SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
AUGUST 11, 1998
FACTUAL DATA CORP.
(Exact name of registrant as specified in its charter)
COLORADO 0-24205 84-1449911
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
5200 HAHNS PEAK DRIVE
LOVELAND, COLORADO 80538
(Address of principal executive offices)
(970) 663-5700
(Registrant's telephone number, including area code)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 11, 1998, Factual Data Corporation (the "Company") closed its
acquisition of the assets of Heritage Credit Reporting, Inc. ("Heritage")
pursuant to an Asset Purchase Agreement (the "Agreement") executed on August
11, 1998 and effective July 31, 1998. The Company and its franchisees and
licensees provide information services, including mortgage credit reports to
mortgage and consumer lenders, employment screening services ("EMPfacts") and
credit and tenant screening services ("QUICKpeek Tenant"). Prior to the
acquisition, Heritage was a licensee of the Company operating in the
metropolitan Chicago, Illinois area.
Pursuant to the Agreement, the Company acquired the fixed assets,
contract rights, intellectual property rights to trade names and computer
software, personnel files, books and records, deposits, prepaid assets and the
goodwill of Heritage in exchange for (i) $250,000 cash paid at closing, (ii) a
promissory note in the principal amount of $1,570,957, (iii) 11,595 shares of
Common Stock of the Company valued at $100,000, and (iv) cancellation of a
promissory note in the amount of $68,239 payable to the Company from Heritage.
The note bears interest at 8% per annum, is payable in twenty quarterly
installments commencing September 30, 1998 and is secured by a lien on all of
the assets purchased pursuant to the Agreement. The Company also assumed the
lease obligations for the Heritage facility.
In connection with the purchase, the Company entered into an employment
agreement with Charles F. Geis, a former employee of Heritage. The employment
agreement commenced August 1, 1998 and is effective for a three year term,
subject to automatic one year extensions. Mr. Geis will serve as Vice
President/Regional Operations for the credit reporting division of the
Company. Mr. Geis also entered into a non-competition agreement which is for
the term of his employment agreement plus one year. The Company also entered
into a non-competition agreement with Michael P. and Gail Kelly (the
"Kellys"), the former shareholders of Heritage, and Heritage Business
Services, Inc. (the "Consultant"), an entity with which the Company has
entered into a service agreement. Under the Service Agreement, the
Consultant, through the services of the Kellys, will assist the Company in
acquisitions of other entities, including those engaged in the business of
providing information services such as those currently provided by the
Company. The Services Agreement is for a three year term which commenced
August 1, 1998.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) It is impracticable to provide the required financial statements
relative to Heritage at this time. In accordance with Item 7(a)(1), the
Registrant will file the required financial statements as an amendment to this
Form 8-K as soon as practicable, but not later than 60 days after this report
on Form 8-K must be filed.
(b) It is impracticable to provide the required pro forma financial
information relative to Heritage and the Registrant at this time. In
accordance with Item 7(b)(2), the Registrant will file the required financial
statements as an amendment to this Form 8-K as soon as practicable, but not
later than 60 days after this report on Form 8-K must be filed.
(c) Exhibits
2.1 Asset Purchase Agreement between Factual Data Corp. and Heritage
Credit Reporting, Inc. dated as of July 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FACTUAL DATA CORPORATION
Date: August 25, 1998 By: /s/ Jerald H. Donnan
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Jerald H. Donnan,
Chief Executive Officer
DJK\FACTUAL\FORM8-K2.HER
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
FACTUAL DATA CORP.
AND
HERITAGE CREDIT REPORTING, INC.
DATED AS OF JULY 31, 1998
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
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Page
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RECITALS 1
ARTICLE I 1
DEFINITIONS 1
ARTICLE II 4
ACQUISITION OF THE ASSETS 4
2.1 Delivery Of Assets 4
2.2 Purchase Price for Assets 5
2.3 Assumed Liabilities 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS 7
3.1 Organization and Qualification Of Seller 7
3.2 Authorized Capitalization 8
3.3 Authorization 8
3.4 Product Rights 9
3.5 Bulk Sale Law 9
3.6 No Conflicting Agreements 9
3.7 Compliance with Applicable Law 9
3.8 Material Misstatements or Omissions 10
3.9 No Known Adverse Effects 10
3.10 Consents and Approvals 10
3.11 Subsidiaries 10
3.12 Litigation 10
3.13 Brokers 11
3.14 Taxes 11
3.15 Ownership 11
3.16 Accounts 11
3.17 License Agreements 12
3.18 Intellectual Property 12
3.19 Contracts 13
3.20 Financial Statements 13
3.21 Absence of Undisclosed or Contingent Liabilities 13
3.22 No Material Adverse Changes 14
3.23 Absence of Developments 14
3.24 Title to Properties 15
3.25 Tax Matters 15
3.26 Tax Notices 16
3.27 Employees 17
3.28 Employee Benefit Plans 18
3.29 Gifts 19
3.30 Employee Health and Safety 19
3.31 Representations as to Knowledge 19
3.32 Representations Concerning Acquisition Stock 19
3.33 Representations Concerning Solvency 21
3.34 No Representations Concerning Year 2000 Compliance 21
ARTICLE IV 22
PRE-CLOSING COVENANTS OF SELLER 22
4.1 Inspection of Properties and Books 22
4.2 Other Contracts 23
4.3 Ongoing Operation 23
4.4 Indebtedness 23
4.5 Records 23
4.6 Articles of Incorporation; Bylaws 23
4.7 Distributions or Dividends 23
4.8 Notice of Breach 24
4.9 Nondisclosure 24
4.10 Employment Matters 24
4.11 Insurance 24
4.12 Preservation of Business 25
4.13 Regulatory Filings 26
4.14 No Negotiations 26
4.15 Assignment of Contracts, Leases and Other Agreements 27
4.16 Best Efforts 27
4.17 Additional Disclosure 27
ARTICLE V 27
POST-CLOSING COVENANTS 27
5.1 Further Assurances 27
5.2 Litigation Support 28
ARTICLE VI 28
REPRESENTATIONS AND WARRANTIES OF PURCHASER 28
6.1 Organization and Qualification of Purchaser 28
6.2 Authorization 28
6.3 No Conflicting Agreements 29
6.4 Compliance with Applicable Law 29
6.5 Litigation 29
6.6 Material Misstatements or Omissions 29
6.7 Consents and Approvals 29
6.8 Brokers 30
6.9 Representations as to Knowledge 30
6.10 Representations Concerning Solvency 30
ARTICLE VII 31
COVENANTS OF PURCHASER 31
7.1 Other Contracts 31
7.2 Additional Disclosure 31
7.3 Notice of Breach 31
7.4 Nondisclosure 32
7.5 Best Efforts 32
7.6 Regulatory Filings 32
7.7 Employment Agreement 32
7.8 Non-Compete and Confidentiality Agreements 33
7.9 Service Agreement 33
7.10 Change in Business 33
7.12 Additional Disclosure 33
ARTICLE VIII 34
CONDITIONS PRECEDENT TO CLOSING 34
8.1 Conditions Precedent to Obligations of Seller 34
8.2 Conditions Precedent to Obligations of Purchaser 36
ARTICLE IX 40
SURVIVAL OF REPRESENTATIONS AND WARRANTIES 40
ARTICLE X 41
INDEMNIFICATION 41
10.1 Indemnification 41
10.2 Limitation of Liability 42
10.3 Method of Asserting Claims 42
10.4 Payment of Claim 44
10.5 Other Rights and Remedies Not Affected 44
10.6 Post-Closing Adjustments and Right of Offset 44
ARTICLE XI 46
AMENDMENT, TERMINATION AND BREACH 46
11.1 Amendment and Modification 46
11.2 Termination and Abandonment 46
ARTICLE XII 47
CLOSING 47
12.1 Closing 47
12.2 Allocations 47
12.3 Seller's Deliveries at Closing 47
12.4 Purchaser's Deliveries at Closing 49
12.5 Forwarding of Receivables and Payment of Expenses 50
12.6 Removal of Personal Effects Following Closing 51
ARTICLE XIII 51
MISCELLANEOUS 51
13.1 Notice 51
13.2 Entire and Sole Agreement 52
13.3 Successors and Assigns 52
13.4 Expenses 52
13.5 Severability 53
13.6 Governing Law 53
13.7 Counterparts 53
13.8 Amendments 53
13.9 No Third Party Beneficiary 53
13.10 Headings 53
13.11 Disputes 53
13.12 Delivery of Exhibits and Schedules 54
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into effective this 31st day of July,
1998, by and between FACTUAL DATA CORP., a Colorado corporation ("Purchaser"),
and HERITAGE CREDIT REPORTING, INC., an Illinois corporation ("Seller").
RECITALS
WHEREAS, on or about June 25, 1998, Purchaser issued a term sheet to
Seller ("Term Sheet") pursuant to which Purchaser indicated its desire to
proceed with the acquisition of certain assets of Seller; and
WHEREAS, the Term Sheet contemplated the parties would enter into a definitive
Asset Purchase Agreement which definitive agreement is as set forth below (the
"Agreement") and which shall supersede the Term Sheet in its entirety; and
WHEREAS, Purchaser desires to purchase, and Seller desires to sell, the assets
of Seller as described on Exhibit 2.1 hereto (the "Assets") and Purchaser
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desires to assume the liabilities of Seller described on Exhibit 2.3 hereto
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("Assumed Liabilities");
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and in reliance upon the representations and warranties
contained herein, the parties hereto agree as follows:
ARTICLE IVIV
DEFINITIONS
The following terms used in this Agreement shall, unless the context
requires otherwise, have the meanings designated below:
Assets means the assets set forth on Exhibit 2.1 hereto.
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Assumed Liabilities means the liabilities set forth on Exhibit 2.3 hereto
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which may include but are not necessarily limited to, equipment or facility
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leases.
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Acquisition Stock means shares of Common Stock of Purchaser issued to
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Seller pursuant to Article 2.2.
Claim Notice has the meaning given to it in Article 10.3(a).
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Closing has the meaning given to it in Article 12.1.
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Closing Date has the meaning given to it in Article 12.1.
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Code means the Internal Revenue Code of 1986, as amended.
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Common Shares means Purchaser's voting Common Stock.
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Communication means collectively any publicity release, security filing,
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private placement memorandum or any other communication.
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Damages means any and all damages, claims, deficiencies, losses and expenses,
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as further defined in Article 10.1.
ERISA means the Employee Retirement Income Security Act of 1974, as amended,
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and any regulations, rules or orders promulgated thereunder.
Evaluation Material means Seller's documents, financial statements,
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information and materials which shall be used in connection with a due
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diligence review.
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Financial Statements has the meaning given to it in Article 3.22.
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Indemnified Party means the party claiming indemnification under Article X.
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Indemnifying Party means the party against whom indemnification claims are
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asserted under Article X.
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Intellectual Property means (a) all inventions (whether patentable or
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unpatentable and whether or not reduced to practice), all improvements thereto
and all patents, patent applications and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions and
reexaminations thereof, (b) all trademarks, services marks, trade dress,
logos, trade names and corporate names, together with all translations,
adaptations, derivations and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connections therewith, (c) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (d) all mask
works and all applications, registration and renewals in connection therewith,
(e) all trade secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights
and (h) all copies and tangible embodiments thereof (in whatever form or
medium).
Loss means Damages for which any claim may be asserted under Article X.
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Other Company Agreements means the Employment Agreement and Non-Compete and
- --------------------------
Confidentiality Agreement.
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Note shall have the meaning given it in Article 2.2
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Notice means the thirty day period which the indemnifying party shall have
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from the personal delivery or mailing of the Claim Notice.
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OSHA means the Occupational Safety and Health Act of 1970, as amended, and any
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regulations, rules or orders promulgated thereunder.
Purchase Price has the meaning given it in Article 2.2.
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Purchaser means Factual Data Corp., a Colorado corporation, or its assigns.
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Retained Accounts Receivable means accounts receivable retained by Seller and
- -----------------------------
shall include receivables due for all work, labor and services performed by
Seller and billed by Seller in the normal course of business through and
including the day before Closing.
Seller means Heritage Credit Reporting, Inc., an Illinois corporation.
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Shareholders means all owners of capital stock of Seller at the date hereof
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and as of Closing.
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Tax or Taxes means any federal, state, local or foreign income, gross
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receipt, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code Section
59A), custom duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or
add-on minimum, estimating or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
Tax Return means any return, declaration, report, claim for refund or
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information return or statement relating to Taxes, including any schedule or
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attachment thereto, and including any amendment thereof.
Uniform Commercial Code means the Uniform Commercial Code applicable in the
- -------------------------
State of Illinois.
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ARTICLE VV
ACQUISITION OF THE ASSETSOF THE ASSETS
Subject to the terms and conditions set forth in this Agreement:
2.1 DELIVERY OF ASSETS2.1 DELIVERY OF ASSETS. At the Closing, as
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defined below, Seller shall endorse and deliver such instruments, documents,
certificates or instructions as may be necessary to vest title to the Assets
set forth on Exhibit 2.1 hereto in Purchaser. Upon receipt of such documents,
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instruments, certificates or instructions, and upon the Closing,
Purchaser shall become the beneficial and record holder of the Assets and
entitled to all of the rights, benefits and privileges with respect thereto.
The Assets shall be delivered by Seller to Purchaser at the Closing and will
be free of all encumbrances, liens, security interests or other claims. At
the Closing, the Assets which will be transferred to Purchaser, and their
value, shall be as follows:
<TABLE>
<CAPTION>
Asset Category Valuation(1)
------------------------ ------------
<S> <C>
Fixed Assets $ 75,000
Intellectual Property(2) 1,875,835
Non-Compete and
Confidentiality Agreement 30,000
Deposits 8,361
-----------
Total $1,989,196
===========
</TABLE>
_________________________
(1) The parties acknowledge and agree that the valuation of the Assets if
not determined at the date of execution of this Agreement, shall be made by
the parties not later than twenty (20) days prior to Closing.
(2) The Intellectual Property to be transferred shall include all rights,
including contract rights and customer agreements, and trade names of Seller
and all computer software programs, designed, written or used by Seller,
including but not limited to the source codes for all programs, if any.
Each of Seller and the Purchaser covenant that it will not take a
position on any income tax return or before any governmental agency or in any
judicial proceeding that is inconsistent in any way with this allocation.
2.2 PURCHASE PRICE FOR ASSETS2.2 PURCHASE PRICE FOR ASSETS. The
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aggregate purchase price for the Assets is $1,989,196, which shall consist of
$250,000 cash, a promissory note for an aggregate amount of $1,570,957, shares
of Common Stock of the Company valued at $100,000 calculated based upon
the market value (as defined below) of the Purchaser's Common Shares on the
day immediately preceding the Closing and payment of a note dated December 31,
1997 owed to Purchaser by Seller totalling $68,239 (the "December 1997 Note")
(collectively, the "Purchase Price"), which shall be delivered to Seller at
the Closing subject to and upon the terms and conditions hereof and the
representations and warranties contained herein, in the following manner:
(a) At the Closing, Purchaser shall pay an aggregate cash
consideration of $250,000 to the Seller, which shall be paid in the form of a
cashier's check or a wire transfer to a financial institution designated by
the Seller. Such payment shall represent $250,000 in currency of the United
States of America.
(b) At the Closing, Purchaser shall deliver to Seller certificates
representing, $100,000 worth of restricted Common Shares of Purchaser (the
"Acquisition Stock"). Such Acquisition Stock shall be valued based on the
average of the closing bid and ask prices of Purchaser's Common Shares on the
day immediately preceding the Closing Date.
(c) Purchaser shall deliver to Seller a non-negotiable promissory note in
the aggregate principal amount of $1,570,957 (the "Note"). The Note shall be
issued by Purchaser on the following terms and conditions:
(i) The Note shall bear interest at the rate of 8% per annum and
shall be due and payable in 20 equal quarterly installments of principal,
together with accrued interest thereon, commencing September 30, 1998.
(ii) The Note, a copy of which is attached hereto as Exhibit 2.2(c), shall
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be secured by a perfected lien on all of the Assets sold pursuant to this
Agreement. If required by a senior debt lender, the lien securing payment of
the Note shall be subordinated to any senior institutional bank or credit
arrangements secured by Purchaser at any time prior to or after the execution
of this Agreement and Seller agrees to execute a subordination agreement and
intercreditor agreement in form satisfactory to the senior debt lender at such
time as a senior credit facility is obtained by Purchaser.
(d) At Closing, the December 1997 Note to Purchaser from Seller shall
be marked paid and delivered to Seller.
(e) The parties contemplate that, subsequent to the Closing, an audit of
the financial records of Seller may be performed in accordance with generally
accepted accounting principles by independent certified public accountants
designated by the Purchaser, and at Purchaser's sole cost and expense.
2.3 ASSUMED LIABILITIES2.3 ASSUMED LIABILITIES. As part of the
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consideration for the Assets, the Purchaser shall assume and pay, perform and
discharge the Assumed Liabilities described on Exhibit 2.3 hereto. The
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Purchaser will pay, perform and discharge the Assumed Liabilities as they
become due provided the Purchaser shall not be obligated to pay, perform or
discharge any obligation except to the extent that such obligation or
liability constitutes a valid and legally enforceable claim against Seller.
ARTICLE VIVI
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERSAND WARRANTIES
OF SELLER AND SHAREHOLDERS
Seller and Shareholders represent and warrant to Purchaser that the
statements contained in this Article III are true, correct and complete as of
the date of this Agreement and will, except as otherwise expressly provided in
this Agreement be true, correct and complete on the Closing Date (as though
made then and as though the Closing Date were substituted for the date of this
Agreement) as follows:
3.1 ORGANIZATION AND QUALIFICATION OF SELLER3.1 ORGANIZATION AND
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QUALIFICATION OF SELLER. The Seller is a corporation duly organized, validly
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existing and in good standing under the laws of the State of Illinois, and is
duly qualified and authorized to do business as a foreign corporation and is
in good standing in each jurisdiction, if any, in which the nature of the
business conducted by it or the properties owned, leased or operated by it
makes such qualification necessary or, if not, then such lack of authorization
will not have materially adversely affected the Purchaser's use of the
Assets. The Seller has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted. The copies of the Articles of Incorporation (certified by the
Secretary of the State of Illinois) and the Bylaws of the Seller, both as
amended to date, which have been delivered to Purchaser and attached hereto as
Exhibits 3.1(a) and 3.1(b), respectively, are complete and correct, and the
- -----------------------------
Seller is not in default under or in violation of any provision of its
- --
Articles of Incorporation or Bylaws. The minute books (containing the records
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of meeting of the shareholders, the board of directors and any committees of
the board of directors), the stock certificate books and the stock record
books of the Seller, as delivered to Purchaser, are correct and complete.
3.2 AUTHORIZED CAPITALIZATION3.2 AUTHORIZED CAPITALIZATION. The
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authorized capital stock of the Seller consists of 10,000 shares of Common
Stock, of which 1,000 shares are issued and outstanding as of the date of this
Agreement. All shares issued and outstanding as of the date of this Agreement
have been duly authorized and validly issued and are fully paid and
nonassessable. No shares of the Seller's capital stock are held in treasury.
The Seller has no authorized or outstanding stock or securities convertible
into or exchangeable for, or any authorized or outstanding option, warrant or
other right to subscribe for or to purchase, or convert any obligation into,
any unissued shares. There are no authorized or outstanding stock
appreciation, phantom stock, profit participation or similar rights with
respect to the Seller. There are no voting trusts, voting agreements, proxies
or other agreements or understandings with respect to the voting of the
capital stock of the Seller.
3.3 AUTHORIZATION3.3 AUTHORIZATION. This Agreement has been duly and
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validly executed and delivered by Seller and the Shareholders and the
agreements, representations and warranties contained herein constitute valid
and binding obligations, representations and warranties of Seller and the
Shareholders enforceable in accordance with their terms. Attached hereto as
Exhibit 3.2(a) is a Certificate which shall evidence the approval and
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authorization of the shareholder(s) of Seller and which shall be attested to
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by the President of Seller. This Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and unanimously
approved by the board of directors of Seller. Attached hereto as Exhibit
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3.2(b) is a certified copy of the Directors' Consent or a resolution passed
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pursuant to duly and validly called meeting of the Board of Directors. This
Agreement constitutes, and all other agreements contemplated hereby to be
executed and delivered by the Seller will when executed and delivered
constitute, the legal, valid and binding obligations of, and be enforceable in
accordance with their respective terms against, the Seller.
3.4 PRODUCT RIGHTS3.4 PRODUCT RIGHTS. As of the Closing, subject to
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those limitations set forth in this Agreement, Seller has no rights with
respect to any trademarks and trade names.
3.5 BULK SALE LAW3.5 BULK SALE LAW. Seller will comply with the bulk
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sale provisions of the Illinois Uniform Commercial Code.
3.6 NO CONFLICTING AGREEMENTS3.6 NO CONFLICTING AGREEMENTS. The
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execution and delivery of this Agreement by Seller does not, and consummation
by Seller of the transactions contemplated hereby will not, (a) violate any
existing term or provision of any law, regulation, order, writ, judgment,
injunction or decree applicable to Seller or the Assets which will materially
adversely affect Purchaser's ability to utilize the Assets, (b) conflict with
or result in a breach of any of the material terms, conditions or provisions
of the Articles of Incorporation or Bylaws of Seller or of any agreement or
instrument to which Seller is a party, or (c) result in the creation or
imposition of any lien, charge, security interest, encumbrance, restriction or
claim upon the Assets, which will materially adversely affect Purchaser's
ability to utilize the Assets.
3.7 COMPLIANCE WITH APPLICABLE LAW3.7 COMPLIANCE WITH APPLICABLE LAW.
--------------------------------- ------------------------------
Except as set forth in Exhibit 3.7(a), Seller has not received any notice
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or information of any violation, probable violation or default by Seller under
any applicable law, regulation or order of any governmental department,
commission, board or agency or instrumentality, domestic or foreign, having
jurisdiction over Seller's operations which could materially adversely affect
the business, operations, financial condition, properties or assets of Seller,
or the ability to consummate the transaction contemplated hereby. To the best
of Seller's knowledge after diligent inquiry, Seller has operated its
business, and will continue to operate its business, in compliance with the
Fair Credit Reporting Act, the Real Estate Settlement Procedures Act, the Fair
Debt Collection Practices Act and applicable state law. Additionally, Seller
has given notice to the Illinois Department of Employment Security and
Illinois Department of Revenue, which are to the best of Seller's knowledge
the only entities that require notice of the sale of the Assets.
3.8 MATERIAL MISSTATEMENTS OR OMISSIONS3.8 MATERIAL MISSTATEMENTS OR
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OMISSIONS. Neither this Agreement nor any other document, certificate or
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statement furnished to Purchaser by or on behalf of Seller in connection with
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this Agreement contains any untrue statement of a material fact, or omits any
material fact necessary to make the statements contained herein or therein not
misleading in light of the context in which they were made.
3.9 NO KNOWN ADVERSE EFFECTS3.9 NO KNOWN ADVERSE EFFECTS. There is no
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fact known to Seller, its officers, directors or employees which
materially adversely affects or will materially adversely affect the Assets
which has not been set forth in writing in this Agreement or disclosed in the
other documents, certificates or written statements furnished to Purchaser by
or on behalf of Seller in connection herewith.
3.10 CONSENTS AND APPROVALS3.10 CONSENTS AND APPROVALS. The
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execution and delivery by Seller of this Agreement, and the performance by
Seller of its obligations hereunder, does not require Seller to obtain any
consent, approval, agreement, or action of, or make any filing with or give
any notice to, any corporation, person, entity, or firm or any public,
governmental or judicial authority except (i) such as have been duly obtained
or made, as the case may be, and or will be duly obtained and made and in full
force and effect as of the Closing, (ii) those as to which the failure to
obtain would have no material adverse effect on the Assets or the transactions
contemplated hereby, and (iii) approval of the Seller's Shareholders, which
shall be obtained prior to the execution hereof.
3.11 SUBSIDIARIES3.11 SUBSIDIARIES. Seller does not own, have an
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ownership interest in, or control any corporation, partnership, proprietorship
or other entity.
3.12 LITIGATION3.12 LITIGATION. Except as described in Exhibit 3.12,
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there are no actions, proceedings or investigations pending or threatened
against Seller or the Assets before any court or administrative agency which
could result in any material adverse change in the operations or financial
condition of Seller other than as identified therein.
3.13 BROKERS3.13 BROKERS. All negotiations relative to this Agreement
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and the transactions contemplated hereby have been carried out by Seller
directly with representatives of Purchaser, without the intervention of any
person in such manner as to give rise to any valid claim by any person against
Purchaser for a finder's fee, brokerage commission, or similar payment. All
rights of indemnity under Article X hereof shall apply to any claim relating
to a Loss (hereinafter defined) arising out of this Agreement for any fee,
commission or similar payment.
3.14 TAXES3.14 TAXES. Seller shall pay all Taxes arising out of the
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transfer of the Assets and shall be responsible for all personal property
taxes for the business of Seller through the date of the Closing. Purchaser
shall not be responsible for any business, occupation, withholding or similar
Tax, or any Taxes of any kind related to the Assets or the business of Seller
for any period prior to the Closing.
3.15 OWNERSHIP3.15 OWNERSHIP. Seller is the owner, beneficially and
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of record, of all of the Assets as identified on Exhibit 2.1 hereto, free and
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clear of all liens, encumbrances, security agreements, equities, options,
claims, charges and restrictions, except as otherwise described on Exhibit
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3.15 hereto.
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3.16 ACCOUNTS3.16 ACCOUNTS. The list of customers attached
------------ --------
hereto as Exhibit 3.16(a) represents the customers with which Seller now does
---------------
business, principally in the area of mortgage credit reporting. The customers
with which Seller maintains a contract or agreement are identified on Exhibit
-------
3.16(b) hereto. Except as described on Exhibit 3.16(c), all such contracts or
- ------- ---------------
agreements are valid and enforceable contracts or agreements and are not
currently, and will not be at Closing, in default, invalid or unenforceable in
any manner, nor to the actual knowledge of Seller is termination threatened or
imminent. Seller has performed all of its material obligations and material
responsibilities as described under each such contract or agreement, none of
such contracts or agreements are subject to any counterclaim or set-off and
such contracts are in full force and effect and will continue in full force
and effect following the Closing (assuming continuing performance by Purchaser
following the Closing, which is not warranted or represented by Seller).
Except as described on Exhibit 3.16(d), Seller has no reason to believe that
---------------
amounts payable under such contracts or agreements, assuming due performance
by Purchaser in the future (which is not warranted or represented by Seller),
will not be paid in accordance with the terms of such contracts or agreements.
Seller has not received any notices of default, claims, or any other type of
notice with respect to each such contract or agreement or, if such notice has
been received, a copy of any such notice has been provided in writing to
Purchaser.
3.17 LICENSE AGREEMENTS3.17 LICENSE AGREEMENTS. Attached as
---------------------- ------------------
Exhibit 3.17 is a complete and accurate list of any license agreements to
---------
which Seller is a party as of the date hereof. Also stated on Exhibit 3.17 is
------------
the expiration date of each such license agreement. Except as described on
Exhibit 3.17, all such license agreements are valid and enforceable contracts
-----------
or agreements and are not currently, and will not be at Closing, in material
default, invalid or unenforceable in any manner. The license agreement that
currently exists between the Purchaser and Seller shall terminate at Closing.
To the extent the transfer of any license agreement hereunder requires the
consent of any third party, Seller and Shareholders shall use their best
efforts to obtain such consents. Seller has not received any written notices
of default, claims or any other type of written notice with respect to any
license agreement or, if such written notice has been received, a copy of such
notice has been provided in writing to Purchaser.
3.18 INTELLECTUAL PROPERTY3.18 INTELLECTUAL PROPERTY. Attached as
------------------------- ---------------------
Exhibit 3.18 to this Agreement is a schedule of all trade names, trademarks,
----------
service marks, copyrights, computer software, source code and their
registrations, owned by Seller or in which Seller has any right, license, or
for which Seller has made application, together with a brief description of
each (hereinafter collectively the "Intellectual Property"). To the best of
Seller's knowledge, Seller has not infringed, and by its use of its
Intellectual Property, is not now infringing on any United States or Illinois
trade name, trademark, service mark or copyright belonging to any other
person, firm or corporation, and to the best of Seller's knowledge, the use of
the Intellectual Property by Purchaser will not conflict with, infringe
on or otherwise violate the rights of others.
3.19 CONTRACTS3.19 CONTRACTS. Except as set forth in Exhibit 3.19,
------------- --------- ------------
Seller is not a party to, nor is the property of Seller bound by, any
contract, distributorship agreement, license agreement, agency agreement or
output or requirements agreement, or any other agreement, indenture, mortgage,
deed of trust, lease, security agreement, loan agreement or instrument
which Purchaser would succeed to by its purchase of the Assets, nor will the
purchase of the Assets by Purchaser create any default by Seller as to any of
such agreements which will materially adversely affect the Purchaser's use of
the Assets.
3.20 FINANCIAL STATEMENTS3.20 FINANCIAL STATEMENTS. Seller has
------------------------ --------------------
delivered to Purchaser copies of Seller's balance sheet at December 31, 1997
and the statements of income and retained earnings for the years ended
December 31, 1997 and 1996 and the quarter ended March 31, 1998 (collectively,
the "Financial Statements"). The Financial Statements are based upon the
information contained in the books and records of Seller and fairly and
accurately present the financial condition of Seller as of the dates thereof
and results of operations for the periods referred to therein. The monthly
financial statements generated by Seller from and after March 31, 1998 will be
prepared on a basis consistent with the methods and procedures used to prepare
the Financial Statements. If requested by Purchaser, Seller will deliver such
monthly financial statements from and after the period ended March 31, 1998 to
Purchaser within 60 days of the end of each month from the date hereof to
Closing.
3.21 ABSENCE OF UNDISCLOSED OR CONTINGENT LIABILITIES3.21 ABSENCE OF
---------------------------------------------------- ----------
UNDISCLOSED OR CONTINGENT LIABILITIES. Seller has no liabilities (whether
---------------------------------------
accrued, absolute, contingent, unliquidated or otherwise, whether due or to
--
become due, whether known or unknown, and regardless of when asserted) except
-
as otherwise set forth in the Financial Statements, the monthly financial
statements and Exhibit 3.21 hereto.
-------------
3.22 NO MATERIAL ADVERSE CHANGES3.22 NO MATERIAL ADVERSE CHANGES.
------------------------------- ---------------------------
Since the date of the most recent Financial Statements, there has been no
change materially adverse to Seller in its Assets, financial condition, gross
profit, operating results, customer, employee or supplier relations, business
condition or prospects, except as otherwise disclosed on Exhibit 3.22 hereto.
------------
3.23 ABSENCE OF DEVELOPMENTS3.23 ABSENCE OF DEVELOPMENTS. Since the
--------------------------- -----------------------
date of the Term Sheet by and between Seller and Purchaser, Seller has and
will until Closing:
(a) Conducted its business and operations only in the regular and
ordinary course; maintained reasonable business insurance; committed no waste
of the Assets; disposed or otherwise changed the nature of any Asset such that
cash or accounts receivable are increased (other than in the ordinary course
of business), nor created or suffered to exist any material lien, charge or
encumbrance on any Asset or incurred any indebtedness for borrowed money
(other than in the ordinary course) which is secured by one or more of the
Assets; and has used its best efforts to maintain and preserve its business
organization intact and maintain its relationships with suppliers, employees,
customers and others;
(b) Refrained from making capital expenditures or commitments for
additions to the property, plant or equipment or entered into transactions
which could materially alter or affect operations, except as otherwise have
been approved in writing by Purchaser;
(c) Except from the assets to be retained by Seller, refrained from
paying the officers or directors or their affiliates, whether in the
capacities of shareholders, directors, officers or employees, any dividends or
any bonuses or any other forms of compensation except for non-bonus
compensation in accordance with current practice; and
(d) Maintained title to, and refrained from making or permitting, any
transfer, sale, pledge, encumbrance on, lien or other disposition of the
Assets of Seller, except in the ordinary course of business.
3.24 TITLE TO PROPERTIES3.24 TITLE TO PROPERTIES. Seller does
----------------------- -------------------
not own any real property. The lease to which Seller is a party, a true and
complete copy of which is attached hereto as Exhibit 3.24, is in full force
------------
and effect, and Seller holds a valid and existing leasehold interest in such
lease for the term set forth in such lease. Seller shall utilize its best
efforts to obtain an assignment of the property lease if requested to do so by
Purchaser. Seller shall have delivered complete and accurate copies of such
lease to Purchaser, and such lease shall not have been modified in any
material respect except to the extent that such modifications are disclosed in
writing delivered to Purchaser. Seller is not in default, and no
circumstances exist which, if unremedied would, either with or without notice
or the passage of time or both, result in a default under such lease, nor is
Seller in default under the lease. The fixed assets necessary for the conduct
of Seller's businesses are in good condition and repair, ordinary wear and
tear excepted, and are usable in the ordinary course of business. There are
no defects in such fixed assets or other conditions relating thereto which, in
the aggregate, materially adversely affect the operation or value of such
fixed assets. Seller owns, or leases under valid leases, all equipment and
other tangible assets necessary for the conduct of its business.
3.25 TAX MATTERS3.25 TAX MATTERS.
---------------- ------------
(a) The Seller has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects. All
Taxes owed by the Seller (whether or not shown on any Tax Return) have been
paid. The Seller is not currently the beneficiary of any extension of time
within which to file any Tax Return. No claim has ever been made by an
authority in a jurisdiction where the Seller does not file Tax Returns that it
is or may be subject to taxation by that jurisdiction. There are no
encumbrances on any of the Assets of the Seller that arose in connection with
any failure (or alleged failure) to pay any Taxes.
(b) The Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, shareholder or other third party.
(c) There is no basis for any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is no dispute or
claim concerning any liability for Taxes of the Seller (i) claimed or raised
by any authority in writing or orally with any directors, officers or
employees of the Seller, or (ii) as to which any such person has knowledge
based upon personal contact with any agent of such authority. Exhibit 3.25
------------
lists all federal, state, local and foreign income Tax Returns filed with
respect to the Seller for taxable periods ended on or after December 31, 1995,
indicates those Tax Returns that have been audited and indicates those Tax
Returns that currently are the subject of audit. The Seller has delivered to
the Purchaser correct and complete copies of all federal income Tax Returns,
examination reports, and statements of deficiencies filed, assessed against or
agreed to by the Seller since December 31, 1995.
3.26 TAX NOTICES3.26 TAX NOTICES. Except as set forth on Exhibit
--------------- ----------- -------
3.26 hereto, no deficiency for any Taxes has been proposed, asserted or
- ----
assessed against Seller that has not been resolved and paid in full. No
- ----
waiver, extension or comparable consent given by Seller regarding the
- ----
application of the statute of limitations with respect to any Taxes
- ----
outstanding, nor is any request for any such waiver or consent pending.
- ----
Except as described in Exhibit 3.26 hereto, there has been no tax audit or
- ----
other administrative proceeding or court proceeding with respect to any Taxes,
- ---
nor is any such Tax audit or other proceeding pending, nor has there been any
notice to Seller by any taxing authority regarding any such Tax, audit or
other proceeding or, to the best knowledge of Seller, is any such Tax audit or
other proceeding threatened with regard to any Taxes. Seller does not expect
the assessment of any additional Taxes and is not aware of any unresolved
questions, claims or disputes concerning the liability for Taxes which would
exceed the estimated reserves established on its books and records. For the
purposes hereof, the term "Taxes" means all taxes, charges, fees, levies or
other assessments, including without limitation, all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, workmen's compensation, social security,
unemployment, excise, estimated, severance, stamp, occupation, property or
other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever including, without limitation, all interest and penalties thereon,
and additions to tax or additional amounts imposed by any taxing authority,
domestic or foreign, upon Seller.
3.27 EMPLOYEES3.27 EMPLOYEES. Except as described on Exhibit 3.27,
------------- --------- ------------
(a) Seller has no actual knowledge that any executive employee of Seller or
any group of Seller's employees has any plan or intention to terminate his,
her or its employment following the Closing; (b) Seller has complied with all
laws relating to the employment of labor, including provisions thereof
relating to wages, hours, equal opportunity, collective bargaining and the
payment of social security and other taxes; (c) to the best of Seller's
knowledge, Seller has no material labor relations problem pending and its
labor relations are satisfactory; (d) there are no workmen's compensation,
sexual harassment, discrimination or claims pending against Seller nor is
Seller aware of any facts that would give rise to such claims; (e) to the best
of Seller's knowledge, no employee of Seller is subject to any secrecy or
non-competition agreement or any other agreement or restriction of any kind
that would impede in any way the ability of such employee to carry out fully
all activities of such employee in furtherance of the business of Seller; and
(f) to the best of Seller's knowledge, no employee or former employee of
Seller has any claim with respect to any intellectual property rights of
Seller.
3.28 EMPLOYEE BENEFIT PLANS3.28 EMPLOYEE BENEFIT PLANS.
---------------------------- ----------------------
(a) Except as provided in writing to Purchaser and as listed on
Exhibit 3.28, with respect to all employees and former employees of Seller and
-------
all dependents and beneficiaries of such employees and former employees, (i)
Seller does not maintain or contribute to any non-qualified deferred
compensation or retirement plans, contracts or arrangements, (ii) Seller does
not maintain or contribute to any qualified defined contribution plans as
defined in Section 3(34) of ERISA or Section 414(i) of the Code, (iii) Seller
does not maintain or contribute to any qualified defined benefit plans as
defined in Section 3(35) of ERISA or Section 414(j) of the Code, and (iv)
Seller does not maintain or contribute to any employee welfare benefit plans
as defined in Section 3(1) of ERISA.
(b) To the best of Seller's knowledge, to the extent required (either as a
matter of law or to obtain the intended tax treatment and tax benefits), all
employee benefit plans as defined in Section 3(3) of ERISA which Seller does
maintain or to which it does contribute (collectively, the "Plans") comply in
all material respects with the requirements of ERISA and the Code. With
respect to the Plans, (i) all required contributions which are due have been
made and a proper accrual has been made for all contributions due in the
current fiscal year, (ii) there are no actions, suits or claims pending, other
than routine uncontested claims for benefits, and (iii) there have been no
prohibited transactions as defined in Section 406 of ERISA or Section 4975 of
the Code.
(c) Seller does not contribute (and has not ever contributed) to any
multi-employer plan, as defined in Section 3(37) of ERISA. Seller has no
actual or potential liabilities under Section 4201 of ERISA for any complete
or partial withdrawal from a multi-employer plan. Seller has no actual or
potential liability for death or medical benefits after separation from
employment, other than (i) death benefits under the employee benefit plans or
programs (whether or not subject to ERISA) that will be set forth in writing
to Purchaser, and (ii) health care continuation benefits described in Section
4980B of the Code.
3.29 GIFTS3.29 GIFTS. Neither Seller nor any of its officers,
--------- -----
directors or shareholders has made or agreed to make gifts of money, other
property or similar benefits (other than incidental gifts of articles of
nominal value) to any actual or potential customer, supplier, governmental
employee, political party, candidate for office, governmental agency or
instrumentality or any other person in a position to assist or hinder Seller
in connection with any actual or proposed business transaction.
3.30 EMPLOYEE HEALTH AND SAFETY3.30 EMPLOYEE HEALTH AND SAFETY.
-------------------------------- --------------------------
Seller has not received a notice or charge asserting any violation of or
liability under, OSHA or any other federal or state acts (including rules and
regulations thereunder) and, to the best of Seller's knowledge, has not
violated and has no liability regulating or otherwise affecting employee
health and safety.
3.31 REPRESENTATIONS AS TO KNOWLEDGE3.31 REPRESENTATIONS AS TO
-------------------------------------- ---------------------
KNOWLEDGE. The representations and warranties contained in Article III hereof
--
shall in each and every event whereby an exercise of discretion or a
statement to the "best knowledge", "best of knowledge" or "knowledge" is
required on behalf of any party to this Agreement be deemed to require that
such exercise of discretion or statement be in good faith, with due diligence,
to the best efforts of each such party and be exercised always in a reasonable
manner and within reasonable times.
3.32 REPRESENTATIONS CONCERNING ACQUISITION STOCK3.32 REPRESENTATIONS
------------------------------------------------ ---------------
CONCERNING ACQUISITION STOCK. The Shareholders make the following
- ------------------------------
representations and warranties with respect to the Acquisition Stock:
- -----------
(a) Shareholders are acquiring the Acquisition Stock for investment
purposes only, not for the account of any other person and not with a view to
distribution, assignment or resale to any person. The Shareholders will not
sell, hypothecate or otherwise transfer the Acquisition Stock unless (i) the
Acquisition Stock is registered under the Securities Act of 1933, as amended
("Act"), and registered or qualified for sale under applicable state
securities laws, or (ii) the Shareholders have received a written opinion of
counsel (which opinion and counsel are satisfactory to the Purchaser) that an
exemption from the registration or qualification requirements of the Act and
such state laws is available.
(b) The Shareholders understand and agree that certificates representing
the Acquisition Stock will contain the following restrictive legend:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR STATE SECURITIES LAWS. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED OR DISPOSED OF EXCEPT IN COMPLIANCE WITH THE SECURITIES
ACT OF 1933, APPLICABLE STATE SECURITIES LAWS AND THE APPLICABLE RULES AND
REGULATIONS THEREUNDER.
(c) The Shareholders have received and have carefully reviewed the
representations made by Purchaser in this Agreement and all Exhibits and
documents delivered by Purchaser to Seller and Shareholders hereunder. All
documents and information which Seller or the Shareholders have requested has
been delivered by Purchaser to them. The Shareholders have been afforded the
opportunity to discuss the current and proposed future business operations of
the Purchaser with the officers and other representatives of the Purchaser.
In evaluating the suitability of an investment in the Acquisition Stock, the
Shareholders have not relied upon any representations or other information
from the Purchaser or any person acting on its behalf other than as set forth
in this Agreement or delivered to Seller and Shareholders in accordance with
the terms of this Agreement or in connection with the transactions
contemplated hereby. The Shareholders have carefully considered and have, to
the extent they believe appropriate, obtained the advice of their legal, tax,
accounting and financial advisors concerning the suitability of an investment
in the Acquisition Stock and have determined that the Acquisition Stock is a
suitable investment.
3.33 REPRESENTATIONS CONCERNING SOLVENCY3.33 REPRESENTATIONS
--------------------------------------- ---------------
CONCERNING SOLVENCY. The Seller has not incurred, and does not intend to
----------------
incur, and has no reasonable basis to believe that it will incur, any debts
beyond its ability to pay such debts as they become due. Seller has, and will
continue to have, assets greater than Seller's debts, based upon a fair
valuation and has paid, and will pay, its debts as they become due. Purchaser
may rely on such representations in asserting that Purchaser has no reasonable
cause to believe that Seller is or will become insolvent as a result of the
transactions contemplated hereby. Seller has undertaken the transactions
described herein in good faith, considering its obligations to any person or
entity to whom Seller owes a right to payment, whether or not the right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or unsecured and
has undertaken the transaction described herein without any intent to hinder,
delay or defraud its creditors. Seller will not, and has not, concealed this
transaction or the proceeds of such transaction from any of its creditors.
Seller has not removed or concealed any assets from its creditors and will not
incur debt in connection with the assets or business that is significantly
greater than the normal and customary debts of Seller in the ordinary course.
Seller does not contemplate and has no reason to contemplate it will seek
protection under the bankruptcy laws and believes in good faith that it will
receive consideration reasonably equivalent to the value of the Assets being
purchased by the Purchaser.
3.34 NO REPRESENTATIONS CONCERNING YEAR 2000 COMPLIANCE3.34 NO
--------------------------------------------------------- --
REPRESENTATIONS CONCERNING YEAR 2000 COMPLIANCE. Neither Seller nor
--------------------------------------------
Shareholders make any representation or warranty concerning the Seller's
--
computer system (defined to include both hardware and software) compliance
with the Year 2000 date change.
ARTICLE VIIVII
PRE-CLOSING COVENANTS OF SELLERCOVENANTS OF SELLER
Seller hereby covenants and agrees that, between the date hereof and the
Closing, it will comply with the provisions of this Article IV, except to the
extent Purchaser may otherwise consent in writing.
4.1 INSPECTION OF PROPERTIES AND BOOKS4.1 INSPECTION OF
----------------------------------------- -------------
PROPERTIES AND BOOKS. Seller shall assist any individual or individuals
-------------
designated by Purchaser with reasonable prior notice to visit or inspect any
property of Seller, at reasonable times acceptable to both parties, including
books of accounts and records of Seller, to make extracts or copies of such
books and records and to discuss the affairs, finances and accounts of Seller
with its officers, and shall use its best efforts to obtain access for
Purchaser to Seller's accountants' work papers. As a condition to the
Closing, the parties acknowledge and agree that Seller shall furnish to
Purchaser Evaluation Material which shall be used in connection with a due
diligence review. The parties agree that Purchaser shall treat the Evaluation
Material confidentially, and shall not disclose to any party, except as
otherwise set forth herein, the Evaluation Material or any information set
forth therein; provided, however, that Purchaser is authorized to disclose the
Evaluation Material to its investment banker, counsel and accountants for
their review. Purchaser shall instruct its officers, directors, employees,
agents or representa-tives of the confidential nature of the Evaluation
Material and shall be responsible for ensuring that the Evaluation Material is
kept confidential by such persons. In the event the Closing is not
consummated, all Evaluation Material shall be returned to Seller, within ten
days of a request therefor, with the understanding that Purchaser shall retain
no copies of the Evaluation Material and shall not disclose to any other party
the Evaluation Material or information contained therein, with the exception
of (i) information which becomes generally available to the public other than
as a result of disclosure by Purchaser, or (ii) information included in the
Evaluation Material which is first disclosed by a third party not bound by a
confidentiality agreement with Seller and (iii) information required to be
disclosed in any registration statement or periodic report under the
disclosure requirements of applicable federal and state securities laws.
4.2 OTHER CONTRACTS4.2 OTHER CONTRACTS. Except in the ordinary course
------------------ ---------------
of business, Seller shall not enter into or become subject, and shall not
cause Seller to enter into or become subject, to any agreement, transaction,
or commitment which would restrict or in any way impair the obligation or
ability of Seller to comply with all of the terms of this Agreement.
4.3 ONGOING OPERATION4.3 ONGOING OPERATION. Seller shall carry on its
-------------------- -----------------
business diligently and substantially in the same manner as heretofore
conducted. The business of Seller shall be conducted only in the ordinary
course and neither the shareholders of Seller nor Seller shall take any action
except in the ordinary course of Seller's business, on an arm-length basis and
in accordance in all material respects with all applicable laws, rules and
regulations and Seller's past custom and industry practice.
4.4 INDEBTEDNESS4.4 INDEBTEDNESS. Seller will not create, incur,
--------------- ------------
assume, guarantee or otherwise become liable with respect to any indebtedness
related or connected with, or secured by, the Assets, except in the ordinary
course of its business and subject to prior written notice to Purchaser.
Except in the ordinary course of its business, and subject to prior written
notice to Purchaser, Seller will not sell, pledge, encumber or otherwise
subject the Assets to any claim or indebtedness.
4.5 RECORDS4.5 RECORDS. Seller shall maintain its books, accounts and
---------- -------
records in the usual, regular and ordinary manner.
4.6 ARTICLES OF INCORPORATION; BYLAWS4.6 ARTICLES OF INCORPORATION;
------------------------------------ --------------------------
BYLAWS. Seller will not amend its Articles of Incorporation or Bylaws or
----
otherwise alter its corporate existence or powers.
--
4.7 DISTRIBUTIONS OR DIVIDENDS4.7 DISTRIBUTIONS OR DIVIDENDS. Seller
----------------------------- --------------------------
will not declare or pay any dividend, make any distribution on shares of its
capital stock or repurchase any shares of its capital stock.
4.8 NOTICE OF BREACH4.8 NOTICE OF BREACH. In the event of and
------------------- ----------------
promptly after becoming aware of the occurrence or threatened occurrence of
any event which would cause or constitute a breach of any warranty,
representation, covenant or agreement of Seller contained herein, Seller shall
give notice in writing of such event or threatened event to Purchaser and use
all reasonable efforts to prevent or promptly remedy such breach or threatened
breach.
4.9 NONDISCLOSURE4.9 NONDISCLOSURE. The parties agree that any
---------------- -------------
publicity release, security filing, memorandum or any other communication
(collectively "Communication"), whether written or oral, identifying this
proposed transaction shall not identify Seller at any time prior to Closing
unless required by applicable securities laws or regulations. Seller shall
timely review any public communication prepared by Purchaser before its
dissemination and release.
4.10 EMPLOYMENT MATTERS4.10 EMPLOYMENT MATTERS. Seller shall not,
---------------------- ------------------
directly or indirectly, except in the ordinary course of business and with
prior notice to Purchaser, (i) enter into or modify any employment, severance
or similar agreements or arrangements with, or grant any bonuses, salary
increases, severance or termination paid to, any officers or directors or
consultants, or (ii) take any action with respect to the grant of any bonuses,
salary increases, severance or termination pay or with respect to any
increase of benefits payable in effect on the date hereof. Seller shall not
adopt or amend any bonus, profit sharing, compensation, stock option, pension,
retirement, deferred compensation, employment or other employee benefit plan,
trust, fund or group arrangement for the benefit or welfare of any employees
or any bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, employment or other employee benefit plan, agreement,
trust, fund or arrangements for the benefit or welfare of any director.
4.11 INSURANCE4.11 INSURANCE. Without 30 days' prior written
------------- ---------
notice to Purchaser, Seller shall not cancel or terminate its current
insurance policies or cause any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies providing coverage equal to or greater than the coverage under the
cancelled, terminated or lapsed policies for substantially similar premiums
are in full force and effect. To the extent Seller has paid premiums for
insurance coverage that will continue in effect on a post-Closing basis, the
Purchaser will reimburse Seller at Closing the prorated portion of
post-Closing insurance coverage based upon the time period covered by such
insurance both prior to, and subsequent to, Closing. Seller shall purchase
tail coverage covering Seller and its officers and directors for any error and
omission claims made policy maintained by Seller which may be purchased
post-Closing but shall be effective as of the Closing.
4.12 PRESERVATION OF BUSINESS4.12 PRESERVATION OF BUSINESS. Seller
---------------------------- ------------------------
and the Shareholders shall (i) use their best efforts to preserve intact
Seller's business organization and goodwill, keep available the services of
Seller's officers and employees as a group and maintain satisfactory
relationships with suppliers, distributors, customers and others having
business relationships with Seller, (ii) confer on a regular and weekly basis
with representatives of Purchaser to report operational matters and the
general status of ongoing operations, (iii) not intentionally take any action
which would render, or which reasonably may be expected to render, any
representation or warranty made by Seller in the Agreement untrue at the
Closing, (iv) notify Purchaser of any emergency or other change in the normal
course of Seller's business or in the operation of Seller's properties and of
any governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would be material,
individually or in the aggregate, to the business, operations or financial
condition of Seller or the ability of Seller to consummate the transactions
contemplated by this Agreement, and (v) promptly notify Purchaser in writing
if Seller or its representatives shall discover that any representation or
warranty made by Seller in this Agreement was when made, or has subsequently
become, untrue in any respect.
4.13 REGULATORY FILINGS4.13 REGULATORY FILINGS. Seller is not
---------------------- ------------------
required, and shall not be required prior to or following Closing, to make any
filings or submissions under any laws or regulations applicable to Seller for
the consummation of the transactions contemplated herein. Seller shall make
all filings necessary such that, at the Closing, Purchaser may file for and
obtain use of Seller's corporate name identified on page one of this
Agreement. Purchaser has advised Seller that the execution of this Agreement
and closing of the transaction contemplated hereby may require the Purchaser
to provide certain disclosure concerning the business and the financial
statements of Seller to the United States Securities and Exchange Commission.
Seller hereby consents to the inclusion of disclosure concerning Seller, the
financial statements of Seller and the representations and warranties made by
Seller in the course of this transaction, in a periodic report or any
amendment thereto, in order to allow Purchaser to discharge its disclosure
obligations under the Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder.
4.14 NO NEGOTIATIONS4.14 NO NEGOTIATIONS. None of Seller, its
-------------------- ---------------
officers, directors or the Shareholders shall cause Seller to, directly or
indirectly, through any officer, director, agent or otherwise, solicit,
initiate or encourage submission of any proposal or offer from any person or
entity (including any of its or their officers or employees) relating to any
liquidation, dissolution, recapitalization, merger, consolidation or
acquisition or the purchase of all or a material portion of the assets of, or
any equity interest in, Seller, or any similar transaction or business
combination involving Seller, or participate in any negotiations regarding, or
furnish to any other person, any information with respect to, or
otherwise cooperate in any way with, or assist or participate in, facilitate
or encourage, any effort or attempt by any other person or entity to do or
seek any of the foregoing. Seller shall within five business days notify
Purchaser of any such proposal or offer, or any inquiry from or contact with
any person with respect thereto, and shall promptly provide Purchaser with
such information regarding such proposal, offer, inquiry or contact as
Purchaser may request.
4.15 ASSIGNMENT OF CONTRACTS, LEASES AND OTHER AGREEMENTS4.15
--------------------------------------------------------------
ASSIGNMENT OF CONTRACTS, LEASES AND OTHER AGREEMENTS. Seller agrees that,
------------------------------------------------
prior to the Closing, it will secure the approval of all parties with which
Seller has customer, supplier or other agreements as to which assignment is
contemplated to Purchaser, as to which consent is expressly required, and,
should Purchaser desire to assume any other contract, lease, agreement or
right, Seller shall use its best efforts to secure the approval of the
remaining party to the contract, lease, agreement or right such that Purchaser
may succeed to rights and obligations of Seller under such contracts,
leases, agreements or rights.
4.16 BEST EFFORTS4.16 BEST EFFORTS. Seller agrees to use its
---------------- ------------
best efforts in good faith to satisfy the various conditions to Closing and to
consummate the transactions provided for herein as expeditiously as possible.
Seller will not take or knowingly permit to be taken any action that would be
in breach of the terms or provisions of this Agreement or that would cause any
of its representations and warranties contained herein to be or become untrue.
4.17 ADDITIONAL DISCLOSURE4.17 ADDITIONAL DISCLOSURE. From the date
------------------------- ---------------------
of this Agreement to and including the Closing Date, Seller promptly upon the
occurrence thereof, will advise Purchaser of each event subsequent to the date
hereof which would have had to be disclosed on any schedule or exhibit to
this Agreement had it occurred prior to the date hereof.
ARTICLE VIIIVIII
POST-CLOSING COVENANTSCOVENANTS
The parties agree as follows with respect to the period following the
Closing.
5.1 FURTHER ASSURANCES5.1 FURTHER ASSURANCES. In case at any time
--------------------- ------------------
after the Closing any further action is necessary or desirable to carry out
the purposes of this Agreement, each of the parties will take such further
action (including the execution and delivery of such further instruments and
documents) as any other party reasonably may request, all at the sole cost and
expense of the requesting party (unless the requesting party is entitled
to indemnification therefor under Article X).
5.2 LITIGATION SUPPORT5.2 LITIGATION SUPPORT. In the event and
--------------------- ------------------
for so long as any party actively is contesting or defending against any
action, suit, proceedings, hearing, investigation, charge, complaint, claim or
demand in connection with (a) any transaction contemplated by this Agreement,
or (b) any fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure to act or
transaction on or prior to the Closing Date involving the Seller, each of the
other parties will cooperate with each other and counsel in the contest or
defense, make available their personnel, and provide such testimony and access
to their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting or
defending party (unless the contesting or defending party is entitled to
indemnification therefor under Article X).
ARTICLE IXIX
REPRESENTATIONS AND WARRANTIES OF PURCHASEREPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser represents and warrants to Seller that the statements contained
in this Article VI are true, correct and complete as of the date of this
Agreement and will, except as otherwise expressly provided in this Agreement
be true, correct and complete on the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement) as
follows:
6.1 ORGANIZATION AND QUALIFICATION OF PURCHASER6.1 ORGANIZATION AND
---------------------------------------------- ----------------
QUALIFICATION OF PURCHASER. Purchaser is a corporation duly organized,
--------------------------
validly existing and in good standing under the laws of the State of Colorado
----
and has the full corporate power and authority to own and operate its
properties and to carry on its business.
6.2 AUTHORIZATION6.2 AUTHORIZATION. This Agreement has been duly and
---------------- -------------
validly executed by Purchaser and the agreements, representations, and
warranties contained herein constitute valid and binding obligations,
representations, and warranties of Purchaser enforceable in accordance with
their terms.
6.3 NO CONFLICTING AGREEMENTS6.3 NO CONFLICTING AGREEMENTS. The
------------------------------ -------------------------
execution and delivery of this Agreement by Purchaser does not, and
consummation by Purchaser of the transactions contemplated hereby will not,
(a) violate any existing term or provision of any law, regulation, order,
writ, judgment, injunction or decree applicable to Purchaser, (b) conflict
with or result in a breach of any of the terms, conditions or provisions of
the Articles of Incorporation or Bylaws of Purchaser or of any agreement or
instrument to which Purchaser is a party, or (c) result in the creation or
imposition of any lien, charge, security interest, encumbrance, restriction or
claim upon Purchaser or any of its assets.
6.4 COMPLIANCE WITH APPLICABLE LAW6.4 COMPLIANCE WITH APPLICABLE
--------------------------------- --------------------------
LAW. Purchaser has not received any notice or information of any violation,
- ---
probable violation or default by Purchaser under any applicable law,
regulation or order of any governmental department, commission, board or
agency or instrumentality, domestic or foreign, having jurisdiction over
Purchaser's operations which could materially adversely affect the business,
operations, financial condition, properties or assets of Purchaser or the
ability to consummate the transaction contemplated hereby.
6.5 LITIGATION6.5 LITIGATION. There are no actions, proceedings or
------------- ----------
investigations pending, or to the knowledge of Purchaser, threatened against
Purchaser or its officers or directors, before any court or administrative
agency or administrative officer.
6.6 MATERIAL MISSTATEMENTS OR OMISSIONS6.6 MATERIAL MISSTATEMENTS OR
-------------------------------------- -------------------------
OMISSIONS. Neither this Agreement nor any other document, certificate or
--------
statement furnished to Seller by or on behalf of Purchaser in connection with
---
this Agreement contains any untrue statement of a material fact, or omits any
material fact necessary to make the statements contained herein and therein
not misleading in light of the context in which they were made.
6.7 CONSENTS AND APPROVALS6.7 CONSENTS AND APPROVALS. The execution
------------------------- ----------------------
and delivery by Purchaser of this Agreement, and the performance by Purchaser
of Purchaser's obligations hereunder, do not require Purchaser to obtain any
consent, approval or action of, or make any filing with or give any notice to,
any corporation, person or firm or any public, governmental or judicial
authority except (i) such as have been duly obtained or made, as the case may
be, and are in full force and effect on the date hereof and will continue to
be in full force and effect on the Closing Date, and (ii) those which the
failure to obtain would have no material adverse effect on the transactions
contemplated hereby.
6.8 BROKERS6.8 BROKERS. All negotiations relative to this Agreement
---------- -------
and the transactions contemplated hereby have been carried out by
representatives of Purchaser directly with Seller, without the intervention of
any person on behalf of Purchaser in such manner as to give rise to any
valid claim by any person against Seller for a finder's fee, brokerage
commission or similar payment. All rights of indemnity under Article X hereof
shall apply to any claim relating to a Loss (hereinafter defined) arising out
of this Agreement for any fee, commission or similar payment.
6.9 REPRESENTATIONS AS TO KNOWLEDGE6.9 REPRESENTATIONS AS TO
---------------------------------- ---------------------
KNOWLEDGE. The representations and warranties contained in Article VI hereof
-----
shall in each and every event whereby and exercise of discretion or a
statement to the "best knowledge", "best of knowledge" or "knowledge" is
required on behalf of any party to this Agreement be deemed to require that
such exercise of discretion or statement be in good faith, with due diligence,
to the best efforts of each such party and be exercised always in a reasonable
manner and within reasonable times.
6.10 REPRESENTATIONS CONCERNING SOLVENCY6.10 REPRESENTATIONS
----------------------------------------- ---------------
CONCERNING SOLVENCY. The Purchaser has not incurred, and does not intend to
-----------
incur, and has no reasonable basis to believe that it will incur, any debts
beyond its ability to pay such debts as they become due. Purchaser has, and
will continue to have, assets greater than Purchaser's debts, based upon a
fair valuation and has paid, and will pay, its debts as they become due.
Seller may rely on such representations in asserting that Seller has no
reasonable cause to believe that Purchaser is or will become insolvent as a
result of the transactions contemplated hereby. Purchaser has undertaken the
transactions described herein in good faith, considering its obligations to
any person or entity to whom Purchaser owes a right to payment, whether or not
the right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured and has undertaken the transaction described herein
without any intent to hinder, delay or defraud its creditors. Purchaser will
not, and has not, concealed this transaction from any of its creditors.
Purchaser has not removed or concealed any assets from its creditors.
Purchaser does not contemplate and has no reason to contemplate it will seek
protection under the bankruptcy laws and believes in good faith that the
Assets it will receive have a value reasonably equivalent to the value of the
consideration being paid to Seller.
ARTICLE XX
COVENANTS OF PURCHASEROF PURCHASER
Purchaser covenants and agrees as follows:
7.1 OTHER CONTRACTS OTHER CONTRACTS. From and after the date of this
--------------- ---------------
Agreement, Purchaser will not enter into or become subject to any agreement or
commitment which would restrict or in any way impair the obligation of
Purchaser to comply with all of the terms of this Agreement.
7.2 ADDITIONAL DISCLOSURE7.2 ADDITIONAL DISCLOSURE. From the
------------------------ ---------------------
date of this Agreement to and including the Closing, Purchaser will, promptly
upon the occurrence thereof, advise Seller of each event subsequent to the
date hereof which would have had to be disclosed by Purchaser on any schedule
or exhibit to this Agreement had it occurred prior to the date hereof.
7.3 NOTICE OF BREACH7.3 NOTICE OF BREACH. In the event of and
--------------------- ----------------
promptly after becoming aware of the occurrence or threatened occurrence of
any event which would cause or constitute a breach of any warranty,
representation, covenant or agreement of Purchaser contained herein, Purchaser
shall give notice in writing of such event or threatened event to Seller
and use all reasonable efforts to prevent or promptly remedy such breach or
threatened breach.
7.4 NONDISCLOSURE7.4 NONDISCLOSURE. The Purchaser agrees that any
---------------- -------------
publicity release, security filing, or any other communication (collectively
"Communications"), whether written or oral, identifying this proposed
transaction shall not identify Seller any time prior to Closing unless
required by applicable securities laws or regulations.
7.5 BEST EFFORTS7.5 BEST EFFORTS. Purchaser agrees to use its best
--------------- ------------
efforts in good faith to satisfy the various conditions to Closing and to
consummate the transactions provided for herein as expeditiously as possible.
Purchaser will not take or knowingly permit to be taken any action that
would be contrary to or in breach of the terms or provisions of this Agreement
or that would cause any of the representations and warranties of Purchaser
contained herein to be or become untrue.
7.6 REGULATORY FILINGS7.6 REGULATORY FILINGS. Purchaser has
--------------------- ------------------
advised Seller that the transaction contemplated hereby will require Purchaser
to file disclosure, in the form of a periodic report on amendments thereto,
with the United States Securities and Exchange Commission, which report may
include disclosure concerning, and the financial statements of, Seller.
Seller hereby consents to the inclusion of disclosure concerning Seller, the
financial statements of Seller and the representations and warranties made by
Seller in the course of this transaction, in such periodic report or
amendment, in order to allow Purchaser to discharge its disclosure obligations
under the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder. Purchaser agrees to provide Seller upon request a copy
of such periodic report or any amendment thereto at least three business days
prior to filing. Purchaser will make all required filings with the Securities
and Exchange Commission that relate to this transaction.
7.7 EMPLOYMENT AGREEMENT7.7 EMPLOYMENT AGREEMENT. Prior to Closing,
----------------------- --------------------
the termination of the Seller's existing employment agreements, if any, shall
have been negotiated on terms satisfactory to Purchaser and Seller. An
employment agreement shall have been entered into between Purchaser and
Charles F. Geis for a term of not less than three years, substantially in the
form of Exhibit 7.7 hereto.
------------
7.8 NON-COMPETE AND CONFIDENTIALITY AGREEMENTS7.8 NON-COMPETE AND
--------------------------------------------- ---------------
CONFIDENTIALITY AGREEMENTS. At or prior to Closing, all key employees of
-----------------------
Seller listed on Exhibit 7.8 shall enter into non-compete and confidentiality
-----------
agreements with Purchaser substantially in the form of Exhibit 7.8 hereto.
-----------
7.9 SERVICE AGREEMENT7.9 SERVICE AGREEMENT. Prior to Closing, Michael
-------------------- -----------------
P. Kelly shall form a new corporation to be known as Heritage Business
Services, Inc., and Heritage Business Services, Inc. shall enter into a
service agreement with the Purchaser pursuant to which the Purchaser shall
utilize the services of Heritage Business Services, Inc. in connection with
its proposed acquisition of other businesses. The form of the service
agreement, which shall be executed at Closing, is attached as Exhibit 7.9.
-----------
7.10 CHANGE IN BUSINESS7.10 CHANGE IN BUSINESS. Purchaser shall
----------------------- ------------------
notify Seller of any emergency or other change in the normal course of
Purchaser's business or in the operation of Purchaser's properties and of any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would be material,
individually or in the aggregate, to the business, operations or financial
condition of Purchaser or the ability of Purchaser to consummate the
transactions contemplated by this Agreement, and (i) promptly notify Seller in
writing if Purchaser or its representatives shall discover that any
representation or warranty made by Purchaser in this Agreement was when made,
or has subsequently become, untrue in any respect.
7.11 BEST EFFORTS. Purchaser agrees to use its best efforts in good
------------
faith to satisfy the various conditions to Closing and to consummate the
transactions provided for herein as expeditiously as possible. Purchaser will
not take or knowingly permit to be taken any action that would be in breach of
the terms or provisions of this Agreement or that would cause any of its
representations and warranties contained herein to be or become untrue.
7.12 ADDITIONAL DISCLOSURE7.12 ADDITIONAL DISCLOSURE. From the date
------------------------- ---------------------
of this Agreement to and including the Closing Date, Purchaser promptly upon
the occurrence thereof, will advise Seller of each event subsequent to the
date hereof which would have had to be disclosed on any exhibit to this
Agreement had it occurred prior to the date hereof.
ARTICLE XIXI
CONDITIONS PRECEDENT TO CLOSINGPRECEDENT TO CLOSING
8.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER8.1 CONDITIONS
------------------------------------------------ ----------
PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of Seller to consummate
-----------------------------------
and effect this Agreement are subject to the satisfaction in all material
respects, on or before the Closing Date, of the following conditions (unless
waived by Seller in writing in the manner provided in Paragraph 8.1(d)
hereof):
(a) Representations and Warranties of Purchaser; Performance by
------------------------------------------------------------
Purchaser. (i) The representations and warranties of Purchaser set forth in
----
Article VI hereof shall (except where stated to be as of an earlier date) be
accurate in all material respects on and as of the Closing as though made on
and as of the Closing, except for any changes resulting from activities or
transactions which may have taken place after the date hereof which are
expressly permitted by this Agreement or which have been entered into in the
ordinary course of business and are not expressly prohibited by this
Agreement; (ii) Purchaser shall have performed all obligations and complied
with all covenants required to be performed or to be complied with by
Purchaser under this Agreement prior to or at the Closing Date including the
delivery of all documents and the Purchase Price required at the Closing; and
(iii) Seller shall have received a certificate dated the Closing and signed by
the President of Purchaser to the effect that the representations and
warranties made by Purchaser in this Agreement are true and accurate in all
material respects as of the Closing (or, where applicable, as of the earlier
specified date), which certificate shall be in the form of Exhibit 8.1(a).
--------------
(b) Action. All action necessary to authorize the execution, delivery and
------
performance of this Agreement by Purchaser and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Purchaser. Purchaser shall have furnished Seller with copies of all consents
or resolutions adopted or executed by Purchaser in connection with such
actions, certified by the Secretary of Purchaser.
(c) No Action or Proceeding. As of the Closing, no action or
--------------------------
proceeding by any public authority or person shall be pending before any court
or administrative body or overtly threatened to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
herein. There shall not be threatened, instituted or pending any action or
proceeding, before any court or governmental authority or agency, domestic or
foreign, (i) challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions, (ii) seeking to prohibit direct or indirect
ownership or operation by Purchaser of all or a material portion of the
business or Assets of Seller, or to compel Seller or Purchaser to dispose of
or to hold separately all or a material portion of the business or assets of
Seller, as a result of the transactions contemplated hereby, (iii) seeking to
require direct or indirect transfer or sale by Purchaser of any of the Assets,
(iv) seeking to invalidate or render unenforceable any material provision of
this Agreement or any of the other agreements attached hereto as Exhibits or
Schedules, or otherwise contemplated hereby, (v) seeking relief against
Purchaser under any federal or state law or regulation relating to bankruptcy,
insolvency, reorganization or moratorium or creditors' rights generally, (vi)
otherwise relating to and materially adversely affecting the transactions
contemplated hereby, or (vii) which could result in any material adverse
change in the business, operations, financial condition or properties of
Purchaser.
(d) Waiver of Conditions Precedent. Seller may waive any or all of the
------------------------------
conditions precedent set forth in this Article VIII, either prospectively or
retroactively, by giving written notice of such waiver to Purchaser. No
waiver of any condition precedent pursuant to this paragraph 8.1(d) shall,
unless otherwise expressly stated in such written notice of waiver, extend to
any covenant or agreement contained herein or to any other condition
precedent.
(e) Discovery of Facts or Circumstances. Seller shall not have discovered
-----------------------------------
any fact or circumstance existing as of the date of this Agreement which has
not been disclosed to Seller as of the date of this Agreement regarding the
business, assets, liabilities, properties, condition (financial or otherwise),
results of operations or prospects of Purchaser which is, individually or in
the aggregate with other such facts and circumstances, materially adverse to
Purchaser.
(f) Opinion of Counsel. Seller shall have received from counsel to
--------------------
Purchaser, an opinion dated the Closing, in the form attached hereto, which
shall be in form satisfactory to counsel for Seller.:
(g) Miscellaneous. No party shall have initiated action seeking monetary
-------------
damages or claims in connection with, or seeking to prohibit or enjoin the
transactions described in this Agreement.
8.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER8.2
--------------------------------------------------------
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligation of Purchaser
---------------------------------------
to consummate and effect this Agreement are subject to the satisfaction in all
material respects, on or before the Closing Date, of the following conditions
(unless waived by Purchaser in writing in the manner provided in paragraph
8.2(f) hereof):
(a Representations and Warranties of Seller and Shareholders;
-------------------------------------------------------------
Performance by Seller. (i) The representations and warranties of Seller and
----------------
its Shareholders set forth in Article III hereof shall (except where stated to
be as of an earlier date) be accurate in all material respects on and as of
the Closing as though made on and as of the Closing, except for any changes
resulting from activities or transactions which may have taken place after the
date hereof which are expressly permitted by this Agreement or which have been
entered into in the ordinary course of business and are not expressly
prohibited by this Agreement; (ii) Seller shall have performed all obligations
and complied with all covenants required to be performed or to be complied
with by it under this Agreement prior to the Closing; (iii) Purchaser shall
have received a certificate dated as of the Closing and signed by the
President of Seller to the effect that the representations and warranties made
by Seller in this Agreement are true and accurate in all material respects as
of the Closing (or, where applicable, as of the earlier specified date) in the
form attached as Exhibit 8.2(a); and (iv) Purchaser shall have entered into an
--------------
employment agreement with Charles F. Geis, a service agreement with Heritage
Business Services, Inc. and non-compete and confidentiality agreements with
all key employees in the form attached as Exhibit 7.7 which shall commence by
-----------
its terms on Closing of the purchase of the Assets.
(b Action. All action necessary to authorize the execution, delivery and
------
performance of this Agreement by Seller and the consummation of the
transactions contemplated hereby shall have been duly and validly taken by
Seller. Seller shall have furnished Purchaser with copies of all consents or
resolutions adopted or executed by Seller in connection with such actions,
certified by the Secretary of Seller.
(c No Action or Proceeding. As of the Closing, no action or
--------------------------
proceeding by any public authority or person shall be pending before any court
or administrative body or overtly threatened to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
herein. Further, except as described on Exhibit 3.7(a), there shall not be
--------------
threatened, instituted or pending any action or proceeding, before any court
or governmental authority or agency, domestic or foreign, (i) challenging or
seeking to make illegal, or to delay or otherwise directly or indirectly
restrain or prohibit, the consummation of the transactions contemplated hereby
or seeking to obtain material damages in connection with such transactions,
(ii) seeking to prohibit direct or indirect ownership or operation by
Purchaser of all or a material portion of the business or assets of Seller, or
to compel Purchaser or Seller to dispose of or to hold separately all or a
material portion of the business or assets of Seller, as a result of the
transactions contemplated hereby, (iii) seeking to require direct or indirect
transfer or sale by Purchaser of any of the Assets, (iv) seeking to invalidate
or render unenforceable any material provision of this Agreement or any of the
other agreements attached hereto as Exhibits or Schedules, or otherwise
contemplated hereby, (v) seeking relief against Seller under any federal or
state law or regulation relating to bankruptcy, insolvency, reorganization or
moratorium or creditors' rights generally, (vi) otherwise relating to and
materially adversely affecting the transactions contemplated hereby, or (vii)
which could result in any material adverse change in the business, operations,
financial condition or properties of Seller or the Assets.
(d No Adverse Changes. There shall have been no event or change occurring
------------------
between the execution of this Agreement and the Closing which in the aggregate
may be deemed to have a material adverse effect on the business, operations,
financial condition or properties of Seller or the Assets.
(e Litigation. Except as described on Exhibit 3.12, there shall be no
---------- ------------
actions, proceedings or investigations pending, threatened against Seller or
its officers or directors before any court, any administrative agency or
administrative officer or executive, which could result in any material
adverse change in the business, operations, financial condition or properties
of Seller or the Assets.
(f Waiver of Conditions Precedent. Purchaser may waive any or all of
------------------------------
the conditions precedent set forth in this Article 8.2, either prospectively
or retroactively, by giving written notice of such waiver to Seller. No
waiver of any condition precedent pursuant to this paragraph 8.2(f) shall,
unless otherwise expressly stated in such written notice of waiver, extend to
any other covenant or agreement contained herein or to any other condition
precedent.
(g Breach or Violation. Seller shall have obtained, or caused to be
--------------------
obtained, each consent and approval necessary in order that the transactions
contemplated herein not constitute a breach or violation of, or result in a
right of termination or acceleration of, or creation of any encumbrance on any
of the Assets, pursuant to the provisions of any agreement, arrangement or
undertaking of or affecting Seller or any license, franchise or permit of or
affecting Seller.
(h Governmental Filings. All material governmental filings,
---------------------
authorizations and approvals that are required for the consummation of the
------
transactions contemplated hereby shall have been duly made and obtained by
Seller (except filings required by Purchaser pursuant to applicable securities
laws).
(i Discovery of Facts or Circumstances. Purchaser shall not have
---------------------------------------
discovered any fact or circumstance existing as of the date of this Agreement
-
which has not been disclosed to Purchaser as of the date of this Agreement
regarding the business, assets, liabilities, properties, condition (financial
or otherwise), results of operations or prospects of Seller which is,
individually or in the aggregate with other such facts and circumstances,
materially adverse to Seller or the value of the Assets.
(j Damage. There shall have been no damage, destruction or loss of or to
------
any property or properties owned or used by Seller, or to the Assets, whether
or not covered by insurance which, in the aggregate, has or would be
reasonably likely to have, a material adverse effect on Seller.
(k Opinion of Counsel. Purchaser shall have received from counsel to
------------------
Seller, an opinion dated the Closing, in the form attached hereto, which shall
be in form satisfactory to counsel for Purchaser.
ARTICLE XIIXII
SURVIVAL OF REPRESENTATIONS AND WARRANTIESSURVIVAL OF REPRESENTATIONS AND
WARRANTIES
Except as otherwise stated below, the representations, warranties,
covenants and agreements made by the respective parties in this Agreement or
in a certificate executed and delivered in connection with the transactions
contemplated hereby shall survive the Closing for a period of three (3) years.
The foregoing shall be subject to the exception that any claims relating to
tax matters covered in paragraphs 3.27 and 3.28 hereof shall survive for the
period of the applicable statute of limitations pertaining to tax claims. All
covenants, agreements, representations and warranties made herein or pursuant
hereto shall be deemed to be material and to have been relied upon by the
parties hereto, notwithstanding any investigation heretofore or hereinafter
made by or on behalf of the parties prior to the Closing, provided, however,
that no legal remedy, at law or in equity, shall be available with respect to
any loss, liability, or breach of agreement or warranty or misrepresentation
if the party alleging such loss, liability, breach, or misrepresentation had
actual knowledge of the existence, nature and extent thereof on the Closing
and, despite such knowledge, proceeded with the Closing without objection.
ARTICLE XIIIXIII
INDEMNIFICATION
10.1 INDEMNIFICATION10.1 INDEMNIFICATION. Subject to the
------------------- ---------------
provisions of Article IX and this Article X, Seller and Shareholders agree to
indemnify in respect of, and hold Purchaser harmless against, any and all
damages, claims, deficiencies, losses, and expenses (collectively "Damages")
resulting from (i) any material: misrepresentation; breach of warranty; or
nonfulfillment or failure to perform any covenant or agreement on the part of
Seller or the Shareholders made as a part of or contained in this Agreement or
in any certificate executed and delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, except for Damages
resulting from any such misrepresentations, breach of warranty or
nonfulfillment or failure to perform any such covenant or agreement known to
Purchaser and waived in writing by Purchaser as of the Closing and (ii)
Seller's operation of its business through the date of Closing. Subject to
the provisions of Article IX and this Article X, Purchaser agrees to indemnify
in respect of, and hold Seller harmless against, any and all Damages resulting
from (i) any material: misrepresentation; breach of warranty; or
nonfulfillment or failure to perform any covenant or agreement on the part of
Purchaser made as a part of or contained in this Agreement or in any
certificate executed and delivered pursuant to this Agreement or in connection
with the transactions contemplated hereby except for Damages resulting from
any such misrepresentations, breach of warranty or nonfulfillment or failure
to perform any such covenant or agreement known to Seller and waived in
writing by Seller as of the Closing and (ii) Purchaser's operation of the
purchased business after the date of Closing. The party claiming
indemnification hereunder is hereinafter referred to as the "Indemnified
Party" and the party against whom such claims are asserted hereunder is
hereinafter referred to as the "Indemnifying Party". Damages for which a
claim or action may be asserted hereunder are hereinafter referred to as a
"Loss".
10.2 LIMITATION OF LIABILITY10.2 LIMITATION OF LIABILITY.
----------------------------- -----------------------
Neither party shall be liable to the other party to this Agreement except to
the extent that the aggregate amount of Losses for which they would otherwise
(but for this provision) be liable under this Article X exceeds in the
aggregate the sum of $25,000 and then only to the extent of such excess.
Claims for indemnification by either party shall be limited to the greater of
(i) the amount of the Purchase Price, or (ii) the amount of any damages,
claims, deficiencies, losses and expenses paid by the Indemnified Party to a
third party.
10.3 METHOD OF ASSERTING CLAIMS10.3 METHOD OF ASSERTING CLAIMS. All
------------------------------ --------------------------
claims for indemnification by any Indemnified Party under this Article X shall
be asserted and resolved as follows:
(a In the event that any claim or demand for which an Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against or
sought to be collected from such Indemnified Party by a third party, said
Indemnified Party shall, within fifteen (15) days of such claim or demand
being made, notify the Indemnifying Party of such claim or demand, specifying
the nature of and specific basis for such claim or demand and the amount or
the estimated amount thereof to the extent then feasible (the "Claim Notice").
During such fifteen (15) day period, the Indemnified Party shall not take any
action or file any response to any claim or demand, it being the intent of the
parties that any such response shall be prepared and submitted by the
Indemnifying Party. The estimate of Loss contained in the Claim Notice shall
not limit the amount of the Indemnifying Party's ultimate liability under the
claim. The Indemnifying Party shall not be obligated to indemnify the
Indemnified Party with respect to any such claim or demand if the Indemnified
Party fails to notify the Indemnifying Party thereof in accordance with the
provisions of this Agreement within said fifteen (15) day period. The
Indemnifying Party shall have 30 days from the personal delivery or mailing of
the Claim Notice (the "Notice Period") to notify the Indemnified Party (i)
whether or not the liability of the Indemnifying Party to the Indemnified
Party hereunder with respect to such claim or demand is disputed, and (ii)
whether or not the Indemnifying Party desires, at the sole cost and expense of
the Indemnifying Party, to defend the Indemnified Party against such claim or
demand; provided, however, that any Indemnified Party is hereby authorized
prior to and during the Notice Period to file any motion, answer or other
pleading which it shall deem necessary or appropriate to protect its interest
or those of the Indemnifying Party and not unreasonably prejudicial to the
Indemnifying Party. In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, then, except as hereinafter
provided, the Indemnifying Party shall have the right to defend by all
appropriate proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion. If the Indemnified Party desires to
participate in, but not control, any such defense or settlement it may do so
at its sole cost and expense. If requested by the Indemnifying Party, the
Indemnified Party agrees to cooperate with the Indemnifying Party and its
counsel in contesting any claim or demand which the Indemnifying Party elects
to contest, or, if appropriate and related to the claim in question, in making
any counterclaim against the person asserting the third party claim or demand,
or any cross complaint against any person but in any such case at the sole
cost and expense of the Indemnifying Party. No claim may be settled without
the consent of the Indemnifying Party, unless such settlement includes the
complete release of the Indemnifying Party.
(b In the event any Indemnified Party should have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party does not notify the Indemnified
Party within the Notice Period that it disputes such claim, the amount of such
claim shall be conclusively deemed a liability of the Indemnifying Party
hereunder. If the Indemnifying Party has disputed such claim, as provided
above, such dispute shall be resolved by arbitration as provided in Article
13.11.
10.4 PAYMENT OF CLAIM10.4 PAYMENT OF CLAIM. Upon the
---------------------- ----------------
determination of the liability of Seller or Purchaser under Article 10.1, 10.2
and 10.3, as the case may be, after payment by the Indemnified Party of, or
upon entry of final judgment or reaching of a settlement in respect of, an
Indemnifiable Claim, or determination of a Loss to the Indemnified Party
occasioned by the breach of a representation and warranty by the Indemnifying
Party, and notice thereof to the Indemnifying Party, the Indemnifying Party
shall within thirty (30) days after receipt of such notice pay to the
Indemnified Party the amount of the payment, judgment, settlement or Loss, as
the case may be.
10.5 OTHER RIGHTS AND REMEDIES NOT AFFECTED10.5 OTHER RIGHTS AND
------------------------------------------- ----------------
REMEDIES NOT AFFECTED. The indemnification rights of the parties under this
------------------
Article X are independent of and in addition to such rights and remedies as
the parties may have at law or in equity or otherwise for any
misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant hereunder on the part of any party hereto including without
limitation the right to seek specific performance, rescission or restitution,
none of which rights or remedies shall be affected or diminished hereby.
10.6 POST-CLOSING ADJUSTMENTS AND RIGHT OF OFFSET POST-CLOSING
-------------------------------------------- ------------
ADJUSTMENTS AND RIGHT OF OFFSET. As promptly as practicable, but in no event
------------------------------
later than 120 days following the Closing, the Purchaser may audit and
calculate the actual results of operations from June 1, 1997 to May 31, 1998.
The parties agree that the Seller has submitted to Purchaser a statement of
revenues prepared in accordance with generally accepted accounting principles
indicating that revenues totaled $3,634,824 for the period from June 1, 1997
to May 31, 1998. In the event of a material variation in revenues between the
results of such audit and the statement of revenues provided by Seller to
Purchaser prior to the Closing (such material variation in revenues to be
defined as a variation of more than $10,000, then the Purchaser shall have the
right to offset 55% of such material variation in excess of either of the
above-described amounts against the promissory note payment due in the quarter
immediately following the determination of such material variation. In
addition, the amount of any such offset shall also be increased by interest
calculated at the rate of 12% per annum from the date of the Closing to the
date of the promissory note payment in which the offset is taken. If Seller
disagrees with the results of such audit and wishes to contest the results of
such audit, the Seller shall so notify Purchaser within ten days of written
notice from the Purchaser of the intention to exercise the right to offset, or
any other rights of Purchaser. Within 20 days of a notice of intention to
contest the audited results from Seller to Purchaser, Seller and Purchaser
shall each have the right to select a firm of certified public accountants
(which may be the certified public accountants that prepared the financial
statements on behalf of Purchaser or Seller). Upon the expiration of such
20-day period, the two certified public accountants shall jointly select,
within ten days, a third firm of certified public accountants who shall be
responsible for determining the proper accounting of revenues. Such
independent firm of certified public accountants shall, within 30 days of
their selection or within a time period mutually acceptable to Purchaser and
Seller, evaluate the respective claims of the parties and tender a decision to
the parties concerning the proper determination of revenues. If no further
disagreement exists between the parties following the determination by the
independent firm of certified public accountants, then in such event the cost
and fees payable to such independent firm shall be assumed by Purchaser in the
event a material variation in revenues of less than $10,000 is determined to
exist or, in the alternative, if a material variation in revenues of $10,000
or more is determined to exist, then the fees and costs of such independent
certified public accounting firm shall be paid by Seller. Should either of
the parties then disagree with the determination by the independent certified
public accounting firm, any further dispute shall be subject to the provisions
of Article 13.11 hereof. The Note shall also contain provisions which shall
permit the Purchaser to offset indemnification claims under Article X against
payments due under the Note. The right of offset shall survive the Closing
for a period of three years, provided that the right of offset regarding tax
matters will survive the Closing until expiration of the applicable statute of
limitations.
ARTICLE XIVXIV
AMENDMENT, TERMINATION AND BREACHTERMINATION AND BREACH
11.1 AMENDMENT AND MODIFICATION11.1 AMENDMENT AND MODIFICATION.
------------------------------ --------------------------
This Agreement may be amended, modified or supplemented only by an instrument
in writing, executed after the date hereof, making specific reference to this
Article and to each Article and paragraph hereof to which such amendment,
modification or supplement applies, which document shall be signed by an
authorized officer of Purchaser and by Seller.
11.2 TERMINATION AND ABANDONMENT11.2 TERMINATION AND ABANDONMENT.
------------------------------- ---------------------------
This Agreement may be terminated and the transaction provided for by this
Agreement may be abandoned without liability on the part of any party to any
other party:
(a At any time before the Closing Date, by mutual consent of
Purchaser and Seller;
(b Commencing five days prior to Closing and until the Closing, by
Purchaser, if any of the conditions provided for in paragraph 8.2 of this
Agreement have not been met and have not been waived by Purchaser in writing;
(c Commencing five days prior to Closing and until the Closing, by Seller,
if any of the conditions of Paragraph 8.1 of this Agreement have not been met
and have not been waived by Seller in writing; and
(d By either party if the mutual conditions to Closing provided for in
paragraph 8.3 of this Agreement have not been met at time of Closing.
In the event of the termination and abandonment of this Agreement by any
party as above provided in this Article XI, written notice shall forthwith be
given to the other party, and each party shall be solely responsible to pay
its own expenses incident to preparation for the consummation of this
Agreement and the transactions contemplated hereunder (except as otherwise
provided herein).
ARTICLE XVXV
CLOSING
12.1 CLOSING12.1 CLOSING. The closing of this Agreement (the
----------- -------
"Closing") shall become effective as of July 31, 1998 unless a later time and
date is mutually agreed upon by the parties hereto.
12.2 ALLOCATIONS12.2 ALLOCATIONS. At the closing, the parties
--------------- -----------
shall allocate or prorate all the portion attributable to Seller of the water,
sewer, electric, other utilities and rent through the date of Closing and
shall make closing adjustments, if necessary, to take into account such
allocations and prorations. For purposes of income and expense all income and
expenses incurred on or before the day of Closing shall be billed and
collected by, and paid for, respectively, by Seller. The effective time of
the Closing shall be 12:01 a.m. on the day following the Closing date.
12.3 SELLER'S DELIVERIES AT CLOSING12.3 SELLER'S DELIVERIES AT
------------------------------------- ----------------------
CLOSING. At the Closing Seller will deliver the following documents to the
Purchaser all of which shall be reasonably satisfactory in form and substance
to the Purchaser and its counsel:
(a Bill of Sale. Bill of Sale for the Assets in the form annexed as
------------
Exhibit 12.3(a) hereto, together with such deeds, instruments, conveyances,
- ----------------
certificates of title, assignments, assurances and other documents as may be
- --
required to sell, convey and transfer title to the Assets from Seller to the
Purchaser free and clear of any and all liens, claims, charges, taxes,
encumbrances, pledges, security interests, options or other restrictions of
any kind.
(b Assignment of Intellectual Property. Assignment of Intellectual
-------------------------------------
Property described and scheduled in Exhibit 3.18 together with assurances and
------------
other documents as may be required to transfer all of Seller's right, title
and interest in the Intellectual Property.
(c Assignment of Contracts, Leases and Other Agreements. Assignment of
----------------------------------------------------
contracts, leases and other agreements, annexed as Exhibit 3.19 together with
------------
assurances and other documents as may be required to transfer all of Seller's
right, title and interest in the contracts, leases and other agreements.
(d Opinion of Counsel. An opinion from Aronberg Goldgehn Davis & Garmisa,
------------------
counsel to Seller, dated the Closing Date, in the form described in Article
8.2 of this Agreement.
(e Consents and Approvals. All consents, approvals and
------------------------
authorizations, all notices and all registrations and filings required to be
-
obtained, given or made under any law, statute, rule, regulation, judgment,
order, injunction, contract, agreement or other instrument to which Seller is
subject, bound or a party, or by which Seller or any of its properties is
bound or subject, in each case which is required to permit the consummation of
the transactions contemplated by the Agreement without contravention,
violation or breach by the Seller of any of the terms thereof.
(f Certificates. Certificate of good standing for Seller from the
------------
Secretary of State of the State of Illinois dated as of a date reasonably
prior to the Closing Date.
(g Resolutions. Certified copy of resolutions of the Board of Directors
-----------
and the Shareholders of Seller authorizing, inter alia, the execution and
delivery of this Agreement, the sale of the Assets and the other transactions
contemplated under this Agreement.
(h Employment Agreement. The employment agreement of Charles F. Geis set
--------------------
forth in the form annexed as Exhibit 7.7 hereto.
------------
(i Non-Compete and Confidentiality Agreements. The non-compete agreements
------------------------------------------
of all key employees of Seller in the form annexed as Exhibit 7.8 hereto.
-----------
(j Service Agreement. The service agreement of Heritage Business
------------------
Services, Inc. set forth in the form attached as Exhibit 7.9 hereto.
- ------------
(k Delivery of Corporate and Business Records. Such other corporate and
------------------------------------------
business records related to the Assets as may be reasonably requested by the
Purchaser including without limitation employee and personnel folders and
applications, payroll, tax related records and financial data.
(l Officer's Certificate in the form described in Article 8.2 of this
---------------------
Agreement.
(m Other documents. Such other documents, instruments, certificates and
---------------
agreements including assignment of space lease to Purchaser, as Purchaser and
its counsel may reasonably request.
(n License Agreement. The license agreement by and between the
------------------
Seller and the Purchaser shall be delivered to Purchaser and, upon such
delivery, Seller shall be released from any and all further obligation and
liability under such license agreement.
12.4 PURCHASER'S DELIVERIES AT CLOSING12.4 PURCHASER'S DELIVERIES
------------------------------------- ----------------------
AT CLOSING. At the Closing, Purchaser shall deliver the following documents
- -----------
to Seller all of which shall be in a form reasonably acceptable to Seller and
their counsel:
(a Purchase Price. The purchase price for the Assets referred to in
--------------
Article 2.2 including the cash portion, the Acquisition Stock (or the letter
referred to below), the Note and the marked paid December 1997 Note from
Seller to Purchaser. Certificates for the Acquisition Stock must be issued
within five business days after Closing in accordance with a letter of
instruction to the Purchaser's transfer agent prepared by Purchaser and
delivered to Seller at the Closing.
(b Consents and Approval. All consents, approvals and authorizations, all
---------------------
notices and all registrations and filings required to be obtained, given or
made under any law, statute, rule, regulation, judgment, order, injunction,
contract, agreement or other instrument to which the Purchaser is a party, or
by which it or any of its properties is bound or subject, in each case which
is required to permit the consummation of the transactions contemplated by
this Agreement without contravention, violation or breach by the Purchaser of
any of the terms thereof.
(c Opinion of Counsel. An opinion from counsel to the Purchaser, dated
------------------
the Closing Date, in the form described in Article 8.1 of this Agreement.
(d Certificates. Certificate of good standing, dated as of a date
------------
reasonably prior to the date of Closing, from the Secretary of State of the
State of Colorado as to the good standing of the Purchaser.
(e Resolutions. Certified copy of resolutions of the Board of
-----------
Directors of the Purchaser authorizing, inter alia, the execution and delivery
of this Agreement and the Note, the purchase of the Assets, and the other
transactions contemplated hereby.
(f Officer's Certificate in the form described in Article 8.1 of this
---------------------
Agreement.
(g Other Documents. Such other documents, instruments, certificates and
---------------
agreements including without limitation, if assumed, the assumption of the
lease, as Seller and its counsel may reasonably request.
12.5 FORWARDING OF RECEIVABLES AND PAYMENT OF EXPENSES12.5
-----------------------------------------------------------
FORWARDING OF RECEIVABLES AND PAYMENT OF EXPENSES. Following the Closing, in
--------------------------------------------
the event the Purchaser receives payment of receivables which were billed by
Seller, and are the property of Seller, the Purchaser shall take prompt action
(defined to mean not less than every seven calendar days), to forward to
Seller such checks or other remittances as Purchaser shall have received and
which are the property of Seller. Likewise, in the event payments are
received by Seller which are the property of Purchaser and which relate to
receivables created after the purchase of the Assets, the Seller shall
promptly forward (not later than seven calendar days after receipt thereof)
such checks or other remittances to the Purchaser representing payments on
receivables which are the property of Purchaser. In addition, any expenses
incurred by the Seller in the operation of its business from and after August
1, 1998 which are paid by Seller shall be reimbursed by Purchaser within ten
days of Seller submitting invoices and receipts with respect to any such
expenses incurred and paid for by Seller for expenses incurred and paid for
from and after August 1, 1998.
12.6 REMOVAL OF PERSONAL EFFECTS FOLLOWING CLOSING12.6 REMOVAL OF
------------------------------------------------- ----------
PERSONAL EFFECTS FOLLOWING CLOSING. In the event the Seller maintains assets
-------------------------------
which are the personal property of Seller on the premises and Seller desires
to remove such personal property, the Seller shall have a period of sixty days
following the Closing to remove such personal property. As to any such
personal property removed, the Seller shall provide the Purchaser with a
schedule of such property prior to the removal of the same from the premises.
ARTICLE XVIXVI
MISCELLANEOUS
13.1 NOTICE13.1 NOTICE. All notices and communications required
---------- ------
or permitted to be given hereunder shall be in writing, signed by the sender,
and delivered by personal delivery overnight courier service or by registered
or certified mail to:
If to Purchaser: Jerald H. Donnan, President
Factual Data Corp.
5200 Hahns Peak Drive
Loveland, Colorado 80538
With a copy to: Robert W. Walter, Esq.
Berliner Zisser Walter &
Gallegos, P.C.
1700 Lincoln Street, Suite 4700
Denver, Colorado 80203-4547
If to Seller: Michael P. Kelly, President
Heritage Credit Reporting, Inc.
800 East Northwest Highway, #200
Palatine, Illinois 60067
With a copy to: Susan H. Mendelsohn, Esq.
Aronberg Goldgehn Davis & Garmisa
One IBM Plaza, Suite 3000
Chicago, Illinois 60611
or such other address as shall have been furnished in writing. Receipt by, or
filing with, the respective parties of any communications shall be deemed to
have occurred for the purpose of this Agreement, when personally delivered, or
next business day if sent by overnight courier, or two days after deposit
thereof, postage prepaid, properly addressed, in the United States mail.
13.2 ENTIRE AND SOLE AGREEMENT13.2 ENTIRE AND SOLE AGREEMENT.
----------------------------- -------------------------
This Agreement, including all Exhibits and Schedules hereto (which by this
reference shall incorporate herein all such Exhibits and Schedules as if more
fully set forth herein), constitutes the entire agreement between the parties
and as of Closing supersedes all agreements, representations, warranties,
statements, promises and understandings, whether oral or written, with respect
to the subject matter hereof. After Closing neither party shall be bound by
or charged with any oral or written agreements, representations, warranties,
statements, promises or understandings not specifically set forth in this
Agreement or in the certificates or documents delivered in connection
herewith.
13.3 SUCCESSORS AND ASSIGNS13.3 SUCCESSORS AND ASSIGNS. Except as
-------------------------- ----------------------
otherwise provided in this Agreement, all covenants and agreements of the
parties contained in this Agreement shall be binding upon and inure to the
benefit of the respective successors and permitted assigns of the parties
hereto and the heirs, personal representatives, executors and assigns of the
Shareholders. This Agreement may not be assigned by any party hereto without
the prior express written consent of the other parties hereto.
13.4 EXPENSES13.4 EXPENSES. Whether or not the transactions
------------ --------
contemplated hereby shall be consummated, each party shall be solely
responsible for payment of all expenses incurred by it in connection with the
consummation of this Agreement and the transactions contemplated hereunder
except as otherwise provided herein.
13.5 SEVERABILITY13.5 SEVERABILITY. Should any one or more of the
---------------- ------------
provisions of this Agreement be determined to be illegal or unenforceable, all
other provisions of this Agreement shall be given effect separately from
the provision or provisions determined to be illegal or unenforceable and
shall not be affected thereby.
13.6 GOVERNING LAW13.6 GOVERNING LAW. This Agreement shall be
------------------ -------------
construed and enforced in accordance with and governed by the laws of the
State of Colorado without regard to conflicts of laws principles.
13.7 COUNTERPARTS13.7 COUNTERPARTS. This Agreement may be executed
---------------- ------------
simultaneously in two or more counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
Agreement.
13.8 AMENDMENTS13.8 AMENDMENTS. Neither this Agreement nor any term
-------------- ----------
hereof may be changed, waived, discharged or terminated orally, but only by an
instrument in writing in accordance with paragraph 11.1 hereof.
13.9 NO THIRD PARTY BENEFICIARY13.9 NO THIRD PARTY BENEFICIARY.
------------------------------ --------------------------
The terms and provisions of this Agreement are intended solely for the benefit
of the parties hereto, and it is not the intention of the parties to confer
third-party beneficiary rights upon any other person or entity.
13.10 HEADINGS13.10 HEADINGS. The headings in this Agreement are for
------------- --------
purposes of convenience and easy reference only and shall not limit or
otherwise affect the meaning hereof.
13.11 DISPUTES13.11 DISPUTES. In the event of any dispute which
------------- --------
arises between the parties and which relates to the subject matter of this
Agreement, the parties acknowledge and agree that any such dispute shall be
submitted for binding arbitration in Denver, Colorado in accordance with the
Arbitration Commercial Rules procedures established by the American
Arbitration Association or, if such association is not then in existence, an
independent association of arbitrators which may be designated by agreement of
the parties. In the event the parties are unable to agree on an
independent association of arbitrators from which arbitrators may be drawn,
either party may apply to a court of competent jurisdiction for appointment of
arbitrators, however, such application will only be made in the event the
American Arbitration Association is not then in existence. The arbitrator(s)
shall make detailed written findings to support their award. The prevailing
party in any such arbitration proceeding shall be awarded such costs and
expenses (including reasonable attorney's and expert witness' fees) as were
incurred by the prevailing party as a result of the institution and
prosecution of the arbitration proceeding including all costs and expenses
(including reasonable attorney's and expert witness fees) to enter judgment
upon or enforce any such award including all appellate proceedings.
13.12 DELIVERY OF EXHIBITS AND SCHEDULES13.12 DELIVERY OF EXHIBITS AND
--------------------------------------- ------------------------
SCHEDULES. All Exhibits and Schedules to be delivered by either of the
---------
parties hereto upon execution of this Agreement which are not so delivered
shall be delivered to the other party not later than 20 days from the date of
the execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASER:
FACTUAL DATA CORP.
By: /s/ JeraldH. Donnan
-------------------------
Jerald H. Donnan, Chairman of the Board
SELLER:
HERITAGE CREDIT REPORTING, INC.
By: /s/ Michael P. Kelly, President
---------------------------------------
Michael P. Kelly, President
SHAREHOLDERS, but only with respect
to Articles III and X
/s/ Michael P. Kelly
------------------------
Michael P. Kelly
/s/ Gail Kelly
-----------------
Gail Kelly
RWW\FACTUAL\APA-HCR.CLN
TABLE OF ATTACHMENTS
EXHIBIT DESCRIPTION
- ------- ------------------------------------
2.1 List of Acquired Assets
2.2(c)(i) Form of Promissory Note
2.3 List of Assumed Liabilities
3.1(a) Articles of Incorporation, as amended
3.1(b) ByLaws, as amended
3.2(a) Certificate of Seller Shareholder Approval
3.2(b) Directors' Consent
3.7(a) Governmental Notices
3.12 Litigation
3.15 Exceptions to Title of Assets
3.16(a) Customer Accounts
3.16(b) Customer Contracts or Agreements
3.16(c) Impaired Customer Contracts
3.16(d) Slow Pay Contracts or Agreements
3.17 License Agreements
3.18 Intellectual Property
3.19 Contracts
3.21 Liabilities not on Financial Statements
3.22 Material Adverse Changes
3.24 Leases
3.25 Tax Returns
3.26 Tax Notices
3.27 Employment Matters
3.28 Benefit Plans
7.7 Form of Employment Agreement with Charles F. Geis
7.8 Non-Compete and Confidentiality Agreements with Key Employees
7.9 Service Agreement with Heritage Business Services, Inc.
8.1(a) Form of Certificate of Purchaser
8.2(a) Form of Certificate of Seller
12.3(a) Bill of Sale
