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
__________________________
November 15, 1995
(Date of Earliest Event Reported)
United Systems Technology, Inc.
(Exact name of registrant as specified in its charter)
Iowa 0-9574 42-110279
(State or other (Commission file (I.R.S. Employer
jurisdiction of number) Identification Number)
incorporation)
3021 Gateway Drive, Suite 240
Irving, Texas 75603
(214) 518-0728
(Address of principal executive offices and telephone number)
(214) 518-0728
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets
On November 15, 1995, United Systems Technology, Inc.
("USTI") purchased substantially all of the assets and
assumed certain liabilities of QDS Acquisitions, Inc. (QDS")
from Dralvar Capital Corp. ("Dralvar"). These assets were
previously acquired by certain Dralvar shareholders through
foreclosure on their security interests in such assets
granted by QDS. The purchase price consisted of the
issuance of 5,000,000 shares of USTI Common Stock. Of the
total shares issued, 2,500,000 of such shares have been
placed in escrow for a 120 period after closing subject to
an Escrow Agreement executed by USTI, Dralvar and Resource
Trust Bank, as escrow agent. In addition, USTI assumed
certain obligations of Dralvar. The assets purchased by
USTI consisted of (a) all operating assets of QDS including
its Utility Billing System ("UBS") and its Law Enforcement
Automated Data Retrieval System ("LEADRS") software,(b) the
non-exclusive right to sell and provide software maintenance
and services for the Quest Fund Accounting ("QFA") software
product line from the closing date through February 28,
1997, (c) substantially all hardware, equipment, supplies,
furniture, furnishings and other fixed assets, (d) all
software used for product development, (e) trade secrets and
proprietary information including the name QuestTM and any
other trademarks, (f) business records of Dralvar, including
customer lists and related contracts and contract rights and
(g) certain accounts receivable of Dralvar totaling
approximately $52,630. USTI assumed certain obligations of
Dralvar which consisted of obligations to customers in the
amount of $187,645 and accrued expenses in the amount of
$1,442.
The consideration utilized by USTI for this transaction
consisted primarily of the issuance of its Common Stock for
the transaction. QDS was engaged in the business of
developing, marketing and supporting application software
for municipal and county governments and USTI intends to
continue to use the assets acquired in such business.
The acquisition was arrived at through an arm's-length
transaction between USTI and Dralvar. There is no material
relationship between Dralvar and USTI or any of its
affiliates, directors or officers, or associates thereof.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits.
(a) Financial statement of the business acquired.
The required financial statements are not
available as of the filing of this report and will
be filed at a subsequent date, but not later than
60 days from the filing of this report.
(b) Pro forma financial statements.
The required pro forma financial information is
not available as of the filing of this report and
will be filed at a subsequent date, but not later
than 60 days from the filing of this report.
(c) Exhibits
The following documents are filed as exhibits
herewith, unless otherwise specified, and are
incorporated herein by this reference.
10.1 Asset Purchase Agreement, dated November 15,
1995 by and between United Systems Technology,
Inc., Dralvar Capital Corp. and Kenneth Neff.
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 thereunto duly
authorized.
United Systems Technology, Inc.
Date: November 29, 1995 By: /s/ Randall L. McGee_________
Randall L. McGee, Secretary
and Treasurer (Principal
Financial and Accounting
Officer)
[DESCRIPTION] EXHIBITS TO THE FORM 8-K
ASSET PURCHASE AGREEMENT
November 15, 1995
By and Among
United Systems Technology, Inc.
as Purchaser
and
Dralvar Capital Corp.
as Seller
TABLE OF CONTENTS
1. SALE AND PURCHASE OF ASSETS 1
1.1 Description of Assets 1
1.2 Assets Exclude 3
1.3 Liabilities 3
2. PURCHASE PRICE 3
2.1 Amount and Payment 3
3. CLOSING 4
3.1 Deliveries by Company 5
3.2 Deliveries by Purchaser 5
3.3 Possession 5
3.4 Taxes and Fees 5
4. REPRESENTATIONS AND WARRANTIES OF COMPANY AND
SHAREHOLDER 6
4.1 Authorized Capitalization; Outstanding
Shares 6
4.2 Organization, Good Standing, Power, etc. 6
4.3 Agreements Relating to Stock 6
4.4 Officers and Directors 6
4.5 No Subsidiaries 6
4.6 Authorizations and Enforceability 6
4.7 Effect of Agreement, etc 7
4.8 Restrictions; Burdensome Agreements 7
4.9 Government and Other Consents 7
4.10 Permits, Licenses, Compliance with
Applicable Laws and Court Orders 7
4.11 Financial Statements 7
4.12 Absence of Undisclosed Liabilities 8
4.13 Tax Matters 8
4.14 Title to Properties: Absence of Liens
Encumbrances, etc. 8
4.15 Hardware, Equipment and Condition 9
4.16 Insurance 9
4.17 Agreements, Plans, Arrangements, etc 9
4.18 Litigation 10
4.19 Intangible Property 10
4.20 Intentionally Left Blank 10
4.21 Customers 10
TABLE OF CONTENTS
(Continued)
4.22 Books and Records 10
4.23 Employees 10
4.24 Labor Relations 10
4.25 Employee Benefits and Benefit Plans, etc 11
4.26 Brokers 11
4.27 Acquisition Agreements 11
4.28 Absence of Certain Changes or Events 11
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER 12
5.1 Organization, Good Standing, Power, etc 12
5.2 Authorization of Agreement and
Enforceability 12
5.3 Effect of Agreement. Consents. etc 12
5.4 No Finder 12
6. COVENANTS OF THE COMPANY 12
6.1 Conduct of Business Until Closing Date 12
6.2 Access to Properties and Records 13
6.3 Advice of Changes 14
6.4 Conduct 14
6.5 Payment of Salaries and Wages, etc 14
6.6 Employee Benefit Plans, etc 14
6.7 Fulfillment of Conditions 14
7. COVENANTS OF PURCHASER 14
7.1 Confidentiality 14
7.2 Disruption of Business Relationships 15
7.3 Board Addition 15
8. ADDITIONAL COVENANTS OF THE COMPANY 15
8.1 Covenant of Confidentiality 15
8.2 Covenant Not to Conduct Third Party
Negotiations 15
8.3 Covenant to Assist and Not to Interfere 15
9. COVENANTS OF QDS, ACQUSITIONS, INC. 15
10. EMPLOYEES 15
10.1 Company's Employees 15
10.2 Employment Relationship 16
10.3 Employee Benefit Plans, Programs and
Practices 16
10.3.1 No Continuing Commitment 16
10.4. Pending Claims 16
TABLE OF CONTENTS
(Continued)
11. CONDITIONS TO COMPANY'S OBLIGATIONS 16
11.1 Accuracy of Representations and
Warranties 17
11.2 Performance of Covenant 17
11.3 Litigation, etc 17
11.4 Certificates 17
12. CONDITIONS TO PURCHASER'S OBLIGATIONS 17
12.1 Accuracy of Representations and
Warranties 17
12.2 Performance of Covenants 17
12.3 Litigation, etc 17
12.3.1 No Claims, etc. 18
12.3.2 No Violations 18
12.3.3 Laws, etc 18
12.4 Opinion of Counsel to Company 18
12.5 Consents 18
12.6 Certificate 18
12.7 Satisfactory Completion of Due Diligence 18
13. TERMINATION 19
14. INDEMNIFICATION 19
15. GENERAL 19
15.1 Expenses, etc 19
15.2 Survival of Representations and
Warranties 19
15.3 Waivers 19
15.4 Announcements 20
15.5 Binding Effect; Benefits 20
15.6 Notices 20
15.7 Further Assurances 21
15.8 Entire Agreement; Amendment 21
15.9 Headings 21
15.10 Severability 21
15.11 Counterparts 21
15.12 Gender; Singular and Plural 21
15.13 Third Parties 22
15.14 Governing Law; Performance 22
15.15 Attorneys' Fees 22
15.16 Arbitration 22
15.17 Time of Essence 22
TABLE OF CONTENTS
(Continued)
Exhibits
Exhibit 1.1 (a) Quest Product Lines
Exhibit 1.1 (b) Quest Fund Accounting License
Agreement
Exhibit 1.1 (c) Hardware, Equipment, Supplies,
Furniture, Furnishings
and Other Fixed Assets
Exhibit 1.1 (d) Software Used In Product
Development and Support
Exhibit 1.1 (f) Quest Customer List
Exhibit 1.1 (g) Quest Licensed Applications To
Customers
Exhibit 1.1 (h) Contracts and Agreements
Exhibit 1.1 (i) Accounts Receivable Purchased
Exhibit 1.2 (c) Excluded Assets
Exhibit 1.2 (d) Excluded Accounts Receivable
Exhibit 1.3 (b) Sales Commissions Assumed
Exhibit 2.1 (c) Potential Credits to Customers
Exhibit 2.1 (c)i Escrow Agreement
Exhibit 2.1 (c)ii Potential Product Returns
Exhibit 3.1 (a) Bill of Sale
Exhibit 4.1 Shareholder List
Exhibit 4.23 Employees
Exhibit 12.4 Opinion of Counsel
ASSET PURCHASE AGREEMENT
PARTIES
The parties to this Agreement are DRALVAR CAPITAL
CORP., a Minnesota corporation, the company
("Company"),which Company is selling certain assets which
were previously acquired by certain of the Company's
shareholders through foreclosure on their security interests
from QDS Acquisitions, Inc. ("QDS"), Company, Kenneth Neff,
President and Control Shareholder ("Control Shareholder")
and UNITED SYSTEMS TECHNOLOGY, INC., an Iowa corporation,
the purchaser of such assets of Company ("Purchaser"). The
parties hereby agree as follows:
RECITALS
A. Company acquired its assets from certain of its
shareholders who, as secured creditors, acquired the assets
through foreclosure from QDS.
B.. Company is engaged in the development, sale and support
of certain computer software products;
C. Purchaser, being engaged in a similar business, desires
to purchase the operating assets which are owned by the
Company upon the terms and conditions set forth herein; and
D. Company is willing to sell and Purchaser is willing to
purchase such assets upon the terms and conditions set forth
herein:
AGREEMENT
1. SALE AND PURCHASE OF ASSETS. On the terms
and subject to the conditions of this Agreement, Company
will sell, assign and convey to Purchaser and Purchaser will
purchase from Company, all of the right, title and interest
in and to the "Assets," as defined below, free and clear of
all liens, claims and encumbrances except as provided
herein.
1.1 Description of Assets. The "Assets" are
all of the operating business assets of the Company , except
as specifically excluded herein, consisting at Closing of:
(a) All operating assets of the Company,
including but not limited to the Quest Utility Billing
System ("UBS") and the Quest Law Enforcement Automated
Data Retrieval System ("LEADRS") software product lines
and the customer relationships and related contracts
and agreements with respect to such product line. Such
product lines are more specifically described in
Exhibit 1.1 (a) hereto;
(b) The Company shall either (i) obtain and
transfer to the Purchaser a non-exclusive license for
the sale of the Quest Fund Accounting ("QFA") software
product line. The license will permit the Purchaser to
sell and provide software maintenance and service to
QFA customers for a period of at least twelve months
from the date of closing. The Company agrees to pay a
consideration of up to $25,000 for such license. Such
non-exclusive license and transfer is included as
Exhibit 1.1 (b) hereto; or (ii) cause QDS Acquisition,
Inc., as licensee, to appoint Purchaser as its value
added reseller ("VAR") agent to sell and to provide
software maintenance and services to QFA customers for
a period commencing on the Closing Date and ending
February 28, 1997.
(c) All hardware, equipment, supplies,
furniture, furnishings and other fixed assets (the
"fixed assets") as described in Exhibit 1.1 (c) hereto;
(d) All software used for product
development and support as described in Exhibit 1.1 (d)
hereto;
(e) Trade secrets and other proprietary
information used in connection with the operation of
the business, the name "QUEST", Utility Billing System
"UBS", Law Enforcement Automated Data Retrieval System
"LEADRS", Quest Fund Accounting "QFA" and any other
trademarks, service marks or trade names, and the
nonexclusive right to use the trademark QFA or Quest
Fund Accounting.
(f) Business records of the Company,
including customer lists, supplier lists, business
studies, consultant reports, and business plans and
budgets, in whatever medium they may be stored,
including paper, microfilm, magnetic or electronic
media. A list of the Company's current customers is
included in Exhibit 1.1 (f) hereto;
(g) All transferable permits, licenses and
governmental approvals necessary for or used in
connection with the operation of the business or the
use of its assets. A list of all software licenses with
respect to software licensed by the Company is included
in Exhibit 1.1 (g) hereto;
(h) Certain contract rights and agreements
in connection with the Company and its business as
listed on Exhibits 1.1 (h) hereto; and
(i) Certain accounts receivable of the
Company and prepayments received by the Company, as
described in Exhibit 1.1 (i) attached hereto related to
products and services to be delivered after November 1,
1995.
Company shall make available to Purchaser's independent
certified public accountants, Grant Thornton, for inspection
and copying, corporate records and copies of books of
account, ledgers and financial statements necessary for
Purchaser's auditors to perform a pre-closing audit, if so
requested by the Purchaser.
1.2 Assets Exclude. Except as provided
elsewhere herein, the Assets exclude:
(a) Corporate minute book(s), stock books,
other corporate records, and corporate seal of the
Company and QDS;
(b) Originals of books of account, ledgers,
and financial statements; and
(c) Certain miscellaneous assets,
principally certain tangible assets, as described in
Exhibit 1.2(c) attached hereto.
(d) Certain accounts receivable of the
Company, as described in Exhibit 1.2 (d) attached hereto.
(e) Cash or cash equivalents or bank
deposits, except for the cash payments to Purchaser as
called for in this agreement.
1.3 Liabilities. Except as expressly provided
in this Section 1.3, Purchaser assumes no debts, tax
liabilities or other liabilities or obligations (contractual
or otherwise) of Company and QDS or any other debts,
liabilities or obligations related to the conduct of
Company's or QDS's business prior to the closing date of
this transaction. Purchaser will assume the following
liabilities of the Company, and no others:
(a) The obligations under those certain
contracts, license and maintenance agreements marked as
"yes" as listed in Exhibit 1.1(h) and obligations related to
annual maintenance services which are marked as "paid" in
Exhibit 1.1(h) and software licenses listed on exhibit
1.1(g) hereto; and
(b) Sales commissions per Exhibit 1.3 (b)
2. PURCHASE PRICE.
2.1 Amount and Payment. The purchase price
("Purchase Price") for the Assets shall be:
(a) The Purchaser shall issue 5,000,000
shares of United Systems Technology, Inc. ("USTI") shares of
Common Stock in the name of the Company, as provided in
Section 2.1(b) and 2.1(c) below. The total purchase price
will be determined by multiplying the number of shares of
USTI Common Stock by the fair market value of the USTI
Common Stock on the Closing Date, defined herein, of this
transaction. The fair market value of the USTI Common Stock
will be the mean of the closing bid and asked price of the
stock as reported on the pink sheets of the National
Quotation Bureau, inc. on the business day preceding the
Closing Date;
(b) The purchase price defined in 2.1 (a)
above will be reduced by an amount equal to any payments
received by the Company prior to the Closing Date for
maintenance and professional services which are to be
provided after November 1, 1995 and listed as "Payments
Rec'd By Quest" on Exhibit 1.1(i). This reduction in the
purchase price will be effected by reducing the number of
shares of USTI shares of Common Stock issued on the Closing
Date or by the Company making a cash payment to the
Purchaser for an amount equal to the "Payments Rec'd By
Quest" on Exhibit 1.1(i) on the Closing Date;
(c) The Purchaser shall issue up to
2,500,000 of the shares of USTI Common Stock in the name of
the Company, as defined above, at the Closing Date of this
transaction. The remaining 2,500,000 of the shares of USTI
Common Stock ("Reserve Shares") shall be issued in the name
of the Company and placed in escrow with Resource Trust Bank
of Minneapolis, Minnesota in accordance with the terms of an
escrow agreements in the form set forth in Exhibit
2.1(c)(i), provided that, the Reserve Shares will be reduced
by an amount equal to (i) redemption by customers of "Quest
Bucks" and other open credits as listed on Exhibit 2.1(c) in
the form of reduced payments to the Purchaser, (ii) amounts,
if any, refunded by the Purchaser to customers listed on
Exhibit 2.1(c)(ii) who purchased products prior to the
Closing Date that were subject to the Company's 60 day
return policy, (iii) an amount equal to the value of any
accrued vacation hours set forth on Exhibit 4.23 which USTI
assumes for any Company employee it hires after the Closing
and (iv)$1,600 related to the annual maintenance fees
related to the Hubbard County contract. For purposes of
this section, the Reserve Shares shall be valued at the
market value of the USTI Common Stock on the Closing Date.
The Reserve Shares will not be reduced to the extent that
(a) the redemption by customers of "Quest Bucks" are made
against accounts receivable described in Exhibit 1.2(d), or
(b) the Company refunds amounts , if any, to customers
listed in Exhibit 2.1(c)(ii) who purchased products prior to
the Closing Date that were subject to the Company's 60 day
return policy or (c) the Company makes a cash payment to the
Purchaser for any redemption of "Quest Bucks", customer
refunds defined above prior to the expiration of 120 days
after the Closing Date, an amount equal to the value of any
accrued vacation hours set forth on Exhibit 4.23 which USTI
assumes for any Company employee it hires after the Closing
and $1,600 related to the annual maintenance fees related to
the Hubbard County contract.
3. CLOSING. The closing of the transactions
contemplated by Section 1 hereof (the "Closing") shall take
place at the offices of Mansfield & Tanick, 1560
International Centre, 900 Second Avenue South, Minneapolis,
Minnesota, 55402-3383 at 3:00 p.m., local time, on November
15, 1995, or at such other date, time and place as Purchaser
and Company shall mutually agree in writing (the "Closing
Date").
Conveyance, transfer, assignment and delivery of
the Assets shall be by bills of sale, certificates of
transfer, endorsements, assignments and other instruments of
transfer and conveyance in such form as Purchaser may
reasonably request. Company will from time to time after the
Closing make such further conveyances, transfers,
assignments and deliveries, and execute such further
instruments and documents, as Purchaser deems reasonably
necessary in order to effectuate and confirm the sale of
Assets and other transactions contemplated by this
Agreement. At Closing, the Company, its Control Shareholder
and the Purchaser shall respectively execute and deliver the
following additional instruments and documents:
3.1 Deliveries by Company.
(a) A bill of sale in form attached hereto
as Exhibit 3.1(a) covering all of the Assets being acquired
hereunder;
(b) All required assignments of assignable
licenses, permits, trademarks and other intangible Assets in
appropriate forms, if any;
(c) Releases of financing statements and
other recorded encumbrances terminating all liens and
encumbrances against, and security interests in, any of the
Assets, in form sufficient for filing or recording; with the
exception of that factoring agreement for the Hubbard County
Purchase Order.
(d) The certificates described in Section
12.6 below;
(e) All required consents to assignments of
contracts and agreements, if any; and
(f) Such other documents and instruments as
counsel for Purchaser may reasonably require to effectuate
or evidence the transfer of all of the Assets.
3.2 Deliveries by Purchaser:
(a) The certificates described in Section
11.4 below; and
(b) Such other documents and instruments as
counsel for Company may reasonably require, from time to
time, to effectuate or evidence the transactions
contemplated hereby.
(c) Certificate for USTI Common Stock in
accordance with 2.1(c).
3.3 Possession. Purchaser shall take possession
of the Assets as of Closing.
3.4 Taxes and Fees.
(a) Any transfer, sales or use tax, or
transfer, filing or recording fees, payable upon or with
respect to the sale of the Assets shall be paid when due by
Purchaser.
(b) All personal property taxes
attributable to any of the Assets shall be apportioned as of
Closing.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
AND CONTROL SHAREHOLDER. The "Disclosure Schedules"
described herein shall mean all of the disclosures made in
writing by Company to Purchaser, whether in the form of
Exhibits to this Agreement, summarized schedules, or copies
or originals of actual documents delivered or made available
to Purchaser for its review. Company and Purchaser shall
agree in writing at Closing on the specific content of the
final Disclosure Schedules. Subject to the Disclosure
Schedules, Company and its Control Shareholder represent and
warrant to Purchaser as follows, provided that the Control
Shareholder are not providing any representation and
warranty on Sections 4.1, 4.2, 4.3, 4.4, 4.5, 4.6, 4.7, 4.8
and 4.25:
4.1 Authorized Capitalization; Outstanding
Shares. The authorized capital stock of Company consists of
500 000 shares of Common Stock of which shares are issued
and outstanding to the shareholders set forth in Exhibit 4.1
hereto.
4.2 Organization, Good Standing, Power, etc.
Company (a) is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Minnesota; (b) is authorized or licensed to do business as a
foreign corporation and is in good standing in the
jurisdictions listed in the Disclosure Schedules; (c) is not
required to be authorized or licensed to do business as a
foreign corporation in any other jurisdiction (within or
without the United States) by reason of the nature of the
business conducted by it or the properties owned or leased
or operated by it; and (d) has the requisite power and
authority to own, lease and operate its properties and to
carry on its business as currently conducted.
4.3 Agreements Relating to Stock. The Company
is not a party to any written or oral agreement,
understanding, arrangement or commitment or bound by any
certificate of incorporation, bylaw or instrument (including
options, warrants or convertible securities) which creates
any rights in any person with respect to shares of the
capital stock or any other securities of Company or which
relates to the voting of or creates rights in any person
with respect to the capital stock or other securities of
Company.
4.4 Officers and Directors. A complete and
correct list of all Company officers and directors is set
forth in the Disclosure Schedules.
4.5 No Subsidiaries. Company owns no interest,
directly or indirectly, in any other corporation, company,
business trust, partnership, limited partnership, joint
venture, or other entity or association (other than
financial investments).
4.6 Authorizations and Enforceability. Company
has all requisite power and authority to execute, deliver
and perform this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been
duly and validly authorized, executed and delivered by
Company and constitutes the valid and binding obligation of
Company, fully enforceable in accordance with its terms.
4.7 Effect of Agreement, etc. The execution,
delivery and performance of this Agreement by Company and
its Control Shareholder and the consummation of the
transactions contemplated hereby will not, with or without
the giving of notice or the lapse of time, or both: (a)
violate any provision of law, statute, rule or regulation to
which Company is subject; (b) violate any judgment, order,
writ or decree of any court, arbitrator or governmental
agency applicable to Company; (c) have any adverse effect on
any of the Assets; or (d) result in the breach of or
conflict with any term, covenant, condition or provision of,
result in the modification or termination of, constitute a
default under, or result in the creation or imposition of,
any lien, security interest, charge or encumbrance upon any
of the Assets pursuant to any charter, bylaw, commitment,
contract or other agreement or instrument, to which Company
is a party or by which any of its Assets is bound.
4.8 Restrictions; Burdensome Agreements.
Company is not a party to any contract, commitment or
agreement, and none of Company or its properties or the
Assets are subject to or bound or affected by any charter,
bylaw or other corporate restriction, or any order,
judgment, decree, law, statute, ordinance, rule, regulation
or other restriction of any kind or character, which would
prevent Company from entering into this Agreement or from
consummating the transactions contemplated hereby.
4.9 Government and Other Consents. (a) No
consent, authorization or approval of, or exemption by, or
filing with any governmental, public or self-regulatory body
or authority is required in connection with the execution,
delivery and performance by Company of this Agreement or any
of the instruments or agreements herein referred to, or the
taking of any action herein contemplated; and (b) no consent
of any other person or entity is required in connection with
the execution, delivery and performance by Company of this
Agreement or any of the instruments or agreements herein
referred to or the taking of any action herein contemplated,
except such consents as shall be set forth by Company in the
Disclosure Schedules and obtained and in full force and
effect on or before Closing.
4.10 Permits, Licenses, Compliance with
Applicable Laws and Court Orders. Company has all requisite
corporate power and authority, and all permits, licenses and
approvals of governmental and administrative authorities, to
own, lease and operate its properties and to carry on its
business as presently conducted; and all such permits,
licenses and approvals material to the conduct of the
business of Company are in full force and effect. Company's
conduct of its business does not violate or infringe any
applicable law, statute, ordinance or regulation. Company
is not in default in any respect under any executive,
legislative, judicial, administrative or private (such as
arbitration) ruling, order, writ, injunction or decree.
4.11 Financial Statements. A true and correct
copy of the final unaudited financial statements of Company
for the fiscal years ended August 31, 1994 and 1995,
including the related statement of operations and balance
sheets for each of the fiscal years then ended, and the
interim financial statements for the period ended September
30, 1995, including the related statement of operations and
balance sheet for the period then ended, have been delivered
to Purchaser as part of the Disclosure Schedules. The
foregoing financial statements were prepared in accordance
with generally accepted accounting principles ("GAAP").
Such statements are correct and complete and fairly present
the financial position and results of operations of Company
as of said dates and for the periods indicated. The
financial statements of Company for the fiscal years ended
August 31, 1994 and 1995, and for the interim period ended
September 30, 1995, referred to above, are referred to
herein as the "Financial Statements", and the fiscal year
end and interim balance sheets of Company included therein
are referred to herein as the "Balance Sheets."
4.12 Absence of Undisclosed Liabilities. Except
to the extent reflected or reserved against or otherwise
disclosed in the Financial Statements, as of August 31, 1994
and 1995, and September 30, 1995, the Company had no
liabilities, debts or obligations of any nature, whether
absolute, accrued, contingent or otherwise, or whether due
or to become due. Subsequent to September 30, 1995, Company
has not incurred any liabilities, debts or obligations other
than in the ordinary course of business or otherwise than as
disclosed in the Disclosure Schedules hereto, and Company
has properly recorded in its books of account all items of
income and expense and all other proper charges and accruals
required to be made. Since September 30, 1995, no debts or
liabilities of or to Company have been forgiven, settled or
compromised except for full consideration or except in the
ordinary course of business.
4.13 Tax Matters. Company has prepared and
filed, with the appropriate United States, state and local
governmental agencies and foreign governmental agencies, all
tax returns required to be filed and has paid all taxes
payable or which have become due pursuant to any assessment,
deficiency notice, 30-day letter or similar notice received
by it. A complete and correct copy of the income tax return
of Company for the fiscal year ending in 1994 as filed with
the Internal Revenue Service and all state taxing
authorities, together with all related correspondence and
notices, have been delivered to Purchaser as part of the
Disclosure Schedules.
4.14 Title to Assets and Properties: Absence of
Liens and Encumbrances, etc. Except as set forth in the
Disclosure Schedules, Company has good and marketable title
to the Assets and its properties and assets used in its
business (including, without limitation, the assets
reflected in the Financial Statements, except as since sold
or otherwise disposed of in the ordinary course of
business), free and clear of all mortgages, security
interests, claims, liens, charges, encumbrances,
restrictions on use or transfer or other defects in title.
Company is not a consignee or other type of bailee for any
other person. The agreements or instruments under which
Company holds or is entitled to the use of any personal
property are set forth in Disclosure Schedules and are in
full force and effect, and all royalties or other payments
payable thereunder prior to the date hereof have been duly
paid. No default or event of default exists, and no event
which, with notice or lapse of time or both, would
constitute a default, has occurred and is continuing, under
the terms or provisions, express or implied, of any of such
agreement or other instrument or under the terms or
provisions of any agreement to which any of such properties
is subject, nor has Company received notice of any claim of
such default, nor has Company failed to comply in any
respect with any provision or condition of any such lease,
agreement or other instrument. Furthermore, the Company and
its Control Shareholder hereby represent and warrant that
Purchaser will have no liability or obligation for rental
payments due prior to Closing under that certain lease
agreement between B.E.A. Leasing, Inc., as landlord, and
Quest Data Systems, Inc., as tenant, with respect to the
leased premises at 3312 & 3316 Gorham Avenue South, St.
Louis Park, MN, 55426 and shall not have an obligation for
lease payments due after Closing or for any other matter
related to such obligations except for continuing occupancy.
4.15 Hardware, Equipment and Condition. The
Disclosure Schedules set forth a correct and complete list
of all of the hardware and equipment being sold hereunder
("fixed assets"). No warranty is extended as to condition
or suitability for use.
4.16 Insurance. All physical properties and
assets of Company or on any of the premises of Company are
covered by such fire, casualty, product liability and other
insurance policies issued by reputable companies as are
customarily obtained to cover comparable properties and
assets by businesses in the region in which such properties
and assets are located, in amounts, scope and coverage which
are adequate and reasonable in light of existing conditions.
4.17 Agreements, Plans, Arrangements, etc.
Except as set forth in the Disclosure Schedules, Company is
not a party to, nor is Company or any of the Assets or its
other properties bound or affected by, any oral or written:
(a) lease agreement (whether as lessor or
lessee) relating to real or personal property;
(b) license agreement, assignment or other
contract (whether as licensor or licensee, assignor or
assignee) relating to trademarks, trade names, patents,
copyrights (or applications therefor), unpatented designs or
styles, know-how or technical assistance;
(c) agreement with any labor union;
(d) agreement with any supplier,
distributor, franchiser, dealer, sales agent or
representative, including, without limitation, any agreement
or commitment regarding the purchase, development or license
of software products;
(e) agreement with any supplier or customer
with respect to discounts or allowances;
(f) joint venture or partnership agreement
with any other person;
(g) agreement with any bank, factor,
finance company or similar organization regarding the
financing of accounts receivable or other extensions of
credit;
(h) agreement granting any lien, security
interest or mortgage on any Asset or other property of
Company, including, without limitation, any factoring
agreement for the assignment of accounts receivable;
(i) agreement which restricts the Company
from doing business anywhere in the world; or
(j) agreement, statute or regulation giving
any party the right to renegotiate or require a reduction in
prices or the repayment of any amount previously paid.
4.18 Litigation. Except as set forth in the
Disclosure Schedules, there is no claim, action, suit,
proceeding, arbitration, investigation or inquiry pending or
threatened before any Federal, state, municipal, foreign or
other court or any governmental, administrative or self-
regulatory body or agency, or any private arbitration
tribunal, relating to or affecting Company or any of the
Assets or other properties or businesses of Company, or the
transactions contemplated by this Agreement.
4.19 Intangible Property. The Disclosure
Schedules set forth a correct and complete list of all
patents, trademarks, trade names, service marks, copyrights
and applications therefor now or heretofore used (and
indicates whether owned by Company or used pursuant to
licenses or other arrangements, as described therein) in the
conduct of the business of the Company.
4.20 [Intentionally Left Blank]
4.21 Customers. Exhibit 1.1(f) sets forth the
following information with respect to Company's customers:
a list of each of Company's customers including a list of
the software packages licensed to each customer and the
status of license and/or maintenance agreements with each
customer.
4.22 Books and Records. The books and records
of Company are located at the Company's offices, at 3312
Gorham Avenue South, Minneapolis, MN, 55426. Such books of
account and other financial and corporate records of Company
are in all material respects complete and correct, are
maintained in accordance with good business practices, and
are accurately reflected in the Financial Statements.
4.23 Employees. Exhibit 4.23 sets forth the
names, starting dates of employment, salary or wage rate and
functions by category of each employee of Company. Company
is not party to any employment contract.
4.24 Labor Relations Company is in compliance
in all material respects with all applicable laws, rules and
regulations respecting employment conditions and practices,
has withheld all amounts required by law or agreement to be
withheld from the wages or salaries of its employees and is
not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing.
Except as set forth in the Disclosure Schedules, there are
no unfair labor practice or race, religion, age, sex or
other discrimination complaints or claims pending or
threatened against Company before any court, board,
department, commission or agency, and there are no such
claims or complaints that have been informally asserted by
an employee or ex-employee of Company, and, to the knowledge
of Company and the Shareholder, there is no basis for
assertion of any such complaint or claim against Company.
4.25 Employee Benefits and Benefit Plans, etc.
The Disclosure Schedules set forth a correct and complete
list of every stock option, stock purchase, stock
appreciation right, bonus, deferred compensation, excess
benefits, profit sharing, thrift, savings, retirement, major
medical, long-term disability, hospitalization, insurance or
other plan, arrangement, commitment or practice of Company
providing employee or executive benefits or benefits to any
person. All reasonably anticipated obligations of Company,
whether arising by operation of law, by contract, by past
custom or practice or otherwise, for salaries, vacation and
holiday pay, bonuses and other forms of compensation which
were payable to its officers, directors or other employees
as at August 31, 1995, and as of the Closing,, or properly
accruable as at such dates have been paid as of such dates
or adequate accruals therefor have been made in the
Financial Statements, except for the accrued vacation pay
set forth on Exhibit 10.1 which Company hereby agrees to pay
in full at or after the Closing..
4.26 Brokers. No firm, corporation, agency or
other person has any right to a consultant's or finder's fee
or any type of brokerage commission payable in relation to
or in connection with the transactions contemplated by this
Agreement by reason of any action taken or agreement entered
into by Company.
4.27 Acquisition Agreements. There are no
agreements relating to the acquisition of the business of
Company to which Company is a party, other than this
Agreement
4.28 Absence of Certain Changes or Events.
Except as set forth in the Disclosure Schedules, since
August 31, 1995, Company has not:
(a) incurred any obligation or liability
(fixed or contingent) except trade or business obligations
incurred in the ordinary course of business, as such
business was conducted prior to such date, none of which
were entered into for an inadequate consideration;
(b) suffered the occurrence of any events
which, individually or in the aggregate, have had, or might
reasonably be expected to have, an adverse effect on its
financial condition, results of operations, Assets or other
properties, business or prospects of Company;
(c) incurred damage to or destruction of
any of the Assets or other properties, in any material
amount, by fire, storm or other casualty, whether or not
covered by insurance;
(d) mortgaged, pledged or subjected to lien
or any other encumbrance any of its Assets or other
properties;
(e) sold, transferred or leased any of its
Assets or other properties in a material amount, except for
the sale of products in the ordinary course of business;
(f) discharged any managerial employee;
(g) waived or released any rights of any
material value; material value being an individual amount of
$2,000 or an aggregate amount of $7,500.
(h) made or granted any general or specific
wage or salary increase in a material amount; or
(i) made any increase in or commitment to
increase any employee benefits or adopted or made any
commitments to adopt any additional employee benefit plan.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
represents and warrants to Company as follows:
5.1 Organization, Good Standing, Power, etc.
Purchaser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Iowa.
Purchaser has all requisite corporate power and authority to
execute, deliver and perform this Agreement and consummate
the transactions contemplated herein.
5.2 Authorization of Agreement and
Enforceability. This Agreement has been duly and validly
authorized, executed and delivered by Purchaser and
constitutes the valid and binding obligation of Purchaser,
fully enforceable in accordance with its terms.
5.3 Effect of Agreement. Consents. etc. No
consent, authorization or approval or exemption by, or
filing with, any governmental or public body or authority is
required in connection with the execution, delivery and
performance by Purchaser of this Agreement or the taking of
any action hereby contemplated.
5.4 No Finder. To Purchaser's knowledge, there
is no firm, corporation, agency or other person that is
entitled to a consultant's or finder's fee or any type of
brokerage commission in relation to or in connection with
the transactions contemplated by this Agreement as a result
of any agreement with Purchaser.
6. COVENANTS OF THE COMPANY. The Company
shall observe the following covenants:
6.1 Conduct of Business Until Closing Date.
Except as Purchaser may otherwise consent in writing or as
permitted by Section 6.4 or required pursuant to terms of
this Agreement, between the date hereof and the Closing
Date, Company shall:
6.1.1 operate its business in the usual, regular
and ordinary manner, and, to the extent consistent with such
operation, use its best efforts to (a) preserve its present
business organization intact; (b) keep available the
services of its present employees; and (c) preserve its
present business relationships with customers, suppliers and
others having business dealings with it;
6.1.2 (a) maintain all Assets and other
properties necessary for the conduct of its business,
whether owned or leased, in substantially the same condition
as they now are (reasonable wear and tear which are not such
as to adversely affect the operation of such business and
damage due to unavoidable casualty excepted); (b) maintain
insurance upon all of its properties and with respect to the
conduct of its business comparable in amount, scope and
coverage to that in effect on the date of this Agreement;
and (c) give Purchaser immediate written notice of any
material damage to its properties by fire or other casualty;
6.1.3 maintain its books, records and accounts in
the usual, regular and ordinary manner, on a basis
consistent with prior periods;
6.1.4 duly comply with all laws, ordinances and
regulations applicable to it, its properties and to the
conduct of its business;
6.1.5 perform all of its material obligations
without default; provided, however, that Company may
dispute, in good faith, any alleged obligation of Company;
6.1.6 give Purchaser prompt written notice of any
offers received regarding the acquisition of any of the
capital stock or any of the Assets of Company (except for
transactions in the ordinary course of business);
6.1.7 neither: (a) amend its Articles of
Incorporation or Bylaws, (other than to effectuate a change
in its corporate name); (b) merge with or into, consolidate,
amalgamate or otherwise combine with, any other entity; (c)
change the character of its business; nor (d) negotiate or
cooperate with any person with respect thereto;
6.1.8 neither: (a) encumber, mortgage, or
voluntarily subject to lien any of the Assets; (b) enter
into any employment agreement or increase the compensation
of any employee; nor (c) sell, lease or otherwise dispose of
any of its Assets or other properties (except inventories to
be disposed of in the ordinary course of business);
6.1.9 not: (a) solicit, directly or indirectly,
or cause any other person to solicit any offer to acquire
any of the capital stock or any Assets of Company, except
for transactions in the ordinary course of business; (b)
afford any third party which may be considering the
acquisition of any of the capital stock or any of the Assets
of Company access to its properties, books or records; or
(c) enter into any negotiations for, or enter into, any
agreement or understanding which provides for the
acquisition of any of the capital stock or any Assets of
Company or any part thereof to a person other than in
connection with the transactions contemplated herein.
6.2 Access to Properties and Records.
Subsequent to execution and delivery of this Agreement,
Company shall give to Purchaser and to its counsel,
accountants and other representatives full access at any
reasonable time to its properties, books, tax returns,
contracts, commitments and records and, with prior approval
of Seller, at reasonable times communicate with management,
key employees, customers and suppliers, all for the sole
purpose of evaluating the business of Company, and shall
furnish to Purchaser and its representatives all such
additional information and documents concerning Company as
Purchaser or its representatives may from time to time
reasonably request.
6.3 Advice of Changes. Between the date hereof
and the Closing Date, Company shall advise Purchaser
promptly in writing of any fact, which, if known at the date
hereof, would have been required to be set forth or
disclosed in or pursuant to this Agreement, or which
constitutes a breach of any provision of this Section 6.
6.4 Conduct. Except as Purchaser may otherwise
consent in writing, Company shall not enter into any
transaction or take any action which would result in any of
the representations and warranties of Company contained in
this Agreement not being true and correct at and as of (a)
the time immediately after such action or transaction was
entered into or event has occurred with the same force and
effect as though made on such date, and (b) the Closing Date
with the same force and effect as though made on such date.
6.5 Payment of Salaries and Wages, etc. All
obligations of Company, whether arising by operation of law,
by contract, by past custom or practice or otherwise, for
salaries, vacation and holiday pay, bonuses and other forms
of compensation payable to Company's officers, directors or
other employees on or before the Closing Date, shall be paid
by Company as set forth on Exhibit 10.1 hereto. The Company
may, however, dispute in good faith any such alleged
obligations.
6.6 Employee Benefit Plans, etc. Company will
make, pay and satisfy in full, as and when due, all
contributions due by Company to any Company Plan. Purchaser
specifically does not assume any such contribution
obligations.
6.7 Fulfillment of Conditions. Company and the
Shareholder will take all such actions within their control
as shall be necessary or desirable in order to fulfill all
of the conditions set forth in Section 12 which are required
to be fulfilled by Company or the Shareholder.
7. COVENANTS OF PURCHASER. Purchaser shall
observe the following covenants:
7.1 Confidentiality. From the date the parties
first began negotiations related to the matters contemplated
hereby through Closing, and if Closing should not occur for
any reason then indefinitely, Purchaser, for itself, its
affiliated entities, and its representatives and agents,
shall not publish or disclose and shall not authorize or
permit any of its officers, employees, directors, agents or
representatives or any third party to publish or disclose
any trade secrets, or other confidential information or any
data or business or financial books, records or other
information of or pertaining to Company, which has been
furnished to it by Company or to which it or any of its
affiliated entities, and its or their officers, employees,
directors, agents, attorneys or accountants has had access
during any investigation made in connection with this
Agreement, and which is not otherwise available to it,
except as required by law.
7.2 Disruption of Business Relationships. From
the date hereof through Closing, Purchaser will use its best
efforts not to adversely affect the business relationship of
Company with any supplier, customer, or employee, and
Purchaser will not use any information obtained from Company
in connection with the solicitation of business from any
customer of Company.
7.3 Board Addition. The Purchaser will take
the necessary corporate action to increase the number of
members of its Board of Directors by one member and appoint
or elect a person designated by the Company to fill this
vacancy as of the Closing Date.
8. ADDITIONAL COVENANTS OF THE COMPANY.
8.1 Covenant of Confidentiality. Company
covenants that it will not at any time publish or disclose,
or authorize or permit any of its agents or representatives
or any third party to publish or disclose, any information
or other data, including without limitation financial
information, or business or financial books, records or
other information of or pertaining to Purchaser or any other
person or entity which has been furnished by or on behalf of
Purchaser in connection with this Agreement, and which is
not otherwise publicly available, except as required by law.
8.2 Covenant Not to Conduct Third Party
Negotiations. Company covenants that, unless and until this
Agreement is terminated, it will not at any time conduct
discussions or negotiations with any potential buyer or
financial intermediary for Company or the Assets.
8.3 Covenant to Assist and Not to Interfere.
Company covenants that, unless and until this Agreement is
terminated, for the period of five (5) years following
Closing, it will not, whether for its own account or for the
account of any other person, firm, corporation or other
business organization, interfere with Purchaser's
relationship with any person, firm, corporation or other
business organization who is an employee, client, customer
or supplier of Company.
9. Covenants of QDS Acquisitions, Inc. QDS
Acquisitions, Inc. hereby agrees to appoint Purchaser as its
VAR as set forth in Section 1.1(b) above and hereby agrees
to maintain its existence and to otherwise assure its
continued performance of its obligations under its Software
Licensing Agreement with Computoservice, Inc. through the
later of February 28, 1997 or the expiration of such
Agreement.
10. EMPLOYEES.
10.1 Company's Employees. Company shall provide
Purchaser, no later than fifteen (15) business days prior to
the Closing, a complete listing of all Company's employees,
which listing shall contain the following information:
Name;
Social Security Number;
Residence address;
Job title;
Date of hire; and
Annual compensation
Moreover, no later than fifteen (15) business days prior to
the Closing, Company shall provide Purchaser with access to
the personnel files of all employees. This listing of
employees is included as Exhibit 4.23 of this agreement.
10.2 Employment Relationship. Company shall
notify each of its employees, no later than five (5)
business days prior to the Closing, or as otherwise agreed
in writing between Company and Purchaser, that his or her
employment with Company shall cease effective immediately
prior to the Closing. Purchaser shall be allowed to meet
with Company's employees prior to the Closing to address any
employment-related concerns such employees may have. Company
and Purchaser understand and acknowledge that Purchaser may
or may not offer employment to any or all of Company's
employees who apply for employment with Purchaser.
10.3 Employee Benefit Plans, Programs and
Practices. Company shall terminate all of its employee
benefit plans, programs and practices upon the Closing.
Company shall be responsible for paying to all of its
employees any accrued benefits to which they may be entitled
pursuant to the terms and conditions of said plans, programs
and practices. Purchaser shall have no responsibility for,
and Company shall indemnify and hold Purchaser harmless
from, any and all claims for employee benefits plans,
programs or practices made by employees of Company who
ceased being employees of Company prior to the Closing.
10.3.1 No Continuing Commitment. Purchaser shall
not be required to continue, and Purchaser expressly does
not assume or take subject to, the terms or obligations of
any of Company's employee benefit plans, programs or
practices covering Company's employees or former employees,
if any, who are hired by Purchaser after the Closing.
10.4. Pending Claims. Company shall retain
responsibility for all claims, costs, and expenses with
respect to any other employment-related claims, causes of
action, or proceedings incurred but not resolved as of the
Closing. Nothing expressed or implied in this Agreement is
intended or shall be construed to confer upon or give any
employee, or his or her agents or legal representatives, any
rights or remedies under or by reason of this Agreement or
the transactions contemplated hereby.
11. CONDITIONS TO COMPANY'S OBLIGATIONS. The
obligations of Company hereunder are subject to the
fulfillment, at or prior to the Closing, of each of the
following conditions, any or all of which may be waived in
writing by Company, in its sole discretion:
11.1 Accuracy of Representations and Warranties.
Each of the representations and warranties of Purchaser
contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though made
on and as of the Closing Date, except as affected by
transactions contemplated hereby.
11.2 Performance of Covenant. Purchaser shall
have performed and complied with all covenants, obligations
and agreements to be performed or complied with by it on or
before the Closing Date pursuant to this Agreement.
11.3 Litigation, etc. No claim, action, suit,
proceeding, arbitration, investigation or hearing or notice
of hearing shall be pending or threatened against or
affecting Purchaser which might result, or has resulted,
either in an action to enjoin or prevent or delay the
consummation of the transactions contemplated by this
Agreement or in such an injunction.
11.4 Certificates. Company shall have received
(i) a certificate signed by Purchaser, dated the Closing
Date, satisfactory in form and substance to Company and its
counsel, certifying as to the fulfillment of the conditions
specified in Sections 11.1 through 11.3, and (ii) a
certificate signed by the President and Secretary of
Purchaser, dated the Closing Date, satisfactory in form and
substance to Company and its counsel, certifying the
accuracy as of the Closing Date of the Purchaser's
representations and warranties hereunder.
12. CONDITIONS TO PURCHASER'S OBLIGATIONS. The
obligations of Purchaser hereunder are subject to the
fulfillment, at or prior to the Closing, of each of the
following conditions, any or all of which may be waived in
writing by Purchaser, in its sole discretion:
12.1 Accuracy of Representations and Warranties.
Each of the representations and warranties of Company
contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though made
on and as of the Closing Date, except as affected by
transactions contemplated hereby.
12.2 Performance of Covenants. Company shall
have performed and complied with all covenants, obligations
and agreements to be performed or complied with by it on or
before the Closing Date pursuant to this Agreement.
12.3 Litigation, etc. No claim, action, suit,
proceeding, arbitration, investigation or hearing or notice
of hearing shall be pending or threatened against or
affecting Purchaser which might result, or has resulted,
either in an action to enjoin or prevent or delay the
consummation of the transactions contemplated by this
Agreement or in such an injunction.
12.3.1 No Claims, etc. No claim, action, suit,
proceeding, arbitration, investigation or hearing or notice
of hearing shall be pending or threatened against or
affecting Company which: (a) might result, or has resulted,
either in an action to enjoin or prevent or delay the
consummation of the transactions contemplated by this
Agreement or in such an injunction; and (b) could have a
material adverse effect on the Assets and has not been
disclosed herein or pursuant hereto on or before the date
hereof.
12.3.2 No Violations. No violation of Company
shall exist, or be alleged by any governmental authority to
exist, of any law, statute, ordinance or regulation, the
enforcement of which would materially adversely affect the
financial condition, results of operations, properties or
business of Company.
12.3.3 Laws, etc. No law, regulation or decree
shall have been proposed, adopted or promulgated, or have
become effective, the enforcement of which would materially
adversely affect the ability of Company or the Shareholder
to consummate the transactions contemplated by this
Agreement.
12.4 Opinion of Counsel to Company. Purchaser
shall have received a favorable opinion of Mansfield &
Tanick, counsel to Company, addressed to Purchaser, dated
the Closing Date, with respect to the matters set forth in
Sections 4.1, 4.2 (a) and (d), 4.6, 4.7 (a), (b) and (d) (to
the best knowledge of such counsel), 4.9(a) and (b) (to the
best knowledge of such counsel), 4.14 (to the best knowledge
of such counsel) and 4.18 (to the best knowledge of such
counsel) hereof, in any case qualified as to factual matters
by the best knowledge of such counsel. Such opinion is
attached as Exhibit 12.4.
12.5 Consents. Company shall have delivered to
Purchaser all consents and approvals of all persons and
entities necessary for the performance of the transactions
contemplated by this Agreement, and Purchaser shall have
obtained the consents of third parties deemed necessary or
appropriate by Purchaser.
12.6 Certificate. Purchaser shall have received
(i) a certificate signed by Company, dated the Closing Date,
satisfactory in form and substance to Purchaser and its
counsel, certifying as to the fulfillment of the conditions
specified in Sections 12.1 through 12.3, and (ii) a
certificate signed by the President and Secretary of Company
and the Shareholders, dated the Closing Date, satisfactory
in form and substance to Purchaser and its counsel,
certifying as to the accuracy as of the Closing Date of the
representations and warranties made by Company and the
Shareholders.
12.7 Satisfactory Completion of Due Diligence.
Purchaser shall be satisfied in its sole discretion with the
content of the final Disclosure Schedules and shall
otherwise be satisfied in its sole discretion with the
results of its due diligence review.
In addition, it shall be a condition to
Purchaser's obligations hereunder that no event or
circumstance occur or be found to exist with respect to the
Company at any time prior to the Closing Date which would
cause or would reasonably be expected to cause a materially
adverse effect upon the business or financial condition of
Company or upon the Assets being purchased hereunder.
13. TERMINATION. This Agreement may be
terminated prior to the Closing Date:
13.1 By Company or Purchaser if the Closing has
not taken place on or before November 17, 1995, unless
extended by Purchaser in accordance with Section 3 hereto;
provided, however. that such termination shall not relieve
any party from liability if such party, as of the
termination date, is in breach of any of the provisions of
this Agreement.
13.2 By Purchaser, if on the Closing Date any of
the conditions set forth in Section 12 have not been
satisfied, or waived by Purchaser.
13.3 By Company, if on the Closing Date any of
the conditions set forth in Section 11 have not been
satisfied, or waived by the Company.
14. INDEMNIFICATION. Company and its Control
Shareholder, jointly and severally, will defend, indemnify
and hold harmless Purchaser and any person claiming by or
through it or its successors and assigns from, against and
in respect of any and all losses, claims, and liabilities
incurred by or asserted against Purchaser or its successors
or assigns in connection with (i) any breach of any of the
representations and warranties of Company in this Agreement
(ii) any breach of the representations and warranties of the
Control Shareholder in this Agreement, (iii) any breach of
any covenant or agreement made by Company in this Agreement,
or (iv) any liability, debt or obligation of Company and its
Control Shareholder or lien or encumbrance on the Assets not
specifically assumed by Purchaser in this Agreement.
However, any claim for indemnification shall be brought
within 24 months of the date of Closing. The maximum
liability hereunder to the Company and Control Shareholder
(in the aggregate) shall not exceed the value of the stock
actually paid as consideration in Section 2.1 , valued as of
the date of closing.
15. GENERAL.
15.1 Expenses, etc. Except as otherwise
provided herein, whether or not the transactions
contemplated by this Agreement are consummated, each party
hereto shall pay its own expenses and the fees and expenses
of its counsel and accountants and other experts.
15.2 Survival of Representations and Warranties.
The representations, warranties, covenants and agreements
set forth in this Agreement, the Disclosure Schedules, any
other written representation and in any ancillary document
shall survive the Closing.
15.3 Waivers. The waiver by any party hereto of
a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent
breach.
15.4 Announcements. Each party hereto
agrees that it shall not, except as otherwise required by
applicable law or regulations, make or release any
statement, announcement or publicity with respect to this
Agreement or the transactions contemplated hereby, including
written statements to employees, customers, and suppliers,
or permit any of its officers, directors or employees to do
so unless the form and content of any such statement,
announcement or publicity and the time of release thereof
shall have been approved in writing by Purchaser and
Company.
15.5 Binding Effect; Benefits. This Agreement
shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, personal
representatives, successors and assigns.
15.6 Notices. All notices, requests, demands and
other communications which are required to be or may be
given under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered in person or
transmitted by fax or five (5) days after deposit in the
U.S. mails by certified or registered first class mail,
postage prepaid, return receipt requested, addressed to the
party to whom the same is so given or made.
15.6.1 if to Company and its Control Shareholder,
to:
Dralvar Capital Corp.
2650 IDS Center
80 South Eight Street
Minneapolis, MN 55402
Attn: Paul Kenworthy, Chairman
Fax Number: (612) 339-8240
with a copy to:
Mansfield & Tanick, P.A.
900 2nd Avenue South
Suite 1560
Minneapolis, MN 55402
Attn: Earl H. Cohen
Fax Number: (612) 339-3161
15.6.2 if to Purchaser
to:
United Systems Technology, Inc.
3021 Gateway Drive, Suite 240
Irving, TX 75063
Attn: Thomas E. Gibbs, President
Fax Number: (214) 580-8280
with a copy to:
Law Snakard & Gambill
3200 Bank One Tower
500 Throckmorton St.
Ft. Worth, Texas 76102
Attn: Vernon E. Rew, Jr.
Fax Number: (817) 332-7473
or to such other address or Fax Number as any party may
designate by giving notice to the other parties hereto.
15.7 Further Assurances. The Company shall,
from time to time at or after the Closing, at the request of
Purchaser, and without further consideration, execute and
deliver such other instruments and take such other actions
as may be required to confer to Purchaser and its assignees
the benefits contemplated by this Agreement.
15.8 Entire Agreement; Amendment. This
Agreement (including the Exhibits and Disclosure Schedules
hereto) constitutes the entire agreement and supersedes all
prior agreements and understandings, oral and written,
between the parties hereto with respect to the subject
matter hereof and may not be amended, modified or terminated
unless in a written instrument executed by the party or
parties sought to be bound.
15.9 Headings. The section and other headings
contained in this Agreement are for reference purposes only
and shall not be deemed to be a part of this Agreement or to
affect the meaning or interpretation of this Agreement.
15.10 Severability. The invalidity of all or any
part of any section of this Agreement shall not render
invalid the remainder of this Agreement or the remainder of
such section. If any provision of this Agreement is so
broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
15.11 Counterparts. This Agreement may be
executed in any number of counterparts, each of which, when
executed, shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
A faxed copy of an executed counterpart shall evidence
execution.
15.12 Gender; Singular and Plural. Any reference
in this Agreement in the masculine gender shall include the
feminine and neuter genders, and vice versa, as appropriate.
Any reference in this Agreement in the singular shall mean
the plural, and vice versa, as appropriate.
15.13 Third Parties. Nothing in
this Agreement, whether expressed or implied, is intended to
confer any rights or remedies on any person other than
Purchaser and Company, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability
of any third party, nor shall any provision give any third
party any right of subrogation or action against any party
to this Agreement.
15.14 Governing Law; Performance. This Agreement
shall be construed as to both validity and performance and
enforced in accordance with and governed by the internal
laws of the State of Texas. This Agreement shall be
performable in Dallas County, Texas
15.15 Attorneys' Fees. In the event of any
action or proceeding arising out of or in connection with
this Agreement, the prevailing party will be entitled to all
costs, expenses and reasonable attorneys' fees incurred with
or without suit and on appeal.
15.16 Arbitration. Except as provided below, any
dispute between the parties arising under or related to this
Agreement, or the rights and liabilities or either party
under this Agreement, shall be determined by arbitration.
The arbitrators shall be appointed, and such arbitration
shall be conducted in Dallas, Texas, in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association, and the judgment upon the award rendered may be
entered in any court having jurisdiction thereof. The
prevailing party shall be entitled to recover the
arbitrators' fees from the other party. The provisions of
this Section 15.15 shall not limit:
(a) the right of the Purchaser and its
successors and assigns to obtain provisional, injunctive or
other equitable relief from a court of competent
jurisdictional in appropriate circumstances in the event of
a breach by the Company or the Control Shareholder of its or
their obligations under this Agreement; or
(b) the right of the Purchaser and its
successors and assigns to tender the defense of or join
Company or the Control Shareholder in any court or other
proceeding that may give rise to a fight of indemnification
of Purchaser under Section 14.
15.17 Time of Essence. Time is of the essence of
this Agreement.
DATED this 15th day of November, 1995.
COMPANY: DRALVAR CAPITAL CORP.
By: /s/ Paul Kenworthy
Paul Kenworthy, Chairman of the Board
CONTROL SHAREHOLDER: Kenneth Neff
By: /s/ Kenneth Neff
Kenneth Neff,
PURCHASER: UNITED SYSTEMS TECHNOLOGY, INC.
By: /s/ Thomas E. Gibbs
Thomas E. Gibbs, President
QDS ACQUISITIONS, INC.: QDS ACQUISITIONS, INC.
By: /s/ Kenneth Neff
Kenneth Neff, President
For the purposes of its obligations under Section
1.1(b) and Section 9 hereof.
