Exhibit 2.1
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ASSET PURCHASE AGREEMENT
by and between
FACTUAL DATA CORP.
and
C.B. UNLIMITED, INC.
Dated as of September 5, 2000
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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Page
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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 No Assumption of Liabilities.................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER..................5
3.1 Organization and Qualification of Seller.....................5
3.2 Authorized Capitalization....................................5
3.3 Authorization................................................6
3.4 Accrued Employee Benefits....................................6
3.5 Bulk Sale Law................................................6
3.6 No Conflicting Agreements....................................6
3.7 Compliance with Applicable Law...............................6
3.8 Material Misstatements or Omissions..........................7
3.9 No Known Adverse Effects.....................................7
3.10 Consents and Approvals.......................................7
3.11 Subsidiaries.................................................7
3.12 Litigation...................................................7
3.13 Brokers......................................................7
3.14 Taxes........................................................7
3.15 Ownership....................................................8
3.16 Accounts.....................................................8
3.17 License Agreements...........................................8
3.18 Intellectual Property........................................8
3.19 Customers....................................................9
3.20 Contracts....................................................9
3.21 Financial Statements.........................................9
3.22 Absence of Undisclosed or Contingent Liabilities.............9
3.23 No Material Adverse Changes..................................9
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3.24 Absence of Developments......................................9
3.25 Title to Properties.........................................10
3.26 Tax Matters.................................................10
3.27 Tax Notices.................................................11
3.28 Employees...................................................11
3.29 Employee Benefit Plans......................................11
3.30 Gifts.......................................................12
3.31 Employee Health and Safety..................................12
3.32 Representations as to Knowledge.............................12
3.33 Representations Concerning Solvency.........................13
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER..........................................13
4.1 Inspection of Properties and Books..........................13
4.2 Other Contracts.............................................14
4.3 Ongoing Operation...........................................14
4.4 Indebtedness................................................14
4.5 Records.....................................................14
4.6 Articles of Incorporation; Bylaws...........................14
4.7 Distributions or Dividends..................................14
4.8 Notice of Breach............................................14
4.9 Nondisclosure...............................................15
4.10 Employment Matters..........................................15
4.11 Insurance...................................................15
4.12 Preservation of Business....................................15
4.13 Regulatory Filings..........................................16
4.14 No Negotiations.............................................16
4.15 Assignment of Contracts, Leases and Other Agreements........16
4.16 Seller's Efforts............................................16
4.17 Additional Disclosure.......................................17
ARTICLE V
POST-CLOSING COVENANTS...................................................17
5.1 Further Assurances..........................................17
5.2 Litigation Support..........................................17
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER..............................17
6.1 Organization and Qualification of Purchaser.................17
6.2 Authorization...............................................17
6.3 No Conflicting Agreements...................................18
6.4 Compliance with Applicable Law..............................18
6.5 Litigation..................................................18
6.6 Material Misstatements or Omissions.........................18
6.7 Consents and Approvals......................................18
6.8 Brokers.....................................................18
6.9 Representations as to Knowledge.............................19
ARTICLE VII
COVENANTS OF PURCHASER...................................................19
7.1 Other Contracts.............................................19
7.2 Additional Disclosure.......................................19
7.3 Notice of Breach............................................19
7.4 Nondisclosure...............................................19
7.5 Best Efforts................................................19
7.6 Regulatory Filings..........................................19
7.7 Non-Compete and Confidentiality Agreements..................20
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING..........................................20
8.1 Conditions Precedent to Obligations of Seller...............20
8.2 Conditions Precedent to Obligations of Purchaser............22
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES...............................24
ARTICLE X
INDEMNIFICATION..........................................................25
10.1 Indemnification.............................................25
10.2 Limitation of Liability.....................................25
10.3 Method of Asserting Claims..................................25
10.4 Payment of Claim............................................26
10.5 Other Rights and Remedies Not Affected......................27
10.6 Post-Closing Adjustments and Right of Offset................27
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH........................................27
11.1 Amendment and Modification..................................27
11.2 Termination and Abandonment.................................27
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ARTICLE XII
CLOSING..................................................................28
12.1 Closing.....................................................28
12.2 Allocations.................................................28
12.3 Seller's Deliveries at Closing..............................28
12.4 Purchaser's Deliveries at Closing...........................29
12.5 Forwarding of Receivables...................................30
12.6 Removal of Personal Effects Following Closing...............30
12.7 Cooperation; Premises.......................................31
12.8 Interim Employee Benefits...................................31
12.9 Subleases of Miscellaneous Equipment........................31
ARTICLE XIII
MISCELLANEOUS............................................................31
13.1 Notice......................................................31
13.2 Entire and Sole Agreement...................................32
13.3 Successors and Assigns......................................32
13.4 Expenses....................................................32
13.5 Severability................................................32
13.6 Governing Law...............................................32
13.7 Counterparts................................................32
13.8 Amendments..................................................32
13.9 No Third Party Beneficiary..................................33
13.10 Headings....................................................33
13.11 Disputes....................................................33
13.12 Delivery of Exhibits........................................33
13.13 Access to Books and Records.................................33
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 5th day of September, 2000, by
and between Factual Data Corp., a Colorado corporation ("Purchaser"), and C.B.
Unlimited, Inc., an Ohio corporation ("Seller").
RECITALS
WHEREAS, on or about July 14, 2000, Purchaser issued a term sheet to Seller
("Term Sheet") pursuant to which Purchaser indicated its desire to proceed with
the acquisition of the 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(a) hereto (the "Assets") and
Purchaser will assume only 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(a) hereto.
Assumed Liabilities means the liabilities set forth on Exhibit 2.3
hereto.
Claim Notice has the meaning given to it in Section 10.3(a).
Closing 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.
Effective Date has the meaning given to it in Section 12.1.
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 will be used in connection with Purchaser's due
diligence review.
Excluded Assets shall mean cash on hand, cash investments, notes receivable
and Retained Accounts Receivable.
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 trademarks, services marks, logos and
trade names, together with all translations, adaptations, derivations and
combinations thereof and including all goodwill associated therewith, and all
applications, registrations and renewals, (b) all copyrightable works, all
copyrights and all applications, registrations and renewals, (c) all mask works
and all applications, registration and renewals, (d) all trade secrets and
confidential business information (including ideas, research and development,
know-how, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (e) all computer software (including data and related
documentation), (f) all other proprietary rights, and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
Loss means Damages for which any claim may be asserted under Article X.
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.
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.
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Retained Accounts Receivable means accounts receivable retained by Seller
and shall include receivables due for all work, labor and services performed by
Seller prior to the Effective Date and billed by Seller before or after the
Effective Date.
Seller means C.B. Unlimited, Inc., an Ohio corporation.
Shareholder means the owner of all capital stock of Seller at the date
hereof and as of Closing (i.e., ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.--100%).
Tax or 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.
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 set forth on Exhibit 2.1(a) 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. 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. At
the Closing, the Assets which will be transferred to Purchaser, and their value,
shall be as follows:
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Asset Category Valuation
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Fixed and operating assets (except postage meters)........ $ 60,000
Contract rights........................................... 175,000
Customer agreements and customer lists.................... 873,038
Non-Compete and Confidentiality Agreements................ 15,000
Deposits.................................................. 1,962
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Total............................................ $1,125,000
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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. Attached as
Exhibit 2.1(b) are copies of IRS Form 8594, the respective copies of which shall
be timely filed with the Internal Revenue Service by Seller and Purchaser.
2.2 Purchase Price for Assets. The aggregate purchase price for the
Assets shall consist of $1,000,000 cash and a subordinated promissory note in
the aggregate amount of $125,000 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 $1,000,000 to the Seller, of which $732,576.23 shall
be paid in the form of a wire transfer to a financial institution
designated by the Seller, $142,423.77 of which shall be paid by wire
transfer to Key Bank National Association in connection with a loan
payoff and $125,000 of which shall be paid in the form of a wire
transfer to ▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP in accordance with Section 2.2(c)
below.
(b) Purchaser shall deliver to Seller a subordinated
promissory note in the aggregate principal amount of $125,000 (the
"Note"). The Note shall be issued by Purchaser on the following terms
and conditions:
(i) The Note shall bear interest at the rate of 9%
per annum and shall be due and payable in full in 180 days
from date of issuance.
(ii) The Note, a copy of which is attached hereto as
Exhibit 2.2(b)(i), shall be secured by a perfected lien on all
of the Assets sold pursuant to this Agreement. The payments
under the Note and the lien securing payment of the Note shall
be subordinated to the Purchaser's senior institutional bank
and credit arrangements and Seller agrees to execute a
subordination and intercreditor agreement in the form attached
hereto as Exhibit 2.2(b)(ii). A security agreement and UCC-1
financing statement setting forth the subordinated security
interest in the form attached as Exhibit 2.2(b)(iii) shall be
executed at the Closing by Purchaser and filed by Seller with
the Indiana Secretary of State or other required regulatory
agencies or governmental agencies, such as a county clerk and
recorder's office, in each state and entity in which a UCC
filing may be required.
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(c) As of the date hereof, the Seller and ▇▇▇▇ ▇▇▇▇▇▇ & Parks
LLP are entering into Escrow Instructions in the form attached hereto
as Exhibit 2.2(c). Purchaser is intended by the Seller and ▇▇▇▇ ▇▇▇▇▇▇
& Parks LLP to be a third party beneficiary of the Escrow Instructions.
2.3 No Assumption of Liabilities. The Purchaser does not and shall not
assume, pay, perform or discharge any liability of Seller except as may be
specifically set forth on Exhibit 2.3. Seller will pay off all equipment leases
and loan obligations prior to or at Closing and tender the Assets to the
Purchaser free and clear of liens and encumbrances and will provide Purchaser
with recorded UCC-3 Termination Statements to evidence such payoffs.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
Seller and Shareholder, jointly and severally, 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 as follows:
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 incorporation, and, except for the State of Indiana, is duly
qualified and authorized to do business as a foreign corporation and is in good
standing in each jurisdiction, if any, in which the nature of the business
conducted by it or the properties owned, leased or operated by it makes such
qualification necessary or, if not, then such lack of authorization will not
have materially adversely affected the Purchaser's use of the Assets. The Seller
has all requisite corporate power and authority to own, lease and operate its
properties and 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 incorporation) and the Bylaws of the Seller, both as amended to date,
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 eight hundred fifty (850) shares of no par common stock, of
which ten (10) shares are issued and outstanding as of the date of this
Agreement. All shares issued and outstanding as of the date of this Agreement
have been duly authorized and validly issued and are fully paid and
nonassessable. 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.
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3.3 Authorization. This Agreement has been duly and validly executed and
delivered by Seller and the Shareholder and the agreements, representations and
warranties contained herein constitute valid and binding obligations,
representations and warranties of Seller and the Shareholder enforceable in
accordance with their terms. 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 Accrued Employee Benefits. Except as set forth on Exhibit 3.4, the
Seller has no obligation for accrued employee benefits, salaries, bonuses or
vacation pay. See Section 12.2(i).
3.5 Bulk Sale Law. Seller has advised Purchaser that Seller is not required
to comply with the bulk sale or comparable or similar provisions of the Ohio or
Indiana Uniform Commercial Code.
3.6 No Conflicting Agreements. 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, (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) 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 actual knowledge of Seller and the Shareholder,
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 and applicable state law. Additionally, Seller has given or will
be timely giving notice of the sale of Assets to all government entities that
require such notice.
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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 Adverse Effects. There is no fact known to Seller, its
officers, directors or executive employees or the Shareholder 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
Shareholder, which shall be obtained prior to the execution hereof.
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, to the actual
knowledge of Seller and Shareholder, 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 for a
finder's fee, brokerage commission, or similar payment. All rights of indemnity
under Article X hereof shall be available to Purchaser against Seller and
Shareholder in connection with any claim made against Purchaser relating to a
Loss (hereinafter defined) arising out of this Agreement for any fee, commission
or similar payment, where such Loss was due to the actions or contractual
commitments of Seller or Shareholder.
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 Effective 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 Effective Date.
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3.15 Ownership. Seller is the owner, beneficially and of record, of all
of the Assets as identified on Exhibit 2.1(a) 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.
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 and employment and tenant screening. 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, nor is termination 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 (other than those with respect to "off-the-shelf" software, i.e.,
so-called "shrink-wrap" licenses (collectively, "Shrink-Wrap Software") )
requires the consent of any third party, Seller and Shareholder shall use
reasonable 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 Seller's actual 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 Seller's actual
knowledge, the use of the Intellectual Property (other than Shrink-Wrap
Software) by Purchaser will not conflict with, infringe on or otherwise violate
the rights of others.
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3.19 Customers. Exhibit 3.19 to this Agreement sets forth a correct list of
all customers of Seller constituting the customer list being purchased by Buyer
hereunder together with summaries of the revenues from each customer during the
most recent 12 months ending 30 days prior to the date hereof.
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 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 December 31, 1999 and the statements of income and
retained earnings for the two years then ended. The Financial Statements are
based upon the information contained in the books and records of Seller and
fairly and accurately present the financial condition of Seller as of the dates
thereof and results of operations 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) except as otherwise set forth in the Financial Statements and Exhibit
3.22 hereto.
3.23 No Material Adverse Changes. Since the later date of the Term Sheet or
the most recent Financial Statements, there has been no change materially
adverse to Seller in its revenues, 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 only in the regular
and ordinary course; maintained reasonable business insurance;
committed no waste of the Assets; has not 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 reasonable efforts to maintain and preserve its business
organization intact and maintain its relationships with suppliers,
employees, customers and others;
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(b) Other than in the ordinary course of business, 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;
(c) Except from the assets to be retained by Seller (i.e., the
Excluded Assets), 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 other than the Excluded Assets
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. The fixed assets necessary for the conduct of Seller's business are in
good condition and repair, ordinary wear and tear excepted, and are usable in
the ordinary course of business. There are no defects in such fixed assets or
other conditions relating thereto which, in the aggregate, materially adversely
affect the operation or value of such fixed assets. 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) The Seller has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all material
respects. All Taxes owed by the Seller (whether or not shown on any Tax
Return) have been paid. The Seller is currently the beneficiary of any
extension of time within which to file any Tax Return. 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. 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 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 basis for any authority to assess any
additional Taxes for any period for which Tax Returns have been filed.
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 executive employees of the Seller, or (ii)
as to which any such person has knowledge based upon 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, 1997,
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, or will attach as Exhibit 3.26, 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 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. Seller does not expect
the assessment of any additional Taxes and is not aware of any unresolved
questions, claims or disputes concerning the liability for Taxes which would
exceed the estimated reserves established on its books and records.
3.28 Employees. Except as described on Exhibit 3.28, (a) Seller has no
actual or constructive notice that any employee of Seller (other than the
Shareholder) or any group of Seller's employees has any plan or intention to
terminate his, her or its employment following the Closing; (b) 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; (c) to Seller's knowledge,
without making any investigation, Seller has no material labor relations problem
pending and its labor relations are satisfactory; (d) there are no 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; (e) to
Seller's knowledge, without making any investigation, 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 (f) 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.
3.29 Employee Benefit Plans. The Purchaser is not assuming any obligations
whatsoever with respect to the Seller's employee benefit plans or to the
Seller's employees individually.
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(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 Seller's knowledge, to the extent required (either as a
matter of law or to obtain the intended tax treatment and tax
benefits), all 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 identified 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 executive 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. To Seller's knowledge, without having
made any investigation, Seller has not violated and has no liability, and has
not received a notice or charge asserting any violation of or liability under,
OSHA or any other federal or state acts (including rules and regulations
thereunder) regulating or otherwise affecting employee health and safety.
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" or "best of
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 and after a reasonable investigation, to reasonable efforts of each
such party and be exercised always in a reasonable manner and within reasonable
times.
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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 and believes in good faith that it will
receive consideration reasonably equivalent to the value of the Assets being
purchased by the Purchaser.
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER
Seller hereby covenants and agrees that, between the date of the Term
Sheet 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 during Seller's
normal business hours 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 the affairs, finances and accounts of Seller with its officers, and
shall use its 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 five
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.
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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. 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 arms-length basis and in accordance in all material
respects with all applicable laws, rules and regulations and Seller's past
custom and industry practice.
4.4 Indebtedness. Seller will not create, incur, assume, guarantee or
otherwise become liable with respect to any indebtedness for borrowed funds
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 unless funded with Excluded Assets.
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 and use all reasonable efforts to prevent or
promptly remedy such breach or threatened breach.
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.
No public or other communication prepared by Purchaser regarding the
transactions contemplated by this Agreement may be disclosed by Purchaser
without Seller's prior written approval, which shall not be unreasonably
withheld, unless such disclosure is required by federal securities laws. Seller
shall promptly review any such communication upon its receipt from Purchaser.
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4.10 Employment Matters. 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.
4.11 Insurance. Without providing Purchaser 30 days' prior written
notice, Seller shall not cancel or terminate its current insurance policies or
cause any of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
equal to or greater than the coverage under the cancelled, terminated or lapsed
policies for substantially similar premiums are in full force and effect. To the
extent Seller has paid premiums for insurance coverage that will continue in
effect on a post-Effective Date basis, the Purchaser will reimburse Seller at
Closing the prorated portion of post-Effective Date insurance coverage based
upon the time period covered by such insurance both prior to, and subsequent to,
the Effective Date. Seller shall purchase tail coverage covering Seller and its
officers and directors for any error and omission policy maintained by Seller
within 30 days after Closing.
4.12 Preservation of Business. Seller and the Shareholder shall (i) use
reasonable efforts to preserve intact Seller's business organization and
goodwill, keep available the services of Seller's officers and employees (other
than the Shareholder) as a group and maintain satisfactory relationships with
suppliers, distributors, customers and others having business relationships with
Seller, (ii) confer on a regular and weekly basis with representatives of
Purchaser to report operational matters and the general status of ongoing
operations, (iii) not intentionally take any action which would render, or which
reasonably may be expected to render, any representation or warranty made by
Seller in the Agreement untrue at the Closing, (iv) 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) of which it has actual knowledge 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 (v) 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.
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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
Shareholder 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.
4.15 Assignment of Contracts, Leases and Other Agreements. Seller
agrees that, prior to the Closing, it will use reasonable efforts to 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 reasonable 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 Seller's Efforts. Seller agrees to use reasonable efforts in good
faith 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 Effective 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.
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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
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).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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 Closing 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 or instrument to which Purchaser is a party, 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.
17
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.
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.
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 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 are in full force and effect
on the date hereof and will continue to be in full force and effect on the
Closing, 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 or Shareholder for a finder's fee, brokerage commission or
similar payment. All rights of indemnity under Article X hereof shall be
available to Seller and Shareholder against Purchaser in connection with any
claim made against Seller or Shareholder relating to a Loss (hereinafter
defined) arising out of this Agreement for any fee, commission or similar
payment where such loss was due to the actions or contractual commitments of
Purchaser.
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" or "best of
"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 and after a reasonable investigation, to the best efforts of each such
party and be exercised always in a reasonable manner and within reasonable
times.
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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 reasonable 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.
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. Purchaser agrees to provide Seller upon request
a copy of such periodic report or any amendment thereto. Purchaser will make all
required filings with the Securities and Exchange Commission that relate to this
transaction.
7.7 Non-Compete and Confidentiality Agreements. At or prior to Closing, the
Purchaser shall execute non-compete and confidentiality agreements with the
Seller and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. substantially in the form of Exhibit 7.7 hereto.
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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 Closing, of the following conditions
(unless waived by Seller in writing in the manner provided in Section 8.1(d)
hereof), and Purchaser shall use reasonable efforts to cause such satisfaction:
(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, 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) 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 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 Chief Executive
Officer 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.
(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, or (vi) which could result in any material adverse change in
the business, operations, financial condition or properties of
▇▇▇▇▇▇▇▇▇.
▇▇
(▇) Waiver of Conditions Precedent. Seller 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.
(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.
(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.
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(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) Lease Assignment or Sublease. Seller shall have assigned
to Purchaser the lease of Seller's office space on terms and conditions
such that Seller and Shareholder shall be fully released from liability
thereunder from and after the Closing (the "Lease Assignment").
(h) 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.
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 Closing, of the following
conditions (unless waived by Purchaser in writing in the manner provided in
Section 8.2(f) hereof) and Seller shall use reasonable efforts to cause such
satisfaction:
(a) Representations and Warranties of Seller and Shareholder;
Performance by Seller. (i) The representations and warranties of Seller
and its Shareholder 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 obligations and
complied with all 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 the Seller and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. in the form attached
as Exhibit 7.7, which shall commence by their terms on Closing of the
purchase of the Assets.
(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.
22
(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, or (vi) which could result
in any material adverse change in the business, operations, financial
condition or properties of Seller or the Assets.
(d) No 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 (including employee retention), operations,
financial condition or properties of Seller or the 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.
(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.
23
(h) Governmental Filings. All material governmental filings,
authorizations and approvals that are required to be made by Seller 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
the Assets, 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 in the form attached
hereto as Exhibit 8.2(k).
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 eighteen (18)
months. 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. All
covenants, agreements, representations and warranties made herein or pursuant
hereto shall be deemed to be material and to have been relied upon by the
parties hereto, 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.
24
ARTICLE X
INDEMNIFICATION
10.1 Indemnification. Subject to the provisions of Article IX and this
Article X, Seller and Shareholder agree to indemnify in respect of, and hold
Purchaser harmless against, any and all damages, claims, deficiencies, losses,
and expenses, other than the Assumed Liabilities (all such damages, claims,
deficiencies, losses and expenses are collectively referred to herein as
"Damages"), resulting from (i) any misrepresentation, breach of warranty, or
nonfulfillment or failure to perform any covenant or agreement on the part of
Seller or Shareholder made as a part of or contained in this Agreement or in any
certificate executed and delivered pursuant to this Agreement 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 Purchaser and waived in writing
by Purchaser as of the Closing and (ii) Seller's operation of its business,
including the Seller's failure to pay sales or other taxes, 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 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 and (ii) Purchaser's operation of the purchased business after
the date of Closing. 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 $25,000 and then only to the
extent of such excess. Claims for indemnification by either party shall be
limited to the amount of the Purchase Price.
25
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 Indemnified Party, unless such
settlement includes the complete release of the Indemnified Party and
does not require the Indemnified Party to take or refrain from taking
any action.
(b) In the event any Indemnified Party has 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 (i) the determination of the liability of
Seller or Purchaser under Section 10.1, 10.2 and 10.3, as the case may be, (ii)
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, and (iii) 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.
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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 in equity for any 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, 2000 through June 30,
2000 and the prior fiscal year ended December 31, 1999. In the event of a
material variation in gross revenues between the results of such audit and the
representation as to gross revenues made by Seller and Shareholder 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 the amount of such material
variation in excess of either of the above-described amounts against the Note
set forth in Section 2.2(b) above. In addition, the amount of any such offset
shall also be increased by interest calculated at the rate of 8% per annum from
the date of the Closing to the date the offset is taken.
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) Automatically if the Closing has not occurred by September 30,
2000. The parties shall use reasonable efforts to cause the Closing to
occur on or prior to September 30, 2000.
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).
27
ARTICLE XII
CLOSING
12.1 Closing. The closing of this Agreement (the "Closing") shall be
September 5, 2000 or as soon thereafter as practicable but not later than
September 30, 2000, unless a later date is mutually agreed upon by the parties,
provided that for accounting and proration purposes, this Agreement shall be
deemed to be effective at 12:01 a.m. on the first day of the month in which the
Closing occurs ("Effective Date").
12.2 Allocations. At Closing (i) the Seller will pay Purchaser for all
vacation pay accrued for employees as of the Effective Date; (ii) Seller will
pay Purchaser the amount of all accounts receivable credit balances existing on
the Effective Date; and (iii) the parties shall allocate or prorate all the
portion attributable to Seller of the water, sewer, electric, insurance,
telephone, other utilities and rent through the Effective Date. For purposes of
income and expense all income and expenses generated or incurred on or before
the Effective Date shall be billed on behalf of Seller by Purchaser and
collected by, and paid for, by Seller.
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 and Assignment. ▇▇▇▇ of Sale and Assignment
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
free and clear of any and all liens, claims, charges, taxes,
encumbrances, pledges, security interests, options or other
restrictions of any kind.
(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. This
Assignment shall be deemed included within the ▇▇▇▇ of Sale in (a)
above and shall not be a separate document.
(c) Assignment of Contracts, Leases and Other Agreements.
Assignment of contracts, leases and other agreements, described in
Exhibit 3.20, to the extent requested by Purchaser, 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. This Assignment shall be deemed included within the ▇▇▇▇ of
Sale in (a) above and shall not be a separate document.
(d) Opinion of Counsel. An opinion from ▇▇▇▇ ▇▇▇▇▇▇ & Parks
LLP, counsel to Seller, dated the Closing, in the form attached as
Exhibit 8.2(k) to this Agreement.
28
(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.
(g) Resolutions. Certified copy of resolutions of the Board of
Directors and the Shareholder 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 the Seller and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. in the form set forth in
Exhibit 7.7 hereto.
(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.
(l) License Agreement. The Franchise agreement by and between the
Seller and the Purchaser shall be assigned and delivered to Purchaser and,
upon such assignment and delivery, Seller shall be released from any and
all further obligation and liability under such license agreement.
(m) Lease Assignment. The Lease Assignment.
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.
29
(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) Non-Compete and Confidentiality Agreements. The non-compete
agreements of the Seller and ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. in the form set forth in
Exhibit 7.7 hereto.
(g) 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.
(h) Lease Assignment. The Lease Assignment.
12.5 Forwarding of Receivables. Following the Closing, in the event the
Purchaser receives payment of receivables which were billed by or on behalf of
Seller, and are the property of Seller, the Purchaser shall take prompt action
(defined to mean not less than every five (5) business 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 purchase of the Assets, the Seller shall promptly forward (not
later than five (5) business 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 Shareholder on the premises
and Shareholder desires to remove such personal property, Shareholder shall have
a period of sixty days following the Closing to remove such personal property.
As to any such personal property removed, Shareholder shall provide the
Purchaser with a schedule of such property prior to the removal of the same from
the premises.
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12.7 Cooperation; Premises. Seller covenants that it will qualify or
re-qualify for authorization to do business in the State of Indiana as soon as
reasonably possible after Closing. For a period of 90 days following the
Closing, Seller, without compensation, agrees to assist Purchaser in the
retention of Seller's customers and employees, conversion of the Seller's
computer system, if necessary, and perform any other duties Purchaser may
reasonably request. Seller will secure a sublease or lease assignment in favor
of Purchaser from the lessor of Seller's office space at or prior to Closing in
the form attached as Exhibit 12.7.
12.8 Interim Employee Benefits. For a period not to exceed 30 days after
Closing, the Seller shall continue to provide health and accident insurance
benefits to employees. Purchaser shall reimburse Seller for the cost of such
benefits promptly upon receipt of an invoice therefor. The Purchaser's payroll
and personnel procedures shall apply after the Closing Date.
12.9 Subleases of Miscellaneous Equipment. The Seller shall execute and
deliver the subleases attached hereto as Exhibit 12.9.
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
(return receipt requested) to:
If to Purchaser: ▇. ▇. ▇▇▇▇▇▇, Chief Executive Officer
Factual Data Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Seller: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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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.
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 Shareholder. 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
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 except as otherwise provided herein.
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.
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13.10 Headings. The headings in this Agreement are for purposes of
convenience and easy reference only and shall not limit or otherwise affect the
meaning hereof.
13.11 Disputes. In the event of any dispute which arises between the
parties and which relates to the subject matter of this Agreement, the parties
acknowledge and agree that any such dispute shall be submitted for binding
arbitration in the metropolitan area where the party against whom the claim is
made resides 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.
13.12 Delivery of Exhibits. All Exhibits to be delivered by either of
the parties hereto shall be delivered to the other party prior to the execution
of this Agreement.
13.13 Access to Books and Records. For a period ending with the later
of (i) the expiration of all applicable statutes of limitation pertaining to any
claim made by a third party against Seller or Shareholder, or (ii) the complete
resolution by Seller or Shareholder, as the case may be, of such claim, whether
by suit and/or settlement, Purchaser shall provide Seller and Shareholder with
access during normal business hours and upon reasonable prior notice, to the
books and records of Seller and/or Shareholder acquired by Purchaser pursuant to
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:__________________________________________
▇. ▇. ▇▇▇▇▇▇, Chief Executive Officer
SELLER:
C.B. UNLIMITED, INC.
By:__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., President
SHAREHOLDER, but only with respect
to Articles III and X
By:__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
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TABLE OF ATTACHMENTS
Exhibit Description
------- -----------
2.1(a) List of Acquired Assets
2.2(b) Internal Revenue Service Form 8594
2.2(b)(i) Form of Promissory Note and Amortization Schedule
2.2(b)(ii) Form of Subordinated Agreement
2.2(b)(iii) Form of Security Agreement
2.2(c) Escrow Instructions
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
3.4 Accrued Employee Benefits
3.3(b) Directors' Consent of Seller
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
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 ▇▇▇▇ ▇▇▇▇▇▇ & Parks LLP
10.6 Seller's Representation as to Gross Revenues
12.3 ▇▇▇▇ of Sale and Assignment
12.7 Lease Assignment and Release
12.9 Subleases of Miscellaneous Equipment
35