock will be inscribed with the following legend,
or another legend to the same effect, and agrees to the restrictions set forth
therein:
The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, or under the securities
laws of any other jurisdiction, in reliance upon exemptions from the
registration requirements of such laws. The shares represented by this
certificate may not be sold or otherwise transferred, nor will any
assignee or endorsee hereof be recognized as an owner of the shares by
the issuer unless: (i) a registration statement of the Securities Act
of 1933 and other applicable securities laws with respect to the
shares and the transfer shall then be in effect; or (ii) in the
opinion of counsel
B-18
<PAGE>
satisfactory to the issuer, the shares are transferred in a transaction
which is exempt from the registration requirements of such laws.
3.5 Pending Actions. There are no actions, suits, claims or proceedings
---------------
pending, or to the knowledge of Buyer, threatened against Buyer or any of its
subsidiary companies at law or in equity or by any governmental agency or
instrumentality, domestic or foreign, which materially adversely affect or are
likely to materially adversely affect, (a) Buyer's financial condition, or (b)
Buyer's right or ability to carry on its business substantially as now
conducted, considering such condition in business as being the condition in
business of Buyer and its subsidiary companies taken as a whole.
3.6 Capital Stock. The authorized capital stock of Buyer consists of
-------------
10,000,000 shares of common stock, $.01 par value per share (the "Common
Stock"), and 5,000,000 shares of preferred stock, $.01 par value. Prior to
Closing, Buyer shall have sufficient authorized and unissued common shares to
fulfill its obligations to pay the purchase price described in Section 1.2. As
of the date of this Agreement, 7,361,676 shares of common stock are outstanding
and no shares of preferred stock of the Buyer are outstanding. All the
outstanding shares of the common and preferred stock have been duly and validly
authorized and issued and are fully paid and non-assessable. Except for options
described on Schedule 3.6 of the Disclosure Schedule, as described in Schedule
3.6, there are no outstanding subscriptions, contracts, conversion privileges,
options, warrants, calls or other rights obligating Buyer to issue, sell or
otherwise dispose of, or to purchase, redeem or otherwise acquire any shares of
capital stock of Buyer, other than in connection with this Agreement. The
shares of common stock to be issued in connection with this Agreement, will,
upon such issuance and delivery to the recipients designated under the terms of
this Agreement, be duly authorized, validly issued, fully paid and non-
assessable, and free of any preemptive rights.
3.7 Absence of Changes. Except as set forth on Schedule 3.7 of the
------------------
Disclosure Schedule, and except as otherwise set forth in the Buyer's Proxy
Statement, 10-K and 10-Q's (each as defined in Section 11.4 hereof)
(collectively, the "SEC Documents") since October 31, 1995 there has not been
(i) any material change in the financial condition, assets, liabilities,
business or prospects of the Buyer, (ii) any material damage, destruction, or
loss, not fully covered by insurance, affecting the properties or business of
the Buyer, or (iii) any other event or condition that, individually or in the
aggregate, has been materially adverse in relation to the financial condition,
business or prospects of the Buyer.
3.8 Accuracy of SEC Documents. The financial statements and schedules of
-------------------------
Buyer contained in the SEC Documents (or incorporated therein by reference) were
prepared in accordance with generally accepted accounting principles,
consistently applied, except as noted therein and, except as set forth in
Schedule 3.8 of the Disclosure Schedule, fairly present the information
purported to be shown therein. Each such proxy statement or report did not, on
the date of its mailing (in the case of the Proxy Statement) or the date of its
filing with the SEC (in the case of the 10-K and 10-Q's) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. The Buyer has filed all
reports with the SEC required to be so filed by it since February 1, 1995, and
such reports to not contain any material misstatement or omit to disclose any
material fact relating to Buyer during the relevant reporting periods.
3.9 Broker's or Finder's Fees. No agent, broker, person or firm acting on
-------------------------
behalf of Buyer is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any person controlling,
controlled by or under common control with any of the parties hereto, in
connection with any of the transactions contemplated herein.
B-19
<PAGE>
ARTICLE IV
COVENANTS TO BE PERFORMED PRIOR TO THE CLOSING
----------------------------------------------
The parties hereto covenant and agree that between the date hereof and the
Closing Date:
4.1 Operation in Ordinary Course. From the date hereof to the Closing
----------------------------
Date, Seller and Principals shall cause the Company to, and the Company shall,
(i) conduct its business only in the ordinary course and in substantially the
same manner as conducted at the date hereof, (ii) use its reasonable best
efforts to preserve its business organization intact and to retain the services
of its present officers, key employees, purchasing and sales personnel and
representatives, (iii) use its reasonable best efforts to preserve favorable
relations with its employees, customers, suppliers and others having business
relations with it, (iv) use its reasonable best efforts to comply with all laws,
ordinances and regulations applicable to it in the conduct of its business, (v)
not enter into, amend in any material respect or terminate any lease, contract
or agreement, and (vi) conduct its business in such a manner that the
representations and warranties contained in Article shall continue to be true
and correct on and as of the Closing Date as if made on and as of the Closing
Date.
4.2 Notice of Events.
----------------
(a) The Seller shall promptly notify the Buyer of (i) any event,
condition or circumstance occurring from the date hereof through the Closing
Date that would constitute a violation or breach of this Agreement, (ii) any
event, occurrence, transaction or other item which would have been required to
have been disclosed on any Schedule or statement delivered hereunder, had such
event, occurrence, transaction or item existed on the date hereof, other than
items arising in the ordinary course of business which would not render any
representation or warranty of the Seller misleading, and (iii) any lawsuits,
claims, proceedings or investigations which after the date hereof are threatened
or commenced against Seller or against the Company or any officer, director,
employee, consultant, agent or shareholder with respect to the affairs of the
Company.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.2(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Seller or the Principals shall promptly deliver to Buyer
an update to the Disclosure Schedule specifying such change. Upon receipt of
any such updated Disclosure Schedule from the Seller or Principals, Buyer shall
have the right to terminate this Agreement in accordance with Section 9.1(d) by
giving notice in accordance with Section 12.8 within 7 days following delivery
of such updated Disclosure Schedule to Buyer. If Buyer fails to give such
notice within such 7 day period, the Disclosure Schedule shall be deemed amended
to include the updated information for all purposes hereunder. The parties
acknowledge that as of the date of this Agreement, the Seller and Principals
have not yet delivered a complete Disclosure Schedule. The Seller and
Principals agree to deliver a completed final Disclosure Schedule (subject to
updates as provided above) within 10 days following the date of this Agreement.
Buyer shall have a 7-day option to terminate following delivery of such
completed final Disclosure Schedule in the same manner as with an updated
Disclosure Schedule as described above.
4.3 Exclusive Dealing. During the period from the date of this Agreement
-----------------
to the Closing Date, neither Seller nor the Principals shall not take, and
Seller and the Principals shall cause the Company to refrain from taking, any
action to directly or indirectly encourage, initiate or engage in discussions or
negotiations with, or provide any information to, any corporation, partnership,
person, or other entity or group, other than Buyer, concerning the merger of the
Company with any other entity, the purchase and sale of the assets and
properties of the Company, the purchase and sale of the Stock, or any
transaction similar to the foregoing involving either the Company or Seller.
4.4 Examinations and Investigations. Prior to the Closing Date, Buyer
-------------------------------
shall be entitled, through its employees and representatives, including, without
limitation, its counsel, Smith, Gambrell & Russell, and Buyer's accountants, to
make such investigation of the assets, properties, business and operations of
the Company, and such examination of the books, records and financial condition
of the Company as Buyer wishes. Any such investigation and
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<PAGE>
examination shall be conducted at reasonable times and under reasonable
circumstances and Seller and the Principals shall cause the Company to,
cooperate fully therein. No investigation by Buyer shall diminish or obviate
any of the representations, warranties, covenants or agreements of Seller and
the Principals under this Agreement, or Buyer's rights under Article VIII of
this Agreement. In order that Buyer may have full opportunity to make such
business, accounting and legal review, examination or investigation as it may
wish of the business and affairs of the Company, Seller and the Principals shall
furnish, and shall cause the Company to furnish, the representatives of Buyer
during such period with all such information and copies of such documents
concerning the affairs of the Company as such representatives may reasonably
request and cause its officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with such representatives in connection with such
review and examination. If this Agreement terminates, Buyer, its employees and
representatives shall keep confidential and shall not use in any manner any
information or documents obtained from the Company concerning its assets,
properties, business and operations, unless readily ascertainable from public or
published information, or trade sources, or subsequently developed by Buyer
independent of any investigation of the Company, or received from a third party
not under an obligation to the Company or Seller to keep such information
confidential. If this Agreement terminates, any documents obtained from Seller
or the Company shall be returned and the confidentiality obligations herein
shall survive for so long as such information remains confidential.
4.5 Affiliate Indebtedness Owed to the Company. At or prior to the
------------------------------------------
Closing, the Seller and the Principals shall, and shall cause each Affiliate of
the Seller and the Principals to, pay to the Company any amounts owed by such
person to the Company and any amounts owed by Seller or the Principals or any
such Affiliate to any other person if such indebtedness is guaranteed by, or
secured by any of the assets or properties of, the Company.
4.6 Affiliate Indebtedness Owed by the Company. Except as set forth in
------------------------------------------
Schedule 4.6 of the Disclosure Schedule, any and all indebtedness of the Company
to Seller or the Principals, and any Affiliate of the Seller or the Principals
and any director, officer or employee of any of the foregoing (including all
intercompany accounts) shall be repaid or contributed to the capital of the
Company as of the Closing Date.
ARTICLE V
CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
--------------------------------------------------------
The obligation of the Buyer to enter into and complete the Closing is
subject, at Buyer's option, to the fulfillment on or prior to the Closing Date
of the following conditions, any one or more of which may be waived by Buyer
only in writing:
5.1 Representations and Covenants. The representations and warranties of
-----------------------------
Seller and the Principals contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date. Seller and the Principals shall
have performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by the
Seller and the Principals on or prior to the Closing Date. The Seller and the
Principals shall deliver to the Buyer a certificate dated the Closing Date to
such effect.
5.2 Litigation. No action, suit or proceeding shall have been instituted
----------
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated by this Agreement or to seek
damages or a discovery order in connection with such transactions, or that has
or could reasonably be expected to have, in the opinion of Buyer, a materially
adverse effect on the assets, properties, business, operations or financial
condition of the Company.
5.3 Net Worth and Cash of the Company. The total combined revenues of PSI
---------------------------------
and HSI for the period January 1, 1995 through December 31, 1995, shall have
been at least $300,000, as determined by Habif, Arogeti & Wynne, P.C. Seller
shall deliver to the Buyer a certificate dated the Closing Date to such effect.
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5.4 Governmental Permits and Approvals. All permits and approvals from
----------------------------------
any governmental or regulatory body required for the lawful consummation of the
Closing and the continued operation of the business of the Company shall have
been obtained.
5.5 Third Party Consents. All consents, permits, waivers and approvals
--------------------
from parties to material contracts or other agreements with the Company or with
Seller that may be required in connection with the performance by the Seller of
its obligations under this Agreement or the continuance of such contracts or
other agreements with the Company without material modification after the
Closing shall have been obtained (with satisfactory written evidence thereof,
and with recordable form where necessary, to be furnished to the Buyer at the
Closing).
5.6 Transfer Taxes. Seller shall have paid, or caused to be paid, all
--------------
stock transfer and other taxes required to be paid in connection with the sale
and delivery to Buyer of the Stock, and shall have caused all appropriate stock
transfer tax stamps to be affixed to the certificates representing the Stock.
5.7 Estoppel Certificates. Buyer shall have received such estoppel
---------------------
certificates from parties to any or all of the leases, purchase options and
options to sell as Buyer may reasonably request.
5.8 No Material Adverse Change. Prior to the Closing Date, there shall be
--------------------------
no material adverse change in the assets or liabilities, the business or
condition, (financial or otherwise) of the Company, its employees or customers
regardless of reason, including, but not limited, to those changes that are as a
result of any legislative or regulatory change, revocation of any license or
rights to do business, failure to obtain any environmental permits at the normal
time or in the manner applied for by the Company, fire, explosion, accident,
casualty, labor trouble, flood, riot, storm, condemnation or act of God or other
public force or otherwise. Seller shall have delivered to Buyer a certificate,
dated the Closing Date, to such effect.
5.9 Books and Records. Buyer shall have received the minute books, stock
-----------------
certificate books, stock transfer books, corporate seals, books of account and
all books, papers, records, correspondence and instruments of, or relating to,
the Company and its business. Buyer shall have completed its investigation of
the Company, its business and its operations and Buyer shall have completed its
examination of books and records of the Company, and the results thereof shall
be acceptable to Buyer.
5.10 Good Standing Certificates, Etc. Seller shall have delivered all
--------------------------------
certified resolutions, certificates, documents or instruments with respect to
the Company's corporate existence and authority as the Buyer may have reasonably
requested prior to the Closing Date.
5.11 Non-Compete Agreements. Simultaneously with the Closing of the
-----------------------
transactions contemplated hereby, each of the Seller and the Principals shall
have executed and delivered to the Company a Non-Competition Agreement in
substantially the form attached as Exhibit C hereto.
5.12 Subscription Agreement. Simultaneously with the closing of the
-----------------------
transactions contemplated hereby, Seller shall have executed and delivered to
the Company, a Subscription Agreement in substantially the form attached as
Exhibit D hereto.
5.13 Authorization of Shares. The Shareholders of Buyer shall have
-----------------------
approved an amendment to the Buyer's Articles of Incorporation authorizing a
sufficient number of additional shares of Buyer's common stock to enable Buyer
to pay the Purchase Price described in Section 1.2 hereof.
5.14 Ratification of Agreement. The Shareholders of Buyer shall have
-------------------------
ratified this Agreement and the transactions contemplated herein.
5.15 Closing of AUBIS Acquisition. The Shareholders of Buyer shall have
----------------------------
ratified the Amended and Restated Merger Agreement dated as of December 13, 1995
and amended and restated as of March 29, 1996 among Buyer, AUBIS L.L.C., AUBIS
Hospitality Systems, Inc., AUBIS Systems Integration, Inc. and certain persons
and
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<PAGE>
affiliates of AUBIS L.L.C. (the "AUBIS Merger Agreement") and the transactions
contemplated therein. All conditions to the Closing required pursuant to the
AUBIS Merger Agreement shall have been satisfied or waived prior to Closing.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE
---------------------------------------------------------
The obligation of the Seller to enter into and complete the Closing is
subject, at Seller's option, to the fulfillment of the following conditions, any
one or more of which may be waived by Seller only in writing:
6.1 Representations and Covenants. The representations and warranties of
-----------------------------
Buyer contained in this Agreement shall be true in all material respects on and
as of the Closing Date with the same force and effect as though made on and as
of the Closing Date. Buyer shall have performed and complied with in all
material respects all covenants and agreements required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Buyer shall
deliver to Seller a certificate dated the Closing Date to such effect signed by
an executive officer of Buyer.
6.2 Litigation. No action, suit or proceeding shall have been instituted
----------
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transaction, or that has or could
reasonably be expected to have, in the opinion of Seller, a materially adverse
effect on the assets, properties, business, operations or financial condition of
Buyer.
6.3 Governmental Permits and Approvals. All permits and approvals from
----------------------------------
any governmental or regulatory body required for the lawful consummation of the
Closing and the continued operation of the business of the Company shall have
been obtained.
6.4 Resolutions. There shall have been delivered to the Seller a copy of
-----------
the resolutions duly adopted by the board of directors of Buyer, certified
accurate by an executive officer of Buyer as of the Closing Date, authorizing
and approving the execution and delivery by Buyer of this Agreement, and the
consummation by the Buyer of the transactions contemplated hereby.
6.5 Good Standing Certificates, etc. Buyer shall have delivered all such
-------------------------------
certified resolutions, certificates, documents or instruments with respect to
Buyer's corporate existence and authority as Seller's counsel may have
reasonably requested prior to the Closing Date.
6.6 Authorization of Shares. The Shareholders of Buyer shall have
-----------------------
approved an amendment to the Buyer's Articles of Incorporation authorizing a
sufficient number of additional shares of Buyer's common stock to enable Buyer
to pay the purchase price described in Section 1.2 hereof.
6.7 Ratification of Agreement. The Shareholders of Buyer shall have
-------------------------
ratified this Agreement and the transactions contemplated herein.
6.8 Closing of AUBIS Acquisition. The Shareholders of Buyer shall
----------------------------
have ratified the AUBIS Merger Agreement and the transactions contemplated
therein. All conditions to the Closing required pursuant to the AUBIS Merger
Agreement shall have been satisfied or waived prior to Closing.
ARTICLE VII
ACTIONS TO BE TAKEN AT THE CLOSING
----------------------------------
The following actions shall be taken at the Closing, each of which shall be
conditioned on completion of all the others and all of which shall be deemed to
have taken place simultaneously:
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<PAGE>
7.1 Stock Certificates. Seller shall deliver to Buyer stock
------------------
certificate(s) representing all of the Stock, duly endorsed in blank or
accompanied by stock powers duly executed in blank, in proper form for transfer,
in accordance with the terms of Section 1.1 of this Agreement.
7.2 Purchase Price. Buyer shall deliver to Seller the portion of the
--------------
Purchase Price payable at Closing in accordance with the terms of Section 1.2 of
this Agreement.
7.3 Opinion of Counsel to the Sellers. The Seller shall deliver to Buyer
---------------------------------
an opinion of Kilpatrick & Cody, counsel to Seller, dated the Closing Date,
substantially in the form attached hereto as Exhibit F.
7.4 Opinion of Counsel to the Buyer. Buyer shall deliver to Seller an
-------------------------------
opinion of Smith, Gambrell & Russell, counsel to Buyer, dated the Closing Date,
substantially in the form attached hereto as Exhibit G.
7.5 Resignations of Directors and Officers. Seller shall deliver signed
--------------------------------------
resignations of any director and officer of the Company requested by Buyer dated
the Closing Date.
7.6 Closing Certificate of the Seller. Seller shall deliver to Buyer a
---------------------------------
closing certificate signed by Seller, dated the Closing Date, in a form
reasonably satisfactory to the Buyer.
7.7 Closing Certificate of the Buyer. Buyer shall deliver to Seller a
--------------------------------
closing certificate signed by an executive officer of Buyer, dated the Closing
Date, in a form reasonably satisfactory to Seller.
7.8 Other Documents and Certificates. Buyer and Seller shall deliver, or
--------------------------------
with respect to Seller cause the Company to deliver, certificates, agreements,
permits, approvals and other documents reasonably requested by counsel for Buyer
or Seller, as the case may be, to satisfy, or to evidence the satisfaction of,
as the case may be, the conditions precedent to Closing set forth in Articles
and .
7.9 Election of Board of Directors. The Buyer and Seller shall take such
------------------------------
actions as are necessary to provide that immediately following the Closing, the
Board of Directors of the Company shall be comprised of the following
individuals: Paul Harrison, Larry Fisher, Nate Lipson and James Askew.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
-----------------------------------------------------------
8.1 Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of Seller, Principals and Buyer contained in this
Agreement shall survive the Closing and shall continue for a period of one year
following the Closing Date; except that representations and warranties contained
in Sections 2.4, 2.13, 2.24 and 2.26 shall survive until expiration of the
applicable statutes of limitation for breach of such representations and
warranties. The expiration of any representation or warranty shall not affect
any party's right to claim indemnification for a breach of such representation
or warranty, provided such party gives notice of such claim in accordance with
the provisions of this Article prior to the expiration of such representation
or warranty.
8.2 Seller's and Principals' Indemnity Agreement. Subject to the
--------------------------------------------
provisions of Section 8.6 hereof, the Seller and the Principals, jointly and
severally, shall defend, indemnify and hold harmless the Buyer and the Company
(and their respective directors, officers, employees, agents, affiliates,
successors and assigns) from and against any and all direct or indirect
requests, demands, claims, payments, defenses, obligations, recoveries,
deficiencies, fines, penalties, interest, assessments, actions, liens, causes of
action, suits, proceedings, judgments, losses, damages (including without
limitation punitive, exemplary or consequential damages, lost income and
profits, interruptions of business and diminution in the value of the Stock),
liabilities, costs, and expenses of any kind (including without limitation (i)
interest, penalties and reasonable attorneys' fees and expenses, (ii) attorneys'
fees and expenses necessary to enforce their rights to indemnification
hereunder, and (iii) consultants' fees and other costs of defending or
investigating any claim hereunder), and interest on any amount payable as a
result of the foregoing, whether accrued, absolute, contingent,
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<PAGE>
known, unknown, or otherwise as of the Closing Date or thereafter asserted
against, imposed upon or incurred by Buyer, the Company or any of their
respective directors, officers, employees, agents, affiliates, successors or
assigns (a "Loss of Buyer") by reason of, resulting from, arising out of, based
upon, awarded or asserted against in respect of or otherwise in respect of:
(a) any period or periods of the Company ending prior to the Closing
and which involve any claims against Buyer, the Company or the Company's
properties or assets relating to actions or inactions of Seller or the Company
or their respective officers, directors, shareholders, employees or agents prior
to Closing, or the operation of the business of the Company prior to the Closing
unless such liability was disclosed on the Financial Statements and adequate
reserves were established therefor;
(b) any breach of any representation and warranty or any
misrepresentation in or omission on the part of Seller or Principals contained
in any certificate furnished or to be furnished to Buyer by Seller pursuant to
this Agreement;
(c) any breach or nonfulfillment on the Part of Seller or Principals
of any covenant contained in this Agreement;
(d) any failure of the Seller to transfer the Stock to Buyer, free and
clear of all liens, encumbrances, equities, restrictions, claims and
obligations;
(e) the failure of Seller to obtain, prior to the Closing Date, any
consents, approvals and waivers of governmental agencies or entities, lessors,
landlords, suppliers, and other third parties as may be necessary to permit the
consummation of the transactions contemplated hereby and to permit Buyer to
continue to operate the business of the Company in the manner presently
conducted after the Closing Date;
(f) (i) any Hazardous Materials existing on the Closing Date on, in,
under or affecting, or originating from, all or any portion of the Company's or
its predecessors' in interest present or former properties or assets or any
surrounding areas or any other property now or previously used, owned by or
under the control of the Company or its predecessors in interest that results or
may result in actual or alleged liability on the part of the Company, regardless
of whether or not presently known or caused by or within the control of the
Company or its predecessors in interest; (ii) the violation of or noncompliance
with any Environmental Law relating to or affecting the Company or its
predecessors in interest or its or their present or former business, properties
or assets to the extent the violation or compliance relates to acts or events
occurring on or prior to the Closing Date or state of affairs or circumstances
existing on or prior to the Closing Date; and
(g) any federal, state, local or foreign taxes, including any interest
and penalties thereon, due from the Company or the Seller with respect to any
period prior to the Closing Date, other than amounts accrued therefor on the
Financial Statements.
8.3 Buyer's Indemnity Agreement. Buyer shall indemnify and hold harmless
---------------------------
Seller (and its directors, officers, employees, agents, affiliates, successors
and assigns) from and against any and all direct or indirect requests, demands,
claims, payments, defenses, obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, actions, liens, causes of action, suits,
proceedings, judgments, losses, damages (including without limitation punitive,
exemplary or consequential damages and lost income and profits and interruptions
of business), liabilities, costs, and expenses of any kind (including without
limitation (i) interest, penalties and reasonable attorneys' fees and expenses
(ii) attorneys' fees and expenses necessary to enforce their rights to
indemnification hereunder, and (iii) consultants' fees and other costs of
defending or investigating any claim hereunder, and interest on any amount
payable as a result of the foregoing) whether accrued, absolute, contingent,
known, unknown or otherwise as of the Closing Date or thereafter asserted
against, imposed upon or incurred by Seller or its respective representatives or
assigns, (a "Loss of Seller") by reason of, resulting from, arising out of,
based upon, awarded or asserted against in respect of or otherwise in respect
of:
B-25
<PAGE>
(a) any period or periods of the Company beginning after the Closing
and which involve any claims against Seller or its assets relating to actions or
inactions of the Buyer or the Company or their respective officers, directors,
shareholders, employees or agents after the Closing, or the operation of the
Company after the Closing (except to the extent any of the foregoing arise from
the acts or omissions of the Sellers); and
(b) any breach of any representation and warranty or nonfulfillment of
any covenant or agreement on the part of the Buyer contained in this Agreement,
or any misrepresentation in or omission from or nonfulfillment of any covenant
on the part of the Buyer contained in any certificate furnished or to be
furnished to Seller by Buyer pursuant to this Agreement.
8.4 Indemnification Procedure.
-------------------------
(a) Upon obtaining knowledge thereof, the party to be indemnified
hereunder (the "Indemnitee") shall promptly notify the indemnifying party
hereunder (the "Indemnitor") in writing of any damage, claim, loss, liability or
expense or other matter which the Indemnitee has determined has given or could
give rise to a claim for which indemnification rights are granted hereunder
(such written notice referred to as the "Notice of Claim"). The Notice of Claim
shall specify, in all reasonable detail, the nature and estimated amount of any
such claim giving rise to a right of indemnification, to the extent the same can
reasonably be estimated. Any failure on the part of an Indemnitee to give
timely notice to the Indemnitor of a claim shall not affect the right of the
Indemnitee to obtain indemnification from the Indemnitor with respect to such
claim unless the Indemnitor is actually harmed by such failure to notify, and
only to the extent of such actual harm.
(b) With respect to any matter set forth in a Notice of Claim
relating to a third party claim the Indemnitor shall defend, in good faith and
at its expense, any such claim or demand, and the Indemnitee, at its expense,
shall have the right to participate in the defense of any such third party
claim. So long as Indemnitor is defending, in good faith, any such third party
claim, the Indemnitee shall not settle or compromise such third party claim.
The Indemnitee shall make available to the Indemnitor or its representatives all
records and other materials reasonably required by them for use in contesting
any third party claim and shall cooperate fully with the Indemnitor in the
defense of all such claims. If the Indemnitor does not defend any such third
party claim or if the Indemnitor does not provide the Indemnitee with prompt and
reasonable assurances that the Indemnitor will satisfy the third party claim,
the Indemnitee may, at its option, elect to defend any such third party claim,
at the Indemnitor's expense. An Indemnitor may not settle or compromise any
claim without obtaining a full and unconditional release of the Indemnitee,
unless the Indemnitee consents in writing to such settlement or compromise.
Notwithstanding the foregoing, if there is a reasonable probability that a third
party claim for which the Buyer has indemnification rights against Seller
hereunder will materially and adversely affect Buyer or the Company other than
as a result of money damages or other payments, Buyer shall be entitled to
conduct the defense of such claim at Sellers' expense.
8.5 Set-off. Buyer shall have the right to set-off and apply against all
-------
amounts due and owing Seller under Section 1.2 of this Agreement, and under any
other agreement between Buyer and Seller, all sums in respect of which Seller or
Principals may be liable pursuant to Section 8.2 hereof, such right of set-off
to be in addition to and not in lieu of or an election against any and all other
remedies available to the Buyer under this Agreement or at law or in equity.
8.6 Limitations on Liability of Seller and Principals. Seller and
-------------------------------------------------
Principals shall have no liability with respect to losses of Buyer arising under
subparagraphs (a), (b), (e), or (f) of Section 8.2 until the total of all Losses
of Buyer with respect thereto exceeds $25,000. If the aggregate Losses of Buyer
exceed such $25,000 threshold, the Seller and Principals shall be liable for all
Losses of Buyer to the extent (and only to the extent) Losses of Buyer exceed
such $25,000 threshold. In no event shall Seller and Principals' aggregate
liability under Section 8.2 exceed $125,000.
ARTICLE IX
TERMINATION OF AGREEMENT
------------------------
9.1 Termination. This Agreement may be terminated prior to the Closing as
-----------
follows:
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<PAGE>
(a) at the election of Seller, if any one or more of the conditions to
the obligations of Seller to close has not been fulfilled as of the Closing
Date, or if the Buyer has breached any representation, warranty, covenant or
agreement contained in this Agreement;
(b) at the election of Buyer, if any one or more of the conditions to
its obligations to close has not been fulfilled as of the Closing Date, or if
Seller or Principals have breached any representation, warranty, covenant or
agreement contained in this Agreement;
(c) at the election of Seller or Buyer, if any legal proceeding is
commenced or threatened by any governmental or regulatory body or other person
directed against the consummation of the Closing or any other transaction
contemplated under this Agreement and either Sellers or Buyer, as the case may
be, reasonably and in good faith deem it impractical or inadvisable to proceed
in view of such legal proceeding or threat thereof;
(d) at the election of Buyer, under the circumstances described in
Section 4.2(b);
(e) at any time on or prior to the Closing Date, by mutual written
consent of the parties hereto; or
(f) at any time after June 30, 1996, at the election of either the
Buyer or the Seller.
9.2 Survival. If this Agreement is terminated pursuant to Section 9.1,
--------
this Agreement shall become void and of no further force and effect, except for
the provisions of Section 4.4 relating to the obligation of the Buyer to keep
certain information confidential, Section 12.4 (relating to expenses), Section
12.1 (relating to publicity), and Section 12.5 (relating to indemnification of
brokerage) and none of the parties hereto shall have any liability in respect of
such termination except that any party shall be liable to the extent that
failure to satisfy the conditions of Article V, VI or VII results from such
party acting in bad faith or from the intentional or willful violation of the
representations, warranties, covenants or agreements of such party under this
Agreement.
ARTICLE X
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
IN CONNECTION WITH OFFER OF BUYER'S STOCK
-----------------------------------------
Seller does hereby represent and warrant to the Buyer as follows:
10.1 Accredited Investor. Seller is an "accredited investor" as such
-------------------
term is defined under Rule 501 under the federal Securities Act of 1933, as
amended (the "Securities Act"), and is an entity having its principal office and
principal place of business, and the location in which it entered into and
accepted this Agreement, in Georgia.
10.2 Acquisition for Investment. The shares of Buyer's common stock
--------------------------
which Seller may acquire pursuant to the terms of this Agreement (the
"Acquisition Shares") are being acquired by Seller solely for the account of
Seller, for investment and not with a view to, or for resale in connection with,
any distribution or public offering thereof within the meaning of the Securities
Act.
10.3 Unregistered Securities. Seller understands and acknowledges that
-----------------------
the Acquisition Shares have not been registered under the Securities Act or
under the Georgia Securities Act of 1973, as amended (the "Georgia Act"), and
will not at the time of issuance and delivery of such shares as contemplated by
the terms of this Agreement have been so registered, in reliance upon certain
exemptions from the registration and prospectus delivery requirements of the
Securities Act and the Georgia Act, particularly including Section 10-5-9(13) of
the Georgia Act. Seller understands that the Acquisition Shares so acquired by
Seller must be held by Seller indefinitely, and that Seller must therefore bear
the economic risk of such investment indefinitely, unless a subsequent
disposition thereof is registered under the Securities Act and the Georgia Act,
or is exempt from such registration. Seller further understands that the
availability of the exemptions described in the first sentence of this Section
depend upon, among other things, the bona fide nature of Seller's investment
intent expressed herein, upon which the Buyer hereby expressly relies.
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<PAGE>
10.4 Disclosure.
----------
(a) Seller has previously been furnished by the Buyer, and hereby
acknowledges that Seller has had the opportunity to review (i) a draft of the
preliminary Proxy Statement for the Buyer's 1996 Annual Meeting of Shareholders
(the "Proxy Statement"); (ii) the Buyer's Annual Report to Shareholders for the
fiscal year ended January 31, 1995 (the "ARS"); (iii) the Buyer's Annual Report
on Form 10-KSB for the fiscal year ended January 31, 1995 (the "10-K") as filed
with the United States Securities and Exchange Commission (the "SEC") pursuant
to the requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act"); and (iv) the Buyer's quarterly reports on Form 10-QSB for the
fiscal quarters ended April 30, 1995, July 31, 1995 and October 31, 1995,
respectively (the "10-Q's"), as filed with the SEC pursuant to the requirements
of the 1934 Act.
(b) Seller has been given a reasonable opportunity to request copies
of any documents or other exhibits which are listed as exhibits therein to any
of the Proxy Statement, the 10-K or the 10-Q's, and if requested, copies of such
documents or other exhibits have been provided to Seller a reasonable time prior
to Seller's execution of this Agreement.
(c) Seller has been given the opportunity, at a reasonable time prior
to the execution of this Agreement, to ask questions of the executive officers
and other personnel of the Buyer concerning the terms and conditions of such
party's acquisition of the Acquisition Shares in the transactions contemplated
by this Agreement, and concerning the subject matter of the representations and
warranties of the Buyer contained herein, as well as to obtain any additional
information which the Buyer possesses or can obtain without unreasonable effort
or expense that is necessary to verify the information contained in the
representations and warranties of Buyer set forth in this Agreement or the
information contained in the documents and reports described in paragraph (a) of
this Section.
ARTICLE XI
REGISTRATION OF SHARES
----------------------
11.1 Registration Statement.
----------------------
(a) After the Closing Date, Buyer shall file with the SEC a
registration statement (the "Registration Statement") with respect to resales of
the Acquisition Shares received by each Participating Holder (as defined in
Section 11.1(d)). Buyer shall use reasonable efforts: (i) to cause the
Registration Statement to be declared effective by the SEC on or before the date
90 days after the Closing Date; and (ii) to cause the Registration Statement to
remain effective until the earlier of (A) the third anniversary of the Closing
Date, or (B) the date on which the distribution described in the Registration
Statement is completed as to all Participating Holders (as defined in subsection
(iii) below).
(b) Buyer shall (at its own expense):
(i) prepare and file promptly with the SEC such amendments to the
Registration Statement, and such supplements to the related prospectus, as may
be required in order to comply with the applicable provisions of the Securities
Act, including, without limitation, to maintain the effectiveness or currency
thereof;
(ii) furnish to the respective Participating Holders such numbers of
copies of a prospectus conforming to the requirements of the Securities Act as
they may reasonably request in order to facilitate the disposition of the shares
covered by the Registration Statement; and
(iii) use reasonable efforts to register and qualify the
shares covered by the Registration Statement under the Securities laws of such
states as the respective Participating Holders may reasonably request, provided,
however, that Buyer shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any of such states.
B-28
<PAGE>
(c) Notwithstanding anything to the contrary herein, no Person who
receives Acquisition Shares shall have any rights under this Section 11 unless
such Person executes and delivers to Buyer, a written agreement, reasonably
satisfactory in form and content to Buyer, confirming that such Person wishes to
be allowed to sell Acquisition Shares pursuant to the Registration Statement and
agrees to be bound by the provisions of this Article 11. (A Person who holds any
of the Acquisition Shares and who executes and delivers such an agreement is
referred to in this Article 11 as a "Participating Holder.") Any Participating
Holder who delivers such an agreement more than 30 days after the Closing Date
may be required to pay, as a condition to exercising rights under this Article
11, the amount of incremental expenses incurred by Buyer in complying therewith.
No Participating Holder shall sell any Acquisition Shares pursuant to the
Registration Statement at any time Buyer shall have furnished written notice
that the Registration Statement is not then effective or the prospectus that
forms a part thereof is not current.
(d) Notwithstanding anything to the contrary contained herein, all of
Buyer's obligations under this Section 11.1 (including its obligation to file
and maintain the effectiveness of the Registration Statement) shall terminate
and expire as of the earliest date on which all of the shares of Acquisition
Shares can be sold without any restrictions as to volume or manner of sale
pursuant to subsection (k) of Rule 144 under the Securities Act.
11.2 Indemnification.
---------------
(a) Buyer agrees to indemnify, to the extent permitted by law, each
Participating Holder against all Damages suffered by such Participating Holder
as a result of any untrue or alleged untrue statement of material fact contained
in the Registration Statement or in the related prospectus or preliminary
prospectus (or in any amendment thereof or supplement thereto) or as a result of
any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such untrue statement or omission or alleged untrue statement or
omission results from or is contained in any information furnished in writing to
Buyer by such Participating Holder for use therein or results from such
Participating Holder's failure to deliver a copy of a Registration Statement or
related prospectus (or any amendment thereof or supplement thereto) after Buyer
has furnished such Participating Holder with a sufficient number of copies
thereof.
(b) In connection with the Registration Statement, each Participating
Holder (i) shall furnish to Buyer in writing such information and affidavits as
Buyer reasonably requests for use in connection with such Registration Statement
or the related prospectus, and (ii) to the extent permitted by law, will
indemnify Buyer, its directors and officers and each Person who controls Buyer
(within the meaning of the Securities Act) against all Damages resulting from
any untrue or alleged untrue statement of material fact contained in such
Registration Statement or in the related prospectus or preliminary prospectus
(or in any amendment thereof or supplement thereto) or from any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission or alleged untrue statement or omission results
from or is contained in any information or affidavit furnished in writing by
such Participating Holder.
(c) Any Person entitled to indemnification under this Article 11 will
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification, and (ii) unless in the indemnified
party's reasonable judgment a conflict of interest exists between the
indemnified party and the indemnifying party with respect to such claim, permit
the indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any consent to
the entry of any judgment or any settlement made by the indemnified party
without the indemnifying party's consent (but such consent will not be
unreasonably withheld). Any indemnifying party who is not entitled to, or
elects not to, assume the defense of a claim will pay the fees and expenses of
only one counsel for all parties indemnified by such indemnifying party with
respect to such claim, unless in the reasonable judgment of any indemnified
party a conflict of interest exists between such indemnified party and any other
indemnified party with respect to such claim (in which case the indemnifying
party will pay the fees and expenses of additional counsel).
11.3 Delay of Registration. For a period not to exceed 90 days, Buyer
---------------------
may delay the filing or effectiveness of the Registration Statement, or suspend
the use of the Registration Statement (and the Participating Holders hereby
agree not to offer or sell any shares of Buyer's common stock pursuant to the
Registration Statement during such period),
B-29
<PAGE>
at any time when Buyer, in its reasonable judgment (confirmed in writing if
requested by any Participating Holder), believes:
(a) that the filing of a Registration Statement or the offering or
sale of Buyer's common stock pursuant thereto, or the making of any required
disclosure in connection therewith, could reasonably be expected to have a
material adverse effect upon (i) a pending or scheduled offering of Buyer's
securities, (ii) an acquisition, merger, consolidation, joint venture, equity
investment or other potentially significant transaction or event, or (iii) any
negotiations, discussions or proposal with respect to any of the foregoing; and
(b) that the failure to disclose any material information with
respect to any of the foregoing could result in a violation of the Securities
Act, the Exchange Act or any provision of any state securities law.
In the event Buyer reasonably believes that any of the foregoing circumstances
are continuing after such 90-day period, it may, with the consent of the holders
of a majority of the shares of Buyer's common stock subject (or to be subject)
to the Registration Statement (which consent shall not be unreasonably withheld)
extend such 90-day period for one additional 30-day period.
11.4 Amendment of Section 11. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement, the provisions of this Section 11 may be amended by
Buyer at any time with the consent of the holders of a majority of the shares of
Buyer's common stock that are at that time subject (or to be subject) to the
Registration Statement.
ARTICLE XII
MISCELLANEOUS
-------------
12.1 Publicity. Except as otherwise required by law or stock exchange
---------
rules, none of the parties hereto shall issue any press release or make any
other public statement, in each case relating to or in connection with or
arising out of this Agreement or the matters contained herein, without obtaining
the prior written approval of all parties hereto as to the contents and manner
of presentation and publication thereof.
12.2 Knowledge. Where any representation or warranty contained in this
---------
Agreement is expressly qualified by reference to the knowledge, information or
belief of the Seller or Principals, Seller and each Principal confirms that such
party has made due and diligent inquiry as to the matters that are the subject
of such representations and warranties.
12.3 Gender. All pronouns and any variations thereof refer to the
------
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
12.4 Expenses. The Buyer, the Seller and the Principals shall pay their
--------
own respective expenses, including the fees and disbursements of their
respective counsel in connection with the negotiation, preparation and execution
of this Agreement and the consummation of the transactions contemplated hereby.
The Seller's and Principals' expenses in connection with the negotiation,
preparation and execution of this Agreement and the consummation of the
transactions contemplated hereby shall not be borne by the Company.
12.5 Brokerage Commissions and Finder's Fees. Each of the parties
---------------------------------------
represents and warrants to the others that it has not hired, retained or dealt
with any broker, finder or investment banker or in connection with the
transactions contemplated by this Agreement, and will defend, indemnify and hold
the other parties harmless from and against any and all claims for finder's fees
or brokerage or other commissions which may at any time be asserted against any
of such other parties founded upon a claim which is inconsistent with the
aforesaid representation and warranty of the indemni fying party, together with
any and all losses, damages, costs and expenses (including reasonable attorneys'
fees) relating to such claims or arising therefrom or incurred by the
indemnified party in connection with the enforcement of this indemnification
provision.
B-30
<PAGE>
12.6 Entire Agreement. This Agreement, including all schedules and
----------------
exhibits hereto, constitutes the entire agreement of the parties with respect to
the subject matter hereof, supersedes all prior agreements, negotiations or
letters of intent, and may not be modified, amended or terminated except by a
written instrument specifically referring to this Agreement signed by each of
the parties hereto.
12.7 Waivers and Consents. All waivers and consents given hereunder
--------------------
shall be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar, on the part of the same or any other party.
12.8 Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been given only if and when (i) personally
delivered or (ii) three (3) business days after mailing, postage prepaid, by
certified mail or (iii) when delivered (as evidenced by a receipt) by a
nationally recognized overnight delivery service, or (iv) by facsimile (as
evidenced by written confirmation of transmission and receipt) addressed in each
case as follows:
(a) If to the Seller and the Principals to:
HALIS, L.L.C.
200 Hembree Park Drive
Suite K
Roswell, Georgia 30076
Attention: Paul Harrison
with a copy in like manner to:
Kilpatrick & Cody
1100 Peachtree Street, Suite 2800
Atlanta, Georgia 30209-4530
Attention: Brian L. Schleicher, Esq.
Facsimile No.: (404) 815-6555
(b) If to the Buyer to
Fisher Business Systems, Inc.
900 Circle 75 Parkway
Suite 1700
Atlanta, Georgia 30339
Attention: Larry Fisher
Facsimile No.: (770) 857-4454
with a copy in like manner to:
Smith, Gambrell & Russell
3343 Peachtree Road
Suite 1800
Atlanta, Georgia 30326
Attention: William L. Meyer, Esq.
Facsimile No.: (404) 264-2652
Each party may change its address for the giving of notices and communications
to it, and/or copies thereof, by written notice to the other parties in
conformity with the foregoing.
12.9 Rights of Third Parties. All conditions of the obligations of the
-----------------------
parties hereto, and all undertakings herein, are solely and exclusively for the
benefit of the parties hereto and the Company and their respective successors
B-31
<PAGE>
and assigns, and no other person or entity shall have standing to require
satisfaction of such conditions or to enforce such undertakings in accordance
with their terms, or be entitled to assume that any party hereto will refuse to
consummate the purchase and sale contemplated hereby in the absence of strict
compliance with any or all thereof, and no other person or entity shall, under
any circumstances, be deemed a beneficiary of such conditions or undertakings,
any or all of which may be freely waived in whole or in part, by mutual consent
of the parties hereto at any time, if in their sole discretion they deem it
desirable to do so.
12.10 Headings. The Table of Contents and Article and Section headings
--------
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
12.11 Governing Law. The interpretation and construction of this
-------------
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Georgia.
12.12 Jurisdiction. Any judicial proceeding brought against any of the
------------
parties to this Agreement on any dispute arising out of this Agreement or any
matter related hereto may be brought in the courts of the State of Georgia, or
in the United States District Court for the Northern District of Georgia, and,
by execution and delivery of this Agreement, each of the parties to this
Agreement accepts for himself the exclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement.
12.13 Parties in Interest. After the Closing the Buyer may transfer
-------------------
and assign this Agreement and its rights hereunder to any purchaser of, or other
successor to, the business or assets of the Company. Except as expressly stated
above, this Agreement may not be transferred, assigned, pledged or hypothecated
by either party hereto, other than by operation of law or with the consent of
the other party. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, executors,
administrators, successors and permitted assigns.
12.14 Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one instrument.
12.15 Severability. In case any provision in this Agreement shall be
------------
held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
12.16 Arbitration.
-----------
(a) Any controversy or claim arising out of or relating to this
Agreement, the agreements to be entered into between or among the parties hereto
pursuant to this Agreement or the transactions contemplated hereby and thereby,
shall be submitted to and be finally resolves by arbitration pursuant to the
provisions of the United States Arbitration Act (9 U.S.C. (S) 1 et seq.), to be
conducted by the American Arbitration Association ("AAA"), with such arbitration
to be held in Atlanta, Georgia in accordance with the AAA's Commercial
Arbitration Rules then in effect. Each party hereby irrevocably agrees that
service of process, summons, notices or other communications related to the
arbitration procedure shall be deemed served and accepted by the other party if
given in accordance with Section 12.8. The arbitrators shall render a judgment
of default against any party who fails to appear in a properly noticed
arbitration proceeding. The arbitration shall be conducted by a panel of three
arbitrators selected pursuant to AAA Rules. Any award or decision rendered in
such arbitration shall be final and binding on both parties, and judgment may be
entered thereon in any court of competent jurisdiction if necessary.
(b) Notwithstanding subsection (a) above to the contrary, any
party may seek temporary or preliminary injunctive relief against the other
party at any court or proper jurisdiction with respect to any and all
preliminary injunctive or restraining procedures pertaining to this Agreement or
the breach thereof, pending the outcome of any arbitration proceeding.
B-32
<PAGE>
IN WITNESS WHEREOF, the parties have executed this agreement under seal as
of the date first above written.
BUYER
FISHER BUSINESS SYSTEMS, INC.
By: /s/ Larry Fisher
--------------------------
Title: President
-----------------------
[CORPORATE SEAL]
SELLER
HALIS, L.L.C.
By: /s/ Paul W. Harrison
--------------------------
Title: Managing Member
-----------------------
PRINCIPALS
/s/ Paul W. Harrison (L.S.)
-----------------------------
Paul W. Harrison
/s/ James E. Askew (L.S.)
-----------------------------
James E. Askew
B-33
<PAGE>
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement is entered into as of
September 27, 1996 by and among Fisher Business Systems, Inc., a Georgia
corporation ("Fisher"), HALIS, L.L.C., a Georgia limited liability company
("Seller"), Paul Harrison and James Askew, all individual residents of Georgia.
A. The parties hereto entered into a Stock Purchase Agreement as of
March 29, 1996, (such agreement shall be referred to hereinafter as the
"Original Agreement").
B. The parties wish to amend the Original Agreement as provided herein.
A G R E E M E N T
The parties hereby amend the Original Agreement as follows:
1. Section 9.1(f) is hereby amended by changing "June 30, 1996" to
"November 30, 1996."
Except as expressly amended hereby, the Original Agreement shall continue
in full force and effect.
The parties have caused this First Amendment to be executed and delivered
as of the date first stated above.
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Larry Fisher
---------------------------
Its: Chairman
---------------------------
HALIS, L.L.C., a Georgia limited
liability company
By: /s/ Paul W. Harrison
---------------------------
Its: Managing Member
---------------------------
/s/ Paul Harrison (SEAL)
---------------------------
PAUL HARRISON
/s/ James Askew (SEAL)
---------------------------
JAMES ASKEW
All individual residents of the State
of Georgia
B-34
<PAGE>
APPENDIX C
================================================================================
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
Fisher Business Systems, Inc., a Georgia corporation,
ACC Acquisition Co., a Georgia corporation,
Advanced Custom Computer Solutions, Inc., a Georgia corporation,
and
the Shareholders of Advanced custom computer solutions, inc.
_________________________
Dated as of May 23, 1996
_________________________
================================================================================
C-1
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<C> <S> <C>
SECTION 1. DESCRIPTION OF TRANSACTION............................................ C-6
1.1 Merger of ACC into the Subsidiary..................................... C-6
1.2 Effect of Merger...................................................... C-6
1.3 Closing; Effective Time............................................... C-6
1.4 Articles of Incorporation and Bylaws; Directors and Officers.......... C-6
1.5 Conversion of Shares.................................................. C-7
1.6 Closing of ACC's Transfer Books....................................... C-7
1.7 Exchange of Certificates.............................................. C-7
1.8 Merger Consideration.................................................. C-8
1.9 Post-Closing Adjustment............................................... C-8
1.10 Determination of Pre-Tax Net Income................................... C-8
1.11 Tax Consequences...................................................... C-9
1.12 Further Action........................................................ C-9
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ACC AND THE SHAREHOLDERS............ C-9
2.1 Due Organization; No Subsidiaries; Etc................................ C-9
2.2 Articles of Incorporation and Bylaws; Records......................... C-10
2.3 Capitalization, Etc................................................... C-10
2.4 Financial Statements.................................................. C-10
2.5 Absence of Changes.................................................... C-11
2.6 Title to Assets....................................................... C-12
2.7 Bank Accounts; Receivables; Customers................................. C-12
2.8 Equipment; Leasehold.................................................. C-13
2.9 Proprietary Assets.................................................... C-13
2.10 Contracts............................................................. C-14
2.11 Liabilities........................................................... C-16
2.12 Compliance with Legal Requirements.................................... C-16
2.13 Governmental Authorizations........................................... C-16
2.14 Tax Matters........................................................... C-16
2.15 Employee and Labor Matters; Benefit Plans............................. C-17
2.16 Environmental Matters................................................. C-19
2.17 Sale of Products; Performance of Services............................. C-19
2.18 Insurance............................................................. C-19
2.19 Related Party Transactions............................................ C-20
2.20 Legal Proceedings; Orders............................................. C-20
2.21 Authority; Binding Nature of Agreement................................ C-20
2.22 Non-Contravention; Consents........................................... C-20
2.23 Full Disclosure....................................................... C-21
SECTION 3. REPRESENTATIONS AND WARRANTIES OF FISHER AND THE SUBSIDIARY........... C-21
3.1 SEC Filings; Financial Statements..................................... C-21
3.2 Authority; Binding Nature of Agreement................................ C-22
3.3 Valid Issuance........................................................ C-22
SECTION 4. CERTAIN COVENANTS OF ACC AND THE SHAREHOLDERS......................... C-22
4.1 Access and Investigation.............................................. C-22
4.2 Operation of ACC's Business........................................... C-22
4.3 Notification; Updates to Disclosure Schedule.......................... C-23
4.4 No Negotiation........................................................ C-24
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES................................... C-25
5.1 Filings and Consents.................................................. C-25
5.2 Public Announcements.................................................. C-25
5.3 Best Efforts.......................................................... C-25
5.4 Employment and Noncompetition Agreements.............................. C-25
</TABLE>
C-2
<PAGE>
<TABLE>
<C> <S> <C>
5.5 Release............................................................... C-25
5.6 Termination of Employee Plans......................................... C-25
5.7 FIRPTA Matters........................................................ C-25
5.8 Escrow Agreement...................................................... C-25
5.9 Election to Board..................................................... C-25
5.10 Capital Contribution.................................................. C-25
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF FISHER AND THE SUBSIDIARY...... C-26
6.1 Accuracy of Representations........................................... C-26
6.2 Performance of Covenants.............................................. C-26
6.3 Consents.............................................................. C-26
6.4 Agreements and Documents.............................................. C-26
6.5 No Material Adverse Change............................................ C-26
6.6 Termination of Employee Plans......................................... C-26
6.7 FIRPTA Compliance..................................................... C-26
6.8 Rule 506.............................................................. C-27
6.9 No Restraints......................................................... C-27
6.10 No Legal Proceedings.................................................. C-27
6.11 Increase in Authorized Shares......................................... C-27
6.12 Completion of Due Diligence........................................... C-27
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACC AND THE SHAREHOLDERS... C-27
7.1 Accuracy of Representations........................................... C-27
7.2 Performance of Covenants.............................................. C-27
7.3 Consents.............................................................. C-27
7.4 Agreements and Documents.............................................. C-27
7.5 No Restraints......................................................... C-27
7.6 Increase in Authorized Shares......................................... C-28
SECTION 8. TERMINATION........................................................... C-28
8.1 Termination Events.................................................... C-28
8.2 Termination Procedures................................................ C-28
8.3 Effect of Termination................................................. C-28
SECTION 9. INDEMNIFICATION, ETC.................................................. C-28
9.1 Survival of Representations and Warranties............................ C-28
9.2 Shareholders' Indemnity Agreement..................................... C-29
9.3 Indemnity Agreement of Fisher and the Surviving Corporation........... C-29
9.4 Indemnification Procedure............................................. C-30
9.5 Set-off............................................................... C-30
9.6 Limitations on Liability of Shareholders.............................. C-31
SECTION 10. REGISTRATION OF SHARES................................................ C-31
10.1 Certain Definitions................................................... C-31
10.2 Registration Under Securities Act, Etc................................ C-32
10.3 Incidental Registration............................................... C-32
10.4 Registration Procedures............................................... C-33
10.5 Underwritten Offerings................................................ C-35
10.6 Preparation; Reasonable Investigation................................. C-36
10.7 Indemnification....................................................... C-36
10.8 Amendments and Waivers................................................ C-38
10.9 Nominees for Beneficial Owners........................................ C-38
SECTION 11. MISCELLANEOUS PROVISIONS.............................................. C-38
11.1 Shareholders' Agent................................................... C-38
11.2 Further Assurances.................................................... C-38
11.3 Fees and Expenses..................................................... C-38
11.4 Attorneys' Fees....................................................... C-39
</TABLE>
C-3
<PAGE>
<TABLE>
<C> <S> <C>
11.5 Notices............................................................... C-39
11.6 Confidentiality....................................................... C-40
11.7 Time of the Essence................................................... C-40
11.8 Headings.............................................................. C-40
11.9 Counterparts.......................................................... C-40
11.10 Governing Law; Venue.................................................. C-40
11.11 Successors and Assigns................................................ C-40
11.12 Remedies Cumulative; Specific Performance............................. C-41
11.13 Waiver................................................................ C-41
11.14 Amendments............................................................ C-41
11.15 Severability.......................................................... C-41
11.16 Parties in Interest................................................... C-41
11.17 Entire Agreement...................................................... C-41
11.18 Construction.......................................................... C-41
</TABLE>
C-4
<PAGE>
EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit A - Shareholders
Exhibit B - Certain definitions
Exhibit C - Directors and officers of Surviving Corporation
Exhibit D - Escrow Agreement
Exhibit E - Forms of Employment Agreements and Noncompetition Agreement
Exhibit F - Form of Release
Exhibit G - Persons to execute estoppel certificates
</TABLE>
C-5
<PAGE>
AGREEMENT AND PLAN
OF MERGER AND REORGANIZATION
this agreement and plan of merger and reorganization ("Agreement") is made
and entered into as of May 23, 1996, by and among: Fisher Business Systems,
Inc., a Georgia corporation ("Fisher"); acc acquisition co., a Georgia
corporation and a wholly owned subsidiary of Fisher (the "Subsidiary"); advanced
custom computer solutions, inc., a Georgia corporation ("ACC"); and the parties
identified on Exhibit A, who are all the shareholders of ACC (the
"Shareholders"). Certain capitalized terms used in this Agreement are defined
in Exhibit B.
RECITALS
A. Fisher, ACC and the Subsidiary intend to effect a merger of ACC into
the Subsidiary in accordance with this Agreement and the Georgia Business
Corporation Code (the "Merger"). Upon consummation of the Merger, ACC will
cease to exist, and the Subsidiary will continue to exist as the surviving
corporation of the Merger.
B. It is intended that the Merger quality as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
C. This Agreement has been adopted and approved by the respective boards
of directors of Fisher, ACC and the Subsidiary.
D. The capitalization of ACC consists of 500 shares of the voting common
stock, $1.00 par value per share, representing 100% of the issued and
outstanding stock of ACC (the "ACC Common Stock.")
AGREEMENT
The parties to this Agreement agree as follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF ACC INTO THE SUBSIDIARY. Upon the terms and subject to the
conditions set forth in this Agreement, at the Effective Time (as defined in
Section 1.3), ACC shall be merged with and into the Subsidiary, and the separate
existence of ACC shall cease. The Subsidiary will continue as the surviving
corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF MERGER. The Merger shall have the effects set forth in this
Agreement and in the applicable provisions of the Georgia Business Corporation
Code.
1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Smith, Gambrell & Russell, 3343 Peachtree Road, Suite 1800, Atlanta, Georgia
30326, at 10:00 a.m. local time on July 15, 1996, or at such other time and date
during the period from July 15, 1996 through September 15, 1996, as the parties
shall designate (the "Scheduled Closing Time"). (The date on which the Closing
actually takes place is referred to in this Agreement as the "Closing Date.")
Contemporaneously with or as promptly as practicable after the Closing, a
properly executed certificate of merger for the merger of ACC into the
Subsidiary, conforming to the requirements of the Georgia Business Corporation
Code, shall be filed with the Secretary of State of the State of Georgia. The
Merger shall take effect at the time such certificate of merger is filed with
the Secretary of State of the State of Georgia (the "Effective Time").
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS. Unless
the parties agree otherwise prior to the Effective Time:
(a) the Articles of Incorporation of the Subsidiary shall continue as
the Articles of Incorporation of the Surviving Corporation;
(b) the Bylaws of the Subsidiary shall continue as the Bylaws of the
Surviving Corporation;
C-6
<PAGE>
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit C.
1.5 CONVERSION OF SHARES.
(a) Subject to Sections 1.7(b), at the Effective Time, by virtue of
the Merger and without any further action on the part of Fisher, ACC, the
Subsidiary or any Shareholder, each share of ACC Common Stock outstanding
immediately prior to the Effective Time shall be canceled and retired and
converted into the right to receive a pro rata share of the aggregate Merger
Consideration described in Section 1.8.
(b) If any shares of ACC Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase option, risk of
forfeiture or other condition under any restricted stock purchase agreement or
other agreement with ACC, then the shares of Fisher Common Stock issued in
exchange for such shares of ACC Common Stock will be unvested and subject to the
same repurchase option, risk of forfeiture or other condition, and the
certificates representing such shares of Fisher Common Stock may accordingly be
marked with appropriate legends.
1.6 CLOSING OF ACC'S TRANSFER BOOKS. At the Effective Time, the holders
of certificates representing shares of ACC Common Stock that were outstanding
immediately prior to the Effective Time shall cease to have any rights as
Shareholders of ACC, and the stock transfer books of ACC shall be closed with
respect to all shares of such ACC Common Stock outstanding immediately prior to
the Effective Time. No further transfer of any such shares of ACC's capital
stock shall be made on such stock transfer books after the Effective Time. If,
after the Effective Time, a valid certificate previously representing any of
such shares of ACC Common Stock (an "ACC Stock Certificate") is presented to
Fisher, such ACC Stock Certificate shall be canceled and shall be exchanged as
provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) At the Closing, each Shareholder shall surrender its respective
ACC Stock Certificate(s) to the Surviving Corporation, together with such
transmittal documents as the Surviving Corporation may reasonably require, and
the Surviving Corporation shall deliver to such Shareholder such Shareholder's
pro rata share of the aggregate Merger Consideration to be paid at Closing
pursuant to Section 1.8.
(b) No fractional shares of Fisher Common Stock shall be issued in
connection with the Merger, and no certificates for any such fractional shares
shall be issued. In lieu of such fractional shares, any Shareholder who would
otherwise be entitled to receive a fraction of a share of Fisher Common Stock
(after aggregating all fractional shares of Fisher Common Stock issuable to such
holder) shall, upon surrender of such Shareholder's ACC Stock Certificate(s), be
paid in cash at a rate of $2.00 per share in lieu of such fractional shares.
(c) Until surrendered as contemplated by this Section 1.7, each ACC
Stock Certificate shall be deemed, from and after the Effective Time, to
represent only the right to receive a pro rata share of the Merger
Consideration. If any ACC Stock Certificate shall have been lost, stolen or
destroyed, Fisher may, in its discretion and as a condition precedent to the
issuance of any certificate representing Fisher Common Stock, require the owner
of such lost, stolen or destroyed ACC Stock Certificate to provide an
appropriate affidavit and to deliver a bond (in such sum as Fisher may
reasonably direct) as indemnity against any claim that may be made against
Fisher with respect to such ACC Stock Certificate.
(d) The shares of Fisher Common Stock to be issued in the Merger shall
be characterized as "restricted securities" for purposes of Rule 144 under the
Securities Act, and each certificate representing any of such shares shall bear
a legend identical or similar in effect to the following legend (together with
any other legend or legends required by applicable state securities laws or
otherwise):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION
IS NOT REQUIRED.
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(e) Fisher shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable to any holder or former holder of
ACC Common Stock pursuant to this Agreement such amounts as Fisher may be
required to deduct or withhold therefrom under the Code or under any provision
of state, local or foreign tax law. To the extent such amounts are so deducted
or withheld, such amounts shall be treated for all purposes under this Agreement
as having been paid to the Person to whom such amounts would otherwise have been
paid.
(f) Fisher shall not be liable to any holder or former holder of ACC
Common Stock for any shares of Fisher Common Stock (or dividends or
distributions with respect thereto), or for any cash amounts, delivered to any
public official pursuant to any applicable abandoned property, escheat or
similar law.
1.8 MERGER CONSIDERATION
(a) The aggregate merger consideration to be paid by Fisher to the
Shareholders in consideration of the Merger ("Merger Consideration") shall be,
subject to the Post-Closing Adjustment as provided in Section 1.9, 2,000,000
shares of Fisher Common Stock. Of the 2,000,000 shares of Fisher Common Stock
comprising the Merger Consideration, 1,750,000 shares will be delivered to the
Shareholders at Closing and 250,000 shares shall be delivered into escrow
pursuant to the Escrow Agreement attached as Exhibit D hereto (the "Escrow
Shares"). The Escrow Shares shall be subject to the Post-Closing Adjustment of
the Merger Consideration described in Section 1.9 as well as any claims of
Fisher or the Surviving Corporation arising under Section 9.2.
1.9 POST-CLOSING ADJUSTMENT. The Escrow Shares shall be held pursuant to
the Escrow Agreement pending a post-Closing adjustment of the Merger
Consideration ("Post-Closing Adjustment"), based upon the Pre-Tax Net Income of
the Surviving Corporation for the 12 month period which begins on the first day
of the first full calendar month following the Closing Date (the "Determination
Period"). If the Pre-Tax Net Income of the Surviving Company during the
Determination Period is equal to or greater than $500,000, there will be no
Post-Closing Adjustment. If the Pre-Tax Net Income of the Surviving Corporation
is less than $500,000, the Merger Consideration shall be adjusted downward at a
rate of $1.00 for every $1.00 by which such Pre-Tax Net Income for the
Determination Period is less than $500,000, up to a maximum downward adjustment
of $500,000. Upon final determination of the Post-Closing Adjustment, if no
claims by Fisher or the Surviving Corporation are pending pursuant to Section
9.2, the escrow agent will release the number of Escrow Shares which is equal to
the balance due of the Merger Consideration, as adjusted by the Post-Closing
Adjustment, using the same price for the Escrow Shares as was used to calculate
the portion of the Merger Consideration paid in Fisher Common Stock at Closing,
regardless of any fluctuation in the price of Fisher Common Stock following the
Closing. The balance of the Escrow Shares, if any, shall be transferred to
Fisher to be canceled or held as treasury stock. If the Shareholders are
entitled to all or a portion of the Escrow Shares as a result of the Post-
Closing Adjustment and there is a claim pending by Fisher or the Surviving
Corporation pursuant to Section 9.2, the escrow agent shall release to the
Shareholders only such portion of the Escrow Shares, if any, which are not
subject to such Section 9.2 claim, and shall hold the remaining Escrow Shares in
escrow pending final resolution of such Section 9.2 claim.
1.10 DETERMINATION OF PRE-TAX NET INCOME. "Pre-Tax Net Income" of the
Surviving Corporation shall mean, for purposes of the Post-Closing Adjustment,
all income of the Surviving Corporation for the period in question, less all
expense of the Surviving Corporation for such period prior to adjustment for
income tax; provided, however, that management fees assessed against the
Surviving Corporation by Fisher or any of its affiliates shall not be counted as
an expense of the Surviving Corporation for purposes of determining Pre-Tax Net
Income. For purposes of the Post-Closing Adjustment, the pre-tax net income of
the Surviving Corporation for the Determination Period shall be determined by
the Surviving Corporation's independent certified public accountants within 120
days following the end of the Determination Period (the "Net Income
Determination"). Within 5 business days after receiving the Net Income
Determination, Fisher shall deliver same to the Shareholders' Agent (as defined
in Section 11.1). If the Shareholders' Agent does not deliver a list of written
objections to the Net Income Determination ("Objection Notice") to Fisher within
30 days following delivery to the Shareholders' Agent, the Net Income
Determination shall become final and binding upon the parties. If the
Shareholders' Agent delivers an Objection Notice within such 30 day period, the
parties will endeavor to reconcile any differences and agree upon a final Net
Income Determination. If the parties are unable to agree upon a final Net
Income Determination within 30 days following delivery of the Objection Notice,
at the request of either party the outstanding matters shall be submitted for
resolution by a mutually acceptable accounting firm of recognized national or
regional standing with offices in the Atlanta area. If the parties are unable
to agree upon a mutually acceptable accounting firm, one will be selected at
random from a list of the 10 largest Atlanta offices of certified public
accounting firms having no prior affiliation with Fisher, ACC, the Surviving
Corporation or the Shareholders. Each of Fisher and the Shareholders shall bear
50% of the fees and expenses of the accounting firm so selected. Such
accounting
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firm shall promptly prepare a final Net Income Determination and its conclusions
shall be final and binding upon the parties.
1.11 TAX CONSEQUENCES. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section 368 of the
Code. The parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.12 FURTHER ACTION. If, at any time after the Effective Time, any further
action is determined by Fisher to be necessary or desirable to carry out the
purposes of this Agreement or to vest Fisher with full right, title and
possession of and to all rights and property of ACC, the officers and directors
of Fisher shall be fully authorized (in the name of ACC and otherwise) to take
such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF ACC AND THE SHAREHOLDERS
ACC and the Shareholders jointly and severally represent and warrant,
to and for the benefit of Fisher and the Subsidiary, as follows as of the date
hereof and as of the Closing Date:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) ACC is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and has all necessary power and
authority: (i) to conduct its business in the manner in which its business is
currently being conducted and in the manner in which its business is proposed to
be conducted; (ii) to own and use its assets in the manner in which its assets
are currently owned and used and in the manner in which its assets are proposed
to be owned and used; and (iii) to perform its obligations under all Contracts
by which it is bound.
(b) ACC has not conducted any business under or otherwise used, for
any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the names "ACC Solutions," "ACC" and "ACCS".
(c) ACC is not and has not been required to be qualified, authorized,
registered or licensed to do business as a foreign corporation in any
jurisdiction other than the jurisdictions identified in Part 2.1(c) of the
Disclosure Schedule, except where the failure to be so qualified, authorized,
registered or licensed has not had and will not have a Material Adverse Effect
on ACC. ACC is in good standing as a foreign corporation in each of the
jurisdictions identified in Part 2.1(c) of the Disclosure Schedule.
(d) Part 2.1(d) of the Disclosure Schedule accurately sets forth (i)
the names of the members of the ACC's board of directors, (ii) the names of the
members of each committee of ACC's board of directors, and (iii) the names and
titles of ACC's officers.
(e) ACC has no subsidiaries, and has never owned, beneficially or
otherwise, any shares or other securities of, or any direct or indirect interest
of any nature in, any other Entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS. ACC has delivered to
Fisher accurate and complete copies of: (i) ACC's articles of incorporation and
bylaws, including all amendments thereto; (ii) the stock records of ACC; and
(iii) the minutes and other records of the meetings and other proceedings
(including any actions taken by written consent or otherwise without a meeting)
of the shareholders of ACC, the board of directors of ACC and all committees of
the board of directors of ACC. There have been no meetings or other proceedings
or actions of the shareholders of ACC, the board of directors of ACC or any
committee of the board of directors of ACC that are not fully reflected in such
minutes or other records. There has not been any violation of any of the
provisions of ACC's articles of incorporation or bylaws or of any resolution
adopted by ACC's shareholders, ACC's board of directors or any committee of
ACC's board of directors. The books of account, stock records, minute books and
other records of ACC are accurate, up-to-date and complete, and have been
maintained in accordance with prudent business practices and all applicable
Legal Requirements.
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2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of ACC consists of 500 shares of
common stock, of which 500 shares have been issued and are outstanding. There
are no shares of capital stock held in ACC's treasury. Part 2.3(a) of the
Disclosure Schedule sets forth the names of ACC's shareholders and the number of
shares of ACC common stock owned of record by each of such shareholders. All of
the outstanding shares of ACC common stock have been duly authorized and validly
issued, and are fully paid and non-assessable, and none of such shares is
subject to any repurchase option or restriction on transfer.
(b) There is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire, or otherwise
relating to, any shares of the capital stock or other securities of ACC; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
ACC; (iii) Contract under which ACC is or may become obligated to sell or
otherwise issue any shares of its capital stock or any other securities; or (iv)
condition or circumstance that may give rise to or provide a basis for the
assertion of a claim by any Person to the effect that such Person is entitled to
acquire or receive any shares of capital stock or other securities of ACC.
Except as set forth in Part 2.3(c) of the Disclosure Schedule, ACC has never
issued or granted any option, call, warrant or right to acquire, or otherwise
relating to, any shares of its capital stock or other securities.
(c) All outstanding shares of ACC Common Stock have been issued in
compliance with (i) all applicable securities laws and other applicable Legal
Requirements, and (ii) all requirements set forth in applicable Contracts.
(d) Except as set forth in Part 2.3(e) of the Disclosure Schedule, ACC
has never repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities. All securities so reacquired by ACC were reacquired
in compliance with (i) the applicable provisions of the Georgia Business
Corporation Code and all other applicable Legal Requirements, and (ii) any
requirements set forth in applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) ACC has delivered to Fisher the following financial statements and
notes (collectively, the "Company Financial Statements"): unaudited balance
sheets of ACC as of March 31, 1995 and March 31, 1996 (the unaudited balance
sheet as of March 31, 1996 is hereinafter referred to as the "Unaudited Balance
Sheet"), and the related unaudited statements of income, statements of
shareholders' equity and statements of cash flows of ACC for the years then
ended.
(b) The Company Financial Statements are accurate and complete in all
material respects and present fairly the financial position of ACC as of the
respective dates thereof and the results of operations and cash flows of ACC for
the periods covered thereby. The Company Financial Statements have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered except that the Company
Financial Statements do not contain footnotes and are subject to normal and
recurring year-end audit adjustments, which will not, individually or in the
aggregate, be material in magnitude).
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Disclosure
Schedule, since March 31, 1996:
(a) there has not been any material adverse change in ACC's business,
condition, assets, liabilities, operations, financial performance or prospects,
and no event has occurred that will, or could reasonably be expected to, have a
Material Adverse Effect on ACC;
(b) there has not been any material loss, damage or destruction to, or
any material interruption in the use of, any of ACC's assets (whether or not
covered by insurance);
(c) ACC has not declared, accrued, set aside or paid any dividend or
made any other distribution in respect of any shares of capital stock, and has
not repurchased, redeemed or otherwise reacquired any shares of capital stock or
other securities;
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(d) ACC has not sold, issued or authorized the issuance of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire, or otherwise relating to, any capital stock or any other security, or
(iii) any instrument convertible into or exchangeable for any capital stock or
other security;
(e) there has been no amendment to ACC's articles of incorporation or
bylaws, and ACC has not effected or been a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(f) ACC has not formed any subsidiary or acquired any equity interest
or other interest in any other Entity;
(g) ACC has not made any capital expenditure which, when added to all
other capital expenditures made by ACC since March 31, 1996, exceeds $25,000 in
the aggregate;
(h) ACC has not (i) entered into or permitted any of the assets owned
or used by it to become bound by any Material Contract (as defined in Section
2.10(a)), or (ii) amended or prematurely terminated, or waived any material
right or remedy under, any Material Contract to which it is or was party or
under which it has or has had any rights or obligations;
(i) ACC has not (i) acquired, leased or licensed any right or other
asset from any other Person, (ii) sold or otherwise disposed of, or leased or
licensed, any right or other asset to any other Person, or (iii) waived or
relinquished any right, except for immaterial rights or other immaterial assets
acquired, leased, licensed or disposed of in the ordinary course of business and
consistent with ACC's past practices;
(j) ACC has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness;
(k) ACC has not made any pledge of any of its assets or otherwise
permitted any of its assets to become subject to any Encumbrance, except for
pledges of immaterial assets made in the ordinary course of business and
consistent with ACC's past practices;
(l) ACC has not (i) lent money to any Person, or (ii) incurred or
guaranteed any indebtedness for borrowed money;
(m) ACC has not (i) established, adopted or amended any Employee
Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar payment
to, or increased the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors, officers
or employees, or (iii) hired any new employee;
(n) ACC has not changed any of its methods of accounting or accounting
practices in any respect;
(o) ACC has not made any Tax election;
(p) ACC has not commenced or settled any legal Proceeding;
(q) ACC has not entered into any material transaction or taken any
other material action outside the ordinary course of business or inconsistent
with its past practices; and
(r) ACC has not agreed or committed to take any of the actions
referred to in clauses "(c)" through "(q)" above.
2.6 TITLE TO ASSETS.
(a) ACC owns, and has good, valid and marketable title to, all assets
purported to be owned by it, including: (i) all assets reflected on the
Unaudited Balance Sheet; (ii) all assets referred to in Parts 2.7(b), 2.8 and
2.9 of the Disclosure Schedule and all of ACC's rights under the Contracts
identified in Part 2.10(a) of the Disclosure Schedule; and (iii) all other
assets reflected in ACC's books and records as being owned by ACC. Except as
set forth in Part 2.6(a) of the Disclosure Schedule, all of said assets are
owned by ACC free and clear of any liens or other
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Encumbrances, except for (i) any lien for current taxes not yet due and payable,
and (ii) minor liens that have arisen in the ordinary course of business and
that do not (in any case or in the aggregate) materially detract from the value
of the assets subject thereto or materially impair the operations of ACC.
(b) Part 2.6(b) of the Disclosure Schedule identifies all assets that
are being leased or licensed to ACC.
2.7 BANK ACCOUNTS; RECEIVABLES; CUSTOMERS.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate and
complete information with respect to each account maintained by or for the
benefit of ACC at any bank or other financial institution.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of ACC as of March 31, 1996. Except as set forth in Part
2.7(b) of the Disclosure Schedule, all existing accounts receivable of ACC
(including those accounts receivable reflected on the Unaudited Balance Sheet
that have not yet been collected and those accounts receivable that have arisen
since March 31, 1996 and have not yet been collected) (i) represent valid
obligations of customers of ACC arising from bona fide transactions entered into
in the ordinary course of business, and (ii) are current and will be collected
in full, without any counterclaim or set off, when due net of an allowance for
doubtful accounts not to exceed $75,000 in the aggregate.
(c) Part 2.7(c) of the Disclosure Schedule accurately identifies, and
provides an accurate and complete breakdown of the revenues received from, each
customer or other Person that (together with such Person's affiliates) accounted
for more than $15,000 of the net revenues of ACC in 1995 or 1996. ACC has not
received any notice or other communication indicating that any customer or other
Person identified in Part 2.7(c) of the Disclosure Schedule intends or expects
to cease dealing with ACC or to reduce the volume of business transacted by such
Person with ACC below historical levels.
(d) Part 2.7(d) of the Disclosure Schedule provides an accurate and
complete breakdown of all pending and unfilled orders received by ACC for
products, systems and services.
2.8 EQUIPMENT; LEASEHOLD.
(a) Part 2.8 of the Disclosure Schedule provides accurate and complete
information with respect to all material items of equipment, fixtures, leasehold
improvements and other tangible assets owned by or leased to ACC. The assets
identified in Part 2.8 of the Disclosure Schedule are adequate for the uses to
which they are being put, are in good condition and repair (ordinary wear and
tear excepted) and are adequate for the conduct of ACC's business in the manner
in which such business is currently being conducted and in the manner in which
such business is proposed to be conducted.
(b) ACC does not own any real property or any interest in real
property, except for the leasehold(s) created under the real property lease(s)
identified in Part 2.10(a) of the Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(1) of the Disclosure Schedule sets forth, with respect
to each Company Proprietary Asset that has been registered, recorded or filed
with any Governmental Body or with respect to which an application has been
filed with any Governmental Body, (i) a brief description of such Company
Proprietary Asset, and (ii) the names of the jurisdictions covered by the
applicable registration, recordation, filing or application. Part 2.9(a)(2) of
the Disclosure Schedule identifies and provides a brief description of all other
Company Proprietary Assets owned by ACC. Part 2.9(a)(3) of the Disclosure
Schedule identifies and provides a brief description of each Company Proprietary
Asset that is owned by any other Person and that is licensed to or used by ACC
(except for any Company Proprietary Asset that is licensed to ACC under any
third party software license generally available to the public at a cost of less
than $500), and identifies the license agreement or other agreement under which
such Company Proprietary Asset is being licensed to or used by ACC. Except as
set forth in Part 2.9(a)(4) of the Disclosure Schedule, each Company has good,
valid and marketable title to all of the Proprietary Assets identified in Parts
2.9(a)(1) and 2.9(a)(2) of the Disclosure Schedule, free and clear of all liens
and other Encumbrances, and has a valid right to use all Proprietary Assets
identified in Part 2.9(a)(3) of the Disclosure Schedule. Except as set forth in
Part 2.9(a)(5) of the Disclosure Schedule, ACC is
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not obligated to make any payment to any Person for the use of any Company
Proprietary Asset. Except as set forth in Part 2.9(a)(6) of the Disclosure
Schedule, ACC is free to use, modify, copy, distribute, sell, license or
otherwise exploit each of the Company Proprietary Assets on an exclusive basis.
(b) ACC has taken all measures and precautions necessary to protect
and maintain the confidentiality and secrecy of all Company Proprietary Assets
(except Company Proprietary Assets whose value would be unimpaired by public
disclosure) and otherwise to maintain and protect the value of all Company
Proprietary Assets. Except as set forth in Part 2.9(b) of the Disclosure
Schedule, ACC has not disclosed or delivered or permitted to be disclosed or
delivered to any Person, and no Person (other than ACC) has access to or has any
rights with respect to, the source code, or any portion or aspect of the source
code, of any Company Proprietary Asset.
(c) None of ACC's Proprietary Assets infringes or conflicts with any
Proprietary Asset owned or used by any other Person. ACC is not infringing,
misappropriating or making any unlawful use of, and ACC has not at any time
infringed, misappropriated or made any unlawful use of, or received any notice
or other communication of any actual, alleged, possible or potential
infringement, misappropriation or unlawful use of, any Proprietary Asset owned
or used by any other Person. To the best of the knowledge of ACC and the
Shareholders, no other Person is infringing, misappropriating or making any
unlawful use of, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Company Proprietary Asset.
(d) Except as set forth in Part 2.9(d) of the Disclosure Schedule: (i)
each Company Proprietary Asset conforms in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided with respect thereto by or on behalf of ACC; and (ii) there has
not been any material claim by any customer or other Person alleging that any
Company Proprietary Asset does not conform in all material respects with any
specification, documentation, performance standard, representation or statement
made or provided by or on behalf of ACC, and, to the best of the knowledge of
ACC and the Shareholders, there is no basis for any such claim. ACC has
established adequate reserves on the Unaudited Balance Sheet to cover all costs
associated with any obligations that ACC may have with respect to the correction
or repair of programming errors or other defects in the Company Proprietary
Assets.
(e) The Company Proprietary Assets constitute all the Proprietary
Assets necessary to enable ACC to conduct its business in the manner in which
such business has been conducted and in the manner in which such business is
proposed to be conducted. Except as set forth in Part 2.9(e) of the Disclosure
Schedule, (i) ACC has not licensed any of the Company Proprietary Assets to any
Person on an exclusive basis, and (ii) ACC has not entered into any covenant not
to compete or Contract limiting its ability to exploit fully any of its
Proprietary Assets or to transact business in any market or geographical area or
with any Person.
(f) Except as set forth in Part 2.9(f) of the Disclosure Schedule, all
current and former employees of ACC have executed and delivered to ACC written
agreements (containing no exceptions to or exclusions from the scope of their
coverage) that are substantially identical to the form of [Non-Disclosure and
Work for Hire Agreements] attached to the Disclosure Schedule as Appendices
2.9(1) and 2.9(2). ACC has never engaged or received services from any
consultant or independent contractor in connection with the design or
development of any Proprietary Asset.
2.10 CONTRACTS.
(a) Part 2.10(a) of the Disclosure Schedule identifies each Company
Contract that constitutes a "Material Contract." For purposes of this
Agreement, each of the following shall be deemed to constitute a "Material
Contract":
(i) any Contract relating to the employment or engagement of, or the
performance of services by, any employee, consultant or independent
contractor;
(ii) any Contract relating to the acquisition, transfer, use,
development, sharing or license of any technology or any Proprietary Asset;
(iii) any Contract imposing any restriction on ACC's right or ability
(A) to compete with any other Person, (B) to acquire any product or other
asset or any services from any other Person, to sell any product or other
asset to or perform any services for any other Person or to transact
business or deal in any other manner with any other Person, or (C) to
develop or distribute any technology;
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(iv) any Contract creating or involving any agency relationship,
distribution arrangement or franchise relationship;
(v) any Contract relating to the acquisition, issuance or transfer of
any securities;
(vi) any Contract creating or relating to the creation of any
Encumbrance with respect to any asset owned or used by ACC;
(vii) any Contract involving or incorporating any guaranty, any
pledge, any performance or completion bond, any indemnity, any right of
contribution or any surety arrangement;
(viii) any Contract creating or relating to any partnership or
joint venture or any sharing of revenues, profits, losses, costs or
liabilities;
(ix) any Contract relating to the purchase or sale of any product or
other asset by or to, or the performance of any services by or for, any
Related Party (as defined in Section 2.19);
(x) any Contract to which any Governmental Body is a party or under
which any Governmental Body has any rights or obligations, or involving or
directly or indirectly benefiting any Governmental Body (including any
subcontract or other Contract between ACC and any contractor or
subcontractor to any Governmental Body);
(xi) any Contract entered into outside the ordinary course of business
or inconsistent with ACC's past practices;
(xii) any Contract that has a term of more than 60 days and that may
not be terminated by ACC (without penalty) within 60 days after the
delivery of a termination notice by the Subject Business; and
(xiii) any Contract that contemplates or involves (A) the payment
or delivery of cash or other consideration in an amount or having a value
in excess of $5,000 in the aggregate, or (B) the performance of services
having a value in excess of $5,000 in the aggregate.
(b) ACC has delivered to Fisher accurate and complete copies of all
Contracts identified in Part 2.10(a) of the Disclosure Schedule, including all
amendments thereto. Each Contract identified in Part 2.10(a) of the Disclosure
Schedule is valid and in full force and effect, and is enforceable by ACC in
accordance with its terms, subject to (i) laws of general application relating
to bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
(c) Except as set forth in Part 2.10(c) of the Disclosure Schedule:
(i) ACC has not violated or breached, or committed any default under,
any Company Contract, and, to the best of the knowledge of ACC and the
Shareholders, no other Person has violated or breached, or committed any
default under, any Company Contract;
(ii) to the best of the knowledge of ACC and the Shareholders, no
event has occurred, and no circumstance or condition exists, that (with or
without notice or lapse of time) will, or could reasonably be expected to,
(A) result in a violation or breach of any of the provisions of any Company
Contract, (B) give any Person the right to declare a default or exercise
any remedy under any Company Contract, (C) give any Person the right to
accelerate the maturity or performance of any Company Contract, or (D) give
any Person the right to cancel, terminate or modify any Company Contract;
(iii) since March 24, 1994, ACC has not received any notice or other
communication regarding (A) any actual or possible violation or breach of,
or default under, any Company Contract, or (B) any actual or possible
termination of any Company Contract; and
(iv) ACC has not waived any of its material rights under any Contract.
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(d) No Person is renegotiating, or has the right to renegotiate, any
amount paid or payable to ACC under any Company Contract or any other term or
provision of any Company Contract.
(e) The Contracts identified in Part 2.10(a) of the Disclosure
Schedule collectively constitute all of the Material Contracts necessary to
enable ACC to conduct its business in the manner in which its business is
currently being conducted and in the manner in which its business is proposed to
be conducted.
(f) Part 2.10(f) of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract as to which any pending bid, offer
or proposal has been submitted or received by ACC.
2.11 LIABILITIES.
(a) ACC has no accrued, contingent or other liabilities of any nature,
either matured or unmatured (whether or not required to be reflected in
financial statements in accordance with generally accepted accounting
principles, and whether due or to become due), except for: (i) liabilities
identified as such in the "liabilities" column of the Unaudited Balance Sheet;
(ii) accounts payable or accrued salaries that have been incurred by ACC since
March 31, 1996, in the ordinary course of business and consistent with ACC's
past practices; and (iii) the liabilities identified in Part 2.11(a) of the
Disclosure Schedule.
(b) Part 2.11(c) of the Disclosure Schedule provides an accurate and
complete breakdown of ACC's "deferred support revenue" and all related
obligations and other liabilities of ACC.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. ACC is, and has at all times
since March 24, 1994 been, in compliance with all applicable Legal Requirements,
except where the failure to comply with such Legal Requirements has not had and
will not have in any individual case or in the aggregate, a Material Adverse
Effect on ACC. Except as set forth in Part 2.12 of the Disclosure Schedule,
since March 24, 1994, ACC has not received any notice or other communication
from any Governmental Body regarding any actual or possible violation of, or
failure to comply with, any Legal Requirement.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by ACC, and ACC has
delivered to Fisher accurate and complete copies of all Governmental
Authorizations identified in Part 2.13 of the Disclosure Schedule. The
Governmental Authorizations identified in Part 2.13 of the Disclosure Schedule
are valid and in full force and effect, and collectively constitute all
Governmental Authorizations necessary to enable ACC to conduct its business in
the manner in which its business is currently being conducted and in the manner
in which its business is proposed to be conducted. ACC is, and at all times
since March 24, 1994 has been, in compliance with the material terms and
requirements of the respective Governmental Authorizations identified in Part
2.13 of the Disclosure Schedule. Since March 24, 1994, ACC has not received any
notice or other communication from any Governmental Body regarding (i) any
actual or possible violation of or failure to comply with any term or
requirement of any Governmental Authorization, or (ii) any actual or possible
revocation, withdrawal, suspension, cancellation, termination or modification of
any Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of ACC with
any Governmental Body with respect to any transaction occurring or any taxable
period ending on or before the Closing Date (the "Company Returns") (i) have
been or will be filed when due, and (ii) have been, or will be when filed,
accurately and completely prepared in compliance with all applicable Legal
Requirements. All amounts shown on the Company Returns to be due on or before
the Closing Date have been or will be paid on or before the Closing Date. ACC
has delivered to Fisher accurate and complete copies of all Company Returns
filed since March 24, 1994.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with generally accepted accounting principles. ACC will
establish, in the ordinary course of business and consistent with its past
practices, reserves adequate for the payment of all Taxes for the period from
March 31, 1996 through the Closing Date, and ACC will disclose the dollar amount
of such reserves to Fisher on or prior to the Closing Date.
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(c) Each Company Return relating to income Taxes that has been filed
with respect to any period ended on or prior to March 24, 1994 has either (i)
been examined and audited by all relevant Governmental Bodies, or (ii) by virtue
of the expiration of the limitation period under applicable Legal Requirements,
is no longer subject to examination or audit by any Governmental Body. Except
as set forth in Part 2.14(c) of the Disclosure Schedule, there has been no
examination or audit of any Company Return, and no such examination or audit has
been proposed or scheduled by any Governmental Body. ACC has delivered to
Fisher accurate and complete copies of all audit reports and similar documents
(to which ACC has access) relating to the Company Returns. Except as set forth
in Part 2.14(c) of the Disclosure Schedule, no extension or waiver of the
limitation period applicable to any of the Company Returns has been granted (by
ACC or any other Person), and no such extension or waiver has been requested
from ACC.
(d) Except as set forth in Part 2.14(d) of the Disclosure Schedule, no
claim or Legal Proceeding is pending or has been threatened against or with
respect to ACC in respect of any Tax. There are no unsatisfied liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by ACC. There are no liens for Taxes upon any of the
assets of ACC, except liens for current Taxes not yet due and payable. ACC has
not entered into or become bound by any agreement or consent pursuant to Section
341(f) of the Code. ACC has not been, and ACC will not be, required to include
any adjustment in taxable income for any tax period (or portion thereof)
pursuant to Section 481 of 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions or events occurring, or
accounting methods employed, prior to the Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of ACC that, considered individually or considered
collectively with any other such Contracts, will, or could reasonably be
expected to, give rise directly or indirectly to the payment of any amount that
would not be deductible pursuant to Section 280G or Section 162 of the Code.
ACC is not, and has never been, a party to or bound by any tax indemnity
agreement, tax sharing agreement, tax allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule contains a list of all
salaried employees of ACC as of the date of this Agreement, and correctly
reflects their salaries, any other compensation payable to them (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements), their dates of employment and their positions. ACC is not a
party to any collective bargaining contract or other Contract with a labor union
involving any of its employees.
(b) Part 2.15(b) of the Disclosure Schedule identifies each employee
of ACC who is not fully available to perform work because of disability or other
leave, and sets forth the basis of such leave and the anticipated date of return
to full service.
(c) Part 2.15(c) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, insurance,
supplemental unemployment benefits, profit-sharing, pension or retirement plan,
program or agreement (individually referred to as a "Plan" and collectively
referred to as the "Plans") sponsored, maintained, contributed to or required to
be contributed to by ACC for the benefit of any current or former employee of
ACC.
(d) ACC does not maintain, sponsor or contribute to, and, to the best
of the knowledge of ACC and the Shareholders, ACC has not at any time in the
past maintained, sponsored or contributed to, any employee pension benefit plan
(as defined in Section 3(2)) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), whether or not excluded from coverage under specific
Titles or Merger Subtitles of ERISA) for the benefit of employees or former
employees of ACC (a "Pension Plan").
(e) ACC does not maintain, sponsor or contribute to any employee
welfare benefit plan (as defined in Section 3(1) of ERISA, whether or not
excluded from coverage under specific Titles or Merger Subtitles of ERISA) for
the benefit of employees or former employees of ACC (a "Welfare Plan") except
for those Welfare Plans described in Part 2.15(e) of the Disclosure Schedule,
none of which is a multiemployer plan (within the meaning of Section 3(37) of
ERISA).
(f) With respect to each Plan, ACC has delivered to Fisher:
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(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report (if required
under ERISA) with respect to such Plan for each of 1994 and 1995;
(iii) an accurate and complete copy of (A) the most recent summary
plan description, together with each Summary of Material Modifications (if
required under ERISA) with respect to such Plan, and (B) each material
employee communication relating to such Plan;
(iv) if such Plan is funded through a trust or any third party funding
vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete
copies of the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to such
Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and recordkeeping agreements; and
(vi) an accurate and complete copy of the most recent determination
letter received from the Internal Revenue Service with respect to such Plan
(if such Plan is intended to be qualified under Section 401(a) of the
Code).
(g) ACC is not required to be, and, to the best of the knowledge of
ACC and the Shareholders, ACC has never been required to be, treated as a single
employer with any other Person under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code. ACC has never been a member of an
"affiliated service group" within the meaning of Section 414(m) of the Code. To
the best of the knowledge of ACC and the Shareholders, ACC has never made a
complete or partial withdrawal from a "multiemployer plan" (as defined in
Section 3(37) of ERISA) resulting in "withdrawal liability" (as defined in
Section 4201 of ERISA), without regard to subsequent reduction or waiver of such
liability under either Section 4207 or 4208 of ERISA.
(h) ACC does not have any plan or commitment to create any additional
Welfare Plan or any Pension Plan, or to modify or change any existing Welfare
Plan or Pension Plan (other than to comply with applicable law).
(i) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee of ACC
after any such employee's termination of service (other than (i) benefit
coverage mandated by applicable law, including coverage provided pursuant to
Section 4980B of the Code, (ii) deferred compensation benefits accrued as
liabilities on the Unaudited Balance Sheet, and (iii) benefits the full cost of
which are borne by current or former employees of ACC (or their beneficiaries)).
(j) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(k) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
ERISA and the Code.
(l) Each of the Plans intended to be qualified under Section 401(a) of
the Code has received a favorable determination from the Internal Revenue
Service, and neither ACC, nor any of the Shareholders are aware of any reason
why any such determination letter should be revoked.
(m) Except as set forth in Part 2.15(m) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the Merger or any of the other transactions contemplated by this
Agreement, will result in any bonus payment, golden parachute payment, severance
payment or other payment to any current or former employee or director of ACC
(whether or not under any Plan), or materially increase the benefits payable
under any Plan, or result in any acceleration of the time of payment or vesting
of any such benefits.
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(n) ACC is in compliance in all material respects with all applicable
Legal Requirements and Contracts relating to employment, employment practices,
employee compensation, wages, bonuses and terms and conditions of employment.
(o) ACC has good labor relations, and neither ACC nor any of the
Shareholders has any knowledge of any facts indicating that (i) the consummation
of the Merger or any of the other transactions contemplated by this Agreement
will have a material adverse effect on ACC's labor relations, or (ii) any of
ACC's employees intends to terminate his or her employment with ACC.
2.16 ENVIRONMENTAL MATTERS. ACC is and has at all times been in
compliance, in all material respects, with all applicable Environmental Laws.
ACC possesses all permits and other Governmental Authorizations required under
applicable Environmental Laws, and ACC is and has at all times been in
compliance with the terms and requirements of all such Governmental
Authorizations. ACC has not received any notice or other communication (whether
from a Governmental Body, citizens group, employee or otherwise) that alleges
that ACC is not in compliance with any Environmental Law, and, to the best of
the knowledge of ACC and the Shareholders, there are no circumstances that could
reasonably be expected to prevent or interfere with ACC's compliance with any
Environmental Law in the future. To the best of the knowledge of ACC and the
Shareholders, no current or prior owner of any property leased or controlled by
ACC has received any notice or other communication (whether from a Governmental
Body, citizens group, employee or otherwise) that alleges that such current or
prior owner or ACC is not or was not in compliance with any Environmental Law.
All Governmental Authorizations currently held by ACC pursuant to Environmental
Laws are identified in Part 2.16 of the Disclosure Schedule.
2.17 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Other than normal returns for refunds in the ordinary course of
business at levels consistent with past experience under ACC's standard return
policy, ACC will not incur or otherwise become subject to any material liability
arising from (i) any product, system, program, Proprietary Asset or other asset
designed, developed, manufactured, assembled, sold, supplied, installed,
repaired, licensed or made available by ACC on or prior to the Closing Date, or
(ii) any consulting services, installation services, programming services,
repair services, maintenance services, training services, support services or
other services performed by ACC on or prior to the Closing Date.
(b) Except as set forth in Part 2.17(b) of the Disclosure Schedule, no
customer or other Person has, at any time since March 24, 1994, asserted or
threatened to assert any claim against ACC (other than claims that have been
resolved satisfactorily at no material cost to ACC) under or based upon (i) any
warranty provided by or on behalf of ACC, or (ii) any services performed by ACC.
2.18 INSURANCE. Part 2.18 of the Disclosure Schedule provides accurate and
complete information with respect to each insurance policy maintained by, at the
expense of or for the benefit of ACC and with respect to any claims made
thereunder. ACC has delivered to Fisher accurate and complete copies of the
insurance policies identified in Part 2.18 of the Disclosure Schedule. Each of
the insurance policies identified in Part 2.18 of the Disclosure Schedule is in
full force and effect. Since March 24, 1994, ACC has not received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any claim under any insurance policy, or (c) material adjustment in the
amount of the premiums payable with respect to any insurance policy.
2.19 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.19 of the
Disclosure Schedule: (a) no Related Party has, and no Related Party has at any
time since March 24, 1994 had, any direct or indirect interest in any material
asset used in or otherwise relating to the business of ACC; (b) no Related Party
is, or has at any time since March 24, 1994 been, indebted to ACC; (c) since
March 24, 1994, no Related Party has entered into, or has had any direct or
indirect financial interest in, any material Contract, transaction or business
dealing involving ACC; (d) no Related Party is competing, or has at any time
since March 24, 1994 competed, directly or indirectly, with ACC; and (e) no
Related Party has any claim or right against ACC (other than rights to receive
compensation for services performed as an employee of ACC). For purposes of
this Section 2.19, each of the following shall be deemed to be a "Related
Party": (i) each of the Shareholders; (ii) each individual who is, or who has at
any time since March 24, 1994 been, an officer or director of ACC; (iii) each
individual who is, or who at any time since March 24, 1994 has been, a member of
the immediate family of any of the individuals referred to in clauses "(i)" and
"(ii)" above; and (iv) any trust or other Entity (other than ACC) in which any
one of the individuals referred to in clauses "(i)," "(ii)" and "(iii)" above
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holds (or in which more than one of such individuals collectively hold),
beneficially or otherwise, a material voting, proprietary or equity interest.
2.20 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.20(a) of the Disclosure Schedule,
there is no pending Legal Proceeding, and, to the best of the knowledge of ACC
and the Shareholders, no Person has threatened to commence any Legal Proceeding:
(i) that involves ACC or any of the assets owned or used by ACC; or (ii) that
challenges, or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with, the Merger or any of the other transactions
contemplated by this Agreement. To the best of the knowledge of ACC and the
Shareholders, except as set forth in Part 2.20(a) of the Disclosure Schedule, no
event has occurred, and no claim, dispute or other condition or circumstance
exists, that will, or that could reasonably be expected to, give rise to or
serve as a basis for the commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.20(b) of the Disclosure Schedule, no
Legal Proceeding has ever been commenced by, and no Legal Proceeding has ever
been pending against, ACC.
(c) There is no order, writ, injunction, judgment or decree to which
ACC, or any of the assets owned or used by ACC, are subject. Neither the
Shareholders nor ACC is subject to any order, writ, injunction, judgment or
decree that relates to ACC's business or to any of the assets owned or used by
ACC. To the best of the knowledge of ACC and the Shareholders, no officer or
other employee of ACC is subject to any order, writ, injunction, judgment or
decree that prohibits such officer or other employee from engaging in or
continuing any conduct, activity or practice relating to ACC's business.
2.21 AUTHORITY; BINDING NATURE OF AGREEMENT. The Shareholders and ACC have
the absolute and unrestricted right, power and authority to enter into and to
perform their respective obligations under this Agreement; and the execution,
delivery and performance by ACC of this Agreement has been duly authorized by
all necessary action on the part of ACC and its board of directors and
shareholders. This Agreement constitutes the legal, valid and binding
obligation of the Shareholders and ACC, enforceable against the Shareholders and
ACC in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.22 of the
Disclosure Schedule, neither (i) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (ii)
the consummation of the Merger or any of the other transactions contemplated by
this Agreement, will directly or indirectly (with or without notice or lapse of
time):
(a) contravene, conflict with or result in a violation of (i) any of
the provisions of ACC's articles of incorporation or bylaws, or (ii) any
resolution adopted by ACC's shareholders, the Parent's or ACC's boards of
directors or any committee of ACC's board of directors;
(b) contravene, conflict with or result in a violation of, or give any
Governmental Body or other Person the right to challenge any of the transactions
contemplated by this Agreement or to exercise any remedy or obtain any relief
under, any Legal Requirement or any order, writ, injunction, judgment or decree
to which ACC, or any of the assets owned or used by ACC, are subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by ACC or that otherwise relates to ACC's business or to any of the
assets owned or used by ACC;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Company Contract, or give any
Person the right to (i) declare a default or exercise any remedy under any
Company Contract, (ii) accelerate the maturity or performance of any Company
Contract, or (iii) cancel, terminate or modify any Company Contract; or
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(e) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by ACC (except for
minor liens that will not, in any case or in the aggregate, materially detract
from the value of the assets subject thereto or materially impair the operations
of ACC).
Except as set forth in Part 2.22 of the Disclosure Schedule, ACC is not and will
not be required to make any filing with or given any notice to, or to obtain any
Consent from, any Person in connection with (x) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
2.23 FULL DISCLOSURE. This Agreement (including the Disclosure Schedule)
does not, and Shareholders' Closing Certificate (as defined in Section 6.4(f))
will not, (i) contain any representation, warranty or information that is false
or misleading with respect to any material fact, or (ii) omit to state any
material fact necessary in order to make the representations, warranties and
information contained and to be contained herein and therein not false or
misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF FISHER AND THE SUBSIDIARY
Fisher and the Subsidiary, jointly and severally, represent and
warrant to ACC and the Shareholders as follows:
3.1 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Fisher has delivered to ACC accurate and complete copies
(excluding copies of exhibits) of each report, registration statement (on a form
other than Form S-8) and definitive proxy statement filed by Fisher with the SEC
between January 1, 1995 and the date of this Agreement (the "Fisher SEC
Documents"). As of the time it was filed with the SEC (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing): (i) each of the Fisher SEC Documents complied in all material
respects with the applicable requirements of the Securities Act or the Exchange
Act (as the case may be); and (ii) none of the Fisher SEC Documents contained
any untrue statement of a material fact or omitted 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 which they were made, not
misleading.
(b) The consolidated financial statements contained in the Fisher SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods covered, except as may be indicated in the notes to
such financial statements and (in the case of unaudited statements) as permitted
by Form 10-Q of the SEC, and except that unaudited financial statements may not
contain footnotes and are subject to normal and recurring year-end audit
adjustments (which will not, individually or in the aggregate, be material in
magnitude); and (iii) fairly present the consolidated financial position of
Fisher as of the respective dates thereof and the consolidated results of
operations of Fisher for the periods covered thereby.
3.2 AUTHORITY; BINDING NATURE OF AGREEMENT. Fisher and the Subsidiary
each have the absolute and unrestricted right, power and authority to perform
their respective obligations under this Agreement; and the execution, delivery
and performance by Fisher and the Subsidiary of this Agreement have been duly
authorized by all necessary action on the part of Fisher and the Subsidiary and
their respective boards of directors. This Agreement shall constitute the
legal, valid and binding obligation of Fisher and the Subsidiary, enforceable
against each of them in accordance with its terms, subject to (i) laws of
general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.3 VALID ISSUANCE. The Fisher Common Stock to be issued as Merger
Consideration will, when issued in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable.
SECTION 4. CERTAIN COVENANTS OF ACC AND THE SHAREHOLDERS
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement through the Effective Time (the "Pre-Closing Period"), ACC shall, and
shall cause its Representatives to: (a) provide Fisher and Fisher's
Representatives with reasonable access to ACC's Representatives, personnel and
assets and to all existing books, records, Tax Returns, work papers and other
documents and information relating to ACC; and (b) provide Fisher and Fisher's
Representatives with such copies of the existing books, records, Tax Returns,
work papers and other documents and information relating to ACC, and with such
additional financial, operating and other data and information regarding
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ACC, as Fisher may reasonably request. Notwithstanding the provisions of
Section 11.17, paragraph 7 of the letter agreement between ACC and Fisher dated
April 4, 1996 ("Letter of Intent") shall remain in effect through the Closing
Date and shall bind Fisher with respect to any Evaluation Material (as defined
in the Letter of Intent) provided to Fisher or its Representatives during the
Pre-Closing Period.
4.2 OPERATION OF ACC'S BUSINESS. During the Pre-Closing Period, unless
Fisher otherwise consents in writing:
(a) ACC shall conduct its business and operations in the ordinary
course and in substantially the same manner as such business and operations have
been conducted prior to the date of this Agreement;
(b) ACC shall use reasonable efforts to preserve intact its current
business organizations, keep available the services of its current officers and
employees and maintain its relations and goodwill with all suppliers, customers,
landlords, creditors, employees and other Persons having business relationships
with ACC;
(c) ACC shall keep in full force all insurance policies identified in
Part 2.18 of the Disclosure Schedule;
(d) ACC shall cause its officers to report regularly to Fisher
concerning the status of ACC's business;
(e) ACC shall not declare, accrue, set aside or pay any dividend or
make any other distribution in respect of any shares of capital stock, and shall
not repurchase, redeem or otherwise reacquire any shares of capital stock or
other securities;
(f) ACC shall not sell, issue or authorize the issuance of (i) any
capital stock or other security, (ii) any option, call, warrant or right to
acquire, or relating to, any capital stock or other security, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
(g) neither ACC, nor any of the Shareholders shall amend or permit the
adoption of any amendment to ACC's articles of incorporation or bylaws, or
effect or permit ACC to become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(h) ACC shall not form any subsidiary or acquire any equity interest
or other interest in any other Entity;
(i) ACC shall not make any capital expenditure, except for capital
expenditures that, when added to all other capital expenditures made on behalf
of ACC during the Pre-Closing Period, do not exceed $25,000 in the aggregate;
(j) ACC shall not (i) enter into or become bound by, or permit any of
the assets owned or used by it to become bound by, any Material Contract, or
(ii) amend or prematurely terminate, or waive any material right or remedy
under, any Material Contract;
(k) ACC shall not, other than in the ordinary course of business
consistent with past practice (i) acquire, lease or license any right or other
asset from any other Person, (ii) sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person, or (iii) waive or
relinquish any right, except for immaterial assets acquired, leased, licensed or
disposed of by ACC pursuant to Contracts that are not Material Contracts;
(l) ACC shall not (i) lend money to any Person, or (ii) incur or
guarantee any indebtedness, except that ACC may make routine borrowings in the
ordinary course of business under its respective existing lines of credit;
(m) ACC shall not (i) establish, adopt or amend any Employee Benefit
Plan, (ii) pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, or (iii) hire any new employee whose aggregate annual compensation is
expected to exceed $25,000;
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(n) ACC shall not change any of its methods of accounting or
accounting practices in any respect;
(o) ACC shall not make any Tax election;
(p) ACC shall not commence or settle any Legal Proceeding;
(q) ACC shall not enter into any material transaction or take any
other material action outside the ordinary course of business or inconsistent
with its past practices; and
(r) ACC shall not agree or commit to take any of the actions described
in clauses "(e)" through "(q)" of this Section 4.2.
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, ACC and the Shareholders shall
promptly notify Fisher in writing of:
(i) the discovery by ACC or the Shareholders of any event,
condition, fact or circumstance that occurred or existed on or prior to the
date of this Agreement and that caused or constitutes an inaccuracy in or
breach of any representation or warranty made by ACC or any of the
Shareholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty
made by ACC or any of the Shareholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or
(B) such event, condition, fact or circumstance had occurred, arisen or
existed on or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of ACC or any of
the Shareholders; and
(iv) any event, condition, fact or circumstance that would make
the timely satisfaction of any of the conditions set forth in Section 6 or
Section 7 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is required to
be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then ACC or the Shareholders shall promptly deliver to Fisher an
update to the Disclosure Schedule specifying such change. No such update shall
be deemed to supplement or amend the Disclosure Schedule for the purpose of (i)
determining the accuracy of any of the representations and warranties made by
ACC or any of the Shareholders in this Agreement, or (ii) determining whether
any of the conditions set forth in Section 6 has been satisfied. The parties
acknowledge that as of the date of this Agreement, ACC has not yet delivered the
Disclosure Schedule. ACC agrees to deliver a final Disclosure Schedule within
15 days following the date of this Agreement. Fisher shall have a 10 day option
to terminate this Agreement in accordance with Section 8.1(b) by giving notice
in accordance with Section 8.2. If Fisher fails to give such notice within such
10 day period, the Disclosure Schedule delivered by ACC shall be final for all
purposes hereunder.
(c) Between the date of this Agreement and the Closing Date, ACCS will
promptly notify Buyer in writing if ACCS becomes aware of any fact or condition
that causes or constitutes a breach of any of ACCS's representations and
warranties as of the date of this Agreement, or if ACCS becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require a change in any schedule
if the schedules had been prepared on the date of the occurrence or discovery of
any such fact or condition, ACCS will promptly deliver to Buyer a supplement to
the Schedules specifying such change. If in the opinion of Fisher such
supplemental disclosure adversely affects the business, properties, assets or
financial condition of ACCS, or otherwise adversely affects the transactions
contemplated herein, Fisher may terminate this Agreement and its obligations
hereunder upon written notice to ACCS without any liability to ACCS for such
termination. In the event Fisher elects
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to proceed with the transaction notwithstanding such supplemental disclosure,
then except and to the extent ACCS knowingly failed to make a disclosure as of
the date hereof, Fisher shall be deemed to have waived any right to proceed
against ACCS for damages or equitable relief with respect to any matter
disclosed in such supplement except to the extent Fisher would have had a right
to proceed against ACCS with respect to such matter had it been disclosed on the
date hereof.
4.4 NO NEGOTIATION. During the Pre-Closing Period, neither ACC nor any of
the Shareholders shall, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than Fisher) relating to a possible Acquisition
Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
Fisher) relating to or in connection with a possible Acquisition Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than Fisher) relating to a possible Acquisition Transaction.
ACC shall promptly notify Fisher in writing of any inquiry, proposal or offer
relating to a possible Acquisition Transaction that is received by ACC or any of
the Shareholders during the Pre-Closing Period.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. As promptly as practicable after the execution
of this Agreement, each party to this Agreement (a) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, and (b) shall use his, its or their best efforts to obtain each
Consent (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
Merger or any of the other transactions contemplated by this Agreement. ACC
shall promptly deliver to Fisher a copy of each such filing made, each such
notice given and each such Consent obtained by ACC during the Pre-Closing
Period. Fisher shall promptly deliver to ACC a copy of each such filing made,
each such notice given and each such consent obtained by Fisher during the Pre-
Closing Period.
5.2 PUBLIC ANNOUNCEMENTS. During the Pre-Closing Period, (a) neither ACC
nor any of the Shareholders shall (and ACC shall not permit any of its
Representatives to) issue any press release or make any public statement
regarding this Agreement or the Merger, or regarding any of the other
transactions contemplated by this Agreement, without Fisher's prior written
consent, and (b) Fisher will use reasonable efforts to consult with ACC prior to
issuing any press release or making any public statement regarding the Merger.
5.3 BEST EFFORTS. During the Pre-Closing Period, (a) ACC and the
Shareholders shall use their reasonable best efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis, and (b) Fisher shall use
its reasonable best efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis.
5.4 EMPLOYMENT AND NONCOMPETITION AGREEMENTS. At the Closing, each of the
Shareholders shall execute and deliver to Fisher Employment Agreements in the
forms of Exhibit E-1 and E-2 (the "Employment Agreements") and Noncompetition
Agreements in the forms of Exhibit E-3 and E-4 (the "Noncompetition
Agreements").
5.5 RELEASE. At the Closing, each of the Shareholders shall execute and
deliver to Fisher a Release in the form of Exhibit F (the "Release").
5.6 TERMINATION OF EMPLOYEE PLANS. At the Closing, ACC shall terminate
all bonus plans and other benefit plans under which any of its employees or
former employees may have any rights, and shall ensure that no employee or
former employee of ACC has any rights thereunder and that any liabilities of ACC
thereunder (including any such liabilities relating to services performed prior
to the Closing) are fully extinguished at no cost to ACC.
5.7 FIRPTA MATTERS. At the Closing, (a) ACC shall deliver to Fisher a
statement (in such form as may be reasonably requested by counsel to Fisher)
conforming to the requirements of Section 1.897-2(h)(1)(i) of the United
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States Treasury Regulations, and (b) ACC shall deliver to the Internal Revenue
Service the notification required under Section 1.897-2(h)(2) of the United
States Treasury Regulations.
5.8 ESCROW AGREEMENT. At the Closing, each of Fisher and ACC shall
execute the Escrow Agreement.
5.9 ELECTION TO BOARD. Immediately following the Closing, Fisher shall
cause one seat to be added to its Board of Directors and will appoint Wayne
Surman to serve as a director of Fisher.
5.10 CAPITAL CONTRIBUTION. Fisher and ACC acknowledge that Fisher is in
the process of attempting to raise additional equity capital through private
placements and other sources. Fisher agrees that, consistent with prudent
business practices, Fisher will make available to the Surviving Corporation
working capital in an amount of up to $250,000.00.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF FISHER AND THE SUBSIDIARY
The obligations of Fisher and the Subsidiary to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by ACC and the Shareholders in this Agreement and in each of the
other agreements and instruments delivered to Fisher in connection with the
transactions contemplated by this Agreement shall have been accurate in all
respects as of the date of this Agreement, and shall be accurate in all respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time
(without giving effect to any update to the Disclosure Schedule).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that ACC or any
of the Shareholders is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all respects.
6.3 CONSENTS. All Consents required to be obtained in connection with the
Merger and the other transactions contemplated by this Agreement (including the
Consents identified in Part 2.22 of the Disclosure Schedule) shall have been
obtained and shall be in full force and effect.
6.4 AGREEMENTS AND DOCUMENTS. Fisher shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) the Employment Agreements and the Noncompetition Agreements,
executed by each of the Shareholders;
(b) a Release, executed by each of the Shareholders;
(c) the statement referred to in Section 5.7, executed by ACC;
(d) estoppel certificates, each dated as of a date not more than five
days prior to the Closing Date and satisfactory in form and content to Fisher,
executed by the Persons identified on Exhibit G and by such other Persons as
Fisher may reasonably specify;
(e) a legal opinion of DeLong, Caldwell & Wisebram, dated as of the
Closing Date, satisfactory in form and substance to Fisher and its counsel;
(f) a certificate executed by ACC and the Shareholders and containing
the representation and warranty of ACC and each Shareholder that each of the
representations and warranties set forth in Section 2 is accurate in all
material respects as of the Closing Date as if made on the Closing Date and that
the conditions set forth in Sections 6.1, 6.2, 6.3, 6.4 and 6.5 have been duly
satisfied (the "ACC and Shareholders' Closing Certificate");
(g) the Escrow Agreement, executed by ACC.
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6.5 NO MATERIAL ADVERSE CHANGE. There shall have been no material adverse
change in ACC's business, condition, assets, liabilities, operations, financial
performance or prospects since the date of this Agreement.
6.6 TERMINATION OF EMPLOYEE PLANS. ACC shall have provided Fisher with
evidence, satisfactory to Fisher, as to the termination of the plans referred to
in Section 5.6.
6.7 FIRPTA COMPLIANCE. ACC shall have filed with the Internal Revenue
Service the notification referred to in Section 5.7.
6.8 RULE 506. All applicable requirements of Rule 506 under the
Securities Act shall have been satisfied.
6.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.10 NO LEGAL PROCEEDINGS. No Person shall have commenced or threatened to
commence any Legal Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or seeking to prohibit or limit
the exercise by ACC of any material right pertaining to its ownership of stock
of the Surviving Corporation.
6.11 INCREASE IN AUTHORIZED SHARES. The articles of incorporation of
Fisher shall have been amended to increase the number of authorized shares of
Fisher common stock to 100,000,000.
6.12 COMPLETION OF DUE DILIGENCE. Fisher shall have completed its due
diligence investigation of ACC and shall have been satisfied with the results
thereof.
SECTION 7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF ACC AND THE SHAREHOLDERS.
The obligations of ACC and the Shareholders to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by Fisher and the Subsidiary in this Agreement and in each of
the other agreements and instruments delivered to ACC in connection with the
transactions contemplated by this Agreement shall have been accurate in all
respects as of the date of this Agreement, and shall be accurate in all respects
as of the Scheduled Closing Time as if made at the Scheduled Closing Time.
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
Fisher is required to comply with or to perform at or prior to the Closing shall
have been complied with and performed in all respects.
7.3 CONSENTS. All Consents required to be obtained in connection with the
merger and the other transactions contemplated by this Agreement shall have been
obtained and shall be in full force and effect.
7.4 AGREEMENTS AND DOCUMENTS.
(a) Fisher and the Subsidiary shall have entered into the Employment
Agreements described in Section 6.4(a);
(b) ACC shall have received a legal opinion of Smith, Gambrell &
Russell in form and substance satisfactory to ACC and its counsel;
(c) ACC shall have received a certificate executed by Fisher and the
Subsidiary, and containing the representation and warranty of Fisher and the
Subsidiary that each of the representations and warranties set forth in Section
3 are accurate in all material respects as of the Closing Date as if made on the
Closing Date and that the conditions set forth in Sections 7.1, 7.2, 7.3 and 7.4
have been duly satisfied (the "Fisher Closing Certificate");
(d) Fisher and the Subsidiary shall have executed the Escrow
Agreement.
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7.5 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
ACC shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by ACC illegal.
7.6 INCREASE IN AUTHORIZED SHARES. The articles of incorporation of
Fisher shall have been amended to increase the number of authorized shares of
Fisher common stock to 100,000,000.
SECTION 8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by Fisher if Fisher reasonably determines that the timely
satisfaction of any condition set forth in Section 6 has become impossible
(other than as a result of any failure on the part of Fisher to comply with or
perform any covenant or obligation of Fisher set forth in this Agreement);
(b) by ACC if ACC reasonably determines that the timely satisfaction
of any condition set forth in Section 7 has become impossible (other than as a
result of any failure on the part of ACC or any of the Shareholders to comply
with or perform any covenant or obligation set forth in this Agreement or in any
other agreement or instrument delivered to Fisher);
(c) by Fisher at or after the Scheduled Closing Time if any condition
set forth in Section 6 has not been satisfied by the Scheduled Closing Time;
(d) by ACC at or after the Scheduled Closing Time if any condition set
forth in Section 7 has not been satisfied by the Scheduled Closing Time;
(e) by Fisher if the Closing has not taken place on or before June 30,
1996 (other than as a result of any failure on the part of Fisher to comply with
or perform any covenant or obligation of Fisher set forth in this Agreement);
(f) by ACC if the Closing has not taken place on or before June 30,
1996 (other than as a result of the failure on the part of ACC or any of the
Shareholders to comply with or perform any covenant or obligation set forth in
this Agreement or in any other agreement or instrument delivered to Fisher);
(g) by the mutual consent of Fisher and ACC; or
(h) by Fisher under the circumstances described in Section 4.3(b).
8.2 TERMINATION PROCEDURES. If Fisher wishes to terminate this Agreement
pursuant to Section 8.1(a), Section 8.1(c) or Section 8.1(e), Fisher shall
deliver to ACC a written notice stating that Fisher is terminating this
Agreement and setting forth a brief description of the basis on which Fisher is
terminating this Agreement. If ACC wishes to terminate this Agreement pursuant
to Section 8.1(b), Section 8.1(d) or Section 8.1(f), ACC shall deliver to Fisher
a written notice stating that ACC is terminating this Agreement and setting
forth a brief description of the basis on which ACC is terminating this
Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that: (a) no party shall be relieved of any
obligation or liability arising from any prior breach by such party of any
provision of this Agreement; (b) the parties shall, in all events, remain bound
by and continue to be subject to the provisions set forth in Section 11, as well
as paragraph 7 of the Letter of Intent.
SECTION 9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties of the ACC Shareholders, Fisher and the
Subsidiary contained in this Agreement shall survive the Closing and shall
continue for a period of two years following the Closing Date; except that
representations and warranties contained in Sections 2.6, 2.9, 2.14 and 2.15
shall survive until expiration of the applicable statutes of limitation for
breach of such representations
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and warranties. The expiration of any representation or warranty shall not
affect any party's right to claim indemnification for a breach of such
representation or warranty, provided such party gives notice of such claim in
accordance with the provisions of this Section 9 prior to the expiration of such
representation or warranty.
9.2 SHAREHOLDERS' INDEMNITY AGREEMENT. Subject to the provisions of
Section 9.6 hereof, the Shareholders, jointly and severally, shall defend,
indemnify and hold harmless Fisher and the Surviving Corporation (and their
respective directors, officers, employees, agents, affiliates, successors and
assigns) from and against any and all direct or indirect requests, demands,
claims, payments, defenses, obligations, recoveries, deficiencies, fines,
penalties, interest, assessments, actions, liens, causes of action, suits,
proceedings, judgments, losses, Damages (including without limitation punitive,
exemplary or consequential damages, lost income and profits, interruptions of
business and diminution in the value of the Stock), liabilities, costs, and
expenses of any kind (including without limitation (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce their rights to indemnification hereunder, and (iii)
consultants' fees and other costs of defending or investigating any claim
hereunder), and interest on any amount payable as a result of the foregoing,
whether accrued, absolute, contingent, known, unknown, or otherwise as of the
Closing Date or thereafter asserted against, imposed upon or incurred by Fisher,
the Surviving Corporation or any of their respective directors, officers,
employees, agents, affiliates, successors or assigns (a "Loss of Fisher") by
reason of, resulting from, arising out of, based upon, awarded or asserted
against or otherwise in respect of:
(a) any period or periods of ACC ending prior to the Closing and which
involve any claims against Fisher, ACC, the Surviving Corporation or their
respective properties or assets, relating to actions or inactions of ACC or its
respective officers, directors, shareholders, employees or agents prior to
Closing, or the operation of the business of ACC prior to the Closing unless
such liability was disclosed on the Financial Statements and adequate reserves
were established therefor;
(b) any breach of any representation and warranty contained in this
Agreement or any misrepresentation in or omission on the part of ACC or the
Shareholders contained in any certificate furnished or to be furnished to Buyer
by Seller pursuant to this Agreement;
(c) any breach or nonfulfillment on the Part of ACC or the
Shareholders of any covenant contained in this Agreement;
(d) the failure of ACC or the Shareholders to obtain, prior to the
Closing Date, any consents, approvals and waivers of governmental agencies or
entities, lessors, landlords, suppliers, and other third parties as may be
necessary to permit the consummation of the Merger and to permit the Surviving
Corporation to continue to operate the business of ACC in the manner presently
conducted after the Closing Date;
(e) the failure of the Surviving Corporation to collect any accounts
receivable of the ACC existing on the Closing Date, net of reserve for bad debts
set forth in the Financial Statements, within 180 days following the Closing
Date; provided however, that upon receipt of full payment from Shareholders, the
Surviving Corporation shall reassign to the Shareholders any such account
receivable;
(f) any federal, state, local or foreign taxes, including any interest
and penalties thereon, due from ACC or the Shareholders with respect to any
period prior to the Closing Date, other than amounts accrued therefor on the
Financial Statements.
9.3 INDEMNITY AGREEMENT OF FISHER AND THE SURVIVING CORPORATION. Fisher
and the Surviving Corporation shall indemnify and hold harmless the Shareholders
(and their respective successors and assigns) from and against any and all
direct or indirect requests, demands, claims, payments, defenses, obligations,
recoveries, deficiencies, fines, penalties, interest, assessments, actions,
liens, causes of action, suits, proceedings, judgments, losses, Damages
(including without limitation punitive, exemplary or consequential damages and
lost income and profits and interruptions of business), liabilities, costs, and
expenses of any kind (including without limitation (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce their rights to indemnification hereunder, and (iii)
consultants' fees and other costs of defending or investigating any claim
hereunder, and interest on any amount payable as a result of the foregoing)
whether accrued, absolute, contingent, known, unknown or otherwise as of the
Closing Date or thereafter asserted against, imposed upon or incurred by
Shareholders or its respective representatives or assigns, (a "Loss of
Shareholders") by reason of, resulting from, arising out of, based upon, awarded
or asserted against in respect of or otherwise in respect of:
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(a) any period or periods of the Surviving Corporation beginning after
the Closing and which involve any claims against the Shareholders or their
respective assets relating to actions or inactions of Fisher or the Surviving
Corporation or their respective officers, directors, shareholders, employees or
agents after the Closing, or the operation of the Surviving Corporation after
the Closing (except to the extent any of the foregoing arise from the acts or
omissions of the Shareholders); and
(b) any breach of any representation and warranty or nonfulfillment of
any covenant or agreement on the part of Fisher or the Subsidiary contained in
this Agreement, or any misrepresentation in or omission from or nonfulfillment
of any covenant on the part of the Fisher or the Subsidiary contained in any
certificate furnished or to be furnished to the Shareholders by Fisher or the
Subsidiary pursuant to this Agreement.
9.4 INDEMNIFICATION PROCEDURE.
(a) Upon obtaining knowledge thereof, the party to be indemnified
hereunder (the "Indemnitee") shall promptly notify the indemnifying party
hereunder (the "Indemnitor") in writing of any damage, claim, loss, liability or
expense or other matter which the Indemnitee has determined has given or could
give rise to a claim for which indemnification rights are granted hereunder
(such written notice referred to as the "Notice of Claim"). The Notice of Claim
shall specify, in all reasonable detail, the nature and estimated amount of any
such claim giving rise to a right of indemnification, to the extent the same can
reasonably be estimated. Any failure on the part of an Indemnitee to give
timely notice to the Indemnitor of a claim shall not affect the right of the
Indemnitee to obtain indemnification from the Indemnitor with respect to such
claim unless the Indemnitor is actually harmed by such failure to notify, and
only to the extent of such actual harm.
(b) With respect to any matter set forth in a Notice of Claim relating
to a third party claim the Indemnitor shall defend, in good faith and at its
expense, any such claim or demand, and the Indemnitee, at its expense, shall
have the right to participate in the defense of any such third party claim. So
long as Indemnitor is defending, in good faith, any such third party claim, the
Indemnitee shall not settle or compromise such third party claim. The
Indemnitee shall make available to the Indemnitor or its representatives all
records and other materials reasonably required by them for use in contesting
any third party claim and shall cooperate fully with the Indemnitor in the
defense of all such claims. If the Indemnitor does not defend any such third
party claim or if the Indemnitor does not provide the Indemnitee with prompt and
reasonable assurances that the Indemnitor will satisfy the third party claim,
the Indemnitee may, at its option, elect to defend any such third party claim,
at the Indemnitor's expense. An Indemnitor may not settle or compromise any
claim without obtaining a full and unconditional release of the Indemnitee,
unless the Indemnitee consents in writing to such settlement or compromise.
Notwithstanding the foregoing, if there is a reasonable probability that a third
party claim for which the Buyer has indemnification rights against Seller
hereunder will materially and adversely affect Buyer or the Company other than
as a result of money damages or other payments, Buyer shall be entitled to
conduct the defense of such claim at Sellers' expense.
9.5 SET-OFF. Fisher and the Surviving Corporation shall have the right to
set-off and apply against the Escrow Shares (valued at their Closing Date
valuation determined pursuant to Section 1.8) and against any other amounts
owing from Fisher or the Surviving Corporation to the Shareholders under any
other agreement between Fisher or the Surviving Corporation and Shareholders,
all sums in respect of which the Shareholders may be liable pursuant to Section
9.2 hereof, such right of set-off to be in addition to and not in lieu of or an
election against any and all other remedies available to Fisher and the
Surviving Corporation under this Agreement or at law or in equity.
9.6 LIMITATIONS ON LIABILITY OF SHAREHOLDERS. Shareholders shall have no
liability with respect to Losses of Buyer arising under subparagraphs (a), (b),
or (d) of Section 9.2 until the total of all Losses of Buyer with respect
thereto exceeds $25,000. If the aggregate Losses of Buyer exceed such $25,000
threshold, the Seller and Principals shall be liable for all Losses of Buyer to
the extent (and only to the extent) Losses of Buyer exceed such $25,000
threshold.
SECTION 10. REGISTRATION OF SHARES
10.1 CERTAIN DEFINITIONS. As used in this Section 10, the following terms
shall have the following respective meanings:
"Registrable Securities" shall mean any of the Fisher Common Stock to be
----------------------
issued to the Stockholders in the Merger.
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"Initiating Holders" shall mean any holder or holders who in the aggregate
------------------
own not less than 50% of the aggregate number of Registrable Securities then
existing, which have not previously been sold to the public.
The terms "register", "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by Fisher in
---------------------
complying with this Section 10, including, without limitation, all registration
and filing fees, printing expenses, fees and disbursements of counsel for
Fisher, blue sky fees and expenses, and accountants' expenses including without
limitation any special audits or "comfort" letters incident to or required by
any such registration, and any fees and disbursements of underwriters
customarily paid by issuers or sellers of securities, but excluding underwriting
discounts and commissions, and, as to any registration effected pursuant to
Section 10.3, the reasonable fees and disbursements of one special counsel
retained by the Holders of the Registrable Securities being registered.
10.2 REGISTRATION UNDER SECURITIES ACT, ETC.
Registration on Request.
-----------------------
(a) Request. At any time after 9 months following the date of this
-------
Agreement, if Fisher has not made a registration of its own equity securities
subject to the provisions of Subsection 10.3 below, upon the written request of
one or more Initiating Holders, requesting that Fisher effect the registration
under the Securities Act of all or part of such Initiating Holders' Registrable
Securities (but not less than 25% of the Registrable Securities outstanding) and
specifying the intended method or methods of disposition thereof, Fisher will
promptly, but in any event within 10 business days, give written notice of such
requested registration to all holders of Registrable Securities and thereupon
will use its best efforts to effect the registration under the Securities Act
of:
(i) the Registrable Securities which Fisher has been so requested to
register by such Initiating Holders, for disposition in accordance with the
intended method or methods of disposition stated in such request,
(ii) all other Registrable Securities which Fisher has been requested
to register by the holders thereof by written request delivered to Fisher
within 10 days after the giving of such written notice by Fisher (which
request shall specify the intended method or methods of disposition of such
Registrable Securities), and
(iii) all shares of Fisher Common Stock which Fisher may elect to
register for its own account in connection with the offering of Registrable
Securities pursuant to this Section 10.2,
all to the extent requisite to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Securities so to be
registered, provided that Fisher shall not be required to effect more than one
--------
registration pursuant to this Section 10.2.
(b) Registration Statement Form. Each registration requested pursuant
---------------------------
to this Section 10.2 shall be effected by the filing of a registration statement
on any form which Fisher is eligible to use, such form to be selected by Fisher,
after consultation with counsel and after notice of such selection of such form
is delivered to the holders of all Registrable Securities electing to
participate in such registration; provided, however, that if the holders of at
least a majority of the Registrable Securities as to which registration has been
requested pursuant to this Section 10.2 shall so request, Fisher shall file such
registration statement pursuant to the SEC's Rule 415, or any successor rule or
regulation thereto, so as to permit the continuous or delayed offering of the
Registrable Securities in accordance with the intended method of disposition
specified in the Initiating Holder's notice pursuant to sub-section (a) of this
Section 10.2, but in no event shall Fisher be required to maintain the
effectiveness of such registration beyond the period specified in Section
10.4(b).
(c) Expenses. Except as otherwise prohibited by applicable law,
--------
Fisher will pay all Registration Expenses in connection with the registration of
Registrable Securities requested pursuant to this Section 10.2.
(d) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 10.2 shall not be deemed to be effected unless it has
been declared effective by the SEC or otherwise becomes effective, provided
--------
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that a registration which does not become effective after Fisher has
substantially prepared and has filed or its in a position to file a registration
statement with respect thereto solely by reason of the refusal to proceed of all
of the Initiating Holders (other than any refusal to proceed based upon the
advice of their counsel that the registration statement, or the prospectus
contained therein, contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing) shall be deemed to have been effected by Fisher pursuant to this
Section 10.2.
(e) Registration Rights Exclusive. Fisher will not register
-----------------------------
securities for sale for the account of any person other than the holders of
Registrable Securities, and will not, in any event, register any securities
other than Registrable Securities, in any registration of Registrable Securities
requested by one or more holders pursuant to this Section 10.2 (except for
shares to be registered by or on behalf of Fisher where the underwriter, if any,
does not object to the inclusion of such Company shares in the registration),
unless, in each such case, permitted to do so by the written consent of such
holders representing at least 51% (by number of shares) of the Registrable
Securities as to which registration has been requested by such holders. Fisher
will not grant to any Person the right to request a registration of securities
prohibited by this subdivision (e).
(f) Separate Transferability of Demand Registration Rights. In
------------------------------------------------------
connection with the transfer of any portion or portions of the Registrable
Securities, any Stockholder may, at its sole election, transfer the demand
registration entitlement granted by this Section 10.2 to and for the exclusive
benefit of the Registrable Securities so transferred or may retain one or both
of such demand registration entitlements for the exclusive benefit of the
holders of the retained Registrable Securities. In such event, the terms
"Initiating Holders" and "Registrable Securities" shall, for the purposes of
this Section 10.2, refer exclusively to the Registrable Securities for whose
benefit such rights have been transferred or retained, as the case may be. Such
Stockholders shall effect the transfer or retention of demand registration
rights hereunder by giving notice to Fisher concurrently with any transfer of
Registrable Securities. Once the Stockholder has made a transfer of Registrable
Securities without retaining the exclusive benefit of such rights to its
retained Registrable Securities, it shall not thereafter, without the express
written consent of the subsequent holders of such transferred Registrable
Securities, purport to grant or retain demand registration rights to the
exclusive benefit of any subset of the Registrable Securities. Nothing
contained in this Section 10.2(f) shall be construed to require Fisher to effect
more than one such demand registration pursuant to Section 10.2.
10.3 INCIDENTAL REGISTRATION. (a) Right to Include Registrable Securities.
---------------------------------------
If, at any time within twelve (12) years from the date hereof, Fisher proposes
to register any of its equity securities under the Securities Act, whether or
not for sale for its own account, on a form and in a manner which would permit
registration of Fisher Common Stock held by any Shareholder ("Registrable
Securities") for sale to the public under the Securities Act, it will each such
time give prompt written notice to all holders of Registrable Securities of its
intention to do so, describing such securities and specifying the form and
manner and the other relevant facts involved in such proposed registration, and
upon the written request of any such holder delivered to Fisher within ten (10)
business days after the giving of any such notice (which request shall specify
the Registrable Securities intended to be disposed of by such holder and the
intended method or methods of disposition thereof), Fisher will use its best
efforts to effect the registration under the Securities Act of all Registrable
Securities which Fisher has been so requested to register by the holders of
Registrable Securities (hereinafter "Requesting Holder"), to the extent
requisite to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered,
provided that:
- --------
(i) if, at any time after giving such written notice of its intention
to register any of its securities and prior to the effective date of the
registration statement filed in connection with such registration, Fisher
shall determine for any reason not to register such securities, Fisher may,
at its election, give written notice of such determination to each holder
of Registrable Securities and thereupon shall be relieved of its obligation
to register any Registrable Securities in connection with such registration
(but not from its obligation to pay the Registration Expenses in connection
therewith as provided in subdivision (b) of this Section 10.1);
(ii) if (A) the registration so proposed by Fisher involves an
underwritten offering of the securities so being registered, whether or not
for sale for the account of Fisher, to be distributed by or through one or
more underwriters of recognized standing under underwriting terms
appropriate for such a transaction, (B) Fisher proposes that the securities
to be registered in such underwritten offering will not include all of the
Registrable Securities requested to be so included, and (C) the managing
underwriter of such underwritten offering shall advise Fisher in writing
that, in its judgment, the distribution of all or a specified portion of
such Registrable Securities concurrently with the securities being
distributed by such underwriters will materially adversely affect the
distribution of such securities by such underwriters (such written advice
to state the reasons
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<PAGE>
therefor), then Fisher will promptly furnish each such holder of
Registrable Securities with a copy of such opinion and may require, by
written notice to each such holder accompanying such written advice, that
the distribution of all or a specified portion of such Registrable
Securities be excluded from such distribution (in case of an exclusion of a
portion of such Registrable Securities, such portion to be allocated among
such holders in proportion to the respective numbers of shares of
Registrable Securities so requested to be registered by such holders); and
(iii) Fisher shall not be obligated to effect any registration of
Registrable Securities under this Section 10.1 incidental to the
registration of any of its securities in connection with mergers,
acquisitions, exchange offers, dividend reinvestment plans or stock option
or other employee benefit plans or incidental to the registration of any
non-equity securities not convertible into equity securities.
(b) Expenses. Except as otherwise prohibited by applicable law, Fisher
--------
will pay all Registration Expenses in connection with each registration of
Registrable Securities requested pursuant to this Section 10.
10.4 REGISTRATION PROCEDURES. If and whenever Fisher is required to use
its best efforts to effect the registration of any Registrable Securities under
the Securities Act as provided in Section 10.1, Fisher will promptly:
(a) prepare and (in any event within sixty (60) days of the last date
on which the holders of Registrable Securities may notify Fisher of their
request to include their Registrable Securities in such registration in
accordance herewith) file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such registration
statement to become effective;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the provisions of the Securities Act with respect to the disposition of all
Registrable Securities and other securities covered by such registration
statement until the earlier of such time as all of such Registrable Securities
and securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or the expiration of ninety (90) days after such registration
statement becomes effective; and will furnish, upon request, to each such seller
and each Requesting Holder prior to the filing thereof a copy of any amendment
or supplement to such registration statement or prospectus and shall not file
any such amendment or supplement to which any such seller or holder shall have
reasonably objected on the grounds that such amendment or supplement does not
comply in all material respects with the requirements of the Securities Act or
of the rules or regulations thereunder;
(c) furnish to each seller of such Registrable Securities and each
Requesting Holder such number of conformed copies of such registration statement
and of each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents, if any,
incorporated by reference in such registration statement or prospectus, and such
other documents, as such seller or Requesting Holder may reasonable request;
(d) use its best efforts to register or qualify all Registrable
Securities and other securities covered by such registration statement under
such other securities or blue sky laws of the states of the United States as
each seller shall reasonably request, to keep such registration or qualification
in effect for so long as such registration statement remains in effect, and do
any and all other acts and things which may be necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of its
Registrable Securities covered by such registration statement, except that
Fisher shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not but
for the requirements of this subsection (d) be obligated to be so qualified, or
to subject itself to taxation in any such jurisdiction, or to consent general
service of process in any such jurisdiction;
(e) upon request, furnish to each seller of Registrable Securities and
each Requesting Holder a signed counterpart, addressed to such seller and such
holder, of (i) an opinion of counsel for Fisher, dated the effective date of
such registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), and (ii) a "comfort" letter, dated the effective date of such
registration statement (and, if such registration includes an underwritten
public offering, dated the date of the closing under the underwriting
agreement), signed by the independent public accountants who have certified
Fisher's financial statements included in such registration statement, covering
substantially the same matters with respect to such registration
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<PAGE>
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities and, in the case of the accountants' letter, such other
financial matters, as the principal underwriter for such sellers or such holders
may reasonably request;
(f) immediately notify each seller of Registrable Securities covered
by such registration statement and each Requesting Holder, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, upon discovery that, or upon the happening of any event as a result of
which, the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing, which
untrue statement or omission requires amendment of the registration statement or
supplementation of the prospectus, and at the request of any such seller or
holder, prepare and furnish to such seller and holder a reasonable number of
copies of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such registrable
Securities, such prospectus shall not include an untrue statement of a material
fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing; provided, however, that each holder of Registrable
Securities registered pursuant to such registration statement agrees that he or
it will not sell any Registrable Securities pursuant to such registration
statement during the time that Fisher is preparing and filing with the SEC a
supplement to or an amendment of such prospectus or registration statement.
(g) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its securities holders, as
soon as reasonably practicable, an earnings statement covering the period of at
least twelve (12) months, but not more than eighteen (18) months, begging with
the first month of the first fiscal quarter after the effective date of such
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(h) provide and cause to be maintained a transfer agent and registrar
for all Registrable Securities covered by such registration statement from and
after a date not later than the effective date of such registration statement;
and
(i) use its best efforts to list all Common Stock covered by such
registration statement on each securities exchange on which any of the Fisher
Common Stock is then listed or, if Fisher Common Stock is not then quoted on
NASDAQ or listed on any national securities exchange, use its best efforts to
have such Fisher Common Stock covered by such registration statement quoted on
NASDAQ or, at the option of Fisher, listed on a national securities exchange.
Fisher may require each seller of Registrable Securities as to which any
registration is being effected to furnish Fisher such information regarding such
seller and the distribution of such securities as Fisher may from time to time
reasonably request in writing and as shall be required by law or by the SEC in
connection therewith.
10.5 UNDERWRITTEN OFFERINGS.
(a) Underwritten Offerings Exclusive. Whenever a registration
--------------------------------
requested by one or more Holders pursuant to Section 10.2 is for an underwritten
offering, only shares of Registrable Securities which are to be distributed by
the underwriters designated by such holders may be included in such
registration, unless such holders shall have permitted other securities to be
included in such registration and such underwritten offering is provided in
subdivision 10.2(e). If such holders shall determine that the number of shares
of Registrable Securities and any such other securities to be sold in any such
underwritten offering should be limited due to market conditions or otherwise,
Fisher shall include in such registration to the extent of the number which
Fisher is so advised can be sold in such offering (i) first, Registrable
-
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares of
such securities requested to be included by such holders, and (ii) other
--
securities of Fisher proposed to be included in such registration, in accordance
with the priorities, if any, then existing among Fisher and the holders of such
securities.
(b) Underwriting Agreement. If requested by the underwriters for any
----------------------
underwritten offering of Registrable Securities on behalf of a holder or holders
of Registrable Securities pursuant to a registration requested under Section
10.2, Fisher will enter into an underwriting agreement reasonably acceptable to
Fisher with such underwriters
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<PAGE>
for such offering, such agreement to contain such representations and warranties
by Fisher and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities to the effect and to the extent provided in
Section 10.2. The holders of Registrable Securities on whose behalf Registrable
Securities are to be distributed by such underwriters shall be parties to any
such underwriting agreement and the representations and warranties by, and the
other agreements on the part of, Fisher to and for the benefit of such
underwriters, shall also be made to and for the benefit of such holders of
Registrable Securities. Such holders of Registrable Securities shall not be
required by Fisher to make any representations or warranties to or agreements
with Fisher or the underwriters other than reasonable representations,
warranties or agreements (including indemnity agreements customary in secondary
offerings) regarding such holder, such holder's Registrable Securities and such
holder's intended method or methods of disposition and any other representation
required by law.
(c) Incidental Underwritten Offerings. If Fisher at any time proposes
---------------------------------
to register any of its securities under the Securities Act as contemplated by
Section 10.3 and such securities are to be distributed by or through one or more
underwriters, Fisher will use its best efforts, if requested by any holder of
Registrable Securities who requests incidental registration of Registrable
Securities in connection therewith pursuant to Section 10.3, to arrange for such
underwriters to include the Registrable Securities to be offered and sold by
such holder among the securities to be distributed by or through such
underwriters, provided that, for purposes of this sentence, best efforts shall
--------
not require Fisher to reduce the amount or sale price of such securities
proposed to be distributed by or through such underwriters. The holders of
Registrable Securities to be distributed by such underwriters shall be parties
to the underwriting agreement between Fisher and such underwriters and the
representations and warranties by, and the other agreements on the part of,
Fisher to and for the benefit of such underwriters, shall also be made to and
for the benefit of such holders of Registrable Securities, and Fisher will
cooperate with such holders of Registrable Securities to the end that the
conditions precedent to the obligations of such holders of Registrable
Securities under such underwriting agreement shall not include conditions that
are not customary in underwriting agreements with respect to combined primary
and secondary distributions and shall be otherwise satisfactory to such holders.
Such holders of Registrable Securities shall not be required by Fisher to make
any representations or warranties to or agreements with Fisher or the
underwriters other than reasonable representations, warranties or agreements
(including indemnity agreements customary in secondary offerings) regarding such
holder, such holder's Registrable Securities and such holder's intended method
or methods of distribution and any other representation required by law.
(d) Selection of Underwriters. Whenever a registration requested
-------------------------
pursuant to Section 10.2 is for an underwritten offering, the holders of a
majority of the Registrable Securities included in such registration shall have
the right to select the managing underwriter(s) to administer the offering,
after consulting with Fisher as to such selection and subject to the approval of
Fisher, which approval will not be unreasonably withheld. If Fisher at any time
proposes to register any of its securities under the Securities Act for sale for
its own account and such securities are to be distributed by or through one or
more underwriters, the selection of the managing underwriter(s) shall be made by
Fisher and notice of the selection thereof delivered to the holders of all
Registrable Securities eligible to participate in such registration.
(e) Holdback Agreements. (i) If any registration pursuant to Section
-------------------
10.2 or 10.3 shall be in connection with an underwritten public offering, each
holder of Registrable Securities agrees by acquisition of such Registrable
Securities, if so required by the managing underwriter, not to effect any public
sale or distribution of Registrable Securities (other than as part of such
underwritten public offering) within seven days prior to the effective date of
such registration statement or 120 days after the effective date of such
registration statement.
(ii) Fisher agrees (A) not to effect any public sale or distribution
-
of any of its equity securities or securities convertible into or exchangeable
or exercisable for any of such securities during the seven days prior to and the
earlier of 90 days after any underwritten registration pursuant to Section 10.2
or 10.3 has become effective and the date on which all securities under such
registration statement are sold, except as part of such underwritten
registration and except pursuant to registrations on Form S-8 or any successor
thereto, and (B) use its best efforts to cause each holder of its equity
-
securities or any securities convertible into or exchangeable or exercisable for
any of such securities, in each case purchased from Fisher at any time after the
date of this Agreement (other than in a public offering) to agree not to effect
any such public sale or distribution of such securities during such period.
10.6 PREPARATION; REASONABLE INVESTIGATION. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under the Securities Act, Fisher will give the holders of Registrable
Securities on whose behalf such Registrable Securities are to be so registered
and their underwriters, if any, each Requesting Holder, and their respective
counsel and accountants, the opportunity to participate in the preparation
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<PAGE>
of such registration statement, each prospectus included therein or filed with
the SEC and each amendment thereof or supplement thereto, and will give each of
them such access to its books and records and such opportunities to discuss the
business of Fisher with its officers and the independent public accountants who
have certified its financial statements as shall be necessary in the opinion of
such holders and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act. To minimize
disruption and expense to Fisher during the course of the registration process,
sellers of Registrable Securities to be covered by any such registration
statement shall coordinate their investigation and due diligence efforts
hereunder and, to the extent practicable, will act through a single set of
counsel and a single set of accountants.
10.7 INDEMNIFICATION.
(a) Indemnification by Fisher. In the event of any registration of
-------------------------
any securities of Fisher under the Securities Act, Fisher will, and hereby does,
indemnify and hold harmless in the case of any registration statement filed
pursuant to Section 10.2 or 10.3, the seller of any Registrable Securities
covered by such registration statement, its directors, trustees and officers,
each other person who participates as an underwriter in the offering or sale of
such securities and each other person, if any, who controls such seller or any
such underwriter within the meaning of the Securities Act against any losses,
claims, damages, liabilities or expenses, joint or several, to which such seller
or Requesting Holder or any such director or officer or participating or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
document incorporated by reference therein, or (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and Fisher will
reimburse such seller, Requesting Holder and each such director, trustee,
officer, participating person and controlling person for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding, provided that
--------
Fisher shall not be liable in any such case to the extent that any such loss,
claim, damage, liability or expense (or action or proceeding in respect thereof)
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to Fisher through an instrument duly executed by such seller or such Requesting
Holder or any such director, trustee, officer, participating person or
controlling person specifically stating that it is for use in the preparation
thereof. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such seller or such Requesting Holder or
any such director, officer, participating person or controlling person and shall
survive the transfer of such securities by such seller. Fisher shall agree to
make provision for contribution relating to such indemnity as shall be
reasonably requested by any seller of Registrable Securities or the
underwriters.
(b) Indemnification by the Sellers. Fisher may require, as a
------------------------------
condition to including any Registrable Securities in any registration statement
filed pursuant to sections 10.2 or 10.3, that Fisher shall have received an
undertaking satisfactory to it from the prospective seller of such securities,
to indemnify and hold harmless (in the same manner and to the same extent as set
forth in subdivision (a) of this section 10.7) Fisher, each director of Fisher,
each officer of Fisher who shall sign such registration statement and each other
person, if any, who controls Fisher within the meaning of the Securities Act,
with respect to any statement in or omission from such registration statement,
any preliminary prospectus, final prospectus or summary prospectus included
therein, or any amendment or supplement thereto, if such statement or omission
was made in reliance upon and in conformity with written information furnished
to Fisher through an instrument only executed by such seller specifically
stating that it is for use in the preparation of such registration statement,
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of Fisher or any such director, officer
or controlling person and shall survive the transfer of such securities by such
seller.
(c) Notice of Claims, etc. Promptly after receipt by an indemnified
----------------------
party of notice of the commencement of any action or proceeding involving a
claim referred to in the preceding subdivisions of this section 10.7, such
indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party, give written notice to the latter of the commencement of
such action, provided that the failure of any indemnified party to give notice
--------
as provided herein shall not relieve the indemnifying party of its obligations
under the preceding subdivisions of this Section 10.7. In case any such action
is brought against an indemnified party, unless in such indemnified party's
reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist in respect of
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such claim, the indemnifying party shall be entitled to participate in and to
assume the defense thereof, jointly with any other indemnifying party similarly
notified, to the extent that it may wish, with counsel reasonable satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by the latter in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the consent of the indemnified party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) Other Indemnification. Indemnification similar to that specified
---------------------
in the preceding subdivisions of this section 10.7 (with appropriate
modifications) shall be given by Fisher and each seller of Registrable
Securities with respect to any required registration or other qualification of
such Registrable Securities under any federal or state law or regulation of
governmental authority other than the Securities Act.
(e) Indemnification Payments. The indemnification required by this
------------------------
section 10.7 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
10.8 AMENDMENTS AND WAIVERS. The provisions of this Section may be
amended and Fisher may take any action herein prohibited, or omit to perform any
act herein required to be performed by it, only if Fisher shall have obtained
the written consent to such amendment, action or omission to act, of the holder
or holders of 51% or more of the shares of Registrable Securities (and, in the
case of any amendment, action or omission to act which adversely affects any
specific holder of Registrable Securities or a specific group of holders of
Registrable Securities, the written consent of each such holder or holders of
51% or more of the Registrable Securities held by such group). Each holder of
any Registrable Securities at the time shall be bound by any consent authorized
by this section 10.8, whether or not such Registrable Securities shall have been
marked to indicate such consent.
10.9 NOMINEES FOR BENEFICIAL OWNERS. In the event that any Registrable
Securities are held by a nominee for the beneficial owner thereof, the
beneficial owner thereof may, at its election, be treated as the holder of such
Registrable Securities for purposes of any request or other action by any holder
or holders of Registrable Securities pursuant to this Agreement or any
determination of any number or percentage of shares of Registrable Securities
held by any holder or holders of Registrable Securities contemplated by this
Agreement. If the beneficial owner of any Registrable Securities so elects,
Fisher may require assurances reasonably satisfactory to it of such owner's
beneficial ownership of such Registrable Securities.
SECTION 11. MISCELLANEOUS PROVISIONS
11.1 SHAREHOLDERS' AGENT. The Shareholders hereby irrevocably appoint
Wayne Surman as their agent for purposes of Sections 1.10, 9 and 11.10(d) (the
"Shareholders' Agent"), and Wayne Surman hereby accepts this appointment as the
Shareholders' Agent. Fisher shall be entitled to deal exclusively with the
Shareholders' Agent on all matters relating to Sections 1.10, 9 and 11.10(d),
and shall be entitled to rely conclusively (without further evidence of any kind
whatsoever) on any document executed or purported to be executed on behalf of
any Shareholder by the Shareholders' Agent, and on any other action taken or
purported to be taken on behalf of any Shareholder by the Shareholders' Agent,
as fully binding upon such Shareholder. If the Shareholders' Agent shall die,
become disabled or otherwise be unable to fulfill his responsibilities as agent
of the Shareholders, then the Shareholders shall, within ten (10) days after
such death or disability, appoint a successor agent and, immediately thereafter,
shall notify Fisher of the identity of such successor. Any such successor shall
become the "Shareholders' Agent" for purposes of Sections 1.10, 9 and 11.10(d).
If for any reason there is no Shareholders' Agent at any time, all references
herein to the Shareholders' Agent shall be deemed to refer to the Shareholders.
11.2 FURTHER ASSURANCES. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at or after the Closing) for the purpose of carrying out or evidencing any
of the transactions contemplated by this Agreement.
11.3 FEES AND EXPENSES. Subject to Section 9, all fees, costs and expenses
(including legal fees and accounting fees) that have been incurred or that are
incurred in the future by such party in connection with the transactions
contemplated by this Agreement, including all fees, costs and expenses incurred
by such party in connection
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with or by virtue of (a) any investigation and review conducted by such party of
the other parties' business (and the furnishing of information in connection
with such investigation and review), (b) the negotiation, preparation and review
of this Agreement (including the Disclosure Schedule) and all agreements,
certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the transactions contemplated by this Agreement,
(c) the preparation and submission of any filing or notice required to be made
or given in connection with any of the transactions contemplated by this
Agreement, and the obtaining of any Consent required to be obtained in
connection with any of such transactions, and (d) the consummation of the Merger
shall be paid: (i) by Fisher, if incurred by Fisher or the Subsidiary; and (ii)
by ACC, if incurred by ACC or the Shareholders.
11.4 ATTORNEYS' FEES. If any action or proceeding relating to this
Agreement or the enforcement of any provision of this Agreement is brought
against any party hereto, the prevailing party shall be entitled to recover
reasonable attorneys' fees, costs and disbursements (in addition to any other
relief to which the prevailing party may be entitled).
11.5 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile) to the
address or facsimile telephone number set forth beneath the name of such party
below (or to such other address or facsimile telephone number as such party
shall have specified in a written notice given to the other parties hereto):
if to Fisher:
Fisher Business Systems, Inc.
1950 Spectrum Circle, Suite 400
Marietta, Georgia 30067
Attention: Larry Fisher, President
Facsimile: (770) 857-4454
with a copy to:
Smith, Gambrell & Russell
3343 Peachtree Road, N.E.
Suite 1800
Atlanta, Georgia 30326-1010
Attn: William L. Meyer, Esq.
Facsimile: (404) 264-2652
if to ACC:
Advanced Custom Computer Solutions, Inc.
1000 Abernathy Road, Suite 1040
Atlanta, Georgia 30328
Attention: President
Facsimile: (770) 481-7275
with a copy to:
DeLong, Caldwell, Logue & Wisebram
1770 Resurgens Plaza
945 E. Paces Ferry Road
Atlanta, Georgia 30326
Attention: Earnest H. DeLong, Jr., Esq.
Facsimile: (404) 842-0565
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<PAGE>
if to any of the Shareholders:
c/o Wayne Surman
2976 Sewell Mill Road
Marietta, Georgia 30062
11.6 CONFIDENTIALITY. On and at all times after the Closing Date, ACC and
each Shareholder shall keep confidential, and shall not use or disclose to any
other Person, any non-public document or other non-public information in ACC's
or such Shareholder's possession that relates to the business of ACC or the
Subsidiary.
11.7 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
11.8 HEADINGS. The bold-faced Section headings contained in this Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken
together, shall constitute one agreement.
11.10 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and governed
in all respects by, the internal laws of the State of Georgia (without giving
effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
to or otherwise commenced in any state or federal court located in Cobb County,
Georgia. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in Cobb County, Georgia
(and each appellate court located in the State of Georgia) in connection
with any such legal proceeding;
(ii) agrees that each state and federal court located in Cobb
County, Georgia shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal
court located in Cobb County, Georgia, any claim that such party is not
subject personally to the jurisdiction of such court, that such legal
proceeding has been brought in an inconvenient forum, that the venue of such
proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) The Shareholders irrevocably constitute and appoint the
Shareholders' Agent as their agent to receive notices hereunder and service of
process in connection with any legal proceeding relating to this Agreement or
the enforcement of any provision of this Agreement.
11.11 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: ACC
and its successors and assigns (if any); the Shareholders and their respective
personal representatives, executors, administrators, estates, heirs, successors
and assigns (if any); Fisher and its successors and assigns (if any). This
Agreement shall inure to the benefit of: ACC, the Shareholders; Fisher; and the
respective successors, heirs personal representatives and assigns (if any) of
the foregoing. Following the Merger, Fisher may freely assign any or all of its
rights under this Agreement (including its indemnification rights under Section
9), in whole or in part, to any other Person without obtaining the consent or
approval of any other party hereto or of any other Person.
11.12 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. The rights and remedies
of the parties hereto shall be cumulative (and not alternative). The parties to
this Agreement agree that, in the event of any breach or threatened breach by
any party to this Agreement of any covenant, obligation or other provision set
forth in this Agreement for the benefit of any other party to this Agreement,
such other party shall be entitled (in addition to any other remedy that may be
available to it) to (a) a decree or order of specific performance or mandamus to
enforce the observance and
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performance of such covenant, obligation or other provision, and (b) an
injunction restraining such breach or threatened breach.
11.13 WAIVER.
(a) No failure on the part of any party to exercise any power, right,
privilege or remedy under this Agreement, and no delay on the part of any party
in exercising any power, right, privilege or remedy under this Agreement, shall
operate as a waiver of such power, right, privilege or remedy; and no single or
partial exercise of any such power, right, privilege or remedy shall preclude
any other or further exercise thereof or of any other power, right, privilege or
remedy.
(b) No party shall be deemed to have waived any claim arising out of
this Agreement, or any power, right, privilege or remedy under this Agreement,
unless the waiver of such claim, power, right, privilege or remedy is expressly
set forth in a written instrument duly executed and delivered on behalf of such
party; and any such waiver shall not be applicable or have any effect except in
the specific instance in which it is given.
11.14 AMENDMENTS. Subject to Section 10.9, this Agreement may not be
amended, modified, altered or supplemented other than by means of a written
instrument duly executed and delivered on behalf of all of the parties hereto.
11.15 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
11.16 PARTIES IN INTEREST. Except for the provisions of Sections 9 and
10, none of the provisions of this Agreement is intended to provide any rights
or remedies to any Person other than the parties hereto and their respective
successors, heirs, personal representatives and assigns (if any).
11.17 ENTIRE AGREEMENT. This Agreement and the other agreements referred
to herein set forth the entire understanding of the parties hereto relating to
the subject matter hereof and thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter hereof and thereof, including without limitation the Letter of Intent
(other than paragraph 7 thereof, which shall survive to the extent provided
herein).
11.18 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires: the
singular number shall include the plural, and vice versa; the masculine gender
shall include the feminine and neuter genders; the feminine gender shall include
the masculine and neuter genders; and the neuter gender shall include the
masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement to
"Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
The parties hereto have caused this Agreement to be executed and delivered
as of May 23, 1996.
"FISHER"
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
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<PAGE>
By: /s/ Larry Fisher
------------------------------------
Its: Chairman
------------------------------------
"SUBSIDIARY"
ACC ACQUISITION CO.,
a Georgia corporation
By: /s/ Larry Fisher
-------------------------------------
Title: Chairman
-----------------------------------
"ACC"
ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC.,
a Georgia corporation
By: /s/ Wayne Surman
-------------------------------------
Its: President
-------------------------------------
"THE SHAREHOLDERS"
/s/ Wayne Surman
-----------------------------------(SEAL)
Wayne Surman
/s/ Charlotte Surman
-----------------------------------(SEAL)
Charlotte Surman
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<PAGE>
EXHIBIT A
Shareholders
Names
-----
Wayne Surman
Charlotte Surman
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<PAGE>
EXHIBIT B
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit B):
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale, license, disposition or acquisition of all or a material
portion of ACC's business or assets;
(b) the issuance, disposition or acquisition of (i) any capital stock or
other equity security of ACC or Fisher, as the case may be; (ii) any option,
call, warrant or right (whether or not immediately exercisable) to acquire, or
otherwise relating to, any capital stock or other equity security of ACC or
Fisher, as the case may be; or (iii) any security, instrument or obligation that
is or may become convertible into or exchangeable for any capital stock or other
equity security of ACC or Fisher, as the case may be; or
(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving ACC or Fisher, as the case may
be.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit B is attached (including the Disclosure
Schedule), as it may be amended from time to time.
COMPANY CONTRACT. "Company Contract" shall mean any Contract: (a) to
which ACC is a party; (b) by which ACC or any of its assets are or may become
bound or under which ACC has, or may become subject to, any obligation; or (c)
under which ACC has or may acquire any right or interest.
COMPANY PROPRIETARY ASSET. "Company Proprietary Asset" shall mean any
Proprietary Asset owned by or licensed to ACC or otherwise used by ACC.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, warranty,
insurance policy, benefit plan, or legally binding commitment or undertaking of
any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost
(including costs of investigation) or expense of any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule (dated
as of the date of the Agreement) delivered to Fisher on behalf of ACC and the
Shareholders.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security), any restriction of any nature (including any
restriction on the voting of any security, any restriction on the transfer of
any security or other asset, any restriction on the receipt of any income
derived from any asset, any restriction on the use of any asset and any
restriction on the possession, exercise or transfer of any other attribute of
ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any limited
liability company or joint stock company), firm or other enterprise,
association, organization or entity.
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<PAGE>
ENVIRONMENTAL LAW. "Environmental Law" means any federal, state, local or
foreign Legal Requirement relating to pollution or protection of human health or
the environment (including ambient air, surface water, ground water, land
surface or subsurface strata), including any law or regulation relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city, local or other political subdivision.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitute, principle of common
law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT. A violation or other matter will be deemed to
have a "Material Adverse Effect" on ACC if such violation or other matter
(considered together with all other matters that would constitute exceptions to
the representations and warranties set forth in the Agreement or in the
Shareholders' Closing Certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on
ACC's business, condition, assets, liabilities, operations, financial
performance or prospects.
MATERIALS OF ENVIRONMENTAL CONCERN. "Materials of Environmental Concern"
include chemicals, pollutants, contaminants, wastes, toxic substances, asbestos,
PCBs, petroleum and petroleum products and any other substance that is now or in
the future regulated by any Environmental Law or that is otherwise a danger to
health, reproduction or the environment.)
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (a) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, source code, computer program, invention, design, blueprint,
engineering drawing, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset; or (b) right to use or exploit
any of the foregoing.
REPRESENTATIVES "Representatives" shall mean officers, directors,
employees, agents, attorneys, accounts, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, withholding tax or payroll tax), levy, assessment, tariff, duty (including
any customs duty), deficiency or fee, and any
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<PAGE>
related charge or amount (including any fine, penalty or interest), imposed,
assessed or collected by or under the authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
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<PAGE>
EXHIBIT C
Directors and Officers of Surviving Corporation After the Merger
1. Directors
Paul Harrison
Larry Fisher
Nate Lipson
Wayne Surman
Charlotte Surman
2. Officers
President: Wayne Surman
Vice President: Larry Fisher
Secretary: Charlotte Surman
Treasurer: Larry Fisher
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<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This First Amendment to Agreement and Plan of Merger and Reorganization is
entered into as of September 11, 1996, by and among Fisher Business Systems,
Inc., a Georgia corporation ("Fisher"); ACC Acquisition Co., a Georgia
corporation and a wholly-owned subsidiary of Fisher (the "Subsidiary"); Advanced
Custom Computer Solutions, Inc., a Georgia corporation ("ACC"); and Wayne Surman
and Charlotte Surman, each an individual resident of the State of Georgia (the
"Shareholders").
RECITALS
A. The parties hereto entered into an Agreement and Plan of Merger and
Reorganization as of May 23, 1996 (the "Original Agreement").
B. The parties wish to amend the Original Agreement as provided herein.
A G R E E M E N T
The parties hereby amend the Original Agreement as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Original Agreement.
2. Section 1.8 of the Original Agreement is hereby deleted and the
following new Section 1.8 is hereby substituted in its place:
1.8 MERGER CONSIDERATION. The aggregate merger consideration to be
paid by Fisher to the Shareholders in consideration of the Merger ("Merger
Consideration") shall be 750,000 shares of Fisher Common Stock. The Fisher
Common Stock comprising the Merger Consideration will be delivered to the
Shareholders at Closing. In addition, on the Closing Date, Fisher shall
grant options to purchase an aggregate of 100,000 shares of Fisher Common
Stock, exercisable for a term expiring in ten years, at a price equal to
the fair market value of Fisher Common Stock on the Closing Date. Not later
than two days prior to the Closing Date, the Shareholders shall notify
Fisher of those employees of ACCS who will receive said option grants,
indicating the number of options which each recipient is to receive.
2. Sections 1.9, 1.10, 5.9, and 6.4(g) and Exhibit D of the Original
Agreement are hereby deleted in their entity.
3. Section 7.4(d) of the Original Agreement is hereby deleted and the
following new Section 7.4(d) is hereby substituted in its place:
(d) Fisher shall have executed Option Agreements in accordance with
instructions from Shareholders pursuant to Section 1.8.
4. Section 8.1(e) of the Original Agreement is hereby amended by changing
"June 30, 1996" to "October 31, 1996."
5. Section 8.1(f) of the Original Agreement is hereby amended by changing
"June 30, 1996" to "October 31, 1996."
Except as expressly amended hereby, the Original Agreement shall continue
in full force and effect.
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<PAGE>
The parties have caused this First Amendment to be executed and delivered
as of the date first stated above.
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Larry Fisher
----------------------------------------
Larry Fisher, Chairman
ACC ACQUISITION CO., a Georgia
corporation
By: /s/ Larry Fisher
----------------------------------------
Larry Fisher, President
ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC., a Georgia corporation
By: /s/ Wayne Surman
----------------------------------------
Wayne Surman, President
/s/ Wayne Surman
-----------------------------------(SEAL)
WAYNE SURMAN
/s/ Charlotte Surman
-----------------------------------(SEAL)
CHARLOTTE SURMAN
Each an individual resident of the State
of Georgia
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<PAGE>
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
This Second Amendment to Agreement and Plan of Merger and Reorganization is
entered into as of October 31, 1996, by and among Fisher Business Systems, Inc.,
a Georgia corporation ("Fisher"); ACC Acquisition Co., a Georgia corporation and
a wholly-owned subsidiary of Fisher (the "Subsidiary"); Advanced Custom Computer
Solutions, Inc., a Georgia corporation ("ACC"); and Wayne Surman and Charlotte
Surman, each an individual resident of the State of Georgia (the
"Shareholders").
RECITALS
A. The parties hereto entered into an Agreement and Plan of Merger and
Reorganization as of May 23, 1996 (the "Original Agreement"), and that certain
First Amendment to Agreement and Plan of Merger and Reorganization, dated as of
September 11, 1996 (the "First Amendment;" the Original Agreement, as amended by
the First Amendment, is hereinafter referred to as the "Agreement").
B. The parties wish to amend the Agreement as provided herein.
A G R E E M E N T
The parties hereby amend the Agreement as follows:
1. All capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Agreement.
2. Section 8.1(e) of the Agreement is hereby amended by changing "October
31, 1996" to "December 31, 1996."
3. Section 8.1(f) of the Agreement is hereby amended by changing "October
31, 1996" to "December 31, 1996."
Except as expressly amended hereby, the Agreement shall continue in full
force and effect.
The parties acknowledge that the terms and conditions of the merger have
not yet been finalized.
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The parties have caused this Second Amendment to be executed and delivered
as of the date first stated above.
FISHER BUSINESS SYSTEMS, INC.,
a Georgia corporation
By: /s/ Larry Fisher
----------------------------------------
Larry Fisher, Chairman
ACC ACQUISITION CO., a Georgia
corporation
By: /s/ Larry Fisher
----------------------------------------
Larry Fisher, President
ADVANCED CUSTOM COMPUTER
SOLUTIONS, INC., a Georgia corporation
By: /s/ Wayne Surman
----------------------------------------
Wayne Surman, President
/s/ Wayne Surman
-----------------------------------(SEAL)
WAYNE SURMAN
/s/ Charlotte Surman
-----------------------------------(SEAL)
CHARLOTTE SURMAN
Each an individual resident of the State
of Georgia
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<PAGE>
APPENDIX D
FISHER BUSINESS SYSTEMS, INC.
1996 STOCK OPTION PLAN
1. PURPOSE
The purpose of Fisher Business Systems, Inc.'s 1996 Stock Option Plan (the
"Plan") is to encourage and enable eligible directors, officers and employees of
Fisher Business Systems, Inc. (the "Company") and its subsidiaries to acquire
proprietary interests in the Company through the ownership of Common Stock of
the Company. The Company believes that directors, officers and key employees
who participate in the Plan will have a closer identification with the Company
by virtue of their ability as shareholders to participate in the Company's
growth and earnings. The Plan also is designed to provide motivation for
participating directors, officers and key employees to remain in the employ of
and to give greater effort on behalf of the Company. It is the intention of the
Company to have the Plan qualify as an "incentive stock option plan" under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
the regulations promulgated thereunder. Accordingly, the provisions of the Plan
shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.
2. DEFINITIONS
The following words or terms shall have the following meanings:
(a) "Agreement" shall mean a stock option agreement between the Company and
an Eligible Employee or an Eligible Participant pursuant to the terms of this
Plan.
(b) "Average Market Price" shall mean the mean between the high "bid" and
low "ask" prices as of the close of business for the Company's shares of Common
Stock in the over-the-counter market, as reported by The Nasdaq Stock Market (or
other national quotation service). If the Company's Common Stock is not
regularly traded in the over-the-counter market but is registered on a national
securities exchange, "Average Market Price" shall mean the closing price of the
Company's Common Stock on such national securities exchange.
(c) "Board of Directors" shall mean the Board of Directors of the Company
or the Executive Committee of such Board.
(d) "Committee" shall mean the committee appointed by the Board of
Directors to administer the Plan.
(e) "Common Stock" shall mean the $.01 par value Common Stock of the
Company.
(f) "Company" shall mean Fisher Business Systems, Inc., a Georgia
corporation.
(g) "Eligible Employee(s)" shall mean a person or persons regularly
employed by the Company or a Subsidiary.
(h) "Eligible Participant" shall mean an Eligible Employee or a Non-
Employee Director.
(i) "Non-Employee Director" shall mean a director of the Company who is not
a regular salaried employee of the Company or one of its subsidiaries.
(j) "Optionee" shall mean an Eligible Employee or Eligible Participant
having a right to purchase Common Stock under an Agreement.
(k) "Option(s)" shall mean the right or rights granted to Eligible
Employees or Eligible Participants to purchase Common Stock under the Plan.
(l) "Plan" shall mean this Fisher Business Systems, Inc. 1996 Stock Option
Plan.
D-1
<PAGE>
(m) "Shares," "Stock" or "Common Stock" shall mean shares of the Common
Stock.
(n) "Subsidiary" shall mean any corporation, if the Company owns or
controls, directly or indirectly, a majority of the voting stock of such
corporation.
(o) "Ten Percent Owner" shall mean an individual who, at the time an Option
is granted, owns directly or indirectly more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company.
3. EFFECTIVE DATE
The effective date of the Plan (the "Effective Date") shall be the date the
Plan is adopted by the Board of Directors or the date the Plan is approved by
the shareholders of the Company, whichever is earlier. The Plan must be
approved by the affirmative vote of not less than a majority of the votes
entitled to be cast thereon, which shareholder vote must be taken within twelve
(12) months after the date the Plan is adopted by the Board of Directors. Such
shareholder vote shall not alter the Effective Date of the Plan. In the event
shareholder approval of the adoption of the Plan is not obtained within the
aforesaid twelve (12) month period, then any options granted in the intervening
period shall be void.
4. SHARES RESERVED FOR PLAN
The shares of the Company's Common Stock to be sold to Eligible Employees
and Eligible Participants under the Plan may at the election of the Board of
Directors be either treasury shares or shares originally issued for such
purpose. The maximum number of shares which shall be reserved and made
available for sale under the Plan shall be 3,000,000. Any shares subject to an
Option which for any reason expires or is terminated unexercised may again be
subject to an Option under the Plan.
5. ADMINISTRATION OF THE PLAN
The Plan shall be administered by the Board of Directors of the Company or
the Committee. The Committee shall be comprised of not less than two (2)
members appointed by the Board of Directors of the Company from among its
members. No member of the Board of Directors shall be appointed or serve as a
member of the Committee, and any such appointment or service immediately and
automatically shall terminate, in the event that such person is not a
disinterested person. As used herein, the term "disinterested person" means a
director who is not, during the one year prior to service as an administrator of
the Plan, or during such service, granted or awarded equity securities pursuant
to the Plan or any other plan of the Company or any of its affiliates (as such
term is defined in the General Rules and Regulations of the Securities Exchange
Act of 1934, as amended).
Within the limitations described herein, the Board of Directors of the
Company or the Committee shall administer the Plan, select the Eligible
Employees and Eligible Participants to whom Options will be granted, determine
the number of shares to be optioned to each Eligible Employee and Eligible
Participant and interpret, construe and implement the provisions of the Plan.
Board of Directors and Committee members shall be reimbursed for out-of-pocket
expenses reasonably incurred in the administration of the Plan.
If the Plan is administered by the Board of Directors, a majority of the
members of the Board of Directors shall constitute a quorum, and the act of a
majority of the members of the Board of Directors present at any meeting at
which a quorum is present, or acts approved in writing by a majority of the
members of the Board of Directors shall be the acts of the Board of Directors.
If the Plan is administered by the Committee, the Committee shall select one of
its members as Chairman and shall hold its meetings at such times and places,
and pursuant to such rules consistent with the Plan, as it may determine. A
majority of the members of the Committee shall constitute a quorum, and the acts
of a majority of the members present at any meeting at which a quorum is
present, or acts approved in writing by a majority of the members of the
Committee shall be the acts of the Committee.
6. ELIGIBILITY
Options granted pursuant to Section 8 shall be granted only to Eligible
Employees. Options granted pursuant to Section 9 shall be granted only to
Eligible Participants. Options granted pursuant to Section 10 shall be granted
only to Non-Employee Directors.
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7. DURATION OF THE PLAN
The Plan shall remain in effect until all shares subject to or which may
become subject to the Plan shall have been purchased pursuant to Options granted
under the Plan; provided that Options under the Plan must be granted within ten
(10) years from the Effective Date.
8. QUALIFIED INCENTIVE OPTIONS
It is intended that Options granted under the Plan pursuant to this Section
8 shall be qualified incentive stock options under the provisions of Section 422
of the Code and the regulations thereunder or corresponding provisions of
subsequent revenue laws and regulations in effect at the time such Options are
granted. Such Options shall be evidenced by stock option agreements in such
form and not inconsistent with this Plan as the Board of Directors or the
Committee shall approve from time to time, which agreements shall contain in
substance the following terms and conditions:
(a) Price. The purchase price for shares purchased upon exercise will be
-----
the Average Market Price on the day the Option is granted, as determined by the
Board of Directors or the Committee, or, if the Stock is not traded in the
organized markets, then the price shall be the fair market value of the Stock as
determined in good faith by the Board of Directors or the Committee, but in no
case less than the par value of such stock; provided further that the purchase
price of stock deliverable upon the exercise of a qualified incentive option
granted to a Ten Percent Owner shall be not less than one hundred ten percent
(110%) of the Average Market Price or fair market value on the day the Option is
granted, as determined by the Board of Directors or the Committee, but in no
case less than the par value of such stock.
(b) Number of Shares. The Agreement shall specify the number of shares
----------------
which the Optionee may purchase under such Option.
(c) Exercise of Options. The shares subject to the Option may be purchased
-------------------
in whole or in part by the Optionee in accordance with the terms of the
Agreement, from time to time after shareholder approval of the Plan, but in no
event later than ten (10) years from the date of grant of the Option.
Notwithstanding the foregoing, shares subject to an Option granted to a Ten
Percent Owner shall be exercisable no later than five (5) years from the date of
grant of the Option.
(d) Medium and Time of Payment. Stock purchased pursuant to an Agreement
--------------------------
shall be paid for in full at the time of purchase. Payment of the purchase
price shall be in cash or shares of the Common Stock of the Company, or a
combination of cash and shares of the Common Stock of the Company. Upon receipt
of payment, the Company shall, without transfer or issue tax, deliver to the
Optionee (or other person entitled to exercise the Option) a certificate or
certificates for such shares.
(e) Rights as a Shareholder. An Optionee shall have no rights as a
-----------------------
shareholder with respect to any shares covered by an Option until the date of
issuance of the stock certificate to the Optionee for such shares. Except as
otherwise expressly provided in the Plan, no adjustments shall be made for
dividends or other rights for which the record date is prior to the date such
stock certificate is issued.
(f) Nonassignability of Option. No Option shall be assignable or
--------------------------
transferable by the Optionee except by will or by the laws of descent and
distribution. During the lifetime of the Optionee, the Option shall be
exercisable only by him or her.
(g) Effect of Termination of Employment or Death. In the event that an
--------------------------------------------
Optionee during his or her lifetime ceases to be an employee of the Company or
of any subsidiary of the Company for any reason (including retirement) other
than death or permanent and total disability, any Option or unexercised portion
thereof which was otherwise exercisable on the date of termination of employment
shall expire unless exercised within a period of three (3) months from the date
on which the Optionee ceased to be an employee, but in no event after the term
provided in the Optionee's Agreement. In the event that an Optionee ceases to
be an employee of the Company or of any subsidiary of the Company for any reason
(including retirement) prior to the time that an Option is exercisable, his or
her Option shall terminate and be null and void.
In the event that an Optionee during his or her lifetime ceases to be an
employee of the Company or any subsidiary of the Company by reason of death or
permanent and total disability, any Option or unexercised portion
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thereof which was otherwise exercisable on the date such Optionee ceased
employment shall expire unless exercised within a period of one (1) year from
the date on which the Optionee ceased to be an employee, but in no event after
the term provided in the Optionee's Agreement. Permanent and total disability
as used herein is as defined in Section 22(e)(3) of the Code.
In the event of the death of an Optionee, the Option shall be exercisable
by his or her personal representatives, heirs or legatees, as provided herein.
(h) Recapitalization. In the event that dividends are payable in Common
----------------
Stock of the Company or in the event there are splits, subdivisions or
combinations of shares of Common Stock of the Company, the number of Shares
available under the Plan shall be increased or decreased proportionately, as the
case may be, and the number of Shares deliverable upon the exercise thereafter
of any Option theretofore granted shall be increased or decreased
proportionately, as the case may be, without change in the aggregate purchase
price.
(i) Reorganization. In case the Company is merged or consolidated with
--------------
another corporation and the Company is not the surviving corporation, or in case
the property or stock of the Company is acquired by another corporation, or in
case of a separation, reorganization, recapitalization or liquidation of the
Company, the Board of Directors of the Company, or the Board of Directors of any
corporation assuming the obligations of the Company hereunder, shall either (i)
make appropriate provision for the protection of any outstanding Options by the
substitution on an equitable basis of appropriate stock of the Company, or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to the shares of Common Stock of the Company, provided only
that the excess of the aggregate fair market value of the shares subject to
option immediately after such substitution over the purchase price thereof is
not more than the excess of the aggregate fair market value of the shares
subject to option immediately before such substitution over the purchase price
thereof, or (ii) upon written notice to the Optionee provide that the Option
(including the shares not then exercisable) must be exercised within sixty (60)
days of the date of such notice or it will be terminated.
(j) General Restriction. Each Option shall be subject to the requirement
-------------------
that if at any time the Board of Directors shall determine, in its discretion,
that the listing, registration or qualification of the Shares subject to such
Option upon any securities exchange or under any state or federal law, or the
consent or approval of any government regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of such Option or the
issue or purchase of Shares thereunder, such Option may not be exercised in
whole or in part unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors.
9. NON-QUALIFIED OPTIONS
The Committee may grant to Eligible Participants options under the Plan
which are not qualified incentive stock options under the provisions of Section
422 of the Code. Such non-qualified options shall be evidenced by Agreements in
such form and not inconsistent with this Plan as the Board of Directors or the
Committee shall approve from time to time, which Agreements shall contain in
substance the same terms and conditions as set forth in Section 8 hereof with
respect to qualified incentive options; provided, however, that the limitations
set forth in Sections 8(a), 8(c) and 8(g) shall not be applicable to non-
qualified options.
10. NON-EMPLOYEE DIRECTOR PARTICIPATION
(a) On and as of the second Tuesday in June of each year during the term of
this Plan, each then Non-Employee Director of the Company shall be granted,
without the necessity of action by the Committee, an Option hereunder to
purchase 10,000 shares of Common Stock at the Average Market Price of such Stock
on the date of grant.
(b) Each new Non-Employee Director of the Company shall receive a one-time
grant, without necessity of action by the Board of Directors or the Committee,
as the case may be, of an option hereunder to purchase 10,000 Shares on the date
such Non-Employee Director first becomes a member of the Board of Directors of
the Company, at an exercise price equal to the Average Market Price of such
Stock on the date of grant.
(c) In the event the remaining number of shares of Stock reserved for
issuance under the Plan are insufficient to grant options for the appropriate
number of shares of Stock to Non-Employee Directors as of any grant date, then
no options shall be granted as of that grant date. Options granted to Non-
Employee Directors hereunder shall be evidenced
D-4
<PAGE>
by Agreements in such form and not inconsistent with this Plan as the Board of
Directors or the Committee shall approve from time to time, which Agreements
shall contain in substance the same terms and conditions set forth in Section 8
hereof with respect to qualified incentive options; provided, however, that the
limitations set forth in Sections 8(a) and 8(c) with respect to Ten Percent
Owners shall not be applicable to options granted to Non-Employee Directors
pursuant to this Section 10.
(d) Options granted pursuant to this Section 10 are intended to be under a
"formula plan" as recognized by Rule 16b-3(c)(2)(ii) promulgated under the
Securities Exchange Act of 1934, as amended, and shall be interpreted
accordingly.
(e) The provisions of this Section 10 shall not be amended more than once
every six months, other than to comport with changes in the Internal Revenue
Code, the Employee Retirement Income Security Act, or the rules thereunder.
11. AMENDMENT OF THE PLAN
The Plan may at any time or from time to time be terminated, modified or
amended by the affirmative vote of not less than a majority of the votes
entitled to be cast thereon by the Company's shareholders. The Board of
Directors may at any time and from time to time modify or amend the Plan in any
respect, except that without shareholder approval the Board of Directors may not
(1) increase the maximum number of shares for which Options may be granted under
the Plan either in the aggregate or to any Eligible Employee (other than
increases due to changes in capitalization as referred to in Section 8(h)
hereof), or (2) reduce the option price or waiting period (except as otherwise
expressly provided in the Plan in the case of a reorganization of the Company as
referred to in Section 8(i) hereof), or (3) extend the period during which
Options may be granted or exercised, or (4) change the class of employees
eligible for incentive stock options under Section 6 hereof, or (5) to otherwise
materially modify (within the meaning of Rule 16b-3 of the Securities Exchange
Act of 1934, as amended) the requirements as to eligibility for participation in
the Plan, or (6) to otherwise materially increase (within the meaning of Rule
16b-3 of the Securities Exchange Act of 1934, as amended) the benefits accruing
to participants under the Plan. The termination or any modification or
amendment of the Plan shall not, without the written consent of an Optionee,
affect his or her rights under an Option or right previously granted to him or
her. With the written consent of the Optionee affected, the Board of Directors
or the Committee may amend outstanding option agreements in a manner not
inconsistent with the Plan. Without employee consent, the Board of Directors
may at any time and from time to time modify or amend outstanding option
agreements in such respects as it shall deem necessary in order that Options
granted hereunder shall comply with the appropriate provisions of the Code and
regulations thereunder which are in effect from time to time respecting
"Qualified Incentive Options."
12. LIMITATION ON NUMBER OF SHARES THAT MAY BE PURCHASED
The aggregate fair market value (determined at the time the Option is
granted) of the shares with respect to which incentive stock options are
exercisable for the first time by an Optionee during any calendar year (under
all incentive stock option plans of the Company) shall not exceed $100,000.
13. BINDING EFFECT
All decisions of the Board of Directors or the Committee involving the
implementation, administration or operation of the Plan or any offering under
the Plan shall be binding on the Company, all Eligible Employees and Eligible
Participants participating in the Plan, and on all persons eligible or who
become eligible to participate in the Plan.
D-5
<PAGE>
FISHER BUSINESS SYSTEMS, INC.
1950 Spectrum Circle, Suite 400, Marietta, Georgia 30067
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 1996 ANNUAL
MEETING OF SHAREHOLDERS.
The undersigned hereby appoints Larry Fisher and Jeffrey C. Brenner or either
of them, with power of substitution to each, the proxies of the undersigned to
vote the Common Stock of the undersigned at the Annual Meeting of Shareholders
of FISHER BUSINESS SYSTEMS, INC. ("Fisher") to be held at the offices of Smith,
Gambrell & Russell, LLP, 3343 Peachtree Road, N.E., Suite 1800, Atlanta,
Georgia 30326 on Monday, November 18, 1996, at 9:00 a.m., local time, and any
adjournments or postponements thereof:
(1) To approve an amendment to the Articles of Incorporation of Fisher to
increase the number of authorized shares of Common Stock from 10,000,000 shares
to 100,000,000 shares;
[_] FOR [_] AGAINST [_] ABSTAIN
(2) To consider and vote upon a proposal to ratify:
(a)the merger of AUBIS Hospitality Systems, Inc. and AUBIS Systems
Integration, Inc. (collectively, the "AUBIS Subsidiaries"), each a wholly-
owned subsidiary of AUBIS, L.L.C. ("AUBIS"), with and into two wholly-owned
subsidiaries of Fisher (collectively, the "Fisher Subsidiaries") and the
Amended and Restated Agreement and Plan of Merger and Reorganization, dated
December 13, 1995 and amended and restated as of March 29, 1996 and as
further amended on September 27, 1996, among AUBIS, the AUBIS Subsidiaries,
certain affiliates of AUBIS, Fisher and the Fisher Subsidiaries, pursuant to
which the AUBIS Subsidiaries will be merged into the Fisher Subsidiaries, and
in which AUBIS will receive 10,000,000 shares of Fisher Common Stock; and
(b)the acquisition of HALIS Software, Inc. ("HSI"), a wholly-owned
subsidiary of HALIS, L.L.C. ("HALIS"), and the Stock Purchase Agreement,
dated March 29, 1996 and amended as of September 27, 1996, between Fisher and
HALIS and its affiliates, pursuant to which HSI will become a wholly-owned
subsidiary of Fisher, and in which HALIS will receive 5,000,000 shares of
Fisher Common Stock; and
(c)the merger of Advanced Custom Computer Solutions, Inc. ("ACCS") with and
into ACC Acquisition Co., a wholly-owned subsidiary of Fisher, and the
Agreement and Plan of Merger and Reorganization, dated May 23, 1996 and
amended as of September 11, 1996 and as further amended on October 31, 1996,
(the "ACCS Agreement"), among ACCS, certain affiliates of ACCS, Fisher and
ACC Acquisition Co., pursuant to which ACCS will be merged into ACC
Acquisition Co. and in which the shareholders of ACCS will receive 750,000
shares of Fisher Common Stock;
[_] FOR [_] AGAINST [_] ABSTAIN
(3) To elect four (4) directors to constitute the Board of Directors of
Fisher, to serve for a term of one year and until their successors are elected
and qualified;
[_] FOR all nominees listed below [_] WITHHOLD AUTHORITY to vote for all
(except as marked to the contrary nominees listed below
below)
LARRY FISHER, PAUL W. HARRISON, JEFFREY C. BRENNER and NATE LIPSON
INSTRUCTION: To withhold authority to vote for any individual nominee write the
nominee's name in the space provided below.
_______________________________________________________________________________
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(4) To approve the adoption of the 1996 Stock Option Plan of Fisher;
[_] FOR [_] AGAINST [_] ABSTAIN
(5) To transact such other business incidental to the conduct of the Annual
Meeting as may properly come before the Annual Meeting or any adjournments or
postponements thereof, including any adjournments or postponements for the
purpose of soliciting additional votes in favor of the above proposals.
[_] FOR [_] AGAINST [_] ABSTAIN
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" THE ABOVE PROPOSALS AND UNLESS
INSTRUCTIONS TO THE CONTRARY ARE INDICATED IN THE SPACE PROVIDED, THIS PROXY
WILL BE SO VOTED.
A stockholder may revoke a proxy by submitting at any time prior to the vote
at the Annual Meeting a later dated proxy with respect to the same shares, by
delivering written notice of revocation to the Secretary of Fisher at any time
prior to such vote or by attending the Annual Meeting and voting in person.
Mere attendance at the Annual Meeting will not in and of itself revoke a proxy.
Please date and sign this Proxy
- - - exactly as name(s) appears on the
mailing label.
----------------------------------
- - -
----------------------------------
Print Name(s):____________________
NOTE: When signing as an attor-
ney, trustee, executor, adminis-
trator or guardian, please give
your title as such. If a corpora-
tion or partnership, give full
name by authorized officer. In
the case of joint tenants, each
joint owner must sign.
Dated: ___________________________
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