Exhibit 10.65
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of the 16th day of June, 2003 by and among Xxxxx X. Xxxxxx, Xx.
and Xxxxx Xxxxxx (collectively, the "Garveys") and Integrated Information
Systems, Inc. ("IIS"), a Delaware corporation.
RECITALS
A. IIS holds legal and beneficial title to certain assets including the
trade names "CitySolutions", "CityServe" and "CitizenServe" and all other
material trademarks, service marks and trade names of the CitySolutions service
(whether or not registered including pending applications for registration),
intellectual property rights and source code to the "CitySolutions", "CityServe"
and "CitizenServe" products, and other software elements, and the Intellectual
Property Assets as defined in Exhibit B attached hereto, and existing customer
lists and customer contracts and inventory, documentation, and furniture,
fixtures and equipment (the "CitySolutions Assets") utilized for the operation
of the CitySolutions, CityServe, and CitizenServe businesses, (the
"CitySolutions Business"), all as set forth on Exhibit A attached hereto.
B. IIS owes net reimburseable amounts to Garveys for expenses properly
incurred on behalf of IIS by Garveys in the course of carrying out their duties
as employees of IIS, and IIS will owe Garveys for quarterly cash payments for
the quarters ending June 30, 2003 and September 30, 2003 for the guarantees
provided by the Garveys for the IIS credit facility with AnchorBank, FSB. (the
"Reimbursables").
C. Garveys desire to acquire all of IIS's right, title and interest in
and to all of the CitySolutions Assets for the purpose of operating the
CitySolutions Business.
D. IIS is willing to sell to Garveys the CitySolutions Assets and to
facilitate the transfers of other items to Garveys for the purpose of operating
the CitySolution Business on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Garveys and IIS
(collectively, the "Parties") hereby agree as follows:
PURCHASE AND SALE OF IIS ASSETS
1.1 Purchase and Sale. On the terms and subject to the conditions of
this Agreement, at the Closing referred to in Section 2.1, IIS shall sell,
assign, transfer and deliver to Garveys, and Garveys shall purchase, acquire and
accept from IIS, free and clear of any and all liens, mortgages, adverse claims,
charges, security interests, encumbrances or other restrictions or limitations
whatsoever, all of IIS's right, title and interest in and to the CitySolutions
Assets. To effect the transfer of the CitySolutions Assets from IIS to Garveys
at the Closing or such date that is mutually agreed between IIS and Garveys, IIS
shall deliver or cause to be delivered to Garveys, a duly authorized and
executed Assignment of Intellectual Property in the form attached as Exhibit B
hereto and a duly authorized and executed Assignment and Xxxx of Sale in the
form attached as Exhibit C hereto.
1.2 Extinguishment of Reimburseables. At the Closing, Garveys shall
deliver or cause to be delivered a Waiver of Claim for $45,996.00 of the
Reimbursables in the form attached as Exhibit D hereto. Upon the Closing, the
obligation of IIS to pay $45,996.00 of the Reimbursables to Garveys shall be
extinguished forever.
1.3 Assignment of Contracts. At the Closing, IIS shall deliver or
cause to be delivered to Garveys a duly authorized and executed Assignment of
Contracts in the form attached as Exhibit E hereto.
1.4 Transition Activities. Upon the Closing, the employees with IIS
who have been assigned to the CitySolutions Business shall transition to
employment with the Garveys, and IIS shall provide additional transition
services as set forth on Exhibit F attached hereto.
1.5 Release of Lien. At the Closing, IIS shall deliver or cause to be
delivered to Garveys, a duly executed and authorized Release of Security
Interests of AnchorBank, FSB ("AnchorBank") substantially in the form attached
as Exhibit G hereto.
CLOSING
2.1 Closing. The closing of the purchase and sale of the CitySolutions
Assets and the related transaction pursuant to this Agreement (the "Closing")
shall be on June 16, 2003 at 10:00 a.m. (the "Closing Date") and shall occur at
the offices of IIS at 0000 Xxxx 00xx Xxxxxx, Xxxxx, XX 00000, or at such other
time and place as shall be mutually agreed to by the Parties. If the Closing
does not occur by 5:00 p.m. on June 30, 2003, then either party may terminate
this Agreement without any liability to the other party under this Agreement or
otherwise.
At the Closing:
a. IIS shall deliver duly authorized and executed Assignment of
Intellectual Property, Assignment and Xxxx of Sale, Assignment of Contracts, and
the Release of Security Interests from AnchorBank; and
b. Garveys shall deliver to IIS that same day the Waiver of Claim
for Reimbursables.
c. IIS shall deliver to Garveys certified resolutions of its
board of Directors approving the execution, delivery and performance of this
Agreement and authorizing the consummation of the transactions contemplated
hereby.
d. This Agreement and the transactions contemplated herein
may be terminated and abandoned at any time on or prior to the Closing Date by
Garveys if:
(i) any representation or warranty made herein for the
benefit of Garveys, or any certificate, schedule or document furnished to
Garveys pursuant to this Agreement is untrue in any material respect; or
(ii) IIS shall have defaulted in any material respect in
the performance of any material obligation under this Agreement.
e. Notwithstanding the approval of the Board of Directors
of IIS, this Agreement and the transactions contemplated herein may be
terminated and abandoned at any time on or prior to the Closing Date by IIS if:
(i) any representation or warranty made herein for
the benefit of IIS, or any certificate, schedule or document furnished to IIS
pursuant to this Agreement is untrue in any material respect; or
(ii) Garveys shall have defaulted in any material respect
in the performance of any material obligation under this Agreement.
THE PRE-CLOSING PERIOD
3.1 Due Diligence; Delivery of Information. Prior to the Closing of
this Agreement (the "Pre-Closing Period"), IIS and shall make available to
Garveys for review and inspection the CitySolutions Assets and all materials,
documentation and other information relating to the CitySolutions Assets and the
CitySolutions Business.
3.2 Confidentiality. Garveys shall not disclose any proprietary
information or trade secrets which were disclosed to Garveys as a result of due
diligence conducted pursuant to this Agreement.
3.3 Covenants of IIS and During Pre-Closing Period. During the
Pre-Closing Period, IIS hereby covenants, subject to fulfillment of its
fiduciary duties to IIS and its shareholders, as follows:
a. Destruction of Assets. IIS management shall not allow IIS to
engage in any activity which results in destruction of, damage to, or loss of,
any CitySolutions Assets (whether or not covered by insurance) without the
written consent of Garveys.
b. Disposition of Assets. IIS management shall not allow IIS to
sell, assign, lease, transfer or otherwise dispose of any CitySolutions Assets
without the written consent of Garveys.
c. Encumbrances. IIS management shall not allow IIS to mortgage,
pledge or otherwise encumber any CitySolutions Assets, subject to existing
encumbrances as of the date of this Agreement, without the written consent of
Garveys.
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 Covenants, Representations and Warranties of IIS . IIS hereby
covenants, represents and warrants to Garveys that:
a. Ownership. IIS is the sole legal and beneficial owner of the
CitySolutions Assets and has good and marketable title free and clear of any
liens, mortgages, security interests, encumbrances, pledges, charges, adverse
claims or other restrictions or limitations, subject to existing encumbrances as
of the date of this Agreement , with full and absolute right and power to sell,
assign, transfer and deliver the CitySolutions Assets to Garveys. Any work
performed by IIS staff on behalf of Garveys shall be a "work for hire," sole
property of Garveys, with actual title and ownership rights for such work
transferring only after all related payments for such work have been made to
IIS.
b. Title. Upon the sale, assignment, transfer and delivery of the
CitySolutions Assets along with delivery of the Release of Security Interests
from AnchorBank pursuant to this Agreement, Garveys shall have good, valid and
marketable title to the CitySolutions Assets owned by IIS, free and clear of any
lien, mortgage, adverse claim, charge, encumbrance, limitation, restrictions or
limitations whatsoever.
c. Corporate Existence, Authorization, Approval and
Enforceability. IIS is a corporation duly organized and existing and in good
standing under the laws of the State of Delaware. IIS has all requisite power
and authority to enter into and perform the terms of this Agreement. The
execution, delivery and performance of this Agreement by IIS has been duly
authorized by all necessary action, including any required corporate,
partnership or trust authorization. IIS is not subject to any restriction under
any corporate charter, partnership agreement, trust agreement, agreement,
instrument, order, judgment, decree, law, statute or regulation, or any other
restriction of any kind or character, which would prevent IIS from entering into
this Agreement or consummating the transactions contemplated hereby in
accordance with the terms hereof. This Agreement when executed and delivered by
IIS will constitute a valid and binding obligation of IIS enforceable in
accordance with its terms, subject to the laws of general application relating
to bankruptcy, insolvency and the relief of debtors, rules of law governing
specific performance, injunctive relief and other equitable remedies, and public
policy.
d. No Conflict. The execution, delivery and performance of this
Agreement by IIS shall not result in the breach of, default of, or conflict
with, any other agreement or obligation of IIS.
4.2 Representations and Warranties of Garveys. Garveys covenant,
represent and warrant to IIS that:
a. Approval and Enforceability. Garveys is not subject to any
restriction under any corporate charter, partnership agreement, trust agreement,
agreement, instrument, order, judgment, decree, law, statute or regulation, or
any other restriction of any kind or character, which would prevent Garveys from
entering into this Agreement or consummating the transactions contemplated
hereby in accordance with the terms hereof. This Agreement, when executed and
delivered by Garveys, will constitute a valid and binding obligation of Garveys
together and individually, enforceable in accordance with its terms, subject to
the laws of general application relating to bankruptcy, insolvency and the
relief of debtors, rules of law governing specific performance, injunctive
relief and other equitable remedies, and public policy.
b. Brokers or Finders. Garveys has not incurred, and will not
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
4.3 Duration of Covenants, Representations and Warranties. The Parties
hereby represent to each other that all of the representations, warranties and
covenants contained in this Agreement and in any documents, certificates or
other instruments delivered by or on behalf of the Parties are true now, will be
true at the Closing and shall survive the Closing.
4.4 Invoicing Services. Until the earlier of three years from the
Closing Date or the date upon which Garveys (or an entity through which they
operate the CitySolutions Assets) become authorized vendors for the municipal
clients located in Arizona (the "Arizona Municipalities"), IIS will deliver
invoices prepared by Garveys for products sold to and services performed for the
Arizona Municipalities by the Garveys relating to the CitySolutions business.
IIS shall remit any payments received from such Clients with respect to such
invoices to the Garveys within five business days after IIS's actual receipt
thereof from such Clients and after posting at IIS' bank. IIS shall have no
duty to pursue any collection efforts with respect to such Clients or invoices
and shall have no liability with respect to the collection of such receivables.
IIS shall transmit to Garveys any correspondence received from such Clients
relating to the collection of any invoices. Garveys shall indemnify and hold
harmless IIS from and against all liabilities relating to the invoicing services
performed by IIS and IIS shall have no obligation to continue these services if
such services are determined to be unlawful or in violation of any agreement
entered into between IIS and such Clients.
GENERAL PROVISIONS
5.1 Liabilities Not Assumed. Garveys shall have no responsibility or
obligation for, or be obligated to assume or pay any debt, obligation or
liability of IIS except for the duties and obligations of the Contracts, as
defined in Exhibit E attached hereto, assigned to Garveys by IIS as set forth in
Section 1.3.
5.2 Risk of Loss. Risk of loss to the CitySolutions Assets prior to
the Closing shall remain on IIS.
5.3 Final Agreement. This Agreement and the exhibits attached hereto
constitute the final and complete agreement between the Parties concerning the
subject matter of this Agreement. This Agreement supersedes all prior
agreements, understandings, negotiations and discussions, written or oral,
between the Parties with respect thereto. Any modification, revision or
amendment of this Agreement shall not be effective unless made in writing and
executed by the Parties.
5.4 Language. The language used in this Agreement shall be deemed to
be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction shall be applied against any Party. The captions
are for convenience only and shall not control or affect the meaning or
construction of the provisions of this Agreement.
5.5 Severability. In case any one or more of the provisions contained
herein shall, for any reason, be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provisions of this Agreement, and this Agreement shall be construed as
if the invalid, illegal or unenforceable provisions(s) had never been contained
herein; provided that such invalid, illegal or unenforceable provisions shall
first be curtailed, limited or eliminated to the extent necessary to remove such
invalidity, illegality or unenforceability with respect to the applicable law as
it shall then be applied.
5.6 Waiver. Except as expressly set forth herein, any waiver of, or
promise not to enforce, any right under this Agreement shall not be enforceable
unless evidenced in writing and signed by the party against whom enforcement of
the waiver is sought.
5.7 Headings. The headings in this Agreement are for the purpose of
convenience only and shall not limit, enlarge or affect any of the covenants,
terms, conditions or provisions of this Agreement.
5.8 Effect of Recitals. The recitals contained in this Agreement are
an integral part of this Agreement.
5.9 Notices. All notices, requests, demands and other communications
made pursuant to this Agreement shall be in writing and shall be sent by
registered or certified mail, return receipt requested, or by commercial courier
or by facsimile transmission to the Parties at the addresses or numbers set
forth below, or to such other person and place as the Party shall designate by
notice to the other Party:
IIS: Chief Financial Officer, IIS
0000 Xxxx 00xx Xxxxxx
Xxxxx, Xxxxxxx 00000
Garveys: Xxxxx Xxxxxx
0000 X. Xxxxxx Xxxx, #000
Xxxxx, Xxxxxxx 00000
5.10 Assignments. No Party may assign this Agreement or delegate any
obligations under this Agreement without obtaining the written consent of each
of the other Parties.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
5.12 Governing Law. This Agreement shall be governed construed and
enforced in accordance with the laws of the State of Arizona and the laws of the
United States of America. Any litigation between the Parties shall be conducted
in Maricopa County, Arizona and the Parties hereby submit to such jurisdiction
and venue.
5.13 Force Majeure. Neither party will be liable for any failure or
delay in its performance under this Agreement due to causes, including, but not
limited to, acts of God, acts of civil or military authority, fire, epidemic,
flood, earthquake, riot, war, sabotage, labor shortage, or dispute, and
governmental action, which are beyond its reasonable control; provided however,
that the delayed party (a) gives the other party written notice of such cause
promptly, and in any event within fifteen (15) calendar days of discovery
thereof, and (b) uses its reasonable efforts to correct such failure or delay in
its performance.
5.14 Independent Parties. None of the provisions of this Agreement
shall be deemed to constitute a partnership, joint venture, or any other such
relationship between the parties hereto, and neither party shall have any
authority to bind the other in any manner. Neither party shall have or hold
itself out as having any right, authority, or agency to act on behalf of the
other party in any capacity or in any manner, except as may be specifically
authorized in this Agreement.
5.15 No Waiver. Failure by either party to enforce any provision of
this Agreement will not be deemed a waiver of future enforcement of that or any
other provision.
5.16 No Rights In Third Parties. This Agreement is made for the
benefit of IIS and Garveys and not for the benefit of any third parties.
5.17 Miscellaneous. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
collectively will constitute one and the same instrument. The headings and
captions used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement. This Agreement will be
interpreted fairly in accordance with its terms and without any strict
construction in favor of or against either party based on draftsmanship of the
Agreement or otherwise.
5.18 Construction. The parties hereto hereby acknowledge and agree
that each party has participated in the drafting of this Agreement and that this
Agreement has been, to the extent it was felt necessary, reviewed by the
respective legal counsel for the parties hereto and that the rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party will not be applied to the interpretation of this Agreement. No
inference in favor of, or against, any party will be drawn from the fact that
one party has drafted any portion hereof.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date
first above written.
GARVEYS: IIS:
Xxxxx X. Xxxxxx, Xx Integrated Information Systems, Inc.
By: /s/ Xxxxx X. Xxxxxx, Xx. By: /s/ Xxxxxx X. Xxxxxxx
--------------------------- -----------------------
Name: Xxxxx X. Xxxxxx, Xx. Name: Xxxxxx X. Xxxxxxx
Title: SVP and CFO
Xxxxx Xxxxxx
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
