ASSET PURCHASE AGREEMENT
by and between
FACTUAL DATA CORP.
and
RESIDENTIAL MORTGAGE CREDIT
REPORTING, INC.
Dated as of September 3, 1999
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TABLE OF CONTENTS
RECITALS
ARTICLE I
DEFINITIONS
ARTICLE II
ACQUISITION OF THE ASSETS
2.1 Delivery of Assets
2.2 Purchase Price for Assets
2.3 No Assumption of Liabilities
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER 3.1 Organization
and Qualification of Seller 3.2 Authorized Capitalization 3.3
Authorization 3.4 Product Rights 3.5 Bulk Sale Law 3.6 No Conflicting
Agreements 3.7 Compliance with Applicable Law 3.8 Material Misstatements
or Omissions 3.9 No Known Adverse Effects 3.10 Consents and Approvals 3.11
Subsidiaries 3.12 Litigation 3.13 Brokers 3.14 Taxes 3.15 Ownership 3.16
Accounts 3.17 License Agreements 3.18 Intellectual Property 3.19 Customers
3.20 Contracts 3.21 Financial Statements 3.22 Absence of Undisclosed or
Contingent Liabilities 3.23 No Material Adverse Changes 3.24 Absence of
Developments 3.25 Title to Properties 3.26 Tax Matters 3.27 Tax Notices
3.28 Employees 3.29 Employee Benefits Plans 3.30 Gifts 3.31 Employee
Health and Safety 3.32 Representations as to Knowledge 3.33
Representations Concerning Solvency
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER 4.1 Inspection of Properties and Books 4.2
Other Contracts 4.3 Ongoing Operation 4.4 Indebtedness 4.5 Records 4.6
Articles of Incorporation; Bylaws
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4.7 Distributions or Dividends
4.8 Notice of Breach
4.9 Nondisclosure
4.10 Employment Matters
4.11 Insurance
4.12 Preservation of Business
4.13 Regulatory Filings
4.14 No Negotiations
4.15 Assignment of Contracts, Leases and Other Agreements
4.16 Best Efforts
4.17 Additional Disclosure
ARTICLE V
POST-CLOSING COVENANTS
5.1 Further Assurances
5.2 Litigation Support
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER 6.1 Organization and
Qualification of Purchaser 6.2 Authorization 6.3 No Conflicting Agreements
6.4 Compliance with Applicable Law 6.5 Litigation 6.6 Material
Misstatements or Omissions 6.7 Consents and Approvals 6.8 Brokers 6.9
Representations as to Knowledge
ARTICLE VII COVENANTS OF PURCHASER 7.1 Other Contracts 7.2 Additional Disclosure
7.3 Notice of Breach 7.4 Nondisclosure 7.5 Best Efforts 7.6 Regulatory
Filings 7.7 Non-Compete and Confidentiality Agreements
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Obligations of Seller
8.2 Conditions Precedent to Obligations of Purchaser
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
ARTICLE X
INDEMNIFICATION
10.1 Indemnification
10.2 Limitation of Liability
10.3 Method of Asserting Claims
10.4 Payment of Claim
10.5 Other Rights and Remedies Not Affected
10.6 Post-Closing Adjustment and Right of Offset
ARTICLE XI
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AMENDMENT, TERMINATION AND BREACH
11.1 Amendment and Modification
11.2 Termination and Abandonment
ARTICLE XII
CLOSING
12.1 Closing
12.2 Allocations
12.3 Seller's Deliveries at Closing
12.4 Purchaser's Deliveries at Closing
12.5 Employees' Vacations
12.6 Removal of Personal Effects Following Closing
12.7 Cooperation; Premises
ARTICLE XIII
MISCELLANEOUS
13.1 Notice 13.2 Entire and Sole Agreement 13.3 Successors and Assigns
13.4 Expenses 13.5 Severability 13.6 Governing Law 13.7 Counterparts 13.8
Amendments 13.9 No Third Party Beneficiary 13.10 Headings 13.11 Disputes
13.12 Delivery of Exhibits
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 3rd day of September, 1999,
by and between Factual Data Corp., a Colorado corporation ("Purchaser"), and
Residential Mortgage Credit Reporting, Inc., a Missouri corporation ("Seller").
RECITALS
WHEREAS, on or about August 3, 1999, Purchaser issued a term sheet to
Seller ("Term Sheet") pursuant to which Purchaser indicated its desire to
proceed with the acquisition of the assets of Seller; and
WHEREAS, the Term Sheet contemplated the parties would enter into a
definitive Asset Purchase Agreement which definitive agreement is as set forth
below (the "Agreement") and which shall supersede the Term Sheet in its
entirety; and
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, the
assets of Seller as described on Exhibit 2.1 hereto (the "Assets") and Purchaser
will assume only the liabilities of Seller described on Exhibit 2.3 hereto
("Assumed Liabilities");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and in reliance upon the representations and warranties
contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The following terms used in this Agreement shall, unless the context
requires otherwise, have the meanings designated below:
Assets means the assets set forth on Exhibit 2.1 hereto.
Assumed Liabilities means the liabilities set forth on Exhibit 2.3 hereto.
Claim Notice has the meaning given to it in Section 10.3(a).
Closing has the meaning given to it in Section 12.1.
Code means the Internal Revenue Code of 1986, as amended.
Communication means collectively any publicity release, security filing,
private placement memorandum or any other communication.
Damages means any and all damages, claims, deficiencies, losses and
expenses, as further defined in Section 10.1.
Effective Date has the meaning given to it in Section 12.1.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
Evaluation Material means Seller's documents, financial statements,
information and materials which shall be used in connection with a due diligence
review.
Excluded Assets shall mean cash on hand, cash investments and notes
receivable.
Financial Statements has the meaning given to it in Section 3.21.
Indemnified Party means the party claiming indemnification under Article
X.
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Indemnifying Party means the party against whom indemnification claims are
asserted under Article X.
Intellectual Property means (a) all trademarks, services marks, trade
dress, logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connections therewith, (b) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (c) all mask
works and all applications, registration and renewals in connection therewith,
(d) all trade secrets and confidential business information (including ideas,
research and development, know-how, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (e) all computer software
(including data and related documentation), (f) all other proprietary rights,
and (g) all copies and tangible embodiments thereof (in whatever form or
medium).
Loss means Damages for which any claim may be asserted under Article X.
Note shall have the meaning given it in Section 2.2
Notice means the thirty day period which the indemnifying party shall have
from the personal delivery or mailing of the Claim Notice.
OSHA means the Occupational Safety and Health Act of 1970, as amended, and
any regulations, rules or orders promulgated thereunder.
Purchase Price has the meaning given it in Section 2.2.
Purchaser means Factual Data Corp., a Colorado corporation, or its
assigns.
Seller means Residential Mortgage Credit Reporting, Inc.
Shareholder means the owner of capital stock of Seller at the date hereof
and as of Closing to wit: Bentley International, Inc. (100%).
Tax or Taxes means any federal, state, local or foreign income, gross
receipt, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), custom duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimating or other tax of any kind whatsoever, including any interest,
penalty or addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
Uniform Commercial Code means the Uniform Commercial Code applicable in
the state of organization of the Seller.
ARTICLE II
ACQUISITION OF THE ASSETS
Subject to the terms and conditions set forth in this Agreement:
2.1 Delivery Of Assets. At the Closing, Seller shall endorse and deliver
such instruments, documents, certificates or instructions as may be necessary to
vest title to the Assets set forth on Exhibit 2.1 hereto in Purchaser. Upon
receipt of such documents, instruments, certificates or instructions, and upon
the Closing, Purchaser shall become the beneficial and record holder of the
Assets and entitled to all of the rights, benefits and privileges with respect
thereto. The Assets shall be delivered by Seller to Purchaser at the Closing and
will be free of all encumbrances, liens, security interests or other claims. At
the Closing, the Assets which will be transferred to Purchaser, and their value,
shall be as follows:
Asset Category Valuation
Fixed and operating assets $ 41,125
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Contract rights, customer agreements
and customer lists 245,429
Intellectual property, software and licenses --
Personnel files --
Books and records --
Non-Compete and Confidentiality Agreement 36,000
Deposits 2,446
Prepaid assets and supplies inventories --
Goodwill and other intangibles --
Total $325,000
Each of Seller and Purchaser covenant that it will not take a position on
any income tax return or before any governmental agency or in any judicial
proceeding that is inconsistent in any way with this allocation.
2.2 Purchase Price for Assets. The aggregate purchase price for the
Assets, except Billed Accounts Receivable which are treated in (c) below, shall
consist of $162,500 cash and a promissory note in the aggregate amount of
$162,500 which shall be delivered to Seller at the Closing subject to and upon
the terms and conditions hereof and the representations and warranties contained
herein, in the following manner:
(a) At the Closing, Purchaser shall pay an aggregate cash
consideration of $162,500 to the Seller, which shall be paid in the form
of bank cleared funds or a wire transfer to a financial institution
designated by the Seller.
(b) Purchaser shall deliver to Seller a non-negotiable promissory
note in the aggregate principal amount of $162,500 (the "Note"). The Note
shall be issued by Purchaser on the following terms and conditions:
(i) The Note shall bear interest at the rate of 8% per annum
and shall be due and payable in 12 quarterly installments of
principal and interest in accordance with the amortization schedule
attached to the Note commencing September 30, 1999.
(ii) The Note, a copy of which is attached hereto as Exhibit
2.2(b)(i), shall be secured by a perfected lien on all of the Assets
sold pursuant to this Agreement. The lien securing payment of the
Note shall be subordinated to any senior institutional bank or
credit arrangements secured by Purchaser at any time prior to or
after the execution of this Agreement and Seller agrees to execute a
subordination agreement and intercreditor agreement in form
satisfactory to the senior debt lender at such time as a senior
credit facility is obtained by Purchaser. A security agreement and
UCC-1 financing statement setting forth the subordinated security
interest in the form attached as Exhibit 2.2(b)(ii) shall be
executed at the Closing by Purchaser and filed by Seller with the
Arizona Secretary of State or other required regulatory agencies or
governmental entities in each state and entity in which a UCC filing
may be required.
(c) In addition to the Assets listed on Exhibit 2.1, the Purchaser
shall also purchase, and Seller shall sell, Seller's billed accounts
receivable. Seller will xxxx its accounts as of the close of business on
August 31, 1999 (the "Receivables"). Receivables will be discounted by 25%
and the resultant balance less a 15% holdback on all Receivables will be
paid by Purchaser to Seller by wire transfer on September 3, 1999. Within
120 days from Closing, Purchaser will release and pay the holdback amount
on a dollar for dollar basis for any collections over 60% of such
Receivables up to 75% of such Receivables.
(d) The parties contemplate that, subsequent to the Closing, an
audit of the financial records of Seller may be performed in accordance
with generally accepted accounting principles by independent certified
public accountants designated by the Purchaser, and at Purchaser's sole
cost and expense.
2.3 No Assumption of Liabilities. The Purchaser does not and shall not
assume, pay, perform or discharge any liability of Seller except as may be
specifically set forth on Exhibit 2.3. Seller will pay off all equipment leases
and loan obligations prior to Closing and tender the Assets to the Purchaser
free and clear of liens and encumbrances and will provide Purchaser with
recorded UCC-3 Termination Statements to evidence such payoffs.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER
Seller and Shareholder represent and warrant to Purchaser that the
statements contained in this Article III are true, correct and complete as of
the date of this Agreement and will, except as otherwise expressly provided in
this Agreement be true, correct and complete on the Closing as follows:
3.1 Organization and Qualification Of Seller. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
state of incorporation, and is duly qualified and authorized to do business as a
foreign corporation and is in good standing in each jurisdiction, if any, in
which the nature of the business conducted by it or the properties owned, leased
or operated by it makes such qualification necessary or, if not, then such lack
of authorization will not have materially adversely affected the Purchaser's use
of the Assets. The Seller has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted. The copies of the Articles of Incorporation (certified by the
Secretary of the State of the state of incorporation) and the Bylaws of the
Seller, both as amended to date, which have been delivered to Purchaser and
attached hereto as Exhibits 3.1(a) and 3.1(b), respectively, are complete and
correct, and the Seller is not in default under or in violation of any provision
of its Articles of Incorporation or Bylaws.
3.2 Authorized Capitalization. The authorized capital stock of the Seller
consists of 30,000 shares of common stock, of which 100 shares are issued and
outstanding as of the date of this Agreement. All shares issued and outstanding
as of the date of this Agreement have been duly authorized and validly issued
and are fully paid and nonassessable. No shares of the Seller's capital stock
are held in treasury. The Seller has no authorized or outstanding stock or
securities convertible into or exchangeable for, or any authorized or
outstanding option, warrant or other right to subscribe for or to purchase, or
convert any obligation into, any unissued shares. There are no authorized or
outstanding stock appreciation, phantom stock, profit participation or similar
rights with respect to the Seller. There are no voting trusts, voting
agreements, proxies or other agreements or understandings with respect to the
voting of the capital stock of the Seller.
3.3 Authorization. This Agreement has been duly and validly executed and
delivered by Seller and the Shareholder and the agreements, representations and
warranties contained herein constitute valid and binding obligations,
representations and warranties of Seller and the Shareholder enforceable in
accordance with their terms. Attached hereto as Exhibit 3.3(a) is a Certificate
which shall evidence the approval and authorization of the Shareholder of Seller
and which shall be attested to by the President of Seller. This Agreement and
the consummation of the transactions contemplated hereby and thereby have been
duly and unanimously approved by the board of directors of Seller. Attached
hereto as Exhibit 3.3(b) is a certified copy of the Directors' Consent or a
resolution passed pursuant to a duly and validly called meeting of the Board of
Directors. This Agreement constitutes, and all other agreements contemplated
hereby to be executed and delivered by the Seller will when executed and
delivered constitute, the legal, valid and binding obligations of, and be
enforceable in accordance with their respective terms against, the Seller.
3.4 Product Rights. As of the Closing, subject to those limitations set
forth in this Agreement, Seller has no rights with respect to any trademarks and
trade names.
3.5 Bulk Sale Law. Seller has advised Purchaser that Seller is not
required to comply with the bulk sale provisions of the Arizona Uniform
Commercial Code.
3.6 No Conflicting Agreements. The execution and delivery of this
Agreement by Seller does not, and consummation by Seller of the transactions
contemplated hereby will not, (a) violate any existing term or provision of any
law, regulation, order, writ, judgment, injunction or decree applicable to
Seller or the Assets, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of the Articles of Incorporation or Bylaws of
Seller or of any agreement or instrument to which Seller is a party, or (c)
result in the creation or imposition of any lien, charge, security interest,
encumbrance, restriction or claim upon the Assets.
3.7 Compliance with Applicable Law. Except as set forth in Exhibit 3.7,
Seller has not received any notice or information of any violation, probable
violation or default by Seller under any applicable law, regulation or order of
any governmental department, commission, board or agency or instrumentality,
domestic or foreign, having jurisdiction over Seller's operations which could
materially adversely affect the business, operations, financial condition,
properties or assets of Seller, or the ability to consummate the transaction
contemplated hereby. To the best of Seller's and the Shareholder's' knowledge
after diligent inquiry, Seller has operated its business, and will continue to
operate its business, in compliance
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with the Fair Credit Reporting Act, the Real Estate Settlement Procedures Act,
the Fair Debt Collection Act and applicable state law. Additionally, Seller has
given notice of the sale of Assets to all government entities that require such
notice.
3.8 Material Misstatements or Omissions. Neither this Agreement nor any
other document, certificate or statement furnished to Purchaser by or on behalf
of Seller in connection with this Agreement contains any untrue statement of a
material fact, or omits any material fact necessary to make the statements
contained herein or therein not misleading in light of the context in which they
were made.
3.9 No Known Adverse Effects. There is no fact known to Seller, its
officers, directors or employees or the Shareholder which materially adversely
affects or will materially adversely affect the Assets which has not been set
forth in writing in this Agreement or disclosed in the other documents,
certificates or written statements furnished to Purchaser by or on behalf of
Seller in connection herewith.
3.10 Consents and Approvals. The execution and delivery by Seller of this
Agreement, and the performance by Seller of its obligations hereunder, does not
require Seller to obtain any consent, approval, agreement, or action of, or make
any filing with or give any notice to, any corporation, person, entity, or firm
or any public, governmental or judicial authority except (i) such as have been
duly obtained or made, as the case may be, and or will be duly obtained and made
and in full force and effect as of the Closing, (ii) those as to which the
failure to obtain would have no material adverse effect on the Assets or the
transactions contemplated hereby, and (iii) approval of the Seller's
Shareholder, which shall be obtained prior to the execution hereof.
3.11 Subsidiaries. Seller does not own, have an ownership interest in, or
control any corporation, partnership, proprietorship or other entity.
3.12 Litigation. Except as described in Exhibit 3.12, there are no
actions, proceedings or investigations pending or threatened against Seller or
the Assets before any court or administrative agency which could result in any
material adverse change in the operations or financial condition of Seller other
than as identified therein.
3.13 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Seller directly with
representatives of Purchaser, without the intervention of any person in such
manner as to give rise to any valid claim by any person against Purchaser for a
finder's fee, brokerage commission, or similar payment. All rights of indemnity
under Article X hereof shall apply to any claim relating to a Loss (hereinafter
defined) arising out of this Agreement for any fee, commission or similar
payment.
3.14 Taxes. Seller shall pay all Taxes arising out of the transfer of the
Assets and shall be responsible for all personal property taxes for the business
of Seller through the Effective Date of the Closing. Purchaser shall not be
responsible for any business, occupation, withholding or similar Tax, or any
Taxes of any kind related to the Assets or the business of Seller for any period
prior to the Effective Date.
3.15 Ownership. Seller is the owner, beneficially and of record, of all of
the Assets as identified on Exhibit 2.1 hereto, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions, except as otherwise described on Exhibit 3.15 hereto.
3.16 Accounts. The list of customers attached hereto as Exhibit 3.16(a)
represents the customers with which Seller now does business, principally in the
area of mortgage credit reporting. The customers with which Seller maintains a
contract or agreement are identified on Exhibit 3.16(b) hereto. Except as
described on Exhibit 3.16(c), all such contracts or agreements are valid and
enforceable contracts or agreements and are not currently, and will not be at
Closing, in default, invalid or unenforceable in any manner, nor is termination
threatened or imminent to the actual knowledge of Seller. Seller has performed
all of its material obligations and material responsibilities as described under
each such contract or agreement, none of such contracts or agreements are
subject to any counterclaim or set-off, other than in ordinary course, and such
contracts are in full force and effect and will continue in full force and
effect following the Closing (assuming continuing performance by Purchaser
following the Closing, which is not warranted or represented by Seller). Except
as described on Exhibit 3.16(d), Seller has no reason to believe that amounts
payable under such contracts or agreements, assuming due performance by
Purchaser in the future (which is not warranted or represented by Seller), will
not be paid in accordance with the terms of such contracts or agreements. Seller
has not received any notices of default, claims, or any other type of notice
with respect to each such contract or agreement or, if such notice has been
received, a copy of any such notice has been provided in writing to Purchaser.
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3.17 License Agreements. Attached as Exhibit 3.17 is a complete and
accurate list of any license agreements to which Seller is a party as of the
date hereof. Also stated on Exhibit 3.17 is the expiration date of each such
license agreement. Except as described on Exhibit 3.17, all such license
agreements are valid and enforceable contracts or agreements and are not
currently, and will not be at Closing, in material default, invalid or
unenforceable in any manner. To the extent the transfer of any license agreement
hereunder requires the consent of any third party, Seller and Shareholder shall
use their best efforts to obtain such consents. Seller has not received any
written notices of default, claims or any other type of written notice with
respect to any license agreement or, if such written notice has been received, a
copy of such notice has been provided in writing to Purchaser.
3.18 Intellectual Property. Attached as Exhibit 3.18 to this Agreement is
a schedule of all Intellectual Property owned by Seller. To the best of Seller's
knowledge, Seller has not infringed, and by its use of its Intellectual
Property, is not now infringing on any United States or state trade name,
trademark, service xxxx or copyright belonging to any other person, firm or
corporation and, to the best of Seller's knowledge, the use of the Intellectual
Property by Purchaser will not conflict with, infringe on or otherwise violate
the rights of others.
3.19 Customers. Exhibit 3.19 to this Agreement sets forth a correct and
current list of all customers of Seller together with summaries of the revenues
from each customer during the most recent 12 months ending 30 days prior to the
date hereof.
3.20 Contracts. Except as set forth in Exhibit 3.20, Seller is not a party
to, nor is the property of Seller bound by, any contract, distributorship
agreement, license agreement, agency agreement or output or requirements
agreement, or any other agreement, indenture, mortgage, deed of trust, lease,
security agreement, loan agreement or instrument which Purchaser would succeed
to by its purchase of the Assets, nor will the purchase of the Assets by
Purchaser create any default by Seller as to any of such agreements which will
materially adversely affect the Purchaser's use of the Assets.
3.21 Financial Statements. Seller has delivered to Purchaser copies of
Seller's balance sheet as of December 31, 1998 and the statements of income for
the period from November 15, 1998 to December 31, 1998 and from January 1, 1999
to June 30, 1999 (collectively, the "Financial Statements"). The Financial
Statements are based upon the information contained in the books and records of
Seller and to the best of Seller's and Shareholder's knowledge and belief,
fairly and accurately present the financial condition of Seller as of the
foregoing dates and results of operations for the periods referred to herein.
The monthly financial statements generated by Seller from and after the interim
period delivered to Purchaser will be prepared on a basis consistent with the
methods and procedures used to prepare the Financial Statements.
3.22 Absence of Undisclosed or Contingent Liabilities. Seller has no
liabilities (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due, whether known or unknown, and regardless of when
asserted) except as otherwise set forth in the Financial Statements and Exhibit
3.22 hereto.
3.23 No Material Adverse Changes. Since the date of the most recent
Financial Statements, there has been no change materially adverse to Seller in
its Assets, financial condition, gross profit, operating results, customer,
employee or supplier relations, business condition or prospects, except as
otherwise disclosed on Exhibit 3.23 hereto.
3.24 Absence of Developments. Since the date of the Term Sheet by and
between Seller and Purchaser, Seller has, and will until Closing:
(a) Conducted its business and operations only in the regular and
ordinary course; maintained reasonable business insurance; committed no
waste of the Assets; disposed or otherwise changed the nature of any Asset
such that cash or accounts receivable are increased (other than in the
ordinary course of business), nor created or suffered to exist any
material lien, charge or encumbrance on any Asset or incurred any
indebtedness for borrowed money (other than in the ordinary course) which
is secured by one or more of the Assets; and has used its best efforts to
maintain and preserve its business organization intact and maintain its
relationships with suppliers, employees, customers and others;
(b) Refrained from making capital expenditures or commitments for
additions to the property, plant or equipment or entered into transactions
which could materially alter or affect operations, except as otherwise
have been approved in writing by Purchaser;
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(c) Except from the assets to be retained by Seller, refrained from
paying the officers or directors or their affiliates, whether in the
capacities of Shareholder, directors, officers or employees, any dividends
or any bonuses or any other forms of compensation except for non-bonus
compensation in accordance with current practice; and
(d) Maintained title to, and refrained from making or permitting,
any transfer, sale, pledge, encumbrance on, lien or other disposition of
the Assets of Seller except in the ordinary course of business.
3.25 Title to Properties. Seller does not own any real property. The lease
to which Seller is a party, a true and complete copy of which is attached hereto
as Exhibit 3.25, is in full force and effect, and Seller holds a valid and
existing leasehold interest in such lease for the term set forth in such lease.
The fixed assets necessary for the conduct of Seller's business are in good
condition and repair, ordinary wear and tear excepted, and are usable in the
ordinary course of business. There are no defects in such fixed assets or other
conditions relating thereto which, in the aggregate, materially adversely affect
the operation or value of such fixed assets. Seller owns, or leases under valid
leases, all equipment and other tangible assets necessary for the conduct of its
business.
3.26 Tax Matters.
(a) The Seller has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Seller (whether or not shown on any Tax Return) have
been paid. The Seller is not currently the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by
an authority in a jurisdiction where the Seller does not file Tax Returns
that it is or may be subject to taxation by that jurisdiction. There are
no encumbrances on any of the Assets of the Seller that arose in
connection with any failure (or alleged failure) to pay any Taxes.
(b) The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, shareholder or other third
party.
(c) There is no basis for any authority to assess any additional
Taxes for any period for which Tax Returns have been filed. There is no
dispute or claim concerning any liability for Taxes of the Seller (i)
claimed or raised by any authority in writing or orally with any
directors, officers or employees of the Seller, or (ii) as to which any
such person has knowledge based upon personal contact with any agent of
such authority. Exhibit 3.26 lists all federal, state, local and foreign
income Tax Returns filed with respect to the Seller for taxable periods
ended on or after December 31, 1995, indicates those Tax Returns that have
been audited and indicates those Tax Returns that currently are the
subject of audit. The Seller has delivered to the Purchaser, or will
attach as Exhibit 3.26, correct and complete copies of all federal income
Tax Returns, examination reports, and statements of deficiencies filed,
assessed against or agreed to by the Seller since December 31, 1995.
3.27 Tax Notices. Except as set forth on Exhibit 3.27 hereto, no
deficiency for any Taxes has been proposed, asserted or assessed against Seller
that has not been resolved and paid in full. No waiver, extension or comparable
consent given by Seller regarding the application of the statute of limitations
with respect to any Taxes outstanding, nor is any request for any such waiver or
consent pending. Except as described in Exhibit 3.27 hereto, there has been no
tax audit or other administrative proceeding or court proceeding with respect to
any Taxes, nor is any such Tax audit or other proceeding pending, nor has there
been any notice to Seller by any taxing authority regarding any such Tax, audit
or other proceeding or, to the best knowledge of Seller, is any such Tax audit
or other proceeding threatened with regard to any Taxes. Seller does not expect
the assessment of any additional Taxes and is not aware of any unresolved
questions, claims or disputes concerning the liability for Taxes which would
exceed the estimated reserves established on its books and records. For the
purposes hereof, the term "Taxes" means all taxes, charges, fees, levies or
other assessments, including without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, workmen's compensation, social security,
unemployment, excise, estimated, severance, stamp, occupation, property or other
taxes, customs, duties, fees, assessments or charges of any kind whatsoever
including, without limitation, all interest and penalties thereon, and additions
to tax or additional amounts imposed by any taxing authority, domestic or
foreign, upon Seller.
3.28 Employees. Except as described on Exhibit 3.28, (a) Seller has no
actual or constructive notice that any executive employee of Seller or any group
of Seller's employees has any plan or intention to terminate his, her or its
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employment following the Closing; (b) Seller has complied with all laws relating
to the employment of labor, including provisions thereof relating to wages,
hours, equal opportunity, collective bargaining and the payment of social
security and other taxes; (c) to the best of Seller's knowledge, Seller has no
material labor relations problem pending and its labor relations are
satisfactory; (d) there are no workmen's compensation, sexual harassment,
discrimination or claims pending against Seller nor is Seller aware of any facts
that would give rise to such claims; (e) to the best of Seller's knowledge, no
employee of Seller is subject to any secrecy or non-competition agreement or any
other agreement or restriction of any kind that would impede in any way the
ability of such employee to carry out fully all activities of such employee in
furtherance of the business of Seller; and (f) to the best of Seller's
knowledge, no employee or former employee of Seller has any claim with respect
to any intellectual property rights of Seller.
3.29 Employee Benefit Plans. The Purchaser is not assuming any obligations
whatsoever with respect to the Seller's employee benefit plans or to the
Seller's employees individually.
(a) Except as provided in writing to Purchaser and as listed on
Exhibit 3.29, with respect to all employees and former employees of Seller
and all dependents and beneficiaries of such employees and former
employees, (i) Seller does not maintain or contribute to any non-qualified
deferred compensation or retirement plans, contracts or arrangements, (ii)
Seller does not maintain or contribute to any qualified defined
contribution plans as defined in Section 3(34) of ERISA or Section 414(i)
of the Code, (iii) Seller does not maintain or contribute to any qualified
defined benefit plans as defined in Section 3(35) of ERISA or Section
414(j) of the Code, and (iv) Seller does not maintain or contribute to any
employee welfare benefit plans as defined in Section 3(1) of ERISA.
(b) To the best of Seller's knowledge, to the extent required
(either as a matter of law or to obtain the intended tax treatment and tax
benefits), all employee benefit plans as defined in Section 3(3) of ERISA
which Seller does maintain or to which it does contribute (collectively,
the "Plans") comply in all material respects with the requirements of
ERISA and the Code. With respect to the Plans, (i) all required
contributions which are due have been made and a proper accrual has been
made for all contributions due in the current fiscal year, (ii) there are
no actions, suits or claims pending, other than routine uncontested claims
for benefits, and (iii) there have been no prohibited transactions as
defined in Section 406 of ERISA or Section 4975 of the Code.
(c) Seller does not contribute (and has not ever contributed) to any
multi-employer plan, as defined in Section 3(37) of ERISA. Seller has no
actual or potential liabilities under Section 4201 of ERISA for any
complete or partial withdrawal from a multi-employer plan. Seller has no
actual or potential liability for death or medical benefits after
separation from employment, other than (i) death benefits under the
employee benefit plans or programs (whether or not subject to ERISA) that
will be set forth in writing to Purchaser, and (ii) health care
continuation benefits described in Section 4980B of the Code.
3.30 Gifts. Neither Seller nor any of its officers, directors or
Shareholder has made or agreed to make gifts of money, other property or similar
benefits (other than incidental gifts of articles of nominal value) to any
actual or potential customer, supplier, governmental employee, political party,
candidate for office, governmental agency or instrumentality or any other person
in a position to assist or hinder Seller in connection with any actual or
proposed business transaction.
3.31 Employee Health and Safety. Seller has not violated and has no
liability, and has not received a notice or charge asserting any violation of or
liability under, OSHA or any other federal or state acts (including rules and
regulations thereunder) and, to the best of Seller's knowledge, regulating or
otherwise affecting employee health and safety.
3.32 Representations as to Knowledge. The representations and warranties
contained in Article III hereof shall in each and every event whereby an
exercise of discretion or a statement to the "best knowledge", "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith, with due diligence, to the best efforts of each such party and be
exercised always in a reasonable manner and within reasonable times.
3.33 Representations Concerning Solvency. The Seller has not incurred, and
does not intend to incur, and has no reasonable basis to believe that it will
incur, any debts beyond its ability to pay such debts as they become due. Seller
has, and will continue to have, assets greater than Seller's debts, based upon a
fair valuation and has paid, and will pay, its debts as they become due.
Purchaser may rely on such representations in asserting that Purchaser has no
reasonable cause to believe that Seller is or will become insolvent as a result
of the transactions contemplated hereby. Seller has undertaken the transactions
described herein in good faith, considering its obligations to any person or
entity to whom Seller owes a
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right to payment, whether or not the right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured and has undertaken the transaction
described herein without any intent to hinder, delay or defraud its creditors.
Seller will not, and has not, concealed this transaction or the proceeds of such
transaction from any of its creditors. Seller has not removed or concealed any
assets from its creditors and will not incur debt in connection with the assets
or business that is significantly greater than the normal and customary debts of
Seller in the ordinary course. Seller does not contemplate and has no reason to
contemplate it will seek protection under the bankruptcy laws and believes in
good faith that it will receive consideration reasonably equivalent to the value
of the Assets being purchased by the Purchaser.
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER
Seller hereby covenants and agrees that, between the date hereof and the
Closing, it will comply with the provisions of this Article IV, except to the
extent Purchaser may otherwise consent in writing.
4.1 Inspection of Properties and Books. Seller shall assist any individual
or individuals designated by Purchaser with reasonable prior notice to visit or
inspect any property of Seller, at reasonable times acceptable to both parties,
including books of accounts and records of Seller, to make extracts or copies of
such books and records and to discuss the affairs, finances and accounts of
Seller with its officers, and shall use its best efforts to obtain access for
Purchaser to Seller's accountants' work papers. As a condition to the Closing,
the parties acknowledge and agree that Seller shall furnish to Purchaser
Evaluation Material which shall be used in connection with a due diligence
review. The parties agree that Purchaser shall treat the Evaluation Material
confidentially, and shall not disclose to any party, except as otherwise set
forth herein, the Evaluation Material or any information set forth therein;
provided, however, that Purchaser is authorized to disclose the Evaluation
Material to its investment banker, counsel and accountants for their review.
Purchaser shall instruct its officers, directors, employees, agents or
representatives of the confidential nature of the Evaluation Material and shall
be responsible for ensuring that the Evaluation Material is kept confidential by
such persons. In the event the Closing is not consummated, all Evaluation
Material shall be returned to Seller, within ten days of a request therefor,
with the understanding that Purchaser shall retain no copies of the Evaluation
Material and shall not disclose to any other party the Evaluation Material or
information contained therein, with the exception of (i) information which
becomes generally available to the public other than as a result of disclosure
by Purchaser, or (ii) information included in the Evaluation Material which is
first disclosed by a third party not bound by a confidentiality agreement with
Seller and (iii) information required to be disclosed in any registration
statement or periodic report under the disclosure requirements of applicable
federal and state securities laws.
4.2 Other Contracts. Except in the ordinary course of business, Seller
shall not enter into or become subject, and shall not cause Seller to enter into
or become subject, to any agreement, transaction, or commitment which would
restrict or in any way impair the obligation or ability of Seller to comply with
all of the terms of this Agreement.
4.3 Ongoing Operation. Seller shall carry on its business diligently and
substantially in the same manner as heretofore conducted. The business of Seller
shall be conducted only in the ordinary course and neither the Shareholder of
Seller nor Seller shall take any action except in the ordinary course of
Seller's business, on an arms-length basis and in accordance in all material
respects with all applicable laws, rules and regulations and Seller's past
custom and industry practice.
4.4 Indebtedness. Seller will not create, incur, assume, guarantee or
otherwise become liable with respect to any indebtedness related or connected
with, or secured by, the Assets, except in the ordinary course of its business
and subject to prior written notice to Purchaser. Except in the ordinary course
of its business, and subject to prior written notice to Purchaser, Seller will
not sell, pledge, encumber or otherwise subject the Assets to any claim or
indebtedness.
4.5 Records. Seller shall maintain its books, accounts and records in
the usual, regular and ordinary manner.
4.6 Articles of Incorporation; Bylaws. Seller will not amend its Articles
of Incorporation or Bylaws or otherwise alter its corporate existence or powers.
4.7 Distributions or Dividends. Seller will not declare or pay any
dividend, make any distribution on shares of its capital stock or repurchase any
shares of its capital stock.
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4.8 Notice of Breach. In the event of and promptly after becoming aware of
the occurrence or threatened occurrence of any event which would cause or
constitute a breach of any warranty, representation, covenant or agreement of
Seller contained herein, Seller shall give notice in writing of such event or
threatened event to Purchaser and use all reasonable efforts to prevent or
promptly remedy such breach or threatened breach.
4.9 Nondisclosure. The parties agree that any publicity release, security
filing, memorandum or any other communication, whether written or oral,
identifying this proposed transaction shall not identify Seller at any time
prior to Closing unless required by applicable securities laws or regulations.
Seller shall timely review and approve any public communication prepared by
Purchaser before its dissemination and release.
4.10 Employment Matters. Seller shall not, directly or indirectly, except
in the ordinary course of business and with prior notice to Purchaser, (i) enter
into or modify any employment, severance or similar agreements or arrangements
with, or grant any bonuses, salary increases, severance or termination paid to,
any officers or directors or consultants, or (ii) take any action with respect
to the grant of any bonuses, salary increases, severance or termination pay or
with respect to any increase of benefits payable in effect on the date hereof.
Seller shall not adopt or amend any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other employee
benefit plan, trust, fund or group arrangement for the benefit or welfare of any
employees or any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund or arrangements for the benefit or welfare of any
director.
4.11 Insurance. Without providing Purchaser 30 days' prior written notice,
Seller shall not cancel or terminate its current insurance policies or cause any
of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
equal to or greater than the coverage under the canceled, terminated or lapsed
policies for substantially similar premiums are in full force and effect. To the
extent Seller has paid premiums for insurance coverage that will continue in
effect on a post-Effective Date basis, the Purchaser will reimburse Seller
within 15 days of Closing the prorated portion of post-Effective Date insurance
coverage based upon the time period covered by such insurance both prior to, and
subsequent to, the Effective Date. Seller shall purchase tail coverage covering
Seller and its officers and directors for any error and omission policy
maintained by Seller prior to Closing.
4.12 Preservation of Business. Seller and the Shareholder shall (i) use
their best efforts to preserve intact Seller's business organization and
goodwill, keep available the services of Seller's officers and employees as a
group and maintain satisfactory relationships with suppliers, distributors,
customers and others having business relationships with Seller, (ii) confer on a
regular and weekly basis with representatives of Purchaser to report operational
matters and the general status of ongoing operations, (iii) not intentionally
take any action which would render, or which reasonably may be expected to
render, any representation or warranty made by Seller in the Agreement untrue at
the Closing, (iv) notify Purchaser of any emergency or other change in the
normal course of Seller's business or in the operation of Seller's properties
and of any governmental or third party complaints, investigations or hearings
(or communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would be material,
individually or in the aggregate, to the business, operations or financial
condition of Seller or the ability of Seller to consummate the transactions
contemplated by this Agreement, and (v) promptly notify Purchaser in writing if
Seller or its representatives shall discover that any representation or warranty
made by Seller in this Agreement was when made, or has subsequently become,
untrue in any respect.
4.13 Regulatory Filings. Seller is not required, and shall not be required
prior to or following Closing, to make any filings or submissions under any laws
or regulations applicable to Seller for the consummation of the transactions
contemplated herein. Seller shall make all filings necessary such that, at the
Closing, Purchaser may file for and obtain use of Seller's corporate name
identified on page one of this Agreement. Purchaser has advised Seller that the
execution of this Agreement and closing of the transaction contemplated hereby
may require the Purchaser to provide certain disclosure concerning the business
and the financial statements of Seller to the United States Securities and
Exchange Commission. Seller hereby consents to the inclusion of disclosure
concerning Seller, the financial statements of Seller and the representations
and warranties made by Seller in the course of this transaction, in a periodic
report or any amendment thereto, in order to allow Purchaser to discharge its
disclosure obligations under the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder.
4.14 No Negotiations. None of Seller, its officers, directors or the
Shareholder shall cause Seller to, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage submission of any
proposal or offer from any person or entity (including any of its or their
officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or the purchase of all or
a material portion of the assets of, or any
16
equity interest in, Seller, or any similar transaction or business combination
involving Seller, or participate in any negotiations regarding, or furnish to
any other person, any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of the foregoing. Seller
shall within five business days notify Purchaser of any such proposal or offer,
or any inquiry from or contact with any person with respect thereto, and shall
promptly provide Purchaser with such information regarding such proposal, offer,
inquiry or contact as Purchaser may request.
4.15 Assignment of Contracts, Leases and Other Agreements. Seller agrees
that, prior to the Closing, it will secure the approval of all parties with
which Seller has customer, supplier or other agreements as to which consent is
expressly required and assignment is contemplated to Purchaser and, should
Purchaser desire to assume any other contract, lease, agreement or right, Seller
shall use its best efforts to secure the approval of the remaining party to the
contract, lease, agreement or right such that Purchaser may succeed to rights
and obligations of Seller under such contracts, leases, agreements or rights.
4.16 Best Efforts. Seller agrees to use its best efforts in good faith to
satisfy the various conditions to Closing and to consummate the transactions
provided for herein as expeditiously as possible. Seller will not take or
knowingly permit to be taken any action that would be in breach of the terms or
provisions of this Agreement or that would cause any of its representations and
warranties contained herein to be or become untrue.
4.17 Additional Disclosure. From the date of this Agreement to and
including the Effective Date, Seller promptly upon the occurrence thereof, will
advise Purchaser of each event subsequent to the date hereof which would have
had to be disclosed on any exhibit to this Agreement had it occurred prior to
the date hereof.
ARTICLE V
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
5.1 Further Assurances. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
each of the parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other party
reasonably may request, all at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification therefor under
Article X).
5.2 Litigation Support. In the event and for so long as any party actively
is contesting or defending against any action, suit, proceedings, hearing,
investigation, charge, complaint, claim or demand in connection with (a) any
transaction contemplated by this Agreement, or (b) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction on or prior to the Closing
involving the Seller, each of the other parties will cooperate with each other
and counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at the sole cost and
expense of the contesting or defending party (unless the contesting or defending
party is entitled to indemnification therefor under Article X).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the statements contained
in this Article VI are true, correct and complete as of the date of this
Agreement and will, except as otherwise expressly provided in this Agreement be
true, correct and complete on Closing as follows:
6.1 Organization and Qualification of Purchaser. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado and has the full corporate power and authority to own
and operate its properties and to carry on its business.
6.2 Authorization. This Agreement has been duly and validly executed by
Purchaser, as certified in Exhibit 6.2 hereto, and the agreements,
representations, and warranties contained herein constitute valid and binding
obligations, representations, and warranties of Purchaser enforceable in
accordance with their terms.
17
6.3 No Conflicting Agreements. The execution and delivery of this
Agreement by Purchaser does not, and consummation by Purchaser of the
transactions contemplated hereby will not, (a) violate any existing term or
provision of any law, regulation, order, writ, judgment, injunction or decree
applicable to Purchaser, (b) conflict with or result in a breach of any of the
terms, conditions or provisions of the Articles of Incorporation or Bylaws of
Purchaser or of any agreement or instrument to which Purchaser is a party, or
(c) result in the creation or imposition of any lien, charge, security interest,
encumbrance, restriction or claim upon Purchaser or any of its assets.
6.4 Compliance with Applicable Law. Purchaser has not received any notice
or information of any violation, probable violation or default by Purchaser
under any applicable law, regulation or order of any governmental department,
commission, board or agency or instrumentality, domestic or foreign, having
jurisdiction over Purchaser's operations which could materially adversely affect
the business, operations, financial condition, properties or assets of Purchaser
or the ability to consummate the transaction contemplated hereby.
6.5 Litigation. There are no material actions, proceedings or
investigations pending, or to the knowledge of Purchaser, threatened against
Purchaser or its officers or directors, before any court or administrative
agency or administrative officer.
6.6 Material Misstatements or Omissions. Neither this Agreement nor any
other document, certificate or statement furnished to Seller by or on behalf of
Purchaser in connection with this Agreement contains any untrue statement of a
material fact, or omits any material fact necessary to make the statements
contained herein and therein not misleading in light of the context in which
they were made.
6.7 Consents and Approvals. The execution and delivery by Purchaser of
this Agreement, and the performance by Purchaser of Purchaser's obligations
hereunder, do not require Purchaser to obtain any consent, approval or action
of, or make any filing with or give any notice to, any corporation, person or
firm or any public, governmental or judicial authority except (i) such as have
been duly obtained or made, as the case may be, and are in full force and effect
on the date hereof and will continue to be in full force and effect on the
Closing, and (ii) those which the failure to obtain would have no material
adverse effect on the transactions contemplated hereby.
6.8 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by representatives of
Purchaser directly with Seller, without the intervention of any person on behalf
of Purchaser in such manner as to give rise to any valid claim by any person
against Seller for a finder's fee, brokerage commission or similar payment. All
rights of indemnity under Article X hereof shall apply to any claim relating to
a Loss (hereinafter defined) arising out of this Agreement for any fee,
commission or similar payment.
6.9 Representations as to Knowledge. The representations and warranties
contained in Article VI hereof shall in each and every event whereby and
exercise of discretion or a statement to the "best knowledge", "best of
knowledge" or "knowledge" is required on behalf of any party to this Agreement
be deemed to require that such exercise of discretion or statement be in good
faith, with due diligence, to the best efforts of each such party and be
exercised always in a reasonable manner and within reasonable times.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees as follows:
7.1 Other Contracts. From and after the date of this Agreement, Purchaser
will not enter into or become subject to any agreement or commitment which would
restrict or in any way impair the obligation of Purchaser to comply with all of
the terms of this Agreement.
7.2 Additional Disclosure. From the date of this Agreement to and
including the Closing, Purchaser will, promptly upon the occurrence thereof,
advise Seller of each event subsequent to the date hereof which would have had
to be disclosed by Purchaser on any exhibit to this Agreement had it occurred
prior to the date hereof.
7.3 Notice of Breach. In the event of and promptly after becoming aware of
the occurrence or threatened occurrence of any event which would cause or
constitute a breach of any warranty, representation, covenant or agreement of
Purchaser contained herein, Purchaser shall give notice in writing of such event
or threatened event to Seller and use all reasonable efforts to prevent or
promptly remedy such breach or threatened breach.
18
7.4 Nondisclosure. The Purchaser agrees that any publicity release,
security filing, or any other communication, whether written or oral,
identifying this proposed transaction shall not identify Seller any time prior
to Closing unless required by applicable securities laws or regulations.
7.5 Best Efforts. Purchaser agrees to use its best efforts in good faith
to satisfy the various conditions to Closing and to consummate the transactions
provided for herein as expeditiously as possible. Purchaser will not take or
knowingly permit to be taken any action that would be contrary to or in breach
of the terms or provisions of this Agreement or that would cause any of the
representations and warranties of Purchaser contained herein to be or become
untrue.
7.6 Regulatory Filings. Purchaser has advised Seller that the transaction
contemplated hereby will require Purchaser to file disclosure, in the form of a
periodic report or amendments thereto, with the United States Securities and
Exchange Commission, which report may include disclosure concerning, and the
financial statements of, Seller. Purchaser agrees to provide Seller upon request
a copy of such periodic report or any amendment thereto. Purchaser will make all
required filings with the Securities and Exchange Commission that relate to this
transaction.
7.7 Non-Compete and Confidentiality Agreements. At or prior to Closing,
the Purchaser shall execute non-compete and confidentiality agreements with the
Seller, the Shareholder, and with Xxxxx X. Xxxxxx substantially in the form of
Exhibit 7.7 hereto.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Obligations of Seller. The obligations of
Seller to consummate and effect this Agreement are subject to the satisfaction
in all material respects, on or before Closing, of the following conditions
(unless waived by Seller in writing in the manner provided in Section 8.1(d)
hereof):
(a) Representations and Warranties of Purchaser; Performance by
Purchaser. (i) The representations and warranties of Purchaser set forth
in Article VI hereof shall (except where stated to be as of an earlier
date) be accurate in all material respects on and as of the Closing as
though made on and as of the Closing, except for any changes resulting
from activities or transactions which may have taken place after the date
hereof which are expressly permitted by this Agreement or which have been
entered into in the ordinary course of business and are not expressly
prohibited by this Agreement; (ii) Purchaser shall have performed all
obligations and complied with all covenants required to be performed or to
be complied with by Purchaser under this Agreement prior to or at the
Closing including the delivery of all documents required at the Closing;
and (iii) Seller shall have received a certificate dated the Closing and
signed by the President of Purchaser to the effect that the
representations and warranties made by Purchaser in this Agreement are
true and accurate in all material respects as of the Closing (or, where
applicable, as of the earlier specified date), which certificate shall be
in the form of Exhibit 8.1.
(b) Action. All action necessary to authorize the execution,
delivery and performance of this Agreement by Purchaser and the
consummation of the transactions contemplated hereby shall have been duly
and validly taken by Purchaser. Purchaser shall have furnished Seller with
copies of all consents or resolutions adopted or executed by Purchaser in
connection with such actions, certified by the Secretary of Purchaser.
(c) No Action or Proceeding. As of the Closing, no action or
proceeding by any public authority or person shall be pending before any
court or administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated herein. There shall not be threatened, instituted or pending
any action or proceeding, before any court or governmental authority or
agency, domestic or foreign, (i) challenging or seeking to make illegal,
or to delay or otherwise directly or indirectly restrain or prohibit, the
consummation of the transactions contemplated hereby or seeking to obtain
material damages in connection with such transactions, (ii) seeking to
prohibit direct or indirect ownership or operation by Purchaser of all or
a material portion of the business or Assets of Seller, or to compel
Seller or Purchaser to dispose of or to hold separately all or a material
portion of the business or assets of Seller, as a result of the
transactions contemplated hereby, (iii) seeking to require direct or
indirect transfer or sale by Purchaser of any of the Assets, (iv) seeking
to invalidate or render unenforceable any material provision of this
Agreement or any of the other agreements attached hereto as Exhibits, or
otherwise contemplated hereby, (v) seeking relief against Purchaser under
any federal or state law or regulation relating to bankruptcy, insolvency,
reorganization or moratorium or creditors' rights generally, (vi)
otherwise relating to and materially adversely affecting the
19
transactions contemplated hereby, or (vii) which could result in any
material adverse change in the business, operations, financial condition
or properties of Purchaser.
(d) Waiver of Conditions Precedent. Seller may waive any or all of
the conditions precedent set forth in this Article VIII, either
prospectively or retroactively, by giving written notice of such waiver to
Purchaser. No waiver of any condition precedent pursuant to this paragraph
8.1(d) shall, unless otherwise expressly stated in such written notice of
waiver, extend to any covenant or agreement contained herein or to any
other condition precedent.
(e) Discovery of Facts or Circumstances. Seller shall not have
discovered any fact or circumstance existing as of the date of this
Agreement which has not been disclosed to Seller as of the date of this
Agreement regarding the business, assets, liabilities, properties,
condition (financial or otherwise), results of operations or prospects of
Purchaser which is, individually or in the aggregate with other such facts
and circumstances, materially adverse to Purchaser.
(f) Opinion of Counsel. Seller shall have received from Xxxxx &
Xxxxxx, P.C., counsel to Purchaser, an opinion dated the Closing, to the
following effect:
(i) Purchaser is a corporation duly organized, validly
existing in a good standing under the laws of the State of Colorado.
(ii) Execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action, corporate and
otherwise, by Purchaser; this Agreement is a valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance
with its terms except as enforcement can be limited by general
equitable principles or bankruptcy, insolvency or similar laws
affecting creditor's rights generally.
(iii) The execution and delivery of the Agreement will not
violate or conflict with the Articles of Incorporation or Bylaws of
Purchaser or any agreement known to such counsel to which Purchaser
is a party or by which Purchaser or its assets are bound.
(iv) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or any
court is required to be obtained or made by Purchaser pursuant to
this Agreement except such as has been obtained or made.
(v) Except as disclosed in this Agreement or the Exhibits
hereto, such counsel is not aware of any material pending or
threatened action, suit, proceeding or investigation before any
court or any public, regulatory or governmental agency, authority or
body, involving Purchaser or any of its officers or directors, and
such counsel does not know of any legal matter or government
proceedings regarding Purchaser.
(g) Miscellaneous. No party shall have initiated action seeking
monetary damages or claims in connection with, or seeking to prohibit or
enjoin the transactions described in this Agreement.
8.2 Conditions Precedent to Obligations of Purchaser. The obligation of
Purchaser to consummate and effect this Agreement are subject to the
satisfaction in all material respects, on or before Closing, of the following
conditions (unless waived by Purchaser in writing in the manner provided in
Section 8.2(f) hereof):
(a) Representations and Warranties of Seller and Shareholder;
Performance by Seller. (i) The representations and warranties of Seller
and its Shareholder set forth in Article III hereof shall (except where
stated to be as of an earlier date) be accurate in all material respects
on and as of the Closing as though made on and as of the Closing, except
for any changes resulting from activities or transactions which may have
taken place after the date hereof which are expressly permitted by this
Agreement or which have been entered into in the ordinary course of
business and are not expressly prohibited by this Agreement; (ii) Seller
shall have performed all obligations and complied with all covenants
required to be performed or to be complied with by it under this Agreement
prior to the Closing; (iii) Purchaser shall have received a certificate
dated as of the Closing and signed by the President of Seller to the
effect that the representations and warranties made by Seller in this
Agreement are true and accurate in all material respects as of the Closing
(or, where applicable, as of the earlier specified date) in
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the form attached as Exhibit 8.2; (iv) Purchaser shall have entered into
non-compete and confidentiality agreements with the Seller, the
Shareholder and with Xxxxx X. Xxxxxx in the form attached as Exhibit 7.7,
which shall commence by their terms on Closing of the purchase of the
Assets; and (v) Seller shall have obtained the landlord's consent as
contemplated in Section 12.7 hereof.
(b) Action. All action necessary to authorize the execution,
delivery and performance of this Agreement by Seller and the consummation
of the transactions contemplated hereby shall have been duly and validly
taken by Seller. Seller shall have furnished Purchaser with copies of all
consents or resolutions adopted or executed by Seller in connection with
such actions, certified by the Secretary of Seller.
(c) No Action or Proceeding. As of the Closing, no action or
proceeding by any public authority or person shall be pending before any
court or administrative body or overtly threatened to restrain, enjoin or
otherwise prevent the consummation of this Agreement or the transactions
contemplated herein. Further, except as described on Exhibit 3.7, there
shall not be threatened, instituted or pending any action or proceeding,
before any court or governmental authority or agency, domestic or foreign,
(i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or
indirect ownership or operation by Purchaser of all or a material portion
of the business or assets of Seller, or to compel Purchaser or Seller to
dispose of or to hold separately all or a material portion of the business
or assets of Seller, as a result of the transactions contemplated hereby,
(iii) seeking to require direct or indirect transfer or sale by Purchaser
of any of the Assets, (iv) seeking to invalidate or render unenforceable
any material provision of this Agreement or any of the other agreements
attached hereto as Exhibits, or otherwise contemplated hereby, (v) seeking
relief against Seller under any federal or state law or regulation
relating to bankruptcy, insolvency, reorganization or moratorium or
creditors' rights generally, (vi) otherwise relating to and materially
adversely affecting the transactions contemplated hereby, or (vii) which
could result in any material adverse change in the business, operations,
financial condition or properties of Seller or the Assets.
(d) No Adverse Changes. There shall have been no event or change
occurring between the execution of this Agreement and the Closing which in
the aggregate may be deemed to have a material adverse effect on the
business, operations, financial condition or properties of Seller or the
Assets.
(e) Litigation. Except as described on Exhibit 3.12, there shall be
no actions, proceedings or investigations pending, threatened against
Seller or its officers or directors before any court, any administrative
agency or administrative officer or executive, which could result in any
material adverse change in the business, operations, financial condition
or properties of Seller or the Assets.
(f) Waiver of Conditions Precedent. Purchaser may waive any or all
of the conditions precedent set forth in this Section 8.2, either
prospectively or retroactively, by giving written notice of such waiver to
Seller. No waiver of any condition precedent pursuant to this Section
8.2(f) shall, unless otherwise expressly stated in such written notice of
waiver, extend to any other covenant or agreement contained herein or to
any other condition precedent.
(g) Breach or Violation. Seller shall have obtained, or caused to be
obtained, each consent and approval necessary in order that the
transactions contemplated herein not constitute a breach or violation of,
or result in a right of termination or acceleration of, or creation of any
encumbrance on any of the Assets, pursuant to the provisions of any
agreement, arrangement or undertaking of or affecting Seller or any
license, franchise or permit of or affecting Seller.
(h) Governmental Filings. All material governmental filings,
authorizations and approvals that are required for the consummation of the
transactions contemplated hereby shall have been duly made and obtained by
Seller (except filings required by Purchaser pursuant to applicable
securities laws).
(i) Discovery of Facts or Circumstances. Purchaser shall not have
discovered any fact or circumstance existing as of the date of this
Agreement which has not been disclosed to Purchaser as of the date of this
Agreement regarding the business, assets, liabilities, properties,
condition (financial or otherwise), results of operations or prospects of
Seller which is, individually or in the aggregate with other such facts
and circumstances, materially adverse to Seller or the value of the
Assets.
21
(j) Damage. There shall have been no damage, destruction or loss of
or to any property or properties owned or used by Seller, or to the
Assets, whether or not covered by insurance which, in the aggregate, has
or would be reasonably likely to have, a material adverse effect on
Seller.
(k) Opinion of Counsel. Purchaser shall have received from counsel
to Seller, an opinion dated the Closing, to the following effect:
(i) Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Missouri.
(ii) Execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action, corporate or
otherwise, by Seller, and by its Shareholder; this Agreement is a
valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms except as enforcement can be limited by
general equitable principles or bankruptcy, insolvency or similar
laws affecting creditor's rights generally.
(iii) The execution and delivery of this Agreement and the
sale of the Assets by Seller will not violate or conflict with the
Articles of Incorporation or Bylaws of Seller or any agreement or
instrument to which Seller is a party or by which Seller or its
Assets are bound.
(iv) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or any
court is required to be obtained or made by Seller for the sale of
the Assets pursuant to this Agreement, except such as have been
obtained or made.
(v) Except as disclosed in this Agreement or the Exhibits
hereto, such counsel is not aware, after reasonable investigation,
of any pending or threatened action, suit, proceeding or
investigation before any court or any public, regulatory or
governmental agency, authority or body, involving Seller or any of
its officers or directors, and such counsel does not know of any
legal matter or government proceedings regarding Seller.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
Except as otherwise stated below, the representations, warranties,
covenants and agreements made by the respective parties in this Agreement or in
a certificate executed and delivered in connection with the transactions
contemplated hereby shall survive the Closing for a period of three (3) years.
The foregoing shall be subject to the exception that any claims relating to tax
matters covered in Sections 3.26 and 3.27 hereof shall survive for the period of
the applicable statute of limitations pertaining to tax claims. All covenants,
agreements, representations and warranties made herein or pursuant hereto shall
be deemed to be material and to have been relied upon by the parties hereto,
notwithstanding any investigation heretofore or hereinafter made by or on behalf
of the parties prior to the Closing, provided, however, that no legal remedy, at
law or in equity, shall be available with respect to any loss, liability, or
breach of agreement or warranty or misrepresentation if the party alleging such
loss, liability, breach, or misrepresentation had actual knowledge of the
existence, nature and extent thereof on the Closing and, despite such knowledge,
proceeded with the Closing without objection.
ARTICLE X
INDEMNIFICATION
10.1 Indemnification. Subject to the provisions of Article IX and this
Article X, Seller and Shareholder agree to indemnify in respect of, and hold
Purchaser harmless against, any and all damages, claims, deficiencies, losses,
and expenses (collectively "Damages") resulting from (i) any misrepresentation,
breach of warranty, or nonfulfillment or failure to perform any covenant or
agreement on the part of Seller or the Shareholder made as a part of or
contained in this Agreement or in any certificate executed and delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby, except for Damages resulting from any such misrepresentations, breach of
warranty or nonfulfillment or failure to perform any such covenant or agreement
known to Purchaser and waived in writing by Purchaser as of the Closing and (ii)
Seller's operation of its business through the date of Closing. Subject to the
provisions of Article IX and this Article X, Purchaser agrees to indemnify in
respect of, and hold Seller harmless against, any and all Damages resulting
22
from (i) any misrepresentation, breach of warranty, or nonfulfillment or failure
to perform any covenant or agreement on the part of Purchaser made as a part of
or contained in this Agreement or in any certificate executed and delivered
pursuant to this Agreement or in connection with the transactions contemplated
hereby except for Damages resulting from any such misrepresentations, breach of
warranty or nonfulfillment or failure to perform any such covenant or agreement
known to Seller and waived in writing by Seller as of the Closing and (ii)
Purchaser's operation of the purchased business after the date of Closing. The
party claiming indemnification hereunder is hereinafter referred to as the
"Indemnified Party" and the party against whom such claims are asserted
hereunder is hereinafter referred to as the "Indemnifying Party". Damages for
which a claim or action may be asserted hereunder are hereinafter referred to as
a "Loss".
10.2 Limitation of Liability. Neither party shall be liable to the other
party to this Agreement except to the extent that the aggregate amount of Losses
for which they would otherwise (but for this provision) be liable under this
Article X exceeds in the aggregate the sum of $10,000 and then only to the
extent of such excess. Claims for indemnification by either party shall be
limited to the greater of (i) the amount of the Purchase Price, or (ii) the
amount of any damages, claims, deficiencies, losses and expenses paid by the
Indemnified Party to a third party.
10.3 Method of Asserting Claims. All claims for indemnification by any
Indemnified Party under this Article X shall be asserted and resolved as
follows:
(a) In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted
against or sought to be collected from such Indemnified Party by a third
party, said Indemnified Party shall, within twenty (20) days of such claim
or demand being made, notify the Indemnifying Party of such claim or
demand, specifying the nature of and specific basis for such claim or
demand and the amount or the estimated amount thereof to the extent then
feasible (the "Claim Notice"). The estimate of Loss contained in the Claim
Notice shall not limit the amount of the Indemnifying Party's ultimate
liability under the claim. The Indemnifying Party shall not be obligated
to indemnify the Indemnified Party with respect to any such claim or
demand if the Indemnified Party fails to notify the Indemnifying Party
thereof in accordance with the provisions of this Agreement within said
twenty (20) day period. The Indemnifying Party shall have 30 days from the
personal delivery or mailing of the Claim Notice (the "Notice Period") to
notify the Indemnified Party (i) whether or not the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such
claim or demand is disputed, and (ii) whether or not the Indemnifying
Party desires, at the sole cost and expense of the Indemnifying Party, to
defend the Indemnified Party against such claim or demand; provided,
however, that any Indemnified Party is hereby authorized prior to and
during the Notice Period to file any motion, answer or other pleading
which it shall deem necessary or appropriate to protect its interest or
those of the Indemnifying Party and not unreasonably prejudicial to the
Indemnifying Party. In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, then, except as
hereinafter provided, the Indemnifying Party shall have the right to
defend by all appropriate proceedings, which proceedings shall be promptly
settled or prosecuted by it to a final conclusion. If the Indemnified
Party desires to participate in, but not control, any such defense or
settlement it may do so at its sole cost and expense. If requested by the
Indemnifying Party, the Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which
the Indemnifying Party elects to contest, or, if appropriate and related
to the claim in question, in making any counterclaim against the person
asserting the third party claim or demand, or any cross complaint against
any person but in any such case at the sole cost and expense of the
Indemnifying Party. No claim may be settled without the consent of the
Indemnifying Party, unless such settlement includes the complete release
of the Indemnifying Party.
(b) In the event any Indemnified Party should have a claim against
any Indemnifying Party hereunder which does not involve a claim or demand
being asserted against or sought to be collected from it by a third party,
the Indemnified Party shall send a Claim Notice with respect to such claim
to the Indemnifying Party. If the Indemnifying Party does not notify the
Indemnified Party within the Notice Period that it disputes such claim,
the amount of such claim shall be conclusively deemed a liability of the
Indemnifying Party hereunder. If the Indemnifying Party has disputed such
claim, as provided above, such dispute shall be resolved by arbitration as
provided in Section 13.11.
10.4 Payment of Claim. Upon the determination of the liability of Seller
or Purchaser under Section 10.1, 10.2 and 10.3, as the case may be, after
payment by the Indemnified Party of, or upon entry of final judgment or reaching
of a settlement in respect of, an Indemnifiable Claim, or determination of a
Loss to the Indemnified Party, and notice thereof to
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the Indemnifying Party, the Indemnifying Party shall within thirty (30) days
after receipt of such notice pay to the Indemnified Party the amount of the
payment, judgment, settlement or Loss, as the case may be.
10.5 Other Rights and Remedies Not Affected. The indemnification rights of
the parties under this Article X are independent of and in addition to such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto including without limitation
the right to seek specific performance, rescission or restitution, none of which
rights or remedies shall be affected or diminished hereby.
10.6 Post-Closing Adjustments and Right of Offset. As promptly as
practicable, but in no event later than 120 days following the Closing, the
Purchaser may audit and calculate the actual results of Seller's operations
(including an audit of net revenues) from January 1, 1999 through the Closing
and the prior fiscal year ended December 31, 1998. In the event of a material
variation in net revenues between the results of such audit and the
representation as to net revenues made by Seller and Shareholder to Purchaser in
Exhibit 10.6 hereto (such material variation in net revenues to be defined as a
variation of more than the lesser of (i) 2% of revenues, or (ii) $10,000), then
the Purchaser shall have the right to offset the amount of such material
variation in excess of either of the above-described amounts against the Note
described in Section 2.2(b) above. Purchaser shall have no right of offset for
variations in net revenues disclosed to Purchaser in writing prior to Closing
nor shall Purchaser have a right of offset with respect to Seller's breach of a
representation or warranty herein if the Purchaser had actual knowledge of such
breach prior to Closing. In addition, the amount of any such offset shall also
be increased by interest calculated at the rate of 8% per annum from the date of
the Closing to the date the offset is taken. The Purchaser shall also have the
right of offset in lieu of payment under Section 10.4 above if it so elects.
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH
11.1 Amendment and Modification. This Agreement may be amended, modified
or supplemented only by an instrument in writing, executed after the date
hereof, making specific reference to this Article and to each Article and
paragraph hereof to which such amendment, modification or supplement applies,
which document shall be signed by an authorized officer of Purchaser and by
Seller.
11.2 Termination and Abandonment. This Agreement may be terminated and the
transaction provided for by this Agreement may be abandoned without liability on
the part of any party to any other party:
(a) At any time before the Closing Date, by mutual consent of Purchaser and
Seller;
(b) Automatically if the Closing has not occurred by September 30,
1999.
In the event of the termination and abandonment of this Agreement by any
party as above provided in this Article XI, written notice shall forthwith be
given to the other party, and each party shall be solely responsible to pay its
own expenses incident to preparation for the consummation of this Agreement and
the transactions contemplated hereunder (except as otherwise provided herein).
ARTICLE XII
CLOSING
12.1 Closing. The closing of this Agreement (the "Closing") shall be
September 3, 1999 or as soon thereafter as practicable but not later than
September 30, 1999, unless a later date is mutually agreed upon by the parties,
provided for accounting and allocation purposes, this Agreement shall be deemed
to be effective at 12:01 a.m. on the first day of the month in which the Closing
occurs ("Effective Date").
12.2 Allocations. At Closing (i) the Seller will pay Purchaser for all
vacation pay accrued for employees as of the Effective Date (see Exhibit 3.27);
and (ii) the parties shall allocate or prorate all the portion attributable to
Seller of the water, sewer, electric, other utilities and rent through the
Effective Date. For purposes of income and expense all income and expenses
incurred on or before the Effective Date shall be billed and collected by, and
paid for, by Seller.
24
12.3 Seller's Deliveries at Closing. At the Closing Seller and Shareholder
will deliver the following documents to the Purchaser all of which shall be
reasonably satisfactory in form and substance to the Purchaser and its counsel:
(a) Xxxx of Sale. Xxxx of Sale for the Assets in the form described
in Exhibit 12.3 hereto, together with such deeds, instruments,
conveyances, certificates of title, assignments, assurances and other
documents as may be required to sell, convey and transfer title to the
Assets from Seller to the Purchaser free and clear of any and all liens,
claims, charges, taxes, encumbrances, pledges, security interests, options
or other restrictions of any kind.
(b) Assignment of Intellectual Property. Assignment of Intellectual
Property described in Exhibit 3.18 together with assurances and other
documents as may be required to transfer all of Seller's right, title and
interest in the Intellectual Property.
(c) Assignment of Contracts, Leases and Other Agreements. Assignment
of contracts, leases and other agreements, described in Exhibit 3.20
together with assurances and other documents as may be required to
transfer all of Seller's right, title and interest in the contracts,
leases and other agreements.
(d) Opinion of Counsel. An opinion from Riezman & Blitz, P.C.,
counsel to Seller, dated the Closing, in the form described in Section 8.2
of this Agreement.
(e) Consents and Approvals. All consents, approvals and
authorizations, all notices and all registrations and filings required to
be obtained, given or made under any law, statute, rule, regulation,
judgment, order, injunction, contract, agreement or other instrument to
which Seller is subject, bound or a party, or by which Seller or any of
its properties is bound or subject, in each case which is required to
permit the consummation of the transactions contemplated by the Agreement
without contravention, violation or breach by the Seller of any of the
terms thereof.
(f) Certificates. Certificate of good standing for Seller from the
Secretary of State of the state of incorporation of Seller dated as of a
date reasonably prior to the Closing.
(g) Resolutions. Certified copy of resolutions of the Board of
Directors and the Shareholder of Seller authorizing, inter alia, the
execution and delivery of this Agreement, the sale of the Assets and the
other transactions contemplated under this Agreement.
(h) Non-Compete and Confidentiality Agreements. The non-compete
agreements of the Seller, the Shareholder and Xxxxx X. Xxxxxx in the form
set forth in Exhibit 7.7 hereto.
(i) Delivery of Corporate and Business Records. Such other corporate
and business records related to the Assets as may be reasonably requested
by the Purchaser including without limitation employee and personnel
folders and applications, payroll, tax related records and financial data.
(j) Officer's Certificate in the form described in Section 8.2 of
this Agreement.
(k) Other documents. Such other documents, instruments, certificates
and agreements including assignment of space lease to Purchaser, as
Purchaser and its counsel may reasonably request.
(l) License Agreement. The license agreement by and between the
Seller and the Purchaser shall be delivered to Purchaser and, upon such
delivery, Seller shall be released from any and all further obligation and
liability under such license agreement.
12.4 Purchaser's Deliveries at Closing. At the Closing, Purchaser shall
deliver the following documents to Seller all of which shall be in a form
reasonably acceptable to Seller and its counsel:
(a) Purchase Price. The purchase price for the Assets referred to in
Section 2.2 (a) and (b) including the cash portion and the Note.
25
(b) Consents and Approval. All consents, approvals and
authorizations, all notices and all registrations and filings required to
be obtained, given or made under any law, statute, rule, regulation,
judgment, order, injunction, contract, agreement or other instrument to
which the Purchaser is a party, or by which it or any of its properties is
bound or subject, in each case which is required to permit the
consummation of the transactions contemplated by this Agreement without
contravention, violation or breach by the Purchaser of any of the terms
thereof.
(c) Opinion of Counsel. An opinion from Xxxxx & Xxxxxx, P.C.,
counsel to the Purchaser, dated the Closing Date, in the form described in
Section 8.1 of this Agreement.
(d) Resolutions. Certified copy of resolutions of the Board of
Directors of the Purchaser authorizing, inter alia, the execution and
delivery of this Agreement and the Note, the purchase of the Assets, and
the other transactions contemplated hereby.
(e) Officer's Certificate in the form described in Section 8.1 of
this Agreement.
(f) Non-Compete and Confidentiality Agreements. The non-compete
agreements of the Seller, the Shareholder and Xxxxx X. Xxxxxx in the form
set forth in Exhibit 7.7 hereto.
(g) Other Documents. Such other documents, instruments, certificates
and agreements including without limitation, if assumed, the assumption of
the lease, as Seller and its counsel may reasonably request.
12.5 Employees' Vacations. Shortly after Closing, the Purchaser shall
offer each former employee of Seller the right to: (a) obtain his/her accrued
vacation pay in cash; or (b) to use his/her accrued vacation as paid time off in
accordance with the Purchaser's customary employee practices.
12.6 Removal of Personal Effects Following Closing. In the event the
Seller maintains assets which are the personal property of Seller on the
premises and Seller desires to remove such personal property, the Seller shall
have a period of sixty days following the Closing to remove such personal
property. As to any such personal property removed, the Seller shall provide the
Purchaser with a schedule of such property prior to the removal of the same from
the premises.
12.7 Cooperation; Premises. For a period of 90 days following the Closing,
Seller, without compensation, agrees to assist Purchaser in the retention of
Seller's customers and employees, conversion of the Seller's computer system, if
necessary, and perform any other duties Purchaser may reasonably request.
Further, Seller will obtain a consent from the lessor of Seller's office space
to the assignment of such space to the Purchaser effective on the Closing Date.
ARTICLE XIII
MISCELLANEOUS
13.1 Notice. All notices and communications required or permitted to be
given hereunder shall be in writing, signed by the sender, and delivered by
personal delivery overnight courier service or by registered or certified mail
to:
If to Purchaser: X. X. Xxxxxx, President
Factual Data Corp.
0000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxx
Xxxxx & Xxxxxx, P.C.
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
If to Seller: Residential Mortgage Credit Reporting, Inc.
0000 X. Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
With a copy to: Riezman & Xxxxx, X.X.
00
0000 Xxxxxxxxx Avenue, 0xx Xxxxx
Xxxxxxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
or such other address as shall have been furnished in writing. Receipt by, or
filing with, the respective parties of any communications shall be deemed to
have occurred for the purpose of this Agreement, when personally delivered, or
next business day if sent by overnight courier, or two days after deposit
thereof, postage prepaid, properly addressed, in the United States mail.
13.2 Entire and Sole Agreement. This Agreement, including all Exhibits
hereto (which by this reference shall incorporate herein all such Exhibits as if
more fully set forth herein), constitutes the entire agreement between the
parties and as of Closing supersedes all agreements, representations,
warranties, statements, promises and understandings, whether oral or written,
with respect to the subject matter hereof. After Closing neither party shall be
bound by or charged with any oral or written agreements, representations,
warranties, statements, promises or understandings not specifically set forth in
this Agreement or in the certificates or documents delivered in connection
herewith.
13.3 Successors and Assigns. Except as otherwise provided in this
Agreement, all covenants and agreements of the parties contained in this
Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties hereto and the heirs, personal
representatives, executors and assigns of the Shareholder. This Agreement may
not be assigned by any party hereto without the prior express written consent of
the other parties hereto.
13.4 Expenses. Whether or not the transactions contemplated hereby shall
be consummated, each party shall be solely responsible for payment of all
expenses incurred by it in connection with the consummation of this Agreement
and the transactions contemplated hereunder except as otherwise provided herein.
13.5 Severability. Should any one or more of the provisions of this
Agreement be determined to be illegal or unenforceable, all other provisions of
this Agreement shall be given effect separately from the provision or provisions
determined to be illegal or unenforceable and shall not be affected thereby.
13.6 Governing Law. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Colorado without regard
to conflicts of laws principles.
13.7 Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
13.8 Amendments. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing in accordance with Section 11.1 hereof.
13.9 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of the parties hereto, and it is
not the intention of the parties to confer third-party beneficiary rights upon
any other person or entity.
13.10 Headings. The headings in this Agreement are for purposes of
convenience and easy reference only and shall not limit or otherwise affect the
meaning hereof.
13.11 Disputes. In the event of any dispute which arises between the
parties and which relates to the subject matter of this Agreement, the parties
acknowledge and agree that any such dispute shall be submitted for binding
arbitration in Denver, Colorado in accordance with the Arbitration Commercial
Rules procedures established by the American Arbitration Association or, if such
association is not then in existence, an independent association of arbitrators
which may be designated by agreement of the parties. In the event the parties
are unable to agree on an independent association of arbitrators from which
arbitrators may be drawn, either party may apply to a court of competent
jurisdiction for appointment of arbitrators, however, such application will only
be made in the event the American Arbitration Association is not then in
existence. The arbitrator(s) shall make detailed written findings to support
their award. The prevailing party in any such arbitration proceeding shall be
awarded such costs and expenses (including reasonable attorney's and expert
witness' fees) as were incurred by the prevailing party as a result of the
institution and prosecution of the arbitration proceeding including all costs
and expenses (including reasonable attorney's and expert witness fees) to enter
judgment upon or enforce any such award including all appellate proceedings.
27
13.12 Delivery of Exhibits. All Exhibits to be delivered by either of the
parties hereto shall be delivered to the other party prior to the execution of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASER:
FACTUAL DATA CORP.
By: /s/ X. X. Xxxxxx
X. X. Xxxxxx, President
SELLER:
RESIDENTIAL MORTGAGE CREDIT
REPORTING, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, Chairman
SHAREHOLDER, but only with respect to
Articles III and X:
BENTLEY INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, President
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TABLE OF ATTACHMENTS
Exhibit Description
2.1 List of Acquired Assets
2.2(b)(i) Form of Promissory Note and Amortization Schedule
2.2(b)(ii) Form of Security Agreement
2.3 List of Assumed Liabilities
3.1(a) Articles of Incorporation of Seller
3.1(b) Bylaws of Seller
3.3(a) Certificate of Seller re: Shareholder Approval
3.3(b) Directors' Consent of Seller
3.7 Governmental Notices
3.12 Litigation
3.15 Exceptions to Title of Assets
3.16(a) Customer Accounts
3.16(b) Customer Contracts or Agreements
3.16(c) Impaired Customer Contracts
3.16(d) Delinquent Contracts or Agreements
3.17 License Agreements
3.18 Intellectual Property
3.19 Seller's Customers--Revenues
3.20 Contracts
3.22 Liabilities not on Financial Statements
3.23 No Material Adverse Changes
3.25 Leases
3.26 Tax Returns
3.27 Tax Notices
3.28 Employment Matters
3.29 Employee Benefit Plans
6.2 Directors' Consent of Purchaser
7.7 Non-Compete and Confidentiality Agreements
8.1 Form of Certificate of Purchaser
8.1(f) Opinion of Xxxxx & Xxxxxx, P.C.
8.2 Form of Certificate of Seller
8.2(k) Opinion of Riezman & Blitz, P.C.
10.6 Seller's and Shareholder's Representation as to Net Revenues
12.3 Xxxx of Sale and Assignment
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