<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
FISHER BUSINESS SYSTEMS, INC.
-----------------------------
(Name of Issuer)
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(Title of Class of Securities)
337753-30-5
- -------------------------------------------------------------------------------
(CUSIP Number)
Paul W. Harrison
200 Hembree Park Drive
Suite K
Roswell, GA 30076
(770) 667-1667
------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
November 18, 1996
- -------------------------------------------------------------------------------
(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement of Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]
The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page. The information required on the
remainder of this cover page shall not be deemed to be "filed" for the purpose
of Section 18 of the Securities and Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section of the Act but shall be subject to
all other provisions of the Act (however, see the Notes).
Check the following box if a fee is being paid with the statement.
[_]
(A fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership or more than five percent of
the class of securities described in item 1; and (2) has filed no amendment
subsequent thereto reporting beneficial ownership of five percent or less of
such class. (See Rule 13d-7))
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
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Page ________ of _________
SCHEDULE 13D
CUSIP NO. 337753-30-5
--------------
1 NAME OF REPORTING PERSON S.S. OR IRS
IDENTIFICATION NO. OF ABOVE PERSON
HALIS, L.L.C.
------------------------------------
I.R.S Identification No. 58-2216306
------------------------
------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_]
(b) [_]
N/A
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3. SEC USE ONLY
------------------------------------------------------------------------
4. SOURCE OF FUNDS*
00
------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_]
N/A
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NUMBER OF 7. SOLE VOTING POWER
SHARES 5,000,000 Shares of Common Stock
BENEFICIALLY
OWNED BY -------------------------------------------------
EACH
REPORTING 8. SHARED VOTING POWER None
PERSON WITH -------------------------
9. SOLE DISPOSITIVE POWER
5,000,000 shares of Common Stock
-------------------------------------------------
10. SHARED DISPOSITIVE POWER None
-------------------
--------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,000,000 shares of Common Stock
--------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN
ROW (11) EXCLUDES CERTAIN SHARES* [_]
N/A
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.3% of Common Stock
--------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON (See Instructions)
00
--------------------------------------------------------------------------
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Page _______ of ________
Item 1. Security and Issuer.
-------------------
This statement (this "Statement") relates to the Common Stock par value
$.01 per share (the "Securities") of Fisher Business Systems, Inc. (the
"Issuer"), with principal executive offices located at 1950 Spectrum
Circle, Suite 400, Marietta, Georgia 30067.
Item 2. Identify and Background.
-----------------------
(a) This Statement is filed on behalf of HALIS, L.L.C., a Georgia
limited liability company ("HALIS"). In addition to HALIS, information
is being provided regarding the following managers and officers of
HALIS:
Paul W. Harrison, President and Manager
Elizabeth A. Marino, Secretary, Treasurer and Manager
Collectively, HALIS and the managers and officers are referred to as
the "Reporting Persons"
(b) The principal business offices of HALIS and its executive officers
and managers is:
200 Hembree Park Drive
Suite K
Roswell, GA 30076
(c) HALIS is now a holding company whose sole asset is the shares of
Common Stock of the Issuer. Paul W. Harrison is President and Manager
of HALIS; Chairman and Chief Executive Officer of the Issuer, 1950
Spectrum Circle, Suite 400, Marietta, GA 30067; President and Manager
of AUBIS, L.L.C. ("AUBIS"), 2028 Powers Ferry Road, Suite 190,
Marietta, GA 30067; and President and Chief Executive Officer of Paul
Harrison Enterprises, Inc. ("PHE"), 3390 Peachtree Road, N.E., Suite
1000, Atlanta, GA 30326.
Elizabeth A. Marino is Secretary, Treasurer and Manager of HALIS;
Secretary, Treasurer and Manager of AUBIS, 2028 Powers Ferry Road,
Suite 190, Marietta, GA 30067; and Secretary and Treasurer of Paul
Harrison Enterprises, Inc., 3390 Peachtree Road, N.E., Suite 1000,
Atlanta, GA 30326.
(d) None.
(e) None.
(f) HALIS is a Georgia limited liability company.
Paul W. Harrison and Elizabeth A. Marino are citizens of the
United States of America
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Page _______ of ________
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Securities were acquired pursuant to a Stock Purchase Agreement
whereby the Issuer acquired all of the outstanding shares of HALIS
Software, Inc., a wholly-owned subsidiary of HALIS, in exchange for
5,000,000 shares (the "Acquired Shares") of the Securities as
consideration therefor.
Item 4. Purpose of the Transaction.
--------------------------
The acquisition of the Acquired Shares is pursuant to a Stock Purchase
Agreement whereby the Issuer acquired all of the outstanding stock of
HALIS Software, Inc., and as consideration therefor, HALIS acquired
5,000,000 shares of the Securities from the Issuer (the "HALIS
Transaction"). The HALIS Transaction occurred simultaneously with
another transaction whereby two wholly-owned subsidiaries of the
Issuer merged with two-wholly owned subsidiaries of AUBIS, L.L.C.
("AUBIS"). AUBIS acquired in that transaction 10,000,000 shares of the
Securities of the Issuer (the "AUBIS Transaction"). Paul W. Harrison
is the President and Manager of HALIS and AUBIS. Additionally, Paul W.
Harrison controls approximately 48.2% of PHE, and PHE and Mr. Harrison
in his individual capacity collectively control approximately 49.2% of
AUBIS and 70.3% of HALIS.
Collectively, these two acquisitions from HALIS and AUBIS by the
Issuer will enable the Issuer to enter the Healthcare Information
Systems market, which is a refocus of its business direction.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) The Acquired Shares represent 22.3% of the currently outstanding
Securities of the Issuer and are all of the shares owned by HALIS. PHE
also owns a convertible promissory note of the Issuer that is
convertible into 90,000 shares of the Securities and holds
approximately 5,000 shares of the Issue that were purchased during
1996. Mr. Harrison additionally holds an option to purchase 1,400,000
shares of the Securities at a price of $1.125 per share.
As a result of the AUBIS Transaction, AUBIS owns 44.5% of the
outstanding Securities of the Issuer (the "AUBIS Shares").
(b) HALIS has sole power to vote and dispose of the Acquired Shares.
AUBIS has sole power to vote and dispose of the AUBIS Shares. Paul W.
Harrison has sole power to vote and dispose of the shares of the
Issuer owned in his individual capacity.
(c) Other than the AUBIS Transaction, no other transactions were
effectuated during the past 60 days by the Reporting Persons involving
the Securities.
(d) None.
(e) Not Applicable.
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Page _______ of ________
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
---------------------------------------------------------------------
to Securities of the Issuer.
---------------------------
Paul W. Harrison is the Chairman and Chief Executive Officer and a
Director of the Issuer pursuant to an employment agreement with
Issuer entered as part of the AUBIS Transaction. PHE holds a
promissory note of the Issuer that is convertible into 90,000 shares
of the Securities, and Mr. Harrison holds options to purchase
1,400,000 shares of the Securities at $1.125 per share.
Item 7. Material to be Filed as Exhibits.
--------------------------------
Exhibit 1: Stock Purchase Agreement between Fisher Business Systems,
Inc. and HALIS, L.L.C., and Paul W. Harrison and James
Askew, dated as of March 29, 1996, as amended by First
Amendment to Stock Purchase Agreement dated as of
September 27, 1996.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Date: November 29, 1996
---------------------------
HALIS, L.L.C.
By: /s/ Paul W. Harrison
---------------------------------------
Paul W. Harrison, President and Manager
<PAGE>
EXHIBIT 1
---------
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
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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
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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
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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
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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
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
B-6
<PAGE>
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.
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
B-7
<PAGE>
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 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
B-8
<PAGE>
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") 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
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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;
(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;
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(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 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
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<PAGE>
"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 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
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<PAGE>
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.
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
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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.
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
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<PAGE>
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.
(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
B-15
<PAGE>
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 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
B-16
<PAGE>
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 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;
B-17
<PAGE>
(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 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
B-18
<PAGE>
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.
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.
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<PAGE>
(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 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.
B-20
<PAGE>
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.
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.
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<PAGE>
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 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.
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<PAGE>
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:
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 V and VI.
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.
B-23
<PAGE>
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 VIII 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, 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
B-24
<PAGE>
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:
(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
B-25
<PAGE>
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:
(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.
B-26
<PAGE>
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.
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
----------------------
B-27
<PAGE>
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.
(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-28
<PAGE>
(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), 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.
B-29
<PAGE>
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.
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-30
<PAGE>
(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
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.
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<PAGE>
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.
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
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<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
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