<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 29, 1997
UNICOMP, INC.
(Exact name of registrant as specified in its charter)
Commission file number: 0-15671
Colorado 84-1023666
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1850 Parkway Place, Suite 925
Marietta, Georgia 30067
(Address of principal executive offices including zip code)
Registrant's telephone number, including area code: (770) 424-3684
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to an Agreement and Plan or Reorganization dated November 29,
1997 (the "Agreement"), the Registrant acquired 100% of the issued and
outstanding capital stock of Novatek Corporation and Sun and Sky Development
Corporation (together "Novatek"). The Registrant exchanged approximately $6.9
million worth of its common stock in exchange for all of the capital stock of
Novatek. The terms of the Agreement and the amount of the consideration paid
for the Novatek capital stock was determined through arms-length negotiations
among the parties.
Novatek is a United States corporation based in Coral Springs, Florida.
The Registrant will merge Novatek with Smoky Mountain Technologies, an existing
subsidiary of the Registrant. Prior to the acquisition, Novatek was a
privately held corporation in the business of providing point-of-sale and
payment transaction systems and related services. The Registrant intends to
continue such business.
Novatek owns corporate offices at 3773 Northwest 126th Avenue in Coral
Springs, Florida. All administrative, warehousing and production functions
presently take place at this location.
The description of the transactions contemplated by the Agreement is
qualified entirely by reference to the Agreement which is attached hereto as
Exhibit 2.1 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
The financial statements will be provided within 60 days of the date
of filing this Form 8-K.
(b) Pro Forma Financial Information
The pro forma financial statements will be provided within 60 days of
the date of filing this Form 8-K.
(c) Exhibits
Exhibit No. Description
Exhibit 2.1 Agreement and Plan of Reorganization By
and Among UniComp, Inc., Smoky Mountain
Technologies, Inc., Novatek Corporation,
Its Shareholders, Sun and Sky Development
Corporation, and Its Shareholders Dated
November 29, 1997
2
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Marietta, State of Georgia, on the 15th day of December, 1997.
UNICOMP, INC.
By: /s/ Stephen A. Hafer
----------------------------------------------------
Stephen A. Hafer
Chairman of the Board, President and Chief Executive
Officer
3
<PAGE>
EXHIBIT 2.1
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
UNICOMP, INC.,
SMOKY MOUNTAIN TECHNOLOGIES, INC.,
NOVATEK CORPORATION,
ITS SHAREHOLDERS,
SUN AND SKY DEVELOPMENT CORPORATION
AND ITS SHAREHOLDERS
DATED: November 29, 1997
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 MERGER...............................................................1
1.1 Merger................................................................1
1.2 Reorganization........................................................2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES CONCERNING SHAREHOLDERS...............2
2.1 Authority of Shareholders.............................................2
2.2 No Conflict or Breach.................................................3
2.3 Share Ownership.......................................................3
2.4 Brokers...............................................................3
2.5 Investment............................................................3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING THE MERGING
CORPORATIONS...............................................................4
3.1 Organization and Good Standing; Governing Documents...................4
3.2 Authority.............................................................4
3.3 No Conflict or Breach.................................................4
3.4 Consents and Approvals................................................5
3.5 Capitalization........................................................5
3.6 Subsidiaries; Investments.............................................5
3.7 Minute and Stock Transfer Books.......................................5
3.8 Financial Statements..................................................6
3.9 Books and ............................................................6
3.10 Title to Assets; Liens................................................6
3.11 Real Property.........................................................7
3.12 Tangible Personal Property............................................8
3.13 Inventories...........................................................8
3.14 Contracts.............................................................8
3.15 Receivables...........................................................9
3.16 Intellectual Property.................................................8
3.17 Major Suppliers and Customers........................................10
3.18 Litigation.....................................................,.....10
3.19 Compliance with Decrees and Laws.....................................10
3.20 Permits..............................................................10
3.21 Taxes................................................................10
3.22 Environmental Matters................................................11
3.23 Insurance............................................................11
3.24 Labor and Employment Matters.........................................11
3.25 Employee Benefit Plans...............................................12
3.26 Absence of Certain Changes...........................................12
3.27 Product Warranties...................................................13
i
<PAGE>
3.28 Related Party Transactions...........................................13
3.29 Brokers..............................................................13
3.30 Names................................................................13
3.31 Bank Accounts........................................................14
3.32 Disclosure...........................................................14
3.33 Year 2000............................................................14
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SMT...............................14
4.1 Organization and Good Standing.......................................14
4.2 Authority............................................................15
4.3 No Conflict or Breach................................................15
4.4 Governmental Approvals...............................................15
4.5 Brokers..............................................................15
ARTICLE 5 COVENANTS OF SHAREHOLDERS AND THE MERGING CORPORATIONS..............15
5.1 Conduct of Business..................................................15
5.2 Access and Information...............................................16
5.3 No Other Solicitations...............................................16
5.4 Employment and Noncompetition Agreements.............................16
5.5 No Other Solicitations...............................................17
ARTICLE 6 COVENANTS OF SMT AND UNICOMP........................................17
6.1 Registration of UniComp Shares.......................................17
6.2 Tax Matters..........................................................17
(a) Tax Returns Filed On or Before the Closing Date.................17
(b) Tax Periods With Filing Dates On Or After the Closing Date......17
(c) Tax Periods Beginning Before and Ending After the Closing Date..17
(d) Cooperation on Tax Matters......................................17
6.3 Audited Financial Statements.........................................18
6.4 Insurance............................................................18
6.5 Guaranties...........................................................18
ARTICLE 7 MUTUAL COVENANTS....................................................18
7.1 Best Efforts.........................................................18
7.2 Confidentiality......................................................18
ARTICLE 8 INTENTIONALLY OMMITTED..............................................19
ARTICLE 9 INTENTIONALLY OMMITTED..............................................20
ii
<PAGE>
ARTICLE 10 CLOSING............................................................21
10.1 Closing..............................................................21
10.2 Deliveries by the Merging Corporations and Shareholders..............21
10.3 Deliveries by SMT....................................................22
10.4 Further Assurances...................................................22
ARTICLE 11 INDEMNIFICATION....................................................23
11.1 Indemnification by Shareholders......................................23
11.2 Indemnification by SMT and UniComp...................................23
11.3 Notice of Claim......................................................23
11.4 Defense..............................................................23
11.5 Time for Claims......................................................24
11.6 Limitation...........................................................24
11.7 Maximum Indemnity Amount.............................................24
ARTICLE 12 TERMINATION........................................................24
12.1 Termination..........................................................24
12.2 Effect on Obligations................................................25
ARTICLE 13 MISCELLANEOUS......................................................25
13.1 Survival of Representations..........................................25
13.2 Expenses.............................................................25
13.3 Publicity............................................................25
13.4 Best Efforts.........................................................25
13.5 Notices..............................................................26
13.6 Counterparts.........................................................27
13.7 Assignment...........................................................27
13.8 Third Party Beneficiaries............................................28
13.9 Headings.............................................................28
13.10 Recitals............................................................28
13.11 Amendments..........................................................28
13.12 Specific Performance................................................28
13.13 Governing Law.......................................................28
13.14 Jurisdiction: Service of Process....................................28
13.15 Resolution of Disputes..............................................28
13.16 Remedies............................................................29
13.17 Severability........................................................29
13.18 Entire Agreement....................................................29
13.19 Definition..........................................................29
13.20 Construction........................................................30
iii
<PAGE>
SCHEDULES
Schedule 2.3 Share Ownership
Schedule 3.1 Jurisdictions Where Qualified
Schedule 3.3 Conflicts and Breaches of Agreements
Schedule 3.4 Consents and Approvals
Schedule 3.7 Officers and Directors
Schedule 3.8 Financial Statements
Schedule 3.9 Books and Records
Schedule 3.10 Liens
Schedule 3.11 Real Property
Schedule 3.13 Inventory
Schedule 3.14 Contracts
Schedule 3.15 Receivables
Schedule 3.16 Intellectual Property
Schedule 3.17 Major Suppliers and Customers
Schedule 3.18 Litigation
Schedule 3.19 Compliance with Decrees and Laws
Schedule 3.20 Permits
Schedule 3.21 Taxes
Schedule 3.23 Insurance
Schedule 3.24 Labor and Employment Matters
Schedule 3.25 Employee Benefits
Schedule 3.26 Certain Changes
Schedule 3.27 Product Warranty
Schedule 3.28 Related Party Transactions
Schedule 3.30 Names
Schedule 3.31 Bank Accounts
Schedule 3.33 Year 2000
Schedule 5.4 Employment and Noncompetition Agreements
EXHIBITS
Exhibit A Form of Employment and Consulting Agreement
Exhibit B Legal Opinion of Counsel to Shareholders and Novatek
Exhibit C Legal Opinion of Counsel to UniComp
iv
<PAGE>
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (together with all Schedules and
Exhibits, this "Agreement"), is entered into as of November 29, 1997, by and
among SMOKY MOUNTAIN TECHNOLOGIES, INC., a North Carolina corporation ("SMT"),
UNICOMP, INC., a Colorado corporation and the parent corporation of SMT
("UniComp"), NOVATEK CORPORATION, a Delaware corporation ("Novatek"), all
shareholders of Novatek (the "Novatek Shareholders"), SUN AND SKY DEVELOPMENT
CORPORATION, a Florida corporation ("S&S"), and all shareholders of S&S (the
"S&S Shareholders"). Novatek and S&S are sometimes referred to collectively as
the "Merging Corporations," and the Novatek Shareholders and S&S Shareholders
are referred to collectively as the "Shareholders."
Statement of Purpose
The parties desire to enter into a transaction in which the Merging
Corporations will be merged with and into SMT and all issued and outstanding
shares of the capital stock of Novatek (the "Novatek Shares") and all shares of
the capital stock of S&S (the "S&S Shares") will be exchanged for shares of the
capital stock of UniComp on the terms and conditions set forth in this
Agreement.
THEREFORE, the parties agree as follows:
ARTICLE 1
MERGER
1.1 Merger. On the Closing date (as defined in Article 10) or as soon
thereafter as possible, SMT shall execute and file with the appropriate office
of the Secretary of State of North Carolina, the Secretary of State of Delaware
and the Secretary of State of Florida Articles of Merger and Certificates of
Merger (collectively, the "Articles of Merger"), pursuant to which the Merging
Corporations shall be merged with and into SMT (the "Merger"). The Merger shall
be effected pursuant to an Agreement and Plan of Merger executed and delivered
by SMT, UniComp and the Merging Corporations containing the following terms:
(a) As of the filing of the Articles of Merger with the office of the
Secretary of State of North Carolina (the "Effective Time"), (i) each of
the Merging Corporations shall be merged with and into SMT, and the
separate legal existence of each of the Merging Corporations shall cease;
(ii) SMT shall continue as the surviving corporation and shall succeed to
all rights, privileges, powers, franchises and properties of each of the
Merging Corporations; (iii) the Articles of Incorporation and Bylaws of SMT
in effect immediately prior to the Effective Time shall continue as the
Articles of Incorporation and Bylaws of SMT after the Effective Time
until amended in accordance with their terms and applicable law; and
(iv) the persons serving as directors and officers of SMT immediately
prior to the
<PAGE>
Effective Time shall continue to serve in such capacities after the
Effective Time until their removal or resignation in accordance with the
Bylaws of SMT and applicable law.
(b) As of the Effective Time, by virtue of the Merger, (i) the
Novatek Shares shall be converted into the right of the Novatek
Shareholders to receive at Closing (as defined in Article 10) pro rata in
accordance with their ownership of Novatek Shares from UniComp, Seven
Hundred Forty Two Thousand, Eight Hundred and Fifty Eight (742,858)
unregistered shares of the common stock of UniComp (collectively, the
"Novatek-UniComp Shares"), which number represents the shares of UniComp
common stock which when multiplied by Eight Dollars and 75/100 ($8.75), the
bid price of UniComp common stock reported on the NASDAQ National Market
System ("NASDAQ") as of the time of the parties' agreement in principal to
effect this transaction, equals Six Million Five Hundred Thousand Dollars
($6,500,000) (the "Novatek Exchange Amount"); and (ii) the S&S Shares shall
be converted into the right of the S&S Shareholders to receive at Closing
pro rata in accordance with their ownership of S&S Shares from UniComp
Forty Five Thousand Eight Hundred and Fifty (45,850) unregistered shares of
the common stock of UniComp (the "S&S-UniComp Shares"), which number
represents the shares of UniComp common stock which when multiplied by
Eight Dollars and 75/100 ($8.75), the bid price of UniComp common stock
reported on NASDAQ as of the time of the parties' agreement in principal to
effect this transaction equals Four Hundred One Thousand One Hundred Ninety
Three and 12/100 Dollars ($401,193.12) (the "S&S Exchange Amount"). The
Novatek-UniComp Shares and the S&S-UniComp Shares are referred to
collectively as the "UniComp Shares," and the Novatek Exchange Amount and
S&S Exchange Amount are referred to collectively as the "Exchange Amount."
1.2 Reorganization. The parties intend that each transaction contemplated
by this Agreement qualify as a forward triangular reorganization under Section
368(a)(1)(A) and (a)(2)(D) of the Internal Revenue Code of 1986, as amended, and
the parties shall take all steps reasonably necessary to so qualify the
transaction.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES CONCERNING SHAREHOLDERS
Each Shareholder represents and warrants to SMT and UniComp, with respect
to himself, as follows:
2.1 Authority of Shareholders. Each Shareholder has full power and
authority to execute, deliver and perform this Agreement and the agreements
referred to in this Agreement to which such Shareholder is party (the "Ancillary
Agreements") and to consummate the transactions contemplated by this Agreement
and by the Ancillary Agreements. This Agreement has been duly executed and
delivered by each Shareholder, and the Ancillary Agreements, when executed and
delivered, will be duly executed and delivered by each such Shareholder, and
each such agreement
<PAGE>
is, or upon execution and delivery will be, a valid and binding obligation of
each Shareholder, enforceable against each Shareholder in accordance with its
terms.
2.2 No Conflict or Breach. The execution, delivery and performance of
this Agreement and the Ancillary Agreements do not and will not (a) to the best
knowledge of the Merging Corporation and their Executive Officers, conflict with
or constitute a violation of any law, statute, judgment or regulation of any
legislative body, court, administrative agency, governmental authority or
arbitrator applicable to any Shareholder, or (b) to the best knowledge of the
Merging Corporation and their Executive Officers, constitute or cause a breach
or violation of any covenant, agreement or obligation binding upon any
Shareholder or affecting any of his properties.
2.3 Share Ownership. Each Shareholder is the owner, beneficially and of
record, of all right, title and interest in and to the number of issued and
outstanding Novatek Shares and S&S Shares set forth opposite his name on
Schedule 2.3. Each Shareholder has, and will have at the Closing, good and
marketable title to all such shares and the absolute right to sell, assign and
transfer the same to SMT, free and clear of all liens, pledges, encumbrances,
security interests, options or other restrictions. No Shareholder is party to
any option, warrant, right, contract, call, put or other agreement or commitment
providing for the disposition or acquisition of any of the Novatek Shares or the
S&S Shares (other than this Agreement). No Shareholder is party to any voting
trust, proxy or other agreement or understanding with respect to any of the
Novatek Shares or S&S Shares.
2.4 Brokers. No finder, broker, agent or other intermediary has acted for
or on behalf of any Shareholder in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from any Shareholder.
2.5 Investment. Each Shareholder (a) understands that the offer and sale
of the UniComp Shares have not been, and will not be, registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering; (b) is
acquiring the UniComp Shares solely for his own account for investment purposes
and not with a view to the distribution of the UniComp Shares, and will not
transfer the UniComp Shares without compliance with all applicable securities
laws; (c) is a sophisticated investor with sufficient knowledge and experience
in financial, investment and business affairs to permit him to evaluate the
merits and risks involved in purchasing the UniComp Shares and is able to bear
the economic risk and lack of liquidity inherent in holding the UniComp Shares
for an indefinite period of time; and (d) has received information concerning
UniComp consisting of the UniComp investment package and has had the opportunity
to ask questions of, and receive answers from, UniComp and its representatives
concerning the business of UniComp and the terms of the UniComp Shares and to
obtain additional information as desired in order to evaluate the merits and
risks inherent in holding the UniComp Shares.
<PAGE>
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING
THE MERGING CORPORATIONS
Shareholders and the Merging Corporations, jointly and severally, represent
and warrant to SMT and UniComp as follows:
3.1 Organization and Good Standing; Governing Documents. Novatek is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. S&S is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. Each Merging
Corporation has all requisite power and authority to own, operate and lease its
properties and to carry on its business as now being conducted. To the best
knowledge of each Merging Corporation and its Executive Officers, each Merging
Corporation is duly qualified to do business as a foreign corporation and is in
good standing in all other jurisdictions in which the character of the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, and such jurisdictions are listed on
Schedule 3.1. True and complete copies of the Articles of Incorporation and
Bylaws of each of the Merging Corporations, including all amendments to such
documents, have been provided to SMT.
3.2 Authority. To the best knowledge of the Merging Corporation and their
Executive Officers, each Merging Corporation has all requisite power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated by this Agreement. To the best knowledge of the
Merging Corporation and their Executive Officers, the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated by this Agreement, have been duly and validly authorized by all
necessary corporate and shareholder action on the part of each Merging
Corporation. To the best knowledge of the Merging Corporation and their
Executive Officers, this Agreement has been duly executed and delivered by each
Merging Corporation and constitutes a valid and binding obligation of Novatek,
enforceable against Novatek in accordance with its terms.
3.3 No Conflict or Breach. The execution, delivery and performance of
this Agreement do not and will not:
(a) conflict with or constitute a violation of the Articles of
Incorporation or Bylaws of either of the Merging Corporations;
(b) to the best knowledge of the Merging Corporation and their
Executive Officers, conflict with or constitute a violation of any law,
statute, judgment, order, decree or regulation of any legislative body,
court, administrative agency, governmental authority or arbitrator
applicable to or relating to either of the Merging Corporations or its
assets;
(c) to the best knowledge of the Merging Corporation and their
Executive
<PAGE>
Officers, conflict with, constitute a default under, result in a breach or
acceleration of or require notice to or the consent of any third party
under any contract, agreement, commitment, mortgage, note, license or other
instrument or obligation to which either of the Merging Corporations is
party or by which it is bound or by which its assets are affected other
than as set out on Schedule 3.3; or
(d) to the best knowledge of the Merging Corporation and their
Executive Officers, result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever on any of the assets of
either of the Merging Corporations or on the Shares.
3.4 Consents and Approvals. To the best knowledge of the Merging
Corporation and their Executive Officers, Schedule 3.4 describes (a) each
consent, approval, authorization, registration or filing with any federal, state
or local judicial or governmental authority or administrative agency, and (b)
each consent, approval, authorization of or notice to any other third party,
which is required in connection with the valid execution and delivery by
Shareholders and each Merging Corporation of this Agreement or the consummation
by Shareholders and each Merging Corporation of the transactions contemplated by
this Agreement (the items described in clauses (a) and (b), collectively, the
"Required Consents").
3.5 Capitalization. The authorized capital stock of Novatek consists of
1,000 shares, $.01 par value, of which 1,000 shares are issued and outstanding.
The authorized capital stock of S&S consists of 1,000 shares of common stock, no
par value, of which 1,000 shares are issued and outstanding. All of the Shares
are validly issued, fully paid and nonassessable, are free from, and were not
issued in violation of any, preemptive rights, and are owned of record and
beneficially by Shareholders and other individuals in the numbers set forth
opposite their respective names on Schedule 2.3. There are no outstanding or
authorized options, warrants, rights, contracts, calls, puts, right to
subscribe, conversion rights or other agreements or commitments to which either
Merging Corporation is a party or which are binding upon either Merging
Corporation providing for the issuance, disposition or acquisition of any of its
capital stock (other than this Agreement). There are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
either Merging Corporation. There are no voting trusts, proxies or any other
agreements or understandings with respect to the voting of the capital stock of
either Merging Corporation. Neither Merging Corporation is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any of its capital stock.
3.6 Subsidiaries; Investments. Neither Merging Corporation owns or holds,
or has ever owned or held, any shares of stock or any other security or interest
in any other entity, or any rights to acquire any such security or interest.
3.7 Minute and Stock Transfer Books. To the best knowledge of the Merging
Corporation and their Executive Officers and except as set out on Schedule 3.7,
the minute books of each Merging Corporation are true, correct, complete and
current in all material respects and contain accurate and complete records of
all material actions taken by its shareholders, its Board
<PAGE>
of Directors and each committee of its Board of Directors, and all signatures
contained in such minute books are the true signatures of the persons whose
signatures they purport to be. The stock transfer books of each Merging
Corporation are true, correct, complete and current in all respects. Schedule
3.7 to this Agreement sets forth a true, correct and complete list of the names
and titles of all officers and directors of each Merging Corporation.
3.8 Financial Statements.
(a) Shareholders and Novatek have previously delivered to SMT true
and complete copies of (i) the unaudited balance sheets of Novatek as of
December 31, 1996 and 1995 and the related statements of operations,
shareholders' equity and cash flows for the fiscal years then ended, and
(ii) interim unaudited financial reports prepared for each quarter since
December 31, 1996. The documents described in clauses (i) and (ii)
(collectively, the "Financial Statements") (a) to the best knowledge of
the Merging Corporation and their Executive Officers, are in accordance
with the books and records of Novatek; (b) to the best knowledge of the
Merging Corporation and their Executive Officers and except as set out on
Schedule 3.8, present fairly the assets, liabilities and financial
condition of Novatek as of the respective dates of the Financial
Statements, and the results of operations for the periods then ending; and
(c) to the best knowledge of Novatek and its Executive Officers and except
as set out on Schedule 3.8, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved.
(b) To the best knowledge of the Merging Corporation and their
Executive Officers and except as disclosed on Schedule 3.8, Novatek does
not have any liability or obligation, whether accrued, absolute, or
contingent that is not reflected or reserved against in the most recent of
the Financial Statements, except for those that are not required by
generally accepted accounting principles to be included on such financial
statements or as set out on Schedule 3.8. To the best knowledge of the
Merging Corporation and their Executive Officers, any items of income or
expense which are unusual or of a nonrecurring nature are separately
disclosed in the Financial Statements.
3.9 Books and Records. To the best knowledge of the Merging Corporation
and their Executive Officers and except as set out on Schedule 3.9, the books
and records of each Merging Corporation are true, accurate and complete and,
where appropriate, have been maintained in accordance with generally accepted
accounting principles applied on a consistent basis. At Closing, all such books
and records, including without limitation all tax returns filed by each Merging
Corporation will be in the possession of Novatek.
3.10 Title to Assets; Liens. Each Merging Corporation has good and
marketable title to all of the properties and assets (real or personal, tangible
or intangible) owned by it (including, without limitation, those properties and
assets shown on the most recent
<PAGE>
of the Financial Statements) and a valid leasehold or other possessory interest
in all other properties and assets used, operated or occupied by it, located on
its premises or otherwise shown on the most recent of the Financial Statements,
except for tangible personal property sold or disposed of in the ordinary course
of business of the Merging Corporations and consistent with past practice. To
the best knowledge of the Merging Corporation and their Executive Officers, all
of the properties and assets of the Merging Corporations (whether real or
personal, tangible or intangible, owned, leased or otherwise acquired) are free
and clear of any liens, claims, charges, security interests, mortgages, pledges
or other encumbrances or restrictions of any nature whatsoever (collectively,
"Liens"), other than:
(a) Liens for taxes not yet due and payable; and
(b) Liens described on Schedule 3.10.
To the best knowledge of the Merging Corporation and their Executive Officers,
there are no existing breaches or defaults under, and no events or circumstances
have occurred which, with or without notice or lapse of time or both, would
constitute a breach of or a default under, any instrument, agreement or other
document that creates, evidences or constitutes any such Lien or that evidences,
secures or governs the terms of any indebtedness or obligation secured by any
such Lien (any such instrument, agreement or other document is referred to
herein as a "Lien Instrument"). To the best knowledge of the Merging
Corporation and their Executive Officers, the consummation of the transactions
contemplated by this Agreement will not, with respect to any Lien Instrument,
(i) constitute a breach thereof or a default thereunder, (ii) permit (with or
without notice, lapse of time or both), cause or result in (A) the acceleration
of any indebtedness or other obligation evidenced, secured or governed thereby
or (B) the foreclosure or other enforcement of any such Lien, (iii) permit or
cause the terms thereof to be renegotiated, or (iv) require the consent of the
holder of any such indebtedness or obligation or any third party.
3.11 Real Property. Schedule 3.11 contains a true and correct description
of all (i) real property owned by either of the Merging Corporations (the "Owned
Real Property"), (ii) real property leased by either of the Merging Corporations
(the "Leased Real Property"), (iii) leases relating to the Leased Real Property
(collectively, the "Real Property Leases"), (iv) to the best knowledge of the
Merging Corporation and their Executive Officers, Liens upon or affecting any of
the Owned Real Property or the SMT's rights to or interest in any of the Leased
Real Property or any Real Property Lease, (v) to the best knowledge of the
Merging Corporation and their Executive Officers, agreements, oral or written,
pursuant to which any person or entity (other than the Merging Corporations)
leases, subleases, occupies or has the right to occupy any Owned Real Property
or Leased Real Property, and (vi) to the best knowledge of the Merging
Corporation and their Executive Officers, agreements and other undertakings,
oral or written, to sell, lease, sublease, assign, encumber or otherwise dispose
of any Owned Real Property, Leased Real Property or Real Property Lease. To the
best knowledge of the Merging Corporation and their Executive Officers, the
Owned Real Property and the Leased Real Property are zoned for the various
purposes for which the buildings and other improvements located thereon (the
"Improvements") are presently being used, and such uses thereof are in
compliance with all applicable zoning and land use laws, ordinances and
regulations. To the best knowledge of the Merging Corporation and their
Executive Officers, all Improvements are in good repair and in
<PAGE>
good operating condition and free from latent and patent defects. To the best
knowledge of the Merging Corporation and their Executive Officers, no part of
any Improvement encroaches on any real property not included in the Owned Real
Property or the Leased Real Property. To the best knowledge of the Merging
Corporation and their Executive Officers, each of the Real Property Leases is
valid, biding and enforceable in accordance with its terms and is in full force
and effect, and there are no offsets or defenses by either landlord or tenant
thereunder. To the best knowledge of the Merging Corporation and their
Executive Officers, there are no existing breaches of or defaults under, and no
events or circumstances have occurred which, with or without notice or lapse of
time or both, would constitute a breach of or a default under, any of the Real
Property Leases.
3.12 Tangible Personal Property. Each Merging Corporation owns or leases
all buildings, machinery, equipment and other tangible assets necessary for the
conduct of its business (the "Tangible Property"). To the best knowledge of the
Merging Corporation and their Executive Officers, each item of Tangible Property
is in good operating order, condition and repair (ordinary wear and tear
excepted) is suitable for immediate use in the ordinary course of business of
the Merging Corporation to which it belongs, and to the best knowledge of each
Merging Corporation and its Executive Officers, is free from defects (latent and
patent), is merchantable and is of a quality and quantity presently usable in
the ordinary course of business of the Merging Corporation to which it belongs.
To the best knowledge of the Merging Corporation and their Executive Officers,
no item of Tangible Property is in need of repair or replacement other than as
part of routine maintenance in the ordinary course of business.
3.13 Inventories. To the best knowledge of the Merging Corporation and
their Executive Officers and except as set out on Schedule 3.13, all items
included in the inventories of each Merging Corporation (i) are in good
condition, not obsolete and nondefective, (ii) are useable or saleable in the
ordinary course of business of the Merging Corporation owning such inventory and
at the current operating profit margins of the Merging Corporation owning such
inventory, and (iii) have been acquired by the Merging Corporation owning such
inventory only in bona fide transactions entered into in the ordinary course of
business.
3.14 Contracts. To the best knowledge of the Merging Corporation and their
Executive Officers, Schedule 3.14 lists all contracts, commitments, agreements
(including agreements for the borrowing of money or the extension of credit),
leases (other than Real Property Leases), licenses, understandings and
obligations, whether written or oral, to which each Merging Corporation is party
or by which either of them is bound or affected (the "Contracts") except
Contracts requiring the payment of less than five thousand dollars ($5,000) or
providing for the provision by the Merging Corporations of goods or services of
less than five thousand dollars ($5,000). To the best knowledge of the Merging
Corporation and their Executive Officers, the aggregate value of all such
Contracts not listed on Schedule 3.14 shall not exceed twenty thousand dollars
($20,000). To the best knowledge of the Merging Corporation and their Executive
Officers, the Merging Corporations have delivered to SMT true and complete
copies of all written Contracts and true and complete memoranda of all oral
Contracts, including any and all amendments and other modifications to such
Contracts. To the best knowledge of the Merging
<PAGE>
Corporation and their Executive Officers, each of the Contracts is valid,
binding and enforceable in accordance with its terms and is in full force and
effect. To the best knowledge of the Merging Corporation and their Executive
Officers, there are no existing defaults, and no events or circumstances have
occurred which, with or without notice or lapse of time or both, would
constitute defaults, under any of the Contracts. To the best knowledge of
the Merging Corporation and their Executive Officers and except as disclosed
on Schedule 3.14, consummation of the transactions contemplated by this
Agreement will not, with respect to any Contract, (i) constitute a default
thereunder, (ii) require the consent of any person or party, except for the
Required Consents, or (iii) affect the continuation, validity and
effectiveness of any Contract or the terms of any Contract.
3.15 Receivables. To the best knowledge of the Merging Corporation and
their Executive Officers, other than as set out on Schedule 3.15, all accounts
receivable and trade accounts reflected on the Financial Statements (less any
such receivables collected since the date of such financial statement) and all
accounts receivable and trade accounts presently owing and to be owing to the
Merging Corporations on the Closing Date, as hereinafter defined (collectively,
the "Receivables"), in each case net of the reserves established and reflected
on the Financial Statements, are, and on the Closing Date will be, legal, valid
and binding obligations, and the aggregate value of any such Receivables which
are not collectible in full at face value (net of the reserves established and
reflected in the Financial Statements) will not exceed five thousand dollars
($5,000).
3.16 Intellectual Property. To the best knowledge of the Merging
Corporation and their Executive Officers, Schedule 3.16 sets forth a list of all
(i) trademarks, service marks, trade names, logos and other designations owned
or used by each Merging Corporation, all United States, foreign and state
registrations relating thereto, (ii) copyrighted works owned by each Merging
Corporation and registrations issued by the United States Copyright Office or
the office of any foreign jurisdiction for any of the copyrights, (iii)
inventions owned or used by each Merging Corporation which are the subject of
United States or foreign letters patent or applications therefor, together with
the applicable patent number, application number, application date and issue
date and (iv) confidential or proprietary processes, formulas, technical data,
and other similar information that is of commercial value to each Merging
Corporation, including a brief description thereof (collectively, "Intellectual
Property"). To the best knowledge of the Merging Corporation and their
Executive Officers, each Merging Corporation owns all right, title and interest
in and to each item included within its Intellectual Property, free and clear of
any Liens or licenses. The Intellectual Property consists of all of the
intellectual property rights necessary to conduct the business of the Merging
Corporations. To the best knowledge of the Merging Corporation and their
Executive Officers, all registrations relating to the Intellectual Property are
validly issued and remain in full force and effect, except as disclosed in
Schedule 3.16. To the best knowledge of the Merging Corporation and their
Executive Officers, each trademark has been in continuous use on all goods
described in the applicable registrations. To the best knowledge of the Merging
Corporation and their Executive Officers, there are no claims or suits pending
or, to the best knowledge of Shareholders and the Merging Corporations,
threatened against Merging Corporation challenging its ownership of or
unencumbered right to
<PAGE>
use any of the Intellectual Property, nor does there exist any basis therefor.
To the best knowledge of the Merging Corporation and their Executive Officers,
there are no claims or suits pending or threatened against Merging Corporation
alleging that any of the Intellectual Property infringes any rights of any third
parties, nor does there exist any basis therefor.
3.17 Major Suppliers and Customers. To the best knowledge of the Merging
Corporation and their Executive Officers, each supplier of goods or services to
whom either Merging Corporation paid more than five thousand dollars ($5,000),
in the aggregate, during the 12 months ended on September 30, 1997, and each
customer who paid either Merging Corporation more than five thousand dollars
($5,000) in the aggregate, during such period, is disclosed on Schedule 3.17,
which Schedule reflects in each case the amounts so paid. To the best knowledge
of the Merging Corporation and their Executive Officers and except as disclosed
on Schedule 3.15, neither Merging Corporation is engaged in any dispute with any
of such suppliers or customers.
3.18 Litigation. Except as disclosed on Schedule 3.18, there are no
claims, actions, suits, inquiries, hearings or investigations ("Claims") pending
or, to the best knowledge of the Merging Corporations or Shareholders,
threatened, against either Merging Corporation. No Claims have been brought
within the last two years against either Merging Corporation.
3.19 Compliance with Decrees and Laws. There is not outstanding or, to the
best knowledge of the Merging Corporations or Shareholders, threatened, any
order, writ, injunction or decree of any court, governmental agency or
arbitration tribunal against or involving either Merging Corporation. To the
best knowledge of the Merging Corporation and their Executive Officers and
except as disclosed on Schedule 3.19, each Merging Corporation is currently, and
has been at all times, in full compliance with all laws, statutes, rules,
regulations, orders and licensing requirements of federal, state, local and
foreign agencies and authorities applicable to its business and properties
(including, without limitation, those relating to antitrust and trade
regulation, civil rights, environment, labor and employment discrimination,
affirmative action, safety and health) ("Rules"). To the best knowledge of each
Merging Corporation and its Executive Officers, there has been no allegation of
any violation of any Rules, and no investigation or review by any federal, state
or local body or agency is pending or, to the best knowledge of each Merging
Corporation and Shareholders, threatened or planned with respect to either
Merging Corporation.
3.20 Permits. To the best knowledge of each Merging Corporation and its
Executive Officers, each Merging Corporation has obtained all permits,
authorizations, certificates, approvals, licenses, exemptions and
classifications required for the conduct of its business and the ownership and
operation of its assets, all of which are described on Schedule 3.20 (the
"Permits"). Neither Merging Corporation is in violation of any of the Permits,
and no proceedings to revoke or limit any Permit are pending or, to the best
knowledge of the Merging Corporations and Shareholders, threatened.
<PAGE>
3.21 Taxes. Each Merging Corporation has timely filed all tax returns that
it was required to file before the Closing Date, and such tax returns were
correct and complete in all respects. Except as disclosed on Schedule 3.21, all
taxes required to be withheld or paid by each Merging Corporation (whether or
not shown on any tax return) have been withheld and paid. Neither Merging
Corporation is currently the beneficiary of any extension of time within which
to file any tax return and has not waived any statute of limitations in respect
of taxes or agreed to any extension of time with respect to a tax assessment or
deficiency. Except as disclosed on Schedule 3.21, there is no pending or, to
the best knowledge of the Merging Corporation and their Executive Officers,
threatened dispute or claim concerning any tax liability of either Merging
Corporation. Except as disclosed on Schedule 3.21, neither Merging Corporation
has any liability for taxes. Neither Merging Corporation has filed a consent
under Section 341(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), concerning collapsible corporations. Neither Merging Corporation has
ever been a member or an affiliated group within the meaning of Section 1504(a)
of the Code filing a consolidated tax return or ever entered into a tax sharing
or tax allocation agreement.
3.22 Environmental Matters. To the best knowledge of the Merging
Corporation and their Executive Officers, neither Merging Corporation is in
violation of, or has not violated, any applicable federal, state, county or
local statutes, laws, regulations, rules, ordinances, codes, licenses or permits
of any governmental authorities relating to environmental matters, including by
way of illustration and not by way of limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Resource Conservation Recovery
Act, the Clean Air Act, the Clean Water Act, the Occupational Safety and Health
Act, the Toxic Substances Control Act, any "Superfund" or "Superlien" law, or
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order, decree or guideline (whether published or unpublished)
regulating, relating to or imposing liability or standards of conduct concerning
Hazardous Materials, in each case as amended from time to time. For purposes of
this Agreement, "Hazardous Materials" includes but is not necessarily limited to
asbestos, asbestos containing materials ("ACM"), polychlorinated biphenyls,
lead-based paints, any petroleum, petroleum by-product (including, but not
limited to, crude oil, diesel oil, fuel oil, gasoline, lubrication oil, oil
refuse, used motor oil, oil mixed with other waste, oil sludge, and all other
liquid hydrocarbons, regardless of specific gravity), natural or synthetic gas,
or other hazardous or toxic substances, materials, wastes, pollutants or
contaminants defined under or regulated by the Environmental Laws.
3.23 Insurance. Schedule 3.23 describes all insurance policies maintained
by either Merging Corporation with respect to its business. To the best
knowledge of the Merging Corporation and their Executive Officers, such policies
are valid, binding and enforceable in accordance with their terms and are in
full force and effect, and all premiums due thereon have been paid and will be
paid through the Closing Date.
3.24 Labor and Employment Matters. No employees of either Merging
Corporation have been or are represented by a union or other labor organization
or covered by any collective bargaining agreement. To the best knowledge of the
Merging Corporation and their Executive
<PAGE>
Officers, there is no unfair labor practice complaint, labor organizational
effort, strike, slowdown or similar labor matter pending or threatened against
or affecting either Merging Corporation or its business. To the best knowledge
of the Merging Corporation and their Executive Officers and except as disclosed
on Schedule 3.24, each Merging Corporation 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, and, to the
best knowledge of the Merging Corporation and their Executive Officers, there is
no unfair labor practice charge or complaint or charge of employment
discrimination or retaliation against either Merging Corporation pending,
threatened, impending or planned.
3.25 Employee Benefit Plans. Schedule 3.25 sets forth a list of the name,
age, position, rate of compensation and any incentive compensation arrangements,
bonuses or commissions or fringe or other benefits, of each person who is
employed by or associated with either Merging Corporation in any capacity, as
well as each other person to whom either Merging Corporation has a policy,
practice or obligation to pay or provide retirement, health, welfare or other
benefits of any kind. Except as set forth on Schedule 3.25, there are no Plans,
as defined below, contributed to, maintained or sponsored by either Merging
Corporation, to which either Merging Corporation is obligated to contribute or
with respect to which either Merging Corporation has any liability or potential
liability, whether direct or indirect, including all Plans contributed to,
maintained or sponsored by each member of the controlled group of companies,
within the meaning of Sections 414(b), 414(c), and 414(m) of the Code, of which
either Merging Corporation is a member to the extent either Merging Corporation
has any potential liability with respect to such Plans. For purposes of this
Agreement, the term "Plans" shall mean: (a) employee benefit plans as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), whether or not funded and whether or not terminated, (b)
employment agreements, and (c) personnel policies or fringe benefit plans,
policies, programs and arrangements, whether or not subject to ERISA, whether or
not funded, and whether or not terminated, including without limitation, stock
bonus, deferred compensation, pension, severance, bonus, vacation, travel,
incentive, and health, disability and welfare plans.
3.26 Absence of Certain Changes. Except as disclosed on Schedule 3.26, to
the best knowledge of the Merging Corporation and their Executive Officers,
since the date of the most recent of the Financial Statements, each Merging
Corporation has conducted its operations and business only in the ordinary
course, and has not:
(a) suffered a material adverse change in its business, financial
condition, operating results, earnings, assets, customer, supplier,
employee and sales representative relations, business prospects, business
condition or financing arrangements;
(b) redeemed or repurchased, directly or indirectly, any shares of
its capital stock or declared, set aside or paid any dividends or made any
other distributions with respect to any shares of its capital stock;
(c) issued, sold or transferred any notes, bonds or other debt
securities or any
<PAGE>
equity securities, securities convertible, exchangeable or exercisable into
equity securities, or warrants, options or other rights to acquire equity
securities, of such Merging Corporation;
(d) borrowed any amount or incurred or become subject to any
liabilities, except liabilities incurred in the ordinary course of
business;
(e) discharged or satisfied any lien or encumbrance or paid any
obligation or liability, other than liabilities paid in the ordinary course
of business, or prepaid any amount of indebtedness for borrowed money;
(f) sold, leased, assigned or transferred (including without
limitation transfers to Shareholder or any employees or affiliates of the
Merging Corporation) a portion of its tangible assets, except in the
ordinary course of business, or canceled without fair consideration any
debts or claims owing to or held by it;
(g) entered into any other transaction in the ordinary course of
business with commitments in excess of five thousand dollars ($5,000), or
entered into any other material transaction not in the ordinary course of
business, or materially changed any business practice;
(h) made or granted any bonus or any wage, salary or compensation
increase in excess of one thousand dollars ($1,000) per year to any
director, officer, employee or sales representative or consultant or made
or granted any increase in any employee benefit plan or arrangement, or
amended or terminated any existing employee benefit plan or arrangement or
adopted any new employee benefit plan or arrangement; or
(i) incurred intercompany charges or conducted its cash management
customs and practices and accounting methods other than in the usual and
ordinary course of business in accordance with past custom and practice.
3.27 Product Warranties. Other than as set forth as Schedule 3.27, to the
best knowledge of the Merging Corporation and their Executive Officers, there
are no continuing or outstanding warranties applicable to goods or products
manufactured or sold by either Merging Corporation except for warranties implied
by law, with which all such products are in conformity.
3.28 Related Party Transactions. Other than as set forth on Schedule 3.28,
to the best knowledge of the Merging Corporation and their Executive Officers,
the Real Property Leases and the Contracts do not include any agreement with, or
any other commitment to (a) any officer or director of either Merging
Corporation; (b) any person related by blood or marriage to any such officer or
director; (c) any Shareholder; or (d) any corporation, partnership, trust or
other entity in which either Merging Corporation, any such officer, director or
related person or any Shareholder has an equity or participating interest.
3.29 Brokers. No finder, broker, agent or other intermediary has acted for
or on behalf
<PAGE>
of either Merging Corporation in connection with the negotiation or consummation
of this Agreement, and there are no claims for any brokerage commission,
finder's fee or similar payment due from Shareholders or either Merging
Corporation.
3.30 Names. During the term of their existence, (i) Novatek has not been
known by or conducted business under any name other than "Novatek Corporation,"
other than as disclosed on Schedule 3.30; and (ii) S&S has not been known by or
conducted business under any name other than "Sun and Sky Development
Corporation." All assets and rights are held by, and all agreements,
obligations, expenses and transactions have been entered into, incurred and
conducted by each of the Merging Corporations.
3.31 Bank Accounts. Schedule 3.31 sets forth (a) a true and complete list
of the names of each bank, trust company, securities broker and other financial
institution at which either Merging Corporation has an account or safe deposit
box or maintains a banking, custodial, trading or other similar relationship;
and (b) a true and complete list and description of each such account, box and
relationship, indicating in each case the account number and the names of the
officers, employees, agents or other representatives of each Merging Corporation
having access, signatory power or power to give direction with respect to such
account, box or relationship.
3.32 Disclosure. No representation, warranty or statement made by
Shareholders or either Merging Corporation in this Agreement, or any document
furnished or to be furnished to SMT or UniComp pursuant to this Agreement, to
the best knowledge of either Merging Corporation and their Executive Officers,
contains or will contain any untrue statement of a material fact, or omits or
will omit to state any material fact necessary to make the statements contained
in this Agreement or such other document not misleading. The fact that
Shareholders and the Merging Corporations have delivered copies of certain
documents to SMT or UniComp shall not alone constitute disclosure of facts
required to be disclosed on any Schedule to this Agreement, unless such document
is expressly referenced in such Schedule. Receipt by SMT or UniComp of such
documents and notice of their contents (other than by reference on a Schedule)
shall in no way limit other obligations of Shareholders or the Merging
Corporations or the other rights of SMT or UniComp under this Agreement.
3.33 Year 2000. Except as disclosed on Schedule 3.33, all Systems (as
defined below) and all components thereof will function in accordance with
applicable specifications, documentation and warranties prior to, during and
after the calendar year 2000. Prior to, during and after the calendar year
2000, each of the Systems will accept date-related records and information for
the years 2000 and following and perform computations respecting or based on
such date-related information in a correct and appropriate manner. No change in
any calendar year shall adversely affect the performance of any Systems nor
cause any Systems or any of their components to operate in a manner not in
accordance with applicable specifications, documentation or warranties. For the
purpose of this paragraph, "Systems" includes all proprietary and third-party
software and automated machines or systems of any kind being transferred
(including but not limited to systems relating to the operation of buildings and
facilities (such as elevators, escalators, manufacturing control systems,
automated HVAC systems)).
<PAGE>
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SMT AND UNICOMP
SMT and UniComp, jointly and severally, represent and warrant to
Shareholders and the Merging Corporations as follows:
4.1 Organization and Good Standing. SMT is a corporation duly organized,
validly existing and in good standing under the laws of the State of North
Carolina. UniComp is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia.
4.2 Authority. Each of SMT and UniComp has all requisite power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated by this Agreement. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly and validly authorized by all
necessary corporate and shareholder action on the part of SMT and UniComp. This
Agreement has been duly executed and delivered by SMT and UniComp and
constitutes a valid and binding obligation of SMT and UniComp, enforceable
against each of them in accordance with its terms.
4.3 No Conflict or Breach. The execution, delivery and performance of
this Agreement do not and will not (a) conflict with or constitute a violation
of the Articles of Incorporation or Bylaws of SMT or UniComp or (b) conflict
with or constitute a violation of any statute, judgment, order, decree or
regulation of any court, administrative agency, governmental authority or
arbitrator applicable to or relating to SMT or UniComp.
4.4 Governmental Approvals. No consent, approval, authorization,
registration or filing with any federal, state or local judicial or governmental
authority or administrative agency is required in connection with the valid
execution and delivery by SMT or UniComp of this Agreement or the consummation
by SMT or UniComp of the transactions contemplated in this Agreement.
4.5 Brokers. No finder, broker, agent or other intermediary has acted for
or on behalf of SMT or UniComp in connection with the negotiation or
consummation of this Agreement, and there are no claims for any brokerage
commission, finder's fee or similar payment due from SMT or UniComp.
ARTICLE 5
COVENANTS OF SHAREHOLDERS AND THE MERGING CORPORATIONS
The Merging Corporations and each Shareholder jointly and severally
covenant and agree with SMT and UniComp as follows:
<PAGE>
5.1 Conduct of Business. Between the date of this Agreement and the
Closing Date, each Merging Corporation shall, and Shareholders shall cause each
Merging Corporation to, except as otherwise specifically consented to in writing
by SMT:
(a) Conduct its operations in the normal and customary manner in the
ordinary course of business;
(b) Maintain and keep its tangible assets in good operating
order, repair and condition ordinary wear and tear excepted;
(c) Maintain and preserve its unencumbered right to use each item
included in the Intellectual Property;
(d) Keep in full force and effect the insurance described in
Section 3.23;
(e) Perform all of its obligations under and not amend, alter or
modify any provision of any Contract or Real Property Lease;
(f) Use its best efforts to preserve its organization intact and
maintain its relationships with its employees, suppliers and customers;
(g) Promptly advise SMT of any adverse change in the condition
(financial or otherwise) of its business or assets;
(h) Promptly advise SMT of the occurrence of any event or
circumstance which affects the consummation of the transactions
contemplated by this Agreement or which, if in existence on the date of
this Agreement, would have been required to have been disclosed in a
Schedule to this Agreement;
(i) Promptly advise SMT of any change in the list of employees
referred to in Section 3.25 or in the compensation payable to any such
employee; and
(j) Maintain and collect the Receivables and extend credit terms
to its customers in the ordinary course of business consistent with past
practices.
5.2 Access and Information. Shareholders and the Merging Corporations
shall permit SMT and UniComp and their counsel, accountants and other
representatives full access during normal business hours to all the properties,
assets, books, records, agreements and other documents of the Merging
Corporations. Shareholders and the Merging Corporations shall furnish to SMT
and UniComp and their representatives all information concerning the Merging
Corporations as SMT and UniComp may reasonably request. Shareholders and the
Merging Corporations shall permit and facilitate communications between SMT and
UniComp and the suppliers, customers, landlords and other persons having
relationships with the Merging
<PAGE>
Corporations.
5.3 No Other Solicitations. Until the earlier of the Closing Date or the
termination of this Agreement, Shareholders, the Merging Corporations and their
management and representatives shall not solicit or encourage any offer,
proposal or inquiry from, or engage in any discussions or negotiations with, any
person regarding the sale of the Shares, the sale or lease of the assets of
either Merging Corporation, or any merger or other business combination
involving either Merging Corporation.
5.4 Employment and Consulting Agreements. At Closing, each of the
Shareholders listed on Schedule 5.4 shall enter into either the Employment
Agreement or Consulting Agreement substantially in the form attached hereto as
Exhibit A (the "Employment and Consulting Agreement"), the terms of which shall
provide among other things that the employee thereunder shall not compete with
the business of SMT or UniComp during the term of the Employment Agreement and
for a period of six months thereafter.
5.5 No Other Solicitations. Until the earlier of the Closing Date or the
termination of this Agreement, neither Merging Corporation, nor any of its
officers, directors or agents or Shareholders shall solicit or encourage any
offer, proposal or inquiry from, or engage in any discussions or negotiations
with, any person regarding the sale or lease of the business or assets of either
Merging Corporation or the sale of any of the Novatek Shares.
ARTICLE 6
COVENANTS OF SMT AND UNICOMP
6.1 Registration of UniComp Shares. UniComp shall use its best efforts to
file with the Securities and Exchange Commission (the "SEC") a registration
statement on Form S-3, or on such other form as may be available for use by
UniComp under applicable rules and regulations of the SEC that causes the same
material result as a Form S-3 filing would have caused and agreed to by UniComp
and Shareholders, covering (i) 25% of the UniComp Shares no later than 90
calendar days after the Closing Date; (ii) an additional 25% of the UniComp
Shares no later than 180 calendar days after the Closing Date; and (iii) the
remaining 50% of the UniComp Shares no later than 390 calendar days after the
Closing Date. UniComp agrees to use its best efforts to make such registration
effective at the earliest possible date. Upon the effectiveness of each such
registration statement, the UniComp Shares subject thereto may be sold in
accordance with the Securities Act of 1933, as amended. All expenses of such
registrations would be borne by UniComp. Until such time as Shareholders have
sold all UniComp Shares, UniComp would take such steps as would be necessary to
ensure that the registration statements described above remain effective.
UniComp would indemnify Shareholders for any liabilities they may incur in
connection with the registration of the UniComp Shares, including without
limitation, those arising under the Securities Act of 1933 and the rules and
regulations thereunder.
<PAGE>
6.2 Tax Matters.
(a) Tax Returns Filed On or Before the Closing Date. Each Merging
Corporation has timely filed all tax returns that it was required to file
before the Closing Date and the Shareholders shall be responsible for all
tax liability, including any penalties, for such periods. SMT and UniComp
shall not amend any such returns without the prior consent of the
Shareholders, which consent shall not be unreasonably withheld.
(b) Tax Periods With Filing Dates On Or After the Closing Date. SMT
and UniComp shall file all tax returns for the Merging Corporations for all
periods which are to be filed on or after the Closing Date. The Shareholders
agree to review and comment on each such tax return prior to filing, but SMT and
UniComp shall be responsible for all tax liability, including any penalties, for
such periods. Notwithstanding any other provision in this Agreement, the
Shareholders acknowledge and agree that they shall be solely liable for any and
all Subchapter S liability of the Shareholders for S&S.
(c) Tax Periods Beginning Before and Ending After the Closing Date.
SMT and UniComp shall file any tax returns of the Merging Corporations for
tax periods which begin before the Closing Date and end after the Closing
Date. The Shareholders agree to review and comment on each such tax return
prior to filing, but SMT and UniComp shall be responsible for all tax
liability, including any penalties, for such periods.
(d) Cooperation on Tax Matters. UniComp, SMT, the Merging
Corporations and Shareholders shall cooperate fully, as and to the extent
reasonably requested by the other party, in connection with the filing of
tax returns pursuant to this Section and any audit, litigation or other
proceeding with respect to taxes.
6.3 Audited Financial Statements. If required under the rules and
regulations of the Securities and Exchange Commission applicable to UniComp and
SMT in connection with the transactions contemplated by this Agreement, SMT
shall cause to be prepared and delivered audited financial statements sufficient
to fully satisfy any such rules or regulations. The cost of any such financial
statements shall be borne by SMT.
6.4 Insurance. UniComp and SMT agree to maintain insurance coverage of
the assets and potential liabilities of the Merging Corporations in an amount
equal to such coverage prior to the Closing.
6.5 Guaranties. UniComp or SMT shall cause any personal guaranties of the
Shareholders (and their wives) and other former shareholders of the Company for
obligations of the Company and S&S to be released within 30 days or as soon as
reasonably possible.
<PAGE>
ARTICLE 7
MUTUAL COVENANTS
Each of SMT, UniComp, Shareholders and the Merging Corporations covenants
and agrees with the others as follows:
7.1 Best Efforts. All parties shall use their best efforts both prior to
and subsequent to Closing to make or obtain all consents, approvals,
authorizations, registrations and filings with all federal, state or local
judicial or governmental authorities or administrative agencies as are required
in connection with the consummation of the transactions contemplated by this
Agreement.
7.2 Confidentiality. In recognition of the confidential nature of
certain of the information which will be provided to each party by the
others, each party agrees to retain in confidence, and to require its
directors, officers, employees, consultants, professional representatives and
agents (collectively, its "Representatives") to retain in confidence all
confidential information transmitted or disclosed to it by another party to
this Agreement, and further agrees that it will not use for its own benefit
and will not use or disclose to any third party, or permit the use or
disclosure to any third party of, any confidential information obtained from
or revealed by the other, except that each party may disclose the information
to those of its Representatives who need the information for the proper
performance of their assigned duties with respect to the consummation of the
transactions contemplated by this Agreement. In making such information
available to its Representatives, each party shall take any and all
precautions necessary to ensure that its Representatives use the information
only as permitted by this Agreement. Notwithstanding anything to the
contrary in the foregoing provisions, such information may be disclosed (a)
where it is necessary to any regulatory authorities or governmental agencies,
(b) if it is required by court order or decree or applicable law, (c) if it
is ascertainable or obtained from public or published information, (d) if it
is received from a third party not known to the recipient to be under an
obligation to keep such information confidential, or (e) if the recipient can
demonstrate that such information was in its possession prior to disclosure
of the information in connection with this Agreement. If any party shall be
required to make disclosure of any such information by operation of law, such
disclosing party shall give the party from whom such information was received
prior notice of the making of such disclosure and shall use all reasonable
efforts to afford such other party an opportunity to contest the making of
such disclosure. In the event that the Closing shall not occur, each party
shall immediately deliver, or cause to be delivered, to the party from whom
such information was received (without retaining any copies) any and all
documents, statements or other written information obtained from the other
that contain confidential information.
<PAGE>
ARTICLE 8
INTENTIONALLY OMMITTED
<PAGE>
ARTICLE 9
INTENTIONALLY OMMITTED
<PAGE>
ARTICLE 10
CLOSING
10.1 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Womble Carlyle
Sandridge & Rice, PLLC in Atlanta, Georgia at 11:30 a.m., local time, on
November 29, 1997, or in such manner or at such location or other date as may be
mutually agreed upon by the parties to this Agreement; provided, however, as
follows: (a) if one or more conditions to this Agreement is not satisfied by
such date, the party benefiting from such condition may elect, in its sole
discretion, one or more postponements of the Closing for the purpose of enabling
such condition to be satisfied; and (b) notwithstanding the provisions of the
preceding clause (a), in no event may the Closing be postponed beyond November
30, 1997. The date of the Closing is referred to as the "Closing Date." The
parties hereto agree that time is of the essence in the Closing of the
transactions contemplated by this Agreement.
10.2 Deliveries by the Merging Corporations and Shareholders. At Closing
or within seven (7) days of Closing, the Merging Corporations and Shareholders
shall deliver or cause to be delivered to SMT the following:
(a) stock certificates representing the Novatek Shares and the S&S
Shares, duly endorsed in blank or accompanied by stock powers duly executed
in blank, sufficient to transfer Novatek Shares and the S&S Shares on the
books of Novatek;
(b) all bank books, financial and bank records, bookkeeping and
accounting records, copies of all tax returns of the Merging Corporations
and amendments to all of the foregoing, corporate minute books, stock
ledgers and all other books and records of or relating to the Merging
Corporations, certified by Shareholders and the Merging Corporations to be
true, correct and complete as of the Closing Date;
(c) a copy of all corporate and shareholder resolutions authorizing
the execution, delivery and performance of this Agreement by each Merging
Corporation, accompanied by the certification of the Secretary or an
Assistant Secretary of each Merging Corporation to the effect that such
resolutions are in full force and effect and have not been amended,
modified or rescinded;
(e) good standing certificates for each Merging Corporation from the
Secretary of State of the state of its incorporation and each of the states
listed on Schedule 3.1, and certificates from the Departments of Revenue or
Taxation of each such jurisdiction stating that all required taxes have
been paid by each Merging Corporation in full;
(f) the legal opinion referred to in Section 8.6; and
(g) the Employment and Consulting Agreements, duly executed by the
employees thereunder.
<PAGE>
10.3 Deliveries by SMT. At the Closing or within seven (7) days of
Closing, SMT and UniComp shall deliver or cause to be delivered to Shareholders
the following:
(a) a copy of all corporate resolutions of SMT and UniComp
authorizing the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated in this Agreement,
accompanied by certifications of the secretaries or assistant secretaries
of SMT and UniComp to the effect that such resolutions are in full force
and effect and have not been amended, modified or rescinded;
(b) the legal opinion referred to in Section 9.5;
(c) the UniComp Shares; and
(e) the Employment and Consulting Agreements, duly executed on behalf
of SMT.
10.4 Further Assurances. Shareholders shall use their best efforts to
obtain the Required Consents as soon as possible following Closing.
Shareholders shall, at any time on or after the Closing Date, take any and all
steps requested by SMT or UniComp to consummate the transactions contemplated by
this Agreement.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnification by Shareholders. Shareholders shall jointly and
severally indemnify, defend and hold harmless SMT and UniComp and their
officers, directors and affiliates (the "SMT Indemnitees") from, against, and
with respect to any and all loss, damage, claim, obligation, liability, cost and
expense (including without limitation reasonable attorneys' fees and costs and
expenses incurred in investigating, preparing, defending against or prosecuting
any litigation, claim, proceeding or demand), of any kind or character (a
"Loss") arising out of or in connection with any of the following:
(a) any breach of any of the representations or warranties of
Shareholders contained in or made pursuant to this Agreement; or
(b) any failure by Shareholders to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by each pursuant to this Agreement.
11.2 Indemnification by SMT and UniComp. SMT and UniComp shall indemnify,
defend and hold harmless Shareholders from, against and with respect to any Loss
arising out of or in connection with any of the following:
<PAGE>
(a) any breach of any of the representations and warranties of SMT
and UniComp contained in or made pursuant to this Agreement; or
(b) any failure by SMT and UniComp to perform or observe, or to have
performed or observed, in full, any covenant, agreement or condition to be
performed or observed by them pursuant to this Agreement.
11.3 Notice of Claim. Any party seeking to be indemnified hereunder (the
"Indemnified Party") shall, within 15 days following discovery of the matters
giving rise to a Loss, promptly notify the party from whom indemnity is sought
(the "Indemnity Obligor") in writing of any claim for recovery, specifying in
reasonable detail the nature of the Loss and the amount of the liability
estimated to arise therefrom. The Indemnified Party shall provide to the
Indemnity Obligor as promptly as practicable thereafter all information and
documentation reasonably requested by the Indemnity Obligor to verify the claim
asserted.
11.4 Defense. If the facts pertaining to a Loss arise out of the claim of
any third party, or if there is any claim against a third party available by
virtue of the circumstances of the Loss, the Indemnity Obligor may, by giving
written notice to the Indemnified Party within 30 days following its receipt of
the notice of such claim, elect to assume the defense or the prosecution of such
claim, including the employment of counsel or accountants at its cost and
expense; provided, however, that during the interim the Indemnified Party shall
use its best efforts to take all action (not including settlement) reasonably
necessary to protect against further damage or loss with respect to the Loss.
The Indemnified Party shall have the right to employ counsel separate from
counsel employed by the Indemnity Obligor in any such action and to participate
in such action, but the fees and expenses of such counsel shall be at the
Indemnified Party's own expense. Whether or not the Indemnity Obligor chooses
so to defend or prosecute such claim, all the parties to this Agreement shall
cooperate in the defense or prosecution of such claim and shall furnish such
records, information and testimony and shall attend such conferences, discovery
proceedings and trials as may be reasonably requested in connection therewith.
The Indemnity Obligor shall not be liable for any settlement of any such claim
effected without its prior written consent, which shall not be unreasonably
withheld.
11.5 Time for Claims. Any claim asserted with respect to the items
enumerated in Sections 11.1 or 11.2, other than the representations and
warranties contained in Sections 2.3 and 3.21, must be submitted to the
Indemnity Obligor in writing, or invoked in official proceedings, within 12
months after the Closing Date. Any claim asserted with respect to a loss
arising out of or in connection with a breach of Sections 2.3 or 3.21 may be
asserted until barred by the applicable statute of limitations.
11.6 Limitation. Notwithstanding the provisions of Section 11.1 or 11.2,
no party shall have any indemnification obligation under this Agreement unless
and until the aggregate amount of the Losses of the Indemnified Party exceeds
$20,000 in the aggregate, whereupon the Indemnity Obligor shall be liable to
indemnify the Indemnified Party to the extent of the entire amount of such
Losses.
11.7 Maximum Indemnity Amount. Other than for breaches of the
representations and
<PAGE>
warranties of the Shareholders contained in Sections 2.3 and 3.21 concerning
Novetak for which the maximum amount for which a party shall be liable as an
Indemnity Obligor hereunder shall not exceed their portion of the
Novatek-UniComp Shares, and for breaches of the representations and warranties
of the Shareholders contained in Sections 2.3 and 3.21 concerning S&S for which
the maximum amount for which a party shall be liable as an Indemnity Obligor
hereunder shall not exceed their portion of the S&S-Unicomp Shares, the maximum
amount for which a party shall be liable as an Indemnity Obligor hereunder shall
not exceed their portion of 50,000 UniComp Shares.
ARTICLE 12
TERMINATION
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) By the mutual written consent of Shareholders and SMT and
UniComp;
(b) By Shareholders and the Merging Corporations (if Shareholders and
the Merging Corporations are not then in breach of any term of this
Agreement), if SMT and UniComp shall (i) fail to perform in any material
respect their agreements contained in this Agreement required to be
performed on or prior to the Closing Date, or (ii) materially breach any of
their representations or warranties contained in this Agreement, which
failure or breach is not cured within ten days after Shareholders have
notified SMT and UniComp of its intent to terminate this Agreement pursuant
to this subparagraph;
(c) By SMT and UniComp (if SMT or UniComp is not then in breach of
any term of this Agreement), if Shareholders and the Merging Corporations
shall (i) fail to perform in any material respect their agreements
contained in this Agreement required to be performed on or prior to the
Closing Date, or (ii) materially breach any of their representations or
warranties contained in this Agreement, which failure or breach is not
cured within ten days after SMT or UniComp has notified Shareholders of its
intent to terminate this Agreement pursuant to this subparagraph;
(d) By Shareholders and the Merging Corporations or by SMT and
UniComp, if there shall be any order, writ, injunction or decree of any
court or governmental or regulatory agency binding on Shareholders or the
Merging Corporations, or on SMT or UniComp, which prohibits or restrains
any party from consummating the transactions contemplated by this
Agreement; or
(e) By Shareholders and the Merging Corporations or by SMT and
UniComp, if the Closing has not occurred by November 26, 1997, for any
reason other than delay or nonperformance of the party seeking such
termination.
12.2 Effect on Obligations. Termination of this Agreement pursuant to this
Article shall terminate all obligation of the parties hereunder, except for the
obligations under Sections 13.2
<PAGE>
(with respect to expenses), 13.3 (with respect to publicity) and 7.2 (with
respect to confidentiality); provided, however, that termination pursuant to
subparagraphs (b) or (c) of Section 12.1 shall not relieve the defaulting or
breaching party from any liability to the other party to this Agreement.
ARTICLE 13
MISCELLANEOUS
13.1 Survival of Representations. All representations and warranties of
the parties contained in this Agreement or otherwise made in writing in
connection with the transactions contemplated by this Agreement shall survive
the execution and delivery of this Agreement.
13.2 Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement shall be paid by the party incurring such expense, whether or not
the Closing is consummated.
13.3 Publicity. Each party agrees it will not make any press releases or
other announcements prior to the Closing with respect to the transactions
contemplated by this Agreement, except as required by applicable law, without
the prior approval of the other parties.
13.4 Best Efforts. Each party to this Agreement agrees to use its best
efforts to satisfy the conditions to the Closing set forth in this Agreement and
otherwise to consummate the transactions contemplated by this Agreement.
13.5 Notices. All notices, demands and other communications made hereunder
shall be in writing and shall be given either by personal delivery, by
nationally recognized overnight courier (with charges prepaid) or by telecopy
(with telephone confirmation), and shall be deemed to have been given or made
when personally delivered, the day following the date deposited with such
overnight courier service or when transmitted to telecopy machine and confirmed
by telephone, addressed to the respective parties at the following addresses (or
such other address for a party as shall be specified by like notice):
<PAGE>
If to Shareholders:
E. Barry Huffstetler
810 Carl Ridge Drive, Apartment 201
Coral Springs, Florida 33065
Telephone: 954/753-8539
With a copy (which shall not constitute notice) to:
Novatek Corporation
3773 Northwest 126th Avenue
Coral Springs, Florida 33065
ATTN: Mr. Steve Howe
Telephone: 954/341-7700
Telecopy: 954/345-9334
With a copy (which shall not constitute notice) to:
Tripp Scott Conklin & Smith
110 SE 6th Street
Fort Lauderdale, Florida 33301
ATTN: Dennis Smith, Esq.
Telephone: 305/525-7500
Telecopy: 305/761-8475
If to Novatek or S&S:
Novatek Corporation
3773 Northwest 126th Avenue
Coral Springs, Florida 33065
ATTN: Mr. Steve Howe
Telephone: 954/341-7700
Telecopy: 954/345-9334
If to SMT:
Smoky Mountain Technologies, Inc.
112-B Highway 64 West
Murphy, North Carolina 28906
ATTN: B. Michael Wilson
<PAGE>
With a copy (which shall not constitute notice) to:
Womble Carlyle Sandridge & Rice, PLLC
3300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202
ATTN: Cyrus M. Johnson, Jr., Esq.
Telephone: 704/331-4923
Telecopy: 704/338-7809
If to UniComp:
UniComp, Inc.
1850 Parkway Place, Suite 925
Marietta, Georgia 30067
ATTN: Stephen A. Hafer
Telephone: 704/424-3684
Telecopier: 770/424-5558
With a copy (which shall not constitute notice) to:
Snell & Wilmer, LLP
111 E. Broadway, Suite 900
Salt Lake City, Utah 84111
ATTN: David F. Evans, Esq.
Telephone: 801/237-1923
Telecopier: 801/237-1950
13.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.7 Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights, interest or
obligations hereunder shall be assigned by any of the parties to this Agreement
without the prior written consent of all other parties to this Agreement, and
any purported assignment without such consent shall be void; provided, however,
that SMT may assign its rights, interest and obligations under this Agreement to
any subsidiary that is wholly owned by SMT.
13.8 Third Party Beneficiaries. None of the provisions of this Agreement
or any document contemplated by this Agreement is intended to grant any right or
benefit to any person or entity which is not a party to this Agreement.
13.9 Headings. The article and section headings contained in this
Agreement are solely
<PAGE>
for the purpose of reference, are not part of this Agreement and shall not in
any way affect the meaning or interpretation of this Agreement.
13.10 Recitals. The recitals set forth at the beginning of this Agreement
are incorporated by reference in, and made a part of, this Agreement.
13.11 Amendments. Any waiver, amendment, modification or supplement of or
to any term or condition of this Agreement shall be effective only if in writing
and signed by all parties hereto, and the parties to this Agreement waive the
right to amend the provisions of this Section orally.
13.12 Specific Performance. Each party hereto acknowledges that if the
other fails to consummate the transactions contemplated by this Agreement such
failure will cause irreparable harm to the other for which there will be no
adequate remedy at law. Each party shall be entitled, in addition to its other
remedies at law, to specific performance of this Agreement if the other shall,
without cause, refuse to consummate the transactions contemplated by this
Agreement.
13.13 Governing Law. This Agreement shall be governed by the laws of the
State of Florida, without regard to conflicts of laws principles.
13.14 Jurisdiction: Service of Process. Each of the parties to this
Agreement submits to the jurisdiction of any state or federal court sitting in
the applicable district encompassing Coral Springs, Florida, in any action or
proceeding arising out of or relating to this Agreement and agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court. Each of the parties to this Agreement waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety or other security that may be required of any party with
respect thereto. Any party may make service on any other party by sending or
delivering a copy of the process to the party to be served at the address and in
a manner provided in Section 13.5 above; provided, however, that nothing in this
Section 13.14 will affect the right of any party to serve legal process in any
other manner permitted by law or at equity. Each party agrees that a final
judgment in any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by law or at
equity.
13.15 Resolution of Disputes.
(a) No party to this Agreement shall institute a proceeding in any
court or administrative agency to resolve a dispute between the parties
arising out of or related to this Agreement before that party has sought to
resolve the dispute through direct negotiation with the other party. If
the dispute is not resolved within three weeks after a demand for direct
negotiation, the parties shall attempt to resolve the dispute through
mediation in Coral Springs, Florida, administered by the American
Arbitration Association under its commercial mediation rules and procedures
then in effect. If the mediator is unable to facilitate a settlement of
the dispute within a reasonable period of time, as determined by the
mediator, the mediator shall issue a written statement to the parties to
that effect and the aggrieved party shall then seek relief through
arbitration in Coral
<PAGE>
Springs, Florida, administered by the American Arbitration Association
under its commercial arbitration rules and procedures then in effect. The
arbitrator(s) shall base its/their award on applicable laws and judicial
precedent and include in such award a statement of the reasons upon which
the award is based. Judgment on the award rendered by the arbitrator(s)
may be entered in any court having jurisdiction thereof.
(b) All applicable statutes of limitation and defenses based upon the
passage of time shall be tolled while the procedures specified in this
Section 13.15 are pending. The parties will take such action, if any,
required to effectuate such tolling.
(c) Each party is required to continue to perform its obligations
under this Agreement pending final resolution of any dispute arising out of
or relating to this Agreement.
13.16 Remedies. In the event arbitration or litigation shall be necessary
to enforce, interpret or rescind the provisions of this Agreement or any related
matter, the prevailing party shall be entitled to recover from the adverse
party, in addition to any other relief, the prevailing party's reasonable
attorneys' fees for services before trial, at trial, and on any subsequent
appeal by the adverse party.
13.17 Severability. In the event that any provision in this Agreement
shall be determined to be invalid, illegal or unenforceable in any respect, the
remaining provisions of this Agreement shall not be in any way impaired, and the
illegal, invalid or unenforceable provision shall be fully severed from this
Agreement and there shall be automatically added a replacement provision as
similar in terms and intent to such severed provision as may be legal, valid and
enforceable.
13.18 Entire Agreement. This Agreement and the Schedules and Exhibits to
this Agreement, together with the documents and instruments delivered pursuant
to this Agreement, constitute the entire contract between the parties to this
Agreement pertaining to the subject matter of this Agreement, and supersede all
prior and contemporaneous agreements and understandings between the parties with
respect to such subject matter.
13.19 Definition. For the purposes of this Agreement, "to the best
knowledge of the Merging Corporation and their Executive Officers" shall mean
such matters as are actually known by E. Barry Huffstetler and Steven Howe.
13.20 Construction. Each party to this Agreement and its counsel have
reviewed and revised this Agreement. The normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
not be employed in the interpretation of this Agreement or of any amendments,
schedules or exhibits to this Agreement. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated under such statute or rule, unless the context requires
otherwise. The word "including" shall mean including without limitation. The
parties to this Agreement intend that each representation, warranty and covenant
in this Agreement shall have independent significance. If any party has
breached any representation, warranty or covenant in any respect, the fact that
there exists another representation, warranty or covenant relating to the same
subject
<PAGE>
matter (regardless of the relative levels of specificity) which the party has
not breached shall not detract from or mitigate the fact that the party is in
breach of the first representation, warranty or covenant.
IN WITNESS WHEREOF, each of the parties has signed this Agreement, or has
caused this Agreement to be signed by its duly authorized officer, as of the
date first above written.
SHAREHOLDERS OF NOVATEK:
/s/E. Barry Huffstetler
-----------------------
E. Barry Huffstetler
/s/Steven Howe
-----------------------
Steven Howe
/s/Gregory Huffstetler
-----------------------
Gregory Huffstetler
NOVATEK CORPORATION:
By: /s/S.M. Howe
--------------------
Name: S.M. Howe
Title: President
SUN AND SKY DEVELOPMENT
CORPORATION:
By: /s/S.M. Howe
--------------------
Name: S.M. Howe
Title: President
SHAREHOLDERS OF SUN AND SKY
DEVELOPMENT CORPORATION:
/s/E. Barry Huffstetler
------------------------
E. Barry Huffstetler
/s/Steven Howe
------------------------
Steven Howe
<PAGE>
SMOKY MOUNTAIN TECHNOLOGIES, INC.:
By: /s/B. Michael Wilson
--------------------
B. Michael Wilson
President
UNICOMP, INC.:
By: /s/Stephen A. Hafer
----------------------
Stephen A. Hafer
Chief Executive Officer
<PAGE>
SCHEDULES
Schedule 2.3 Share Ownership
Schedule 3.1 Jurisdictions Where Qualified
Schedule 3.3 Conflicts and Breaches of Agreements
Schedule 3.4 Consents and Approvals
Schedule 3.7 Officers and Directors
Schedule 3.8 Financial Statements
Schedule 3.9 Books and Records
Schedule 3.10 Liens
Schedule 3.11 Real Property
Schedule 3.13 Inventory
Schedule 3.14 Contracts
Schedule 3.15 Receivables
Schedule 3.16 Intellectual Property
Schedule 3.17 Major Suppliers and Customers
Schedule 3.18 Litigation
Schedule 3.19 Compliance with Decrees and Laws
Schedule 3.20 Permits
Schedule 3.21 Taxes
Schedule 3.23 Insurance
Schedule 3.24 Labor and Employment Matters
Schedule 3.25 Employee Benefits
Schedule 3.26 Certain Changes
Schedule 3.27 Product Warranty
Schedule 3.28 Related Party Transactions
Schedule 3.30 Names
Schedule 3.31 Bank Accounts
Schedule 3.33 Year 2000
Schedule 5.4 Employment and Noncompetition Agreements
Copies of the above listed schedules have been omitted from the filing, however,
the Company hereby agrees to furnish supplementally a copy of any omitted
schedule to the commission upon request.
<PAGE>
EXHIBIT A
FORM OF EMPLOYMENT AND CONSULTING AGREEMENT
<PAGE>
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 29th day of November,
1997, between SMOKY MOUNTAIN TECHNOLOGIES, INC., a North Carolina corporation
("SMT"), and STEVE HOWE ("EMPLOYEE").
Witnesseth:
WHEREAS, EMPLOYEE is employed as President of the Novatek Division of
SMT; and
WHEREAS, SMT desires to provide a plan for compensating EMPLOYEE in
relation to the degree of EMPLOYEE's success in aiding its business and
affairs and recognizing EMPLOYEE's position of high trust and confidence;
NOW, THEREFORE, in consideration of the foregoing, the parties agree
with each other as follows:
1. Employment and Duties. SMT hereby employs EMPLOYEE and EMPLOYEE
accepts such employment, effective December 1, 1997, as President of the
Novatek Division of SMT, and EMPLOYEE agrees that EMPLOYEE will devote
EMPLOYEE's best efforts and full time during SMT's usual business hours to
the business of SMT and conduct the business and affairs of SMT to the best
of EMPLOYEE's ability, and that EMPLOYEE will adhere to the reasonable
business management and other policies established from time to time and will
perform such other services as requested, all by its President or his
designated representative.
2. Salary and Term. SMT shall pay to EMPLOYEE for all of EMPLOYEE's
services the sum of One Hundred and Ten Thousand Dollars ($110,000) per year,
payable in fifty-two (52) equal weekly installments or in accordance with the
general practice of SMT, hereinafter referred to as EMPLOYEE's "salary."
Termination of employment "for cause", as "for cause" is defined in Paragraph
7, shall terminate the salary of EMPLOYEE as of the date of such termination.
The term of EMPLOYEE's employment under this Agreement shall be from
December 1, 1997 to December 31, 1999, subject to the renewal set forth in
Paragraph 8.
3. Reimbursement of Expenses. EMPLOYEE shall be reimbursed for all of
EMPLOYEE's normal and reasonable expenses of travel, entertainment and other
activities incurred on business on behalf of SMT, subject to reasonable
documentation of such expenses by EMPLOYEE.
<PAGE>
4. Vacations and Company Benefits. EMPLOYEE shall be entitled to
twenty (20) days of vacation with pay each year, the vacation to be taken at
such times as EMPLOYEE selects. EMPLOYEE shall receive all medical insurance
and other employee benefits which SMT, in its sole discretion, provides from
time to time to any of its employees. EMPLOYEE shall be permitted to accrue,
from year to year, any vacation time EMPLOYEE has but does not use. Upon the
termination of EMPLOYEE's employment, any accrued and unused days of vacation
shall be paid to EMPLOYEE at EMPLOYEE's then applicable daily rate of pay.
For purposes of calculating unused vacation for the year in which termination
occurs, vacation shall be prorated to the date of termination.
5. Additional Compensation. In addition to the salary set forth in
Paragraph 2 and subject to the provisions of Paragraphs 6 and 7, SMT agrees
to pay EMPLOYEE additional compensation, hereinafter called "additional
compensation". The additional compensation is determined at the end of each
fiscal year and SMT agrees it will treat EMPLOYEE reasonably similar to the
treatment received by other Executives of SMT. The purpose of this additional
compensation is to provide additional incentive to EMPLOYEE during the year
for which the additional compensation is calculated.
6. Death or Disability. Upon the death of EMPLOYEE or upon such
disability that EMPLOYEE is unable to carry out EMPLOYEE's duties for a
period of three (3) months, EMPLOYEE's employment and salary shall thereupon
terminate, but EMPLOYEE, or the legal representative of EMPLOYEE's estate,
shall continue to be paid the additional compensation payment payable to
EMPLOYEE for completed calendar years of SMT prior to EMPLOYEE's death or
disability. The amount of any additional compensation for the year in which
EMPLOYEE dies shall be prorated to the date of EMPLOYEE's death, and shall be
paid to the legal representative of EMPLOYEE's estate, as SMT reasonably
determines as long as it is reasonably similar to the treatment received by
other Executives of SMT. The amount of any additional compensation for the
year in which the employment of EMPLOYEE terminates because of EMPLOYEE's
disability shall be prorated to the date of EMPLOYEE's termination and shall
be paid as provided in this Paragraph as if EMPLOYEE had died.
7. Termination or Resignation.
(a) Without Cause. In the event of the termination of EMPLOYEE by
SMT for reason other than cause, EMPLOYEE's salary shall continue for the
remainder of the term of this Agreement and the amount of any annual
additional compensation for the year in which EMPLOYEE is terminated shall be
calculated to the date of termination and paid to EMPLOYEE as SMT reasonably
determines as long it is reasonably similar to the treatment received by
other Executives of SMT. "Calculated to the date of termination" shall mean
calculating the additional compensation that would have been owed had
EMPLOYEE been eligible for the entire year, then prorating the additional
compensation by the number of days during the year through the date of
termination. In addition, any unpaid additional compensation based on a
prior fiscal year shall be paid to EMPLOYEE on the date of the termination.
(b) With Cause. In the event of the termination of EMPLOYEE by
SMT for
<PAGE>
cause, no further additional compensation for a present or prior fiscal year
shall be payable to EMPLOYEE, nor shall any further salary be payable to
EMPLOYEE. Being terminated for cause shall mean:
(i) EMPLOYEE being convicted of, or confessing to, a felony;
(ii) EMPLOYEE committing an act of fraud, misappropriation of
funds or embezzlement in connection with his employment under this Agreement.
This provision is not intended to include a reimbursement of expenses that
has proper documentation supplied by EMPLOYEE, but, for one reason or
another, may not have been in compliance with SMT's policies and procedures.
(iii) EMPLOYEE committing an act of material misconduct or
material breach in connection with the performance of his duties under this
Agreement, but only after written notice has been provided to EMPLOYEE
concerning the material misconduct material breach and EMPLOYEE has been
given a reasonable opportunity to cure the material misconduct or the
material breach. If the material misconduct or material breach is reasonably
cured, then no termination for such material misconduct or material breach
may occur.
(c) Resignation. In the event of EMPLOYEE's resignation, no
further additional compensation for a present fiscal year shall be payable to
EMPLOYEE, nor shall any further salary be payable to EMPLOYEE, but any
additional compensation for a completed fiscal year shall be payable to
EMPLOYEE at the same time it would have been payable had EMPLOYEE remained an
employee.
8. Renewal. SMT shall notify EMPLOYEE at least one hundred and twenty
(120) days prior to the expiration of the current term of this Agreement of
SMT's desire to extend EMPLOYEE's employment with SMT. If SMT desires to
extend EMPLOYEE's employment, then included in the notice shall be an
amendment to this Agreement setting forth the extension of the term and any
additional terms and conditions that SMT shall apply during the extended
term. If no notice is forwarded by SMT to EMPLOYEE at least one hundred
and twenty (120) days prior to the expiration of the current term, or
EMPLOYEE does not execute and return the proposed amendment within seven (7)
days of its receipt by EMPLOYEE, the employment of EMPLOYEE shall be deemed
terminated without cause on the expiration date of the current term of this
Agreement.
9. Covenants and Restrictions. EMPLOYEE agrees to the following
covenants and restrictions:
(a) Nondisclosure of proprietary Information. EMPLOYEE recognizes
that all information that has been created, discovered, developed or
otherwise become known to Employer has a commercial value in SMT's business,
including, but not limited to, all inventions, processes, ideas, data,
computer programs, developments, designs, marketing plans, customer lists,
budgets, projections, new products and other information owned by Employer
which is not public information (collectively "Proprietary Information") and
is the sole property of SMT and
<PAGE>
its assigns. At all times, both during the period of the employment by SMT
and after termination of that employment, EMPLOYEE agrees to keep in the
strictest confidence and trust all Proprietary Information. EMPLOYEE will
not disclose any Proprietary Information without the prior express written
consent of SMT.
(b) Nondisclosure of Third-Party Information. EMPLOYEE agrees not
to use or disclose to SMT, or assist in the disclosure to SMT of,
confidential information belonging to any third parties, including any prior
employer(s) of EMPLOYEE.
(c) Return of Documents. Upon the termination of EMPLOYEE's
access to SMT's Proprietary Information for any reason, or upon the
termination of the employment of EMPLOYEE for any reason, EMPLOYEE will
return to SMT all documents, notes, drawings, specifications, computer
programs, data and other materials or copies of such materials containing or
relating to any Proprietary Information, that EMPLOYEE may have in his or her
possession or control, whether kept at the place of employment, at EMPLOYEE's
residence or otherwise.
(d) Covenants of EMPLOYEE - Covenant Not to Compete. In
consideration of EMPLOYEE's employment hereunder, his employment compensation
and the consideration EMPLOYEE received as a Novatek Shareholder upon the
merger of Novatek and SMT, EMPLOYEE is making the covenants set forth in this
Paragraph 9. In recognition of EMPLOYEE's acknowledgment that EMPLOYEE's
services to be rendered to SMT are of a special and unusual character which
have a unique value to SMT, loss of which cannot adequately be compensated by
damages in any action at law; in view of the unique value to SMT of the
services of EMPLOYEE for which SMT has employed EMPLOYEE and the confidential
information to be obtained by or disclosed to EMPLOYEE as an employee of SMT;
and as a material inducement to SMT to employ EMPLOYEE and to pay to EMPLOYEE
the compensation for such services to be rendered to SMT by EMPLOYEE,
EMPLOYEE covenants and agrees as follows:
(i) Period of Covenant. The period of this noncompetition
covenant (the "Noncompetition Period") shall begin on the date hereof and
shall terminate six (6) months following the termination of EMPLOYEE's
employment with SMT for any reason (whether or not such employment is
pursuant to this Agreement).
(ii) Nature and Area of Competition. EMPLOYEE agrees that for
the duration of the Noncompetition Period, EMPLOYEE shall not, in the
Territory (as defined below), directly or indirectly, (1) serve as an
officer, engineer, designer, salesperson, consultant or manager for any
Competitive Business (as defined below) or (2) engage in a Competitive
Business or a business that utilizes or employs, whether alone or in
combination with any technology available from others, any industrial,
commercial or intellectual property rights of SMT, including, without
limitation, any Proprietary Information. For purposes of this Agreement,
"Territory" will mean (i) the entire world, but if such area as determined by
a court of competent jurisdiction to be too broad, then it shall mean (ii)
the continents of North America, South America, Europe and Asia, but if such
area is determined by a court of competent jurisdiction to be too broad, then
it shall mean (iii) the continents of North America, South America and
Europe, but if such area is determined by a court of competent jurisdiction
to be too broad, then it shall mean (iv) the United States of America, Canada
and Mexico, but if such area is determined by a court of competent
jurisdiction to be too broad, then it shall mean (v) the United States of
America, but if such area is
<PAGE>
determined by a court of competent jurisdiction to be too broad, then it
shall mean (vi) any county in which any of Employer's facilities are located
or within which Employer conducts business or solicits customers. For
purposes of this Agreement, "Competitive Business" means a business which is
engaged in or plans within the next six (6) months to engage in the business
of selling, repairing, leasing or supporting software or hardware products
used in the payment processing industry.
(iii) Solicitation. EMPLOYEE agrees that during the
Noncompetition Period, EMPLOYEE will not directly or indirectly, on behalf of
EMPLOYEE or on behalf of any person, firm, partnership, corporation,
association or entity:
Call upon any of the customers of SMT who are such at the time of
EMPLOYEE's termination for the purpose of soliciting or providing
customers to any Competitive Business;
Call upon any of the other key employees, consultants or
representatives of SMT who are such at the time of EMPLOYEE's
termination for the purpose of soliciting or inducing such key
employees, consultants or representatives to discontinue their
relationship with SMT or to establish a relationship with
EMPLOYEE or any Competitive Business; or
Solicit, divert or take away or attempt to solicit, divert or
take away any of the customers, clients, business or patrons of
SMT who are such at the time of EMPLOYEE's termination.
(iv) Accounting for Profits. EMPLOYEE covenants and agrees
that, if EMPLOYEE violates any of his covenants or agreements under this
Paragraph 9, SMT shall be entitled to an accounting and repayment of all
profits, compensation, commissions, remuneration or benefits that EMPLOYEE
directly or indirectly has realized and/or may realize as a result of,
growing out of or in connection with any such violation; such remedy shall be
in addition to and not in limitation of any injunctive relief or other rights
or remedies that SMT is or may be entitled at law, in equity or under this
Agreement.
(v) Reasonableness of Restrictions. EMPLOYEE has carefully
read and considered the provisions of this Agreement and, having done so,
agrees that the restrictions set forth in this Agreement (including, but not
limited to, the time period of restriction and the geographical areas of
restriction set forth in this Paragraph 9) are fair and reasonable and are
reasonably required for the protection of the interests of SMT, its
stockholders, officers, directors and the other employees. Notwithstanding
the foregoing, in the event any part of the covenants set forth in this
Paragraph 9 shall be held to be invalid or unenforceable, the remaining parts
thereof shall nevertheless continue to be valid and enforceable as though the
invalid or unenforceable parts had not been included therein. In the event
that any provision of this
<PAGE>
Paragraph 9 relating to time period and/or geographical areas of restriction
shall be declared by a court of competent jurisdiction to exceed the maximum
time period and/or geographical areas of restriction such court deems
reasonable and enforceable, said time period and/or geographical areas of
restriction shall be deemed to become and thereafter be the maximum time
period and/or geographical areas of restriction that such court deems
reasonable and enforceable.
10. Arbitration. Any controversy arising under or relating to the
interpretation or implementation of this Agreement or the breach thereof
shall be construed under the laws of the State of Florida and shall be
settled by arbitration in the City of Fort Lauderdale, Florida under the
rules then obtaining of the American Arbitration Association. The prevailing
party shall be entitled to payment for all costs and attorneys' fees (both
trial and appellate) incurred by the prevailing party in regard to the
proceedings.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.
SMOKY MOUNTAIN TECHNOLOGIES, INC.
ATTEST: By: /s/B. Michael Wilson
-----------------------------------
President
- -----------------------------
Secretary
WITNESSES: EMPLOYEE:
/s/S. M. Howe
- ------------------------------ -----------------------------------------
STEVE HOWE
- ------------------------------
<PAGE>
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered into as of the
29th day of November, 1997 by and between SMOKY MOUNTAIN TECHNOLOGIES, INC.,
a North Carolina corporation ("SMT") and BARRY HUFFSTETLER ("Consultant").
RECITALS:
A. Consultant is an individual experienced in the business in which
Novatek Corporation is currently engaged.
B. SMT desires to enter into this Agreement in order to engage the
Consultant to provide the Services (as hereinafter defined), in exchange for
the Fee (as hereinafter defined).
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and for other good and valuable consideration, it is
mutually agreed and covenanted by and among the parties to this Agreement as
follows:
1. Recitals. The foregoing Recitals are represented by the parties to
be true and correct, and are incorporated herein by reference and made a part
hereof.
2. Services. In exchange for the hereinafter described Fee,
Consultant hereby agrees to provide support and assistance with regard,
including but not limited, to the following services (collectively, the "
Services") to SMT, as may be reasonably requested by SMT, beginning on the
1st day of December, 1997 (the "Effective Date"), the Services to all be
provided in Coral Springs, Florida at 3773 N.W. 126th Avenue:
a. management planning;
b. oversight assistance;
c. strategic marketing planning;
d. merger coordination and transition planning; and
e. any other service to which the parties may agree to in the
future.
The Services shall be provided in a manner deemed reasonably appropriate by
Consultant.
3. Fees. In exchange for receiving up to twenty (20) hours of the
Services each week, SMT will pay to Consultant Two Thousand Five Hundred
Dollars ($2,500) per week during each week this Agreement is in effect.
Consultant shall be paid $125.00 per hour for each
<PAGE>
hour of Services Consultant provides over 20 hours in any week.
4. Term and Termination.
a. Term. The term of this Agreement shall commence on the 1st day
of December, 1997 and will extend from its Effective Date to the earlier of
November 30, 1998 or the date on which the UniComp stock held by Consultant
become "registered"; provided however, in no event, may the term end prior
to May 31, 1998. "Registered" shall mean that the stock is included in an
S-3 filing and the filing is deemed effective.
b. Termination. (A) Upon the occurrence of one or more of the
following events ("Event of Default"), the party not involved in such Event
of Default (the "Non-Defaulting Party") may, at its discretion, terminate
this Agreement and all rights granted herein, effective upon notice thereof
to the party involved in such Event of Default (the "Defaulting Party"):
i. the Defaulting Party makes any assignment of assets or
business for the benefit of creditors, or if a trustee or receiver is
appointed to administer or conduct the Defaulting Party's business or
affairs, or if the Defaulting Party is adjudged in any legal proceeding to
be either a voluntary or involuntary bankrupt;
ii. the Defaulting Party is nationalized or in any other manner
controlled, either directly or indirectly, by any government or any agency
thereof (the Non-Defaulting Party will have the right to determine
unilaterally whether or not the conditions envisaged by this subparagraph
exist, and such determination will be final);
iii. the Defaulting Party fails to pay any past due amount
required hereunder within thirty (30) days after written notice thereof is
sent to such party, or fails to perform any other covenant, condition,
agreement or provision contained herein within thirty (30) days after
written notice of such failure is sent to such party; or
iv. Consultant fails to provide the Services as may be
reasonably requested by SMT after written notice to Consultant and
Consultant's failure, within thirty (30) days, to then provide the specific
Service requested.
(B) Upon the death of Consultant this Agreement shall terminate.
c. Acceleration of Payments. In the event Consultant terminates
this Agreement due to an Event of Default by SMT, Consultant may, at his
option, require all remaining payments due under this Agreement be paid to
Consultant within thirty (30) days of written notice of his election to
accelerate the payments.
5. Reimbursement of Expenses. Consultant shall be reimbursed for
all of
<PAGE>
Consultant's normal and reasonable expenses of travel and entertainment and
other activities incurred on business on behalf of SMT, subject to reasonable
documentation of such expense by Consultant.
6. Relationship of Parties. The relationship of SMT to Consultant
will be that of an independent contractor and nothing herein will be deemed
to create an employment, partnership or joint venture relationship between
the parties hereto. Absent written authorization, neither party nor any of
their respective officers, directors, agents or employees of a party will
have the authority to enter into contracts in the name of the other party, or
will, habitually or occasionally, exercise such power. The parties agree that
each will be responsible for the reporting and payment of all income and
other taxes for all compensation paid to each hereunder.
7. Other Business Activities. The parties acknowledge that nothing
contained herein will be deemed to prevent or limit Consultant from engaging
in any business activities except as may be provided in Paragraph 10 of this
Agreement.
8. Authority. Each party represents and warrants to the other party
that it has all necessary power and authority to enter into and perform this
Agreement in accordance with the terms hereof.
9. Compliance with Law. Each party will, at its own expense, comply
with all laws, orders and regulations of federal, and municipal authorities,
and with any lawful direction of any public officer which will impose any
duty upon that party regarding the performance under this Agreement.
10. Covenants and Restrictions. Consultant agrees to the following
covenants and restrictions:
(a) Nondisclosure of proprietary Information. Consultant
recognizes that all information that has been created, discovered, developed
or otherwise become known to SMT has a commercial value in SMT's business,
including, but not limited to, all inventions, processes, ideas, data,
computer programs, developments, designs, marketing plans, customer lists,
budgets, projections, new products and other information owned by SMT which
is not public information (collectively "Proprietary Information") and is the
sole property of SMT and its assigns. At all times, both during the period
of the retention by SMT and after termination of that retention, Consultant
agrees to keep in the strictest confidence and trust all Proprietary
Information. Consultant will not disclose any Proprietary Information
without the prior express written consent of SMT.
(b) Nondisclosure of Third-Party Information. Consultant agrees
not to use or disclose to SMT, or assist in the disclosure to SMT of,
confidential information belonging to any third parties, including any prior
employer(s) of Consultant.
(c) Return of Documents. Upon the termination of Consultant's
access to
<PAGE>
SMT's Proprietary Information for any reason, or upon the termination of the
retention of Consultant for any reason, Consultant will return to SMT all
documents, notes, drawings, specifications, computer programs, data and other
materials or copies of such materials containing or relating to any
Proprietary Information, that Consultant may have in his possession or
control, whether kept at the place of SMT's business, at Consultant's
residence or otherwise.
(d) Covenants of Consultant - Covenant Not to Compete. In
consideration of Consultant's retention hereunder, his Fee and the
consideration received by Consultant in the merger between Novatek and SMT,
Consultant is making the covenants set forth in this Paragraph 9. In
recognition of Consultant's acknowledgment that Consultant's services to be
rendered to SMT are of a special and unusual character which have a unique
value to SMT, loss of which cannot adequately be compensated by damages in
any action at law; in view of the unique value to SMT of the services of
Consultant for which SMT has retained Consultant and the confidential
information to be obtained by or disclosed to Consultant as a Consultant of
SMT; and as a material inducement to SMT to retain Consultant and to pay to
Consultant the Fee for such Services to be rendered to SMT by Consultant,
Consultant covenants and agrees as follows:
(i) Period of Covenant. The period of this noncompetition
covenant (the "Noncompetition Period") shall begin on the date hereof and
shall terminate on the six (6) month anniversary following the termination of
Consultant's retention with SMT for any reason (whether or not such retention
is pursuant to this Agreement).
(ii) Nature and Area of Competition. Consultant agrees that
for the duration of the Noncompetition Period, Consultant shall not, in the
Territory (as defined below), directly or indirectly, (1) serve as an
officer, engineer, designer, salesperson, consultant or manager for any
Competitive Business or (2) engage in a Competitive Business (as defined
below), or a business that utilizes or employs, whether alone or in
combination with any technology available from others, any industrial,
commercial or intellectual property rights of SMT, including, without
limitation, any Proprietary Information. For purposes of this Agreement,
"Territory" will mean (I) the entire world, but if such area as determined by
a court of competent jurisdiction to be too broad, then it shall mean (ii)
the continents of North America, South America, Europe and Asia, but if such
area is determined by a court of competent jurisdiction to be too broad, then
it shall mean (iii) the continents of North America, South America and
Europe, but if such area is determined by a court of competent jurisdiction
to be too broad, then it shall mean (iv) the United States of America, Canada
and Mexico, but if such area is determined by a court of competent
jurisdiction to be too broad, then it shall mean (v) the United States of
America, but if such area is determined by a court of competent jurisdiction
to be too broad, then it shall mean (vi) any county in which any of SMT's
facilities are located or within which SMT conducts business or solicits
customers. For purposes of this Agreement, "Competitive Business" means a
business which is engaged in or plans within the next six(6) months to engage
in the business of selling, repairing, leasing or supporting software or
hardware products used in the payment processing industry.
(iii) Solicitation. Consultant agrees that during the
Noncompetition
<PAGE>
Period, Consultant will not directly or indirectly, on behalf of Consultant
or on behalf of any person, firm, partnership, corporation, association or
entity:
Call upon any of the customers of SMT who are such at the time of
Consultant's termination for the purpose of soliciting or
providing customers to any Competitive Business;
Call upon any of the other key employees, consultants or
representatives of SMT who are such at the time of Consultant's
termination for the purpose of soliciting or inducing such key
employees, consultants or representatives to discontinue their
relationship with SMT or to establish a relationship with
Consultant or any Competitive Business; or
Solicit, divert or take away or attempt to solicit, divert or
take away any of the customers, clients, business or patrons of
SMT who are such at the time of Consultant's termination.
(iv) Accounting for Profits Consultant covenants and agrees
that, if Consultant violates any of his covenants or agreements under this
Paragraph 10, SMT shall be entitled to an accounting and repayment of all
profits, compensation, commissions, remuneration or benefits that Consultant
directly or indirectly has realized and/or may realize as a result of,
growing out of or in connection with any such violation; such remedy shall be
in addition to and not in limitation of any injunctive relief or other rights
or remedies that SMT is or may be entitled at law, in equity or under this
Agreement.
(v) Reasonableness of Restrictions. Consultant has carefully
read and considered the provisions of this Agreement and, having done so,
agrees that the restrictions set forth in this Agreement (including, but not
limited to, the time period of restriction and the geographical areas of
restriction set forth in this Paragraph 10) are fair and reasonable and are
reasonably required for the protection of the interests of SMT, its
stockholders, officers, directors and employees. Notwithstanding the
foregoing, in the event any part of the covenants set forth in this Paragraph
10 shall be held to be invalid or unenforceable, the remaining parts thereof
shall nevertheless continue to be valid and enforceable as though the invalid
or unenforceable parts had not been included therein. In the event that any
provision of this Paragraph 10 relating to time period and/or geographical
areas of restriction shall be declared by a court of competent jurisdiction
to exceed the maximum time period and/or geographical areas of restriction
such court deems reasonable and enforceable, said time period and/or
geographical areas of restriction shall be deemed to become and thereafter be
the maximum time period and/or geographical areas of restriction that such
court deems reasonable and enforceable.
11. Entire Agreement. This Agreement, together with any other
Agreements entered into contemporaneously herewith, constitutes and
represents the entire Agreement between the parties hereto and supersedes any
prior understandings or agreements, written or oral, between the parties
hereto respecting the subject matter herein. This Agreement may only be
amended by
<PAGE>
an agreement in writing executed by the parties hereto. This Agreement will
inure to the benefit of and will be binding upon the parties hereto and their
respective successors and assigns, subject, however, to the limitations
contained herein. The unenforceability, invalidity or illegality of any
provision of this Agreement will not render the other provisions
unenforceable, invalid or illegal.
12. Assignment. Neither party may assign any of its rights or
obligations under this Agreement.
13. Waivers. The failure or delay by either party at any time to
enforce this Agreement will not affect either party's right to enforce this
Agreement at any other time. Any waiver by either party of any breach of any
provision, a waiver of the provision itself, or a waiver of any right, power
or remedy under this Agreement will not be deemed a waiver of any other
provision of this Agreement. Notice to or demand on either party in any
situation will not entitle either party to any other or further notice or
demand in any other circumstance. 14. Enforcement Costs. In any
proceeding brought to enforce or determine rights and/or obligations under
this Agreement, the prevailing party will be entitled to recover reasonable
attorney's fees, pre-judgment interest at the maximum rate permitted by law,
court costs and other expenses incurred at the negotiation, pre-litigation,
pre-trial, trial, appellate and post-judgment levels from the non-prevailing
party, whether or not taxable as costs, in addition to any other relief to
which the prevailing party may be entitled.
15. Choice of Law and Venue. This Agreement will be construed,
interpreted, and enforced in accordance with the substantive law of the State
of Florida. Venue for any proceedings arising out of this Agreement will be
in Broward County, Florida.
16. Force Majeure. Neither party will hold the other party responsible
for damages or delays in performance caused by acts of God or other events
beyond the control of said other party that could not have been reasonably
foreseen or prevented. For this purpose, such acts or events will include
storms, floods, epidemics, war, riot, strikes, lockouts or other industrial
disturbances. In the event such acts or events occur, it is agreed that both
parties will use their best efforts to overcome all the effects of such acts
and to resume as soon as reasonably possible the timely performance of acts
contemplated by this Agreement.
17. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
18. Headings. Captions and article or paragraph headings contained in
this Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement nor the
intent of any provision hereof.
19. Notices.
a. All notices and other communications under this Agreement will
be in
<PAGE>
writing and will be deemed to have been given three (3) business days after
deposit in the mail, designated as certified mail, return receipt
requested, postage-prepaid, or one (1) business day after being entrusted
to a reputable commercial overnight delivery service, or when sent by telex
or telecopy on a business day addressed to the party to which such notice
is directed at its address determined as provided in this Section with
customary confirmation of receipt of such telex or telecopy received. All
notices and other communications under this Agreement will be given to the
parties hereto at the following addresses:
if to Consultant, to him at:
E. Barry Huffstetler
810 Coral Ridge Drive
Apartment 201
Coral Springs, FL 33065
<PAGE>
with a copy to:
Dennis D. Smith, Esq.
Tripp, Scott, Conklin & Smith
110 S.E. 6th Street
Fort Lauderdale, FL 33301
Telephone: (954) 525-7500
Facsimile: (954) 761-8475
if to SMT, to it at:
112-B Highway 64 West
Murphy, North Carolina 28906
Attn: B. Michael Wilson
with a copy to:
Womble Carlyle Sandridge & Rice, PLLC
3300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202
Attn: Cyrus M. Johnson, Esq.
Telephone: (704) 331-4923
Facsimile: (704) 338-7809
b. Any party hereto may change the address to which notices will be
directed under this Agreement by giving ten (10) days written notice of
such change to the other party.
IN WITNESS WHEREOF, the parties have hereunto set their hands on the day
and year first above written.
Smoky Mountain Technologies, Inc.
/s/E. Barry Huffstetler By: /s/B. Michael Wilson
- ---------------------------- ----------------------------------
E. Barry Huffstetler
Name: B. Michael Wilson
---------------------------------
Title: President
--------------------------------
<PAGE>
EXHIBIT B
LEGAL OPINION OF COUNSEL TO SHAREHOLDERS AND NOVATEK
<PAGE>
November 26, 1997
UniComp, Inc.
1850 Parkway Place
Suite 925
Marietta, Georgia 30067
Smoky Mountain Technologies, Inc.
112-B Highway 64 West
Murphy, North Carolina 28906
Ladies and Gentlemen:
We have acted as counsel to Novatek Corporation, a Delaware corporation
(the "COMPANY"), Sun and Sky Development Corporation, a Florida corporation
("S&S") and their stockholders (collectively, the "STOCKHOLDERS"), in
connection with the transactions contemplated by the Agreement and Plan of
Reorganization (the "Agreement") dated as of November 26, 1997 among UniComp,
Inc. ("Unicomp"), Smoky Mountain Technologies, Inc. ("SMT"), the COMPANY, S&S
and the STOCKHOLDERS.
This opinion is being delivered to you pursuant to the Agreement and is
being given at the request of and with the consent of the COMPANY, S&S and
the STOCKHOLDERS. All capitalized terms used herein, unless expressly
defined herein, shall have the meanings ascribed to such terms in the
Agreement.
We have examined originals, or copies certified or otherwise identified
to our satisfaction, of the Agreement, and such other documents, records,
certificates and instruments and such corporate and public proceedings and
related records as we deemed to be necessary in order to permit us to render
the opinions hereinafter expressed. Where factual matters material to such
opinion were not independently established, we have relied upon certificates
of appropriate state and local officials, upon representations of executive
officers and responsible employees and agents of the COMPANY and S&S, and
upon such other data as we deemed to be appropriate under the circumstances.
We also wish to advise you that when in the following opinion we have made
statements to our "knowledge" we shall mean (with respect to matters of
fact), that after an examination of documents made available to us by the
COMPANY and S&S after inquiry of officers of the COMPANY and S&S but without
any judgment or litigation searches or any other independent factual
investigation, we have no reason to believe that such statements are
factually incorrect. Statements made to our "knowledge" shall furthermore
refer only to then current actual knowledge of attorneys of our firm who have
given substantive attention to the transaction that is the subject of this
opinion.
Based upon the foregoing and such consideration of matters of law as we
deemed to be relevant, and subject to the qualifications and assumptions set
forth herein, we are of the opinion that:
<PAGE>
November 26, 1997
Page 2
1. S&S is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida. Based solely on the
certificate of good standing from the state of Delaware, the COMPANY is in
good standing under the laws of the state of Delaware.
2. To our knowledge, each of the COMPANY and S&S has the required
authorities and permits to carry on its business as currently existing,
except where the failure to be so qualified or have such authorities and
permits would not have a material adverse effect on the COMPANY or S&S.
3. To our knowledge, the authorized capital stock of the COMPANY
consists of 1,000 shares of common stock, $0.01 par value and 1,000 shares of
such shares of common stock are outstanding on the date hereof. To our
knowledge, each share of such stock has been duly authorized and validly
issued, and, to our knowledge, is fully paid and nonassessable and was not
issued in violation of the preemptive rights of any STOCKHOLDER. To our
knowledge, the authorized capital stock of S&S consists of 1,000 shares of
common stock, no par value and 1,000 shares of such shares of common stock
are outstanding on the date hereof. To our knowledge, each share of such
stock has been duly authorized and validly issued, and, to our knowledge, is
fully paid and nonassessable and was not issued in violation of the
preemptive rights of any STOCKHOLDER. To our knowledge, all issued and
outstanding shares of the capital stock of the COMPANY and S&S are owned
beneficially and of record by the STOCKHOLDERS.
4. To our knowledge, neither the COMPANY nor S&S has any outstanding
options, warrants, calls, conversion rights or other commitments of any kind
to issue or sell any of its capital stock other than the two letter
agreements with Riad Alakkam and Joseph Ganci.
5. The Agreement has been duly authorized, executed and delivered by
each of the COMPANY, S&S and the STOCKHOLDERS and constitutes a valid and
binding obligation of the COMPANY, S&S and the STOCKHOLDERS, enforceable
against the COMPANY, S&S and the STOCKHOLDERS in accordance with its terms.
Our opinion concerning the validity, binding effect and enforceability
of the Agreement means that: (a) the Agreement constitutes an effective
contract under applicable law; (b) the Agreement is not invalid in its
entirety because of a specific statutory prohibition or public policy and is
not subject in its entirety to a contractual defense; and (c) subject to the
last sentence of this paragraph 5, some remedy is available if the COMPANY,
S&S or the STOCKHOLDERS are in default under the Agreement. This opinion
does not mean that: (a) any particular remedy is available upon a material
default or (b) every provision of the Agreement will be upheld or enforced in
any or each circumstance by a court. Furthermore, the enforceability of the
Agreement may be limited or otherwise affected by: (a) bankruptcy,
insolvency, reorganization, moratorium, or other similar statutes, rules,
regulations or other laws affecting the enforcement of creditor's rights
generality; and (b) the unavailability of, or limitation on the availability
of, a particular right or remedy (whether in a proceeding in equity or at
law) because of equitable principles or a requirement as to commercial
reasonableness, unconscionability or good faith. No opinion is expressed as
to the enforceability of the non-competition provisions included in the
Agreement.
<PAGE>
November 26, 1997
Page 3
6. To our knowledge, neither the COMPANY nor S&S are in violation of
any order issued by any court or agency (wherever located), and to our
knowledge there are no claims, actions, suits or proceedings pending, or
threatened against or affecting the COMPANY or S&S, at law or in equity, or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality wherever located, except
in either case, where such violations claims, actions, suits or proceedings,
either singly or in the aggregate, would not have a material adverse effect
on the COMPANY or S&S.
7. To our knowledge, neither the COMPANY nor S&S are in default, and
neither have received any notice of default, under any of its material
contracts or material agreements, except where such defaults, either singly
or in the aggregate, would not have a material adverse effect on the COMPANY
or S&S.
8. To our knowledge, no notice of, consent, authorization, approval or
order of any court or governmental agency or body or, to our knowledge (and
with the exception of contracts with customers and suppliers and lease
contracts for automobiles, as to which no opinion is rendered), any other
party to a material contract is required in connection with the execution,
delivery or consummation of the Agreement by any of the COMPANY, S&S or the
STOCKHOLDERS except for such notices, consents, authorizations, approvals or
orders as have already been made or obtained or which have been disclosed as
necessary and may not have yet been received.
9. The execution of the Agreement and the performance by the COMPANY
AND S&S and the STOCKHOLDERS party thereto of their respective obligations
thereunder do not violate any of the terms or provisions of the Articles of
Incorporation or the By-laws of the COMPANY OR S&S and will not result in any
breach of or default under any lease, instrument, license, permit or any
other material contract, except (i) to the extent specifically set forth on a
Schedule to the Agreement; or (ii) where such breaches or defaults, either
singly or in the aggregate, would not have a material adverse effect on the
COMPANY or S&S.
We render the foregoing opinions as members of the Bar of the State of
Florida and express no opinion as to laws other than the laws of such
jurisdiction and the federal laws of the United States of America.
Additionally, the opinions of the firm expressed herein are subject to
the following assumptions listed below:
(a) The legality, validity, binding effect and enforceability as to
each person other than the COMPANY, S&S and the STOCKHOLDERS or persons
acting on behalf of any of them of each document executed and delivered or to
be executed and delivered and of each other act done or to be done by such
person;
<PAGE>
November 26, 1997
Page 4
(b) That there have been no undisclosed modifications of any provision
of any document reviewed by the firm in connection with the rendering of this
opinion, and no undisclosed prior waiver of any right or remedy contained in
any documents;
(c) The genuineness of each signature other than that of the COMPANY,
S&S and the STOCKHOLDERS or any person acting on behalf of any of them, the
completeness of each document submitted to this firm, the authenticity of
each document reviewed by this firm as an original, the conformity to the
original of each document reviewed by this firm as a copy and the
authenticity of the original of each document received by this firm as a copy;
(d) The truthfulness of each statement as to all factual matters
otherwise not known to this firm to be untruthful contained in any document
encompassed within the due diligence review undertaken by this firm;
(e) The accuracy on the date of the opinion as well as on the date
stated in all governmental certifications of each statement as to each
factual matter contained in such government certification;
(f) Unicomp and SMT have acted in good faith and have complied with all
laws applicable to them that affect the transaction;
(g) The transaction complies with all tests of good faith, fairness and
conscionability required by law;
(h) With respect to paragraph 5, routine procedural matters such as
service of process or qualification to do business in relevant jurisdictions
will be satisfied by the person seeking to enforce the applicable agreement;
(i) All statutes, judicial and administrative decisions, and the rules
and regulations of governmental agencies, constituting the law for which the
firm is assuming responsibility are published (e.g., reported court decisions
and specialized reporting services of BNA, CCH and Prentice-Hall) or
otherwise generally accessible (e.g., Lexis and Westlaw), in each case in a
manner generally available (i.e., in terms of access and distribution
following publication) to lawyers practicing in the State of Florida;
(j) With respect to paragraph 8 hereof, no action, discretionary or
otherwise, will be taken by or on behalf of the COMPANY, S&S and the
STOCKHOLDERS in the future that might result in a violation of law;
(k) There are no other agreements or understandings among the parties
that would modify the terms of the transactions, documents or respective
rights or obligations of the parties to those documents;
(l) With respect to the transaction and the transaction documents,
there have been no mutual mistakes of fact and there exists no fraud or
duress; and
<PAGE>
November 26, 1997
Page 5
(m) The constitutionality and validity of all relevant laws or
regulations and agency actions unless a reported case has otherwise held or
widespread concern has been expressed by commentators as reflected in
materials which lawyers routinely consult.
This opinion is rendered as of the date hereof; we expressly disclaim
any obligation to update any matter in this opinion or advise you of any
matters which may come to our attention subsequent to the date hereof.
This letter is furnished by us as counsel for the COMPANY, S&S and the
STOCKHOLDERS and solely for your benefit, and is rendered solely in
connection with the transaction to which this opinion relates. This opinion
may only be relied upon in connection with this transaction and may not be
relied upon by anyone else.
Very truly yours,
TRIPP, SCOTT, CONKLIN & SMITH, P.A.
/s/Dennis D. Smith
<PAGE>
EXHIBIT C
LEGAL OPINION OF COUNSEL TO UNICOMP
<PAGE>
December 12, 1997
Shareholders of Novatek Corporation
Shareholders of Sun and Sky Development Corporation
Attn: E. Betty Huffstetler
810 Carl Ridge Drive, Apartment 201
Coral Springs, Florida 33065
Re: Agreement and Plan of Reorganization by and among UniComp, Inc., Smoky
Mountain Technologies, Inc., Novatek Corporation, its Shareholders,
Sun and Sky Development Corporation and its Shareholders, dated
November 29, 1997
Ladies and Gentlemen:
We have acted as counsel to UniComp, Inc., a Colorado corporation
(the "Company"), in connection with the execution and delivery of the
Agreement and Plan of Reorganization by and among UniComp, Inc., Smoky
Mountain Technologies, Inc., Novatek Corporation, its Shareholders, Sun and
Sky Development Corporation and its Shareholders, dated November 29, 1997
(the "Agreement"). This opinion, which is effective as of November 30, 1997,
is being rendered and delivered pursuant to Section 9.5 of the Agreement.
Unless the context otherwise requires, all capitalized terms used herein and
not otherwise defined herein shall have the same meanings given them in the
Agreement.
We have examined a copy of the Agreement and have made such legal
and factual examinations and inquiries as we have deemed advisable for the
purpose of rendering this opinion, and in the course thereof, we have
examined, among other things, originals or copies identified to our
satisfaction as being true copies, of those corporate records, certificates,
documents and other instruments which, in our judgment, we considered
necessary or appropriate to enable us to render the opinion expressed below.
For these purposes, with respect to certain factual matters we have
relied, without independent investigation, upon certificates provided by
public officials and by officers of the Company. We have assumed the
correctness of all factual matters set forth in the certificates, the
genuineness of all signatures set forth in the certificates, the genuineness
of all signatures (other than the signatures of the officers of the Company),
the authenticity of all documents submitted to us as originals, the
conformity to the original documents of documents submitted to us as
certified, conformed or photostatic copies thereof, and the authenticity of
the originals from which copies were made.
<PAGE>
Shareholders of Novatek Corporation
Shareholders of Sun and Sky Development Corporation
Attn: E. Betty Huffstetler
December 12, 1997
Page 2
As used herein, the phrase "to our knowledge" means to the actual
knowledge of the lawyers at our firm who have performed work for the Company
and who are still with the firm. We have assumed the due authorization,
execution and delivery by all parties other than the Company and each of its
subsidiaries, as the case may be, of all documents referred to herein, the
enforceability of such documents against such parties in accordance with
their respective terms, and that the performance by such parties of the
actions required or contemplated thereby are within their powers and are in
compliance with all laws and regulations to which they are subject. Further,
we have assumed the due execution and delivery of all certificates
representing shares of common stock of the Company.
We are licensed to practice law in the states of Utah and Colorado
therefore, except as set forth below, our opinion is limited to the internal
laws of such states, and United States federal law, and we assume no
responsibility as to the applicability or the effect of the laws of any other
jurisdiction. In rendering the opinions expressed below with regard to
matters of state corporate law of Georgia, we have assumed with your
permission, that the corporate laws of such state is identical to the laws of
the State of Utah.
On the basis of the foregoing, and subject to the additional
assumptions, qualifications and limitations set forth herein, we are of the
opinion that:
1. The Company is a corporation duly incorporated and validly
existing under the laws of the state of Colorado.
2. Based solely on the certificate of good standing from the
State of Georgia, the Company is in good standing under the laws of the State
of Georgia.
3. The Company has the corporate power and authority to enter,
execute, deliver and perform the Agreement and to consummate the transactions
contemplated by the Agreement. The Agreement has been duly authorized,
executed and delivered by the Company and constitutes the valid and binding
agreement of the Company and is enforceable against the Company in accordance
with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium, fraudulent conveyance or
transfer, or other similar laws relating to or affecting the rights of
creditors generally.
4. Based solely upon our actual knowledge and with no inquiry
outside our law firm, the execution and delivery by the Company will not (a)
result in any violation of the Company's Articles of Incorporation or Bylaws
(as currently in effect); or (b) materially conflict with or constitute a
material violation of any statute, judgment, order, decree or regulation of
any court, administrative agency, governmental authority or arbitrator
applicable to or relating to the Company.
<PAGE>
Shareholders of Novatek Corporation
Shareholders of Sun and Sky Development Corporation
Attn: E. Betty Huffstetler
December 12, 1997
Page 3
5. No consent, approval, authorization, registration or filing
with any federal, state or local judicial or governmental authority or
administrative agency is required in connection with the valid execution and
delivery by the Company of the Agreement or the consummation by the Company
of the transaction contemplated in the Agreement.
6. The shares of common stock of the Company to be issued to the
Shareholders of Novatek Corporation and the Shareholders of Sun and Sky
Development Corporation at Closing, upon issuance, delivery and exchange
therefor in the manner described in the Agreement, will be duly authorized,
validly issued, fully paid and nonassessable.
The opinions set forth above are effective as of the date hereof
and are subject to change and qualification by reason of change of law and
circumstances, lapse of time and other matters. We express no opinion as to
rights, obligations or other matters subsequent to the date hereof, and we
assume no obligation to advise you or any other person or entity of any
changes to our opinion subsequent to the date hereof. This opinion is being
furnished to you solely for your information in connection with this
transaction and is not to be used, circulated, filed, quoted from or
otherwise referred to or relied upon by any other person or for any other
purpose.
Very truly yours,
SNELL & WILMER, L.L.P.
