AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of this 20th day of September, 1999 by and among (i) XXXXXXXXXXX.XXX,
INCORPORATED, a Nevada corporation ("HomeSeekers"); (ii) XMLS, LLC, a Nevada
limited liability company and wholly owned subsidiary of HomeSeekers
("Subsidiary" or "Sub"); (iii) TDT, LLC, a Nevada limited liability company
("Terradatum"); and (iv) the following named members of Terradatum, who
constitute the owners of all of the percentage interests in of Terradatum
(collectively, "the Members"):
Name of Member / Manager Address Member's Voting Percentage
------------------------ ------- --------------------------
Interest in TDT, LLC
--------------------
XXXXXX XXXXXXXXX 0000 Xxxxxx Xxxxxxxx Xxxx thirty-three percent (33%)
Sole Manager Xxxx Xxxxx, XX 00000
XXXXX XXXXXX 0000 Xxxxx Xxxxxx thirty-three percent (33%)
Xxxxx Xxxx, XX 00000
XXXXXXX X. XXXXX 000 Xxxxx Xxx thirty-three percent (33%)
Xxxx Xxxxx, XX 00000
TERRADATUM, LLC, a 0000 Xxxxx Xxxxxx one percent (1%)
Washington limited liability Xxxxx Xxxx, XX 00000
company X.X. Xxx 000
Xxxx Xxxxx, XX 00000
RECITALS
A. Terradatum is in the business of development, marketing, and
licensing Internet based multiple listing service systems in the United States
of America (the "Business" or "Terradatum's Business");
B. The Board of Directors of HomeSeekers, and the members and managers
of Sub and Terradatum have deemed it advisable that HomeSeekers and Terradatum
combine their operations by a merger of Terradatum into Sub, under the terms and
conditions hereinafter set forth (the "Merger");
C. The Board of Directors of HomeSeekers, and the managers and members
of Sub and Terradatum have approved and adopted this Agreement and Plan of
Merger (as defined below) and intend that, to the extent possible, the Merger
qualify for federal income tax purposes as a reorganization within the meaning
of Section 708 of the Internal Revenue Code of 1986, as amended (the "Code");
and
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D. The Board of Directors of HomeSeekers, and the managers and members
of Sub and Terradatum have determined that it is in the best interests of their
respective shareholders and members for HomeSeekers to acquire all of the
percentage interests in Terradatum. In order to effectuate the acquisition, the
parties have agreed, subject to the terms and conditions set forth in this
Agreement, to merge Terradatum with and into Sub so that Sub continues as a
surviving limited liability company and wholly-owned subsidiary of HomeSeekers,
and the Members will be issued certain cash and shares of common stock of
HomeSeekers, in exchange for all of the percentage interests in Terradatum.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements herein contained and subject to the conditions and other terms
herein contained, the parties hereto agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Upon performance (or waiver) of all covenants and
obligations of the parties contained herein and upon fulfillment (or waiver) of
all conditions to the obligations contained herein, and pursuant to Chapter 92A
of the Nevada Revised Statutes (the "NRS"), at the Effective Time (as defined
below) the following will occur:
(a) Terradatum will be merged with and into Sub, with Sub
being the surviving limited liability company (the "Surviving Limited Liability
Company") and the separate existence and organization of Terradatum will cease,
and thereupon Sub will be a wholly-owned subsidiary of HomeSeekers;
(b) Sub, as the Surviving Limited Liability Company, will
succeed, in so far as permitted by law, to all rights, assets, liabilities and
obligations of Terradatum in accordance with the NRS;
(c) The Articles of Organization and Operating Agreement of
Sub will be the Articles of Organization and Operating Agreement of the
Surviving Limited Liability Company until amended as provided by law;
(d) The managers of Sub will be the initial managers of the
Surviving Limited Liability Company at and after the Effective Time.
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ARTICLE II
PURCHASE PRICE/CONVERSION OF SECURITIES
2.1 Conversion of Terradatum Membership Interests in the Merger. At the
Effective Time, by virtue of the Merger and without any action on the part of
Terradatum, HomeSeekers, or the Members:
(a) all membership interests in Terradatum (the "Terradatum
Membership Interests") owned by Terradatum or the Members shall be canceled and
shall cease to exist from and after the Effective Time; and
(b) all such canceled Terradatum Membership Interests shall be
converted into, and be exchanged for, and HomeSeekers shall issue to the
Members, the aggregate total of Six Hundred Forty Thousand (640,000) shares of
validly issued, fully paid and nonasssessable common stock, $.001 par value, of
HomeSeekers (rounded to the nearest whole share) ("HomeSeekers Common Stock")
pursuant to written instructions signed by all of the Members, subject to the
escrow provision of Section 10.4 of this Agreement.
(c) If the Average Closing Sale Price of a share of
HomeSeekers Common Stock for the five (5) consecutive trading days which precede
the third trading day immediately prior to the first anniversary of the
Effective Time (the "First Anniversary Price") is less than Seven Dollars
($7.00) per share, then upon 30 days written notice, HomeSeekers shall pay to
each Member by cashier's check the difference in price between the First
Anniversary Price and Seven Dollars ($7.00) per share with respect to one third
(1/3) of the shares of HomeSeekers Common Stock issued to the Member pursuant to
Section 2.1(a) of this Agreement.
(d) At closing, HomeSeekers shall pay to the Members, by
Cashier's check, the aggregate sum of Two Hundred Thousand Dollars ($200,000)
pursuant to written instructions signed by all of the Members.
2.2 Status of Sub Membership Interests. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
membership interest in Sub, each membership interest in Sub shall continue
unchanged and remain outstanding as a membership interest of the Surviving
Limited Liability Company.
2.3 Additional Consideration. If the Average Closing Sale Price of a
share of HomeSeekers Common Stock for the ten (10) consecutive trading days
which precede the first anniversary of the Effective Time multiplied by Six
Hundred Thousand (600,000) shares does not exceed Ten Million Dollars
($10,000,000), then HomeSeekers shall pay the aggregate sum of One Million Five
Hundred Thousand Dollars ($1,500,000) to such persons or entities as may be
directed in writing by Xxxxxx Xxxxxxxxx, or, if he is deceased or permanently
incapacitated, by Xxxxx Xxxxxx.
ARTICLE III
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CLOSING
3.1 Time and Place. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place at such
time and place as the parties may agree. The date on which the Closing occurs
shall be referred to as the "Closing Date."
3.2 Filing of Plan of Merger. At the Closing, the parties shall cause
the Merger to be consummated by filing duly executed Articles of Merger with the
Secretary of State of the State of Nevada in such form as HomeSeekers determines
is required by and in accordance with the relevant provisions of the NRS (the
date and time of such filing is referred to herein as the "Effective Date" or
"Effective Time").
3.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided under the NRS. Without limiting the generality of
the foregoing, at the Effective Time:
(a) all property, rights, privileges, policies and franchises
of Terradatum and Sub shall vest in Sub and all debts, liabilities and duties of
Terradatum and Sub shall become the debts, liabilities and duties of the
Surviving Limited Liability Company.
(b) the Articles of Organization and Operating Agreement of
Sub, as in effect immediately prior to the Effective Time, shall remain the
Articles of Organization and Operating Agreement thereafter, unless and until
amended in accordance with their terms and as provided by law; and
(c) the managers of Sub at the Effective Time shall be the
managers of the Surviving Limited Liability Company, each to hold such office in
accordance with the Articles of Organization and Operating Agreement of Sub,
until his or her respective successor is duly elected and qualified.
3.4 Tax and Accounting Treatment. The parties hereto acknowledge and
agree that while they desire that the Merger contemplated hereby be treated for
accounting purposes as a tax-free reorganization under Section 708 of the Code,
each person shall be solely responsible for the tax and accounting consequences
of the Merger to such party.
3.5 Procedure at the Closing. At the Closing, the parties agree that
the following shall occur:
(a) Terradatum and the Members shall have satisfied each of
the conditions set forth in Article VIII and shall deliver to HomeSeekers the
documents, certificates, opinions, consents and letters required by Article
VIII.
(b) HomeSeekers shall have satisfied each of the conditions
set forth in Article IX and shall deliver to Terradatum the documents,
certificates, consents and letters required by Article IX.
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(c) HomeSeekers shall direct its transfer agent to issue the
shares of HomeSeekers Common Stock issuable pursuant to Section 2.1. The shares
of HomeSeekers Common Stock issuable pursuant to Section 2.1, are referred to
herein as the "HomeSeekers Shares." HomeSeekers shall cause the aggregate
$200,000 cashier's check or wire transfers to be made as provided for in Section
2.1.
(d) From and after the Effective Time, the books of
Terradatum, shall be closed and no transfer of membership interests in
Terradatum shall thereafter be made.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF HOMESEEKERS AND SUB
As a material inducement to Terradatum and the Members to enter into
this Agreement and to consummate the transactions contemplated hereby,
HomeSeekers and Sub, jointly and severally, make the following representations
and warranties to Terradatum and the Members:
4.1 Organization. HomeSeekers is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nevada. Sub is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of Nevada.
4.2 Corporate Power and Authority. HomeSeekers and Sub have the
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. HomeSeekers and Sub have taken all action necessary to authorize the
execution and delivery of this Agreement, the performance of their obligations
hereunder and the consummation of the transactions contemplated hereby.
4.3 Enforceability. This Agreement has been duly executed and delivered
by HomeSeekers and constitutes a legal, valid and binding obligation of
HomeSeekers, enforceable against HomeSeekers in accordance with its terms,
except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
4.4 No Commissions. HomeSeekers has not incurred any obligation for any
finder's or broker's or agent's fees or commissions or similar compensation in
connection with the transactions contemplated hereby, other than such
compensation as may be due and payable to their officers, employees or
contracted consultants.
4.5 HomeSeekers Common Stock. Upon consummation of the transactions
contemplated hereby and the issuance and delivery of certificates representing
HomeSeekers Shares as provided in this Agreement, HomeSeekers Shares will be
validly issued, fully paid and non-assessable. The issuance of HomeSeekers
Shares will be entitled to the registration rights set forth in Article XI
below.
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4.6 Capitalization. As of the date hereof, the authorized capital stock
of HomeSeekers consists of Fifty Million (50,000,000) shares of HomeSeekers
Common Stock. As of August 31, 1999, 15,205,778 shares of HomeSeekers Common
Stock were validly issued and outstanding.
HomeSeekers is the sole member of XMLS, LLC.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF TERRADATUM AND MEMBERS
As of the date hereof, except as disclosed in a document referring
specifically to the relevant subsections of this Article V which is delivered by
Terradatum to HomeSeekers at or prior to execution of this Agreement (the
"Terradatum Disclosure Schedule"), Terradatum and the Members hereby jointly and
severally represent and warrant to HomeSeekers and Sub as set forth below. The
term "To the Knowledge of Terradatum and the Members" refers to the knowledge
that Terradatum has acquired through its officers and the knowledge that the
individual Members of Terradatum have acquired based on their operation of
Terradatum's Business, assuming that such Members have acquired all of the
knowledge about Terradatum that they should have acquired in the prudent
operation of Terradatum. To ensure the completeness of the representations and
warranties contained herein, the term "Terradatum," as used throughout this
Article V of the Agreement, shall refer both to Terradatum, LLC, a Washington,
limited liability company and to TDT, LLC, a Nevada limited liability company,
and the term "TDT" refers only to TDT, LLC, a Nevada limited liability company.
5.1 Organization. TDT is a limited liability company duly organized,
validly existing and in good standing under the laws of its state of
organization and has all requisite power and authority and all necessary
governmental authorizations to own, lease and operate its properties and to
conduct its business as it is now being conducted. Terradatum has never owned
any Subsidiaries. As used in this Agreement, the term "Subsidiary" means a
"subsidiary" as defined in Rule 1.01 in Regulation S-X promulgated under the
Securities Act of 1933, as amended (the "Securities Act"). TDT is duly qualified
or licensed to do business and is in good standing as a foreign limited
liability company in those states where it is required to do so. The books and
records of Terradatum as made available to HomeSeekers, contain complete and
accurate records of all action taken by Terradatum since its date of
organization. Terradatum has no direct or indirect interest in or loans to any
partnership, corporation, joint venture, business association or other entity
other than as listed in Terradatum Disclosure Schedule. Terradatum has delivered
to HomeSeekers complete and correct copies of the Articles of Organization and
Operating Agreement (or other organizational or charter documents) of Terradatum
in each case as amended to the date hereof.
5.2 Capital Structure. The authorized capital structure of TDT consists
of four membership interests. TDT has provided HomeSeekers and its legal counsel
with a complete and
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accurate list of (a) all issuances of membership interests in TDT, (b) the names
and addresses of all holders of equity in TDT. TDT is not under any obligation
to register under the Securities Act any of its presently outstanding securities
or any securities that may subsequently be issued. There are no agreements or
understandings to which TDT is a party or, to the knowledge of TDT and the
Members, any other agreements or understandings, with respect to the transfer or
voting of equity in TDT.
5.3 No Other Agreements to Sell Assets, Merge, Etc. Except as provided
hereby, Terradatum has no legal obligation, absolute or contingent, to any
person or firm to sell assets other than in the ordinary course of business or
to effect any merger, consolidation or reorganization of Terradatum or to enter
into any agreement with respect thereto.
5.4 Authorization; Execution and Delivery. Terradatum has all requisite
power and authority (a) to execute and deliver this Agreement, the Merger
Agreement and the agreements attached as exhibits hereto to which Terradatum is
a party (the "Terradatum Ancillary Agree ments"), (b) to perform its obligations
under this Agreement, the Merger Agreement and the Terradatum Ancillary
Agreements, and (c) to consummate the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement, the Merger
Agreement and Terradatum Ancillary Agreements by Terradatum and the consummation
by Terradatum of the transactions contemplated hereby and thereby have been duly
approved and authorized by all requisite corporate action of Terradatum. This
Agreement has been duly executed and delivered by Terradatum. Assuming its due
authorization, execution and delivery by HomeSeekers and Sub, to the knowledge
of Terradatum and the Members, this Agreement constitutes the legal, valid and
binding obligation of Terradatum, enforceable in accordance with its terms. The
Members and sole manager of Terradatum have unanimously determined that it is
advisable and in the best interest of Terradatum's Members for Terradatum to
enter into a strategic business combination with HomeSeekers and Sub upon the
terms and subject to the conditions of this Agreement.
5.5 Governmental Approvals and Filings. No approval, authorization,
consent, license, clearance or order of, declaration or notification to, or
filing, registration or compliance with, any governmental or regulatory
authority ("Governmental Entity") is required on the part of Terradatum in order
(a) to permit Terradatum to perform its obligations under this Agreement or (b)
to prevent the termination of any material right, privilege, license or
agreement of Terradatum, or to prevent any Material Adverse Change to
Terradatum's Business, by reason of the transactions contemplated by this
Agreement, except for the filing of the Merger Agreement.
5.6 No Conflict. Except for the receipt of any required approval of the
Members of Terradatum and compliance with the governmental and regulatory
requirements described in Section 5.5 hereof, neither the execution, delivery
and performance of this Agreement by Terradatum nor the consummation by
Terradatum of the transactions contemplated hereby and thereby, will (a)
conflict with, or result in a breach of, any of the terms, conditions or
provisions of Terradatum's Articles of Organization or Operating Agreement, (b)
conflict with, result in a breach or violation of, give rise to a termination
right or a default under, result in the acceleration of performance under
(whether or not after the giving of notice or lapse of time or both), any
mortgage, lien, lease,
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agreement, note, bond, indenture, guarantee or instrument or any license or
franchise granted by or to a third party, in each case, that is material to
Terradatum's Business or that is referenced in Terradatum Disclosure Schedule,
(c) to the knowledge of Terradatum and the Members, conflict with, or result in
a violation of, any statute, regulation, law, ordinance, writ, injunction,
order, judgment or decree to which Terradatum or any of its assets are subject,
(d) to the knowledge of Terradatum and the Members, give rise to a declaration
or imposition of any material lien, charge, security interest or encumbrance of
any nature whatsoever upon any of the assets of Terradatum, (e) to the knowledge
of Terradatum and the Members, adversely affect any franchise, license, permit
or other governmental approval which is material to Terradatum's Business or is
necessary to enable Terradatum to carry on its business as presently conducted,
or (f) require the consent of any third party.
5.7 Financial Statements; Absence of Undisclosed Liabilities.
(a) Terradatum has furnished HomeSeekers with the balance
sheets of Terradatum as of December 31, 1998, and the related statements of
operations, cash flows and changes in members' equity for the period ended
December 31, 1999, together with the notes thereto, and the unaudited balance
sheet and related statements of operations, cash flows and changes in members'
equity for the seven month period ended July 31, 1999 (collectively, the
"Terradatum Financial Statements"). Terradatum Financial Statements, including
the notes thereto, (i) are in accordance with the respective books of
Terradatum; (ii) have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved;
(iii) present fairly the financial position of Terradatum as of the respective
dates thereof and the results of operations and cash flows of Terradatum for the
respective periods indicated therein; and (iv) do not reflect any material items
of nonrecurring income except as stated therein. During the one-year period
ended December 31, 1998, there has been no change in Terradatum's accounting
principles, methods or policies, except as described in the notes to Terradatum
Financial Statements and except that the unaudited interim financial statements
(A) are subject to normal year-end audit adjustments which are not expected to
be material in the aggregate and (B) do not include footnotes.
(b) Terradatum has no liabilities of any nature, whether
accrued, absolute, contingent or otherwise, except for claims not in any way
known to Terradatum, and whether due or to become due, which were not disclosed
or provided for in Terradatum Financial Statements or the notes thereto other
than obligations not required to be disclosed or provided for under generally
accepted accounting principles and liabilities incurred since December 31, 1998,
which are not individually or in the aggregate, material to Terradatum's
Business. To the knowledge of Terradatum, there are no loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5) which
were not adequately provided for in Terradatum Financial Statements or reflected
in the notes thereto.
(c) To the Knowledge of Terradatum and the Members, the
accounts receivable of Terradatum shown on the Terradatum Financial Statements
at December 31, 1998 are collectible in the ordinary and usual course of
business, and are not subject to any defense or right of set-off that may be
asserted or any claim of set-off that may be made, other than as reflected in
the allowance
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for doubtful accounts shown on the balance sheet contained in the Terradatum
Financial Statements at December 31, 1998. The reserve for doubtful accounts is
adequate, and the values at which accounts receivable are carried on such
December 31, 1998 balance sheet reflect the policies of Terradatum consistent
with Terradatum's past practice and are in accordance with generally accepted
accounting principles applied on a consistent basis.
5.8 Absence of Changes. Since July 31, 1999 through the date of this
Agreement, (a) there has been no Material Adverse Change in Terradatum's
Business; (b) there has been no damage, destruction or loss (whether or not
covered by insurance) materially and adversely affecting any assets material to
Terradatum's Business; (c) there has been no change by Terradatum in accounting
principles or methods except insofar as may be required by a change in generally
accepted accounting principles; (d) there has been no revaluation by Terradatum
of any of their assets, including, without limitation, writing down the value of
inventory or writing off notes or accounts receivable; (e) Terradatum has
conducted its business only in the ordinary course consistent with past
practice; and (f) no event described in Section 6.2 or Section 6.3 hereof has
occurred.
5.9 Contracts and Commitments.
(a) Terradatum is not a party or subject to:
(i) Any union contract or collective bargaining
agreement or any employment contract or arrangement, written or oral, providing
for future compensation with any officer, consultant, director or employee which
is not terminable by it on thirty (30) days' notice or less without penalty or
obligation to make payments related to such termination, other than (A) (in the
case of employees other than executive officers) such severance agreements as
are not different from standard arrangements offered to employees generally in
the ordinary course of business consistent with Terradatum's past practices, a
description of which is set forth in the Terradatum Disclosure Schedule and (B)
such agreements as may be imposed or implied by law;
(ii) Any plans, contracts or arrangements, written or
oral, which collectively require aggregate payments by Terradatum in excess of
$10,000 for bonuses, pensions, deferred compensation, severance pay or benefits,
retirement payments, profit-sharing, or the like;
(iii) Any joint marketing, joint development or joint
venture contract or arrangement or any other agreement which has involved or is
expected to involve a sharing of profits with other persons;
(iv) Any existing OEM agreement, distribution
agreement, volume purchase agreement, or other similar agreement in which the
annual amount involved in 1998 exceeded, or is expected to exceed in 1999 or any
subsequent year, $10,000 or pursuant to which Terradatum has granted or received
most favored customer provisions or exclusive marketing rights related to any
product, group of products or territory;
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(v) Any lease for real or personal property pursuant
to which the amount of payments which Terradatum is required to make on an
annual basis exceeds $10,000;
(vi) Any agreement, contract, mortgage, indenture,
lease, instrument, license, franchise, permit, concession, arrangement,
commitment or authorization which may be, by its terms, terminated or breached
by reason of the execution of this Agreement, the Merger Agreement or any
Terradatum Ancillary Agreement, the closing of the Merger, or the consummation
of the transactions contemplated hereby or thereby;
(vii) Except for trade indebtedness incurred in the
ordinary course of business, any instrument evidencing or related in any way to
indebtedness in excess of $10,000 incurred in the acquisition of companies or
other entities or indebtedness in excess of $10,000 for borrowed money by way of
direct loan, sale of debt securities, purchase money obligation, conditional
sale, guarantee, indemnification or otherwise;
(viii) Any license agreement, either as licensor or
licensee;
(ix) Any contract containing covenants purporting to
limit Terradatum's freedom to compete in any line of business or in any
geographic area or with any third party;
(x) Any agreement, contract or commitment relating to
capital expenditures and involving future obligations in excess of $10,000; or
(xi) Any other agreement, contract or commitment
which is material to Terradatum's Business.
(b) To the Knowledge of Terradatum and the Members, each
agreement, contract, mortgage, indenture, plan, lease, instrument, permit,
concession, franchise, arrangement, license and commitment listed in the
Terradatum Disclosure Schedule is valid and binding on Terradatum, and is in
full force and effect, and neither Terradatum, nor to the knowledge of
Terradatum and the Members, any other party thereto, has breached any material
provision of, or is in default under the terms of, any such agreement, contract,
mortgage, indenture, plan, lease, instrument, permit, concession, franchise,
arrangement, license or commitment.
(c) None of the six largest customers of Terradatum during the
twelve month period ended July 31, 1999 (determined on the basis of both
revenues and bookings during such period) has reduced or terminated, or has
notified Terradatum in writing that it intends to materially reduce or
terminate, the amount of its business with Terradatum.
(d) To the knowledge of Terradatum and the Members, there is
no agreement, judgment, injunction, order or decree binding upon Terradatum
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any material current business practice of Terradatum, any
acquisition of material property by Terradatum or the conduct of business by
Terradatum as currently conducted or as proposed to be conducted by Terradatum.
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5.10 Legal Proceedings. Terradatum is not in violation of, and has not
received any notice of any violation of (a) any applicable statute, law,
regulation, ordinance, writ, injunction, order, judgment or decree, the effect
of which violation could, individually or in the aggregate, have an adverse
material effect on Terradatum's Business, or (b) any provision of the Articles
of Organization or Operating Agreement of Terradatum. To the knowledge of
Terradatum and the Members, there is no order, writ, injunction, judgment or
decree outstanding, and no legal, administrative, arbitration or other
proceeding, action, suit or governmental investigation or inquiry against or
relating to Terradatum or its assets or business ("Terradatum Legal
Proceedings") pending or, to the knowledge of Terradatum and the Members,
threatened and, to the knowledge of Terradatum and the Members, there are no
claims (including unasserted claims as to which there has been an action taken
or notice given by a potential claimant demonstrating an awareness of such claim
or it is considered probable by Terradatum or the Members that a claim will be
asserted and there is a reasonable possibility that the outcome will be
unfavorable, all as such terms are used in Statement of Financial Accounting
Standards No. 5), against or relating to Terradatum or its assets or business,
which pending or threatened Terradatum Legal Proceedings or claims would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on Terradatum's Business. To the knowledge of Terradatum and the
Members, there is no Terradatum Legal Pro ceeding which in any manner challenges
or seeks to prevent, enjoin, alter or delay any of the transactions contemplated
hereby. To the knowledge of Terradatum and the Members, there are no existing
liabilities that require Terradatum to indemnify its managers for acts or
omissions by such persons or existing agreements to provide indemnification for
such liabilities. The Terradatum Disclosure Schedule sets forth with respect to
each Terradatum Legal Proceeding, if any, to the extent that the aggregate
remedies or damages claimed for each such complaint are unspecified, involve
specific performance or injunctive relief or exceed $10,000, the forum, the
parties thereto, a brief description of the subject matter thereof and the
amount of damages claimed.
5.11 ERISA Matters.
(a) The Terradatum Disclosure Schedule lists, with respect to
Terradatum and any trade or business (whether or not incorporated) which is
treated as a single employer with Terradatum (an "ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Code, (i) all material
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), (ii) each loan to a
non-officer employee in excess of $5,000, loans to officers, directors, or
managers and any stock option, stock purchase, phantom stock, stock appreciation
right, supplemental retirement, severance, sabbatical, medical, dental, vision
care, disability, employee relocation, cafeteria benefit (Code Section 125) or
dependent care (Code Section 129), life insurance or accident insurance plans,
programs or arrangements, (iii) all bonus, pension, profit sharing, savings,
deferred compensation or incentive plans, programs or arrangements, (iv) other
fringe or employee benefit plans, programs or arrangements that apply to senior
management of Terradatum and that do not generally apply to all employees, and
(v) any current or former employment or executive compensation or severance
agreements, written or otherwise, as to which unsatisfied obligations of
Terradatum of greater than $5,000 remain for the benefit of, or relating to, any
present or former employee, consultant or director of Terradatum (together, the
"Terradatum Employee Plans"). Terradatum and the
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Members represent and warrant that any and all obligations to provide benefits
to Terradatum's employees pursuant to any "tracking" or "phantom" stock plan
shall be satisfied entirely by the Members out of the consideration that they
receive pursuant to this Agreement.
(b) Terradatum has furnished to HomeSeekers a copy of each of
the Terradatum Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and, to the extent still in its
possession, any material employee communications relating thereto) and has, with
respect to each Terradatum Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500 reports filed for the last three
plan years. Any Terradatum Employee Plan intended to be qualified under Section
401(a) of the Code has either obtained from the Internal Revenue Service a
favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has applied to the Internal Revenue Service for such
a determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. Terradatum has also furnished
HomeSeekers with the most recent Internal Revenue Service determination letter
issued with respect to each such Terradatum Employee Plan, and nothing has
occurred since the issuance of each such letter which could reasonably be
expected to cause the loss of the tax-qualified status of any Terradatum
Employee Plan subject to Code Section 401(a).
(c) (i) None of the Terradatum Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in Section
406 of ERISA and Section 4975 of the Code, with respect to any Terradatum
Employee Plan, which could reasonably be expected to have, in the aggregate, a
Material Adverse Effect; (iii) each Terradatum Employee Plan has been
administered in accordance with its terms and in compliance with the
requirements prescribed by any and all statutes, rules and regulations
(including ERISA and the Code), except as would not have, in the aggregate, a
Material Adverse Effect, and Terradatum and each ERISA Affiliate have performed
all obligations required to be performed by them under, are not in any material
respect in default, under or violation of, and have no knowledge of any material
default or violation by any other party to, any of the Terradatum Employee
Plans; (iv) neither Terradatum nor any ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA with respect to any of the Terradatum Employee Plans; (v) all material
contributions required to be made by Terradatum or any ERISA Affiliate to any
Terradatum Employee Plan have been made on or before their due dates and a
reasonable amount has been accrued for contributions to each Terradatum Employee
Plan for the current plan years; (vi) with respect to each Terradatum Employee
Plan, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 or ERISA has occurred; and (vii) no
Terradatum Employee Plan is covered by, and neither Terradatum nor any ERISA
Affiliate has incurred or expects to incur any liability under Title IV of ERISA
or Section 412 of the Code. With respect to each Terradatum Employee Plan
subject to ERISA as
12
either an employee pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
Terradatum has prepared in good faith and timely filed all requisite
governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all notices and reports to
employees required to be filed, distributed or posted with respect to each such
Terradatum Employee Plan. No suit, administrative proceeding, action or other
litigation has been brought, or to the knowledge of Terradatum and the Members
is threatened, against or with respect to any such Terradatum Employee Plan,
including any audit or inquiry by the IRS or United States Department of Labor.
Neither Terradatum nor any ERISA Affiliate is a party to, or has made any
contribution to or otherwise incurred any obligation under, any "multi employer
plan" as defined in Section 3(37) of ERISA.
(d) Every employee or officer of Terradatum that is or has
been eligible to receive health or other welfare benefits from Terradatum
remains employed by Terradatum. No Terradatum employee has ever requested time
off pursuant to the Family Leave Act of 1993. To the knowledge of Terradatum,
Terradatum has complied with (i) the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985
("COBRA") and the proposed regulations thereunder and (ii) the applicable
requirements of the Family Leave Act of 1993 and the regulations thereunder,
except to the extent that such failure to comply would not, in the aggregate,
have a Material Adverse Effect.
(e) The consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or other service
provider of Terradatum or any ERISA Affiliate to severance benefits or any other
payment (including, without limitation, unemployment compensation, golden
parachute or bonus), except as expressly provided in this Agreement, or (ii)
accelerate the time of payment or vesting of any such benefits, or increase the
amount of compensation due any such employee or service provider.
(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Terradatum or any ERISA Affiliate
relating to, or change in participation or coverage under, any Terradatum
Employee Plan which would materially increase the expense of maintaining such
Plan above the level of expense incurred with respect to that Plan for the most
recent fiscal year included in Terradatum's financial statements.
5.12 Taxes.
(a) For purposes of this 5.12 and other provisions of this
Agreement relating to Taxes, the following definitions shall apply:
(i) The term "Taxes" shall mean all taxes, however
denominated, including any interest, penalties or other additions to tax that
may become payable in respect thereof, (A) imposed by any federal, territorial,
state, local or foreign government or any agency or political subdivision of any
such government, which taxes shall include, without limiting the generality of
the foregoing, all income or profits taxes (including but not limited to,
federal income taxes and state
13
income taxes), payroll and employee withholding taxes, unemployment insurance,
social security taxes, sales and use taxes, ad valorem taxes, excise taxes,
franchise taxes, gross receipts taxes, business license taxes, occupation taxes,
real and personal property taxes, stamp taxes, environmental taxes, transfer
taxes, workers' compensation, Pension Benefit Guaranty Corporation premiums and
other governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which are required to be paid, withheld or
collected, (B) any liability for the payment of amounts referred to in (A) as a
result of being a member of any affiliated, consolidated, combined or unitary
group, or (c) any liability for amounts referred to in (A) or (B) as a result of
any obligation to indemnify another person.
(ii) The term "Returns" shall mean all reports,
estimates, declarations of estimated tax, information statements and returns
relating to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
(iii) The term "Code" shall mean the Internal Revenue
Code of 1986, as amended.
(b) All Returns required to be filed by or on behalf of
Terradatum have been duly filed on a timely basis and such Returns are true,
complete and correct. All Taxes shown to be payable on such Returns or on
subsequent assessments with respect thereto, and all payments of estimated Taxes
required to be made by or on behalf of Terradatum under Section 6655 of the Code
or comparable provisions of state, local or foreign law, have been paid in full
on a timely basis or have been accrued on the Financial Statements, and no other
Taxes are payable by Terradatum with respect to items or periods covered by such
Returns (whether or not shown on or reportable on such Returns) or with respect
to any period prior to the date of this Agreement. Terradatum has withheld and
paid over all Taxes required to have been withheld and paid over, and complied
with all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid or owing to any employee, creditor, independent contractor, or other third
party. There are no liens on any of the assets of Terradatum with respect to
Taxes, other than liens for Taxes not yet due and payable or for Taxes that
Terradatum is contesting in good faith through appropriate proceedings and for
which appropriate reserves have been established. Terradatum has not at any time
been a member of any partnership or joint venture for a period for which the
statue of limitations for any Tax potentially applicable as a result of such
membership has not expired. The amount of Terradatum's liability for unpaid
Taxes (whether actual or contingent) for all periods through the date of the
Financial Statements does not, in the aggregate, exceed the amount of the
current liability accruals for Taxes reflected on the Financial Statements, and
the Financial Statements properly accrue in accordance with GAAP all liabilities
for Taxes payable after the date of the Financial Statements attributable to
transactions and events occurring prior to such date. No liability for Taxes of
Terradatum has been incurred (or prior to Closing will be incurred) since the
date of the Financial Statements other than in the ordinary course of business.
14
(c) Terradatum has made available to HomeSeekers true and
complete copies of (i) relevant portions of income tax audit reports, statements
of deficiencies, closing or other agreements received by or on behalf of
Terradatum relating to Taxes, and (ii) all federal and state income or franchise
tax Returns and state sales and use tax Returns for or including Terradatum for
all periods ending on and after July 31, 1999. The Terradatum Disclosure
Schedule sets forth a list of all of the Returns referred to in clause (ii).
Terradatum does not do business in or derives income from any state other than
states for which Returns have been duly filed and made available to HomeSeekers.
(d) The Returns of or including Terradatum have never been
audited by a government or taxing authority, nor is any such audit in process,
threatened or, to Terradatum's knowledge, pending (either in writing or
verbally, formally or informally). No deficiencies exist or have been asserted
(either in writing or verbally, formally or informally) or are expected to be
asserted with respect to Taxes of Terradatum, and Terradatum has not received
notice (either in writing or verbally, formally or informally) and does not
expect to receive notice that it has not filed a Return or paid Taxes required
to be filed or paid. Terradatum is not a party to any action or proceeding for
assessment or collection of Taxes, nor has such event been asserted or
threatened (either in writing or verbally, formally or informally) against
Terradatum or any of its assets. No waiver or extension of any statute of
limitations is in effect with respect to Taxes or Returns of Terradatum.
Terradatum has disclosed on its federal and state income and franchise tax
returns all positions taken therein that could give rise to a substantial
understatement penalty within the meaning of Code Section 6662 or comparable
provisions of applicable state tax laws.
(e) Terradatum is not (and has ever been) a party to any tax
sharing agreement.
(f) To the Knowledge of Terradatum and its Members, Terradatum
is not, nor has it been, a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code, and HomeSeekers is not
required to withhold tax by reason of Section 1445 of the Code. Terradatum is
not a "consenting corporation" under Section 341(f) of the Code. Terradatum has
not entered into any compensatory agreements with respect to the performance of
services which payment thereunder would result in a nondeductible expense to
Terradatum pursuant to Section 280G of the Code or an excise tax to the
recipient of such payment pursuant to Section 4999 of the Code. Terradatum has
not agreed to, nor is it required to make, any adjustment under Code Section
481(a) by reason of, a change in accounting method, and Terradatum will not
otherwise have any income reportable for a period ending after the Closing Date
attributable to a transaction or other event (e.g., an installment sale)
occurring prior to the Closing Date. Terradatum is not, nor has it been, a
"reporting corporation" subject to the information reporting and record
maintenance requirements of Section 6038A and the regulations thereunder.
Terradatum is in compliance with the terms and conditions of any applicable tax
exemptions, agreements or orders of any foreign government to which it may be
subject or which it may have claimed, and the transactions contemplated by this
Agreement will not have any adverse effect on such compliance.
15
(g) The Terradatum Disclosure Schedule contains accurate and
complete information regarding the net operating losses of Terradatum for
federal and applicable state tax purposes. Terradatum has no net operating
losses and credit carryovers or other tax attributes that are currently subject
to limitation under Sections 382, 383, or 384 of the Code (or comparable
provisions of state tax law).
5.13 Intellectual Property.
(a) As used herein, the term "Intellectual Property Rights"
means all intellectual property rights, including, without limitation, domestic
and foreign patents, patent applications, patent rights, trademarks, trademark
registrations, trademark applications, trade names, service marks, service xxxx
applications, copyrights, copyright applications, software, licenses, know-how,
trade secrets, trade rights, proprietary processes and formulae, inventions,
development tools, designs, plans, specifications, technical information and
other proprietary rights, whether or not registered, and all documentation and
media relating to the above. The term "Terradatum Intellectual Property Right"
shall mean Intellectual Property Rights listed on the Terradatum Disclosure
Schedule owned by or granted exclusively or nonexclusively to Terradatum. The
Terradatum Disclosure Schedule contains a complete and accurate list of all
applications, filings and other formal actions made or taken (including any
results thereof) pursuant to federal, state, local and foreign laws by
Terradatum to perfect or protect its interest in Terradatum Intellectual
Property Rights, including, without limitation, all patents, patent
applications, trademarks, trademark applications, service marks and copyright
registrations. Terradatum's current products and products under development are
listed on the Terradatum Disclosure Schedule (collectively, "Terradatum's
Products").
(b) Terradatum owns or has the exclusive right to use, make,
sell, license, or sublicense and bring actions for infringement of all
Terradatum Products and all Terradatum Intellectual Property Rights developed by
or for Terradatum or that are used or currently proposed to be used in the
business of Terradatum as currently conducted or proposed to be conducted. All
of the Terradatum Products and Terradatum Intellectual Property Rights are owned
by Terradatum free and clear of any rights or claims of any former employees,
consultants, officers, directors, or managers of Terradatum and former employers
of all current and former employees, consultants, officers, directors, or
managers of Terradatum. All taxes and fees, including, without limitation,
patent and trademark registration and prosecution fees and all professional fees
in connection therewith pertaining to the Terradatum Intellectual Property
Rights, due and payable on or before the date hereof, have been paid by
Terradatum.
(c) Except as provided for on the Terradatum Disclosure
Schedule, no person has a right to receive a royalty or other payment in respect
of any Terradatum Product or Terradatum Intellectual Property Rights whether or
not pursuant to any contractual arrangements entered into by Terradatum.
Terradatum has no licenses granted, sold or otherwise transferred by or to it
nor other agreements to which it is a party, relating in whole or in part to any
Terradatum Product or Terradatum Intellectual Property Rights.
16
(d) The execution, delivery and performance of this Agreement
and the Terradatum Ancillary Agreements, the consummation of the Merger and the
consummation of the other transactions contemplated hereby and thereby
(including without limitation the continued conduct by HomeSeekers after the
Merger of Terradatum's Business as presently conducted and the incorporation of
any Terradatum Product or Terradatum Intellectual Property Right in any product
of HomeSeekers or the Surviving Limited Liability Company) will not breach,
violate or conflict with any instrument or agreement governing any such
Terradatum Product or Terradatum Intellectual Property Right necessary or
required for, or used in, the conduct of the business of Terradatum as presently
conducted or as proposed to be conducted and will not cause the forfeiture or
termination or give rise to a right of forfeiture or termination of any such
Terradatum Product or Terradatum Intellectual Property Right or impair the right
of HomeSeekers or the Surviving Limited Liability Company or any of its
subsidiaries to use, sell, license or dispose of, either as part or all of an
Terradatum Product or subsequent to the Closing (as defined in Article X) as
part or all of a product of HomeSeekers or the Surviving Limited Liability
Company, or to bring any action which might have otherwise been available to
Terradatum for the infringement of, any such Terradatum Product or Terradatum
Intellectual Property Right or portion thereof. The foregoing representation and
warranty shall not apply in and to the extent that any such breach, default,
forfeiture, termination, right to use, sell, license or dispose of, or right to
bring any action for infringement, is materially caused by or attributable to
any condition, agreement, limitation, law, regulation order, ruling, or other
restriction unknown to Terradatum's members as of the Closing which is
applicable to or binding on HomeSeekers, or on HomeSeekers operation of
Terradatum's business or its use of Terradatum's products, property, or services
after the Closing.
(e) Terradatum's Business and / or the development,
manufacture, marketing, license, sale or use of any Terradatum Product or
Terradatum Intellectual Property Right does not and will not violate any license
or agreement to which Terradatum is a party or infringe any Intellectual
Property Right of any other party; there is no pending or, to the knowledge of
Terradatum and the Members, threatened, claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any
Intellectual Property Right necessary or required for, or used in, the conduct
of the business of Terradatum as presently conducted nor, to the knowledge of
Terradatum and the Members, is there any basis for any such claim, nor has
Terradatum received any notice asserting that any such Intellectual Property
Right or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other party, nor, to the knowledge of
Terradatum and the Members, is there any basis for any such assertion. To
Terradatum's knowledge, there is no infringement on the part of any third party
of Terradatum's Intellectual Property Rights.
(f) Terradatum has taken reasonable and practicable steps (as
set forth in the Terradatum Disclosure Statement, including entering into
confidentiality and non-disclosure agreements with all officers and employees of
and consultants to Terradatum with access to or knowledge of Terradatum's
Intellectual Property Rights) to maintain the secrecy and confidentiality of,
and its proprietary rights in, all Intellectual Property Rights necessary or
required for, or used in, the conduct of Terradatum's Business. All members,
managers, employees, consultants, officers, directors and shareholders of
Terradatum that have had access to any material portion of the
17
Terradatum Intellectual Property Rights are parties to the written
confidentiality agreements included in the Terradatum Disclosure Schedule. To
Terradatum's knowledge, none of Terradatum's employees, consultants, officers or
directors is obligated under any contract (including licenses, covenants or
commitments of any nature) or other agreement, or subject to any judgment,
decree or order of any court or administrative agency, that would conflict with
their obligation to use their best efforts to promote the interests of
Terradatum in the Terradatum Business or that would conflict with the Terradatum
Business. It is currently not necessary nor will it be necessary for Terradatum
to utilize in the Terradatum Business nor will Terradatum utilize in the
Terradatum Business any inventions of any of such persons or entities (or people
it currently intends to hire) made or owned prior to their employment by or
affiliation with Terradatum, nor is it or will it be necessary to utilize any
other assets or rights of any such persons or entities (or people it currently
intends to hire) made or owned prior to their employment with or engagement by
Terradatum, in violation of any registered patents, trade names, trademarks or
copyrights or any other limitations or restrictions to which any such person or
entity is a party or to which any of such assets or rights may be subject,
except to the extent that such utilization would not have a Material Adverse
Effect on the Terradatum Business. To the knowledge of Terradatum and the
Members, none of Terradatum's members, managers, employees, consultants,
officers, directors or shareholders that has had knowledge or access to
information relating to Terradatum's Business has taken, removed or made use of
any proprietary documentation, manuals, products, materials, or any other
tangible item from his previous employer relating to the business as conducted
of such previous employer which has resulted in Terradatum's access to or use of
such proprietary items in Terradatum's Business, and Terradatum will not gain
access to or make use of any such proprietary items in Terradatum's Business,
except to the extent that any such activities would not have a Material Adverse
Effect on Terradatum's Business.
(g) The Terradatum Disclosure Schedule also sets forth a
complete list of all licenses, sublicenses and other agreements as to which
Terradatum is a party and pursuant to which Terradatum or any other person is
authorized to use, license, sublicense, sell or distribute any Intellectual
Property Right and includes the identity of all parties thereto, a description
of the nature and subject matter thereof, the applicable royalty and the term
thereof. Terradatum is not in violation of any license, sublicense or agreement
described on such list except such violations as do not materially impair
Terradatum's rights under such license, sublicense or agreement. The Terradatum
Disclosure Schedule separately identifies each exclusive arrangement between
Terradatum and any third party to use, license, sublicense, sell or distribute
any Terradatum Intellectual Property Right or any Terradatum Product.
5.14 Environmental Matters.
(a) To the Knowledge of Terradatum, the operations of
Terradatum comply in all material respects with all federal, state and local
environmental, health and safety laws, statutes and regulations.
18
(b) Terradatum has not received notice that the operations of
Terradatum are not the subject of any judicial or administrative proceeding
alleging the violation of any federal, state or local environment, health or
safety law, statute or regulation.
(c) Terradatum has not received notice that the operations of
Terradatum are not the subject of any federal or state investigation pursuant to
which Terradatum has been ordered to respond to a release of any hazardous or
toxic waste, substance or constituent or other substance, into the environment
in violation of law.
(d) Terradatum has not filed any notice under federal or state
law indicating past or present treatment, storage or disposal requiring a Part B
permit or designation of "interim status" as defined under 40 C.F.R. Parts
260-270 or any state equivalent of a hazardous or toxic waste as defined therein
or reporting a spill or release of a hazardous or toxic waste, substance or
constituent or other substance, into the environment except in accordance with
applicable law.
(e) To the knowledge of Terradatum and the Members, Terradatum
has not released, as defined in the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. ss.9601 et seq.), any hazardous
substance as defined therein into the environment.
(f) To the knowledge of Terradatum and the Members, none of
the operations of Terradatum involve the generation, transportation, treatment
or disposal as defined under 40 C.F.R. Parts 260-270 or any state equivalent of
hazardous waste as defined therein requiring a Part B permit or designation of
"interim status." To the knowledge of Terradatum and the Members, Terradatum's
Business does not involve the transportation, transfer, recycling, storage, use,
treatment, manufacture, investigation or removal of any hazardous or toxic
waste, substance or constituent or other substance.
(g) To the knowledge of Terradatum and the Members, no
underground storage tanks or surface impoundments are on the premises of
Terradatum.
(h) No lien in favor of any governmental authority for (i) any
liability under federal or state environmental laws or regulations, or (ii)
damages arising from or costs incurred by such governmental authority in
response to a release of a hazardous or toxic waste, substance or constituent or
other substance, into the environment has been filed or attached to the premises
currently owned by Terradatum.
(i) This section has been intentionally left blank.
(j) To the knowledge of Terradatum and the Members, Terradatum
has not exposed any persons in a material manner to, nor received notice of any
claim of injury due to exposure of any person to, hazardous materials
manufactured, stored, used, distributed, disposed of, released or controlled by
Terradatum.
19
(k) No property of Terradatum has been listed as a "border
zone" property pursuant to the Health & Safety Code.
(l) To the knowledge of Terradatum and the Members, no
hazardous materials are present on any property which has been owned, leased or
occupied by Terradatum, for the conduct of its business in violation of any
federal, state or local law and which could result in a material financial
liability to Terradatum.
(m) No claim, complaint, or administrative proceeding has been
brought or is currently pending against Terradatum relating to any liability of
Terradatum existing or threatened with respect to hazardous or toxic waste,
substances or constituents or other substances or as to the investigation or
remediation of hazardous or toxic waste, substances or constituents or other
substances.
As used herein "federal, state and local environmental, health and
safety laws, statutes or regulations" means any and all laws, rules,
regulations, orders, treaties, statutes and codes promulgated by any local,
state, federal or international governmental authority or agency which has
jurisdiction over any portion of the current operations of Terradatum, which
prohibits, regulates or controls any hazardous material or the transportation,
storage, transfer, recycling, use, treatment, manufacture, investigation,
removal, remediation, release, exposure of others to, sale or distribution of
hazardous materials including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. ss.9601 et
seq.), the Hazardous Material Transportation Act (49 U.S.C. ss.1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. ss.6901 et seq.), the
Federal Water Pollution Control Act (33 U.S.C. ss.1251 et seq.), the Clean Air
Act (42 U.S.C. ss.7401 et seq.), the Toxic Substances Control Act, as amended
(15 U.S.C. ss.2601 et seq.), and the Occupational Safety and Health Act (29
U.S.C. ss.651 et seq.), as these laws have been amended or supplemented to date
and any analogous state or local statutes and the regulations promulgated to
date pursuant thereto.
As used herein, "hazardous or toxic waste, substance or constituent or
other substance" means those substances which are regulated by or form the basis
of liability under any federal, state and local environmental, health and safety
laws, statutes or regulations because they are radioactive, toxic, hazardous or
otherwise a danger to health, reproduction or the environment, including,
without limitation: (a) asbestos, (b) oil and petroleum products, (c)
explosives, (d) radioactive substances, pollutants or wastes, (e) urea
formaldehyde-containing building materials, (f) polychlorinated biphenyls, (g)
radon gas, and (h) ultra-hazardous or toxic substances, pollutants or wastes.
5.15 Certain Agreements. Neither the execution and delivery of this
Agreement, the Merger Agreement and the Terradatum Ancillary Agreements, nor the
consummation of the transactions contemplated hereby or thereby will (a) result
in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of Terradatum, under any Plan or otherwise, (b) increase any
benefits otherwise payable under any Plan, or (c) result in the acceleration of
the time of payment or vesting of any such benefits.
20
5.16 Interests of Officers, Directors, and Managers. To the knowledge
of Terradatum and the Members, no manager, member, or officer of Terradatum or
any "affiliate" or "associate" (as those terms are defined in Rule 405
promulgated under the Securities Act) of any such person has had, either
directly or indirectly, a material interest in: (a) any person or entity which
purchases from or sells, licenses or furnishes to Terradatum any goods,
property, technology or intellectual or other property rights or services; (b)
any contract or agreement to which Terradatum is a party or by which it may be
bound or affected; or (c) any property, real or personal, tangible or
intangible, used in or pertaining to Terradatum's Business, including any
interest in the Terradatum Intellectual Property Rights.
5.17 Restrictions on Business Activities. To the knowledge of
Terradatum and the Members, there is no material agreement, judgment,
injunction, order or decree binding upon Terradatum which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of Terradatum, any acquisition of property by Terradatum,
or the conduct of business by Terradatum as currently conducted or as currently
proposed to be conducted by Terradatum.
5.18 Title to Properties; Absence of Liens and Encumbrances; Condition
of Equipment.
(a) The Terradatum Disclosure Schedule lists all facilities
occupied by Terradatum since Terradatum's incorporation, and indicates the
nature of Terradatum's interest in such facilities. To the Knowledge of
Terradatum and the Members, Terradatum has good and valid title to, or, in the
case of leased properties and assets, valid leasehold interests in, all of their
tangible properties and assets, real, personal and mixed, used in their
business, free and clear of any liens, charges, pledges, security interests or
other encumbrances, except as reflected in the Terradatum Financial Statements
or except for such imperfections of title and encumbrances, if any, which are
not substantial in character, amount or extent, and which do not materially
detract from the value, or interfere with the present use, of the property
subject thereto or affected thereby.
(b) To the Knowledge of Terradatum and the Members, the
equipment owned or leased by Terradatum is, taken as a whole, (i) adequate for
the conduct of the business of Terradatum consistent with its past practice,
(ii) suitable for the uses to which it is currently employed, (iii) in good
operating condition, (iv) regularly and properly maintained, (v) not obsolete,
dangerous or in need of renewal or replacement, except for renewal or
replacement in the ordinary course of business, and (vi) free from any defects,
except, with respect to clauses (ii) through (vi) above, as would not have been
a Material Adverse Effect on Terradatum's Business.
5.19 Regulatory Matters; Governmental Licenses; Compliance with Laws.
(a) To the knowledge of Terradatum, Terradatum has obtained
all consents, approvals, registrations, certifications, authorizations, permits
and licenses of, and has made all filings with, or notifications to, all
Governmental Entities pursuant to applicable requirements of all federal, state
or local and, to Terradatum's knowledge, foreign, laws, ordinances, governmental
rules
21
or regulations applicable to Terradatum and its business, including but not
limited to, all such laws, ordinances, governmental rules or regulations
relating to registration of Terradatum's products and certification of its
facilities. Terradatum is in compliance with all federal, state or local and, to
Terradatum's knowledge, foreign, laws, ordinances, governmental rules or
regulations applicable to its business and has no reason to believe that any of
its consents, approvals, authorizations, registrations, certifications, permits,
filings or notifications that it has received or made to operate its business
are invalid or have been or are being suspended, canceled, revoked or
questioned. There is no investigation or inquiry to which Terradatum is a party
or, to Terradatum's knowledge, pending or threatened relating to the operation
of Terradatum's business and its compliance with applicable federal, state,
local or foreign laws, ordinances, governmental rules or regulations.
(b) Terradatum is not in default with respect to any order of
any court, governmental authority or arbitration board or tribunal to which
Terradatum is a party or is subject.
5.20 Labor Matters.
(a) To the Knowledge of Terradatum and the Members, Terradatum
is in compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment and wages and hours and occupational safety and health
and employment practices, and are not engaged in any unfair labor practice. To
the knowledge of Terradatum and the Members, Terradatum has complied in all
material aspects with all applicable provisions of the Consolidated Omnibus
Budget Reconciliation Act of 1985 ("COBRA") and has no material obligations with
respect to any former employees or qualifying beneficiaries thereunder.
Terradatum has not received any notice from any Governmental Entity, and there
has not been asserted before any Governmental Entity, any claim, action or
proceeding to which Terradatum is a party or involving Terradatum, and there is
neither pending nor, to Terradatum's knowledge, threatened any investigation or
hearing concerning Terradatum arising out of or based upon any such laws,
regulations or practices. Except as is not material to Terradatum's Business,
Terradatum has not given to or received from, or anticipates giving to or
receiving from, any employee of Terradatum notice of termination of employment.
The Terradatum Disclosure Schedule sets forth the terms pursuant to which all
amounts may be payable (whether currently or in the future) to current or former
officers, directors, or employees of Terradatum as a result of or in connection
with the Merger.
(b) Terradatum is not a party to any labor agreement with
respect to its employees with any labor organization, union, group or
association and there are no employee unions (or any other similar labor or
employee organizations) under local statutes, custom or practice. Terradatum has
not experienced any attempt by organized labor or its representatives to make
Terradatum conform to demands of organized labor relating to its employees or to
enter into a binding agreement with organized labor that would cover the
employees of Terradatum. To Terradatum's knowledge, there is no labor strike or
labor disturbance pending or threatened against Terradatum nor is any grievance
currently being asserted.
22
5.21 Questionable Payments. Neither Terradatum nor to its knowledge any
director, officer, agent or other employee of Terradatum, has: (a) made any
payments or provided services or other favors in the United States of America or
in any foreign country in order to obtain preferential treatment or
consideration by any Governmental Entity with respect to any aspect of the
business of Terradatum; or (b) made any political contributions which would be
unlawful under the laws of the United States or the foreign country in which
such payments were made. Neither Terradatum, nor to its knowledge any director,
officer, agent or other employee of Terradatum, has been the subject of any
inquiry or investigation by any Governmental Entity in connection with payments
or benefits or other favors to or for the benefit of any governmental or armed
services official, agent, representative or employee with respect to any aspect
of the business of Terradatum or with respect to any political contribution.
5.22 Insurance. The Terradatum Disclosure Schedule contains a complete
and accurate list of all policies or binders of fire, liability, title, worker's
compensation, product liability and other forms of insurance maintained by
Terradatum. Terradatum is not in default under any of such policies or binders,
and Terradatum has not failed to give any notice or to present any claim under
any such policy or binder in a due and timely fashion. There are no facts known
to Terradatum upon which an insurer might be justified in reducing coverage or
increasing premiums on existing policies or binders. There are no outstanding
unpaid claims under any such policies or binders. All policies and binders
provide sufficient coverage for the risks insured against, are in full force and
effect on the date hereof and shall be kept in full force and effect through the
Effective Time.
5.23 Brokers. Except as disclosed on the Terradatum Disclosure
Schedule, no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement. In the event that the preceding sentence is in
any way inaccurate, Terradatum agrees to indemnify and hold harmless HomeSeekers
from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which HomeSeekers or any of its directors, officers,
partners, employees or representatives is responsible.
5.24 Vote Required. The affirmative votes of all of the Members are the
only votes necessary to approve this Agreement and the Merger.
5.25 Investment Representations. Each Member hereby separately
represents and warrants to HomeSeekers that:
(a) Such Member has acquired sufficient information about
HomeSeekers to reach an informed and knowledgeable decision to acquire the
HomeSeekers Shares. The Member is acquiring the HomeSeekers Shares for his or
her own account for investment purposes only and not with a view to, or for the
resale in connection with, any "distribution" thereof for purposes of the
Securities Act.
(b) The Member understands that the HomeSeekers Shares have
not been registered under the Securities Act or in any state in reliance upon
specific exemptions therefrom,
23
which exemptions depend upon, among other things, the bona fide nature of the
Member's investment intent as expressed herein.
(c) By reason of the Member's business or financial experience
or the business or financial experience of my professional advisors who are
unaffiliated with HomeSeekers, the Member has the capacity to protect his or her
own interests in the acquisition of the HomeSeekers Shares.
(d) It is the obligation of the Member to comply with Rule 144
promulgated under the Securities Act and all other applicable state and federal
securities laws.
5.26 Disclosure. No representation or warranty made by Terradatum or
the Members in this Agreement, nor any document, written information, statement,
financial statement, certificate, schedule or exhibit prepared and furnished or
to be prepared and furnished by Terradatum or its representatives pursuant
hereto or in connection with the transactions contemplated hereby, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading in light of the circumstances under which they were
furnished. To the knowledge of Terradatum and the Members, there is no failure
on the part of Terradatum or the Members to comply with any applicable law that
has resulted in, or could reasonably be expected to result in, a Material
Adverse Effect on Terradatum's Business that has not been set forth in this
Agreement or in the Terradatum Disclosure Schedule. Terradatum has provided
copies to HomeSeekers of all documents and information requested by HomeSeekers
pursuant to HomeSeekers' diligence requests.
5.27 Transfer of Assets to Terradatum. Terradatum and the Members
represent and warrant that Terradatum, LLC, a Washington limited liability
company, has effectively conveyed to TDT, LLC, a Nevada limited liability
company, all of Terradatum, LLC's right title and interest to all assets of
Terradatum, LLC as of September 20, 1999, including, without limitation, (a) all
of the assets described in the Draft Audit Report prepared by Xxxxxxxx Xxxxxxx &
Associates in connection with HomeSeekers' due diligence in this matter; (b) all
tangible personal property, furnishings, fixtures, equipment, machinery, parts,
accessories, inventory and any other property listed (the "Terradatum, LLC
Personal Property"); (c) all contracts, agreements, equipment leases,
warranties, and other rights or agreements, whether written or oral (the
"Terradatum, LLC Contracts"); (d) all real estate leases together with all of
Terradatum, LLC's interest in any security deposits, prepaid rent, leasehold
improvements and appurtenances to leased property (the ""Terradatum, LLC Real
Property Leases"); and (e) all of Terradatum, LLC's right, title and interest in
and to the trade names, logos, copyrights, service marks, trademarks, patents,
patent applications, other Intellectual Property Rights, licenses, and goodwill
(the "Terradatum, LLC Intangible Property") (collectively, the "Terradatum, LLC
Assets"). TDT, LLC has full right to convey the Terradatum, LLC Assets to the
Surviving Limited Liability Company in connection with this Agreement.
24
ARTICLE VI
COVENANTS OF TERRADATUM
6.1 Regular Course of Business. From and after the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, except as otherwise consented to in
writing by HomeSeekers, Terradatum shall conduct its businesses in the ordinary
and usual course consistent with past practice and shall use reasonable efforts
to maintain and preserve intact their business organizations, keep available the
services of their officers and employees and maintain positive relations with
licensors, licensees, suppliers, contractors, distributors, customers and others
having business relationships with them. Terradatum shall promptly notify
HomeSeekers of any event or occurrence not in the ordinary course of business
and will not enter into or amend any agreement or take any action which
reasonably could be expected to have a Material Adverse Effect on Terradatum's
Business.
6.2 Restricted Activities and Transactions. From and after the date of
this Agreement until the earlier of the Effective Time or the termination of
this Agreement in accordance with its terms, except as provided herein or as
otherwise consented to in writing by HomeSeekers, Terradatum will not:
(a) propose, adopt or permit an amendment of Terradatum's
Articles of Organization or Operating Agreement;
(b) except in connection with any underway financing as
disclosed on the Terradatum Disclosure Schedule, issue, sell, encumber or
deliver, or agree to issue, sell, encumber or deliver, any shares of any class
of capital stock of Terradatum or any securities convertible into any such
shares or convertible into securities in turn so convertible, or any options,
warrants, or other rights calling for the issuance, sale or delivery of any such
shares or convertible securities or authorize or propose any change in its
equity capitalization;
(c) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock or repurchase, redeem or otherwise acquire any shares of its
capital stock,
(d) mortgage or pledge any of its assets, tangible or
intangible;
(e) (i) borrow, or agree to borrow, any funds or voluntarily
incur, assume or become subject to, whether directly or by way of guarantee or
otherwise, any Material obligation or liability (absolute or contingent), (ii)
cancel or agree to cancel any Material debts or claims, (iii) lease, sell or
transfer, agree to lease, sell or transfer, or grant or agree to grant any
preferential rights to lease or acquire, any of its assets, property or rights
(except for (A) dispositions of obsolete or worthless assets, (B) transactions
involving immaterial assets not in excess of $20,000 in the aggregate and (C)
leases of equipment in the ordinary course of business pursuant to commitments
25
as set forth in the Terradatum Disclosure Schedule, or (iv) except in the
ordinary course of business, make or permit any Material amendments or
termination of any material contract, agreement, license or other right to which
it is a party (for purpose of this Subsection, the term "Material" means
involving amounts in excess of Twenty Thousand Dollars ($20,000);
(f) grant any increase in compensation to any manager,
employee or officer in excess of ten percent (10%) of the previous year's
salary, or amend in any respect the terms of any employee benefit plan or adopt
any new employee benefit plan or similar arrangements or agreements (except in
each case as specifically provided in this Agreement or as required by law), or
enter into or amend any employment, severance or other agreement entered into
with or for the benefit of any employee(s);
(g) accelerate, amend or change the period of exercisability
of any rights to purchase securities of Terradatum or change the vesting period
of any restricted stock of Terradatum or authorize cash payments in exchange for
any outstanding Terradatum Options;
(h) hire any management personnel or terminate any employee of
Terradatum, except in the ordinary course of business involving a person with an
annual salary of less than $10,000 and only (in the case of a new hire) pursuant
to an at-will arrangement without any severance benefits;
(i) acquire control or ownership of any other corporation,
association, joint venture, partnership, business trust or other business
entity, or acquire control or ownership of all or a substantial portion of the
assets of any of the foregoing, or incorporate or form, or cause to be
incorporated or formed, any corporation, association, joint venture,
partnership, business trust or other business entity, or merge, consolidate or
otherwise combine with any other corporation (except as provided for in this
Agreement), or otherwise acquire or agree to acquire any assets which are
material, individually or in the aggregate, to the Terradatum Business;
(j) [this section intentionally left blank]
(k) pay, discharge or satisfy any claims, liabilities or
obligations (whether absolute, accrued, contingent or otherwise), other than the
payment, discharge or satisfaction of in the ordinary course of business
consistent with past practice of liabilities reflected or reserved against in
the Terradatum Financial Statements, consistent with Terradatum's ordinary
course of business;
(l) except in the ordinary course of business, enter into or
agree to enter into any transaction material to Terradatum's Business;
(m) transfer or license to any person or entity, or otherwise
extend, amend or modify, any material rights to the Terradatum Intellectual
Property Rights;
26
(n) enter into or amend any agreements pursuant to which any
other party is granted most favored customer status or exclusive marketing,
distribution or other similar rights with respect to any products of Terradatum;
(o) violate, amend or otherwise modify in any material manner
the material terms of any of the contracts set forth on the Terradatum
Disclosure Schedule;
(p) commence a lawsuit other than for the routine collection
of bills or to enforce Terradatum's rights under this Agreement, or settle a
lawsuit;
(q) change the accounting methods or practices followed by
Terradatum, including any change in any assumption underlying, or method of
calculating, any bad debt, contingency or other reserve, except as may be
required by changes in generally accepted accounting principles, make or change
any material Tax election, adopt or change any Tax accounting method, file any
material Return or any amendment to a material Return (other than as required
and in accordance with Section 4.5), enter into any material closing agreement,
settle any material Tax claim or assessment, or consent to any extension or
waiver of the limitation period applicable to any material Tax claim or
assessment, without the prior consent of HomeSeekers, which consent will not be
unreasonably withheld (for purposes of this covenant a "material" Tax Return,
closing agreement, Tax claim or assessment shall mean a Tax liability with
respect to each such item in excess of $10,000);
(r) take any action that would result in any of the
representations and warranties of Terradatum set forth in this Agreement
becoming untrue;
(s) make any changes in its investment portfolio other than
the reinvestment of the proceeds of maturing, redeemed or prepaid securities,
obligations or other investments into United States Treasury securities maturing
ninety (90) days or less from the date of investment;
(t) allow or permit to be done any act by which any of its
insurance policies may be suspended, impaired or canceled; or
(u) fail to comply in any material respect with all laws
applicable to it.
6.3 Dividends and Distributions; Repurchases. From and after the date
of this Agreement until the earlier of the Effective Time or the termination of
this Agreement in accordance with its terms, except as otherwise consented to in
writing by HomeSeekers, Terradatum will not declare or pay any distribution on
any capital or other account to any of its members in cash or other property,
and will not redeem, repurchase or otherwise acquire any of its stock, or rights
to acquire any of its stock.
6.4 No Default or Violation. From and after the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, except as otherwise consented to in writing by
HomeSeekers, Terradatum will use its best efforts not to
27
(a) violate, or commit a breach of or a default under, any contract, agreement,
lease, license, mortgage or commitment to which it is a party or to which any of
its assets may be subject or (b) violate any statute, regulation, ordinance,
writ, injunction, order, judgment or decree, or any other requirement of any
governmental body or court, applicable to its assets or business, the effect of
which in any such case in clauses (a) or (b) would be materially adverse to
Terradatum's Business.
6.5 Taxes; Consent. From and after the date of this Agreement until the
earlier of the Effective Time or the termination of this Agreement in accordance
with its terms, Terradatum shall prepare and timely file all Returns and
amendments thereto required to be filed by it on or before the Closing Date.
HomeSeekers shall have a reasonable opportunity to review all Returns and
amendments thereto and to approve such Returns (which approval shall not be
unreasonably withheld). Terradatum shall pay and discharge all Taxes,
assessments and governmental charges upon or against it or any of its properties
or assets, and all liabilities at any time existing, before the same shall
become delinquent and before penalties accrue thereon, except to the extent and
as long as: (a) the same are being contested in good faith and by appropriate
proceedings pursued diligently and in such a manner as not to cause any Material
Adverse Effect upon the condition (financial or otherwise) or operations of
Terradatum; and (b) Terradatum shall have set aside on its books adequate
reserves for such Taxes. Between the date of this Agreement and the Closing
Date, Terradatum shall give HomeSeekers and its authorized representatives full
access to all properties, books, records and Returns of or relating to
Terradatum, whether in possession of Terradatum or third-party professional
advisors or representatives in order that HomeSeekers may have full opportunity
to make such investigations as it shall desire to make of the affairs of
Terradatum. Terradatum shall ensure that all third-party advisors and
representatives of Terradatum, including without limitation accountants and
attorneys, fully cooperate and be available to HomeSeekers in connection with
such investigation. Terradatum shall, as of the Closing Date, terminate all tax
allocation agreements or tax sharing agreements with respect to Terradatum and
shall ensure that any such agreements are of no further force or effect as to
Terradatum on and after the Closing Date.
6.6 Advice of Changes. From and after the date of this Agreement until
the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Terradatum will promptly advise HomeSeekers in
writing of (a) any event occurring subsequent to the date of this Agreement
which would render any representation or warranty of Terradatum contained in
this Agreement, if made on or as of the date of such event or the date of the
Closing, untrue or inaccurate or (b) any Material Adverse Change in Terradatum's
Business.
6.7 Negotiation With Others. From and after the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Terradatum shall not, directly or indirectly, (a)
solicit, initiate discussions or engage in negotiations with any person (whether
such negotiations are initiated by Terradatum or otherwise) or take any other
action intended or designed to facilitate the efforts of any person, other than
HomeSeekers, relating to the possible acquisition of Terradatum (whether by way
of merger, purchase of capital stock, purchase of assets or otherwise) or any
material portion of its or their capital stock or assets (with any such efforts
by any such person, including without limitation a firm proposal to make such an
acquisition, to be referred to as an "Acquisition Proposal"), (b) provide
information with respect to Terradatum
28
to any person, other than HomeSeekers, relating to a possible Acquisition
Proposal by any person, other than HomeSeekers, (c) enter into an agreement with
any person, other than HomeSeekers, providing for a possible Acquisition
Proposal, or (d) make or authorize any statement, recommendation or solicitation
in support of any possible Acquisition Proposal by any person other than by
HomeSeekers. In addition, Terradatum agrees to immediately cease any and all
existing activities, discussions or negotiations with any parties conducted
prior to the date hereof with respect to the foregoing. Notwithstanding the
foregoing, nothing contained in this Agreement shall prevent the managers of
Terradatum (or its agents pursuant to its instruction) from taking any of the
following actions: if Terradatum shall receive from a third party an unsolicited
written proposal from a third party to acquire 100% of Terradatum and its entire
business through a merger, consolidation, stock purchase, purchase of all or
substantially all of its assets, or otherwise, and (ii) if the managers have
made a good faith determination, based upon the advice of its legal counsel set
forth in a written opinion or memorandum from such counsel that it would be a
violation of its fiduciary duties to the members of Terradatum to do otherwise,
Terradatum may, without breaching this Section 4.7, furnish information to and
enter into negotiations with such third party. Further, if in the reasonable
good faith judgment of the Terradatum managers any such written proposal is
reasonably likely to be consummated and is more favorable to the members of
Terradatum from a financial perspective than the terms of the Merger (a
"Superior Proposal"), nothing contained in this Agreement shall prevent the
Terradatum managers from approving, accepting and recommending to the members of
Terradatum a Superior Proposal, if the Terradatum managers have made a good
faith determination, based upon the advice of its legal counsel set forth in the
written opinion or memorandum from such counsel, that it would be a violation of
its fiduciary duties to the members of Terradatum to do otherwise; provided that
in each such event Terradatum notifies HomeSeekers of such determination by the
Terradatum managers and provides HomeSeekers with a true and complete copy of
the Superior Proposal received from such third party and of all documents
containing or referring to information of Terradatum that is supplied to such
third party. Except to the extent expressly referenced in this Section 6.7,
nothing in this Section 6.7 shall relieve Terradatum from complying with the
other terms of this Agreement, including, without limitation, the provisions of
Section 6.2.
6.8 Acquisition Proposals. From and after the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Terradatum will provide HomeSeekers with immediate
notice of any inquiry or offer Terradatum receives from or on behalf of any
third party of the type referred to in Section 6.7 hereof, including in such
notice the identity of the third party and a complete description of any such
inquiry or offer, and will provide HomeSeekers with immediate notice if
Terradatum provides or furnishes any information to any third party relating to
a possible Acquisition Proposal.
6.9 Consents, Approvals and Filings. From and after the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement in accordance with its terms, Terradatum will use its best efforts to
comply as promptly as practicable with the governmental requirements specified
in Section 5.5 hereof, if any, and to obtain on or before the Closing all
necessary approvals, authorizations, consents, licenses, clearances or orders of
Governmental
29
Entities referred to in such section or of other persons referred to in Section
5.6 or the Terradatum Disclosure Schedule, if any.
6.10 Access to Records and Properties. HomeSeekers may, prior to the
Effective Time, through its employees, agents and representatives, continue to
conduct or cause to be conducted a detailed review of the business, financial
condition, properties, assets, books and records of Terradatum. Terradatum
agrees to assist HomeSeekers in conducting such review and investigation and
will provide HomeSeekers and its employees, agents and representatives full
access to, and complete information concerning all aspects of the business of
Terradatum, including its books, records (including Returns filed or in
preparation), personnel and premises, and other records relating to Terradatum.
Neither any investigation by HomeSeekers nor the receipt by HomeSeekers of any
data or information from Terradatum, its representatives or advisors will affect
the right of HomeSeekers or Sub to rely on the representations, warranties or
covenants of Terradatum or the right of HomeSeekers to terminate this Agreement
as provided in Section 13.1 hereof.
6.11 Reorganization. From and after the date hereof and until the
Effective Time, Terradatum will not dissolve.
ARTICLE VII
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
7.1 Further Assurances. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby and to
satisfy the conditions set forth in Articles VIII and IX. The Members shall
cause Terradatum to comply with all of the covenants of Terradatum under this
Agreement.
7.2 Confidentiality; Publicity. The Members and Terradatum shall not
disclose the terms of this transaction to any third party nor make any public
announcement related to this Agreement or the transactions contemplated hereby
without the prior written approval of HomeSeekers.
7.3 No Other Discussions. The Members, Terradatum and their respective
Affiliates, employees, agents and representatives will not (i) initiate,
encourage the initiation by others of discussions or negotiations with third
parties or respond to solicitations by third persons relating to any merger,
sale or other disposition of any substantial part of the assets, the Business or
the properties of Terradatum (whether by merger, consolidation, sale of stock,
sale of assets, or otherwise), or (ii) enter into any agreement or commitment
(whether or not binding) with respect to any of the foregoing transactions. The
Members will immediately notify HomeSeekers if any third party attempts to
initiate any solicitation, discussion or negotiation with respect to any of the
foregoing transactions.
30
7.4 Due Diligence Investigation. HomeSeekers has conducted, prior to
Closing, a due diligence investigation of Terradatum, the Assets and the
Business. HomeSeekers believes that Terradatum has provided HomeSeekers and
their designated agents and consultants with the access to Terradatum's Business
and the Assets and all books, records, documents, correspondence and other
materials related thereto which HomeSeekers, their agents and consultants
require to conduct such due diligence review.
7.5 This section has been intentionally left blank.
7.6 Termination of Bonus Arrangements. All existing bonus plans or
incentive compensation arrangements between Terradatum and its employees, except
those listed in the Disclosure Schedule, shall have been canceled prior to the
Closing.
7.7 This section has been intentionally left blank.
7.8 Indebtedness. The Members and Terradatum covenant and agree that
the indebtedness of Terradatum for borrowed money, whether to a Bank or to
another Person (excluding accrued payroll, accounts payable and other ordinary
course of business indebtedness), including without limitation the current
portion of long term debt, shall not exceed Ninety-five Thousand Dollars
($95,000) on the Closing Date. If the indebtedness of Terradatum on the Closing
Date exceeds Ninety-five Thousand Dollars ($95,000) on the Closing Date, then
HomeSeekers shall be entitled to such excess as Indemnifiable Damages (pursuant
to Article X of this Agreement) or such excess shall, if known on the Closing
Date, be deducted from the Purchase Price.
7.9 This section has been intentionally left blank.
7.10 Approval of Members. Terradatum shall use its best efforts to
obtain the necessary approval of its Members of this Agreement and the Merger.
The Members agree to vote for the Merger and the transactions contemplated in
this Agreement and against any other business combination proposal not involving
HomeSeekers.
7.11 Release of Terradatum by the Members. The Members hereby release
and discharge Terradatum and each of its managers and officers from, and agree
and covenant that in no event will the Members commence any litigation or other
legal or administrative proceeding against Terradatum or any of its managers or
officers, whether in law or equity, relating to any and all claims and demands,
known and unknown, suspected and unsuspected, disclosed and undisclosed, for
damages or indemnity, actual or consequential, past, present and future, arising
out of or in any way connected with their ownership or alleged ownership of
percentage interests in Terradatum prior to the Effective Time.
31
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF HOMESEEKERS
The obligations of HomeSeekers to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
by HomeSeekers.
8.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of the Members and Terradatum
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date with the same force and effect as though made at
and as of that time except (i) for changes specifically permitted by or
disclosed pursuant to this Agreement, and (ii) that those representations and
warranties which address matters only as of a particular date shall remain true
and correct as of such date. The Members and Terradatum shall have performed and
complied with all of their obligations required by this Agreement to be
performed or complied with at or prior to the Closing Date, including these
obligations set forth in Article VII herein. The Members and Terradatum shall
have delivered to HomeSeekers a certificate, dated as of the Closing Date, duly
signed, certifying that such representations and warranties are true and correct
and that all such obligations have been performed and complied with.
8.2 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of Terradatum or the Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the service, or products of Terradatum or the Business, and
(iii) none of the Assets shall have been damaged by fire, flood, casualty, riot
or other cause (regardless of insurance coverage for such damage).
8.3 Corporate Certificate. Terradatum shall have delivered to
HomeSeekers (i) copies of its Articles of Organization and Operating Agreement
as in effect immediately prior to the Closing Date, (ii) copies of resolutions
adopted by its members and managers authorizing the transactions contemplated by
this Agreement, (iii) written resignations of Terradatum's managers and other
officers and (iv) a certificate of good standing issued by the Secretary of
State of the State of Nevada as of a date not more than ten (10) days prior to
the Closing Date, certified in the case of subsections (i) and (ii) as of the
Closing Date by the Secretary of Terradatum as being true, correct and complete.
8.4 Consents. Terradatum and Members shall have received consents to
the transactions contemplated hereby and waivers of rights to terminate or
modify any material rights or obligations of Terradatum and the Members from any
person from whom such consent or waiver is required under any contract to which
the Members, Terradatum or the Assets are bound as of a date not more than ten
(10) days prior to the Closing Date, or who, as a result of the transactions
contemplated hereby, would have such rights to terminate or modify such
contracts, either by the terms thereof or as a matter of law.
32
8.5 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of HomeSeekers,
makes it inadvisable to proceed with the transactions contemplated hereby.
8.6 Due Diligence Review. HomeSeekers shall have completed its due
diligence review of Terradatum pursuant to Section 7.4.
8.7 Employment Agreement. Messrs. Hightower, Biggs, and Xxxxxx shall
have entered into the Employment Agreements in the forms attached hereto as
Exhibit 2.
8.8 Lien Releases. All Liens (as defined in Section 12.1 of this
Agreement) encumbering or otherwise affecting the Business or the Assets,
excepting equipment leases, shall have been released in form and substance
acceptable to HomeSeekers.
8.9 Opinion of Counsel. HomeSeekers shall have received an opinion
dated as of the Closing Date, from counsel to Terradatum and the Members in form
and substance acceptable to HomeSeekers.
8.10 Releases. At the Closing, Members and such of their Affiliates as
may be designated by HomeSeekers shall deliver to HomeSeekers a release in such
form as is reasonably satisfactory to HomeSeekers, releasing all claims against
Terradatum up to and including the Effective Date.
8.11 Securities Laws. HomeSeekers shall have received all necessary
consents and otherwise complied with any securities laws applicable to the
issuance of HomeSeekers Shares in connection with the transactions contemplated
hereby.
8.12 Estoppel Certificate and Agreements regarding the Terradatum, LLC
Assets. HomeSeekers shall have received a copy of (a) a duly executed xxxx of
sale conveying all of Terradatum, LLC's right, title and interest in and to the
Terradatum, LLC Personal Property to TDT, LLC; (b) a duly executed assignment of
contracts pursuant to which Terradatum, LLC has assigned to TDT, LLC all of its
right, title and interest in and to the Terradatum, LLC Contracts; (c) a duly
executed assignment of leases pursuant to which Terradatum, LLC has assigned to
TDT, LLC all of its right, title and interest in and to the Terradatum, LLC Real
Property Leases; (d) a duly executed assignment of intangible property assigning
all of Terradatum, LLC's right, title and interest in the Terradatum, LLC
Intangible Property to TDT, LLC; and (e) all other deeds, bills of sale, motor
vehicle titles, warranty deeds, assignments, endorsements, licenses and other
good and sufficient instruments and documents of conveyance and transfer as
shall be necessary and effective to confirm the transfer, conveyance and
assignment to TDT, LLC of all of Terradatum, LLC's right, title, and interest in
and to the Terradatum, LLC Assets. HomeSeekers shall have received from
Terradatum, LLC, a Washington limited liability company, an estoppel certificate
relinquishing to and ratifying the transfer to TDT, LLC, a Nevada limited
liability company, of all right, title, and interest to the Terradatum, LLC
Assets.
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ARTICLE IX
CONDITIONS TO THE
OBLIGATIONS OF TERRADATUM AND THE MEMBERS
The obligations of Terradatum and the Members to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part by the Members:
9.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of HomeSeekers contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. HomeSeekers shall have performed and complied in all material respects
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. HomeSeekers shall have delivered
to the Members certificates, dated as of the Closing Date, and signed by
executive officers thereof, certifying that such representations and warranties
are true and correct, and that all such obligations have been performed and
complied with, in all material respects.
9.2 Consideration and Deposits. At the Closing, HomeSeekers shall have
(a) delivered to the Members the Cash Consideration and HomeSeekers Shares; and
(b) instructed its transfer agent to issue the HomeSeekers Shares.
9.3 Employment Agreement. HomeSeekers shall have caused Messrs.
Hightower, Krause, and Xxxxx to enter into the Employment Agreements in the
forms attached hereto as Exhibit 2.
9.4 No Material Adverse Change or Destruction of Property. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change of HomeSeekers or its Business, (ii) there shall have been no adverse
federal, state or local legislative or regulatory change affecting in any
material respect the service, or products of Terradatum or the Business, and
(iii) none of the Assets shall have been damaged by fire, flood, casualty, riot
or other cause (regardless of insurance coverage for such damage).
9.5 No Adverse Litigation. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit, invalidate or collect damages arising out of
the transactions contemplated hereby, and which, in the judgment of HomeSeekers,
makes it inadvisable to proceed with the transactions contemplated hereby.
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ARTICLE X
INDEMNIFICATION
10.1 Agreement by Members to Indemnify. Subject to the limitation set
forth in the last sentence of this Section 10.1, the Members agree to jointly
and severally indemnify and hold HomeSeekers and their Affiliates, officers,
directors, and agents thereof (collectively, the "Indemnified Parties") harmless
from and against the aggregate of all expenses, losses, costs, deficiencies,
liabilities and damages (including, without limitation, related counsel and
paralegal fees and expenses) incurred or suffered by any of the Indemnified
Parties (collectively, "Indemnifiable Damages") resulting from or arising out of
(i) any breach of a representation or warranty made by the Members or Terradatum
in or pursuant to this Agreement, (ii) any breach of the covenants or agreements
made by the Members or Terradatum in this Agreement, (iii) any inaccuracy in any
certificate delivered by the Members or Terradatum pursuant to this Agreement,
or (iv) any indebtedness exceeding the amounts set forth in Section 7.8 herein.
If it is determined, as provided, that any of the Indemnified Parties is
entitled to indemnification, indemnification shall be effected by redelivery to
HomeSeekers of shares of the common stock of HomeSeekers held in escrow as
provided in Section 10.4 of this Agreement, such shares valued at the Average
Closing Sale Price for a share of HomeSeeker common stock for the ten
consecutive trading days which preceed the date that they are redelivered to
HomeSeekers. With the exceptions of any indemnity obligations arising out of
Section 5.23 of this Agreement and any indemnity obligations arising out of any
claim asserted by Xxxx Xxxxxxxx, the shares held in escrow pursuant to Section
10.4 of this Agreement shall be the limit of the Members' joint and several
liability to indemnify the Indemnified Parties.
10.2 Tax Indemnity.
(a) The Members hereby agree to pay, indemnify, defend and
hold HomeSeekers and Sub harmless from and against any and all Taxes of
Terradatum with respect to any period (or any portion thereof) up to and
including the Effective Time, except for Taxes of Terradatum which are reflected
as current liabilities for Taxes that exist as of the Effective Time ("Current
Tax Liabilities") on the Closing Balance Sheet, together with all legal fees,
disbursements and expenses incurred by HomeSeekers and Sub in connection
therewith. If it is determined, as provided, that any of the Indemnified Parties
is entitled to indemnification, indemnification shall be effected by redelivery
to HomeSeekers of shares of the common stock of HomeSeekers held in escrow as
provided in Section 10.4 of this Agreement, such shares valued at the Average
Closing Sale Price for a share of HomeSeeker common stock for the ten
consecutive trading days which preceed the date that they are redelivered to
HomeSeekers. The shares held in escrow pursuant to Section 10.4 of this
Agreement shall be the limit of the Members' joint and several liability to
indemnify the Indemnified Parties.
10.3 Survival of Representations and Warranties. Each of the
representations and warranties made by HomeSeekers, Sub, Terradatum and the
Members is made as of the date of this Agreement and as of the Effective Date.
The obligation for each of the representations and warranties made by
HomeSeekers, Sub, Terradatum and the Members in this Agreement or pursuant
35
hereto to be truthful shall survive the Closing of the transactions contemplated
hereby. Notwithstanding any knowledge of facts determined or determinable by any
party by investigation, each party shall have the right to fully rely on the
truthfulness, as of the Date of this Agreement and as of the Effective Date, of
each of the representations, warranties, covenants and agreements of the other
parties contained in this Agreement or in any other documents or papers
delivered in connection herewith. Each representation, warranty, covenant and
agreement of the parties contained in this Agreement is independent of each
other representation, warranty, covenant and agreement.
10.4 Escrow. On the Closing Date, one hundred thousand shares of the
HomeSeekers Common Stock that the Members are entitled to receive pursuant to
Section 1 of this Agreement shall instead be delivered on behalf of the Members
to an escrow agent to be mutually agreed upon by the parties (the "Escrow
Agent"). The escrow shall be subject to the following terms and conditions:
(a) All fees and expenses of the escrow agent shall be borne
equally by the parties.
(b) Additional shares received by the Members with respect to
shares held in escrow, as a result of stock dividends and stock splits shall be
delivered to the Escrow Agent and shall be subject to the terms of this
Agreement;
(c) The Escrow Agent shall hold the shares deposited until the
two year anniversary of the Closing Date, whereupon the Escrow Agent shall
release to each of the Members that Member's pro rata portion of shares, as
directed in writing by Xxxxxx Xxxxxxxxx or by Xxxxx Xxxxxx if Xx. Xxxxxxxxx is
then deceased or incapacitated, remaining in the escrow after payment to the
Indemnified Parties of all of its indemnity claims approved as provided in this
Agreement, except that in the event a claim that may result in indemnification
under this Agreement remains undetermined as of the two year anniversary of the
Closing Date, a sufficient number of shares shall be retained in escrow to
provide for payment of any such claim. On the first anniversary of the Closing
Date, after payment to the Indemnified Parties of all of its indemnity claims
approved as provided in this Agreement, and provided that there are retained in
escrow a sufficient number of shares to provide for payment of any unapproved
indemnity claims, the Escrow Agent shall release to the Members the aggregate
number of shares of HomeSeekers common stock yielded by multiplying one hundred
thousand (100,000) by a fraction equal to (x) one (1) minus (y) the fraction the
numerator of which is seven (7) and the denominator of which is the Closing Sale
Price for a share of HomeSeekers common stock on the first anniversary of the
Closing Date. For example, if the Closing Sale Price for a share of HomeSeekers
common stock on the first anniversary of the Closing date is $28.00, and if the
unsatisfied indemnity claims are for $280,000 the Escrow Agent shall release a
number of share equal to the product of 100,000 times (I minus 7/28), or 75,000
shares before retaining shares sufficient to satisfy the $280,000 indemnity
claim; and shall retain 10,000 additional shares (valued at $280,000) to satisfy
the indemnity claim; and thus shall release 65,000 shares.
36
(d) In the event of any claim by any of the Indemnified
Parties for indemnification, the Indemnified Party shall give written notice to
the Members, and the parties shall attempt to reach agreement in respect to that
claim. If the parties fail to reach agreement within 30 days after notice of a
claim has been given, the issue shall be submitted to arbitration in accordance
with the rules and requirements of the CPR Center for Dispute Resolution. Each
party shall submit three (3) proposed arbitrators. The parties shall agree one
of the six (6) arbitrators so proposed. In the event the parties are unable to
agree on the arbitrator, then the CPR Center for Dispute Resolution shall
supply a panel of five arbitrators, and the parties shall select the arbitrator
by taking turns eliminating one arbitrator from the panel until one arbitrator
remains. The decision of the arbitrator shall be final and binding on all
parties, and appropriate instructions in conformity with that decision shall
immediately be given by the arbitrator to the Escrow Agent, who is authorized
and directed to rely on such instructions.
ARTICLE XI
SECURITIES LAW MATTERS
The Members shall have the following registration rights with respect
to HomeSeekers Shares issued to them hereunder:
11.1 Registration. Within thirty (30) days of the Effective Date,
HomeSeekers shall file Registration Statements covering the shares issued by
HomeSeekers pursuant to this Agreement on Form S-3 under the Securities Act, or,
in the event Form S-3 is not available to HomeSeekers, then on another
applicable form. If for any reason the Registration Statement (or any subsequent
registration statement filed thereafter pursuant to this Section 11.1) is
rejected, then, within thirty (30) days of the rejection, HomeSeekers shall file
additional Registration Statements covering the shares issued by HomeSeekers
pursuant to this Agreement on Form S-3 under the Securities Act, or, in the
event Form S-3 is not available to HomeSeekers, then on another applicable form,
until such time as the shares are registered.
11.2 This section has been intentionally left blank.
11.3 Legends. The certificates representing HomeSeekers Shares shall
bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE SHAREHOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO,
OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
37
Such legend shall be removed from the shares when those shares become the
subject of an effective Registration Statement. HomeSeekers may, unless a
registration statement is in effect covering such shares, place stop transfer
orders with its transfer agents with respect to such certificates if it is
necessary to do so to comply with federal securities laws.
ARTICLE XII
DEFINITIONS
12.1 Defined Terms. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Securities
Exchange Act of 1934, as amended, as in effect on the date hereof.
"Average Closing Sales Price" means the numeric average (i.e.,
sum of the closing Sale Prices divided by Number of Trading Days) of
the Closing Sale Prices of HomeSeekers common stock for the period of
time indicated.
The "Business" or "Terradatum's Business" shall have the
meaning given in the first recital to this Agreement.
"Closing Date" shall have the meaning given in Section 3.1 of
this Agreement.
"Closing Sale Price" means the last price in which a share of
HomeSeekers common stock was sold as of the date of determination.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any indenture, lease, sublease, license, loan
agreement, mortgage, note, indenture, restriction, will, trust,
commitment, obligation or other contract, agreement or instrument,
whether written or oral.
"Effective Date" or "Effective Time" shall have the meaning
given in Section 3.2 of this Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, deed of trust, pledge, security
interest, encumbrance, lien or charge of any kind (including, but not
limited to, any conditional sale or other title retention agreement,
any lease in the nature thereof, and the filing of or agreement to give
any financing statement under the Uniform Commercial Code or comparable
law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)"means a change (or
effect), in the financial condition, properties, assets, liabilities,
rights, obligations, or operations of Terradatum which change (or
effect) individually or in the aggregate, is materially adverse to such
financial condition, properties, assets, liabilities, rights,
obligations, or operations.
38
"Person" means an individual, partnership, corporation,
limited liability company, business trust, joint stock company, estate,
trust, unincorporated association, joint venture, Governmental
Authority or other entity, of whatever nature.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Terradatum, LLC Assets," "Terradatum, LLC Personal Property,"
"Terradatum, LLC Contracts," "Terradatum, LLC Real Property Leases,"
and "Terradatum, LLC Intangible Property" shall have the meanings set
forth in Section 5.27 of this Agreement.
"Member Transaction Fees" means all legal, accounting, tax,
consulting, appraisal and financial advisory and other fees and
expenses, including any transfer taxes, fees and expenses and the cost
of title insurance and surveys, incurred, paid, or payable by
Terradatum or the Members in connection with the transactions
contemplated hereby.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes imposed
by any federal, state, local or foreign governmental agency, and any
interest or penalties related thereto.
12.2 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
39
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
13.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by HomeSeekers in the event of a material breach by the
Members or Terradatum of any provision of this Agreement.
13.2 Effect of Termination. Except as provided in Article X and for the
provisions of Section 7.2, in the event of termination of this Agreement
pursuant to Section 13.1, this Agreement shall forthwith become void; provided,
however, that nothing herein shall relieve any party from liability for the
willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered (and shall
be deemed delivered) by certified or registered mail (first class postage
pre-paid), guaranteed overnight delivery, or facsimile transmission if such
transmission is confirmed by delivery by certified or registered mail (first
class postage pre-paid) or guaranteed overnight delivery, to the following
addresses and facsimile numbers (or to such other addresses or facsimile numbers
which such party shall designate in writing to the other party):
(a) if to HomeSeekers or Sub:
HomeSeekers, Incorporated
0000 Xxxxx XxXxxxxx Xxxx., Xxxxx 00
Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, Chairman/CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxxx & Xxxxxx
000 Xxxxxxx Xxxx
Xxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to Terradatum:
Terradatum Corporation
c/o Xxxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) if to the Members:
Xxxxxx Xxxxxxxxx
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Xxxxxxx X. Xxxxx
000 Xxxxx Xxx
Xxxxx Xxxx, XX 00000
Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx
X.X. Xxx 000
Xxxx Xxxxx, XX 00000
41
with a copy to:
Law Offices of Xxxxxx X. Xxxxxxxx
000 Xx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
14.2 Entire Agreement. This Agreement (including the Disclosure
Schedule and Exhibits attached hereto) and other documents delivered at the
Closing pursuant hereto, contains the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter. The Disclosure Schedule and Exhibits constitute a part
hereof as though set forth in full above.
14.3 Expenses. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby, except
that HomeSeekers shall bear its auditors' cost in connection with the audit of
Terradatum's financial statements by its auditors. In the event that the
contemplated transaction fails to close due to no fault of HomeSeekers,
Terradatum shall receive copies of the audit report, and shall repay to
HomeSeekers half the cost of the audit within a one-year period. The Members
hereby agree to pay any and all sales and/or use taxes which may become due and
owing as a result of the completion of the transactions contemplated hereby.
14.4 Waiver. This Agreement may not be modified, amended, supplemented,
canceled, or discharged, except by written instrument executed by all parties.
The failure of any party to enforce any of the provisions of this Agreement
shall not be deemed a waiver of any provisions or of the right of the party
thereafter to enforce any provisions.
14.5 Assignment. The rights and obligations of this Agreement shall
bind and inure to the benefit of the parties and their respective successors and
assigns. Except as expressly provided herein, the rights and obligations of this
Agreement may not be assigned by the Members without the prior written consent
of HomeSeekers, or by HomeSeekers without the consent of Terradatum.
14.6 Counterparts; Facsimile. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument. Executed copies of this
Agreement of this Agreement may be delivered by facsimile, and delivery of
executed facsimile copies to the parties and their counsel shall be deemed to be
a delivery of a duplicate original and sufficient delivery to result in entry to
this Agreement by the transmitting party; provided, however, that within ten
(10) days thereafter a signed duplicate original shall be forwarded to the party
to whom a facsimile copy was forwarded.
14.7 Governing Law, Jurisdiction and Waiver of Venue. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Nevada regardless of the fact that any of the parties hereto may be or may
become a resident of a different country, state, or
42
jurisdiction. Any suit, action, or proceeding arising out of, or with respect
to, this Agreement shall be filed in a court of competent jurisdiction within
the County of Washoe, State of Nevada or in the U.S. District Court for the
District of Nevada, Northern Division. The parties hereby consent to the
personal jurisdiction of such courts within the County of Washoe, State of
Nevada and the U.S. District Court for the District of Nevada, Northern
Division. The parties hereby waive any objections to venue in such courts with
Washoe County, State of Nevada and the U.S. District Court for the District of
Nevada, Northern Division.
14.8 Representation by Counsel. Each party hereto represents and agrees
with the other that it has been represented by independent counsel of its own
choosing; it has had the full right and opportunity to consult with its
respective attorneys and other advisors and has availed itself of this right and
opportunity; its authorized officers have carefully read and fully understand
this Agreement in its entirety and have had it fully explained to them by such
party's counsel; it is fully aware of the contents hereof and the meaning,
intent and legal effect thereof; and its authorized officer is competent to
execute this Agreement and has executed this Agreement free from coercion,
duress or undue influence. Each party and its counsel cooperated in the drafting
and preparation of this Agreement and the documents referred to herein.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against the party that
drafted it is of no application and is hereby expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties and this Agreement.
14.9 Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to receive from the other its reasonable attorneys' fees, costs, and
necessary disbursements in addition to any other relief to which such party may
be entitled.
14.10 Interpretation. If necessary to give effect to the terms and
provisions hereof, the masculine, feminine, and neuter gender of the singular
and plural number shall each be deemed to include the other whenever the context
so indicates. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be valid and effective under applicable law,
such provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the remaining
provisions of this Agreement. The parties acknowledge and agree that this
Agreement is the product of mutual negotiation and that no part herein shall be
construed against either party as the author hereof, and that this provision is
expressly made binding on any legal tribunal for any purpose.
14.11 Severability. In case any provision of this Agreement shall, for
any reason, be held to be invalid, unenforceable, or illegal, such provision
shall be severed from this Agreement, and such invalidity, unenforceable or
illegality shall not affect any other provisions of this Agreement.
14.12 Headings. Headings in this Agreement are inserted for convenience
and identification only and are in no way intended to describe, interpret,
define, limit the scope, extent or intent of this Agreement or any provision
hereof.
43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
XXXXXXXXXXX.XXX. INCORPORATED,
a Nevada corporation
By:/s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Director, Chief Technical Officer
XMLS, LLC, a Nevada limited liability company
By:/s/ Xxxx Xxxxxxx
----------------------------
Name: Xxxx Xxxxxxx
Title: Director, Chief Technical Officer
TDT, LLC, a Nevada limited liability company
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Manager
MEMBERS
TERRADATUM, LLC, a Washington limited
liability company
By: DATATECH SERVICES, LLC,
a California limited liability company
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Manager
44
By: /s/ XXXXXX XXXXXXXXX
----------------------------
XXXXXX XXXXXXXXX
By: /s/ XXXXX XXXXXX
----------------------------
XXXXX XXXXXX
By: /s/ XXXXXXX X. XXXXX
----------------------------
XXXXXXX X. XXXXX
45