EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
NACIO SYSTEMS, INC.,
a Nevada corporation
NOVA COMMUNICATIONS LTD.,
a Nevada corporation
AND
NACIO SYSTEMS, INC.,
a California corporation
April 1, 2005
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TABLE OF CONTENTS
1. Definitions...........................................................1
2. Basic Transaction.....................................................4
(a) Purchase and Sale of Assets.....................................4
(b) Assumption of Liabilities.......................................4
(c) Purchase Price..................................................4
(d) The Closing.....................................................4
(e) Deliveries at the Closing.......................................4
(f) Allocation......................................................4
3. Representations and Warranties of Company.............................4
(a) Organization of Company.........................................5
(b) Authorization of Transaction....................................5
(c) Noncontravention................................................5
(d) Brokers' Fees...................................................5
(e) Title to Tangible Assets........................................5
(f) Financial Statements............................................5
(g) Legal Compliance................................................5
(h) Tax Matters.....................................................5
(i) Real Property...................................................6
(j) Intellectual Property...........................................6
(k) Contracts.......................................................6
(l) Powers of Attorney..............................................6
(m) Litigation......................................................6
(n) Employee Benefits...............................................6
(o) Environmental, Health, and Safety Matters.......................7
(p) Investment......................................................7
(q) Disclaimer of other Representations and Warranties..............7
4. Representations and Warranties of Buyer and Nova......................7
(a) Organization of Buyer and Nova..................................8
(b) Authorization of Transaction....................................8
(c) Noncontravention................................................8
(d) Brokers' Fees...................................................8
(e) Title to Tangible Assets........................................8
(f) Financial Statements............................................8
(g) Legal Compliance................................................9
(h) Tax Matters.....................................................9
(i) Real Property...................................................9
(j) Intellectual Property...........................................9
(k) Contracts.......................................................9
(l) Powers of Attorney.............................................10
(m) Litigation.....................................................10
(n) Employee Benefits..............................................10
(o) Environmental, Health, and Safety Matters......................10
(p) Nova Shares....................................................10
5. Pre-Closing Covenants................................................11
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(a) General........................................................11
(b) Notices and Consents...........................................11
(c) Operation of Business..........................................11
(d) Full Access / Confidential Information.........................11
(e) Notice of Developments.........................................11
6. Conditions to Obligation to Close....................................11
(a) Conditions to Obligation of Buyer and Nova.....................12
(b) Conditions to Obligation of Company............................12
7. Termination..........................................................13
(a) Termination of Agreement.......................................13
(b) Effect of Termination..........................................14
8. Indemnification......................................................14
(a) Indemnification Provisions for Benefit of the Buyer and Nova...14
(b) Indemnification Provisions for Benefit of Company..............14
(c) Matters Involving Third Parties................................15
9. Miscellaneous........................................................15
(a) Survival of Representations and Warranties.....................15
(b) Press Releases and Public Announcements........................15
(c) No Third-Party Beneficiaries...................................15
(d) Entire Agreement...............................................15
(e) Succession and Assignment......................................15
(f) Counterparts...................................................16
(g) Headings.......................................................16
(h) Notices........................................................16
(i) Governing Law..................................................16
(j) Amendments and Waivers.........................................16
(k) Severability...................................................16
(l) Construction...................................................17
(m) Incorporation of Exhibits and Schedules........................17
(n) Employee Benefits Matters......................................17
(o) Bulk Transfer Laws.............................................17
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Exhibit A - Form of Share Certificate
Exhibit B - Forms of Assignments
Exhibit C - Form of Assumption
Exhibit D - Allocation Schedule
Exhibit E - Company Financial Statements
Exhibit F - Buyer and Nova Financial Statements
Exhibit G - Officer Certificates and Board Resolutions
Disclosure Schedule Exceptions to Representations and Warranties
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into
effective as of April 1, 2005, by and among Nacio Systems, Inc., a Nevada
corporation (the "Buyer"), Nova Communications Ltd., a Nevada corporation
("Nova") and Nacio Systems, Inc., a California corporation (the "Company").
Buyer, Nova and Company are the only parties to this Agreement and are sometimes
referred to herein singularly as a "Party" and collectively herein as the
"Parties."
RECITALS
WHEREAS, Company provides web hosting, connectivity and outsourcing
services for businesses that use the Internet; and
WHEREAS, Buyer wishes to purchase substantially all of Company's assets
and to assume substantially all of Company's liabilities, and Company desires to
sell and assign such assets and liabilities to Buyer, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions. When used in this Agreement, the terms set forth below
and those defined throughout the Agreement when initially capitalized shall have
the meanings ascribed to them.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Adverse Consequences" means all legal actions, suits, proceedings,
hearings, governmental investigations, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, penalties, fines, costs,
liabilities, obligations, taxes, liens, losses, expenses, and fees, including
litigation costs and reasonable attorneys' fees and expenses.
"Acquired Assets" means all of the right, title, and interest that
Company possesses and has the right to transfer in and to the following assets:
all of Company's (a) tangible personal property (such as machinery, equipment,
inventories of raw materials and supplies, furniture, automobiles, trucks, and
tools), (b) intellectual property, goodwill associated therewith, Internet
domain name registrations, licenses and sublicenses granted and obtained with
respect thereto, and rights thereunder, remedies against infringements thereof,
and rights to protection of interests therein under the laws of all
jurisdictions, (c) leases, subleases, and rights thereunder, (d) agreements,
contracts, mortgages, instruments, Security Interests, guaranties, and rights
thereunder, (e) claims, causes of action, rights of recovery, rights of set off,
and rights of recoupment (including any such item relating to the payment of
taxes), (f) permits, licenses, orders, registrations, certificates, variances,
and similar rights obtained from governments and governmental agencies, (g)
books, records, ledgers, files, documents, correspondence, advertising and
promotional materials, studies, reports, and other printed or written materials,
and (h) rights in and with respect to the assets associated with its Employee
Benefit Plans; provided, however, that the Acquired Assets shall not include (i)
the corporate charter, qualifications to conduct business as a foreign
corporation, arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers, seals, minute books,
stock transfer books, blank stock certificates, and other documents relating to
the organization, maintenance, and existence of Company as a corporation, or
(ii) any of the rights of Company under this Agreement (or under any written
side agreement between Company on the one hand and Buyer and/or Nova on the
other hand entered into on or after the date of this Agreement).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
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"Assumed Liabilities" means all liabilities and obligations of Company
(whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including (a) all liabilities of Company for
income, transfer, sales, use, and other taxes arising in connection with the
consummation of the transactions contemplated hereby, (b) all liabilities of
Company for costs, payment of claims, and other expenses (including legal fees
and expenses) Company has incurred in connection with this Agreement, the
transactions contemplated hereby, and Company's liquidation and dissolution, (c)
all liabilities and obligations of Company under the agreements, contracts,
leases, licenses, and other arrangements referred to in the definition of
Acquired Assets, (d) all liabilities and obligations of Company pertaining to
dissenter's rights under California Corporations Code ss.1300 et seq., (e) all
other liabilities and obligations of Company set forth in the Disclosure
Schedule, and (f) all liabilities arising from any and all personal guaranties
executed by a director, officer, shareholder, employee, or agent of Company
pertaining to the foregoing; provided, however, that the Assumed Liabilities
shall not include any obligation of Company expressly set forth in this
Agreement (or under any written side agreement between Company on the one hand
and Buyer and/or Nova on the other hand entered into on or after the date of
this Agreement).
"Buyer" has the meaning set forth in the preface above.
"Nova Shares" has the meaning set forth in Section 2(c) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any confidential, trade secret or
other proprietary information (in whatever form or media, and whether or not
marked as confidential) pertaining to Company, including without limitation any
and all information, documents and other materials concerning the business and
affairs of Company that is not already generally available to the public at the
time of disclosure to Buyer or Nova hereunder.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Employee Benefit Plan" means any "employee benefit plan" (as such term
is defined in ERISA ss.3(3)) and any other material employee benefit plan,
program or arrangement of any kind.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
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"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Knowledge" means actual knowledge without independent investigation.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Nova" has the meaning set forth in the preface above.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(c) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and (d) other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Company" has the meaning set forth in the preface above.
"Company Share" means any issued and outstanding share of the Common
Stock of Company.
"Company Stockholder" means any person who or which holds any Company
Share.
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2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms and
conditions of this Agreement, Buyer agrees to purchase from Company, and Company
agrees to sell, transfer, convey, and deliver to Buyer, all of the Acquired
Assets at the Closing for the consideration specified below in this Section 2.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, Buyer agrees to assume and become responsible for
all of the Assumed Liabilities at the Closing.
(c) Purchase Price. Buyer and Nova agree to deliver and pay to Company
at the Closing the following (the "Purchase Price"): a share certificate
evidencing shares of duly issued and outstanding Nova Communications Ltd.
(NVACE.OB) common stock with a market value of Eight Million Dollars
($8,000,000) based on the trailing average of the closing stock price for the
thirty (30) trading days up to and preceding the time of Closing (the "Nova
Shares") in the form of Exhibit A attached hereto.
(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxx Xxxxxxxxx
Xxxxx LLP, located at 000 Xxxxxxx Xxxxxxx, Xxxxx 0000, Xxxx Xxxxxx, Xxxxxxxxxx,
commencing at 9:00 a.m. local time on the second business day following the
satisfaction or waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the Closing itself) or
such other date as the Parties may mutually determine (the "Closing Date");
provided, however that the Closing Date shall be no earlier than May 1, 2005.
(e) Deliveries at the Closing. At the Closing, (i) Company will deliver
to Buyer and Nova the various certificates, instruments, and documents referred
to in Section 6(a) below; (ii) Buyer and Nova will deliver to Company the
various certificates, instruments, and documents referred to in Section 6(b)
below; (iii) Company will execute, acknowledge (if appropriate), and deliver to
Buyer and Nova assignments (including lease and intellectual property transfer
documents) in the forms attached hereto as Exhibits B-1 through B- ; (iv) Buyer
will execute and deliver to Company an assumption in the form attached hereto as
Exhibit C; and (v) Buyer and Nova will deliver to Company the consideration
specified in Section 2(c) above.
(f) Allocation. The Parties agree to allocate the Purchase Price (and
all other capitalizable costs) among the Acquired Assets for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Exhibit D. The Parties covenant and agree
that (i) such allocation was determined in an arm's length negotiation and none
of the parties shall take a position on any tax return (including IRS Form
8594), before any tax authority or in any judicial proceeding that is in any
manner inconsistent with such allocation without the written consent of the
other Party or unless specifically required pursuant to a determination by an
applicable tax authority; (ii) they shall cooperate with each other in
connection with the preparation, execution and filing of all tax returns related
to such allocation; and (iii) they shall promptly advise each other regarding
the existence of any tax audit controversy or litigation related to such
allocation.
3. Representations and Warranties of Company. Company represents and
warrants to Buyer and Nova that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 3),
except as set forth in the disclosure schedule accompanying this Agreement and
signed by the Parties (the "Disclosure Schedule"). The Disclosure Schedule will
be arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 3.
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(a) Organization of Company. Company is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(b) Authorization of Transaction. Company has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder. Without limiting the
generality of the foregoing, the board of directors of Company has duly
authorized the execution, delivery, and performance of this Agreement by
Company. This Agreement constitutes the valid and legally binding obligation of
Company, enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Company is subject or any provision of
the charter or bylaws of Company or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice,
or Security Interest would not have a material adverse effect on the financial
condition of Company taken as a whole or on the ability of the Parties to
consummate the transactions contemplated by this Agreement. Company shall not be
required to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement (including the assignments and assumptions referred to in Section 2
above), except where the failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material adverse effect on
the financial condition of Company taken as a whole or on the ability of the
Parties to consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Company has no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Buyer or Nova could become
liable or obligated.
(e) Title to Tangible Assets. Company has good title to, or a valid
leasehold interest in, the tangible assets it uses regularly in the conduct of
its business.
(f) Financial Statements. Attached hereto as Exhibit E are the
following financial statements (collectively the "Financial Statements"):
unaudited consolidated balance sheets and statements of income, changes in
stockholders' equity, and cash flow as of and for the 9 months ended March 31,
2005 for Company.
(g) Legal Compliance. Company has complied with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), except where the failure to comply would
not have a material adverse effect upon the financial condition of Company taken
as a whole.
(h) Tax Matters. Except as set forth in the Disclosure Schedule,
Company has filed all Income Tax Returns that it was required to file, and has
paid all Income Taxes shown thereon as owing, except where the failure to file
Income Tax Returns or to pay Income Taxes would not have a material adverse
effect on the financial condition of Company taken as a whole.
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(i) Real Property.
(i) Company owns no real property.
(ii) Section 3(i)(ii) of the Disclosure Schedule lists all real
property leased or subleased to Company. Company has delivered to Buyer
and Nova correct and complete copies of the leases and subleases listed
in Section 3(i)(ii) of the Disclosure Schedule (as amended to date). To
the Knowledge of Company, each lease and sublease listed in Section
3(i)(ii) of the Disclosure Schedule is legal, valid, binding,
enforceable, and in full force and effect, except where the illegality,
invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of
Company taken as a whole.
(j) Intellectual Property. Section 3(j) of the Disclosure Schedule
identifies each patent or registration which has been issued to Company with
respect to any of its intellectual property, identifies each pending patent
application or application for registration which Company has made with respect
to any of its intellectual property.
(k) Contracts. Section 3(k) of the Disclosure Schedule lists all
written contracts and other written agreements to which Company is a party the
performance of which will involve consideration in excess of Twenty Five
Thousand Dollars ($25,000). Company has delivered to Buyer and Nova a correct
and complete copy of each contract or other agreement listed in Section 3(k) of
the Disclosure Schedule (as amended to date).
(l) Powers of Attorney. To the Knowledge of Company, there are no
outstanding powers of attorney executed on behalf of Company.
(m) Litigation. Section 3(m) of the Disclosure Schedule sets forth each
instance in which Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of Company taken as a whole.
(n) Employee Benefits.
(i) Section 3(n) of the Disclosure Schedule lists each Employee
Benefit Plan that Company maintains or to which Company contributes.
(A) To the Knowledge of Company, each such Employee
Benefit Plan (and each related trust, insurance contract, or
fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form
and in operation in all respects with the applicable requirements
of ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the financial condition of
Company taken as a whole.
(B) Company has delivered to Buyer and Nova correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent annual report (IRS
Form 5500), and all related trust agreements, insurance
contracts, and other funding arrangements which implement each
such Employee Benefit Plan.
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(o) Environmental, Health, and Safety Matters.
(i) To the Knowledge of Company, Company is in compliance with
Environmental, Health, and Safety Requirements, except for such
noncompliance as would not have a material adverse effect on the
financial condition of Company taken as a whole.
(ii) To the Knowledge of Company, Company has not received any
written notice, report or other information regarding any actual or
alleged material violation of Environmental, Health, and Safety
Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to Company or its facilities arising under
Environmental, Health, and Safety Requirements, the subject of which
would have a material adverse effect on the financial condition of
Company taken as a whole.
(iii) This Section 3(o) contains the sole and exclusive
representations and warranties of Company with respect to any
environmental, health, or safety matters, including without limitation
any arising under any Environmental, Health, and Safety Requirements.
(p) Investment. Company (i) understands that the Nova Shares have not
been, and will not be, registered under the Securities Act, or under any state
securities laws, and are being offered and sold in reliance upon federal and
state exemptions for transactions not involving any public offering, and (ii) is
acquiring Nova Shares solely for its own account for investment purposes, and
not with a view to the distribution thereof (except to Company Stockholders).
Company acknowledges and agrees that the certificate evidencing the Nova Shares
will include a legend reading substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES HAVE BEEN
ACQUIRED WITHOUT A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT AND UNDER ANY
APPLICABLE SECURITIES LAWS, OR AN OPINION OF COUNSEL ACCEPTABLE TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED AS TO SUCH SALE OR
OFFER."
(q) Disclaimer of other Representations and Warranties. Except as
expressly set forth in this Section 3, Company makes no representation or
warranty, express or implied, at law or in equity, in respect of any of its
assets (including, without limitation, the Acquired Assets), liabilities
(including, without limitation, the Assumed Liabilities) or operations,
including, without limitation, with respect to merchantability or fitness for
any particular purpose, and any such other representations or warranties are
hereby expressly disclaimed. Each of Buyer and Nova hereby acknowledges and
agrees that, except to the extent specifically set forth in this Section 3,
Buyer is purchasing the Acquired Assets on an "as-is, where-is" basis. Without
limiting the generality of the foregoing, Company makes no representation or
warranty regarding any assets other than the Acquired Assets or any liabilities
other than the Assumed Liabilities, and none shall be implied at law or in
equity.
4. Representations and Warranties of Buyer and Nova. Each of Buyer and
Nova represents and warrants to Company that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the Disclosure Schedule. The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 4.
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(a) Organization of Buyer and Nova. Each of Buyer and Nova is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Neither Nova's Report on Form
10-KSB for the year ended 2004, nor any other document filed by Nova with the
Securities and Exchange Commission ("SEC") since January 1, 2004, contain a
misstatement of a material fact or fail to state a material fact required to be
stated therein or necessary to make the statements made therein not misleading
as of the date such filing was made. Nova has filed all documents required to be
filed by it with the SEC since January 1, 2004, and no event has occurred which
Nova is required to report on Form 8-K.
(b) Authorization of Transaction. Each of Buyer and Nova has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors of Buyer and
Nova have duly authorized the execution, delivery, and performance of this
Agreement by Buyer and Nova, respectively. This Agreement constitutes the valid
and legally binding obligation of Buyer and Nova, enforceable in accordance with
its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer or Nova is subject or any provision
of its charter or bylaws or (ii) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which Buyer or Nova is a party or by which it is bound or to which any of its
assets is subject. Neither Buyer nor Nova needs to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement (including the assignments and assumptions
referred to in Section 2 above).
(d) Brokers' Fees. Neither Buyer nor Nova has any liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which Company
could become liable or obligated.
(e) Title to Tangible Assets. Each of Buyer and Nova has good title to,
or a valid leasehold interest in, the material tangible assets it uses regularly
in the conduct of its business.
(f) Financial Statements. Attached hereto as Exhibit F are the
following financial statements: a Form 10-QSB/A for Nova, including unaudited
consolidated balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the quarter ended March 31, 2005 for Nova.
The foregoing financial statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby and present fairly the financial condition of Nova as of
such dates and the results of operations of Nova for such periods; provided,
however, that the financial statements are subject to normal year-end
adjustments and lack footnotes and other presentation items.
(g) Legal Compliance. Each of Buyer and Nova has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except where the
failure to comply would not have a material adverse effect upon the financial
condition of Buyer or Nova.
(h) Tax Matters. Except as set forth in the Disclosure Schedule, each
of Buyer and Nova has filed all Income Tax Returns that it was required to file,
and has paid all Income Taxes shown thereon as owing,
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except where the failure to file Income Tax Returns or to pay Income Taxes would
not have a material adverse effect on the financial condition of Buyer or Nova.
(i) Real Property.
(i) Section 4(i)(i) of the Disclosure Schedule lists all real
property that each of Buyer and Nova owns. With respect to each such
parcel of owned real property, and except for matters which would not
have a material adverse effect on the financial condition of Buyer or
Nova:
(A) the identified owner has good and marketable title to
the parcel of real property, free and clear of any Security
Interest, easement, covenant, or other restriction, except for
installments of special assessments not yet delinquent, recorded
easements, covenants, and other restrictions, and utility
easements, building restrictions, zoning restrictions, and other
easements and restrictions existing generally with respect to
properties of a similar character;
(B) there are no leases, subleases, licenses, concessions,
or other agreements granting to any party or parties the right of
use or occupancy of any portion of the parcel of real property;
and
(C) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or any portion
thereof or interest therein.
(ii) Section 4(i)(ii) of the Disclosure Schedule lists all real
property leased or subleased to Buyer or Nova. Buyer and Nova have
delivered to Company correct and complete copies of the leases and
subleases listed in Section 4(i)(ii) of the Disclosure Schedule (as
amended to date). To the Knowledge of each of Buyer and Nova, each
lease and sublease listed in Section 4(i)(ii) of the Disclosure
Schedule is legal, valid, binding, enforceable, and in full force and
effect, except where the illegality, invalidity, nonbinding nature,
unenforceability, or ineffectiveness would not have a material adverse
effect on the financial condition of Buyer or Nova.
(j) Intellectual Property. Section 4(j) of the Disclosure Schedule
identifies each patent or registration which has been issued to Buyer or Nova
with respect to any intellectual property, identifies each pending patent
application or application for registration which Buyer or Nova has made with
respect to any of its intellectual property.
(k) Contracts. Section 4(k) of the Disclosure Schedule lists all
written contracts and other written agreements to which Buyer or Nova is a party
the performance of which will involve consideration in excess of Twenty Five
Thousand Dollars ($25,000). Buyer and Nova have delivered to Company a correct
and complete copy of each contract or other agreement listed in Section 4(k) of
the Disclosure Schedule (as amended to date).
(l) Powers of Attorney. To the Knowledge of Buyer and Nova, there are
no outstanding powers of attorney executed on behalf of Buyer or Nova.
(m) Litigation. Section 4(m) of the Disclosure Schedule sets forth each
instance in which Buyer or Nova (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation would not have a material
adverse effect on the financial condition of Buyer or Nova.
-9-
(n) Employee Benefits.
(i) Section 4(n) of the Disclosure Schedule lists each Employee
Benefit Plan that Buyer or Nova maintains or to which Buyer or Nova
contributes.
(A) To the Knowledge of Buyer and Nova, each such Employee
Benefit Plan (and each related trust, insurance contract, or
fund) has been maintained, funded and administered in accordance
with the terms of such Employee Benefit Plan and complies in form
and in operation in all respects with the applicable requirements
of ERISA and the Code, except where the failure to comply would
not have a material adverse effect on the financial condition of
Buyer or Nova.
(B) Buyer and Nova have delivered to Company correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent annual report (IRS
Form 5500), and all related trust agreements, insurance
contracts, and other funding arrangements which implement each
such Employee Benefit Plan.
(o) Environmental, Health, and Safety Matters.
(i) To the Knowledge of Buyer and Nova, each of Buyer and Nova is
in compliance with all Environmental, Health, and Safety Requirements,
except for such noncompliance as would not have a material adverse
effect on the financial condition of Buyer or Nova.
(ii) To the Knowledge of Buyer and Nova, neither Buyer nor Nova
has received any written notice, report or other information regarding
any actual or alleged material violation of Environmental, Health, and
Safety Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to Buyer or Nova or their respective facilities
arising under Environmental, Health, and Safety Requirements, the
subject of which would have a material adverse effect on the financial
condition of either Buyer or Nova.
(iii) This Section 4(o) contains the sole and exclusive
representations and warranties of Buyer and Nova with respect to any
environmental, health, or safety matters, including without limitation
any arising under any Environmental, Health, and Safety Requirements.
(p) Nova Shares. Subject to Rule 144 promulgated under the Securities
Act and other applicable state securities laws, the Nova Shares shall be duly
issued and outstanding common stock and shall not be subject to any Security
Interest or other transfer restrictions other than under the Securities Act or
applicable state securities laws.
5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best efforts
to take all action and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 6
below).
(b) Notices and Consents. Company will give any notices to third
parties, and Company will use its reasonable best efforts to obtain any third
party consents in connection with the matters referred to in Section 3(c) above.
Each of the Parties will give any notices to, make any filings with, and use its
reasonable best
-10-
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in Section 3(c)
and Section 4(c) above.
(c) Operation of Business. Company will not engage in any practice,
take any action, or enter into any transaction outside the Ordinary Course of
Business.
(d) Full Access / Confidential Information. Company will permit
representatives of Buyer and Nova to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
Company, to all premises, properties, personnel, books, records (including tax
records), contracts, and documents of or pertaining to Company. Each of Buyer
and Nova will treat and hold in the strictest confidence any Confidential
Information it receives from any of Company Stockholders or Company in the
course of the reviews contemplated by this Section 5(d), will not use any of the
Confidential Information except in connection with this Agreement, and in
addition shall not directly or indirectly disclose, copy, distribute, republish
or allow any third party to have access to any Confidential Information except
to the extent necessary to effect the transactions contemplated under this
Agreement (and in such cases solely to its officers, counsel, accountants and
similar agents), and, if this Agreement is terminated for any reason whatsoever,
will return to Company all tangible embodiments (and all copies) of the
Confidential Information which are in its possession.
(e) Notice of Developments.
(i) Company may elect at any time to notify Buyer and Nova of any
development causing a breach of any of its representations and
warranties in Section 3 (f)-(p) above. Unless Buyer and Nova have the
right to terminate this Agreement pursuant to Section 7(a)(ii) below by
reason of the development and exercise that right within the period of
ten (10) business days referred to in Section 7(a)(ii) below, the
written notice pursuant to this Section 5(e)(i) will be deemed to have
amended the Disclosure Schedule, to have qualified the representations
and warranties contained in Section 3 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development.
(ii) Each Party will give prompt written notice to the other
Party of any material adverse development causing a breach of any of
its own representations and warranties in Section 3(a)-(e) and Section
4 above. No disclosure by any Party pursuant to this Section 5(e)(ii),
however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation or breach of warranty.
6. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer and Nova. The obligation of Buyer
and Nova to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
-11-
(iv) Company shall have delivered to Buyer and Nova a certificate
executed by Company's President to the effect that each of the
conditions specified above in Section 6(a)(i)-(iii) is satisfied in all
respects, along with copies of resolutions of Company's Board of
Directors authorizing this Agreement and the transactions contemplated
hereunder, in the forms attached hereto as Exhibit G-1 to G-2;
(v) the Parties shall have received all necessary authorizations,
consents, and approvals of governments and governmental agencies
referred to in Section 3(c) and Section 4(c) above; and
(vi) all actions to be taken by Company in connection with
consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Buyer and Nova.
Each of Buyer and Nova may waive any condition specified in this Section 6(a) if
it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Company. The obligation of Company to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4
above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) Each of Buyer and Nova shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment, order, decree,
ruling, or charge in effect preventing consummation of any of the
transactions contemplated by this Agreement;
(iv) Buyer and Nova shall have delivered to Company a certificate
executed by their respective Officers to the effect that each of the
conditions specified above in Section 6(b)(i)-(iii) is satisfied in all
respects, along with copies of resolutions of Buyer's and Nova's Board
of Directors authorizing this Agreement and the transactions
contemplated hereunder, in the forms attached hereto as Exhibits G-3 to
G-6;
(v) the Parties shall have received all necessary authorizations,
consents, and approvals of governments and governmental agencies
referred to in Section 3(c) and Section 4(c) above;
(vi) Buyer or Nova shall have delivered to Company the Nova
Shares in accordance with this Agreement at or prior to the Closing;
(vii) Company shall have obtained any and all third party and
governmental consents necessary to consummate the transactions
contemplated hereby; and
(viii) all actions to be taken by Buyer and Nova in connection
with consummation of the transactions contemplated hereby and all
certificates, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Company.
-12-
Company may waive any condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7. Termination.
(a) Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(i) The Parties may terminate this Agreement by written consent
of all Parties at any time prior to the Closing;
(ii) Buyer and Nova may terminate this Agreement by giving
written notice to Company at any time prior to the Closing in the event
(A) Company has within the then previous ten (10) business days given
Buyer and Nova any notice pursuant to Section 5(e)(i) above and (B) the
development that is the subject of the notice has had a material
adverse effect upon the financial condition of Company taken as a
whole.
(iii) Buyer and Nova may terminate this Agreement by giving
written notice to Company at any time prior to the Closing (A) in the
event Company has breached any material representation, warranty, or
covenant contained in this Agreement (other than the representations
and warranties in Section 3(f)-(p) above) in any material respect,
Buyer and Nova have notified Company of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach or (B) if the Closing shall not have occurred on or
before August 1, 2005, by reason of the failure of any condition
precedent under Section 6(a) hereof (unless the failure results
primarily from Buyer or Nova breaching any representation, warranty, or
covenant contained in this Agreement); and
(iv) Company may terminate this Agreement by giving written
notice to Buyer and Nova at any time prior to the Closing (A) in the
event Buyer or Nova has breached any material representation, warranty,
or covenant contained in this Agreement in any material respect,
Company has notified Buyer and Nova of the breach, and the breach has
continued without cure for a period of thirty (30) days after the
notice of breach or (B) if the Closing shall not have occurred on or
before August 1, 2005, by reason of the failure of any condition
precedent under Section 6(b) hereof (unless the failure results
primarily from Company itself breaching any representation, warranty,
or covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach); provided, however, that
the confidentiality provisions contained in Section 5(d) above shall survive
termination.
8. Indemnification.
(a) Indemnification Provisions for Benefit of the Buyer and Nova.
(i) Subject to Section 5(e), in the event Company breaches any of
its representations, warranties, and covenants contained in this
Agreement, then Company agrees to indemnify each of Buyer, Nova, their
respective directors, officers, shareholders, agents, attorneys and
employees (each, a "Buyer Indemnified Party") from and against any
Adverse Consequences a Buyer Indemnified Party shall suffer through and
after the date of the claim for indemnification caused by the breach;
provided, however, that Company shall not have any obligation to
indemnify a Buyer Indemnified Party from and against any Adverse
Consequences caused by the breach of any representation or warranty of
Company contained in Section 3(a)-(q) of the Agreement: (A) until the
Buyer
-13-
Indemnified Party has suffered Adverse Consequences by reason of all
such breaches in excess of a Two Hundred Thousand Dollar ($200,000)
aggregate deductible (after which point Company will be obligated only
to indemnify the Buyer Indemnified Party from and against further such
Adverse Consequences) or thereafter (B) to the extent the Adverse
Consequences the Buyer Indemnified Party has suffered by reason of all
such breaches exceeds a One Million Dollar ($1,000,000) aggregate
ceiling (after which point Company will have no obligation to indemnify
the Buyer Indemnified Party from and against further such Adverse
Consequences). Notwithstanding the foregoing, this Section 8(a)(i)
shall be subject to Company's ability to sell available Nova Shares, in
accordance with all applicable laws, to fund any indemnification
obligation arising hereunder, and shall be secondary to any and all
applicable insurance coverage owned by the Parties.
(b) Indemnification Provisions for Benefit of Company.
(i) In the event Buyer breaches any of its representations,
warranties, and covenants contained in this Agreement (including the
assumption agreement and other exhibits attached hereto), then Buyer
agrees to indemnify Company, its directors, officers, shareholders,
agents, attorneys and employees (each, a "Company Indemnified Party")
from and against the entirety of any Adverse Consequences a Company
Indemnified Party shall suffer through and after the date of the claim
for indemnification caused by the breach.
(ii) Buyer agrees to indemnify each Company Indemnified Party
from and against the entirety of any Adverse Consequences such Company
Indemnified Party shall suffer due to or arising from any liability of
Company which is an Assumed Liability.
(iii) In the event Nova breaches any of its representations,
warranties, and covenants contained in this Agreement (including the
exhibits attached hereto), then Nova agrees to indemnify each Company
Indemnified Party from and against the entirety of any Adverse
Consequences a Company Indemnified Party shall suffer through and after
the date of the claim for indemnification caused by the breach. Nova
shall have no obligation to indemnify any Company Indemnified Party
from and against any Adverse Consequences such Company Indemnified
Party shall suffer due to or arising from any liability of Company
which is an Assumed Liability.
(c) Matters Involving Third Parties.
(i) If any third party shall notify any Party ( the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 4, then the Indemnified Party
shall promptly (and in any event within seven (7) business days after
receiving notice of the Third Party Claim) notify the Indemnifying
Party thereof in writing.
(ii) Any Indemnifying Party will have the right at any time to
assume and thereafter conduct the defense of the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnified
Party (not to be withheld unreasonably) unless the judgment or proposed
settlement involves only the payment of money damages without any
admission of liability and does not impose an injunction or other
equitable relief upon the Indemnified Party.
-14-
(iii) Unless and until an Indemnifying Party assumes the defense
of the Third Party Claim as provided in Section 8(c)(ii) above,
however, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent to the entry
of any judgment or enter into any settlement with respect to the Third
Party Claim without the prior written consent of the Indemnifying Party
(not to be withheld unreasonably).
9. Miscellaneous.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder, except as otherwise expressly provided herein.
(b) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party; provided,
however, that any Party may make any public disclosure it believes in good faith
is required by applicable law or any listing or trading agreement concerning
publicly-traded securities (in which case the disclosing Party will use its best
efforts to advise the other Party prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement between the Parties and supersedes
any prior understandings, agreements, or representations by or between the
Parties, written or oral, related to the subject matter hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other Party; provided, however, that Buyer and Nova may (i) assign any or
all of its rights and interests hereunder to one or more of its Affiliates and
(ii) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases Buyer and Nova nonetheless shall remain
responsible for the performance of all of their respective obligations
hereunder).
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given four (4) business
days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or the next business day after it is sent by Federal Express or
similar overnight courier, and addressed to the intended recipient as set forth
below:
If to Company: Nacio Systems, Inc. Copy to: Xxxxxx X. Xxx, Esq.
Attn: Xxxxxx Xxxxxxxxxx Xxxxxxx Xxxxxxxxx Xxxxx XXX
00 Xxxxxxxx Xx. 000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000 Xxxxxxx, XX 00000
-15-
If to Buyer: Nacio Systems, Inc. Copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Attn: Xxxxxx Xxxxxxx Law Offices of Xxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000 000 XX Xxxxxxx, Xxxxx 000
Xxxx, XX 00000 Xxxxxxxx, XX 00000
If to Nova: Nova Communications Ltd. Copy to: Xxxxxx X. Xxxxxxxxx, Esq.
Attn: Art Robins Law Offices of Xxxxxx Xxxxxxxxx
0000 Xxxxxxxx Xxx, Xxxxx 000 000 XX Xxxxxxx, Xxxxx 000
Xxxx, XX 00000 Xxxxxxxx, XX 00000
Any Party may change the address to which notices, requests, demands, claims,
and other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of California without giving
effect to any choice or conflict of law provision or rule. Each Party hereby
submits to the exclusive jurisdiction and venue of the state courts located in
Marin County, California and federal courts located in the Northern District of
California over any dispute arising under this Agreement.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
Parties. Company may consent to any such amendment at any time prior to the
Closing with the prior authorization of its board of directors; provided,
however, that any amendment effected after Company Stockholders have approved
this Agreement will be subject to any restrictions under the California
Corporations Code or other applicable law. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(m) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(n) Employee Benefits Matters. Buyer will adopt and assume at and as of
the Closing each of the Employee Benefit Plans that Company maintains and each
trust, insurance contract, annuity contract, or other funding arrangement that
Company has established with respect thereto. Buyer will ensure that the
Employee Benefit Plans treat employment with Company prior to the Closing Date
the same as employment with Buyer from and after the Closing Date for purposes
of eligibility, vesting, and benefit accrual. Company will transfer (or cause
the plan administrators to transfer) at and as of the Closing all of the
corresponding assets associated
-16-
with the Employee Benefit Plans that Buyer is adopting and assuming. With
respect to each Multiemployer Plan, the Parties shall take all actions necessary
to comply with the requirements of ERISA ss.4204.
(o) Bulk Transfer Laws. Buyer and Nova acknowledge that Company will
not comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
-17-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement effective as
of the date first above written.
"BUYER"
NACIO SYSTEMS, INC.,
a Nevada corporation
By: /s/XXXXXX X. XXXXXX
Name Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Dated: October 21, 2005
"NOVA"
NOVA COMMUNICATIONS LTD.,
a Nevada corporation
By: /s/XXXXXX X. XXXXXX
Name Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Dated: October 21, 2005
"COMPANY"
NACIO SYSTEMS, INC.,
a California corporation
By: /s/XXXXXX XXXXXXXXXX
Name Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
Dated: October 21, 2005
-18-
EXHIBIT A - FORM OF SHARE CERTIFICATE
EXHIBIT B - FORMS OF ASSIGNMENTS
ASSIGNMENT OF CONTRACT RIGHTS
-----------------------------
AND ASSUMPTION OF OBLIGATIONS
-----------------------------
THIS ASSIGNMENT OF CONTRACT RIGHTS AND ASSUMPTION OF OBLIGATIONS (the
"Assignment") is made and entered into effective as of October 21, 2005 by and
between Nacio Systems, Inc., a California corporation ("Assignor"), and Nacio
Systems, Inc., a Nevada corporation ("Assignee").
RECITALS
--------
A. Assignor is selling and transferring to Assignee substantially all
of the assets of Assignor's business pursuant to an Asset Purchase Agreement
dated April 1, 2005 (the "Agreement") by and between Assignee, Assignor and Nova
Communications Ltd., a Nevada corporation.
B. In connection with such transaction, Assignor wishes to assign
certain contracts to Assignee and the Assignee wishes to accept such assignment,
on the terms and conditions set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants herein set forth and of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Assignor hereby assigns and transfers to Assignee all of Assignor's
right, title and interest in and to the contracts included in the Acquired
Assets (as defined in the Agreement) (collectively, the "Contracts"). Assignee
hereby accepts the foregoing assignment and assumes and agrees to perform all of
the obligations of Assignor under each of the Contracts arising after the
Closing (as defined in the Agreement).
2. To the extent that any of the Contracts are not capable of being
assigned or transferred to Assignee without the consent of any third person and
such waiver or consent shall not have been obtained, or if such assignment or
transfer or attempted assignment or transfer would constitute a breach thereof
or a violation of any law or regulation or if the parties hereto otherwise agree
not to obtain such waiver or consent, this Assignment shall not constitute an
assignment or transfer or an attempted assignment or transfer thereof. In such
cases this Assignment, to the extent permitted by law, shall constitute an
equitable assignment by Assignor to Assignee of all of Assignor's rights,
benefits, title and interest in and to the Contracts and, where necessary or
appropriate, Assignee shall be deemed to be Assignor's agent for the purpose of
completing, fulfilling and discharging all of Assignor's rights and liabilities
arising after the date of this Assignment under such Contracts. Assignor shall
use its best efforts to provide Assignee with the benefits of such Contracts
(including, without limitation, permitting Assignee to enforce any rights of
Assignor arising under such Contracts), and Assignee shall, to the extent
Assignee is provided with the benefits of such Contracts, assume, perform and in
due course pay and discharge all debts, obligations and liabilities of Assignor
under such Contracts arising after the Closing (as defined in the Agreement).
3. Assignee shall indemnify, defend and hold Assignor harmless from and
against any and all claims, demands, actions, suits, proceedings, damages,
liabilities, costs, and expenses arising out of Assignee's breach of or failure
to perform any obligation under the Contracts arising after the Closing.
4. Assignee acknowledges and agrees that the other parties to the
Contracts and Assignee may not modify, amend or alter the Contracts in any way
without the consent of Assignor, unless Assignor has been fully released and
discharged from any further liability or obligation under the Contracts, and
that further assignments of the Contracts may not be made without the consent of
Assignor.
5. This Assignment shall inure to the benefit of and shall be binding
upon each of the parties hereto and the successors and assigns of such parties.
This Assignment may not be amended or modified except by a written document
signed by the parties hereto. The parties shall execute and deliver such further
and additional instruments, agreements and other documents as may be necessary
to carry out the provisions of this Assignment. This Assignment shall be
governed by the laws of the State of California. This Assignment is being
delivered pursuant to the Agreement, shall be construed consistently therewith,
and is subject to all of the terms and conditions thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assignment as of the day and year first set forth above.
NACIO SYSTEMS, INC., NACIO SYSTEMS, INC.,
a California corporation a Nevada corporation
By: /s/XXXXXX XXXXXXXXXX By: /s/XXXXXX X. XXXXXX
Name Xxxxxx Xxxxxxxxxx Name Xxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Chief Executive Officer
Dated: October 21, 2005 Dated: October 21, 2005
"Assignor" "Assignee"
ASSIGNMENT, ASSUMPTION, NOVATION AND RELEASE
THIS ASSIGNMENT, ASSUMPTION, NOVATION AND RELEASE ("NOVATION") is made and
entered into effective April 27, 2005 ("EFFECTIVE DATE") by and between Nacio
Systems, Inc., a California corporation ("NACIO-CALIFORNIA"), Nacio Systems,
Inc., a Nevada corporation ("ASSIGNEE"), Nova Communications Ltd., a Nevada
corporation ("NOVA"), and Xxxxxx Xxxxxx ("PROMOTER"). All capitalized terms used
herein that are defined in the Agreement (defined below) shall have the same
meaning herein as specified in the Agreement, unless otherwise expressly defined
herein. Nacio-California, Assignee, Nova and Promoter are sometimes referred to
herein singularly as a "PARTY" and collectively as the "PARTIES."
RECITALS
WHEREAS, Nacio-California is selling and transferring to Assignee
substantially all of the assets of Nacio-California's business pursuant to an
Asset Purchase Agreement dated April 1, 2005 (the "Agreement") by and between
Nacio-California, Promoter (on behalf of Assignee as Assignee's
pre-incorporation promoter) and Nova;
WHEREAS, Articles of Incorporation for Assignee were duly filed on
April 27, 2005;
WHEREAS, the Parties wish for Promoter to assign any and all of
Promoter's rights, interests, duties and obligations under the Agreement to
Assignee, subject to this Novation's terms and conditions.
WHEREAS, the Parties wish for Assignee to substitute for Promoter as a
party to the Agreement, subject to this Novation's terms and conditions.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Parties, intending to be
legally bound, further agree as follows:
1. ASSIGNMENT. Promoter hereby assigns, transfers and conveys to Assignee any
and all of Promoter's rights, interests, duties and obligations in and to the
Agreement. Each Party hereby consents to the foregoing assignment, subject to
this Novation's terms and conditions. As of the Effective Date and thereafter,
the term "Buyer" as defined in the Agreement and all documents and transactions
contemplated thereunder shall refer to Assignee.
2. ASSUMPTION AND NOVATION. Assignee hereby assumes and agrees to be bound, as
of the Effective Date, by the provisions of the Agreement and undertakes and
assumes each and every obligation of Promoter thereunder arising before, on or
after the Effective Date, all with the same force and effect as if Assignee were
an original party under the Agreement. As of the Effective Date, Promoter is
relieved of all liability under the Agreement for the performance of all
obligations, covenants and conditions of the
1
Agreement to be performed by Promoter thereunder at any time whatsoever, whether
before or after the Effective Date, and Assignee assumes any such liability of
Promoter. Each Party hereby agrees and acknowledges that it shall, from and
after the Effective Date, recognize Assignee in the place of Promoter with
respect to all matters arising under the Agreement as if Assignee were the
original party thereunder.
3. MUTUAL RELEASE OF CLAIMS. Each of Nacio-California, Nova and Assignee hereby
releases and forever discharges Promoter, his successors and assigns
(collectively, the "RELEASED PARTIES"), of and from any and all actions, causes
of actions, claims, demands, damages, costs, liabilities, loss of profits,
expenses and compensation on account of any grounds whatsoever, whether at law
or in equity, known or unknown, arising out of or relating to the Agreement,
which such Party had, has and/or may have against the Released Parties up to and
as of the Effective Date ("RELEASED CLAIMS").
4. SCOPE OF RELEASE. It is understood and agreed that the foregoing mutual
release extends to all claims of every kind, nature or description whatsoever,
known or unknown, suspected or unsuspected, in existence as of the Effective
Date and arising from or related to the Released Claims, under the provisions of
Section 1542 of the Civil Code of California. EACH OF NACIO-CALIFORNIA, NOVA AND
PROMOTER HEREBY EXPRESSLY WAIVES SECTION 1542 OF THE CIVIL CODE OF CALIFORNIA
(AND ALL RIGHTS UNDER ANY SIMILAR APPLICABLE LAWS), WHICH READS:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH DEBTOR.
5. VOLUNTARY AND KNOWING EXECUTION. Each Party confirms that it voluntarily
executed this Novation and acknowledges that it: (a) has read this Novation; (b)
has had the opportunity to seek the advice of an attorney regarding this
Novation; (c) understands the terms and consequences of this Novation; and (d)
is fully aware of the legal binding effect of this Novation.
6. MISCELLANEOUS. This Novation: (a) is being delivered pursuant to the
Agreement, shall be construed consistently therewith, and is subject to all of
the terms and conditions thereof; (b) shall be binding upon and shall inure to
the benefit of the Parties and their respective heirs, executors, legal
representatives, successors and assigns; (c) shall be governed by and construed
in accordance with the laws of the State of California; and (d) may not be
altered or amended and no rights hereunder may be waived except by an instrument
in writing signed by all Parties.
2
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assumption as of the day and year first set forth above.
NACIO SYSTEMS, INC., NACIO SYSTEMS, INC.,
a California corporation a Nevada corporation
By: /s/XXXXXX XXXXXXXXXX By: /s/XXXXXX X. XXXXXX
Name Xxxxxx Xxxxxxxxxx Name Xxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Chief Executive Officer
Dated: October 21, 2005 Dated: October 21, 2005
"Nacio-California" "Assignee"
NOVA COMMUNICATIONS LTD., /s/XXXXXX X. XXXXXX
a Nevada corporation Xxxxxx Xxxxxx
By: /s/XXXXXX X. XXXXXX "Promoter"
Name Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Dated: October 21, 2005
"Nova"
3
EXHIBIT A
---------
ASSET PURCHASE AGREEMENT
4
ASSIGNMENT AND ASSUMPTION
-------------------------
OF LEASE AND AGREEMENT
----------------------
THIS ASSIGNMENT AND ASSUMPTION OF LEASE AND AGREEMENT (this
"Assignment") is made as of the 21st day of October, 2005 (the "Effective
Date"), by and between NACIO SYSTEMS, INC., a California corporation
("Assignor"), and NACIO SYSTEMS, INC., a Nevada corporation ("Assignee").
Assignor and Assignee are sometimes referred to collectively herein as the
"Parties," and each of the Parties is occasionally referred to as a "Party."
FACTUAL CONTEXT
---------------
X. Xxxxxxxxx Enterprises, Inc., a California corporation ("Landlord"),
as lessor, and Assignor, as successor lessee to MasterLink, Inc., a California
corporation, are the parties to that certain lease dated March 31, 2000
(including Addendum A and Addendum B attached thereto), which lease has been
amended by: (i) that certain Amendment A dated March 31, 2000 and (ii) that
certain Amendment B dated March 31, 2000 (collectively, the "Lease"). A copy of
the Lease is attached hereto as Exhibit A and incorporated herein. Pursuant to
the terms of the Lease, Assignor leases from Landlord and Landlord leases to
Assignor those certain premises located at 00 Xxxxxxxx Xxxxx, 00 Xxxxxxxx Xxxxx
and 00 Xxxxxxx Xxxxx, located in Lakepoint Business Park, in the City of Novato,
County of Marin, State of California (which premises are more particularly
desribed in the Lease) (collectively, the "Premises").
B. In conjunction with that certain Asset Purchase Agreement dated
April 1, 2005, by and among Assignor, Assignee and Nova Communications Ltd., a
Nevada corporation, Assignor has agreed to assign to Assignee all of its right,
title and interest in, to and under the Lease and the Premises to Assignee, and
Assignee has agreed to accept that assignment on, and subject to, all of the
terms and conditions in this Agreement and the Parties have agreed to hereby
evidence their agreement with respect thereto.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants hereinafter set forth, Assignor and Assignee agree as follows:
1. Assignment and Assumption. Assignor hereby assigns to Assignee all of
Assignor's right, title and interest in, to and under the Lease and the
Premises. Assignee (i) accepts this assignment, (ii) assumes all of Assignor's
obligations under the Lease that arose prior to the Effective Date and that
arise from and after the Effective Date, (iii) agrees to be bound by all of the
provisions of the Lease and (iv) agrees to perform all of the obligations of
"Lessee" under the Lease as a direct obligation to Landlord for all such
obligations, including, without limitation, the obligation to maintain a letter
of credit as provided in the Lease. This assignment and assumption is made on,
and is subject to, all of the terms, conditions, and covenants of this
Assignment.
2. Condition of Premises. The Premises will be delivered by Assignor to Assignee
together with all those items of furniture, fixtures, and equipment (the "FF&E")
located therein on an "AS IS" basis. Assignee acknowledges that Assignor has
made no representations or warranties, express or implied, whatsoever, with
respect to the Premises and/or the FF&E, including, without limitation, any
representation or warranty as to the suitability of the Premises for Assignee's
intended use. Assignor shall have no obligation whatsoever to make or pay the
cost of any alterations, improvements or repairs to the Premises, including,
without limitation, any improvement or repair required to comply with any law,
regulation, building code or ordinance (including the Americans with
Disabilities Act of 1990, as may be amended).
5/19/05 - 1 -
3. Security Deposit. Assignor transfers and assigns any and all of its right,
title, and interest in the security deposit held by Landlord, if any.
4. No Further Modifications Without Assignor's Consent. Assignee shall not
modify, amend or assign the Lease or sublet any portion of the Premises after
the Effective Date without first obtaining the prior written consent of
Assignor, which consent may be withheld in Assignor's sole and absolute
discretion.
5. Indemnification of Assignor. Assignee shall indemnify, defend with counsel
reasonably acceptable to Assignor, protect and hold harmless Assignor and its
agents, employees, directors, shareholders, contractors and representatives from
and against any and all losses, claims, liabilities, judgments, causes of
action, damages, costs and expenses (including without limitation, reasonable
attorneys' fees and experts' fees), caused by or arising in connection with: (i)
any obligation or breach of the Lease (as the Lease may be amended from time to
time after the Effective Date), including without limitation, all obligations
that arose prior to the Effective Date and all obligations that arise from and
after the Effective Date; (ii) the condition or maintenance of the Premises,
including, without limitation the condition of the Premises or maintenance
obligations that arose prior to the Effective Date and those that arise from and
after the Effective Date; (iii) Assignee's use, occupancy or operation of the
Premises; (iv) the negligence or willful misconduct of Assignee or its agents,
employees, contractors, invitees; and (v) a breach of Assignee's obligations
under this Assignment.
6. General Provisions.
6.1 Further Assurances. Each Party will, at its own cost and expense,
execute and deliver such further documents and instruments and will take such
other actions as may be reasonably required or appropriate to evidence or carry
out the intent and purpose of this Assignment.
6.2 Enforcement by Landlord. Landlord is a third party beneficiary of
this Assignment. As such, the provisions of this Assignment inure to the benefit
of, and are enforceable by, Landlord.
6.3 Entire Assignment; Waiver. This Assignment constitutes the final,
complete and exclusive statement between the Parties pertaining to the terms of
Assignor's assignment of the Lease and the Premises to Assignee, supercedes all
prior and contemporaneous understandings or agreements of the Parties, and is
binding on and inures to the benefit of their respective heirs, representatives,
successors and assigns. Neither Party has been induced to enter into this
Assignment by, nor is either Party relying on any representation or warranty
outside those expressly set forth in this Assignment. Any agreement made after
the Effective Date is ineffective to modify, waive, or terminate this
Assignment, in whole or in part, unless that agreement is in writing, is signed
by both Parties, and specifically states that it modifies this Assignment.
6.4 Governing Law. This Assignment will be governed by, and construed
in accordance with California law.
6.5 Captions. Captions to the sections in this Assignment are included
for convenience only and do not modify any of the terms of this Assignment.
6.6 Severability. If any term or provision of this Assignment is, to
any extent, held to be invalid or unenforceable, the remainder of this
Assignment will not be affected, and each term or provision of this Assignment
will be valid and be enforced to the fullest extent permitted by law. If the
application of any term or provision of this Assignment to any person or
circumstances other than those as to which it is held invalid or unenforceable,
will not be affected, and each term or provision of this Assignment will be
valid and be enforced to the fullest extent permitted by law.
5/19/05 - 2 -
6.7 Waiver of Jury Trial. The Parties desire and intend that any
dispute or controversy arising between them with respect to or in connection
with this Assignment be subject to expeditious resolution in a court trial
without a jury. Therefore, each Party irrevocably and unconditionally waives any
right it may have to a trial by jury of any cause of action, claim, counterclaim
or cross-complaint in any action, proceeding or other hearing brought by any
Party against another Party or Parties on any matter whatsoever arising out of,
or in any way connected with, this Assignment, the relationship of the Parties
concerning the subject matter of this Assignment or the documents related
thereto or any claim of injury or damage, or the enforcement of any remedy under
any statute, law, ordinance, rules or regulation now or hereafter in effect
concerning this Assignment. Each of the Parties certifies and acknowledges that
it understands and has considered the implications of such waiver and it makes
such waiver voluntarily.
6.8 Attorneys' Fees. In the event a Party commences a legal proceeding
to enforce any of the terms of this Assignment, the prevailing Party in such
action shall have the right to recover reasonable attorneys' fees and costs from
the other Party to be fixed by the court in the same action, whether at trial or
upon appeal.
6.9 Counterpart Execution. This Assignment may be executed in
counterparts and this Assignment shall be effective when each Party shall have
executed at least one counterpart thereof.
IN WITNESS WHEREOF, the Parties have executed this Assignment as of the
Effective Date.
NACIO SYSTEMS, INC., NACIO SYSTEMS, INC.,
a California corporation a Nevada corporation
By: /s/XXXXXX XXXXXXXXXX By: /s/XXXXXX X. XXXXXX
Name Xxxxxx Xxxxxxxxxx Name Xxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Chief Executive Officer
Dated: October 21, 2005 Dated: October 21, 2005
"Assignor" "Assignee"
- 3 -
EXHIBIT A
---------
COPY OF LEASE
NACIO SYSTEMS, INC.
ABSTRACT OF REAL PROPERTY LEASE OBLIGATIONS
-------------------------------------------
January 4, 2002
Revised By Xxxx XxXxxxxx 1/4/02
A. 45, 55 and 00 Xxxxxxxx Xxxxx.
----------------------------
Title of Document: Standard Industrial Lease ("Lease")
Lessor: Condotti Enterprises, Inc., a California corporation
Lessee: Nacio Systems, Inc., a California corporation (formerly
known as MasterLink USA, Inc.)
Date of Lease: March 31, 2000
Premises: 00 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx (the "45 Building")
00 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx (the "55 Building")
00 Xxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx (the "68 Building")
Rentable Square Feet: 45 Building 14,000 rent. sq. ft. of warehouse space
55 Building 14,400 rent. sq. ft. of office space
14,400 rent. sq. ft. of warehouse space
68 Building 1,727 rent. sq. ft. of office space
3,616 rent. sq. ft. of warehouse space
734 Loft area (no charge)
68 Building (office) 9,512 rent. sq. ft. office upstairs unfinished
TOTAL RENTABLE SQUARE FEET: 58,389
Initial Lease Term: 45 Building Commenced July 1, 2000; 5 years, with one
option to extend to a date which is co-
terminus with expiration of the Initial Lease
Term for the 55 and 68 Buildings.
55 Building Commenced August 13, 2000; 10 years, to
expire August 12, 2010.
68 Building Commenced August 13, 2000; 10 years, to
expire August 12, 2010.
Base Monthly Rent: 45 Building: Start $5,180.00; should be $10,360 now.
55 Building: Start $30,096.00; should be $31,630.90 now.
68 Building: Start $5,007.29; should be $5,262.66 now.
68 Building (office) Start $12,841.20, should be $13,496.20 now.
TOTAL MONTHLY BASE RENT:
Start $53,124.49; now should be $60,749.76
Annual CPI Increases:45/55/68 Buildings: 3% minimum/8% maximum annual increase
Options to Extend Term: 45/55/68 Buildings: 2 periods of 5 years each.
-------------------
1 Lessee apparently has the right to use 734 square feet of loft space in
the 68 Building but it does not appear that rent is being charged for that
space.
1
Option Period Rent: 45/55/68 Buildings: The then Fair Market Value (defined as the
rent as charged to other tenants in the
Lakepoint Business Park and other local
business parks during the 6 month period
preceding exercise of the option.
Operating Expenses: 45/55/68 Buildings: Lessee pays all.
Property Taxes: 45/55/68 Buildings: Lessee pays all.
Utilities: 45/55/68 Buildings: Lessee pays all.
Insurance: 45/55/68 Buildings: Lessee pays all.
Lessee Repairs/Maintenance: 45/55/68 Buildings: Lessee pays all except Lessor obligations.
Lessor Repairs: 45/55/68 Buildings: Lessors pays foundation; common area;
fire sprinkler; parking area.
Security Deposits: 45 Building: $13,520 cash.
55 Building: $30,096 cash, plus $288,000 Letter Credit.(2)
68 Building: $6,500 cash.
68 Building (office) $16,755 cash
TOTAL SECURITY DEPOSITS:
$66,871 cash(3) plus $288,000 Letter Credit
Permitted Uses: 45/55/68 Buildings: Web hosting (electronic and
telecommunications data equipment) and
administrative offices.
Parking Allowance: 45 Building: Not specified.
55 Building: 60 unreserved spaces.
68 Building: 10 unreserved spaces.
B. Suites 5-6, Suites 7-8, UPS Space at 000 Xxx Xxxxx Xxxx Xxxxxxxxx.
-----------------------------------------------------------------
Title of Document: Lease ("Lease")
Lessor: D/W Associates, a California limited parnership
Lessee: Nacio Systems, Inc., a California corporation (formerly
known as MasterLink USA, Inc.)
Date of Lease: November 17, 1998 (plus Addendum) as first amended on
September 23, 1999, second amended on May 24, 2001.
Premises: Suites 5-6, Suites 7-8, and UPS Space at 000 Xxx Xxxxx Xxxx Xxxxxxxxx.
Rentable Square Feet: Suite 5-6: 1166 rentable square feet at 353 Bel Marin Keys.
Suite 7-8: 900 rentable square feet at 353 Bel Marin Keys.
Suite 9: 600 rentable square feet at 353 Bel Marin Keys.
UPS Space: 0 generator pad area outdoors at 353 BMK.
TOTAL RENTABLE SQUARE FEET:
2,666 square feet
-------------------
(2) So long as Lessee is not in default, the Letter of Credit xxxxx off
1/10th per lease year. However, Lessee is in default so a burn-off likely did
not occur. This same Letter of Credit also forms part of the Security Deposit
for the 68 Building.
(3) The security deposits have been applied against rent owing per ledger
card from Condiotti.
2
Initial Lease Term: All Spaces: Commenced November 1, 1999, expire November
30, 2003.
Base Monthly Rent: All Spaces: $3,810 as of Nov. 1, 1999, plus $100 for UPS
Space outdoors less $225 for 000 xxxx xxxxxxx xxxx, xxxxx
00X, 000 XXX. Increased due to CPI bumps.
Annual CPI Increases: All Spaces: On December 1 of each year, min. 3%/max. 6%.
Operating Expenses: All Spaces: Lessee pays all.
Property Taxes: All Spaces: Lessee pays all.
Utilities: All Spaces: Lessee pays all.
Insurance: All Spaces: Lessee pays all.
Lessee Repairs/Maintenance: All Spaces: Lessee pays all.
Security Deposits: All Spaces: $3,388 cash.
Permitted Uses: All Spaces: Office uses.
Parking Allowance: All Spaces: Not specified.
C. Suites 8 & 9 at 000 Xxx Xxxxx Xxxx Xxxxxxxxx.
--------------------------------------------
Title of Document: Lease ("SubLease Agreement")
Lessor: D/W Associates, a California limited partnership
Lessee: XxxxxxxxXxxx.xxx
Date of Lease: June 1, 2001.
Premises: Suites 8 & 9 at 000 Xxx Xxxxx Xxxx Xxxxxxxxx,
Xxxxxxxx Xxxxxx Feet: Suite 8: 775 rentable square feet at 353 Bel Marin Keys.
Suite 9: 600 rentable square feet at 353 Bel Marin Keys.
TOTAL RENTABLE SQUARE FEET:
1,375 square feet
Initial Lease Term: All Spaces: Commenced June 1, 2001, month-to-month.
Base Monthly Rent: All Spaces: $2,039.26
payable directly to D/W Associates to offset Nacio lease
amounts.
Annual CPI Increases: All Spaces: On December 1 of each year, min. 3%/max. 6%.
Security Deposits: All Spaces: $4,675.37 cash to Nacio.
3
STANDARD INDUSTRIAL LEASE
BASIC LEASE INFORMATION
Date: March 31, 2000
Landlord: Condiotti Enterprises
Tenant: MasterLink, Inc.
Address: 00 Xxxxxxxx Xxxxx, Novato
Premises: 00 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx of Building: 28,800
Rentable Office Area of Premises: Not less than 14,400 square feet
Rentable Warehouse Area of Premises: 14,400
Term: Ten (10) years
Term Commencement Date: See Addendum "A"
Term Expiration Date: Ten years from the Term Commencement Date
Base Monthly Rent: $30,096.00
Minimum Annual Rent Adjustment: Three (3) percent
Maximum Annual Rent Adjustment: Eight (8) percent
Security Deposit: $30,096.00
Use: Web hosting (electronic and
telecommunications data equipment) and
administrative offices
Tenant's Address For Notices: Landlord's Address For Notices and Payments:
MasterLink, Inc. Condiotti Enterprises, Inc.
00 Xxxxxxxx Xxxxx X.X. Xxx 0000
Xxxxxx, XX 00000 Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxx XxXxxx
Exhibits and Addenda:
Exhibit "A"; the Building identified as Exhibit "C"; the CC&Rs
00 Xxxxxxxx Xxxxx Exhibit "D"; the Building Improvement specifications for
Exhibit "A1"; the Building identified as 00 Xxxxxxxx Xxxxx
68 Xxxxxxxx Court Exhibit "E"; Letter of Credit
Exhibit "B"; the portion of the Exhibit "F"; Site Plan
Premises identified as 55 Addendum "A"; Terms and Conditions
Xxxxxxxx Court Addendum "B"; Modifications to the Lease
Exhibit "B1"; the portion of the
Premises located at 00
Xxxxxxxx Xxxxx
The Sections of the Lease identified above in the margin are those Sections
where references to particular Basic Lease Information initially appear. Each
such reference shall incorporate the applicable Basic Lease Information. In the
event of any conflict between any Basic Lease Information and the Lease, the
latter shall control.
XX
Xxxxxx: PP Lessee: AD
-------- --------
STANDARD INDUSTRIAL LEASE
BASIC LEASE INFORMATION
Date: March 31, 2000
Landlord: Condiotti Enterprises
Tenant: MasterLink, Inc.
Address: 00 Xxxxxxxx Xxxxx, Novato
Premises: 00 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx of Building: 15,589
Rentable Office Area of Premises: 1,727
Rentable Warehouse Area of Premises: 3,616
Loft Area of Premises 734
Term: Ten (10) years
Term Commencement Date: See Addendum "A"
Term Expiration Date: Ten years from the Term Commencement Date
for the portion of the Premises at 55
Xxxxxxxx, as per Addendum "A"
Base Monthly Rent: $5,007.29
Minimum Annual Rent Adjustment: Three (3) percent
Maximum Annual Rent Adjustment: Eight (8) percent
Security Deposit: $6,500.00
Use: Web hosting (electronic and
telecommunications data equipment) and
administrative offices
Tenant's Address For Notices: Landlord's Address For Notices and Payments:
MasterLink, Inc. Condiotti Enterprises, Inc.
00 Xxxxxxxx Xxxxx X.X. Xxx 0000
Xxxxxx, XX 00000 Xxxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxx XxXxxx
Exhibits and Addenda:
Exhibit "A"; the Building identified as Exhibit "C"; the CC&Rs
00 Xxxxxxxx Xxxxx Exhibit "D"; the Building Improvement specifications for
Exhibit "A1"; the Building identified as 00 Xxxxxxxx Xxxxx
68 Xxxxxxxx Court Exhibit "E"; Letter of Credit
Exhibit "B"; the portion of the Exhibit "F"; Site Plan
Premises identified as 55 Addendum "A"; Terms and Conditions
Xxxxxxxx Court Addendum "B"; Modifications to the Lease
Exhibit "B1"; the portion of the
Premises located at 00
Xxxxxxxx Xxxxx
The Sections of the Lease identified above in the margin are those Sections
where references to particular Basic Lease Information initially appear. Each
such reference shall incorporate the applicable Basic Lease Information. In the
event of any conflict between any Basic Lease Information and the Lease, the
latter shall control.
XX
Xxxxxx: PP Lessee: AD
-------- --------
ASSIGNMENT OF TRADEMARKS, COPYRIGHTS, INVENTIONS, TRADE SECRETS AND OTHER
-------------------------------------------------------------------------
INTELLECTUAL PROPERTY
---------------------
THIS ASSIGNMENT OF TRADEMARKS, COPYRIGHTS, INVENTIONS, TRADE SECRETS
AND OTHER INTELLECTUAL PROPERTY (the "Assignment") is made and entered into
effective as of October 21, 2005 by Nacio Systems, Inc., a California
corporation ("Assignor"), in favor of Nacio Systems, Inc., a Nevada corporation
("Assignee").
RECITALS
--------
A. Assignor is selling and transferring to Assignee substantially all
of Assignor's assets pursuant to an Asset Purchase Agreement dated April 1, 2005
(the "Agreement") by and among Assignor, Assignee, and Nova Communications Ltd.,
a Nevada corporation.
B. In connection with such transaction, Assignor wishes to assign all
of its intellectual property rights to Assignee and the Assignee wishes to
accept such assignment, on the terms and conditions set forth herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants herein set forth and of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Trademarks. Assignor has adopted, used, is using, and is the owner
of various common law trademarks, service marks, and slogans in connection with
web hosting, connectivity and outsourcing services for businesses that use the
Internet, including but not limited to, those listed on Exhibit A hereto
(collectively, the "Marks"). For good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, Assignor hereby grants and assigns
to Assignee, its successors and assigns all right, title and interest in and to
the Marks and any registrations of the Marks with the United States Patent and
Trademark Office or any other governmental agency, together with that part of
the goodwill of the business connected with the use of and symbolized by the
Marks and the right to xxx and recover damages and profits for past
infringements.
2. Copyrights. For good and valuable consideration, receipt of which is
hereby acknowledged, Assignor hereby sells, grants, conveys and assigns to
Assignee, its successors, assigns and licensees, all right, title and interest
(under copyright or otherwise) and the unencumbered right to exercise such
rights in any and all media now known or hereafter devised throughout the
universe in perpetuity, that are now held by Assignor in and to each registered
and unregistered work of authorship (each, a "Work") owned in whole or in party
by Assignor, and all precursors, artwork, works in progress, drafts, revisions,
models, translations, sequels and other versions of the Work that may heretofore
have been created with the sanction of Assignor, and does hereby further sell,
grant, convey and assign to Assignee all tangible media in which the Work has
been embodied.
1
3. Inventions. Assignor hereby assigns to Assignee exclusively
throughout the world all right, title and interest (xxxxxx or inchoate) in (a)
any and all inventions owned in whole or in part by Assignor, whether protected
or protectible by patent, (b) all precursors, portions and work in progress with
respect thereto and all inventions, technology, information, and know-how,
materials and tools relating thereto or to the development, support or
maintenance thereof, and (c) all patent rights, trade secret rights, sui generis
database rights and all other intellectual and industrial property rights of any
sort and all business, contract rights, causes of action, and goodwill in,
incorporated or embodied in, used to develop, or related to any of the
foregoing.
4. Trade Secrets & Other Intellectual Property. To the extent that
Assignor possesses Trade Secrets (as defined below) not assigned under the
previous Sections of this Assignment, Assignor hereby assigns to Assignee
exclusively throughout the world all right, title and interest in (a) all
information and know-how of a technical or business nature, oral or written,
including designs, prototypes, art work, business plans, financial data,
budgets, projections, economic studies, marketing information, reports, systems
and procedures, pricing data, computer programs and software, trade secrets,
proposed trade names or marks, identity or terms of agreement with actual or
prospective suppliers, customers, employees or other business allies, supplied
by or on behalf of Assignor, and (b) all observations and all memoranda,
analyses, compilations, studies, or other documents or records prepared by
Assignee or its representatives that reflect or are developed from or based on
the foregoing (collectively, the "Trade Secrets"). The Trade Secrets do not
include information that is or becomes generally available to the public.
5. General. Assignor agrees to assist Assignee, or its designee, at
Assignee's expense, in every proper way to secure Assignee's rights in any and
all of the foregoing intellectual property and all rights relating thereto in
any and all jurisdictions, including the disclosure to Assignee of all pertinent
information and data with respect thereto, the execution of all applications,
specifications, oaths, assignments and all other instruments that Assignee shall
deem necessary or advisable in order to apply for and obtain such rights and in
order to assign and convey to Assignee, its successors, and assigns the sole and
exclusive rights, title and interest in and to such and any trademarks,
copyrights, patents, or other intellectual property rights relating thereto. If
Assignee is unable for any reason to secure Assignor's signature to apply for or
to pursue any application for any United States or foreign trademark, copyright
or patent registrations, then Assignor hereby irrevocably designates and
appoints Assignee and its duly authorized officers and agents as Assignor's
agent and attorney in fact, to act for and in its behalf and stead to execute
and file any such applications and to do all other lawfully permitted acts to
further the prosecution and issuance of trademark registrations, copyright
registrations, or letters patent thereon with the same legal force and effect as
if executed by Assignor. This Assignment shall inure to the benefit of and shall
be binding upon Assignor, Assignee and their respective successors and assigns.
This Assignment may not be amended or modified except by a written document
signed by Assignor and Assignee. Assignor shall execute and deliver such further
and additional instruments, agreements and other documents as may be necessary
to carry out the provisions of this Assignment. This Assignment shall be
governed by the laws of the State of California, without reference to its
principles of conflicts of law.
2
IN WITNESS WHEREOF, the undersigned has duly executed this Assignment
as of the day and year first set forth above.
NACIO SYSTEMS, INC.,
a California corporation
By:/s/XXXXXX XXXXXXXXXX
Name: Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
"Assignor"
3
Exhibit A
Nacio
PowerColo
TeraSafe
4
EXHIBIT C - FORM OF ASSUMPTION
ASSUMPTION AGREEMENT
THIS ASSUMPTION AGREEMENT ("Assumption") is made and entered into
effective as of October 21, 2005 by and between Nacio Systems, Inc., a
California corporation ("Assignor"), and Nacio Systems, Inc., a Nevada
corporation ("Assignee"). All capitalized terms used herein that are defined in
the Agreement (defined below) shall have the same meaning herein as specified in
the Agreement, unless otherwise expressly defined herein.
WITNESSETH
WHEREAS, Assignor is selling and transferring to Assignee substantially
all of the assets of Assignor's business pursuant to an Asset Purchase Agreement
dated April 1, 2005 (the "Agreement") by and between Assignee, Assignor and Nova
Communications Ltd., a Nevada corporation; and
WHEREAS, pursuant to the Agreement, Assignee is to assume certain
obligations of Assignor,
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants herein set forth and of other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
hereby agree as follows:
1. Assumption of Obligations
Assignee hereby assumes and agrees to pay, perform, fulfill and
discharge in full, as and when due, all liabilities and obligations arising
under or pursuant to the Assumed Liabilities. Assignee agrees that, upon
Assignor's reasonable request, it shall do, execute, acknowledge, and deliver
all acts, deeds, instruments of transfer, agreements and other documents as may
be reasonably required to further effect and evidence the assumption of
liabities hereunder.
2. Indemnification
Assignee shall indemnify, defend and hold harmless Assignor, its
directors, officers, shareholders, attorneys, agents and employees, from,
against and with respect to any claim, liability, obligation, loss, damage,
assessment, judgment, cost or expense (including without limitation, reasonable
attorneys' fees and costs and expenses reasonably incurred in investigating,
preparing, defending against or prosecuting any litigation or claim), action,
suit, proceeding or demand, of any kind or character arising out of or in any
manner incident, relating or attributable to any failure of Assignee to perform,
fulfill or discharge any of the Assumed Liabilities.
4. Effect
This Assumption shall be binding upon and shall inure to the benefit of
the parties hereto and their respective heirs, executors, legal representatives,
successors and assigns. This Assumption is being delivered pursuant to the
Agreement, shall be construed consistently therewith, and is subject to all of
the terms and conditions thereof.
5. Governing Law
This Assumption and all performances hereunder shall be governed by and
construed in accordance with the laws of the State of California.
6. Modifications
This Assumption may not be altered or amended and no rights hereunder
may be waived except by an instrument in writing signed by all parties hereto.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Assumption as of the day and year first set forth above.
NACIO SYSTEMS, INC., NACIO SYSTEMS, INC.,
a California corporation a Nevada corporation
By: /s/XXXXXX XXXXXXXXXX By: /s/XXXXXX X. XXXXXX
Name Xxxxxx Xxxxxxxxxx Name Xxxxxx X. Xxxxxx
Title: Chief Financial Officer Title: Chief Executive Officer
Dated: October 21, 2005 Dated: October 21, 2005
"Assignor" "Assignee"
EXHIBIT D - ALLOCATION SCHEDULE
EXHIBIT D
ALLOCATION SCHEDULE
The Purchase Price shall be allocated to the assets as stated in Company's
Consolidated Operations - Balance Sheet As of March 31, 2005, a copy of which is
attached as Exhibit E, with any excess being applied to goodwill.
EXHIBIT E - COMPANY FINANCIAL STATEMENTS
EXHIBIT F - BUYER AND NOVA FINANCIAL STATEMENTS
EXHIBIT G - OFFICER CERTIFICATES AND BOARD RESOLUTIONS
Disclosure Schedule
-------------------
Exceptions to Representations and Warranties
--------------------------------------------
Unless the context otherwise requires, all capitalized terms in this Disclosure
Schedule shall have the meanings ascribed to them in the Asset Purchase
Agreement ("Agreement"), effective April 1, 2005, by and among Nacio Systems,
Inc., a Nevada corporation (the "Buyer"), Nova Communications Ltd., a Nevada
corporation ("Nova") and Nacio Systems, Inc., a California corporation (the
"Company").
This Disclosure Schedule and the information contained herein are intended
solely to qualify and limit certain representations, warranties and covenants of
the Parties set forth in the Agreement.
No reference or disclosure of any item or other matter in this Disclosure
Schedule shall be construed as an admission or indication that such item or
other matter is material or that such item or other matter is required to be
referred to or disclosed in this Disclosure Schedule. No reference in this
Disclosure Schedule to any agreement or document shall be construed as an
admission or indication that such agreement or document is enforceable or
currently in effect or that there are any obligations remaining to be performed
or any rights that may be exercised under such agreement or document. No
disclosure set forth herein relating to any possible breach or violation of any
agreement, law or regulation shall be construed as an admission of such breach
or violation.
The information contained in each section of this Disclosure Schedule shall be
deemed to be disclosed and incorporated by reference in each of the other
sections of this Disclosure Schedule where it is reasonably apparent on its face
that such disclosure is applicable to such other sections.
SCHEDULE 3(A)
-------------
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. The Plan provides for, inter alia,
the issuance of 27,000,000 shares of common stock of the reorganized corporation
to various creditor classes. Company has compiled a current shareholder list
pursuant to the Plan. However, there remains a possibility that any creditor,
shareholder or other third party may dispute the current shareholder list and/or
the number of shares of Company's common stock owned by a shareholder.
SCHEDULE 3(B)
-------------
Company intends to seek the requisite approval of its board of directors and
shareholders for the transactions contemplated in the Agreement and to provide
notice of dissenter's rights in accordance with the California Corporations
Code. It is possible that one or more of Company's shareholders may challenge
Company's power and authority to execute and deliver this Agreement and to
perform its obligations hereunder.
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. The Plan provides for, inter alia,
the issuance of 27,000,000 shares of common stock of the reorganized corporation
to various creditor classes. Company has compiled a current shareholder list,
including Company's current addresses for each shareholder and the number of
shares of Company's common stock owned by each shareholder, pursuant to the Plan
and has sought shareholder approval accordingly. However, there remains a
possibility that any creditor or other third party may dispute the accuracy or
completeness of the current shareholder list, or that a shareholder may claim
that Company did not properly seek shareholder authorization or provide proper
notice to shareholders in connection with this Agreement.
SCHEDULE 3(C)
-------------
Pursuant to that certain Standard Lease, dated March 31, 2000, by and between
Company and Condiotti Enterprises, Inc., a California corporation ("Landlord"),
pertaining to Company's principal place of business, Company may assign said
lease in connection with a purchase of all or substantially all of Company's
assets, provided that the buyer assumes in full the obligations of Company under
the lease. Buyer shall execute the form of Assignment and Assumption of Lease
attached hereto.
Reference is made to the Equipment Lease Agreement, dated May 19, 2004, by and
between Company and Direct Capital Corporation ("Lessor"), covering certain
computer equipment (the "Equipment Lease"). The Equipment Lease requires
Lessor's consent to any assignment. Company shall cooperate with Buyer, at
Buyer's expense, in obtaining Lessor's consent in accordance with the Assignment
of Contract Rights and Assumption of Obligations, by and between Company and
Buyer.
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code),
including, without limitation, the Debtor's Plan of Reorganization dated April
25, 2003 (the "Plan") approved by the Bankruptcy Court therein on May 22, 2003.
Buyer shall assume Company's obligations under the Plan and Company shall
cooperate with Buyer, at Buyer's expense, in obtaining any and all necessary
third party consents in connection therewith.
Company has not obtained an affirmative opinion in writing as to the fairness of
the consideration to the shareholders of Company pursuant to California
Corporations Code Section 1203.
SCHEDULE 3(D)
-------------
Company has incurred substantial legal fees in connection with the transactions
contemplated herein.
SCHEDULE 3(E)
-------------
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. The Plan provides for, inter alia,
the issuance of 27,000,000 shares of common stock of the reorganized corporation
to various creditor classes. Numerous creditors maintained UCC1 security
interest filings against Company's assets at the time that Company initiated the
foregoing proceeding. The Plan provides that, as of the effective date of the
Plan, all property vested in Company shall be free and clear of all claims of
creditors, except the obligations that are imposed or preserved by the Plan.
Buyer shall assume Company's obligations under the Plan and Company shall
cooperate with Buyer, at Buyer's expense, in obtaining any and all necessary
third party consents in connection therewith.
Reference is made to the UCC1 Financing Statement, Filing Number 03-11560597,
filed with the California Secretary of State on April 24, 2003, listing Nacio
Investment Group as the secured party and Company as debtor. The foregoing
filing relates, at least in part, to Nacio Investment Group's claim for monies
loaned pursuant to the Plan, which Nacio Investment Group alleges is in the
approximate amount of $911,000.
Reference is made to the Judgement Lien, Filing Number 03-31660970, filed with
the California Secretary of State on November 6, 2003, listing Xxxxxxx X. Xxxxxx
as the creditor and Company as debtor, pertaining to fees for legal services
provided to Company by Xxxxxxx X. Xxxxxx.
Reference is made to the Judgement Lien, Filing Number 03-31660974, filed with
the California Secretary of State on November 6, 2003, listing Xxxxxxx X. Xxxxxx
as the creditor and Company as debtor, pertaining to fees for legal services
provided to Company by Xxxxxxx X. Xxxxxx.
Reference is made to the UCC1 Financing Statement, Filing Number 04-16160353,
filed with the California Secretary of State on May 28, 2004, listing Sterling
National Bank as the secured party and Company as debtor.
SCHEDULE 3(F)
-------------
Company's financial statements attached as Exhibit E have not been prepared in
accordance with GAAP.
SCHEDULE 3(G)
-------------
Company has not obtained an affirmative opinion in writing as to the fairness of
the consideration to the shareholders of Company pursuant to California
Corporations Code Section 1203.
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. There remains a possibility that
any and all creditors of Company, or another third party, may assert that
Company has not complied with the Plan and may pursue legal action against
Company relating thereto. Buyer shall assume Company's obligations under the
Plan and Company shall cooperate with Buyer, at Buyer's expense, in obtaining
any and all necessary third party consents in connection therewith.
SCHEDULE 3(H)
-------------
Company is currently indebted to the Internal Revenue Service in the amount of
approximately $920,000. The IRS has agreed to weekly payments of approximately
$5,000 to pay down the foregoing debt.
SCHEDULE 3(I)
-------------
Pursuant to that certain Standard Lease, dated March 31, 2000, by and between
Company and Condiotti Enterprises, Inc., a California corporation ("Landlord"),
pertaining to Company's principal place of business, Company may assign said
lease in connection with a purchase of all or substantially all of Company's
assets, provided that the buyer assumes in full the obligations of Company under
the lease. Buyer shall execute the form of Assignment and Assumption of Lease
attached hereto. To the Knowledge of Company, Landlord has not declared Company
in default under the foregoing lease, nor has Landlord terminated said lease.
SCHEDULE 3(J)
-------------
Reference is made to the trademark application for "TeraSafe" pending before the
U.S. Patent and Trademark Office, Serial Number 78355932.
SCHEDULE 3(K)
-------------
The following list excludes service contracts entered into by Company in the
ordinary course of its business.
Reference is made to the Equipment Lease Agreement, dated May 19, 2004, by and
between Company and Direct Capital Corporation ("Lessor"), covering certain
computer equipment (the "Equipment Lease"). The Equipment Lease requires
Lessor's consent to any assignment. Company shall cooperate
with Buyer, at Buyer's expense, in obtaining Lessor's consent in accordance with
the Assignment of Contract Rights and Assumption of Obligations, by and between
Company and Buyer.
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. Buyer shall assume Company's
obligations under the Plan and Company shall cooperate with Buyer, at Buyer's
expense, in obtaining any and all necessary third party consents in connection
therewith.
SCHEDULE 3(L)
-------------
none
SCHEDULE 3(M)
-------------
Reference is made to In Re: Nacio Systems, Inc., Case No. 02-10596 (Bankr. N.D.
Ca.), in which Company sought relief under Chapter 11 of the Bankruptcy Code
(Title 11 of the United States Code), including, without limitation, the
Debtor's Plan of Reorganization dated April 25, 2003 (the "Plan") approved by
the Bankruptcy Court therein on May 22, 2003. There remains a possibility that
any and all creditors of Company, or another third party, may assert that
Company has not complied with the Plan and may pursue legal action against
Company relating thereto.
Reference is made to Nacio Systems, Inc. v. Nacio Investment Group, LLC, Xxxxx
Xxxxx, Xxxxx Xxxxx, et al., Case No. CV 052533, in which Company brought suit
against certain defendants for damages and declaratory relief relating to
conversion, breach of fiduciary duty, and fraud and deceit. Company filed the
Complaint in the foregoing action on June 7, 2005. The defendants in this action
have asserted cross-claims against Company.
SCHEDULE 3(N)
-------------
Company provides the following benefits to Company employees: Blue Cross medical
coverage and 30 personal days (vacation or sick days) .
NOVA COMMUNICATIONS LTD./NACIO SYSTEMS, INC. (NV)
DISCLOSURE SCHEDULE
SCHEDULE 4(I)(I)
----------------
None
SCHEDULE 4(I)(II)
-----------------
None
SCHEDULE 4(J)
-------------
None
SCHEDULE 4(K)
-------------
None
SCHEDULE 4(M)
-------------
None
SCHEDULE 4(N)
-------------
None
Approved and accepted.
"BUYER"
NACIO SYSTEMS, INC.,
a Nevada corporation
By: /s/XXXXXX X. XXXXXX
Name Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Dated: October 21, 2005
"NOVA"
NOVA COMMUNICATIONS LTD.,
a Nevada corporation
By: /s/XXXXXX X. XXXXXX
Name Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
Dated: October 21, 2005
"COMPANY"
NACIO SYSTEMS, INC.,
a California corporation
By: /s/XXXXXX XXXXXXXXXX
Name Xxxxxx Xxxxxxxxxx
Title: Chief Financial Officer
Dated: October 21, 2005
