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ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT is entered into as of this 2nd day
of May, 2001 between Delsoft Consulting, Inc., a Georgia corporation ("Seller"),
and Mega Professionals International, Inc., a California corporation ("Buyer").
WHEREAS, Seller is, among other things, engaged through its Consulting
Division in the development, marketing, licensing, and sale of Business Services
(as herein defined); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, all of the assets that are essential to or useful for developing,
marketing, licensing and selling Business Services and otherwise continuing the
operations of the Consulting Division as a going concern, subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
1.Definitions
For all purposes of this Purchase Agreement, certain capitalized terms
specified in Article 28 shall have the meanings set forth in Article 28, except
as otherwise expressly provided.
2. Sale and Purchase of Assets; Assumption of Liabilities
2.1 Asset Sale
On the basis of the representations, warranties and agreements contained
herein, and subject to the terms and conditions hereof, Seller agrees to sell,
assign, transfer, convey and deliver to Buyer, and Buyer agrees to purchase from
Seller, the Assets at the Closing.
2.1.1 Assets
The Assets which are being purchased and sold pursuant to this Purchase
Agreement are:
(a) all of Seller's Intellectual Property or other proprietary
rights and all Business Trademarks and associated goodwill,
including the right to use the name "Delsoft Consulting, Inc.,"
pertaining to the Consulting Division, other than the Excluded
Assets (as defined below);
(b) all of Seller's Intellectual Property necessary for
developing, marketing, maintaining or licensing of Business
Services, or otherwise necessary for the operation of the
Consulting Division;
(c) all of Seller's accounts receivables accruing on or after
January 15, 2001. Such receivables shall not include any accounts
receivables, awards or judgments in favor of or due to be paid to
Seller that accrued prior to January 15, 2001.
(d) all licenses, agreements and other arrangements under which
Seller has the right to use any Third Party Intellectual Property
Rights used or held for use in the conduct of the business of the
Consulting Division or necessary for developing and marketing the
provision of Business Services (collectively, the "Licenses");
(e) except as set forth on Schedule 2.1.1(e), all past and
present mailing lists, customer lists, vendor lists, client
lists, warranty information, standard forms of documents, manuals
of operation or business procedures, and other similar
information to the extent used or held for use in the operation
of the business of the Consulting Division;
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(f) all employees of the Consulting Division and rights over any
employee contracts between Seller and such employee;
(g) all Seller's H1-B visas and employee contracts currently held
by Seller and any other immigration filings currently pending;
(1) For Immigration purposes, Buyer agrees to assume all of
the rights, duties, obligations and assets from Seller and will
continue to operate a similar business, consistent with INS's
concept of Successor-In-Interest.
(h) certain tangible personal property used or held for use in
the operation of the business of the Consulting Division,
including telephone and fax numbers, as set forth on Schedule
2.1.1(h);
(i) any preferred vendor status held by Seller in relation to the
business of the Consulting Division as set forth on Schedule
2.1.1(i);
(j) all Seller's rights related to the Seller's website; and
(k) all books and records of Seller (including all contracts,
commitments, reports of examination and other records and
information, including on discs, tapes and other data-storing
media, but excluding management information systems not used
exclusively in the business of the Consulting Division) used or
held for use in the conduct of the business of the Consulting
Division, but in all cases excluding the originals of any
personnel records.
2.1.2 Excluded Assets
Notwithstanding the provisions of Section 2.1.1, or any other article of this
Purchase Agreement, the Assets shall not include, and Seller is not selling,
transferring, assigning, conveying or delivering to Buyer, and Buyer is not
purchasing, acquiring or accepting from Seller, any rights or assets applicable
to the non-Consulting Division portion of Seller's operations, including, but
not limited to, the following (the "Excluded Assets"):
(a) any of Seller's cash, bank deposits or similar cash items
existing as of the close of business on the Closing Date;
(b) any fixed assets or other tangible personal property of
Seller that is not on Schedule 2.1.1(h);
(c) any leaseholds or other interests in real property;
(d) any Intellectual Property used in products and services of
Seller other than the Business Services related to the Consulting
Division; and
(e) any accounts receivables or claim, right or interest of
Seller in or to any refund, rebate, abatement or other recovery
for U.S. federal, state, local or foreign net income, franchise,
gross income, alternative or add-on minimum, gross income, gross
receipts, sales, use, ad valorem, transfer, profits, license,
withholding, payroll, employment, excise, severance, stamp,
occupation, premium, environmental, windfall profit, real or
personal property taxes, customs, duties or other taxes,
governmental fees or other like assessment or charges of any kind
whatsoever, together with any interest due Seller thereon, for
any periods prior to the January 15, 2001;
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2.2 Purchase Price
For and in consideration of the conveyances and assignments described herein and
in addition to the assumption of liabilities as set forth in Section 2.7, Buyer
agrees to pay to Seller, and Seller agrees to accept from Buyer, a purchase
price (the "Purchase Price") equal to the greater of:
(a) The total outstanding balance due and payable on the Closing
Date, as hereinafter defined, on a Promissory Note between the
Seller and Comerica Bank dated March 1, 1998 (the "Promissory
Note"). Seller hereby waives any adjustments or credits in its
favor against Comerica Bank, and agrees to modify the Promissory
Note to provide that the amount owing to Comerica Bank as of
March 1, 2001 shall not be less than $90,625.25 nor more than
$250,000; or
(b) An amount as set forth on Schedule 2.2(b).
2.3 Excess Payments
In the event that Buyer makes any payments to Seller, or to any other
entity on behalf of, or for the benefit of Seller, or guarantees any amounts
which guaranty results in the extension of additional credit to Seller in excess
of the purchase price set forth in Article 2.2 above, said payments shall be
deemed a loan to Seller, the terms of which shall be as set forth in the
Promissory Note.
2.4 Credit Against Purchase Price
There shall be credited against the Purchase Price to be paid by Buyer, an
amount equal to any amounts paid or guaranteed pursuant to Articles 2.2 or 2.3
by Buyer to Seller or to Comerica Bank or any other entity on behalf of Seller
prior to the Closing Date.
2.5 Option to Convert
At any time from the date of the letter of intent entered into between the
Seller and Buyer dated February 28, 2001 ("LOI") until the Closing Date, Buyer
shall have the option to convert any amount paid or guaranteed pursuant to
Articles 2.2 or 2.3 into shares of common stock of Seller, at a conversion price
(the "Conversion Price") equal to the lesser of:
(i) 40% discount from the closing bid price on the date of the
LOI; or
(ii) 40% discount from the closing bid price on the date of the
conversion.
2.6 Merger Option
(i) From the date of the LOI until the Closing Date, or May 1,
2001, whichever is sooner, Buyer shall have the exclusive option,
("Option Period"), of merging with and into the Seller.
(ii) From the Closing Date, or May 1, 2001, whichever is sooner,
and for 10 months thereafter, Buyer shall have the right of first
refusal for any proposed merger between Seller and a third party.
(iii) For purposes of any proposed merger between Seller and
Buyer, each share of the Buyer shall be converted into 30 shares of
Seller. This ratio is based on Buyer's net assets (Cash plus Accounts
Receivable less Accounts Payable) being in excess of $500,000 and the
Buyer's year 2000 sales being approximately $1.5 million. This ratio
is also based on Buyer having outstanding options to purchase (in the
aggregate) no more than 300,000 shares of common stock. Should these
figures not be as stated, a proportional adjustment will be made in
the conversion rate of the stock.
(iv) For a period of 12 months after the effective date of any
merger of Buyer and Seller, there shall not be any reverse split in
excess of a 10 to 1 ratio.
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2.7 Assumption of Liabilities
At the Closing, Buyer shall assume only the liabilities and obligations of
Sellers to be performed after the Closing Date under the contracts, agreements
and leases acquired by the Buyer under the terms of this Agreement.
3.Representations and Warranties by Seller
Seller represents and warrants to Buyer as follows:
3.1 Organization and Standing
Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Georgia and is duly qualified to do
business as a foreign corporation and is in good standing under the laws of
the State of Georgia. Neither the nature of the business conducted by
Seller, nor the character of the properties owned, leased or otherwise held
by Seller makes any such qualification necessary in any other state,
country, territory or jurisdiction. Seller has the full and unrestricted
power and authority, corporate and otherwise, to own, lease and otherwise
to hold and operate the Assets, to carry on the business of the Consulting
Division as now conducted, and to enter into and perform the terms of this
Agreement, the other Seller Documents and the transactions contemplated
hereby and thereby.
3.2 Authorization
The execution, delivery and performance of this Agreement and of the other
Seller Documents, and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
actions of Seller (none of which actions has been modified or rescinded and
all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery each other Seller Document
will constitute, a valid and binding agreement and obligation of Seller,
enforceable in accordance with its respective terms, except to the extent
that enforcement of the rights and remedies created hereby and thereby may
be limited by bankruptcy and other similar laws of general application
affecting the rights and remedies of creditors and by general equity
principles. Except as specified in Section 3.5, the execution, delivery and
performance by Seller of this Agreement and of the other Seller Documents
will not require the consent, approval or authorization of any person,
entity or governmental authority.
3.3 Litigation; Compliance with Law
Except as set forth in Schedule 3.3, there is no action, suit,
investigation, claim, arbitration or litigation pending or threatened
against or involving either Seller, the Assets, or the Consulting Division,
or the propriety of this Agreement or any other Seller Document, at law or
in equity, or before or by any court, arbitrator or governmental authority,
and Seller is not operating under or subject to any order, judgment, decree
or injunction of any court, arbitrator or governmental authority. No
governmental agency or authority has at any time challenged, questioned, or
commenced or given notice of intention to commence any investigation
relating to, the legal right of Seller to conduct the business of the
Consulting Division as now or heretofore conducted by Seller. Seller has
complied and is in compliance with all laws, ordinances, regulations,
awards, orders, judgments, decrees and injunctions applicable to Seller, to
the Assets, and to its business and operations, including all federal,
state and local laws, ordinances, regulations and orders pertaining to
employment or labor, safety, health, environmental protection, zoning and
other matters, the violation of which would materially adversely affect the
Assets, the Consulting Division, or Seller's ability to effect the
transactions contemplated by this Agreement. Seller has obtained and holds
all permits, licenses and approvals (none of which has been modified or
rescinded and all of which are in full force and effect) from all
governmental authorities necessary in order to conduct its business and
operations as presently conducted and to own, use and maintain the Assets.
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3.4 Financial Statements and Condition; Liabilities
(a) Attached hereto as Schedule 3.4 is the Seller's Form 10-KSB for the
fiscal year ended June 30, 2000 which contains the Seller's statement of
the results of operations (the "Business Operating Statements"). The
Business Operating Statements have been compiled from and are in accordance
with Seller's books and records for the Consulting Division (which books
and records are correct and complete) in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved, in all material respects (except for the omission of footnotes
and as otherwise disclosed on Schedule 3.4), and fairly present in all
material respects the results of operations (before interest and income
taxes) and of the Consulting Division for the periods then ended, and are
correct and complete in all material respects. The amounts reflected in the
Business Operating Statements (other than as of and for the period ended
June 30, 2000) are as included in Seller's audited consolidated financial
statements for the same periods covered thereby.
(b) Since June 30, 2000, Seller has not made any contract, agreement or
commitment or incurred any obligation or liability (contingent or
otherwise) relating to the Assets, nor has there been any discharge or
satisfaction of any obligation or liability owed by Seller, which is not in
the ordinary course of business or which is inconsistent with past business
practices, nor has there occurred any loss or material injury to the Assets
as the result of any fire, accident, act of God or the public enemy, or
other casualty, or any adverse material change in the Assets or in the
condition (financial or otherwise) of the Consulting Division.
3.5 Assets; Consents
(a) Seller is the sole and exclusive legal and equitable owner of and has
good, marketable, and insurable (at standard rates) title to the Assets
free and clear of any Encumbrances, except for those Encumbrances set forth
in Schedule 3.5(a), which shall be removed prior to or contemporaneously
with the Closing.
(b) On the Closing Date, Buyer shall acquire good, marketable and insurable
title to, and all right, title and interest in, the Assets, free and clear
of all Encumbrances. The Assets so acquired, at the Closing shall
constitute all of the real, personal and mixed assets and property, both
tangible and intangible, excluding the Excluded Assets, which are used,
held for use, necessary or useful for the business and operations of the
Consulting Division.
(c) All of the Assets to be sold hereunder are transferable by Seller's
sole act and deed, and no consent on the part of any other person is
necessary to validate the transfer to Buyer.
(d) Nothing in this Agreement shall be construed as an attempt or agreement
to assign any Asset, including any license, certificate, approval,
authorization, agreement, contract, lease, or other right, which by its
terms or by law is nonassignable, or is nonassignable without the consent
of a third party, unless and until a consent shall be given from the party
whose consent would be required ("Nonassignable Assets").
3.6 Intellectual Property; Licenses
(a) To the best knowledge of the Seller, Seller owns, or is licensed or
otherwise possesses all necessary rights to use, all Intellectual Property
that is used in the business of the Consulting Division ("Consulting
Division Intellectual Property"). Except as set forth in Schedule 3.6(a),
Seller owns all Consulting Division Intellectual Property free and clear of
Encumbrances.
(b) To the best knowledge of the Seller, Schedule 3.6(b) lists all (i)
patents, patent applications, registered and unregistered trademarks, trade
names and service marks, registered and material unregistered copyrights
(including all computer software) included in the Consulting Division
Intellectual Property, including the jurisdictions in which each such item
of Consulting Division Intellectual Property has been issued or registered
or in which any application for such issuance and registration has been
filed, (ii) licenses, sublicenses and other agreements as to which Seller
is a party and pursuant to which any person is authorized to use any
Consulting Division
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Intellectual Property, and (iii) licenses, sublicenses and other agreements
as to which Seller is a party and pursuant to which Seller is authorized to
use any third party patents, trademarks or copyrights, including software
which are incorporated in, are or form a part of any Business Product, or
otherwise are necessary for research and development or any operations of
the Consulting Division ("Third Party Intellectual Property Rights").
(c) To the best knowledge of the Seller, except as set forth in Schedule
3.6(c), there are no royalties, fees or other payments payable by Seller to
any person by reason of the ownership, use, sale or disposition of
Intellectual Property in the conduct of the business of the Consulting
Division. Schedule 3.6(c) identifies all licenses or similar agreements
involving Third Party Intellectual Property Rights which require third
party consent for assignment to Buyer or require a new license to Buyer.
(d) To the best knowledge of the Seller, there is no unauthorized use,
disclosure, infringement or misappropriation of any Consulting Division
Intellectual Property, any trade secret material to the Consulting
Division, or any Intellectual Property right of any third party to the
extent licensed by or through the Consulting Division, or Seller on behalf
of the Consulting Division, by any third party, including any employee or
former employee of Seller. Seller represents and warrants that it has the
right to bring an action for the infringement or misappropriation of all of
Seller's Intellectual Property that pertains to the Business Products or
the Business Services or otherwise is used in the operation of the
Consulting Division.
(e) To the best knowledge of the Seller, Seller is not, nor will it be as a
result of the execution and delivery of this Agreement or the performance
of Seller's obligations under this Agreement, in breach of any license,
sublicense or other agreement relating to the Consulting Division
Intellectual Property or Third Party Intellectual Property Rights.
(f) To the best knowledge of the Seller, the conduct of the business of the
Consulting Division does not infringe any patent, trademark, service xxxx,
copyright, trade secret or other Intellectual Property right of any third
party; and the Seller has not advised any third party that such third party
may be infringing any Consulting Division Intellectual Property or
breaching any license or agreement involving Consulting Division
Intellectual Property.
(g) To the best knowledge of the Seller, except as set forth on Schedule
3.6(g), any third party to which Seller has disclosed or allowed access to
proprietary and confidential Consulting Division Intellectual Property has
executed a confidentiality and nondisclosure agreement with respect to such
Intellectual Property.
3.7 Contracts
To the best knowledge of the Seller, set forth and described in Schedule
3.7 are all of the Contracts and Licenses (both written and verbal)
relating to the Assets, to the Consulting Division or to the business and
operations thereof. Seller has not entered into any agreement or
understanding, whether written or oral, which waives any of its rights
under any such Contract or License. Seller has delivered true and complete
copies of all such Contracts or Licenses relating to all Seller's contracts
as Buyer may reasonably request (and all amendments and modifications
thereto) to Buyer prior to the execution of this Agreement. The unperformed
obligations ascertainable from the terms on the face of such Contracts and
Licenses (and such amendments or modifications thereto), are the only
existing unperformed obligations thereunder. Each Contract and License is
in full force and effect, and constitutes a valid and binding obligation
of, and is legally enforceable in accordance with its terms against, the
parties thereto, except to the extent that enforcement of the rights and
remedies created hereby and thereby may be limited by bankruptcy and other
similar laws of general application affecting the rights and remedies of
creditors and by general equity principles. Seller has complied with all of
the provisions of such Contracts and Licenses and is not in default
thereunder, and there has not occurred any event which (whether with or
without notice, lapse of time, or the happening or occurrence of any other
event) would constitute such a default. There has not been (i) any failure
of any party to any such Contract or License to comply with all provisions
thereof, (ii) any default by any party thereunder, (iii) any threatened
cancellation
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thereof, (iv) any outstanding dispute thereunder, or (v) any basis for any
claim of breach or default thereunder.
3.8 Conflicts
To the best knowledge of the Seller, except as set forth in Schedule 3.8,
the execution and delivery of this Agreement and the other Seller
Documents, the fulfillment of and the compliance with the respective terms
and provisions of each, and the consummation of the transactions described
in each, do not and will not conflict with or violate any law, ordinance,
regulation, order, award, judgment, injunction or decree applicable to
Sellers, to the Assets or to the Consulting Division, or conflict with or
result in a breach of or constitute a default under any of the terms,
conditions or provisions of Seller's articles of incorporation or bylaws,
or any contract, agreement, lease, commitment, or understanding to which
Seller is a party or by which Seller is bound or to which any of the Assets
or the Consulting Division is subject, or result in the acceleration of any
indebtedness or in the creation of any Encumbrance upon the Assets.
3.9 Taxes
To the best knowledge of the Seller, the Company has filed all material Tax
Returns required to be filed through the date hereof. All Taxes shown as
due on such Tax Returns have been paid.
3.10 Environmental Matters
To the best knowledge of the Seller, with respect to environmental matters:
(a) the operations of the Consulting Division have been and are in
compliance with all applicable Environmental Laws and all permits, licenses
or other authorizations issued pursuant to Environmental Laws
("Environmental Permits"), and Seller has obtained all Environmental
Permits necessary to operate the business;
(b) there are no judicial or administrative proceedings pending or, to the
knowledge of Seller, threatened against Seller alleging the violation of
any Environmental Laws;
(c) there are no investigations pending or, to the knowledge of Seller,
threatened against Seller which could lead to the imposition of any
liability pursuant to any Environmental Laws; and
(d) Seller has not received any notice claiming any violation of any
Environmental Laws or any Environmental Permit.
3.11 Labor Relations
(a) To the best knowledge of the Seller, there are no strikes, work
stoppages, grievance proceedings, union organization efforts, or other
controversies pending or threatened between Seller and any of its employees
or agents or any union or collective bargaining unit. Seller has complied
and is in compliance in all material respects with all laws and regulations
relating to the employment of labor, including, without limitation,
provisions relating to wages, hours, collective bargaining, occupational
safety and health, equal employment opportunity, and the withholding of
income taxes and social security contributions. Except as set forth in
Schedule 3.11(a) hereto, there are no collective bargaining agreements,
employment agreements between Seller and any of its respective employees or
professional service contracts not terminable at will relating to the
Consulting Division. The consummation of the transactions contemplated
hereby will not cause Buyer to incur or suffer any liability relating to,
or obligation to pay, severance, termination, or other payments to any
person or entity. Except as set forth in Schedule 3.11(a) hereto, no
employee of Seller has any contractual right to continued employment by
Seller following consummation of the transactions contemplated by this
Agreement. Seller has previously delivered to Buyer an accurate and
complete list, dated as of the date of this agreement, of all employees of
the Consulting Division, and the positions with Seller and the rate of
compensation (including salary, bonuses and commissions) of each such
employee.
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(b) To the best knowledge of the Seller, except as set forth in Schedule
3.11(b), neither Seller nor any of Seller's employees is a party to any
contract containing provisions that limit in any way the ability of Seller
or any of Seller's employees prior to the Closing, or Buyer or any of
Seller's employees who become employees of Buyer after the Closing to
engage in the Consulting Division business.
(c) To the best knowledge of the Seller, except as set forth on Schedule
3.11(c), no Consulting Division employees have brought any claims or
grievances against Seller, whether through a formal or informal grievance
process.
3.12 Disclosure
To the best knowledge of the Seller, all facts of material importance to
the Assets and to the Consulting Division have been fully and truthfully
disclosed to Buyer in this Agreement. No representation or warranty by
Seller in, and no document, statement, certificate, opinion letter,
schedule or exhibit to be furnished or delivered to Buyer pursuant to, this
Agreement or any other Seller Document contains or will contain any
material untrue or misleading statement of fact or omits or will omit any
fact necessary to make the statements contained herein or therein not
materially misleading.
4.Representations and Warranties by Buyer
Buyer represents, warrants and covenants to Sellers as follows:
4.1 Organization and Standing
Buyer is a corporation duly organized, validly existing and in good
standing under the laws of the state of California. Buyer has all the
requisite corporate power and corporate authority to enter into and perform
the terms of this Agreement and the other Buyer Documents and to carry out
the transactions contemplated hereby and thereby.
4.2 Authorization
The execution, delivery and performance of this Agreement and of the other
Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby, have been duly and validly authorized by all necessary
actions of Buyer (none of which actions has been modified or rescinded and
all of which actions are in full force and effect). This Agreement
constitutes, and upon execution and delivery each such other Buyer Document
will constitute, a valid and binding agreement and obligation of Buyer,
enforceable in accordance with its respective terms, except to the extent
that enforcement of the rights and remedies created hereby and thereby may
be limited by bankruptcy and other similar laws of general application
affecting the rights and remedies of creditors and by general equity
principles. The execution, delivery and performance of this Agreement by
Buyer will not require the consent, approval or authorization of any
person, entity or governmental authority which has not been received as of
the date of this Agreement.
4.3 Compliance with Law
The execution and delivery of this Agreement, the fulfillment of and the
compliance with the respective terms and provisions of this Agreement, and
the consummation of the transactions described in this Agreement, do not
and will not conflict with or violate any law, ordinance, regulation,
order, award, judgment, injunction or decree applicable to Buyer, or
conflict with or result in a breach of or constitute a default under any of
the terms, conditions or provisions of Buyer's articles of incorporation or
bylaws, or any contract, agreement, lease, commitment, or understanding to
which Buyer is a party or by which Buyer is bound. Except as specified on
Schedule 4.3, the execution, delivery and performance by Buyer of this
Agreement and any agreements contemplated hereby will not require the
consent, approval or authorization of any person, entity or governmental
authority which has not been obtained as of the date hereof.
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5.Covenants and Agreements of Seller
Seller covenants and agrees with Buyer as follows:
5.1 Negative Covenants
Pending and prior to the Closing, Seller will not, without the prior
written approval of Buyer, do or agree to do any of the following:
5.1.1 Dispositions; Mergers
Sell, assign, lease or otherwise transfer or dispose of any of the Assets;
or merge or consolidate with or into any other entity or enter into any
agreements relating thereto; provided, however, that Seller may sell,
assign, lease or otherwise transfer or dispose of any Asset if such Asset
is expended in the ordinary course of business, consistent with Seller's
past business practices and with customary practices in the software
industry, and property or equipment of like kind and equivalent value is
substituted therefore.
5.1.2 Accounting Principles and Practices
Change or modify any of Seller's accounting principles or practices or any
method of applying such principles or practices.
5.1.3 Additional Agreements
Materially modify or amend any Contract or License or enter into any other
contracts, leases, commitments, understandings, licenses, or other
agreements (collectively, "Additional Agreements") or incur any obligation
or liability (contingent or absolute); provided, however, that Seller may
enter into such Additional Agreements in the ordinary course of business
consistent with Seller's past business practices and with customary
practices in the software industry, so long as such Additional Agreements
do not involve revenues, payments or obligations in excess of Ten Thousand
Dollars ($10,000.00) for each such Additional Agreement in any month, or
Fifty Thousand Dollars ($50,000.00) for all such Additional Agreements in
any month in the aggregate, and each such Additional Agreement is
terminable on not more than thirty (30) days' prior written notice and
provided further that Buyer's consent shall not be unreasonably withheld.
5.1.4 Breaches; Employment Contracts
Do or omit to do any act (or permit such action or omission) which will
cause a material breach of any Contract or License or any other contract,
understanding, commitment, obligation, lease, license or other agreement to
which Seller is a party or by which Seller is bound; or with respect to
Consulting Division employees only, enter into or become subject to any
employment, labor or union contract, any professional service contract not
terminable at will, or any bonus, pension, insurance, profit sharing,
incentive, deferred compensation, severance pay, retirement,
hospitalization, employee benefit, or other similar plan; or increase the
compensation payable or to become payable to any employee, or pay or
arrange to pay any bonus payment to any employee.
5.1.5 Offers to Employees
Offer employment to any Consulting Division employee elsewhere than with
the Consulting Division or take any action at any time to prevent or to
discourage any Consulting Division employee from remaining employed in
connection with the business and operations of the Consulting Division,
unless Buyer communicates to Seller its intention not to hire the
Consulting Division employee. The employees of the Consulting Division at
the date hereof are set forth on Schedule 5.1.5.
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5.1.6 No Inconsistent Negotiations
Seller shall not authorize or permit any of its Affiliates or any officer,
director, employee, investment banker, attorney or other adviser or
representative of Seller to sell, dispose of or encumber the Assets, or any
material portion thereof, or consider or solicit any offers, engage in any
negotiations, or make any agreements with respect to the sale or
disposition of the Assets or any material portion thereof. Seller shall
inform other persons with which it has been discussing the possible sale of
the Assets that Seller has entered into this Agreement, and Seller shall
notify Buyer promptly in writing following receipt of any unsolicited
inquiries or offers with respect to the foregoing.
5.2 Affirmative Covenants
Pending and prior to the Closing Date, Seller will:
5.2.1 Preserve Existence
Preserve its corporate existences and business organizations intact,
maintain its existing licenses, use its best efforts to preserve for Buyer
its relationships with suppliers, customers, employees and others having
business relations with them, insofar as they related directly to the
Consulting Division, and keep all Assets in their present condition,
ordinary wear and tear excepted.
5.2.2 Normal Operations
Subject to the terms and conditions of this Agreement (including, without
limitation, Section 5.1), (i) carry on the Consulting Division businesses
and activities, in the usual and ordinary course of business consistent
with Seller's past business practices and with customary practices in the
industry; (ii) use its best efforts to preserve its present business
organization and relationships; (iii) pay or otherwise satisfy all of its
obligations (cash and barter) as they come due and payable; (iv) maintain
all of its properties in customary repair, order and condition; (v)
maintain its books of account, records, and files in substantially the same
manner as heretofore; and (vi) pay the full salary of and any and all other
compensation due to each Consulting Division employee through the Closing
Date.
5.2.3 Taxes
Pay or discharge when due and payable all Tax liabilities and obligations,
including without limitation those for federal, state or local income,
property, unemployment, withholding, sales, transfer, stamp, documentary,
use and other Taxes.
5.2.4 Corporate Action
Take all corporate action under the law of any state having jurisdiction
over Seller necessary to effectuate the transactions contemplated by this
Agreement and by the other Seller Documents.
5.2.5 Transfer Tax; Bulk Sales
Take all necessary action to provide for the payment of all applicable
state sales, transfer or use taxes, and to comply with all applicable bulk
transfer and similar laws, in connection with the transactions contemplated
by this Agreement and the other Seller Documents.
5.2.6 Access
Subject to the provisions of Article 11, give to Buyer and Buyer's
authorized representatives full and complete access upon reasonable notice
during normal business hours to Seller's properties, books, records,
contracts, commitments, facilities, premises, and equipment and to Seller's
officers and employees. In addition, with Seller's consent, which shall not
be withheld unreasonably, Buyer may contact vendors, customers, suppliers,
manufacturers and others with
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whom Seller does business in connection with the business and operations of
the Consulting Division; provided, however, that Buyer will notify Seller
prior to making such contact.
5.2.7 Other Information
Subject to the provisions of Article 11, provide to Buyer all such other
information and copies of documents concerning Seller, the operation of the
Consulting Division and the Assets, and Seller's Consulting Division
customers and suppliers, as Buyer may reasonably request.
5.2.8 Insurance
Maintain in full force and effect all of their existing casualty,
liability, and other insurance through the day following the Closing Date
in amounts not less than those in effect on the date hereof.
5.2.9 Consents
Obtain all third party consents required to assign to Buyer those
agreements and licenses included in the Assets.
5.2.10 Stockholder Consent
Seller will use its best efforts to have obtained the binding consent of
its stockholders to the sale of the Consulting Division expeditiously
following the date of this Agreement.
5.3 Best Efforts
Between the date of this Agreement and the Closing Date, Seller and Buyer
will use their Best Efforts to cause the conditions in Articles 7 and 8 to
be satisfied.
5.4 Employees
(a) For a period commencing upon the execution of this Agreement and ending
twelve (12) months following the Closing Date, Seller and its Affiliates
will not offer employment to any Consulting Division Employee without the
prior written approval of Buyer. Prior to the Closing Date, Buyer may offer
employment to the Consulting Division Employees and in such event Seller
shall release the Consulting Division Employee from any obligation to
Seller, but Seller shall retain any obligation it may have to the
Consulting Division Employees with respect to their employment with Seller
up to and including the Closing Date, including without limitation with
respect to employment, training or educational benefits, severance pay or
other termination benefits, and shall indemnify Buyer for any claim with
respect thereto by any Consulting Division Employee in accordance with
Section 17.2. Seller shall retain any obligation it may have to an
Consulting Division Employee with respect to vacation, limited only to the
extent to which Buyer has assumed the liability for a particular Consulting
Division Employee's vacation in an employment agreement with that
Consulting Division Employee.
5.5 Announcements
Except for statements and regulatory filings as may be required by
applicable law or any governmental authority, neither Seller nor any of its
agents or Affiliates shall make any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated herein without the prior written consent of
Buyer, which consent shall not be unreasonably withheld.
6.Covenants and Agreements of Buyer
Buyer covenants and agrees with Seller as follows:
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6.1 Corporate Action
Prior to the Closing, Buyer shall take all corporate action under the law
of the state of California that is necessary to effectuate the transactions
contemplated by this Agreement and the other Buyer Documents.
6.2 Announcements
Except for statements and regulatory filings as may be required by
applicable law or any governmental authority, neither Buyer nor any of its
agents or Affiliates shall make any public statements, including, without
limitation, any press releases, with respect to this Agreement and the
transactions contemplated herein without the prior written consent of
Seller, which consent shall not be unreasonably withheld.
7.Conditions Precedent to Buyer's Obligation to Close
The obligations of Buyer to purchase the Assets and to proceed with the
Closing are subject to the satisfaction (or waiver by Buyer) at or prior to
the Closing of each of the following conditions:
7.1 Representations and Covenants
Except as set forth in this Agreement or in the schedules to this
Agreement, the representations and warranties of Seller made in this
Agreement or in any other Seller Document shall have been true and correct
in all material respects when made, and shall be true and correct in all
material respects on the Closing Date as though such representations and
warranties were made on and as of the Closing Date; and Seller shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement or any other Seller Document to be
performed or complied with by Seller prior to the Closing.
7.2 Delivery of Documents
Seller shall have delivered to Buyer all agreements, instruments and
documents required to be delivered by Seller to Buyer pursuant to Section
9.2.
7.3 Legal Proceedings
No action or proceeding by or before any governmental authority shall have
been instituted or threatened (and not subsequently dismissed, settled or
otherwise terminated) which might restrain, prohibit or invalidate the
transactions contemplated by this Agreement or any other Seller Document,
other than an action or proceeding instituted or threatened by Buyer.
7.4 Employment Agreements With Designated Employees
Buyer shall have entered into an employment agreement to be effective on
the Closing Date with each Designated Employee as set forth on Schedule
7.4.
7.5 Absence of Material Change
Neither the Consulting Division nor the Assets shall have suffered a
material adverse change since the date of this Agreement, and there shall
have been no changes since the date of this Agreement in the business,
operations, prospects, condition (financial or otherwise), properties,
assets or liabilities of Seller, of the Consulting Division or of the
Assets (regardless of whether or not such events or changes are consistent
with the representations and warranties given herein by Seller), except
changes contemplated by this Agreement and changes in the ordinary course
of business which are not (either individually or in the aggregate)
materially adverse. For purposes
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of this Section 7.5, a "material adverse change" shall be deemed not to
include continuing losses that are consistent with Seller's historical
losses through December 31, 2000.
7.6 Government Consents
All material consents, orders, permits or authorizations of, or
declarations or filings with, or expiration of waiting periods imposed by,
any governmental entity necessary for transactions contemplated by this
Agreement shall have been filed, expired or been obtained, other than
those, that, individually or in the aggregate, the failure to be filed,
expired or obtained would not, in the reasonable opinion of Buyer and the
Seller, have a material adverse effect on Buyer or the Seller.
8.Conditions Precedent to Seller's Obligation to Close
The obligations of Seller to sell, transfer, convey and deliver the Assets
and to proceed with the Closing are subject to the satisfaction (or waiver
by Seller) at or prior to the Closing of each of the following conditions:
8.1 Representations and Covenants
The representations and warranties of Buyer made in this Agreement or in
any other Buyer Document shall have been true and correct in all material
respects when made, and shall be true and correct in all material respects
on the Closing Date as though such representations and warranties were made
on and as of the Closing Date; and Buyer shall have performed and complied
in all material respects with all covenants and agreements required to be
performed or complied with by Buyer prior to the Closing.
8.2 Delivery by Buyer
Buyer shall have delivered to Seller all agreements, instruments and
documents required to be delivered by Buyer to Seller pursuant to Section
9.3.
8.3 Legal Proceedings
No action or proceeding by or before any governmental authority shall have
been instituted or threatened (and not subsequently dismissed, settled, or
otherwise terminated) that might restrain, prohibit, or invalidate the
transactions contemplated by this Agreement, other than an action or
proceeding instituted or threatened by Seller.
8.4 Stockholder Consent and Notification
Seller will have used its best efforts to have obtained the binding consent
of a majority of its stockholders to the sale of the Consulting Division
expeditiously following the date of this Agreement.
9.The Closing
9.1 Closing
The Closing hereunder shall be held on or before May 1, 2001, unless
otherwise mutually agreed in writing (the "Closing Date"). The Closing
shall be held at 10:00 A.M. local time at the offices of Seller's attorney,
0 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 or at such other time and place as
the parties may agree.
9.2 Delivery by Seller
At or before the Closing, Seller shall deliver to Buyer:
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9.2.1 Agreements and Instruments
The following bills of sale, statements, assignments and other instruments
of transfer, dated as of the Closing Date, in form sufficient to transfer
and convey to Buyer title (of the quality provided for in this Agreement)
to the Assets and satisfactory to counsel to Buyer:
(i) the Xxxx of Sale;
(ii) the Assignment of Contracts;
(iii) Such other certificates, opinions, instruments or documents
as Buyer may reasonably request in order to effect and document the
transactions contemplated hereby.
9.2.2 Certificate Concerning Amendments and Additional Agreements
A certificate of Seller describing all amendments or modifications to any
Contracts or Licenses and all Additional Agreements made or entered into
between the date hereof and the Closing Date, and certifying that each
amendment or modification and/or each such Additional Agreement, as the
case may be, were entered into in accordance with Section 5.1.
9.2.3 Certified Resolutions
A copy of the resolutions of directors and shareholders of Seller,
certified as being correct and complete and then in full force and effect,
authorizing the execution, delivery and performance of this Agreement, and
of the other Seller Documents, and the consummation of the transactions
contemplated hereby and thereby (ii) a copy of the by-laws of Seller, and
(iii) copy of the certificate of incorporation of Seller, all certified by
the Secretary of Seller as being true, correct and complete as of the
Closing Date;
9.2.4 Officers' Certificates
A certificate of Seller signed by its President and Chief Financial Officer
certifying that the representations and warranties of Seller made herein
and in the other Seller Documents were true and correct in all material
respects as of the date of this Agreement and are true and correct in all
material respects as of the Closing Date, and that Seller has performed and
complied in all material respects with all covenants and agreements
required to be performed or complied with by Seller on or prior to the
Closing; and
9.2.5 Opinion of Counsel
An opinion of counsel to Seller, dated the Closing Date, addressed to
Buyer, substantially in the form attached hereto as Exhibit A, covering the
matters addressed under Sections 3.1, 3.2, and 3.8.
9.3 Delivery by Buyer
At or before the Closing, Buyer shall deliver to Seller:
9.3.1 Purchase Price Payment
The Purchase Price in the amount and manner set forth in Article 2.
9.3.2 Agreements and Instruments
The certificates, instruments or documents as Seller may reasonably request
in order to effect and document the transactions contemplated hereby.
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9.3.3 Certified Resolutions
Copies of the resolutions of the directors of Buyer, certified as being
correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement and of the other
Buyer Documents, and the consummation of the transactions contemplated
hereby and thereby.
9.3.4 Officers' Certificate
A certificate of Buyer signed by the President and the Secretary of Buyer
certifying that the representations and warranties of Buyer made herein
were true and correct in all material respects as of the date of this
Agreement and are true and correct in all material respects as of the
Closing Date, and that Buyer has performed and complied in all material
respects with all covenants and agreements required to be performed or
complied with by Buyer prior to the Closing.
10. Termination
10.1 Termination
(a) This Agreement may be terminated on or prior to the Closing Date as
follows:
(i) by written consent of Seller and Buyer;
(ii) by Seller or Buyer if it reasonably concludes that a
condition to its obligation to close set forth in Article 7 or 8,
as the respective case may be, cannot be satisfied prior to May
1, 2001;
(iii) by Seller if there shall have been a breach by Buyer, or by
Buyer if there shall have been a breach by Seller, of any of
their respective representations and warranties set forth in this
Agreement, which breach would entitle the party receiving the
representation or warranty not to consummate the transactions
contemplated hereby under Section 8.1 (in the case of a breach of
representation or warranty by Seller) or Section 9.1 (in the case
of a breach of representation or warranty by Buyer), which breach
shall not have been cured within 20 Business Days following
receipt by the breaching party of written notice of the breach
from Buyer or Seller;
Notwithstanding Section 10.1(a)(ii)-(iii) hereof, a party who is
or whose Affiliate is in material breach of any of its
obligations or representations and warranties hereunder shall not
have the right to terminate this Agreement pursuant to Section
10.1(a)(ii)-(iii).
(b) The termination of this Agreement shall be effectuated by the delivery
by the party terminating this Agreement to the other party of a written
notice of the termination. If this Agreement so terminates, it shall become
null and void and have no further force or effect, except as provided in
Section 10.2.
10.2 Survival After Termination
If this Agreement is terminated in accordance with Section 10.1 hereof and
the transactions contemplated hereby are not consummated, this Agreement
shall become void and of no further force and effect, except for the
provisions of Sections 5.5 and 6.2 and Articles 12 provided, however, that
the termination shall not relieve any party of any liability for any breach
of this Agreement.
10.3 Penalty for Withdrawal
(i) If, after the date of the LOI, Seller fails to complete the
Closing, in addition to paying the Buyer:
(a) any advances or guarantees made by the Buyer to Comerica Bank or any
other entity on behalf of the Seller; and
(b) any amounts paid by the Buyer directly to the Seller,
Seller agrees that within no more than seven (7) days after the
contemplated Closing Date, Seller will pay a penalty to the Buyer in the
amount of $75,000.
(ii) If, after the date of the LOI, Buyer fails or refuses to
provide reasonable adequate Interim Source of Funds to cover
Seller's payroll and payroll related expenses for Seller's
consultants and two principals, Seller may terminate this
agreement, provided however that Seller will be liable for
re-paying the Buyer for all funds advanced or guaranteed, and
Buyer will release any UCC beyond those reasonably necessary to
completely secure repayment of funds advanced or guaranteed.
11. Conduct Following Closing
11.1 Access to Information
After the Closing Date, Buyer will provide to Seller and to Seller's
officers, employees, counsel and other representatives upon request
(subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or third-party confidentiality
obligation), reasonable access for inspection and copying of any Business
Records, Governmental Permits, Contracts, Licenses and any other
information existing as of the Closing Date and relating to the Business
which Seller reasonably chose not to copy prior to the Closing Date.
12. Protection of Proprietary Information
12.1 Agreement to Keep Confidential
Except as provided in Section 5.2, between the date of this Agreement and
for a period of three years following the Closing Date, Buyer and Seller
agree that each will use the same procedures to keep confidential all of
the other's proprietary information, on a confidential basis that is
received from, or made available by, the other in the course of the
transactions contemplated hereby, as it uses to protect its own
confidential information. Such information includes, for purposes of this
Article 12, information about the other's business plans and strategies,
marketing ideas and concepts, especially with respect to unannounced
products and services, present and future product plans, pricing, volume
estimates, financial data, product enhancement information, business plans,
marketing plans, sales strategies, customer information (including
customers' applications and environments), market testing information,
development plans, specifications, customer requirements, configurations,
designs, plans, drawings, apparatus, sketches, software, hardware, data,
prototypes, and business information, if such information is marked as
"Confidential Information."
12.2 Seller's Obligation
Except as provided in Section 5.2, Seller shall use the same procedures to
keep confidential the proprietary information conveyed to Buyer as part of
the Assets as Seller uses to protect its own confidential information.
12.3 Information Not Confidential
Notwithstanding the foregoing, such proprietary information shall not be
deemed confidential and no party hereto shall have any obligation with
respect to any such Proprietary Information that:
(a) was already known to such party;
(b) is or becomes publicly known through publication, inspection
of a product, or otherwise, and through no negligence or other
wrongful act of such party;
(c) is received by such party from a third party without similar
restriction and without breach of this Agreement;
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(d) is independently developed by such party; or
(e) is required to be disclosed under applicable law or judicial
process, including reports required to be publicly filed with the
Securities and Exchange Commission.
12.4 Protective Order
If any party hereto is requested or required (by oral questions,
interrogatories, request for information or documents, subpoena, civil
investigative demand or similar process) to disclose any proprietary
information, such party will promptly notify the other party of such
request or requirement and will cooperate with such other party's efforts
to seek an appropriate protective order or other appropriate remedy. If, in
the absence of a protective order or the receipt of a waiver hereunder, any
party is in the written opinion of such party's counsel compelled to
disclose the proprietary information or else stand liable for contempt or
suffer other censure or significant penalty, such party may disclose only
so much of the proprietary information to the third party compelling
disclosure as is required by law. In such case, such party will exercise
its good faith efforts to obtain a protective order or other reliable
assurance that confidential treatment will be accorded to such proprietary
information.
13. Nonsolicitation.
Seller hereby agrees that it shall not, for a period of three (3) years
from February 28, 2001 (the "Restrictive Period"), directly or indirectly,
contact, solicit or direct any person, firm, or corporation to contact or
solicit, any of Seller's customers, prospective customers, or business
partners for the purpose of selling or attempting to sell, any products
and/or services that are the same as or similar to the products and
services provided by Buyer to its customers during the Restrictive Period.
In addition, Seller will not disclose the identity of any such business
partners, customers, or prospective customers, or any part thereon to any
person, firm, corporation, association, or other entity for any reason or
purpose whatsoever. Seller shall not solicit on its own behalf or on behalf
of any other person or company, the services of any person who is an
employee of the Seller and/or solicit any of Seller's employees to
terminate their employment with the Buyer.
14. Agreement Not to Compete
In connection with the transactions contemplated by this Agreement, the
Seller, covenants and agrees that it shall not compete at any time,
directly or indirectly with Buyer in owning, managing, operating,
controlling or being a consultant to, participating or having any ownership
interest in, or being connected in any material respect with the ownership,
management, operation or control of any Consulting which engages in the
business of providing software services similar to that of the Consulting
Division for a period of two (2) years following the Closing Date.
15. Possession and Control
Between the date hereof and the Closing Date, Buyer shall not directly or
indirectly control, supervise or direct, or attempt to control, supervise
or direct, the business and operations of the Consulting Division, and such
operation, including complete control and supervision of all programs,
shall be the sole responsibility of Seller; provided, however, that Buyer
shall be entitled to inspect the Assets as provided in Section 5.2 so that
an uninterrupted and efficient transfer of ownership may be effected. On
and after the Closing Date, Seller shall have no control over, or right to
intervene or participate in, the business and operations of the Consulting
Division.
16. Risk of Loss
The risk of loss or damage by fire or other casualty or cause to the Assets
until the Closing Date shall be upon Seller. In the event of such loss or
damage prior to the Closing Date, Seller shall make commercially reasonable
efforts to promptly restore, replace or repair the damaged Assets to their
previous condition at Seller's sole cost and expense. In the event such
loss or damage shall not be restored, replaced, or repaired as of the
Closing Date, Buyer shall, at its option, either:
17
(a) proceed with the Closing and receive all insurance proceeds to which
Seller would be entitled as a result of such loss or damage; provided,
however, that if such proceeds do not equal the loss, Seller shall pay the
deficiency to Buyer, or
(b) defer the Closing Date until such restorations, replacements or repairs
are made (provided that no such deferral shall affect the rights of the
parties hereto to terminate this Agreement pursuant to the provisions of
Article 10).
17. Survival; Indemnification
17.1 Survival of Seller's Representations
The representations and warranties made by Seller in this Agreement or
pursuant hereto shall survive the Closing Date for a period of sixteen (16)
months, and shall also survive and shall be unaffected by (and shall not be
deemed waived by) any investigation, audit, appraisal, or inspection at any
time made by or on behalf of Buyer, provided, however, that the
representations and warranties made in Sections 3.5 and 3.6, and all other
representations and warranties as they relate to the Excluded Assets or the
non-Consulting Division portion of the Seller's business or any liability
not expressly assumed by Buyer, shall survive indefinitely. However, a
cause of action arising under any representation or warranty which
terminates on the date which is sixteen (16) months after the Closing Date
shall be preserved to the extent that notice of a Claim in accordance with
Section 17.5 hereof shall have been delivered on or before such date to
Seller.
17.2 Indemnification by Seller
Seller hereby covenants and agrees to indemnify and hold harmless the
Buyer, its employees and directors from and against any loss, liability,
claim, cost, damage, or expense (including reasonable legal fees and
expenses) (collectively, a "Loss") arising out of or resulting from, any
actions by Seller prior to February 28, 2001.
17.3 Survival of Buyer's Representations
The representations and warranties made by Buyer in this Agreement or
pursuant hereto shall survive the Closing Date for a period of sixteen (16)
months. However, a cause of action arising under any representation or
warranty which terminates on the date which is sixteen (16) months after
the Closing Date shall be preserved to the extent that notice of a Claim in
accordance with Section 17.5 hereof shall have been delivered on or before
such date to Buyer.
17.4 Indemnification by Buyer
Buyer hereby covenants and agrees to indemnify and hold harmless the
Seller, its employees and directors from and against any loss, liability,
claim, cost, damage, or expense (including reasonable legal fees and
expenses) (collectively, a "Loss") arising out of or resulting from, any
actions by Buyer after February 28, 2001.
17.5 Conditions of Indemnification
The obligations and liabilities of Seller and of Buyer hereunder with
respect to their respective indemnities pursuant to this Article 17,
resulting from any claim or other assertion of liability by third parties
(hereinafter called collectively, "Claims"), shall be subject to the
following terms and conditions:
(a) The party seeking indemnification (the "Indemnified Party") must give
the other party or parties, as the case may be (the "Indemnifying Party"),
notice of any such Claim promptly after the Indemnified Party receives
notice thereof, and the Indemnified Party must give the Indemnifying Party
such information with respect to such Claim as the Indemnifying Party may
reasonably request;
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(b) The Indemnifying Party shall have the right, but not the obligation,
exercisable by written notice to the Indemnified Party within 30 days of
receipt of notice of the Claim, to undertake, by counsel or other
representatives of its own choosing, the defense of such claim and, subject
to the other provisions of this Section 17.5, control the settlement of
such Claim;
(c) In the event that the Indemnifying Party shall not elect to undertake
such defense within the time provided, the Indemnified Party shall have the
right to undertake the defense, compromise or settlement of such Claim, by
counsel or other representatives of its own choosing, on behalf of and for
the account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense of such Claim at any time prior to
settlement, compromise or final determination thereof); and
(d) If there is a reasonable probability that a Claim may materially and
adversely affect the Indemnified Party other than as a result of money
damages or other money payments, (i) the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense,
compromise or settlement of the Claim, (ii) the Indemnifying Party shall
not, without the Indemnified Party's written consent, settle or compromise
any Claim or consent to entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the plaintiff to
the Indemnified Party of a release from all liability in respect of such
Claim, and (iii) in the event that the Indemnifying Party undertakes
defense of any Claim, the Indemnified Party, by counsel or other
representative of its own choosing and at its sole cost and expense, shall
have the right to consult with the Indemnifying Party and its counsel or
other representatives concerning such Claim and the Indemnifying Party and
the Indemnified Party and their respective counsel or other representatives
shall cooperate with respect to such Claim.
(e) In the event a claim for indemnification is made by Buyer based on an
alleged breach by Seller of Section 3.5 or 3.6 (an "Infringement Claim"),
in lieu of the procedures set forth in Section 17.5(d), the following
procedures shall apply: Buyer shall have the right to participate in (but
not control), at its expense, the defense of any Infringement Claim that
Seller is defending as provided in this Agreement. Buyer shall cooperate
with Seller in a reasonable way to facilitate the settlement or defense of
such Infringement Claim, and shall not acknowledge the validity of any
alleged Infringement Claim or of any patent, copyright or any third party,
or otherwise make statements that could reasonably be expected to have the
effect of hampering or undermining Seller's defense or settlement of the
Infringement Claim. Seller shall not, without Buyer's prior written
consent, enter into any compromise or settlement that (i) commits Buyer to
take, or forbear to take, any action, other than the payment of a
reasonable royalty or other reasonable compensation for the use of Third
Party Intellectual Property Rights or (ii) does not obtain for Buyer the
right to continued use of the allegedly infringing information unless
Seller has (y) procured for Buyer the right to continue using such Third
Party Intellectual Property Rights or (z) provided instructions to replace
or modify the same so that it is not subject to such Infringement Claim and
is functionally equivalent, in each case in clauses (i) and (ii), upon
commercially reasonable terms for the industries in which the Consulting
Division participates.
17.6 Damages
Notwithstanding anything contained in this Agreement to the contrary, no
party shall be liable to the other party for indirect, special, or punitive
loss or damage arising out of this Agreement. Each party agrees to mitigate
its losses.
18. Remedies
18.1 Exclusive Remedies
The right of termination provided in Section 10 of this Agreement, the
right of indemnity provided in Section 17 of this Agreement and the right
of setoff provided in Section 18.2 of this Agreement shall be the exclusive
remedies of Seller and Buyer against the other for any and all claims
arising under or in connection with this Agreement; provided, however, that
Buyer shall have the right to pursue any other remedies it has at law or in
equity or otherwise with respect to (i) claims of intentional
misrepresentation or fraud by Seller, its directors, officers, employees,
19
representatives or Affiliates, or (ii) any criminal matters committed by
Seller, its officers, directors, employees, representatives or Affiliates.
18.2 Failure of Seller to Pay
If Seller shall fail to pay in a timely manner any amount becoming due
under this Agreement or any other Seller Documents, or fail to pay or
indemnify Buyer pursuant to Section 17.2 within thirty (30) days of notice
by Buyer to Seller, then Buyer shall be entitled to set off such amounts
due against payments otherwise due to Seller pursuant to this Agreement;
provided, however, that Buyer's set off of such amounts shall be in
addition to, and not in substitution for, any other rights or remedies
which Buyer may have pursuant to this Agreement or any other Buyer
Document, or at law or in equity or otherwise.
19. Additional Actions and Documents
Each of the parties hereto agrees that it will, at any time, prior to, at
or after the Closing Date, take or cause to be taken such further actions,
and execute, deliver and file or cause to be executed, delivered and filed
such further documents and instruments, and obtain such consents, as may be
necessary or reasonably requested in connection with the consummation of
the purchase and sale contemplated by this Agreement or in order to fully
effectuate the purposes, terms and conditions of this Agreement.
20. Notices
All notices, demands, requests, or other communications which may be or are
required to be given or made by any party to any other party pursuant to
this Agreement shall be in writing and shall be hand delivered, mailed by
first-class registered or certified mail, return receipt requested, postage
prepaid, delivered by overnight air courier, or transmitted by telegram,
telex, or facsimile transmission addressed as follows:
(i) If to Buyer:
Mega Professionals International, Inc.
000 Xxxxxx Xxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxxx Xxxxx
with a copy (which shall not constitute notice) to:
_______________________________
_______________________________
_______________________________
(ii) If to Seller:
Delsoft Consulting, Inc.
000 Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxx
with a copy (which shall not constitute notice) to:
Xxxxx & Schloss LLP
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
or such other address as the addressee may indicate by written notice to
the other parties.
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Each notice, demand, request, or communication which shall be given or made
in the manner described above shall be deemed sufficiently given or made
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, the affidavit of messenger or (with
respect to a telex) the answerback being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused
by the addressee upon presentation.
21. Waiver
No delay or failure on the part of any party hereto in exercising any
right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be construed
as a waiver of any default or any acquiescence therein. No single or
partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege, or the exercise of any
other right, power or privilege. No waiver shall be valid against any party
hereto unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent expressly
specified therein.
22. Benefit and Assignment
Except as hereinafter specifically provided in this Article 22, no party
hereto shall assign this Agreement, in whole or in part, whether by
operation of law or otherwise, without the prior written consent of Seller
(if the assignor is Buyer) or Buyer (if the assignor is Seller); and any
purported assignment contrary to the terms hereof shall be null, void and
of no force and effect. In no event shall any assignment by Seller of its
rights and obligations under this Agreement, whether before or after the
Closing, release Seller from its liabilities hereunder. Notwithstanding the
foregoing, Buyer or any permitted assignee of Buyer may assign this
Agreement and any and all rights hereunder, in whole or in part, to any
subsidiary of Buyer or to any entity in which the controlling shareholders
of Buyer maintain control.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns as permitted
hereunder. No person or entity other than the parties hereto is or shall be
entitled to bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants and agreements set
forth in this Agreement shall be solely for the benefit of, and shall be
enforceable only by, the parties hereto or their respective successors and
assigns as permitted hereunder.
23. Remedies Cumulative
Except as specifically provided herein, the remedies provided herein shall
be cumulative and shall not preclude the assertion by Seller or by Buyer of
any other rights or the seeking of any other remedies against the other, or
its successors or assigns. Nothing contained herein shall preclude a party
from seeking equitable relief, where appropriate.
24. Entire Agreement; Amendment
This Agreement, including the Schedules and Exhibits hereto and the other
instruments and documents referred to herein or delivered pursuant hereto.
This Agreement shall govern in the event of a conflict between this
Agreement and the Option Agreement. No amendment, modification or discharge
of this Agreement shall be valid or binding unless set forth in writing and
duly executed by the party against whom enforcement of the amendment,
modification or discharge is sought.
25. Severability
If any part of any provision of this Agreement or any other agreement,
document or writing given pursuant to or in connection with this Agreement
shall be invalid or unenforceable under applicable law, such part shall be
ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said agreement.
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26. Headings
The headings of the sections and subsections contained in this Agreement
are inserted for convenience only and do not form a part or affect the
meaning, construction or scope thereof.
27. Governing Law
This Agreement, the rights and obligations of the parties hereto, and any
claims or disputes relating thereto, shall be governed by and construed
under and in accordance with the laws of the State of Georgia, excluding
the choice of law rules thereof.
28. Definitions and References
As used herein, the following terms shall have the meanings set forth
below, unless the context otherwise requires:
"Additional Agreements" shall have the meaning set forth in Section
5.1.3.
"Affiliate" of any specified entity means any other person or entity
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified entity. For the purposes of
this definition, "control" when used with respect to any specified entity
means the power to direct the management and policies of such entity,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have correlative
meanings to the foregoing.
"Assignment of Contracts" means certain Assignment of Contracts, dated
as of the Closing Date and executed by Sellers.
"Assumption Agreement" means certain Assumption Agreements, dated the
Closing Date and executed by Buyer and Sellers.
"Xxxx of Sale" means certain Xxxx of Sale and Assignment of Assets,
dated as of the Closing Date and executed by Sellers.
"Business Services" means any consulting, training, evaluating or
similar service provided by Seller's Consulting Division.
"Business Trademarks" means the Seller's registered and unregistered
trademarks used in connection with marketing, licensing and selling
Business Services.
"Buyer Documents" shall mean, collectively, this Agreement and any
certificates, instruments or documents as Seller may reasonably request in
order to effect and document the transactions contemplated in this
Agreement.
"Claims" shall have the meaning specified in Section 17.5.
"Closing" means the closing of the purchase, assignment and sale of
the Assets contemplated hereunder.
"Closing Date" means the time and date on which the Closing takes
place, as established by Section 9.1.
"Designated Employees" shall mean those employees of Sellers engaged
in and necessary to the operation of the Consulting Division, as listed in
Schedule 7.4.
"Encumbrances" mean any mortgages, pledges, liens, claims, security
interests, agreements, restrictions, defects in title, easements,
encumbrances, or charges.
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"Consulting Division" means that portion of the Seller's business
which involves the development, marketing, license and sale of services
used for providing comprehensive information technology services and
solutions, including, but not limited to, outsourcer and systems integrator
services.
"Consulting Division Intellectual Property" shall have the meaning
specified in Section 3.6(a).
"Indemnified Party" and "Indemnifying Party" shall have the respective
meanings specified in Section 17.5(a).
"Intellectual Property" means all patents, trademarks (and associated
goodwill), trade names, service marks, copyrights and any applications
therefore, schematics, technology, know-how, trade secrets, inventory,
ideas, algorithms, processes, computer software programs and applications
(in both source code and object code form), inventions (whether or not
patentable), improvements, and tangible or intangible proprietary
information or material.
"Interim Source of Funds" shall mean any amounts to be paid to or on
behalf of the Seller for the purposes of enabling Seller to be able to
cover their payroll and any payroll related expenses for the Seller's
consultant's, Xxxxx Xxxxxxxxx and Xxxx Xxxxxxx. Such Interim Source of
Funds shall take one of the following forms, at Buyer's option:
(i) direct funding from Buyer to Seller;
(ii) assumption or purchase, by Buyer, of the Comerica Bank's
line of credit to Seller and the continued extension of credit
thereunder by Buyer;
(iii) the guarantee to Comerica Bank by Buyer on behalf of Seller
to provide for continued payments by Comerica Bank to Seller; or
(iv) any combination of the above.
"Purchase Price" shall have the meaning specified in Section "Seller
Documents" shall mean, collectively, this Agreement, any Xxxx of Sale, any
Assignment of Licenses, any Assignment of Contracts and any Assumption
Agreement.
"Software" means (i) computer programs, including any and all software
implementations of algorithms, models and methodologies, whether in source
code or object code, (ii) databases and compilations, including any and all
data and collections of data, whether machine readable or otherwise, (iii)
descriptions, specifications, techniques, designs, files, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, and (iv) all documentation, including user manuals and training
materials, relating to any of the foregoing, in each case owned or licensed
by Seller and used in connection with the exploitation of the Business
Services. Notwithstanding the foregoing, Software does not include those
items prepared for customers in the operation of Seller's business for
which the customer contractually has vested sole title.
"Tax" or "Taxes" shall mean all federal, state, local, foreign, and
other taxes, assessments or other governmental charges, including, without
limitation, (i) income, estimated income, business, occupation, franchise,
property, sales, use, excise, employment, unemployment, payroll, social
security, ad valorem, transfer, gains, profits, capital stock, license,
gross receipts, stamp, real estate, severance and withholding taxes, and
(ii) interest, penalties and additions in connection therewith.
"Tax Returns" shall mean all returns, documentations, reports,
statements and other materials required to be filed with respect to Taxes.
"Third Party Intellectual Property Rights" shall have the meaning
specified in Section 3.6(b).
All references to clauses, Sections, Exhibits and Schedules are to
Sections of and Exhibits and Schedules to this Agreement.
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29.Signature in Counterparts
This Agreement may be executed in separate counterparts, none of which need
contain the signatures of all parties, each of which shall be deemed to be
an original, and all of which taken together constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than the number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or has caused this Agreement to be duly executed and delivered
in its name on its behalf, all as of the day and year first above written.
MEGA PROFESSIONALS INTERNATIONAL, INC.
/s/ Xxxxxx Xxxxx
-----------------------------
By: Xxxxxx Xxxxx
Title: President
DELSOFT CONSULTING, INC.
/s/ Xxxx Xxxxxxx
-----------------------------
By: Xxxx Xxxxxxx
Title: Acting President
