EXHIBIT 10.7
DEFINITIVE ACQUISITION AGREEMENT
OF
CMS TECHNOLOGY SERVICES, L.P.
THIS ACQUISITION AGREEMENT effective as of July 1, 2004 and executed as
of July 13, 2004 (this "Agreement"), is made and entered into by and among
Systems Evolution Inc., a Texas corporation and Systems Evolution Inc., an Idaho
corporation ("Buyer"), and Southwest CMS Technology Services LP, a Texas limited
partnership acting through its general partner CMS Associates, LLC, a Texas
limited liability corporation ("CMS") and the individual parties listed on
Exhibit A hereto (jointly, severally and collectively the "Seller").
WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, the respective Boards of Directors of Buyer and the general
partner of Seller have approved an acquisition of Seller by Buyer (the
"Acquisition"), in connection with which all of Seller's interest will be
conveyed to Buyer in consideration of the purchase price set forth below
(together with the other transactions contemplated by this Agreement, the
"Transactions");
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Transactions;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.1 Closing Date. The closing of the Transactions (the "Closing") shall
take place at the offices of the Seller in Stafford, Texas, as soon as
practicable after the satisfaction or waiver of each of the conditions set forth
in Article IV hereof or at such other time and place and on such other date as
Buyer and Seller shall agree; provided that each of the closing conditions set
forth in Article IV hereof shall have been satisfied or waived at or prior to
such time. The date on which the Closing occurs is herein referred to as the
"Closing Date."
1.2 The Transactions. Subject to the terms and conditions of this
Agreement:
(a) On the Closing Date, the interest holders of Seller, based
upon ownership of Seller as listed in Exhibit A, shall tender
to Buyer all interest in and to Seller and receive from Buyer
the purchase price consideration set forth below (the
"Purchase Price") pro rata according to their share ownership
in the Seller as listed in Exhibit A.
(b) The Purchase Price shall consist of: (i) two checks in the
total amount of Ten Thousand Dollars ($10,000.00) made payable
to ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ for Two Thousand Dollars ($2,000.00)
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ for Eight Thousand Dollars
($8,000.00); (ii) two promissory notes in the total amount of
Forty Thousand Dollars ($40,000), in the form attached hereto
as Exhibit B, made payable to ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (for
$32,000.00) and ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (for $8,000.00) in four
(4) equal installments with no interest thereon each quarter
thereafter commencing on October 1st, 2004 and ending on July
1st, 2005 ("Final Payout"); and (iii) Two Hundred Thousand
(200,000) shares of restricted Common stock of Systems
Evolution Inc., an Idaho corporation which is publicly traded
on the OTCBB under the symbol "SEVI" ("Buyer Common Stock").
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller that:
(a) Organization. Buyer is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of
Texas and the state of Idaho. Buyer has all requisite corporate power
and corporate authority to own, lease and operate all of its properties
and assets and to carry on its business as now being conducted, except
where the failure to be so organized, existing or in good standing
would not have a Material Adverse Effect on the financial condition of
Buyer and its subsidiaries, taken as a whole (a "Buyer MAE"). Buyer is
duly qualified to do business, and is in good standing, in each
jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be duly
qualified would not have a Buyer MAE. Buyer has heretofore delivered to
Seller true and complete copies of Buyer's Certificates of
Incorporation, as amended, and Buyer's bylaws as in existence on the
date hereof.
(b) Authorization and Validity of Agreement. The execution and
delivery by Buyer of this Agreement and the consummation by Buyer of
the Transactions contemplated hereby have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by Buyer and is the legal valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
(c) No Conflict. The execution and delivery of this Agreement
does not, and the consummation of the Transactions will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or
result in the creation of any lien or encumbrance upon any of the
properties or assets of Buyer under, any provision of (i) the charter
or bylaws of Buyer, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease, guaranty or other financial assurance
agreement or other agreement, instrument, permit, concession, franchise
or license applicable to Buyer, and (iii) subject to governmental
filing and other matters referred to in the following sentence, any
judgment, order, decree, statute, law, ordinance, rule or regulation or
arbitration award applicable to Buyer, other than, in the case of
clause (ii), any such conflicts, violations, defaults, rights or liens
or encumbrances that individually or in the aggregate would not have a
Buyer MAE. No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or agency,
domestic or foreign, including local authorities (a "Governmental
Entity"), is required by or with respect to Buyer in connection with
the execution and delivery of this Agreement by Buyer or the
consummation by Buyer of the Transactions, except for such consents,
approvals, orders, authorizations, registrations, declarations, filings
and notices as are set forth in Schedule 2.1(c).
2.2 Representations and Warranties of Seller. Seller hereby, jointly
and severally (according to their respective ownership interest as
listed on Exhibit A hereto), represents and warrants to Buyer that:
(a) Organization. Seller is a limited partnership duly
organized, validly existing and in good standing under the laws of the
state of Texas. Seller has all requisite corporate power and corporate
authority and all necessary governmental authorizations to own, lease
and operate all of its properties and assets and to carry on its
business as now being conducted, except where the failure to be so
organized, existing or in good standing or to have such governmental
authority would not (i) have a Material Adverse Effect on the assets,
properties, business, operations, or condition (financial or otherwise)
of Seller, taken as a whole or (ii) prevent or materially adversely
affect the ability of Seller to perform and comply with its obligations
under this Agreement, or any other agreement to be executed and
delivered in connection with the Transactions (a "Seller MAE"). Seller
is duly qualified as a foreign corporation to transact business, and is
in good standing, in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except in such jurisdictions where
the failure to be duly qualified does not and would not have a Seller
MAE. Seller is in compliance with all applicable laws, judgments,
orders, rules and regulations, domestic and foreign, except where
failure to be in such compliance would not have a Seller MAE. Seller
has heretofore delivered to Buyer true and complete copies of Seller's
Certificate of Limited Partnership and Limited Partnership Agreement
(the "Partnership Documents"), and CMS's Articles of Organization as in
existence on the date hereof.
(b) Capitalization. The authorized capital stock of Seller
consists of 100,000 shares of Seller Stock. As of the date of this
Agreement, there were 100,000 shares of Seller Stock issued and
outstanding. All issued and outstanding shares of Seller Stock are
validly issued, fully paid and nonassessable, were not issued in
violation of any preemptive rights or other preferential rights of
subscription or purchase of any person, and no holder thereof is
entitled to preemptive rights. Seller is not a party to, and is not
aware of, (i) any voting agreement, voting trust or similar agreement
or arrangement relating to any class or series of its capital stock, or
(ii) any agreement or arrangement providing for registration rights
with respect to any capital stock or other securities of Seller.
(c) Authorization and Validity of Agreement. Seller has all
requisite corporate power and authority to enter into this Agreement,
and to perform its respective obligations hereunder. The execution and
delivery by Seller of this Agreement to which it is a party and the
consummation by it of the Transactions have been duly authorized by all
necessary corporate action. This Agreement has been duly executed and
delivered by Seller and is the valid and binding obligation of Seller
enforceable against it in accordance with its terms.
(d) No Approvals or Notices Required; No Conflict with
Instruments to which Seller is a Party. The execution and delivery of
this Agreement does not, and the consummation of the Transactions and
compliance with the provisions hereof and thereof will not, conflict
with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of or "put" right with
respect to any obligation or to loss of a material benefit under, or
result in the creation of any lien or encumbrance upon any of the
properties or assets of Seller, any provision of (i) the Partnership
Documents of Seller, (ii) except as set forth in Schedule 2.2(d), any
loan or credit agreement, note, bond, mortgage, indenture, lease,
guaranty or other financial assurance agreement or other agreement,
instrument, permit, concession, franchise or license applicable to
Seller or any of their respective properties or assets, and (iii)
subject to governmental filing and other matters referred to in the
following sentence, any judgment, order, decree, statute, law,
ordinance, rule or regulation or arbitration award applicable to Seller
or their respective properties or assets, other than (A), in the case
of clause (ii), any such conflicts, violations, defaults, rights or
liens or encumbrances that individually or in the aggregate would not
have a Seller MAE. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Seller in connection with the execution
and delivery of this Agreement by Seller or the consummation by Seller
of the Transactions.
(e) Commission Filings; Financial Statements. Seller is not a
public corporation and is not required to file any reports,
registration statements and other filings with the Commission.
To the best of the Seller's knowledge, each of the Seller's
consolidated financial statements (including any related notes or
schedules) (i) was prepared in accordance with customary accounting
principles applied on a consistent basis (except as may be noted
therein or in the notes or schedules thereto) and (ii) except for
non-compliance that would not have a Seller MAE, complied with the
rules and regulations of the Commission. Such consolidated financial
statements fairly present the consolidated financial position of Seller
as of the dates thereof and the results of operations, cash flows and
changes in stockholders' equity for the periods then ended (subject, in
the case of the unaudited interim financial statements, to the
exclusion of normal year-end audit adjustments and footnote
disclosures). As of the date hereof, Seller has no liabilities,
absolute or contingent, that may reasonably be expected to have a
Seller MAE, except (i) those incurred in the ordinary course of
business consistent with past operations and not relating to the
borrowing of money and (ii) those set forth in Schedule 2.2(e).
(f) Conduct of Business in the Ordinary Course; Absence of
Certain Changes and Events. Since the date of the initial Letter of
Intent, except as contemplated by this Agreement or set forth in
Schedule 2.2(e), Seller has conducted its business only in the ordinary
and usual course in accordance with past practice, and there has not
been: (i) a Seller MAE; (ii) to the knowledge of Seller, any other
condition, event or development that reasonably may be expected to
result in a Seller MAE; (iii) any change by Seller in its accounting
methods, principles or practices; (iv) any revaluation by Seller of any
of its assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable other than in the
ordinary course of business and consistent with past practice; (v) any
entry by Seller into any commitment or transaction that would be
material to Seller; (vi) any declaration, setting aside or payment of
any dividends or distributions in respect of the Seller Stock or any
redemption, purchase or other acquisition of any of its securities;
(vii) any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting the properties or business of
Seller; (viii) any increase in indebtedness of borrowed money other
than borrowing under existing credit facilities, the amount of which is
disclosed in Schedule 2.2 (d) and (e); (ix) any granting of a security
interest or lien or encumbrance on any property or assets of Seller.
(g) Litigation. Except as disclosed in Schedule 2.2(g), there
are no claims, actions, suits, investigations, inquiries or
proceedings, pending or, to the knowledge of Seller, threatened against
Seller any of their respective properties at law or in equity, wherever
located (i) that exist today or (ii) that would otherwise, if adversely
determined, have a Seller MAE. Seller is not subject to any judicial,
governmental or administrative order, writ, judgment, injunction or
decree. Seller, jointly and severally, agrees to indemnify and hold
Buyer harmless for any damages, costs and expenses, including
reasonable legal fees, for any and all claims, actions, suits,
investigations, inquiries or proceedings arising out of those items
disclosed in Schedule 2.2(g).
(h) Taxes. Except as set forth in Schedule 2.2(h),
(i) all returns and reports, including, without
limitation, information and withholding returns and reports
("Tax Returns"), of or relating to any foreign, federal, state
or local tax, assessment or other governmental charge ("Taxes"
or a "Tax") that are required to be filed on or before the
Closing Date by or with respect to Seller, have been or will
be duly and timely filed, all such Tax Returns are or will be
true, correct and complete in all material respects, and all
Taxes, including interest and penalties, due and payable
whether or not shown on any such Tax Return have been or will
be duly and timely paid or adequately provided for in reserves
established by Seller in its consolidated financial
statements, except where the failure to file Tax Returns or to
pay or provide for Taxes would not result in a Seller MAE;
(ii) the charges, accruals and reserves for Taxes
with respect to Seller reflected in the consolidated financial
statements included in the Seller Commission Filings have been
prepared in accordance with generally accepted accounting
principles and are sufficient to cover the payment of all
material Taxes, including any penalties or interest thereon
and whether or not assessed or disputed, that are, or are
hereafter found to be, or to have been, due with respect to
the operations of Seller through the periods covered thereby
and Seller has (and as of the Closing Date will have) made all
estimated tax payments required with respect to Taxes for Tax
Returns not yet due;
(iii) there is no action, suit, proceeding, audit or
claim now proposed or pending against or with respect to
Seller in respect to any Taxes, and no material assessment,
deficiency or adjustment has been asserted or proposed with
respect to any Tax Return of or with respect to Seller that
has not been adequately provided for in reserves established
by Seller;
(iv) no waiver or extension of any statute of
limitations or the period of assessment or collection of any
Taxes relating to any federal, state, local or foreign Tax
matter has been given by or requested from Seller and no power
of attorney with respect to any such Taxes has been filed or
entered into with any Governmental Authority, in either case
that will be outstanding as of the Closing Date and the time
for filing any Tax Return relating to Seller has not been
extended to a date later than the date of this Agreement;
(v) except for statutory liens or encumbrances for
current Taxes not yet delinquent, no liens or encumbrances for
Taxes exist upon the assets of Seller;
(vi) Seller is not a party to or bound by or has an
obligation under any written Tax separation, sharing or
similar agreement or arrangement;
(i) Severance Payments. Except as set forth in Schedule
2.2(i), neither Seller nor any of the Seller Subsidiaries will have any
liability or obligation to pay a severance payment or similar
obligation to any of their respective employees, officers or directors
as a result of the Transactions, nor will any of such persons be
entitled to an increase in severance payments or other benefits as a
result of the Transactions in the event of the subsequent termination
of their employment.
(j) Brokers. Except as set forth in Schedule 2.2(j), no
broker, investment banker, or other Person acting on behalf of Seller
is or will be entitled to any broker's, finder's or other similar fee
or commission in connection with the Transactions.
(k) Compliance with Laws. Seller hold all required, necessary
or applicable permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities, except where the
failure to so hold could not reasonably be expected to have a Seller
MAE (the "Seller Permits"). All applications with respect to such
Seller Permits, were complete and correct in all material respects when
made and Seller does not know of any reason why any of such permits,
licenses, variances, exemptions, orders, franchises and approvals would
be subject to cancellation. Seller is in compliance with the terms of
the Seller Permits except where the failure to so comply could not
reasonably be expected to have a Seller MAE. Seller has not violated or
failed to comply with any statute, law, ordinance, regulation, rule,
permit or order of any Federal, state or local government, domestic or
foreign, or any Governmental Entity, any arbitration award or any
judgment, decree or order of any court or other Governmental Entity,
applicable to Seller or its business, assets or operations, except for
violations and failures to comply that would not have a Seller MAE.
(l) Contracts. Schedule 2.2(l) contains a complete list of the
following contracts, agreements, arrangements and commitments: (A) all
employment or consulting contracts or agreements to which Seller is
contractually obligated; (B) current leases, sales contracts and other
agreements with respect to any real property of Seller or to which
Seller is contractually obligated and current leases, sales contracts
or other agreements with respect to personal property of Seller is
contractually obligated, in each case having (1) a remaining term of
greater than one year or (2) total payments that may be required of
Seller exceeding $10,000; (C) contracts or commitments for capital
expenditures or acquisitions in excess of $10,000 to which Seller is
obligated; (D) agreements, contracts, indentures or other instruments
relating to the borrowing of money, or the guarantee of any obligation
for the borrowing of money, to which Seller is a party or any of their
respective properties is bound; (E) all material indemnification and
guaranty or other similar obligations (other than those obligations
which occur in the ordinary course of business) to which Seller is
bound; (F) any outstanding bonds, letters of credit posted or
guaranteed by Seller with respect to any Person, other than those that
do not exceed $10,000 in the aggregate; and (G) any covenants not to
compete or other obligations affecting Seller that would materially
restrict any of them or their affiliates from engaging in any business
or activity. True and correct copies of all the instruments described
in Schedule 2.2(l) have been furnished or made available to Buyer.
Except as noted in Schedule 2.2(l), all such agreements, arrangements
or commitments are valid and subsisting and Seller, to the extent each
is a party, has duly performed its obligations thereunder in all
material respects to the extent such obligations have accrued, and no
breach or default exists thereunder by Seller or, to the knowledge of
Seller, any other party thereto. There are no material liabilities of
any of the parties to any of the contracts between Seller and third
parties arising from any breach of or default in any provision thereof,
other than such breaches that, individually or in the aggregate, could
not reasonably be expected to have a Seller MAE, or that would permit
the acceleration of any obligation of any party thereto or the creation
of a lien or encumbrance upon any asset of Seller.
(m) Title to Property.
(i) Seller has good and indefeasible title to, or
valid leasehold interests in, all of their properties and
assets including all real property and all other properties
(tangible or intangible, real or personal) carried on their
books as an asset or used exclusively by them in their
business.
(ii) Seller has complied in all material respects
with the terms of all leases to which it is a party and under
which it is in occupancy, and all such leases are in full
force and effect. Seller enjoys peaceful and undisturbed
possession under all such leases.
(n) Insurance Policies. Schedule 2.2(n) contains a correct and
complete description of all insurance policies of Seller covering
Seller, any employees or other agents of Seller or any assets of
Seller. Each such policy is in full force and effect, is with
responsible insurance carriers and is substantially equivalent in
coverage and amount to policies covering companies of the size of
Seller and in the business in which Seller is engaged, in light of the
risk to which such companies and their employees, businesses,
properties and other assets may be exposed. All retroactive premium
adjustments under any worker's compensation policy of Seller have been
recorded in Seller's financial statements in accordance with generally
accepted accounting principles and are reflected in the financial
statements.
(o) Loans. Schedule 2.2(o) sets forth all existing loans,
advances or other extensions of credit (excluding accounts receivable
arising in the ordinary course of business) by Seller to any party,
including intercompany loans, advances, guaranties or extensions of
credit.
ARTICLE III
ADDITIONAL AGREEMENTS
3.1 Filings; Consents; Reasonable Efforts. Subject to the terms and
conditions of this Agreement, Seller and Buyer shall (I)make all filings
necessary under the applicable Securities Acts, the Exchange Act, the Texas
Corporations and Partnership Laws and applicable blue sky or similar securities
laws and shall use all reasonable efforts to obtain required approvals and
clearances with respect thereto; (ii) use reasonable efforts to obtain all
consents, waivers, approvals, authorizations, and orders required in connection
with the authorization, execution, and delivery of this Agreement; and (iii) use
reasonable efforts to take, or cause to be taken, all appropriate action, and
do, or cause to be done, all things necessary, proper, or advisable to make
effective as promptly as practicable the Transactions.
3.2 Notification of Certain Matters. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller, orally and in writing, of
(i) the occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty contained in
this Agreement to be untrue or inaccurate at any time from the date hereof to
the Closing Date; and (ii) any material failure of Seller or Buyer, as the case
may be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be compiled with or satisfied by
it hereunder.
3.3 Indemnification of Sellers after the Closing Date. After the
Closing Date, Buyer shall cause to indemnify and hold the individual parties
listed in Exhibit A harmless for any damages, costs and expenses, including
reasonable legal fees, for any and all third-party claims, actions, suits,
investigations, inquiries or proceedings arising after the Closing Date and out
of any actions of said individuals in the ordinary course of business and within
the scope of their employment or affiliation with Buyer as officers, directors,
employees or independent contractors of Buyer.
3.4 Buyback Option of Seller. In the event that Buyer plans to
discontinue or divest itself of all operations in the San Antonio area within
three years of the Closing Date, Seller shall have a right of first refusal to
purchase the entire San Antonio operations, including all of the existing
accounts, assets (including rights to the trade names "CMS" and "CMS Technology
Services"), and liabilities, located within the San Antonio area for a cash sum
secured by a promissory note (payable in 36 equal monthly installments)
calculated as follows: multiply by twenty-five percent (25%) the average annual
service revenues recorded in the fiscal years prior to the year in which
discontinuation of operations in San Antonio occurs.
ARTICLE IV
CONDITIONS
4.1 Conditions to Obligations of Each Party. The respective obligations
of each party to consummate the Agreement and the Transactions shall be subject
to the fulfillment of the following conditions:
(a) No order shall have been entered and remain in effect in
any action or proceeding before any foreign, federal or state court or
governmental agency or other foreign, federal or state regulatory or
administrative agency or commission that would prevent or make illegal
the consummation of the Transactions;
(b) There shall have been obtained any and all material
permits, approvals and consents of any governmental body, commission or
agency that reasonably may be deemed necessary so that the transactions
contemplated thereby will be in compliance with applicable laws, the
failure to comply with which would have a Seller MAE or Buyer MAE; and
(c) The receipt of all approvals and consents of third persons
the granting of which is necessary for the Transactions contemplated in
connection therewith.
(d) Seller understands and acknowledges that such Buyer Common
Stock to be issued will not be registered under the Securities Act of
1933 and will be restricted stock under SEC Rule 144 for a period of at
least one year from the date of issuance. Seller acknowledges that the
share certificates shall bear some form of restrictive legend as
follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE "SECURITIES") HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING
OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE SECURITIES HAVE
BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD OR OFFERED FOR SALE IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
OR EVIDENCE ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED.
4.2 Additional Conditions to Obligations of Buyer. The obligation of
Buyer to consummate the Agreement and the Transactions is, at the option of
Buyer, also subject to the fulfillment at or prior to the Closing Date of the
following conditions:
(a) The representations and warranties of Seller in this
Agreement shall be true and correct on the Closing Date as if made on
and as of that date, except for changes with the prior written consent
of Buyer;
(b) There shall have been no material adverse change in the
assets, properties, business, operations, or condition (financial or
otherwise) of Seller (taken as a whole);
(c) There shall be no liability or claim existing with respect
to Seller that is material to Seller, taken as a whole, other than such
liabilities or claims the nature and amount of which have been
disclosed in all material respects in this Agreement as of the date
hereof;
(d) All of the other terms, conditions, covenants and
agreements to be complied with or performed by Seller under this
Agreement on or before the Closing Date shall have been duly complied
with or performed in all material respects;
(e) The Closing Date shall have occurred on or before July 31,
2004;
(f) Seller shall deliver to Buyer customary closing documents,
each of which shall be dated as of the Closing Date, duly executed and
in a form reasonably satisfactory to Buyer, including a certificate of
Seller's general partner confirming all of the matters set forth in
Sections 4.2(a)-(d);
(g) There shall not have occurred (i) any suspension or
limitation on trading in securities generally on any Stock Exchange or
the establishment of minimum prices on such Exchange, (ii) a
declaration of a banking moratorium either by Federal or New York State
authorities or (iii) any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or
other calamity or crisis the effect of which on financial markets is
such as to make it, in the sole judgment of Buyer, impractical or
inadvisable to proceed with the consummation of the Transactions
contemplated hereby to be consummated at the Closing Date.
4.3 Additional Conditions to Obligations of Seller. The obligation of
Seller to consummate the Transactions contemplated by this Agreement is, at the
option of Seller, also subject to the fulfillment at or prior to the Closing
Date of the following conditions:
(a) The representations and warranties of Buyer contained in
Section 2.1 shall be accurate as of the date of this Agreement and
(except to the extent such representations and warranties speak
specifically as of an earlier date) as of the Closing Date as though
such representations and warranties had been made at and as of that
time; all the terms, covenants and conditions of this Agreement to be
complied with and performed by Buyer on or before the Closing Date
shall have been duly complied with and performed in all material
respects.
ARTICLE V
GENERAL PROVISIONS
5.1 Survival of Representations, Warranties and Indemnities. The
representations, warranties and indemnities in this Agreement shall survive the
confirmation of the Closing Date until Final Payout.
5.2 Public Statements. Seller and Buyer agree to consult with each
other prior to issuing any press release or otherwise making any public
statement with respect to the transactions contemplated hereby.
5.3 Assignment. This Agreement shall inure to the benefit of and will
be binding upon the parties hereto and their respective legal representatives,
successors and permitted assigns.
5.4 Notices. All notices, requests, demands, claims and other
communications which are required to be or may be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (i) delivered
in Person or by courier, (ii) sent by telecopy or facsimile transmission, answer
back requested, or (iii) mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties hereto at the following addresses:
if to Seller:
▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
Mr. T. ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇. ▇▇. ▇▇▇▇'▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
if to Buyer:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Systems Evolution Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
or to such other address as any party shall have furnished to the other
by notice given in accordance with this Section 5.4. Such notices shall be
effective, (i) if delivered in Person or by courier, upon actual receipt by the
intended recipient, (ii) if sent by telecopy or facsimile transmission, when the
answer back is received, or (iii) if mailed, upon the earlier of five days after
deposit in the mail and the date of delivery as shown by the return receipt
therefor.
5.5 Governing Law. All questions arising out of this Agreement and the
rights and obligations created herein, or its validity, existence,
interpretation, performance or breach shall be governed by the laws of the State
of Texas, without regard to conflict of laws principles.
5.6 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated.
5.7 Counterparts. This Agreement may be executed in counterparts, each
of which shall be an original, but all of which together shall constitute one
and the same agreement.
5.8 Headings. The Section headings herein are for convenience only and
shall not affect the construction hereof.
5.9 Entire Agreement: Third Party Beneficiaries. This Agreement shall
constitute the entire agreement and supersede all other prior agreements and
understandings, both oral and written, among the parties or any of them, with
respect to the subject matter hereof and neither this nor any document delivered
in connection with this Agreement confers upon any Person not a party hereto any
rights or remedies hereunder.
5.10 Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is, or whose stockholders are, entitled to
the benefits thereof. This Agreement may not be amended or supplemented at any
time, except by an instrument in writing signed on behalf of each party hereto.
The waiver by any party hereto of any condition or of a breach of another
provision of this Agreement shall not operate or be construed as a waiver of any
other condition or subsequent breach. The waiver by any party hereto of any of
the conditions precedent to its obligations under this Agreement shall not
preclude it from seeking redress for breach of this Agreement other than with
respect to the condition so waived.
IN WITNESS WHEREOF, each of the parties caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized and in their
individual capacities, all as of the date first above written.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]
BUYER
SYSTEMS EVOLUTION INC.,
a Texas Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SYSTEMS EVOLUTION INC.,
An Idaho Corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SELLER
SOUTHWEST CMS TECHNOLOGIES SERVICES LP,
a Texas Limited Partnership acting
through its General Partner, CMS
Associates, LLC
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ___________________________
Title: ____________________________
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
EXHIBIT A
OWNERSHIP OF SELLER
Southwest CMS Technology Services LP
CMS Associates Inc., general partner..............1%
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.................................79%
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇................................20%
CMS Associates, LLC
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇...............................100%
Buyer Common Stock
The 200,000 restricted shares of SEVI Common Stock referred to in Section 1.2(b)
shall be distributed as follows: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ to receive 160,000 restricted
shares of SEVI Common stock ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ to receive 40,000 restricted
shares of SEVI Common stock
EXHIBIT B
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
COUNTY OF ▇▇▇▇▇▇ JULY 13, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
FOR VALUE RECEIVED, Systems Evolution Inc., a Texas corporation
("Maker") promises to pay to the order of ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ at ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, the principal sum of THIRTY TWO THOUSAND
DOLLARS ($32,000) payable in four (4) equal installments of Eight Thousand
Dollars ($8,000) each quarter commencing on October 1, 2004 and ending on July
1, 2005.
If default be made in the payment when due of any part or installment
of this Note, then the whole sum of the principal will become immediately due
and payable at the option of the holder of this Note, without notice. Further,
if Maker should at any time fail in business or become insolvent, or commit an
act of bankruptcy, or if any writ of execution, garnishment, attachment, or
other legal process is issued against any deposit account of or other property
of the Maker, or if any assessment for taxes against Maker, other than taxes on
real property, is made by the federal or state government, or any department of
the federal or state government, or if Maker fails to notify holder of any
material change in his financial condition, then and in such case all of the
obligations of the Maker will, at the option of the holder, become due and
payable immediately without demand or notice.
In the event of commencement of suit to enforce payment of this Note,
Maker agrees to pay such additional attorneys' fees and court costs as the court
may adjudge reasonable.
This Note is made and enforceable under the laws of the State of Texas.
IN WITNESS OF THIS AGREEMENT, Maker has caused this Note to be
executed.
SYSTEMS EVOLUTION INC.
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
EXHIBIT B
FORM OF PROMISSORY NOTE
PROMISSORY NOTE
COUNTY OF ▇▇▇▇▇▇ JULY 13, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇▇▇
FOR VALUE RECEIVED, Systems Evolution Inc., a Texas corporation
("Maker") promises to pay to the order ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, at ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, the principal sum of EIGHT THOUSAND DOLLARS
($8,000) payable in four (4) equal installments of Two Thousand Dollars ($2,000)
each quarter commencing on October 1, 2004 and ending on July 1, 2005.
If default be made in the payment when due of any part or installment
of this Note, then the whole sum of the principal will become immediately due
and payable at the option of the holder of this Note, without notice. Further,
if Maker should at any time fail in business or become insolvent, or commit an
act of bankruptcy, or if any writ of execution, garnishment, attachment, or
other legal process is issued against any deposit account of or other property
of the Maker, or if any assessment for taxes against Maker, other than taxes on
real property, is made by the federal or state government, or any department of
the federal or state government, or if Maker fails to notify holder of any
material change in his financial condition, then and in such case all of the
obligations of the Maker will, at the option of the holder, become due and
payable immediately without demand or notice.
In the event of commencement of suit to enforce payment of this Note,
Maker agrees to pay such additional attorneys' fees and court costs as the court
may adjudge reasonable.
This Note is made and enforceable under the laws of the State of Texas.
IN WITNESS OF THIS AGREEMENT, Maker has caused this Note to be
executed.
SYSTEMS EVOLUTION INC.
-----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Executive Officer
SCHEDULES
2.1(c) Consents and Approvals of Buyer
NONE
2.2(d) Bank Liabilities of Seller
(A) Bank of America "Creditline for Business" $50,000.00 line of
credit, with drawn amount of $39,000.00.
(B) ▇▇▇▇▇ Fargo term loan number ▇▇-▇▇▇▇▇▇▇-▇ with an outstanding
balance amount of $71,000.00.
(C) Revolving purchase line of credit with ▇▇▇▇▇▇ Micro, activated for
an amount of $30,000.00.
2.2(e) Other Liabilities of Seller NONE over $10,000.00
2.2(g) Litigation
NONE
2.2(h) Taxes
NONE
2.2(i) Severance Payments
NONE
2.2(j) Brokers
NONE
2.2(l) Contracts
(A) Lease Agreement dated August 1st, 2003 with Console Building
LP for the premises located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, which terminates July 31, 2005.
(B) Lease with City Capital for N-Central dated April 29th, 2004
for an amount of $875 per month for 36 months.
2.2(n) Insurance Policies
(A) $100,000.00 life insurance policy on ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ with
the USAA Life Insurance Company, policy number J568436365.
(B) $100,000.00 life insurance policy on ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ with
the USAA Life Insurance Company, policy number M851845223.
(C) General Business insurance policy with Sentry Insurance, A
Mutual Company, policy number ▇▇-▇▇▇▇▇-▇▇, sold and
represented by J. ▇▇▇▇▇▇▇ ▇▇▇▇▇.
2.2(o) Advances and inter-company Loans of Seller
NONE
