UNITED STATES
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): January 17, 1997
COMPUTER MANAGEMENT SCIENCES, INC.
(Exact name of registrant as specified in its charter)
Florida 0-26622 59-2264633
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
8133 Baymeadows Way, Jacksonville, FL 32256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(904)737-8955
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Acquisition of Miaco Corporation
On January 16, 1997, Computer Management Sciences, Inc., a Florida
corporation (the "Registrant"), entered into an Agreement and Plan of Merger
(the "Merger Agreement") by and among the Registrant, Bronco Acquisition, Inc.,
a Florida corporation and newly-formed, wholly-owned subsidiary of the
Registrant (the "Subsidiary"), MIACO Corporation, a Colorado corporation
("Miaco"), and each of the shareholders of Miaco (collectively, the
"Shareholders"). The transaction was structured to qualify as a tax-free reverse
triangular subsidiary merger under Internal Revenue Code Section 368(a)(1)(E)
(the "Merger"). The Merger was effectuated on January 17, 1997, through the
filing of Articles of Merger with the Secretary of State of each of Florida and
Colorado. Pursuant to the Merger Agreement, the Subsidiary was merged with and
into Miaco, with Miaco surviving the Merger as a wholly-owned subsidiary of the
Registrant. The Merger was intended to qualify as a "pooling of interests" for
financial accounting purposes.
Pursuant to the Merger, all of the outstanding capital stock of
Miaco was exchanged, on a pro rata basis, for 584,080 shares of the common stock
of the Registrant (the "Shares"), plus cash in lieu of any fractional shares. An
additional 18,074 shares of the common stock of the Registrant are reserved for
issuance pursuant to outstanding Miaco stock options assumed by the Registrant.
As a condition to consummating the Merger, the Registrant and the
Shareholders entered into a Restricted Stock and Registration Rights Agreement
dated January 16, 1997 (the "Restricted Stock Agreement"). Pursuant to the
Restricted Stock Agreement, the Shareholders acknowledged that the Shares being
issued pursuant to the Merger are characterized as "restricted securities" under
the Securities Act of 1933, as amended (the "Securities Act"), inasmuch as they
are being acquired from the Registrant in a transaction not involving a public
offering, and, accordingly, that under the Securities Act the Shares may be
resold only in limited circumstances. The Shareholders further acknowledged that
they were familiar with the Securities and Exchange Commission's Rule 144 and
the resale limitations imposed thereby and by the Securities Act. Finally, the
Restricted Stock Agreement grants the Shareholders certain "piggy-back" and
demand registration rights pursuant to which the Shareholders will be allowed to
include the Shares in certain registered public offerings of the Registrant's
common stock under limited circumstances.
As a further condition of the Merger, two key executives of Miaco entered
into Employment Agreements with Miaco in connection with the Merger.
The foregoing description is qualified in its entirety by reference to the
Merger Agreement (as filed and listed as Exhibit 2.4 and incorporated herein by
reference).
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. No financial statements for
Miaco are required to be presented pursuant to Rule 3-05(b)(1)(i) of Regulation
S-X because, as to Miaco, none of the thresholds specified in Rule 1-02(w) of
Regulation S-X (defining a "significant subsidiary") exceed 20%.
(b) Pro Forma Financial Information. No pro forma financial information
for Miaco is required to be presented pursuant to Rule 11-01 of Regulation S-X
because Miaco is not a "significant subsidiary" as defined in Rule 1-02(w) of
Regulation S-X.
(c) Exhibits.
Exhibit Number Description
2.4 Agreement and Plan of Merger, dated January 16, 1997, by and among
Computer Management Sciences, Inc., Bronco Acquisition, Inc., Miaco
Corporation ("Miaco"), and each of the shareholders of Miaco.
<PAGE>
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.
COMPUTER MANAGEMENT SCIENCES, INC.
(Registrant)
By: /s/ ANTHONY COLALUCA
Anthony Colaluca, Vice President
and Chief Accounting Officer
Date: January 31, 1997
UNITED STATES
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
COMPUTER MANAGEMENT SCIENCES, INC.
January 31, 1997
EXHIBITS
<PAGE>
EXHIBIT 2.4
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made this 16th day of January, 1997,
by and among COMPUTER MANAGEMENT SCIENCES, INC., a Florida corporation
("Parent"), BRONCO ACQUISITION, INC., a Florida corporation ("Subsidiary"),
MIACO CORPORATION, a Colorado corporation ("Target" or "Surviving Corporation"),
and Shari G. Leigh, Martin B. Greer, Daniel P. Dunlap, Jr., John D. Karen and
Richard C. Blakeman, each an individual residing in the State of Colorado,
except for Daniel P. Dunlap, Jr., who resides in the State of Maryland
(hereinafter collectively referred to as "Target Shareholders").
Recitals:
A. Subsidiary, Parent, Target and Target Shareholders, which shareholders
collectively beneficially hold one hundred percent (100%) of the outstanding
capital stock of Target, desire to adopt and enter into a plan of reorganization
within the meaning of Section 368(a) of the Code;
B. Each of Subsidiary, Parent and Target is intended to be "a party
to a reorganization" within the meaning of Section 368(b) of the Code; and
C. It is desirable that Subsidiary be merged into Target pursuant to the
plan of reorganization and this Agreement and in accordance with the applicable
statutes of the State of Colorado and the State of Florida.
Agreements:
In consideration of the mutual covenants and agreements set forth in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Definitions. The capitalized terms used herein and in the attached
schedules and exhibits shall have the meanings assigned to them in Exhibit A
attached hereto and by this reference incorporated herein, which definitions
shall apply to both the singular and the plural forms of such terms.
Section 2. Merger; Effect of Merger. On the Corporate Filing Date, Subsidiary
shall merge with and into Target, which shall survive the Merger as the
Surviving Corporation.
2.1 Effect of Merger. The Merger shall become effective upon the filing of duly
executed Articles of Merger with the Secretary of State of Colorado and the
Department of State of Florida in accordance with the applicable Legal
Requirements of the State of Colorado and the State of Florida. On the Corporate
Filing Date, and as a result of the Merger, (i) the separate existence of
Subsidiary will cease; (ii) title to all assets and properties, or any interest
therein, owned by Subsidiary will be vested in the Surviving Corporation without
reversion or impairment; (iii) the Surviving Corporation will thenceforth be
responsible and liable for all the liabilities and obligations of Subsidiary;
(iv) neither the rights of creditors nor any liens upon the property of
Subsidiary will be impaired by the Merger; and (v) the Target Shares that are to
be converted into Parent Shares and into cash, for fractional shares, will be
converted only as set forth herein, and the Target Shareholders are entitled
only to the rights provided herein.
<PAGE>
2.2 Surviving Corporation. Following the Merger, the existence of the Surviving
Corporation shall continue unaffected and unimpaired by the Merger, with all the
rights, privileges, immunities and powers, and subject to all the duties and
liabilities of a corporation organized under the laws of the State of Colorado.
2.3 Name. As a result of the Merger, the name of the Surviving
Corporation shall be unchanged from the name of Target.
2.4 Articles of Incorporation. The articles of incorporation of Surviving
Corporation, as in effect on the Corporate Filing Date, shall remain the
articles of incorporation of Surviving Corporation from and after the Corporate
Filing Date, subject to the right of Surviving Corporation to amend its articles
of incorporation in accordance with Colorado law.
2.5 Bylaws. The bylaws of Surviving Corporation, as in effect on the Corporate
Filing Date, shall remain the bylaws of Surviving Corporation from and after the
Corporate Filing Date, subject to the right of Surviving Corporation to amend
its bylaws in accordance with its articles of incorporation and with Colorado
law.
2.6 Directors and Officers. Until the election and qualification of their
successors, the members of the board of directors and the officers of Subsidiary
in office on the Corporate Filing Date shall be the board of directors and
officers of Surviving Corporation.
Section 3. Closing and Conversion of Shares.hares
3.1 Closing. The Closing shall occur on the Closing Date in Jacksonville,
Florida, at the offices of Holland & Knight, counsel for Parent and Subsidiary,
or at such other place as the parties agree.
3.2 Documents to be Delivered at Closing.osing
(a) Ancillary Agreements. At Closing, the parties shall
execute, enter into and deliver the following agreements ("Ancillary
Agreements"):
(i) Employment Agreement, between Surviving
Corporation and each Key Employee, in the form attached hereto as Exhibit B
("Employment Agreement").
(ii) Restricted Stock and Registration Rights
Agreement, among Parent and Target Shareholders, in the form attached hereto as
Exhibit C ("Restricted Stock Agreement").
(iii) Noncompetition Agreement, between Parent and
each of the Target Shareholders, in the form attached hereto as Exhibit D
("Noncompetition Agreement").
<PAGE>
(b) Closing Documents. At Closing, the parties shall execute,
enter into and deliver the following documents and instruments ("Closing
Documents"):
(i) Parent and Subsidiary shall deliver to Target
and Target Shareholders an opinion, based on appropriate representations herein
of all the parties hereto and satisfactory to Target and Target Shareholders, of
counsel to Parent and Subsidiary, which opinion shall be substantially in the
form attached hereto as Exhibit E.
(ii) Target and Target Shareholders shall deliver to
Parent and Subsidiary an opinion, based on appropriate representations herein of
all of the parties hereto and satisfactory to Parent and Subsidiary, of counsel
to Target and Target Shareholders, which opinion shall be substantially in the
form attached hereto as Exhibit F.
(iii) Target shall execute and deliver to Parent
Articles of Merger, in form and substance reasonably acceptable to Parent, for
filing with the Secretary of State of Colorado and the Department of State of
Florida, substantially in the form attached hereto as Exhibit G.
(iv) Parent's Auditors shall deliver to Parent,
Target and Target Shareholders a letter, satisfactory in form and content to
Parent, Target and Target Shareholders, confirming that the Merger will be
treated as a pooling of interests for financial accounting purposes.
(v) Target's counsel shall deliver to Target and
Target Shareholders an opinion, based on appropriate representations of all
parties hereto, satisfactory in form and content to Target and Target
Shareholders, confirming that the Merger will be treated as a tax-free exchange
for federal income tax purposes.
(vi) Target shall execute and deliver to Parent such
other documents, certificates and instruments as may be reasonably requested to
implement fully the transactions contemplated by this Agreement.
3.3 Conversion of Target Shares. On the Corporate Filing Date, as a result of
the Merger and without any action on the part of Target or any of Target
Shareholders, each and every issued and outstanding share of capital stock of
Target ("Target Issued Shares") shall be converted into, and exchanged for,
shares of Parent Common Stock, and each and every share of capital stock of
Target subject to issuance pursuant to Target Stock Options that are outstanding
on the Corporate Filing Date, not exercised or terminated and convertible by
their respective terms into the right to receive Parent Common Stock ("Target
Option Shares"), shall be so converted, in the manner set forth below:
(a) Target Shares. As used herein, "Target Shares" means
the total number of Target Issued Shares and Target Option Shares on the
Corporate Filing Date;
(b) Parent Shares; Conversion Ratio. The number of shares of
Parent Common Stock into which the Target Shares, in the aggregate, shall be
converted is 602,163 ("Parent Shares"). The ratio used in converting Target
Shares into Parent Shares ("Conversion Ratio") shall be determined by dividing
the number of Parent Shares by the number of Target Shares. The number of Parent
Shares issuable to each of Target Shareholders shall be determined by
multiplying the number of Target Issued Shares held by such shareholder by the
Conversion Ratio. Fractional Parent Shares shall not be issued to any of Target
Shareholders in exchange for Target Issued Shares, and, in lieu thereof, each of
Target Shareholders shall receive a cash payment equal to such fraction
multiplied by the Exchange Price.
<PAGE>
3.4 Exchange of Certificates. At Closing, each of Target Shareholders shall
surrender to Parent, for cancellation, the certificate(s) evidencing the Target
Issued Shares held by such Target Shareholder ("Target Certificate"). Upon such
surrender, the holder of such Target Certificate shall be entitled to receive
from Parent in exchange therefor a certificate representing the number of Parent
Shares that such holder has the right to receive pursuant to Section 3.3, and
the Target Certificate so surrendered shall be cancelled. Until surrendered as
contemplated by this Section 3.4, each Target Certificate shall be deemed at any
time after the Closing to represent only the right to receive, upon such
surrender, the certificate representing Parent Shares and cash in lieu of any
fractional Parent Shares as contemplated hereby.
3.5 No Fractional Shares. In lieu of a certificate or scrip representing a
fractional Parent Share, Parent shall pay to each of Target Shareholders who
surrenders a Target Certificate in accordance herewith and who otherwise would
be entitled, given the number of Target Issued Shares the Target Certificate
represents, to receive a fractional Parent Share, an amount of cash equal to
such fraction multiplied by the Exchange Price.
3.6 No Further Ownership Rights in Target Stock. All shares of Parent Common
Stock issued in exchange for Target Issued Shares in accordance with the terms
hereof (including any cash paid pursuant to Section 3.5) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Target Issued
Shares, and there shall be no further registration of transfers on the stock
transfer books of Target of the Target Issued Shares.
3.7 Stock Options.
(a) On the Corporate Filing Date, each outstanding option to
purchase shares of Target capital stock (a "Target Stock Option" or
collectively, "Target Stock Options"), whether vested or unvested, shall be
assumed by Parent. All plans or agreements described above pursuant to which any
Target Stock Option has been issued or may be issued are referred to
collectively as the "Target Option Plans". Each Target Stock Option shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such Target Stock Option immediately prior to the Merger
(except that, in accordance with the Target Option Plans, all such Target Stock
Options shall be fully vested due to the occurrence of a change of control), the
same number of shares of Parent Common Stock as the holder of such Target Stock
Option would have been entitled to receive pursuant to the Merger had such
holder exercised such option in full immediately prior to the Corporate Filing
Date, at a price per share equal to (y) the aggregate exercise price for the
Target Option Shares otherwise purchasable pursuant to such Target Stock Option
divided by (z) the number of full shares of Parent Common Stock deemed
purchasable pursuant to such Target Stock Option; provided, however, that in the
case of any option to which section 421 of the Code applies by reason of its
qualification under section 422 of the Code ("incentive stock options" or
"ISOs"), the option price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
determined in order to comply with section 424(a) of the Code. With respect to
any Target Stock Option that provides for the acceleration of vesting in the
event that the Target common stock achieves certain public trading price
thresholds, such trading price thresholds shall be adjusted by dividing the
threshold set forth in the Target Stock Option by the exchange ratio
contemplated by the Merger.
<PAGE>
(b) As soon as practicable after the Corporate Filing Date,
Parent shall deliver to the holders of Target Stock Options appropriate notices
setting forth such holders' rights pursuant to the respective Target Option
Plans and the agreements evidencing the grants of such options shall continue in
effect on the same terms and conditions (subject to the adjustments required by
Section 3.7(a) after giving effect to the Merger). Parent shall exercise
reasonable efforts to comply with the terms of the Target Option Plans and
ensure, to the extent required by, and subject to the provisions of, such plans,
that Target Stock Options which qualified as incentive stock options immediately
prior to the Corporate Filing Date continue to qualify as incentive stock
options of Parent after the Corporate Filing Date.
(c) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Target Stock Options assumed in accordance with
Section 3.7(a). As soon as practicable after the Corporate Filing Date, but in
no event later than 45 days following the Closing Date, Parent shall file a
registration statement on Form S-8 (or any successor or other appropriate forms)
with respect to the shares of Parent Common Stock subject to any Target Stock
Options held by persons who are or were directors, officers or employees of
Target or its subsidiaries and shall use its best efforts to maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options remain outstanding. With respect to those
individuals who subsequent to the Merger will be subject to the reporting
requirements under Section 16(a) of the Exchange Act, where applicable, Parent
shall use reasonable efforts to administer Target Option Plans assumed pursuant
to Section 3.7(a) in a manner that complies with Rule 16b-3 promulgated under
the Exchange Act, as it may be amended, to the extent the applicable Target plan
complied with such rule immediately prior to the Merger.
Section 4. Representations and Warranties of Target Shareholders. As an
inducement to Parent and Subsidiary to execute this Agreement and to enter into
the transactions contemplated to take place hereunder, and except as expressly
set forth in any schedule attached hereto that specifically references the
applicable subsection set forth below (all of which schedules are hereinafter
referred to collectively as the "Target Schedule of Exceptions"), Target
Shareholders hereby represent and warrant to Parent and Subsidiary that:
4.1 Organization. Target is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Colorado, with the legal power
to own and operate its assets and to carry on its business as presently
conducted, and it is duly authorized to conduct business in, and is in good
standing under the laws of, each jurisdiction in which the nature of its
business or the ownership or operation of its properties requires such
qualification, except where the failure to so qualify would not have a material
adverse effect upon Target . Target has no subsidiaries. Target has delivered to
Parent true and complete copies of its articles of incorporation and bylaws, as
in effect on the date hereof, and a current certificate of its status from the
Secretary of State of Colorado. The minute books containing the records of
meetings of the shareholders and board of directors of Target and any committees
of its board of directors, its stock certificate books, and its stock record
books are accurate and complete in all material respects, and true and complete
copies of such minute books and records have been delivered to Parent. Target is
not in material default under or in material violation of any provision of its
articles of incorporation or bylaws.
<PAGE>
4.2 Authority. Target has the full right, power, legal capacity and authority to
execute, deliver and perform its obligations under the Transaction Documents to
which it is a party, and no approval or consent of, or notice to, any person,
entity, or governmental agency or authority is necessary with respect to such
execution or performance. Target's execution, delivery and performance of the
Transaction Documents have been duly authorized by all necessary action and will
not violate any provision of its articles of incorporation or bylaws. This
Agreement is, and the other documents to be delivered by Target pursuant hereto
(when executed and delivered) will be, valid and enforceable obligations of
Target, binding on it in accordance with their terms.
4.3 Capitalization; Shareholders. Set forth beneath Target's name on Schedule
4.3 are (a) a complete and accurate description (by number, class, series, and
par value of shares) of its authorized capital stock, (b) the name and address
of each of its record shareholders, (c) the number of shares of each class or
series of its stock held by each shareholder of record, and (d) the total number
of shares of its capital stock that are issued and outstanding. There are no
issued and outstanding shares of Target's capital stock other than the Target
Issued Shares. The Target Issued Shares have been duly authorized, and are
validly issued, fully paid, and nonassessable, in each case free and clear of
all Liens other than any Liens created by or imposed upon the holders thereof.
Target has no shareholders of record other than Target Shareholders. There are
no outstanding or authorized options, warrants, rights, contracts, calls, puts,
rights to subscribe, conversion rights, or other agreements or commitments to
which Target is a party or by which Target is bound providing for the issuance,
disposition, or acquisition of any of the Target Issued Shares or unissued
shares of Target's capital stock. Target has no outstanding or authorized stock
appreciation, phantom stock, or similar rights.
4.4 Directors and Officers. Set forth beneath Target's name on Schedule 4.4 are
the names and addresses of all directors and officers of Target, each of whom
has been duly elected and qualified for, and is currently acting in, such
positions.
4.5 No Interest in Other Entities. Except for interests in the entities
described in the Target Schedule of Exceptions, Target owns no shares or other
equity or ownership interests, either of record, beneficially or equitably, in
any corporation, association, partnership, joint venture or other legal entity
other than shares of capital stock representing non-controlling interests in
publicly-traded companies obtained by Target for investment in the Ordinary
Course of Business.
4.6 Financial Statements. Target has delivered or will deliver to Parent true
and complete copies of the Financial Statements. The 1996 Balance Sheet and the
Interim Balance Sheet included therein fairly present, in all material respects
in accordance with GAAP, the financial position, assets and liabilities of
Target as of March 31, 1996 and October 31, 1996, respectively, and the
statements of income, cash flows and shareholders' equity for the two fiscal
years and the seven-month period ended March 31, 1996 and October 31, 1996,
respectively, fairly present, in all material respects, the results of
operations, cash flows and shareholders' equity, respectively, of Target for the
periods and at the dates indicated.
4.7 Existing Condition. Since the Interim Balance Sheet date, Target
has not:
(a) incurred any Obligations or Taxes (in each case whether
absolute or contingent, whether liquidated or unliquidated, whether due or to
become due and whether insured or uninsured) other than Obligations or Taxes
incurred in the Ordinary Course of Business, or discharged or satisfied any Lien
or paid any Obligations or Taxes, other than in the Ordinary Course of Business,
or failed to pay or discharge when due any Obligations or Taxes, which failure
to pay or discharge has caused or will cause any material damage or risk of
material loss to it or to any material portion of any of its Assets;
<PAGE>
(b) sold, encumbered, assigned or transferred any Assets which
would have been included in the Assets if the date of the Closing were the
Interim Balance Sheet date or on any date since then, except for the sale of
Assets in the Ordinary Course of Business;
(c) created, incurred, assumed or guaranteed any indebtedness
for money borrowed, except for the endorsement of checks in the Ordinary Course
of Business, or mortgaged, pledged or subjected any of its Assets to any Lien
except for Permitted Encumbrances;
(d) made or suffered any amendment or termination of any
Contract to which it is a party or by which it is bound, or cancelled, modified
or waived any right or Receivable held by it (having a value of more than
$25,000.00) other than in the Ordinary Course of Business;
(e) declared, set aside or paid any dividend or made or agreed
to make any other distribution or payment in respect of the Target Issued Shares
or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or
acquire any of the Target Issued Shares;
(f) had filed or entered, or, to Target's actual knowledge,
overtly threatened, against Target any Adverse Claims (i) materially and
adversely affecting Target's Business, operations or Assets, or (ii) amounting,
individually or in the aggregate, to more than $25,000;
(g) suffered any repeated, recurring or prolonged shortage,
cessation or interruption of personnel, supplies or utility or other services
required to conduct its Business or maintain its Business Condition, if such
shortage, cessation or interruption of supplies or services would have a
material adverse effect on its Business or Business Condition;
(h) suffered any material adverse change in its Business
or Business Condition;
(i) received notice or had knowledge of any actual or
threatened labor trouble, union organizational effort, strike or other
occurrence, event or condition of any similar character which has had or might
reasonably be expected to have a material adverse effect on its Business or
Business Condition;
(j) incurred any single Obligation or group of related
Obligations for capital expenditures, capital additions or betterments the
amount of which exceeds $25,000.00, other than in the Ordinary Course of
Business, or except such as may be involved in ordinary repair, maintenance or
replacement of its Assets;
(k) except for increases that result from the provision of
service over time under existing benefit plans and rates of compensation from
the hiring of new personnel and other increases occurring in the Ordinary Course
of Business, materially increased its Employment-Related Liabilities;
(l) changed any of the accounting principles followed by
it or the methods of applying such principles; or
(m) entered into any transaction other than in the Ordinary
Course of Business.
<PAGE>
4.8 Assets. The Assets, taken as a whole, include all rights and property
necessary to the conduct of the Business by Surviving Corporation substantially
in the manner as it is presently conducted by Target. The Assets and all
transactions relating thereto are, in all material respects, accurately
reflected on the books and records of Target.
4.9 Condition of Assets. The Assets, taken as a whole, are (a) in adequate
working condition and repair to conduct the Business substantially in the manner
as it is presently conducted, and (b) in material compliance with all Legal
Requirements applicable to such Assets.
4.10 Real Property and Leases.erty and Leases
(a) Real Property. Target holds no legal, equitable or
beneficial interests in any real property, including, but not limited to, any
fee simple interest, any ground leasehold interest or any interest as a
mortgagee or secured creditor with respect to real property.
(b) Leases. The only Leases under which Target is a lessor,
lessee or sublessee are identified on Schedule 4.10(b), and true and complete
copies of such Leases have been delivered to Parent. Each Lease is in full force
and effect and has not been assigned, modified, supplemented or amended except
as listed on the Target Schedule of Exceptions, and neither Target nor, to the
best knowledge of Target Shareholders, the landlord or sublandlord under any
Lease is in material default under any of the Leases, and no circumstances or
state of facts presently exists which, with the giving of notice or passage of
time, or both, would permit the landlord or sublandlord under any Lease to
terminate any Lease.
(c) No Violations. Target's use of each of the Facilities
complies in all material respects with all Insurance Requirements of Target's
insurers and Legal Requirements of all governmental bodies having jurisdiction
over the Facilities, and Target has received no notices, oral or written, from
any governmental body that Target's use of the Facilities violates any such
Legal Requirements or such Insurance Requirements.
(d) No Condemnation Proceeding. Target has not received
any written notice, and has no knowledge, that any condemnation or similar
proceeding affecting any of the Facilities is pending.
4.11 Tangible Personal Property.al Property
(a) Except as set forth in the Interim Financial Statements,
Target is the sole lawful and beneficial owner of its Tangible Personal
Property, other than Tangible Personal Property which Target has the right to
use in the Business pursuant to valid and enforceable Contracts, free and clear
of all Liens, except Permitted Encumbrances, and it has good and valid title to
all such property.
(b) Schedule 4.11(b) is Target's latest depreciation schedule
(as of October 31, 1996), and such schedule sets forth all material Tangible
Personal Property owned by Target as of such date. Target has neither acquired
nor disposed of any material Tangible Personal Property since such date other
than in the Ordinary Course of Business.
<PAGE>
(c) Schedule 4.11(c) identifies all material Tangible Personal
Property that is used or held for use in the Business but not owned by Target.
(d) Target has not removed or permitted the removal of any
Tangible Personal Property from the Facilities since October 31, 1996, other
than in the Ordinary Course of Business.
4.12 Intellectual Property.ectual Property
(a) Target owns or has the right to use, pursuant to a valid
and enforceable license, all material Intellectual Property necessary for the
operation of the Business as presently conducted. The execution and delivery of
this Agreement, and the consummation of the transactions contemplated hereby,
will neither cause Target to be in violation or default under any license
relating to any material Intellectual Property nor entitle any other party to
any such license to terminate or modify such license, except for any violation,
default, termination or modification as would not cause a material adverse
effect upon Target. Since January 1, 1992, each employee of Target who has had
access to the material Intellectual Property of Target has executed a
confidentiality agreement that is substantially similar to Target's standard
form confidentiality agreement.
(b) Target has not infringed upon or misappropriated any
material Intellectual Property rights of third parties. Target has never
received notice of any Adverse Claim alleging any such infringement or
misappropriation. To the best knowledge of Target Shareholders, no third party
has infringed upon or misappropriated any of its material Intellectual Property
rights.
(c) Set forth beneath Target's name on Schedule 4.12 is a list
and description of each material patent, trademark, copyright, trade name and
service mark included in Target's Intellectual Property, and each license,
agreement, or other permission that it has granted to any third party which is
currently in effect (individually involving license fees or royalties of at
least $5,000) with respect to any patent, trademark, copyright, trade name and
service mark included in Target's Intellectual Property. Target has delivered to
Parent true and complete copies of all documentation pertaining to such items
which constitute a part of Target's Intellectual Property.
4.13 Receivables. All Receivables reflected on Target's books and records, are
valid, bona fide Receivables subject to no setoffs or counterclaims. Schedule
4.13 sets forth a listing and aging of Target's Receivables which are reflected
in its books and records as of November 30, 1996. Except as disclosed on
Schedule 4.13, Target has not been informed by any customer that it does not
intend to pay any such Receivable. Parent and Subsidiary acknowledge that actual
collection of Target's Receivables following the Closing Date will depend upon a
number of factors, such as the post-closing financial condition of customers,
the level and effectiveness of collection efforts undertaken after Closing by
Parent and Surviving Corporation and customers' satisfaction with the services
provided by Surviving Corporation following Closing.
4.14 Bank Accounts and Credit. Set forth on Schedule 4.14 is a complete and
accurate list of all banks and lending institutions with which Target maintains
accounts or has credit arrangements, the name of each person who has signing
authority for such accounts and credit arrangements and the balances of deposits
in or outstanding Obligations under, each of such accounts or credit
arrangements. Target's Obligations to banks and lending institutions are
currently prepayable without penalty or premium.
<PAGE>
4.15 Contracts. Contracts
(a) Set forth on Schedule 4.15 is a complete and accurate list
of all executory Contracts other than the customer Contracts set forth on
Schedule 4.16.
(b) Target has delivered or has caused to be delivered to
Parent a true and complete copy of each of the Contracts, together with all
amendments thereto, that is required to be listed on Schedule 4.15. Except as
indicated on Schedule 4.15, each such Contract is in full force and effect.
(c) Target is not, and to the best knowledge of Target
Shareholders, no other party is, in material breach or material default under
any such Contract, and no event has occurred which, with or without the giving
of notice or lapse of time, or both, would constitute a material breach or
material default under any such Contract or permit the termination or
modification of, or acceleration of any material Obligation under, any such
Contract. No material amount due to Target under any Contract has been assigned,
hypothecated, or encumbered.
(d) The execution, delivery and performance of and compliance
with this Agreement and the transactions contemplated hereunder will not result
in any violation of or be in conflict with or constitute a material default
under any such Contract, or result in the creation of any material Lien upon any
of Target's Assets, or result in any event which, with the lapse of time or the
giving of notice, could constitute a material default under any such Contract.
(e) Target is not a party to any oral Contract that, if
reduced to writing, would be required to be listed in Schedule 4.15.
(f) There are no outstanding powers of attorney executed on
Target's behalf. Target is not a guarantor or otherwise liable for any Liability
or Obligation of any other person, except for the endorsement of checks in the
Ordinary Course of Business.
4.16 Customers. Set forth on Schedule 4.16 is a complete and accurate list of
all customers of Target for the calendar year ended December 31, 1995, and the
ten months ended October 31, 1996, individually accounting for more than
$50,000.00 of net sales, and set forth opposite the name of each customer is the
amount of net sales and the approximate percentage of total net sales of Target
attributable to such customer for such period. To the best knowledge of Target
Shareholders, no customer listed on Schedule 4.16 has advised Target, orally or
in writing, that it will stop doing business with, or materially decrease the
amount of business done with, Target, except for changes in the Ordinary Course
of Business.
4.17 Permits and Filings. Target possesses all material Permits necessary for it
to conduct the Business in all material respects as presently conducted.
Schedule 4.17 contains a list of all material Permits presently held in respect
to the Business, true and complete copies of which have been provided to Parent.
All of such material Permits are in full force and effect, and no suspension or
revocation of any of them is pending or, to Target's knowledge threatened. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby will not violate or terminate any such material
Permits. Target is not in breach or violation of any terms or conditions
applicable to any such material Permits. No proceedings (judicial,
administrative or otherwise) have been commenced, or to the knowledge of Target
Shareholders, threatened with respect to such material Permits. To the knowledge
of Target Shareholders, all applications and reports required to be filed by
Target with governmental authorities have been duly filed by Target, except
where the failure to file such applications and reports would not materially
adversely affect the Business, and all such applications and reports are correct
and complete in all material respects and have been prepared and filed in all
material respects in accordance with all Legal Requirements pertaining thereto.
<PAGE>
4.18 Insurance. Schedule 4.18 accurately sets forth for each policy the name of
the insurer, the risks insured against, coverage limits, deductible amounts, all
outstanding claims thereunder, and whether the terms of such policy provide for
retrospective premium adjustments. All such policies are in full force and
effect in accordance with their terms, no notice of cancellation has been
received, and there is no existing default or event which, with the giving of
notice or lapse of time or both, would constitute a default thereunder.
4.19 Liabilities of Target. Target has no Liabilities of the kind which are
required to be reflected in the financial statements of Target, or disclosed in
the notes thereto, in accordance with GAAP, except for the Liabilities (a) which
are reflected on the Interim Balance Sheet, or disclosed in the notes thereto,
or (b) which have arisen in the Ordinary Course of Business since October 31,
1996. . All Tax Returns with respect to any Taxes have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns properly reflect in all
material respects the liabilities of Target for Taxes for the fiscal periods,
property or events covered thereby. All Taxes shown as due on such Tax Returns
have been paid and properly accrued on the Financial Statements. The accruals
for Taxes contained in the Financial Statements are adequate, in all material
respects, to cover the Tax liabilities of Target with respect to the Business as
of their respective dates and include adequate provision for all deferred Taxes,
and no events have occurred subsequent to such dates to make any of such
accruals materially inadequate. Target has not received any notice of assessment
or proposed assessment in connection with any Tax Returns and there are not
pending Tax examinations of, or Tax claims asserted against, Target or any of
its Assets. Target has not extended, or waived the application of, any statute
of limitations of any jurisdiction regarding the assessment or collection of any
Taxes. There are no Tax liens (other than any lien for current Taxes not yet due
and payable) on any of the Assets of Target. Target has made all deposits
required by law to be made with respect to employees' withholding and other
employment taxes, including without limitation the portion of such deposits
relating to Taxes imposed upon Target. Target has delivered to Parent correct
and complete copies of all Tax Returns filed, examination reports received, and
statements of deficiencies assessed against or agreed to by it relating to tax
years 1990 through 1995.
4.21 Environmental Matters. No Adverse Claims and/or Regulatory Actions have
been asserted, assessed or are pending against Target and, to the best knowledge
of Target, no Adverse Claims and/or Regulatory Actions are threatened against
Target arising out of or due to an Environmental Condition. Target's operation
of the Business has been in material compliance with all applicable
Environmental Laws.
4.22 No Adverse Claims. There are no material Adverse Claims affecting Target or
its Assets pending in any court or by or before any federal, state, county or
municipal department, commission, board, bureau or agency or other governmental
instrumentality, nor to the best knowledge of Target Shareholders is any such
material Adverse Claim threatened or being asserted. Neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby will result in the creation or imposition of any material Lien upon any
of Target's Assets.
<PAGE>
4.23 Employees. Schedule 4.23 contains a true and correct schedule of the names
of all persons who are employed by Target as of December 31, 1996, and their
compensation rates. The aggregate Employment-Related Liabilities as of October
31, 1996, were as reflected on the Interim Balance Sheet, and have not changed
since that date except in the Ordinary Course of Business. Except as disclosed
on Schedule 4.23, Target has no written employment Contracts, or other
Contracts, that contain any severance or termination pay Obligations. All of its
employees are properly and currently licensed in accordance with all Legal
Requirements. To the best knowledge of Target Shareholders, no non-clerical
employee of Target has advised Target, orally or in writing, of his intention to
terminate employment with it or Surviving Corporation.
4.24 Collective Bargaining Agreements. Target is not a party to or bound by any
collective bargaining agreement, and there is no pending or, to the best
knowledge of Target Shareholders, threatened labor Adverse Claim, labor union
organizing attempt, strike or work stoppage that affects or would affect it.
4.25 Employee Benefit Plans.nefit Plans
(a) Set forth on Schedule 4.25(a) is a complete and accurate
list of Target's Benefit Plans. A complete and correct copy of each of the
Benefit Plans and of any related trust agreements, insurance or annuity
contracts, valuations, and other funding agreements for each Benefit Plan has
been delivered to Parent.
(b) All of Target's ERISA Plans are listed in Part I of
Schedule 4.25(b). All of Target's Benefit Plans that are not ERISA Plans, if
any, are listed in Part II of Schedule 4.25(b). No five (5) or fewer
shareholders who own at least 80% of the Target Issued Shares also own at least
80% of an entity that sponsors or participates in a defined benefit pension
plan. Target does not maintain and has not maintained in the past any defined
benefit pension plan, and is not and has not been a party to any agreement
requiring it to contribute to a multi-employer plan within the meaning of
Section 3(37) of ERISA. There are no unfunded vested benefits under any
Qualified Plan which is subject to the vesting and funding standards of ERISA
and no unfunded liabilities for all benefits accrued through the date of the
last actuarial valuation of such Plan (calculated on the basis of the Plan's
normal funding assumptions on such valuation). Target has operated in good faith
compliance with a reasonable interpretation of the continuation coverage
requirements of COBRA. Other than claims for benefits in the ordinary course,
there are no pending claims involving the ERISA Plans or Qualified Plans by any
participant covered under the ERISA Plans or Qualified Plans or otherwise
involving the ERISA Plans or Qualified Plans which allege a breach of fiduciary
duties or violation of the applicable state or federal law which may result in
material liability on the part of Surviving Corporation or any Qualified Plan or
ERISA Plan under ERISA or any other law, nor to the knowledge of Target is there
any reasonable basis for such a claim.
(c) Target has not engaged in any transactions that would
subject it to a tax, penalty or liability for prohibited transactions imposed by
ERISA or Section 4975 of the Code.
(d) Each of the Qualified Plans meets the requirements of
Section 401(a) of the Code, and the trust, if any, forming a part of each
Qualified Plan is exempt from federal income tax under Section 501(a) of the
Code. A favorable determination letter has been issued by the Internal Revenue
Service within the past ten (10) years as to the qualification under Section
401(a) of the Code (including, but not limited to, amendments made by ERISA),
with respect to each Qualified Plan, and Target has delivered to Parent true and
correct copies of all such determination letters. None of the determination
letters has been revoked or modified by the Internal Revenue Service.
<PAGE>
(e) All contributions required by law or required in
accordance with the terms of the Qualified Plans to have been made prior to the
Closing Date will have been made.
(f) Except pursuant to the Benefit Plans listed on Schedule
4.25(a) and under COBRA, Target does not have any present or future liability to
former employees or to their dependents, survivors or beneficiaries in
connection with or arising out of any plan, compensation arrangement or practice
which Target maintained or adopted or to which Target contributed prior to the
date hereof, and Target has not maintained, adopted or contributed to any plan
that provides benefits or payments to former employees or their dependents,
survivors or beneficiaries, except pursuant to the Benefit Plans listed on
Schedule 4.25(a) and under COBRA.
(g) Target has satisfied in all material respects all
reporting and disclosure requirements applicable under ERISA, and the Department
of Labor and Internal Revenue Service and Pension Benefit Guaranty Corporation
regulations promulgated thereunder, with respect to all ERISA Plans and
Qualified Plans, and Target has delivered to Parent true and complete copies of
the most recently filed and disclosed Forms 5500 Forms 5500-C/R (with exhibits),
and summary plan descriptions and summaries of material modification for the
ERISA Plans and Qualified Plans. In the event that a Form 5500 for any of
Target's Qualified Plans and ERISA Plans for the 1996 plan year has not been
filed prior to the Closing Date, a proper extension will be filed if necessary.
(h) No Qualified Plan has had any "unrelated business taxable
income" as defined in Sections 512 through 514 of the Code. There have been no
claims, or notice of claims, filed under any fiduciary liability insurance
policy covering any Benefit Plan.
(i) The Trustees of each of the Qualified Plans have completed
their required annual accountings for the plan years ended on or before December
25, 1993, such accountings accurately reflect the financial positions of the
Qualified Plans as of their respective date, and true and complete copies of the
Trustees' reports or schedules of such accountings have been delivered to
Parent.
4.26 No Violation. Target has complied in all material respects with all, and is
not in violation in any material respect of any, Legal Requirements affecting
Target or its Assets. Target has not received any notice of any violation or
alleged violation, and is not, to its knowledge, under any investigation with
respect to a possible violation of any Legal Requirements. Target has filed in a
timely manner all reports, documents, and other materials that it was required
to file under any Legal Requirements, except where the failure to make such
filing would not materially adversely affect the Business, and the information
contained therein was correct and complete in all material respects. Target
possesses all records and documents that it is required to retain under any
Legal Requirements, except where the failure to possess such records and
documents would not materially adversely affect the Business. Without limiting
the generality of the foregoing, Target has complied in all material respects
with all applicable securities laws, antitrust laws, Tax laws, workers'
compensation laws, occupational health and safety laws, and laws relating to the
employment of labor, employee civil rights, and equal employment opportunities.
<PAGE>
4.27 No Conflicts. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein by Target does not and
will not (a) violate any Legal Requirements or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any material Obligation to which Target is a party or by which it
is bound or to which any of its Assets is subject, or result in the imposition
of any material Lien upon any of its Assets, except for any violation, conflict,
breach, default, acceleration, failure to give notice or Lien which would not
have a material adverse effect upon Target. Except for the filing of the
Articles of Merger, Target is not required to give notice to, to make any filing
with, or to obtain the authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated hereby.
4.28 Conditions Affecting Target. Except as disclosed on the Target Schedule of
Exceptions, there is no event or condition known to Target Shareholders that has
or could reasonably be expected to have a material adverse effect on the
Business or Business Condition of Target considered as a whole, other than such
conditions as may affect as a whole the industry or marketplace in which it
operates.
4.29 Availability of Documents. Target has made available to Parent copies of
all documents listed in any schedule hereto or referred to herein, including,
without limitation all Leases, Contracts, Permits, licenses and Intellectual
Property documentation. Such copies are true and complete in all material
respects and include all material amendments, supplements and modifications
thereto or waivers currently in effect thereunder.
4.30 Commissions. Except for the brokers' fee in the amount of $270,000 (plus
expenses) owed to Green Manning & Bunch, Ltd. on account of the Merger, Target
has not authorized any person to act in such a manner as to give rise to any
valid Adverse Claim against Target, Subsidiary, Surviving Corporation or Parent
for a brokerage commission, finder's fee, or similar payment as a result of the
transactions contemplated hereby.
4.31 Consents. Target has obtained such consents, approvals, and assurances
necessary to effectuate the transactions contemplated hereby, including (without
limitation) approvals of applicable regulatory bodies, Target's lenders,
Target's landlords, and other parties to material Contracts of Target, except
where the failure to obtain such consents would not have a material adverse
effect upon the Business.
4.32 Target Total Shareholders Equity. At Closing, the total shareholders'
equity of Target is not less than $646,000, calculated in accordance with GAAP,
but excluding (i) investment banking, legal, accounting and other transaction
fees related to this Agreement, which shall not exceed $325,000 in the
aggregate, and (iii) any charges taken by Target in accordance with SFAS 121.
4.33 Financial Accounting Considerations.siderations
(a) Target has been an independent business entity and has not
been a subsidiary or division of another enterprise for more than two years
prior to the date of this Agreement;
(b) Target does not now, nor has it at any time prior to the
date of this Agreement, owned more than 10% of the issued and outstanding shares
of Parent Common Stock;
<PAGE>
(c) All changes in equity interests of Target (including
derivative interests, such as stock options or subscription rights), if any,
within the two years immediately preceding the date of this Agreement, are the
result of valid business purposes unrelated to the Merger and were not made in
contemplation of the Merger or any other business combination; and
(d) The Merger will not result in any material change in the
substantive shareholder rights of Target Shareholders or in their relative
interests in the combined post-Merger enterprise.
5. Additional Several Representations of Target Shareholders. Each of the
Target Shareholders hereby severally, and not jointly, represents and
warrants to Parent and Subsidiary as to himself or herself as follows:
5.1 Authority. Such Target Shareholder has the full right, power, legal capacity
and authority to enter into, and to perform his or her obligations under, the
Transaction Documents to which such Target Shareholder is a party. The
Transaction Documents to be delivered by such Target Shareholder pursuant hereto
(when executed and delivered) will be valid and enforceable obligations of such
Target Shareholder and binding on such Target Shareholder in accordance with
their terms.
5.2 Ownership of Target Shares. Such Target Shareholder owns the Target Shares
set forth by such Target Shareholder's name on Schedule 4.2 hereof, beneficially
and (except as disclosed in Schedule 4.2) of record, free and clear of any
Liens.
5.3 Liability. Anything herein to the contrary notwithstanding, no Target
Shareholder shall have any liability or obligation whatsoever regarding the
breach of any of the representations and warranties set forth in this Section 5
which are made by and on behalf of any other Target Shareholder. Each of Parent
and Subsidiary shall be entitled to pursue its full legal rights and remedies
against any particular Target Shareholder who breaches his or her
representations and warranties contained in this Section 5.
Section 6. Representations and Warranties of Parent and Subsidiary. As an
inducement to Target and Target Shareholders to execute this Agreement and to
enter into the transactions contemplated to take place hereunder, and except as
expressly set forth in any schedule attached hereto that specifically references
the applicable subsection set forth below (all of which schedules are
hereinafter referred to collectively as the "Parent/Subsidiary Schedule of
Exceptions"), Parent and Subsidiary, jointly and severally, hereby represent and
warrant to Target and Target Shareholders that:
6.1 Organization of Parent. Parent is a corporation duly organized, validly
existing, and in good standing under the laws of Florida, with the corporate
power to own and operate its assets and to carry on its business as presently
conducted, and it is duly authorized to conduct business in, and is in good
standing under the laws of, each jurisdiction in which the nature of its
business or the ownership or operation of its properties requires such
qualification. Parent is not in default under or in violation of any provision
of its articles of incorporation or bylaws.
<PAGE>
6.2 Authority of Parent. Parent has the full right, power, legal capacity and
authority to enter into, and to perform its obligations under, the Transaction
Documents. Parent's execution, delivery, and performance of this Agreement have
been duly authorized by all necessary action, including approval by its board of
directors, and no other approval or consent of, or notice to, any person,
entity, or governmental agency or authority is necessary with respect to such
execution or performance. Parent's execution, delivery and performance of this
Agreement, the Ancillary Agreements and the Closing Documents have been duly
authorized by all necessary actions and will not violate any provision of its
articles of incorporation or bylaws. The Transaction Documents to be delivered
by Parent pursuant hereto (when executed and delivered) will be, valid and
enforceable obligations of Parent, binding on Parent in accordance with their
terms.
6.3 Organization of Subsidiary. Subsidiary is a corporation duly organized,
validly existing, and in good standing under the laws of Florida, with the
corporate power to own and operate its assets and to carry on its business as
presently conducted, and it is duly authorized to conduct business in, and is in
good standing under the laws of, each jurisdiction in which the nature of its
business or the ownership or operation of its properties requires such
qualification. Subsidiary is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
6.4 Authority of Subsidiary. Subsidiary has the full right, power, legal
capacity and authority to enter into, and to perform its obligations under, the
Transaction Documents. Subsidiary's execution, delivery, and performance of this
Agreement have been duly authorized by all necessary action, including approval
by its board of directors and sole shareholder, and no other approval or consent
of, or notice to, any person, entity, or governmental agency or authority is
necessary with respect to such execution or performance. Subsidiary's execution,
delivery and performance of this Agreement, the Ancillary Agreements and the
Closing Documents have been duly authorized by all necessary actions and will
not violate any provision of its articles of incorporation or bylaws. The
Transaction Documents (when executed and delivered) will be, valid and
enforceable obligations of Subsidiary, binding on Subsidiary in accordance with
their terms.
6.5 Valid Issuance of Parent Shares. The Parent Shares to be issued pursuant to
the Merger and upon the exercise of Target Stock Options assumed pursuant to
this Agreement, when issued, will be duly authorized, validly issued, fully paid
and non-assessable.
6.6 No Material Adverse Change. Since September 30, 1996, Parent has conducted
its business in the ordinary course and there has not occurred: (a) any material
adverse change in the financial condition, liabilities, assets or business of
Parent; (b) any amendment or change in the Articles of Incorporation or Bylaws
of Parent; or (c) any damage to, destruction or loss of any assets of the Parent
(whether or not covered by insurance) that materially and adversely affects the
financial condition or business of Parent.
6.7 Investigations. There is no pending or, to the knowledge of Parent,
threatened investigation by any governmental agency involving a matter which, if
determined adversely to Parent, would have a material adverse effect upon Parent
or would be viewed as important to a shareholder of Parent in making a
determination as to whether to purchase or sell the Parent Common Stock.
<PAGE>
6.8 Exchanges. Parent is not a party to any agreement, plan or proposal which
would result in the Parent Common Stock being exchanged for a security of
another corporation or a different security of Parent or which would result in
any person or group of persons becoming initially the beneficial owner, as
defined in Securities and Exchange Commission Rule 13d-3, of fifteen percent
(15%) or more of the outstanding Parent Common Stock or which would result in a
majority of the Board of Directors of Parent being composed of persons who are
not presently members of that Board of Directors.
6.9 Ownership of Subsidiary. Parent owns one hundred percent (100%)
of the issued and outstanding capital stock of Subsidiary.
6.10 No Adverse Claims. There are no material Adverse Claims affecting Parent or
its assets pending in any court or by or before any federal, state, county or
municipal department, commission, board, bureau or agency or other governmental
instrumentality, nor is any material Adverse Claim threatened or being asserted.
There is no adverse claim enjoining Parent or in any way restricting it or the
use of its assets. Without limiting the generality of the foregoing, there are
no Adverse Claims asserted or perfected, or to the best knowledge of Parent,
threatened against Parent resulting from or with respect to or based upon breach
of warranty, breach of contract, intentional tortious acts, negligence, or
strict liability that could have a material adverse effect on any of the assets
or Business Condition of Parent. Neither this Agreement nor the consummation of
the transactions contemplated hereby (a) will result in the creation or
imposition of any Lien upon any of its assets, or (b) will give to any third
party any interest or rights in, or with respect to, any of its assets.
6.11 No Violation. Parent has complied in all material respects with all, and is
not in violation in any material respect of any, Legal Requirements affecting
Parent or its assets. Parent has not received any notice of any violation or
alleged violation, and is not, to its knowledge, under any investigation with
respect to a possible violation of any Legal Requirements. Parent has filed in a
timely manner all reports, documents, and other materials that it was required
to file under any Legal Requirements, except where the failure to make such
filing would not materially adversely affect its business, and the information
contained therein was correct and complete in all material respects. Parent
possesses all records and documents that it is required to retain under any
Legal Requirements, except where the failure to possess such records and
documents would not materially adversely affect its business. Without limiting
the generality of the foregoing, Parent has complied in all material respects
with all applicable securities laws, antitrust laws, Tax laws, workers'
compensation laws, occupational health and safety laws, and laws relating to the
employment of labor, employee civil rights, and equal employment opportunities.
6.12 Conditions Affecting Parent. There is no fact, development or threatened
development with respect to the markets, products, services, clients, customers,
facilities, computer software, data bases, personnel, vendors, suppliers,
operations, assets or prospects of its business that is known to Parent which
would materially adversely affect its business or Business Condition of Parent
considered as a whole, other than such conditions as may affect as a whole the
industry or marketplace in which it operates. Parent does not have any reason to
believe that any loss of any employee, agent, customer or supplier or other
advantageous arrangement will result because of the consummation of the
transactions contemplated hereby.
<PAGE>
6.13 Completeness and Continuation of Disclosure. None of Parent's or
Subsidiary's representations and warranties set forth herein, nor any
information or statements contained in the lists or documents provided or to be
provided by them, notwithstanding any investigation thereof by Target, contains
or will contain any untrue statement of a material fact, or omits or will omit
any material fact necessary to render the statements made not misleading, either
at the date hereof or at Closing.
6.14 Commissions. Neither Parent nor Subsidiary has authorized any person to act
in such a manner as to give rise to any valid adverse claim against Target or
Target Shareholders for a brokerage commission, finder's fee, or similar payment
as a result of the transactions contemplated hereby.
6.15 Restricted Stock Agreement. The representations and warranties made by
Parent and Subsidiary in the Restricted Stock Agreement are incorporated herein
by reference and made a part hereof.
6.16 No Conflicts. The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated herein by Parent and
Subsidiary does not and will not (a) violate any Legal Requirements or (b)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material Obligation to which either
Parent or Subsidiary is a party or by which either is bound or to which any of
Parent's or Subsidiary's Assets are subject, or result in the imposition of any
material Lien upon any of Parent's or Subsidiary's Assets. Neither Parent nor
Subsidiary is required to give notice to, to make any filing with, or to obtain
the authorization, consent, or approval of any government or governmental agency
in order to consummate the transactions contemplated hereby.
6.17 Consents. Parent and Subsidiary have obtained such consents, approvals, and
assurances necessary to effectuate the transactions contemplated hereby,
including (without limitation) approvals of applicable regulatory bodies,
Parent's and Subsidiary's lenders, landlords, and other parties to material
Contracts of Parent or Subsidiary, except where the failure to obtain such
consents would not have a material adverse effect upon the Business.
6.18 SEC Documents; Company Financial Statements. Parent has
delivered to each of the Target Shareholders true and complete copies of all
prospectuses, reports and definitive proxy statements filed by it (together with
any amendments required to be made with respect thereto) with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act") and under Securities Exchange Act of 1934, as
amended (the "Exchange Act") on or after September 29, 1995, all in the form so
filed (all of the foregoing, together with all exhibits and schedules thereto
and documents incorporated by reference therein, being collectively referred to
as the "Disclosure Documents"). As of their respective filing dates, the
Disclosure Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act as applicable and the rules and
regulations of the Commission promulgated thereunder, and none of the Disclosure
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were made,
not misleading, except to the extent corrected by a document subsequently filed
with the Commission. The Disclosure Documents constitute all prospectuses,
reports, proxy statements and other filings required to be made by Parent
pursuant to the Securities Act and the Exchange Act on or after September 29,
1995. All material contracts and other documents of Parent and its subsidiaries
<PAGE>
required to be filed as exhibits to the Disclosure Documents have been filed as
required. The financial statements of Parent including the notes thereto,
included in the Disclosure Documents (the "Parent Financial Statements") comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the Commission with respect thereto,
have been prepared in accordance with GAAP consistently applied (except as may
be indicated in the notes thereto) and present fairly in all material respects
the consolidated financial position of Parent at the dates thereof and of its
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal audit adjustments which are not material in
amount or significance). There has been no change in Parent accounting policies
except as described in the notes to the Parent Financial Statements.
6.19 Tax-Free Reorganization. The representations and warranties made by Parent
and Subsidiary in the Tax Representations Letter, delivered to Target
concurrently with the execution of this Agreement, relating to the Merger's
qualification as a reorganization under Section 368(a)(1) of the Code are
incorporated herein by reference and made a part hereof.
Section 7. Post-Closing Agreements.
7.1 Nasdaq National Market Listing. Parent shall cause the Parent Shares
issuable in connection with the Merger or in connection with the assumed Target
Stock Options to be listed on the Nasdaq National Market System effective as of
the Closing Date.
7.2 Publishing of Financial Results of Combined Entities. Parent agrees that it
will not consummate an underwritten public offering of its common stock (whether
a primary offering by Parent or a secondary offering by its shareholders) until
Parent has published unaudited combined results of operations of Parent and
Surviving Corporation covering a period of at least 30-days; provided, however,
such results of operations shall be published no later than May 15, 1997.
7.3 Auditor's Representation Letter. In connection with the audit of the
financial statements of Target for the period from April 1, 1996, through
December 31, 1996, or the Closing Date, Target Shareholders who also are the
chief executive and chief financial officers of Target will provide Parent's
Auditors or Target's Auditors with a customary representation letter on behalf
of Target required under Generally Accepted Auditing Standards.
7.4 COBRA. Former employees of Target (and their beneficiaries) who are
currently receiving continuation coverage under Target's group health plans and
current employees (and their beneficiaries) whose employment is terminated in
contemplation of the Merger and who elect continuation coverage under Target's
group health plans shall be entitled to continued coverage under the coverage
continuation provisions of Section 4980B of the Code and of Sections 601 through
608 of ERISA. In the event Parent or Surviving Corporation terminates such group
health plans of Target, continuation coverage shall be provided to such former
employees and such terminated employees (and their beneficiaries) under the then
current plan or plans of Parent or Surviving Corporation. Neither Parent nor
Surviving Corporation shall take any action to jeopardize such continuation
coverage rights described herein, and both of them shall continue to provide
such rights, whether or not they would otherwise be permitted to discontinue
such rights on account of the Merger.
7.5 Target's Benefit Plans. Parent agrees to maintain Target's existing benefit
plans for 90 days following the Merger. Thereafter, Parent and Subsidiary shall
use their best efforts to permit Target employees to realize the full benefits
to which they are entitled under any of the Benefit Plans and to integrate such
employees into Parent's employee benefit plans as expeditiously as possible,
including, but not limited to, granting employees of Target past service credit
for their period of employment with Target to the extent such grant of past
service credit is not prohibited under any Parent employee benefit plan or any
provision of ERISA. Neither Parent nor Subsidiary shall take any action that
would prevent a terminated employee from receiving a distribution (or a direct
rollover) of his or her vested account in any Benefit Plan at least as soon as
he or she would have received such distribution under the terms of such Benefit
Plan.
<PAGE>
7.6 Guarantees. With respect to those debts or obligations described
in Schedule 4.7(c) upon which Shari Leigh and Martin Greer are personally
liable, Parent will either pay such debts in full or seek to obtain the release
of Shari Leigh and Martin Greer from their personal liability for such debts;
provided, however, if Parent concludes that it is in its best interest to allow
such debts to remain outstanding and it is unable to obtain the release of Shari
Leigh and Martin Greer from their personal guarantees, Parent agrees to
indemnify and hold Shari Leigh and Martin Greer harmless for or from any
liability arising from such personal guarantees.
7.7 Tax Matters. Except as required by applicable law, Parent and Subsidiary
will not take or cause to be taken any action which would prevent the Merger
from qualifying as a reorganization under Section 368(a)(1) of the Code. Parent
and Subsidiary will report the Merger as such a reorganization in all filings
with the IRS and state income tax authorities.
Section 8.ioSecurities Matters Relating to Parent Shares. Attached hereto as
Exhibit C is the form of Restricted Stock Agreement to be executed and delivered
at Closing by Parent and each of Target Shareholders, which contains provisions
relating to, among other things: (i) the perfection of a limited offering
exemption under federal and applicable state securities laws (the "Securities
Laws") for the issuance of the Parent Shares in connection with the Merger; (ii)
the disclosure of all material facts relating to the Parent Common Stock; (iii)
certain representations and warranties of Parent concerning Parent and the
Parent Shares; and (iv) certain representations and warranties of Target
Shareholders concerning their acquisition and holding of the Parent Shares; and
(v) certain covenants of Parent with respect to future registration of the
Parent Shares under the Securities Laws.
Section 9. Corporate Filing Date of Merger. On the first business day after the
Closing or at such other time as shall be agreed upon in writing by Parent,
Subsidiary, and Target, an executed counterpart of Articles of Merger, certified
as to the requisite shareholder approval (which shall be deemed to have been
obtained by the joinder of all of Target Shareholders as parties hereto), shall
be submitted by Subsidiary for filing with the Secretary of State of the State
of Colorado and the Department of State of the State of Florida. The date of the
later of such filings, is referred to herein as the "Corporate Filing Date."
Section 10. Survival; Indemnification.
10.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, indemnification provisions and
agreements of the parties made or set forth in the Transaction Documents shall
survive the execution and delivery hereof or thereof, the Closing, and any
investigation made by the parties and shall continue in full force and effect
thereafter, subject to the limitations provided in Section 10.4(f).
10.2 Indemnification Exclusive Remedy. The remedies provided in this Section 10
constitute the sole and exclusive remedies for recovery against the
Indemnitor(s) based upon the inaccuracy, untruth, incompleteness or breach of
any representation or warranty of any Indemnitor contained in the Transaction
Documents or based upon the failure of any Indemnitor to perform any covenant,
agreement or undertaking required by the terms of the Transaction Documents to
be performed by such Indemnitor.
<PAGE>
10.3 Indemnification Rights and Obligations.
(a) Target Shareholders, jointly and severally, hereby agree
to indemnify Surviving Corporation and Parent with respect to, and hold
Surviving Corporation and Parent harmless from, any Liability or Impairment
which Surviving Corporation or Parent may directly or indirectly incur or suffer
by reason of, or which results from, arises out of or is based upon (i) the
inaccuracy of any representation or warranty made by Target or Target
Shareholders in the Transaction Documents (other than the individual
representations, warranties and covenants made severally by a particular Target
Shareholder in this Agreement or in any other Transaction Document); or (ii) the
failure of Target or Target Shareholders to comply with any covenants made by
Target or Target Shareholders in the Transaction Documents (other than the
individual representations, warranties and covenants made severally by a
particular Target Shareholder in this Agreement or in any other Transaction
Document).
(b) Each Target Shareholder, severally and not jointly, hereby
agrees to indemnify Surviving Corporation and Parent with respect to, and hold
Surviving Corporation and Parent harmless from, any Liability or Impairment
which Surviving Corporation or Parent may directly or indirectly incur or suffer
by reason of, or which results from, arises out of or is based upon, the
inaccuracy of any representation or warranty made by such Target Shareholder in
Section 5 hereof.
(c) Surviving Corporation and Parent, jointly and severally,
hereby agree to indemnify Target Shareholders with respect to, and hold Target
Shareholders harmless from, any Liability or Impairment which Target
Shareholders may directly or indirectly incur or suffer by reason of, or which
results from, arises out of or is based upon (i) the inaccuracy of any
representation or warranty made by Subsidiary or Parent in the Transaction
Documents, (ii) the failure of Subsidiary or Parent to comply with any covenants
made by Subsidiary or Parent Transaction Documents, (iii) the conduct of the
Business by Surviving Corporation or Parent subsequent to the Closing Date, or
(iv) the conduct of the Business by Target on or prior to the Closing Date
unless the specific Liability or Impairment for which Target Shareholders are
seeking indemnification would constitute a breach of this Agreement for which
Parent and Subsidiary have a right of indemnification from Target Shareholders.
(d) Anything herein to the contrary notwithstanding, no party
shall make any Indemnification Claim(s) against any other party(ies) pursuant to
this Section 10: (i) unless the dollar amount of all Liabilities or Impairments
suffered or incurred by the party seeking such indemnity hereunder shall exceed,
in the aggregate, the amount of $75,000, but, if such amount is exceeded, the
indemnifying party(ies) shall be required to pay the full amount of such
aggregate Liabilities or Impairments (without deduction for such $75,000
threshold amount) for which indemnification rights and obligations are provided
under this Section 10; (ii) for any amount in excess of the indemnifying party's
pro rata portion (i.e., with respect to the Target Shareholders, their
respective percentage interests in the capital stock of Target) of the aggregate
value of the transaction contemplated by this Agreement, i.e., the product of
the Parent Shares multiplied by the Exchange Price.
(e) Anything herein to the contrary notwithstanding, no party
shall be liable to any other party under this Section 10 for punitive or
consequential damages, including lost profits, except to the extent contained in
a settlement, award or judgment obtained by a third party.
<PAGE>
10.4 Method of Asserting Claims. All Indemnification Claims by a party entitled
to be indemnified hereunder (an "Indemnitee") by another party hereto (an
"Indemnitor), under this Section 10, shall be asserted and resolved as follows:
(a) Subsidiary (and then Surviving Corporation) is hereby
designated the representative of (i) Parent and Subsidiary, and (ii) the Entity
Related Parties of Surviving Corporation, Subsidiary and Parent, to the extent
necessary to give effect to the provisions of Sections 10.4 through 10.5 hereof,
and in that representative capacity, Subsidiary is referred to as Indemnitee or
Indemnitor, as appropriate.
(b) Shareholder Representative is hereby designated the
representative of Target Shareholders as set forth in Section 10.6 to the extent
necessary to give effect to the provisions of Section 10.4 through 10.5 hereof,
and in that representative capacity, Shareholder Representative is referred to
as the Indemnitee or Indemnitor, as appropriate.
(c) In the event that any Liability for which Indemnitor is
obligated to indemnify Indemnitee hereunder is asserted against or sought to be
collected by a third party, Indemnitee shall promptly notify the Indemnitor of
such Liability, specifying the nature of such Liability and the amount or the
estimated amount thereof to the extent then feasible to estimate (which estimate
shall not be conclusive of the final amount of such Liability) (the "Claim
Notice"). The Indemnitor shall have thirty (30) days from its receipt of the
Claim Notice (the "Notice Period") to notify Indemnitee (i) whether or not
Indemnitor disputes its obligation to indemnify Indemnitee hereunder with
respect to such Liability, and (ii) if it does not dispute such obligation to
indemnify, whether or not it desires, at its sole cost and expense, to defend or
control the defense of Indemnitee against such Liability; provided, however,
that Indemnitee is hereby authorized prior to and during the Notice Period to
file any motion, answer or other pleading which it shall deem necessary or
appropriate to protect its interests. In the event that Indemnitor notifies
Indemnitee within the Notice Period that the Indemnitor does not dispute such
obligation to indemnify and desires to defend or control the defense of
Indemnitee against such Liability, then, except as hereinafter provided, the
Indemnitor shall have the right to defend by appropriate proceedings, which
proceedings shall be promptly settled or brought to a final conclusion in such a
manner as to avoid any risk of Indemnitee becoming liable for any additional
Liability. If Indemnitee desires to participate in any such defense or
settlement it may do so, but it shall not be in control of such defense or
settlement and its participation shall be at its sole cost and expense;
provided, however, if in the reasonable opinion of Indemnitee, any such
Liability involves an issue or matter which reasonably could have a material
adverse effect on the business, operations, assets, properties or prospects of
Indemnitee or any division of Indemnitee, Indemnitee shall have the right to
approve of counsel selected by Indemnitor, which approval shall not be
unreasonably withheld. If the Indemnitor disputes the Indemnitor's obligation to
indemnify with respect to such Liability or elects not to defend against such
Liability, whether by not giving timely notice as provided above or otherwise,
then the amount of any such Liability, or, if the same be contested by the
Indemnitor or by Indemnitee (but Indemnitee shall not have any obligation to
contest any such claim or demand), then that portion thereof as to which such
defense is unsuccessful, shall be conclusively deemed to be an obligation to
indemnify of the Indemnitor hereunder (subject, if the Indemnitor has timely
disputed any obligation to indemnify, to a determination that any disputed
obligation to indemnify is covered by these indemnification provisions).
<PAGE>
(d) In the event Indemnitee should have an Indemnification
Claim against the Indemnitor which does not involve a Liability being asserted
against or sought to be collected from it by a third party, Indemnitee shall
promptly send a Claim Notice with respect to such Liability or Impairment to the
Indemnitor. If the Indemnitor does not notify Indemnitee within the Notice
Period that it disputes such Liability or Impairment, the amount of such
Liability or Impairment shall be conclusively deemed a Liability of the
Indemnitor hereunder. If an Indemnitor does respond within the Notice Period and
such response disputes such claim or Liability, in whole or in part, the
Indemnitee shall have no remedy other than to initiate the Resolution Process
under Section 11.
(e) Nothing herein shall be deemed to prevent any Indemnitee
from making an Indemnification Claim with respect to potential or contingent
Liabilities or Impairments, provided the Claim Notice sets forth the specific
basis for any such potential or contingent Liabilities or Impairments and the
estimated amount thereof to the extent then feasible and the indemnified party
has reasonable grounds to believe that such a Liability will be asserted or
Impairment will be incurred or suffered.
(f) The indemnification rights under this Section 10 shall not
apply unless a Claim Notice has been delivered to Indemnitor on or prior to the
following dates, as applicable: (i) if the subject matter of such Claim Notice
was, or through the exercise of reasonable diligence should have been, evident
to the auditors in the course of such audit process, the date of issuance of the
first, definitive audit report by independent certified public accountants
issued subsequent to the Closing Date and relating to the financial statements
of the combined enterprise (including both Parent and Surviving Corporation);
(ii) if the subject matter of such Claim Notice was not, nor through the
exercise of reasonable diligence should have been, evident to the auditors in
the course of such audit process, the first (1st) anniversary of the Closing
Date; or (iii) except as expressly provided in the immediately following
sentence, in any event not later than the first (1st) anniversary of the Closing
Date. Anything herein to the contrary notwithstanding, (x) the cut-off date for
Claim Notices under clause (i) of this Section 10.4(f) (f) shall be extended, if
and to the extent necessary, to provide Parent 30 days' actual notice of the
results of such audit, and (y) if the indemnification rights relate to the
inaccuracy of a representation or warranty made by Target Shareholders in
Section 5, then the Claim Notice shall be effective hereunder regardless of when
delivered.
10.5 Payment.
(a) In the event that any party has an obligation to indemnify
another under Section 10.4, such party shall promptly pay the indemnified party
the amount of such obligation. If there should be a dispute as to the amount or
manner of determining any indemnity obligation owed under this Section 10, the
party from which indemnification is due shall nevertheless pay, when due, such
portion, if any, of the obligation as shall not be subject to dispute. Upon the
payment in full of any indemnity obligation, either by setoff or otherwise, the
party making payment shall be subrogated to the rights of the indemnified party
against any person, firm, corporation or other entity with respect to the
Liability or Impairment on which the indemnity obligation is based.
<PAGE>
(b) Anything herein to the contrary notwithstanding, any and
all indemnification obligations hereunder shall be satisfied by Indemnitor's
delivery to Indemnitee of shares of Parent Common Stock, properly registered in
Indemnitee's name or endorsed for transfer to Indemnitee, which shall have an
aggregate value equal to such indemnification obligation (including any interest
accrued thereon) determined by valuing the shares of Parent Common Stock so
delivered at the Exchange Price; provided, however, if at the time such
indemnification obligation is determined, Indemnitor (other that Parent) holds
insufficient shares of Parent Common Stock to satisfy his or her indemnification
obligation in such medium of exchange, any excess indemnification obligation
shall be satisfied in cash.
10.6 Shareholder Representative.sentative
(a) Target Shareholders irrevocably make, constitute and
appoint Shari G. Leigh as their agent (the "Shareholder Representative") and
authorize and empower her to fulfill the role of Shareholder Representative
hereunder. In the event of her resignation, she shall appoint, as a successor,
any one of the Target Shareholders or an individual who shall agree in writing
to accept such appointment, and the resigning Shareholder Representative's
resignation shall not be effective until such a successor shall have been
appointed. If a Shareholder Representative should die or become incapacitated,
his or her successor may be appointed by the Shareholder Representative pursuant
to Shareholder Representative's valid will or, in the absence of such
appointment, within thirty (30) days of his or her death or incapacity by a
majority in interest of Target Shareholders (including the personal
representative of the estate of any deceased Target Shareholder). The choice of
a successor Shareholder Representative appointed in any manner permitted above
shall be final and binding upon all of the Target Shareholders. The decisions
and actions of any successor Shareholder Representative shall be, for all
purposes, those of a Shareholder Representative as if originally named herein.
(b) Each of Target Shareholders has made, constituted and
appointed and by the execution of this Agreement hereby irrevocably makes,
constitutes and appoints the Shareholder Representative as such person's true
and lawful attorney in fact and agent, for such person and in such person's
name, (i) to receive all Claim Notices and all other notices and communications
directed to such shareholder under this Agreement and to take any action (or to
determine to take no action) with respect thereto as he or she may deem
appropriate as effectively as such shareholder could act for himself or herself,
including without limitation, the settlement or compromise of any Adverse Claim,
and (ii) to execute and deliver all instruments and documents of every kind
incident to the foregoing to all intents and purposes and with the same effect
as such shareholder could do personally, and each such shareholder hereby
ratifies and confirms as his or her own act, all that the Shareholder
Representative shall do or cause to be done pursuant to the provisions hereof.
All Claim Notices and all other notices and communications directed to Target
Shareholders or any one of them under this Agreement shall be given to the
Shareholder Representative.
(c) The death or incapacity of any Target Shareholder shall
not terminate the authority and agency of the Shareholder Representative.
(d) Target Shareholders hereby agree to indemnify the
Shareholder Representative and to hold him or her harmless against any Adverse
Claim incurred without willful misconduct or bad faith on the part of the
Shareholder Representative and arising out of or in connection with his or her
duties as Shareholder Representative.
<PAGE>
10.7 Payments by Third Parties. Surviving Corporation shall be
obligated to offset against any claim hereunder the full amount of any payments
(including insurance proceeds) promptly received by Surviving Corporation from
third parties, which payments pertain to the Liability or Impairment which is
the subject of the claim. Surviving Corporation shall have no obligation to seek
recovery against any third party (including any insurer) with respect to any
claim hereunder. With respect to claims paid by or on behalf of Target
Shareholders to Parent the Shareholder Representative shall retain the right, on
behalf of Target Shareholders to proceed against insurers and third parties
under claims of warranty, guaranty, indemnification or otherwise, or against
other parties that may be responsible for any conditions or facts that give rise
to any such claim, and Surviving Corporation shall provide such information and
otherwise cooperate with Target in such matters to the extent reasonably
requested by Target. If Surviving Corporation or any affiliate of Parent
receives any funds from insurers, third parties or otherwise with respect to a
claim which has been paid by or on behalf of Target Shareholders to Surviving
Corporation, Surviving Corporation shall pay over such funds to the Shareholder
Representative. Surviving Corporation shall maintain all books and records of
Target until expiration of the time periods set forth in Section 10.4(f) and
thereafter with respect to those relating to any Dispute until the Resolution
Process with respect to such Dispute is completed.
11. Resolution of Disputes. The following procedures ("Resolution Process")
shall be used to resolve any controversy, disagreement or dispute
(collectively, "Dispute") arising out of or relating to this Agreement or any
of the Transaction Documents:
11.1 Negotiation. The parties shall attempt in good faith to resolve any Dispute
promptly by negotiations between executives who have authority to settle the
Dispute. Either party may give the other party written notice of any Dispute not
resolved in the normal course of business ("Notice of Dispute"). Within ten (10)
days following delivery of such Notice of Dispute, executives of both parties
shall meet at a mutually acceptable time and place (by mutual agreement, such
meeting may be held by telephone), and thereafter as often as they deem
necessary, to exchange relevant information and to attempt to resolve the
Dispute. If the matter has not been resolved within twenty (20) days following
delivery of such Notice of Dispute, or if the parties fail to meet within ten
(10) days, either party may initiate mediation of the Dispute or claim as
provided in Section 11.2.
11.2 Mediation. If any Dispute has not been resolved by negotiation as provided
in Section 11.1, the parties shall endeavor to resolve the Dispute by mediation
under the then current Model Procedure for Mediation of Business Disputes of the
Center for Public Resources, Inc. ("CPR"), 366 Madison Avenue, New York, New
York 10017. The neutral third party will be selected from the CPR Panel of
Neutrals. If the parties encounter difficulty in agreeing on a neutral, they
will seek the assistance of CPR in the selection process. Unless otherwise
agreed by the parties, the place of mediation shall be St. Louis, Missouri.
11.3 Arbitration. Any Dispute that has not been resolved by mediation, as
provided in Section 11.2 within forty-five (45) days of the initiation of such
procedure, shall be finally settled by arbitration conducted expeditiously in
accordance with the CPR Rules for Non-Administered Arbitration of Business
Disputes by a sole arbitrator; provided, however, that if one party has
requested the other party to participate in a non-binding dispute resolution
procedure under Sections 11.1 or 11.2 and the other party has failed to
participate therein, the other party may initiate arbitration before expiration
of the above time period. The arbitration shall be governed by the United States
Arbitration Act, 9 U.S.C. " 1-16, and judgment upon the award rendered by the
arbitrator may be entered by any court having jurisdiction thereof. Unless
otherwise agreed by the parties, the place of arbitration shall be St. Louis,
<PAGE>
Missouri. The arbitrator is not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any damages in
excess of compensatory damages.
11.4 Costs. The parties shall bear their respective costs in connection with the
dispute resolution procedures described in Sections 11.1 and 11.2, except that
the parties shall share equally the fees and expenses of any neutral third party
or arbitrator and the costs of any facility used in connection with such dispute
resolution procedures.
11.5 Representation by an Attorney. With respect to the non-binding procedures
provided in Sections 11.1 and 11.2, if a negotiator intends to be accompanied at
a meeting by an attorney, the other negotiator shall be given at least two (2)
working days' notice of such intention and may also be accompanied by an
attorney. All negotiations relating to any of the procedures provided in this
Section 11 are confidential and shall be treated as compromise and settlement
negotiations for purposes of the rules of evidence of all applicable
jurisdictions.
Section 12.Miscellaneous.
12.1 Expenses. Except as expressly provided herein, each of Parent and Target
shall bear its own expenses and costs incurred in connection with the
negotiation, execution and delivery hereof and the Closing of the transactions
contemplated hereby; provided, however, to the extent that Target's aggregate
investment banking, legal, accounting and other transaction fees related to the
transactions contemplated by this Agreement exceed $325,000, such fees shall be
the obligation of Target Shareholders. Target Shareholders shall pay all
documentary stamp taxes and surtaxes, if any, incident to the transfer of the
Target Shares in connection with the Merger.
12.2 Public Announcements. Each of the parties agrees not to make or permit any
announcement or public disclosure, and not to issue or permit issuance of any
press release, concerning this Agreement or the transactions contemplated
hereby, other than a joint press release by Parent and Target to be made
simultaneously herewith, without the prior approval of the other parties, except
as may be required of Parent to comply fully with its disclosure obligations
under its disclosure obligations under the Exchange Act.
12.3 Additional Agreements; Best Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Legal Requirements to
consummate and make effective the transactions contemplated hereby, including
cooperating fully with the other parties. In case at any time after the Closing
Date or the Corporate Filing Date any further action is necessary or desirable
to carry out the purposes hereof or to vest the Surviving Corporation with full
title to all Assets, rights, approvals, immunities, and franchises of Target,
each party hereto shall take all such necessary action.
12.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida, except any conflict of laws
principles of Florida that may direct the interpretation or enforcement hereof
to the laws of any other jurisdiction.
<PAGE>
12.5 Successors and Assigns. Except as otherwise provided in the Restricted
Stock Agreement, a party shall not assign any of its rights or delegate any of
its obligations hereto without the prior, written consent of the other parties.
All of the terms hereof shall be binding upon and inure to the benefit of and be
enforceable by and against the successors, heirs, legal representatives and
permitted assigns of the parties hereto. The reference contained herein to
successors and assigns of the parties is not intended to constitute a consent to
assignment by any of the parties.
12.6 Entire Agreement. This Agreement, including the exhibits and schedules
hereto, and the other documents delivered pursuant hereto, constitute the full
and entire understanding and agreement among the parties concerning the subject
matter hereof, and supersedes all prior agreements and negotiations, oral or
written, concerning that subject matter, all of which are merged into this
Agreement. Nothing herein, express or implied, is intended to confer upon any
party, other than the parties hereto, and their respective successors and
permitted assigns, any rights, remedies, obligations or liabilities under or by
reason hereof.
12.7 Amendment. A modification or amendment of this Agreement, any of the
Ancillary Agreements, or any of the Closing Documents shall be effective only if
it is in writing and executed by all the parties hereto, and by any other party
to the document being amended.
12.8 Notices. To be effective, a notice or other communication required or
permitted hereunder must be given in writing or by facsimile transmission, or if
by similar means, must be promptly confirmed in writing. Unless otherwise
specified herein a notice is considered effectively given when it is received by
the intended recipient or when the intended recipient refuses delivery. If a
notice is mailed by certified or registered United States mail, with return
receipt requested, or sent by a courier or delivery service, to the address of
the intended recipient specified below (or such other address as the intended
recipient has previously specified in a written notice received by the sender),
the notice shall be presumed to have been received or refused by the intended
recipient on the date indicated on the return receipt or return invoice.
If to Parent or Subsidiary (or Surviving Corporation):
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, FL 32256
Attn: Jerry W. Davis
Fax: (904) 737-6376
With a copy to:
Holland & Knight LLP
50 North Laura Street
Suite 3900
Jacksonville, FL 32202
Attn: L. Kinder Cannon III, Esq.
Fax: (904) 358-1872
<PAGE>
If to Target:
MIACO Corporation
The Cascades
6300 S. Syracuse Way, Suite 415
Englewood, CO 80111
Attn: Shari G. Leigh
Fax: (303) 850-1195
With a copy to:
Cooley Godward LLP
2595 Canyon Boulevard, Suite 250
Boulder, CO 80302-6737
Attn: James H. Carroll, Esq.
Fax: (303) 546-4099
If to Target Shareholders or to any of Target Shareholders,
individually:
MIACO Corporation
The Cascades
6300 S. Syracuse Way, Suite 415
Englewood, CO 80111
Attn: Shari G. Leigh
Fax: (303) 850-1195
12.9 Titles and Subtitles. The titles of the sections and subsections hereof are
for convenience of reference only and are not to be considered in construing
this Agreement.
12.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
12.11 Delays or Omissions. No delay or omission in exercising any right, power,
or remedy of any party hereto, upon any breach or default of any other party
hereto, shall impair any such right, power or remedy, nor shall it be construed
to be a waiver of any such breach or default, or any acquiescence therein, or of
or in any similar breach or default thereafter occurring. To be effective, any
waiver, permit, consent or approval of any kind on the part of any party hereto
of any breach or default hereunder, or any waiver of any provisions or
conditions hereof, must be in writing. Unless otherwise specified herein, all
remedies of a party for a breach hereof shall be cumulative.
12.12 Time is of the Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
12.13 Attorneys Fees. It is the intention of the parties hereto that all
disputes arising out of this Agreement will be resolved pursuant to the dispute
resolution procedures set forth in Section 11. However, should a court declare
the dispute resolution provisions set forth in Section 11 inapplicable or
unenforceable for any reason and litigation is commenced by any party concerning
any provision hereof or the rights and duties of any party hereto, the
prevailing party in such litigation shall be entitled, in addition to such other
relief as may be granted, to all costs incurred by the prevailing party in
enforcing, defending, or prosecuting any claim arising out of this Agreement,
including all Attorneys' Fees and costs and expenses of agents, experts,
accountants, consultants, investigators and supersedeas bonds, whether incurred
before or after demand or commencement of legal proceedings, and whether
incurred pursuant to trial, appellate, bankruptcy, administrative, or
judgment-execution proceedings.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their respective duly authorized representatives as of the date set forth in the
first paragraph.
PARENT
COMPUTER MANAGEMENT SCIENCES, INC., a Florida
corporation
By: /s/ ANTHONY V. WEIGHT
Anthony V. Weight, Senior Vice President
SUBSIDIARY
BRONCO ACQUISITION, INC., a Florida corporation
By: /s/ ANTHONY V. WEIGHT
Anthony V. Weight, Senior Vice President
TARGET
MIACO CORPORATION, a Colorado corporation
By: /s/ SHARI G. LEIGH
Shari G. Leigh, President
TARGET SHAREHOLDERS
/s/ SHARI G. LEIGH
Shari G. Leigh
/s/ MARTIN B. GREER
Martin B. Greer
/s/ DANIEL P. DUNLAP, JR.
Daniel P. Dunlap, Jr.
/s/ JOHN D. KAREN
John D. Karen
/s/ RICHARD C. BLAKEMAN
Richard C. Blakeman
<PAGE>
EXHIBIT "A"
DEFINITIONS OF TERMS
"1996 Balance Sheet" means the balance sheet of Target for the year ended
March 31, 1996, audited by Target's Auditors and prepared in accordance with
GAAP on a basis consistent with prior years, together with the accountants'
report thereon and all notes and schedules pertaining thereto.
"1996 Financial Statement(s)" means the 1996 Balance Sheet, together with
the statement of income, statement of cash flows, and statement of shareholders'
equity of Target for the year ended March 31, 1996, audited by Target's Auditors
and prepared in accordance with GAAP on a basis consistent with prior years,
together with the accountants' report thereon and all notes and schedules
pertaining thereto.
"Adverse Claim(s)" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, damages, awards, dues, penalties, fines, costs, amounts
paid in settlement, injunctions, claims of specific performance, losses,
expenses, and fees, including, but not limited to claims threatened, asserted or
perfected resulting from or with respect to or based upon breach of warranty,
breach of contract, intentional tortious acts, negligence, or strict liability,
and all Attorneys' Fees in connection therewith.
"Agreement" means this Agreement and Plan of Merger, as it may be amended
from time to time, including all exhibits and schedules to which reference is
made herein. All references to a "Section" shall refer to a section of this
Agreement unless otherwise indicated. Words such as "hereby," "herein,"
"hereinafter," "hereof," "hereto," "hereunder," and "herewith" refer to this
Agreement as defined in this paragraph and as a whole, unless the context
otherwise requires.
"Ancillary Agreement(s)" has the meaning set forth in Section 3.2(a).
"Asset(s)" means Real Property, Facilities, Leasehold Improvements,
Tangible Personal Property, and Intangible Personal Property.
"Attorneys' Fees" means all attorneys' fees, including fees associated
with paralegals and law clerks, and expenses, court costs, and fees and expenses
of expert witnesses, at both trial and appellate levels, including, but not
limited to, those arising in connection with all Obligations, Employment-Related
Liabilities, Adverse Claims, Taxes, Indemnification Claims
and other claims relating to the Agreement.
"Benefit Plan(s)" means all Qualified Plans, all Other Qualified Plans,
and all ERISA Plans, and (to the extent not otherwise included as ERISA Plans)
all stock ownership, stock option, stock purchase, excess benefit, voluntary
employees' beneficiary association, vacation, severance pay, bonus, deferred
compensation, non-cash compensation or other similar plan, program, or
arrangement, and any other employee benefit plan of any kind, maintained by
Target or which is a multiple employer plan to which Target makes employer
contributions with respect to its employees, or which is a terminated plan under
which Target has any present or future Obligation or Liability (other than to
make current wage or salary payments) with respect to its employees or former
employees.
"Business" means the business conducted by Target on the date hereof,
which principally involves providing relational database consulting and training
services to various customers, with a particular emphasis on management database
information systems.
<PAGE>
"Business Condition" means, collectively, the business, operations,
properties, assets, results of operations, condition (financial or otherwise) or
prospects of the person or entity in question.
"Claim Notice" has the meaning set forth in Section 10.4(c).
"Closing" means the consummation of all the transactions relating to the
Merger contemplated herein other than the filing of the Articles of Merger of
Target and Subsidiary.
"Closing Date" means the date of the execution and closing of this
Agreement.
"Closing Document(s)" has the meaning set forth in Section 3.2(b).
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985
and all regulations promulgated thereunder.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"Contract(s)" means any Lease, any Receivable or any of the following
contracts or agreements, whether written or oral (unless otherwise indicated),
but only to the extent that any such agreement involves a right or Obligation
having a value of $25,000.00 (the "Threshold Amount") or more: (a) any material
franchise or license agreement under which Target is either a franchisor,
licensor, franchisee or licensee; (b) any written agreement (or group of related
written agreements) for the lease (as lessor or lessee) of Tangible Personal
Property providing for annual lease payments in excess of the Threshold Amount;
(c) any written agreement (or group of related written agreements) for the
purchase or sale of merchandise, supplies, products, or other goods, Tangible
Personal Property or for the furnishing or receipt of services that either calls
for performance over a period of more than 60 days; (d) any agreement, contract
or commitment relating to the Business, and not otherwise listed on any other
schedule hereto, that continues over a period of more than six (6) months from
the date hereof; (e) any distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Business to which Target is a
party; (f) any written agreement concerning a partnership or joint venture; (g)
any note, debenture, bond, equipment trust agreement, letter of credit
agreement, loan agreement or other contract or commitment for the borrowing or
lending of money relating to the Business or any agreement or arrangement for a
line of credit or guarantee (other than the endorsement of checks in the
Ordinary Course of Business), pledge or undertaking of any indebtedness of any
other person relating to the Business; (h) any written agreement concerning
confidentiality, nonsolicitation or noncompetition; (i) any written agreement
between Target and any of its directors, officers, employees or shareholders;
(j) any collective bargaining agreement, written employment agreement, or
severance agreement; (k) any transferable license or permit with respect to the
Business; (l) any right of Target to any warranty (express or implied),
guaranty, or license received from a manufacturer, contractor, lessor, or
seller, and any related claim, credit, or right of recovery or set-off with
respect to such warranties; (m) any commitment or agreement for any capital
expenditure or leasehold improvement relating to the Business; (n) any written
agreement under which the consequences of a default or termination could have a
material adverse effect on Target's Assets, Liabilities, Business or Business
Condition; and (o) any other written agreement (or group of related agreements)
either involving an Asset or right or a Liability or Obligation valued at more
than the Threshold Amount or not entered into in the Ordinary Course of
Business.
"Conversion Ratio" has the meaning set forth in Section 3.3.
"Corporate Filing Date" has the meaning set forth in Section 9.
<PAGE>
"Employment-Related Liabilities" means all Obligations arising out of
employment matters or relationships, including, but not limited to, any payroll,
salary and wages, Benefit Plans, unemployment compensation, workers'
compensation, withholding of any Taxes, FICA, FUTA or SUTA obligations, employee
health or life insurance, hospitalization, savings, bonus, deferred
compensation, incentive compensation, holiday, vacation, severance pay, sick
pay, sick leave, disability, tuition refund, service award, company car,
scholarship, relocation, patent award, claim with respect to Intellectual
Property, fringe benefit, overtime, and all Attorneys' Fees arising in
connection therewith.
"Entity Related Parties" means all affiliates (as the term is defined in
Rule 405 under the Securities Act of 1933, as amended) of the specified person
and all officers, directors, employees, agents and shareholders of such
specified person or his or its affiliates.
"Environmental Condition" means any of the following: (i) the release on,
under or from the Facilities of any "hazardous substances" as defined in any
Environmental Laws; (ii) any contamination of the Facilities, including, without
limitation, the presence of any hazardous substance which has come to be located
on or under the Facilities from another location; (iii) any material violation
or alleged violation of any Environmental Laws with respect to the Facilities or
Target's Business operations in or on the Facilities; (iv) any injury to human
health or safety or to the environment by reason of the past or present
condition of, or past or present activities on or under, the Facilities; or (v)
the generation, manufacture, storage, treatment, handling, transportation or
other use, however defined, of any hazardous substance on or from the
Facilities.
"Environmental Law(s)" means any and all federal, state, local and foreign
laws, statutes, codes, ordinances, regulations, rules, policies, consent
decrees, judicial orders, administrative orders or other requirements relating
to the environment or to human health or safety associated with the environment,
all as amended or modified from time to time. Environmental Laws include, but
are not limited to, the following statutes and all rules and regulations
relating thereto, all as amended or modified from time to time: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. "9601 et seq., as amended by the Superfund Amendments and Reauthorization
Act of 1986, 42 U.S.C. " 9601B9675; the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. ' 6901B6991; the Clean Air Act, 42 U.S.C. " 7401 et seq; the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. ' 136 et seq; the
Toxic Substances Control Act, 15 U.S.C. " 2601B2671; the Federal Water Pollution
Control Act of 1972; the Safe Drinking Water Act of 1972, 42 U.S.C. "300(f) et
seq; the Refuse Act of 1899, 33 U.S.C. "401 et seq; and the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. '11001 et seq.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and all regulations promulgated pursuant thereto.
"ERISA Plan(s)" means all employee benefit plans, as defined in ERISA,
maintained by Target or which is a multiple employer plan to which it makes
employee contributions with respect to its employees, or which is a terminated
plan under which Target has any present or future Obligation or Liability
(whether direct, indirect, or contingent) other than Qualified Plans and Other
Qualified Plans.
<PAGE>
"Exchange Price" means, with respect to Parent Common Stock, the closing
price of the Parent Common Stock on the Closing Date, as reported on the
Nasdaq/NMS. In the event that the Parent Common Stock does not trade as of the
Closing Date, the closing price for such date (for purposes of determining the
Exchange Price) shall be deemed to be the closing price for the day next
preceding such date on which the Parent Common Stock traded.
"Facility or Facilities" means the land, building, Leasehold Improvements
and other property described in Schedule 4.10.
"Financial Statements" means the 1996 Financial Statements and the
Interim Financial Statements of Target.
"Fixtures and Equipment" means all equipment, furniture, furnishings,
fixtures, machinery, tools, appliances, vehicles, spare and replacement parts,
and similar property owned, used, or leased by Target in connection with the
Business.
"GAAP" means Generally Accepted Accounting Principles, consistently
applied throughout the periods involved.
"Impairment(s)" means any loss, destruction, condemnation or diminution in
the value, quantity or quality of any Asset from any cause whatsoever other than
depreciation or amortization occurring in the Ordinary Course of Business.
"Indemnification Claim" means the amount of any indemnity to which any
party claims it is entitled pursuant to this Agreement.
"Indemnitee" has the meaning set forth in Section 10.4.
"Indemnitor" has the meaning set forth in Section 10.4.
"Insurance Requirement(s)" means all terms of any insurance policy, all
requirements of the issuer of any insurance policy, and all orders, rules,
regulations and other requirements of the National Board of Fire Underwriters
(or any other body exercising similar functions, in each case) applicable to or
affecting the Facilities or any part thereof or any use or condition thereof.
"Intangible Personal Property" means Contracts; Intellectual Property; all
rights to the names of the Business and all goodwill associated with the
Business conducted under those names; and all other intangible assets, rights,
and property, wherever located, of Target.
"Intellectual Property" means all (a) patents, patent applications, patent
disclosures, and improvements thereto; (b) trademarks, service marks, trade
dress, logos, trade names, and corporate names, and registrations and
applications for registration thereof (other than trademarks, service marks,
trade dress, logos, trade names and corporate names which are related to
products sold by Target and provided to Target by third party vendors); (c)
computer software, data, and documentation; (d) trade secrets and confidential
business information, including ideas, formulae, compositions, inventions
(whether patentable or unpatentable and whether or not reduced to practice),
know-how, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial, marketing, and business
data, pricing and cost information, business and marketing plans, and customer,
employee, and supplier lists and information; (e) other proprietary rights; and
(f) copies and tangible embodiments thereof (in whatever form or medium).
<PAGE>
"Interim Balance Sheet" means the balance sheet of Target as of October
31, 1996, prepared in accordance with GAAP on a basis consistent with prior
years.
"Interim Financial Statement(s)" means the Interim Balance Sheet, together
with the statement of income and statement of cash flows of Target for the
period beginning on April 1, 1996, and ended on the date of the Interim Balance
Sheet, prepared in accordance with GAAP on a basis consistent with prior years.
"Key Employee(s)" means Shari G. Leigh and Martin B. Greer.
"Lease(s)" means all of Target's rights under the lease agreements or
sublease agreements pursuant to which Target leases, holds and operates the
Facilities, and all supplements, amendments, modifications, extensions,
renewals, or restatements thereof and any agreements affecting the same, all as
listed on Schedule 4.10.
"Leasehold Improvement(s)" means all leasehold improvements to the
Facilities.
"Legal Requirement(s)" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions and requirements of all governmental authorities,
officials, agencies and officers, ordinary or extraordinary, which now or at any
time prior to Closing were applicable to Target, Target Shareholders, Parent,
Subsidiary, the Business or the Facilities or any use, operation or condition
thereof.
"Liability" or "Liabilities" means Obligations, Liens, Employment-Related
Liabilities, Taxes, Adverse Claims, and Attorneys' Fees, in each case whether
absolute or contingent, whether liquidated or unliquidated, whether due or to
become due and whether insured or uninsured.
"Lien(s)" means (a) any encumbrance, mortgage, pledge, lien, charge or
other security interest of any kind on, of or in any property or assets of any
character, or the income or profits therefrom; or (b) any arrangement or
agreement which prohibits the creation of such encumbrances, mortgages, pledges,
liens, charges or other security interest or which restricts transfer of any
property or assets.
"Merger" means the merger of Subsidiary with and into Target, under the
terms and conditions set forth in the Agreement.
"Notice Period" has the meaning set forth in Section 10.4(c).
"Obligation(s)" means all debts, duties, or obligations of any kind
arising under any Contract or other agreement, including all Attorneys' Fees
arising in connection therewith.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Other Qualified Plan(s)" means the qualified pension and profit-sharing
plans not maintained by Target but to which it makes employer contributions with
respect to its employees.
"Parent" means COMPUTER MANAGEMENT SCIENCES, INC., a Florida
corporation.
<PAGE>
"Parent Common Stock" means shares of Parent's class of common stock, par
value $0.01 per share, which stock is registered under Section 12(g) of the
Securities Exchange Act of 1934, as amended, and listed for trading on the
NASDAQ/NMS.
"Parent Shares" has the meaning set forth in Section 3.3.
"Parent/Subsidiary Schedule of Exceptions" has the meaning set forth in
Section 6.
"Parent's Auditors" means KPMG Peat Marwick L.L.P.
"Permits" means all permits, licenses, certificates, governmental
approvals and other authorizations necessary to lawfully conduct the Business.
"Permitted Encumbrances" means (i) any Lien for Taxes not yet due and
payable, (ii) any non-judgment Lien arising by operation of law and not
predicated on the filing or recordation of any notice thereof, (iii)
imperfections of title and encumbrance which are not material in character,
amount or extent and which do not materially detract from the value or
materially interfere with the present use of the property subject thereto or
affected thereby, or (iv) any Lien that is described in the Target Schedule of
Exceptions.
"Person" shall mean any individual or any corporation, partnership, joint
venture, association or other entity or enterprise.
"Qualified Plans" means the qualified pension and profit sharing plans
maintained by Target.
"Receivable(s)" means all of Target's rights to payment for goods sold,
for services rendered, or for any other purpose, including all accounts
receivable and notes receivable disclosed in Target's Financial Statements.
"Regulatory Action(s)" means any formal or adverse claim, demand, action
or proceeding brought or instigated by any governmental authority in connection
with any Environmental Law (including without limitation civil, criminal and/or
administrative proceedings), whether or not seeking costs, damages, penalties or
expenses.
"Related Party" means an Entity Related Party or a Shareholder Related
Party.
"Shareholder Related Parties" means all entities of which such specified
shareholder is a director, officer, employee, agent, partner or shareholder and
each natural person related by blood or marriage to such specified shareholder
within the third degree; provided, however, Shareholder Related Parties shall
not include any entity that has a class of securities registered pursuant to the
Securities Exchange Act of 1934, as amended, of which the specified person
beneficially owns not more than five percent (5%).
"Shareholder Representative" has the meaning set forth in Section 10.6.
"Subsidiary" means BRONCO ACQUISITION, INC., a Florida corporation.
"Surviving Corporation" means Target, in its capacity as the
corporation surviving the Merger.
<PAGE>
"Tangible Personal Property" means Fixtures and Equipment, inventories,
and all other tangible assets, rights, and property, wherever located, of
Target, including, but not limited to, all books and records of the Business
existing on or after the date hereof.
"Target" means MIACO Corporation, a Colorado corporation.
"Target Auditors" means Erhardt, Keefe, Steiner & Hoffman, P.C.,
independent certified public accountants, Denver, Colorado.
"Target Certificate(s)" has the meaning set forth in Section 3.4.
"Target Issued Shares" has the meaning set forth in Section 3.3.
"Target Option Shares" has the meaning set forth in Section 3.3.
"Target Schedule of Exceptions" has the meaning set forth in Section 4.
"Target Shareholders" means Shari G. Leigh, Martin B. Greer, Daniel
P.Dunlap, Jr., John D. Karen and Richard C. Blakeman.
"Target Shares" has the meaning set forth in Section 3.3.
"Tax Return(s)" means all federal, state, local, and foreign tax returns,
reports, statements, and other similar filings required to be filed by Target.
"Tax(es)" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including Taxes under Section 59A of
the Code), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
added-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, including all
Attorneys' Fees arising in connection with any dispute thereof.
"Third Party Claim(s)" means third party claims, actions, demands or
proceedings (other than Regulatory Actions) based on negligence, trespass,
strict liability, nuisance, toxic tort or detriment to human health or welfare
due to any Release of Hazardous Substances or Contamination, and whether or not
seeking costs, damages, penalties or expenses.
"Transaction Documents" means the Agreement, Ancillary Agreements and
Closing Documents.
