ASSET PURCHASE AGREEMENT
by and between
FACTUAL DATA CORP.
and
PREMIER MORTGAGE CREDIT SERVICES, INC.
Dated as of January 19, 1999
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS ...........................................................1
ARTICLE I
DEFINITIONS........................................................1
ARTICLE II
ACQUISITION OF THE ASSETS..........................................3
2.1 Delivery Of Assets.........................................3
2.2 Purchase Price for Assets..................................4
2.3 Assumed Liabilities........................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS..........5
3.1 Organization and Qualification Of Seller...................6
3.2 Authorized Capitalization..................................6
3.3 Authorization..............................................6
3.4 Product Rights.............................................6
3.5 Bulk Sale Law..............................................6
3.6 No Conflicting Agreements..................................7
3.7 Compliance with Applicable Law.............................7
3.8 Material Misstatements or Omissions........................7
3.9 No Known Material Adverse Effects..........................7
3.10 Consents and Approvals.....................................7
3.11 Subsidiaries...............................................8
3.12 Litigation.................................................8
3.13 Brokers....................................................8
3.14 Taxes......................................................8
3.15 Ownership..................................................8
3.16 Accounts...................................................9
3.17 License Agreements.........................................9
3.18 Intellectual Property......................................9
3.19 Customers..................................................9
3.20 Contracts.................................................10
3.21 Financial Statements......................................10
3.22 Absence of Undisclosed or Contingent Liabilities..........10
3.23 No Material Adverse Changes...............................10
3.24 Absence of Developments...................................10
3.25 Title to Properties.......................................11
3.26 Tax Matters...............................................11
3.27 Tax Notices...............................................12
3.28 Employees.................................................12
3.29 Employee Benefit Plans....................................13
3.30 Gifts.....................................................13
3.31 Employee Health and Safety................................13
3.32 Representations as to Knowledge...........................14
3.33 Representations Concerning Solvency.......................14
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER...................................15
4.1 Inspection of Properties and Books........................15
4.2 Other Contracts...........................................15
4.3 Ongoing Operation.........................................15
4.4 Indebtedness..............................................16
4.5 Records...................................................16
4.6 Articles of Incorporation; Bylaws.........................16
4.7 Distributions or Dividends................................16
4.8 Notice of Breach..........................................16
4.9 Nondisclosure.............................................16
4.10 Employment Matters........................................16
4.11 Insurance.................................................17
4.12 Preservation of Business..................................17
4.13 Regulatory Filings........................................17
4.14 No Negotiations...........................................17
4.15 Assignment of Contracts, Leases and Other Agreements......18
4.16 Good Faith Efforts........................................18
4.17 Additional Disclosure.....................................18
ARTICLE V
POST-CLOSING COVENANTS............................................18
5.1 Further Assurances........................................18
5.2 Litigation Support........................................18
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER.......................19
6.1 Organization and Qualification of Purchaser...............19
6.2 Authorization.............................................19
6.3 No Conflicting Agreements.................................19
6.4 Compliance with Applicable Law............................19
6.5 Litigation................................................19
6.6 Material Misstatements or Omissions.......................20
6.7 Consents and Approvals....................................20
6.8 Brokers...................................................20
6.9 Representations as to Knowledge...........................20
6.10 No Undisclosed Liabilities................................20
ARTICLE VII
COVENANTS OF PURCHASER............................................21
7.1 Other Contracts...........................................21
7.2 Additional Disclosure.....................................21
7.3 Notice of Breach..........................................21
7.4 Nondisclosure.............................................21
ASSET PURCHASE AGREEMENT
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7.5 Best Efforts..............................................21
7.6 Regulatory Filings........................................21
7.7 Non-Compete and Confidentiality Agreements................22
7.8 Employment Agreements.....................................22
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING...................................22
8.1 Conditions Precedent to Obligations of Seller.............22
8.2 Conditions Precedent to Obligations of Purchaser..........24
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES........................28
ARTICLE X
INDEMNIFICATION...................................................29
10.1 Indemnification...........................................29
10.2 Limitation of Liability...................................29
10.3 Method of Asserting Claims................................30
10.4 Payment of Claim..........................................31
10.5 Other Rights and Remedies Not Affected....................31
10.6 Post-Closing Adjustments and Right of Offset..............31
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH.................................32
11.1 Amendment and Modification................................32
11.2 Termination and Abandonment...............................32
ARTICLE XII
CLOSING ..........................................................32
12.1 Closing...................................................32
12.2 Allocations...............................................32
12.3 Seller's Deliveries at Closing............................33
12.4 Purchaser's Deliveries at Closing.........................34
12.5 Forwarding of Receivables.................................35
12.6 Removal of Personal Effects Following Closing.............35
12.7 Cooperation; Premises.....................................35
ARTICLE XIII
MISCELLANEOUS.....................................................36
13.1 Notice....................................................36
13.2 Entire and Sole Agreement.................................36
13.3 Successors and Assigns....................................37
13.4 Expenses..................................................37
13.5 Severability..............................................37
13.6 Governing Law.............................................37
13.7 Counterparts..............................................37
ASSET PURCHASE AGREEMENT
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13.8 Amendments................................................37
13.9 No Third Party Beneficiary................................37
13.10Headings..................................................37
13.11Disputes..................................................38
13.12Delivery of Exhibits......................................38
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 19th day of January, 1999, by and
between Factual Data Corp., a Colorado corporation ("Purchaser"), and Premier
Mortgage Credit Services, Inc., an Illinois corporation ("Seller"). For
accounting purposes, this Agreement shall be deemed to be effective on January
1, 1999. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ are referred to as the
"Shareholders."
RECITALS
WHEREAS, on or about December 10, 1998, Purchaser issued a term sheet to Seller
("Term Sheet") pursuant to which Purchaser indicated its desire to proceed with
the acquisition of certain assets of Seller; and
WHEREAS, the Term Sheet contemplated the parties would enter into a definitive
Asset Purchase Agreement which definitive agreement is as set forth below (the
"Agreement") and which shall supersede the Term Sheet in its entirety; and
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, the assets
of Seller as described on Exhibit 2.1 hereto (the "Assets") and Purchaser
desires to assume the liabilities of Seller described on Exhibit 2.3 hereto
("Assumed Liabilities");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and in reliance upon the representations and warranties
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall, unless the context requires
otherwise, have the meanings designated below:
Assets means the assets set forth on Exhibit 2.1 hereto.
Assumed Liabilities means the liabilities set forth on Exhibit 2.3 hereto which
may include but are not necessarily limited to, equipment or facility leases.
Claim Notice has the meaning given to it in Section 10.3(a).
Closing has the meaning given to it in Section 12.1.
Closing Date has the meaning given to it in Section 12.1.
Code means the Internal Revenue Code of 1986, as amended.
Communication means collectively any publicity release, security filing, private
placement memorandum or any other communication.
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Damages means any and all damages, claims, deficiencies, losses and expenses, as
further defined in Section 10.1.
ERISA means the Employee Retirement Income Security Act of 1974, as amended, and
any regulations, rules or orders promulgated thereunder.
Evaluation Material means Seller's documents, financial statements, information
and materials which shall be used in connection with a due diligence review.
Excluded Assets means all of the Seller's cash held by Seller or generated from
the business of Seller on hand, cash investments and billed accounts receivable
as of Closing; the Assets of Seller identified herein as not being conveyed; all
items of Assets which are disposed of by Seller in the ordinary course of
business through no fault of Seller; and the Buyer's Promissory Note and all
security instruments and rights granted to secure payment of same and all
contract and/or property rights granted in said Note, security document and the
Asset Purchase Agreement.
Financial Statements has the meaning given to it in Section 3.21.
Indemnified Party means the party claiming indemnification under Article X.
Indemnifying Party means the party against whom indemnification claims are
asserted under Article X.
Intellectual Property means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, services marks, trade dress, logos,
trade names and corporate names, together with all translations, adaptations,
derivations and combinations thereof and including all goodwill associated
therewith, and all applications, registrations and renewals in connections
therewith, (c) all copyrightable works, all copyrights and all applications,
registrations and renewals in connection therewith, (d) all mask works and all
applications, registration and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
Loss means Damages for which any claim may be asserted under Article X.
Other Company Agreements means the Non-Compete and Confidentiality
Agreements.
Note shall have the meaning given it in Section 2.2
Notice means the thirty day period which the indemnifying party shall have from
the personal delivery or mailing of the Claim Notice.
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OSHA means the Occupational Safety and Health Act of 1970, as amended, and any
regulations, rules or orders promulgated thereunder.
Purchase Price has the meaning given it in Section 2.2.
Purchaser means Factual Data Corp., a Colorado corporation, or its assigns.
Seller means Premier Mortgage Credit Services, Inc., an Illinois
corporation.
Shareholders means all owners of capital stock of Seller at the date hereof and
as of Closing to wit: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (51.25%) and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (48.75%).
Tax or Taxes means any federal, state, local or foreign income, gross receipt,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Section 59A), custom
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimating or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Uniform Commercial Code means the Uniform Commercial Code applicable in the
state of organization of the Seller.
ARTICLE II
ACQUISITION OF THE ASSETS
Subject to the terms and conditions set forth in this Agreement:
2.1 Delivery of Assets At the Closing, Seller shall endorse and deliver such
instruments, documents, certificates or instructions as may be necessary
to vest title to the Assets, not including the Excluded Assets, set forth
on Exhibit 2.1 hereto in Purchaser. Upon receipt of such documents,
instruments, certificates or instructions, and upon the Closing, Purchaser
shall become the beneficial and record holder of the Assets and entitled
to all of the rights, benefits and privileges with respect thereto. Except
as otherwise provided herein, the Assets shall be delivered by Seller to
Purchaser at the Closing and will be free of all encumbrances, liens,
security interests or other claims.
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At the Closing, the Assets which will be transferred to Purchaser, and their
value, shall be as follows:
Asset Category Valuation(1)
Fixed and operating assets $________
Contract rights, customer agreements and
customer lists ________
Intellectual property, software and licenses ________
Personnel files ________
Books and records ________
Non-Compete and confidentiality agreements ________
Deposits ________
Prepaid assets ________
Goodwill ________
-------------------------
(1) The parties acknowledge and agree that the valuation of the Assets if not
determined at the date of execution of this Agreement, shall be made by
the parties not later than twenty (20) days prior to Closing.
Each of Seller and Purchaser covenant that it will not take a position on any
income tax return or before any governmental agency or in any judicial
proceeding that is inconsistent in any way with this allocation.
2.2 Purchase Price for Assets The aggregate purchase price for the Assets
shall consist of $238,500, plus or minus prorations, cash and a promissory
note in the aggregate amount of $88,500 which shall be delivered to Seller
at the Closing subject to and upon the terms and conditions hereof and the
representations and warranties contained herein, in the following manner:
(a) At the Closing, Purchaser shall pay an aggregate cash consideration of
$238,500 to the Seller, which shall be paid in the form of bank
cleared funds or a wire transfer to a financial institution designated
by the Seller.
(b) Purchaser shall deliver to Seller a non-negotiable promissory note in
the aggregate principal amount of $88,500 (the "Note") plus
Purchaser's security agreement and financing statements. The Note
shall be issued by Purchaser on the following terms and conditions:
(i) The Note shall bear interest at the rate of 8% per annum and
shall be due and payable in 12 quarterly installments of
principal and interest in accordance with the amortization
schedule attached to the Note commencing March 31, 1999.
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(ii) The Note, a copy of which is attached hereto as Exhibit
2.2(b)(i), shall be secured by a perfected subordinated second
lien on all of the Assets sold pursuant to this Agreement. The
lien securing payment of the Note shall be subordinated to any
senior institutional bank or credit arrangements including
accounts receivable financing obtained by Purchaser at any time
prior to or after the execution of this Agreement and Seller
agrees to execute a subordination agreement and intercreditor
agreement in form satisfactory to the senior debt lender at such
time as a senior credit facility is obtained by Purchaser. A
security agreement and UCC-1 setting forth the subordinated
security interest in the form attached as Exhibit 2.2(b)(ii)
shall be executed at the Closing by Purchaser and filed by Seller
at Purchaser's cost with the Illinois Secretary of State or other
required regulatory agencies or governmental entities in each
state and entity in which a UCC filing may be required.
(c) The parties contemplate that, subsequent to the Closing, an audit of
the financial records of Seller may be performed in accordance with
generally accepted accounting principles by independent certified
public accountants designated by the Purchaser, and at Purchaser's
sole cost and expense.
(d) Each party hereto specifically recognizes and identifies that
ancillary agreements by and between the parties will be required to be
executed concurrently at Closing. It is, therefore, specifically
agreed that an additional condition to any parties' obligation to
close the transaction described herein is the finalization of the
Non-Compete and Confidentiality Agreements by and between Purchaser
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇. At
the Closing, Purchaser shall deliver to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ each a non-negotiable promissory note in the principal amount
of $75,000. Each Note shall bear interest at the rate of 8.0% per
annum and shall be due and payable in 12 quarterly installments of
principal and interest in accordance with the amortization schedule
attached to the Notes commencing March 31, 1999.
2.3 Assumed Liabilities As part of the consideration for the Assets, the
Purchaser shall assume and pay, perform and discharge the Assumed
Liabilities described on Exhibit 2.3 hereto. The Purchaser will pay,
perform and discharge the Assumed Liabilities as they become due provided
the Purchaser shall not be obligated to pay, perform or discharge any
obligation except to the extent that such obligation or liability
constitutes a valid and legally enforceable claim against Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS
Seller and Shareholders (except that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ makes no representations or
warranties whatsoever regarding Seller) represent and warrant to Purchaser that
the statements contained in this Article III are true, correct and complete as
of the date of this Agreement and will, except as otherwise expressly provided
in this Agreement be true, correct and complete on the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement) as follows:
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3.1 Organization and Qualification Of Seller The Seller is a corporation
duly organized, validly existing and in good standing under the laws
of the state of Illinois, and is duly qualified and authorized to do
business. The Seller has all requisite corporate power and authority
to carry on its business as now being conducted. The copies of the
Articles of Incorporation (certified by the Secretary of the State of
the state of Illinois) and the Bylaws of the Seller, both as amended
to Date of Closing, which have been delivered to Purchaser and
attached hereto as Exhibits 3.1(a) and 3.1(b), respectively, are
complete and correct, and the Seller is not in default under or in
violation of any provision of its Articles of Incorporation or
Bylaws.
3.2 Authorized Capitalization The authorized capital stock of the Seller
consists of 1,000 shares of common stock, of which 800 shares are
issued and outstanding as of the date of this Agreement. No shares of
the Seller's capital stock are held in treasury. The Seller has no
authorized or outstanding stock or securities convertible into or
exchangeable for, or any authorized or outstanding option, warrant or
other right to subscribe for or to purchase, or convert any
obligation into, any unissued shares. There are no authorized or
outstanding stock appreciation, phantom stock, profit participation
or similar rights with respect to the Seller. There are no voting
trusts, voting agreements, proxies or other agreements or
understandings with respect to the voting of the capital stock of the
Seller.
3.3 Authorization This Agreement has been duly and validly executed and
delivered by Seller and the Shareholders and the agreements,
representations and warranties contained herein constitute valid and
binding obligations, representations and warranties of Seller and the
Shareholders enforceable in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or
similar laws affecting the enforcement of creditors' rights and by
the availability of injunctive relief with specific performance.
Attached hereto as Exhibit 3.3(a) is a Certificate which shall
evidence the approval and authorization of the Shareholder of Seller
and which shall be attested to by the President of Seller. This
Agreement and the consummation of the transactions contemplated
hereby and thereby have been duly and unanimously approved by the
board of directors of Seller. Attached hereto as Exhibit 3.3(b) is a
certified copy of the Directors' Consent or a resolution passed
pursuant to a duly and validly called meeting of the Board of
Directors. This Agreement constitutes, and all other agreements
contemplated hereby to be executed and delivered by the Seller will
when executed and delivered constitute, the legal, valid and binding
obligations of, and be enforceable in accordance with their
respective terms against, the Seller.
3.4 Product Rights As of the Closing, subject to those limitations set
forth in this Agreement, Seller has no rights with respect to any
trademarks and trade names.
3.5 Bulk Sale Law To the best of Seller's knowledge, Seller is not
required to comply with the bulk sale provisions of the Illinois
Uniform Commercial Code and Purchaser waives compliance by Seller
with all bulk sales laws.
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3.6 No Conflicting Agreements Except as set forth in Exhibit 3.6, the execution
and delivery of this Agreement by Seller does not, and consummation by
Seller of the transactions contemplated hereby will not, (a) violate any
existing term or provision of any law, regulation, order, writ, judgment,
injunction or decree applicable to Seller or the Assets which materially
affects the assets or business of Seller, (b) conflict with or result in a
breach of any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of Seller or of any agreement or instrument to
which Seller is a party, or (c) with the exception of the agreements
evidencing and securing the debts owed Seller under paragraph 2.2(B),
result in the creation or imposition of any lien, charge, security
interest, encumbrance, restriction or claim upon the Assets.
3.7 Compliance with Applicable Law Except as set forth in Exhibit 3.7, Seller
has not received any notice or information of any violation, probable
violation or default by Seller under any applicable law, regulation or
order of any governmental department, commission, board or agency or
instrumentality, domestic or foreign, having jurisdiction over Seller's
operations which could materially adversely affect the business,
operations, financial condition, properties or assets of Seller, or the
ability to consummate the transaction contemplated hereby. To the best of
Seller's and the Shareholders' knowledge after diligent inquiry, Seller has
operated its business, and will continue to operate its business, in
compliance with the Fair Credit Reporting Act, the Real Estate Settlement
Procedures Act, the Fair Debt Collection Act and applicable state law.
Additionally, Seller has given notice of the sale of Assets to all
government entities that require such notice, if any.
3.8 Material Misstatements or Omissions Neither this Agreement nor any other
document, certificate or statement furnished to Purchaser by or on behalf
of Seller in connection with this Agreement contains any untrue statement
of a material fact, or omits any material fact necessary to make the
statements contained herein or therein not misleading in light of the
context in which they were made.
3.9 No Known Material Adverse Effects There is no fact known to Seller, which
materially adversely affects or will materially adversely affect the Assets
which has not been set forth in writing in this Agreement or disclosed in
the other documents, certificates or written statements furnished to
Purchaser by or on behalf of Seller in connection herewith.
3.10 Consents and Approvals The execution and delivery by Seller of this
Agreement, and the performance by Seller of its obligations hereunder, does
not require Seller to obtain any consent, approval, agreement, or action
of, or make any filing with or give any notice to, any corporation, person,
entity, or firm or any public, governmental or judicial authority except
(i) such as have been duly obtained or made, as the case may be, and or
will be duly obtained and made and in full force and effect as of the
Closing, (ii) those as to which the failure to obtain would have no
material adverse effect on the Assets or the transactions contemplated
hereby, and (iii) approval of the Seller's Shareholders, which shall be
obtained prior to the execution hereof.
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3.11 Subsidiaries Seller does not own, have an ownership interest in, or control
any corporation, partnership, proprietorship or other entity.
3.12 Litigation Except as described in Exhibit 3.12, there are no actions,
proceedings or investigations pending or threatened against Seller or the
Assets before any court or administrative agency which could result in any
material adverse change in the operations or financial condition of Seller
other than as identified therein.
3.13 Brokers All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by Seller directly with
representatives of Purchaser, without the intervention of any person in
such manner as to give rise to any valid claim by any person against
Purchaser on behalf of Seller for a finder's fee, brokerage commission, or
similar payment. All rights of indemnity under Article X hereof shall apply
to any claim relating to a Loss (hereinafter defined) arising out of this
Agreement for any fee, commission or similar payment.
3.14 Taxes Seller shall pay all Taxes arising out of the transfer of the Assets
and shall be responsible for all personal property taxes for the business
of Seller through the date of the Closing. Purchaser shall not be
responsible for any business, occupation, withholding or similar Tax, or
any Taxes of any kind related to the Assets or the business of Seller for
any period prior to the Closing.
3.15 Ownership Seller is the owner, beneficially and of record, of all of the
Assets as identified on Exhibit 2.1 hereto, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions, except as otherwise described on Exhibit 3.15 hereto. EXCEPT
AS SET FORTH IN PARAGRAPH 3.25 BELOW, THE ASSETS ARE BEING SOLD PURSUANT TO
THIS AGREEMENT, "AS IS, WHERE IS" WITHOUT ANY OTHER REPRESENTATION,
WARRANTY, LIABILITY OR OTHER OBLIGATION ON THE PART OF SELLER WHATSOEVER,
WHETHER EXPRESSED OR IMPLIED. THE EXPRESSED WARRANTY AS TO TITLE TO THE
ASSETS IS IN LIEU OF AND EXCLUDES ALL OTHER WARRANTIES, WHETHER EXPRESSED
OR IMPLIED, BY OPERATION OF LAW OR OTHERWISE, INCLUDING WITHOUT LIMITATION,
ANY WARRANTY OR REPRESENTATION AS TO THE CONDITION OF THE ASSETS OR AS TO
THE MERCHANTABILITY OF THE ASSETS OR ANY WARRANTY OF FITNESS OF THE ASSETS
FOR ANY PARTICULAR PURPOSE, ALL OF WHICH ARE EXPRESSLY WAIVED BY PURCHASER.
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3.16 Accounts The list of customers attached hereto as Exhibit 3.16(a)
represents the customers with which Seller now does business, principally
in the area of mortgage credit reporting. The customers with which Seller
maintains a contract or agreement are identified on Exhibit 3.16(b) hereto.
Except as described on Exhibit 3.16(c), all such contracts or agreements
are valid and enforceable contracts or agreements and are not currently,
and will not be at Closing, in default, invalid or unenforceable in any
manner, or where termination is threatened or imminent to the actual
knowledge of Seller. Seller has performed all of its material obligations
and material responsibilities as described under each such contract or
agreement, none of such contracts or agreements are subject to any
counterclaim or set-off and such contracts are in full force and effect and
will continue in full force and effect following the Closing (assuming
continuing performance by Purchaser following the Closing, which is not
warranted or represented by Seller). Except as described on Exhibit
3.16(d), Seller has no reason to believe that amounts payable under such
contracts or agreements, assuming due performance by Purchaser in the
future (which is not warranted or represented by Seller), will not be paid
in accordance with the terms of such contracts or agreements. Seller has
not received any notices of default, claims, or any other type of notice
with respect to each such contract or agreement or, if such notice has been
received, a copy of any such notice has been provided in writing to
Purchaser.
3.17 License Agreements Attached as Exhibit 3.17 is a complete and accurate list
of any license agreements to which Seller is a party as of the date hereof.
Also stated on Exhibit 3.17 is the expiration date of each such license
agreement. Except as described on Exhibit 3.17, all such license agreements
are valid and enforceable contracts or agreements and are not currently,
and will not be at Closing, in material default, invalid or unenforceable
in any manner. To the extent the transfer of any license agreement
hereunder requires the consent of any third party, Seller and Shareholders
shall use their best efforts to obtain such consents. Seller has not
received any written notices of default, claims or any other type of
written notice with respect to any license agreement or, if such written
notice has been received, a copy of such notice has been provided in
writing to Purchaser.
3.18 Intellectual Property Attached as Exhibit 3.18 to this Agreement is a
schedule of all trade names, trademarks, service marks, copyrights,
computer software, source code and their registrations, owned by Seller or
in which Seller has any right, license, or for which Seller has made
application, together with a brief description of each (hereinafter
collectively the "Intellectual Property"). To the best of Seller's
knowledge, Seller has not infringed, and by its use of its Intellectual
Property, is not now infringing on any United States or state trade name,
trademark, service ▇▇▇▇ or copyright belonging to any other person, firm or
corporation and, to the best of Seller's knowledge, the use of the
Intellectual Property by Purchaser will not conflict with, infringe on or
otherwise violate the rights of others.
3.19 Customers Exhibit 3.19 to this Agreement sets forth a correct and current
list of all customers of Seller together with summaries of the revenues
from each customer during the most recent 12 months ending 30 days prior to
the date hereof.
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3.20 Contracts Except as set forth in Exhibit 3.20, Seller is not a party to,
nor is the property of Seller bound by, any contract, distributorship
agreement, license agreement, agency agreement or output or requirements
agreement, or any other agreement, indenture, mortgage, deed of trust,
lease, security agreement, loan agreement or instrument which Purchaser
would succeed to by its purchase of the Assets, nor will the purchase of
the Assets by Purchaser create any material default by Seller as to any of
such agreements which will materially adversely affect the Purchaser's use
of the Assets.
3.21 Financial Statements Seller has delivered to Purchaser copies of Seller's
balance sheet as of the end of the most recent fiscal year and the
statements of income and retained earnings for the years ended for the two
most recent fiscal years and for the interim period commencing January 1,
1998 and ending October 31, 1998 (collectively, the "Financial
Statements"). The Financial Statements are based upon the information
contained in the books and records of Seller and fairly and accurately
present in all material respects the financial condition of Seller as of
the dates thereof and results of operations of the business for the periods
referred to therein.
3.22 Absence of Undisclosed or Contingent Liabilities Seller has no liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise, whether
due or to become due, whether known or unknown, and regardless of when
asserted) which could materially and adversely affect any of the Assets of
the Seller except as otherwise set forth in the Financial Statements, and
Exhibit 3.22 hereto.
3.23 No Material Adverse Changes Since the date of the most recent Financial
Statements, there has been no change materially adverse to Seller in its
Assets, financial condition, gross profit, operating results, customer,
employee or supplier relations, business condition or prospects, except as
otherwise disclosed on Exhibit 3.23 hereto.
3.24 Absence of Developments Since the date of the Term Sheet by and between
Seller and Purchaser, Seller has, and will until Closing:
(a) Conducted its business and operations in substantially the same manner
as heretofore conducted; maintained business insurance; committed no
waste of the Assets; disposed or otherwise changed the nature of any
Asset such that cash or accounts receivable are increased (other than
in the ordinary course of business), nor created or suffered to exist
any material lien, charge or encumbrance on any Asset or incurred any
indebtedness for borrowed money (other than in the ordinary course)
which is secured by one or more of the Assets; and has used its best
efforts to maintain and preserve its business organization intact and
maintain its relationships with suppliers, employees, customers and
others;
(b) Refrained from making capital expenditures or commitments for
additions to the property, plant or equipment or entered into
transactions which could materially alter or affect operations, except
as otherwise have been approved in writing by Purchaser;
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(c) Except from the assets to be retained by Seller, refrained from paying
the officers or directors or their affiliates, whether in the
capacities of shareholders, directors, officers or employees, any
dividends or any bonuses or any other forms of compensation except for
non-bonus compensation in accordance with current practice; and
(d) Maintained title to, and refrained from making or permitting, any
transfer, sale, pledge, encumbrance on, lien or other disposition of
the Assets of Seller except in the ordinary course of business.
3.25 Title to Properties Seller does not own any real property. The lease to
which Seller is a party, a true and complete copy of which is attached
hereto as Exhibit 3.25, is in full force and effect, and Seller holds a
valid and existing leasehold interest in such lease for the term set forth
in such lease. Seller shall utilize its good faith efforts to obtain an
assignment of the property lease if requested to do so by Purchaser. Seller
shall have delivered complete and accurate copies of such lease to
Purchaser, and such lease shall not have been modified in any material
respect except to the extent that such modifications are disclosed in
writing delivered to Purchaser. Seller is not in default, and no
circumstances exist which, if unremedied would, either with or without
notice or the passage of time or both, result in a default under such
lease, nor is Seller in default under the lease. The tangible Assets have
been operated in a businesslike manner, have been maintained and serviced
in accordance with Seller's normal practices and as necessary in the normal
course of business. Seller owns, or leases under valid leases, all
equipment and other tangible assets necessary for the conduct of its
business.
3.26 Tax Matters
(a) Except as set forth in Exhibit 3.26, the Seller has filed all Tax
Returns that it was required to file. All Taxes owed by the Seller
(whether or not shown on any Tax Return) have been paid. The Seller is
not currently the beneficiary of any extension of time within which to
file any Tax Return. To the best of Seller's knowledge, no claim has
ever been made by an authority in a jurisdiction where the Seller does
not file Tax Returns that it is or may be subject to taxation by that
jurisdiction. To the best of Seller's knowledge, there are no
encumbrances on any of the Assets of the Seller that arose in
connection with any failure (or alleged failure) to pay any Taxes.
(b) The Seller has withheld and paid substantially all Taxes required to
have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, shareholder or
other third party.
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(c) There is no dispute or claim concerning any liability for Taxes of the
Seller (i) claimed or raised by any authority in writing or orally
with any directors, officers or employees of the Seller; or (ii) as to
which any such person has knowledge based on personal contact with any
agent of such authority. Exhibit 3.26 lists all federal, state, local
and foreign income Tax Returns filed with respect to the Seller for
taxable periods ended on or after December 31, 1995, indicates those
Tax Returns that have been audited and indicates those Tax Returns
that currently are the subject of audit. The Seller has delivered to
the Purchaser correct and complete copies of all federal income Tax
Returns, examination reports, and statements of deficiencies filed,
assessed against or agreed to by the Seller since December 31, 1995.
3.27 Tax Notices Except as set forth on Exhibit 3.27 hereto, no deficiency for
any Taxes has been proposed, asserted or assessed against Seller that has
not been resolved and paid in full. No waiver, extension or comparable
consent has been given by Seller regarding the application of the statute
of limitations with respect to any Taxes outstanding, nor is any request
for any such waiver or consent pending. Except as described in Exhibit 3.27
hereto, there has been no tax audit or other administrative proceeding or
court proceeding with respect to any Taxes, nor is any such Tax audit or
other proceeding pending, nor has there been any notice to Seller by any
taxing authority regarding any such Tax, audit or other proceeding or, to
the best knowledge of Seller, is any such Tax audit or other proceeding
threatened with regard to any Taxes. For the purposes hereof, the term
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, workmen's compensation, social security, unemployment,
excise, estimated, severance, stamp, occupation, property or other taxes,
customs, duties, fees, assessments or charges of any kind whatsoever
including, without limitation, all interest and penalties thereon, and
additions to tax or additional amounts imposed by any taxing authority,
domestic or foreign, upon Seller and not how that term is defined under
Article I hereof.
3.28 Employees Except as described on Exhibit 3.28, (a) Seller has complied with
all laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes; (b) to the best of Seller's
knowledge, Seller has no material labor relations problem pending; (c)
Seller is unaware of workmen's compensation, sexual harassment,
discrimination or claims pending against Seller nor is Seller aware of any
facts that would give rise to such claims; (d) to the best of Seller's
knowledge, no employee of Seller is subject to any secrecy or
non-competition agreement or any other agreement or restriction of any kind
that would impede in any way the ability of such employee to carry out
fully all activities of such employee in furtherance of the business of
Seller; and (e) to the best of Seller's knowledge, no employee or former
employee of Seller has any claim with respect to any intellectual property
rights of Seller.
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3.29 Employee Benefit Plans
(a) Except as provided in writing to Purchaser and as listed on Exhibit
3.29, with respect to all employees and former employees of Seller and
all dependents and beneficiaries of such employees and former
employees, (i) Seller does not maintain or contribute to any
non-qualified deferred compensation or retirement plans, contracts or
arrangements, (ii) Seller does not maintain or contribute to any
qualified defined contribution plans as defined in Section 3(34) of
ERISA or Section 414(i) of the Code, (iii) Seller does not maintain or
contribute to any qualified defined benefit plans as defined in
Section 3(35) of ERISA or Section 414(j) of the Code, and (iv) Seller
does not maintain or contribute to any employee welfare benefit plans
as defined in Section 3(1) of ERISA.
(b) To the best of Seller's knowledge, to the extent required (either as a
matter of law or to obtain the intended tax treatment and tax
benefits), any employee benefit plans as defined in Section 3(3) of
ERISA which Seller does maintain or to which it does contribute
(collectively, the "Plans") comply in all material respects with the
requirements of ERISA and the Code. With respect to the Plans, (i) all
required contributions which are due have been made and a proper
accrual has been made for all contributions due in the current fiscal
year, (ii) there are no actions, suits or claims pending, other than
routine uncontested claims for benefits, and (iii) there have been no
prohibited transactions as defined in Section 406 of ERISA or Section
4975 of the Code.
(c) Seller does not contribute (and has not ever contributed) to any
multi-employer plan, as defined in Section 3(37) of ERISA. Seller has
no actual or potential liabilities under Section 4201 of ERISA for any
complete or partial withdrawal from a multi-employer plan. Seller has
no actual or potential liability for death or medical benefits after
separation from employment, other than (i) death benefits under the
employee benefit plans or programs (whether or not subject to ERISA)
that will be set forth in writing to Purchaser, and (ii) health care
continuation benefits described in Section 4980B of the Code.
3.30 Gifts Neither Seller nor any of its officers, directors or shareholders has
made or agreed to make gifts of money, other property or similar benefits
(other than incidental gifts of articles of nominal value) to any actual or
potential customer, supplier, governmental employee, political party,
candidate for office, governmental agency or instrumentality or any other
person in a position to assist or hinder Seller in connection with any
actual or proposed business transaction.
3.31 Employee Health and Safety Seller has received no notice, nor does the
Seller have knowledge of any facts which could give rise to any notice that
Seller has violated or is potentially liable under, OSHA or any other
federal or state acts (including rules and regulations thereunder) and, to
the best of Seller's knowledge, regulating or otherwise affecting employee
health and safety.
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3.32 Representations as to Knowledge The representations and warranties
contained in Article III hereof shall in each and every event whereby an
exercise of discretion or a statement to the "best knowledge", "best of
knowledge" or "knowledge" is required on behalf of any party to this
Agreement be deemed to require that such exercise of discretion or
statement be in good faith, with due diligence, to the best efforts of each
such party and be exercised always in a reasonable manner and within
reasonable times.
3.33 Representations Concerning Solvency The Seller has not incurred, and does
not intend to incur, and has no reasonable basis to believe that it will
incur, any debts beyond its ability to pay such debts as they become due.
Seller has, and will continue to have, assets greater than Seller's debts,
based upon a fair valuation and has paid, and will pay, its debts as they
become due. Purchaser may rely on such representations in asserting that
Purchaser has no reasonable cause to believe that Seller is or will become
insolvent as a result of the transactions contemplated hereby. Seller has
undertaken the transactions described herein in good faith, considering its
obligations to any person or entity to whom Seller owes a right to payment,
whether or not the right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal,
equitable, secured or unsecured and has undertaken the transaction
described herein without any intent to hinder, delay or defraud its
creditors. Seller will not, and has not, concealed this transaction or the
proceeds of such transaction from any of its creditors. Seller has not
removed or concealed any assets from its creditors and will not incur debt
in connection with the assets or business that is significantly greater
than the normal and customary debts of Seller in the ordinary course.
Seller does not contemplate and has no reason to contemplate it will seek
protection under the bankruptcy laws as a result of consummating the
transactions encompassed by this Agreement, and believes in good faith that
it will receive consideration reasonably equivalent to the value of the
Assets being purchased by the Purchaser.
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ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER
Seller hereby covenants and agrees that, between the date hereof and the
Closing, it will comply with the provisions of this Article IV, except to the
extent Purchaser may otherwise consent in writing.
4.1 Inspection of Properties and Books Seller shall assist any individual or
individuals designated by Purchaser with reasonable prior notice to visit
or inspect any property of Seller, at reasonable times acceptable to both
parties, including books of accounts and records of Seller, to make
extracts or copies of such books and records and to discuss in a
confidential nature and context the affairs, finances and accounts of
Seller with its officers, and shall use its best efforts to obtain access
for Purchaser to Seller's accountants' work papers. As a condition to the
Closing, the parties acknowledge and agree that Seller shall furnish to
Purchaser Evaluation Material which shall be used in connection with a due
diligence review. The parties agree that Purchaser shall treat the
Evaluation Material confidentially, and shall not disclose to any party,
except as otherwise set forth herein, the Evaluation Material or any
information set forth therein; provided, however, that Purchaser is
authorized to disclose the Evaluation Material to its investment banker,
counsel and accountants for their review. Purchaser shall instruct its
officers, directors, employees, agents or representatives of the
confidential nature of the Evaluation Material and shall be responsible for
ensuring that the Evaluation Material is kept confidential by such persons.
In the event the Closing is not consummated, all Evaluation Material shall
be returned to Seller, within ten days of a request therefor, with the
understanding that Purchaser shall retain no copies of the Evaluation
Material and shall not disclose to any other party the Evaluation Material
or information contained therein, with the exception of (i) information
which becomes generally available to the public other than as a result of
disclosure by Purchaser, or (ii) information included in the Evaluation
Material which is first disclosed by a third party not bound by a
confidentiality agreement with Seller and (iii) information required to be
disclosed in any registration statement or periodic report under the
disclosure requirements of applicable federal and state securities laws.
Purchaser agrees that Seller may require that Purchaser certify in writing
that it has retained no Evaluation Material.
4.2 Other Contracts Except in the ordinary course of business, Seller shall not
enter into or become subject, and shall not cause Seller to enter into or
become subject, to any agreement, transaction, or commitment which would
restrict or in any way impair the obligation or ability of Seller to comply
with all of the terms of this Agreement.
4.3 Ongoing Operation Using its good faith efforts, Seller shall carry on its
business diligently and substantially in the same manner as heretofore
conducted. The business of Seller shall be conducted only in the ordinary
course and neither the shareholders of Seller nor Seller shall take any
action except in the ordinary course of Seller's business, on an arm-length
basis and in accordance in all material respects with all applicable laws,
and Seller's past custom and industry practice.
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4.4 Indebtedness Except as otherwise provided herein, Seller will not create,
incur, assume, guarantee or otherwise become liable with respect to any
indebtedness related or connected with, or secured by, the Assets, except
in the ordinary course of its business and subject to prior written notice
to Purchaser. Except in the ordinary course of its business, and subject to
prior written notice to Purchaser, Seller will not sell, pledge, encumber
or otherwise subject the Assets to any claim or indebtedness.
4.5 Records Seller shall maintain its books, accounts and records in the usual,
regular and ordinary manner.
4.6 Articles of Incorporation; Bylaws Seller will not amend its Articles of
Incorporation or Bylaws or otherwise alter its corporate existence or
powers.
4.7 Distributions or Dividends Seller will not declare or pay any dividend,
make any distribution on shares of its capital stock or repurchase any
shares of its capital stock.
4.8 Notice of Breach In the event of and promptly after becoming aware of the
occurrence or threatened occurrence of any event which would cause or
constitute a breach of any warranty, representation, covenant or agreement
of Seller contained herein, Seller shall give notice in writing of such
event or threatened event to Purchaser.
4.9 Nondisclosure The parties agree that any publicity release, security
filing, memorandum or any other communication, whether written or oral,
identifying this proposed transaction shall not identify Seller at any time
prior to Closing unless required by applicable securities laws or
regulations. Seller shall timely review and approve any public
communication prepared by Purchaser before its dissemination and release.
4.10 Employment Matters Except as otherwise provided herein, Seller shall not,
directly or indirectly, except in the ordinary course of business and with
prior notice to Purchaser, (i) enter into or modify any employment,
severance or similar agreements or arrangements with, or grant any bonuses,
salary increases, severance or termination paid to, any officers or
directors or consultants, or (ii) take any action with respect to the grant
of any bonuses, salary increases, severance or termination pay or with
respect to any increase of benefits payable in effect on the date hereof.
Seller shall not adopt or amend any bonus, profit sharing, compensation,
stock option, pension, retirement, deferred compensation, employment or
other employee benefit plan, trust, fund or group arrangement for the
benefit or welfare of any employees or any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
arrangements for the benefit or welfare of any director.
- 16 -
4.11 Insurance Seller shall maintain its current insurance policies. To the
extent Seller has paid premiums for insurance coverage that will continue
in effect on a post-Closing basis, the Purchaser will reimburse Seller
within 15 days of Closing the prorated portion of post-Closing insurance
coverage based upon the time period covered by such insurance both prior
to, and subsequent to, Closing. Seller shall purchase tail coverage
covering Seller and its officers and directors for any error and omission
policy maintained by Seller prior to Closing.
4.12 Preservation of Business Seller and the Shareholders shall (i) maintain and
preserve the business organization of Seller's relationships with
employees, suppliers, distributors, customers and others having business
relationships with Seller, (ii) notify Purchaser of any emergency or other
change in the normal course of Seller's business or in the operation of
Seller's properties and of any governmental or third party complaints,
investigations or hearings (or communications indicating that the same may
be contemplated) if such emergency, change, complaint, investigation or
hearing would be material, individually or in the aggregate, to the
business, operations or financial condition of Seller or the ability of
Seller to consummate the transactions contemplated by this Agreement, and
(iii) promptly notify Purchaser in writing if Seller or its representatives
shall discover that any representation or warranty made by Seller in this
Agreement was when made, or has subsequently become, untrue in any respect.
4.13 Regulatory Filings Seller is not required, and shall not be required prior
to or following Closing, to make any filings or submissions under any laws
or regulations applicable to Seller for the consummation of the
transactions contemplated herein. Seller shall make all filings necessary
such that, at the Closing, Purchaser may file for and obtain use of
Seller's corporate name identified on page one of this Agreement. Purchaser
has advised Seller that the execution of this Agreement and closing of the
transaction contemplated hereby may require the Purchaser to provide
certain disclosure concerning the business and the financial statements of
Seller to the United States Securities and Exchange Commission. Seller
hereby consents to the inclusion of disclosure concerning Seller, the
financial statements of Seller and the representations and warranties made
by Seller in the course of this transaction, in a periodic report or any
amendment thereto, in order to allow Purchaser to discharge its disclosure
obligations under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
4.14 No Negotiations None of Seller, its officers, directors or the Shareholders
shall cause Seller to, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage submission of
any proposal or offer from any person or entity (including any of its or
their officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or the purchase of
all or a material portion of the assets of, or any equity interest in,
Seller, or any similar transaction or business combination involving
Seller, or participate in any negotiations regarding, or furnish to any
other person, any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other person or entity to do or seek any of the
foregoing. Seller shall within five business days notify Purchaser of any
such proposal or offer, or any inquiry from or contact with any person with
respect thereto, and shall promptly provide Purchaser with such information
regarding such proposal, offer, inquiry or contact as Purchaser may
request.
- 17 -
4.15 Assignment of Contracts, Leases and Other Agreements Except as otherwise
provided herein or in the Exhibits, Seller agrees that, prior to the
Closing, it will secure the approval of all parties with which Seller has
customer, supplier or other agreements as to which consent is expressly
required and assignment is contemplated to Purchaser and, should Purchaser
desire to assume any other contract, lease, agreement or right, Seller
shall use its best efforts to secure the approval of the remaining party to
the contract, lease, agreement or right such that Purchaser may succeed to
rights and obligations of Seller under such contracts, leases, agreements
or rights.
4.16 Good Faith Efforts Seller agrees to use its good faith efforts to satisfy
the various conditions to Closing and to consummate the transactions
provided for herein as expeditiously as possible. Seller will not take or
knowingly permit to be taken any action that would be in breach of the
terms or provisions of this Agreement or that would cause any of its
representations and warranties contained herein to be or become untrue.
4.17 Additional Disclosure From the date of this Agreement to and including the
Closing Date, Seller promptly upon the occurrence thereof, will advise
Purchaser of each event subsequent to the date hereof which would have had
to be disclosed on any exhibit to this Agreement had it occurred prior to
the date hereof.
ARTICLE V
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the Closing.
5.1 Further Assurances In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting
party (unless the requesting party is entitled to indemnification therefor
under Article X).
5.2 Litigation Support In the event and for so long as any party actively is
contesting or defending against any action, suit, proceedings, hearing,
investigation, charge, complaint, claim or demand in connection with (a)
any transaction contemplated by this Agreement, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence,
event, incident, action, failure to act or transaction on or prior to the
Closing Date involving the Seller, each of the other parties will cooperate
with each other and counsel in the contest or defense, make available their
personnel, and provide such testimony and access to their books and records
as shall be necessary in connection with the contest or defense, all at the
sole cost and expense of the contesting or defending party (unless the
contesting or defending party is entitled to indemnification therefor under
Article X).
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
In order to induce Seller to enter into this Agreement and the consummation of
the transactions contemplated hereunder, Purchaser represents and warrants to
Seller that the statements contained in this Article VI are true, correct and
complete as of the date of this Agreement and will, except as otherwise
expressly provided in this Agreement be true, correct and complete on the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement) as follows:
6.1 Organization and Qualification of Purchaser Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Colorado and has the full corporate power and authority to own and
operate its properties and to carry on its business.
6.2 Authorization This Agreement has been duly and validly executed by
Purchaser, as certified in Exhibit 6.2 hereto, and the agreements,
representations, and warranties contained herein constitute valid and
binding obligations, representations, and warranties of Purchaser
enforceable in accordance with their terms.
6.3 No Conflicting Agreements The execution and delivery of this Agreement by
Purchaser does not, and consummation by Purchaser of the transactions
contemplated hereby will not, (a) violate any existing term or provision of
any law, regulation, order, writ, judgment, injunction or decree applicable
to Purchaser, (b) conflict with or result in a breach of any of the terms,
conditions or provisions of the Articles of Incorporation or Bylaws of
Purchaser or of any agreement, contract, or instrument, or order to which
Purchaser is a party or by which it is bound, or (c) result in the creation
or imposition of any lien, charge, security interest, encumbrance,
restriction or claim upon Purchaser or any of its assets.
6.4 Compliance with Applicable Law Purchaser has not received any notice or
information of any violation, probable violation or default by Purchaser
under any applicable law, regulation or order of any governmental
department, commission, board or agency or instrumentality, domestic or
foreign, having jurisdiction over Purchaser's operations which could
materially adversely affect the business, operations, financial condition,
properties or assets of Purchaser or the ability to consummate the
transaction contemplated hereby.
6.5 Litigation There are no material actions, proceedings or investigations
pending, or to the knowledge of Purchaser, threatened against Purchaser or
its officers or directors, before any court or administrative agency or
administrative officer.
- 19 -
6.6 Material Misstatements or Omissions Neither this Agreement nor any other
document, certificate or statement furnished to Seller by or on behalf of
Purchaser in connection with this Agreement contains any untrue statement
of a material fact, or omits any material fact necessary to make the
statements contained herein and therein not misleading in light of the
context in which they were made. There is to the best of Purchaser's
knowledge no fact pertaining particularly to the Assets or the business of
the Seller which materially and adversely affects, or in the future will
materially and adversely affect, the Assets which is known to Purchaser and
has not been disclosed to Seller.
6.7 Consents and Approvals The execution and delivery by Purchaser of this
Agreement, and the performance by Purchaser of Purchaser's obligations
hereunder, do not require Purchaser to obtain any consent, approval or
action of, or make any filing with or give any notice to, any corporation,
person, entity or firm or any public, governmental or judicial authority
except (i) such as have been duly obtained or made, as the case may be, or
will be duly obtained and made and are in full force and effect on the date
hereof and will continue to be in full force and effect on the Closing
Date, and (ii) those which the failure to obtain would have no material
adverse effect on the transactions contemplated hereby.
6.8 Brokers All negotiations relative to this Agreement and the transactions
contemplated hereby have been carried out by representatives of Purchaser
directly with Seller, without the intervention of any person on behalf of
Purchaser in such manner as to give rise to any valid claim by any person
against Seller for a finder's fee, brokerage commission or similar payment.
All rights of indemnity under Article X hereof shall apply to any claim
relating to a Loss (hereinafter defined) arising out of this Agreement for
any fee, commission or similar payment.
6.9 Representations as to Knowledge The representations and warranties
contained in Article VI hereof shall in each and every event whereby and
exercise of discretion or a statement to the "best knowledge", "best of
knowledge" or "knowledge" is required on behalf of any party to this
Agreement be deemed to require that such exercise of discretion or
statement be in good faith, with due diligence, to the best efforts of each
such party and be exercised always in a reasonable manner and within
reasonable times.
6.10 No Undisclosed Liabilities Purchaser has no material debt, liability or
obligation that would have a material adverse effect on the business or
financial condition of Purchaser, except as disclosed herein, in the
Purchaser's SEC periodic reports, or as incurred in connection with
Purchaser's acquisition of the Assets or of other companies.
- 20 -
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees as follows:
7.1 Other Contracts From and after the date of this Agreement, Purchaser will
not enter into or become subject to any agreement or commitment which would
restrict or in any way impair the obligation of Purchaser to comply with
all of the terms of this Agreement.
7.2 Additional Disclosure From the date of this Agreement to and including the
Closing, Purchaser will, promptly upon the occurrence thereof, advise
Seller of each event subsequent to the date hereof which would have had to
be disclosed by Purchaser on any exhibit to this Agreement had it occurred
prior to the date hereof.
7.3 Notice of Breach In the event of and promptly after becoming aware of the
occurrence or threatened occurrence of any event which would cause or
constitute a breach of any warranty, representation, covenant or agreement
of Purchaser contained herein, Purchaser shall give notice in writing of
such event or threatened event to Seller and use all reasonable efforts to
prevent or promptly remedy such breach or threatened breach.
7.4 Nondisclosure The Purchaser agrees that any publicity release, security
filing, or any other communication, whether written or oral, identifying
this proposed transaction shall not identify Seller any time prior to
Closing unless required by applicable securities laws or regulations.
7.5 Best Efforts Purchaser agrees to use its best efforts in good faith to
satisfy the various conditions to Closing and to consummate the
transactions provided for herein as expeditiously as possible. Purchaser
will not take or knowingly permit to be taken any action that would be
contrary to or in breach of the terms or provisions of this Agreement or
that would cause any of the representations and warranties of Purchaser
contained herein to be or become untrue. Purchaser will reasonably
cooperate with Seller in all matters necessary to complete the Closing.
7.6 Regulatory Filings Purchaser has advised Seller that the transaction
contemplated hereby will require Purchaser to file disclosure, in the form
of a periodic report or amendments thereto, with the United States
Securities and Exchange Commission, which report may include disclosure
concerning, and the financial statements of, Seller. Seller hereby consents
to the inclusion of disclosure concerning Seller, the financial statements
of Seller and the representations and warranties made by Seller in the
course of this transaction, in such periodic report or amendment, in order
to allow Purchaser to discharge its disclosure obligations under the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder. Purchaser agrees to provide Seller upon request a copy of such
periodic report or any amendment thereto at least three business days prior
to filing. Purchaser will make all required filings with the Securities and
Exchange Commission that relate to this transaction.
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7.7 Non-Compete and Confidentiality Agreements At or prior to Closing, ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ shall enter into
non-compete and confidentiality agreements with Purchaser substantially in
the form of Exhibit 7.7 hereto.
7.8 Employment Agreements At or prior to Closing, Seller shall have terminated
all employment agreements to which it is a party. The Purchaser's personnel
policies and practices, including tenure earned by the Seller's employees,
will apply after the Closing Date.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Obligations of Seller The obligations of Seller to
consummate and effect this Agreement are subject to the satisfaction in all
material respects, on or before the Closing Date, of the following
conditions (unless waived by Seller in writing in the manner provided in
Section 8.1(d) hereof):
(a) Representations and Warranties of Purchaser; Performance by Purchaser.
(i) The representations and warranties of Purchaser set forth in
Article VI hereof shall (except where stated to be as of an earlier
date) be accurate in all material respects on and as of the Closing as
though made on and as of the Closing, Seller shall not have discovered
any material error, misstatement or omission in any of the
representations and warranties of Purchaser herein or in any exhibit
hereto; (ii) Purchaser shall have performed all obligations and
complied with all covenants required to be performed or to be complied
with by Purchaser under this Agreement prior to or at the Closing Date
including the delivery of all documents required at the Closing; and
(iii) Seller shall have received a certificate dated the Closing and
signed by the President of Purchaser to the effect that the
representations and warranties made by Purchaser in this Agreement are
true and accurate in all material respects as of the Closing (or,
where applicable, as of the earlier specified date), which certificate
shall be in the form of Exhibit 8.1.
(b) Action. All action necessary to authorize the execution, delivery and
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby shall have been duly and validly
taken by Purchaser. Purchaser shall have furnished Seller with copies
of all consents or resolutions adopted or executed by Purchaser in
connection with such actions, certified by the Secretary of Purchaser.
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(c) No Action or Proceeding. As of the Closing, no action or proceeding by
any public authority or person shall be pending before any court or
administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the
transactions contemplated herein. There shall not be threatened,
instituted or pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i) challenging
or seeking to make illegal, or to delay or otherwise directly or
indirectly restrain or prohibit, the consummation of the transactions
contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or
indirect ownership or operation by Purchaser of all or a material
portion of the business or Assets of Seller, or to compel Seller or
Purchaser to dispose of or to hold separately all or a material
portion of the business or assets of Seller, as a result of the
transactions contemplated hereby, (iii) seeking to require direct or
indirect transfer or sale by Purchaser of any of the Assets, (iv)
seeking to invalidate or render unenforceable any material provision
of this Agreement or any of the other agreements attached hereto as
Exhibits, or otherwise contemplated hereby, (v) seeking relief against
Purchaser under any federal or state law or regulation relating to
bankruptcy, insolvency, reorganization or moratorium or creditors'
rights generally, (vi) otherwise relating to and materially adversely
affecting the transactions contemplated hereby, or (vii) which could
result in any material adverse change in the business, operations,
financial condition or properties of Purchaser.
(d) Waiver of Conditions Precedent. Seller, in Seller's sole discretion,
may waive any or all of the conditions precedent set forth in this
Article VIII, either prospectively or retroactively, by giving written
notice of such waiver to Purchaser. No waiver of any condition
precedent pursuant to this paragraph 8.1(d) shall, unless otherwise
expressly stated in such written notice of waiver, extend to any
covenant or agreement contained herein or to any other condition
precedent.
(e) Discovery of Facts or Circumstances. Seller shall not have discovered
any fact or circumstance existing as of the date of this Agreement
which has not been disclosed to Seller as of the date of this
Agreement regarding the business, assets, liabilities, properties,
condition (financial or otherwise), results of operations or prospects
of Purchaser which is, individually or in the aggregate with other
such facts and circumstances, materially adverse to Purchaser.
(f) Opinion of Counsel. Seller shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇,
P.C., counsel to Purchaser, an opinion dated the Closing, to the
following effect:
(i) Purchaser is a corporation duly organized, validly existing in a good
standing under the laws of the State of Colorado.
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(ii) Execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action, corporate and otherwise, by
Purchaser; this Agreement is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms except as enforcement can be limited by general equitable
principles or bankruptcy, insolvency or similar laws affecting
creditor's rights generally.
(iii)The execution and delivery of the Agreement will not violate or
conflict with the Articles of Incorporation or Bylaws of
Purchaser or any agreement known to such counsel to which
Purchaser is a party or by which Purchaser or its assets are
bound.
(iv) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or any court is
required to be obtained or made by Purchaser pursuant to this
Agreement except such as has been obtained or made.
(v) Except as disclosed in this Agreement or the Exhibits hereto,
such counsel is not aware of any material pending or threatened
action, suit, proceeding or investigation before any court or any
public, regulatory or governmental agency, authority or body,
involving Purchaser or any of its officers or directors, and such
counsel does not know of any legal matter or government
proceedings regarding Purchaser.
(g) Miscellaneous. No party shall have initiated action seeking monetary
damages or claims in connection with, or seeking to prohibit or enjoin
the transactions described in this Agreement.
(h) Approval of Documentation. The form and substance of all opinions,
certificates and other documents required to be delivered to Seller
hereunder shall be satisfactory in all reasonable respects to Seller
and its counsel.
(i) Absence of Litigation. No claim, action, suit or proceeding shall be
pending or threatened against any of the parties hereto which enjoins,
or seeks to enjoin, any of the transactions contemplated hereby or
which, if adversely determined, would prevent consummation of the
transactions contemplated by this Agreement or the Exhibits hereto or
have a material adverse effect upon the Assets.
8.2 Conditions Precedent to Obligations of Purchaser The obligation of
Purchaser to consummate and effect this Agreement are subject to the
satisfaction in all material respects, on or before the Closing Date, of
the following conditions (unless waived by Purchaser in writing in the
manner provided in Section 8.2(f) hereof):
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(a) Representations and Warranties of Seller and Shareholders; Performance
by Seller. (i) The representations and warranties of Seller and its
Shareholders set forth in Article III hereof shall (except where
stated to be as of an earlier date) be accurate in all material
respects on and as of the Closing as though made on and as of the
Closing, except for any changes resulting from activities or
transactions which may have taken place after the date hereof which
are expressly permitted by this Agreement or which have been entered
into in the ordinary course of business and are not expressly
prohibited by this Agreement; (ii) Seller shall have performed all
material obligations and complied with all material covenants required
to be performed or to be complied with by it under this Agreement
prior to the Closing; (iii) Purchaser shall have received a
certificate dated as of the Closing and signed by the President of
Seller to the effect that the representations and warranties made by
Seller in this Agreement are true and accurate in all material
respects as of the Closing (or, where applicable, as of the earlier
specified date) in the form attached as Exhibit 8.2; and (iv)
Purchaser shall have entered into non-compete and confidentiality
agreements with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ in the form attached as Exhibit 7.7, which shall commence
by their terms on Closing of the purchase of the Assets.
- 25 -
(b) Action. All action necessary to authorize the execution, delivery and
performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby shall have been duly and validly
taken by Seller. Seller shall have furnished Purchaser with copies of
all consents or resolutions adopted or executed by Seller in
connection with such actions, certified by the Secretary of Seller.
(c) No Action or Proceeding. As of the Closing, no action or proceeding by
any public authority or person shall be pending before any court or
administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the
transactions contemplated herein. Further, except as described on
Exhibit 3.7, there shall not be threatened, instituted or pending any
action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make
illegal, or to delay or otherwise directly or indirectly restrain or
prohibit, the consummation of the transactions contemplated hereby or
seeking to obtain material damages in connection with such
transactions, (ii) seeking to prohibit direct or indirect ownership or
operation by Purchaser of all or a material portion of the business or
assets of Seller, or to compel Purchaser or Seller to dispose of or to
hold separately all or a material portion of the business or assets of
Seller, as a result of the transactions contemplated hereby, (iii)
seeking to require direct or indirect transfer or sale by Purchaser of
any of the Assets, (iv) seeking to invalidate or render unenforceable
any material provision of this Agreement or any of the other
agreements attached hereto as Exhibits, or otherwise contemplated
hereby, (v) seeking relief against Seller under any federal or state
law or regulation relating to bankruptcy, insolvency, reorganization
or moratorium or creditors' rights generally, (vi) otherwise relating
to and materially adversely affecting the transactions contemplated
hereby, or (vii) which could result in any material adverse change in
the business, operations, financial condition or properties of Seller
or the Assets.
(d) No Material Adverse Changes. There shall have been no event or change
occurring between the execution of this Agreement and the Closing
which in the aggregate may be deemed to have a material adverse effect
on the business, operations, financial condition or properties of
Seller or any material Assets.
(e) Litigation. Except as described on Exhibit 3.12, there shall be no
actions, proceedings or investigations pending, threatened against
Seller or its officers or directors before any court, any
administrative agency or administrative officer or executive, which
could result in any material adverse change in the business,
operations, financial condition or properties of Seller or the Assets.
- 26 -
(f) Waiver of Conditions Precedent. Purchaser may waive any or all of the
conditions precedent set forth in this Section 8.2, either
prospectively or retroactively, by giving written notice of such
waiver to Seller. No waiver of any condition precedent pursuant to
this Section 8.2(f) shall, unless otherwise expressly stated in such
written notice of waiver, extend to any other covenant or agreement
contained herein or to any other condition precedent.
(g) Breach or Violation. Seller shall have obtained, or caused to be
obtained, each consent and approval necessary in order that the
transactions contemplated herein not constitute a breach or violation
of, or result in a right of termination or acceleration of, or
creation of any encumbrance on any of the Assets, pursuant to the
provisions of any agreement, arrangement or undertaking of or
affecting Seller or any license, franchise or permit of or affecting
Seller.
(h) Governmental Filings. All material governmental filings,
authorizations and approvals that are required for the consummation of
the transactions contemplated hereby shall have been duly made and
obtained by Seller (except filings required by Purchaser pursuant to
applicable securities laws).
(i) Discovery of Facts or Circumstances. Purchaser shall not have
discovered any fact or circumstance existing as of the date of this
Agreement which has not been disclosed to Purchaser as of the date of
this Agreement regarding the business, assets, liabilities,
properties, condition (financial or otherwise), results of operations
or prospects of Seller which is, individually or in the aggregate with
other such facts and circumstances, materially adverse to Seller or
the value of the Assets.
(j) Damage. There shall have been no damage, destruction or loss of or to
any property or properties owned or used by Seller, or to any material
Assets of Seller, whether or not covered by insurance which, in the
aggregate, has or would be reasonably likely to have, a material
adverse effect on Seller.
(k) Opinion of Counsel. Purchaser shall have received from counsel to
Seller, an opinion dated the Closing, to the following effect:
(j) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Illinois.
(iii)Execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action, corporate or otherwise, by
Seller, and by its Shareholders; this Agreement is a valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms except as enforcement can be limited by
general equitable principles or bankruptcy, insolvency or similar
laws affecting creditor's rights generally.
- 27 -
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Except as otherwise stated below, the representations, warranties, covenants and
agreements made by the respective parties in this Agreement or in a certificate
executed and delivered in connection with the transactions contemplated hereby
shall survive the Closing for a period of three (3) years and thereafter all
such representations and warranties shall be extinguished. The foregoing shall
be subject to the exception that any claims relating to tax matters covered in
Sections 3.26 and 3.27 hereof shall survive for the period of the applicable
statute of limitations pertaining to tax claims. The parties hereto shall have
liability and responsibility for its surviving representations and warranties
made herein, notwithstanding any investigation heretofore or hereinafter made by
or on behalf of the parties prior to the Closing, provided, however, that no
legal remedy, at law or in equity, shall be available with respect to any loss,
liability, or breach of agreement or warranty or misrepresentation if the party
alleging such loss, liability, breach, or misrepresentation had actual knowledge
of the existence, nature and extent thereof on the Closing and, despite such
knowledge, proceeded with the Closing without objection.
- 28 -
ARTICLE X
INDEMNIFICATION
10.1 Indemnification Subject to the provisions of Article IX and this Article X,
Seller and Shareholders agree to indemnify in respect of, and hold
Purchaser harmless against, any and all damages, claims, deficiencies,
losses, and expenses (collectively "Damages") resulting from (i) any
misrepresentation, breach of warranty, or nonfulfillment or failure to
perform any covenant or agreement contained herein which survives the
Closing or in any certificate executed and delivered pursuant to this
Agreement or in connection with the transactions contemplated hereby,
provided, however, notwithstanding anything herein to the contrary, Seller
and Shareholders shall have no liability under this Agreement to Purchaser
for Damages resulting from (a) any such misrepresentations, breach of
warranty or nonfulfillment or failure to perform any such covenant or
agreement, or any fact or omission, known to Purchaser or any of its
employees at the date hereof or at and immediately after the Closing; (b)
any liability or obligation of Seller assumed by Buyer in writing pursuant
to he Agreement; or (c) or any action, assessment, claim, demand or suit
incident to any of the foregoing; and (ii) Seller's operation of its
business through the date of Closing. Subject to the provisions of Article
IX and this Article X, Purchaser agrees to indemnify in respect of, and
hold Seller harmless against, any and all Damages resulting from (i) any
misrepresentation, breach of warranty, or nonfulfillment or failure to
perform any covenant or agreement on the part of Purchaser made as a part
of or contained in this Agreement or in any certificate executed and
delivered pursuant to this Agreement or in any document delivered by
Purchaser to Seller pursuant hereto or in connection with the transactions
contemplated hereby except for Damages resulting from any such
misrepresentations, breach of warranty or nonfulfillment or failure to
perform any such covenant or agreement known to Seller and waived in
writing by Seller as of the Closing; (ii) Purchaser's operation of the
purchased business after the date of Closing; (iii) any liability or
obligation not specifically retained by Seller in writing pursuant to this
Agreement; (iv) any liability of Seller assumed by Purchaser; and (v) any
action assessment claim demand preceding the suit incident to any of the
foregoing. The party claiming indemnification hereunder is hereinafter
referred to as the "Indemnified Party" and the party against whom such
claims are asserted hereunder is hereinafter referred to as the
"Indemnifying Party". Damages for which a claim or action may be asserted
hereunder are hereinafter referred to as a "Loss".
10.2 Limitation of Liability Neither party shall be liable to the other party to
this Agreement except to the extent that the aggregate amount of Losses for
which they would otherwise (but for this provision) be liable under this
Article X exceeds in the aggregate the sum of $10,000 and then only to the
extent of such excess. Claims for indemnification by either party shall be
limited to the greater of (i) the amount of the Purchase Price, or (ii) the
amount of any damages, claims, deficiencies, losses and expenses paid by
the Indemnified Party to a third party.
- 29 -
10.3 Method of Asserting Claims All claims for indemnification by any
Indemnified Party under this Article X shall be asserted and resolved as
follows:
(a) In the event that any claim or demand for which an Indemnifying Party
would be liable to an Indemnified Party hereunder is asserted against
or sought to be collected from such Indemnified Party by a third
party, said Indemnified Party shall, within twenty (20) days of such
claim or demand being made, notify the Indemnifying Party of such
claim or demand, specifying the nature of and specific basis for such
claim or demand and the amount or the estimated amount thereof to the
extent then feasible (the "Claim Notice"). The estimate of Loss
contained in the Claim Notice shall not limit the amount of the
Indemnifying Party's ultimate liability under the claim. The
Indemnifying Party shall not be obligated to indemnify the Indemnified
Party with respect to any such claim or demand if the Indemnified
Party fails to notify the Indemnifying Party thereof in accordance
with the provisions of this Agreement within said twenty (20) day
period. The Indemnifying Party shall have 30 days from the personal
delivery or mailing of the Claim Notice (the "Notice Period") to
notify the Indemnified Party (i) whether or not the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to
such claim or demand is disputed, and (ii) whether or not the
Indemnifying Party desires, at the sole cost and expense of the
Indemnifying Party, to defend the Indemnified Party against such claim
or demand; provided, however, that any Indemnified Party 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 interest or those of the Indemnifying Party and not
unreasonably prejudicial to the Indemnifying Party. In the event that
the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against
such claim or demand, then, except as hereinafter provided, the
Indemnifying Party shall have the right to defend by all appropriate
proceedings, which proceedings shall be promptly settled or prosecuted
by it to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement it may
do so at its sole cost and expense. If requested by the Indemnifying
Party, the Indemnified Party agrees to cooperate with the Indemnifying
Party and its counsel in contesting any claim or demand which the
Indemnifying Party elects to contest, or, if appropriate and related
to the claim in question, in making any counterclaim against the
person asserting the third party claim or demand, or any cross
complaint against any person but in any such case at the sole cost and
expense of the Indemnifying Party. No claim may be settled without the
consent of the Indemnifying Party, unless such settlement includes the
complete release of the Indemnifying Party.
- 30 -
(b) In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand
being asserted against or sought to be collected from it by a third
party, the Indemnified Party shall send a Claim Notice with respect to
such claim to the Indemnifying Party. If the Indemnifying Party does
not notify the Indemnified Party within the Notice Period that it
disputes such claim, the amount of such claim shall be conclusively
deemed a liability of the Indemnifying Party hereunder. If the
Indemnifying Party has disputed such claim, as provided above, such
dispute shall be resolved by arbitration as provided in Section 13.11.
10.4 Payment of Claim Upon the determination of the liability of Seller or
Purchaser under Section 10.1, 10.2 and 10.3, as the case may be, after
payment by the Indemnified Party of, or upon entry of final judgment or
reaching of a settlement in respect of, an Indemnifiable Claim, or
determination of a Loss to the Indemnified Party occasioned by the breach
of a representation and warranty by the Indemnifying Party, and notice
thereof to the Indemnifying Party, the Indemnifying Party shall within
thirty (30) days after receipt of such notice pay to the Indemnified Party
the amount of the payment, judgment, settlement or Loss, as the case may
be.
10.5 Other Rights and Remedies Not Affected The indemnification rights of the
parties under this Article X are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or
otherwise for any misrepresentation, breach of warranty or failure to
fulfill any agreement or covenant hereunder on the part of any party hereto
including without limitation the right to seek specific performance,
rescission or restitution, none of which rights or remedies shall be
affected or diminished hereby.
10.6 Post-Closing Adjustments and Right of Offset As promptly as practicable,
but in no event later than 120 days following the Closing, the Purchaser
may audit and calculate the actual results of Seller's operations
(including an audit of gross revenues) from January 1, 1998 through the
Closing and the prior fiscal year ended December 31, 1997. In the event of
a material variation in revenues between the results of such audit and the
financial statements or revenue information provided by Seller to Purchaser
in Exhibit 10.6 hereto (such material variation in revenues to be defined
as a variation of more than the lesser of (i) 2% of revenues, or (ii)
$10,000), then the Purchaser shall have the right to offset all of such
material variation in excess of either of the above-described amounts
against the promissory note payment due in the period immediately following
the determination of such material variation. In addition, the amount of
any such offset shall also be increased by interest calculated at the rate
of 18% per annum from the date of the Closing to the date of the promissory
note payment in which the offset is taken. The Note shall also contain
provisions which shall permit the Purchaser to offset indemnification
claims under Article X against payments due under the Note. The right of
offset shall survive the Closing for a period of three years, provided that
the right of offset regarding tax matters will survive the Closing until
expiration of the applicable statute of limitations.
- 31 -
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH
11.1 Amendment and Modification This Agreement may be amended, modified or
supplemented only by an instrument in writing, executed after the date
hereof, making specific reference to this Article and to each Article and
paragraph hereof to which such amendment, modification or supplement
applies, which document shall be signed by an authorized officer of
Purchaser and by Seller.
11.2 Termination and Abandonment This Agreement may be terminated and the
transaction provided for by this Agreement may be abandoned without
liability on the part of any party to any other party:
(a) At any time before the Closing Date, by mutual consent of Purchaser
and Seller;
(b) Commencing five days prior to Closing and until the Closing, by
Purchaser, if any of the conditions provided for in Section 8.2 of
this Agreement have not been met and have not been waived by Purchaser
in writing;
(c) Commencing five days prior to Closing and until the Closing, by
Seller, if any of the conditions of Section 8.1 of this Agreement have
not been met and have not been waived by Seller in writing; and
(d) Automatically if the Closing has not occurred by January 31, 1999.
In the event of the termination and abandonment of this Agreement by any party
as above provided in this Article XI, written notice shall forthwith be given to
the other party, and each party shall be solely responsible to pay its own
expenses incident to preparation for the consummation of this Agreement and the
transactions contemplated hereunder (except as otherwise provided herein).
ARTICLE XII
CLOSING
12.1 Closing The closing of this Agreement (the "Closing") shall be January 19,
1999 or as soon thereafter as practicable but not later than January 31,
1999; unless a later date is mutually agreed upon by the parties, provided
for accounting and allocation purposes, this Agreement shall be deemed to
be effective at 12:01 a.m. on the first day of the month in which Closing
occurs ("Closing Date").
12.2 Allocations At the Closing, (i) the Seller will pay the Purchaser for all
vacation pay accrued as of the Closing Date; (ii) Seller will pay Purchaser
the amount of all accounts receivable credit balances existing on the
Closing Date; and (iii) the parties shall allocate or prorate all the
portion attributable to Seller of the water, sewer, electric, other
utilities, rent, insurance and other pro-ratable items through the Closing
Date. For purposes of income and expense all income and expenses incurred
on or before the Closing Date shall be billed and collected by, and paid
for, respectively, by Seller.
- 32 -
12.3 Seller's Deliveries at Closing At the Closing Seller and Shareholder will
deliver the following documents to the Purchaser all of which shall be
reasonably satisfactory in form and substance to the Purchaser and its
counsel:
(a) ▇▇▇▇ of Sale. ▇▇▇▇ of Sale for the Assets in the form described in
Exhibit 12.3 hereto, together with such deeds, instruments,
conveyances, certificates of title, assignments, assurances and other
documents as may be required to sell, convey and transfer title to the
Assets from Seller to the Purchaser.
(b) Assignment of Intellectual Property. Assignment of Intellectual
Property described in Exhibit 3.18 together with assurances and other
documents as may be required to transfer all of Seller's right, title
and interest in the Intellectual Property.
(c) Assignment of Contracts, Leases and Other Agreements. Assignment of
contracts, leases and other agreements, described in Exhibit 3.20
together with assurances and other documents as may be required to
transfer all of Seller's right, title and interest in the contracts,
leases and other agreements.
(d) Opinion of Counsel. An opinion from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq., counsel
to Seller, dated the Closing Date, in the form described in Section
8.2 of this Agreement.
(e) Consents and Approvals. All consents, approvals and authorizations,
all notices and all registrations and filings required to be obtained,
given or made under any law, statute, rule, regulation, judgment,
order, injunction, contract, agreement or other instrument to which
Seller is subject, bound or a party, or by which Seller or any of its
properties is bound or subject, in each case which is required to
permit the consummation of the transactions contemplated by the
Agreement without contravention, violation or breach by the Seller of
any of the terms thereof.
(f) Certificates. Certificate of good standing for Seller from the
Secretary of State of the state of incorporation of Seller dated as of
a date reasonably prior to the Closing Date.
(g) Resolutions. Certified copy of resolutions of the Board of Directors
and the Shareholders of Seller authorizing, inter alia, the execution
and delivery of this Agreement, the sale of the Assets and the other
transactions contemplated under this Agreement.
(h) Non-Compete and Confidentiality Agreements. The non-compete agreements
of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ in the
form annexed as Exhibit 7.7 hereto.
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(i) Delivery of Corporate and Business Records. Such other corporate and
business records related to the Assets as may be reasonably requested
by the Purchaser including without limitation employee and personnel
folders and applications, payroll, tax related records and financial
data.
(j) Officer's Certificate in the form described in Section 8.2 of this
Agreement.
(k) Other documents. Such other documents, instruments, certificates and
agreements including assignment of space lease to Purchaser, as
Purchaser and its counsel may reasonably request.
12.4 Purchaser's Deliveries at Closing At the Closing, Purchaser shall deliver
the following documents to Seller all of which shall be in a form
reasonably acceptable to Seller and their counsel:
(a) Purchase Price. The purchase price for the Assets referred to in
Section 2.2 including the cash portion and the Note executed by
Purchaser.
(b) Consents and Approval. All consents, approvals and authorizations, all
notices and all registrations and filings required to be obtained,
given or made under any law, statute, rule, regulation, judgment,
order, injunction, contract, agreement or other instrument to which
the Purchaser is a party, or by which it or any of its properties is
bound or subject, in each case which is required to permit the
consummation of the transactions contemplated by this Agreement
without contravention, violation or breach by the Purchaser of any of
the terms thereof.
(c) Opinion of Counsel. An opinion from ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to
the Purchaser, dated the Closing Date, in the form described in
Section 8.1 of this Agreement.
(d) Resolutions. Certified copy of resolutions of the Board of Directors
of the Purchaser authorizing, inter alia, the execution and delivery
of this Agreement and the Note, the purchase of the Assets, and the
other transactions contemplated hereby.
(e) Officer's Certificate. In the form described in Section 8.1 of this
Agreement.
(f) Other Documents. Such other documents, instruments, certificates and
agreements including without limitation, if assumed, the assumption of
the lease, as Seller and its counsel may reasonably request.
(g) Security Agreement. Security Agreement in favor of Seller covering the
Assets.
(h) Financing Statement. Financing Statement in favor of Seller covering
the Assets.
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12.5 Forwarding of Receivables Following the Closing, in the event the Purchaser
receives payment of receivables which were billed by Seller, and are the
property of Seller, the Purchaser shall take prompt action (defined to mean
not less than every seven calendar days), to forward to Seller such checks
or other remittances as Purchaser shall have received and which are the
property of Seller. Likewise, in the event payments are received by Seller
which are the property of Purchaser and which relate to receivables created
after the Closing Date, the Seller shall promptly forward (not later than
seven calendar days after receipt thereof) such checks or other remittances
to the Purchaser representing payments on receivables which are the
property of Purchaser.
12.6 Removal of Personal Effects Following Closing In the event the Seller
maintains assets which are the personal property of Seller on the premises
and Seller desires to remove such personal property, the Seller shall have
a period of sixty days following the Closing to remove such personal
property. As to any such personal property removed, the Seller shall
provide the Purchaser with a schedule of such property prior to the removal
of the same from the premises.
12.7 Cooperation; Premises For a period of 90 days following the Closing Date,
Shareholders, agree to assist Purchaser in the retention of Seller's
customers and employees, conversion of Seller's computer system to
Purchaser's computer system, if necessary, and perform any other duties
that Purchaser may reasonably request. Further, if the Seller's office
facilities are to be relocated, Shareholders agree to assist in finding new
space. Buyer will cause the Financing Statement to be filed and perfected
in all jurisdictions where filings are required.
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ARTICLE XIII
MISCELLANEOUS
13.1 Notice All notices and communications required or permitted to be given
hereunder shall be in writing, signed by the sender, and delivered by
personal delivery overnight courier service or by registered or certified
mail to:
If to Purchaser: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
Factual Data Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Seller:.. Premier Mortgage Credit Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Shareholders: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
c/o Premier Mortgage Credit Services, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or such other address as shall have been furnished in writing. Receipt by, or
filing with, the respective parties of any communications shall be deemed to
have occurred for the purpose of this Agreement, when personally delivered, or
next business day if sent by overnight courier, or two days after deposit
thereof, postage prepaid, properly addressed, in the United States mail.
13.2 Entire and Sole Agreement This Agreement, including all Exhibits hereto
(which by this reference shall incorporate herein all such Exhibits as if
more fully set forth herein), constitutes the entire agreement between the
parties and as of Closing supersedes all agreements, representations,
warranties, statements, promises and understandings, whether oral or
written, with respect to the subject matter hereof. After Closing neither
party shall be bound by or charged with any oral or written agreements,
representations, warranties, statements, promises or understandings not
specifically set forth in this Agreement or in the certificates or
documents delivered in connection herewith.
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13.3 Successors and Assigns Except as otherwise provided in this Agreement, all
covenants and agreements of the parties contained in this Agreement shall
be binding upon and inure to the benefit of the respective successors and
permitted assigns of the parties hereto and the heirs, personal
representatives, executors and assigns of the Shareholders. This Agreement
may not be assigned by any party hereto without the prior express written
consent of the other parties hereto.
13.4 Expenses Whether or not the transactions contemplated hereby shall be
negotiated and consummated, each party shall be solely responsible for
payment of all expenses incurred by it in connection with the consummation
of this Agreement and the transactions contemplated hereunder. Each party
will hold the other harmless from and against any and all claims or
liability arising in connection therewith.
13.5 Severability Should any one or more of the provisions of this Agreement be
determined to be illegal or unenforceable, all other provisions of this
Agreement shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected
thereby.
13.6 Governing Law This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of Colorado without regard to
conflicts of laws principles.
13.7 Counterparts This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
13.8 Amendments Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally, but only by an instrument in
writing in accordance with Section 11.1 hereof.
13.9 No Third Party Beneficiary The terms and provisions of this Agreement are
intended solely for the benefit of the parties hereto, and it is not the
intention of the parties to confer third-party beneficiary rights upon any
other person or entity.
13.10Headings The headings in this Agreement are for purposes of convenience
and easy reference only and shall not limit or otherwise affect the meaning
hereof.
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13.11Disputes Each of the parties hereto hereby consents to the jurisdiction of
any state or federal court located within the state of Illinois, and
irrevocably agrees that all action and proceeding related to this Agreement
or the transactions contemplated hereby be properly litigated in such
courts; provided however, if either party shall claim indemnification
hereunder for any claim other than third party claims, the parties
acknowledge and agree that any such dispute shall be submitted for binding
arbitration in Denver, Colorado in accordance with the Arbitration
Commercial Rules procedures established by the American Arbitration
Association or, if such association is not then in existence, an
independent association of arbitrators which may be designated by agreement
of the parties. In the event the parties are unable to agree on an
independent association of arbitrators from which arbitrators may be drawn,
either party may apply to a court of competent jurisdiction for appointment
of arbitrators, however, such application will only be made in the event
the American Arbitration Association is not then in existence. The
arbitrator(s) shall make detailed written findings to support their award.
The prevailing party in any such arbitration proceeding shall be awarded
such costs and expenses (including reasonable attorney's and expert
witness' fees) as were incurred by the prevailing party as a result of the
institution and prosecution of the arbitration proceeding including all
costs and expenses (including reasonable attorney's and expert witness
fees) to enter judgment upon or enforce any such award including all
appellate proceedings.
13.12Delivery of Exhibits All Exhibits to be delivered by either of the parties
hereto upon execution of this Agreement which are not so delivered shall be
delivered to the other party not later than 20 days from the date of the
execution of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
PURCHASER:
FACTUAL DATA CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
SELLER:
PREMIER MORTGAGE CREDIT SERVICES, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
SHAREHOLDERS, but only with respect
to Articles III and X
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, but only as to Article X
TABLE OF ATTACHMENTS
Exhibit Description
2.1 List of Acquired Assets
2.2(b)(i) Form of Promissory Note and Amortization Schedule
2.2(b)(ii) Form of Security Agreement
2.3 List of Assumed Liabilities
3.1(a) Articles of Incorporation of Seller
3.1(b) Bylaws of Seller
3.3(a) Certificate of Seller re: Shareholder Approval
3.3(b) Directors' Consent of Seller
3.6 Conflicting Agreements
3.7 Governmental Notices
3.12 Litigation
3.15 Exceptions to Title of Assets
3.16(a) Customer Accounts
3.16(b) Customer Contracts or Agreements
3.16(c) Impaired Customer Contracts
3.16(d) Delinquent Contracts or Agreements
3.17 License Agreements
3.18 Intellectual Property
3.19 Seller's Customers--Revenues
3.20 Contracts
3.22 Liabilities not on Financial Statements
3.23 No Material Adverse Changes
3.25 Leases
3.26 Tax Returns
3.27 Tax Notices
3.28 Employment Matters
3.29 Employee Benefit Plans
6.2 Directors' Consent of Purchaser
7.7 Non-Compete and Confidentiality Agreements--Zernitz,
Zernitz and ▇▇▇▇▇▇▇▇▇▇▇
8.1 Form of Certificate of Purchaser
8.1(f) Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
8.2 Form of Certificate of Seller
8.2(k) Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
10.6 Seller's Gross Revenue Representation
12.3 ▇▇▇▇ of Sale and Assignment