STOCK PURCHASE AGREEMENT
EX-2.2
Stock Purchase Agreement
THIS STOCK PURCHASE AGREEMENT, made as of the 5th day of April, 2000, by
and among VERTICAL COMPUTER SYSTEMS, INC., a Delaware corporation ("Buyer"),
XXXXXXXXXX.XXX, a Nevada corporation ("Company"), and XXXXX XXXXX, XXXXXX X.
XXXXXXXXX 1995 FAMILY TRUST, XXXX AND XXXXX XXXXXXXX, CENTURY CAPITAL LLC,
XXXXXXX X. XXXXXX, XXX XXXXXX, XXXXXX XXXXX, XXXX XXXXXXXX, JUNE K. XXXXXXXX,
XXXXXXX XXXX XXXXX FAMILY TRUST DATED 2-29-1999, XXXXXXX XXXXXXXX, XXXX XXXXX,
XXXXXXXX XXXXX & XXXXXXX XXXXX, AND XXXXXXX XXXXX & XXXXXX XXXXX (hereinafter
referred to individually as a "Shareholder" and, collectively, as the
"Shareholders");
BACKGROUND
A. Shareholders own ONE HUNDRED PERCENT (100%) of the issued and
outstanding shares of capital stock of Company, the number of such shares owned
by each of the Shareholders is set forth opposite the names of the respective
Shareholders on Exhibit A;
B. Buyer desires to acquire ONE HUNDRED PERCENT (100%) of the issued and
outstanding capital stock of Company held by the Shareholders in exchange solely
for shares of voting stock of Buyer on the terms and conditions hereinafter set
forth; and
C. Company is engaged in the business of providing online travel services
(the "Business");
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. Acquisition of Stock; Restrictions on Transfer. On the Closing Date (as
hereinafter defined), the Shareholders shall convey, transfer and assign, upon
the terms and conditions herein set forth, to Buyer, free and clear of all
liens, security interests, pledges, claims and encumbrances of every kind,
nature and description, and Buyer shall accept from the Shareholders, ONE
HUNDRED PERCENT (100%) of the outstanding capital stock of Company held by the
Shareholders in exchange for (a) Common Stock of Buyer representing a total
market value (calculated based on the average closing price of Buyer's Common
Stock for the five (5) market days prior to the Closing Date (as hereinafter
defined)) of FIVE MILLION DOLLARS ($5,000,000) on the Closing Date to be
delivered within ten (10) days of the Closing (as hereinafter defined) to each
Shareholder in the amount set forth on Schedule 2.1. Buyer Stock is deemed
"Restricted Securities" as defined by Rule 144 of the 1933 Act (as defined
herein). Further, once Buyer Stock becomes freely tradable, each of the three
largest Shareholders listed on Exhibit A shall not trade more than twenty
percent (20%) of its shares during any single quarter. This Stock
Purchase Agreement is intended as a plan of reorganization within the provisions
of ss.368(a) of the Internal Revenue Code of 1986, as amended.
2. Representations and Warranties of Company with Respect to Company. As
material inducement to Buyer to enter into this Agreement and to close
hereunder, Company hereby makes the following representations, warranties and
agreements to and with Buyer:
2.1 Due Organization; Capitalization and Articles, Bylaws and
Records.
Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada and has the full corporate power
and authority to own its properties, carry on its business as it is now being
conducted and perform its obligations under all Contracts (as herein defined),
and is duly qualified to do business as a foreign corporation in the
jurisdictions specified in Part 2.1 of the Disclosure Schedule ("Disclosure
Schedule" shall mean the schedule (dated as of the date of the Agreement)
attached hereto as Exhibit "B" which is attached to the Agreement and
incorporated in the Agreement by reference), which constitutes all the
jurisdictions in which Company conducts any business. The authorized capital
stock of Company consists of TEN MILLION (10,000,000) shares of Preferred Stock,
$.001 par value per share, none of which are outstanding; and THIRTY MILLION
(30,000,000) shares of Common Stock, $.001 par value per share, of which TEN
MILLION SIX HUNDRED FIFTY THOUSAND EIGHT HUNDRED EIGHTY(10,650,880) shares are
outstanding and owned by the Shareholders, free and clear of all liens,
encumbrances, security agreements options, claims, charges and restrictions, all
of which outstanding shares are validly issued, fully paid and non-assessable.
There are no shares of Company's capital stock held in its treasury. There
are no options, warrants, rights, shareholder agreements or other instruments or
agreements outstanding giving any person the right to acquire any shares of
capital stock of Company, nor are there any commitments to issue or execute any
such options, warrants, rights, shareholder agreements or other instruments or
agreements. There are no outstanding stock appreciation rights or similar rights
measured with respect to any of Company's capital stock, nor are there any
instruments, or agreements giving anyone the right to acquire any such rights.
Each Shareholder has delivered to the Buyer accurate and complete copies of the
stock certificates evidencing the Shares. The minute books and stock records of
Company are complete and accurate and all signatures included therein are the
genuine signatures of the persons indicated as signing. True, correct and
complete copies of Company's minute books and stock records, including Company's
Articles of Incorporation and Bylaws and all amendments to both, have been
delivered to the Buyer. Company is not in default under or in violation of any
provision of its Articles of Incorporation or its Bylaws. The books of account,
stock records, minute books and other records of Company are accurate,
up-to-date and complete, and have been maintained in accordance with sound and
prudent business practices.
2.2 Authority; Binding Nature of Agreements.
2.1.1 Company has the absolute and unrestricted right, power
and authority to enter into and to perform its obligations under this Agreement
and all other agreements, certificates and instruments contemplated to be
executed and delivered by Company in connection with this Agreement, and the
execution, delivery and performance by Company of this Agreement and such other
agreements, certificates and instruments have been duly authorized by all
necessary action on the part of Company and the Shareholders, Board of Directors
and officers. Each of this Agreement and such other agreements, certificates and
instruments constitutes, or upon execution and delivery will constitute, the
legal, valid and binding obligation of Company, enforceable against Company in
accordance with its terms, except as enforceability may be limited by bankruptcy
and other similar laws affecting creditors rights.
2.1.2 Each of the Shareholders has the absolute and
unrestricted right, power and capacity to enter into and to perform their
respective obligations under this Agreement and all other agreements,
certificates and instruments contemplated to be executed and delivered by each
Shareholder in connection with this Agreement, and the execution, delivery and
performance by such Shareholder of this Agreement and such other agreements,
certificates and instruments have been duly authorized by all necessary action
on the part of the respective Shareholder. Each of this Agreement and such other
agreements, certificates and instruments constitutes, or upon execution and
delivery will constitute, the legal, valid and binding obligation of each
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as enforceability may be limited by bankruptcy and other similar laws
affecting creditors rights.
2.3 Non-Contravention; Consents. To the best knowledge of Company,
neither the execution and delivery of any of this Agreement, nor the
consummation or performance of any of the transactions contemplated hereby, will
directly or indirectly (with or without notice or lapse of time):
2.3.1 Contravene, conflict with or result in a violation of
(i) any of the provisions of Company's articles of incorporation or Bylaws, or
(ii) any resolution adopted by the Shareholders, Company's Board of Directors or
any committee of Company's Board of Directors;
2.3.2 Contravene, conflict with or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
transactions contemplated hereby or to exercise any remedy or obtain any relief
under, any Legal Requirement or any Order to which Company or any Shareholder,
or any of the assets owned or used by Company, is subject;
2.3.3 Cause Company to become subject to, or to become liable
for the payment of, any Tax;
2.3.4 Contravene, conflict with or result in a violation or
breach of, or result in a default under, any provision of any of the Contracts;
2.3.5 Give any Person the right to (i) declare a default or
exercise any remedy under any Contract, (ii) accelerate the maturity or
performance of any Contract, or (iii) cancel, terminate or modify any Contract;
2.3.6 Give any Person the right to any payment by Company or
give rise to any acceleration or change in the award, grant, vesting or
determination of options, warrants, rights, severance payments or other
contingent obligations of any nature whatsoever of Company in favor of any
Person, in any such case as a result of the change in control of Company or
otherwise resulting from the transactions contemplated hereby;
2.4 Financial Statements.
2.4.1 Company has delivered to the Buyer the following
financial statements and notes, which are included in Part 2.4 of the Disclosure
Schedule (collectively, the "Financial Statements"):
(a) The unaudited balance sheets of Company as of March
31, 2000 (the "Unaudited Interim Balance Sheet"), and related unaudited
statements of operations for the three months then ended; and
(b) The Financial Statements are complete and correct,
in accordance with the books and records of Company, present fairly and
accurately the financial position of Company as of the respective dates thereof
and the results of operations and changes in shareholder's equity and fund
balance and cash flows of Company and the Selling Shareholder for the respective
periods covered thereby, and have been prepared in conformity with GAAP applied
on a consistent basis, subject, in the case of the unaudited financial
statements, to normal recurring year-end adjustments, the effect of which will
not be material, and the absence of notes.
2.5 Liabilities.
2.5.1 Company has no Liabilities, except for:
(a) liabilities reflected as part of the Unaudited
Interim Balance Sheet;
(b) liabilities (of the type required to be reflected as
current liabilities on a balance sheet prepared in accordance with GAAP incurred
by Company in the ordinary course of business since March 31, 2000, none of
which individually or in the aggregate had or will have an material adverse
effect on the business of Company or its property, assets, financial condition,
earnings, profits or prospects; and
(c) Company's obligations under the Contracts listed in
Part 2.5 of the Disclosure Schedule and under Excluded Contracts.
2.5.2 Part 2.5 of the Disclosure Schedule:
(a) provides an accurate and complete breakdown and
aging of Company's accounts payable as of March 31___, 2000;
(b) provides an accurate and complete breakdown of all
customer deposits and other deposits held by Company as of 31_________, 2000;
(c) provides an accurate and complete breakdown of
Company's long term debt as of the date of this Agreement; and
(d) accurately identifies, and provides an accurate and
complete breakdown of the amounts paid to, each supplier or other Person that
received more than $5,000 from Company from August 11, 1999_ through March 31,
2000. Except as disclosed in Part 2.5 of the Disclosure Schedule, neither
Company nor the Shareholder has any notice of or reason to believe that any of
the suppliers listed in this Part 2.5 of the Disclosure Schedule will not
continue to be suppliers of Company after the Closing.
2.6 Absence of Changes.
2.6.1 Except as set forth in Part 2.6 of the Disclosure
Schedule since March 31 , 2000:
(a) To the best of Company's knowledge, there has not
been any material adverse effect in Company's business, condition, assets,
liabilities, operations, financial performance, results of operations or
prospects, and to Company's or any Shareholder's knowledge, no event has
occurred that likely would have an adverse effect on Company's business,
condition, assets, liabilities, operations, financial performance, results of
operations or prospects;
(b) To the best of Company's knowledge, Company has not
entered into any transaction of any kind or taken any other action outside the
ordinary course of business;
(c) To the best of Company's knowledge, Company has not
implemented any change affecting the banking and safe deposit arrangements or
powers of attorney or grants of agency in effect for Company, any new bank
accounts or safe deposit boxes opened for Company, or any new powers of attorney
or grants of agency executed or made by Company;
(d) To the best of Company's knowledge, Company has not
failed to perform any of its obligations in any material respect or suffering or
permitting any default to exist under, or receipt of a notice of termination,
breach or default with respect to any contract to which any of them is a party
or by which it or any of its property may be bound or affected;
(e) To the best of Company's knowledge, Company has not
transferred or granted any rights in or entered into any settlement regarding
its proprietary assets;
(f) To the best of Company's knowledge, Company has used
its best efforts to preserve its business organization intact, to keep available
the services of its employees and to preserve its relationships with its
customers, suppliers and others with whom it deals; and
(g) To the best of Company's knowledge, Company has not
agreed or committed (in writing or otherwise), to take any of the actions
referred to in clauses "c" through "f" above.
2.7 Real Estate.
2.7.1 To the best of Company's knowledge, Company has no
right, title or interest in, or any obligation or duty relating to, any real
estate or real property, except for its interest as a tenant, lessee, subtenant
or sublessee under the leases disclosed on Part 2.7 of the Disclosure Schedule
(the "Leases");
2.7.2 (1) All written and oral leases or subleases
(collectively, the "Leases") of the Leased Properties are disclosed on Part 2.7
of the Disclosure Schedule, including for each its date, the name of the
landlord (and owner if different than the landlord), the name of the lessee and
any sublessee, the location and use of the property, the monthly base rental
payment, any scheduled or formula increases in base rent, a description of any
provisions for tax or expense pass-throughs, the amount of any security deposit,
the lease expiration date, all options to renew and whether there are any
non-disturbance agreements from mortgagees or paramount lessors; (2) Company has
delivered to the Buyer true and complete copies of all Leases, all amendments
and supplements thereto and all such non-disturbance agreements; (3) Company is
not and, to the Knowledge of Company each Shareholder each landlord under any
Lease, is not in material default under any Lease, and no event has occurred
which, with the giving of notice or passage of time or both, would constitute a
material default by Company to
the knowledge of Company and each Shareholder, any landlord under any Lease; and
(4) neither the execution or performance of this Agreement nor the consummation
of any of the transactions contemplated herein will result in a breach of or
constitute a default under any of the Leases.
2.8 Title to Assets. Except as set forth in Part 2.8 of the
Disclosure Schedule, to the best of Company's knowledge, Company owns, free and
clear of Encumbrances:
2.8.1 All assets reflected on the Unaudited Interim Balance
Sheet (except for inventory sold by Company since March 31, 2000, in the
ordinary course of business);
2.8.2 All assets acquired by Company since August 11, 1999
(except for inventory sold by Company since August 11, 1999, in the ordinary
course of business);
2.8.3 All assets referred to in Parts 2.9 and 2.10 of the
Disclosure Schedule and all of Company's rights under Contracts; and
2.8.4 All other assets reflected in Company's books and
records as being owned by Company.
2.9 Receivables.
2.9.1 To the best of Company's knowledge, Part 2.9 of the
Disclosure Schedule provides an accurate and complete breakdown and aging of all
accounts and notes receivable and a list of all other receivables of Company as
of March 31, 2000;
2.9.2 Except as set forth in Part 2.9 of the Disclosure
Schedule, all existing accounts receivable of Company (including those accounts
receivable reflected on the Unaudited Interim Balance Sheet that have not yet
been collected and those accounts receivable that have arisen since March 31,
2000, and have not yet been collected):
(a) Represent valid obligations of customers of Company
arising from bona fide transactions entered into in the ordinary course of
business;
(b) Are current and where known collection problems
exist, such problems have been disclosed;
2.10 Equipment, etc.
2.10.1 Part 2.10 of the Disclosure Schedule consists of a
Company capital equipment and depreciation schedule, which describes historical
cost and depreciation information with respect to all of Company's capital
equipment, furniture, fixtures,
improvements and other tangible personal property. Part 2.10 also accurately
identifies all material tangible personal property leased to Company;
2.10.2 Each material asset of Company:
(a) Is free of defects and deficiencies and in good
condition and repair, consistent with its age and intended use (ordinary wear
and tear excepted);
(b) Complies in all material respects and, to Company's
and each Shareholder's Knowledge, is being operated and otherwise used in full
compliance with all applicable Legal Requirements;
(c) Is adequate for the uses to which it is being put;
(d) Is adequate for the conduct of Company's business in
the manner in which such business is currently being conducted;
(e) Has been maintained in accordance with reasonable
maintenance schedules;
(f) Is owned by Company free and clear of any
Encumbrance; and
(g) Is located at Company's principal business office.
2.11 Tax Matters.
2.11.1 To the best of Company's knowledge, except as set forth
in Part 2.11 of the Disclosure Schedule, each Tax required to have been paid, or
claimed by any Governmental Body to be payable, by Company (whether pursuant to
any Tax Return or otherwise) has been duly paid in full on a timely basis. Any
Tax required to have been withheld or collected by Company has been duly
withheld and collected, and (to the extent required) each such Tax has been paid
to the appropriate Governmental Body;
2.11.2 To the best of Company's knowledge, Part 2.11 of the
Disclosure Schedule accurately identifies all Tax Returns required to be filed
by or on behalf of Company with any Governmental Body with respect to any
taxable period ending on or before the Closing Date ("Company Returns"). All
Company Returns (including monthly payroll returns) (i) have been or will be
filed when due, and (ii) have been, or will be when filed, accurately and
completely prepared in full compliance with all applicable Legal Requirements.
All amounts shown on Company Returns to be due on or before the Closing Date,
and all amounts otherwise payable in connection with Company Returns on or
before the Closing Date, have been or will be
paid on or before the Closing Date. Company has delivered to the Buyer accurate
and complete copies of Company Returns (other than monthly payroll returns)
filed by Company;
2.11.3 To the best of Company's knowledge, except as disclosed
in Part 2.11 of the Disclosure Schedule, Company's liability for unpaid Taxes
for all periods ending on or before the date of the Unaudited Interim Balance
Sheet does not, in the aggregate, exceed the amount of the current liability
accruals for Taxes (excluding reserves for deferred taxes) reported in the
Unaudited Interim Balance Sheet;
2.11.4 To the best of Company's knowledge, Part 2.11 of the
Disclosure Schedule accurately identifies each examination or audit of any
Company Return that has been conducted by any Governmental Body. Company has
delivered to the Buyer accurate and complete copies of all audit reports and
similar documents (to which Company has access) relating to Company Returns.
Except as set forth in Part 2.11 of the Disclosure Schedule, no extension or
waiver of the limitation period applicable to any of Company Returns has been
granted (by Company or any other Person), and no such extension or waiver has
been requested from Company;
2.11.5 To the best of Company's knowledge, except as set forth
in Part 2.14 of the Disclosure Schedule, no claim or other Proceeding is pending
or has been threatened against or with respect, to Company or the Selling
Shareholder in respect of any Tax. There are no unsatisfied Liabilities for
Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by the Selling Shareholder or Company. Company has not
entered into or become bound by any agreement or consent pursuant to ss. 341(f)
of the Internal Revenue Code of 1986, as amended (the "Code"). Company has not
been, and will not be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to ss. 481 or 263A of the Code or
any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing;
2.11.6 To the best of Company's knowledge, there is no
agreement, plan, arrangement or other Contract covering any employee or
independent contractor or former employee or independent contractor of Company
that, individually or collectively, could give rise directly or indirectly to
the payment of any amount that would not be deductible pursuant to ss.280G or
ss.162 of the Code;
2.11.7 To the best of Company's knowledge, Company is not, and
has never been, a party to or bound by any tax indemnity agreement, tax sharing
agreement, tax allocation agreement or similar Contract;
2.11.8 To the best of Company's knowledge, Company is not a
United States real property holding corporation within the meaning of ss.
897(c)(2) of the Code and has
not been a United States real property holding corporation within the applicable
period specified in ss.897(c)(1)(A)(ii) of the Code;
2.11.9 To the best of Company's knowledge, except as set forth
in Part 2.11 of the Disclosure Schedule, Company has no net operating losses or
other tax attributes presently subject to limitation under Code xx.xx. 382, 383
or 384 or the federal consolidated return regulations;
2.11.10 To the best of Company's knowledge, all Taxes required
to be withheld from employees, deemed employees or other persons up to and
through the Closing Date will have been withheld and timely deposited prior to
the Closing;
2.11.11 To the best of Company's knowledge, the requirements
of ss. 274 of the Code (disallowance of certain entertainment and similar
expenses) have been complied with in all material respects;
2.11.12 To the best of Company's knowledge, no non-deductible
expenses have been deducted on the federal income Tax Return for any year open
to audit by the Internal Revenue Service;
2.11.13 To the best of Company's knowledge, except as set
forth in Part 2.11 of the Disclosure Schedule, no Internal Revenue Service or
state, county or local tax audit is currently in progress;
2.11.14 To the best of Company's knowledge, Company is not a
party to any safe harbor lease within the meaning of ss. 168(f)(8) of the Code,
as in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act
of 1982. Company has not participated in an international boycott as defined in
Code ss. 999. Company does not have a permanent establishment in any foreign
country, as defined in any applicable Tax treaty or convention between the
United States of America and such foreign country, and Company is not a party to
any joint venture, partnership or other agreement, contract or arrangement
(either in writing or verbally, formally or informally) which could be treated
as a partnership for federal income tax purposes;
2.11.15 To the best of Company's knowledge, Company has filed
all reports and has created and/or retained all records required under ss.6038A
of the Code with respect to its ownership by and transactions with related
parties. The Shareholders all related foreign persons and Company have
maintained all records required to be maintained under ss. 6038A with respect to
transactions between Company and [the Selling Shareholder or] the related
foreign persons. All documents that are required to be created and/or preserved
by the Shareholder and related foreign persons with respect to transactions with
Company are either maintained in the United States, or Company is exempt from
the record maintenance
requirements of ss.6038A with respect to such transactions under Treasury
Regulation ss.1.6038A-1. Company is not a party to any record maintenance
agreement with the Internal Revenue Service with respect to ss.6038A. Each of
the Shareholders and related foreign persons that has engaged in transactions
with Company has authorized Company to act as its limited agent solely for
purposes of xx.xx. 7602, 7603 and 7604 of the Code with respect to any request
by the Internal Revenue Service to examine records or produce testimony related
to any transaction with Company, and each such authorization remains in full
force and effect.
2.12 Contracts.
2.12.1 To the best of Company's knowledge, part 2.12 of the
Disclosure Schedule identifies each material Contract (the "Contracts"). Except
as identified in Part 2.15 of the Disclosure Schedule, all material Contracts
are in writing. Company has delivered to Buyer accurate and complete copies of
all written material Contracts identified in Part 2.12 of the Disclosure
Schedule, including all amendments thereto;
2.12.2 To the best of Company's knowledge, each Contract is
valid and in full force and effect, and is enforceable by Company in accordance
with its terms;
2.12.3 To the best of Company's knowledge, except as set forth
in Part 2.11 of the Disclosure Schedule:
(a) no person acting for Company has violated or
breached, or declared or committed any default under, any Contract;
(b) no event has occurred, and no circumstance or
condition exists, that likely would (with or without notice or lapse of time)
(A) result in a violation or breach of any of the provisions of any Contract,
(B) give any Person the right to declare a default or exercise any remedy or
hinder any Contract, (C) give any Person the right to accelerate the maturity or
performance of any Contract, or (D) give any Person the right to cancel,
terminate or modify any Contract;
(c) Company has not waived any of its rights under any
Contract.
2.12.4 To the best of Company's knowledge, each Person against
which Company has or may acquire any rights under any Contract is solvent and is
able to satisfy all of such Person's current and future monetary obligations and
other obligations and Liabilities to Company;
2.12.5 To the best of Company's knowledge, except as set forth
in Part 2.12 of the Disclosure Schedule:
(a) Company has never guaranteed or otherwise agreed to
cause, insure or become liable for, and has never pledged any of its assets to
secure, the performance or payment of any obligation or other Liability of any
other Person except in the ordinary course of business; and
(b) Company has never been a party to or bound by (A)
any joint venture agreement, partnership agreement, profit sharing agreement,
cost sharing agreement, loss sharing agreement or similar Contract, or (B) any
Contract that creates or grants to any Person, or provides for the creation or
grant of, any stock appreciation right, phantom stock right or similar right or
interest.
2.12.6 To the best of Company's knowledge, the performance of
the Contracts will not result in any violation of or failure to comply with any
Legal Requirement;
2.12.7 To the best of Company's knowledge, except as
identified in Part 2.12 of the Disclosure Schedule, no Person is materially
renegotiating, or has the contractual right to materially renegotiate, any
amount paid or payable to Company under any Contract or any other term or
provision of any Contract;
2.12.8 To the best of Company's knowledge, the Contracts
identified in Part 2.12 of the Disclosure Schedule and the Excluded Contracts
collectively constitute all of the Contracts necessary to enable Company to
conduct its business in the manner in which its business is currently being
conducted and in the manner in which its business is proposed to be conducted;
2.12.9 To the best of Company's knowledge, except as set forth
in Part 2.12 of the Disclosure Schedule: (i) the Contracts of Company, including
but not limited to those described in Part 2.12 of the Disclosure Schedule, are
legally valid, binding and enforceable agreements of Company, except as
enforceability may be limited by bankruptcy and other similar laws affecting
creditors rights, and, to the Knowledge of Company and each Shareholder, the
other parties thereto; Company is not and, to the Knowledge of Company and each
Shareholder, no other party to any such Contract is in violation of or in
default under such Contracts and no event or circumstances have occurred which
constitute, or after notice or lapse of time or both would constitute, a
violation or default thereunder on the part of Company or, to the Knowledge of
Company and each Shareholder, any other party thereto or result in a right to
accelerate or loss of rights; and such Contracts will continue to be binding in
accordance with their terms after the Closing, assuming any Consents listed in
Part 2.12 of the Disclosure Schedule are obtained; (ii) Company has fulfilled
all obligations required pursuant to each Contract to have been performed by it,
and Company and the Shareholders have no reason to believe that Company will not
be able to fulfill all of its obligations under the Contracts which remain to be
performed after the date hereof, and (iii) none of the payments required to be
made under any Contract has been prepaid by more than 30 days prior to the due
date of such payment thereunder and the estimated
cost to complete any Contract of Company, plus expenses incurred by them on that
Contract, will not exceed the total Contract price.
2.13 Proprietary Assets.
2.13.1 Attached as Part 2.13 of the Disclosure Schedule is (i)
a description of all Proprietary Assets owned by, licensed to or used in the
business of Company together with a designation of ownership, and (ii) a listing
of all agreements or arrangements which affect the ownership or use of any
Proprietary Asset. Except as set forth in Part 2.13 of the Disclosure Schedules,
Company is, or upon consummation of the transactions contemplated hereby will
be, the owner of all right, title and interest in and to each such Proprietary
Asset free and clear of all Encumbrances or has the right to use, free and clear
of royalties or any claims or rights of others, such Proprietary Assets;
2.13.2 To the best of Company's knowledge, Company has taken
all measures and precautions necessary to protect the confidentiality and value
of each Proprietary Asset identified or required to be identified in Part 2.13
of the Disclosure Schedule;
2.13.3 To the best of Company's knowledge, except as set forth
in Part 2.13 of the Disclosure Schedule, all current and former employees and
consultants of Company have executed an agreement regarding confidentiality and
proprietary information substantially in the form or forms attached as Exhibit
"C." To Company's and each Shareholder's Knowledge, none of the employees or
consultants of Company is in violation thereof;
2.13.4 To the best of Company's knowledge, Company is not
infringing, and has not at any time infringed or received any notice or other
communication (in writing or otherwise) of any actual, alleged, possible or
potential infringement of, any Proprietary Asset owned or used by any other
Person. To the best Knowledge of Company and each Shareholder, no other Person
is infringing, and no Proprietary Asset owned or used by any other Person
infringes or conflicts with, any Proprietary Asset owned or used by Company;
2.13.5 To the best of Company's knowledge, the Proprietary
Assets identified in Part 2.13 of the Disclosure Schedule constitute all of the
Proprietary Assets necessary to enable Company to conduct its business in the
manner in which its business is currently being conducted;
2.13.6 To the best of Company's knowledge, Company has not
licensed or sublicensed any party to use any of the Proprietary Assets;
2.13.7 To the best of Company's knowledge, there are no Orders
pending against or affecting the Proprietary Assets;
2.13.8 To the best of Company's knowledge, there is no
unexpired valid patent on products or processes that Company uses in
manufacturing its products that Company is not entitled to use;
2.13.9 To the best of Company's knowledge, neither the Selling
Shareholder nor any officer, director or employee of Company or, to the
Knowledge of Company or any Shareholder, any third party has an interest in any
of the Proprietary Assets;
2.13.10 To the best of Company's knowledge, there is no
governmental restriction or limitation, domestic or foreign, on the manner in
which any of the Proprietary Assets may be used.
2.14 Proceedings; Orders.
2.14.1 To the best of Company's knowledge, except as set forth
in Part 2.14 of the Disclosure Schedule, there is no pending Proceeding, and no
Person has threatened to commence any Proceeding:
(a) That involves Company or that otherwise relates to
or likely would affect Company's business or any of the assets owned or used by
Company (whether or not Company is named as a party thereto); or
(b) That challenges, or that may have the effect of
preventing, delaying, making illegal or otherwise interfering with, any of the
transactions contemplated hereby.
2.14.2 To the best of Company's knowledge, except as set forth
in Part 2.14 of the Disclosure Schedule, no event has occurred, and no claim,
dispute or other condition or circumstance exists, that likely would directly or
indirectly give rise to or serve as a basis for Commencement of any such
Proceeding;
2.14.3 To the best of Company's knowledge, except as set forth
in Part 2.14 of the Disclosure Schedule, no Proceeding has ever been commenced
by or against Company, and no Proceeding otherwise involving or relating to
Company has been pending or threatened at any time;
2.14.4 To the best of Company's knowledge, except as disclosed
in Part 2.14 of the Disclosure Schedule, each Proceeding listed in Part 2.14 of
the Disclosure Schedule is fully covered by existing policies of insurance; and
2.14.5 To the best of Company's knowledge, except as disclosed
in Part 2.14 of the Disclosure Schedule, Company is not a party to any
Proceeding as a party plaintiff, nor is Company presently contemplating the
initiation of any such Proceeding.
2.15 Bank Accounts.
To the best of Company's knowledge, Part 2.15 of the Disclosure Schedule
accurately sets forth, with respect to each account maintained by or for the
benefit of Company at any bank or other financial institution: (a) the name and
location of the institution at which such account is maintained; (b) the name in
which such account is maintained and the account number of such account; (c) a
description of such account, and the purpose for which such account is used; (d)
the current balance in such account; and (e) the names of all individuals
authorized to draw on or make withdrawals from such account and a description of
the authority of each such individual with respect thereto.
To the best of Company's knowledge, there are no safe deposit boxes or
similar arrangements maintained by or for the benefit of Company.
2.16 Compliance with Legal Requirements.
2.16.1 To the best of Company's knowledge:
(a) Company is in full compliance, in all material
respects with each Legal Requirement that is applicable to it or to the conduct
of its business or the ownership or use of any of its assets;
(b) No event has occurred, and no condition or
circumstance exists, that likely would (with or without notice or lapse of time)
constitute or result directly or indirectly in any material violation by Company
of, or a failure on the part of Company to comply with, any Legal Requirement;
and
(c) Company has not received, at any time, any notice or
other communication (in writing or otherwise) from any Governmental Body or any
other Person regarding (i) any actual, alleged, possible or potential violation
of, or failure to comply with, any Legal Requirement, or (ii) any actual,
alleged, possible or potential obligation on the part of Company to undertake,
or to bear all or any portion of the cost of, any cleanup or any remedial,
corrective or response action of any nature.
2.17 Environmental Matters.
2.17.1 Company is in compliance in all material respects with
all applicable Environmental Laws. Company has not received any notice or other
communication (in writing or otherwise) that alleges that Company is not in
compliance with any Environmental Law,
and there are no circumstances that likely would prevent or interfere with
Company's compliance with any Environmental Law in the future;
2.17.2 No investigation made and no environmental assessments
obtained by Buyer shall limit or invalidate any representation or warranty made
by or disclosures required under this Agreement; and
2.17.3 Company has not retained or assumed, either
contractually, by operation of law or otherwise, the liability of any other
person under any Environmental Law.
2.18 Brokers.
No broker or finder has acted for any Shareholder or Company in
connection with this Agreement or the transactions contemplated
hereby, and no broker or finder is entitled to any brokerage or
finder's or similar fees or other commissions in respect of such
transactions based in any way on agreements, arrangements or
understandings made by or on behalf of any Shareholder or Company,
except for Century Capital LLC, which is entitled to certain fees
pursuant to the Exclusive Investment Banker Agreement between
Company and Century Capital LLC, which agreement is attached hereto
as Exhibit F. Company and Buyer agree that consummation of the
transaction contemplated herein is contingent upon agreement,
satisfactory to Buyer, by Century Capital LLC and Company on amount
and kind of fees due Century Capital LLC.
2.19 Selling Shareholders.
2.19.1 To the best of Company's knowledge, there is no
Proceeding pending, and no Person has threatened to commence any Proceeding,
that may have an adverse effect on the ability of any Shareholder to comply with
or perform such Shareholder's covenants or obligations under the Agreement. No
event has occurred, and no claim, dispute or other condition or circumstance
exists, that likely would directly or indirectly give rise to or serve as a
basis for the commencement of any such Proceeding;
2.19.2 To the best of Company's knowledge, no Consent or
Governmental Authorization by any Person is required in connection with the
execution, delivery and performance by any Shareholder of this Agreement or the
consummation of the transactions contemplated hereby;
2.19.3 To the best of Company's knowledge, assuming
consummation of the transactions contemplated hereby, neither the execution and
delivery of this Agreement or any other agreement herein contemplated to be
entered into by each Shareholder, nor the consummation of such transactions nor
the fulfillment of the terms thereof, violates or will violate, or results or
will result in a Breach of any of the terms and provisions of, or constitutes or
will constitute a default under, or conflicts or will conflict with, or results
or will result in any augmentation or acceleration of rights, benefits or
obligations of any party under any agreement, indenture or other instrument to
which such Shareholder is a party or is bound;
2.19.4 To the best of Company's knowledge, assuming
consummation of the transactions contemplated hereby, each Shareholder is, and
at Closing will be, the record and beneficial owner and holder of the Shares,
free and clear of any Encumbrances
2.20 Year 0000 Xxxxxxxx.
To the best of Company's knowledge, Company's information technology
and all updates thereto are Year 2000 Compliant. "Year 2000
Compliant," as used herein, means, with respect to information
technology, that the information technology accurately processes
date/time data (including, but not limited to, calculating,
comparing and sequencing) from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year
2.21 Full Disclosure.
2.22.1 To the best of Company's knowledge, none of the
representations and warranties of any Shareholder and Company in the Agreement
or the Disclosure Schedule Updates contains or will contain any untrue statement
of material fact or omits or will omit to state any fact necessary to make any
of the representations, warranties or statements contained therein not
misleading;
2.22.2 To the best of Company's knowledge, as of the date of
this Agreement, Company and each Shareholder have provided the Buyer and the
Buyer's Representatives with full and complete access to all of Company's
records and other documents and data requested by them.
3. Conduct of the Business of Company Pending Closing. Between the date
hereof and the Closing hereunder, Company shall and Shareholders shall use their
best efforts to cause Company to:
3.1 Not take or suffer or permit any action which would render
untrue any of the representations or warranties of Company herein contained, and
not omit to take any action, the omission of which would render untrue any such
representation or warranty;
3.2 Conduct its Business in a good and diligent manner in the
ordinary and usual course;
3.3 Not enter into any contract, agreement, commitment or
arrangement with any party, other than contracts for the sale of merchandise or
services and contracts for the purchase of materials, services and supplies in
the ordinary and usual course of its Business, and not amend, modify or
terminate any Company Agreement without the prior written consent of Buyer; and
3.4 Use its best efforts to preserve its business organization
intact, to keep available the services of its employees and to preserve its
relationships with customers, suppliers and others with whom it deals;
4. Conditions Precedent to Buyer's Obligation to Close. The following
shall be conditions precedent to the obligation of Buyer to close hereunder, any
of which may be waived in whole or in part by Buyer:
4.1 Each of the representations and warranties of Company and the
Shareholders contained in this Agreement is now and, except as to those
expressly limited to the date hereof or some other specific date, at all times
after the date of this Agreement to and including the time of Closing shall be,
true and correct individually and collectively in all material respects,
provided that any references to materiality in any representation and warranty
shall be disregarded for purposes of this provision;
4.2 Each of the agreements, covenants and undertakings of Company
and the Shareholders contained in this Agreement, except for those calling for
performance after Closing, will have been fully performed and complied with both
individually and collectively in all material respects at or before Closing;
4.3 All actions, proceedings, instruments and documents required to
enable Company and the Shareholders to perform this Agreement or matters
incident thereto (other than matters for which Buyer is responsible under the
terms of this Agreement), and all other legal matters not relating to a default
by Buyer of its obligations hereunder, shall have been duly taken, satisfied,
executed or delivered, as the case may be, to the reasonable satisfaction of
Buyer;
4.4 All documents required to be delivered by the Shareholders at or
prior to Closing shall have been delivered or shall be tendered at the time and
place of Closing;
4.5 Xxxxx Xxxxx and Xxxxxx XxXxxxxxx shall each have executed and
delivered to Buyer an employment agreement in substantially the forms attached
hereto as Exhibits C and D, respectively, with only such changes as are approved
by Buyer and the employee (in which event Buyer agrees to execute and deliver a
copy of such agreement to the employee).
4.6 Company and Buyer agree that Company shall allocate and book
travel-related gross profits among Company and the Buyer's non-domestic partners
and agents as follows: (a) if Company books outbound from USA to a partner
country, gross profits are disbursed 75% to Company and 25% to the partner; (b)
if partner books outbound to USA from partner country, gross profits are
disbursed 25% to Company and 75% to the partner; and (c) if booking is from
third party and neither to or from USA, gross profits are disbursed 25% to
Company and 25% to the partner and 50% to booking third party. "Gross profits"
are defined as (i) commissions from sales of travel-related products or (ii) the
difference between the sale price of a travel-related product and its cost.
4.7 Buyer shall be satisfied that Company's material contracts with
third parties shall not be voided or impaired by virtue of the transactions
contemplated in this Stock Purchase Agreement.
4.8 Buyer shall be satisfied with Company's contractual relationship
with the Patheo Group.
4.9 Company and Shareholders understand that Buyer has entered into,
or may enter into in the future, relationships with entities throughout the
world , in some of which entities Buyer may have an ownership interest and which
may result, by virtue of Buyer's ownership or other transactions, in an actual
or potential conflict of interest between Buyer (and such entities) and Company.
Company and Shareholders hereby acknowledge and waive any such actual or
potential conflict of interest.
5. Conditions Precedent to Company's Obligation to Close. The following
shall be conditions precedent to the obligation of Company to close hereunder,
any of which may be waived in whole or in part by Company:
5.1 Each of the representations and warranties of Buyer contained in
this Agreement is now and, except as to those expressly limited to the date
hereof or some other specified date, at all times after the date of this
Agreement to and including the time of Closing shall be, true and correct
individually and collectively in all material respects, provided that any
references to materiality in any representation or warranty shall be disregarded
for purposes of this provision;
5.2 Each of the agreements, covenants and undertakings of Buyer
contained in this Agreement, except for those calling for performance after
Closing, will have been fully performed and complied with both individually and
collectively in all material respects at or before Closing;
5.3 All documents required to be delivered by Buyer at or prior to
Closing shall have been delivered or shall be tendered at the time and place of
Closing.
5.4 Buyer shall loan or otherwise capitalize Company in the amount
of $500,000 for working capital; and Buyer shall provide Company technological
expertise and accounting services to Company on a direct cost basis. Buyer shall
pay Company's legal fees and expenses up to $5,000 in connection with this
transaction. Buyer shall repay direct expenses of Xxxxx Xxxxx and Xxxxxx
XxXxxxxxx unreimbursed by Company since August 1999, and not to exceed $25,000,
pursuant to the terms of an interest bearing (6%) one (1) year promissory note
with monthly repayments to them.
6. Closing.
6.1 Closing Date. The closing of the transactions provided for in
this Agreement (herein sometimes called the "Closing") shall take place at
Buyer's offices at 0000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx on April 23,
2000 or such other place and time as shall be agreed to between the President of
Buyer and the Shareholders' Agent. The date and time of Closing is sometimes
herein called the "Closing Date;"
6.2 Deliveries by the Shareholders and Company at Closing. At
Closing, the Shareholders and Company will deliver or cause to be delivered to
Buyer the following:
6.2.1 Certificates for TEN MILLION SIX HUNDRD FIFTY THOUSAND EIGHT
HUNDRED EIGHTY (10,650,880) shares of Common Stock of Company, endorsed by the
Shareholders in blank, or with stock transfer powers executed by the
Shareholders in blank attached;
6.2.2 Certificates of the President or a Vice-President of Company
and the Shareholders, dated as of the Closing Date, confirming (a) the truth and
correctness of all of the representations and warranties of Company and the
Shareholders contained in Section 2 herein as of the Closing Date and as of all
times between the date hereof and the Closing Date, subject to the provisions of
Section 5 hereof, and (b) that all agreements and covenants of Company and the
Shareholders specified herein have been complied with, and (c) that no
Shareholder has filed an application or taken any action with a view to
exercising any rights of repurchase under ss.25507(b) of the California
Corporate Securities Law of 1968, as amended, with respect to the transactions
contemplated hereby;
6.2.3 The Certificate of the Secretary or an Assistant Secretary of
Company, dated the Closing Date, that the necessary corporate action by the
Board of Directors of Company has been taken to authorize the consummation by
Company of the transactions provided for herein;
6.2.4 The signed resignations of all directors and all officers of
Company, dated and effective as of the Closing Date, other than Xxxxx Xxxxx and
Xxxxxx XxXxxxxxx who
shall each remain as members of the five person board of directors of Company
until termination of employment with Company or Buyer;
6.2.5 The stock books and records, corporate minute books
(containing the originals of all minutes and resolutions ever adopted or
consented to or agreed to by the shareholders, directors or any committee of
directors of Company) and the corporate seal of Company;
6.2.6 The favorable legal opinion of Law Offices of Xxxx X.
Xxxx, counsel for the Shareholders and Company, respectively, dated the Closing
Date, , as to matter set forth in paragraph 2 hereof;
6.2.7 A "good standing" certificate for Company and a
certified copy of the Articles of Incorporation and all amendments thereto
issued by the Department of State of Nevada and dated as of a date within five
(5) days prior to the Closing Date;
6.2.8 The original copy of each document listed on Schedules
On Exhibit B;
6.2.9 [Deleted]
6.2.10 Agreements in the form of Exhibits D and F,
respectively, executed by Xxxxx Xxxxx and Xxxxxx XxXxxxxxx.
6.3 Deliveries by Buyer at Closing. At the Closing, Buyer will
deliver or cause to be delivered to the Shareholders the following:
6.3.1 Within ten (10) days of the Closing, certificates for an
aggregate number of shares of validly issued, fully paid and non-assessable
Buyer Stock registered in the names of the Shareholders representing a total
market value (calculated based on the average closing price of Buyer's Common
Stock for the five (5) market days prior to the Closing Date) of FIVE MILLION
DOLLARS ($5,000,000) on the Closing Date Such consideration is to be apportioned
in accordance with their respective interests as set forth on Exhibit A;
6.3.2 The Certificate of the President or a Vice-President of
Buyer, dated the Closing Date, confirming the truth and correctness of all of
the representations and warranties of Buyer contained herein as of the Closing
Date and as of all times between the date hereof and the Closing Date; and
6.3.3 The Certificate of the Secretary or an Assistant
Secretary of Buyer, dated the Closing Date, that the necessary corporate action
by the Board of Directors of Buyer has been taken to authorize the consummation
by Buyer of the transactions provided for herein.
6.4 Waiver By Parties of Closing Items. Each of the parties hereto
expressly acknowledges the right of any of the parties to waive any conditions
or obligations of the other parties to that party, including, without
limitation, items to be delivered at Closing and any conditions precedent to the
Closing.
7. Securities Laws Compliance Procedures.
7.1 Knowledge Respecting Buyer. Each Shareholder represents and
acknowledges that he or she is a sophisticated investor with knowledge and
experience in business and financial matters, knows, or has had the opportunity
to acquire, all information concerning the business, affairs, financial
condition and prospects of Buyer which he or she deems relevant to make a fully
informed decision regarding the consummation of the transactions contemplated
hereby and is able to bear the economic risk and lack of liquidity inherent in
holding the Buyer Stock. Without limiting the foregoing, each Shareholder
understands and acknowledges that neither Buyer nor anyone acting on its behalf
has made any representations or warranties other than those contained herein
respecting Buyer or the future conduct of Buyer's business or of Company's
business, and no Shareholder has relied upon any representations or warranties
other than those contained herein in the belief that they were made on behalf of
Buyer;
7.2 Status of Shares to be Issued. Each Shareholder agrees,
acknowledges and confirms that he or she has been advised and understands as
follows:
7.2.1 Shareholder is acquiring the shares of Buyer Stock to be
issued to him or her for his or her own account and without a view to any
distribution or resale thereof, other than a distribution or resale which, in
the opinion of counsel for such Shareholder (which opinion shall be satisfactory
in form and substance to Buyer), may be made without violating the registration
provisions of the Securities Act of 1933, as amended (the "1933 Act") or any
applicable blue sky laws. Shareholder acknowledges that the shares of Buyer
Stock are "restricted securities" within the meaning of Rule 144 under the 1933
Act and have not been registered under the 1933 Act or any state securities laws
and thereafter must be held indefinitely unless they are subsequently registered
under the 1933 Act or an exemption from such registration is available. Buyer is
under no obligation to register the shares of Buyer Stock under the 1933 Act or
any state securities law or to take any action which would make available an
exemption from such registration;
7.2.2 There shall be endorsed on the certificates evidencing
the shares of Buyer Stock delivered at Closing a legend substantially similar to
the following:
"THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED SECURITIES" AS DEFINED BY
RULE 144 UNDER THE ACT. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE AVAILABILITY OF
WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE COMPANY."
7.2.3 Except under certain limited circumstances, the above
restrictions on the transfer of the shares of Buyer Stock will also apply to any
and all shares of capital stock or other securities issued or otherwise acquired
with respect to such shares, including, without limitation, shares and
securities issued or acquired as a result of any stock dividend, stock split or
exchange or any distribution of shares or securities pursuant to any corporate
reorganization, reclassification or similar event;
7.2.4 Buyer and its transfer agent may refuse to effect a
transfer of any of the shares of Buyer Stock by the Shareholders or any of their
successors, personal representatives or assigns otherwise than as contemplated
hereby.
8. Further Assurances. Buyer and the Shareholders agree to execute and
deliver all such other instruments and take all such other action as any party
may reasonably request from time to time, before or after Closing and without
payment of further consideration, in order to effectuate the transactions
provided for herein. The parties shall cooperate fully with each other and with
their respective counsel and accountants in connection with any steps required
to be taken as part of their respective obligations under this Agreement,
including, without limitation, the preparation of financial statements and tax
returns.
9. Termination.
9.1 This Agreement may be terminated at any time prior to the
Closing Date:
9.1.1 By the written agreement of Buyer and Company;
9.1.2 By either Company or Buyer by written notice to the
other parties if the transactions contemplated hereby shall not have been
consummated pursuant hereto by 5:00 p.m. PST on April 23, 2000 unless such date
shall be extended by the mutual written consent of Company and Buyer, provided
that no party may give such notice if its breach of this Agreement has precluded
the consummation of this Agreement;
9.1.3 By Buyer by written notice to the other parties if (i)
Company fails to deliver the opinion of counsel, as required by paragraph 6.2.6
hereof; or (ii) the representations and warranties of Company and the
Shareholders shall not have been true and correct in all respects (in the case
of a representation or warranty containing a materiality qualification) or in
all material respects (in the case of a representation or warranty without a
materiality qualification) as of the date when made, or (iii) any of the
conditions set forth in Section 8 shall not have been, or if it becomes apparent
that any of such conditions will not be, fulfilled by 5:00 p.m. PST on April 23,
2000, unless such failure shall be due to the failure of Buyer to perform or
comply with any of the
covenants, agreements or conditions hereof to be performed or complied with by
it prior to the Closing.
9.2 In the event of the termination of this Agreement pursuant to
Section 9, this Agreement shall become void, without any liability to any party
in respect hereof or of the transactions contemplated hereby on the part of any
party hereto, or any of its directors, officers, employees, agents, consultants,
representatives, advisers, stockholders or Affiliates, except for any liability
resulting from such party's breach of this Agreement.
10. Miscellaneous.
10.1 Controlling Law. This Agreement is to be construed in
accordance with and governed by the internal laws of the State of California (as
permitted by ss.1646.5 of the California Civil Code or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties.
10.2 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received only (i) when
personally delivered, or (ii) on the day specified for delivery when deposited
with a courier service such as Federal Express for delivery to the intended
addressee, or (iii) three (3) days following the day when deposited in the
United States mails, registered or certified mail, postage prepaid, return
receipt requested, addressed as set forth below::
If to: Buyer
VERTICAL COMPUTER SYSTEMS, INC.
0000 Xxxxxxxx Xxxxxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy, given in the manner prescribed above, to:
XXXXXX XXXXX & XXXXX LLP
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 213-622-1444
If to Company:
XXXXXXXXXX.XXX
0000 Xxxxxx Xxxxxx Xxxxxxx, 0xx Xxxxx
Xxx Xxxxx, XX 00000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy, given in the manner prescribed above, to:
LAW OFFICES OF XXXX X. XXXX
0000 Xxxxxxxx Xxxxxxxxx, #000
Xxx Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address to the other parties in
conformity with the provisions of this Section for the giving of notice.
Notice by mail shall be by courier service guaranteeing delivery within five (5)
days of its receipt of a notice if transmitted from outside the continental
United States.
Any party may alter the address to which communications or copies are to
be sent by giving notice of such change of address to the other parties in
conformity with the provisions of this Section for the giving of notice.
10.3 Exhibits and Schedules. All Exhibits and Schedules attached
hereto are hereby incorporated by reference into, and made a part of, this
Agreement.
10.4 Binding Nature of Agreement; No Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective, successors and assigns.
10.5 Assignments Prohibited. Company shall not assign or suffer or
permit an assignment, by operation of law or otherwise, of its rights or
obligations under or interest in this Agreement without the prior written
consent of the other party. For purposes of this Subsection, the term
"assignment" shall be deemed to include a merger in which Company is not the
surviving entity, a consolidation or division of Company, a sale of all or
substantially all of the assets of
Company, or a change of control resulting from a sale or repurchase of shares or
similar transaction involving Company. A "change of control" shall be deemed to
have occurred as a result of a merger or other transaction in which Company is
the surviving entity if some or all of the shareholders of Company immediately
prior to the transaction do not have sufficient voting power entitling them to
elect at least a majority of the directors of the corporation immediately
following the transaction. In the event of a breach of this provision, the
non-breaching party shall have the option, in addition to any other remedy
available at law or in equity, to terminate this Agreement at any time after the
breach occurs.
10.6 No Third-Party Beneficiaries. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and its
respective successors and assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.
10.7 Execution in Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. If executed in multiple
counterparts, this Agreement shall become binding when two or more counterparts
hereto, individually or taken together, bear the signatures of all of the
parties reflected hereon as the signatories. Facsimile counterpart signatures to
this Agreement shall be acceptable at the Closing if the originally executed
counterpart is delivered within a reasonable time thereafter.
10.8 Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that any other
provision may be invalid or unenforceable in whole or in part for any reason.
(Comment: Some courts may decline to narrow or otherwise rewrite a provision
that is determined to be unenforceable as written, notwithstanding the final
sentence in the above provision.)
10.9 Entire Agreement. This Agreement together with the related
agreements referred to herein contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, express or implied, oral or written. The express terms hereof
control and supersede any course of performance and/or usage of the trade
inconsistent with any of the terms hereof.
10.10 Disclaimer of Representations. Except as expressly set forth
in Section Section 2 hereof and the Exhibits referred to therein, Company has
not made any representations or warranties to Buyer, and Buyer expressly
acknowledges that it is not relying on any other information received from
Company or its representatives (including, without limitation, any projections,
forecasts or forward-looking information).
10.11 Amendments and Modifications. This Agreement may not be
amended or modified other than by an agreement in writing signed by all of the
parties.
10.12 Section Headings. The Section and Subsection headings in this
Agreement and the recitals at the beginning of this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its
interpretation.
10.13 Interpretation. When a reference is made in this Agreement to
a Section, Exhibit or Schedule, such reference shall be to a Section of, or an
Exhibit or Schedule to, this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement and the recitals at the
beginning of this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed, as the context indicates, to be followed by the words "but [is] [are]
not limited to." Where specific language is used to clarify or illustrate by
example a general statement contained herein, such specific language shall not
be deemed to modify, limit or restrict the construction of the general statement
which is being clarified or illustrated. The language in this Agreement has been
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any party. The words "herein," "hereof,"
"hereunder" and words of like import shall refer to this Agreement as a whole
including its Schedules and Exhibits, unless the context clearly indicates to
the contrary (for example, that a particular Section or Exhibit is the intended
reference).
10.14 Expenses of the Parties. Each party shall bear the expenses
incurred by such party in connection with the negotiation and execution of this
Agreement and the consummation of the transactions contemplated hereby, except
that the expenses of Company shall be deemed to be expenses of, and shall be
borne by, Company.
10.15 Statutory References. A reference in this Agreement to a
statute or statutory provision shall mean such statute or statutory provision as
it has been amended through the date as of which the particular Agreement
provision is to take effect, or to any successor statute or statutory provision
relating to the same subject as the statutory provision referred to in this
Agreement, and to any then applicable rules or regulations promulgated
thereunder.
10.16 Waiver of Jury Trial. THE PARTIES HEREBY EXPRESSLY WAIVE THE
RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING BROUGHT BY OR AGAINST
EITHER OF THEM RELATING TO THIS AGREEMENT. BECAUSE DISPUTES ARISING IN
CONNECTION WITH COMPLEX TRANSACTIONS ARE MORE QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON, THE PARTIES PREFER, BASED ON THE ADVICE OF
THEIR COUNSEL, THAT ANY DISPUTE BE RESOLVED BY A JUDGE APPLYING APPLICABLE LAW.
10.17 Jurisdiction; Service of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may shall be brought against any of the parties only in the courts of
the State of California, County of Los Angeles, or, if it has or can acquire the
necessary jurisdiction, in the United States District Court for the Central
District of California, and each of the parties consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and irrevocably waives any objection to venue laid
therein. Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world. The provisions of
this Section shall also apply to any actions involving directors, officers,
shareholders, controlling persons and affiliates of Buyer brought by or against
them in their respective capacities as such.
10.18 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
Accordingly, it is agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of California or in any California state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (a) consents to the
personal jurisdiction of any federal court located in the State of California or
of any California state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court, and (c) agrees that it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal or state court
sitting in the State of California.
10.19 Recovery of Fees by Prevailing Party. In the event of a
lawsuit to enforce or interpret the provisions of this Agreement, the prevailing
party shall pay the other party reasonable attorneys' fees and other costs and
expenses including expert witness fees in such amount as the court shall
determine. In addition, such non-prevailing party shall pay reasonable
attorneys' fees incurred by the prevailing party in enforcing, or on appeal
from, a judgment in favor of the prevailing party. The preceding sentence is
intended by the parties hereto to be severable from the other provisions of this
Agreement and to survive and not be merged into such judgment.
10.20 Duty of Cooperation. Each party shall cooperate in good faith
with the other parties generally, and in particular will make available, as the
other parties reasonably request, management decisions, liaison personnel,
information, approvals and acceptances so that the other parties may properly
perform their obligations under this Agreement.
10.21 Survival of Agreements, Representations, etc. All warranties,
representations, agreements and covenants made by a party herein or in any
certificate or other instrument [required to be] delivered by or on behalf of a
party in connection with this Agreement, shall be considered to have been relied
upon by the other party and shall survive the Closing under
this Agreement regardless of any investigation made by any party [or information
about any breach known to any party prior to the Closing; shall continue in full
force and effect; and shall provide a basis for the remedies provided for herein
or otherwise available to the non-breaching party. No representation or warranty
contained herein shall be deemed to have been waived, affected or impaired by
any investigation made by or knowledge of any party to this Agreement. All
statements in any such certificate or other instrument [delivered at or in
connection with the Closing shall constitute representations and warranties of
the party making such delivery. Each agreement, representation and warranty
contained herein is independent of all other agreements, representations and
warranties contained herein (whether or not covering an identical or a related
subject matter) and must be independently and separately complied with and
satisfied. Exceptions or qualifications to any agreement, representation or
warranty contained herein shall not be construed as exceptions or qualifications
to any agreement, other warranty or representation.
10.22 Time of the Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
10.23 Confidentiality; Publicity. The parties acknowledge that the
transaction described herein is of a confidential nature and shall not be
disclosed prior to the Closing except to consultants, advisors and Affiliates,
or as required by law. None of the parties hereto shall make any public
disclosure of the terms of this Agreement prior to the Closing, except as
required by law, such requirement to substantiated by a written opinion of
counsel. The parties shall endeavor to make only those press releases or other
public disclosures as are required by law; provided, however, that no press
release or other public disclosure shall be made without a minimum of hours'
prior consultation with the other parties.
10.24 Construction. The construction of this Agreement shall not
take into consideration the party who drafted or whose representative drafted
any portion of this Agreement, and no canon of construction shall be applied
that resolves ambiguities against the drafter of a document. The parties
acknowledge that they were advised by competent counsel that each has chosen to
represent such party and each party has had a full opportunity to comment upon
and negotiate the terms of this Agreement. The language used in this Agreement
shall be deemed to be [is] the language chosen by the parties hereto to express
their mutual intent as a result of arm's length bargaining.
10.25 Independent Contractor. For any services provided hereunder,
or under any other arrangement arising out of this Agreement, each party is
acting as an independent contractor and not as an agent of any other party
hereto and nothing in this Agreement shall be construed as creating a
partnership, joint venture or similar relationship of any kind between among the
parties hereto. No party shall hold itself out as having authority to create
binding obligations for any other party.
10.26 Conflicting Agreements. No party hereto shall enter into any
other agreement nor shall any party incur any obligations that are inconsistent
with the provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
"COMPANY"
XXXXXXXXXX.XXX
By: ____________________________________
Xxxxx Xxxxx, its Chief Executive Officer
By: ____________________________________
Xxxxxx X. XxXxxxxxx, its President
"BUYER"
VERTICAL COMPUTER SYSTEMS, INC.
By: ____________________________________
Xxxxxxx Xxxx, its President
SHAREHOLDERS
______________________
XXXXX XXXXX
______________________________________
XXXXXX X XXXXXXXXX 1995 FAMILY TRUST
______________________________________
SEMPER FI LIMITED PARTNERSHIP
_______________________________________
CENTURY CAPITAL LLC
_______________________________________
XXXXXXX X. XXXXXX
________________________________________
XXX XXXXXX
_____________________________________
XXXXXX XXXXX
_____________________________________
XXXX XXXXXXXX
____________________________________
JUNE X. XXXXXXXX
__________________________________________________
XXXXXXX XXXX XXXXX FAMILY TRUST DATED 2/29/1999
____________________________________
XXXXXXX XXXXXXXX
____________________________________
XXXX XXXXX
____________________________________
XXXXXXXX XXXXX & XXXXXXX XXXXX
____________________________________
XXXXXXX XXXXX & XXXXXX XXXXX
EXHIBIT A
(Shareholders and their Interests)
SHAREHOLDERS SHARES CURRENTLY OWNED
------------ ----------------------
XXXXX XXXXX 4,641,000
XXXXXX X XXXXXXXXX 1995 FAMILY TRUST 4,459,000
XXXX AND XXXXX XXXXXXXX 500,000
CENTURY CAPITAL LLC 1,002,880
XXXXXXX X. XXXXXX 5,000
XXX XXXXXX 3,000
XXXXXX XXXXX 5,000
XXXX XXXXXXXX 10,000
JUNE X. XXXXXXXX 5,000
XXXXXXX XXXX XXXXX FAMILY TRUST DATED 2-29-1999 6,000
XXXXXXX XXXXXXXX 3,000
XXXX XXXXX 5,000
XXXXXXXX XXXXX & XXXXXXX XXXXX 3,000
XXXXXXX XXXXX & XXXXXX XXXXX 3,000
EXHIBIT B
(Disclosure Schedule)
2.1 States in Which Company is Qualified to do Business as a Foreign
Corporation:
2.2 [Intentionally Omitted].
2.3 [Intentionally Omitted].
2.4 Financial Statements:
2.5 List of Liabilities:
2.6 Material Changes:
2.7 Leases:
2.8 Encumbered Assets:
2.9 Receivables:
2.10 Equipment:
2.11 Outstanding Tax Obligations:
2.12 Material Contracts
2.13 Proprietary Assets:
2.14 Legal Proceedings:
2.15 Bank Accounts:
2.16 Legal Requirements Not Complied With
EXHIBIT C
(Form of Confidentiality and
Proprietary Information Agreements Signed by Shareholders)
Exhibit D
(Xxxxx Xxxxx Employment Agreement)
Exhibit E
(Xxxxxx XxXxxxxxx Employment Agreement)
Exhibit F
(Exclusive Investment Banker Agreement
between Company and Century Capital LLC)
