ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into s of May 7, 1999 ("Effective Date"), by and between PC
Specialists, Inc., a California corporation (the "Buyer"), 3SI,
Inc., a Colorado corporation (the "Seller"), and 3SI Holdings,
Inc., a Colorado corporation (the "Parent"). The Buyer, the Seller
and the Parent may be referred to herein collectively as the
"Parties" and individually as a "Party."
RECITALS
A. Parent is the sole owner of Seller.
B. Seller is engaged in the business of reselling computers and
computer components (the "Business").
C. Seller desires to sell certain assets of the Business to
Buyer, upon the conditions set forth in this Agreement.
D. Buyer desires to purchase and acquire these certain assets of
the Business, upon the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter contained, the Parties hereby agree as
follows:
ARTICLE I
PURCHASE AND SALE
1.1 Agreement to Purchase and Sell Assets. Upon the terms
and subject to the conditions set forth in this Agreement, at the
Closing, Seller will sell, transfer, convey, assign and deliver to
the Buyer, and the Buyer will purchase or acquire from the Seller,
all right, title and interest of the Seller in and to all of the
assets of the Business owned by Seller (other than the Excluded
Assets) used in or in connection with, or arising out of, the
Business (the "Assets"), including, but not limited to:
(a) All tangible personal property, furniture, machinery, tooling,
equipment, fixtures, leasehold improvements, telephone and mobile
communications equipment and other fixed assets used in the
Business, and all books, manuals and documentation relating
thereto, including sales records and normal business records
associated with the Business;
(b) All inventory of the Business, wherever located.
(c) All (i) trademarks, trade names and logos and any derivations
or thereof, the Internet domain name "XX.xxx" and any and all
rights to the associated Internet website, copyrights, patents,
trade secrets and all other intellectual property of the Seller,
and all registrations and applications for the same, owned or used
in connection with the Assets or the business, (ii) sales promotion
materials relating to the Assets or the Business, including
Seller's telephone numbers and directory listings, (iii0 all
methods of operation and manuals, (iv) all sales and credit and
records relating to the Assets or Business, (vi) employee lists of
all persons who immediately prior to the Closing Date were
employees of the Seller in respect of the Business;
(d) All the Seller's rights under (i) the Xxxxxx Corporation
Contract (the "Xxxxxx Contract") and the State of New Mexico
Contract (the "New Mexico Contract"), the lease for the facility
located at 0000 X. Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000 (the
"Facility Lease"), (ii) any and all open purchase orders from
costumers and the associated orders with suppliers, (iii) any
leases for tangible personal property, (iv) all assignable
registrations, licenses, permits and approvals, and (v) all
representation agreements with sales representatives and agents,
used in or relating to the Assets or the Business (hereafter,
collectively referred to as the "Contracts");
(e) All computer programs, computer software, the master disk of
source codes for internally developed software, and other
proprietary computer and computer programming information relating
to and used in connection with the Assets or the Business;
(f) Any and all claims and rights against third parties, if and to
the extent they relate to the condition of the Assets including,
without limitation, all rights under manufactures' and vendors'
warranties (collectively the "Claims"); and
(g) All of the Sellers goodwill in, and the going concern value
of, the Business.
The Assets shall include, without limitation, all of the Assets
reflected on the Sellers May 7, 1999 Balance Sheet attached hereto
as Exhibit A ("Balance Sheet"), except for those which have been
transferred or disposed of in the ordinary course of the Business
after May 7, 1999 ("Balance Sheet Date") and those excluded assets
listed in Section 1.2 below. It shall also include a non-
exclusive, worldwide, perpetual royalty-free license to use the
name "3SI."
1.2 Excluded Assets. The Assets shall not include, and
Seller shall not sell to Buyer, any of the following items
(collectively, the "Excluded Assets"):
(a) All cash on hand or in bank accounts, and any other cash
equivalents, including without limitation certificates of deposit,
commercial paper, treasury bills, asset or money market accounts,
marketable securities and all such similar accounts or investments;
(b) All accounts receivable earned in the Business before the
Closing Date (the "Accounts Receivable");
(c) Pension, profit sharing and savings plans and trusts and
any assets thereof;
(d) All tangible personal property consumed by Seller in the
ordinary course of business between the date hereof and the Closing
Date;
(e) All amounts due the Seller in connection with any tax
refunds, prepaid taxes, rights under any tax-sharing agreement, or
similar payments for periods ending on or prior to the Closing
Date;
(f) The corporate minute books, corporate seals, corporate
lists, sales records, tax return work papers, and similar corporate
records of Seller;
(g) All governmental licenses and permits, or similar rights
that cannot by their terms be assigned to Buyer;
(h) Any and all amounts payable to the Seller from related or
affiliated parties of the Seller;
(i) All software development costs and prepaid royalties of
the Seller;
(j) The assets used in the development and delivery of the
KEWi products and services, which business the Seller shall
continue to conduct after the Closing Date;
(k) The corporate names "3SI, Inc. and 3SI Holdings, Inc.;
and
(l) The equipment leased from Tatonka Capital Corporation
which lease is now the subject of a lawsuit between Seller and
Tatonka Capital Corporation.
1.3 Liabilities.
(a) Except as specifically provided for in this Section 1.3,
Buyer shall not assume and shall not be responsible for, any
liabilities, debts or obligations of Seller or of the Business, of
any kind or nature whatsoever. Buyer agrees, as of the Closing
Date, to assume only the following liabilities and obligations of
Seller (collectively, the "Assumed Liabilities"):
(i) The continuing obligations incurred on or after the
Closing Date under each of the Contracts, provided, however, that
Buyer's obligation to assume the Contracts is limited in accordance
with Section 12.4 below;
(ii) All liabilities and obligations relating to the
Assets or the Business incurred on and after the Closing Date; and
(iii) One half of the cost of all sales, use,
transfer, recording, and similar taxes (other than income taxes)
arising out of the sale and transfer of the Assets.
(b) The Assumed Liabilities shall not include, and Buyer
shall not assume or be liable for, and does not undertake or
attempt to assume or discharge any of the following:
(i) All current or long term liabilities of Seller
relating to the Assets or the Business set forth on the Balance
Sheet, including (but not by way of limitation) accounts payable,
accrued payroll, customer deposits, lines of credit, bank debit,
notes payable, capital leases, and amounts due to related parties;
(ii) All Current liabilities of Seller relating to the
Assets or the Business arising in the ordinary course of business
from the Balance Sheet Date through the Closing Date, including
(but not by way of limitation) accounts payable, accrued payroll,
customer deposits, lines of credit, bank debt, notes payable,
capital leases (if any), and amounts due to related parties;
(iii) Any income tax liability or obligation of
Seller relating to the operation of the Business prior to the
Closing Date or arising from, or incident to, the sale, assignment,
transfer and delivery of the Assets, or any delinquent sales,
payroll or other delinquent tax obligation;
(iv) Any accrued, but unpaid employee benefits, including
(but not by way of limitation) sick leave, vacation time and any
unpaid commissions either due and payable on or prior to the
Closing or due and payable upon receipt of accounts receivable to
be collected and paid to Seller.
(v) Any workers' compensation liabilities with respect
to employees of the Business relating to illnesses or injuries
occurring prior to the Closing Date;
(vi) Any liability or obligation of Seller created under
this Agreement or arising out of the transactions contemplated
hereby, except as specifically provided in this Agreement;
(vii) Any liability or obligation of Seller arising
out of or relating to any pension, retirement or profit-sharing
plan or trust, including (but not by way of limitation) Seller's
401K Plan; and
(viii) any other liabilities or obligations of Seller
not expressly assumed by Buyer hereunder.
1.4 Total Purchase Price and Method of Payment. The total
purchase price (the "Purchase Price") to be paid by Buyer for the
Assets shall consist of (i) a cash payment to Seller of Five
Hundred Thousand Dollars ($500,000) payable at the Closing
("Initial Payment") and (ii) the Contingent Payments (as defined
below). The Initial Payment shall be payable by certified check or
wire transfer as designated by Seller. In addition to the Initial
Payment, upon satisfying the specific contingencies set forth
below, Buyer shall pay Seller the following amounts:
(a) For the period between the Closing and the date one year after
the Closing ("Year 1 Period"): (a) $250,000 upon renewal of the
Xxxxxx Contract; (b) $75,000 upon renewal of the New Mexico
Contract; and (c) an amount equal to 75% of the 3SI Division
Profits for the year 1 Period.
(b) For the period between the end of the Year 1 Period and the
date one year thereafter ("Year 2 Period"): (a) $250,000 upon
renewal of the Xxxxxx Contract; (b) $75,000 upon renewal of the New
Mexico Contract; and (c) an amount equal to 50% of the 3SI Division
Profits for the Year 2 Period.
(c) For the period between the end of the Year 2 Period and the
date one year thereafter ("Year 3 Period"): an amount equal to 50%
of the 3SI Division Profits for the Year 3 Period.
Hereinafter, the amounts in subsections 1.4(a), (b) and (c) shall
be referred to collectively as the "Contingent Payments." Each
Contingent Payment shall be made by certified check or wire
transfer within fifteen (15) days of satisfying such contingency.
In no event shall the purchase price exceed $3,000,000. If the
sum of the Initial Purchase Payment and the Contingent Payments
made according to the terms set forth above does not equal the
$3,000,000 threshold by the date that is three years after the
Closing Date, then no further Purchase Price consideration shall be
paid.
1.5 Determination of 3SI division Profits: Dispute Resolution.
(a) "3SI Division Profits" shall be defined as 3SI Gross Revenues
less the sum of 3SI Direct Expenses, the 3SI Overhead Charge, and
any contingent Payments made in the applicable period.
(i) "3SI Gross Revenues" shall equal any and all revenues derived
from "A" all Colorado and Wyoming-based activities; (B) the Xxxxxx
Contract; and (C) the New Mexico Contract in a given year.
(ii) "3SI Direct Expenses" shall equal any and all expenses
incurred in a given year for the sole benefit of the 3SI division,
including: (A) cost of goods sold; (B) direct payroll and
benefits; (C) third party labor used internally or as part of any
engagement; (D) facilities and equipment rental; (E) utilities and
telephone (not including phone, utilities or maintenance for the
New Mexico facility); (F) alarm and security; (G) insurance; (H)
supplies; (I) printing and postage; (J) recruiting; (K) vehicle
mileage and repair; (L) travel and entertainment; (M) meetings and
conventions; (N) applicable federal and state taxes; and (O) any
other expenses incurred for the direct benefit of the 3SI Division.
(iii) "3SI Overhead Charge" shall equal two percent of 3SI
Gross Revenues. This overhead charge reflects corporate overhead
which is otherwise not directly expensed to Buyer's satellite
offices, including: marketing and promotion activities; executive
and managerial involvement; legal and professional services;
finance and interest charges; investment in infrastructure and
depreciation; purchasing services: credit and collections services;
accounts payable services; general accounting and financial
services; customer service and RMA coordination; vendor relations;
operations and MIS support and general corporate support.
(iv) "3SI Division shall mean that portion of the business of Buyer
after the Closing Date related to (A) all Colorado and Wyoming-
based activities; (B) the servicing of the Xxxxxx Contract; and (C)
the servicing of the New Mexico Contract.
(b) At such time as Buyer shall determine 3SI Division Profits for
each of Year One and Year Two (which shall be no later than 45 days
following the end of such year), Buyer shall provide Seller with a
statement setting forth the calculation of 3SI Division Profits for
such year.
(c) In the event that Seller does not object to the determination
by Buyer of 3SI Division Profits for a given year by written notice
of objection (the `Notice of Objection") delivered to Buyer within
ten (10) days after Seller's receipt of such determination, which
Notice of Objection shall describe in reasonable detail Seller's
proposed adjustment to the proposed 3SI Division Profits
determination, the proposed 3SI Division Profits for such year
shall be deemed final and binding.
(d) Buyer shall issue and deliver to the Seller the appropriate
Contingent Payment, if any, to be issued and delivered within 5
days after the calculation for such year shall have become final
and binding on the parties (the "Contingent Payment Date").
(e) If Seller does deliver a Notice of Objection to Buyer in
accordance with subsection 1.5 (c), then the dispute shall be
resolved as follows:
(i) Seller and Buyer shall promptly endeavor to agree upon the
calculation of 3SI Division Profits for such year. In the event
that a written agreement determining the amount of 3SI Division
Profits for such year has not been reached within ten (10) days
after the date of receipt by Buyer and Seller of Seller's Notice of
Objection thereto, then Buyer's determination of 3SI Division
Profits for such year shall be submitted to a nationally
recognized, independent auditing firm upon which Seller and Buyer
shall agree (the "Accountants"). If the parties cannot agree on a
nationally recognized, independent auditing firm, the parties shall
submit the matter to arbitration in accordance with Section 13.3.
and the Accountants shall be selected by the arbitrators appointed
pursuant to such Section 13.3.
(ii) Within thirty (30) days of the submission of any dispute
concerning the determination of 3SI Division Profits to the
Accountants, the Accountants shall render a decision in accordance
with this Section 1.5 along with a statement of reasons therefore.
The decision of the Accountants shall be final and binding upon
each party hereto.
(iii) The fees and expenses of the Accountants for any
determination under this Section 1.5 shall be borne by Buyer if the
determination of 3SI Division Profits by the Accountants exceeds
the Buyer's determination of 3SI Division Profits by more than 10%
(using the Buyer's determination of 3SI Division Profits as the
denominator); otherwise the fees and expenses shall be borne by
Seller.
(iv) In determining 3SI Division Profits for a given year, Buyer
shall provide Seller and its representatives reasonable access to
all books and records of Buyer necessary to verify the calculations
and Buyer shall cooperate with Seller and its representatives in
their efforts to verify the calculations.
1.6 Allocation of Purchase Price. The Purchase Price shall be
allocated among the Assets as provided in Exhibit B. Each Party
agrees that it shall not take any position that varies from or is
inconsistent with such allocation in any filing made by such party
with the United States Internal Revenue Service or with any other
local, state or federal regulatory authority.
1.7 Non-Compete. At the Closing, each of Seller, Parent and
certain principals/shareholders of Parent shall enter into a Non-
Compete Agreement with Buyer in the form attached hereto as Exhibit
C (the "Non-Compete Agreement").
1.8 Closing. The date of Closing (herein referred to as the
"Closing Date") shall be on or before May 15, 1999 with the actual
day of Closing on or before such date as mutually agreed to by the
parties in writing. Unless otherwise agreed, the Closing shall
take place at the offices of Xxxx, Forward, Xxxxxxxx & Scripps LLP,
000 Xxxx Xxxxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, at the hour
of 9:00 a.m.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND PARENT
Except as specifically disclosed by Seller or Parent to Buyer
in this Agreement or in Seller's Disclosure Memorandum (which
disclosures shall be deemed to modify and qualify each of the
following representations and warranties of Seller), Seller and
Parent jointly and severally represent and warrant to Buyer as
follows:
2.1 Corporate Status. Each of Seller and Parent is a corporation
which is duly organized, validly existing, and in good standing
under the laws of the State of Colorado. Each of Seller and Parent
is duly qualified to do business in each jurisdiction in which the
character of and location of its assets or operations makes
qualification to do business as a foreign corporation necessary.
Each of Seller and Parent has full corporate power to carry on its
business as it is now being conducted and as proposed to be
conducted and to own and operate its assets. Each of Seller and
Parent has full corporate power and authority to execute and
deliver this Agreement and perform the transactions contemplated
hereby.
2.2 Corporate Actions. All corporate or other actions and
proceedings necessary to be taken by or on the part of either
Seller or Parent in connection with the execution and delivery of
this Agreement and the consummation of the transactions
contemplated by this Agreement, including the obtaining of approval
by the directors and shareholders of Seller, have been duly and
validly taken, and this Agreement has been duly and validly
authorized, executed and delivered by each of Seller and Parent and
constitutes the legal, valid and binding obligation of each of
Seller and Parent, enforceable against each of Seller and Parent in
accordance with and subject to its terms.
2.3 No Defaults. Neither the execution, delivery or performance
by either Seller or Parent of this Agreement nor the consummation
by either Seller or Parent of the transactions contemplated hereby
is an event that, of itself or with the giving of notice or the
passage of time or both, will:
(a) Violate or conflict with the provisions of the articles of
Incorporation or Bylaws of either Seller or Parent;
(b) Violate or conflict with or result in any breach of or any
default under, result in any termination or modification of, or
cause any acceleration of any obligation under, any contract,
mortgage, indenture, agreement, lease or other instrument to which
either Seller or Parent is a party or by which it is bound, or by
which it may be affected, or result in the creation of any lien or
encumbrance upon any of either Seller's or Parent's assets, except
for agreements, indentures and instruments related to the financing
of the transactions contemplated by this Agreement; or
(c) Violate any judgment, decree, order, statute, rule or
regulation applicable to either Seller or Parent.
2.4 Breach. Neither Seller nor parent is in violation or breach
of any of the terms, conditions or provisions of its Articles of
Incorporation, as amended, its Bylaws, or any indenture, mortgage
or deed of trust or other contracts, lease, instrument, court
order, judgment, arbitration award, or decree materially affecting
the business of either Seller or Parent, to which either Seller or
Parent is a party or by which it is otherwise bound, where the
effect thereof would have a material adverse effect on either
Seller or Parent.
2.5 Approvals and Consents. No approvals or consents of persons
or entities not a party to this Agreement are legally or
contractually required to be obtained by either Seller or Parent in
connection with the consummation of the transactions contemplated
by this Agreement. To each of Seller's and Parent's knowledge, no
permit, license, consent, approval or authorization of, or filing
with, any governmental regulatory authority or agency is required
in connection with the execution, delivery and performance of this
Agreement, or the consummation of the transactions contemplated
hereby, except where its absence would not have a material adverse
effect on the Business and Assets taken as a whole.
2.6 Title to and Condition of Assets; Leases.
(a) Seller has good, valid and marketable title to all of the
Assets, free and clear of all liens, encumbrances and security
interests of every kind or character.
(b) Seller owns or leases all tangible assets necessary for the
conduct of its Business. Each such tangible asset is free from
defects (patent and latent), ahs been maintained in accordance with
normal industry practice, is in good operating condition and repair
(subject to normal wear and tear), and is suitable for the purposes
for which it presently is used.
(c) Seller and Seller's landlord have all rights necessary to
occupy the Facility and to enter into the lease agreements and
assignments contemplated by this Agreement.
(d) The assets of Seller subject to the liens by Tatonka Capital
Corporation, Community First Financial, StorageTek Financial
Services, MicroAge Computer Centers, Access Graphics, Inc. and
Information Leasing Corporation are not included in the Assets to
be transferred to Buyer in this transaction.
2.7 Inventory. The inventory of the Business as reflected on the
Balance Sheet or acquired thereafter has been acquired and
maintained in the ordinary course of business; is of good and
merchantable quality; consists substantially of a quality,
quantity, and condition usable or saleable in the ordinary course
of business within a period of one (1) year from the Closing Date;
and is not subject to any write down or write off for obsolescence
or otherwise under generally accepted accounting principles.
Seller is not under any liability or obligation with respect to the
return of inventory in the possession of any third party.
2.8 Financial Statements of Seller. The Balance Sheet and all
other financial statements of Seller provided to Buyer, including
the footnotes thereto ("Seller Financial Statements"), have been
prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods indicated.
The Financial Statements fairly present the financial condition of
Seller at the date thereof, and the related statement of income,
shareholders' equity and changes in financial position fairly
present the results of the operations of Seller, if any, and the
changes in the financial position of the period indicated.
2.9 Events Since Balance Sheet Date. Except as set forth in the
Balance Sheet, and as disclosed in this Agreement or in Seller's
Disclosure Memorandum, there has not been since the Balance Sheet
Date:
(a) Any material adverse change in the assets or liabilities of
the Business, other than changes in the ordinary course of
business;
(b) Any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Assets; or
(c) Any material transactions entered into or any material
liabilities or obligations incurred by the Business, other than in
the ordinary course of Business.
2.10 Current Liabilities. At Closing the current liabilities
of Seller relating to the Business do not exceed the current assets
of the Business.
2.11 Liabilities. Except for those liabilities (i) reflected
or reserved against in the Balance Sheet, (ii) not yet due and
payable or obligations to be performed or satisfied after the date
hereof under contracts and agreements set forth in Seller's
Disclosure Memorandum, (iii) disclosed in this Agreement or
Seller's Disclosure Memorandum, and (iv) incurred in the ordinary
course of business of the Business between the Balance Sheet Date
and the Closing, there are no liabilities or obligations of Seller
relating to the Business, known or unknown, due or not yet due,
liquidated or unliquidated, fixed, contingent or otherwise, where
the effect thereof would have a material adverse effect on the
Business or the Assets.
2.12 Taxes. Seller has filed all applicable federal, state,
local and foreign tax returns required to be filed to date, in
accordance with provisions of law pertaining thereto, and has paid
all taxes, interest, penalties and assessments shown as due thereon
or otherwise due and payable by Seller (including without
limitation income, withholding, excise, unemployment, social
security, occupation, transfer, franchise, property, sales and use
taxes, import, duties or charges, and all penalties an interest in
respect thereof) except where the failure to file such returns or
pay such taxes has no material adverse effect on the Business and
the Assets taken as a whole.
2.13 Facility Lease. The Facility Lease is in full force and
effect; all rents and additional rents due to date have been paid;
Seller has been in peaceable possession since the commencement of
the original term of lease and is not in default thereunder and no
waiver, indulgence or postponement of the Seller's obligations
thereunder has been granted by the lessor; and there exists no
event of default or event, occurrence, condition or act (including
the transaction contemplated hereby) which, with the giving of
notice, the lapse of time or the happening of any further events or
condition, would be a default under the Facility Lease (other than
payments not yet due which would become a default if not paid when
due). Seller has not knowingly violated or been given notice of
violation of any of the terms or conditions under the Facility
Lease, and to the best knowledge of Seller, all of the covenants to
be performed by any other party under such lease have been fully
performed. The Facility is in a condition of good maintenance and
repair and is adequate and suitable for the purposes for which it
is presently being used. To the best knowledge of Seller, neither
the Facility nor the operation or maintenance thereof, violate any
restrictive covenant or any provision of any federal, state or
local law, ordinance, rule or regulation, or encroaches on any
property owned by others. No condemnation proceeding is pending or
threatened which would preclude or impair the use of the Facility
for the purposes for which it is currently used.
2.14 Contracts. Seller has delivered to Buyer true and
correct copies of each Contract. As of the date of this Agreement,
all such Contracts are, and as of the Effective Date will be,
valid, enforceable in accordance with their terms and in full force
and effect, and to the knowledge of Seller, Seller is not, and as
of the Effective Date Seller will not be, in default thereunder.
As of the date of this Agreement, neither Seller nor Parent has
received notice that any party to any Contract intends to cancel or
terminate such Contract.
2.15 Permits. Set forth in the Seller's Disclosure Memorandum
is a complete and accurate list of all material permits, licenses,
approvals, franchises, notices, authorizations issued by
governmental entities or other regulatory authorities, federal,
state or local (collectively the "Permits") held by Seller in
connection with the Business. The Permits are all the permits
required for the conduct of the business of Seller. Each permit is
in full force and effect, and Seller has not engaged in any
activity which would cause or permit revocation or suspension of
any such Permit, and no action or proceeding looking to or
contemplating the revocation or suspension of any such Permit is
pending or, to Seller's knowledge threatened. The consummation of
the transactions contemplated hereby will in no way affect the
continuation, validity or effectiveness of the Permits. Neither
Seller nor the Facility nor any of the Assets are required to be
specially licensed by, nor are they subject to specific regulation
of, any governmental or regulatory body by reason of the conduct of
the Business.
2.16 Insurance. The Seller's Disclosure Memorandum contains
a complete and accurate list of insurance policies which Seller
maintains with respect to the Business and the Asses. All such
policies are in full force and effect and there currently exists no
right of termination on the part of the insurance as a result of
any prior default on the part of Seller. Such policies, with
respect to their amounts and types of coverage, are believed by
Seller to be adequate to insure against material risks to which
Seller and its property and the Assets are normally exposed in the
operation of the Business. Since the Balance Sheet Date, there has
not been any material adverse change in Seller's relationship with
its insurers or in the premiums payable pursuant to such policies.
2.17 Product Warranty. Each product manufactured, sold, leased,
licensed or delivered by Seller conforms with all applicable
contractual commitments and all express and implied warranties.
Seller has no liability and, to the best knowledge of Seller, there
is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand which
may give rise to any liability for replacement or repair thereof or
other damages in connection therewith, subject only to the reserve
for product warranty claims set forth in the Balance Sheets. No
product manufactured, sold, leased, or delivered by Seller is
subject to any guaranty, warranty, or other indemnity beyond the
applicable standard terms and conditions of sale or lease, all of
which are reproduced and described in detail in the Seller's
Disclosure memorandum in addition to copies of the standard terms
and conditions of sale or lease for Seller, containing applicable
guaranty, warranty, and indemnity provisions have been provided to
Buyer by Seller.
Intellectual Property.
(a) All domestic and foreign patents, patent applications,
copyrighted works, copyright applications and registrations, trade
secrets, inventions, developments, customer lists, manufacturing
and secret processes, hardware designs, programming processes,
software and other information, and know-how (if any) that are used
by, owned by or licensed to Seller and that relate to the Business
(collectively, the "Intellectual Property") are listed in the
Seller's Disclosure Memorandum which indicates, with respect to
each, the nature of Seller's interest therein and the expiration
date thereof or the date on which Seller's interest therein
terminates. Registered copyrights, patents, trademarks and service
marks that are owned by or licensed to Seller and that relate to
the business of Seller have been duly registered in, filed in or
issued by, as the case may be, the United States Patent and
Trademark Office, the United States Register of Copyrights or the
corresponding offices of other countries identified on such
Schedule, and have been properly maintained and renewed in
accordance with all applicable provisions of law and administrative
regulations in the United States and each such country. The
Intellectual Property is the only intellectual property used in or
otherwise necessary to operate the Business as currently conducted.
(b) Use of the Intellectual Property and any other
intellectual property used by Seller in its business does not
require the consent of any other person and the same are freely
transferable (except as otherwise provided by law) and are owned
exclusively by Seller, free and clear of any attachments, liens,
encumbrances or adverse claims, and to the best knowledge of
Seller, neither its present nor contemplated activities or products
infringe, misappropriate, dilute, impair or constitute unfair
competition with respect to any patent, trade name, trademark,
copyright or other proprietary rights of others.
(c) No other person has an interest in or right or license to
use, or the right to license others under the Intellectual
Property. There are no claims or demands of any other person
pertaining thereto and no proceedings have been instituted, are
pending or, to the best knowledge of Seller, threatened that
challenge the rights of Seller in respect thereof and Seller does
not know of any fact that could be the basis of any such claim.
Seller is not aware of any infringement of any of the Intellectual
Property by others nor is any of the Intellectual property subject
to the outstanding order, decree, judgment, stipulation,
settlement, lien, charge, encumbrance or attachment. No claim or
demand has been made and no proceeding has been filed or, to the
best knowledge of Seller, is threatened to be filed charging Seller
with infringement of any patent, trade name, trademark, service
xxxx or copyright and Seller does not know of any facts which could
be the basis of such claims. There are no royalties, honoraria,
fees or other payments payable by Seller to any person with respect
to any of the Intellectual Property.
(d) There are no payments that are required to be made by
Seller for the use of its Intellectual Property. Seller is not
using or in any way making any unlawful or wrongful use of any
confidential information or Intellectual Property of any third
party, including without limitation any former employer of any
present or past employee of Seller or of any of Seller's
predecessors. Seller is not a party to any non-competition or
confidentiality agreement related to the business of Seller with
any party other than Seller or Buyer.
2.19 Compliance With Law and Regulations. Each of Seller and
parent is in compliance with all requirements of law, federal,
state and local, and all requirements of all governmental bodies or
agencies having jurisdiction over it, the operation of the Business
and the use of the Assets, except where the failure to be in such
compliance would not have a material adverse effect on the Business
or the assets taken as a whole. Each of Seller, Parent and the
Facility are in full compliance with applicable environmental laws.
Neither Seller nor Parent is aware of any past or current tenant
of the Facility violating any law, including, but not limited to,
any environmental laws. Each of Seller and Parent has properly
filed all reports and other documents required to be filed with
federal, state, local, or foreign governments or subdivisions or
agencies thereof. Neither Seller nor Parent has received any
notice, not heretofore complied with, from any federal, state or
municipal authority or any insurance or inspection body that any of
its properties, facilities, equipment or business procedures or
practices fails to comply with any applicable law, ordinance,
regulation, or requirement of any public authority or body.
2.20 Employees: Labor Problems. Each of Seller and Parent is
in compliance with all federal, state or other applicable laws
respecting employment and employment practices, terms and
conditions of employment, wages and hours, equal employment
opportunity, nondiscrimination, occupational safety and health, and
payment of social security and similar taxes and, to the best
knowledge of each of Seller and Parent, has not and is not engaged
in any unfair labor practice, has not suffered or sustained any
labor disputes resulting in any work stoppage, and no such work
stoppage is threatened. There do not currently exist any written
or oral contracts for long-term employment, consulting agreements
or agreements containing provisions for significant severance or
parachute payments. Each of Seller and Parent is current in all of
its salary obligations to its employees who are employed in
connection with the Business, and each of such employees has been
provided with an address and telephone number of either Seller or
Parent, as appropriate.
2.21 Litigation. There are no suits, judgments, arbitrations,
administrative charges or other legal proceedings, claims or
governmental investigations pending against, or to each of Seller's
and Parent's knowledge, threatened against either Seller or Parent
or the Business which will have a material adverse effect on the
Business or the Assets taken as a whole after the Closing. There
are no lawsuits, legal proceedings or investigations of any nature
pending or, to each of Seller's and Parent's knowledge, threatened
against or affecting it which would materially impair either
Seller's or Parent's ability to carry out the transactions
contemplated by this Agreement.
2.22 Customers, Distributors and Independent Sales
Representatives. The Seller's Disclosure Memorandum sets forth the
names and addresses of all customers to which, and independent
sales representatives and distributors through which, Seller has
sold or distributed in excess of $25,000 of its products or
services in the Business during any of the last two fiscal years.
During such period and through the date hereof, no such customer,
distributor or independent sales representative has canceled or
otherwise terminated its relationship with Seller or decreased
materially its usage or purchase of the products or services of
Seller, except for changes in customer relationships that have
occurred in the ordinary course of business the aggregate value of
which has not exceeded $250,000. To the knowledge of Seller, no
such customer, independent sales representative or distributor has
any plan or intention to terminate, cancel or otherwise modify its
relationship with Seller in a manner that would be adverse to
Seller.
2.23 No Broker or Finder. Neither Seller nor Parent has
employed or used the services of any broker or finder in connection
with this transaction and each of Seller and Parent shall hold
Buyer completely free and harmless from the claims of any person
claiming to have so acted on behalf of either Seller or Parent.
2.24 Operation in Ordinary Course. Since the Balance Sheet Date:
(a) Seller has operated the Business in the ordinary course
of business, consistent with the past practice, except as related
to the transactions contemplated hereby.
(b) Seller has maintained its books, accounts and records in
the usual, customary and ordinary manner.
2.25 Disclosure. Neither this Agreement nor the Seller's
Disclosure Memorandum contains any untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as specifically disclosed by Buyer to Seller in this
Agreement or in the Buyer's Disclosure Memorandum (which
disclosures shall be deemed to modify and qualify each of the
following representations and warranties of Buyer), Buyer
represents and warrants to Seller as follows:
3.1 Corporate Status. Buyer is a corporation which is duly
organized, validly existing, and in good standing under the laws of
the State of California. Buyer is duly qualified to do business in
each jurisdiction in which the character of and location of its
assets or operations makes qualification to do business as a
foreign corporation necessary. Buyer has full corporate power to
carry on its business as it is now being conducted and as proposed
to be conducted and to own and operate its assets. Buyer has full
corporate power and authority to execute and deliver this Agreement
and perform the transactions contemplated hereby.
3.2 Corporate Actions. All corporate or other actions and
proceedings necessary to be taken by or on the part of Buyer in
connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated by this
Agreement, including the obtaining of approval by the directors and
shareholders of Buyer, have been duly and validly taken, and this
Agreement has been duly and validly authorized, executed and
delivered by Buyer and constitutes the legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with
and subject to its terms.
3.3 No Defaults. Neither the execution, delivery or
performance by Buyer of this Agreement nor the consummation by
Buyer of the transactions contemplated hereby is an event that, of
itself or with the giving of notice or the passage of time or both,
will:
(a) Violate or conflict with the provisions of the Articles
of Incorporation or Bylaws of Buyer;
(b) Violate or conflict with or result in any breach of or
any default under, result in any termination or modification of, or
cause any acceleration of any obligation under, any contract,
mortgage, indenture, agreement, lease or other instrument to which
Buyer is a party to by which it is bound, or by which it may be
affected, or result in the creation of any lien or encumbrance upon
any of Buyer's assets, except for agreements, indentures and
instruments related to the financing of the transactions
contemplated by this Agreement; or
(c) Violate any judgment, decree, order, statute, rule or
regulation applicable to Buyer.
3.4 Breach. Buyer is not in violation or breach of any of
the terms, conditions or provisions of its Articles of
Incorporation, as amended, its Bylaws, or any indenture, mortgage
or deed of trust or other contracts, lease, instrument, court
order, judgment, arbitration award, or decree materially affecting
the business of the Buyer, to which Buyer is a party or by which it
is otherwise bound, where the effect thereof would have a material
adverse effect on the Buyer.\
3.5 Approvals and Consents. No approvals or consents of
persons or entities not a party to this Agreement are legally or
contractually required to be obtained by Buyer in connection with
the execution and delivery of this Agreement or the consummation of
the transactions contemplated by this Agreement.
3.6 Litigation. There are no lawsuits, judgments,
arbitrations, administrative charges or other legal proceedings,
claims or governmental investigations pending against, or to
Buyer's knowledge, threatened against the Buyer relating to or
affecting the execution, delivery or performance of this Agreement
or the ability of Buyer to perform its obligations under this
Agreement.
3.7 No Broker or Finder. Buyer has not employed or used the
services of any broker or finder in connection with this
transaction and shall hold Seller completely free and harmless from
the claims of any person claiming to have so acted on behalf of
Buyer.
3.8 Disclosure. Neither this Agreement nor the Buyer's
Disclosure Memorandum contains any untrue statement of a material
fact or omits a material fact necessary to make the statements
contained herein or therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE IV
DISCLOSURE MEMORANDUM
The Seller's Disclosure Memorandum (the "Seller's Disclosure
Memorandum"), is attached to this Agreement as Attachment I, shall
be executed on behalf of Seller and Parent, and shall contain
accurate, true and correct information and data and, to the extent
expressly set forth herein, shall be accompanied by a copy of each
document referred to therein or otherwise identified as to its
location to the reasonable satisfaction of Buyer. The Buyer's
Disclosure Memorandum (the "Buyer's Disclosure Memorandum") shall
be executed on behalf of Buyer, and shall contain accurate, true
and correct information and data in all material respects. Terms
used and defined in this Agreement shall have the same definition
when used in the Seller's Disclosure Memorandum or the Buyer's
Disclosure Memorandum, as the case may be, and any schedules or
exhibits attached thereto.
ARTICLE V
COVENANTS OF SELLER AND PARENT
5.1 Representations and Warranties. Seller or Parent, as
appropriate, shall give detailed written notice to Buyer promptly
upon learning of any fact which (i) would render untrue in any
material respect any of Seller's, Parent's or Buyer's
representations or warranties contained in this Agreement or the
information contained in the Seller's Disclosure Memorandum or the
Buyer's Disclosure Memorandum, or (ii) would cause Seller, Parent
or Buyer to fail to comply with its obligations hereunder in any
material respect between the Effective Date and the Closing Date.
5.2 Notice of Proceeding. Seller or Parent, as appropriate,
will promptly notify Buyer in writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions contemplated
hereby; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an
investigation into, or institute a suit or proceeding to restrain
or enjoin, the consummation of this Agreement or such transactions,
or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.
5.3 Consummation of Agreement. Each of Seller and parent
shall use its best efforts to fulfill and perform all conditions
and obligations on its part to be fulfilled and performed under
this Agreement, and cause the transactions contemplated by this
Agreement to be fully consummated.
5.4 Confidentiality. Except as and to the extent required by
law, each of Seller and Parent will not disclose or use, and will
direct its representative snot to disclose or use to the detriment
of Buyer, any Confidential Information (as defined below)
furnished, or to be furnished, by Buyer, or its respective
representatives, at any time or in any manner other than in
connection with is evaluation of the transaction proposed in this
letter. For purposes of this paragraph, "Confidential Information"
means any information about Buyer identified in writing as
"Confidential" promptly following its disclosure to Seller or
Parent, unless (a) such information is already known to Seller,
Parent or their representatives on a nonconfidential basis or to
others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of Seller, Parent or
its representatives, (b) the use of such information is required in
making any filing or obtaining any consent or approval required for
the consummation of the transaction contemplated hereby, or (c) the
furnishing or use of such information is compelled by judicial or
administrative process or by other requirements of law. Upon the
written request of Buyer, Seller or Parent, as appropriate, will
promptly return to Buyer or destroy any Confidential Information in
its possession and certify in writing to Buyer that it has done so.
5.5 Exclusive Dealing. Seller and Parent understand and
acknowledge that Buyer will incur significant expenses in
connection with its review and investigation of Seller.
Accordingly, Seller and Parent agree that beginning on the date
hereof and trough and including May 31, 1999, each of Seller and
Parent will not, and each will not permit any affiliate, officer,
director, shareholder, employee, attorney, accountant, financial
advisor or other representative of Seller, Parent or their
affiliates to negotiate with, solicit, or participate in
negotiations with any third party with respect to the sale of
Seller or Parent, the sale of any assets of Seller or Parent (other
than in the ordinary course), the sale of any ownership interests
in Seller or Parent, or any similar transaction. Seller or Parent
will immediately notify Buyer regarding any contact between Seller
or Parent or any of their representatives and any other person
regarding any such offer or proposal or any related inquiry.
5.6 Disclosure. Except as to the extent required by law
including the federal securities laws, without the prior written
consent of Buyer, each of Seller nor Parent will not make, and each
will direct is representatives not to make, directly or indirectly,
any public comment, statement or communication with respect to, or
otherwise to disclose or to permit the disclosure of the existence
of discussions regarding, a possible transaction between Buyer and
Seller or Parent, conditions, or other aspects of the transaction
proposed in this Agreement. If Seller or Parent is required by law
to make any such disclosure, it must first provide to Buyer the
content of the proposed disclosure, the reasons that such
disclosure is required by law, and the time and place that the
disclosure will be made and it shall make its reasonable best
efforts to accommodate changes to the required disclosure suggested
by Buyer. Buyer acknowledges that Seller is a Section 12(g) of the
securities Exchange Act of 1934 (the "Act") reporting company and
is required to make certain public disclosures in accordance with
the Act.
5.7 Operations. Seller agrees, through the Closing Date, at
Seller's sole cost and expense to (i) keep all existing insurance
policies affecting the Assets in full force and effect; (ii)
continue to provide all services and maintain all of the fixed
Assets in good working order in a responsible manner consistent
with past practice; and (iii) at the request of Buyer, at any time
within thirty (30) days after the Closing, terminate and settle all
employment contracts for employees Buyer designates to be hired by
Buyer ("Designated Employees").
5.8 Operations Pending Closing. Subsequent to the date of
this Agreement and prior to the Closing Date, Seller shall cause
the Business to be operated in the ordinary course, consistent with
past practice, except with respect to the KEWi products, services
and assets which business the Company shall conduct in its sole
discretion. Until and including the Closing Date, Seller shall use
its best efforts to cause the Business to maintain its insurance
coverage and its books, accounts and records in the usual manner in
a basis consistent with current practice and to comply in all
material respects with all laws, ordinances and regulations of
governmental authorities applicable to the Business.
5.9 Restrictions. Except as disclosed in this Agreement or
in Seller's Disclosure Memorandum, prior to the Closing Date, and
without the prior written consent of Buyer, Seller shall not:
(a) Encumber or grant any security interest in any Asset
other than in the ordinary course of business; or
(b) Amend or modify any Contract which obligates the Business
to expend more than Twenty-Five Thousand Dollars ($25,000.00)
following the Closing Date.
5.10 Consents: Estoppels. Notwithstanding any other
provision of this Agreement, to the extent that the consent or
approval of any third person is required under any Contract in
order to assign any such Contract from Seller to Buyer, each of
Seller and Parent shall use its best efforts to obtain such
consents and approvals before the Closing until such consent is
obtained. A Contract will not be assigned until such consent is
obtained. Seller shall obtain an estoppel certificate from the
Landlord of the Facility in form satisfactory to Buyer.
5.11 Access to Properties and Information. Buyer and its
representatives shall be afforded full access to all of the assets,
properties, books, records, agreements, other documents and
employees of Seller relating to the Assets and the Business, in all
cases during normal business hours and upon reasonable prior
notice. Buyer and its representatives shall have the right to make
abstracts from or copies of any such books, records, agreements,
and commitments, and such Business shall furnish Buyer's
representatives with such information concerning such affairs and
copies of such documents, contracts, agreements and records as
Buyer may reasonably request. All such information provided to
Buyer in written form by Seller to the knowledge of Seller shall be
true, complete and correct and shall be deemed represented as such
by Seller to Buyer. Any such investigation shall be conducted in
such a manner as not to interfere unreasonably with the operation
of the Business.
5.12 Termination of Employees. Upon the request of Buyer, at
any time between the Closing Date and thirty (30) days after the
Closing Date, Seller will terminate all employees designated to be
hired by Buyer (the "Designated Employees"), deliver final
paychecks to such Designated Employees for unpaid wages, accrued
vacation, unused sick days and any other amounts owing to such
Designated Employees through the Closing Date; provided, howe4ver,
if a Designated Employee elects to maintain his or her accrued
vacation up to a maximum amount of ten (10) days, Seller shall pay
to Buyer the amount it otherwise would have paid to such Designated
Employee for such accrued vacation and Buyer will credit such
Designated Employee for the number of vacation days he or she
elects to maintain. Seller shall cooperate with Buyer in the
hiring and transitioning of the Designated Employees. Seller has
sole responsibility and obligation for any employee-related
liabilities relating to the Designated Employees arising on or
prior to the Closing Date. On or after the Closing Date, Seller
shall have the sole responsibility and obligation for complying
with the health care continuation coverage requirements of Internal
Revenue Code ("Code") Section 4980B and Section 601 et seq. of
ERISA ("COBRA") that are applicable to (i) Seller's employees who
are not Designated Employees, and their spouses and dependents, and
(ii) Designated Employees not retained in Buyer's employ for at
least six months. Seller shall be solely responsible for providing
COBRA continuation coverage to any person entitled to such coverage
in connection with any health plan sponsored by Seller. Seller
shall indemnify, defend and hold harmless Buyer and its employees,
officers, directors, successors, assigns, subsidiaries,
shareholders, agents, attorneys, representatives and affiliates
from and against any and all losses, liabilities, demands, claims,
expenses, judgments, costs, attorneys' fees, taxes and penalties
arising under Code Section 4980B or ERISA Section 601 et seq. with
respect to any individual who was an employee (or a spouse or
dependent of such employee) of Seller prior to the Closing and who
had or has a "qualifying event" (within the meaning of Code Section
4980 (B) (f)(3)) before, on or after the Closing.
5.13 Liens. On or prior to the Closing Date, Seller shall
have either obtained lien releases for any outstanding liens on the
Assets or evidence satisfactory to Buyer that the debts underlying
such liens have been paid in full. In the event Seller cannot
obtain lien releases on or prior to the Closing Date, Seller shall
make its best efforts to obtain such lien releases as soon as
possible following the Closing.
ARTICLE VI
COVENANTS OF BUYER
Buyer covenants and agrees that from the date hereof until the
completion of the Closing:
6.1 Representations and Warranties. Buyer shall give
detailed written notice to Seller promptly upon learning of any
fact which (i) would render untrue in any material respect any of
Buyer's or Seller's representations or warranties contained in this
Agreement or the information contained in the Buyer's Disclosure
Memorandum or the Seller's Disclosure Memorandum or (ii) would
cause Buyer or Seller to fail to comply with is obligations
hereunder in any material respect between the Effective Date and
the Closing Date.
6.2 Notice of Proceeding. Buyer will promptly notify Seller
in writing upon:
(a) Becoming aware of any order or decree or any complaint
praying for an order or decree restraining or enjoining the
consummation of this Agreement or the transactions contemplated
hereunder; or
(b) Receiving any notice from any governmental department,
court, agency or commission of its intention (i) to institute an
investigation into, or institute a suit or proceeding to restrain
or enjoin, the consummation of this Agreement or such transactions,
or (ii) to nullify or render ineffective this Agreement or such
transactions if consummated.
6.3 Consummation of Agreement. Buyer shall fulfill and
perform all conditions and obligations on its part to be fulfilled
and performed under this Agreement, and cause the transactions
contemplated by this Agreement to be fully carried out.
6.4 Confidentiality. Except as and to the extent required by
law, Buyer will not disclose or use, and will direct its
representatives not to disclose or use to the detriment of Seller
or Parent, any Confidential Information (as defined below)
furnished, or to be furnished, by Seller, or its respective
representatives, at any time or in any manner other than in
connection with its evaluation of the transaction proposed in this
letter. For the purposes of this paragraph, "Confidential
Information" means any information about Seller or Parent
identified in writing as "Confidential" promptly following its
disclosure to Buyer, unless (a) such information is already known
to Buyer or its representatives on a nonconfidential basis or to
others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of Buyer or its
representatives, (b) the use of such information is required in
making any filing or obtaining any consent or approval required for
the consummation of the transaction contemplated hereby, or (c) the
furnishing or use of such information is compelled by judicial or
administrative process or by other requirements of law. Upon the
written request of Seller or Parent, Buyer will promptly return to
the Company or destroy any Confidential Information in its
possession and certify in writing to Seller or Parent, as
appropriate, that it has done so. Buyer acknowledges that Parent
is a publicly held "reporting" company which is required to file
regular reports with the SEC pursuant to the Securities Exchange
Act of 1934 (the "Act").
6.5 Exclusive Dealing. Except as and to the extent required
by law, without the prior written consent of Seller or Parent,
Buyer will not, and each will not direct its representatives to
make, directly or indirectly, any public comment, statement or
communication with respect to, or otherwise to disclose or to
permit the disclosure of the existence of discussions regarding, a
possible transaction between Buyer and Seller or Parent,
conditions, or other aspects of the transaction proposed in this
Agreement. If Buyer is required by law to make any such
disclosure, it must first provide to Seller the content of the
proposed disclosure, the reasons that such disclosure is required
disclosure suggested by Seller.
6.6 Offer of Employment. Buyer shall offer employment to
certain Designated Employees of the Business to whom Buyer decides,
in its sole discretion, to offer employment. Other than as set
forth in Section 5.12 regarding employees hired by Buyer but not
continuing in Buyer's employ for at least six (6) months, Buyer
shall be responsible for employee-related liabilities relating to
employees it hires and arising after the Closing Date. Any and all
costs, expenses and liabilities arising from or relating to the
failure of Buyer to hire existing employees of the Business shall
be the sole responsibility of Seller
6.7 Continuance of Business During Contingent Payment Period.
Buyer has the present intention to continue to operate the
Business from the date hereof to the date that is three years after
the date hereof (the "Contingent Payment Period"). During the
Contingent Payment Period, Buyer shall use its commercially
reasonable efforts to operate the Business and to perform its
obligations under and obtain the renewal of the Xxxxxx Contract and
New Mexico Contract.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER AND PARENT
The obligations of Seller and Parent under this Agreement are,
at its option, subject to the fulfillment of the following
conditions prior to or on the Closing Date:
7.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall have been true and correct as of
the Effective Date and as of the Closing Date with the same effect
as though such representations and warranties had been made on and
as of the Closing Date, except to the extent changes are permitted
or contemplated pursuant to this Agreement; and
(b) Buyer shall have performed and complied with each and
every covenant and agreement required by this Agreement to be
performed or complied with by it prior to or on the Closing Date.
7.2 Officer's Certificate. Buyer shall have furnished Seller
with a certificate, dated the Closing Date and duly executed by a
duly authorized executive office of Buyer, in form and substance
satisfactory to the Seller, certifying that the conditions set
forth in Sections 7.1(a) and (b) have been satisfied.
7.3 Deliveries. Buyer shall have complied with each and
every one of its obligations set forth in Section 9.2.
7.4 Consents. All of the consents required to be obtained
pursuant to Section 5.10 shall have been obtained.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are, at its
option, subject to the fulfillment of the following conditions
prior to or on the Closing Date:
8.1 Representations, Warranties and Covenants.
(a) Each of the representations and warranties of Seller and
Parent contained in this Agreement shall have been true and correct
as of the Effective Date and as of the Closing Date with the same
effect as though such representations and warranties had been made
on and as of the Closing Date, except to the extent changes are
permitted or contemplated pursuant to this Agreement; and
(b) Each of Seller and Parent shall have performed and
complied with each and every covenant and agreement required by
this Agreement to be performed or complied with by them prior to or
on the Closing Date.
8.2 Officer's Certificate. Each of Seller and Parent shall
have furnished Buyer with a certificate, dated the Closing Date and
duly executed by a duly authorized executive officer of Seller or
Parent, as appropriate, to the effect that the conditions set forth
in Sections 8.1 (a) and (b) have been satisfied.
8.3 Deliveries. Seller shall have complied with each and
every one of its obligations set forth in Section 9.1.
8.4 Consents. All of the consents required to be obtained
and the estoppel certificate referenced in Sections 5.10 shall have
been obtained.
ARTICLE IX
ITEMS TO BE DELIVERED AT THE CLOSING
9.1 Deliveries by Seller. At the Closing, Seller shall
deliver to Buyer the following documents, duly executed by Seller
or such other signatory as may be required by the nature of the
document:
(a) Such deeds, bills of sale, certificates of title,
endorsements, assignments and other good and sufficient instruments
of sale, conveyance and transfer and assignment in form and
substance reasonably satisfactory to Buyer sufficient to sell,
convey, transfer and assign to Buyer all right, title and interest
of Seller in and to the Assets;
(b) Certified copies of resolutions, duly adopted by the
Board of Directors and Shareholders of Seller which shall be in
full force and effect at the time of the Closing, authorizing the
execution, delivery and performance by Seller of this Agreement and
the consummation of the transactions contemplated hereby;
(c) The consents and estoppels obtained pursuant to Section
5.10;
(d) The certificate referred to in Section 8.2;
(e) The Non-Compete Agreements executed by Buyer and each of
Parent, Seller, Xx. Xxxxxx, Xx. Xxxxxx and Xx. Xxxxx;
(f) The Employment Agreement executed by Buyer and Xx.
Xxxxxx, the former of which is attached hereto as Exhibit D;
(g) The Confidentiality and Non-Disclosure Agreements
executed by Buyer and each of Xx. Xxxxxx, Xx. Xxxxx and Xx. Xxxxx,
the form of which is attached hereto as Exhibit E;
(h) A Facility Lease Assignment and Assumption Agreement for
the facility located at 6886 S. Yosemite Street, Englewood,
Colorado (the "Facility") in form satisfactory to Buyer;
(i) An executed Landlord Estoppel Certificate for the
Facility in form satisfactory to Buyer;
(j) An executed license to use the name, "3SI," the form of
which is attached hereto as Exhibit F ("License Agreement");
(k) An opinion of counsel from Seller's counsel, the form of
which is attached hereto as Exhibit G; and
(l) Lien releases for the Assets or evidence satisfactory to
Buyer that the debts underlying such liens have been paid in full.
9.2 Deliveries by Buyer. At the Closing, Buyer shall deliver
to Seller, duly executed by Buyer or other signatory as required by
the nature of the document:
(a) The Initial Payment as set forth in Section 1.4;
(b) Certified copies of resolutions, duly adopted by the
directors of Buyer, which shall be in full force and effect at the
time of the Closing, authorizing the execution, delivery and
performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby;
(c) The certificate referred to in Section 7.2;
(d) The Non-Compete Agreements executed by Buyer and each of
Parent, Buyer, Xx. Xxxxxx, Xx. Xxxxxx and Xx. Xxxxx;
(e) The Employment Agreement executed by Buyer and Xx.
Xxxxxx;
(f) The Confidentiality and Non-Disclosure Agreements
executed by Buyer and each of Xx. Xxxxxx, Xx. Xxxxx and Xx. Xxxxx;
(g) The License Agreement; and
(h) The Facility Lease Assignment and Assumption Agreement.
9.3 Property Tax Proration. The Parties shall prorate and
adjust at Closing the 1999 personal property tax, if any, covering
assets purchased based upon their reasonable best estimate of
amounts owning as of the Closing Date.
9.4 Utilities. Utility charges shall be prorated through
Closing by Seller and Buyer based on their reasonable best
estimates of amounts owing as of the Closing Date.
9.5 Rent. Rent charges for the Facility owed to Landlord by
Seller and rent charges owed to Seller by tenants of the Facility
shall be prorated through the Closing Date by Buyer and Seller
based on the terms of the applicable leases.
ARTICLE X
POST-CLOSING MATTERS
10.1 Collections. Seller will promptly remit to Buyer any
payments received by it on any of the accounts receivable incurred
in the Business on or after the Closing Date. Buyer will promptly
remit to Seller any payments received by it on any of the accounts
receivable incurred in the Business prior to the Closing Date.
Buyer may endorse checks for deposit, payable to Seller, received
in payment of accounts receivable incurred in the Business on or
after the Closing Date.
10.2 CRM Business Segment. Buyer acknowledges and agrees that
Seller will continue to operate under the corporate name, "3SI,
Inc." as a Master Reseller for XXXx.xxx delivering sales, support,
outsourcing and integration services for the Customer Relationship
Management (CRM) business segment of Seller on and after the
Closing Date. The "CRM Business Segment" is defined by the
following software segments:
Customer Service Software (KEWi)
Sales Automation/Contact Management Applications (being developed
by XXXx.xxx)
Marketing Applications (integration of the customer support and
sales automation systems.
Additional Seller Services. At Buyer's option, for a period
of up to six (6) months after the Closing Date, Seller shall
provide to Buyer operational and financial administration services
to support the former employees of Seller hired by Buyer, including
(but not by way of limitation) processing payroll, withholding
taxes, and payment and administration of employee benefits. Such
services shall be provided in a manner consistent with the past
practices of Seller. Buyer shall promptly reimburse Seller for its
out-of-pocket costs incurred in providing such services.
10.4 Right to Offset Contingent Payments: Escrow.
Immediately following the Closing, Seller shall provide Buyer with
a list of the names and current addresses of all creditors of
Seller as of the Closing Date. Buyer shall have the right to
inform each of the Sellers of the purchase of assets and provide
them the opportunity to make a claim against the Contingent
Payments. Other than the Assumed Liabilities for which Buyer shall
be solely responsible, Buyer shall tender to Seller any and all
third party demands for payment Buyer receives for obligations or
liabilities incurred by or owing third parties in a timely manner,
which if not satisfied could reasonably be expected to have an
adverse effect on Buyer, as determined in the reasonable discretion
of Buyer, then Buyer may pay such obligations on behalf of Seller
and offset such amount from any Contingent Payment owing to Seller
under this Agreement. This right of offset shall not be the
exclusive remedy of Buyer to obtain reimbursement from Seller for
such payment. If a third party demands or Buyer reasonably
believes a third party will demand from Buyer payment for an
obligation incurred by or owing from Seller which Seller disputes,
Buyer may place in escrow the amount from any Contingent Payment(s)
owing to Seller reasonably necessary to pay such amount ("Escrow
Amount"). The Escrow Amount shall be held in escrow until either
Seller satisfies such obligation, at which point the Escrow Amount
shall be released to Seller, or if both Seller fails to satisfy
such obligation and Buyer in its sole and reasonable discretion
determines such amount is owing to the third party, then such
Escrow Amount shall be released to Buyer for payment to the third
party.
10.5 Consents After the Closing. Notwithstanding any other
provision of this Agreement, to the extent that the consent or
approval of any third person is required under any Contract in
order to assign any such Contract from Seller to Buyer and such
consent is not obtained prior to the Closing, each of Seller and
Parent shall use its diligent and best efforts after the Closing to
obtain such consent and approval. A Contract will not be assigned
until such consent is obtained. If it is not possible to obtain
such consent or approval for a Contract, then each of Seller and
Parent will use reasonable efforts to establish a mutually
satisfactory arrangement to provide to Buyer the benefits of such
Contract which shall include, among other items, the immediate
payment over to Buyer of any gross proceeds received under such
Contract (without any deductions for taxes or otherwise). If
Seller has not obtained an estoppel certificate on or prior to the
Closing, Seller shall use its diligent and best efforts to obtain
an estoppel certificate from the Landlord of the Facility in form
satisfactory to Buyer.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Seller and Parent. Seller and Parent
shall jointly and severally indemnify, defend and hold Buyer
harmless from and against any and all liabilities or obligations
arising with respect to the Assets or the Business up to the
Closing, excepting only those certain liabilities expressly assumed
by Buyer hereunder. Further, Seller and Parent shall jointly and
severally indemnify, defend and hold harmless Buyer from and
against any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies,
including reasonable attorney's fees and costs (collectively,
"Losses") that Buyer may incur or suffer, which arise, result from,
or relate to: (i) any inaccuracy of either Seller's or Parent's
representations and warranties contained in this Agreement or in
any agreement, instrument or document entered into pursuant hereto
or in connection with the Closing, (ii) any breach of or failure by
either Seller or Parent to perform any of its covenants or
agreements contained in this Agreement or in any agreement,
instrument or document pursuant hereto or in connection with the
Closing, (iii) any violation of environmental or health and safety
or other laws (as in effect at the Closing) arising out of the
ownership or operation of the Business, including the real estate
upon which the Facility is located, based on events or
circumstances occurring or conditions existing prior to the
Closing, regardless of when such claim, liability or loss is
asserted, claimed or sustained, (iv) any liability or obligation of
Seller or Parent not included in the Assumed Liabilities, (v) any
liability or obligation arising out of the litigation with Tatonka
Capital Corporation, its subsidiaries, affiliates or assignees or
(vi) any liability or obligation arising under the liens against
the assets of Seller, including liens held by Community First
Financial, Tatonka Capital Corporation, Storagetek Financial
Services Corporation, Access Graphics, Inc., MicroAge Computer
Centers, Inc. and Information Leasing Corporation. Neither Seller
nor Parent shall have any liability under this Section 11.1 unless
Buyer gives written notice to Seller or Parent, as appropriate,
asserting a claim for such Losses, including reasonably detailed
facts and circumstances pertaining thereto, before the expiration
of two (2) years from the Closing Date, except for claims arising
from breach of: (i) representations and warranties as to taxes and
environmental matters, which shall survive until the expiration of
the applicable statute of limitations.
11.2 Indemnification by Buyer. Buyer shall indemnify, defend
and hold each of Seller and Parent harmless from and against any
and all liabilities or obligations arising with respect to the
Assets or the Business, as conducted by Buyer, after the Closing
Date, excepting claims asserted after the Closing Date which relate
to products sold or actions taken by Seller prior to the Closing
Date. Further, Buyer shall indemnify, defend and hold harmless
each of Seller and Parent from and against any and all Losses that
Seller or Parent may incur or suffer, which arise, result from or
relate to: (i) any inaccuracy of Buyer's representations and
warranties contained in this Agreement or in any agreement,
instrument or document pursuant hereto or in connection with the
Closing, (ii) any breach of or failure by Buyer to perform any of
its covenants or agreements contained in this Agreement or in any
agreement, instrument or document pursuant hereto or in connection
with the Closing, (iii) or any act, omission or breach by Buyer
relating to any of the Assumed Liabilities and occurring after the
Closing Date. Buyer shall not have any liability under this
Section 11.2 unless Seller or Parent, as appropriate, gives written
notice to Buyer asserting a claim for such Losses, including
reasonably detailed facts and circumstances pertaining thereto,
before the expiration of two (2) years from the Closing Date.
11.3 Defense of Third Party Actions.
(a) Promptly after receipt of notice of any written assertion
of a claim, or the commencement of any action, suit, or proceeding,
by a third party against a party to this Agreement ("Third Party
Action"), the party in receipt of such notice who believes that it
is entitled to indemnification under this Article XI (the
"Indemnified Party") shall give notice to the other party hereto
(the "Indemnifying Party") of such action. The failure of the
Indemnified Party to give such notice to the Indemnifying Party
will not relieve the Indemnifying Party of any liability hereunder
unless it was prejudiced thereby, nor will it relieve it of any
Liability which it may have other than under this Article XI.
(b) Upon receipt of a notice of a Third Party Action, the
Indemnifying Party shall have the right, at its option and at its
own expense, to participate in and be present at the defense of
such Third Party Action, but not to control the defense,
negotiation or settlement thereof, which control shall remain with
the Indemnified Party, unless the Indemnifying Party makes the
election provided in paragraph (c) below.
(c) By written notice within 20 days after receipt of a
notice of a Third Party Action, an Indemnifying Party may elect to
assume control of the defense, negotiation and settlement thereof,
with counsel reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party agrees (a) to
promptly indemnify the Indemnified Party for its expenses to date,
and (b) to hold the Indemnified Party harmless from and against any
and all Losses caused by or arising out of any settlement of the
Third Party Action approved by the Indemnifying Party or any
judgment in connection with that Third Party Action. The
Indemnifying Party shall not in the defense of the Third Party
Action enter into any settlement which does not include as a term
thereof the giving by the third party claimant of an unconditional
release of the Indemnified Party, or consent to entry of any
judgment except with the consent of the Indemnified Party.
(d) Upon assumption of control of the defense of a Third
Party Action under paragraph (iii) above, the Indemnifying Party
will not be liable to the Indemnified Party hereunder for any legal
or other expenses subsequently incurred in connection with the
defense of the Third Party Action, other than reasonable expenses
of investigation.
(e) If the Indemnifying Party does not elect to control the
defense of a Third Party Action under paragraph (c), the
Indemnifying Party shall promptly reimburse the Indemnified Party
for expenses incurred by the Indemnified Party in connection with
defense of such Third Party Action, as and when the same shall be
incurred by the Indemnified Party.
(f) Any party who has not assumed control of the defense of
any Third Party Action shall have the duty to cooperate with the
party which assumed such defense.
11.4 Miscellaneous.
(a) Either party hereto shall be entitled to indemnification
hereunder unless the matter giving rise to the applicable
liability, payment, obligation or expense was clearly disclosed in
writing to the Indemnified Party prior to the Closing Date.
(b) If any Loss is recoverable under more than one provision
hereof, the Indemnified Party shall be entitled to assert a claim
for such Loss until the expiration of the longest period of time
within which to assert a claim for Loss under any of the provisions
which are applicable.
(c) Buyer shall have the right, but not the obligation, to
offset amounts due from Seller or Parent, as appropriate, under
this Article XI against the Contingent Payment obligations.
ARTICLE XII
MISCELLANEOUS
12.1 Termination of Agreement. This Agreement may be
terminated at any time on or prior to the Closing Date: (a) by the
mutual consent of Seller and Buyer; (b) by either Buyer or Seller
if the Closing has not occurred on or before June 30, 1999;
provided at the time of termination the party desiring to terminate
is not then in breach of this Agreement; or (c) by Buyer at any
time prior to May 31, 1999 if Buyer, prior to such date, determines
in its sole discretion that the results of its due diligence
investigation of Seller is in any way unsatisfactory. A
termination pursuant to this Section 12.1 shall not relieve any
Party of any liability it otherwise has for a breach of this
Agreement. As a condition to any termination by Buyer hereunder,
all information and materials relating to the Business and to which
Buyer obtained access during the negotiations leading to, or
following, execution of this Agreement, and any other writings
containing excerpts of such materials or information, and any or
all xxxxx thereof, shall be delivered to Seller.
12.2 Expenses. Each Party hereto shall bear all of its
expenses incurred in connection with the transactions contemplated
by this Agreement, including without limitation, accounting and
legal fees incurred in connection herewith.
12.3 Preservation of Records. Buyer shall preserve and make
available (including the right to inspect and copy) to Seller, its
attorneys and accountants, for a reasonable period of time from and
after the Closing Date (but in any event at least until all
applicable statutes of limitation with respect to audits by taxing
authorities have expired) and during normal business hours, such of
the books, records, files, correspondence, memoranda and other
documents transferred pursuant to this Agreement as Seller may
reasonably require in connection with any legitimate purpose,
including, but not limited to, the preparation of tax reports and
returns, the preparation of financial statements and the
calculation of the Contingent Payments and Buyer shall at its own
expense cause its employees to fully cooperate and to provide such
reasonable assistance as may be requested by Seller. Buyer shall
notify Seller prior to the destruction of such records and shall
offer to return such records to the Seller.
12.4 Non-Assignable Contracts. Nothing contained in this
Agreement shall be construed as an assignment or an attempted
assignment of any Contract which is by law non-assignable without
the consent of the other party or parties thereto, unless such
consent shall be given.
12.5 Further Assurances. From time to time prior to, on and
after the Closing Date, each Party hereto will execute all such
instruments and take all such actions as any other Party, being
advised by counsel, shall reasonably request, without payment of
further consideration, in connection with carrying out and
effectuating the intent and purpose hereof and all transactions and
things contemplated by this Agreement, including without limitation
the execution and delivery of any and all confirmatory and other
instruments in addition to those to be delivered on the Closing
Date, and any and all actions which may reasonably be necessary or
desirable to complete the transactions contemplated hereby. 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.
ARTICLE XIII
DISPUTE RESOLUTION
13.1 Direct Discussion. In the event of any dispute, claim,
question, or disagreement arising out of or relating to this
Agreement (a "Dispute"), the Parties involved in such Dispute shall
use their best efforts to settle such Dispute. To this effect,
senior management of the Parties involved shall consult and
negotiate with each other in good faith to attempt to reach a just
and equitable solution satisfactory to both parties.
13.2 Mediation. In the event that the Dispute cannot be
settled through direct discussion within a period of thirty (30)
days (except as the parties may otherwise agree), the Parties to
the Dispute shall endeavor to settle the Dispute in an amicable
manner by mediation under the Commercial Mediation Rules of the
American Arbitration Association.
13.3 Arbitration. In the event that the Dispute cannot be
settled through mediation under Section 13.2 above, the Dispute
shall be submitted to binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association, and the procedures set forth below. In the event of
any inconsistency between the Rules of the American Arbitration
Association and the procedures set forth below, the procedures set
forth below shall control. Judgment upon the award rendered by the
arbitrators may be enforced in any court having jurisdiction
thereof.
(a) Location. The location of the arbitration shall be in
San Diego County, California.
(b) Selection of Arbitrators. The arbitration shall be
conducted by a panel of three neutral arbitrators who are
independent and disinterested with respect to the Parties, this
Agreement, and the outcome of the arbitration. Each Party shall
appoint one neutral arbitrator, and these two arbitrators so
selected by the Parties shall then select the third arbitrator. If
one Party has given written notice to the other Party as to the
identity of the arbitrator appointed by the Party, and the Party
thereafter makes a written demand on the other Party to appoint its
designated arbitrator within the next thirty days, and the other
Party fails to appoint its designated arbitrator within thirty-one
days after receiving said written demand, then the arbitrator who
has already been designated shall appoint the other two
arbitrators.
(c) Discovery. Unless the Parties mutually agree in writing
to some additional and specific pre-hearing discovery, the only
pre-hearing discovery shall be (a) reasonably limited production of
relevant and non-privileged documents, and (b) the identification
of witnesses to be called at the hearing, which identification
shall give the witness's name, general qualifications and position,
and a brief statement as to the general scope of the testimony to
be given by the witness. The arbitrators shall decide any disputes
and shall control the process concerning these pre-hearing
discovery matters. Pursuant to the Rules of the American
Arbitration Association, the parties may request the arbitrator or
other person authorized by law to subpoena witnesses and documents
for presentation at the hearing.
(d) Case Management. Prompt resolution of any dispute is
important to the Parties; and the Parties hereto agree that the
arbitration of any dispute shall be conducted expeditiously. The
arbitrators are instructed and directed to assume case management
initiative and control over the arbitration process (including
scheduling of events, pre-hearing discovery and activities, and the
conduct of the hearing), in order to complete the arbitration as
expeditiously as is reasonably practical for obtaining a just
resolution of the Dispute.
(e) Legal Representation. Counsel to the Parties in
connection with the negotiation of and consummation of the
transactions under this Agreement shall be entitled to represent
their respective party in any and all proceedings under this
Section 13.3 or in any other proceeding. Seller and Buyer,
respectively, waive the right and agree they shall not seek to
disqualify any such counsel in any such proceeding for any reason,
including but not limited to the fact such counsel or any member
thereof may be a witness in any such proceeding or possess or have
learned of information of a confidential or financial nature of the
party whose interest are adverse to the party represented by such
counsel in any such proceeding.
(f) Remedies. The arbitrators may grant any legal or
equitable remedy or relief that the arbitrators deem just and
equitable, to the same extent that remedies or relief could be
granted by a state or federal court, provided however, that no
punitive damages may be awarded. The decision of any two of the
three arbitrators appointed shall be binding upon the parties.
(g) Expenses. The expenses of the arbitration, including the
arbitrators' fees, expert witness fees, and attorney's fees, may be
awarded to the prevailing party, in the discretion of the
arbitrators, or may be apportioned between the parties in any
manner deemed appropriate by the arbitrators. Unless and until the
arbitrators decide that one Party is to pay for all (or a share) of
such expense, both Parties shall share equally in the payment of
the arbitrators' fees as and when billed by the arbitrators.
(h) Confidentiality. Except as set forth below, the Parties
shall keep confidential the fact of the arbitration, the dispute
being arbitrated, the decision of the arbitrators, and any
documents produced by the parties in the course of the arbitration.
Notwithstanding the foregoing, the parties may disclose
information about the arbitration to persons who have a need to
know, such as directors, trustees, management employees, witnesses,
experts, investors, attorneys, lenders, insurers, and others who
may be directly affected. Once the arbitration award has become
final, if the arbitration award is not promptly satisfied, then the
prevailing party may, notwithstanding the foregoing, disclose
information about the arbitration only to the extent necessary to
obtain judicial enforcement of the award.
ARTICLE XIV
GENERAL PROVISIONS
14.1 Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall be binding upon and inure to
the benefit of the Parties hereto, and their respective
representative, successors and assigns. No Party hereto may assign
any of its rights or delegate any of its duties hereunder without
the prior written consent of the other Party, and any such
attempted assignment or delegation without such consent shall be
void. Seller agrees not to unreasonably withhold its consent to
any assignment by Buyer of its rights hereunder prior to Closing to
a corporation or other entity controlled by Buyer, provided that
(a) such assignee will assume all obligations of Buyer hereunder,
without Buyer being released, and (b) such assignment will not, in
Seller's reasonable judgment, delay in any material way or make
more doubtful the Closing.
14.2 Amendments: Waivers. The terms, covenants,
representations, warranties and conditions of this Agreement may be
changed, amended modified, waived, discharged or terminated only by
a written instrument executed by the Party waiving compliance. The
failure of any Party at any time or times to require performance of
any provision of this Agreement shall in no manner affect the right
of such Party at a later date to enforce the same. No waiver by
any Party of any condition or the breach of any provision, term,
covenant, representation or warranty contained in this Agreement,
whether by conduct or otherwise, in any one or more instance shall
be deemed to be or construed as a further or continuing waiver of
any such condition or of the breach of any other provision, term,
covenant, representation or warranty of this Agreement.
14.3 Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be
in writing (which shall include notice by telex or facsimile
transmission) and shall be deemed to have been duly made and
received when personally served, or when delivered by Federal
Express or a similar overnight courier service, expenses prepaid,
or, if sent by telex, graphic scanning or other facsimile
communications equipment, delivered by such equipment, addressed as
set forth below:
(a) If to Seller or Parent, then to:
3SI Holdings, Inc.
0000 Xxxxx Xxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxx & Xxxx, LLP
000 X. Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
(b) If to Buyer, then to:
PC Specialists, Inc.
0000 Xxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
Xxxx, Forward, Xxxxxxxx & Scripps, LLP
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Telephone: (000) 000-0000
Fax: (000) 000-0000
Any Party may alter the address to which communications are to be
sent by giving notice of such change of address in conformity with
the provisions of this Section 14.3 providing for the giving of
notice.
14.4 Announcements. Neither Party shall make any announcement
regarding this Agreement or any of its terms without the prior
written consent of the other Party. The Parties acknowledge and
agree that Seller is a Section 12(g) reporting company under the
Act and subject to the disclosure requirements of the Act.
14.5 Captions. The captions of Articles and Sections of this
Agreement are for convenience only and shall not control or affect
the meaning or construction of any of the provisions of this
Agreement.
14.6 Governing Law. This Agreement and all questions relating
to its validity, interpretation, performance and enforcement shall
be governed by and construed in accordance with the laws of the
State of California.
14.7 Entire Agreement. This Agreement and the other documents
delivered hereunder constitute the full and entire understanding
and agreement between the Parties with regard to the subject matter
hereof, and supersedes all prior agreements, understandings,
inducements or conditions, express or implied, oral or written,
relating to the subject matter hereof, except as herein contained.
The express terms hereof control and supersede any course of
performance and/or usage of trade inconsistent with any of the
terms hereof.
14.8 Execution; 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. This Agreement shall become binding when one or more
counterparts hereof, individually or taken together, shall bear the
signatures of all of the Parties reflected hereon as the
signatories.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
duly executed by their duly authorized signatories, all as of the
day and year first above written.
SELLER: 3SI, INC., a Colorado Corporation
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
PARENT: 3SI HOLDINGS, INC., a Colorado corporation
By: /s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx, President
PARENT: PC SPECIALISTS, INC., a California Corporation
By: /s/ Xxxxx Xxxxx
Xxxxx Xxxxx, President
