UNITED STATES
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): March 31, 1999
FACTUAL DATA CORP.
(Exact name of registrant as specified in its charter)
Colorado 0-24205 84-1449911
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
5200 Hahns Peak Drive
Fort Collins, Colorado 80538
(Address of principal executive offices)
(970) 663-5700
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On March 31, 1999, and April 1, 1999, respectively, Factual Data Corp. (the
"Company") closed its acquisition of the assets of Imfax, Inc. ("Imfax") and
United Data Services, Inc. ("United") pursuant to separate Asset Purchase
Agreements. 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"). Imfax is headquartered in Bellevue, Washington
and operates in Washington, Oregon and Idaho. United is headquartered in
Burlington, Massachusetts and operates primarily in Massachusetts and the
northeast.
Pursuant to the Imfax Agreement, the Company acquired the assets of Imfax and
obtained non-competition agreements with its two shareholders. The total
consideration paid to Imfax and these persons was $1,643,622 in the form of
$821,811 cash and a $821,811 promissory note payable over eight quarters
commencing June 30, 1999 with interest at 8% per annum. Additionally, the
Company acquired computer equipment for $130,000 in cash.
Pursuant to the United Agreement, the Company acquired the assets of United and
entered into employment agreements and non-competition agreements with its five
principals. The total consideration paid was $3,400,000 cash and a $1,100,000
promissory note payable over twelve quarters commencing June 30, 1999 with
interest at 8% per annum.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) It is impracticable to provide financial statements of United at this time.
In accordance with Item 7(a)(4), the Company 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. With respect to Imfax, none of the tests in Item 310(c) of
Regulation S-B were exceeded, hence no historical financial statements of
the business acquired are included herein.
(b) It is impracticable to provide pro forma financial information relative to
United and the Company at this time. In accordance with Item 7(a)(4), the
Company 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. With respect to Imfax, none of the tests
set forth in Item 310(d) of Regulation S-B were exceeded, hence no pro
forma financial statements are included herein.
(c) Exhibits.
2.1 Asset Purchase Agreement between Factual Data Corp. and Imfax, Inc.,
dated as of March 31, 1999.
2.2 Asset Purchase Agreement between Factual Data Corp. and United Data
Services, Inc., dated as of April 1, 1999.
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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 CORP.
Date: April 2, 1999 By: /s/ Jerald H. Donnan
--------------------
Jerald H. Donnan,
Chief Executive Officer
ASSET PURCHASE AGREEMENT
by and between
FACTUAL DATA CORP.
and
IMFAX, INC.
Dated as of April 1, 1999
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS..........................................................1
ARTICLE I
DEFINITIONS....................................................1
ARTICLE II
ACQUISITION OF THE ASSETS......................................3
2.1 Delivery Of Assets.....................................3
2.2 Purchase Price for Assets..............................4
2.3 Assumed Liabilities....................................5
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS......5
3.1 Organization and Qualification Of Seller...............5
3.2 Authorized Capitalization..............................6
3.3 Authorization..........................................6
3.4 Product Rights.........................................6
3.5 Bulk Sale Law..........................................6
3.6 No Conflicting Agreements..............................6
3.7 Compliance with Applicable Law.........................7
3.8 Material Misstatements or Omissions....................7
3.9 No Known Adverse Effects...............................7
3.10 Consents and Approvals.................................7
3.11 Subsidiaries...........................................7
3.12 Litigation.............................................7
3.13 Brokers................................................7
3.14 Taxes..................................................7
3.15 Ownership..............................................8
3.16 Accounts...............................................8
3.17 License Agreements.....................................8
3.18 Intellectual Property..................................9
3.19 Customers..............................................9
3.20 Contracts..............................................9
3.21 Financial Statements...................................9
3.22 Absence of Undisclosed or Contingent Liabilities.......9
3.23 No Material Adverse Changes............................9
3.24 Absence of Developments................................9
3.25 Title to Properties...................................10
3.26 Tax Matters...........................................10
3.27 Tax Notices...........................................11
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3.28 Employees.............................................11
3.29 Employee Benefit Plans................................12
3.30 Gifts.................................................12
3.31 Employee Health and Safety............................12
3.32 Representations as to Knowledge.......................13
3.33 Representations Concerning Solvency...................13
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER...............................13
4.1 Inspection of Properties and Books....................14
4.2 Other Contracts.......................................14
4.3 Ongoing Operation.....................................14
4.4 Indebtedness..........................................14
4.5 Records...............................................14
4.6 Articles of Incorporation; Bylaws.....................14
4.7 Distributions or Dividends............................14
4.8 Notice of Breach......................................14
4.9 Nondisclosure.........................................14
4.10 Employment Matters....................................15
4.11 Insurance.............................................15
4.12 Preservation of Business..............................15
4.13 Regulatory Filings....................................16
4.14 No Negotiations.......................................16
4.15 Assignment of Contracts, Leases and Other Agreements..16
4.16 Best Efforts..........................................16
4.17 Additional Disclosure.................................16
4.18 Non-Compete and Confidentiality Agreements............16
4.19 Employment Agreements.................................17
ARTICLE V
POST-CLOSING COVENANTS........................................17
5.1 Further Assurances....................................17
5.2 Litigation Support....................................17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER...................17
6.1 Organization and Qualification of Purchaser...........17
6.2 Authorization.........................................17
6.3 No Conflicting Agreements.............................18
6.4 Compliance with Applicable Law........................18
6.5 Litigation............................................18
6.6 Material Misstatements or Omissions...................18
6.7 Consents and Approvals................................18
6.8 Brokers...............................................18
6.9 Representations as to Knowledge.......................18
6.10 No Known Adverse Effects..............................19
6.11 Knowledge of Industry.................................19
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6.12 Absence of Undisclosed or Contingent Liabilities......19
6.13 No Material Adverse Changes...........................19
6.14 Representations Concerning Solvency...................19
ARTICLE VII
COVENANTS OF PURCHASER........................................19
7.1 Other Contracts.......................................19
7.2 Additional Disclosure.................................20
7.3 Notice of Breach......................................20
7.4 Nondisclosure.........................................20
7.5 Best Efforts..........................................20
7.6 Regulatory Filings....................................20
7.7 Non-Compete and Confidentiality Agreements............20
7.8 Employment Agreements.................................20
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING...............................21
8.1 Conditions Precedent to Obligations of Seller.........21
8.2 Conditions Precedent to Obligations of Purchaser......23
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................25
ARTICLE X
INDEMNIFICATION...............................................26
10.1 Indemnification.......................................26
10.2 Limitation of Liability...............................26
10.3 Method of Asserting Claims............................26
10.4 Payment of Claim......................................27
10.5 Other Rights and Remedies Not Affected................28
10.6 Post-Closing Adjustments and Right of Offset..........28
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH.............................28
11.1 Amendment and Modification............................28
11.2 Termination and Abandonment...........................29
ARTICLE XII
CLOSING.......................................................29
12.1 Closing...............................................29
12.2 Allocations...........................................29
12.3 Seller's Deliveries at Closing........................29
12.4 Purchaser's Deliveries at Closing.....................30
12.5 Forwarding of Receivables.............................31
12.6 Removal of Personal Effects Following Closing.........31
12.7 Cooperation; Premises.................................32
ARTICLE XIII
MISCELLANEOUS.................................................32
13.1 Notice................................................32
13.2 Entire and Sole Agreement.............................33
13.3 Successors and Assigns................................33
13.4 Expenses..............................................33
13.5 Severability..........................................33
13.6 Governing Law.........................................33
13.7 Counterparts..........................................33
13.8 Amendments............................................33
13.9 No Third Party Beneficiary............................33
13.10Headings..............................................33
13.11Disputes..............................................34
13.12Delivery of Exhibits..................................34
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of April, 1999, by
and between Factual Data Corp., a Colorado corporation ("Purchaser"), and Imfax,
Inc. ("Seller") and for certain purposes the Shareholders identified in Article
I below.
RECITALS
WHEREAS, on or about March 12, 1999, 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
desires to assume only the liabilities of Seller described on Exhibit 2.3 hereto
("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 I
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.
Assumed Liabilities means the liabilities set forth on Exhibit 2.3 hereto
which also sets forth liabilities not being assumed.
Claim Notice has the meaning given to it in Section 10.3(a).
Closing has the meaning given to it in Section 12.1.
Code means the Internal Revenue Code of 1986, as amended.
Communication means collectively any publicity release, security filing,
private placement memorandum or any other communication.
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Damages means any and all damages, claims, deficiencies, losses and
expenses, as further defined in Section 10.1.
Effective Date has the meaning given to it in Section 12.1.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
Evaluation Material means Seller's documents, financial statements,
information and materials which shall be used in connection with a due
diligence review.
Excluded Assets shall mean cash on hand, notes receivable and Retained
Accounts Receivable.
Financial Statements has the meaning given to it in Section 3.21.
Indemnified Party means the party claiming indemnification under Article X.
Indemnifying Party means the party against whom indemnification claims are
asserted under Article X.
Intellectual Property means (a) all inventions (whether patentable or
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.
Other Company Agreements means the Non-Compete and Confidentiality
Agreements.
Note shall have the meaning given it in Section 2.2
Notice means the thirty day period which the indemnifying party shall have
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 regulations, rules or orders promulgated thereunder.
Purchase Price has the meaning given it in Section 2.2.
Purchaser means Factual Data Corp., a Colorado corporation.
Retained Accounts Receivable means accounts receivable retained by Seller
and shall include receivables due or payable (including all unbilled or
delayed billed in-file revenues) for all work, labor and services performed
by Seller in the normal course of business through and including the day
before the Effective Date.
Seller means Imfax, Inc.
Shareholders means all owners of capital stock of Seller at the date hereof
and as of Closing, to wit: Pentzer Corporation (95%) and Jack Milne (5%).
Tax or Taxes means any federal, state, local or foreign income, gross
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
information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
Uniform Commercial Code means the Uniform Commercial Code applicable in the
state of organization of the Seller.
ARTICLE II
ACQUISITION OF THE ASSETS
Subject to the terms and conditions set forth in this Agreement:
2.1 Delivery Of Assets. At the Closing, 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, 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:
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Asset Category Valuation
Fixed and operating assets; old computers....$ 14,000
Contract rights, customer agreements
and customer lists......................... 1,601,000
Intellectual property, software and licenses. ________
Personnel files.............................. ________
Books and records............................ ________
Non-Compete and Confidentiality Agreements... 20,000
Deposits..................................... 4,780
Prepaid assets and supplies inventories...... 3,842
Goodwill..................................... ________
Each of Seller and 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 Assets. The aggregate purchase price for the Assets
shall consist of $821,811 cash and a promissory note in the aggregate
amount of $821,811 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
$821,811 to the Seller, which shall be paid in the form of bank
cleared funds or a wire transfer to a financial institution designated
by the Seller.
(b) At the Closing, Purchaser shall deliver to Seller a non-negotiable
promissory note in the aggregate principal amount of $821,811 (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 8 quarterly installments of principal
and interest in accordance with the amortization schedule
attached to the Note commencing June 30, 1999.
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(ii) The Note, a copy of which is attached hereto as Exhibit
2.2(b)(i), shall be secured by a perfected lien on all of the
Assets sold pursuant to this Agreement. If the Purchaser provides
substituted collateral acceptable to the Seller, the lien
securing payment of the Note will 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 and Seller has accepted such substituted collateral. A
security agreement and UCC-1 setting forth the security interest
in the form attached as Exhibit 2.2(b)(ii) shall be executed at
the Closing by Purchaser and filed by Seller with the Washington
Secretary of State or other required regulatory agencies or
governmental entities in each state and entity in which a UCC
filing may be required.
(iii)The Note, at any time after Closing will, at the request of the
Seller, will be cancelled and reissued on the same terms and
conditions to Pentzer Corporation and/or Jack Milne.
(c) 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 Liabilities. As part of the consideration for the Assets, the
Purchaser shall assume and pay, perform and discharge the Assumed
Liabilities described on Exhibit 2.3 hereto. The 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 III
REPRESENTATIONS AND 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 as follows:
3.1 Organization and Qualification Of Seller. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
state of incorporation, 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 the state of
incorporation) 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.
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3.2 Authorized Capitalization. The authorized capital stock of the Seller
consists of 250,000 shares of common stock, of which 50,000 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 which would impair or limit the consummation of the transactions
contemplated hereunder. 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 Authorization. This Agreement has been duly and 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 3.3(a) is a Certificate which shall evidence the approval and
authorization of the Shareholder of Seller and which shall be attested to
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
3.3(b) is a certified copy of the Directors' Consent or a resolution passed
pursuant to a 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 Rights. As of the Closing, subject to those limitations set forth
in this Agreement, Seller has no rights with respect to any trademarks and
trade names except the name "Imfax" and associated common law trademark
rights which it will utilize in winding down and dissolving the Seller on
or before the first anniversary date from Closing.
3.5 Bulk Sale Law. Seller has advised Purchaser that Seller is not required to
comply with the bulk sale provisions of the Washington Uniform Commercial
Code.
3.6 No Conflicting Agreements. The 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 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.
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3.7 Compliance with Applicable Law. Except as set forth in Exhibit 3.7, Seller
has not received any notice 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 and the Shareholders' 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 Act and applicable state law.
Additionally, Seller has given notice of the sale of Assets to all
government entities that require such notice.
3.8 Material Misstatements or Omissions. Neither this Agreement nor any other
document, certificate or statement furnished to Purchaser by or on behalf
of Seller 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 or therein not misleading in light of the
context in which they were made.
3.9 No Known Adverse Effects. There is no fact known to Seller, its officers,
directors or employees or the Shareholders 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 Approvals. The 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 and Board of
Directors of Pentzer Corporation, which shall be obtained prior to the
execution hereof.
3.11 Subsidiaries. Seller does not own, have an ownership interest in, or
control any corporation, partnership, proprietorship or other entity.
3.12 Litigation. Except as described in Exhibit 3.12, 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 Brokers. All negotiations relative to this Agreement 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 Taxes. Seller shall pay all Taxes arising out of the 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.
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3.15 Ownership. Seller is the owner, beneficially and of record, of all of the
Assets as identified on Exhibit 2.1 hereto, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions, except as otherwise described on Exhibit 3.15 hereto.
3.16 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, or where termination is threatened or imminent to the actual
knowledge of Seller. 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 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. 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. Notwithstanding any provision to the contrary, Seller
and Shareholders make no representation or warranty concerning the right or
power of Seller to assign to Purchaser any license agreement or rights of
Seller, except in accordance with the terms of any license agreements to
which Seller is a party.
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3.18 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 state 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 Customers. Exhibit 3.19 to this Agreement sets forth a correct and current
list of all customers of Seller together with summaries of the revenues
from each customer during the most recent 12 months ending 30 days prior to
the date hereof.
3.20 Contracts. Except as set forth in Exhibit 3.20, 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.
3.21 Financial Statements. Seller has delivered to Purchaser copies of Seller's
balance sheet as of the end of the most recent fiscal year and the
statements of income and retained earnings for the years ended for the two
most recent fiscal years and for the interim period commencing January 1,
1999 and ending on February 28, 1999 (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 the interim period
delivered to Purchaser 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 interim period to Purchaser prior to Closing.
3.22 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 and on
Exhibit 3.22 hereto.
3.23 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 3.23 hereto.
3.24 Absence of Developments. Since the date of the Term Sheet by and between
Seller and Purchaser, Seller has, and will until Closing:
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(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 for 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.
3.25 Title to Properties. Seller does not own any real property. The leases to
which Seller is a party, a true and complete copy of which have previously
been provided to Purchaser, are in full force and effect, and Seller holds
a valid and existing leasehold interest in such leases for the term set
forth in such leases. Seller shall utilize its best efforts to obtain an
assignment of the property leases if requested to do so by Purchaser.
Seller shall have delivered complete and accurate copies of such leases to
Purchaser, and such leases 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
leases. 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.
3.26 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.
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(b) The Seller has withheld and paid all Taxes required to have been
withheld and paid by it 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.
3.27 Tax Notices. Except as set forth on Exhibit 3.27 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 3.27
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.
3.28 Employees. Except as described on Exhibit 3.28, (a) Seller has no actual or
constructive notice 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.
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3.29 Employee Benefit Plans.
(a) Except as provided in writing to Purchaser and as listed on Exhibit
3.29, 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.
3.30 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.
3.31 Employee Health and Safety. Seller has not violated and has no liability,
and 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,
regulating or otherwise affecting employee health and safety.
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3.32 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.
3.33 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 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.
ARTICLE IV
PRE-CLOSING COVENANTS 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.
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4.1 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
representatives 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 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 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 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 Records. Seller shall maintain its books, accounts and records in the
usual, regular and ordinary manner.
4.6 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 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 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 Nondisclosure. The parties agree that any publicity release, security
filing, memorandum or any other 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 and approve any public
communication prepared by Purchaser before its dissemination and release.
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4.10 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 Insurance. Without providing Purchaser 30 days' prior written notice,
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-Effective Date basis, the
Purchaser will reimburse Seller within 15 days of Closing the prorated
portion of post-Effective Date 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 policy maintained by Seller prior to
Closing.
4.12 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.
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4.13 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 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 Agreements. Seller agrees that,
prior to the Closing, it will use its best efforts to secure the approval
of all parties with which Seller has customer, supplier or other agreements
as to which consent is expressly required and assignment is contemplated to
Purchaser 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 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 Disclosure. From the date of this Agreement to and including the
Closing, 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 exhibit to this Agreement had it occurred prior to the
date hereof.
4.18 Non-Compete and Confidentiality Agreements. At or prior to Closing, Pentzer
Corporation and Jack Milne shall enter into non-compete and confidentiality
agreements with Purchaser substantially in the form of Exhibit 7.7 hereto.
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4.19 Employment Agreements. At or prior to Closing, Seller shall have terminated
all employment agreements to which it is a party.
ARTICLE V
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
5.1 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 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 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 VI
REPRESENTATIONS 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 as follows:
6.1 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 Authorization. This Agreement has been duly and validly executed by
Purchaser, as certified in Exhibit 6.2 hereto, and the agreements,
representations, and warranties contained herein constitute valid and
binding obligations, representations, and warranties of Purchaser
enforceable in accordance with their terms.
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6.3 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 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 Litigation. There are no material 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 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 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, and (ii) those which the failure to obtain
would have no material adverse effect on the transactions contemplated
hereby.
6.8 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 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.
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6.10 No Known Adverse Effects. There is no fact actually known to Purchaser, its
officers or directors which materially adversely affects or will materially
adversely affect the Purchaser which has not been set forth in writing in
this Agreement or disclosed in the other documents, certificates or written
statements furnished to Seller by or on behalf of Purchaser in connection
herewith.
6.11 Knowledge of Industry. Purchaser has been engaged in the business of credit
reporting for several years and except for the express warranties and
representations set forth in this Agreement is buying the Assets on an "as
is, where is" basis.
6.12 Absence of Undisclosed or Contingent Liabilities. Purchaser 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 in excess of $50,000 except as otherwise set
forth in its SEC Reports.
6.13 No Material Adverse Changes. Since the date of the most recent SEC Reports,
there has been no change materially adverse to Purchaser, its financial
condition, gross profit, operating results, business condition or
prospects.
6.14 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 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 and will not incur debt in connection with the assets or business
that is significantly greater than the normal and customary debts of
Purchaser in the ordinary course. Purchaser 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 purchase price being paid to Seller.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees as follows:
7.1 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.
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7.2 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 exhibit to this Agreement had it occurred
prior to the date hereof.
7.3 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 Nondisclosure. The Purchaser agrees that any publicity release, security
filing, or any other communication, 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 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 Filings. Purchaser has advised Seller that the transaction
contemplated hereby will require Purchaser to file disclosure, in the form
of a periodic report or 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 Non-Compete and Confidentiality Agreements. At or prior to Closing,
Purchaser shall execute the non-compete and confidentiality agreements with
Seller substantially in the form of Exhibit 7.7 hereto.
7.8 Employment Agreements. At or prior to Closing, Seller shall have terminated
all employment agreements to which it is a party.
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ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 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, of the following conditions
(unless waived by Seller in writing in the manner provided in Section
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 including the delivery of all documents
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.
(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.
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(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 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 Jones & Keller,
P.C., counsel to Purchaser, an opinion dated the Closing, to the
following effect:
(i) Purchaser is a corporation duly organized, validly existing in a
good standing under the laws of the State of Colorado.
(ii) Execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action, corporate and otherwise, by
Purchaser; this Agreement is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms except as enforcement can be limited by general equitable
principles or bankruptcy, insolvency or similar laws affecting
creditor's rights generally.
(iii)The execution and delivery of the Agreement will not violate or
conflict with the Articles of Incorporation or Bylaws of
Purchaser or any agreement known to such counsel to which
Purchaser is a party or by which Purchaser or its assets are
bound.
(iv) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or any court is
required to be obtained or made by Purchaser pursuant to this
Agreement except such as has been obtained or made.
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(v) Except as disclosed in this Agreement or the Exhibits hereto,
such counsel is not aware of any material pending or threatened
action, suit, proceeding or investigation before any court or any
public, regulatory or governmental agency, authority or body,
involving Purchaser or any of its officers or directors, and such
counsel does not know of any legal matter or government
proceedings regarding Purchaser.
(g) 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 Purchaser.
(h) Litigation. There shall be no actions, proceedings or investigations
pending, threatened against Purchaser 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 Purchaser.
(i) Breach or Violation. Purchaser 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 Purchaser or any license, franchise or permit of or
affecting Purchaser.
(j) 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 Purchaser (except filings required by Seller or Seller's
parent pursuant to applicable securities laws).
(k) 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 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, of the
following conditions (unless waived by Purchaser in writing in the manner
provided in Section 8.2(f) hereof):
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(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; and (iv) Purchaser shall have entered into
non-compete and confidentiality agreements with Pentzer Corporation
and Jack Milne 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, 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 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.
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(f) Waiver of Conditions Precedent. Purchaser may waive any or all of the
conditions precedent set forth in this Section 8.2, either
prospectively or retroactively, by giving written notice of such
waiver to Seller. No waiver of any condition precedent pursuant to
this Section 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.
ARTICLE IX
SURVIVAL 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
and in the case of the Note attached as Exhibit 2.2(b)(i), until the Note is
paid in full. The foregoing shall be subject to the exception that any claims
relating to tax matters covered in Sections 3.26 and 3.27 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.
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ARTICLE X
INDEMNIFICATION
10.1 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
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
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 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 Claims. All claims for indemnification by any
Indemnified Party under this Article X shall be asserted and resolved as
follows:
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(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 twenty (20) 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"). 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 twenty (20) 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 Section 13.11.
10.4 Payment of Claim. Upon the determination of the liability of Seller or
Purchaser under Section 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.
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10.5 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. 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 Seller's operations
(including an audit of gross revenues) from January 1, 1998 through the
Closing and the prior fiscal year ended December 31, 1997. In the event of
a material variation in gross revenues between the results of such audit
and the representation as to gross revenues made by Seller to Purchaser in
Exhibit 10.6 hereto (such material variation in revenues to be defined as a
variation of more than 2% of such gross revenues, then the Purchaser shall
have the right to offset the amount of such material variation in excess of
the above-described amount against the Note delivered pursuant to Section
2.2(a) above. In addition, the amount of any such offset shall also be
increased by interest calculated at the rate of 8% per annum from the date
of the Closing to the date the offset is taken. Any amounts not offset at
the end of the 120 day period following Closing shall be immediately paid
to the Seller. 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 2% of gross revenues is
determined to exist or, in the alternative, if a material variation in
revenues of 2% or more of gross revenues 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.
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH
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11.1 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 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, by mutual consent of Purchaser and
Seller;
(b) Automatically if the Closing has not occurred by April 30, 1999.
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 XII
CLOSING
12.1 Closing. The closing of this Agreement (the "Closing") shall be April 1,
1999 or as soon thereafter as practicable but not later than April 30,
1999, unless a later date is mutually agreed upon by the parties, provided
for accounting and allocation purposes, this Agreement shall be deemed to
be effective at 12:01 a.m. on the first day of the month in which the
Closing occurs ("Effective Date").
12.2 Allocations. At Closing (i) the Seller will pay Purchaser for all vacation
pay accrued for employees as of the Effective Date; (ii) Seller will pay
Purchaser the amount of all accounts receivable credit balances existing on
the Effective Date; and (iii) the parties shall allocate or prorate all the
portion attributable to Seller of the water, sewer, electric, other
utilities and rent through the Effective Date. For purposes of income and
expense all income and expenses incurred or attributable to work, labor and
services performed by Seller on or before the Effective Date shall be
billed and collected by, and paid for, respectively, by Seller.
12.3 Seller's Deliveries at Closing. At the Closing Seller and Shareholder 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 described in
Exhibit 12.3 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.
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<PAGE>
(b) Assignment of Intellectual Property. Assignment of Intellectual
Property described 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, described in Exhibit 3.20
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) 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.
(e) Certificates. Certificate of good standing for Seller from the
Secretary of State of the state of incorporation of Seller dated as of
a date reasonably prior to the Closing.
(f) 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.
(g) Non-Compete and Confidentiality Agreements. The non-compete agreements
of Pentzer Corporation and Jack Milne in the form set forth in Exhibit
7.7 hereto.
(h) Delivery of Corporate and Business Records. Such other corporate and
business records related to the Assets as may be reasonably requested
by the Purchaser.
(i) Officer's Certificate in the form described in Section 8.2 of this
Agreement.
(j) Other documents. Such other documents, instruments, certificates and
agreements including assignment of space lease to Purchaser, as
Purchaser and its counsel may reasonably request.
12.4 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:
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<PAGE>
(a) Purchase Price. The purchase price for the Assets referred to in
Section 2.2 in the form of the Note.
(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 Jones & Keller, P.C., counsel to
the Purchaser, dated the Closing, in the form described in Section 8.1
of this Agreement.
(d) 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.
(e) Officer's Certificate in the form described in Section 8.1 of this
Agreement.
(f) Non-Compete and Confidentiality Agreements. The non-compete agreements
of Pentzer Corporation and Jack Milne in the form set forth in Exhibit
7.7 hereto.
(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. 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.
12.6 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.
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<PAGE>
12.7 Cooperation; Premises. For a period of 90 days following the Closing,
Seller, at Seller's expense, agrees to assist Purchaser in the retention of
Seller's customers and employees, if necessary, and perform any other
duties Purchaser may reasonably request. Purchaser will reimburse Seller
for any reasonable travel expenses if such travel is specifically requested
by Purchaser. Further, Seller will attempt to secure a 90 day holdover in
favor of Purchaser from the lessors of Seller's office spaces and will
further assist the Purchaser in terminating, renewing or re-negotiating the
leases with the lessors of such office spaces and in relocating such
offices.
ARTICLE XIII
MISCELLANEOUS
13.1 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: Samuel E. Wing, Esq.
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
If to Seller: Michael B. Cahill, President
Imfax, Inc.
11555 S.E. 8th Street, Suite 200
Bellevue, Washington 98004
With a copy to: Scott Davis
c/o Pentzer Corporation
818 West Riverside, Suite 350
Spokane, Washington 99201
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.
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<PAGE>
13.2 Entire and Sole Agreement. This Agreement, including all Exhibits hereto
(which by this reference shall incorporate herein all such Exhibits 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 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 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 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 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 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 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 Section 11.1 hereof.
13.9 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.
13.10Headings. The headings in this Agreement are for purposes of convenience
and easy reference only and shall not limit or otherwise affect the meaning
hereof.
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<PAGE>
13.11Disputes. 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.
13.12Delivery of Exhibits. All Exhibits to be delivered by either of the parties
hereto upon execution of this Agreement shall be delivered to the other
party not later than Closing.
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/ Jerald H. Donnan
----------------
Jerald H. Donnan, President
SELLER:
IMFAX, INC.
By:/s/ Michael B. Cahill
SHAREHOLDERS, but only with respect
to Articles III and X
PENTZER CORPORATION
By: /s/ Richard A. Davis
Its: President
/s/Jack Milne
Jack Milne, Individually
<PAGE>
TABLE OF ATTACHMENTS
Exhibit Description
2.1 List of Acquired Assets
2.2(b)(i) Form of Promissory Note and Amortization Schedule
2.2(b)(ii) Form of Security Agreement
2.3 List of Assumed Liabilities
3.1(a) Articles of Incorporation of Seller
3.1(b) Bylaws of Seller
3.3(a) Certificate of Seller re: Shareholder Approval
3.3(b) Directors' Consent of Seller
3.7 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) Delinquent Contracts or Agreements
3.17 License Agreements
3.18 Intellectual Property
3.19 Seller's Customers--Revenues
3.20 Contracts
3.22 Liabilities not on Financial Statements
3.23 No Material Adverse Changes
3.25 Leases
3.26 Tax Returns
3.27 Tax Notices
3.28 Employment Matters
3.29 Employee Benefit Plans
6.2 Directors' Consent of Purchaser
7.7 Non-Compete and Confidentiality Agreements
8.1 Form of Certificate of Purchaser
8.1(f) Opinion of Jones & Keller, P.C.
8.2 Form of Certificate of Seller
10.6 Seller's Representation as to Gross Revenues
12.3 Bill of Sale and Assignment
ASSET PURCHASE AGREEMENT
by and between
FACTUAL DATA CORP.
and
UNITED DATA SERVICES, INC.
Dated as of April 1, 1999
<PAGE>
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
Page
RECITALS..........................................................1
ARTICLE I
DEFINITIONS....................................................1
ARTICLE II
ACQUISITION OF THE ASSETS......................................3
2.1 Delivery Of Assets.....................................3
2.2 Purchase Price for Assets..............................3
2.3 Assumed Liabilities....................................4
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDERS......5
3.1 Organization and Qualification Of Seller...............5
3.2 Authorized Capitalization..............................5
3.3 Authorization..........................................5
3.4 Product Rights.........................................6
3.5 Bulk Sale Law..........................................6
3.6 No Conflicting Agreements..............................6
3.7 Compliance with Applicable Law.........................6
3.8 Material Misstatements or Omissions....................6
3.9 No Known Adverse Effects...............................6
3.10 Consents and Approvals.................................6
3.11 Subsidiaries...........................................7
3.12 Litigation.............................................7
3.13 Brokers................................................7
3.14 Taxes..................................................7
3.15 Ownership..............................................7
3.16 Customer Accounts......................................7
3.17 License Agreements.....................................8
3.18 Intellectual Property..................................8
3.19 Customers..............................................8
3.20 Contracts..............................................8
3.21 Financial Statements...................................8
3.22 Absence of Undisclosed or Contingent Liabilities.......9
3.23 No Material Adverse Changes............................9
3.24 Absence of Developments................................9
3.25 Title to Properties....................................9
3.26 Tax Matters...........................................10
3.27 Tax Notices...........................................10
3.28 Employees.............................................11
3.29 Employee Benefit Plans................................11
3.30 Gifts.................................................12
3.31 Employee Health and Safety............................12
3.32 Representations as to Knowledge.......................12
3.33 Representations Concerning Solvency...................12
3.34 Disclosures...........................................13
ARTICLE IV
PRE-CLOSING COVENANTS OF SELLER...............................13
4.1 Inspection of Properties and Books....................13
4.2 Other Contracts.......................................13
4.3 Ongoing Operation.....................................13
4.4 Indebtedness..........................................14
4.5 Records...............................................14
4.6 Articles of Organization; Bylaws......................14
4.7 Distributions or Dividends............................14
4.8 Notice of Breach......................................14
4.9 Nondisclosure.........................................14
4.10 Employment Matters....................................14
4.11 Insurance.............................................15
4.12 Preservation of Business..............................15
4.13 Regulatory Filings....................................15
4.14 No Negotiations.......................................16
4.15 Assignment of Contracts, Leases and Other Agreements..16
4.16 Best Efforts..........................................16
4.17 Additional Disclosure.................................16
ARTICLE V
POST-CLOSING COVENANTS........................................16
5.1 Further Assurances....................................16
5.2 Litigation Support....................................17
5.3 Notice of Proposed Sales..............................17
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER...................17
6.1 Organization and Qualification of Purchaser...........17
6.2 Authorization.........................................17
6.3 No Conflicting Agreements.............................17
6.4 Compliance with Applicable Law........................18
6.5 Litigation............................................18
6.6 SEC Filings...........................................18
6.7 No Material Adverse Change............................18
6.8 Material Misstatements or Omissions...................18
6.9 Consents and Approvals................................19
6.10 Brokers...............................................19
6.11 Representations as to Knowledge.......................19
ARTICLE VII
COVENANTS OF PURCHASER........................................19
7.1 Other Contracts.......................................19
7.2 Additional Disclosure.................................19
7.3 Notice of Breach......................................19
7.4 Nondisclosure.........................................20
7.5 Best Efforts..........................................20
7.6 Regulatory Filings....................................20
7.7 Non-Compete and Confidentiality Agreements............20
7.8 Employment Agreements.................................20
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING...............................20
8.1 Conditions Precedent to Obligations of Seller.........20
8.2 Conditions Precedent to Obligations of Purchaser......23
ARTICLE IX
SURVIVAL OF REPRESENTATIONS AND WARRANTIES....................26
ARTICLE X
INDEMNIFICATION...............................................26
10.1 Indemnification.......................................26
10.2 Limitation of Liability...............................26
10.3 Method of Asserting Claims............................27
10.4 Payment of Claim......................................28
10.5 Other Rights and Remedies Not Affected................28
10.6 Post-Closing Adjustments and Right of Offset..........28
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH.............................28
11.1 Amendment and Modification............................28
11.2 Termination and Abandonment...........................29
ARTICLE XII
CLOSING
12.1 Closing...............................................29
12.2 Allocations...........................................29
12.3 Seller's Deliveries at Closing........................29
12.4 Purchaser's Deliveries at Closing.....................31
12.5 Forwarding of Receivables.............................31
12.6 Removal of Personal Effects Following Closing.........32
12.7 Cooperation; Premises.................................32
ARTICLE XIII
MISCELLANEOUS.................................................32
13.1 Notice................................................32
13.2 Entire and Sole Agreement.............................33
13.3 Successors and Assigns................................33
13.4 Expenses..............................................33
13.5 Severability..........................................33
13.6 Governing Law.........................................33
13.7 Counterparts..........................................33
13.8 Amendments............................................33
13.9 No Third Party Beneficiary............................33
13.10Headings..............................................34
13.11Disputes..............................................34
13.12Delivery of Exhibits..................................34
<PAGE>
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of April, 1999,
by and between Factual Data Corp., a Colorado corporation ("Purchaser"), United
Data Services, Inc. ("Seller"), a Massachusetts corporation, and for certain
purposes the Shareholders identified in Article I hereof.
RECITALS
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
desires to assume only the liabilities of Seller described on Exhibit 2.3 hereto
("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 I
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.
Assumed Liabilities means the liabilities set forth on Exhibit 2.3 hereto
which also sets forth liabilities not being assumed.
Claim Notice has the meaning given to it in Section 10.3(a).
Closing has the meaning given to it in Section 12.1.
Code means the Internal Revenue Code of 1986, as amended.
Communication means collectively any publicity release, security filing,
private placement memorandum or any other communication.
Damages means any and all damages, claims, deficiencies, losses and
expenses, as further defined in Section 10.1.
Effective Date has the meaning given to it in Section 12.1.
ERISA means the Employee Retirement Income Security Act of 1974, as
amended, and any regulations, rules or orders promulgated thereunder.
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Evaluation Material means Seller's documents, financial statements,
information and materials which shall be used in connection with a due
diligence review.
Excluded Assets shall mean the microCEL license granted pursuant to that
certain microCEL Credit System License Agreement entered into on October
25, 1994 by microCEL and Seller (the "microCEL License"), cash on hand,
notes receivable and accounts receivable billed through the Effective Date.
Financial Statements has the meaning given to it in Section 3.21.
Indemnified Party means the party claiming indemnification under Article X.
Indemnifying Party means the party against whom indemnification claims are
asserted under Article X.
Intellectual Property means (a) all inventions (whether patentable or
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.
Other Company Agreements means the Non-Compete and Confidentiality
Agreements.
Note shall have the meaning given to it in Section 2.2.
Notice means the thirty day period which the indemnifying party shall have
from the personal delivery or mailing of the Claim Notice.
OSHA means the Occupational Safety and Health Act of 1970, as amended, and
any regulations, rules or orders promulgated thereunder.
Purchase Price has the meaning given it in Section 2.2.
Purchaser means Factual Data Corp., a Colorado corporation, or its assigns.
Security Agreement shall have the meaning given to it in Section 2.2.
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<PAGE>
Seller means United Data Services, Inc., incorporated under the laws of the
Commonwealth of Massachusetts.
Shareholders means all owners of capital stock of Seller at the date hereof
and as of Closing to wit: Daniel G. Suleski, Jr., Gerald Mirliani, Michael
Foutes, Craig Avedikian and Paul Mignone.
Tax or Taxes means any federal, state, local or foreign income, gross
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
information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.
Uniform Commercial Code means the Uniform Commercial Code applicable in the
state of organization of the Seller.
ARTICLE II
ACQUISITION OF THE ASSETS
Subject to the terms and conditions set forth in this Agreement:
2.1 Delivery Of Assets. At the Closing, 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, instruments, certificates or instructions, and
as of the Effective Date, 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, custody and control of
the Assets will be transferred to Purchaser.
2.2 Purchase Price for Assets. The aggregate purchase price for the Assets
shall consist of $3,400,000 cash and a promissory note in the aggregate
amount of $1,100,000 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
$3,400,000 (less a 15% holdback for purposes of Section 10.6 hereof)
to the Seller, which shall be paid in the form of bank cleared funds
or a wire transfer to a financial institution designated by the
Seller;
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<PAGE>
(b) At the Closing, Purchaser shall deliver to Seller a promissory note in
the aggregate principal amount of $1,100,000 (the "Note"). The Note
shall be issued by Purchaser on the following terms and conditions:
(i) The Note shall bear interest at 8% per annum and shall be due and
payable in twelve quarterly installments of principal and
interest in accordance with the amortization schedule attached to
the Note commencing June 30, 1999.
(ii) The Note, a copy of which is attached hereto as Exhibit
2.2(b)(i), shall be secured by a perfected first lien on all of
the Assets sold pursuant to this Agreement. A security agreement
and UCC-1 setting forth the security interest in the form
attached as Exhibit 2.2(b)(ii) shall be executed at the Closing
by Purchaser and filed by Seller with the Commonwealth of
Massachusetts or other required regulatory agencies or
governmental entities in each state and entity in which a UCC
filing may be required.
(c) The purchase price shall be allocated among the Assets as follows:
Asset Category
Fixed and operating assets and computers..... $ 14,000
Contract rights, customer agreements
and customer lists......................... 4,451,891
Intellectual property, software and licenses. ________
Personnel files.............................. ________
Books and records............................ ________
Non-Compete and Confidentiality Agreements... 25,000
Deposits..................................... 9,109
Prepaid assets and supplies inventories...... ________
Goodwill and other intangible assets......... ________
Each of Seller and 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; and
(d) The parties contemplate that, within the 120 day period following 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 Liabilities. As part of the consideration for the Assets, the
Purchaser shall assume and pay, perform and discharge the Assumed
Liabilities described on Exhibit 2.3 hereto. The 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.
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<PAGE>
ARTICLE III
REPRESENTATIONS AND 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 at the Closing as follows:
3.1 Organization and Qualification Of Seller. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the
state of incorporation, 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 except
where such lack of authorization of Seller will not materially adversely
affect 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 Organization (certified by the Secretary of the State of the state of
incorporation) 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
Organization or Bylaws. The minute books (containing the records 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 Capitalization. The authorized capital stock of the Seller
consists of 200,000 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 Authorization. This Agreement has been duly and validly executed and
delivered by Seller and the Shareholders. Attached hereto as Exhibit 3.3(a)
is a Certificate which shall evidence the approval and authorization of the
shareholders of Seller and which shall be attested to by the President of
Seller. This Agreement and the consummation of the transactions
contemplated hereby have been duly and unanimously approved by the board of
directors of Seller. Attached hereto as Exhibit 3.3(b) is a certified copy
of the Directors' Consent or a resolution passed pursuant to a 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.
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3.4 Product Rights. As of the Closing, subject to those limitations set forth
in this Agreement, Seller has no rights with respect to any trademarks and
trade names except as set forth on Exhibit 3.4.
3.5 Bulk Sale Law. There is no Massachusetts bulk sales law.
3.6 No Conflicting Agreements. The 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, (b) conflict with or result in a breach of any of
the terms, conditions or provisions of the Articles of Organization 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.
3.7 Compliance with Applicable Law. Except as set forth in Exhibit 3.7, Seller
has not received any notice 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 and the Shareholders' 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 Act and other applicable federal
and state law. Additionally, Seller has given notice of the sale of Assets
to all government entities that require such notice.
3.8 Material Misstatements or Omissions. Neither this Agreement nor any other
document, certificate or statement furnished to Purchaser by or on behalf
of Seller 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 or therein not misleading in light of the
context in which they were made.
3.9 No Known Adverse Effects. There is no fact regarding Seller or any of its
employees, customers or vendors known to Seller, its officers or directors
or the Shareholders 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 Approvals. The 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, and (ii) those as to which the failure to obtain would have no
material adverse effect on the Assets or the transactions contemplated
hereby.
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3.11 Subsidiaries. Seller does not own, have an ownership interest in, or
control any corporation, partnership, proprietorship or other entity.
3.12 Litigation. Except as described in Exhibit 3.12, 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 Brokers. All negotiations relative to this Agreement 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 Taxes. Seller shall pay all Taxes arising out of the transfer of the Assets
and shall be responsible for all personal property taxes for the business
of Seller through the Effective Date. 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 Ownership. Seller is the owner, beneficially and of record, of all of the
Assets as identified on Exhibit 2.1 hereto, free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges and
restrictions, except as otherwise described on Exhibit 3.15 hereto.
3.16 Customer Accounts. The list of customers attached hereto as Exhibit 3.16(a)
represents the customers with which Seller now does business, principally
in the areas of mortgage credit reporting, appraisals and title abstracting
and related services with which Seller maintains a contract or agreement.
Except as described on Exhibit 3.16(b), all such contracts or agreements
are valid and enforceable contracts or agreements and Seller is not
currently, and will not be at Closing, in default, of any such contract or
agreement in any material manner, or where termination is threatened or
imminent to the actual knowledge of Seller. 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(c), 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.
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3.17 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. To the extent the transfer of any license
agreement which is not an Excluded Asset hereunder requires the consent of
any third party, Seller and Shareholders shall use their reasonable
business 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 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. 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 state
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 any Intellectual Property which is not an Excluded Asset by Purchaser
will not conflict with, infringe on or otherwise violate the rights of
others.
3.19 Customers. Exhibit 3.19 to this Agreement sets forth a correct and current
list of all customers of Seller together with summaries of the revenues
from each customer during the most recent 12 months ending 30 days prior to
the date hereof.
3.20 Contracts. Except as set forth in Exhibit 3.20, 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.
3.21 Financial Statements. Seller has delivered to Purchaser copies of Seller's
balance sheet as of the end of the most recent fiscal year and the
statements of income and retained earnings for the years ended for the two
most recent fiscal years (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 December 31, 1998 delivered to Purchaser 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 December 31, 1998
to Purchaser within 5 days before the date of Closing.
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3.22 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 3.22 hereto.
3.23 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 3.23 hereto.
3.24 Absence of Developments. Since December 31, 1998, 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.
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3.25 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 3.25, 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 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. To the Seller's knowledge, 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.
3.26 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 as 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 3.26 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.
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3.27 Tax Notices. Except as set forth on Exhibit 3.27 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 3.27
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.
3.28 Employees. Except as described on Exhibit 3.28, (a) Seller has no actual or
constructive notice that any executive employee of Seller or any group of
Seller's employees has any plan or intention not to accept offers of
continuing employment by Purchaser 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.
3.29 Employee Benefit Plans.
(a) Except as provided in writing to Purchaser and as listed on Exhibit
3.29, 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.
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(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.
3.30 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.
3.31 Employee Health and Safety. Seller has not in any material way violated and
has no material liability, and 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, regulating or otherwise affecting employee health and
safety.
3.32 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.
3.33 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.
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3.34 Disclosures. The Shareholders do hereby, individually represent and
acknowledge to the Purchaser that Shareholder has received a disclosure
package containing the SEC documents referred to in Section 6.6 below and
has further received all information regarding the Purchaser requested by
Shareholder and such disclosure package has been carefully reviewed by
Shareholder and his legal and tax counsel.
ARTICLE IV
PRE-CLOSING COVENANTS 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 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
representatives 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 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.
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4.3 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 arms-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 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 Records. Seller shall maintain its books, accounts and records in the
usual, regular and ordinary manner.
4.6 Articles of Organization; Bylaws. Seller will not amend its Articles of
Organization or Bylaws or otherwise alter its corporate existence or
powers.
4.7 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 except out of Excluded Assets.
4.8 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 Nondisclosure. The parties agree that any publicity release, security
filing, memorandum or any other 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 and have the right to approve any
public communication prepared by Purchaser before its dissemination and
release.
4.10 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.
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4.11 Insurance. Without providing Purchaser 30 days' prior written notice,
Seller shall not cancel or terminate its current insurance policies (i)
covering any of the Assets; or (ii) Seller or its officers and directors
for professional errors and omissions, 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-Effective Date basis, the Purchaser will
reimburse Seller within 15 days of Closing the prorated portion of
post-Effective Date insurance coverage based upon the time period covered
by such insurance both prior to, and subsequent to, Closing. Seller shall
maintain in effect insurance covering Seller and its officers and directors
for any error and omission policy until such time as Seller purchases tail
coverage therefor.
4.12 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 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 in the
Commonwealth of Massachusetts 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. Prior to making any such disclosure, Purchaser shall afford
Seller an opportunity to review and comment thereon.
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4.14 No Negotiations. From the date hereof through the Closing or earlier
termination of this Agreement, 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 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 consent is
expressly required and assignment is contemplated to Purchaser and, should
Purchaser desire to assume any other contract, lease, agreement or right,
Seller shall use its reasonable business 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 Efforts. Seller agrees to use its reasonable business 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 Disclosure. From the date of this Agreement to and including the
Effective 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 exhibit to this Agreement had it occurred prior to
the date hereof.
ARTICLE V
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing.
5.1 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).
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5.2 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 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).
5.3 Notice of Proposed Sales. If after the shares have been distributed to the
Shareholders in accordance with the Escrow Agreement, any Shareholder
intends to sell or otherwise dispose of his Shares or any portion of his
Shares, other than by gift to his immediate family or to a trust for the
benefit of such Shareholder and/or members of his immediate family, the
Shareholder agrees to notify the Purchaser in writing of his intention.
Such written notification shall be deemed to be received on the date
provided in Section 13.1 (the "Notification Date"). The Purchaser thereby
reserves the right to buy within seven (7) days after the Notification Date
such Shares valued on a per share basis on the closing price of Purchaser's
common stock as reported by the Nasdaq Stock Market, Inc. on the
Notification Date.
ARTICLE VI
REPRESENTATIONS 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 at the Closing as follows:
6.1 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. Purchaser is duly
qualified to do business as a foreign corporation in each jurisdiction in
which the failure to do so would have a materially adverse effect on the
Purchaser.
6.2 Authorization. This Agreement has been duly and validly executed by
Purchaser, as certified in Exhibit 6.2 hereto, and the agreements,
representations, and warranties contained herein constitute valid and
binding obligations, representations, and warranties of Purchaser
enforceable in accordance with their terms.
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6.3 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 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 Litigation. There are no material 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 SEC Filings. Purchaser has filed in a timely manner all reports required to
be filed by Purchaser with the Securities and Exchange Commission (the
"SEC") pursuant to the Securities Exchange Act of 1934, as amended (the "34
Act"). As of their respective filing dates, all registration statements and
reports filed by Purchaser with the SEC pursuant to the Securities Act of
1933, as amended (the "33 Act") or the 34 Act (the "SEC Filings") complied
in all material respects with the requirements of the 33 Act or the 34 Act,
as the case may be, and none of the SEC Filings contained any untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of the circumstances in which they were made, not misleading, except to the
extent corrected by a document subsequently filed by Purchaser with the
SEC. The financial statements of Purchaser, including the notes thereto,
included in the SEC Filings (the "Purchaser Financial Statements") comply
as to form in all material respects with applicable accounting requirements
and with the rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly the financial position of
Purchaser as of the dates thereof and the results of Purchaser's operations
and cash flows for the periods then ended. There has been no change in
Purchaser's accounting policies except as described in the notes to the
Purchaser Financial Statements.
6.7 No Material Adverse Change. Since the date of the balance sheet included in
Purchaser's most recent report on Form 10-K as filed with the SEC,
Purchaser has conducted its business in the ordinary course and there has
not occurred (i) any material adverse change in the financial condition,
liabilities, assets or business of Purchaser, (ii) any amendment or change
in the Articles of Incorporation or Bylaws of Purchaser, or (iii) any
damage to, or destruction or loss of, any assets of Purchaser that
materially and adversely affects the financial condition, business or
prospects of Purchaser.
6.8 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.
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6.9 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 Effective Date, and (ii) those which the failure to
obtain would have no material adverse effect on the transactions
contemplated hereby.
6.10 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.
6.11 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.
ARTICLE VII
COVENANTS OF PURCHASER
Purchaser covenants and agrees as follows:
7.1 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 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 exhibit to this Agreement had it occurred
prior to the date hereof.
7.3 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.
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7.4 Nondisclosure. The Purchaser agrees that any publicity release, security
filing, or any other communication, 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 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 Filings. Purchaser has advised Seller that the transaction
contemplated hereby will require Purchaser to file disclosure, in the form
of a periodic report or 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 34
Act, 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 Non-Compete and Confidentiality Agreements. At Closing, Daniel G. Suleski,
Jr., Gerald Mirliani, Michael Foutes, Craig Avedikian and Paul Mignone
shall enter into non-compete and confidentiality agreements with Purchaser
substantially in the form of Exhibit 7.7 hereto.
7.8 Employment Agreements. At Closing, Seller shall have terminated all
employment agreements to which it is a party. New employment agreements
shall be entered into with Daniel G. Suleski, Jr., Gerald Mirliani, Michael
Foutes, Craig Avedikian and Paul Mignone in the form attached hereto as
Exhibit 7.8 which shall be executed at Closing.
ARTICLE VIII
CONDITIONS PRECEDENT TO CLOSING
8.1 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 Closing, of the following conditions
(unless waived by Seller in writing in the manner provided in Section
8.1(d) hereof):
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(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 Closing including the delivery of all documents
required at the Closing; (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; (iv) Purchaser and Shareholders shall have entered into
non-compete and confidentiality agreements as contemplated in Section
7.7 above which shall commence by their terms on Closing; and (v)
Purchaser and Shareholders shall have entered into employment
agreements as contemplated in Section 7.8 above which shall commence
by their terms on Closing.
(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 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.
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(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) 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 Purchaser.
(f) 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.
(g) Opinion of Counsel. Seller shall have received from Jones & Keller,
P.C., counsel to Purchaser, an opinion dated the Closing, to the
following effect:
(i) Purchaser is a corporation duly organized, validly existing in a
good standing under the laws of the State of Colorado.
(ii) Execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action, corporate and otherwise, by
Purchaser; this Agreement is a valid and binding obligation of
Purchaser, enforceable against Purchaser in accordance with its
terms except as enforcement can be limited by general equitable
principles or bankruptcy, insolvency or similar laws affecting
creditor's rights generally.
(iii)The execution and delivery of the Agreement will not violate or
conflict with the Articles of Incorporation or Bylaws of
Purchaser or any agreement known to such counsel to which
Purchaser is a party or by which Purchaser or its assets are
bound.
(iv) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or any court is
required to be obtained or made by Purchaser pursuant to this
Agreement except such as has been obtained or made.
(v) Except as disclosed in this Agreement or the Exhibits hereto,
such counsel is not aware of any material pending or threatened
action, suit, proceeding or investigation before any court or any
public, regulatory or governmental agency, authority or body,
involving Purchaser or any of its officers or directors, and such
counsel does not know of any legal matter or government
proceedings regarding Purchaser.
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(vi) The Note shall have been duly authorized and is a legally binding
obligation of Purchaser in accordance with its terms.
(h) Sublease Agreement. The Agreement regarding sublease of the Seller's
present office space in substantially the form attached hereto as
Exhibit 12.7 shall have been approved by the Landlord and the Seller
and the Purchaser.
8.2 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 Effective Date, of
the following conditions (unless waived by Purchaser in writing in the
manner provided in Section 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; (iv) Purchaser and Shareholders shall have
entered into non-compete and confidentiality agreements as
contemplated in Section 7.7 above which shall commence by their terms
on Closing; and (v) Purchaser and Shareholders shall have entered into
employment agreements as contemplated in Section 7.8 above which shall
commence by their terms on Closing.
(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 Clerk of Seller.
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(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, 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 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 Section 8.2, either
prospectively or retroactively, by giving written notice of such
waiver to Seller. No waiver of any condition precedent pursuant to
this Section 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 to be made by Seller
for the consummation of the transactions contemplated hereby shall
have been duly made and obtained by Seller.
(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.
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(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 Peabody &
Arnold LLP, counsel to Seller, an opinion dated the Closing, to the
following effect:
(i) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of
Massachusetts.
(ii) Upon the consummation of the transactions described herein,
Purchaser will acquire all of the right, title and interest of
Seller in and to the Assets free and clear of all adverse claims
and charges, encumbrances, claims, liens or other encumbrances of
the type which can be perfected by filing of a financing
statement in Massachusetts on Form UCC-1, except as otherwise
disclosed herein.
(iii)Execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly
authorized by all necessary action, corporate or otherwise, by
Seller, and by its Shareholders; this Agreement is a valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms except as enforcement can be limited by
general equitable principles or bankruptcy, insolvency or similar
laws affecting creditor's rights generally.
(iv) The execution and delivery of this Agreement and the sale of the
Assets by Seller will not violate or conflict with the Articles
of Organization or Bylaws of Seller or any agreement or
instrument known to such counsel to which Seller is a party or by
which Seller or its Assets are bound.
(v) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or any court is
required to be obtained or made by Seller for the sale of the
Assets pursuant to this Agreement, except such as have been
obtained or made.
(vi) Except as disclosed in this Agreement or the Exhibits hereto,
such counsel is not aware, after reasonable investigation, of any
pending or threatened action, suit, proceeding or investigation
before any court or any public, regulatory or governmental
agency, authority or body, involving Seller or any of its
officers or directors, and such counsel does not know of any
legal matter or government proceedings regarding Seller.
(l) Sublease Agreement. The Agreement regarding sublease of the
Seller's present office space in substantially the form attached
hereto as Exhibit 12.7 shall have been approved by the Landlord
and the Seller and the Purchaser.
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ARTICLE IX
SURVIVAL 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 two (2) years. The
foregoing shall be subject to the exception that any claims relating to tax
matters covered in Sections 3.26 and 3.27 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 X
INDEMNIFICATION
10.1 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
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
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".
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10.2 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 $10,000 and then only to
the extent of such excess. Claims for indemnification by either party shall
be limited to the lesser 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. In no event shall any
Shareholder be liable for an amount greater than the amount determined by
multiplying (i) the aggregate amount of all Losses as to which indemnity is
sought by Purchaser under this Article X by (ii) such Shareholder's
percentage ownership interest in the Seller as of the Closing unless such
Shareholder is determined in accordance with Section 13.11 to have engaged
in fraudulent or grossly reckless conduct.
10.3 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 twenty (20) 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"). 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 twenty (20) 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.
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(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 Section 13.11.
10.4 Payment of Claim. Upon the determination of the liability of Seller or
Purchaser under Section 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 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. 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 Seller's operations
(including an audit of gross revenues) for the years ended December 31,
1997 and 1998. In the event of a material variation in gross revenues
between the results of such audit and the representation as to gross
revenues made by Seller to Purchaser in Exhibit 10.6 hereto (such material
variation in revenues to be defined as a variation of more than the lesser
of (i) 2% of revenues, or (ii) $10,000), then the Purchaser shall have the
right to offset the amount of such material variation in excess of either
of the above-described amounts against the 15% holdback amount set forth in
Section 2.2(a) above. Any amounts not offset at the end of the 120 day
period following Closing shall be immediately paid to the Seller.
ARTICLE XI
AMENDMENT, TERMINATION AND BREACH
11.1 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.
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11.2 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, by mutual consent of Purchaser and
Seller;
(b) By either Seller or Purchaser if the Closing has not occurred by April
15, 1999.
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 XII
CLOSING
12.1 Closing. The closing of this Agreement (the "Closing") shall be April 1,
1999 or as soon thereafter as practicable but not later than April 15,
1999, unless a later date is mutually agreed upon by the parties, provided
however, this Agreement shall be deemed to be effective at 12:01 a.m. on
April 1, 1999 ("Effective Date").
12.2 Allocations. At Closing (i) the Seller will pay Purchaser for all vacation
pay accrued for employees as of the Effective Date; (ii) Seller will pay
Purchaser the amount of all accounts receivable credit balances existing on
the Effective Date; and (iii) the parties shall allocate or prorate all the
portion attributable to Seller of the water, sewer, electric, other
utilities and rent through the Effective Date. For purposes of income and
expense all income and expenses incurred on or before the Effective Date
shall be billed and collected by, and paid for, respectively, by Seller.
12.3 Seller's Deliveries at Closing. At the Closing Seller and Shareholders 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 described in
Exhibit 12.3 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 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.
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(c) Assignment of Contracts, Leases and Other Agreements. Assignment of
contracts, leases and other agreements, described in Exhibit 3.20
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 Peabody & Arnold LLP, counsel to
Seller, dated the Effective Date, in the form described in Section 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 incorporation of Seller dated as of
a date reasonably prior to the Effective 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) Non-Compete and Confidentiality Agreements. The non-compete agreements
of Daniel G. Suleski, Jr., Gerald Mirliani, Michael Foutes, Craig
Avedikian and Paul Mignone in the form set forth in Exhibit 7.7
hereto.
(i) Employment Agreements. The employment agreements of Daniel G. Suleski,
Jr., Gerald Mirliani, Michael Foutes, Craig Avedikian and Paul Mignone
in the form set forth in Exhibit 7.8 hereto.
(j) 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.
(k) Officer's Certificate in the form described in Section 8.2 of this
Agreement.
(l) Other documents. Such other documents, instruments, certificates and
agreements including assignment of space lease to Purchaser, as
Purchaser and its counsel may reasonably request.
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12.4 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
Section 2.2 including the cash portion.
(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 Jones & Keller, P.C., counsel to
the Purchaser, dated the Effective Date, in the form described in
Section 8.1 of this Agreement.
(d) 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.
(e) Officer's Certificate in the form described in Section 8.1 of this
Agreement.
(f) Non-Compete and Confidentiality Agreements. The non-compete agreements
of Daniel G. Suleski, Jr., Gerald Mirliani, Michael Foutes, Craig
Avedikian and Paul Mignone in the form set forth in Exhibit 7.7
hereto.
(g) Employment Agreements. The employment agreements of Daniel G. Suleski,
Jr., Gerald Mirliani, Michael Foutes, Craig Avedikian and Paul Mignone
in the form described as Exhibit 7.8 hereto.
(h) 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. 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.
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12.6 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.
12.7 Cooperation; Premises. For a period of 90 days following the Effective
Date, Seller, agrees to assist Purchaser in the retention of Seller's
customers and employees, including revision and execution or re-execution
of all customer agreements as determined by Purchaser and to perform any
other duties Purchaser may reasonably request. Further, Seller will secure
a sublease in favor of Purchaser from the lessor of Seller's office space
in substantially the form attached hereto as Exhibit 12.7 and will further
assist the Purchaser in acquiring new office space suitable for the needs
of the business being purchased hereunder.
ARTICLE XIII
MISCELLANEOUS
13.1 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: Samuel E. Wing, Esq.
Jones & Keller, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
If to Seller: Daniel G. Suleski, Jr.
United Data Services, Inc.
20 Blanchard Road
Burlington, Massachusetts 01803
With a copy to: Donald E. Vaughan, Esq.
Peabody & Arnold LLP
50 Rowes Wharf
Boston, Massachusetts 02110
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<PAGE>
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 Agreement. This Agreement, including all Exhibits hereto
(which by this reference shall incorporate herein all such Exhibits 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 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 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 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 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 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 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 Section 11.1 hereof.
13.9 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.
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13.10Headings. The headings in this Agreement are for purposes of convenience
and easy reference only and shall not limit or otherwise affect the meaning
hereof.
13.11Disputes. 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.
13.12Delivery of Exhibits. All Exhibits 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/ Jerald H. Donnan
Jerald H. Donnan, President
SELLER:
UNITED DATA SERVICES, INC.
By: /s/ Daniel G. Suleski, Jr.
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SHAREHOLDERS, but only with respect
to Articles III and X
/s/ Daniel G. Suleski, Jr.
Daniel G. Suleski, Jr.
/s/ Gerald Mirliani
Gerald Mirliani
/s/ Michael Foutes
Michael Foutes
/s/ Craig Avedikian
Craig Avedikian
/s/ Paul Mignone
Paul Mignone
<PAGE>
TABLE OF ATTACHMENTS
Exhibit Description
2.1 List of Acquired Assets
2.2(b)(i) Form of Promissory Note and Amortization Schedule
2.2(b)(ii) Form of Security Agreement
2.3 List of Assumed Liabilities
3.1(a) Articles of Organization of Seller
3.1(b) Bylaws of Seller
3.3(a) Certificate of Seller re: Shareholders Approval
3.3(b) Directors' Consent of Seller
3.7 Governmental Notices
3.12 Litigation
3.15 Exceptions to Title of Assets
3.16(a) Customer Accounts
3.16(b) Impaired Customer Contracts
3.16(c) Delinquent Contracts or Agreements
3.17 License Agreements
3.18 Intellectual Property
3.19 Seller's Customers--Revenues
3.20 Contracts
3.22 Liabilities not on Financial Statements
3.23 No Material Adverse Changes
3.25 Leases
3.26 Tax Returns
3.27 Tax Notices
3.28 Employment Matters
3.29 Employee Benefit Plans
6.2 Directors' Consent of Purchaser
7.7 Non-Compete and Confidentiality Agreements
7.8 Employment Agreements
8.1 Form of Certificate of Purchaser
8.1(g) Opinion of Jones & Keller, P.C.
8.2 Form of Certificate of Seller
8.2(k) Opinion of Peabody & Arnold LLP
10.6 Seller's and Shareholders' Representation as to Gross
Revenues
12.3 Bill of Sale and Assignment
12.7 Form of Agreement re: Sublease of Office Space
