EXHIBIT 99a
ASSET PURCHASE AGREEMENT
------------------------
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of 12:01 a.m., Central Daylight Savings Time, on the 6th day
of July, 1997 (the "Effective Date") by and among Cycle Software Services, Inc.,
a Minnesota corporation (the "Company"); Omni Resources Corporation -- Midwest,
a Massachusetts corporation ("Midwest"); and Omni Multimedia Group, Inc., a
Delaware corporation ("Multimedia").
BACKGROUND
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Midwest desires to sell certain of its assets to the Company and the
Company desires to purchase such assets.
AGREEMENT
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In consideration of the foregoing premises and of the mutual agreements
hereinafter set forth, the Company, Midwest and Multimedia agree as follows:
1. SALE OF ASSETS. (a) Multimedia and Midwest hereby sell, contribute,
assign, transfer and deliver to the Company certain of Midwest's tangible and
intangible assets, properties and rights (the "Purchased Assets"), as described
in paragraphs (i) through (v) below (but excluding the Excluded Assets, as
defined in Section 2), free and clear of any lien, claim, or encumbrance of any
nature whatsoever, other than the Assumed Liabilities and a security interest
held by Finova Capital Corporation ("FINOVA"):
(i) Fixed Assets. All furniture, fixtures, equipment,
leasehold improvements and other fixed assets owned and used by Midwest and
located at its leased premises at 0000 Xxxxxxx Xxxxxx Xxxxx, Xxxxxxxxxxx,
Xxxxxxxxx (the "Leased Premises").
(ii) Lease. Except as otherwise set forth herein, all of
Midwest's right, title and interest in and to the lease for the Leased Premises,
including any security and damage deposit related thereto (the "Lease").
(iii) Books and Records. All of Midwest's files, client
records, job records, archives, sales, supplier and operating records, vendor
lists and other records with respect to the Business (whether maintained in
printed copy or computer or electronic databases), including any software
related thereto, as well as copies of Midwest's employees' records for the
twelve (12) month period preceding the Closing Date and copies of personnel
files for Midwest's current employees.
(iv) Client List. All of Midwest's client lists, prospect
lists and other related records with respect to (whether maintained in printed
copy or computer or electronic data bases), including any related software.
(v) Inventory. All of Midwest's inventory, whether in the form
of raw materials, work in process or finished products (the `Inventory").
(b) The Purchased Assets are being purchased on an as is/where is basis
and ALL EXPRESS AND IMPLIED WARRANTIES, INCLUDING WARRANTIES OF MERCHANTABILITY
AND FITNESS FOR A PARTICULAR PURPOSE, ARE HEREBY EXPRESSLY EXCLUDED AND
DISCLAIMED.
(c) The purchase price for the Purchased Assets (except for the
Inventory) shall be $15,000, which shall be paid on behalf of Midwest to FINOVA.
The Inventory is hereby transferred to the Company on a consignment basis. The
Company shall use its best efforts to sell or use the Inventory in a
commercially reasonable manner. In the event the Company uses any Inventory, it
shall pay to FINOVA on behalf of Midwest the book value of such Inventory. Any
amounts collected with respect to sales of Inventory shall be paid, on behalf of
Midwest and Multimedia, to FINOVA, with an accounting of such payments to
FINOVA, Midwest and Multimedia.
2. EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the
contrary, the Purchased Assets shall not include any assets not specified in
Section 1 hereof, including without limitation the following assets of Midwest
(the "Excluded Assets"), which shall be retained by Midwest:
(a) Midwest's accounts receivable;
(b) Midwest's corporate minute books and stock records
and tax returns; and
(c) Midwest's intellectual property, including all
trademarks, trade names, including the name "Omni
Midwest," service marks, copyrights, drawings,
current and previous marketing material, portfolios
and other intellectual property owned or used by
Midwest.
3. ASSUMPTION OF LIABILITIES. Subject to the representations and
warranties provided in this Agreement, the Company shall assume the liabilities,
duties and obligations of Midwest arising under the Lease; provided, however,
that Midwest shall retain and be responsible for (a) any liabilities or
obligations arising under the Lease relating to events occurring prior to the
Effective Date and (b) unpaid real estate taxes in the amount of $14,299.17 (and
any penalties or late charges relating thereto), which Midwest shall pay by
August 1, 1997. The Company shall offer employment to all of Midwest employees
(except for Xxxx Xxxxxxx, who shall be terminated by Midwest), shall credit such
employees with all accrued vacation earned in connection with their employment
by Midwest as of the Effective Date and shall be responsible for their salaries
and benefits (excluding medical insurance) commencing on the Effective Date.
Midwest shall be responsible for any obligations arising out of the termination
of Xx. Xxxxxxx. The obligations of the Company set forth in this Section 3 are
hereinafter referred to as the "Assumed Liabilities."
4. LIABILITIES EXCLUDED. Except for the liabilities assumed in Section
3, the Company is not assuming and shall not be liable for any claims, potential
claims, liabilities, debts or obligations (contractual or otherwise) of Midwest
or Multimedia of any kind, whether now existing or hereafter arising, whether
accrued or contingent, including, without limitation, the following: (i) claims,
potential claims, obligations, debts and liabilities arising directly or
indirectly from or in connection with the operation of the Business on or before
the Effective Date, including, without limitation, any claims, potential claims,
obligations, debts, liabilities or expenses arising directly or indirectly from
or in connection with any of Midwest's projects completed prior to the Effective
Date; (ii) claims, potential claims and liabilities arising directly or
indirectly from
or in connection with the Lease prior to the Effective Date; (iii) obligations,
debts and liabilities arising directly or indirectly from or in connection with
any breach or default by Midwest or Multimedia with respect to obligations to
third parties arising from the consummation of the transactions contemplated
herein; (vi) obligations, debts and liabilities arising directly or indirectly
from or in connection with any acts or omissions of Midwest or Multimedia,
whether occurring before, on, or after the Effective Date; (vii) obligations,
debts and liabilities arising directly or indirectly from or in connection with
any liability or obligation of Midwest in respect of any state, local, federal
or foreign taxes (whether in the nature of income, transfer, sales, withholding,
employee, excise, property, customs, gross receipts, special assessments or
other taxes or duties of any kind whatsoever) or penalties, interest or fines in
respect thereof, or any reporting requirement or estimated tax payable with
respect thereto; (viii) claims, potential claims, obligations, debts and
liabilities arising directly or indirectly from or in connection with any
litigation, investigation or other proceeding pending or threatened in respect
of Midwest or Multimedia on or prior to the Effective Date or subsequently
asserted which is attributable to facts existing, events or omissions occurring
or projects completed by Midwest or Multimedia or their affiliates prior to the
Effective Date; (ix) obligations, debts and liabilities arising directly or
indirectly from or in connection with any liability or obligation to any party
under any Midwest employee benefit plan; and (x) obligations, debts and
liabilities arising directly or indirectly from or in connection with any
liability or obligation of Midwest to any employee or former employee of Midwest
for periods on or prior to the Effective Date, whether under an employment
contract or for unpaid or accrued salary, severance pay, termination pay,
pensions, bonuses or otherwise, but only to the extent such obligations are not
being assumed by the Company hereunder.
As used in this Section 4, "claims" shall mean demands against Midwest
by Midwest's clients or others for money or equitable relief, including, but not
limited to, lawsuits or arbitrations in which Midwest is a party and all events
or circumstances of which Midwest has notified its insurers. As used in this
Section 4, "potential claims" shall mean circumstances of
which Midwest is or should be aware and which may give rise to a claim by
Midwest's clients or others against Midwest or Midwest's employees or
consultants.
5. MIDWEST'S REPRESENTATIONS AND WARRANTIES. In order to induce the
Company to enter into this Agreement and to consummate the transactions
contemplated herein, Midwest hereby makes the representations and warranties to
the Company set forth below. As used throughout this Agreement, the term
"knowledge" and the phrase "should have knowledge" shall mean as known to
Midwest, its directors, officers and principals, as the case may be, after
reasonable inquiry and investigation by Midwest, its directors, officers, and
principals, as the case may be.
(a) Clear Title. Midwest has full right, title and interest in
and to the Purchased Assets and the unrestricted right and authority to
contribute, assign, transfer and deliver all of the Purchased Assets in
accordance with the terms of this Agreement. All of the Purchased Assets are
free and clear of all security interests, liens, pledges, mortgages, conditional
sales contracts, lessors' interests (other than the Lease), attachments,
judgments, claims, easements and other encumbrances of every kind and nature,
except for a security interest held by FINOVA.
(b) Contractual Commitments. There are no written or oral
commitments, contracts or agreements to which Midwest or Multimedia is a party
or by which any of them is bound that will be binding upon or otherwise affect
the Company or the Purchased Assets.
(c) Litigation. There is no action, suit, claim, litigation,
investigation, proceeding or controversy in any court or any arbitration or
other proceeding before any arbitrator or public commission, bureau, board or
agency pending, or, to the best knowledge of Midwest, threatened by or against
Midwest. There is no judgment, order, writ, stipulation, award or injunction
enjoining Midwest in the conduct of its business or any decree of any court or
governmental agency adversely affecting the operation of its business.
(d) Midwest's Employees. Midwest has no written or oral
agreement with any employee that is not terminable by Midwest upon not more than
30 days' written notice without
payment of any additional consideration. No unfair labor practice, equal
opportunity complaint, wage and hour complaint, OSHA, or other alleged
employment-, health- or safety-related or health violation is pending or, to the
best knowledge of Midwest, threatened against Midwest.
(e) Incorporation, Legal Capacity, and Authority. Midwest is
duly organized, validly existing and in good standing under the laws of the
State of Minnesota. Midwest is qualified to do business in any states where it
is required to qualify to transact business, except where the failure to qualify
would not have a material adverse effect on Midwest.
(f) Authorization. This Agreement and the transactions
provided for hereunder have been duly authorized by all necessary corporate
action of Midwest and Multimedia, and this Agreement constitutes the valid and
legally binding obligation of Midwest and Multimedia, enforceable against each
in accordance with its terms. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, will violate any provision of Midwest's articles of incorporation,
by-laws or any provision of any agreement, indenture, instrument, order,
judgment or decree to which Midwest or Multimedia is a party or by which any one
or more of them is bound.
(g) No Disputes. Midwest has no material disputes with any of
its creditors or employees.
(h) Taxes. Midwest has duly filed all reports and returns
required to be filed on or before the Effective Date with respect to sales and
use taxes, and all sales and use taxes due and payable in connection with
Midwest's business up to the Effective Date have been or will be paid when
required to be paid.
(i) Ownership of Midwest. Multimedia owns 100 percent of the
outstanding common stock of Midwest and no other rights to or interests in
Midwest common stock exist or are outstanding.
(k) No Brokers. Midwest and Multimedia have no contractual
commitments with, or are required to pay to, any broker or finder any commission
or fee in connection with the consummation of the transactions contemplated in
this Agreement.
6. THE COMPANY'S REPRESENTATIONS AND WARRANTIES. In order to induce
Midwest and Multimedia to enter into this Agreement and to consummate the
transaction contemplated herein, the Company makes the representations and
warranties set forth below.
(a) Organization. The Company is duly organized, validly
existing, and in good standing under the laws of the State of Minnesota. The
Company is qualified to do business in all states where it is required to
qualify to transact business, except where the failure to qualify would not have
a material adverse effect on the Company. To the best of the Company's
knowledge, no consent, approval, or order of, no registration, filing, or
qualification with, and no application or notice to any third party is required
in order to consummate the transactions contemplated in this Agreement.
(b) Authorization. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated by this
Agreement, or violate any provision of the Company's Articles of Incorporation,
Bylaws or any provision of any agreement, indenture, instrument, order, judgment
or decree to which the Company is a party or by which it is bound.
(c) Litigation. There is no action, suit, claim, litigation,
investigation, proceeding or controversy in any court or any arbitration or
other proceeding before any arbitrator or public commission, bureau, board or
agency pending, or, to the best knowledge of the Company, threatened by or
against the Company. There is no judgment, order, writ, stipulation, award or
injunction enjoining the Company in the conduct of its business or any decree of
any court or governmental agency adversely affecting the operation of its
business.
(d) No Brokers. The Company has no contractual commitments
with, or is required to pay to, any broker or finder any commission or fee in
connection with the consummation of the transactions contemplated in this
Agreement.
7. COVENANTS OF THE PARTIES.
(a) Medical Coverage. Midwest shall offer COBRA medical
coverage to its employees through August 31, 1997, at the employees' cost.
(b) Accounts Receivable. The Company shall use its standard
and customary efforts to collect on behalf of, and as agent for, Midwest the
accounts receivable outstanding as of the Effective Date and shall promptly pay
to FINOVA, on behalf of Midwest and Multimedia, any amounts so collected, with
an accounting of such payments to FINOVA, Midwest and Multimedia. Midwest hereby
constitutes the Company the true and lawful attorney of Midwest for ninety days
from the date hereof, to demand and receive payments with respect to such
accounts receivable and to give receipts in respect of the same and to assert or
enforce any claim, right or title of Midwest with respect to said accounts
receivable. The Company shall not compromise or settle any unpaid receivable
without the prior consent of Midwest. At the expiration of such ninety day
period, the Company shall assign to Midwest, at Midwest's option, any receivable
which has not been fully collected.
(c) Preservation of Records. Midwest will, for a period of
three years after the Effective Date, maintain and keep copies of any books and
records that have been retained by Midwest in the ordinary course and relate to
its business and its operations prior to the Effective Date, and will permit the
Company or its duly authorized officers, agents or employees, to examine any
such books and records upon prior notice, at reasonable times.
(d) Further Assurance. For the better assuring and confirming
in the Company of its rights in and title to the Purchased Assets, Midwest and
Multimedia shall execute and deliver or cause to be executed and delivered all
such further bills of sale, assignments, powers of attorney and assurances as
the Company shall reasonably request. Midwest and Multimedia agree that they
will not (and will cause Omni Resources Corporation - Midwest not to) take any
action detrimental or adverse to the Company in connection with their rights,
pursuant to a Letter Agreement with FINOVA, dated February 7, 1997, to purchase
or obtain any assignment of amounts owed to FINOVA, or to enforce the same
against the Company.
8. CONDITIONS TO CLOSING.
It shall be a condition to the Company's obligation to execute and
close this Agreement that FINOVA consent to this transaction and agree to
release its security interest in the Purchased
Assets (other than the Inventory and proceeds therefrom), in a manner
satisfactory to the Company and to permit the sale of the Inventory in the
normal and ordinary course. It shall be a condition to Midwest's and
Multimedia's obligation to execute and close this Agreement that they be
released from obligations under the Lease (except as set forth in Section 3(b)
hereof) in a manner satisfactory to them.
9. INDEMNIFICATION.
(a) Indemnity for Damages. The Company shall indemnify, defend
and hold Midwest and Multimedia, their affiliates, directors and officers and
each of their successors and assigns, harmless in respect of any Damages (as
hereinafter defined) incurred by such parties; and Midwest and Multimedia,
jointly and severally, shall indemnify, defend and hold the Company, its
affiliates, directors and officers, and each of their successors and assigns,
harmless in respect of any Damages incurred by such parties.
(b) Definition of Damages. "Damages" as used in this Section
12 shall mean any claim, loss, cost, expense, liability, fine, penalty,
interest, payment or damage (including reasonable attorneys' fees, accountants'
fees, and any cost of litigation, negotiation, settlement, or appeal):
(i) incurred by the Company, its shareholders, its
affiliates, directors or officers, or their successors or assigns, resulting or
arising from or in connection with (A) the breach of any of the representations
or warranties made by Midwest; (B) the breach or the failure of performance by
Midwest or Multimedia of any of the covenants required to be performed by them
hereunder; (C) other than the Assumed Liabilities, any liability arising from or
in connection with the operation of the Midwest's business on or prior to the
Effective Date; or (D) the Excluded Assets or any obligation, debt, or other
liability of Midwest, of any nature whatsoever, not expressly assumed by the
Company pursuant hereto; provided, however, that Midwest and Multimedia shall
not be liable for any amounts in excess of $20,000 in the aggregate with respect
to any Damages arising from subsection (i)(A).
(ii) incurred by Midwest, Multimedia, their
affiliates, their directors or officers or their successors or assigns resulting
or arising from or in connection with (A) the breach of any of the
representations or warranties made by the Company in this Agreement; (B) the
breach or failure of performance by the Company of any of the covenants required
to be performed by the Company hereunder, including but not limited to, any
failure to pay amounts due Midwest under this Agreement or any failure to
assume, pay, discharge, or perform any of the Assumed Liabilities; or (C) any
liability arising exclusively from the use of the Purchased Assets after the
Effective Date.
(c) Definition of Affiliates. The term "Affiliate" of the
Company, Midwest or Multimedia shall mean any person directly or indirectly
controlling, controlled by, or under common control with, the Company, Midwest
or Multimedia, as the case may be.
10. EXPENSES. The Company, Midwest and Multimedia shall each pay their
respective costs and expenses, including, without limitation, attorney and
accounting fees, incurred or to be incurred by them in negotiating and preparing
this Agreement and in closing and carrying out the transactions contemplated by
this Agreement.
11. MISCELLANEOUS.
(a) Entire Agreement. This Agreement supersedes all other
agreements and understandings among the parties, either oral or written,
constitutes the entire agreement of the parties with respect to the subject
matter hereof, and shall be amended only by an instrument in writing executed by
all parties.
(b) Binding Effect. This Agreement and the covenants herein
contained shall be binding upon, and inure to the benefit of, the parties hereto
and their respective successors, assigns, and legal representatives.
(c) Notices. Any notices hereunder shall be deemed given when
personally delivered in writing, when dispatched via overnight courier or when
mailed as described below, and shall be deemed received when personally
delivered in writing, twenty-four (24) hours after being sent via overnight
express courier, or seventy-two (72) hours after it has been deposited in
the United States Mail, registered or certified, postage prepaid, properly
addressed to the party to whom it is intended at the address set forth below or
at such other address to which notice is given in accordance herewith:
(i) In the case of the Company, to:
0000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxxxx
With a copy to:
Xxxx X. Xxxxx, Esq.
Xxxxxxx, Street and Deinard, P.A.
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxx, Xxxxxxxxx 00000
(ii) In the case of Midwest and Multimedia:
Omni Multimedia Group, Inc.
00 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxx X. Xxx
Executive Vice President
With a copy to:
Xxxxxxx Xxxx, Esq.
Xxxxxx & Xxxx
000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
(d) Specific Performance. In addition to any other remedies
the parties may have under this Agreement or at law or equity, the parties
acknowledge that the Purchased Assets are unique and that a party may have no
adequate remedy at law if the other party shall fail to perform any of its
obligations hereunder. In such event, such party shall have the right, in
addition to any other rights it may have under this Agreement or under law, to
specific performance of this Agreement plus costs and attorneys fees.
(e) Paragraph and Subparagraph Headings, Etc. Paragraph and
subparagraph headings throughout this Agreement are for the convenience of the
parties and do not constitute a part of this Agreement. Personal pronouns shall
be deemed masculine, feminine or neuter, singular or plural, as the context
requires.
(f) Governing Law. This Agreement shall be governed by the
laws of the State of Minnesota.
(g) Counterparts. This Agreement may be executed in several
counterparts, including execution by facsimile counterparts, each of which shall
be deemed an original but all of which counterparts collectively shall
constitute one instrument representing the Agreement among the parties.
(h) Further Assurances. Each party agrees to execute and
deliver, or cause to be executed and delivered, all instruments, certificates,
and documents, and to take all such other actions, as the other party to this
Agreement may reasonably request from time to time in order to effectuate the
purpose and intent of this Agreement.
(i) Survival of Representations and Warranties. Each of the
representations and warranties of the parties contained in this Agreement shall
survive the Closing.
(j) Third Party Beneficiary. FINOVA shall be a third party beneficiary
of, and shall be entitled to enforce, the Company's obligations as set forth in
Sections 1(c) and 7(b) hereof.
SIGNATURES:
CYCLE SOFTWARE SERVICES, INC.
By_______________________________
Its_____________________________
OMNI RESOURCES CORPORATION -- MIDWEST
By_______________________________
Its_____________________________
OMNI MULTIMEDIA GROUP, INC.
By_______________________________
Its___
