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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-KA
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 1998
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(April 25, 1997)
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INCOMNET, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA
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(State or other jurisdiction of incorporation)
0-12386 95-2871296
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(Commission File Number) (I.R.S. Employer
Identification No.)
21031 Ventura Boulevard, Suite 1100, Woodland Hills, California 91364
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 887-3400
NOT APPLICABLE
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(Former name, former address and former fiscal year,
if changed since last report)
Total number of pages in this document: 117
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TABLE OF CONTENTS
ITEM 7. EXHIBITS
Exhibit A.1 - Stock Purchase Agreement Between Incomnet, Inc.
and Jerry C. Buckley, dated April 25, 1997. . . . . . . . . . 3
Exhibit A.2 - Stock Purchase Agreement Between Incomnet, Inc.
and Ralph Flygare, dated April 25, 1997 . . . . . . . . . . .27
Exhibit A.3 - Stock Purchase Agreement Between Incomnet, Inc.
and Robert Reisbaum, dated April 25, 1997 . . . . . . . . . .50
Exhibit A.4 - Stock Purchase Agreement Between Incomnet, Inc.
and E. V. Schmidt, dated April 25, 1997 . . . . . . . . . . .64
Exhibit A.5 - Stock Purchase Agreement Between Incomnet, Inc.
and Diane Orendorff, dated April 25, 1997 . . . . . . . . . .78
Exhibit A.6 - Stock Purchase Agreement Between Incomnet, Inc.
and Nora Kenner Hoffberg, dated April 25, 1997. . . . . . . .92
Exhibit B.1 - Promissory Note Between Incomnet, Inc.
and Jerry C. Buckley, dated April 25, 1997. . . . . . . . . 106
Exhibit B.2 - Promissory Note Between Incomnet, Inc.
and Jerry C. Buckley, dated April 25, 1997. . . . . . . . . 108
Exhibit B.3 - Promissory Note Between Incomnet, Inc.
and Ralph Flygare, dated April 25, 1997 . . . . . . . . . . 110
Exhibit B.4 - Promissory Note Between Incomnet, Inc.
and Ralph Flygare, dated April 25, 1997 . . . . . . . . . . 112
Exhibit B.5 - Promissory Note Between Incomnet, Inc.
and Robert Reisbaum, dated April 25, 1997 . . . . . . . . . 114
Exhibit B.6 - Promissory Note Between Incomnet, Inc.
and E. V. Schmidt, dated April 25, 1997 . . . . . . . . . . 116
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The following Exhibits A.1 through A.6 and B.1 through B.6 are submitted as
an amendment to the 8-K dated May 2, 1997 entitled "Item 2. Acquisition or
Disposition of Assets."
EXHIBIT A.1 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND JERRY C.
BUCKLEY
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among Jerry C. Buckley, an individual ("Seller"), California
Interactive Computing, Inc., a California corporation (the "Company"), and
Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 25,129.5 shares or 28.44% of the
outstanding shares of the capital stock, par value $0.10 per share, of the
Company (the "Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
C. The Company believes that the transactions contemplated by this
Agreement are in the Company's best interests, and that the Company will
derive substantial benefits from them.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, twenty-five thousand
and one hundred and twenty-nine and one-half (25,129.5) shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of $608,290,
including interest, payable as follows:
(a) On the Closing Date the Purchaser shall deliver to the Seller a
non-negotiable promissory note in the form of Exhibit A hereto (the
"Promissory Note") having an initial principal amount equal to 500,000 plus
total interest of 108,290, as follows:
-- $5,000 per month for the 12 month period commencing in the thirteenth
month after the Closing Date and ending in the twenty-fourth month after the
Closing Date or until the promissory note is paid in full;
-- $13,563.58 per month for the next 12 months period commencing in the
twenty-fifth month after the Closing Date and ending in the thirty-sixth
month after the Closing Date or until the promissory note is paid in full;
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-- $18,556.08 per month for the next 12 months period commencing in the
thirty-seventh month after the Closing Date and ending in the forty-eighth
month after the Closing Date or until the promissory note is paid in full;
-- $13,563.58 per month for the next 12 months period commencing in the
forty-ninth month after the Closing Date and ending in the sixtieth month
after the Closing Date or until the promissory note is paid in full.
(b) On the Closing Date, Purchaser will assume the loan payable by the
Company to the Seller in the outstanding amount of $286,011.89, will pay
$90,000 to the Seller on the Closing Date and will issue the Seller a
non-negotiable promissory note in the form of Exhibit B hereto (the "Second
Promissory Note"). The Purchaser will cause the Company to repay the
remaining $196,011.89 plus interest of 10,988.11, in 24 installments as
follows:
-- $13,500 per month for the 12 month period commencing in the thirteenth
month after the Closing Date and ending in the twenty-fourth month after the
Closing Date or until the promissory note is paid in full;
-- $3,750 per month for the next 12 months period commencing in the
twenty-fifth month after the Closing Date and ending in the thirty-sixth
month after the Closing Date or until the promissory note is paid in full.
SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
(a) The Seller shall deliver to Purchaser (i) the certificates
representing the shares of Stock being sold by the Seller pursuant to this
Agreement, with appropriate stock power(s) attached and endorsed in blank,
(ii) revised bank signature cards as contemplated by Section 3.13 of this
Agreement, and (iii) written resignations by the Seller evidencing his
resignation from all prior positions as an officer, director, employee and
consultant to the Company, subject to Section 9.2 of this Agreement.
(b) Purchaser shall:
(i) Pay to the Seller, by wire transfer of funds or by check, the
amount required to be paid to the Seller pursuant to Section 1.2(b).
(ii) Execute and deliver to the Seller the Promissory Note required
to be delivered to the Seller pursuant to Section 1.2(a).
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(iii) Execute and deliver to the Seller the Second Promissory Note
required to be delivered to the Seller pursuant to Section 1.2(b).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLER
The Company and the Seller jointly and severally represent and warrant to
Purchaser as follows:
3.1 SUBSIDIARIES. There is no corporation, general partnership, limited
partnership, joint venture, association, trust or other entity or organization
which the Company directly or indirectly controls or in which the Company
directly or indirectly owns any equity or other interest.
3.2 GOOD STANDING. The Company (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all necessary power and authority to own its assets and
to conduct its business as it is currently being conducted, and (iii) is duly
qualified or licensed to do business and is in good standing in every
jurisdiction (both domestic and foreign) where such qualification or licensing
is required.
3.3 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Company has delivered
to Purchaser complete and correct copies of (i) the articles of
incorporation, bylaws and other charter or organizational documents of the
Company, including all amendments thereto, (ii) the stock records of the
Company, and (iii) the minutes and other records of the meetings and other
proceedings of the shareholders and directors of the Company. The Company is
not in violation or breach of (i) any of the provisions of its articles of
incorporation, bylaws or other charter or organizational documents, or (ii)
any resolution adopted by its shareholders or directors. There have been no
meetings or other proceedings of the shareholders or directors of the Company
that are not fully reflected in the appropriate minute books or other written
records of the Company.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of two hundred thousand (200,000) shares of common stock, par value
$0.10 per share, of which eighty-eight thousand three hundred and sixty
(88,360) shares are issued and outstanding, twenty-five thousand, one hundred
and twenty-nine and one-half (25,129.5) of which are owned by the Seller.
All of the outstanding shares of the capital stock of the Company are validly
issued, fully paid and non-assessable, and have been issued in full
compliance with all applicable federal, state, local and foreign securities
laws and other laws. There are no (i) outstanding options, warrants or rights
to acquire any shares of the capital stock or other securities of the
Company, (ii) outstanding securities or obligations which are convertible
into or exchangeable for any shares of the capital stock or other securities
of the Company, or (iii) contracts or arrangements under which the Company is
or may become bound to sell or otherwise issue any shares of its capital
stock or any other securities.
3.5 FINANCIAL STATEMENTS. The Company has delivered to Purchaser the
following financial statements (the "Existing Financial Statement"): (i) the
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audited balance sheet of the Company as of June 30, 1996; (ii) the audited
statements of income and retained earnings, stockholders' equity and changes
in financial position of the Company for the year ended June 30, 1996; and
(iii) supporting supplemental schedules. Except as stated therein or in the
notes thereto, the Existing Financial Statements: (a) present fairly the
financial position of the Company as of the respective dates thereof and the
results of operations and changes in financial position of the Company for
the respective periods covered thereby; and (b) present fairly in the opinion
of management the financial position of the Company as of the respective
dates thereof and the results of operations and changes in financial position
of the Company for the respective periods covered thereby. The financial
statements to be delivered by the Company pursuant to Section 6.7 will
present fairly in the opinion of management the financial position of the
Company as of the respective dates thereof and the results of operations and
changes in financial position of the Company. The Company and the Sellers
have no knowledge that the financial statements are not presented in
accordance with generally accepted accounting principles. The Purchaser,
however, at its expense, has initiated a financial audit of the Company's
books and records and is relying upon its auditor to present the Company's
financial position in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered
thereby and the periods covered by the Existing Financial Statements.
3.6 ABSENCE OF CHANGES. Except as otherwise disclosed to the Purchaser
in writing in Exhibit C to this Agreement, since December 31, 1996:
(a) There has not been any adverse change in the business, condition,
assets, operations or prospects of the Company and no event has occurred that
might have an adverse effect on the business, condition, assets, operations
or prospects of the Company.
(b) The Company has not (i) declared, set aside or paid any dividend or
made any other contribution in respect of any shares of capital stock, nor
(ii) repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities.
(c) The Company has not sold or otherwise issued any shares of capital
stock or any other securities.
(d) The Company has not amended its articles of incorporation, bylaws or
other charter or organizational documents, nor has it effected or been a
party to any merger, recapitalization, reclassification of shares, stock
split, reverse stock split, reorganization or similar transaction.
(e) The Company has not formed any subsidiary or contributed any funds
or other assets to any subsidiary.
(f) The Company has not purchased or otherwise acquired any assets, nor
has it leased any assets from any other person, except in the ordinary course
of business consistent with past practice.
(g) The Company has not made any capital expenditure outside the
ordinary course of business or inconsistent with past practice, or in an
amount exceeding three thousand dollars ($3,000), and the total amount of the
capital
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expenditures made by the Company has not exceeded ten thousand dollars
($10,000).
(h) The Company has not sold or otherwise transferred any assets to any
other person, except in the ordinary course of business consistent with past
practice and at a price equal to the fair market value of the assets
transferred.
(i) There has not been any loss, damage or destruction to any of the
properties or assets of the Company (whether or not covered by insurance).
(j) The Company has not written off as uncollectible any indebtedness or
accounts receivable, except for write-offs that were made in the ordinary
course of business consistent with past practice and that involved less than
one hundred dollars ($100) singly and less than one thousand dollars ($1,000)
in the aggregate.
(k) The Company has not leased any assets to any other person except in
the ordinary course of business consistent with past practice and at a rental
rate equal to the fair rental value of the leased assets.
(l) The Company has not mortgaged, pledged, hypothecated or otherwise
encumbered any assets, except in the ordinary course of business consistent
with past practice.
(m) The Company has not entered into any contract or incurred any debt,
liability or other obligation (whether absolute, accrued, contingent or
otherwise), except for (i) contracts that were entered into in the ordinary
course of business consistent with past practice and that have terms of less
than six months and do not contemplate payments by or to the Company which
will exceed, over the term of the contract, three thousand dollars ($3,000)
in the aggregate, and (ii) current liabilities incurred in the ordinary
course of business consistent with the past practice.
(n) The Company has not made any loan or advance to any other person,
except for advances that have been made to customers in the ordinary course
of business consistent with past practice and that have been properly
reflected as "accounts receivables."
(o) The Company has not paid any bonus to, or increased the amount of
the salary, fringe benefits or other compensation or remuneration payable to,
any of the directors, officers or employees of the Company, except as
disclosed in Exhibit E.
(p) No contract or other instrument to which the Company is or was a
party or by which the Company or any of the Company's assets are or were
bound has been amended or terminated, except in the ordinary course of
business consistent with past practice.
(q) The Company has not discharged any lien or discharged or paid any
indebtedness, liability or other obligation, except for current liabilities
that (i) are reflected in the December 31, 1996 Balance Sheet or have been
incurred since December 31, 1996 in the ordinary course of business
consistent with past practice, and (ii) have been discharged or paid in the
ordinary course of
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business consistent with past practice.
(r) The Company has not forgiven any debt or otherwise released or
waived any right or claim, except in the ordinary course of business
consistent with past practice.
(s) The Company has not changed its methods of accounting or its
accounting practices in any respect.
(t) The Company has not entered into any transaction outside the
ordinary course of business or inconsistent with past practice.
(u) The Company has not agreed or committed (orally or in writing) to do
any of the things described in clauses (b) through (t) of this Section 3.6.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no debt,
liability or other obligation of any nature (whether due or to become due and
whether absolute, accrued, contingent or otherwise) that is not reflected or
reserved against in the December 31, 1996 Balance Sheet, except for
obligations incurred since December 31, 1996 in the ordinary course of
business consistent with past practice.
3.8 ACCOUNTS RECEIVABLE. All of the Company's accounts receivable are
collectible at their full recorded amounts, net of the accounts reflected on
the Company's Balance Sheet as of December 31, 1996 and are true and correct
to the best knowledge of Seller.
3.9 REAL PROPERTY LEASES. The Company has delivered to Purchaser
complete and correct copies of all of the real property leases to which the
Company is a party, including all amendments thereto. All of said leases are
valid and in full force and effect and are enforceable against the respective
lessors thereunder in accordance with their terms. There is no existing
default by any party under any of said leases, and there exists no condition
or set of circumstances which, with notice or lapse of time or both, would
constitute such a default. The lessee under each of said leases enjoys
peaceful possession of the leasehold created thereby.
3.10 TANGIBLE PERSONAL PROPERTY. The tangible personal property of the
Company constitutes all of the tangible personal property necessary for the
conduct by the Company of its business as currently conducted, and each item
thereof is in good operating condition and repair (ordinary wear and tear
excepted). Any leases relating to said personal property, if any, are valid
and in full force and effect, and are enforceable against the respective
lessors thereunder in accordance with their terms. There is no existing
default by any person under any of said leases, and there exists no condition
or set of circumstances which, with notice or lapse of time or both, would
constitute such a default.
3.11 TRADEMARKS AND TRADENAMES. The Company has the unrestricted right
to use any trademark, service mark, trade name or copyright which it is
presently using, and to the best of the Company's knowledge, the Company has
not infringed or is not infringing upon any trademark, service mark, trade
name, copyright or patent that is owned or used by any other person.
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3.12 INSURANCE. The Company has delivered to Purchaser complete and
correct copies of all of the insurance policies to which the Company is a
party or which cover the Company, including all renewals thereof and
endorsements thereto. All of said policies are valid and in full force and
effect. There is no existing default by the Company under any of said
policies, and there exists no condition or set of circumstances which, with
notice or lapse of time or both, would constitute such a default. There is no
pending claim, action or proceeding arising out of or based upon any of the
Company's policies, and there exists no basis for any such claim, action or
proceeding.
3.13 BANK ACCOUNTS. Upon the Closing, the Seller covenants to cause the
signature cards on all of the Company's bank accounts to be modified to
reflect the Purchaser's designee (i.e., Melvyn Reznick unless otherwise
requested in writing by the Purchaser) as the sole signatory on said accounts
with authority to draw on or make withdrawals therefrom, and to remove all
other names from said signature cards and bank accounts.
3.14 CONTRACTS. The Company has delivered to Purchaser complete and
correct copies of all of the contracts and other instruments including all
amendments thereto. All of such contracts and other instruments are valid
and in full force and effect, and are enforceable in accordance with their
terms. There is no existing default by any person under any of said contracts
or other instruments, and there exists no condition or set of circumstances
which, with notice or lapse of time or both, would constitute such a default.
3.15 TITLE TO PERSONAL PROPERTY. The Company has good, valid and
marketable title to all of its personal property (both tangible and
intangible) and interests therein, including without limitation all of the
personal property reflected in the December 31, 1996 Balance Sheet. All of
such personal property and interests therein are owned free and clear of any
liens, pledges, security interests, claims, equities, options, charges,
encumbrances or restrictions. The Seller warrants that he has no claims to
the tangible personal property of the Company, including any computer
hardware, software, accessories and any items of furniture or fixtures or
other materials that are created, used or owned by the Company in the conduct
of its business. The Seller warrants that (i) he has no claims to use any
trademark, service mark, trade name or copyright which is presently being
used by the Company, and (ii) he will not use any trademark, service mark,
trade name, copyright or patent that is owned, used or claimed by the Company
without the express written permission of the Company.
3.16 TAX MATTERS. All federal, state, local and foreign tax returns
required to be filed by the Company have been properly prepared and duly
filed, and all taxes required to be paid by, or claimed by any federal,
state, local or foreign taxing authority to be payable by, the Company have
been paid in full. The provisions for taxes reflected in the December 31,
1996 Balance Sheet are adequate for all taxes payable with respect to the
period prior to December 31, 1996. There is no (i) pending audit or
examination of the Company (or of any of the tax returns thereof) being
conducted by any federal, state, local or foreign taxing authority, (ii)
pending or threatened claim or dispute relating to the payment of any taxes
by the Company, (iii) basis upon which any federal, state, local or foreign
taxing authority may make any claim for the payment of additional taxes by
the Company, or (iv) outstanding agreement or waiver extending the statutory
limitations period applicable to the payment of any taxes by the Company.
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3.17 EMPLOYEE AND LABOR MATTERS. To the best of the knowledge of the
Company, none of the Company's employees intends to establish or join a
business that is or would be competitive with the business conducted by the
Company. There is no pending or threatened labor dispute, strike, slowdown or
work stoppage that may affect the business of the Company. There is no
unfair labor practice complaint pending against the Company before the
National Labor Relations Board. The Company is not engaged in any unfair
labor practice. There is no grievance or arbitration proceeding pending
against, or threatened to be asserted or commenced against, the Company under
any collective bargaining agreement, union contract, or general labor or
employment law, rule or regulation.
3.18 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. The Company is not in
violation of, nor has it failed to conduct its business in full compliance
with, any applicable federal, state, local or foreign laws, regulations,
rules, treaties, rulings, orders, directives or decrees. The Company has
delivered to Purchaser complete and correct copies of all of the licenses,
permits, authorizations and franchises to which the Company is subject and
all said licenses, permits, authorizations and franchises are valid and in
full force and effect. Said licenses, permits, authorizations and franchises
constitute all of the licenses, permits, authorizations and franchises
necessary to permit the Company to conduct its business in the manner in
which it is now being conducted, and the Company is not in violation or
breach of any of the terms, requirements or conditions of any of said
licenses, permits, authorizations or franchises.
3.19 ENVIRONMENTAL COMPLIANCE MATTERS. To the best of the knowledge of
the Company and the Seller, without conducting any study or independent
investigation:
(a) There is no soil or ground water contamination by any "Hazardous
Material" for which the Company may be liable. "Hazardous Material" shall
mean any flammables, asbestos, explosives, radioactive materials, hazardous
wastes, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any applicable federal, state or local laws, rules, regulations or
orders which have been designated as potentially dangerous to public health
and/or safety when present in the environment.
(b) There are no underground storage tanks, asbestos containing
materials or PCBs on any property owned, leased, operated or occupied by the
Company or relating to the business of the Company.
(c) The Company has not exposed its employees or others to Hazardous
Materials in violation of applicable laws.
(d) No Hazardous Material is present in the surface water or groundwater
of any Company facility and no likelihood exists that any Hazardous Material
present on or in any other land, groundwater or surface water will come to be
present in the surface water or groundwater of any Company facility. The
Company has provided to Purchaser all site assessments, if any, of properties
relating to the business of the Company available to or conducted by the
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Company.
(e) The Company has not received any notice that an action, proceeding,
liability or claim exists or is threatened against the Company with respect
to the transfers or releases of Hazardous Materials by the Company.
(f) There are no (i) enforcement, cleanup, removal or other governmental
or regulatory actions instituted, completed or threatened against the Company
pursuant to any applicable federal, state or local laws, ordinances or
regulations relating to any Hazardous Material, (ii) claims made or
threatened by any third party against the Company with respect to or because
of its property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Material, or (iii) conditions on
any of the properties of the Company that could cause such properties or any
part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of any of such properties under any Hazardous Material
law.
3.20 EXPORT ADMINISTRATION ACT AND FOREIGN CORRUPT PRACTICES ACT. The
Company is and has always been in full compliance with the Export
Administration Act of 1976 and the regulations promulgated thereunder
("EAA"), as well as the Foreign Corrupt Practices Act ("FCPA"). The Company
has duly and timely submitted all reports required to be submitted under the
EAA. The Company is not subject to any pending inquiry, investigation or
audit by any agency responsible for enforcing or administering the EAA or the
FCPA. Neither the Company nor any of its employees or agents has made any
payment of, or any promise to pay, any money or anything of value: (i) to
any foreign official for the purpose of influencing any act or decision of
such foreign official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in order to assist the Company in obtaining or
retaining business; (ii) to any foreign political party or official thereof
or any candidate for foreign political office for the purpose of influencing
any act or decision of such party, official or candidate in its or his
official capacity, or inducing such party, official or candidate to use its
or his influence with a foreign government or instrumentality thereof to
affect or influence any act or decision of such government or
instrumentality, in order to assist the Company in obtaining or retaining
business; or (iii) to any other person while knowing or having reason to know
that all or a portion of such money or thing of value would be used for any
of the purposes specified in clauses (i) and (ii) of this Section 3.20.
3.21 CONFLICT OF INTEREST TRANSACTIONS. No past or present shareholder,
director, officer or employee of the Company or any of their affiliates (i)
is indebted to, or has any financial, business or contractual relationship or
arrangement with, the Company, other than as disclosed in Section 1.2(b) of
this Agreement, or (ii) has any direct or indirect interest in any property,
asset or right which is owned or used by the Company.
3.22 LITIGATION. There is no action, suit, proceeding, dispute,
litigation, claim, complaint or investigation by or before any court,
tribunal, governmental body, governmental agency or arbitrator pending or, to
the best of the Company's or the Seller's knowledge, threatened against or
with respect to the Company which (i) if adversely determined would have an
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adverse effect on the business, condition, assets, operations or prospects of
the Company, or (ii) challenges or would challenge any of the actions
required to be taken by the Company under this Agreement. There exists no
basis for any such action, suit, proceeding, dispute, litigation, claim,
complaint or investigation.
3.23 WAIVER OF RIGHT TO PURCHASE SHARES. The Company and the Seller have
validly waived any right they would have under the Company's Articles of
Incorporation to purchase the shares of Stock being purchased by Purchaser
pursuant to this Agreement.
3.24 AUTHORIZATION; BINDING NATURE OF AGREEMENT. The Company and the
Seller have all necessary power and authority to enter into and perform their
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Company and the Seller have been duly authorized by all
necessary action on the part of the Company and its officers, directors and
shareholders, and by the Seller. This Agreement is a valid and binding
obligation of the Company and the Seller.
3.25 NON-CONTRAVENTION. Neither (a) the execution and delivery of this
Agreement or the Second Promissory Note, nor (b) the performance of this
Agreement or the payment of the Second Promissory Note will: (i) contravene
or result in a violation of any of the provisions of the articles of
incorporation, bylaws or other charter or organizational documents of the
Company; (ii) contravene or result in a violation of any resolution adopted
by the shareholders or directors of the Company; (iii) result in a violation
or breach of, or give any person the right to declare (whether with or
without notice or lapse of time) a default under or to terminate, any
agreement or other instrument to which the Company is a party or by which the
Company or any of its assets is bound; (iv) give any person the right to
accelerate the maturity of any indebtedness or other obligation of the
Company; (v) result in the loss of any license or other contractual right of
the Company; (vi) result in the loss of, or in a violation of any of the
terms, provisions or conditions of, any governmental license, permit,
authorization or franchise of the Company; (vii) result in the creation or
imposition of any lien, charge, encumbrance or restriction on any of the
assets of the Company; (viii) result in the reassessment or revaluation of
any property of the Company or by any taxing authority or other governmental
authority; (ix) result in the imposition of, or subject the Company or
Purchaser to any liability for, any conveyance or transfer tax or any similar
tax; or (x) result in a violation of any law, rule, regulation, treaty,
ruling, directive, order, arbitration award, judgment or decree to which the
Company or any of its assets is subject.
3.26 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by the Company or the Seller in connection
with the execution, delivery or performance of this Agreement (including the
sale to Purchaser of the shares of Stock being purchased by Purchaser
hereunder).
3.27 BROKERS. The Company has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transaction
contemplated by this Agreement, and, to the best of the Company's knowledge,
no
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person is entitled, or intends to claim that it is entitled, to receive
any such fees or commissions in connection with such transaction.
3.28 FULL DISCLOSURE. Neither this Agreement (including the exhibits
hereto) nor any statement, certificate or other document delivered to
Purchaser by or on behalf of the Company or the Seller contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the representations and other statements contained herein and therein
not misleading.
3.29 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of the Company and the Seller set forth in this Agreement are true
and correct on the date hereof, and will be true and correct on the Closing
Date as though such representations and warranties were made as of the
Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a) he
owns twenty-five thousand, one hundred and twenty-nine and one-half
(25,129.5) shares of Stock and does not own any other securities or other
assets of the Company, that (b) he has at the Closing, good and valid title
to all of such shares free and clear of any liens, pledges, security
interests, adverse claims, equities, options, proxies, charges, encumbrances
or restrictions (other than the restrictions set forth in the Company's
Articles of Incorporation) and that he shall sign over such shares to the
name of the Purchaser at the time of Closing, with said shares to be held by
the Escrow Agent until the Purchaser pays the Seller for the purchase of said
shares subject to terms of Section 1.2 (a) of the Purchase Agreement. As long
as Purchaser remains current in his payments subject to terms of Section 1.2
(a) of the Purchase Agreement, the Seller gives to the Purchaser full voting
rights of all stock being purchased.
4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
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the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
4.8 WAIVE FIRST RIGHT OF REFUSAL TO PURCHASE SHARES OF CIC. The Seller
waives the right that he has as a shareholder of CIC to purchase the shares
owned by other CIC shareholders that are also being purchased by the
Purchaser in other transactions.
4.9 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
4.10 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
4.11 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
4.12 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
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which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
such representations and warranties were made as of the Closing Date.
5.7 INDEMNIFICATION OF THE COMPANY AND ITS OFFICERS BY OTHER
SHAREHOLDERS. The Purchaser warrants that as part of the transaction to
acquire stock from each shareholder, the Purchaser is requiring each Seller
to indemnify the Company and all former employees, officers, directors and
other shareholders against personal liability for any actions prior to the
close of the transactions.
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SECTION 6. PRE-CLOSING COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following without the prior written consent of Purchaser:
(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
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over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
(l) pay any bonus to, or increase the amount of the salary, fringe
benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
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insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
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Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a)
Purchaser shall use its best efforts to cause the conditions set forth in
Sections 10.1 and 10.3 to be satisfied on a timely basis, and (b) Purchaser
shall promptly inform the Seller if Purchaser believes or has any reason to
believe that any of the conditions set forth in Section 10 might not be
satisfied on a timely basis on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are
to be consummated at the Closing is subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors
of the Company. The directors of the Company shall have duly appointed
(effective as of the Closing) such other persons as Purchaser shall have
designated to fill the vacancies on the Company's Board of Directors. The
Seller shall be appointed to be a member of the Company's Board of Directors
on the Closing Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement,
shall have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the
Closing Date as though such representations and warranties were made as of
the Closing Date. In addition, the Purchaser shall have verified to its
satisfaction that (a) the Company's total revenues for the fiscal year ended
June 30, 1996 were at least $2.5 million, (b) the Company has no long term
debts other than the loans from the Seller and Ralph Flygare which aggregate
approximately $450,000, (c) the Company has no short term debts which are
inconsistent with its earnings and revenues, (d) the Company has good, valid
and unencumbered title to all of the software which it represents to own, (e)
the Company has no pending or threatened litigation or claims against it and
no liabilities other than those disclosed in its financial statements, (f)
the Company has a stable base of customers with a minimum of 80% having no
plans to switch to a new software provider, and (g) that the Company's
software performs as it represents, and to the satisfaction of its customers.
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9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by
them on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
Agreement, and all instruments and other documents incident to such
transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr.
Eric Hoffberg.
9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that
are to be consummated at the Closing are subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of which may be
waived by the Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser set forth in this Agreement shall have been true and correct in
all material respects on the date of this Agreement, and shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the
Closing Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
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This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in
connection herewith prior to or at the Closing, (i) shall survive, and shall
not be affected by, the Closing (or the termination of this Agreement
pursuant to Section 11), and (ii) shall not be affected by any information
furnished to, or any investigation made by, any other party hereto or any of
such other party's employees, attorneys, accountants or other
representatives. For purposes of this Agreement, each statement or other
item of information in any disclosures by the Seller or the Company to the
Purchaser shall be deemed to be a representation and warranty of the Company
pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates from and against any damage, cost or loss that is directly or
indirectly suffered or incurred at any time by Purchaser or any of such
directors, officers, shareholders, employees, attorneys, agents or other
affiliates and that arises directly or indirectly out of or by virtue of, or
is directly or indirectly connected with, the breach or inaccuracy of any of
the representations and warranties of the Company or the failure of the
Company to perform any of its covenants or obligations contained in this
Agreement (or in any instrument or other document delivered hereunder or in
connection herewith).
13.2 INDEMNIFICATION OF PURCHASER BY THE SELLER. The Seller shall
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hold harmless and indemnify Purchaser and each of Purchaser's past, present
and future directors, officers, shareholders, employees, attorneys, agents
and other affiliates ("Purchaser's Affiliates") from and against any damage,
loss or cost that is directly or indirectly suffered or incurred at any time
by Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties
of the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other
document delivered hereunder or in connection herewith.
13.3 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this
transaction, the Seller (i) agrees to indemnify and hold harmless the Company
and any of its former and present officers, other shareholders, directors and
employees for any actions, real or imagined, taken by these individuals prior
to the Close of this transaction that may have had, in the opinion of the
Seller, any adverse impact in any manner upon the Seller, whether real or
perceived, and (ii) willingly and knowingly agrees that the payment from the
Purchaser at the Closing of this transaction resolves any claim or potential
claim, action, suit, proceeding, dispute, litigation or complaint by the
Seller against the Company or any of the present or former directors,
officers, other shareholders and employees of the Company and (iii) gives up
the right to initiate any action, suit, proceeding, dispute, litigation,
claim or complaint before any court, tribunal, governmental body,
governmental agency or arbitrator against the Company or any of the present
or former directors, officers, other shareholders and employees of the
Company for actions taken by the Company or any of the present or former
directors, officers and employees of the Company prior to the Closing of this
transaction.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless
and indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any
party hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
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the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
13.6 INDEMNIFICATION NOT A WAIVER. A person's right to
indemnification pursuant to this Section 13 shall not be deemed to be such
person's exclusive remedy in connection with or arising from the breach or
inaccuracy of any of the representations and warranties of the Indemnifying
Party or the failure of the Indemnifying Party to perform any of its
covenants or obligations contained in this Agreement or in any instrument or
other document delivered hereunder or in connection herewith. The exercise
by any person of his right to demand and receive such indemnification shall
not be deemed to prejudice, or to operate as a waiver of, any remedy to which
such person may be entitled at law or equity.
13.7 RIGHT OF SETOFF. Should the Seller be deemed by a Court of Law
to be responsible for any damage or loss for which the Seller has indemnified
the Purchaser, the Purchaser (i) agrees to limit the Seller's liability to a
maximum of $100,000, except if the Seller is found to have engaged in an act
of fraud that resulted in the damage or loss by the purchaser, and Purchaser
(ii) shall have the right to set off the amount of any such damage, loss or
cost up to $100,000 against the amount of any obligation of Purchaser or the
Company to the Seller or his successors or assigns (including, without
limitation, any amounts payable under the Promissory Note and the Second
Promissory Note), except if the Seller is found to have engaged in an act of
fraud that resulted in the damage or loss by the purchaser, in which case
there shall be no limit to the amount that may be set off by the Purchaser.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
Purchaser may reasonably request for the purpose of carrying out or
evidencing the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
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such other address as the intended recipient shall have specified in a
written notice given to the other parties hereto);
IF TO THE SELLER:
Jerry C. Buckley
c/o California Interactive Computing, Inc.
Avenue Stanford
Valencia, California 91355
IF TO THE COMPANY:
California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or
other publicity concerning the transactions contemplated by this Agreement
shall be issued, given or otherwise disseminated without the prior approval
of each of the parties hereto; provided, however, that such approval shall
not be unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if
any, and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable
to
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any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person
(including, without limitation, any employees or creditors of the Company)
other than the parties hereto and their respective heirs, successors and
assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES.
When used herein with respect to any non-corporate entity: the terms
"shares," "stock" and "capital stock" shall be deemed to refer to equity
interests of any nature in such entity; the term "shareholder" shall be
deemed to refer to any holder of any equity interest in such entity; and the
terms "director" and "officer" shall be deemed to refer to any person who is
involved in the management of such entity or who performs functions for such
entity that are similar to the functions performed by officers or directors
of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ Jerry C. Buckley
--------------------
Jerry C. Buckley
COMPANY: CALIFORNIA INTERACTIVE COMPUTING, INC.,
a California Corporation
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By: /s/ Jerry C. Buckley
--------------------
Jerry C. Buckley, President
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT A.2 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND RALPH
FLYGARE
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among Ralph Flygare, an individual ("Seller"), California
Interactive Computing, Inc., a California corporation (the "Company"), and
Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 25,129.5 shares or 28.44% of the
outstanding shares of the capital stock, par value $0.10 per share, of the
Company (the "Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
C. The Company believes that the transactions contemplated by this
Agreement are in the Company's best interests, and that the Company will
derive substantial benefits from them.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, twenty-five thousand
and one hundred and twenty-nine and one-half (25,129.5) shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of $608,290,
including interest, payable as follows:
(a) On the Closing Date the Purchaser shall deliver to the Seller a
non-negotiable promissory note in the form of Exhibit A hereto (the
"Promissory Note") having an initial principal amount equal to 500,000,
bearing simple interest at the rate of 8% per annum, commencing to accrue one
year from the Closing Date, payable in equal monthly installments of
principal and interest of $10,000 for the 12 month period commencing in the
thirteenth moth after the Closing Date and ending in the twenty-fourth month
after the Closing Date, and $13,563.58 per month for the next 36 months or
until the Promissory Note is repaid in full.
(b) On the Closing Date, Purchaser will assume the loan payable by the
Company to the Seller in the outstanding amount of $132,516.02, will pay
$75,000 to the Seller on the Closing Date. The Purchaser will cause the
Company to repay the remaining $57,516.02, plus interest of 8% per annum, in
12 equal monthly installments of $5,003.23, commencing in the thirteenth moth
after the Closing Date and ending in the twenty-fourth month after the
Closing Date, to be evidenced by the non-negotiable, interest bearing
promissory note (the "Second Promissory Note") attached to this Agreement as
Exhibit B.
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SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
(a) The Seller shall deliver to Purchaser (i) the certificates
representing the shares of Stock being sold by the Seller pursuant to this
Agreement, with appropriate stock power(s) attached and endorsed in blank,
(ii) revised bank signature cards as contemplated by Section 3.13 of this
Agreement, and (iii) written resignations by the Seller evidencing his
resignation from all prior positions as an officer, director, employee and
consultant to the Company, subject to Section 9.2 of this Agreement.
(b) Purchaser shall:
(i) Pay to the Seller, by wire transfer of funds or by check, the
amount required to be paid to the Seller pursuant to Section 1.2(b).
(ii) Execute and deliver to the Seller the Promissory Note required
to be delivered to the Seller pursuant to Section 1.2(a).
(iii) Execute and deliver to the Seller the Second Promissory Note
required to be delivered to the Seller pursuant to Section 1.2(b).
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLER
The Company and the Seller jointly and severally represent and warrant to
Purchaser as follows:
3.1 SUBSIDIARIES. There is no corporation, general partnership, limited
partnership, joint venture, association, trust or other entity or
organization which the Company directly or indirectly controls or in which
the Company directly or indirectly owns any equity or other interest.
3.2 GOOD STANDING. The Company (i) is duly organized, validly existing
and in good standing under the laws of the jurisdiction in which it is
incorporated, (ii) has all necessary power and authority to own its assets
and to conduct its business as it is currently being conducted, and (iii) is
duly qualified or licensed to do business and is in good standing in every
jurisdiction (both domestic and foreign) where such qualification or
licensing is required.
3.3 CHARTER DOCUMENTS AND CORPORATE RECORDS. The Company has delivered
to
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Purchaser complete and correct copies of (i) the articles of
incorporation, bylaws and other charter or organizational documents of the
Company, including all amendments thereto, (ii) the stock records of the
Company, and (iii) the minutes and other records of the meetings and other
proceedings of the shareholders and directors of the Company. The Company is
not in violation or breach of (i) any of the provisions of its articles of
incorporation, bylaws or other charter or organizational documents, or (ii)
any resolution adopted by its shareholders or directors. There have been no
meetings or other proceedings of the shareholders or directors of the Company
that are not fully reflected in the appropriate minute books or other written
records of the Company.
3.4 CAPITALIZATION. The authorized capital stock of the Company
consists of two hundred thousand (200,000) shares of common stock, par value
$0.10 per share, of which eighty-eight thousand three hundred and sixty
(88,360) shares are issued and outstanding, twenty-five thousand, one hundred
and twenty-nine and one-half (25,129.5) of which are owned by the Seller.
All of the outstanding shares of the capital stock of the Company are validly
issued, fully paid and non-assessable, and have been issued in full
compliance with all applicable federal, state, local and foreign securities
laws and other laws. There are no (i) outstanding options, warrants or rights
to acquire any shares of the capital stock or other securities of the
Company, (ii) outstanding securities or obligations which are convertible
into or exchangeable for any shares of the capital stock or other securities
of the Company, or (iii) contracts or arrangements under which the Company is
or may become bound to sell or otherwise issue any shares of its capital
stock or any other securities.
3.5 FINANCIAL STATEMENTS. The Company has delivered to Purchaser the
following financial statements (the "Existing Financial Statement"): (i) the
audited balance sheet of the Company as of June 30, 1996; (ii) the audited
statements of income and retained earnings, stockholders' equity and changes
in financial position of the Company for the year ended June 30, 1996; and
(iii) supporting supplemental schedules. Except as stated therein or in the
notes thereto, the Existing Financial Statements: (a) present fairly the
financial position of the Company as of the respective dates thereof and the
results of operations and changes in financial position of the Company for
the respective periods covered thereby; and (b) present fairly in the opinion
of management the financial position of the Company as of the respective
dates thereof and the results of operations and changes in financial position
of the Company for the respective periods covered thereby. The financial
statements to be delivered by the Company pursuant to Section 6.7 will
present fairly in the opinion of management the financial position of the
Company as of the respective dates thereof and the results of operations and
changes in financial position of the Company. The Company and the Sellers
have no knowledge that the financial statements are not presented in
accordance with generally accepted accounting principles. The Purchaser,
however, at its expense, has initiated a financial audit of the Company's
books and records and is relying upon its auditor to present the Company's
financial position in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods covered
thereby and the periods covered by the Existing Financial Statements.
3.6 ABSENCE OF CHANGES. Except as otherwise disclosed to the Purchaser
in
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writing in Exhibit C to this Agreement, since December 31, 1996:
(a) There has not been any adverse change in the business, condition,
assets, operations or prospects of the Company and no event has occurred that
might have an adverse effect on the business, condition, assets, operations
or prospects of the Company.
(b) The Company has not (i) declared, set aside or paid any dividend or
made any other contribution in respect of any shares of capital stock, nor
(ii) repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities.
(c) The Company has not sold or otherwise issued any shares of capital
stock or any other securities.
(d) The Company has not amended its articles of incorporation, bylaws or
other charter or organizational documents, nor has it effected or been a
party to any merger, recapitalization, reclassification of shares, stock
split, reverse stock split, reorganization or similar transaction.
(e) The Company has not formed any subsidiary or contributed any funds
or other assets to any subsidiary.
(f) The Company has not purchased or otherwise acquired any assets, nor
has it leased any assets from any other person, except in the ordinary course
of business consistent with past practice.
(g) The Company has not made any capital expenditure outside the
ordinary course of business or inconsistent with past practice, or in an
amount exceeding three thousand dollars ($3,000), and the total amount of the
capital expenditures made by the Company has not exceeded ten thousand
dollars ($10,000).
(h) The Company has not sold or otherwise transferred any assets to any
other person, except in the ordinary course of business consistent with past
practice and at a price equal to the fair market value of the assets
transferred.
(i) There has not been any loss, damage or destruction to any of the
properties or assets of the Company (whether or not covered by insurance).
(j) The Company has not written off as uncollectible any indebtedness or
accounts receivable, except for write-offs that were made in the ordinary
course of business consistent with past practice and that involved less than
one hundred dollars ($100) singly and less than one thousand dollars ($1,000)
in the aggregate.
(k) The Company has not leased any assets to any other person except in
the ordinary course of business consistent with past practice and at a rental
rate equal to the fair rental value of the leased assets.
(l) The Company has not mortgaged, pledged, hypothecated or otherwise
encumbered any assets, except in the ordinary course of business consistent
with past practice.
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(m) The Company has not entered into any contract or incurred any debt,
liability or other obligation (whether absolute, accrued, contingent or
otherwise), except for (i) contracts that were entered into in the ordinary
course of business consistent with past practice and that have terms of less
than six months and do not contemplate payments by or to the Company which
will exceed, over the term of the contract, three thousand dollars ($3,000)
in the aggregate, and (ii) current liabilities incurred in the ordinary
course of business consistent with the past practice.
(n) The Company has not made any loan or advance to any other person,
except for advances that have been made to customers in the ordinary course
of business consistent with past practice and that have been properly
reflected as "accounts receivables."
(o) The Company has not paid any bonus to, or increased the amount of
the salary, fringe benefits or other compensation or remuneration payable to,
any of the directors, officers or employees of the Company, except as
disclosed in Exhibit E.
(p) No contract or other instrument to which the Company is or was a
party or by which the Company or any of the Company's assets are or were
bound has been amended or terminated, except in the ordinary course of
business consistent with past practice.
(q) The Company has not discharged any lien or discharged or paid any
indebtedness, liability or other obligation, except for current liabilities
that (i) are reflected in the December 31, 1996 Balance Sheet or have been
incurred since December 31, 1996 in the ordinary course of business
consistent with past practice, and (ii) have been discharged or paid in the
ordinary course of business consistent with past practice.
(r) The Company has not forgiven any debt or otherwise released or
waived any right or claim, except in the ordinary course of business
consistent with past practice.
(s) The Company has not changed its methods of accounting or its
accounting practices in any respect.
(t) The Company has not entered into any transaction outside the
ordinary course of business or inconsistent with past practice.
(u) The Company has not agreed or committed (orally or in writing) to do
any of the things described in clauses (b) through (t) of this Section 3.6.
3.7 ABSENCE OF UNDISCLOSED LIABILITIES. The Company has no debt,
liability or other obligation of any nature (whether due or to become due and
whether absolute, accrued, contingent or otherwise) that is not reflected or
reserved against in the December 31, 1996 Balance Sheet, except for
obligations incurred since December 31, 1996 in the ordinary course of
business consistent with past practice.
3.8 ACCOUNTS RECEIVABLE. All of the Company's accounts receivable are
collectible at their full recorded amounts, net of the accounts reflected on
the
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Company's Balance Sheet as of December 31, 1996 and are true and correct
to the best knowledge of Seller.
3.9 REAL PROPERTY LEASES. The Company has delivered to Purchaser
complete and correct copies of all of the real property leases to which the
Company is a party, including all amendments thereto. All of said leases are
valid and in full force and effect and are enforceable against the respective
lessors thereunder in accordance with their terms. There is no existing
default by any party under any of said leases, and there exists no condition
or set of circumstances which, with notice or lapse of time or both, would
constitute such a default. The lessee under each of said leases enjoys
peaceful possession of the leasehold created thereby.
3.10 TANGIBLE PERSONAL PROPERTY. The tangible personal property of the
Company constitutes all of the tangible personal property necessary for the
conduct by the Company of its business as currently conducted, and each item
thereof is in good operating condition and repair (ordinary wear and tear
excepted). Any leases relating to said personal property, if any, are valid
and in full force and effect, and are enforceable against the respective
lessors thereunder in accordance with their terms. There is no existing
default by any person under any of said leases, and there exists no condition
or set of circumstances which, with notice or lapse of time or both, would
constitute such a default.
3.11 TRADEMARKS AND TRADENAMES. The Company has the unrestricted right
to use any trademark, service mark, trade name or copyright which it is
presently using, and to the best of the Company's knowledge, the Company has
not infringed or is not infringing upon any trademark, service mark, trade
name, copyright or patent that is owned or used by any other person.
3.12 INSURANCE. The Company has delivered to Purchaser complete and
correct copies of all of the insurance policies to which the Company is a
party or which cover the Company, including all renewals thereof and
endorsements thereto. All of said policies are valid and in full force and
effect. There is no existing default by the Company under any of said
policies, and there exists no condition or set of circumstances which, with
notice or lapse of time or both, would constitute such a default. There is no
pending claim, action or proceeding arising out of or based upon any of the
Company's policies, and there exists no basis for any such claim, action or
proceeding.
3.13 BANK ACCOUNTS. Upon the Closing, the Seller covenants to cause the
signature cards on all of the Company's bank accounts to be modified to
reflect the Purchaser's designee (i.e., Melvyn Reznick unless otherwise
requested in writing by the Purchaser) as the sole signatory on said accounts
with authority to draw on or make withdrawals therefrom, and to remove all
other names from said signature cards and bank accounts.
3.14 CONTRACTS. The Company has delivered to Purchaser complete and
correct copies of all of the contracts and other instruments including all
amendments thereto. All of such contracts and other instruments are valid
and in full force and effect, and are enforceable in accordance with their
terms. There is no existing default by any person under any of said contracts
or other instruments, and there exists no condition or set of circumstances
which, with notice or lapse of time or both, would constitute such a default.
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3.15 TITLE TO PERSONAL PROPERTY. The Company has good, valid and
marketable title to all of its personal property (both tangible and
intangible) and interests therein, including without limitation all of the
personal property reflected in the December 31, 1996 Balance Sheet. All of
such personal property and interests therein are owned free and clear of any
liens, pledges, security interests, claims, equities, options, charges,
encumbrances or restrictions. The Seller warrants that he has no claims to
the tangible personal property of the Company, including any computer
hardware, software, accessories and any items of furniture or fixtures or
other materials that are created, used or owned by the Company in the conduct
of its business. The Seller warrants that (i) he has no claims to use any
trademark, service mark, trade name or copyright which is presently being
used by the Company, and (ii) he will not use any trademark, service mark,
trade name, copyright or patent that is owned, used or claimed by the Company
without the express written permission of the Company.
3.16 TAX MATTERS. All federal, state, local and foreign tax returns
required to be filed by the Company have been properly prepared and duly
filed, and all taxes required to be paid by, or claimed by any federal,
state, local or foreign taxing authority to be payable by, the Company have
been paid in full. The provisions for taxes reflected in the December 31,
1996 Balance Sheet are adequate for all taxes payable with respect to the
period prior to December 31, 1996. There is no (i) pending audit or
examination of the Company (or of any of the tax returns thereof) being
conducted by any federal, state, local or foreign taxing authority, (ii)
pending or threatened claim or dispute relating to the payment of any taxes
by the Company, (iii) basis upon which any federal, state, local or foreign
taxing authority may make any claim for the payment of additional taxes by
the Company, or (iv) outstanding agreement or waiver extending the statutory
limitations period applicable to the payment of any taxes by the Company.
3.17 EMPLOYEE AND LABOR MATTERS. To the best of the knowledge of the
Company, none of the Company's employees intends to establish or join a
business that is or would be competitive with the business conducted by the
Company. There is no pending or threatened labor dispute, strike, slowdown or
work stoppage that may affect the business of the Company. There is no
unfair labor practice complaint pending against the Company before the
National Labor Relations Board. The Company is not engaged in any unfair
labor practice. There is no grievance or arbitration proceeding pending
against, or threatened to be asserted or commenced against, the Company under
any collective bargaining agreement, union contract, or general labor or
employment law, rule or regulation.
3.18 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. The Company is not in
violation of, nor has it failed to conduct its business in full compliance
with, any applicable federal, state, local or foreign laws, regulations,
rules, treaties, rulings, orders, directives or decrees. The Company has
delivered to Purchaser complete and correct copies of all of the licenses,
permits, authorizations and franchises to which the Company is subject and
all said licenses, permits, authorizations and franchises are valid and in
full force and effect. Said licenses, permits, authorizations and franchises
constitute all of the licenses, permits, authorizations and franchises
necessary to permit the Company to conduct its business in the manner in
which it is now being conducted, and the Company is not in violation or
breach of any of the terms,
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requirements or conditions of any of said licenses, permits, authorizations
or franchises.
3.19 ENVIRONMENTAL COMPLIANCE MATTERS. To the best of the knowledge of
the Company and the Seller, without conducting any study or independent
investigation:
(a) There is no soil or ground water contamination by any "Hazardous
Material" for which the Company may be liable. "Hazardous Material" shall
mean any flammables, asbestos, explosives, radioactive materials, hazardous
wastes, toxic substances or related materials, including, without limitation,
any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," or "toxic substances"
under any applicable federal, state or local laws, rules, regulations or
orders which have been designated as potentially dangerous to public health
and/or safety when present in the environment.
(b) There are no underground storage tanks, asbestos containing
materials or PCBs on any property owned, leased, operated or occupied by the
Company or relating to the business of the Company.
(c) The Company has not exposed its employees or others to Hazardous
Materials in violation of applicable laws.
(d) No Hazardous Material is present in the surface water or groundwater
of any Company facility and no likelihood exists that any Hazardous Material
present on or in any other land, groundwater or surface water will come to be
present in the surface water or groundwater of any Company facility. The
Company has provided to Purchaser all site assessments, if any, of properties
relating to the business of the Company available to or conducted by the
Company.
(e) The Company has not received any notice that an action, proceeding,
liability or claim exists or is threatened against the Company with respect
to the transfers or releases of Hazardous Materials by the Company.
(f) There are no (i) enforcement, cleanup, removal or other governmental
or regulatory actions instituted, completed or threatened against the Company
pursuant to any applicable federal, state or local laws, ordinances or
regulations relating to any Hazardous Material, (ii) claims made or
threatened by any third party against the Company with respect to or because
of its property relating to damage, contribution, cost recovery compensation,
loss or injury resulting from any Hazardous Material, or (iii) conditions on
any of the properties of the Company that could cause such properties or any
part thereof to be subject to any restrictions on the ownership, occupancy,
transferability or use of any of such properties under any Hazardous Material
law.
3.20 EXPORT ADMINISTRATION ACT AND FOREIGN CORRUPT PRACTICES ACT. The
Company is and has always been in full compliance with the Export
Administration Act of 1976 and the regulations promulgated thereunder
("EAA"), as well as the Foreign Corrupt Practices Act ("FCPA"). The Company
has duly and timely submitted all reports required to be submitted under the
EAA. The Company is not subject to any pending inquiry, investigation or
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audit by any agency responsible for enforcing or administering the EAA or the
FCPA. Neither the Company nor any of its employees or agents has made any
payment of, or any promise to pay, any money or anything of value: (i) to
any foreign official for the purpose of influencing any act or decision of
such foreign official to use his influence with a foreign government or
instrumentality thereof to affect or influence any act or decision of such
government or instrumentality, in order to assist the Company in obtaining or
retaining business; (ii) to any foreign political party or official thereof
or any candidate for foreign political office for the purpose of influencing
any act or decision of such party, official or candidate in its or his
official capacity, or inducing such party, official or candidate to use its
or his influence with a foreign government or instrumentality thereof to
affect or influence any act or decision of such government or
instrumentality, in order to assist the Company in obtaining or retaining
business; or (iii) to any other person while knowing or having reason to know
that all or a portion of such money or thing of value would be used for any
of the purposes specified in clauses (i) and (ii) of this Section 3.20.
3.21 CONFLICT OF INTEREST TRANSACTIONS. No past or present shareholder,
director, officer or employee of the Company or any of their affiliates (i)
is indebted to, or has any financial, business or contractual relationship or
arrangement with, the Company, other than as disclosed in Section 1.2(b) of
this Agreement, or (ii) has any direct or indirect interest in any property,
asset or right which is owned or used by the Company.
3.22 LITIGATION. There is no action, suit, proceeding, dispute,
litigation, claim, complaint or investigation by or before any court,
tribunal, governmental body, governmental agency or arbitrator pending or, to
the best of the Company's or the Seller's knowledge, threatened against or
with respect to the Company which (i) if adversely determined would have an
adverse effect on the business, condition, assets, operations or prospects of
the Company, or (ii) challenges or would challenge any of the actions
required to be taken by the Company under this Agreement. There exists no
basis for any such action, suit, proceeding, dispute, litigation, claim,
complaint or investigation.
3.23 WAIVER OF RIGHT TO PURCHASE SHARES. The Company and the Seller have
validly waived any right they would have under the Company's Articles of
Incorporation to purchase the shares of Stock being purchased by Purchaser
pursuant to this Agreement.
3.24 AUTHORIZATION; BINDING NATURE OF AGREEMENT. The Company and the
Seller have all necessary power and authority to enter into and perform their
obligations under this Agreement. The execution, delivery and performance of
this Agreement by the Company and the Seller have been duly authorized by all
necessary action on the part of the Company and its officers, directors and
shareholders, and by the Seller. This Agreement is a valid and binding
obligation of the Company and the Seller.
3.25 NON-CONTRAVENTION. Neither (a) the execution and delivery of this
Agreement or the Second Promissory Note, nor (b) the performance of this
Agreement or the payment of the Second Promissory Note will: (i) contravene
or result in a violation of any of the provisions of the articles of
incorporation, bylaws or other charter or organizational documents of the
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Company; (ii) contravene or result in a violation of any resolution adopted
by the shareholders or directors of the Company; (iii) result in a violation
or breach of, or give any person the right to declare (whether with or
without notice or lapse of time) a default under or to terminate, any
agreement or other instrument to which the Company is a party or by which the
Company or any of its assets is bound; (iv) give any person the right to
accelerate the maturity of any indebtedness or other obligation of the
Company; (v) result in the loss of any license or other contractual right of
the Company; (vi) result in the loss of, or in a violation of any of the
terms, provisions or conditions of, any governmental license, permit,
authorization or franchise of the Company; (vii) result in the creation or
imposition of any lien, charge, encumbrance or restriction on any of the
assets of the Company; (viii) result in the reassessment or revaluation of
any property of the Company or by any taxing authority or other governmental
authority; (ix) result in the imposition of, or subject the Company or
Purchaser to any liability for, any conveyance or transfer tax or any similar
tax; or (x) result in a violation of any law, rule, regulation, treaty,
ruling, directive, order, arbitration award, judgment or decree to which the
Company or any of its assets is subject.
3.26 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by the Company or the Seller in connection
with the execution, delivery or performance of this Agreement (including the
sale to Purchaser of the shares of Stock being purchased by Purchaser
hereunder).
3.27 BROKERS. The Company has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transaction
contemplated by this Agreement, and, to the best of the Company's knowledge,
no person is entitled, or intends to claim that it is entitled, to receive
any such fees or commissions in connection with such transaction.
3.28 FULL DISCLOSURE. Neither this Agreement (including the exhibits
hereto) nor any statement, certificate or other document delivered to
Purchaser by or on behalf of the Company or the Seller contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the representations and other statements contained herein and therein
not misleading.
3.29 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of the Company and the Seller set forth in this Agreement are true
and correct on the date hereof, and will be true and correct on the Closing
Date as though such representations and warranties were made as of the
Closing Date.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a) he
owns twenty-five thousand, one hundred and twenty-nine and one-half
(25,129.5) shares of Stock and does not own any other securities or other
assets of the Company, that (b) he has at the Closing, good and valid title
to all of such shares free and clear of any liens, pledges, security
interests, adverse claims, equities, options, proxies, charges, encumbrances
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or restrictions (other than the restrictions set forth in the Company's
Articles of Incorporation) and that he shall sign over such shares to the
name of the Purchaser at the time of Closing, with said shares to be held by
the Escrow Agent until the Purchaser pays the Seller for the purchase of said
shares subject to terms of Section 1.2 (a) of the Purchase Agreement. As long
as Purchaser remains current in his payments subject to terms of Section 1.2
(a) of the Purchase Agreement, the Seller gives to the Purchaser full voting
rights of all stock being purchased.
4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
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warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
4.8 WAIVE FIRST RIGHT OF REFUSAL TO PURCHASE SHARES OF CIC. The Seller
waives the right that he has as a shareholder of CIC to purchase the shares
owned by other CIC shareholders that are also being purchased by the
Purchaser in other transactions.
4.9 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
4.10 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
4.11 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
4.12 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
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performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
such representations and warranties were made as of the Closing Date.
5.7 INDEMNIFICATION OF THE COMPANY AND ITS OFFICERS BY OTHER
SHAREHOLDERS. The Purchaser warrants that as part of the transaction to
acquire stock from each shareholder, the Purchaser is requiring each Seller
to indemnify the Company and all former employees, officers, directors and
other shareholders against personal liability for any actions prior to the
close of the transactions.
SECTION 6. PRE-CLOSING COVENANTS OF THE COMPANY
Between the date of this Agreement and the Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following without the prior written consent of Purchaser:
(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
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(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
(l) pay any bonus to, or increase the amount of the salary, fringe
benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
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December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
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schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a)
Purchaser shall use its best efforts to cause the conditions set forth in
Sections 10.1 and 10.3 to be satisfied on a timely basis, and (b) Purchaser
shall promptly inform the Seller if Purchaser believes or has any reason to
believe that any of the conditions set forth in Section 10 might not be
satisfied on a timely basis on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are
to be consummated at the Closing is subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
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shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors
of the Company. The directors of the Company shall have duly appointed
(effective as of the Closing) such other persons as Purchaser shall have
designated to fill the vacancies on the Company's Board of Directors. The
Seller shall be appointed to be a member of the Company's Board of Directors
on the Closing Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement,
shall have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the
Closing Date as though such representations and warranties were made as of
the Closing Date. In addition, the Purchaser shall have verified to its
satisfaction that (a) the Company's total revenues for the fiscal year ended
June 30, 1996 were at least $2.5 million, (b) the Company has no long term
debts other than the loans from the Seller and Ralph Flygare which aggregate
approximately $450,000, (c) the Company has no short term debts which are
inconsistent with its earnings and revenues, (d) the Company has good, valid
and unencumbered title to all of the software which it represents to own, (e)
the Company has no pending or threatened litigation or claims against it and
no liabilities other than those disclosed in its financial statements, (f)
the Company has a stable base of customers with a minimum of 80% having no
plans to switch to a new software provider, and (g) that the Company's
software performs as it represents, and to the satisfaction of its customers.
9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by
them on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
Agreement, and all instruments and other documents incident to such
transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr.
Eric Hoffberg.
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9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that
are to be consummated at the Closing are subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of which may be
waived by the Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser set forth in this Agreement shall have been true and correct in
all material respects on the date of this Agreement, and shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the
Closing Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
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SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in
connection herewith prior to or at the Closing, (i) shall survive, and shall
not be affected by, the Closing (or the termination of this Agreement
pursuant to Section 11), and (ii) shall not be affected by any information
furnished to, or any investigation made by, any other party hereto or any of
such other party's employees, attorneys, accountants or other
representatives. For purposes of this Agreement, each statement or other
item of information in any disclosures by the Seller or the Company to the
Purchaser shall be deemed to be a representation and warranty of the Company
pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates from and against any damage, cost or loss that is directly or
indirectly suffered or incurred at any time by Purchaser or any of such
directors, officers, shareholders, employees, attorneys, agents or other
affiliates and that arises directly or indirectly out of or by virtue of, or
is directly or indirectly connected with, the breach or inaccuracy of any of
the representations and warranties of the Company or the failure of the
Company to perform any of its covenants or obligations contained in this
Agreement (or in any instrument or other document delivered hereunder or in
connection herewith).
13.2 INDEMNIFICATION OF PURCHASER BY THE SELLER. The Seller shall
hold harmless and indemnify Purchaser and each of Purchaser's past, present
and future directors, officers, shareholders, employees, attorneys, agents
and other affiliates ("Purchaser's Affiliates") from and against any damage,
loss or cost that is directly or indirectly suffered or incurred at any time
by Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties
of the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other
document delivered hereunder or in connection herewith.
13.3 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this
transaction, the Seller (i) agrees to indemnify and hold harmless the Company
and any of its former and present officers, other shareholders, directors and
employees for any actions, real or imagined, taken by these individuals prior
to the Close of this transaction that may have had, in the opinion of the
Seller, any adverse impact in any manner upon the Seller, whether real or
perceived, and (ii) willingly and knowingly agrees that the payment from the
Purchaser at the Closing of this transaction resolves any claim or potential
claim, action, suit, proceeding, dispute, litigation or complaint by the
Seller against the Company or any of the present or former directors,
officers, other shareholders and employees of the Company and (iii) gives up
the right to initiate any action, suit, proceeding, dispute, litigation,
claim or complaint before any court, tribunal, governmental body,
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governmental agency or arbitrator against the Company or any of the present
or former directors, officers, other shareholders and employees of the
Company for actions taken by the Company or any of the present or former
directors, officers and employees of the Company prior to the Closing of this
transaction.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless
and indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any
party hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
13.6 INDEMNIFICATION NOT A WAIVER. A person's right to
indemnification pursuant to this Section 13 shall not be deemed to be such
person's exclusive remedy in connection with or arising from the breach or
inaccuracy of any of the representations and warranties of the Indemnifying
Party or the failure of the Indemnifying Party to perform any of its
covenants or obligations contained in this Agreement or in any instrument or
other document delivered hereunder or in connection herewith. The exercise
by any person of his right to demand and receive such indemnification shall
not be deemed to prejudice, or to operate as a waiver of, any remedy to which
such person may be entitled at law or equity.
13.7 RIGHT OF SETOFF. Should the Seller be deemed by a Court of Law
to be responsible for any damage or loss for which the Seller has indemnified
the Purchaser, the Purchaser (i) agrees to limit the Seller's liability to a
maximum of $100,000, except if the Seller is found to have engaged in an act
of fraud that resulted in the damage or loss by the purchaser, and Purchaser
(ii) shall have the right to set off the amount of any such damage, loss or
cost up to $100,000 against the amount of any obligation of Purchaser or the
Company to the Seller or his successors or assigns (including, without
limitation, any amounts payable under the
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Promissory Note and the Second Promissory Note), except if the Seller is
found to have engaged in an act of fraud that resulted in the damage or loss
by the purchaser, in which case there shall be no limit to the amount that
may be set off by the Purchaser.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
Purchaser may reasonably request for the purpose of carrying out or
evidencing the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a
written notice given to the other parties hereto);
IF TO THE SELLER:
Ralph Flygare
c/o California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
IF TO THE COMPANY:
California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
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Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or
other publicity concerning the transactions contemplated by this Agreement
shall be issued, given or otherwise disseminated without the prior approval
of each of the parties hereto; provided, however, that such approval shall
not be unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if
any, and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable
to any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person
(including, without limitation, any employees or creditors of the Company)
other than the parties hereto and their respective heirs, successors and
assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
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masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES.
When used herein with respect to any non-corporate entity: the terms
"shares," "stock" and "capital stock" shall be deemed to refer to equity
interests of any nature in such entity; the term "shareholder" shall be
deemed to refer to any holder of any equity interest in such entity; and the
terms "director" and "officer" shall be deemed to refer to any person who is
involved in the management of such entity or who performs functions for such
entity that are similar to the functions performed by officers or directors
of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ Ralph Flygare
-----------------
Ralph Flygare
COMPANY: CALIFORNIA INTERACTIVE COMPUTING, INC.,
a California Corporation
By: /s/ Jerry C. Buckley
----------------------
Jerry C. Buckley, President
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
-------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT A.3 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND ROBERT
REISBAUM
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among Robert Reisbaum, an individual ("Seller"), California
Interactive Computing, Inc., a California corporation (the "Company"), and
Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 24,629.5 shares or 27.87% of the
outstanding shares of the capital stock, par value $0.10 per share, of the
Company (the "Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, Twenty-Four Thousand
and Six Hundred and Twenty-Nine and One-Half (24,629.5) shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of Four
Hundred and Ninety Thousand and Fifty-Two Dollars ($490,052), plus interest
as required. On the Closing Date, the Purchaser shall deliver to the Seller a
down payment of Fifty-Five Thousand and Seven Hundred and Nineteen Dollars
($55,719), consisting of Twenty-Seven Thousand and Eight Hundred and Sixty
Dollars ($27,860) in cash to be paid on the Close of this transaction and a
non-negotiable promissory note in the Form of Exhibit A hereto ("Promissory
Note A") for the remaining down payment of Twenty-Seven Thousand and Eight
Hundred and Fifty-Nine Dollars ($27,859) to be paid with an interest of 8%
per annum in 12 monthly payments of Two Thousand and Four Hundred and
Twenty-Three Dollars and Forty-One Cents ($2,423.41) commencing at the Close
of this transaction, and the remaining balance of Four Hundred and
Thirty-Four Thousand and Three Hundred and Thirty-Three Dollars ($434,333) to
be paid bearing simple interest at the rate of 8% per annum, commencing to
accrue one-year from the Closing Date, payable in equal monthly installments
of principal and interest equal to $10,603.34 for the 48 month period
commencing in the thirteenth month after the Closing Date and ending 48
months later. In addition, upon commencing a stock option program for
directors, officers, employees, former shareholders and key consultants of
CIC, Incomnet will provide to the Seller options to purchase 20,000 shares of
stock in CIC at the same terms that are provided to all other participants in
the plan.
SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
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this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
(a) The Escrow Agent shall deliver to the Purchaser a notice that he
holds the certificates representing the shares of Stock being sold by the
Seller pursuant to this Agreement, with appropriate stock power(s) attached
and endorsed in blank.
(b) The Escrow Agent shall:
(i) Pay to the Seller, by wire transfer of funds or by check, the
amount required to be paid to the Seller pursuant to Section 1.2.
(ii) Execute and deliver to the Seller the Promissory Note required
to be delivered to the Seller pursuant to Section 1.2.
SECTION 3. INDEMNIFICATION AND WARRANTIES OF THE SELLER ASSOCIATED WITH THE
COMPANY
3.1 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
3.2 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
3.3 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
3.4 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
3.5 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this
transaction, the Seller (i) agrees to indemnify and hold harmless the Company
and any of its former and present officers, other shareholders,
directors and employees for any actions, real or imagined, taken by these
individuals prior to the Close of this transaction that may have had, in the
opinion of the Seller, any adverse impact in any manner upon the Seller,
whether real or perceived, and (ii) willingly and knowingly agrees that the
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payment from the Purchaser at the Closing of this transaction resolves any
claim or potential claim, action, suit, proceeding, dispute, litigation or
complaint by the Seller against the Company or any of the present or former
directors, officers, other shareholders and employees of the Company and (iii)
gives up the right to initiate any action, suit, proceeding, dispute,
litigation, claim or complaint before any court, tribunal, governmental body,
governmental agency or arbitrator against the Company or any of the present or
former directors, officers, other shareholders and employees of the Company
for actions taken by the Company or any of the present or former directors,
officers and employees of the Company prior to the Closing of this transaction.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER ASSOCIATED WITH
THE SALE TO THE PURCHASER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a) he
owns Twenty-Four Thousand and Six Hundred and Twenty-Nine and One-Half
(24,629.5) shares of Stock and does not own any other securities or other
assets of the Company, that (b) he has, and shall transfer to the Purchaser
at the Closing, good and valid title to all of such shares free and clear of
any liens, pledges, security interests, adverse claims, equities, options,
proxies, charges, encumbrances or restrictions (other than the restrictions
set forth in the Company's Articles of Incorporation).
4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
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governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
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person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
such representations and warranties were made as of the Closing Date.
SECTION 6. PRE-CLOSING COVENANTS RELATING TO THE COMPANY
The Seller acknowledges that the Closing of this transaction is
dependent upon the Company continuing to operate in the manner described
below in Sections 6.1 through 6.9 and that the Purchaser has the full right
to void this transaction if the Company does not operate in the manner as set
forth below in Sections 6.1 through 6.9 of this Agreement. Accordingly, as a
condition to the Purchaser's obligation to close any of the transactions
contemplated by this Agreement, between the date of this Agreement and the
Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following without the prior written consent of Purchaser:
(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
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(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
(l) pay any bonus to, or increase the amount of the salary, fringe
benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
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(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
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believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a) Purchaser
shall use its best efforts to cause the conditions set forth in Sections 10.1
and 10.3 to be satisfied on a timely basis, and (b) Purchaser shall promptly
inform the Seller if Purchaser believes or has any reason to believe that any of
the conditions set forth in Section 10 might not be satisfied on a timely basis
on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are to
be consummated at the Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors of
the Company. The directors of the Company shall have duly appointed (effective
as of the Closing) such other persons as Purchaser shall have designated to fill
the vacancies on the Company's Board of Directors. The Seller shall be
appointed to be a member of the Company's Board of Directors on the Closing
Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement, shall
have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the Closing
Date as though such representations and warranties were made as of the Closing
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Date. In addition, the Purchaser shall have verified to its satisfaction that
(a) the Company's total revenues for the fiscal year ended June 30, 1996 were at
least $2.5 million, (b) the Company has no long term debts other than the loans
from the Seller and Ralph Flygare which aggregate approximately $450,000, (c)
the Company has no short term debts which are inconsistent with its earnings and
revenues, (d) the Company has good, valid and unencumbered title to all of the
software which it represents to own, (e) the Company has no pending or
threatened litigation or claims against it and no liabilities other than those
disclosed in its financial statements, (f) the Company has a stable base of
customers with a minimum of 80% having no plans to switch to a new software
provider, and (g) that the Company's software performs as it represents, and to
the satisfaction of its customers.
9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by them
on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
Agreement, and all instruments and other documents incident to such
transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr. Eric
Hoffberg.
9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that are
to be consummated at the Closing are subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by the
Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser set forth in this Agreement shall have been true and correct in all
material respects on the date of this Agreement, and shall be true and correct
in all material respects on the Closing Date as though such representations and
warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
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in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the Closing
Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in
connection herewith prior to or at the Closing, (i) shall survive, and shall
not be affected by, the Closing (or the termination of this Agreement
pursuant to Section 11), and (ii) shall not be affected by any information
furnished to, or any investigation made by, any other party hereto or any of
such other party's employees, attorneys, accountants or other
representatives. For purposes of this Agreement, each statement or other
item of information in any disclosures by the Seller or the Company to the
Purchaser shall be deemed to be a representation and warranty of the Company
pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless and
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indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates from and against any damage, cost or loss that is directly or
indirectly suffered or incurred at any time by Purchaser or any of such
directors, officers, shareholders, employees, attorneys, agents or other
affiliates and that arises directly or indirectly out of or by virtue of, or
is directly or indirectly connected with, the breach or inaccuracy of any of
the representations and warranties of the Company or the failure of the
Company to perform any of its covenants or obligations contained in this
Agreement (or in any instrument or other document delivered hereunder or in
connection herewith).
13.2 INDEMNIFICATION BY THE SELLER. The Seller shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates ("Purchaser's Affiliates") from and against any damage, loss or
cost that is directly or indirectly suffered or incurred at any time by
Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties
of the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other
document delivered hereunder or in connection herewith.
13.3 RIGHT OF SETOFF. Purchaser and the Company shall have the
right to set off the amount of any damages, loss or cost with respect to
which the Purchaser may be indemnified by the Seller hereunder against the
amount of any obligation of Purchaser or the Company to the Seller or his
successors or assigns.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless
and indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any
party hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
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the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
13.6 INDEMNIFICATION NOT A WAIVER. A person's right to
indemnification pursuant to this Section 13 shall not be deemed to be such
person's exclusive remedy in connection with or arising from the breach or
inaccuracy of any of the representations and warranties of the Indemnifying
Party or the failure of the Indemnifying Party to perform any of its
covenants or obligations contained in this Agreement or in any instrument or
other document delivered hereunder or in connection herewith. The exercise
by any person of his right to demand and receive such indemnification shall
not be deemed to prejudice, or to operate as a waiver of, any remedy to which
such person may be entitled at law or equity.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
Purchaser may reasonably request for the purpose of carrying out or
evidencing the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a written
notice given to the other parties hereto);
IF TO THE SELLER:
Robert Reisbaum
2641 Federal Avenue
Los Angeles, CA 90064
IF TO THE COMPANY:
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California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or
other publicity concerning the transactions contemplated by this Agreement
shall be issued, given or otherwise disseminated without the prior approval
of each of the parties hereto; provided, however, that such approval shall
not be unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if
any, and shall inure to the benefit of the parties hereto and their
respective heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable
to any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
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understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person
(including, without limitation, any employees or creditors of the Company)
other than the parties hereto and their respective heirs, successors and
assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES.
When used herein with respect to any non-corporate entity: the terms
"shares," "stock" and "capital stock" shall be deemed to refer to equity
interests of any nature in such entity; the term "shareholder" shall be
deemed to refer to any holder of any equity interest in such entity; and the
terms "director" and "officer" shall be deemed to refer to any person who is
involved in the management of such entity or who performs functions for such
entity that are similar to the functions performed by officers or directors
of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ Robert Reisbaum
----------------------
Robert Reisbaum
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
--------------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
-----------------------------------
Stephen A. Caswell, Secretary
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EXHIBIT A.4 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND E. V.
SCHMIDT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among E. V. Schmidt, an individual ("Seller"), California
Interactive Computing, Inc., a California corporation (the "Company"), and
Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 11,982 shares or 13.57% of the
outstanding shares of the capital stock, par value $0.10 per share, of the
Company (the "Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, Eleven Thousand and
Nine Hundred and Eighty-Two (11,982) shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of Two Hundred
and Seventy-Four Thousand and Seven Hundred and Ten Dollars ($274,710). On
the Closing Date, the Purchaser shall deliver to the Seller a cash payment of
Twenty-Seven Thousand and One Hundred and Eight Dollars ($27,108) and a
non-negotiable promissory note in the Form of Exhibit A hereto ("The
Promissory Note") having an initial principal amount equal to Two Hundred and
Eleven Thousand and Two Hundred and Ninety-Seven Dollars ($211,297), bearing
simple interest at the rate of 8% per annum, commencing to accrue one year
from the Closing Date, payable in equal monthly installments of principal and
interest equal to $5,158 for the 48 month period commencing in the thirteenth
month after the Closing Date and ending 48 months later.
SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
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(a) The Escrow Agent shall deliver to the Purchaser a notice that he
holds the certificates representing the shares of Stock being sold by the
Seller pursuant to this Agreement, with appropriate stock power(s) attached
and endorsed in blank.
(b) The Escrow Agent shall:
(i) Pay to the Seller, by wire transfer of funds or by check, the
amount required to be paid to the Seller pursuant to Section 1.2.
(ii) Execute and deliver to the Seller the Promissory Note required
to be delivered to the Seller pursuant to Section 1.2.
SECTION 3. INDEMNIFICATION AND WARRANTIES OF THE SELLER ASSOCIATED WITH THE
COMPANY
3.1 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
3.2 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
3.3 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
3.4 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
3.5 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this transaction,
the Seller (i) agrees to indemnify and hold harmless the Company and any of
its former and present officers, other shareholders, directors and employees
for any actions, real or imagined, taken by these individuals prior to the
Close of this transaction that may have had, in the opinion of the Seller,
any adverse impact in any manner upon the Seller, whether real or perceived,
and (ii) willingly and knowingly agrees that the payment from the Purchaser
at the Closing of this transaction resolves any claim or potential claim,
action, suit, proceeding, dispute, litigation or complaint by the Seller
against the Company or any of the present or former directors, officers,
other shareholders and employees of the Company and (iii) gives up the right
to initiate any action, suit, proceeding, dispute, litigation, claim or
complaint before any court, tribunal, governmental body, governmental agency
or arbitrator against the Company or any of the present or
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former directors, officers, other shareholders and employees of the Company
for actions taken by the Company or any of the present or former directors,
officers and employees of the Company prior to the Closing of this
transaction.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER ASSOCIATED WITH
THE SALE TO THE PURCHASER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a) he
owns Eleven Thousand and Nine Hundred and Eighty-Two (11,982) shares of Stock
and does not own any other securities or other assets of the Company, that
(b) he has, and shall transfer to the Purchaser at the Closing, good and
valid title to all of such shares free and clear of any liens, pledges,
security interests, adverse claims, equities, options, proxies, charges,
encumbrances or restrictions (other than the restrictions set forth in the
Company's Articles of Incorporation).
4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
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to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
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such representations and warranties were made as of the Closing Date.
SECTION 6. PRE-CLOSING COVENANTS RELATING TO THE COMPANY
The Seller acknowledges that the Closing of this transaction is
dependent upon the Company continuing to operate in the manner described
below in Sections 6.1 through 6.9 and that the Purchaser has the full right
to void this transaction if the Company does not operate in the manner as set
forth below in Sections 6.1 through 6.9 of this Agreement. Accordingly, as a
condition to the Purchaser's obligation to close any of the transactions
contemplated by this Agreement, between the date of this Agreement and the
Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following without the prior written consent of Purchaser:
(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
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(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
(l) pay any bonus to, or increase the amount of the salary, fringe
benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
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6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
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7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a) Purchaser
shall use its best efforts to cause the conditions set forth in Sections 10.1
and 10.3 to be satisfied on a timely basis, and (b) Purchaser shall promptly
inform the Seller if Purchaser believes or has any reason to believe that any of
the conditions set forth in Section 10 might not be satisfied on a timely basis
on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are to
be consummated at the Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors of
the Company. The directors of the Company shall have duly appointed (effective
as of the Closing) such other persons as Purchaser shall have designated to fill
the vacancies on the Company's Board of Directors. The Seller shall be
appointed to be a member of the Company's Board of Directors on the Closing
Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement, shall
have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the Closing
Date as though such representations and warranties were made as of the Closing
Date. In addition, the Purchaser shall have verified to its satisfaction that
(a) the Company's total revenues for the fiscal year ended June 30, 1996 were at
least $2.5 million, (b) the Company has no long term debts other than the loans
from the Seller and Ralph Flygare which aggregate approximately $450,000, (c)
the Company has no short term debts which are inconsistent with its earnings and
revenues, (d) the Company has good, valid and unencumbered title to all of the
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software which it represents to own, (e) the Company has no pending or
threatened litigation or claims against it and no liabilities other than those
disclosed in its financial statements, (f) the Company has a stable base of
customers with a minimum of 80% having no plans to switch to a new software
provider, and (g) that the Company's software performs as it represents, and to
the satisfaction of its customers.
9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by them
on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
Agreement, and all instruments and other documents incident to such
transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr.
Eric Hoffberg.
9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that are
to be consummated at the Closing are subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by the
Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser set forth in this Agreement shall have been true and correct in all
material respects on the date of this Agreement, and shall be true and correct
in all material respects on the Closing Date as though such representations and
warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the Closing
Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
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instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in connection
herewith prior to or at the Closing, (i) shall survive, and shall not be
affected by, the Closing (or the termination of this Agreement pursuant to
Section 11), and (ii) shall not be affected by any information furnished to,
or any investigation made by, any other party hereto or any of such other
party's employees, attorneys, accountants or other representatives. For
purposes of this Agreement, each statement or other item of information in any
disclosures by the Seller or the Company to the Purchaser shall be deemed to
be a representation and warranty of the Company pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless and
indemnify Purchaser and each of Purchaser's past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates from
and against any damage, cost or loss that is directly or indirectly suffered or
incurred at any time by Purchaser or any of such directors, officers,
shareholders, employees, attorneys, agents or other affiliates and that arises
directly or indirectly out of or by virtue of, or is directly or indirectly
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connected with, the breach or inaccuracy of any of the representations and
warranties of the Company or the failure of the Company to perform any of its
covenants or obligations contained in this Agreement (or in any instrument or
other document delivered hereunder or in connection herewith).
13.2 INDEMNIFICATION BY THE SELLER. The Seller shall
hold harmless and indemnify Purchaser and each of Purchaser's past, present
and future directors, officers, shareholders, employees, attorneys, agents and
other affiliates ("Purchaser's Affiliates") from and against any damage, loss
or cost that is directly or indirectly suffered or incurred at any time by
Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties of
the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other document
delivered hereunder or in connection herewith.
13.3 RIGHT OF SETOFF. Purchaser and the Company shall have the
right to set off the amount of any damages, loss or cost with respect to
which the Purchaser may be indemnified by the Seller hereunder against the
amount of any obligation of Purchaser or the Company to the Seller or his
successors or assigns.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless and
indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any party
hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
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13.6 INDEMNIFICATION NOT A WAIVER. A person's right to indemnification
pursuant to this Section 13 shall not be deemed to be such person's exclusive
remedy in connection with or arising from the breach or inaccuracy of any of the
representations and warranties of the Indemnifying Party or the failure of the
Indemnifying Party to perform any of its covenants or obligations contained in
this Agreement or in any instrument or other document delivered hereunder or in
connection herewith. The exercise by any person of his right to demand and
receive such indemnification shall not be deemed to prejudice, or to operate as
a waiver of, any remedy to which such person may be entitled at law or equity.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
Purchaser may reasonably request for the purpose of carrying out or evidencing
the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a written
notice given to the other parties hereto);
IF TO THE SELLER:
E. V. Schmidt
1447 Avenida de Cortez
Pacific Palisades, CA 90272
IF TO THE COMPANY:
California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
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Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or other
publicity concerning the transactions contemplated by this Agreement shall be
issued, given or otherwise disseminated without the prior approval of each of
the parties hereto; provided, however, that such approval shall not be
unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if any,
and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable to
any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person (including,
without limitation, any employees or creditors of the Company) other than the
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parties hereto and their respective heirs, successors and assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the neuter
gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES. When
used herein with respect to any non-corporate entity: the terms "shares,"
"stock" and "capital stock" shall be deemed to refer to equity interests of
any nature in such entity; the term "shareholder" shall be deemed to refer to
any holder of any equity interest in such entity; and the terms "director" and
"officer" shall be deemed to refer to any person who is involved in the
management of such entity or who performs functions for such entity that are
similar to the functions performed by officers or directors of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ E. V. Schmidt
------------------
E. V. Schmidt
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
-------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
-----------------------
Stephen A. Caswell, Secretary
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EXHIBIT A.5 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND DIANE
ORENDORFF
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among Diane Orendorff, an individual ("Seller"), California
Interactive Computing, Inc., a California corporation (the "Company"), and
Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 1,000 shares of the outstanding
shares of the capital stock, par value $0.10 per share, of the Company (the
"Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, One Thousand (1,000)
shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of $19,900.
SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
(a) The Escrow Agent shall deliver to the Purchaser a notice that he
holds the certificates representing the shares of Stock being sold by the
Seller pursuant to this Agreement, with appropriate stock power(s) attached
and endorsed in blank.
(b) The Escrow Agent shall deliver to the Seller a check for $19,900.
SECTION 3. INDEMNIFICATION AND WARRANTIES OF THE SELLER ASSOCIATED WITH THE
COMPANY
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3.1 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
3.2 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
3.3 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
3.4 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
3.5 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this
transaction, the Seller (i) agrees to indemnify and hold harmless the Company
and any of its former and present officers, other shareholders, directors and
employees for any actions, real or imagined, taken by these individuals prior
to the Close of this transaction that may have had, in the opinion of the
Seller, any adverse impact in any manner upon the Seller, whether real or
perceived, and (ii) willingly and knowingly agrees that the payment from the
Purchaser at the Closing of this transaction resolves any claim or potential
claim, action, suit, proceeding, dispute, litigation or complaint by the
Seller against the Company or any of the present or former directors,
officers, other shareholders and employees of the Company and (iii) gives up
the right to initiate any action, suit, proceeding, dispute, litigation,
claim or complaint before any court, tribunal, governmental body,
governmental agency or arbitrator against the Company or any of the present
or former directors, officers, other shareholders and employees of the
Company for actions taken by the Company or any of the present or former
directors, officers and employees of the Company prior to the Closing of this
transaction.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER ASSOCIATED WITH
THE SALE TO THE PURCHASER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a)
she owns One Thousand (1,000) shares of Stock and does not own any other
securities or other assets of the Company, that (b) he has, and shall
transfer to the Purchaser at the Closing, good and valid title to all of such
shares free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions
(other than the restrictions set forth in the Company's
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Articles of Incorporation).
4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser represents and warrants to the Seller as follows:
5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
such representations and warranties were made as of the Closing Date.
SECTION 6. PRE-CLOSING COVENANTS RELATING TO THE COMPANY
The Seller acknowledges that the Closing of this transaction is
dependent upon the Company continuing to operate in the manner described
below in Sections 6.1 through 6.9 and that the Purchaser has the full right
to void this transaction if the Company does not operate in the manner as set
forth below in Sections 6.1 through 6.9 of this Agreement. Accordingly, as a
condition to the Purchaser's obligation to close any of the transactions
contemplated by this Agreement, between the date of this Agreement and the
Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following
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without the prior written consent of Purchaser:
(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
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(l) pay any bonus to, or increase the amount of the salary, fringe
benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
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6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a) Purchaser
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shall use its best efforts to cause the conditions set forth in Sections 10.1
and 10.3 to be satisfied on a timely basis, and (b) Purchaser shall promptly
inform the Seller if Purchaser believes or has any reason to believe that any of
the conditions set forth in Section 10 might not be satisfied on a timely basis
on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are to
be consummated at the Closing is subject to the satisfaction, on or before the
Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors of
the Company. The directors of the Company shall have duly appointed (effective
as of the Closing) such other persons as Purchaser shall have designated to fill
the vacancies on the Company's Board of Directors. The Seller shall be
appointed to be a member of the Company's Board of Directors on the Closing
Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement, shall
have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the Closing
Date as though such representations and warranties were made as of the Closing
Date. In addition, the Purchaser shall have verified to its satisfaction that
(a) the Company's total revenues for the fiscal year ended June 30, 1996 were at
least $2.5 million, (b) the Company has no long term debts other than the loans
from the Seller and Ralph Flygare which aggregate approximately $450,000, (c)
the Company has no short term debts which are inconsistent with its earnings and
revenues, (d) the Company has good, valid and unencumbered title to all of the
software which it represents to own, (e) the Company has no pending or
threatened litigation or claims against it and no liabilities other than those
disclosed in its financial statements, (f) the Company has a stable base of
customers with a minimum of 80% having no plans to switch to a new software
provider, and (g) that the Company's software performs as it represents, and to
the satisfaction of its customers.
9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by them
on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
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Agreement, and all instruments and other documents incident to such
transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr. Eric
Hoffberg.
9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that are
to be consummated at the Closing are subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by the
Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Purchaser set forth in this Agreement shall have been true and correct in all
material respects on the date of this Agreement, and shall be true and correct
in all material respects on the Closing Date as though such representations and
warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the Closing
Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
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(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in
connection herewith prior to or at the Closing, (i) shall survive, and shall
not be affected by, the Closing (or the termination of this Agreement
pursuant to Section 11), and (ii) shall not be affected by any information
furnished to, or any investigation made by, any other party hereto or any of
such other party's employees, attorneys, accountants or other
representatives. For purposes of this Agreement, each statement or other
item of information in any disclosures by the Seller or the Company to the
Purchaser shall be deemed to be a representation and warranty of the Company
pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates from and against any damage, cost or loss that is directly or
indirectly suffered or incurred at any time by Purchaser or any of such
directors, officers, shareholders, employees, attorneys, agents or other
affiliates and that arises directly or indirectly out of or by virtue of, or
is directly or indirectly connected with, the breach or inaccuracy of any of
the representations and warranties of the Company or the failure of the
Company to perform any of its covenants or obligations contained in this
Agreement (or in any instrument or other document delivered hereunder or in
connection herewith).
13.2 INDEMNIFICATION BY THE SELLER. The Seller shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates ("Purchaser's Affiliates") from and against any damage, loss or
cost that is directly or indirectly suffered or incurred at any time by
Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties
of the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other
document
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delivered hereunder or in connection herewith.
13.3 RIGHT OF SETOFF. Purchaser and the Company shall have the
right to set off the amount of any damages, loss or cost with respect to
which the Purchaser may be indemnified by the Seller hereunder against the
amount of any obligation of Purchaser or the Company to the Seller or his
successors or assigns.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless
and indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any
party hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
13.6 INDEMNIFICATION NOT A WAIVER. A person's right to
indemnification pursuant to this Section 13 shall not be deemed to be such
person's exclusive remedy in connection with or arising from the breach or
inaccuracy of any of the representations and warranties of the Indemnifying
Party or the failure of the Indemnifying Party to perform any of its
covenants or obligations contained in this Agreement or in any instrument or
other document delivered hereunder or in connection herewith. The exercise
by any person of his right to demand and receive such indemnification shall
not be deemed to prejudice, or to operate as a waiver of, any remedy to which
such person may be entitled at law or equity.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
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Purchaser may reasonably request for the purpose of carrying out or
evidencing the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a
written notice given to the other parties hereto);
IF TO THE SELLER:
Diane Orendorff
2324 North Orchard Drive
Burbank, CA 91504
IF TO THE COMPANY:
California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or
other publicity concerning the transactions contemplated by this Agreement
shall be issued, given or otherwise disseminated without the prior approval
of each of the parties hereto; provided, however, that such approval shall
not be unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
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referred to in connection with the interpretation hereof.
14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if any,
and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable
to any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto
in the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person
(including, without limitation, any employees or creditors of the Company)
other than the parties hereto and their respective heirs, successors and
assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES.
When used herein with respect to any non-corporate entity: the terms
"shares," "stock" and "capital stock" shall be deemed to refer to equity
interests of
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any nature in such entity; the term "shareholder" shall be
deemed to refer to any holder of any equity interest in such entity; and the
terms "director" and "officer" shall be deemed to refer to any person who is
involved in the management of such entity or who performs functions for such
entity that are similar to the functions performed by officers or directors
of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ Diane Orendorff
-------------------------
Diane Orendorff
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
-------------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
-------------------------
Stephen A. Caswell, Secretary
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EXHIBIT A.6 - STOCK PURCHASE AGREEMENT BETWEEN INCOMNET, INC. AND NORA KENNER
HOFFBERG
THIS STOCK PURCHASE AGREEMENT ("Agreement") is entered into as of April
25, 1997, by and among Nora Kenner Hoffberg, an individual ("Seller"),
California Interactive Computing, Inc., a California corporation (the
"Company"), and Incomnet, Inc., a California corporation ("Purchaser").
R E C I T A L S
A. The Seller is the record owner of 500 shares of the outstanding shares
of the capital stock, par value $0.10 per share, of the Company (the "Stock").
B. The parties hereto wish to provide for the sale of the Stock by the
Seller to the Purchaser pursuant to the terms and subject to the conditions
of this Agreement.
SECTION 1. SALE AND PURCHASE
1.1 SALE AND PURCHASE OF STOCK. Subject to the terms and conditions of
this Agreement, the Seller shall sell, transfer, assign and deliver to
Purchaser, and Purchaser shall purchase from the Seller, Five Hundred (500)
shares of Stock.
1.2 PURCHASE PRICE. As consideration for the sale by the Seller of its
shares of Stock to Purchaser on the Closing Date (as defined in Section 2.1
of this Agreement), Purchaser shall pay a total purchase price of $9,950.
SECTION 2. CLOSING
2.1 ESCROW. Prior to closing, all documents and Consideration related to
this transaction shall be deposited in an Escrow Account handled by Mark J.
Richardson (the "Escrow Agent"), who will act as an escrow agent pursuant to
the terms of an Escrow Agreement with both the Purchaser and Seller.
2.2 TIME AND PLACE. The closing of the transactions contemplated by
this Agreement (the "Closing") shall be held at the offices of the Company in
Valencia, California, at 1:00 p.m on or before April 25, 1997, or at such
other place, time or date (the "Closing Date") as the parties hereto may
agree.
2.3 PROCEDURES AT CLOSING. The following shall take place at the
Closing:
(a) The Escrow Agent shall deliver to the Purchaser a notice that he
holds the certificates representing the shares of Stock being sold by the
Seller pursuant to this Agreement, with appropriate stock power(s) attached
and endorsed in blank.
(b) The Escrow Agent shall deliver to the Seller a check for $19,900.
SECTION 3. INDEMNIFICATION AND WARRANTIES OF THE SELLER ASSOCIATED WITH THE
COMPANY
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3.1 INTANGIBLE PROPERTY. The Seller warrants that he has (i) no
financial, business or contractual relationship or arrangement with the
Company nor (ii) any direct or indirect interest in any property, asset or
right which is owned or used by the Company, except as described in the
Employment Agreement Between California Interactive Computing, Inc. and Jerry
C. Buckley, attached as Exhibit D.
3.2 OBLIGATIONS. The Seller warrants that Company has no debt, liability
or other obligation (whether absolute, accrued, contingent or otherwise), to
the Seller, other than the debt that has been assumed by the Purchaser as
described in Section 1.2 (b).
3.3 CLAIMS TO TANGIBLE PERSONAL PROPERTY. The Seller warrants that he
has no claims to ownership of the tangible personal property of the Company,
including any computer hardware, software, accessories and any items of
furniture or fixtures or other materials that are created, used or owned by
the Company in the conduct of its business.
3.4 CLAIMS TO TRADEMARKS AND TRADENAMES. The Seller warrants that (i)
he has no claims to use any trademark, service mark, trade name or copyright
which is presently being used by the Company, and (ii) he will not use any
trademark, service mark, trade name, copyright or patent that is owned, used
or claimed by the Company without the express written permission of the
Company.
3.5 INDEMNIFICATION FROM LITIGATION. Upon the Closing of this
transaction, the Seller (i) agrees to indemnify and hold harmless the Company
and any of its former and present officers, other shareholders, directors and
employees for any actions, real or imagined, taken by these individuals prior
to the Close of this transaction that may have had, in the opinion of the
Seller, any adverse impact in any manner upon the Seller, whether real or
perceived, and (ii) willingly and knowingly agrees that the payment from the
Purchaser at the Closing of this transaction resolves any claim or potential
claim, action, suit, proceeding, dispute, litigation or complaint by the
Seller against the Company or any of the present or former directors,
officers, other shareholders and employees of the Company and (iii) gives up
the right to initiate any action, suit, proceeding, dispute, litigation,
claim or complaint before any court, tribunal, governmental body,
governmental agency or arbitrator against the Company or any of the present
or former directors, officers, other shareholders and employees of the
Company for actions taken by the Company or any of the present or former
directors, officers and employees of the Company prior to the Closing of this
transaction.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLER ASSOCIATED WITH
THE SALE TO THE PURCHASER
4.1 OWNERSHIP OF SHARES. The Seller represents and warrants that (a)
she owns Five Hundred (500) shares of Stock and does not own any other
securities or other assets of the Company, that (b) he has, and shall
transfer to the Purchaser at the Closing, good and valid title to all of such
shares free and clear of any liens, pledges, security interests, adverse
claims, equities, options, proxies, charges, encumbrances or restrictions
(other than the restrictions set forth in the Company's Articles of
Incorporation).
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4.2 POWER AND AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Seller represents and warrants that he has full power and
authority to enter into this Agreement and to perform its obligations
hereunder, and that the execution, delivery and performance of this
Agreement by him has been duly authorized by all necessary action on its
part.
(b) The Seller represents and warrants that, assuming that this
Agreement is a valid and binding obligation of each of the other parties
hereto, this Agreement is a valid and binding obligation of the Seller.
4.3 LITIGATION. The Seller represents and warrants that there is no
action, suit, proceeding, dispute, litigation, claim, complaint or
investigation by or before any court, tribunal, governmental body,
governmental agency or arbitrator pending or, to the best of the knowledge of
the Seller, threatened against the Seller which challenges or would challenge
any of the actions required to be taken by the Seller under this Agreement.
4.4 NON-CONTRAVENTION. The Seller represents and warrants that neither
the execution and delivery of this Agreement nor the performance hereof
(including the sale of shares of Stock being sold by or on behalf of the
Seller pursuant hereto) (i) will result in any violation or breach of any
agreement or other instrument to which the Seller is a party or by which the
Seller is a party or by which the Seller or any of the shares of Stock owned
(beneficially or of record) by the Seller is bound, or (ii) will result in a
violation of any law, rule, regulation, treaty, ruling, directive, order,
arbitration award, judgment or decree to which the Seller or any of such
shares of Stock is subject.
4.5 APPROVALS. The Seller represents and warrants that no
authorization, consent or approval of, or registration or filing with, any
governmental authority or any other person is required to be obtained or made
by the Seller in connection with the execution and delivery of this Agreement
or the performance hereof (including the sale of the shares of Stock being
sold by or on behalf of the Seller pursuant hereto).
4.6 BROKERS. The Seller represents and warrants that he has not agreed
to pay any brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement, and, to the best
of the knowledge of the Seller, no person is entitled, or intends to claim
that it is entitled, to receive any such fees or commissions in connection
with such transactions.
4.7 REPRESENTATIONS TRUE ON CLOSING DATE. The Seller represents and
warrants that the representations and warranties of the Seller set forth in
this Agreement are true and correct on the date hereof, and will be true and
correct on the Closing Date as though such representations and warranties
were made as of the Closing Date.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Seller as follows:
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5.1 NON-DISTRIBUTIVE INTENT. The shares of Stock being purchased by
Purchaser pursuant to this Agreement are not being acquired by Purchaser with
a view to the public distribution of them.
5.2 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement or the Promissory Note nor the performance hereof or thereof (i)
will result in any violation or breach of any agreement or other instrument
to which Purchaser is a party or by which Purchaser is bound, or (ii) will
result in a violation of any law, rule, regulation, treaty, ruling,
directive, order, arbitration award, judgment or decree to which Purchaser is
subject.
5.3 AUTHORIZATION; BINDING NATURE OF AGREEMENT. Purchaser has all
necessary power and authority to enter into and perform its obligations under
this Agreement and the Promissory Note. The execution, delivery and
performance of this Agreement and the Promissory Note on behalf of Purchaser
have been duly authorized by all necessary action on the part of Purchaser
and its officers, directors and shareholders. Assuming that this Agreement
is a valid and binding obligation of each of the other parties hereto, (i)
this Agreement is a valid and binding obligation of Purchaser, and (ii) the
Promissory Note will be a valid and binding obligation of Purchaser as of the
Closing Date.
5.4 APPROVALS. No authorization, consent or approval of, or
registration or filing with, any governmental authority or any other person
is required to be obtained or made by Purchaser in connection with the
execution, delivery or performance of this Agreement or the Promissory Note.
5.5 BROKERS. Purchaser has not agreed to pay any brokerage fees,
finder's fees or other fees or commissions with respect to the transactions
contemplated by this Agreement, and, to the best of Purchaser's knowledge, no
person is entitled, or intends to claim that it is entitled, to receive any
such fees or commissions in connection with such transactions.
5.6 REPRESENTATIONS TRUE ON CLOSING DATE. The representations and
warranties of Purchaser set forth in this Agreement are true and correct on
the date hereof, and will be true and correct on the Closing Date as though
such representations and warranties were made as of the Closing Date.
SECTION 6. PRE-CLOSING COVENANTS RELATING TO THE COMPANY
The Seller acknowledges that the Closing of this transaction is
dependent upon the Company continuing to operate in the manner described
below in Sections 6.1 through 6.9 and that the Purchaser has the full right
to void this transaction if the Company does not operate in the manner as set
forth below in Sections 6.1 through 6.9 of this Agreement. Accordingly, as a
condition to the Purchaser's obligation to close any of the transactions
contemplated by this Agreement, between the date of this Agreement and the
Closing Date:
6.1 CONDUCT OF BUSINESS. The Company shall carry on its business in the
same manner as such business has been conducted prior to the date of this
Agreement. Without limiting the generality of the foregoing, the Company
shall not do, and shall ensure that none of its subsidiaries is permitted to
do, any of the following without the prior written consent of Purchaser:
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(a) declare, set aside or pay any dividend or make any other
distribution in respect of any shares of capital stock, or repurchase,
redeem or otherwise reacquire any shares of capital stock or other
securities;
(b) sell or otherwise issue any shares of capital stock or any other
securities;
(c) amend its articles of incorporation, bylaws or other charter or
organizational documents, or effect or become a party to any merger,
recapitalization, reclassification of shares, stock split, reverse stock
split, reorganization or similar transaction;
(d) form any new subsidiary or acquire any equity interest or other
interest in any other entity;
(e) purchase or otherwise acquire any assets, or lease any assets
from any other person, except in the ordinary course of business consistent
with past practice;
(f) make any capital expenditure (i) outside the ordinary course of
business, (ii) inconsistent with past practice, (iii) in an amount
exceeding three thousand dollars ($3,000), or (iv) in an amount which would
cause the total amount of the capital expenditures made by the Company
between the date of this Agreement and the Closing Date to exceed ten
thousand dollars ($10,000);
(g) sell or otherwise transfer any assets to any other person, except
in the ordinary course of business consistent with past practice and at a
price equal to the fair market value of the assets transferred;
(h) lease any assets to any other person, except in the ordinary
course of business consistent with past practice and at rental rate equal
to the fair value of the assets leased;
(i) mortgage, pledge, hypothecate or otherwise encumber any assets,
except in the ordinary course of business consistent with past practice;
(j) enter into any contract or incur any debt, liability or other
obligation (whether absolute, accrued, contingent or otherwise), except for
(i) contracts that are entered into in the ordinary course of business
consistent with past practice and that have terms of less than six months
and do not contemplate payments by or to the Company which will exceed,
over the term of the contract, three thousand dollars ($3,000) in the
aggregate, and (ii) current liabilities incurred in the ordinary course of
business consistent with past practice;
(k) make any loan or advance to any other person, except for advances
that are made to customers in the ordinary course of business consistent
with past practice and that are properly reflected as "accounts
receivables";
(l) pay any bonus to, or increase the amount of the salary, fringe
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benefits or other compensation or remuneration payable to, any of the
directors or officers of the Company;
(m) amend or terminate any contract or other instrument to which the
Company is a party or by which the Company or any of its assets is bound,
except in the ordinary course of business consistent with past practice;
(n) take any action that would result in a violation or breach of, or
a default under, any contract or other instrument to which the Company is a
party or by which the Company or any of its assets is bound;
(o) discharge any lien or discharge or pay any indebtedness,
liability or other obligation, except for current liabilities that (i) are
reflected on December 31, 1996 Balance Sheet or have been incurred since
December 31, 1996 in the ordinary course of business consistent with past
practice, and (ii) are to be discharged or paid in the ordinary course of
business consistent with past practice;
(p) forgive any debt or otherwise release or waive any right or
claim, except in the ordinary course of business consistent with past
practice;
(q) change its methods of accounting or accounting practices in any
respect;
(r) enter into any other transaction outside the ordinary course of
business or inconsistent with past practice;
(s) take any action that would cause any of the Company's
representations and warranties set forth in this Agreement to become untrue
or incorrect; or
(t) agree or commit (orally or in writing) to do any of the things
described in clauses (a) through (s) of this Section 6.1.
6.2 EMPLOYEES. The Company shall use its best efforts to keep available
to the Company all of its current employees.
6.3 BUSINESS RELATIONSHIPS. The Company shall use its best efforts to
preserve the current relationships of the Company with customers, carriers
and all other users and suppliers of goods or services and with all other
persons having business relationships with the Company.
6.4 INSURANCE. The Company shall keep in full force all of the
insurance policies referred in Section 3.12 of this Agreement.
6.5 ACCESS. The Company shall provide Purchaser and Purchaser's
employees, attorneys, accountants and other representatives full and complete
access to all properties and records of the Company, and shall arrange for
its certified public accountants to make available to Purchaser copies of all
working papers relating to the Existing Financial Statements and to the
financial statements referred to in Section 6.7 of this Agreement.
6.6 OBLIGATION TO UPDATE DISCLOSURE. The Company shall promptly
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disclose to Purchaser in writing any facts or circumstances arising after the
date hereof that would have been required to be disclosed to the Purchaser
pursuant to this Agreement if such facts or circumstances had existed as of
the date hereof.
6.7 AUDITED FINANCIAL STATEMENTS. On or before April 11, 1997, the
Company shall deliver to Purchaser the following financial statements: (i)
the unaudited balance sheet of the Company as of March 31, 1997, (ii) the
unaudited statements of income and retained earnings, stockholders' equity
and changes in financial position of the Company for the six months ended
December 31, 1996; (iii) the audited balance sheet of the Company as of June
30, 1996; (iv) the audited statements of income and retained earnings,
stockholders' equity and changes in financial position of the Company for the
fiscal year ending June 30, 1996; and (v) supporting and supplemental
schedules. Said financial statements shall be accompanied by an unqualified
opinion of the Company's independent certified public accountants to the
effect that said financial statements: (i) present fairly in the opinion of
management the financial position of the Company as of June 30, 1996 and
December 31, 1996 and the results of operations and changes in financial
position of the Company for the fiscal year ended June 30, 1996 and the six
months ended December 31, 1996; and (ii) have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the period covered thereby.
6.8 COOPERATION. The Company shall cooperate fully with the Seller and
Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
6.9 CONDITIONS. In addition to its other obligations hereunder, the
Company shall use its best efforts to cause the conditions set forth in
Sections 9.1 through 9.8 to be satisfied on a timely basis. The Company
shall promptly inform Purchaser if the Company believes or has any reason to
believe that any of the conditions set forth in Section 9 might not be
satisfied in a timely manner on or before the Closing Date.
SECTION 7. PRE-CLOSING COVENANTS OF THE SELLER
Between the date hereof and the Closing Date:
7.1 COOPERATION. The Seller shall cooperate fully with the Company and
the Purchaser for the purpose of attempting to ensure the consummation of the
transactions contemplated hereby.
7.2 CONDITIONS. In addition to its other obligations hereunder, the
Seller shall use his best efforts to cause the conditions set forth in
Section 9 to be satisfied on a timely basis. The Seller shall promptly
inform Purchaser if it believes or has any reason to believe that any of the
conditions set forth in Section 9 might not be satisfied on a timely basis on
or before the Closing Date.
SECTION 8. PRE-CLOSING COVENANT OF PURCHASER
Between the date of this Agreement and the Closing Date: (a)
Purchaser shall use its best efforts to cause the conditions set forth in
Sections 10.1
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and 10.3 to be satisfied on a timely basis, and (b) Purchaser
shall promptly inform the Seller if Purchaser believes or has any reason to
believe that any of the conditions set forth in Section 10 might not be
satisfied on a timely basis on or before the Closing Date.
SECTION 9. CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to consummate the transactions that are
to be consummated at the Closing is subject to the satisfaction, on or before
the Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
9.1 ACQUISITION OF OTHER SHARES. The Purchaser shall have acquired or
shall acquire on the Closing Date 100% of the issued and outstanding capital
stock of the Company, including the shares of Stock subject to this Agreement.
9.2 RESIGNATIONS OF CERTAIN DIRECTORS. Such directors of the Company as
Purchaser shall have specified in writing shall have submitted their
resignations (to be effective as of the Closing) from the Board of Directors
of the Company. The directors of the Company shall have duly appointed
(effective as of the Closing) such other persons as Purchaser shall have
designated to fill the vacancies on the Company's Board of Directors. The
Seller shall be appointed to be a member of the Company's Board of Directors
on the Closing Date.
9.3 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Company set forth in this Agreement, and each of the
representations and warranties of the Seller set forth in this Agreement,
shall have been true and correct in all material respects on the date of this
Agreement, and shall be true and correct in all material respects on the
Closing Date as though such representations and warranties were made as of
the Closing Date. In addition, the Purchaser shall have verified to its
satisfaction that (a) the Company's total revenues for the fiscal year ended
June 30, 1996 were at least $2.5 million, (b) the Company has no long term
debts other than the loans from the Seller and Ralph Flygare which aggregate
approximately $450,000, (c) the Company has no short term debts which are
inconsistent with its earnings and revenues, (d) the Company has good, valid
and unencumbered title to all of the software which it represents to own, (e)
the Company has no pending or threatened litigation or claims against it and
no liabilities other than those disclosed in its financial statements, (f)
the Company has a stable base of customers with a minimum of 80% having no
plans to switch to a new software provider, and (g) that the Company's
software performs as it represents, and to the satisfaction of its customers.
9.4 PERFORMANCE. The Seller shall have tendered to Purchaser all of its
shares of Stock, and the Company and the Seller shall have duly complied with
and performed, in all material respects, all other agreements, covenants and
obligations required by this Agreement to be complied with or performed by
them on or before the Closing Date.
9.5 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
the Company and the Seller relating to the transactions contemplated by this
Agreement, and all instruments and other documents incident to such
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transactions, shall be reasonably satisfactory in form and substance to
Purchaser, and Purchaser shall have received copies of such instruments and
other documents (including certified copies of corporate resolutions and
"good standing" certificates) as it may reasonably request.
9.6 RETENTION OF GENERAL MANAGER. Prior to the Closing Date, Eric
Hoffberg agrees with the Company and the Purchaser to serve as the General
Manager of the Company for at least 12 months after the Closing Date.
9.7 VICE PRESIDENT OF SALES AND MARKETING. Prior to the Closing Date,
Michael Ewing agrees to serve as the Company's Vice-President of Sales and
Marketing for at least 12 months after the Closing Date, reporting to Mr.
Eric Hoffberg.
9.8 FINAL APPROVAL OF BOARD OF DIRECTORS. The Purchaser's Board of
Directors adopts a resolution giving final approval to this Agreement and the
transactions contemplated by this Agreement.
SECTION 10. CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE
The obligations of the Seller to consummate the transactions that
are to be consummated at the Closing are subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of which may be
waived by the Seller in whole or in part):
10.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser set forth in this Agreement shall have been true and correct in
all material respects on the date of this Agreement, and shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made as of the Closing Date.
10.2 PERFORMANCE. Purchaser shall have duly complied with and performed,
in all material respects, all agreements and obligations required by this
Agreement to be complied with or performed by Purchaser on or before the
Closing Date.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings of
Purchaser relating to the transactions contemplated by this Agreement and all
instruments and other documents incident to such transactions, shall be
reasonably satisfactory in form and substance to the Seller, and the Seller
shall have received copies of such instruments and other documents as it may
reasonably request.
SECTION 11. TERMINATION OF AGREEMENT
This Agreement and the transactions contemplated hereby may be
terminated and abandoned at any time before the Closing:
(a) by the unanimous consent of the parties hereto;
(b) by the Seller, if there has been a material breach by Purchaser
of any of the representations, warranties, covenants or
obligations of Purchaser set forth herein;
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(c) by Purchaser, if there has been a material breach by the Company,
or the Seller of any of the representations, warranties,
covenants or obligations of the Company or the Seller set forth
herein; or
(d) if the Closing shall not have taken place by 4:00 p.m. on June 1,
1997 (or such later time or date as the parties hereto may
agree), (i) by Purchaser for any reason, unless the failure of
the Closing to take place by such time is attributable to the
failure of Purchaser to perform its obligations hereunder, or
(ii) by the Seller for any reason, unless the failure of the
Closing to take place by such time is attributable to the failure
of the Seller to perform its obligations hereunder.
SECTION 12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of each party hereto,
(including the representations and warranties of such party set forth in this
Agreement and the representations and warranties of such party set forth in
the instruments and other documents delivered pursuant hereto or in
connection herewith prior to or at the Closing, (i) shall survive, and shall
not be affected by, the Closing (or the termination of this Agreement
pursuant to Section 11), and (ii) shall not be affected by any information
furnished to, or any investigation made by, any other party hereto or any of
such other party's employees, attorneys, accountants or other
representatives. For purposes of this Agreement, each statement or other
item of information in any disclosures by the Seller or the Company to the
Purchaser shall be deemed to be a representation and warranty of the Company
pursuant to this Agreement.
SECTION 13. INDEMNIFICATION
13.1 INDEMNIFICATION BY COMPANY. The Company shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates from and against any damage, cost or loss that is directly or
indirectly suffered or incurred at any time by Purchaser or any of such
directors, officers, shareholders, employees, attorneys, agents or other
affiliates and that arises directly or indirectly out of or by virtue of, or
is directly or indirectly connected with, the breach or inaccuracy of any of
the representations and warranties of the Company or the failure of the
Company to perform any of its covenants or obligations contained in this
Agreement (or in any instrument or other document delivered hereunder or in
connection herewith).
13.2 INDEMNIFICATION BY THE SELLER. The Seller shall hold harmless
and indemnify Purchaser and each of Purchaser's past, present and future
directors, officers, shareholders, employees, attorneys, agents and other
affiliates ("Purchaser's Affiliates") from and against any damage, loss or
cost that is directly or indirectly suffered or incurred at any time by
Purchaser or any of Purchaser's Affiliates and that arises directly or
indirectly out of or by virtue of, or is directly or indirectly connected
with, the breach or inaccuracy of any of the representations and warranties
of the Seller or the failure of the Seller to perform any of his covenants or
obligations contained in this Agreement or in any instrument or other
document delivered hereunder or in connection herewith.
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13.3 RIGHT OF SETOFF. Purchaser and the Company shall have the right to set
off the amount of any damages, loss or cost with respect to which the
Purchaser may be indemnified by the Seller hereunder against the amount of
any obligation of Purchaser or the Company to the Seller or his successors or
assigns.
13.4 INDEMNIFICATION BY PURCHASER. Purchaser shall hold harmless and
indemnify the Seller and each of the past, present and future directors,
officers, shareholders, employees, attorneys, agents and other affiliates of
the Seller from and against any damage, loss, shareholder or derivative suits
or claims as a result of this stock purchase agreement or cost that is
directly or indirectly suffered or incurred at any time by the Seller or any
of such directors, officers, shareholders, employees, attorneys, agents or
other affiliates and that arises directly or indirectly out of or by virtue
of, or is directly or indirectly connected with, the breach or inaccuracy of
any of the representations and warranties of Purchaser or the failure of
Purchaser to perform any of its covenants or obligations contained in this
Agreement or in any instrument or other document delivered hereunder or in
connection herewith.
13.5 NOTICE AND OPPORTUNITY TO DEFEND. If any legal proceeding is
initiated, or any claim or demand is made, against any person with respect to
which such person (the "Indemnified Party") may make a claim against any
party hereto (the "Indemnifying Party") pursuant to this Section 13, then the
Indemnified Party shall give prompt written notice of such legal proceeding,
claim or demand to the Indemnifying Party. The Indemnifying Party shall, at
its own expense and with its own counsel, defend or settle such legal
proceedings, claim or demand; provided, however, that: (i) the Indemnifying
Party shall keep the Indemnified Party informed of all material developments
and events relating to such legal proceeding, claim or demand; (ii) the
Indemnified Party shall have the right to participate, at its own expense, in
the defense of such legal proceeding, claim or demand and shall cooperate as
reasonably requested by the Indemnifying Party in the defense thereof; and
(iii) the Indemnifying Party shall not settle such legal proceeding, claim or
demand without the prior written consent of the Indemnified Party, which
consent shall not be unreasonably withheld.
13.6 INDEMNIFICATION NOT A WAIVER. A person's right to indemnification
pursuant to this Section 13 shall not be deemed to be such person's exclusive
remedy in connection with or arising from the breach or inaccuracy of any of the
representations and warranties of the Indemnifying Party or the failure of the
Indemnifying Party to perform any of its covenants or obligations contained in
this Agreement or in any instrument or other document delivered hereunder or in
connection herewith. The exercise by any person of his right to demand and
receive such indemnification shall not be deemed to prejudice, or to operate as
a waiver of, any remedy to which such person may be entitled at law or equity.
SECTION 14. MISCELLANEOUS
14.1 FURTHER ASSURANCES. Following the Closing, the Seller shall
furnish to Purchaser and the Company such instruments and other documents as
Purchaser may reasonably request for the purpose of carrying out or evidencing
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the transactions contemplated hereby.
14.2 FEES AND EXPENSES. Purchaser and Company shall pay all fees,
costs and expenses that it incurs in connection with the negotiation and
preparation of this Agreement and in carrying out the transactions
contemplated hereby (including, without limitation, all fees and expenses of
its counsel and accountant).
14.3 DEFAULT. In the event that Purchaser is found to be in default
of the Promissory Note described in Sections 1.2 (a), then the Seller has the
right to demand that the remaining payments for all stock be made in full
within 30 days or that all stock not paid for on a pro-rated basis based on
payments actually made be returned to the Seller by the Escrow Agent.
14.4 NOTICES. Each notice or other communication hereunder shall be
in writing and shall be deemed to have been duly given on the earlier of (i)
the date on which such notice or other communication is actually received by
the intended recipient thereof, or (ii) the date five (5) days after the date
such notice or other communication is mailed by registered or certified mail
(postage prepaid) to the intended recipient at the following address (or at
such other address as the intended recipient shall have specified in a written
notice given to the other parties hereto);
IF TO THE SELLER:
Nora Kenner Hoffberg
23308 Bingham Court
Valencia, CA 91354
IF TO THE COMPANY:
California Interactive Computing, Inc.
25572 Avenue Stanford
Valencia, California 91355
Attention: Jerry C. Buckley, President
IF TO PURCHASER:
Incomnet, Inc.
21031 Ventura Boulevard, Suite 1100
Woodland Hills, California 91364
Attention: Melvyn Reznick, President
14.5 PUBLICITY. No press release, notice to any third party or other
publicity concerning the transactions contemplated by this Agreement shall be
issued, given or otherwise disseminated without the prior approval of each of
the parties hereto; provided, however, that such approval shall not be
unreasonably withheld.
14.6 TABLE OF CONTENTS AND HEADINGS. The table of contents of this
Agreement and the underlined headings contained herein are for convenience
only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.
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14.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
14.8 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed in all respects by, the laws of the State of California.
The venue for any legal action under this Agreement shall be in the
appropriate forum in the County of Los Angeles, State of California.
14.9 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective heirs, successors and assigns, if any,
and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns, if any.
14.10 SEVERABILITY. In the event that any provision of this
Agreement, or the application of such provision to any person or set of
circumstances, shall be determined to be invalid, unlawful or unenforceable to
any extent at any time after the Closing Date, the remainder of this
Agreement, and the application of such provision to persons or circumstances
other than those as to which it is determined to be invalid, unlawful or
unenforceable, shall not be affected and shall continue to be enforceable to
the fullest extent permitted by law.
14.11 WAIVER. No failure or delay on the part of any party hereto in
the exercise of any power, right or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude any other or further exercise thereof or of any
other power, right or privilege.
14.12 ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding of the parties hereto and supersedes all prior agreements and
understandings among the parties relating to the subject matter hereof.
14.13 PARTIES IN INTEREST. Except for the provisions of Section 14,
none of the provisions of this Agreement or of any other document relating
hereto is intended to provide any rights or remedies to any person (including,
without limitation, any employees or creditors of the Company) other than the
parties hereto and their respective heirs, successors and assigns, if any.
14.14 VARIATIONS OF PRONOUNS. Whenever required by the context
hereof, the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; and the neuter
gender shall include the masculine and feminine genders.
14.15 "PERSON". The term "person" as used herein shall include any
individual, corporation, general partnership, limited partnership, joint
venture, association, trust, organization, business entity, government (or
political subdivision thereof) or governmental agency.
14.16 APPLICABILITY OF CERTAIN TERMS TO NON-CORPORATE ENTITIES. When
used herein with respect to any non-corporate entity: the terms "shares,"
"stock" and "capital stock" shall be deemed to refer to equity interests of
any nature in such entity; the term "shareholder" shall be deemed to refer to
any holder of any equity interest in such entity; and the terms "director" and
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"officer" shall be deemed to refer to any person who is involved in the
management of such entity or who performs functions for such entity that are
similar to the functions performed by officers or directors of a corporation.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
SELLER: /s/ Nora Kenner Hoffberg
------------------------
Nora Kenner Hoffberg
PURCHASER: INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.1 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND JERRY C. BUCKLEY
$500,000 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of Jerry C. Buckley, an individual ("Payee") at 25572 Avenue
Stanford, Valencia, California 91355, the principal sum of Five Hundred
Thousand Dollars ($500,000), plus total interest of $108,290, commencing to
accrue on April 25, 1998, payable as follows:
-- $5,000 per month for the 12 month period commencing in the thirteenth
month after the Closing Date and ending in the twenty-fourth month after the
Closing Date or until the promissory note is paid in full;
-- $13,563.58 per month for the next 12 months period commencing in the
twenty-fifth month after the Closing Date and ending in the thirty-sixth
month after the Closing Date or until the promissory note is paid in full;
-- $18,556.08 per month for the next 12 months period commencing in the
thirty-seventh month after the Closing Date and ending in the forty-eighth
month after the Closing Date or until the promissory note is paid in full;
-- $13,563.58 per month for the next 12 months period commencing in the
forty-ninth month after the Closing Date and ending in the sixtieth month
after the Closing Date or until the promissory note is paid in full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default by Maker
hereunder:
-- The failure of the Maker to make any payment of principal or
interest required hereunder within 30 days of the due date for
such payment, as it may properly be extended pursuant to the
terms of this Note; or
-- The failure of Maker to fully perform any other material covenants
and agreements under this Note and continuance of such failure for
a period of 30 days after written notice of the default by Payee to
the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
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declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in lawful money
of the United States. Any payment that is more than 10 days late shall be
subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be made or given
to Payee at the address provided to Maker or to such other place as Payee may
from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers and assigns,
waives presentment, dishonor, protest, notice of protest, demand for payment
and dishonor in nonpayment of this Note, bringing of suit or diligence of
taking any action to collect any sums owing hereunder or in proceeding
against any of the rights and properties securing payment hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.2 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND JERRY C. BUCKLEY
$196,011.89 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of Jerry C. Buckley, an individual ("Payee") at 25572 Avenue
Stanford, Valencia, California 91355, the principal sum of One Hundred and
Ninety-Six Thousand and Eleven Dollars and Eighty-Nine Cents ($196,011.89)
and interest of Ten Thousand and Nine Hundred and Eighty-Eight Dollars and
Eleven Cents ($10,988.11) in twenty-four monthly installments as follows:
-- $13,500 per month for the 12 month period commencing in the thirteenth
month after the Closing Date and ending in the twenty-fourth month after the
Closing Date or until the promissory note is paid in full;
-- $3,750 per month for the next 12 months period commencing in the
twenty-fifth month after the Closing Date and ending in the thirty-sixth
month after the Closing Date or until the promissory note is paid in full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default by Maker
hereunder:
-- The failure of the Maker to make any payment of principal or
interest required hereunder within 30 days of the due date
for such payment, as it may properly be extended pursuant
to the terms of this Note; or
-- The failure of Maker to fully perform any other material
covenants and agreements under this Note and continuance
of such failure for a period of 30 days after written notice
of the default by Payee to the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in
lawful money of the United States. Any payment that is more than 10 days late
shall be subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be
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made or given to Payee at the address provided to Maker or to such other
place as Payee may from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers and assigns,
waives presentment, dishonor, protest, notice of protest, demand for payment
and dishonor in nonpayment of this Note, bringing of suit or diligence of
taking any action to collect any sums owing hereunder or in proceeding
against any of the rights and properties securing payment hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.3 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND RALPH FLYGARE
$500,000 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of Ralph Flygare, an individual ("Payee") at 25572 Avenue Stanford,
Valencia, California 91355, the principal sum of Five Hundred Thousand
Dollars ($500,000), plus simple interest at the rate of 8% per annum
commencing to accrue on April 25, 1998, payable in 12 equal monthly
installments of principal and interest of $10,000 commencing on April 25,
1998 and ending on April 18, 1999, and thereafter in 36 equal monthly
installments of principal and interest of $13,563.58 until April 18, 2002
(the "Maturity Date"), when all principal and accrued but unpaid interest is
payable in full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default by Maker
hereunder:
-- The failure of the Maker to make any payment of
principal or interest required hereunder within
30 days of the due date for such payment, as it may
properly be extended pursuant to the terms of this
Note; or
-- The failure of Maker to fully perform any other
material covenants and agreements under this Note
and continuance of such failure for a period of 30
days after written notice of the default by Payee to
the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in
lawful money of the United States. Any payment that is more than 10 days late
shall be subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be made or
given to Payee at the address provided to Maker or to such other place as
Payee may from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers and
assigns, waives presentment, dishonor, protest, notice of protest, demand for
payment and dishonor in nonpayment of this Note, bringing of
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suit or diligence of taking any action to collect any sums owing hereunder or
in proceeding against any of the rights and properties securing payment
hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.4 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND RALPH FLYGARE
$57,516.02 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of Ralph Flygare, an individual ("Payee") at 25572 Avenue Stanford,
Valencia, California 91355, the principal sum of Fifty-Three Thousand and
Seven Hundred and Sixteen Dollars and Two Cents ($57,516.02), plus interest
of 8% per annum, payable in 12 equal monthly installments of $5,003.23
commencing on April 25, 1998 and ending on April 25, 1999 (the "Maturity
Date"), on which date all principal and accrued but unpaid interest is
payable in full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default
by Maker hereunder:
-- The failure of the Maker to make any payment of
principal or interest required hereunder within
30 days of the due date for such payment, as it may
properly be extended pursuant to the terms of this
Note; or
-- The failure of Maker to fully perform any other
material covenants and agreements under this Note
and continuance of such failure for a period of 30
days after written notice of the default by Payee to
the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in lawful money
of the United States. Any payment that is more than 10 days late shall be
subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be made or
given to Payee at the address provided to Maker or to such other place as
Payee may from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers
and assigns, waives presentment, dishonor, protest, notice of protest, demand
for payment and dishonor in nonpayment of this Note, bringing of
suit or diligence of taking any action to collect any sums owing hereunder
or in proceeding against any of the rights and properties securing payment
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hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
----------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.5 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND ROBERT REISBAUM
$27,859 and $434,333 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of Robert Reisbaum, an individual ("Payee"), 2641 Federal Avenue,
Los Angeles, CA 90064, the principal sums of Twenty Seven Thousand and Eight
Hundred and Fifty-Nine Dollars ($27,859) plus simple interest at the rate of
8% per annum and Four Hundred Thousand and Thirty-Four Thousand and Three
Hundred And Thirty-Three Dollars ($434,333), plus simple interest at the rate
of 8% per annum. The principal of $27,859 will commence to accrue immediately
and will be payable payable in 12 consecutive monthly installments of
$2,423.41 commencing 30 days after the Close of this transaction. The
principal of $434,333 will commence to accrue on April 29, 1998, payable in
48 equal monthly installments of principal and interest equal to $$10,603.34
commencing on April 29, 1998 and ending on April 29, 2001 (the "Maturity
Date"), when all principal and accrued but unpaid interest is payable in
full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default by Maker
hereunder:
-- The failure of the Maker to make any payment of
principal or interest required hereunder within
30 days of the due date for such payment, as it may
properly be extended pursuant to the terms of this
Note; or
-- The failure of Maker to fully perform any other
material covenants and agreements under this Note
and continuance of such failure for a period of 30
days after written notice of the default by Payee to
the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in lawful money
of the United States. Any payment that is more than 10 days late shall be
subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be made or given
to Payee at the address provided to Maker or to such other place as Payee may
from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers
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and assigns, waives presentment, dishonor, protest, notice of protest, demand
for payment and dishonor in nonpayment of this Note, bringing of suit or
diligence of taking any action to collect any sums owing hereunder or in
proceeding against any of the rights and properties securing payment
hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
------------------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
-----------------------------
Stephen A. Caswell, Secretary
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EXHIBIT B.6 - PROMISSORY NOTE BETWEEN INCOMNET, INC. AND E. V. SCHMIDT
$211,297 April 25, 1997
Woodland Hills, California
FOR VALUE RECEIVED, Incomnet, Inc., a California corporation (the "Maker") at
21031 Ventura Blvd. #1100, Woodland Hills, CA 91364 hereby promises to pay to
the order of E. V. Schmidt, an individual ("Payee") at 25572 Avenue Stanford,
Valencia, California 91355, the principal sum of Two Hundred and Eleven
Thousand and Two Hundred and Ninety-Seven Dollars ($211,297), plus simple
interest at the rate of 8% per annum commencing to accrue on April 25, 1998,
payable in 48 equal monthly installments of principal and interest equal to
$5,158 commencing on April 25, 1998 and ending on April 25, 2001 (the
"Maturity Date"), when all principal and accrued but unpaid interest is
payable in full.
1. RIGHT OF PREPAYMENT. Maker has the right to prepay all or any
portion of this Note at any time during its term without penalty. Such
prepayments shall be applied first to interest and then to principal.
2. DEFAULT. Any of the following shall constitute a default by Maker
hereunder:
-- The failure of the Maker to make any payment of
principal or interest required hereunder within
30 days of the due date for such payment, as it may
properly be extended pursuant to the terms of this
Note; or
-- The failure of Maker to fully perform any other
material covenants and agreements under this Note
and continuance of such failure for a period of 30
days after written notice of the default by Payee to
the Maker.
Upon the occurrence of a default hereunder, Payee may, at its option, declare
immediately due and payable the entire unpaid principal sum of this Note
together with all accrued and unpaid interest owing at the time of such
declaration pursuant to this Note.
3. PAYMENT & LATE PAYMENT. This Note shall be payable in lawful money
of the United States. Any payment that is more than 10 days late shall be
subject to a late fee of 1.5% of the payment amount.
4. PLACE OF PAYMENT. All payments on this Note are to be made or given
to Payee at the address provided to Maker or to such other place as Payee may
from time to time direct by written notice to Maker.
5. WAIVER. Maker, for itself and its successors, transfers and
assigns, waives presentment, dishonor, protest, notice of protest, demand for
payment and dishonor in nonpayment of this Note, bringing
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of suit or diligence of taking any action to collect any sums owing hereunder
or in proceeding against any of the rights and properties securing payment
hereunder.
6. SEVERABILITY. If any provision of this Note or the application
thereof to any persons or entities or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Note shall not be deemed
affected thereby and every provision of this Note shall be valid and
enforceable to the fullest extent permitted by law.
7. NO PARTNER. Payee shall not become or be deemed to be a partner or
joint venturer with Maker by reason of any provision of this Note. Nothing
herein shall constitute Maker and Payee as partners or joint venturers or
require Payee to participate in or be responsible or liable for any costs,
liabilities, expenses or losses of Maker.
8. NO WAIVER. The failure to exercise any rights herein shall not
constitute a waiver of the right to exercise the same or any other right at
any subsequent time in respect of the same event or any other event.
9. RIGHT OF OFFSET. In the event of any material default by the Payee
under the terms of that certain Stock Purchase Agreement, dated April 29,
1997, by and between the Maker, the Payee and California Interactive
Computing, Inc., the Maker will have the right to offset any damage, loss or
cost suffered or incurred by the Maker as the result of said breach from the
next payments due on this Note.
10. GOVERNING LAW. This Note shall be governed by and construed solely
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, Maker has executed this Note as of the date first
hereinabove written.
INCOMNET, INC.
By: /s/ Melvyn Reznick
-------------------------
Melvyn Reznick, President
Attested By: /s/ Stephen A. Caswell
-----------------------------
Stephen A. Caswell, Secretary
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