STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made effective as of
September __, 2000, by and between Origin Investment Group, Inc., a Maryland
corporation, with its principal offices at 000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000 ("Buyer"), Xx. Xxxx X. Xxxxx and Xxx. Xxxxx X.
Xxxxx as Trustees to The Xxxxx Family Trust dated 7/12/00, residents of the
State of California, City of Long Beach (The Xxxxx Family Trust, and Xx. Xxxx X.
Xxxxx and Xxx. Xxxxx X. Xxxxx acting in the capacity as Trustees to the Xxxxx
Family Trust, collectively referred to herein as "Sellers").
RECITALS
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the "Shares") of capital stock of: (a) Transition
1/Management Accounting Systems, Inc., ("Transition 1/MAS") a California
corporation, with its principal place of business at 0000 Xxxxxx Xxxxxx, Xxx.
000, Xxxx Xxxxx, Xxxxxxxxxx, also doing business as "T1/MAS" for the
consideration and on the terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1.1 DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Section 1:
"Acquired Company"--(a) Transition 1/Management Accounting Systems, Inc. and all
operations and financial interests conducted and ------------------- owned under
the name of "Transition 1/Management Accounting Systems, Inc." and (b) all
wholly owned subsidiaries of Transition 1/Management Accounting Systems, Inc.,
including but not limited to xXxxxx.xxx, a California corporation.
"Applicable Contract"--any Contract (a) under which the Acquired Company has any
rights, (b) under which the Acquired Company is or may become subject to any
obligation or liability, or (c) by which the Acquired Company or any of the
assets owned or used by it is or may become bound.
"Balance Sheet"--as defined in Section 3.4.
"Balance Sheet Date" - August 31, 2000
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"Best Efforts"--the efforts that a commercially prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously as possible provided, however, that an obligation
to use Best Efforts under this Agreement does not require the Person subject to
that obligation to take actions that would result in a materially adverse change
in the benefits to such Person of this Agreement and the Contemplated
Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this Agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any material
inaccuracy in or material breach of, or any material failure to perform or
comply with, such representation, warranty, covenant, obligation, or other
provision.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes place.
"Company"--Acquired Company.
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"Consent"--any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including but not limited to:
(a) the sale of the Shares by Sellers to Buyer;
(b) the execution, delivery, and performance of the Promissory Note, the
Employment Agreements, the Noncompetition Agreements, and the Sellers' Releases.
(c) the performance by Buyer and Sellers of their respective covenants and
obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of control over
the Acquired Company.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"Damages"--as defined in Section 10.2.
"Disclosure Letter"--the disclosure letter to be delivered by Sellers to Buyer
by -October 4, 2000.
"Employment Agreements"--as defined in Section 2.4(a)(iii).
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income, or exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages, expense,
liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law of the United States,
state or federal.
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials, violations
of discharge limits, or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of pollutants or
hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the hazardous
characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used so that
they do not present unreasonable risks to human health or the Environment when
used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the transportation of
hazardous substances, pollutants, oil, or other potentially harmful substances;
(g) cleaning up pollutants that have been released, preventing the threat of
release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them, for
damages done to their health or the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"Facilities"--any real property, leaseholds, or other interests currently or
formerly owned or operated by the Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by the Acquired Company.
"Governmental Authorization"--any approval, consent, license, permit, waiver, or
other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"Governmental Body"--any:
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(a) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);
(d) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
"Hazardous Materials"--any waste or other substance that is listed, defined,
designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, and specifically including petroleum and all derivatives
thereof or synthetic substitutes therefor and asbestos or asbestos-containing
materials.
"Intellectual Property Assets" --as defined in Section 3.22.
"IRC"--the Internal Revenue Code of 1986, as amended, or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS"--the United States Internal Revenue Service or any successor agency, and,
to the extent relevant, the United States Department of the Treasury.
"Knowledge"--an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
such individual is actually aware of such fact or other matter and is under no
special duty of inquiry to ascertain such knowledge.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"Material" - a matter is material if it would otherwise have a significant
impact on the determination of the matter.
"Noncompetition Agreements"--as defined in Section 2.4(a)(iv).
"Occupational Safety and Health Law"--any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order"--any award, decision, injunction, judgment, order, ruling, subpoena, or
verdict entered, issued, made, or rendered by any court, administrative agency,
or other Governmental Body or by any arbitrator.
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if such action is
consistent with the past practices of such Person and is taken in the ordinary
course of the normal day-to-day operations of such Person.
"Organizational Documents"--(a) the articles or certificate of incorporation and
the bylaws of a corporation; (b) the partnership agreement and any statement of
partnership of a general partnership; (c) the limited partnership agreement and
the certificate of limited partnership of a limited partnership; (d) any charter
or similar document adopted or filed in connection with the creation, formation,
or organization of a Person; and (e) any amendment to any of the foregoing.
"Person"--any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person"--with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person in which such individual or members of such individual's Family
hold (individually or in the aggregate) a Material Interest; and
(c) any Person with respect to which such individual or one or more members of
such individual's Family serves as a director, officer, partner, executor, or
trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or indirectly
controlled by, or is directly or indirectly under common control with such
specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a general
partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, (a) the "Family" of an individual includes (i)
the individual, (ii) the individual's spouse and former spouses, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least 10% of the
outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Release"--any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
"Representative"--with respect to a particular Person, any director, officer,
employee, agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Sellers"--as defined in the first paragraph of this Agreement.
"Sellers' Releases"--as defined in Section 2.4.
"Shares"--as defined in the Recitals of this Agreement.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or other
Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax Return"--any return (including any information return), report, statement,
schedule, notice, form, or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Body in
connection with the determination, assessment, collection, or payment of any tax
or in connection with the administration, implementation, or enforcement of or
compliance with any Legal Requirement relating to any tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
lead a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Sellers
will sell and transfer to Buyer, and Buyer will purchase from Sellers: an
aggregate of 2,000 shares of common stock of Transition 1/Management Accounting
Systems, Inc., where said 2,000 shares represent one hundred percent (100%) of
the total outstanding Shares of Transition 1/Management Accounting Systems,
Inc., hereinafter "Acquired Company Shares".
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Acquired Company Shares will
be $2,500,000 in Origin Investment Group, Inc. common stock ("Origin Shares"),
subject to adjustment as defined in this paragraph.
The purchase price will be paid in the following manner:
Issuance of Origin Shares. At the Closing, Buyer will issue ____________ shares
of common stock of Origin Investment Group, Inc. to Sellers, where the amount
issued will be contingent upon the closing bid price of the common stock one
trading day immediately preceding the date of Closing, as quoted by Bloomberg,
L.P. ("Closing Bid Price") The actual amount of Origin Shares issued shall be
equal to the quotient of $2,500,000 and the Closing Bid Price.
[$2,500,000/Closing Bid Price], subject to a maximum issuance of 2,500,000
shares ("Maximum Issuance") and a minimum issuance of 1,500,000 shares ("Minimum
Issuance"). The Market Value of the Origin Shares shall be defined as the
product of the total shares issued and the Closing Bid Price.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Transition 1/Management Accounting Systems, Inc. at
10:00 a.m. (local time) on a date within 7 business days after the completion
and receipt of written evaluation report resulting from a financial due
diligence investigation conducted by Buyer's independent accounting firm.
Subject to the provisions of Section 9, failure to consummate the purchase and
sale provided for in this Agreement on the date and time and at the place
determined pursuant to this Section 2.3 will not result in the termination of
this Agreement and will not relieve any party of any obligation under this
Agreement.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Sellers will deliver to Buyer:
(i) certificates representing the one hundred percent (100%) of the Acquired
Company Shares, duly endorsed (or accompanied by duly executed stock powers
signed before a notary);
(ii) releases in the form of Exhibit 2.4(a)(ii) executed by Sellers
(collectively, "Sellers' Releases");
(iii) employment agreements in the form of Exhibit 2.4(a)(iii), executed by
Sellers (collectively, "Employment Agreements");
(iv) noncompetition agreements in the form of Exhibit 2.4(a)(iv), executed by
Sellers (collectively, the "Noncompetition Agreements"); and
(v) a certificate executed by Sellers representing and warranting to Buyer that
each of Sellers' representations and warranties in this Agreement was accurate
in all material respects as of the date of this Agreement and is accurate in all
material respects as of the Closing Date as if made on the Closing Date; and
(b) Buyer will deliver to Sellers:
(i) Certificate(s) of Origin Investment Group, Inc. common stock representing
the consideration for the purchase of the T1/MAS shares as defined in Paragraph
2.2 above;
(ii) a certificate executed by Buyer to the effect that each of Buyer's
representations and warranties in this Agreement was accurate in all respects as
of the date of this Agreement and is accurate in all respects as of the Closing
Date as if made on the Closing Date; and
(iii) the Employment Agreements, executed by Buyer.
(iv) Copies of an executed common stock purchase agreement, joint escrow
instructions and registration rights agreement between Buyer and Alpha Venture
Capital, Inc. structured to allow Buyer to draw down on a secured equity line of
credit in periodic intervals as defined within the common stock purchase
agreement and all other documents relating to the closing of the Buyer-Alpha
transaction.
(v) copy of Origin Investment Group, Inc. board resolution indicating that
$2,000,000 of investment capital has been set aside to be invested, over a
period of 12 months immediately following the Closing Date, within Transition
1/Management Accounting Systems, Inc. ("Investment Proceeds") to be used for
infrastructure development and implementing the ASP strategy to be deployed by
T1/MAS and xXxxxx.xxx.
2.5 [Intentionally Omitted]
3. REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers represent and warrant to Buyer that to the best of Sellers' Knowledge as
follows:
3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and accurate list for
the Acquired Company of its name, its jurisdiction of incorporation, other
jurisdictions in which it is authorized to do business, and its capitalization
(including the identity of each stockholder and the number of shares held by
each). The Acquired Company is a corporation duly organized, validly existing,
and in good standing under the laws of California, with full corporate power and
authority to conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to perform all its
obligations under Applicable Contracts. With the exception of the ability to do
business within Arizona, the Acquired Company has not qualified to do business
as a foreign corporation in any other state.
(b) Sellers have delivered to Buyer copies of the Organizational Documents of
the Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Sellers, enforceable against Sellers in accordance with its terms. Upon the
execution and delivery by Sellers of the Employment Agreements, the Sellers'
Releases, and the Noncompetition Agreements (collectively, the "Sellers' Closing
Documents"), the Sellers' Closing Documents will constitute the legal, valid,
and binding obligations of Sellers, enforceable against Sellers in accordance
with their respective terms. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Sellers' Closing Documents and to perform their obligations under this Agreement
and the Sellers' Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither the
execution and delivery of this Agreement nor the consummation or performance of
any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A) any provision of
the Organizational Documents of the Acquired Company, or (B) any resolution
adopted by the board of directors or the stockholders of the Acquired Company;
(ii) to the Knowledge of the Sellers, contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which the
Acquired Company or either Seller, or any of the assets owned or used by the
Acquired Company, may be subject;
(iii) to the Knowledge of the Sellers, contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Acquired Company or that
otherwise relates to the business of, or any of the assets owned or used by, the
Acquired Company;
(iv) [Intentionally omitted.]
(v) to the Knowledge of Sellers, contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the right to declare
a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any material Applicable
Contract; or
(vi) to the Knowledge of Sellers, result in the imposition or creation of any
Encumbrance upon or with respect to any of the material assets owned or used by
the Acquired Company.
Except as set forth in Part 3.2 of the Disclosure Letter, to the knowledge of
Sellers, no Seller or the Acquired Company is or will be required to give any
notice to or obtain any Consent from any Person in connection with the execution
and delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
3.3 CAPITALIZATION
The authorized equity securities of the Acquired Company consist of: (a) 2,000
shares of common stock, no par value of Transition 1/Management Accounting
Systems, Inc.; ("T1 Shares"). Sellers are and will be on the Closing Date the
record and beneficial owners and holders of the T1/MAS Shares, free and clear of
all Encumbrances. The Xxxxx Family Trust currently owns 2,000 of the T1 Shares.
In addition, Transition 1/Management Accounting Systems, Inc. owns 5,000 shares
of xXxxxx.xxx, a California corporation, and wholly owned subsidiary of
Transition 1/Management Accounting Systems, Inc. All of the outstanding equity
securities of the Acquired Company have been duly authorized and validly issued
and are fully paid and nonassessable. There are no Contracts relating to the
issuance, sale, or transfer of any equity securities or other securities of the
Acquired Company. To the best of Seller's Knowledge, none of the outstanding
equity securities or other securities of the Acquired Company was issued in
violation of the Securities Act or any other Legal Requirement. No Acquired
Company owns, or has any Contract to acquire, any equity securities or other
securities of any Person (other than the Acquired Company) or any direct or
indirect equity or ownership interest in any other business.
3.4 FINANCIAL STATEMENTS
Sellers have delivered to Buyer or Buyer's independent certified public
accountants, certain financial statements of the Company representing its 1999
fiscal year end operations including income statement and monthly unaudited
financial statements for the first eight months of operations for fiscal year
2000. Such financial statements and notes have been prepared for internal use
and Buyer agrees to conduct its own independent financial due diligence to
determine the actual financial condition of the Acquired Company.
3.5 BOOKS AND RECORDS
The books of account, and stock record books of the Acquired Company, all of
which have been made available to Buyer, are complete and correct. The minute
books of the Acquired Company are accurate as to corporate action reflected
therein. At the Closing, all of those books and records will be in the
possession of the Acquired Company.
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
[Intentionally omitted.]
3.7 CONDITION AND SUFFICIENCY OF LEASEHOLD
To the best of Sellers' Knowledge, except as set forth in part 3.7 of the
Disclosure Letter, the buildings, plants, structures, and equipment leased or
owned by the Acquired Company are structurally sound, are in good operating
condition and repair, and are adequate for the uses to which they are being put,
and none of such buildings, plants, structures, or equipment is in need of
maintenance or repairs except for ordinary, routine maintenance and repairs that
are not material in nature or cost. The building, plants, structures, and
equipment leased or owned by the Acquired Company are sufficient for the
continued conduct of the Acquired Company's business after the Closing in
substantially the same manner as conducted prior to the Closing.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Acquired Company that are reflected on the
Company's August 31, 2000, balance sheet or on the accounting records of the
Acquired Company as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, to the Knowledge of Sellers, the Accounts
Receivable are or will be as of the Closing Date current and collectible. 80% of
the Accounts Receivable either have been or will be collected in full, without
any set-off, within one hundred eighty days after the date of Closing. To the
Knowledge of Sellers, or as disclosed in the Disclosure Letter, there is no
contest, claim, or right of set-off, other than returns in the Ordinary Course
of Business, under any Contract with any obligor of an Accounts Receivable
relating to the amount or validity of such Accounts Receivable. Part 3.8 of the
Disclosure Letter contains a complete and accurate list of all Accounts
Receivable as of August 31, 2000.
3.9 INVENTORY
All inventory of the Acquired Company held for the first-time resale is salable
in the Ordinary Course of Business. The quantities of each item of inventory are
not excessive, but are reasonable in the present circumstances of the Acquired
Company.
3.10 NO UNDISCLOSED LIABILITIES
Except as set forth in Part 3.10 of the Disclosure Letter, to the Knowledge of
Sellers, the Acquired Company has no liabilities or obligations of any nature
except for liabilities or obligations reflected in the Balance Sheet and the
August 31, 2000, balance sheet and current liabilities incurred in the Ordinary
Course of Business since the respective dates thereof.
3.11 TAXES
(a) The Acquired Company has filed or caused to be filed (on a timely basis
since January 1, 1996 all Tax Returns that are or were required to be filed by
or with respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Sellers have delivered
or made available to Buyer copies of, and Part 3.11 of the Disclosure Letter
contains a complete and accurate list of, all such Tax Returns relating to
income or franchise taxes filed since 1996. The Acquired Company has paid all
Taxes that have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by Sellers or the Acquired
Company, except such Taxes, if any, as are listed in Part 3.11 of the Disclosure
Letter and are being contested in good faith.
(b) Except as disclosed in the Disclosure Letter, no Tax Returns have been
audited by the IRS or relevant state tax authorities. Part 3.11 of the
Disclosure Letter contains a complete and accurate list of all audits of all
such Tax Returns, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter. Except as described in Part 3.11 of the Disclosure Letter, no
Seller or Acquired Company has given or been requested to give waivers or
extensions (or is or would be subject to a waiver or extension given by any
other Person) of any statute of limitations relating to the payment of Taxes of
the Acquired Company or for which the Acquired Company may be liable.
(c) To the Knowledge of Sellers, the charges and accruals with respect to Taxes
on the respective books of the Acquired Company are adequate and are at least
equal to that Acquired Company's liability for Taxes. There exists no proposed
tax assessment against the Acquired Company except as disclosed in Part 3.11 of
the Disclosure Letter. To Sellers' Knowledge, all Taxes that the Acquired
Company is or was required by Legal Requirements to withhold or collect have
been duly withheld or collected and, to the extent required, have been paid to
the proper Governmental Body or other Person.
(d) To the best Knowledge of Sellers, all Tax Returns filed by the Acquired
Company are true, correct, and complete. There is no tax sharing agreement that
will require any payment by the Acquired Company after the date of this
Agreement.
3.12 NO MATERIAL ADVERSE CHANGE
Notwithstanding the withdrawal of $250,000 from the Acquired Company by Xx. Xxxx
Xxxxx, since the date of the Balance Sheet, there has not been any material
adverse change in the business, operations, properties, prospects, assets, or
condition of the Acquired Company, and no event has occurred or circumstance
exists that may result in such a material adverse change.
3.13 [Intentionally Omitted]
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter and to the
Knowledge of Sellers:
(i) each Acquired Company is, and at all times since 1/1/96 has been, in full
compliance with each material Legal Requirement that is or was applicable to it
or to the conduct or operation of its business or the ownership or use of any of
its assets;
(ii) no event has occurred or circumstance exists that (with or without notice
or lapse of time) (A) may constitute or result in a violation by the Acquired
Company of, or a failure on the part of the Acquired Company to comply with, any
material Legal Requirement, or (B) may give rise to any obligation on the part
of the Acquired Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature; and
(iii) each Acquired Company has not received, at any time since 1/1/96, any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible, or
potential violation of, or failure to comply with, any material Legal
Requirement, or (B) any actual, alleged, possible, or potential obligation on
the part of the Acquired Company to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and accurate list of
each Governmental Authorization that is held by the Acquired Company or that
otherwise relates to the business of, or to any of the assets owned or used by,
the Acquired Company. Each Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter is valid and in full force and
effect. Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and at all times 1/1/96 has been, in full
compliance with all of the material terms and requirements of each Governmental
Authorization identified or required to be identified in Part 3.14 of the
Disclosure Letter;
(ii) no event has occurred or circumstance exists that may (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any material term or requirement of any
Governmental Authorization listed or required to be listed in Part 3.14 of the
Disclosure Letter, or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, or termination of, or any modification to,
any Governmental Authorization listed or required to be listed in Part 3.14 of
the Disclosure Letter;
(iii) each Acquired Company has not received, at any time since 1/1/96, any
notice or other communication (whether oral or written) from any Governmental
Body or any other Person regarding (A) any actual, alleged, possible, or
potential violation of or failure to comply with any term or requirement of any
material Governmental Authorization, or (B) any actual, proposed, possible, or
potential revocation, withdrawal, suspension, cancellation, termination of, or
modification to any Governmental Authorization; and
(iv) all applications required to have been filed for the renewal of the
Governmental Authorizations listed or required to be listed in Part 3.14 of the
Disclosure Letter have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
To the Knowledge of Sellers, the Governmental Authorizations listed in Part 3.14
of the Disclosure Letter collectively constitute all of the Governmental
Authorizations necessary to permit the Acquired Company to lawfully conduct and
operate its business in the manner they currently conduct and operate such
business and to permit the Acquired Company to own and use its assets in the
manner in which it currently owns and uses such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there is no
pending Proceeding:
(i) that has been commenced by or against the Acquired Company or that otherwise
relates to or may affect the business of, or any of the assets owned or used by,
the Acquired Company; or
(ii) that challenges, or that may have the effect of preventing, delaying,
making illegal, or otherwise interfering with, any of the Contemplated
Transactions.
To the Knowledge of Sellers, (1) no such Proceeding has been Threatened, and (2)
no event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. Sellers have delivered to
Buyer copies of all pleadings, correspondence, and other documents relating to
each Proceeding listed in Part 3.15 of the Disclosure Letter.
(b) Except as set forth in part 3.15 of the Disclosure Letter and to the
Knowledge of Sellers:
(i) there is no Order to which any of the Acquired Company, or any of the assets
owned or used by the Acquired Company, is subject;
(ii) neither Seller is subject to any Order that relates to the business of, or
any of the assets owned or used by, the Acquired
Company; and
(iii) no officer, director, agent, or employee of the Acquired Company is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of the Acquired Company.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since the date of the
Balance Sheet, the Acquired Companies have conducted their businesses only in
the Ordinary Course of Business and there has not been any:
(a) change in the Acquired Company's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of the Acquired
Company; issuance of any security convertible into such capital stock; grant of
any registration rights; purchase, redemption, retirement, or other acquisition
by the Acquired Company of any shares of any such capital stock; or declaration
or payment of any dividend or other distribution or payment in respect of shares
of capital stock;
(b) amendment to the Organizational Documents of the Acquired Company;
(c) except in the Ordinary Course of Business, payment or increase by the
Acquired Company of any bonuses, salaries, or other compensation to any
stockholder, director, officer, employee or entry into any employment,
severance, or similar Contract with any director, officer;
(d) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of the Acquired
Company;
(e) damage to or destruction or loss of any asset or property of the Acquired
Company, whether or not covered by insurance, materially and adversely affecting
the properties, assets, business, financial condition, or prospects of the
Acquired Company, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint venture, credit,
or similar agreement, or (ii) any Applicable Contract or transaction involving a
total remaining commitment by or to the Acquired Company of at least $20,000.00;
(g) sale (other than sales of inventory in the Ordinary Course of Business),
lease, or other disposition of any asset or property of the Acquired Company or
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of the Acquired Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to the Acquired
Company in excess of $20,000.00;
(i) material change in the accounting methods used by the Acquired Company; or
(j) agreement, whether oral or written, by the Acquired Company to do any of the
foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and accurate list,
and Sellers have delivered to Buyer true and complete copies, of:
(i) each Applicable Contract that involves performance of services or delivery
of goods or materials by the Acquired Company of an amount or value in excess of
$10,000.00;
(ii) each Applicable Contract that involves performance of services or delivery
of goods or materials to the Acquired Company of an amount or value in excess of
$10,000.00;
(iii) each lease, rental or occupancy agreement, license, installment and
conditional sale agreement, and other Applicable Contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real or personal property (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $100,000.00 and with terms of less than one
year);
(iv) each other Applicable Contract (other than standard software licenses) with
respect to patents, trademarks, copyrights, or other intellectual property,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the non-disclosure of any of the
Intellectual Property Assets;
(v) each joint venture, partnership, and other Applicable Contract (however
named, but excluding employee compensation arrangements) involving a sharing of
profits, losses, costs, or liabilities by the Acquired Company with any other
Person;
(vi) each Applicable Contract (other than vendor or distribution agreements)
containing covenants that in any way purport to restrict the business activity
of the Acquired Company or limit the freedom of the Acquired Company to engage
in any line of business or to compete with any Person;
(vii) each Applicable Contract providing for payments to or by any Person based
on sales, purchases, or profits, other than direct payments for goods;
(viii) each power of attorney that is currently effective and outstanding;
(x) each Applicable Contract to the Knowledge of Sellers entered into other than
in the Ordinary Course of Business that contains or provides for an express
undertaking by the Acquired Company to be responsible for consequential damages;
(xi) each Applicable Contract for capital expenditures in excess of $15,000.00;
(xii) each written warranty, guaranty, and or other similar undertaking with
respect to contractual performance extended by the Acquired Company other than
in the Ordinary Course of Business; and
(xiii) each amendment, supplement, and modification (whether oral or written) in
respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter and to the
Knowledge of Sellers:
(i) neither Seller (and no Related Person of either Seller) has or may acquire
any rights under, and neither Seller has or may become subject to any obligation
or liability under, any Contract that relates to the business of, or any of the
assets owned or used by, the Acquired Company; and
(ii) no officer, director, agent, employee, consultant, or contractor of the
Acquired Company is bound by any Contract that purports to limit the ability of
such officer, director, agent, employee, consultant, or contractor to (A) engage
in or continue any conduct, activity, or practice relating to the business of
the Acquired Company, or (B) assign to the Acquired Company or to any other
Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter and to Sellers'
Knowledge, each Contract identified or required to be identified in Part 3.17(a)
of the Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter and to Sellers'
Knowledge:
(i) each Acquired Company is, and at all times since December 31, 1998, has
been, in full compliance with all applicable terms and requirements of each
Contract involving more than $15,000 under which such Acquired Company has or
had any obligation or liability or by which such Acquired Company or any of the
assets owned or used by such Acquired Company is or was bound;
(ii) each other Person that has or had any obligation or liability under any
Applicable Contract involving more than $25,000 under which each Acquired
Company has or had any rights is, and at all times since the Balance Sheet date
has been, in full compliance with all applicable terms and requirements of such
Contract;
(iii) no event has occurred or circumstance exists that (with or without notice
or lapse of time) may contravene, conflict with, or result in a violation or
breach of, or give the Acquired Company or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract
involving more than $15,000; and
(iv) no Acquired Company has given to or received from any other Person, at any
time since the December 31, 1999 Balance Sheet date, any notice or other
communication (whether oral or written) regarding any actual, alleged, possible,
or potential violation or breach of, or default under, any Applicable Contract
involving more than $15,000.
(A) To the Knowledge of Sellers, there are no material renegotiations of,
attempts to renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to the Acquired Company under current or completed
contracts with any Person and, to the Knowledge of Sellers and Acquired Company,
no such Person has made written demand of such renegotiation.
3.18 INSURANCE
(a) Sellers have delivered to Buyer:
(i) true and complete copies of all policies of insurance to which the Acquired
Company is a party or under which the Acquired Company, or any director of the
Acquired Company, is or has been covered at any time within the 2 years
preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for policies of
insurance; and
(iii) any statement by the auditor of the Acquired Company's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting the Acquired Company,
including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by the Acquired Company; and
(iii) all obligations of the Acquired Company to third parties not otherwise
contained in Contracts disclosed herein with respect to insurance (including
such obligations under leases and service agreements) and identifies the policy
under which such coverage is provided.
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for the current
policy year:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance policy for an amount
in excess of $10,000.00, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of insurance, and period of
coverage; and
(C) the amount and a brief description of the claim; and
(iii) a statement describing the loss experience for all claims that were
self-insured, including the number and aggregate cost of such claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter:
(i) All policies to which the Acquired Company is a party:
(A) are valid, outstanding, and enforceable;
(B) to the Knowledge of Sellers, are sufficient for compliance with all Legal
Requirements and Contracts to which the Acquired Company is a party or by which
any of them is bound;
(C) to the Knowledge of Sellers, will continue in full force and effect
following the consummation of the Contemplated Transactions; and
(ii) Except as disclosed in the Disclosure Letter, no Seller has received (A)
any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is no longer in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations thereunder.
(iii) The Acquired Company have paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy to which the
Acquired Company is a party.
(iv) The Acquired Company have given notice to the insurer of all claims that
may be insured thereby.
(B) are sufficient for compliance with all Legal Requirements and contracts to
which the Acquired Company is a party or by which any of them is bound; and
(C) will continue in full force and effect following the consummation of the
Contemplated Transactions.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the disclosure letter:
(a) To Sellers' Knowledge, the Acquired Company is, and at all times has been,
in full compliance with, and has not been and is not in violation of or liable
under, any Environmental Law, United States, federal and state laws.
(b) There are no pending or, to the Knowledge of Sellers and the Acquired
Company, Threatened claims or Encumbrances resulting from any Environmental,
Health, and Safety Liabilities or arising under or pursuant to any Environmental
Law, United States, federal and state laws, with respect to or affecting any of
the Facilities.
(c) To Sellers' Knowledge, the Acquired Company has not received any citation,
directive, inquiry, notice, Order, summons, warning, or other communication that
relates to violation or failure to comply with any Environmental Law.
(d) To Sellers' Knowledge, no Seller or Acquired Company, or any other Person
for whose conduct they are or may be held responsible, has any Environmental,
Health, and Safety Liabilities with respect to the Facilities or with respect to
any other properties and assets (whether real, personal, or mixed) in which
Sellers or the Acquired Company (or any predecessor), has or had an interest, or
at any property geologically or hydrologically adjoining the Facilities or any
such other property or assets.
(e) To Sellers' Knowledge or as disclosed in the Disclosure Letter, there are no
Hazardous Materials present on or in the Environment at the Facilities,
including any Hazardous Materials contained in barrels, above or underground
storage tanks, landfills, land deposits, dumps, or other containers, either
temporary or permanent, and deposited or located in land, water, sumps, or any
other part of the Facilities. No Seller has permitted or conducted, or is aware
of, any Hazardous Activity conducted with respect to the Facilities except in
full compliance with all applicable Environmental Laws.
(f) Sellers have delivered to Buyer true and complete copies and results of any
reports, studies, analyses, tests, or monitoring possessed or initiated by
Sellers or the Acquired Company pertaining to Hazardous Materials or Hazardous
Activities in, on, or under the Facilities.
3.20 EMPLOYEES
(a) Part 3.20 of the Disclosure Letter contains a complete and accurate list of
the following information for each employee or director of the Acquired Company
name; job title; current compensation paid or payable; changes in compensation
since December 31, 1998, vacation accrued.
(b) No director of the Acquired Company is a party to, or is otherwise bound by,
any agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such director and any other Person
("Proprietary Rights Agreement") that in any way adversely affects or will
affect (i) the performance of his duties as a director of the Acquired Company,
or (ii) the ability of the Acquired Company to conduct its business, including
any Proprietary Rights Agreement with Sellers or the Acquired Company by any
such director. To Sellers' Knowledge, no director, officer, or other key
employee of the Acquired Company intends to terminate his employment with such
Acquired Company.
3.21 LABOR RELATIONS; COMPLIANCE
The Acquired Company has not been nor is a party to any collective bargaining or
other labor Contract. Since January 1, 1996, there has not been, there is not
presently pending or existing, and there is not Threatened, (a) any strike,
slowdown, picketing, work stoppage, or employee grievance process, (b) any
Proceeding against or affecting any Acquired Company relating to the alleged
violation of any Legal Requirement pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting any of the Acquired Companies or their
premises, or (c) any application for certification of a collective bargaining
agent. No event has occurred or circumstance exists that could provide the basis
for any work stoppage or other labor dispute. There is no lockout of any
employees by any Acquired Company, and no such action is contemplated by any
Acquired Company. To Sellers' Knowledge, each Acquired Company has complied in
all material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. To Sellers' Knowledge, no
Acquired Company is liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) Intellectual Property Assets--The term "Intellectual Property Assets"
includes: ----------------------------
(i) the names Transition 1/Management Accounting Systems, Inc., T1/MAS,
xXxxxx.xxx and all fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications (collectively,
"Marks");
(ii) all copyrights in both published works and unpublished works (collectively,
"Copyrights");
(iii) all know-how, trade secrets, confidential information, customer lists,
technical information, data, process technology, plans, drawings, blue prints
(collectively, "Trade Secrets"; owned, used, or licensed by the Acquired Company
as licensee or licensor.
(b) Agreements--Part 3.22(b) of the Disclosure Letter contains a complete and
accurate list and summary description, including any royalties paid or received
by the Acquired Company, of all Contracts relating to the Intellectual Property
Assets to which the Acquired Company is a party or by which the Acquired Company
is bound, except for any license implied by the sale of a product and perpetual,
paid-up licenses for commonly available software programs with a value of less
than $5,000.00 under which the Acquired Company is the licensee. There are no
outstanding and, to Sellers' Knowledge, no Threatened disputes or disagreements
with respect to any such agreement.
(c) Trademarks
(i) Part 3.22(c) of Disclosure Letter contains a complete and accurate list and
summary description of all Marks. The Acquired Company is the owner of all
right, title, and interest in and to each of the Marks, free and clear of all
liens, security interests, charges, encumbrances, equities, and other adverse
claims.
(ii) All Marks that have been registered with the United States Patent and
Trademark Office are currently in compliance with all formal legal requirements
(including the timely post-registration filing of affidavits of use and
incontestability and renewal applications), are valid and enforceable, and are
not subject to any maintenance fees or taxes or actions falling due within
ninety days (90) after the Closing Date.
(iii) To Sellers' Knowledge, no Xxxx has been or is now involved in any
opposition, invalidation, or cancellation and no such action is Threatened with
the respect to any of the Marks.
(iv) To Sellers' Knowledge, there is no potentially interfering trademark or
trademark application of any third party.
(v) To Sellers' Knowledge, no Xxxx is infringed or has been challenged or
threatened in any way. None of the Marks used by the Acquired Company infringes
or is alleged to infringe any trade name, trademark, or service xxxx of any
third party.
3.23 CERTAIN PAYMENTS
Except as disclosed in part 3.23 of the Disclosure Letter, since 1/1/96, to the
Knowledge of Sellers, no Acquired Company or director, officer, agent, or
employee of the Acquired Company, has directly or indirectly (a) made any
contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other
payment to any Person, private or public, regardless of form, whether in money,
property, or services (i) to obtain favorable treatment in securing business,
(ii) to pay for favorable treatment for business secured, (iii) to obtain
special concessions or for special concessions already obtained, for or in
respect of the Acquired Company, or (iv) in violation of any Legal Requirement,
(b) established or maintained any fund or asset that has not been recorded in
the books and records of the Acquired Company.
3.24 DISCLOSURE
(a) To the Knowledge of Sellers, no representation or warranty of Sellers in
this Agreement and no statement in the Disclosure Letter omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading.
(b) There is no fact known to either Seller that has specific application to
either Seller or the Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as either Seller
can reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Acquired Company (on a
consolidated basis) that has not been set forth in this Agreement or the
Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as disclosed in the Disclosure Letter and to the Knowledge of Sellers, no
Seller or any Related Person of Sellers or of the Acquired Company has, or since
the first day of the next to last completed fiscal year of the Acquired Company
has had, any interest in any property (whether real, personal, or mixed and
whether tangible or intangible), used in or pertaining to the Acquired Company's
businesses. Except as disclosed in the Disclosure Letter and to the Knowledge of
Sellers, no Seller or any Related Person of Sellers or of the Acquired Company
is, or since the first day of the next to last completed fiscal year of the
Acquired Company has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with the
Acquired Company other than business dealings or transactions conducted in the
Ordinary Course of Business with the Acquired Company at substantially
prevailing market prices and on substantially prevailing market terms, or (ii)
engaged in competition with the Acquired Company with respect to any line of the
products or services of such Acquired Company (a "Competing Business") in any
market presently served by such Acquired Company except for less than one
percent of the outstanding capital stock of any Competing Business that is
publicly traded on any recognized exchange or in the over-the-counter market.
Except as set forth in Part 3.25 of the Disclosure Letter, no Seller or any
Related Person of Sellers or of the Acquired Company is a party to any Contract
with, or has any claim or right against, the Acquired Company.
3.26 BROKERS OR FINDERS
Buyer has agreed to assume the obligation for brokerage or finders' fees or
agents' commissions or other similar payment in connection with this Agreement.
Buyer is wholly responsible for any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents commissions or other similar
payment in connection with this Agreement that has been or will incur and will
indemnify and hold Sellers harmless from such payment due by or through Sellers
as a result of the action of Sellers or of the Acquired Company.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Maryland. Buyer has delivered to Sellers copies
of the Organizational Documents of Buyer, as currently in effect.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms. Upon the
execution and delivery by Buyer of the Employment Agreements between the
Acquired Company and Mssrs. Landau, Laborde, Xxxxx and Xxxxx, and the
Non-Competition Agreement between the Acquired Company and Xx. Xxxx Xxxxx
(collectively, the "Buyer's Closing Documents"), the Buyer's Closing Documents
will constitute the legal, valid, and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms. Buyer has the absolute
and unrestricted right, power, and authority to execute and deliver this
Agreement and the Buyer's Closing Documents and to perform its obligations under
this Agreement and the Buyer's Closing Documents.
(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will give any Person the right to prevent, delay, or otherwise interfere with
any of the Contemplated Transactions pursuant to:
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or the stockholders of
Buyer;
(iii) any Legal Requirement or Order to which Buyer may be subject,including
Buyer's Offering Circulars;
(iv) any Contract to which Buyer is a party or by which Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions. Buyer agrees to deliver Schedule 4.2 to Sellers on or before
October 4, 2000.
4.3 INVESTMENT INTENT
Buyer is acquiring the Shares for its own account and not with a view to their
distribution within the meaning of Section 2(11) of the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 BROKERS OR FINDERS
Buyer and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Sellers harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents.
5. COVENANTS OF SELLERS PRIOR TO CLOSING DATE
5.1 ACCESS AND INVESTIGATION
Subject to the confidentiality provisions of Paragraph 11.3 hereof, between the
date of this Agreement and the Closing Date, Sellers will, and will cause the
Acquired Company to, (a) afford Buyer and its Representatives and prospective
lenders and their Representatives (collectively, "Buyer's Advisors") full and
free access to the Acquired Company's personnel, properties, contracts, books
and records, and other documents and data, (b) furnish Buyer and Buyer's
Advisors with copies of all such contracts, books and records, and other
existing documents and data as Buyer may reasonably request, and (c) furnish
Buyer and Buyer's Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
5.2 OPERATION OF THE BUSINESSES OF THE ACQUIRED COMPANY
Between the date of this Agreement and the Closing Date, Sellers will, and will
cause the Acquired Company to:
(a) conduct the business of such Acquired Company only in the Ordinary Course of
Business;
(b) use their Best Efforts to preserve intact the current business organization
of such Acquired Company, keep available the services of the current officers,
employees, and agents of such Acquired Company, and maintain the relations and
good will with suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with such Acquired Company;
(c) confer with Buyer concerning operational matters of a material nature; and
(d) otherwise report periodically to Buyer concerning the status of the
business, operations, and finances of such Acquired Company.
5.3 NEGATIVE COVENANT
Except as otherwise expressly permitted by this Agreement, between the date of
this Agreement and the Closing Date, Sellers will not, and will cause the
Acquired Company not to, without the prior consent of Buyer, take any
affirmative action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in Section
3.16 is likely to occur.
5.4 REQUIRED APPROVALS
As promptly as practicable after the date of this Agreement, Sellers will, and
will cause the Acquired Company to, make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Acquired Company to, (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all Consents identified in Schedule 4.2.
5.5 NOTIFICATION
Between the date of this Agreement and the Closing Date, each Seller will
promptly notify Buyer in writing if such Seller becomes aware of any fact or
condition that causes or constitutes a Breach of any of Sellers' representations
and warranties as of the date of this Agreement, or if such Seller becomes aware
of the occurrence after the date of this Agreement of any fact or condition that
would (except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in the
Disclosure Letter if the Disclosure Letter were dated the date of the occurrence
or discovery of any such fact or condition, Sellers will promptly deliver to
Buyer a supplement to the Disclosure Letter specifying such change. During the
same period, each Seller will promptly notify Buyer of the occurrence of any
Breach of any covenant of Sellers in this Section 5 or of the occurrence of any
event that may make the satisfaction of the conditions in Section 7 impossible
or unlikely.
5.6 PAYMENT OF INDEBTEDNESS BY RELATED PERSONS
Except as expressly provided in this Agreement, Sellers will cause all
indebtedness owed to the Acquired Company by either Seller or any Related Person
of either Seller to be paid in full prior to Closing.
5.7 NO NEGOTIATION
Until such time, if any, as this Agreement is terminated pursuant to Section 9,
Sellers will not, and will cause the Acquired Company and each of their
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the business or assets (other than in the Ordinary Course
of Business) of the Acquired Company, or any of the capital stock of the
Acquired Company, or any merger, consolidation, business combination, or similar
transaction involving the Acquired Company.
5.8 BEST EFFORTS
Between the date of this Agreement and the Closing Date, Sellers will use their
Best Efforts to cause the conditions in Sections 7 and 8 to be satisfied.
6. COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 APPROVALS OF GOVERNMENTAL BODIES
As promptly as practicable after the date of this Agreement, Buyer will, and
will cause each of its Related Persons to, make all filings required by Legal
Requirements to be made by them to consummate the Contemplated Transactions.
Between the date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, cooperate with Sellers with respect to all filings
that Sellers are required by Legal Requirements to make in connection with the
Contemplated Transactions, and (ii) cooperate with Sellers in obtaining all
consents identified in Part 3.2 of the Disclosure Letter and (iii) cooperate
with Sellers in all reasonable manner in connection with such due diligence as
Sellers deem necessary and appropriate in connection with Buyer, this Agreement,
and the Contemplated Transaction; provided that this Agreement will not require
Buyer to dispose of or make any change in any portion of its business or to
incur any other burden to obtain a Governmental Authorization.
6.2 BEST EFFORTS
Except as set forth in the proviso to Section 6.1, between the date of this
Agreement and the Closing Date, Buyer will use its Best Efforts to cause the
conditions in Sections 7 and 8 to be satisfied.
7. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other actions required
to be taken by Buyer at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Buyer, in whole or in part):
7.1 ACCURACY OF REPRESENTATIONS
(a) All of Sellers' representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement, and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
(b) Each of Sellers' representations and warranties in Sections 3.3, 3.4, 3.12,
and 3.24 must have been accurate in all material respects as of the date of this
Agreement, and must be accurate in all respects as of the Closing Date as if
made on the Closing Date.
(c) There has been no material adverse change in the business, operations or
results of operations of the Acquired Company since December 31, 1998, other
than as disclosed in this Agreement or in the Disclosure Letter.
7.2 SELLERS' PERFORMANCE
(a) All of the covenants and obligations that Sellers are required to perform or
to comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been duly performed and complied with in all material
respects.
(b) Each document required to be delivered pursuant to Section 2.4 must have
been delivered, and each of the other covenants and obligations in Sections 5.4
and 5.8 must have been performed and complied with in all respects.
7.3 CONSENTS
Each of the Consents identified in subparts (b)(vii) of Part 3.2 of the
Disclosure Letter, and each Consent identified in Schedule 4.2, must have been
obtained and must be in full force and effect.
7.4 [Intentionally Omitted]
7.5 NO PROCEEDINGS
Since the date of this Agreement, there must not have been commenced or
Threatened against Buyer, or against any Person affiliated with Buyer, any
Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
any of the Contemplated Transactions.
7.6 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS
There must not have been made or Threatened by any Person any claim asserting
that such Person (a) is the holder or the beneficial owner of, or has the right
to acquire or to obtain beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in, any of the Acquired Company, or (b) is
entitled to all or any portion of the Purchase Price payable for the Shares.
7.7 NO PROHIBITION
Neither the consummation nor the performance of any of the Contemplated
Transactions will, directly or indirectly (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (a) any applicable Legal Requirement or
Order, or (b) any Legal Requirement or Order that has been published,
introduced, or otherwise proposed by or before any Governmental Body.
7.8 BUYER DUE DILIGENCE
Buyer will commence its financial and legal due diligence investigation of the
Acquired Company upon the signing of this Agreement and Buyer's satisfactory
completion of a due diligence investigation relating to the business of the
Acquired Company and Buyer's satisfaction is condition precedent to its
obligations pursuant to the Contemplated Transactions.
8. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions required to
be taken by Sellers at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Sellers, in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS
All of Buyer's representations and warranties in this Agreement (considered
collectively), and each of these representations and warranties (considered
individually), must have been accurate in all material respects as of the date
of this Agreement and must be accurate in all material respects as of the
Closing Date as if made on the Closing Date.
8.2 BUYER'S PERFORMANCE
(a) All of the covenants and obligations that Buyer is required to perform or to
comply with pursuant to this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations (considered
individually), must have been performed and complied with in all material
respects.
(b) Buyer must have delivered each of the documents required to be delivered by
Buyer pursuant to Section 2.4 and must have issued the Origin Shares.
8.3 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter must have
been obtained and must be in full force and effect.
8.4 [Intentionally Omitted]
8.5 NO INJUNCTION
There must not be in effect any Legal Requirement or any injunction or other
Order that (a) prohibits the sale of the Shares by Sellers to Buyer, and (b) has
been adopted or issued, or has otherwise become effective, since the date of
this Agreement.
9. TERMINATION
9.1 TERMINATION EVENTS
This Agreement may, by notice given prior to or at the Closing, be terminated:
(a) by either Buyer or Sellers if a material Breach of any provision of this
Agreement has been committed by the other party and such Breach has not been
waived;
(b) (i) by Buyer if any of the conditions in Section 7 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such condition on or
before the Closing Date; or (ii) by Sellers, if any of the conditions in Section
8 has not been satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Sellers to
comply with their obligations under this Agreement) and Sellers have not waived
such condition on or before the Closing Date;
(c) by mutual consent of Buyer and Sellers;
(d) the inability of the parties to agree on the exhibits to this Agreement
under Section 11.2; or (e) by either Buyer or Sellers if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before October 31, 2000, or such later date as the parties may agree upon.
9.2 EFFECT OF TERMINATION
Each party's right of termination under Section 9.1 is in addition to any other
rights it may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this Agreement is
terminated pursuant to Section 9.1, all further obligations of the parties under
this Agreement will terminate, except that the obligations in Sections 11.1 and
11.3 will survive; provided, however, that if this Agreement is terminated by a
party because of the Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, the supplements to the Disclosure Letter, the certificate
delivered pursuant to Section 2.4(a)(v), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Damages or other remedy based on such
representations, warranties, covenants, and obligations will not be affected by
any investigation conducted with respect to, or any Knowledge acquired (or
capable of being acquired) at any time, whether before or after the execution
and delivery of this Agreement or the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation provided, Buyer shall promptly notify Sellers of any
Knowledge that Buyer obtains. The waiver of any condition based on the accuracy
of any representation or warranty, or on the performance of or compliance with
any covenant or obligation, will not affect the right to indemnification,
payment of Damages, or other remedy based on such representations, warranties,
covenants, and obligations.
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLERS
Sellers, jointly and severally, will indemnify and hold harmless Buyer, the
Acquired Company, and their respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Indemnified Persons")
for, and will pay to the Indemnified Persons the amount of, any loss, liability,
claim, damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable attorneys' fees) or
diminution of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Sellers in this
Agreement, the Disclosure Letter, the supplements to the Disclosure Letter, or
any other certificate or document delivered by Sellers pursuant to this
Agreement, where any supplements to the Disclosure Letter are provided to Buyer
within a reasonable time after Sellers acquire actual Knowledge.
(b) any Breach of any representation or warranty made by Sellers in this
Agreement as if such representation or warranty were made on and as of the
Closing Date after giving effect to any supplement to the Disclosure Letter,
other than any such Breach that is disclosed in a supplement to the Disclosure
Letter and is expressly identified in the certificate delivered pursuant to
Section 2.4(a)(v) as having caused the condition specified in Section 7.1 not to
be satisfied where any supplements to the Disclosure Letter are provided to
Buyer within a reasonable time after Sellers acquire actual Knowledge.
(c) any Breach by either Seller of any covenant or obligation of such Seller in
this Agreement;
(d) any claim by any Person for brokerage or finder's fees or commissions or
similar payments based upon any agreement or understanding alleged to have been
made by any such Person with either Seller or the Acquired Company (or any
Person acting on their behalf) in connection with any of the Contemplated
Transactions.
The remedies provided in this Section 10.2 will not be exclusive of or limit any
other remedies that may be available to Buyer or the other Indemnified Persons.
Any Damages shall be net of insurance proceeds or tax benefits.
10.3 [Intentionally Omitted]
10.4 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Sellers, and will pay to Sellers the
amount of any Damages arising, directly or indirectly, from or in connection
with (a) any Breach of any representation or warranty made by Buyer in this
Agreement or in any certificate delivered by Buyer pursuant to this Agreement,
(b) any Breach by Buyer of any covenant or obligation of Buyer in this
Agreement, or (c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 TIME LIMITATIONS
If the Closing occurs, Sellers will have no liability (for indemnification or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before March 31, 2001, Buyer notifies Sellers of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Buyer. If the Closing occurs, Buyer will have no liability for indemnification
or otherwise with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before March 31, 2001Sellers notify Buyer of a claim specifying the
factual basis of that claim in reasonable detail to the extent then known by
Sellers.
10.6 LIMITATIONS ON AMOUNT--SELLERS
Sellers will have no liability (for indemnification or otherwise) with respect
to the matters described in clause (a), clause (b) or, to the extent relating to
any failure to perform or comply prior to the Closing Date, clause (c) of
Section 10.2 until the total of all Damages with respect to such matters exceeds
$300,000.00 and then only for the amount by which such Damages exceed $300,000
up to and limited to solely the market value of the Origin Shares received by
Sellers pursuant to this Agreement and where such market value is determined as
of the date Buyer provides Sellers with written notice of enforcing its
indemnification rights available pursuant to Paragraph 10.2 hereinabove.
10.7 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with respect to
the matters described in clause (a) or (b) of Section 10.4 until the total of
all Damages with respect to such matters exceeds $50,000.00, and then only for
the amount by which such Damages exceed $50,000.00.
10.8 [Intentionally Omitted]
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 10.2 and 10.4,
of notice of the commencement of any Proceeding against it, such indemnified
party will, if a claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnifying party's failure to give such
notice.
(b) If any Proceeding referred to in Section 10.9(a) is brought against an
indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 10 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) no compromise or
settlement of such claims may be effected by the indemnifying party without the
indemnified party's consent unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the indemnified party,
and (B) the sole relief provided is monetary damages that are paid in full by
the indemnifying party; and (iii) the indemnified party will have no liability
with respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within 30 days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
be bound by any determination made in such Proceeding or any compromise or
settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a Proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the indemnifying party will
not be bound by any determination of a Proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
10.10 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
11. GENERAL PROVISIONS
11.1 EXHIBITS
This Agreement contemplates the attachment of exhibits as defined in Paragraph
2.4 hereinabove, and as otherwise referenced herein. As of the date hereof, the
exhibits have not been agreed to by the parties. The parties agree to negotiate
and finalize the exhibits as soon as practical after the date hereof. When an
exhibit is agreed to, the parties shall initialize, date and attach the exhibit
to the Agreement. If the parties cannot reach an agreement on one or more
exhibits before October 31, 2000, then any party may terminate this Agreement
Without any obligation or liability to the other party.
11.2 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Notwithstanding the foregoing in this paragraph,
Sellers will cause the Acquired Company not to incur any out-of-pocket expenses
in excess of $50,000.00 in connection with this Agreement. In the event of
termination of this Agreement, the obligation of each party to pay its own
expenses will be subject to any rights of such party arising from a breach of
this Agreement by another party.
11.3 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Buyer determines. Unless consented to by Buyer in advance or
required by Legal Requirements, prior to the Closing Sellers shall, and shall
cause the Acquired Company to, keep this Agreement strictly confidential and may
not make any disclosure of this Agreement to any Person. Sellers and Buyer will
consult with each other concerning the means by which the Acquired Company'
employees, customers, and suppliers and others having dealings with the Acquired
Company will be informed of the Contemplated Transactions, and Buyer will have
the right to be present for any such communication.
11.4 CONFIDENTIALITY
Between the date of this Agreement and the Closing Date, Buyer and Sellers will
maintain in confidence, and will cause the directors, officers, employees,
agents, and advisors of Buyer and the Acquired Company to maintain in
confidence, and not use to the detriment of another party or the Acquired
Company any written information furnished (irrespective of the forms or means of
communication) by another party or the Acquired Company in connection with this
Agreement or the Contemplated Transactions, unless (a) such information is
already known to such party or to others not bound by a duty of confidentiality
or such information becomes publicly available through no fault of such party,
(b) the use of such information is necessary or appropriate in making any filing
or obtaining any consent or approval required for the consummation of the
Contemplated Transactions, or (c) the furnishing or use of such information is
required by or necessary or appropriate in connection with legal proceedings.
If the Contemplated Transactions are not consummated, each party will return or
destroy as much of such written information as the other party may reasonably
request.
11.5 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addresses and telecopier numbers as a party may designate by
notice to the other parties):
Sellers Transition 1/Management Accounting Systems
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxx X. Xxxxxxxxxx
000 X. Xxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
Facsimile No.: (000) 000-0000
Buyer: Origin Investment Group, Inc.
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
With a copy to: Xxxxx & Associates, LLP
000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx, Esq., LL.M.
Facsimile No.: (000) 000-0000
11.6 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement may be brought against any of the parties
in the courts of the State of California, County of Los Angeles, or, if it has
or can acquire jurisdiction, in the United States District Court for the Central
District of California, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
11.7 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.8 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power, or privilege under this Agreement or the documents referred to in
this Agreement will operate as a waiver of such right, power, or privilege, and
no single or partial exercise of any such right, power, or privilege will
preclude any other or further exercise of such right, power, or privilege or the
exercise of any other right, power, or privilege. To the maximum extent
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
11.9 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter (including the Letter of Intent between Buyer and Sellers
dated November 10, 1999) and constitutes (along with the documents referred to
in this Agreement) a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This Agreement
may not be amended except by a written agreement executed by the party to be
charged with the amendment.
11.10 DISCLOSURE LETTER
The disclosures in the Disclosure Letter, and those in any Supplement thereto,
must relate only to the representations and warranties in the Section of the
Agreement to which they expressly relate and not to any other representation or
warranty in this Agreement provided, however, the disclosures may incorporate by
reference any other portion of the Disclosure Letter.
11.11 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, which will not be unreasonably withheld,
except that Buyer may assign any of its rights under this Agreement to any
Subsidiary of Buyer provided Buyer shall continue to be liable for the
performance of all its obligations hereunder. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.12 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.13 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Section or Sections of this Agreement.
All words used in this Agreement will be construed to be of such gender or
number as the circumstances require. Unless otherwise expressly provided, the
word "including" does not limit the preceding words or terms.
11.14 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.15 GOVERNING LAW
This Agreement will be governed by the laws of the State of California without
regard to conflicts of laws principles.
11.16 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
11.17 ARBITRATION
The parties agree that any controversy or claim arising out of or relating to
this Agreement, or any dispute arising out of the interpretation or application
of this Agreement, which the parties hereto are unable to resolve, shall be
finally resolved and settled exclusively by arbitration in Los Angeles,
California under the American Arbitration Association's Commercial Arbitration
Rules then in effect and in accordance with the substantive laws of the State of
California. The parties each recognize and consent to the jurisdiction over each
of them by the Courts of the State of California. The award of the arbitrator
shall be final and binding upon the parties and non-appealable, and judgment may
be entered upon such award by any court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of
the date first written above.
Buyer: Sellers:
/s/ Xxxx X. Xxxxx /s/ Xxxx X. Xxxxx
By: __________________________ _____________________________
Xxxx Xxxxx, Chairman and President Xx. Xxxx X. Xxxxx
Trustee to Xxxxx Family Trust
/s/ Xxxxx X. Xxxxx
-----------------------------
Xxx. Xxxxx X. Xxxxx
Trustee to Xxxxx Family Trust
