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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) July 26, 1996
INNOVATIVE TECH SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
ILLINOIS 33-17856-C 65-0071222
(State or other jurisdiction of (Commission file (I.R.S. Employer
incorporation or organization) number) Identification No.)
444 JACKSONVILLE ROAD, SUITE 200
WARMINSTER, PENNSYLVANIA 18974
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (215) 441-5600
Exhibit Index Appears on Page 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 26, 1996, Innovative Tech Systems, Inc., a Illinois corporation (the
"Company"), entered into a stock-for-stock merger agreement (the "Agreement")
with the privately held Facility Management Systems, Inc. of Chicago, Illinois
("FMS"), pursuant to an agreement and plan of merger dated May 31, 1996.
Whereby a wholly-owned subsidiary of the Company and FMS would merge, making
FMS a wholly-owned subsidiary of the Company.
FMS develops and sells software for facility management applications utilizing
bar code systems and pioneered the use of bar codes for facility management.
Its systems have been installed in hundreds of companies and institutions
throughout the United States. FMS develops various products that simplify the
facilities management function.
Under the terms of the Agreement, FMS shareholders will receive 50.114 shares of
Innovative Tech common stock in exchange for each share of FMS common stock.
This exchange ratio will result in approximately 645,619 shares of Innovative
Tech common stock being issued to FMS shareholders.
The purchase price was determined through negotiations between the Company and
FMS conducted on an arms' length basis. During such negotiations, the parties
considered, among other things, the present stage of development of the business
and operations of FMS, the condition of its assets, its financial condition, the
market for its products and its future business prospects.
The Company has no material relationship with FMS or any of its affiliates,
directors or officers, or any associate of any director or officer.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Business Acquired.
(b) Pro Forma Financial Information.
As it is impracticable to provide the required financial statements and pro
forma financial information at the time this Current Report on Form 8-K is filed
with the Securities and Exchange Commission (the "Commission"), the Company will
file the same within 60 days after the date this current Report on Form 8-K is
required to be filed with the Commission.
(c) Exhibits
2 Agreement and Plan of Merger, dated as of May 31, 1996,
between Innovative Tech Systems, Inc. and Facility Management
Systems, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 9, 1996 INNOVATIVE TECH SYSTEMS, INC.
By: /s/ LOUIS J. DESIDERIO
-----------------------------------
Louis J. Desiderio
Vice President and Chief Financial
Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
2 Agreement and Plan of Merger, dated as 5
of May 31, 1996, between Innovative
Tech Systems, Inc. and Facility
Management Systems, Inc.
</TABLE>
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 31, 1996, by and among
INNOVATIVE TECH SYSTEMS, INC., an Illinois corporation ("ITS"), FMS ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of ITS ("Sub"),
FACILITY MANAGEMENT SYSTEMS, INC., an Illinois corporation ("FMS"), and each of
the shareholders holding not less than seventy-five percent (75%) of the issued
and outstanding common stock of FMS, the names, addresses and share holdings of
which appear on Schedule A attached hereto (collectively, the "Shareholders").
W I T N E S S E T H:
WHEREAS, the Boards of Directors of ITS, Sub and FMS deem it advisable
and in the best interests of their respective stockholders to consummate, and
have approved, the transaction provided for herein in which FMS would merge with
and into Sub, with Sub being the surviving corporation (the "Merger"); and
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization within the meaning of the
Internal Revenue Code of 1986, as amended (the "Code"), and as a
pooling-of-interests transaction for accounting purposes.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01 Effective Time of the Merger. Subject to the provisions of
this Agreement, as soon as practicable on or after the Closing Date (as defined
in Section 1.02), (i) a certificate of merger (the "Certificate of Merger")
shall be duly prepared and executed by Sub (and, if required, executed by FMS)
and thereafter delivered to the Secretary of State of the State of Delaware for
filing, as provided in the Delaware General Corporation Law, as amended (the
"GCL"), and (ii) articles of merger (the "Articles of Merger") shall be duly
prepared and executed by FMS (and, if required, executed by Sub) and thereafter
delivered to the Secretary of State of Illinois for filing, as provided in the
applicable Illinois corporate laws (the "BCL"). The Merger shall become
effective upon the filing of the Articles of Merger with the Secretary of State
of Illinois and the filing of the Certificate of Merger with the Secretary of
State of the State of
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Delaware or at such time thereafter as is provided in the Articles of Merger and
Certificate of Merger (the "Effective Time").
SECTION 1.02 Closing. The closing of the Merger (the "Closing") will
take place at 10:00 AM, Philadelphia local time, on a date to be specified by
the parties, which shall be no later than the second business day after
satisfaction of the latest to occur of the conditions set forth in Sections
7.01, 7.02 (other than the delivery of the officers' certificate referred to
therein) and 7.03 (other than the delivery of the officers' certificate referred
to therein) (provided that the other closing conditions set forth in Article VII
have been met or waived as provided in Article VII at or prior to the Closing)
(the "Closing Date"), at the offices of Archer & Greiner, One Centennial Square,
Haddonfield, New Jersey 08033, unless another date or place is agreed to in
writing by the parties hereto.
SECTION 1.03 Effects of the Merger.
(a) At the Effective Time (i) the separate existence
of FMS shall cease and FMS shall be merged with and into Sub
(Sub and FMS are sometimes referred to herein as the
"Constituent Corporations" and Sub is sometimes referred to
herein as the "Surviving Corporation"), (ii) the Certificate
of Incorporation of Sub as in effect immediately prior to the
Effective Time, with such amendments thereto as are effected
by this Agreement, shall be the Certificate of Incorporation
of the Surviving Corporation, and (iii) the By-laws of Sub as
in effect immediately prior to the Effective Time shall be the
By-laws of the Surviving Corporation.
(b) At and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers
and franchises and be subject to all the restrictions,
disabilities and duties of each of the Constituent
Corporations; and all rights, privileges, powers and
franchises of each of the Constituent Corporations, and all
property, real, personal and mixed, and all debts due to
either of the Constituent Corporations on whatever account, as
well as for stock subscriptions and all other things in action
or belonging to each of the Constituent Corporations, shall be
vested in the Surviving Corporation, and all property, rights,
privileges, powers and franchises, and all and every other
interest shall be thereafter as effectively the property of
the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed
or otherwise, in either of the Constituent Corporations, shall
not revert or be in any way impaired; but all rights of
creditors and all liens upon any property of either of the
Constituent Corporations shall be preserved unimpaired, and
all debts, liabilities and duties of the Constituent
Corporations shall thenceforth attach to the Surviving
Corporation, and may be enforced against it to the same extent
as if said debts and liabilities had been incurred by it.
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SECTION 1.04 Directors of the Surviving Corporation. The directors of
Sub at the Effective Time shall, from and after the Effective Time, be the
directors of the Surviving Corporation, until their respective successors have
been duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation's Certificate of
Incorporation and By-laws.
SECTION 1.05 Certificate of Incorporation of the Surviving Corporation.
The Certificate of Incorporation of the Surviving Corporation shall be amended
as follows, effective as of the Effective Time:
Article FIRST shall be amended to read in its
entirety as follows:
"FIRST: Name. The name of the Corporation is
Facility Management Systems, Inc."
SECTION 1.06 Pooling. It is the mutual intention of the parties hereto
that the Merger shall be, and the actions of the parties prior to and at the
Effective Time shall permit the Merger to be, accounted for by ITS and FMS
pursuant to the pooling-of-interests method under generally accepted accounting
principles.
ARTICLE II
CONVERSION OF SECURITIES
SECTION 2.01 Conversion of Capital Stock. (a) As of the Effective Time,
by virtue of the Merger and without any action on the part of the holders of any
shares of Common Stock, no par value per share, of FMS (the "FMS Common Stock"):
(i) Exchange Ratio for Existing FMS Common Stock.
Subject to Section 2.02(d), each issued and outstanding share
of FMS Common Stock (other than shares to be canceled in
accordance with Section 2.01(a)(ii)) shall be converted into
the right to receive, from the Sub, 50.114 (the "Conversion
Number") fully paid and nonassessable shares of the Common
Stock, par value $.0185 per share, of ITS (the "ITS Common
Stock"), subject to adjustment as hereinafter provided. The
shares of ITS Common Stock to be issued in the Merger are
sometimes hereinafter referred to as the "Conversion Shares."
All such shares of FMS Common Stock, when so converted, shall
no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a
certificate representing any such shares shall cease to have
any rights with respect thereto, except the right to receive
the Conversion Shares.
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(ii) Cancellation of Treasury Stock and ITS-Owned
Stock. All shares of FMS Common Stock that are owned by FMS as
treasury stock and any shares of FMS Common Stock owned by ITS
or any Subsidiary of ITS, shall be canceled and retired and
shall cease to exist and no stock of ITS or other
consideration shall be delivered in exchange therefor. As used
in this Agreement, the word "Subsidiary" or "Subsidiaries"
means, with respect to any party, any corporation(s) or other
organization(s), whether incorporated or unincorporated, of
which (A) such party or any other Subsidiary of such party is
a general partner (excluding partnerships, the general
partnership interests of which held by such party or any
Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (B) at least a majority of
the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of
Directors or others performing similar functions with respect
to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or
more of its Subsidiaries, or by such party and one or more of
its Subsidiaries.
SECTION 2.02 Exchange of Certificates.
(a) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Sub shall mail to each
holder of record of a certificate or certificates which
immediately prior to the Effective Time represented
outstanding shares of FMS Common Stock (the "Certificates")
whose shares were converted pursuant to Section 2.01 into the
right to receive shares of ITS Common Stock from the Sub (i) a
letter of transmittal (which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to Sub and
shall be in such form and have such other provisions as ITS
and FMS may reasonably specify) and (ii) instructions for use
in effecting the surrender of the Certificates in exchange for
certificates representing the Conversion Shares. Upon
surrender of a Certificate for cancellation to Sub or to such
other agent or agents as may be appointed by Sub, together
with such letter of transmittal, duly executed, the holder of
such Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole
shares of ITS Common Stock representing the Conversion Shares
which such holder has the right to receive pursuant to the
provisions of this Article II, and the Certificate so
surrendered shall forthwith be canceled. In the event of a
transfer of ownership of FMS Common Stock which is not
registered in the transfer records of FMS, a certificate
representing the proper number of shares of ITS Common Stock
may be issued to a transferee if the Certificate representing
such FMS Common Stock is presented to Sub, accompanied by all
documents required to evidence and effect such transfer and by
evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02,
each Certificate shall be deemed at any time after the
Effective Time to represent only the right to
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receive upon such surrender the certificate representing
Conversion Shares of ITS Common Stock.
(b) Distributions with Respect to Unexchanged Shares.
No dividends or other distributions declared or made after the
Effective Time with respect to ITS Common Stock with a record
date after the Effective Time shall be paid to the holder of
any unsurrendered Certificate with respect to the Conversion
Shares represented thereby. Subject to the effect of
applicable abandoned property, escheat or similar laws,
following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing
whole Conversion Shares issued in exchange therefor, without
interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the
Effective Time theretofore paid with respect to such whole
Conversion Shares, and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record
date after the Effective Time but prior to surrender and a
payment date subsequent to surrender payable with respect to
such whole Conversion Shares.
(c) No Further Ownership Rights in FMS Common Stock.
All Conversion Shares issued upon the surrender for exchange
of shares of FMS Common Stock, all in accordance with the
terms hereof (including any cash paid pursuant to Section
2.02(b)) shall be deemed to have been issued and conferred in
full satisfaction of all rights pertaining to such shares of
FMS Common Stock, and there shall be no further registration
of transfers on the stock transfer books of the Surviving
Corporation of the shares of FMS Common Stock which were
outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article II.
(d) No Fractional Conversion Shares. No certificate
or script representing fractional Conversion Shares of ITS
Common Stock shall be issued upon the surrender for exchange
of Certificates. Fractional Conversion Shares of ITS Common
Stock issuable upon the surrender for exchange of Certificates
shall be rounded to the nearest whole number.
SECTION 2.03 Stock Legends. All certificates representing Conversion
Shares issued pursuant to this Agreement shall bear the following legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, have been
acquired for investment, and may not be offered for sale or
sold unless a registration statement under the Securities Act
of 1933, as amended (the "Act"), with respect to such stock is
then in effect or except upon delivery to Innovative Tech
Systems, Inc., of an opinion of
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counsel acceptable to Innovative Tech Systems, Inc. in its
sole discretion, to the effect that any such transfer will not
be in violation of the Act, applicable state securities laws,
or any rule or regulation promulgated thereunder."
SECTION 2.04 Registration Rights. ITS agrees to use its best efforts,
at the sole cost and expense of the Minority Shareholders (as such term is
defined hereinafter, to (a) register, within twelve (12) months of the Closing
Date, fifty percent (50%) of the Conversion Shares then owned by each of the
Minority Shareholders with the United States Securities and Exchange Commission
on a Form S-3 Registration Statement, (b) within twelve (12) months of the
Closing Date, qualify or obtain exemptions permitting the sale of fifty percent
(50%) of the Conversion Shares then owned by the Minority Shareholders under the
Blue Sky laws of a reasonable number of states requested by the Minority
Shareholders, and (c) maintain such registration statement, qualifications
and/or exemptions effective for at least three (3) years following the Effective
Time. For purposes of this Agreement, the term "Minority Shareholders" shall be
deemed to refer to all of the Shareholders other than Jeffrey P. Coney, Richard
F. Holland and their spouses.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FMS AND SHAREHOLDERS
The representations and warranties of FMS in this Article III, together
with the information contained in the FMS Disclosure Schedule attached hereto as
Schedule B, are being made and given as of the date hereof.
FMS and the Shareholders hereby jointly and severally represent and
warrant to ITS that, except as set forth in the FMS Disclosure Schedule
delivered to ITS on or prior to the date hereof (which Disclosure Schedule makes
explicit reference to the particular representation or warranty as to which
exception is taken), and as contemplated by this Agreement:
SECTION 3.01 Organization; Subsidiaries. FMS is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation and has all requisite corporate
power and corporate authority and all necessary governmental approvals to own,
lease and operate its respective properties and to carry on its respective
business as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power, authority, and governmental
approvals would not have a material adverse effect on FMS. As used in this
Agreement, any reference to any event, change or effect being material or having
a material adverse effect on or with respect to FMS or ITS, means such event,
change or effect is materially adverse to the consolidated condition (financial
or otherwise), properties, assets (including intangible assets), liabilities
(including contingent liabilities), businesses or results of operations of FMS
or ITS, as the case may be, and its Subsidiaries taken as a whole. FMS is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business
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conducted by it makes such qualification or licensing necessary, except where
the failure to be so duly qualified or licensed and in good standing would not
in the aggregate have a material adverse effect on FMS. FMS does not have any
Subsidiaries.
SECTION 3.02 Capitalization. As of the date hereof, the authorized
capital stock of FMS consists of (i) 100,000 shares of FMS Common Stock and (ii)
1,000 shares of Preferred Stock, $100 par value per share (the "Preferred
Stock"). As of the date hereof, 12,883 shares of FMS Common Stock are issued and
outstanding. As of the date hereof, no shares of FMS Preferred Stock are issued
and outstanding. All the outstanding shares of FMS's capital stock are duly
authorized, validly issued, fully paid and non-assessable and free of any
preemptive rights in respect thereto. No bonds, debentures, notes or other
indebtedness having the right to vote (or convertible into securities having the
right to vote) ("Voting Debt") of FMS is issued or outstanding. As of the date
hereof, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character relating to the
issued or unissued capital stock or Voting Debt of FMS or obligating FMS to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interests in, FMS or securities
convertible into or exchangeable for such shares or equity interests or
obligating FMS to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement or commitment. There are no outstanding
contractual obligations of FMS to repurchase, redeem or otherwise acquire any
shares of capital stock of FMS.
SECTION 3.03 Authority. FMS has the requisite corporate power and
corporate authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of the FMS Common Stock,
if and to the extent required by applicable law). The execution, delivery and
performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby (including authorization by the Board of
Directors to solicit stockholder vote on such transactions) have been duly
authorized by all necessary corporate action on the part of FMS and no other
corporate proceedings on the part of FMS are necessary to authorize this
Agreement or to consummate the transactions so contemplated (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
holders of FMS Common Stock, if and to the extent required by applicable law).
This Agreement has been duly executed and delivered by FMS and, assuming this
Agreement constitutes a valid and binding obligation of ITS and Sub, constitutes
a valid and binding obligation of FMS, enforceable against FMS in accordance
with its terms.
SECTION 3.04 Consents and Approvals; No Violations. Except as
contemplated by this Agreement, neither the execution, delivery or performance
of this Agreement by FMS nor the consummation by FMS of the transactions
contemplated hereby nor compliance by FMS with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the Articles of
Incorporation or By-laws of FMS, (ii) require any filing with, or permit,
authorization, consent or approval of, any court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or agency (a "Governmental Entity") (except where
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the failure to obtain such permits, authorizations, consents or approvals or to
make such filings would not have a material adverse effect on FMS), (iii) result
in a violation or breach of, or constitute (with or without due notice or lapse
of time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which FMS is a party or by which it or any of
its properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to FMS or any of its
properties or assets, except in the case of (iii) or (iv) for violations,
breaches or defaults which would not, individually or in the aggregate, have a
material adverse effect on FMS.
SECTION 3.05 Business Plan and Financial Statements. FMS has delivered
to ITS FMS' unaudited financial statements as of and for the period ended
December 31, 1995, including the notes thereto (such unaudited financial
statements are referred to herein as the "FMS Documents"). The FMS Documents, at
the time delivered, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The FMS Documents have been prepared on a
consistent basis during the periods involved and fairly present the financial
position of FMS as at the dates thereof and the results of its operations and
cash flows for the periods then ended.
SECTION 3.06 Absence of Certain Changes. Since December 31, 1995, there
has been no material adverse change in the business, operations, condition
(financial or otherwise), results of operations, assets or liabilities of FMS.
Since December 31, 1995, except as contemplated herein or with respect to the
transactions contemplated hereby, FMS has conducted its business consistent with
past practices and there has been no material change other than in the ordinary
course of business, and FMS has not (a) as of the date hereof, incurred loss of,
or significant injury to, any assets of FMS as a result of any fire, explosion,
flood, windstorm, earthquake, labor trouble, riot, accident, act of God or
public enemy or armed forces, or other occurrence materially adversely affecting
the property or business of FMS; (b) issued any capital stock, bonds or other
corporate securities or debt instruments, or granted any options, warrants or
other rights calling for the issuance thereof; (c) other than in the ordinary
course of business, borrowed any funds in an aggregate amount exceeding $50,000;
(d) incurred or, to FMS's knowledge, become subject to, any material obligation
or liability (absolute or contingent, matured or unmatured), except for a Line
of Credit extended by ITS to FMS in the maximum principal amount of $100,000,
plus accrued interest (the "Line of Credit"), and current liabilities incurred
in the ordinary course of business; (e) declared or made payment of, or set
aside for payment, any dividends or distributions of any assets, or purchased,
redeemed or otherwise acquired any of its capital stock, any securities
convertible into capital stock, or any other securities; (f) mortgaged, pledged
or subjected to any material liens, mortgages, security interests or
encumbrances of any kind, other than for taxes not yet due and payable or liens
or encumbrances that are not material to FMS or any of its assets; (g) sold,
exchanged, transferred or otherwise disposed of any of its material assets, or
canceled any material debts or claims, except in each case in the
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ordinary course of business; (h) acquired a material amount of assets except in
the ordinary course of business; (i) written down the value of any assets or
written off as uncollectible any notes or accounts receivables, except
write-downs and write-offs in the ordinary course of business, none of which,
individually or in the aggregate, are material; (j) entered into any material
transactions other than in the ordinary course of business; (k) increased the
rate of compensation payable, or to become payable, by it to any of its
officers, employees, agents, or independent contractors over the rate being paid
to them on December 31, 1995, except for increases in the ordinary course of
business consistent with past practices; (l) made or permitted any material
amendment or termination of any material agreement to which it is a party; (m)
through negotiation or otherwise, made any commitment or incurred any liability
to any labor organization; (n) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind to any director, officer or
employee; (o) made any material change in any method of accounting or accounting
practice; or (p) entered into any binding obligation to do any of the foregoing.
SECTION 3.07. No Undisclosed Liabilities. Except as and to the extent
set forth in FMS' unaudited financial statements as of, and for the period
ended, December 31, 1995, as of the date hereof, FMS did not have any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of FMS (including the notes
thereto), except for the Line of Credit and other current liabilities incurred
in the ordinary course of business. Since December 31, 1995, FMS has not
incurred any liabilities outside of the ordinary course of business of any
nature, whether or not accrued, contingent or otherwise, which would have,
individually or in the aggregate, a material adverse effect on FMS, other than
the Line of Credit.
SECTION 3.08 Stock Ownership. Each Shareholder is the owner,
beneficially and of record, of the number of shares of the Common Stock of FMS
as set forth opposite his name on Schedule A attached hereto, free and clear of
any claim, lien, option, charge or encumbrance of any nature whatsoever.
SECTION 3.09 ERISA.
(a) Section 3.09 of the FMS Disclosure Schedule
contains a true and complete list of each employee benefit
plan (including, without limitation, any "employee benefit
plan", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), and any
material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization,
insurance or other plan, arrangement or understanding (whether
or not legally binding), maintained or contributed to by FMS
(all the foregoing being herein called the "FMS Benefit
Plans"). FMS has made available to ITS, or will deliver to ITS
within 30 days after the date hereof, a true and correct copy
of (i) the most recent annual report (Form 5500) filed with
the Internal Revenue Service ("IRS"), (ii) each FMS
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Benefit Plan, (iii) each trust agreement and group annuity
contract, if any, relating to each FMS Benefit Plan and (iv)
the most recent actuarial report or valuation relating to each
FMS Benefit Plan subject to Title IV of ERISA.
(b) With respect to FMS Benefit Plans, individually
and in the aggregate, no event has occurred, and to the
knowledge of FMS, there exists no condition or set of
circumstances in connection with which FMS could be subject to
any liability that is reasonably likely to have a material
adverse effect on FMS, under ERISA, the Code or any other
applicable law.
(c) With respect to the FMS Benefit Plans,
individually and in the aggregate, there are no funded benefit
obligations for which contributions have not been made or
properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise
properly footnoted in accordance with generally accepted
accounting principles, on the financial statements of FMS,
which obligations are reasonably likely to have a material
adverse effect on FMS.
SECTION 3.10 Other Benefit Plans. Except as disclosed in the FMS
Documents and except as provided for in this Agreement, as of the date of this
Agreement, FMS is not a party to any oral or written (i) consulting agreement
not terminable on 60 days' or less notice involving the payment of more than
$10,000 per annum, (ii) agreement with any executive officer or other key
employee of FMS the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving FMS of the
nature contemplated by this Agreement or agreement with respect to any executive
officer of FMS providing any term of employment or compensation guarantee and
providing for the payment of in excess of $10,000 per annum, or (iii) agreement
or plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, except to the extent required
by anti-dilution provisions of such plans or by this Agreement.
SECTION 3.11 Litigation. Except as set forth in the FMS Documents,
there is no suit, claim, action, proceeding or investigation pending or, to the
best knowledge of FMS, threatened against, FMS before any Governmental Entity
which, individually or in the aggregate, is reasonably likely to have a material
adverse effect on FMS or a material adverse effect on the ability of FMS to
consummate the transactions contemplated by this Agreement. Except as set forth
in the FMS Documents, FMS is not subject to any outstanding order, writ,
injunction or decree which, insofar as can be reasonably foreseen, individually
or in the aggregate, in the future would have a material adverse effect on FMS
or a material adverse effect on the ability of FMS to consummate the
transactions contemplated hereby.
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SECTION 3.12 Compliance with Applicable Law. FMS holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of its business (the "FMS Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not, individually or in the aggregate, have a
material adverse effect on FMS. FMS is in compliance with the terms of the FMS
Permits, except where the failure so to comply would not have a material adverse
effect on FMS. The business of FMS is not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except for possible
violations which individually or in the aggregate do not, and, insofar as
reasonably can be foreseen, in the future will not, have a material adverse
effect on FMS. As of the date of this Agreement, no investigation or review by
any Governmental Entity with respect to FMS is pending or, to the best knowledge
of FMS, threatened, nor has any Governmental Entity indicated an intention to
conduct the same.
SECTION 3.13 Vote Required. The affirmative vote of two-thirds (2/3) of
the issued and outstanding shares of FMS Common Stock is the only vote of the
holders of any class or series of FMS's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
SECTION 3.14 Proprietary Information of Third Parties. To the best of
FMS's knowledge, no third party has claimed that any person employed by FMS has
(i) violated or may be violating any of the terms or conditions of his or her
employment, non-competition or non- disclosure or utilized or may be utilizing
any trade secret or proprietary information or documentation of such third
party, or (ii) interfered or may be interfering in the employment relationship
between such third party and any of its present or former employees. No third
party has requested information from FMS which suggests that such a claim might
be contemplated. To the best of FMS's knowledge, (i) no person employed by FMS
has employed or proposes to employ any trade secret or any information or
documentation proprietary to any former employer, (ii) no person employed by FMS
has violated any confidential relationship which such person may have had with
any third party, in connection with the development, manufacture or sale of any
product or proposed product or the development or sale of any service or
proposed service of FMS, and (iii) there is no reason to believe there will be
any such employment or violation.
SECTION 3.15 Title to Properties. FMS has good, clear and marketable
title to its properties and assets reflected in the latest balance sheet
included in the FMS Documents or acquired by them since the date of such balance
sheet (other than properties and assets disposed of in the ordinary course of
business since the date of such balance sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges, claims, restrictions and other encumbrances (including without
limitation, easements and licenses), except for liens for or current taxes not
yet due and payable and minor imperfections of title, if any, not material in
nature or amount and not materially detracting from the value or impairing the
use of the property subject thereto or impairing the operations of FMS. To the
best of FMS's knowledge, there are no condemnation, environmental, zoning or
other land use regulation proceedings, either instituted or planned to be
instituted, which would adversely affect the use or operation of FMS's
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properties and assets for its intended uses and purposes, or the value of such
properties, and FMS has not received notice of any special assessment
proceedings which would affect such properties and assets.
SECTION 3.16 Leasehold Interests. Each lease or agreement to which FMS
is a party under which it is a lessee of any property, real or personal, is a
valid and subsisting agreement, duly authorized and entered into, without any
material default of FMS, as the case may be, thereunder and, to the best of
FMS's knowledge, without any material default thereunder of any other party
thereto. FMS's possession of such property has not been disturbed and, to the
best of FMS's knowledge, no claim has been asserted against FMS adverse to its
rights in such leasehold interests.
SECTION 3.17 Taxes. FMS has filed all tax returns, Federal, state,
county and local, required to be filed by it, those returns accurately and
completely reflect FMS's tax obligations with respect to the periods covered
thereby, and FMS has paid all taxes shown to be due by such returns as well as
all other taxes, interest, penalties, assessments and other amounts asserted to
be due or payable by any taxing authority, including without limitation all
taxes which FMS is obligated to withhold from amounts paid or owing to
employees, creditors and third parties. Adequate reserves have been established
by FMS for all taxes accrued but not yet payable. The tax returns of FMS have
never been audited by the Internal Revenue Service or any other taxing
authority. No deficiency assessment with respect to or proposed adjustment of
FMS's Federal, state, county or local taxes is pending or, to the best of FMS's
knowledge, threatened. There is no tax lien, whether imposed by any Federal,
state, county or local taxing authority, outstanding against the assets,
properties or business of FMS.
SECTION 3.18 Other Agreements. FMS is not a party to or otherwise bound
by any written or oral contract or instrument or other restriction which
individually or in the aggregate could materially adversely affect the business,
prospects, financial condition, operations, property or affairs of FMS. FMS is
not a party to or otherwise bound by any written or oral:
(a) distributor, dealer, manufacturer's
representative or sales agency contract or agreement which is
not terminable on less than ninety (90) days' notice without
cost or other liability to FMS (except for contracts which, in
the aggregate, are not material to the business of FMS);
(b) sales contract which entitles any customer to a
rebate or right of set-off, to return any product to FMS after
acceptance thereof or to delay the acceptance thereof, or
which varies in any material respect from FMS's standard form
contracts;
(c) contract with any labor union (and, to the
knowledge of FMS, no organizational effort is being made with
respect to any of its employees);
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(d) contract or other commitment with any supplier
containing any provision permitting any party other than FMS
to renegotiate the price or other terms, or containing any
payback or other similar provision, upon the occurrence of a
failure by FMS to meet its obligations under the contract when
due or the occurrence of any other event;
(e) contract for the future purchase of fixed assets
or for the future purchase of materials, supplies or equipment
in excess of its normal operating requirements;
(f) agreement or indenture relating to the borrowing
of money or to the mortgaging or pledging of, or otherwise
placing a lien or security interest on, any asset of FMS;
(g) guaranty of any obligation for borrowed money or
otherwise;
(h) voting trust or agreement, stockholders'
agreement, pledge agreement, buy-sell agreement or first
refusal or preemptive rights agreement relating to any
securities of FMS;
(i) agreement, or group of related agreements with
the same party or any group of affiliated parties, under which
FMS has advanced or agreed to advance money or has agreed to
lease any property as lessee or lessor;
(j) agreement or obligation (contingent or otherwise)
to issue, sell or otherwise distribute or to repurchase or
otherwise acquire or retire any share of its capital stock or
any of its other equity securities;
(k) assignment, license or other agreement with
respect to any form of intangible property;
(l) agreement under which it has granted any person
any registration rights;
(m) agreement under which it has limited or
restricted its right to compete with any person in any
respect;
(n) other contract or group of related contracts with
the same party involving more than $50,000 or continuing over
a period of more than six months from the date or dates
thereof (including renewals or extensions optional with
another party), which contract or group of contracts is not
terminable by FMS without penalty upon notice of thirty (30)
days or less, but excluding any contract or group of contracts
with a customer of FMS for the sale, license, lease, rental,
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or maintenance of FMS's products or services if such contract
or group of contracts was entered into by FMS in the ordinary
course of business; or
(o) other contract, instrument, commitment, plan or
arrangement, a copy of which would be required to be filed
with the SEC as an exhibit to a registration statement on Form
S-1 if FMS were registering securities under the Securities
Act.
FMS, and to the best of FMS's knowledge, each other party thereto have in all
material respects performed all the obligations required to be performed by them
to date (or each nonperforming party has received a valid, enforceable and
irrevocable written waiver with respect to its non-performance), have received
no notice of default and are not in material default (with due notice or lapse
of time or both) under any of the foregoing agreements, contracts, instruments
or commitments. FMS has no present expectation or intention of not fully
performing all its obligations under each such agreement, contract, instrument
or commitment, and FMS has no knowledge of any breach or anticipated breach by
the other party to any such agreement, contract, instrument or commitment. FMS
is in full compliance with all of the terms and provisions of its Articles of
Incorporation and By-laws, as amended.
SECTION 3.19 Significant Customers and Suppliers. No customer or
supplier which was significant to FMS during fiscal year 1995 or which has been
significant to FMS thereafter, has terminated, materially reduced or threatened
to terminate or materially reduce its purchases from or provision of products or
services to FMS, as the case may be.
SECTION 3.20 Transactions With Affiliates. To the best of FMS'
knowledge, no director, officer, employee or stockholder of FMS, or member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or any member of the family of any such person,
has a substantial interest or is an officer, director, trustee, partner or
holder of more than 5% of the outstanding capital stock thereof, is a party to
any transaction with FMS, including any contract, agreement or other arrangement
providing for the employment of, furnishing of services by, rental of real or
personal property from or otherwise requiring payments to any such person or
firm.
SECTION 3.21 Environmental Protection. FMS has not caused or allowed,
or contracted with any party for, the generation, use, transportation,
treatment, storage or disposal of any Hazardous Substances (as defined below) in
connection with the operation of its business or otherwise. FMS, the operation
of its business, and any real property that FMS owns, and to the best of FMS's
knowledge, any real property which FMS leases or otherwise occupies or uses (the
"Premises") are in compliance in all material respects with all applicable
Environmental Laws (as defined below) and orders or directives of any
governmental authorities having jurisdiction under such Environmental Laws,
including, without limitation, any Environmental Laws or orders or directives
with respect to any cleanup or remediation of any release or threat of release
of Hazardous Substances. FMS has not received any citation, directive, letter or
other
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communication, written or oral, or any notice of any proceeding, claim or
lawsuit, from any person arising out of the ownership or occupation of the
Premises, or the conduct of its operations, and FMS is not aware of any basis
therefor. FMS has obtained and is maintaining in full force and effect all
necessary permits, licenses and approvals required by all Environmental Laws
applicable to the Premises and the business operations conducted thereon
(including operations conducted by tenants on the Premises), and is in
compliance in all material respects with all such permits, licenses and
approvals. FMS has not caused or allowed a release, or a threat of release, of
any Hazardous Substance unto, at or near the Premises, and, to the best of FMS's
knowledge, neither the Premises nor any property at or near the Premises has
ever been subject to a release, or a threat of release, of any Hazardous
Substance. For the purposes of this Agreement, the term "Environmental Laws"
shall mean any Federal, state or local law or ordinance or regulation pertaining
to the protection of human health or the environment, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sections 9601, et seq.,the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. For purposes of
this Agreement, the term "Hazardous Substances" shall include oil and petroleum
products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other
materials classified as hazardous or toxic under any Environmental Laws.
SECTION 3.22 Foreign Corrupt Practices Act. FMS has not taken any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any rules and regulations thereunder. To the best of
FMS' knowledge, there is not now, and there has never been, any employment by
FMS of, or beneficial ownership in FMS by, any governmental or political
official in any country in the world.
SECTION 3.23 Products. FMS has no knowledge of any defects in the
design of, or technology embodied in, any product which FMS currently markets or
has marketed in the past that materially impair or are likely to materially
impair the stated use of the product or, in connection with such stated use is
reasonably likely to injure any consumer of the product or any third party,
which individually or in the aggregate would have a material adverse effect on
FMS.
SECTION 3.24 No Reliance on Forecasts. In the negotiation and
consideration of the transactions contemplated by this Agreement, FMS and its
Board of Directors have not relied on any information or documents concerning
ITS and its business or financial results except: (a) information and documents
that are publicly available, (b) representations and warranties made by ITS in
this Agreement, and (c) disclosure of financial results made pursuant to this
Agreement. In the course of negotiations, ITS and FMS exchanged information
concerning hypothetical situations, based on various assumptions, of the results
of operations of the combined companies and possible market prices for the ITS
Common Stock. FMS makes no representation or warranty regarding any such
hypothetical situations provided by it, including those that may contain
forecasts or projections of its future operating results, and FMS disclaims
reliance on any such hypothetical situations provided by ITS or third parties.
Notwithstanding the foregoing, FMS does represent and warrant that any such
financial projections or forecasts were prepared by it in good faith.
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SECTION 3.25 Employees. Prior to the Closing Date, FMS shall use
commercially reasonable efforts to cause any employees to whom FMS, or after the
Closing Date, ITS or the Surviving Corporation, makes offers of employment or
continued employment for the period following the Effective Time, to accept such
offers of employment, including those employees listed on Exhibit 3.25 to
execute and deliver to ITS at Closing, an Employment Agreement and
Confidentiality and Non-Compete Agreement in the form attached as Annex I,
provided, however, that such commercially reasonable efforts shall not be
construed to require the payment of any inducement or other compensation.
Neither ITS, the Surviving Corporation nor FMS is obligated to make any offers
of employment or continued employment to any employees of FMS or ITS for the
period following the Effective Time.
SECTION 3.26 Intellectual Property. FMS owns all right, title and
interest in or has license rights to all patents, trademarks, service marks,
trade names, mask works, copyrights, trade secrets, know-how, technology and
other intellectual property and proprietary rights material to the conduct of
its business as presently conducted (the "FMS Intellectual Property"). FMS is
not aware of any infringement of the FMS Intellectual Property by any third
party which infringement would have a material adverse effect on the business of
FMS. FMS has not received any claim or notice stating that its business, as
presently conducted, infringes upon or violates any of the patents, trademarks,
service marks, trade names, mask works, copyrights, trade secrets, proprietary
rights or other intellectual property of any other person, which infringement or
violation would have a material adverse effect on FMS. FMS has taken all
reasonable measures to protect the secrecy, confidentiality, and value of the
FMS Intellectual Property.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ITS
The representations and warranties of ITS in this Article IV, together
with the information contained in the ITS Disclosure Schedule attached hereto as
Schedule C, are being made and given as of the date hereof.
ITS represents and warrants to FMS that, except as set forth in the ITS
Disclosure Schedule delivered to FMS on or prior to the date hereof (which
Disclosure Schedule makes explicit reference to the particular representation or
warranty as to which exception is taken) and as contemplated by this Agreement:
SECTION 4.01 Organization. Each of ITS and the Subsidiaries of ITS
listed on the ITS Disclosure Schedule is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation or formation and has all requisite corporate power and corporate
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power,
authority, and governmental approvals would not have a material adverse effect
on ITS. ITS and each of its Subsidiaries is duly
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qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
where the failure to be so duly qualified or licensed and in good standing would
not in the aggregate have a material adverse effect on ITS. ITS does not have
any Subsidiaries other than those listed on the ITS Disclosure Schedule. All of
the outstanding shares of capital stock or partnership interests of each ITS
Subsidiary are owned beneficially and of record by ITS, free and clear of any
liens, charges, restrictions, claims or encumbrances of any nature whatsoever;
and there are no outstanding subscriptions, warrants, options, convertible
securities, or other rights (contingent or other) pursuant to which any such
Subsidiary is or may become obligated to issue any shares of its capital stock
or partnership interests to any person other than ITS. As used in this Article
IV (beginning with Section 4.04), where appropriate, the term "ITS" shall mean
ITS and each of its Subsidiaries.
SECTION 4.02 Capitalization. As of the date hereof, the authorized
capital stock of ITS consists of: (i) 100,000,000 shares of ITS Common Stock of
which 10,227,837 shares are issued and outstanding; and (ii) 200,000,000 shares
of blank check Preferred Stock, no par value, of which, as of the date hereof,
of which no shares are outstanding. As of the date hereof, 1,475,000 shares of
ITS Common Stock are reserved for issuance under ITS' 1994 Stock Option Plan
(the "1994 ITS Plan"), of which options to purchase 1,475,000 shares of Common
Stock are outstanding (vesting of options to purchase 500,000 of such shares is
contingent upon approval by the shareholders of ITS of an amendment to the 1994
ITS Plan to increase the number of shares of ITS Common Stock issuable pursuant
thereto from 975,000 to 1,475,000), including 5,000 options issuable in
connection with the Micro Computer Transaction (as hereinafter defined). ITS has
also granted an option to purchase up to 100,000 shares of Common Stock to The
Wall Street Group, financial consultants to ITS, and up to 100,000 shares of
Common Stock to Target Capital. As of the date hereof, there are warrants to
purchase 11,040,000 shares of ITS Common Stock outstanding (the "Warrants").
All the outstanding shares of ITS' capital stock are, and all shares of
ITS Common Stock which are to be issued pursuant to the Merger or which may be
issued pursuant to the 1994 ITS Plan or the Warrants after the Merger will be,
when issued in accordance with the respective terms thereof, duly authorized,
validly issued, fully paid and non-assessable and free of any preemptive rights
in respect thereto. As of the date hereof, no Voting Debt of ITS is issued or
outstanding.
Except as set forth above and except for this Agreement, as of the date
hereof, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character relating to the
issued or unissued capital stock or Voting Debt of ITS or obligating ITS to
issue, transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Voting Debt of, or other equity interests in, ITS, other than
60,000 shares of Common Stock which may be issued by ITS if the Micro Computer
transaction is consummated, or securities convertible into or exchangeable for
such shares or equity interests or obligating ITS to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement
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or commitment. There are no outstanding contractual obligations of ITS to
repurchase, redeem or otherwise acquire any shares of capital stock of ITS.
For purposes of this Agreement, the term "Micro Computer Transaction"
refers to the contemplated acquisition of Micro Computer of Maryland, Inc., a
Maryland corporation ("Micro Computer"), by Micro Computer of Delaware, Inc., a
Delaware corporation and a wholly-owned subsidiary of ITS, in exchange for
60,000 shares of Common Stock pursuant to the terms and provisions of a certain
Letter of Intent between ITS and Micro Computer, dated as of __________, 1996.
Micro and ITS are currently negotiating the terms and provisions of the Asset
Purchase Agreement for such transaction and there can be no assurances that such
transaction will be consummated.
SECTION 4.03 Authority. Each of ITS and Sub has the requisite corporate
power and corporate authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of ITS and no other corporate proceedings
on the part of ITS are necessary to authorize this Agreement or to consummate
the transactions so contemplated. This Agreement has been duly executed and
delivered by ITS, and, assuming this Agreement constitutes a valid and binding
obligation of FMS, constitutes a valid and binding obligation of each of ITS, as
the case may be, enforceable against it in accordance with its respective terms.
SECTION 4.04 Consents and Approvals; No Violations. Except as
contemplated by this Agreement, neither the execution, delivery or performance
of this Agreement by ITS nor the consummation by ITS of the transactions
contemplated hereby nor compliance by ITS with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws of ITS, (ii) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on ITS), (iii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which ITS is a party or by which it or any of its
properties or assets may be bound or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to ITS or any of its properties
or assets, except in the case of (iii) and (iv) for violations, breaches or
defaults which would not, individually or in the aggregate, have a material
adverse effect on ITS.
SECTION 4.05 SEC Reports and Financial Statements. The ITS Common Stock
was registered under Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") on Form 8-A. Since its initial public offering, ITS
has filed on a timely basis with the SEC and NASDAQ, where appropriate, and has
made or will make immediately available to FMS true
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and complete copies of all forms, reports, schedules, statements, registrations
and other documents required to be filed by it under the Exchange Act or the
Securities Act, and ITS will file on a timely basis all such forms, reports,
schedules, statements, registrations and other documents required to be filed by
it from the date of this Agreement to the Closing Date (as such documents have
been or will be amended or supplemented since the time of their filing,
collectively, the "ITS SEC Documents"). The ITS SEC Documents, including without
limitation any financial statements or schedules included therein, at the time
filed, did not and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading and complied and will comply in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. The financial statements of ITS included in the ITS SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by a Form 10-Q) and fairly present (subject,
in the case of the unaudited statements, to normal, recurring audit adjustments)
the consolidated financial position of ITS as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. To the best of ITS' knowledge, all directors and executive officers of
ITS have filed with the SEC and NASDAQ on a timely basis all forms, reports,
schedules, statements, registrations and other documents required to be filed by
such person with respect to ITS Common Stock under Section 16(a) of the Exchange
Act or Rule 144 promulgated under the Securities Act. ITS shall deliver to FMS
copies of all such documents filed after the date of this Agreement. ITS agrees
that, so long as any Shareholder is eligible to sell share of ITS Common Stock
acquired hereunder pursuant to Rule 144 of the Securities Act of 1933, as
amended, (a) it will use its best efforts to continue to timely file all forms,
reports, schedules, statements, registrations and other documents required to be
filed under the applicable rules and regulations of the SEC, and (b) it will not
voluntarily take any action to have its shares of Common Stock delisted from
quotation on the NASDAQ Small Cap Market (unless such action is taken in
connection with the listing of such securities on a comparable or superior
national securities exchange).
SECTION 4.06 Absence of Certain Changes. Since January 31, 1996, there
has been no material adverse change in the business, operations, condition
(financial or otherwise), results of operations, assets or liabilities of ITS.
Since January 31, 1996, except as contemplated herein or with respect to the
transactions contemplated hereby, ITS has conducted its business consistent with
past practices and there has been no material change other than in the ordinary
course of business, and ITS has not (a) as of the date hereof, incurred loss of,
or significant injury to, any assets of ITS as a result of any fire, explosion,
flood, windstorm, earthquake, labor trouble, riot, accident, act of God or
public enemy or armed forces, or other occurrence materially adversely affecting
the property or business of ITS; (b) issued any capital stock, bonds or other
corporate securities or debt instruments, or granted any options, warrants or
other rights calling for the issuance thereof other than as disclosed in Section
4.02 hereof); (c) other than in the ordinary course of business, borrowed any
funds in an
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aggregate amount exceeding $50,000; (d) incurred or, to ITS's knowledge, become
subject to, any material obligation or liability (absolute or contingent,
matured or unmatured), except for current liabilities incurred in the ordinary
course of business and any liabilities which may be assumed if the Micro
Computer Transaction is consummated; (e) declared or made payment of, or set
aside for payment, any dividends or distributions of any assets, or purchased,
redeemed or otherwise acquired any of its capital stock, any securities
convertible into capital stock, or any other securities; (f) mortgaged, pledged
or subjected to any material liens, mortgages, security interests or
encumbrances of any kind, other than for taxes not yet due and payable or liens
or encumbrances that are not material to ITS, any of its assets; (g) sold,
exchanged, transferred or otherwise disposed of any of its material assets, or
canceled any material debts or claims, except in each case in the ordinary
course of business; (h) acquired a material amount of assets except in the
ordinary course of business; (i) written down the value of any assets or written
off as uncollectible any notes or accounts receivables, except write-downs and
write-offs in the ordinary course of business, none of which, individually or in
the aggregate, are material; (j) entered into any material transactions other
than in the ordinary course of business and the Micro Computer Transaction; (k)
increased the rate of compensation payable, or to become payable, by it to any
of its officers, employees, agents, or independent contractors over the rate
being paid to them on January 31, 1996, except for increases in the ordinary
course of business consistent with past practices; (l) made or permitted any
material amendment or termination of any material agreement to which it is a
party; (m) through negotiation or otherwise, made any commitment or incurred any
liability to any labor organization; (n) made any accrual or arrangement for or
payment of bonuses or special compensation of any kind to any director, officer
or employee; (o) made any material change in any method of accounting or
accounting practice; or (p) entered into any binding obligation to do any of the
foregoing (other than in connection with the Micro Computer Transaction).
SECTION 4.07 No Undisclosed Liabilities. Except as and to the extent
set forth in ITS' audited financial statements as of, and for the three years
ended January 31, 1996, ITS did not have any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by generally accepted accounting principles to be reflected on a consolidated
balance sheet of ITS (including the notes thereto). Since January 31, 1996, ITS
has not incurred any liabilities outside of the ordinary course of business of
any nature, whether or not accrued, contingent or otherwise, which would have,
individually or in the aggregate, a material adverse effect on ITS.
SECTION 4.08 Intentionally Omitted.
SECTION 4.09 ERISA.
(a) Section 4.09 of the ITS Disclosure Schedule contains a
true and complete list of each employee benefit plan (including,
without limitation, any "employee benefit plan", as defined in Section
3(3) of ERISA) and any material bonus, pension profit sharing, deferred
compensation, stock ownership, stock purchase, stock option, phantom
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stock, retirement, vacation, severance, disability, death benefit,
hospitalization, insurance or other plans, arrangement or understanding
(whether or not legally binding) maintained or contributed to by ITS
(all the foregoing being herein called the "ITS Benefit Plans"). ITS
has made available to FMS, or will deliver to FMS within 30 days after
the date hereof, a true and correct copy of (i) the most recent annual
report (Form 5500) filed with the IRS, (ii) each ITS Benefit Plan,
(iii) each trust agreement and group annuity contract, if any, relating
to each ITS Benefit Plan and (iv) the most recent actuarial report or
valuation relating to each ITS Benefit Plan subject to Title IV of
ERISA.
(b) With respect to the ITS Benefit Plans, individually and in
the aggregate, no event has occurred, and to the knowledge of ITS,
there exists no condition or set of circumstances in connection with
which ITS could be subject to any liability that is reasonably likely
to have a material adverse effect on ITS, under ERISA, the Code or any
other applicable law.
(c) With respect to the ITS Benefit Plans, individually and in
the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no
unfunded benefit obligations which have not been accounted for by
reserves, or otherwise properly footnoted in accordance with generally
accepted accounting principles, on the financial statements of ITS,
which obligations are reasonably likely to have a material adverse
effect on ITS.
SECTION 4.10 Other Benefit Plans. Except as set forth in the ITS SEC
Documents, and except as provided for in this Agreement, as of the date of this
Agreement, ITS is not a party to any oral or written (i) consulting agreement
not terminable on 60 days' or less notice involving the payment of more than
$50,000 per annum, (ii) agreement with any executive officer or other key
employee of ITS the benefits of which are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving ITS of the
nature contemplated by this Agreement or agreement with respect to any executive
officer of ITS providing any term of employment or compensation guarantee and
providing for the payment of in excess of $10,000 per annum, or (iii) agreement
or plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of which will
be increased, or the vesting of the benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement, except to the extent required
by anti-dilution provisions of such plans or by this Agreement.
SECTION 4.11 Litigation. Except as disclosed in the ITS SEC Documents
filed prior to the date of this Agreement, there is no suit, claim, action,
proceeding or investigation pending or, to the best knowledge of ITS, threatened
against ITS before any Governmental Entity which, individually or in the
aggregate, is reasonably likely to have a material adverse effect on ITS or a
material adverse effect on the ability of ITS to consummate the transactions
contemplated by this Agreement. Except as disclosed in the ITS SEC Documents
filed prior to the date of this
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Agreement, ITS is not subject to any outstanding order, writ, injunction or
decree which, insofar as can be reasonably foreseen, individually or in the
aggregate, in the future would have a material adverse effect on ITS or a
material adverse effect on the ability of ITS to consummate the transactions
contemplated hereby.
SECTION 4.12 Compliance with Applicable Law. ITS holds all permits,
licenses, variances, exemptions, orders and approvals of all Governmental
Entities necessary for the lawful conduct of its business (the "ITS Permits"),
except for failures to hold such permits, licenses, variances, exemptions,
orders and approvals which would not, individually or in the aggregate, have a
material adverse effect on ITS. ITS is in compliance with the terms of the ITS
Permits, except where the failure so to comply would not have a material adverse
effect on ITS. Except as disclosed in the ITS SEC Documents filed prior to the
date of this Agreement, the business of ITS is not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity, except for
possible violations which individually or in the aggregate do not, and, insofar
as reasonably can be foreseen, in the future will not, have a material adverse
effect on ITS. As of the date of this Agreement, no investigation or review by
any Governmental Entity with respect to ITS is pending or, to the best knowledge
of ITS, threatened, nor has any Governmental Entity indicated an intention to
conduct the same. The 1994 ITS Plan is administered in a manner that complies
with the conditions of Rule 16b-3 promulgated under the Exchange Act.
SECTION 4.13 Intentionally Omitted.
SECTION 4.14 Vote Required. The affirmative vote of the Board of
Directors of the Sub is the only vote by ITS or the Sub necessary to approve the
transactions contemplated hereby.
SECTION 4.15 Proprietary Information of Third Parties. To the best of
ITS' knowledge, no third party has claimed that any person employed by ITS has
(i) violated or may be violating any of the terms or conditions of his or her
employment, non-competition or nondisclosure or utilized or may be utilizing any
trade secret or proprietary information or documentation of such third party or
(ii) interfered or may be interfering in the employment relationship between
such third party and any of its present or former employees. To the best of ITS'
knowledge, (i) no person employed by ITS has employed or proposes to employ any
trade secret or any information or documentation proprietary to any former
employer, (ii) no person employed by ITS has violated any confidential
relationship which such person may have had with any third party, in connection
with the development, manufacture or sale of any product or proposed product or
the development or sale of any service or proposed service of ITS, and (iii)
there is no reason to believe there will be any such employment or violation.
SECTION 4.16 Title to Properties. ITS has good, clear and marketable
title to its properties and assets reflected on the latest balance sheet
included in the ITS SEC Documents or acquired by them since the date of such
balance sheet (other than properties and assets disposed of in the ordinary
course of business since the date of such balance sheet), and all such
properties and assets are free and clear of mortgages, pledges, security
interests, liens, charges, claims,
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restrictions and other encumbrances (including without limitation, easements and
licenses), except for liens for or current taxes not yet due and payable and
minor imperfections of title, if any, not material in nature or amount and not
materially detracting from the value or impairing the use of the property
subject thereto or impairing the operations or proposed operations of ITS. To
the best of ITS's knowledge, there are no condemnation, environmental, zoning or
other land use regulation proceedings, either instituted or planned to be
instituted, which would adversely affect the use or operation of ITS's
properties and assets for their respective intended uses and purposes, or the
value of such properties, and ITS has not received notice of any special
assessment proceedings which would affect such properties and assets.
SECTION 4.17 Leasehold Interests. Each lease or agreement to which ITS
is a party under which it is a lessee of any property, real or personal, is a
valid and subsisting agreement, duly authorized and entered into, without any
material default of ITS thereunder and, to the best of ITS' knowledge, without
any material default thereunder of any other party thereto. ITS' possession of
such property has not been disturbed and, to the best of ITS's knowledge, no
claim has been asserted against ITS adverse to its rights in such leasehold
interests.
SECTION 4.18 Taxes. ITS has filed all tax returns, Federal, state,
county and local, required to be filed by it, those returns accurately and
completely reflect ITS's tax obligations with respect to the periods covered
thereby, and ITS has paid all taxes shown to be due by such returns as well as
all other taxes, interest, penalties, assessments and other amounts asserted to
be due or payable by any taxing authority, including without limitation all
taxes which ITS is obligated to withhold from amounts paid or owing to
employees, creditors and third parties. Adequate reserves have been established
by ITS for all taxes accrued but not yet payable. The tax returns of ITS have
never been audited by the Internal Revenue Service or any other taxing
authority. No deficiency assessment with respect to or proposed adjustment of
ITS's Federal, state, county or local taxes is pending or, to the best of ITS's
knowledge, threatened. There is no tax lien, whether imposed by any Federal,
state, county or local taxing authority, outstanding against the assets,
properties or business of ITS.
SECTION 4.19 Other Agreements. ITS is not a party to or otherwise bound
by any written or oral contract or instrument or other restriction which
individually or in the aggregate could materially adversely affect the business,
prospects, financial condition, operations, property or affairs of ITS. ITS is
not a party to or otherwise bound by any written or oral:
(a) contract with any labor union (and, to the
knowledge of ITS, no organizational effort is being made with
respect to any of its employees);
(b) contract or other commitment with any supplier
containing any provision permitting any party other than ITS
to renegotiate the price or other terms, or containing any
payback or other similar provision, upon the occurrence of a
failure by ITS to meet its obligations under the contract when
due or the occurrence of any other event;
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(c) contract for the future purchase of fixed assets
or for the future purchase of materials, supplies or equipment
in excess of its normal operating requirements;
(d) agreement or indenture relating to the borrowing
of money or to the mortgaging or pledging of, or otherwise
placing a lien or security interest on, any asset of ITS
(other than the Line of Credit);
(e) guaranty of any obligation for borrowed money or
otherwise except a guaranty to PNC Bank of up to $700,000 with
respect to a loan from that bank to Thompson Enterprises;
(f) voting trust or agreement, stockholders'
agreement, pledge agreement, buy-sell agreement or first
refusal or preemptive rights agreement relating to any
securities of ITS;
(g) agreement or obligation (contingent or otherwise)
to issue, sell or otherwise distribute or to repurchase or
otherwise acquire or retire any share of its capital stock or
any of its other equity securities (other than in connection
with the Micro Computer Transaction);
(h) agreement under which it has granted any person
any registration rights (other than in connection with the
Micro Computer Transaction); or
(i) agreement under which it has limited or
restricted its right to compete with any person in any
respect.
ITS, and to the best of ITS' knowledge, such other party thereto have in all
material respects performed all the obligations required to be performed by them
to date (or each non-performing party has received a valid, enforceable and
irrevocable written waiver with respect to its non-performance), have received
no notice of default and are not in material default (with due notice or lapse
of time or both) under any of the foregoing agreements, contracts, instruments
or commitments. ITS has no present expectation or intention of not fully
performing all its obligations under each such agreement, contract, instrument
or commitment, and ITS has no knowledge of any breach or anticipated breach by
the other party to any such agreement, contract, instrument or commitment. ITS
is in full compliance with all of the terms and provisions of its Certificate of
Incorporation and By-laws, as amended.
SECTION 4.20 Significant Customers and Suppliers. No customer or
supplier which was significant to ITS during fiscal year 1995 or which has been
significant to ITS thereafter, has terminated, materially reduced or threatened
to terminate or materially reduce its purchases from or provision of products or
services to ITS, as the case may be.
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SECTION 4.21 Transactions With Affiliates. To the best of ITS'
knowledge, no director, officer, employee or stockholder of ITS, or member of
the family of any such person, or any corporation, partnership, trust or other
entity in which any such person, or any member of the family of any such person,
has a substantial interest or is an officer, director, trustee, partner or
holder of more than 5% of the outstanding capital stock thereof, is a party to
any transaction with ITS, including any contract, agreement or other arrangement
providing for the employment of, furnishing of services by, rental of real or
personal property from or otherwise requiring payments to any such person or
firm, except for such contracts and agreements as are disclosed in the Form 10-K
of ITS for the year ended January 31, 1996.
SECTION 4.22 Environmental Protection. ITS has not caused or allowed,
or contracted with any party for, the generation, use, transportation,
treatment, storage or disposal of any Hazardous Substances (as defined below) in
connection with the operation of its business or otherwise. ITS, the operation
of its business, and any real property that ITS owns, leases or otherwise
occupies or uses (the "Premises") are in compliance in all material respects
with all applicable Environmental Laws (as defined below) and orders or
directives of any governmental authorities having jurisdiction under such
Environmental Laws, including, without limitation, any Environmental Laws or
orders or directives with respect to any cleanup or remediation of any release
or threat of release of Hazardous Substances. ITS has not received any citation,
directive, letter or other communication, written or oral, or any notice of any
proceeding, claim or lawsuit, from any person arising out of the ownership or
occupation of the Premises, or the conduct of its operations, and ITS is not
aware of any basis therefor. ITS has obtained and is maintaining in full force
and effect all necessary permits, licenses and approvals required by all
Environmental Laws applicable to the Premises and the business operations
conducted thereon (including operations conducted by tenants on the Premises),
and is in compliance in all material respects with all such permits, licenses
and approvals. ITS has not caused or allowed a release, or a threat of release,
of any Hazardous Substance unto, at or near the Premises, and, to the best of
ITS's knowledge, neither the Premises nor any property at or near the Premises
has ever been subject to a release, or a threat of release, of any Hazardous
Substance. For the purposes of this Agreement, the term "Environmental Laws"
shall mean any Federal, state or local law or ordinance or regulation pertaining
to the protection of human health or the environment, including without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. Sections 9601, et seq., the Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 11001, et seq., and the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq. For purposes of
this Agreement, the term "Hazardous Substances" shall include oil and petroleum
products, asbestos, polychlorinated biphenyls, urea formaldehyde and any other
materials classified as hazardous or toxic under any Environmental Laws.
SECTION 4.23 Foreign Corrupt Practices Act. ITS has not taken any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended, or any rules and regulations thereunder. To the best of
ITS's knowledge, there is not now, and there has never been, any employment by
ITS of, or beneficial ownership in ITS by, any governmental or political
official in any country in the world.
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SECTION 4.24 Products. There are no known defects in the design of, or
technology embodied in, any product which ITS currently markets or has marketed
in the past that materially impair or are likely to materially impair the stated
use of the product or, in connection with such stated use is reasonably likely
to injure any consumer of the product or any third party, which individually or
in the aggregate would have a material adverse effect on ITS.
SECTION 4.25 No Reliance on Forecasts. In the negotiation and
consideration of the transactions contemplated by this Agreement, ITS and its
Board of Directors have not relied on any information or documents concerning
FMS and its business or financial results except: (a) information and documents
that are publicly available, (b) representations and warranties made by FMS in
this Agreement, and (c) disclosure of financial results made pursuant to this
Agreement. In the course of negotiations, ITS and FMS exchanged information
concerning hypothetical situations, based on various assumptions, of the results
of operations of the combined companies and possible market prices for the ITS
Common Stock. ITS makes no representation or warranty regarding any such
hypothetical situations provided by it, including those that may contain
forecasts or projections of its future operating results, and ITS disclaims
reliance on any such hypothetical situations provided by FMS or third parties.
Notwithstanding the foregoing, ITS does represent and warrant that any such
financial projections and forecasts were prepared by it in good faith.
SECTION 4.26 Employees. Neither ITS, the Surviving Corporation nor FMS
is obligated to make any offers of employment or continued employment to any
employees of FMS or ITS for the period following the Effective Time other than
those employees listed on Exhibit 3.25 attached hereto.
SECTION 4.27 Intellectual Property. ITS owns all right, title and
interest in or has license rights to all patents, trademarks, service marks,
trade names, mask works, copyrights, trade secrets, know-how, technology and
other intellectual property and proprietary rights material to the conduct of
its business as presently conducted (the "ITS Intellectual Property"). ITS is
not aware of any infringement of the ITS Intellectual Property by any third
party which infringement would have a material adverse effect on the business of
ITS. ITS has not received any claim or notice stating that its business, as
presently conduced, infringes upon or violates any of the patents, trademarks,
service marks, trade names, mask works, copyrights, trade secrets, proprietary
rights or other intellectual property of any other person, which infringement or
violation would have a material adverse effect on ITS. ITS has taken all
reasonable measures to protect the secrecy, confidentiality, and value of the
ITS Intellectual Property.
SECTION 4.28 Tax-Free Reorganization. The Merger will qualify as a
"reorganization" within the meaning of Section 368(a)(1)(A) of the Internal
Revenue Code of 1986, as amended, assuming (a) the continuity of interest
requirement is satisfied, (b) the Merger will be undertaken pursuant to a plan
of reorganization duly adopted by FMS and (c) FMS and its shareholders will
satisfy the filing and reporting requirements of all taxing authorities.
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ARTICLE V
COVENANTS
Section 5.01 Covenants of FMS and ITS. During the period from the date
of this Agreement and continuing until the Effective Time, FMS and ITS each
agree as to itself and its Subsidiaries that (except as expressly contemplated
or permitted by this Agreement, or to the extent that the other party shall
otherwise consent in writing):
(a) Ordinary Course. Each party and its Subsidiaries
shall carry on their respective businesses in the usual,
regular and ordinary course in substantially the same manner
as heretofore conducted and use commercially reasonable
efforts to preserve intact their present business
organizations, keep available the services of their present
officers and employees and preserve their relationships with
customers, suppliers and others having business dealings with
them to the end that their goodwill and ongoing business shall
not be impaired in any material respect at the Effective Time.
(b) Dividends; Changes in Stock. No party shall, nor
shall any party permit any of its Subsidiaries to, nor shall
any party propose to, (i) declare or pay any dividends on or
make other distributions in respect of any of its capital
stock (other than dividends from a wholly-owned Subsidiary to
its parent company), (ii) split, combine or reclassify any of
its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or (iii)
repurchase, redeem or otherwise acquire, or permit any
Subsidiary to repurchase, redeem or otherwise acquire, any
shares of capital stock of such party or any of its
Subsidiaries.
(c) Issuance of Securities. No party shall, nor shall
any party permit any of its Subsidiaries to, issue, deliver or
sell, or authorize or propose the issuance, delivery or sale
of, any shares of its capital stock of any class, any Voting
Debt or any securities convertible into, or any rights,
warrants, calls, subscriptions or options to acquire, any such
shares, Voting Debt or convertible securities, other than (i)
the issuance of shares of ITS Common Stock upon the exercise
of stock options described in Section 4.02 hereof; (ii) the
issuance of shares of ITS Common Stock upon exercise of the
Warrants; and (iii) the issuance of shares of Common Stock in
connection with the consummation of the Micro Computer
Transaction.
(d) Governing Documents. No party shall amend or
propose to amend its Articles or Certificate of Incorporation
or By-laws.
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(e) No Dispositions. Other than transactions in the
ordinary course of business consistent with prior practice, no
party shall, nor shall any party permit any of its
Subsidiaries to, sell, lease, license, encumber or otherwise
dispose of, or agree to sell, lease, license, encumber or
otherwise dispose of, any of its assets which are material,
individually or in the aggregate, to FMS or to ITS and its
Subsidiaries taken as a whole, as the case may be.
(f) Indebtedness. No party shall, nor shall any party
permit any of its Subsidiaries to, incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or
sell any debt securities or warrants or rights to acquire any
debt securities of such party or any of its Subsidiaries or
guarantee any debt securities of others, other than in each
case in the ordinary course of business consistent with prior
practice or, with respect to FMS, pursuant to the Line of
Credit.
(g) Other Actions. Notwithstanding the fact that such
action might otherwise be permitted pursuant to this Section
5.01, no party shall, nor shall any party permit any of its
Subsidiaries to, take any action, or by inaction permit an
event to occur, which would or is reasonably likely to result
in any of its representations and warranties set forth in this
Agreement being untrue or in any of the conditions to the
Merger set forth in Article VII not being satisfied. ITS or
FMS, as the case may be, shall promptly give written notice to
the other party upon becoming aware of any fact which, if
known on the date hereof would have been required to be set
forth or disclosed pursuant to this Agreement, and any
impending or threatened breach in any material respect of any
of the representations and warranties contained in this
Agreement and with respect to the latter shall use all
reasonable efforts to remedy the same.
(h) Advice on Changes; Filings. Each of ITS and FMS
shall confer on a regular and frequent basis with the other,
report on operational matters and promptly advise the other
orally and in writing of any change or event having, or which,
insofar as can reasonably be foreseen, could have, a material
adverse effect on such party and its Subsidiaries taken as a
whole. Each of ITS and FMS shall promptly provide the other
(or its counsel) copies of all filings made by such party with
any Federal, state or foreign Governmental Entity in
connection with this Agreement or the transactions
contemplated hereby.
(i) Benefit Plans; Employment Arrangements. Except as
contemplated by this Agreement, no party shall, nor shall any
party permit any of its Subsidiaries to, enter into, adopt,
amend (except as may be required by law) or terminate any FMS
Benefit Plan or ITS Benefit Plan, as the case may be, or other
employee benefit plan or any compensatory or benefit
agreement, arrangement, plan or policy between such party and
one or more of its directors or officers (except in
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connection with the Micro Computer Transaction). No party
shall, nor shall any party permit any of its Subsidiaries to,
except for normal increases in the ordinary course of business
consistent with past practice that, in the aggregate, do not
result in a material increase in benefits or compensation
expense, increase in any manner the compensation or fringe
benefits of any director, officer, employee or consultant or
pay any benefit not required by any plan and arrangement as in
effect as of the date hereof (including, without limitation,
the granting of stock appreciation rights or performance
units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing (except in connection
with the Micro Computer Transaction).
(j) No Solicitations. No party shall nor shall any
party authorize or permit any of their respective officers,
directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative retained
by them to solicit, initiate or encourage submission of
proposals or offers from any person relating to any
acquisition or purchase of all or a substantial portion of the
assets of, or any material equity interest in, such party or
its Subsidiaries or any merger, consolidation, amalgamation or
other business combination with such party or its
Subsidiaries.
Section 5.02. Additional Covenants of FMS. During the period from the
date of this Agreement and continuing until the Effective Time, FMS agrees that
it will not, without the prior written consent of ITS, which consent shall not
be unreasonably withheld or delayed, acquire or agree to acquire, in
consideration for the payment of any FMS Common Stock or other capital stock of
FMS, by merger or consolidating with, or by purchasing a substantial equity
interest in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other business
organization or division thereof or otherwise acquire or agree to acquire any
assets, in each case which are material, individually or in the aggregate, to
FMS.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01 Access to Information. Upon reasonable notice and subject
to restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released), FMS
and ITS shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of FMS and ITS shall (and
shall cause each of their respective Subsidiaries to) furnish promptly to the
other (i) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of federal
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securities laws, if applicable, and (ii) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Unless otherwise required by law, the parties will hold any such information
which is nonpublic in confidence until such time as such information otherwise
becomes publicly available through no wrongful act of either party, and in the
event of termination of this Agreement for any reason each party shall promptly
return all nonpublic documents obtained from any other party, and any copies
made of such documents, to such other party.
SECTION 6.02 Stockholders Meeting. As soon as reasonably practicable
following the date of this Agreement, FMS shall take all action reasonably
necessary in accordance with the BCL, its Articles of Incorporation and By-laws,
to cause its stockholders, by resolution, a meeting or otherwise, to approve and
adopt this Agreement and the Merger.
SECTION 6.03 Legal Conditions to Merger. Each of FMS and ITS will take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Merger (which actions shall
include, without limitation, approvals or filings with any Governmental Entity)
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with the Merger. Each of FMS and ITS will, and will
cause its Subsidiaries to, promptly take all reasonable actions necessary to
obtain (and will cooperate with each other in obtaining) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity or other public or private third party, required to be obtained by ITS
and FMS or any of their Subsidiaries in connection with the Merger or the taking
of any action contemplated thereby or by this Agreement.
SECTION 6.04 Affiliates. FMS will advise all persons who are, at the
time this Agreement is submitted for approval to the stockholders of FMS,
"affiliates" of FMS for purposes of Rule 145 under the Securities Act ("Rule
145") of resale restrictions imposed by the federal securities laws, including
Rule 145, on shares of ITS Common Stock received by them pursuant to the Merger.
FMS shall obtain from each such person a letter stating that such persons are
aware of such restrictions.
SECTION 6.05 Employee Benefit Plans. ITS and FMS shall, as soon as
reasonably practicable following the date of this Agreement, determine which of
the benefit plans of FMS and ITS in effect at the date of this Agreement shall,
to the extent practicable, remain in effect until otherwise determined after the
Effective Time. Each of ITS and FMS shall execute and deliver all such documents
and instruments and take all such other actions as shall be necessary in order
to effect the foregoing.
SECTION 6.06 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense; provided, however, that the Shareholders shall be, jointly and
severally, responsible for paying all legal expenses in excess of $12,000 in the
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aggregate incurred by FMS in connection with this Agreement and the transactions
contemplated hereby.
SECTION 6.07 Brokers or Finders. Each of ITS and FMS represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
brokers' or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, and each of ITS and
FMS agree to indemnify and hold the other harmless from and against any and all
claims, liabilities or obligations with respect to any other fees, commissions
or expenses asserted by any person on the basis of any act or statement alleged
to have been made by such party or its affiliate.
SECTION 6.08 Indemnification. The Shareholders severally, on a pro rata
basis in accordance with their respective share holdings as set forth on
Schedule A attached hereto, agree to indemnify and hold harmless ITS from and
against any loss, cost, damage or expense (including without limitation
reasonable attorney's fees) arising from or relating to:
(a) Any misrepresentation or breach of covenant, warranty or
agreement made by FMS or the Shareholders, or any thereof, herein or in any
document delivered hereunder; or
(b) Any liability or obligation of FMS accruing or otherwise
related to the period prior to the Closing Date, except to the extent such
liability or obligation is set forth on the Closing Balance Sheet (as such term
is defined hereinafter).
(c) Notwithstanding anything to the contrary contained herein,
the Shareholders shall have no liability to ITS under this Section 6.08 unless
the claims made by ITS pursuant to this Section 6.08 exceed $15,000 in the
aggregate. In no event shall such $15,000 threshold be used to establish what
constitutes a "material" item under this Agreement. Furthermore, the maximum
aggregate liability of each of the Shareholders to ITS pursuant to this Section
6.08 shall not exceed, with respect to each such Shareholder, and at his option
an amount equal to the lesser of (i) ten percent (10%) of the aggregate fair
market value on the Effective Date of the shares of ITS Common Stock issued to
him in connection with the Merger, or (ii) if, at the time any claim is made
against such Shareholder, he is still the holder of all of the shares of ITS
Common Stock received by him in the Merger, ten percent (10%) of the aggregate
fair market value of such shares at the time the claim is made by ITS and in any
event, any Shareholder may meet his obligation of indemnification by conveying
his shares of ITS Common Stock back to ITS.
SECTION 6.09 Further Assurances. ITS and FMS agree to execute and
deliver all such other instruments and take all such other action as any party
may reasonably request from time to time, before the Effective Time and without
payment of further consideration, in order to effectuate the transactions
provided for in this Agreement. The parties shall cooperate fully with each
other and with their respective counsel and accountants in connection with any
steps required to be taken as part of their respective obligations under this
Agreement.
31
<PAGE> 32
SECTION 6.10 Additional Agreements; Best Efforts. Subject to the terms
and conditions of this Agreement, each of the parties hereto agrees to use best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of stockholders of FMS described
herein.
ARTICLE VII
CONDITIONS
SECTION 7.01 Conditions to Each Party's Obligation To Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) Stockholder Approval. This Agreement shall have
been approved and adopted by the stockholders of FMS in
accordance with Section 6.02 of this Agreement.
(b) Other Approvals. Other than the filings provided
for by Section 1.01, all authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity the
failure to obtain (or have waived) which would have a material
adverse effect on ITS and its Subsidiaries, in each case taken
as a whole, shall have been filed, occurred or been obtained
or waived.
(c) Pooling Letter. ITS and FMS shall have received
from Coopers & Lybrand a letter in form and substance
satisfactory to each of ITS and FMS to the effect that the
Merger may be accounted for under the pooling-of-interests
method of accounting.
(d) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction or
other order issued by any court of competent jurisdiction or
other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; there shall not
be pending any action, proceeding or investigation before any
court or administrative agency by any Governmental Entity and
any other person which has a reasonable likelihood of success,
challenging or seeking material damages in connection with, or
material changes in the terms of, the Merger.
(e) Employment Agreements. ITS shall have entered
into employment agreements with Richard Holland, Jeffrey
Coney, Janet Sorensen and Joseph DeCarlo, substantially in the
form of Annex I attached hereto (collectively, the "Employment
Agreements").
32
<PAGE> 33
SECTION 7.02 Conditions of Obligations of ITS. The obligations of ITS
to effect the Merger are subject to the satisfaction of the following conditions
unless waived by ITS:
(a) Representations and Warranties. The
representations and warranties of FMS and the Shareholders set
forth in this Agreement shall be true and correct in all
material respects as of the date hereof and (except to the
extent such representations and warranties speak as of an
earlier date) as of the Closing Date as though made on and as
of the Closing Date, and ITS shall have received a certificate
signed on behalf of FMS by the chief executive officer and the
chief financial officer of FMS, and by each Shareholder, to
such effect.
(b) Performance of Obligations of FMS. FMS shall have
performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the
Closing Date, and ITS shall have received a certificate signed
on behalf of FMS by the chief executive officer and the chief
financial officer of FMS to such effect.
(c) No Amendments to Resolutions. Neither the Board
of Directors of FMS nor any committee thereof shall have
amended, modified, rescinded or repealed the resolutions
adopted by such Board on May 30, 1996 (accurate and complete
copies of which have been provided to ITS) and shall not have
adopted any other resolutions in connection with this
Agreement and the transactions contemplated hereby
inconsistent with such resolutions.
(d) Opinion of Counsel. ITS shall have received the
opinion of Schwartz & Freeman, counsel to FMS, dated the
Closing Date, with respect to such matters as ITS may
reasonably request.
(e) Material Adverse Change. Except as set forth on
the FMS Disclosure Schedule, no material adverse change shall
have occurred subsequent to December 31, 1995 in the financial
position, results of operations, assets, liabilities or
prospects of FMS, nor shall any event or circumstance have
occurred which would result in a material adverse change in
the financial position, results of operations, assets,
liabilities or aspects of FMS.
(f) Pooling of Interests. ITS shall have received a
written acknowledgment, in form and substance satisfactory to
ITS, from each intended recipient of Conversion Shares,
confirming that the recipient (i) understands that the Merger
is to be accounted for as a pooling-of-interests for
accounting and financial reporting purposes and (ii) will not
sell, transfer, pledge or otherwise dispose of any of the
Conversion Shares until such time as financial results
covering at least 30 days of post-Merger continued operations
have been published by ITS in the form of a quarterly earnings
report, a Current Report on Form 8-K,
33
<PAGE> 34
a Quarterly Report on Form 10-Q, an Annual Report on Form 10-K
or any other filing or announcement which includes combined
sales and net income and such recipient has been notified in
writing of such publication.
(g) Uniform Commercial Code Searches. FMS shall have
delivered to ITS certified copies of Requests for Information
or Copies (Form UCC-11) or equivalent reports from such
jurisdictions as may be requested by ITS listing all effective
financing statements which name FMS (under its present name or
any previous name or any trade name) as debtor, together with
copies of such financing statements. Such searches shall
indicate the existence of no liens, claims or security
interests, except to the extent of items referred to in the
Closing Balance Sheet.
(h) Employment Agreements. ITS shall have received a
duly executed copy of each of the Employment Agreements.
(i) Investment Letters. ITS shall have received a
duly executed investment letter, in the form attached hereto
as Annex II from each of the Shareholders.
(j) Closing Balance Sheet. ITS shall have received a
balance sheet (the "Closing Balance Sheet")from FMS, dated as
of the date of Closing, and certified as being true, complete
and accurate in all respects by the chief financial officer of
FMS, which shows that (i) all shareholder loans have been
satisfied, and (ii) the total liabilities of FMS do not exceed
$500,000 (plus any amounts drawn under the Note, as hereafter
defined) in the aggregate, plus trade payables, salaries and
other current items incurred by FMS in the ordinary course of
business.
(k) Completion of Due Diligence. ITS shall
satisfactorily complete, within seventy (70) days of the date
hereof, a due diligence audit of the business, financial
condition and affairs of FMS, including without limitation
confirmation that the 1994 and 1995 year-end results of FMS
previously provided by FMS to ITS are true and correct in all
material respects.
(l) Audited Financial Statements. ITS shall receive
audited financial statements for the last three (3) fiscal
years of FMS, prepared by Coopers & Lybrand at ITS's sole cost
and expense, in accordance with generally accepted accounting
principles and otherwise in form and substance acceptable to
ITS in its reasonable discretion, which audited financial
statements shall confirm that the unaudited financial
statements for the same periods heretofore provided by FMS to
ITS are true and correct in all material respects.
34
<PAGE> 35
(m) Forgiveness and Payment of Shareholder Loans.
Subject to and immediately before the Closing, Jeffrey P.
Coney and Richard F. Holland shall cancel and forgive that
portion of the amount owed to them by FMS which is equal to
the amount by which the principal balance together with
accrued but unpaid interest on the loan payable by FMS to them
(the "Tyden Loan") evidenced by a Loan and Option Agreement
dated April 8, 1992, between FMS and E. Tyden AB, Incorporated
shall exceed the principal balance, plus accrued but unpaid
interest, under a term loan from NBD Northfield to Messrs.
Coney and Holland (the "Acquisition Loan"). Such cancellation
shall be made by Messrs. Coney and Holland by the forgiveness
by them at Closing of such amount of the Tyden Loan. Sub shall
pay the remaining balance of principal and interest on the
Tyden Loan with immediately available funds in Chicago,
Illinois, to Messrs. Coney and Holland, or as they shall
otherwise direct (which funds shall be provided to Sub by ITS
pursuant to Section 7.03(h) hereof). The Company represents
that on May 5, 1996, the outstanding principal balance of the
Tyden Loan was $693,809.72, and that all accrued interest
thereon had ben paid through May 5, 1996, and that on May 5,
1996, the outstanding principal balance of the Acquisition
Loan was $340,217, and that all accrued interest thereon had
been paid through May 5, 1996.
SECTION 7.03 Conditions of Obligations of FMS. The obligation of FMS to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by FMS:
(a) Representations and Warranties. The
representations and warranties of ITS set forth in this
Agreement shall be true and correct in all material respects
as of the date hereof and (except to the extent such
representations speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, and FMS
shall have received a certificate signed on behalf of ITS by
its chief executive officers and chief financial officers to
such effect.
(b) Performance of Obligations of ITS. ITS shall have
performed in all material respects all obligations required to
be performed by it under this Agreement at or prior to the
Closing Date, and FMS shall have received a certificate signed
on behalf of ITS by its chief executive officers and chief
financial officers to such effect.
(c) No Amendments to Resolutions. Neither the Board
of Directors of ITS nor any committee thereof shall have
amended, modified, rescinded or repealed the resolutions
adopted by such Board at a meeting duly called and held on
______________ (accurate and complete copies of which have
been provided to FMS), and shall not have adopted any other
resolutions in connection with this Agreement and the
transactions contemplated hereby which are inconsistent with
such resolutions.
35
<PAGE> 36
(d) Capitalization. At the Closing Date, ITS shall
have (i) except to the extent of the exercise of options or
warrants described in Section 4.02 hereof, not more than
10,227,837 shares of ITS Common Stock issued and outstanding,
(ii) options to purchase not more than 1,475,000 shares of ITS
Common Stock outstanding, and (iii) not granted any options or
warrants to purchase, or issued any other securities
convertible into, or entered into any agreements (other than
this Agreement) to issue any of its securities other than as
disclosed or provided in this Agreement.
(e) Material Adverse Change. No material adverse
change shall have occurred subsequent to January 31, 1996 in
the financial position, results of operations, assets,
liabilities or prospects of ITS, nor shall any event or
circumstance have occurred which would result in a material
adverse change in the financial position, results of
operations, assets, liabilities or aspects of ITS.
(f) Opinion of Counsel. FMS shall have received the
opinion of Archer & Greiner, A Professional Corporation,
counsel to ITS, dated the Closing Date, with respect to such
matters as FMS may reasonably request.
(g) ITS Common Stock. The shares of ITS Common Stock
to be issued to holders of FMS Common Stock in the Merger
shall be validly issued, fully paid, nonassessable, free of
preemptive rights and free and clear of any liens, claims,
encumbrances, security interests, equities, charges and
options of any nature whatsoever.
(h) Payment of Indebtedness. Sub shall assume, and
pay in full on the Effective Date, the liabilities listed on
Exhibit 7.03 attached hereto, and ITS shall provide to Sub
cash in an amount sufficient to pay the principal balance plus
accrued interest then outstanding on the Tyden Loan, after the
provision for the cancellation referred to in Section 7.02(m)
has been made. Sub shall also assume and pay in full all
amounts outstanding under a certain line of credit extended by
ITS to FMS pursuant to a Line of Credit Note dated as of May
___, 1996 in the maximum principal amount of $100,000 (the
"Note") in the form of Annex III.
(i) Release of Guarantees. Jeffrey P. Coney and
Richard F. Holland shall be released, on or before the closing
Date, from their guarantees of FMS' obligations heretofore
provided to NBD Bank.
36
<PAGE> 37
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of FMS or ITS:
(a) by mutual consent of the Boards of Directors of
ITS and FMS; or
(b) (i) by either ITS or FMS if there shall have been
a material breach of any representation, warranty, covenant or
agreement on the part of the other set forth in this Agreement
which breach shall not have been cured, in the case of a
representation or warranty, prior to the Closing or, in the
case of a covenant or agreement, within two business days
following receipt by the breaching party of notice of such
breach, or (ii) by either ITS or FMS if any permanent
injunction or other order of a court or other competent
authority preventing the consummation of the Merger shall have
become final and non-appealable; or
(c) by either ITS or FMS if the Merger shall not have
been consummated before September 30, 1996, other than as a
result of a breach by the party attempting to terminate this
Agreement; or
(d) by either party if any required approval of the
stockholders of FMS shall not have been obtained by reason of
the failure to obtain the required vote upon a vote held at a
duly held meeting of stockholders or otherwise or at any
adjournment of such meeting; or
(e) by ITS if any of the conditions specified in
Sections 7.01 or 7.02 has not been met or waived by at such
time as such conditions can no longer be satisfied; or
(f) by FMS if any of the conditions specified in
Sections 7.01 or 7.03 has not been met or waived at such time
as such conditions can no longer be satisfied.
SECTION 8.02 Effect of Termination. In the event of a termination of
this Agreement by either FMS or ITS as provided in Section 8.01, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of ITS or FMS or their respective officers or directors, except (i) with
respect to the last sentence of Section 6.01, and Sections 6.07 and 6.08 and
(ii) to the extent that such termination results from the willful breach by a
party hereto of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
37
<PAGE> 38
SECTION 8.03 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of FMS or of ITS, but, after any such approval,
no amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. Notwithstanding the foregoing, and except as otherwise provided by law,
any amendment, waiver, consent or approval contemplated by this Agreement to be
granted or delivered by ITS or FMS, shall be deemed to have been so granted or
delivered if given or approved by the President or Chief Executive Officer of
such party.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Survival of Representations and Warranties. Except as
otherwise specifically provided herein, the representations and warranties
contained in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive for the earlier of (i) one year following the Effective
Time or (ii) the date of issuance of the January 31, 1997 audit of the Surviving
Corporation.
SECTION 9.02 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only when
personally delivered, or on the day specified for delivery when deposited with a
courier service such as Federal Express for delivery to the intended addressee,
or two days following the day when deposited in the United States mails, by
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:
38
<PAGE> 39
(a) if to ITS, to
Innovative Tech Systems, Inc.
444 Jacksonville Road
Suite 200
Warminster, Pennsylvania 18974
Attention: John M. Thompson, President
Telecopy No.: (215) 441-5733
with a copy to
Gary L. Green, Esquire
Archer & Greiner, A Professional Corporation
One Centennial Square
Haddonfield, New Jersey 08033
Telecopy No.: (609) 795-0574
and
(b) if to FMS, to
Facility Management Systems, Inc.
7250 North Cicero
Chicago, Illinois 60646
Attention: President
Telecopy No.: (847) 675-9955
with a copy to
Stephen E. Goodman, Esquire
Schwartz & Freeman
401 North Michigan Avenue, Suite 1900
Chicago, Illinois 60611
Telecopy No.: (312) 222-0818
SECTION 9.03 Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrases, "the date of this
Agreement," "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to the date set forth in the first
paragraph of this Agreement.
39
<PAGE> 40
SECTION 9.04 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
SECTION 9.05 Schedules and exhibits. All Schedules and Exhibits
referred to herein or attached hereto constitute a part of this Agreement.
Disclosure on any Schedule shall be deemed to satisfy the disclosure
requirements of any other Schedule to which such information may also be
applicable, without any necessity to reference such Schedule in any other
Schedule.
SECTION 9.06 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof, are not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
SECTION 9.07 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the Commonwealth of Pennsylvania
without regard to any applicable conflicts of law.
SECTION 9.08 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the maximum extent
possible.
SECTION 9.09 Publicity. Except as otherwise required by law or the
rules of the SEC or the NASD, for so long as this Agreement is in effect,
neither FMS nor ITS shall, or shall permit any of its Subsidiaries to, issue or
cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld or delayed.
Any such press release or public announcement shall be subject to the prior
review of the other party, which shall not be unreasonably delayed.
SECTION 9.10 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
40
<PAGE> 41
IN WITNESS WHEREOF, ITS and FMS have caused this Agreement to be signed
by their respective officers thereunto duly authorized as of the date first
written above.
INNOVATIVE TECH SYSTEMS, INC.
By: /s/ John M. Thompson
-------------------------------
Name: John M. Thompson
Title: President
FACILITY MANAGEMENT SYSTEMS, INC.
By: /s/ Jeffrey P. Coney
-------------------------------
Name: Jeffrey P. Coney
Title: President
FMS ACQUISITION CORP.
By: /s/ John M. Thompson
-------------------------------
Name: John M. Thompson
Title: President
41
<PAGE> 42
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Jeffrey P. Coney
- -----------------------------------
Jeffrey P. Coney 4676 shares
<PAGE> 43
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Elizabeth L. Coney
- -----------------------------------
Elizabeth L. Coney 1076 shares
<PAGE> 44
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Jeffrey P. Coney as attorney in fact for Julian L. Berman and Joan S. Berman
- ----------------------------------- ------------------------------------
Julian L. Berman -and- Joan S. Berman, as tenants in common
796 shares
<PAGE> 45
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Richard F. Holland
- -----------------------------------
Richard F. Holland 1590 shares
<PAGE> 46
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Wendy B. Holland
- -----------------------------------
Wendy B. Holland 500 shares
<PAGE> 47
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Jacquelyn P. Holland
- -----------------------------------
Jacquelyn P. Holland 300 shares
<PAGE> 48
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Janet I. Sorenson
- -----------------------------------
Janet I. Sorenson 250 shares
<PAGE> 49
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Joseph W. DeCarlo
- -----------------------------------
Joseph W. DeCarlo 250 shares
<PAGE> 50
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ William B. Martin
- -----------------------------------
William B. Martin 226 shares
<PAGE> 51
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Thomas D. Berman
- -----------------------------------
Thomas D. Berman 50 shares
<PAGE> 52
SHAREHOLDER'S SIGNATURE PAGE
FOR THE AGREEMENT AND PLAN OF MERGER
The undersigned hereby executes the Agreement and Plan of Merger dated as of
May 31, 1996 by and among Innovative Tech Systems, Inc., an Illinois
corporation, ITS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of ITS, Facility Management Systems, Inc., an Illinois corporation
("FMS"), and each of the shareholders of FMS.
/s/ Andrew H. Berman
- -----------------------------------
Andrew H. Berman 50 shares
<PAGE> 53
SCHEDULE A
<TABLE>
<CAPTION>
TOTAL %
SHAREHOLDERS SHARES OWNED
- ------------ ------ -----
<S> <C> <C>
Jeffrey P. Coney 4,676 36.3%
Richard F. Holland 1,590 12.3%
Elizabeth L. Coney 1,076 8.4%
Julian L. and Joan S. Berman, 796 6.2%
Tenants in Common
Wendy B. Holland 500 3.9%
Jacquelyn Holland 300 2.3%
Joseph W. DeCarlo 250 1.9%
Janet I. Sorensen 250 1.9%
William Martin 226 1.8%
Thomas D. Berman 50 0.4%
Andrew H. Berman 50 0.4%
------ ----
Total 9,764 75.8%
Total issued and outstanding 12,883
</TABLE>
<PAGE> 54
Exhibit 3.25
James M. Abbott
L. Charles Andersen
Cameron Burke
Karin Burke
Harriet E. Bury
Christopher Cabaj
Elizabeth L. Coney
Gloria Dalka
Kathleen DeCarlo
James Ferguson
Michael B. Finch
Shamim Husain
Mark Johnson
Todd Johnson
Sean A. Jolie
John R. Jones
Michael Kalinka
Michelle King
Joseph Lehman
Malgorzata Madrzyk
William B. Martin
Thomas E. Norton
Tiffany Olson
David R. Palmer
Robert Phillips
Vadim Plavnik
Zev Plotkin
Gerland Pochodaj
Meredith Siemsen
Scott Strunk
John E. Tate IV
Pamela Tomaszewski
J. Milton Wood
William Zuhn
<PAGE> 55
EXHIBIT 7.03
PROJECTED DEBT TO BE PAID OFF BY INNOVATIVE TECH
ASSUMES CLOSING ON JULY 31, 1996
<TABLE>
<CAPTION>
PRINCIPAL INTEREST TOTAL
--------- -------- -----
<S> <C> <C> <C>
NBD installment loan 40,295 56 40,351
NBD revolving line 455,000 3,318 458,318
Mercedes Coney 59,000 0 59,000
Jeffrey Coney 100,000 583 100,583
JPC/RFH Loan from NBD 330,384 1,873 332,257
------- ----- -------
984,679 5,830 990,509
======= ===== =======
</TABLE>
