Exhibit 1
================================================================================
ASSET PURCHASE AGREEMENT
BY AND AMONG
NACIO SYSTEMS, INC.,
a Nevada corporation
NOVA COMMUNICATIONS LTD.,
a Nevada corporation
AND
NACIO SYSTEMS, INC.,
a California corporation
April 1, 2005
================================================================================
TABLE OF CONTENTS
1. Definitions...........................................................1
2. Basic Transaction.....................................................4
(a) Purchase and Sale of Assets.....................................4
(b) Assumption of Liabilities.......................................4
(c) Purchase Price..................................................4
(d) The Closing.....................................................4
(e) Deliveries at the Closing.......................................4
(f) Allocation......................................................4
3. Representations and Warranties of Company.............................4
(a) Organization of Company.........................................5
(b) Authorization of Transaction....................................5
(c) Noncontravention................................................5
(d) Brokers' Fees...................................................5
(e) Title to Tangible Assets........................................5
(f) Financial Statements............................................5
(g) Legal Compliance................................................5
(h) Tax Matters.....................................................5
(i) Real Property...................................................6
(j) Intellectual Property...........................................6
(k) Contracts.......................................................6
(l) Powers of Attorney..............................................6
(m) Litigation......................................................6
(n) Employee Benefits...............................................6
(o) Environmental, Health, and Safety Matters.......................7
(p) Investment......................................................7
(q) Disclaimer of other Representations and Warranties..............7
4. Representations and Warranties of Buyer and Nova......................7
(a) Organization of Buyer and Nova..................................8
(b) Authorization of Transaction....................................8
(c) Noncontravention................................................8
(d) Brokers' Fees...................................................8
(e) Title to Tangible Assets........................................8
(f) Financial Statements............................................8
(g) Legal Compliance................................................9
(h) Tax Matters.....................................................9
(i) Real Property...................................................9
(j) Intellectual Property...........................................9
(k) Contracts.......................................................9
(l) Powers of Attorney.............................................10
(m) Litigation.....................................................10
(n) Employee Benefits..............................................10
(o) Environmental, Health, and Safety Matters......................10
(p) Nova Shares....................................................10
5. Pre-Closing Covenants................................................11
(a) General........................................................11
-i-
(b) Notices and Consents...........................................11
(c) Operation of Business..........................................11
(d) Full Access / Confidential Information.........................11
(e) Notice of Developments.........................................11
6. Conditions to Obligation to Close....................................11
(a) Conditions to Obligation of Buyer and Nova.....................12
(b) Conditions to Obligation of Company............................12
7. Termination..........................................................13
(a) Termination of Agreement.......................................13
(b) Effect of Termination..........................................14
8. Indemnification......................................................14
(a) Indemnification Provisions for Benefit of the Buyer and Nova...14
(b) Indemnification Provisions for Benefit of Company..............14
(c) Matters Involving Third Parties................................15
9. Miscellaneous........................................................15
(a) Survival of Representations and Warranties.....................15
(b) Press Releases and Public Announcements........................15
(c) No Third-Party Beneficiaries...................................15
(d) Entire Agreement...............................................15
(e) Succession and Assignment......................................15
(f) Counterparts...................................................16
(g) Headings.......................................................16
(h) Notices........................................................16
(i) Governing Law..................................................16
(j) Amendments and Waivers.........................................16
(k) Severability...................................................16
(l) Construction...................................................17
(m) Incorporation of Exhibits and Schedules........................17
(n) Employee Benefits Matters......................................17
(o) Bulk Transfer Laws.............................................17
-ii-
Exhibit A - Form of Share Certificate
Exhibit B - Forms of Assignments
Exhibit C - Form of Assumption
Exhibit D - Allocation Schedule
Exhibit E - Company Financial Statements
Exhibit F - Buyer and Nova Financial Statements
Exhibit G - Officer Certificates and Board Resolutions
Disclosure Schedule Exceptions to Representations and Warranties
-iii-
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into
effective as of April 1, 2005, by and among Nacio Systems, Inc., a Nevada
corporation (the "Buyer"), Nova Communications Ltd., a Nevada corporation
("Nova") and Nacio Systems, Inc., a California corporation (the "Company").
Buyer, Nova and Company are the only parties to this Agreement and are sometimes
referred to herein singularly as a "Party" and collectively herein as the
"Parties."
RECITALS
WHEREAS, Company provides web hosting, connectivity and outsourcing
services for businesses that use the Internet; and
WHEREAS, Buyer wishes to purchase substantially all of Company's assets
and to assume substantially all of Company's liabilities, and Company desires to
sell and assign such assets and liabilities to Buyer, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions. When used in this Agreement, the terms set forth below
and those defined throughout the Agreement when initially capitalized shall have
the meanings ascribed to them.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all legal actions, suits, proceedings,
hearings, governmental investigations, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, penalties, fines, costs,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
litigation costs and reasonable attorneys' fees and expenses.
"Acquired Assets" means all of the right, title, and interest that
Company possesses and has the right to transfer in and to the following assets:
all of Company's (a) tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, furniture, automobiles, trucks, and
tools), (b) intellectual property, goodwill associated therewith, Internet
domain name registrations, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, remedies against infringements thereof,
and rights to protection of interests therein under the laws of all
jurisdictions, (c) leases, subleases, and rights thereunder, (d) agreements,
contracts, mortgages, instruments, Security Interests, guaranties, and rights
thereunder, (e) claims, causes of action, rights of recovery, rights of set off,
and rights of recoupment (including any such item relating to the payment of
taxes), (f) permits, licenses, orders, registrations, certificates, variances,
and similar rights obtained from governments and governmental agencies, (g)
books, records, ledgers, files, documents, correspondence, advertising and
promotional materials, studies, reports, and other printed or written materials,
and (h) rights in and with respect to the assets associated with its Employee
Benefit Plans; provided, however, that the Acquired Assets shall not include (i)
the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Company as a corporation, or
(ii) any of the rights of Company under this Agreement (or under any written
side agreement between Company on the one hand and Buyer and/or Nova on the
other hand entered into on or after the date of this Agreement).
-1-
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Assumed Liabilities" means all liabilities and obligations of Company
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including (a) all liabilities of Company for
income, transfer, sales, use, and other taxes arising in connection with the
consummation of the transactions contemplated hereby, (b) all liabilities of
Company for costs, payment of claims, and other expenses (including legal fees
and expenses) Company has incurred in connection with this Agreement, the
transactions contemplated hereby, and Company's liquidation and dissolution, (c)
all liabilities and obligations of Company under the agreements, contracts,
leases, licenses, and other arrangements referred to in the definition of
Acquired Assets, (d) all liabilities and obligations of Company pertaining to
dissenter's rights under California Corporations Code ss.1300 et seq., (e) all
other liabilities and obligations of Company set forth in the Disclosure
Schedule, and (f) all liabilities arising from any and all personal guaranties
executed by a director, officer, shareholder, employee, or agent of Company
pertaining to the foregoing; provided, however, that the Assumed Liabilities
shall not include any obligation of Company expressly set forth in this
Agreement (or under any written side agreement between Company on the one hand
and Buyer and/or Nova on the other hand entered into on or after the date of
this Agreement).
"Buyer" has the meaning set forth in the preface above.
"Nova Shares" has the meaning set forth in Section 2(c) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any confidential, trade secret or
other proprietary information (in whatever form or media, and whether or not
marked as confidential) pertaining to Company, including without limitation any
and all information, documents and other materials concerning the business and
affairs of Company that is not already generally available to the public at the
time of disclosure to Buyer or Nova hereunder.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Benefit Plan" means any "employee benefit plan" (as such term
is defined in ERISA ss.3(3)) and any other material employee benefit plan,
program or arrangement of any kind.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
-2-
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Knowledge" means actual knowledge without independent investigation.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Nova" has the meaning set forth in the preface above.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Company" has the meaning set forth in the preface above.
"Company Share" means any issued and outstanding share of the Common
Stock of Company.
"Company Stockholder" means any person who or which holds any Company
Share.
-3-
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Company, and Company
agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired
Assets at the Closing for the consideration specified below in this Section 2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, Buyer agrees to assume and become responsible for
all of the Assumed Liabilities at the Closing.
(c) Purchase Price. Buyer and Nova agree to deliver and pay to Company
at the Closing the following (the "Purchase Price"): a share certificate
evidencing shares of duly issued and outstanding Nova Communications Ltd.
(NVACE.OB) common stock with a market value of Eight Million Dollars
($8,000,000) based on the trailing average of the closing stock price for the
thirty (30) trading days up to and preceding the time of Closing (the "Nova
Shares") in the form of Exhibit A attached hereto.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxxxxx
Xxxxx LLP, located at 000 Xxxxxxx Xxxxxxx, Xxxxx 0000, Xxxx Xxxxxx, Xxxxxxxxxx,
commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Parties may mutually determine (the "Closing Date");
provided, however that the Closing Date shall be no earlier than May 1, 2005.
(e) Deliveries at the Closing. At the Closing, (i) Company will deliver
to Buyer and Nova the various certificates, instruments, and documents referred
to in Section 6(a) below; (ii) Buyer and Nova will deliver to Company the
various certificates, instruments, and documents referred to in Section 6(b)
below; (iii) Company will execute, acknowledge (if appropriate), and deliver to
Buyer and Nova assignments (including lease and intellectual property transfer
documents) in the forms attached hereto as Exhibits B-1 through B-4; (iv) Buyer
will execute and deliver to Company an assumption in the form attached hereto as
Exhibit C; and (v) Buyer and Nova will deliver to Company the consideration
specified in Section 2(c) above.
(f) Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Exhibit D. The Parties covenant and agree
that (i) such allocation was determined in an arm's length negotiation and none
of the parties shall take a position on any tax return (including IRS Form
8594), before any tax authority or in any judicial proceeding that is in any
manner inconsistent with such allocation without the written consent of the
other Party or unless specifically required pursuant to a determination by an
applicable tax authority; (ii) they shall cooperate with each other in
connection with the preparation, execution and filing of all tax returns related
to such allocation; and (iii) they shall promptly advise each other regarding
the existence of any tax audit controversy or litigation related to such
allocation.
3. Representations and Warranties of Company. Company represents and
warrants to Buyer and Nova that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the disclosure schedule accompanying this Agreement and
signed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
-4-
(a) Organization of Company. Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. Company has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of Company has duly
authorized the execution, delivery, and performance of this Agreement by
Company. This Agreement constitutes the valid and legally binding obligation of
Company, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Company is subject or any provision of
the charter or bylaws of Company or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the financial
condition of Company taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. Company shall not be
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above), except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the financial condition of Company taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Company has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer or Nova could become
liable or obligated.
(e) Title to Tangible Assets. Company has good title to, or a valid
leasehold interest in, the tangible assets it uses regularly in the conduct of
its business.
(f) Financial Statements. Attached hereto as Exhibit E are the
following financial statements (collectively the "Financial Statements"):
unaudited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the 9 months ended March 31,
2005 for Company.
(g) Legal Compliance. Company has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where the failure to comply would
not have a material adverse effect upon the financial condition of Company taken
as a whole.
(h) Tax Matters. Except as set forth in the Disclosure Schedule,
Company has filed all Income Tax Returns that it was required to file, and has
paid all Income Taxes shown thereon as owing, except where the failure to file
Income Tax Returns or to pay Income Taxes would not have a material adverse
effect on the financial condition of Company taken as a whole.
-5-
(i) Real Property.
(i) Company owns no real property.
(ii) Section 3(i)(ii) of the Disclosure Schedule lists all real
property leased or subleased to Company. Company has delivered to Buyer
and Nova correct and complete copies of the leases and subleases listed
in Section 3(i)(ii) of the Disclosure Schedule (as amended to date). To
the Knowledge of Company, each lease and sublease listed in Section
3(i)(ii) of the Disclosure Schedule is legal, valid, binding,
enforceable, and in full force and effect, except where the illegality,
invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of
Company taken as a whole.
(j) Intellectual Property. Section 3(j) of the Disclosure Schedule
identifies each patent or registration which has been issued to Company with
respect to any of its intellectual property, identifies each pending patent
application or application for registration which Company has made with respect
to any of its intellectual property.
(k) Contracts. Section 3(k) of the Disclosure Schedule lists all
written contracts and other written agreements to which Company is a party the
performance of which will involve consideration in excess of Twenty Five
Thousand Dollars ($25,000). Company has delivered to Buyer and Nova a correct
and complete copy of each contract or other agreement listed in Section 3(k) of
the Disclosure Schedule (as amended to date).
(l) Powers of Attorney. To the Knowledge of Company, there are no
outstanding powers of attorney executed on behalf of Company.
(m) Litigation. Section 3(m) of the Disclosure Schedule sets forth each
instance in which Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of Company taken as a whole.
(n) Employee Benefits.
(i) Section 3(n) of the Disclosure Schedule lists each Employee
Benefit Plan that Company maintains or to which Company contributes.
(A) To the Knowledge of Company, each such Employee
Benefit Plan (and each related trust, insurance contract, or
fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form
and in operation in all respects with the applicable requirements
of ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the financial condition of
Company taken as a whole.
(B) Company has delivered to Buyer and Nova correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent annual report (IRS
Form 5500), and all related trust agreements, insurance
contracts, and other funding arrangements which implement each
such Employee Benefit Plan.
-6-
(o) Environmental, Health, and Safety Matters.
(i) To the Knowledge of Company, Company is in compliance with
Environmental, Health, and Safety Requirements, except for such
noncompliance as would not have a material adverse effect on the
financial condition of Company taken as a whole.
(ii) To the Knowledge of Company, Company has not received any
written notice, report or other information regarding any actual or
alleged material violation of Environmental, Health, and Safety
Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to Company or its facilities arising under
Environmental, Health, and Safety Requirements, the subject of which
would have a material adverse effect on the financial condition of
Company taken as a whole.
(iii) This Section 3(o) contains the sole and exclusive
representations and warranties of Company with respect to any
environmental, health, or safety matters, including without limitation
any arising under any Environmental, Health, and Safety Requirements.
(p) Investment. Company (i) understands that the Nova Shares have not
been, and will not be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, and (ii) is
acquiring Nova Shares solely for its own account for investment purposes, and
not with a view to the distribution thereof (except to Company Stockholders).
Company acknowledges and agrees that the certificate evidencing the Nova Shares
will include a legend reading substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN
ACQUIRED WITHOUT A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT AND UNDER ANY
APPLICABLE SECURITIES LAWS, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR
OFFER."
(q) Disclaimer of other Representations and Warranties. Except as
expressly set forth in this Section 3, Company makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities
(including, without limitation, the Assumed Liabilities) or operations,
including, without limitation, with respect to merchantability or fitness for
any particular purpose, and any such other representations or warranties are
hereby expressly disclaimed. Each of Buyer and Nova hereby acknowledges and
agrees that, except to the extent specifically set forth in this Section 3,
Buyer is purchasing the Acquired Assets on an "as-is, where-is" basis. Without
limiting the generality of the foregoing, Company makes no representation or
warranty regarding any assets other than the Acquired Assets or any liabilities
other than the Assumed Liabilities, and none shall be implied at law or in
equity.
4. Representations and Warranties of Buyer and Nova. Each of Buyer and
Nova represents and warrants to Company that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
-7-
(a) Organization of Buyer and Nova. Each of Buyer and Nova is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Neither Nova's Report on Form
10-KSB for the year ended 2004, nor any other document filed by Nova with the
Securities and Exchange Commission ("SEC") since January 1, 2004, contain a
misstatement of a material fact or fail to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading
as of the date such filing was made. Nova has filed all documents required to be
filed by it with the SEC since January 1, 2004, and no event has occurred which
Nova is required to report on Form 8-K.
(b) Authorization of Transaction. Each of Buyer and Nova has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of Buyer and
Nova have duly authorized the execution, delivery, and performance of this
Agreement by Buyer and Nova, respectively. This Agreement constitutes the valid
and legally binding obligation of Buyer and Nova, enforceable in accordance with
its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer or Nova is subject or any provision
of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer or Nova is a party or by which it is bound or to which any of its
assets is subject. Neither Buyer nor Nova needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' Fees. Neither Buyer nor Nova has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Company
could become liable or obligated.
(e) Title to Tangible Assets. Each of Buyer and Nova has good title to,
or a valid leasehold interest in, the material tangible assets it uses regularly
in the conduct of its business.
(f) Financial Statements. Attached hereto as Exhibit F are the
following financial statements: a Form 10-QSB/A for Nova, including unaudited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the quarter ended March 31, 2005 for Nova.
The foregoing financial statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of Nova as of
such dates and the results of operations of Nova for such periods; provided,
however, that the financial statements are subject to normal year-end
adjustments and lack footnotes and other presentation items.
(g) Legal Compliance. Each of Buyer and Nova has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except where the
failure to comply would not have a material adverse effect upon the financial
condition of Buyer or Nova.
-8-
(h) Tax Matters. Except as set forth in the Disclosure Schedule, each
of Buyer and Nova has filed all Income Tax Returns that it was required to file,
and has paid all Income Taxes shown thereon as owing, except where the failure
to file Income Tax Returns or to pay Income Taxes would not have a material
adverse effect on the financial condition of Buyer or Nova.
(i) Real Property.
(i) Section 4(i)(i) of the Disclosure Schedule lists all real
property that each of Buyer and Nova owns. With respect to each such
parcel of owned real property, and except for matters which would not
have a material adverse effect on the financial condition of Buyer or
Nova:
(A) the identified owner has good and marketable title to
the parcel of real property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent, recorded
easements, covenants, and other restrictions, and utility
easements, building restrictions, zoning restrictions, and other
easements and restrictions existing generally with respect to
properties of a similar character;
(B) there are no leases, subleases, licenses, concessions,
or other agreements granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property;
and
(C) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or any portion
thereof or interest therein.
(ii) Section 4(i)(ii) of the Disclosure Schedule lists all real
property leased or subleased to Buyer or Nova. Buyer and Nova have
delivered to Company correct and complete copies of the leases and
subleases listed in Section 4(i)(ii) of the Disclosure Schedule (as
amended to date). To the Knowledge of each of Buyer and Nova, each
lease and sublease listed in Section 4(i)(ii) of the Disclosure
Schedule is legal, valid, binding, enforceable, and in full force and
effect, except where the illegality, invalidity, nonbinding nature,
unenforceability, or ineffectiveness would not have a material adverse
effect on the financial condition of Buyer or Nova.
(j) Intellectual Property. Section 4(j) of the Disclosure Schedule
identifies each patent or registration which has been issued to Buyer or Nova
with respect to any intellectual property, identifies each pending patent
application or application for registration which Buyer or Nova has made with
respect to any of its intellectual property.
(k) Contracts. Section 4(k) of the Disclosure Schedule lists all
written contracts and other written agreements to which Buyer or Nova is a party
the performance of which will involve consideration in excess of Twenty Five
Thousand Dollars ($25,000). Buyer and Nova have delivered to Company a correct
and complete copy of each contract or other agreement listed in Section 4(k) of
the Disclosure Schedule (as amended to date).
(l) Powers of Attorney. To the Knowledge of Buyer and Nova, there are
no outstanding powers of attorney executed on behalf of Buyer or Nova.
(m) Litigation. Section 4(m) of the Disclosure Schedule sets forth each
instance in which Buyer or Nova (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction,
-9-
judgment, order, decree, ruling, action, suit, proceeding, hearing, or
investigation would not have a material adverse effect on the financial
condition of Buyer or Nova.
(n) Employee Benefits.
(i) Section 4(n) of the Disclosure Schedule lists each Employee
Benefit Plan that Buyer or Nova maintains or to which Buyer or Nova
contributes.
(A) To the Knowledge of Buyer and Nova, each such Employee
Benefit Plan (and each related trust, insurance contract, or
fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form
and in operation in all respects with the applicable requirements
of ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the financial condition of
Buyer or Nova.
(B) Buyer and Nova have delivered to Company correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent annual report (IRS
Form 5500), and all related trust agreements, insurance
contracts, and other funding arrangements which implement each
such Employee Benefit Plan.
(o) Environmental, Health, and Safety Matters.
(i) To the Knowledge of Buyer and Nova, each of Buyer and Nova is
in compliance with all Environmental, Health, and Safety Requirements,
except for such noncompliance as would not have a material adverse
effect on the financial condition of Buyer or Nova.
(ii) To the Knowledge of Buyer and Nova, neither Buyer nor Nova
has received any written notice, report or other information regarding
any actual or alleged material violation of Environmental, Health, and
Safety Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to Buyer or Nova or their respective facilities
arising under Environmental, Health, and Safety Requirements, the
subject of which would have a material adverse effect on the financial
condition of either Buyer or Nova.
(iii) This Section 4(o) contains the sole and exclusive
representations and warranties of Buyer and Nova with respect to any
environmental, health, or safety matters, including without limitation
any arising under any Environmental, Health, and Safety Requirements.
(p) Nova Shares. Subject to Rule 144 promulgated under the Securities
Act and other applicable state securities laws, the Nova Shares shall be duly
issued and outstanding common stock and shall not be subject to any Security
Interest or other transfer restrictions other than under the Securities Act or
applicable state securities laws.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
-10-
(b) Notices and Consents. Company will give any notices to third
parties, and Company will use its reasonable best efforts to obtain any third
party consents in connection with the matters referred to in Section 3(c) above.
Each of the Parties will give any notices to, make any filings with, and use its
reasonable best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters referred to
in Section 3(c) and Section 4(c) above.
(c) Operation of Business. Company will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business.
(d) Full Access / Confidential Information. Company will permit
representatives of Buyer and Nova to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
Company, to all premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to Company. Each of Buyer
and Nova will treat and hold in the strictest confidence any Confidential
Information it receives from any of Company Stockholders or Company in the
course of the reviews contemplated by this Section 5(d), will not use any of the
Confidential Information except in connection with this Agreement, and in
addition shall not directly or indirectly disclose, copy, distribute, republish
or allow any third party to have access to any Confidential Information except
to the extent necessary to effect the transactions contemplated under this
Agreement (and in such cases solely to its officers, counsel, accountants and
similar agents), and, if this Agreement is terminated for any reason whatsoever,
will return to Company all tangible embodiments (and all copies) of the
Confidential Information which are in its possession.
(e) Notice of Developments.
(i) Company may elect at any time to notify Buyer and Nova of any
development causing a breach of any of its representations and
warranties in Section 3 (f)-(p) above. Unless Buyer and Nova have the
right to terminate this Agreement pursuant to Section 7(a)(ii) below by
reason of the development and exercise that right within the period of
ten (10) business days referred to in Section 7(a)(ii) below, the
written notice pursuant to this Section 5(e)(i) will be deemed to have
amended the Disclosure Schedule, to have qualified the representations
and warranties contained in Section 3 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
(ii) Each Party will give prompt written notice to the other
Party of any material adverse development causing a breach of any of
its own representations and warranties in Section 3(a)-(e) and Section
4 above. No disclosure by any Party pursuant to this Section 5(e)(ii),
however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation or breach of warranty.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer and Nova. The obligation of Buyer
and Nova to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
-11-
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Company shall have delivered to Buyer and Nova a certificate
executed by Company's President to the effect that each of the
conditions specified above in Section 6(a)(i)-(iii) is satisfied in all
respects, along with copies of resolutions of Company's Board of
Directors authorizing this Agreement and the transactions contemplated
hereunder, in the form attached hereto as Exhibit G-1;
(v) the Parties shall have received all necessary authorizations,
consents, and approvals of governments and governmental agencies
referred to in Section 3(c) and Section 4(c) above; and
(vi) all actions to be taken by Company in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Buyer and Nova.
Each of Buyer and Nova may waive any condition specified in this Section 6(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Company. The obligation of Company to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Each of Buyer and Nova shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Buyer and Nova shall have delivered to Company a certificate
executed by their respective Officers to the effect that each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in all
respects, along with copies of resolutions of Buyer's and Nova's Board
of Directors authorizing this Agreement and the transactions
contemplated hereunder, in the forms attached hereto as Exhibit G-2;
-12-
(v) the Parties shall have received all necessary authorizations,
consents, and approvals of governments and governmental agencies
referred to in Section 3(c) and Section 4(c) above;
(vi) Buyer or Nova shall have delivered to Company the Nova
Shares in accordance with this Agreement at or prior to the Closing;
(vii) Company shall have obtained any and all third party and
governmental consents necessary to consummate the transactions
contemplated hereby; and
(viii) all actions to be taken by Buyer and Nova in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Company.
Company may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(i) The Parties may terminate this Agreement by written consent
of all Parties at any time prior to the Closing;
(ii) Buyer and Nova may terminate this Agreement by giving
written notice to Company at any time prior to the Closing in the event
(A) Company has within the then previous ten (10) business days given
Buyer and Nova any notice pursuant to Section 5(e)(i) above and (B) the
development that is the subject of the notice has had a material
adverse effect upon the financial condition of Company taken as a
whole.
(iii) Buyer and Nova may terminate this Agreement by giving
written notice to Company at any time prior to the Closing (A) in the
event Company has breached any material representation, warranty, or
covenant contained in this Agreement (other than the representations
and warranties in Section 3(f)-(p) above) in any material respect,
Buyer and Nova have notified Company of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach or (B) if the Closing shall not have occurred on or
before August 1, 2005, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from Buyer or Nova breaching any representation, warranty, or
covenant contained in this Agreement); and
(iv) Company may terminate this Agreement by giving written
notice to Buyer and Nova at any time prior to the Closing (A) in the
event Buyer or Nova has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect,
Company has notified Buyer and Nova of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach or (B) if the Closing shall not have occurred on or
before August 1, 2005, by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results
primarily from Company itself breaching any representation, warranty,
or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any
-13-
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 5(d) above
shall survive termination.
8. Indemnification.
(a) Indemnification Provisions for Benefit of the Buyer and Nova.
(i) Subject to Section 5(e), in the event Company breaches any of
its representations, warranties, and covenants contained in this
Agreement, then Company agrees to indemnify each of Buyer, Nova, their
respective directors, officers, shareholders, agents, attorneys and
employees (each, a "Buyer Indemnified Party") from and against any
Adverse Consequences a Buyer Indemnified Party shall suffer through and
after the date of the claim for indemnification caused by the breach;
provided, however, that Company shall not have any obligation to
indemnify a Buyer Indemnified Party from and against any Adverse
Consequences caused by the breach of any representation or warranty of
Company contained in Section 3(a)-(q) of the Agreement: (A) until the
Buyer Indemnified Party has suffered Adverse Consequences by reason of
all such breaches in excess of a Two Hundred Thousand Dollar ($200,000)
aggregate deductible (after which point Company will be obligated only
to indemnify the Buyer Indemnified Party from and against further such
Adverse Consequences) or thereafter (B) to the extent the Adverse
Consequences the Buyer Indemnified Party has suffered by reason of all
such breaches exceeds a One Million Dollar ($1,000,000) aggregate
ceiling (after which point Company will have no obligation to indemnify
the Buyer Indemnified Party from and against further such Adverse
Consequences). Notwithstanding the foregoing, this Section 8(a)(i)
shall be subject to Company's ability to sell available Nova Shares, in
accordance with all applicable laws, to fund any indemnification
obligation arising hereunder, and shall be secondary to any and all
applicable insurance coverage owned by the Parties.
(b) Indemnification Provisions for Benefit of Company.
(i) In the event Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement (including the
assumption agreement and other exhibits attached hereto), then Buyer
agrees to indemnify Company, its directors, officers, shareholders,
agents, attorneys and employees (each, a "Company Indemnified Party")
from and against the entirety of any Adverse Consequences a Company
Indemnified Party shall suffer through and after the date of the claim
for indemnification caused by the breach.
(ii) Buyer agrees to indemnify each Company Indemnified Party
from and against the entirety of any Adverse Consequences such Company
Indemnified Party shall suffer due to or arising from any liability of
Company which is an Assumed Liability.
(iii) In the event Nova breaches any of its representations,
warranties, and covenants contained in this Agreement (including the
exhibits attached hereto), then Nova agrees to indemnify each Company
Indemnified Party from and against the entirety of any Adverse
Consequences a Company Indemnified Party shall suffer through and after
the date of the claim for indemnification caused by the breach. Nova
shall have no obligation to indemnify any Company Indemnified Party
from and against any Adverse Consequences such Company Indemnified
Party shall suffer due to or arising from any liability of Company
which is an Assumed Liability.
(c) Matters Involving Third Parties.
-14-
(i) If any third party shall notify any Party ( the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 4, then the Indemnified Party
shall promptly (and in any event within seven (7) business days after
receiving notice of the Third Party Claim) notify the Indemnifying
Party thereof in writing.
(ii) Any Indemnifying Party will have the right at any time to
assume and thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages without any
admission of liability and does not impose an injunction or other
equitable relief upon the Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes the defense
of the Third Party Claim as provided in Section 8(c)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party
(not to be withheld unreasonably).
9. Miscellaneous.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder, except as otherwise expressly provided herein.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, related to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer and Nova may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer and Nova nonetheless shall remain
responsible for the performance of all of their respective obligations
hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
-15-
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given four (4) business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or the next business day after it is sent by Federal Express or
similar overnight courier, and addressed to the intended recipient as set forth
below:
If to Company: Nacio Systems, Inc. Copy to: Xxxxxx X. Xxx, Esq.
Attn: Xxxxxx Xxxxxxxxxx Xxxxxxx Xxxxxxxxx Xxxxx XXX
00 Xxxxxxxx Xx. 000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
If to Buyer: Nacio Systems, Inc. Copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Attn: Xxxxxx Xxxxxxx Law Offices of Xxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000 000 XX Xxxxxxx, Xxxxx 000
Xxxx, XX 00000 Xxxxxxxx, XX 00000
If to Nova: Nova Communications Ltd. Copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Attn: Art Robins Law Offices of Xxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000 000 XX Xxxxxxx, Xxxxx 000
Xxxx, XX 00000 Xxxxxxxx, XX 00000
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule. Each Party hereby
submits to the exclusive jurisdiction and venue of the state courts located in
Marin County, California and federal courts located in the Northern District of
California over any dispute arising under this Agreement.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
Parties. Company may consent to any such amendment at any time prior to the
Closing with the prior authorization of its board of directors; provided,
however, that any amendment effected after Company Stockholders have approved
this Agreement will be subject to any restrictions under the California
Corporations Code or other applicable law. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or
-16-
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word "including" shall
mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Employee Benefits Matters. Buyer will adopt and assume at and as of
the Closing each of the Employee Benefit Plans that Company maintains and each
trust, insurance contract, annuity contract, or other funding arrangement that
Company has established with respect thereto. Buyer will ensure that the
Employee Benefit Plans treat employment with Company prior to the Closing Date
the same as employment with Buyer from and after the Closing Date for purposes
of eligibility, vesting, and benefit accrual. Company will transfer (or cause
the plan administrators to transfer) at and as of the Closing all of the
corresponding assets associated with the Employee Benefit Plans that Buyer is
adopting and assuming. With respect to each Multiemployer Plan, the Parties
shall take all actions necessary to comply with the requirements of ERISA
ss.4204.
(o) Bulk Transfer Laws. Buyer and Nova acknowledge that Company will
not comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
-17-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as
of the date first above written.
"BUYER"
NACIO SYSTEMS, INC.,
a Nevada corporation
By: /s/ XXXXXX XXXXXX
--------------------------
Name: Xxxxxx Xxxxxx
--------------------------
Title: CEO
--------------------------
Dated: 10/21/2005
--------------------------
"NOVA"
NOVA COMMUNICATIONS LTD.,
a Nevada corporation
By: /s/ XXXXXX XXXXXX
--------------------------
Name: Xxxxxx Xxxxxx
--------------------------
Title: CEO
--------------------------
Dated: 10/21/2005
--------------------------
"COMPANY"
NACIO SYSTEMS, INC.,
a California corporation
By: /s/ XXXXXX XXXXXXXXXX
--------------------------
Name: Xxxxxx Xxxxxxxxxx
--------------------------
Title: CFO
--------------------------
Dated: 10/21/2005
--------------------------
-18-
