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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 29, 1999
Commission file number 0-14039
Nucleus, Inc.
(Name of Small Business Issuer in its charter)
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
NEVADA 11-2714721
(State of incorporation) (I.R.S. Employer Identification No.)
150 N. Michigan Avenue, Suite 3610
Chicago, IL 60601
(Address of principal executive offices) (Zip Code)
Registrant telephone number, including area code: (312) 683-9000
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ITEM 2 -- Acquisition or Disposition of Assets
a) On April 29, 1999, Nucleus, Inc. (the "Company") entered into and closed an
agreement to acquire one-hundred percent of the capital stock of Comp Pro
Computer, Inc. (the "Acquisition"). The Acquisition was effected pursuant to
a Stock Purchase Agreement, by and between the Company and Comp Pro
Computer, Inc. (the "Agreement"). The Company issued a press release on
April 29, 1999 relating to the Acquisition. The Agreement and press release
are each filed as an exhibit to this Current Report on Form 8-K and are
incorporated herein by reference.
The consideration paid by the Company in connection with the Acquisition
consisted of $150,000 in cash, payable over a period of time and the
forgiveness of $75,000 in debt owed to the Company. The purchase price has
been and will continue to be paid from the Company's working capital. The
total consideration for this transaction was determined on the basis of
arms' length negotiations between representatives of Nucleus and Comp Pro
Computer, Inc.
Comp Pro Computer, Inc. is a Chicago-based provider of information
technology services to small and medium sized businesses, including
computers and peripheral equipment, network design, upgrade, and maintenance
services.
b) Not applicable.
ITEM 7 -- Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Businesses Acquired. The financial statements
required to be filed for Comp Pro are not currently available and will be
filed by amendment to this Form 8-K no later than 60 days from the date
this report is required to be filed.
(b) Pro Forma Financial Information. The required pro forma financial
information will be filed at the time the required financial statements for
Comp Pro are filed.
(c) Exhibits. The following exhibits are filed as part of this Current Report
on Form 8-K:
Exhibit No. Description
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2.1 Stock Purchase Agreement, by and between Nucleus, Inc. and
Comp Pro Computer, Inc. dated April 29, 1999.
99.1 Text of Press Release, dated April 29, 1999, issued by the
Company
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Nucleus, Inc.
Date: May 5, 1999
/s/ J. THEODORE HARTLEY
J. Theodore Hartley, Executive Vice President
and Chief Financial Officer
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EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
2.1 Stock Purchase Agreement between Nucleus, Inc. and Comp Pro
Computer, Inc. dated April 29, 1999.
99.1 Text of Press Release, dated April 29, 1999, issued by the
Company
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of this 29th day of April, 1999 by and among Nucleus, Inc., a Nevada
corporation. ("Buyer") and Rafiq Kiswani and Yahya Daoud ("Seller's").
R E C I T I A L S
- - - - - - - - -
WHEREAS, ComPro Computer, Inc. ("ComPro"), an Illinois corporation,
operates a retail computer store and is engaged in the business of computer
sales, services and repairs (the "Business"): and
WHEREAS, the Seller's own all of the issued and outstanding shares of
Common Stock of CompPro; and
WHEREAS, Buyer wishes to purchase and Seller's wish to sell to Buyer, all
of the issued and outstanding shares of CompPro owned by them on the terms and
conditions set forth below:
A G R E E M E N T
- - - - - - - - -
NOW, THEREFORE, for and in consideration of the mutual promises herein
made, and for other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
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1.1 Purchase and Sale. Subject to the terms and conditions of this
Agreement, effective as of 12:01 a.m. Central Daylight Time on April 29, 1999
(the "Closing Date"), Buyer agrees to purchase from Seller's and Seller's agrees
to sell, assign, transfer and deliver to Buyer, All of the issued and
outstanding shares of CompPro, comprising 100% of the total issued and
outstanding shares of stock of CompPro (the "CompPro Stock").
1.2 Acquired Assets. The Business shall include, without limitation, all
of the following assets (the "Assets") of CompPro:
(a) Office furniture and equipment, computers, equipment leases, real
estate leases, and leasehold improvements, including but not limited
to those set forth in Schedule 1.2(a) of the Disclosure Schedules
attached hereto ("Disclosure Schedules").
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(b) Computer software owned or licensed by CompPro, including but not
limited to those set forth in Schedule 1.2(b), along with CompPro's
interest in any other computer software licensed by it from others.
(c) Other agreements, contracts and instruments, including but not limited
to those set forth in Schedule 1.2(c).
(d) All prepayments and deposits, including, without limitation, security
deposits under leases.
(e) The corporate name CompPro Computer, Inc., all assumed names relating
thereto, logos, trademarks, service marks, domain names, trade names,
copyrights, registrations, applications for registration of any of
them, and any other intellectual property rights of CompPro,
including, but not limited to, those listed in Schedule 1.1(e).
(f) Originals of all books and records of CompPro pertaining to the
Assets, including customer lists and credit files, and all those
pertaining to CompPro's employees who are retained by Buyer pursuant
to the Agreement.
(g) All permits, licenses, approvals and other governmental authorizations
relating to the Business including, but not limited to, those listed
in Schedule 1.1 (g).
(h) Any other asset not referred to in Section 1.3 which is used by
CompPro in connection with the Business, including, without
limitation, all telephone and facsimile numbers and e-mail addresses
used by CompPro in connection with the Business.
(i) All goodwill pertaining to the Business.
1.3 Excluded Assets and Excluded Liabilities.
(a) Prior to the Closing Date, Seller's and CompPro shall collect all
receivables or notes, including, without limitation, the receivables
and notes set forth in Schedule 1.3 (a) (collectively, with cash, the
"Excluded Assets").
(b) Prior to the Closing Date, Seller's and CompPro shall pay off all
debts or liabilities, including, without limitation, the debt set
forth in Schedule 1.3 (b) ("Excluded Liabilities").
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1.4 Purchase Price. Buyer shall pay the Seller's, monthly payments for
the Stock, totaling $225,000 (the "Purchase Price"). Payment shall be
made as follows: (i) by the acceptance of $75,000 of debt, (ii) One
payment of $20,000 paid on May 5, 1999 (iii) one payment of $30,000 on
May 28, 1999 plus (iv) two payments of $50,000 paid on June 28, 1999
and July 28, 1999.
1.5 Stock Free of Liens. The Stock to be transferred hereunder shall be
transferred free and clear of all liens, claims, encumbrances,
mortgages, pledges, restrictions or rights of others of every kind and
description.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER'S
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In order to induce Buyer to enter into this Agreement, Seller's represents
and warrants to the Buyer that the statements contained in this Article II are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Article
II).
2.1 Authority Relative to this Agreement. The Seller's has the full power
and authority to execute, deliver and perform this Agreement and any agreement
or document contemplated hereby, and to consummate the transactions contemplated
hereby or thereby. The obligations imposed on Seller's by this Agreement, or by
any agreement or document contemplated hereby, constitute the valid and binding
obligations and agreements of Seller's, enforceable against him in accordance
with their respective terms except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights; and (ii) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
2.2 Compliance of Transaction With Laws and Other Instruments. The
execution, delivery and performance by Seller's of this Agreement and any
agreement or document contemplated hereby, and the performance and consummation
of the transactions contemplated hereby or thereby by Seller's (i) do not
require on behalf of Seller's or CompPro, any approval, consent or waiver of, or
filing with, any governmental agency, court or other authority which has not
been obtained and which is not in full force and effect as of the date hereof;
(ii) will not conflict with or constitute a breach or violation of the charter
or bylaws of CompPro; (iii) will not result in a violation of any law,
regulation, judgment, writ, injunction, order or decree of any court or
governmental or regulatory authority (federal, local or otherwise) to which
CompPro is subject; and (iv) will not require the approval, consent or waiver
of, or filing with any party to,
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violate or conflict with or result in a breach of, or constitute a default or
acceleration of or give rise to a right of termination (or an event which with
notice or lapse of time or both would become a default) under, any provision of
any contract, indenture, mortgage, lease, agreement or other instrument to which
Seller's or CompPro are parties or to which any of their or its assets are
subject.
2.3 Capitalization. The entire authorized capital stock of CompPro
consists of One Hundred (100) shares of common stock, no par value ("Common
Shares"), of which One Hundred (100) Common Shares are issued and outstanding.
All of the issued and outstanding Common Shares have been duly authorized, are
validly issued, fully paid, and nonassessable. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other contracts or commitments that could require
CompPro to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock appreciation,
phantom stock, profit participation, or similar rights with respect to CompPro.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of the capital stock of CompPro. No debt instrument issued
by CompPro has or could have voting rights.
2.4 Stock. Seller's holds of record and owns beneficially One Hundred
(100) Common Shares of CompPro, free and clear of any restrictions on transfer
(other than any restrictions under federal or state securities laws), taxes,
security interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Seller's is not a party to any option, warrant,
purchase right, or other contract or commitment that could require Seller's to
sell, transfer, or otherwise dispose of any capital stock of CompPro (other than
this Agreement). Seller's is not a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock of
CompPro.
2.5 Organization and Qualification. CompPro is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its assets and properties and to conduct the
Business in the manner and in the places where such assets and properties are
owned, leased or operated or the Business is conducted by it. CompPro has no
subsidiaries and does not own, directly or indirectly, any equity interest in
any corporation, partnership, joint venture or other business entity. Seller's
has delivered to the Buyer correct and complete copies of the charter and bylaws
of CompPro (as amended to date). The minute book (containing the records of
meetings of the stockholders, the board of directors, and any committees of the
board of directors), the stock certificate book and the stock record book of
CompPro are correct and complete. CompPro is not in default under or in
violation of any provision of its charter or bylaws.
2.6 Financial and Other Statements. Schedule 2.6 of the Disclosure
Schedules contains true and complete copies of CompPro's Audited Financial
Statments for the years ending
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December 31, 1997 & December 31, 1998 (collectively the "Financial Statements"),
as compiled by an independent public accountant. Except as set forth in Schedule
2.6, the Financial Statements (i) have been prepared in accordance with
generally accepted accounting principles on a consistent basis, and (ii) fairly
present in all material respects the financial position and results of operation
of CompPro as of the indicated dates and for the period indicated therein.
2.7 Title to Properties; Liens; Condition of Properties. CompPro has good
and marketable title to or a valid leasehold in, the properties and assets used
by it, located on its premises, or shown in the Financial Statements or acquired
after the date thereof, which shall exclude the "Excluded CompPro Assets" as
defined in Section 1.3. None of such assets are subject to any mortgage, pledge,
lien, conditional sale agreement, security interest, encumbrance, title defect
or other charge, except for liens for taxes not yet due and payable. Schedule
2.7 of the Disclosure Schedules sets forth the addresses or locations of all
facilities (whether leased or owned) of CompPro.
2.8 No Undisclosed Liabilities. There are no contractual or
non-contractual obligations, debts or liabilities of any nature of CompPro
whether accrued or unaccrued, contingent or absolute, direct or indirect,
recorded or unrecorded, potential or realized (the "Liabilities") as of the date
of the Financial Statements, which are not otherwise disclosed in the Financial
Statements or in the Schedules to this Agreement. CompPro has not incurred any
Liabilities since September 30, 1998, except for those Liabilities incurred in
the ordinary course of business and consistent with past practice and which, in
any event, would not, in the aggregate, have a material adverse effect on the
Business. CompPro is not directly or indirectly (i) liable, by guaranty, surety
or otherwise, upon or with respect to, or (ii) obligated in any way to provide
funds in respect of, or (iii) obligated to guaranty or assume any debt, dividend
or other obligation of any person, corporation, association, partnership or
other entity.
2.9 Tax Matters. CompPro has filed (i) all federal, state, municipal and
local tax returns (whether relating to income, sales, franchise, withholding,
real or personal property, employment or otherwise) ("tax returns") required to
be filed; (ii) all federal, state, municipal and local tax returns (whether
relating to income, sales, franchise, withholding, real or personal property,
employment of otherwise) ("taxes") which are due, pursuant to such returns, or
claimed to be due by any taxing authority, or otherwise due and owing, and any
penalties or other charges due with respect to the late filing of any such
return have been fully paid, and shall be fully paid at the time of closing;
(iii) each such tax return heretofore filed by CompPro correctly and accurately
reflects the amount of its tax liability thereunder; (iv) CompPro is not
currently the beneficiary of any extension of time within which to file any tax
return; (v) no claim has ever been made by an authority in a jurisdiction where
CompPro does not file tax returns that it is or may be subject to taxation by
that jurisdiction; (vi) there are no security interests on any of the assets of
CompPro that arose in connection with any failure (or alleged failure) to pay
any tax; (vii) CompPro has withheld and paid all taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
creditor, independent contractor, or
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other third party and all such taxes shall be withheld or paid by Closing and
all such taxes accrued but not due as of Closing shall be escrowed with Buyer;
(viii) Seller's does not expect any authority to assess any additional taxes for
any period for which tax returns have been filed; and (ix) there is no dispute
or claim concerning any tax liability of CompPro.
2.10 Absence of Certain Changes. Since September 30, 1998, there has not
been:
(a) any material adverse change in the financial condition, properties,
assets, liabilities, personnel or operations of CompPro;
(b) any obligation or liability incurred by CompPro, including the
obligation to perform services normally conducted by the Business, other than
obligations and liabilities incurred in the ordinary course of business;
(c) any purchase, sale or other disposition, or any agreement or other
arrangement for the purchase, sale or other disposition, of any of the services,
properties or assets of the Business, except in the ordinary course of business;
(d) any damage, destruction or loss, whether or not covered by insurance,
affecting the Business;
(e) any loss or threatened loss of any permit, license, qualification or
certificate of authority held or enjoyed by CompPro which loss has had, or could
in the future have, a material adverse effect on the business, properties,
financial condition or results of operation of the Business or Buyer's free and
unencumbered ownership and use of any of the assets or properties of the
Business, whether owned or leased, and whether or not carried or reflected on
the books and records of CompPro;
(f) any pending or threatened labor disputes or strikes, labor union
organizational activity, claim or threatened claim of unfair labor practices, or
any material adverse change in relations with CompPro's employees generally;
(g) any action taken by CompPro outside of the ordinary course of
business;
(h) any written notice of termination of, or default under, any contract;
(i) any loan or advance to or any investment in any person, firm or
corporation, except for normal business advances to employees consistent with
past practice;
(j) any increase in the compensation payable or to become payable to any
of CompPro's officers or employees (other than nonmaterial increases in the
ordinary course of business) and there has been no establishment, adoption,
entering into, or making of any new
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grants or awards under, acceleration of payment or vesting, or any creation of
any obligation to grant any awards under, or any amendment to any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option or other
equity, pension, retirement, incentive or deferred compensation, employment,
retention, termination, severance, health, life or other welfare, fringe,
Employee Benefit Plan (as defined in this Section 2.14), or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any current or
former directors, officers or employees, or any granting or paying of any
benefit not required by any existing CompPro Benefit Plan (as defined in this
Section 2.14) or other existing plan or arrangement;
(k) any commitment for any addition to property, plant or equipment not in
the ordinary course of business by CompPro;
(l) any payment, loan or advance of any amount to, or sale, transfer or
lease of assets to, or any agreements or arrangements with, any of CompPro's
officers, directors or "affiliates," as such term is defined in the rules and
regulations of the Securities and Exchange Commission ("Affiliate");
(m) any charitable or other capital contribution of CompPro;
(n) any declaration, set aside or payment of any dividend, any
distribution with respect to its capital stock, or any redemption, repurchase,
or other acquisition of any of its capital stock;
(o) any failure to pay current liabilities, including accounts payable and
accrued expenses in the ordinary course of business and otherwise in accordance
with their terms; or
(p) any agreement or understanding by CompPro to do any of the foregoing.
2.11 Patents, Trademarks, Trade Names and Similar Rights. CompPro does
not own any trademarks, logos, service marks, trade names, copyrights or other
similar proprietary rights ("Intangibles") used in the Business, and, to the
Seller's's knowledge, has no obligation to any third party with respect thereto.
2.12 Trade Secrets and Customer Lists. CompPro has the right to use,
without liability to others, all trade secrets and customer lists, if any,
required and used in the Business within the last five years and has not
disclosed, sold, licensed, sublicensed or otherwise granted to any third party
the right to use such trade secrets and information. CompPro is not using or in
any way making use of any confidential information or trade secrets of any third
party, including, without limitation, a former employer of any present or past
employee of CompPro.
2.13 [Intentionally Deleted.]
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2.14 Employee Agreements and Plans.
(a) Except as set forth in Schedule 2.14 of the Disclosure Schedules,
neither CompPro, nor any ERISA Affiliate presently maintains, contributes to or
has maintained, contributed to, or had (or may have) any liability under any
Employee Benefit Plan with respect to its employees, former employees, or
independent contractors. For purposes of this Section 2.14 and the Agreement:
(i) "CompPro Benefit Plans" means the plans, programs and arrangements
set forth in Schedule 2.14 of the Disclosure Schedules.
(ii) "Employee Benefit Plan" means (a) any bonus, incentive compensation,
profit sharing, retirement, pension, group insurance, death benefit,
group health, medical expense reimbursement, dependent care, legal
services, flexible benefits or cafeteria, stock option, stock
purchase, stock appreciation rights, phantom stock, savings, deferred
compensation, consulting, severance pay or termination pay, vacation
pay, leave of absence, layoff, life insurance, accident, disability,
workers' compensation, welfare or other employee benefit or fringe
benefit plan, program, arrangement practice or policy which is an
"employee pension benefit plan" as such term is defined in Section
3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or an "employee welfare benefit plan" as defined in
Section 3(1) of ERISA, whether written or unwritten; and
(iii) "ERISA Affiliate" means each person (as defined in Section 3(9) of
ERISA) that, together with CompPro (or any person whose liabilities
CompPro has assumed or is otherwise subject to, whether directly or
indirectly, including as a result of indemnification) would be or has
been treated as a single employer under Section 4001(b) of ERISA or
Section 414 of the Internal Revenue Code of 1986, as amended
("Code").
Except with respect to CompPro Benefit Plans, CompPro does not have
(nor may have) any liability under any Employee Benefit Plan which an
ERISA Affiliate presently maintains, contributes to or has (or may
have) liability under.
(b) With respect to all employees and former employees of CompPro,
neither CompPro nor any ERISA Affiliate presently maintains,
contributes to or has or may have any liability under any funded or
unfunded medical, health or life insurance plan or arrangement or
other employee welfare benefit plan as defined in Section 3(1) of
ERISA for present or future retirees or present or future terminated
employees, except as required by the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA") or state
continuation coverage laws.
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(c) Favorable determination letters have been received by both CompPro
and any master or prototype plan sponsor from the Internal Revenue
Service with respect to each CompPro Benefit Plan which is intended
to comply with the provisions of Section 401(a) of the Code,
evidencing compliance with the relevant provisions of the Tax Equity
and Fiscal Responsibility Act of 1982, the Tax Reform Act of 1984,
the Retirement Equity Act of 1984, the Tax Reform Act of 1986 and
other applicable laws and governmental regulations for which
amendment is required by the Closing. Each such CompPro Benefit Plan
complies in form and in operation with the requirements of the Code
and meets the requirements of a "qualified plan" under Section 401(a)
of the Code and each related trust is exempt from federal income tax
under Code Section 501(a). No event has occurred or circumstance
exists that will or could give rise to disqualification or loss of
tax-exempt status of any such CompPro Benefit Plan or trust.
(d) CompPro, the ERISA Affiliates and all of their respective directors,
officers, employees and any other "fiduciary" (as such term is
defined in Section 3(21) of ERISA) have complied with and performed
all of their contractual obligations and all obligations under the
Code, ERISA and all applicable federal, state and local laws, rules
and regulations (domestic and foreign) required to be performed by
them under or with respect to all of the CompPro Benefit Plans and
any related agreements and there has been no "prohibited transaction"
as defined by Section 4975 of the Code or Section 406 of ERISA with
respect to any CompPro Benefit Plan. Any bonding required by ERISA
with respect to the CompPro Benefit Plans has been obtained and is in
full force and effect.
(e) No CompPro Benefit Plan has any unfunded liability and all accruals
with respect to the CompPro Benefit Plans have been made. No CompPro
Benefit Plan is subject to Section 412 of the Code, Section 302 of
ERISA or Title IV of ERISA. All applicable contributions and premium
payments for all periods ending prior to the Closing (including
periods from the first day of the then current plan year to the
Closing) shall be made prior to the Closing Date in accordance with
past practice. No event has occurred or circumstance exists that
could result in a material increase in premium costs of the CompPro
Benefit Plans that are insured or a material increase in the benefit
costs of such CompPro Benefit Plans that are self-insured.
(f) Neither CompPro nor any ERISA Affiliate maintains, contributes to or
has or may have any liability (including current or potential
withdrawal liability) with respect to any "multi-employer plan" as
such term is defined in Section 3(37) or 4001(a)(3) of ERISA.
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(g) Neither CompPro nor any ERISA Affiliate has maintained an "employee
pension benefit plan", as such term is defined in Section 3(2) of
ERISA, that has been the subject of a "reportable event", as such
term is defined in Section 4043 of ERISA, as to which notices would
be required to be filed with the Pension Benefit Guaranty Corporation
("PBGC"), or any event requiring disclosure under Section 4063(a) of
ERISA. Neither CompPro nor any ERISA Affiliate has incurred any
outstanding liability under Section 4062 of ERISA to the PBGC or
engaged in any transaction described in Section 4069 of ERISA and all
premiums or other amounts due and payable to the PBGC have been paid.
Neither CompPro nor any ERISA Affiliate has terminated any employee
pension benefit plan subject to Title IV of ERISA and no proceeding
by the PBGC to terminated any employee pension benefit plan pursuant
to Title IV of ERISA has ever been instituted or threatened, no
notice of any such termination has been received and no condition
exists which presents a material risk of termination of a CompPro
Benefit Plan.
(h) There is no pending, threatened or anticipated legal action,
proceeding, investigation, dispute, grievance, charge, complaint,
restraining or injunctive order or claim against or involving any
CompPro Benefit Plan maintained by CompPro or any ERISA Affiliate
(other than routine claims for benefits) or the assets of any such
CompPro Benefit Plan and to the best of Seller's knowledge and
belief there is no basis for or any facts which could give rise to
any such legal action, proceeding, investigation, dispute, grievance,
charge, complaint, restraining or injunctive order or claim. No
CompPro Benefit Plan is presently under audit or examination (nor has
notice been received of a potential audit) by the Internal Revenue
Service, Department of Labor or the PBGC, nor are there any matters
pending with respect to any CompPro Benefit Plan with the Internal
Revenue Service under its Voluntary Compliance Resolution program,
its Closing Agreement Program or similar programs.
(i) There has been no act or acts which would result in a disallowance of
a deduction or the imposition of a tax pursuant to Code Section 4980B
or any predecessor provision of the Code, or any related regulations.
No event has occurred with respect to which CompPro or any of its
affiliates could be liable for a tax imposed by any of Code Sections
4972, 4976, 4977, 4979 or 4980, or for a civil penalty under Section
502(c) of ERISA.
(j) With respect to each of the CompPro Benefit Plans, to the extent
applicable, CompPro has delivered to Buyer true and complete copies
of: (i) the plan documents (or, if there is none, a written summary
of the plan's terms and conditions), including any amendments,
related trust agreements, insurance contracts and other funding
arrangements; (ii) the most recent determination
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letters received by CompPro and any master and prototype plan sponsor
from the Internal Revenue Service; (iii) the three most recent IRS
Form 5500 annual reports, including all schedules and attachments
thereto; (iv) the three most recent actuarial valuations; (v) the
most recent financial statement; (vi) all correspondence with the
Internal Revenue Service, the Department of Labor and the PBGC with
respect to the past three plan years, other than IRS Form 5500
filings and PBGC premium payments; and (vii) the most recent summary
plan description and any summaries of material modifications not
reflected therein (or other summaries and descriptions furnished to
participants and beneficiaries, if a summary plan description is not
required). Each CompPro Benefit Plan can be unilaterally amended,
terminated or otherwise discontinued, in whole or part, by CompPro at
any time without liability to CompPro. Neither CompPro nor any ERISA
Affiliate has any formal plan or commitment, or has communicated to
any current or former employee any intention, whether legally binding
or not, to increase any benefits or create new benefits under any
CompPro Benefit Plan or to create any additional Employee Benefit
Plan. Neither CompPro nor any ERISA Affiliate maintains or
contributes to a trust, organization or association described in any
of Sections 501(c)(9), 501 (c)(17) or 501 (c)(20) of the Code.
(k) Neither CompPro nor any of its affiliates is a party to any
employment agreement, whether written or oral, or agreement with
change in control or similar provisions, or collective bargaining
agreement or contract with any labor union relating to any employees
or former employees of CompPro. The execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement will not entitle any individual to
severance pay or accelerate the time of payment or vesting, or
increase the amount of any compensation or benefits due to any
individual nor result in the imposition of any federal excise tax
with respect to any CIS Benefit Plan. All contributions and payments
made or accrued with respect to all CompPro Benefit Plans are
deductible currently under Code Section 162 or 404 and no amount
payable to an employee or former employee of CompPro will be an
"excess parachute payment" which is non-deductible or subject to tax
under Section 280G or 4999 of the Code. CompPro nor any of its
affiliates has currently outstanding any loan or loans to any current
or former employees of CompPro, nor have CompPro or any of its
affiliates guaranteed such loans.
(l) Schedule 2.14 of the Disclosure Schedules sets forth, as of the date
of this Agreement, with respect to each employee employed by CompPro,
his or her name, position, salary or hourly wage, his or her date of
employment and any applicable significant employee benefits or
entitlement not available generally to CompPro's employees.
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(m) CompPro has complied in all respects with all applicable laws
relating to the employment of labor or consultants or independent
contractors in connection with the operation of the Business,
including, without limitation, those relating to wages, hours,
collective bargaining, unemployment insurance, workers' compensation,
immigration and naturalization, equal employment opportunity and the
payment and withholding of taxes.
(n) CompPro is not a party to any contract with any labor organization,
nor has it agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining
unit been certified as representing any of its employees. CompPro has
not experienced any strikes, work stoppages, significant grievance
proceedings or claims of unfair labor practices filed or, to
CompPro's or Seller's knowledge, threatened to be filed with respect
to the operation of the Business.
2.15 Litigation, Proceedings, Etc. Except for matters described in
Schedule 2.15 of the Disclosure Schedules, (i) there is no pending claim,
action, litigation, suit or proceeding against, or investigation of CompPro;
(ii) CompPro has not received any notice of any claim, action, litigation, suit
or proceeding against it or investigation of it, and no such claim, action,
suit, proceeding or investigation is pending or, to Seller's knowledge
threatened against CompPro, and there are no facts existing which would be a
proper basis for any such claim; and (iii) there are no outstanding court,
arbitration or agency orders, decrees or stipulations to which CompPro is a
party or which are directed to CompPro.
2.16 Compliance With Law and Other Instruments: Permits. CompPro is not
(and has not been for the past twelve months) in violation of, or default under:
(i) any term or provision of its charter or by-laws; (ii) any term or provision
of any financial covenant or any indenture, mortgage, contract, commitment or
other agreement or instrument to which it is a party, or by which it or any of
its properties or business is or may be bound or affected, or (iii) any
applicable law (including, without limitation, the Fair Labor Standards Act and
all other federal and state wage and hour laws), any and all Federal immigration
laws, regulations and promulgations, rule, regulation, judgment, order or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over it or any of its properties or business, or CompPro's employees,
consultants or independent contractors. CompPro owns, possesses, or has obtained
licenses, permits, certifications, registrations, approvals or consents and
other authorizations necessary to own or lease, as the case may be, its business
or operations as presently conducted and all such governmental and other
licenses, permits, certifications, registrations, approvals, consents and other
authorizations are in good standing, and there are no proceedings pending or, to
the best knowledge of CompPro's officers and directors, threatened, or any basis
therefor existing, seeking to cancel, terminate or limit such licenses, permits,
certifications, registrations, approvals, or consents or authorizations, or
related to the breach or failure to comply with any law, rule, regulation,
judgment or decree.
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2.17 Transactions with Affiliates. Except as set forth in Schedule 2.17 of
the Disclosure Schedules, there is no lease, sublease, indebtedness, contract,
agreement, commitment, understanding or other arrangement of any kind whatsoever
entered into by CompPro with Seller's, officers or directors or any Affiliate of
any of them. At Closing, CompPro shall cancel all arrangements with any
Affiliate.
2.18 Insurance. Set forth in Schedule 2.18 of the Disclosure Schedules is
a list of insurance in force with respect to the Business, which list is true,
complete and accurate in all material respects. CompPro has paid all premiums
due under such policies and, to its knowledge, such policies are each
outstanding and in full force and effect on the date hereof. No insurance
carrier has refused any application for insurance by CompPro.
2.19 Books and Records. All books and records pertaining to the Business
have been, or prior to the Closing shall have been, made available for review by
Buyer and its representatives and are correct and complete in all material
respects, have been maintained in accordance with good business practice and
fairly reflect the basis for the financial condition and results of operations
of CompPro set forth in the Financial Statements.
2.20 Powers of Attorney; Bank Accounts. There are no outstanding powers of
attorney executed on behalf of CompPro. Set forth in Schedule 2.20 of the
Disclosure Schedules is an accurate and complete list of the name and address of
each bank or other institution where CompPro has an account or safe deposit box,
the number of such account, and the names of all persons authorized to draw
thereon or have access thereto.
2.21 Broker's Fees. CompPro has no obligation or liability to pay any fees
or commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
2.22 Miscellaneous. All compensation payments including vacation, per
diem, holiday and sickness payments, required to be paid to CompPro's personnel
for any period prior to the Closing, will be paid in full at the time of
Closing. Except as is necessary to close the Business and pay off obligations,
Seller's agree not to use the name CompPro Computer, Inc., or any similar name
for any purpose.
2.23 Year 2000. To the knowledge of the Seller's, all software sold,
owned or licensed by CompPro is Year 2000-Compliant. For purpose of this
Agreement, Year 2000-Compliant shall mean:
a) The software includes year 2000 date conversion capabilities,
including without limitation date and century recognition; and
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b) The software includes calculations that accommodate same century/
multi-century formulas and date values; and
c) The software will correct sort ordering and date data interface
values that reflect the century and will automatically compensate for
and manage and manipulate data involving dates, including single-
century formulas and multi-century formulas, and not cause any
abnormal event or abort within the application or result in the
generation of incorrect values or invalid outputs involving such
dates.
2.24 Disclosure. The statements contained in this Agreement, and in all
written documents or Schedules attached hereto prepared and delivered by or on
behalf of CompPro or Seller's pursuant to the terms hereof are true and correct
in all material respects, and such statements, documents or Schedules do not
omit any material fact required by the terms hereof or thereof to be stated
herein or therein or necessary to make the statements contained herein or
therein not misleading. There is no fact known to Seller's or CompPro which
would have a material adverse effect on the Business, other than those which
have been set forth in this Agreement or in the Disclosure Schedules attached
hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
In order to induce Seller's to enter into this Agreement, the Buyer
represents and warrants to the Seller's that the statements contained in this
Article III are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement through
this Article III).
3.1 Authority Relative to this Agreement. The Buyer has the full corporate
power and authority, and has taken all necessary and proper action, corporate
and otherwise, to execute, deliver and perform this Agreement and any other
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby or thereby. All action on the part of Buyer necessary for
the authorization, execution, delivery and performance of this Agreement and any
other agreement or document contemplated hereby, and the consummation of the
transactions contemplated hereby or thereby, has been taken. The obligations
imposed on Buyer by this Agreement, or by any agreement or document contemplated
hereby, constitute the valid and binding obligations and agreements of Buyer,
enforceable against it in accordance with their respective terms, except that
(i) such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights; and (ii) the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to equitable defenses and to
the discretion of the court before which any
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proceeding therefor may be brought.
3.2 Compliance of Transaction With Laws and Other Instruments. The
execution, delivery and performance by Buyer of this Agreement and any agreement
or document contemplated hereby, and the performance and consummation of the
transactions contemplated hereby or thereby by Buyer (i) do not require on
behalf of Buyer any approval, consent or waiver of, or filing with, any
governmental agency, court or other authority which has not been obtained and
which is not in full force and effect as of the date hereof; (ii) will not
result in a violation of any law, regulation, judgment, writ, injunction, order
or decree of any court or governmental or regulatory authority (federal, local
or otherwise) to which Buyer is subject; (iii) will not conflict with or
constitute a breach or violation of the charter or bylaws of Buyer; and (iv)
will not require the approval, consent or waiver of, or filing with any party
to, violate or conflict with or result in a breach of, or constitute a default
or acceleration of or give rise to a right of termination (or an event which
with notice or lapse of time or both would become a default) under, any
provision of any contract, indenture, mortgage, lease, agreement or other
instrument to which Buyer is a party or to which any of its assets are subject.
3.3 Organization and Qualification. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation.
3.4 Consents. Buyer is not subject to any law, ordinance, regulation,
rule, order, judgment, injunction, decree, contract, commitment, lease,
agreement, instrument or other restriction of any kind, which by its provisions
would prevent the consummation of this Agreement or any of the transactions
contemplated hereby, without the consent, filing with or notification of any
third party which has not already been obtained or made or will not be obtained
prior to the Closing.
3.5 Broker's Fees. Buyer has no liability or obligation to pay any fees or
commissions to any broker, investment bankers, finder or agent with respect to
the transactions contemplated by this Agreement.
3.6 Status of Stock. Buyer is purchasing the Stock for its own account,
for investment purposes only, and not with a view to or for sale in connection
with any distribution of such Stock.
ARTICLE IV
BUYER'S CONDITIONS TO CLOSING
-----------------------------
The obligations of Buyer to purchase the Stock and to consummate the
transactions contemplated hereby, are subject to the fulfillment in all respects
on or prior to the Closing Date
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of each of the following conditions:
4.1 Representations and Warranties. The representations and warranties
made by Seller's in Article II hereof shall be true and correct when made, and
shall be true and correct in all material respects on the Closing Date with the
same force and effect as if they had been made on and as of the Closing Date,
except for changes permitted or contemplated by this Agreement and except that
representations which are specifically made as of a specified date shall be true
and correct as of such earlier date.
4.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by Seller's on or prior to the
Closing Date shall have been performed or complied with in all material
respects.
4.3 Closing Deliveries. Buyer shall have received all documents and
instruments required pursuant to Section 7.2 hereof.
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4.4 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority shall be pending against Seller's,
CompPro, or Buyer which seeks to impose substantial damages in connection with,
or to restrain or invalidate the transactions contemplated by, this Agreement,
and no preliminary or permanent injunction or order that would prohibit or
restrain such transactions shall be in effect.
4.5 Absence of Certain Changes. There shall not have occurred prior to the
Closing Date (a) any material adverse change in the Business, or any event or
condition which, with the passage of time or the filing of notice, may cause or
create any such adverse change, or (b) the legal inability of Seller's to
convey, assign and transfer to Buyer the Stock.
4.6 Further Assurances. All actions to be taken by the Seller's in
connection with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and substance to
the Buyer. The Buyer may waive any condition specified in this Article IV if it
executes a writing so stating at or prior to the Closing Date.
4.7 Miscellaneous. (a) Kiswani shall have executed and delivered to Buyer
the employment agreement attached hereto, (b) Seller's shall have delivered to
Buyer, from or with respect to the State of Illinois, a good standing
certificate, a broad form general liability certificate, a letter of clearance
from the Illinois Department of Employment Security, a workman's compensation
certificate, and a tax clearance certificate, and (c) Buyer shall have received
the Articles of Incorporation and the By-Laws of CompPro as amended to the date
hereof, and a certification by an officer of CompPro that same are true and
complete copies of such documents as in effect at the time of certification.
4.8 Excluded Liabilities. Seller's shall have provided Buyer with evidence
of payment or satisfaction of all Excluded Liabilities.
4.9 Excluded Assets. Seller's shall have provided Buyer with evidence of
transfer of all Excluded Assets out of CompPro.
ARTICLE V
SELLER'S CONDITIONS TO CLOSING
------------------------------
The obligations of Seller's to sell the Stock and the obligation of
Seller's to consummate the transactions contemplated hereby are subject to the
fulfillment in all respects on or prior to the Closing of each of the following
conditions:
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5.1 Representations and Warranties. The representations and warranties
made by Buyer in Article III hereof shall be true and correct when made, and
shall be true and correct in all respects on the Closing with the same force and
effect as if they had been made on and as of the Closing, except for changes
permitted or contemplated by this Agreement and except that representations
which are specifically made as of a specified date shall be true and correct as
of such earlier date.
5.2 Performance. All covenants, agreements and conditions contained in
this Agreement to be performed or complied with by Buyer on or prior to the
Closing shall have been performed or complied with in all respects.
5.3 Closing Deliveries. Seller's shall have received all documents and
instruments required pursuant to Section 7.2 hereof.
5.4 Absence of Litigation. No action, suit or proceeding before any court
or any governmental body or authority shall be pending against Seller's,
CompPro, or Buyer which seeks to impose substantial damages in connection with,
or to restrain or invalidate the transactions contemplated by this Agreement and
no preliminary or permanent injunction or order that would prohibit or restrain
such transactions shall be in effect.
ARTICLE VI
FURTHER AGREEMENTS
------------------
6.1 Expenses. Seller's shall pay his costs incurred in connection with the
preparation, negotiation, execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby including, without
limitation, the fees of the attorneys and accountants of Seller's. Buyer shall
pay its costs incurred in connection with the preparation, negotiation,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby including, without limitation, the fees of its
attorneys and accountants.
6.2 Press Releases. Buyer may prepare and issue press releases regarding
this transaction, but will provide advance notice to Seller's thereof.
6.3 Survival of Representations. The representations and warranties
contained herein are and will be deemed and construed to be continuing
representations and warranties and will survive the Closing and continue in full
force and effect thereafter.
6.4 Indemnification.
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(a) From and after the Closing Date, Seller's shall, defend,
indemnify and hold harmless Buyer from and against any and all claims, actions,
causes of action, lawsuits, actual losses, costs, actual damages, actual
liabilities and expenses, including reasonable attorneys' fees and expenses
(collectively, "Damages"), incurred by Buyer that arise out of:
(i) a breach of the representations, warranties, covenants and
agreements given or made by Seller's in this Agreement, any of the Disclosure
Schedules or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Seller's in connection herewith;
(ii) all matters arising out of or in connection with the
operation of the Business before the Closing including, without limitation, all
sales, services and repairs provided by the Business prior to the Closing Date;
(iii) all Excluded CompPro Liabilities and Excluded CompPro
Assets; and
(iv) any claim, action, suit or proceeding asserted or instituted
on the basis of any matter described in clauses (i), (ii), or (iii) of this
paragraph (a) of Section 6.4.
(b) From and after the Closing Date, Buyer shall defend, indemnify and
hold harmless Seller's from and against any and all Damages incurred by Seller's
arising out of (i) a breach of the representations, warranties, covenants and
agreements given or made by Buyer in this Agreement, any of the Disclosure
Schedules, or under or pursuant to any document, certificate, schedule or
instrument delivered by or on behalf of Buyer in connection herewith; (ii) all
matters arising solely out of or solely in connection with the operation of the
Business after the Closing, and (iii) any claim, action, suit or proceeding
asserted or instituted on the basis of any matter described in clauses (i) or
(ii) of this Section 6.4(b).
6.5 Procedures; Third Party Claims. If a claim to which the
indemnification provisions of Section 6.4 apply, arises out of any suit, claim
or other assertion of liability by a third party (hereinafter collectively, the
"Claims" and individually, a "Claim"), the indemnified party agrees to give
written notice within a reasonable time to the indemnifying party of the
existence of such Claim, it being understood that the failure to give such
notice shall not affect the indemnified party's right to indemnification and the
indemnifying party's obligation to indemnify as set forth in this Agreement,
unless the indemnifying party's ability to contest, defend or settle with
respect to such Claim is thereby demonstrated and materially prejudiced.
The obligations and liabilities of the parties hereto with respect to their
respective indemnities pursuant to Section 6.4 resulting from any Claim, shall
be subject to the following
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additional terms and conditions:
(a) The indemnifying party shall have the right to undertake, by
counsel or other representatives of its own choosing, the defense or opposition
to such Claim, subject to the right of approval by indemnified party, which
right shall not be unreasonably withheld.
(b) In the event that the indemnifying party shall elect not to
undertake such defense or opposition, or within 30 days after notice of any such
Claim from the indemnified party shall fail to defend or oppose, the indemnified
party (upon further written notice to the indemnifying party) shall have the
right to undertake the defense, opposition, compromise or settlement of such
Claim, by counsel or other representatives of its own choosing, on behalf of and
for the account and risk of the indemnifying party (subject to the right of the
indemnifying party to assume the defense of or opposition to such Claim at any
time prior to settlement, compromise or final determination thereof).
(c) Anything in this Section 6.5 to the contrary notwithstanding, (i)
if there is a reasonable probability that a Claim may adversely affect the
indemnified party, (x) the indemnified party shall have the right, at its own
cost and expense, either through its own counsel or through counsel of the
indemnifying party, to participate in the defense, opposition, compromise or
settlement of the Claim, and (y) if the indemnified party elects to participate
in the defense through counsel of the indemnifying party, each party shall bear
its share of all legal costs and expenses incurred by counsel for the
indemnifying party in the proportion by which its share of the total Claim bears
to the total Claim, (ii) the indemnifying party shall not, without the
indemnified party's written consent, settle or compromise any Claim or consent
to entry of any judgment which does not include as an unconditional term thereof
the giving by the claimant or the plaintiff to the indemnified party of a
release from all liability in respect of such Claim, and (iii) in the event that
the indemnifying party undertakes defense of or opposition to any Claim, the
indemnified party, by counsel or other representative of its own choosing and at
its sole cost and expense, shall have the right to consult with the indemnifying
party and its counsel or other representatives concerning such Claim and the
indemnifying party and the indemnified party and their respective counsel or
other representatives shall cooperate in good faith with respect to such Claim.
(d) No undertaking of defense or opposition to a Claim shall be
construed as an acknowledgment by such party that it is liable to the party
claiming indemnification with respect to the Claim at issue or other similar
Claims.
6.6 [Intentionally Deleted.]
6.7 Conduct of Business Pending Closing.
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(a) Except as set forth in the Disclosure Schedules, during the
period from the date of this Agreement to the date of Closing (the "Closing
Date"), CompPro shall conduct the Business according to its ordinary and usual
course of business, consistent with past practice. Without limiting the
generality of the foregoing, prior to the Closing Date, CompPro will not,
without the prior written consent of Buyer, engage in any of the following
transactions:
(i) enter into any new employment agreement with officers,
directors or employees;
(ii) grant any increase in the compensation payable or to become
payable to the Seller's or any other officers or employees or establish, adopt,
enter into, or make any new grants or awards under, accelerate payment or
vesting, become obligated to grant any awards under, or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock option or other
equity, pension, retirement, incentive or deferred compensation, employment,
retention, termination, severance, health, life or other welfare, fringe,
Employee Benefit Plan, or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any current or former directors, officers or
employees, or grant or pay any benefit not required by an existing Employee
Benefit Plan or other plan or arrangement.
(iii) make a commitment for any significant investment of a
capital nature;
(iv) enter into any waiver, release or relinquishment of any
contract rights, except, in each case, in the ordinary course of business and
consistent with past practice;
(v) enter into any new leases for property except in the ordinary
course of business;
(vi) acquire the assets of any business or any corporation,
partnership or other business organization or otherwise acquire any assets which
are material in the aggregate to the Business;
(vii) sell, lease or otherwise dispose of any Asset except in the
ordinary course of business consistent with past practice;
(viii) create, assume or incur any encumbrance on any of the
Assets;
(ix) amend, terminate or waive any right of substantial value
relating to the Business;
(x) fail to pay current liabilities, including accounts payable
and
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accrued expenses, in the ordinary course of business and otherwise in accordance
with their terms;
(xi) collect any accounts receivable outside of the ordinary
course and in advance of their due dates;
(xii) take or perform any action which would or might cause any
representation or warranty made by Seller's herein to be rendered inaccurate, in
whole or in part, and/or which would prevent, inhibit or preclude the
satisfaction, in whole or in part, of any covenant required to be performed or
satisfied by Seller's at or prior to the Closing and/or the implementation of
the within transaction;
(xiii) agree in writing or otherwise take any of the foregoing
actions or any action which would make any representation or warranty in this
Agreement to be untrue or incorrect; or
(xiv) otherwise engage in any practice, take any action, or enter
into any transaction of the sort described in Section 2.10 above.
(b) During the period from the date of this Agreement to the Closing
Date, Seller's will:
(i) take and perform any and all actions necessary to render
accurate and/or maintain the accuracy of, all of the representations and
warranties of Seller's and CompPro herein contained and satisfy each covenant or
condition required to be performed or satisfied by Seller's prior to the Closing
and/or cause or permit the implementation of the within transaction;
(ii) carry on and maintain the Business in substantially the same
form, style and manner as operated by Seller's prior to this Agreement and use
their best efforts to preserve CompPro's business organization and its
relationships with its customers, all employees and others having business
relations with CompPro, and not voluntarily engage in any transaction not in the
ordinary course of business without the prior consent of Buyer;
(iii) use his best efforts in good faith to cause those of
CompPro's employees selected by Buyer to continue employment with CompPro
following the Closing Date; and
(iv) give prompt written notice to Buyer of any material
development affecting CompPro's, clients, liabilities, business, financial
condition, operations, results of operations, or future prospects; and give
prompt written notice to Buyer of any material
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development affecting Seller's ability to consummate the transactions
contemplated by this Agreement. No disclosure, pursuant to this paragraph "6.7
(b)(iv)", however, shall cure any misrepresentation, breach of warranty, or
breach of covenant.
6.8 Continued Disclosure. If any event or state of facts occurs or arises
between the earlier of the date hereof (or the date as of which disclosure has
been made with respect to such type of event or state of facts) and the Closing
Date that, had it occurred or arisen prior to or on such date, would have been
required by the terms hereof to be disclosed herein, Seller's shall give notice
thereof in writing to Buyer within five days of the happening of such event or
state of facts. The giving of such notice and the disclosure of such event or
state of facts shall in no way change the conditions precedent to the
obligations of Buyer as set forth in Article IV.
6.9 Full Access. Seller's will permit representatives of the Buyer to have
full access to all premises, properties, personnel, books, records, contracts
and documents of or pertaining to CompPro.
6.10 Exclusivity. CompPro will not and Seller's will not cause or permit
CompPro to: (i) solicit, initiate, or encourage the submission of any proposal
or offer from any person or entity relating to the acquisition of any capital
stock or other voting securities, or any substantial portion of the assets of,
CompPro (including any acquisition structured as a merger, consolidation, or
share exchange) or (ii) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt by any person or entity to
do or seek any of the foregoing. The Seller's will not vote the Stock in favor
of any such acquisition structured as a merger, consolidation, or share
exchange. The Seller's will notify the Buyer immediately if any person or
entity makes any proposal, offer, inquiry, or contact with respect to any of the
foregoing.
ARTICLE VII
CLOSING DELIVERIES
------------------
7.1 Closing. Subject to the conditions contained in this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at a location mutually agreeable to Buyer and Seller's at 10:00 a.m.
Central Daylight Time on April 29,1999.
7.2 Deliveries.
(a) At the Closing, Buyer shall deliver to Seller's:
(i) The Purchase Price pursuant to Section 1.4 hereof;
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(ii) Certified copies of the resolutions of the Board of
Directors of Buyer authorizing Buyer to execute and deliver this Agreement, any
agreement or document contemplated hereby, and to consummate the transactions
contemplated hereby and thereby;
(iii) A certificate of an executive officer of Buyer, dated the
Closing Date, certifying that: (A) all representations and warranties made by
Buyer in Article III hereof were true and correct when made, and are true and
correct on the Closing Date, except for changes permitted or contemplated by
this Agreement and except that representations which are specifically made as of
a specified date shall be true and correct as of such earlier date; and (B) all
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by Buyer on or prior to the Closing Date have been performed or
complied with; and
(iv) A duly executed Employment Agreement, in substantially the
form attached as Exhibit B-1 hereto.
(b) At the Closing, Seller's shall deliver to Buyer:
(i) Certificates for the Stock accompanied by executed assignment
documents or endorsed in blank;
(ii) Possession of all assets used in the Business, except for
Excluded Assets;
(iii) All contracts, leases, agreements or other documents,
books, financial and accounting records of CompPro not previously delivered or
not located on the premises of CompPro, to the extent such items are used in the
Business, and are not Excluded Assets;
(iv) A duly executed Employment Agreement, in substantially the
form attached as Exhibit B-1 hereto;
(v) A certificate of the Seller's, dated as of the Closing Date,
certifying that: (i) all representations and warranties made by Seller's in
Article II hereof were true and correct when made, and are true and correct on
the Closing Date except for changes permitted or contemplated by this Agreement
and except that representations which are specifically made as of a specified
date shall be true and correct as of such earlier date; and (ii) all covenants,
agreements and conditions contained in this Agreement to be performed or
complied with by Seller's on or prior to the Closing Date have been performed or
complied with;
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(vi) All documents required by Article IV hereof; and
(vii) All other documents required by this Agreement.
ARTICLE VIII
POST-CLOSING COVENANTS AND AGREEMENTS
-------------------------------------
8.1 Further Assurances. If at any time and from time to time after the
Closing, Buyer determines that any further assignment, consent to assignment or
other document or any further action is necessary or desirable to carry out the
purposes of and to make effective the transactions contemplated by this
Agreement, Seller's agrees to execute and deliver all such instruments and to
take such actions as may be reasonably necessary or advisable for such purpose.
8.2 Covenant Not to Compete; Nondisclosure and Confidentiality.
(a) Non-Compete. For a period of Three (3) years from the date of
this Agreement, Seller's shall not directly or indirectly through
representatives, agents or otherwise (i) engage in competition with the Business
sold hereunder, its successors or assigns within 100 miles from Palos Heights,
Illinois, (hereafter the "Territory") or with respect to CompPro's or Buyer's
"customers" as defined in this paragraph; or (ii) provide information, solicit
or sell for, own, or organize any interest in, either directly or through any
affiliate or subsidiary corporation, partnership or other entity, or become
engaged by, act as agent for, or in any manner assist, any person, corporation
or other entity that is directly or indirectly in competition with Buyer or the
Business, or their successors or assigns in the Territory or with respect to
Buyer's or CompPro's "customers" as defined in this paragraph. Seller's further
agrees that within the restrictive period, he will not in any way attempt to
divert from Buyer or CompPro any business whatsoever and Seller's further agrees
that during said restrictive period he will not influence or attempt to
influence any of the customers of Buyer or Seller's not to do business with
Buyer or CompPro; Seller's further agrees that he will not make or permit the
making of any public announcement or statement of any kind that he was formerly
employed or connected with Buyer or CompPro, which announcement has as its
purpose directly or indirectly the intent to violate the provisions of this
Agreement. The term "customer", as used herein, shall mean any person or entity
which Seller's has contact with and does business with for Buyer or CompPro at
any time while employed by CompPro or Buyer.
If Seller is terminated by Buyer then the Seller has the right to obtain
employment at any company as long as the position and duties held with the new
organization do not compete with Buyer.
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(b) Confidential Information. During the term set forth in paragraph (a)
and thereafter, Seller's shall not divulge any of Buyer's or CompPro's business
contacts, customers, suppliers, technology, know-how, trade secrets, marketing
techniques, books and records, computer programs, lists, plans, databases, or
any other confidential or proprietary information or make available to any other
persons any documents, files or other papers concerning the foregoing or the
Business or financial affairs of CompPro or Buyer. During the term set forth in
paragraph (a) Seller's and thereafter shall not solicit the employment of any
employee or consultant currently or provisionally employed or retained by Buyer
or CompPro.
(c) Seller's has carefully considered the nature and extent of the
restrictions upon him and the rights and remedies conferred upon Buyer under
this Agreement and hereby acknowledges and agrees that the same are reasonable
in time and territory.
(d) It is stipulated that a breach by Seller's of the restrictive
covenants set forth herein will cause irreparable damage to Buyer and that in
the event of any breach of the provisions under this Section, Buyer, in addition
to any other remedies it has, shall be entitled to an injunction restraining
Seller's from violating or continuing a violation of the restrictive covenants
herein contained. It is further stipulated that the existence of any claim or
cause of action on the part of Seller's against Buyer, whether arising from this
Agreement or otherwise shall in no way constitute a defense to the enforcement
of the restrictive covenants contained herein, and the restrictive periods in
which Buyer is entitled to an injunction shall be extended in an amount which
equals the time period which the Seller's is or has been in violation of the
restrictive covenants contained herein. In the event of a breach of the
restrictive covenants contained in the Agreement, Seller's agrees to the payment
of or reimbursement of Buyer's reasonable attorney's fees and disbursements
incurred in enforcing any such provision. The provisions of this Section shall
survive the Closing Date. If any of the provisions of this Section shall be held
invalid, illegal, or unenforceable by the final decision of a court of competent
jurisdiction and all appeals therefrom shall have failed or the time for such
appeals shall have expired the provision or provisions shall be deemed
eliminated from this Agreement in such jurisdiction but the remaining provisions
shall nevertheless be given full effect. In the event this Agreement or any
portion hereof is more restrictive than permitted by the law of the jurisdiction
in which enforcement is sought, this Agreement or such portion shall be limited
in that jurisdiction only to the extent required by the law of that
jurisdiction. If a court of competent jurisdiction shall determine that the
terms of this Section are partially or wholly inoperative, unenforceable or
invalid in a particular case because of their time or geographic scope or for
any other reason such court shall have the power to limit such time or
geographic scope or otherwise to recast the terms of this Agreement in such case
so as to permit its enforcement to the greatest extent permitted by applicable
law.
8.3 Resignations; Bank Authorizations. Immediately following Closing,
Seller's and the other directors and officers of CompPro shall resign as such
directors and officers of
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CompPro. Immediately following Closing, Seller's shall take all actions required
to change the authorized signatories on all CompPro bank accounts to those
persons designated by Buyer.
ARTICLE IX
TERMINATION; WAIVER
-------------------
9.1 Termination. This Agreement may be terminated at any time prior to the
Closing as follows:
(a) the Buyer and the Seller's may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written notice
to the Seller's at any time prior to the Closing (i) in the event Seller's has
breached any representation, warranty, or covenant contained in this Agreement
in any material respect, the Buyer has notified the Seller's of breach, and the
breach has continued without cure for a period of 10 days after the notice of
breach, or (ii) if the Closing shall not have occurred on or before May 31,
1999, by reason of Seller's being unable or unwilling to effect a Closing on or
before May 31, 1999, or by reason of the failure of any condition precedent
under Article IV hereof (unless the failure results primarily from the Buyer
itself breaching any representation, warranty, or covenant contained in this
Agreement); and
(c) the Seller's may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (i) in the event the Buyer
has breached any representation, warranty, or covenant contained in this
Agreement in any material respect, the Seller's has notified the Buyer of the
breach, and the breach has continued without cure for a period of 10 days after
the notice of breach, or (ii) if the Closing shall not have occurred on or
before May 31, 1999, by reason of Buyer being unable or unwilling to effect a
Closing on or before May 31, 1999, or by reason of the failure of any condition
precedent under Article V hereof (unless the failure results primarily from the
Seller's himself breaching any representation, warranty, or covenant contained
in this Agreement).
9.2 Effect of Termination; Specific Performance.
(a) In the event of the termination of this Agreement pursuant to
Section 9.1 hereof, notice thereof shall be promptly given by the terminating
party to the other party and thereafter this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party or its
directors, officers or stockholders, except that (i) the provisions of
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Section 6.1 hereof shall remain in effect and (ii) nothing in this Section 9.2
shall relieve any party to this Agreement from liability for breach of this
Agreement or any misrepresentation hereof, including pursuant to paragraph (b)
hereof.
(b) In the event of a breach or threatened breach by Seller's or
Buyer of any of the agreements and obligations set forth herein, monetary
damages or the other remedies at law that may be available to the non-breaching
party for such breach or threatened breach will be inadequate and, without
prejudice to the nonbreaching party's right to pursue any remedies at law or in
equity available to it for such breach or threatened breach, including without
limitation the recovery of damages, the non-breaching party will be entitled to
injunctive relief as a means of having the breaching party comply with the
provisions herein.
9.3 Extension; Waiver. At any time prior to the Closing, the parties
hereto may (i) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (ii) waive any inaccuracies in the
representations and warranties contained herein by the other party or in any
document, certificate or writing delivered pursuant hereto by the other party,
or (iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of either party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. No waiver of any breach of a provision of this Agreement
shall constitute or be deemed a waiver of any other breach of the same or any
other provision of this Agreement, and no delay or failure to take action with
respect to any breach or provision of this Agreement shall constitute or be
deemed a waiver of the right to enforce this Agreement and to take action
against such breach or any subsequent breach of the same or any other provision.
ARTICLE X
MISCELLANEOUS PROVISIONS
------------------------
10.1 Entire Agreement; Amendment. Except with respect to those documents
signed in connection with the Closing of the transactions contemplated by this
Agreement and those documents that, by their terms, modify or supersede this
Agreement, this Agreement (including the Disclosure Schedules), contains the
entire agreement between the parties hereto and supersedes all prior oral or
written agreements, promises, representations, commitments or understandings
with respect to the matters provided for herein. This Agreement may be modified
or amended only by a writing duly executed by Buyer and Seller's, which
modification or amendment shall be binding upon all of the parties hereto.
10.2 Assignment and Binding Effect. This Agreement and the rights and
obligations of any party hereunder may not be assigned by any party without the
prior written consent of the
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other party hereto. All covenants, agreements, statements, representations,
warranties and indemnities in this Agreement by and on behalf of either of the
parties hereto shall bind and inure to the benefit of their respective heirs,
successors and permitted assigns of the parties hereto.
10.3 Waivers. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a continuing waiver, and no waiver shall be
binding unless executed in writing by the party making the waiver.
10.4 Notices. All notices, demands or other communications which may be or
are required to be given by any party to any other party pursuant to this
Agreement, shall be in writing and shall be mailed by certified mail, return
receipt requested, postage prepaid, or transmitted by hand delivery, national
overnight express, telegram or facsimile transmission, addressed as follows:
(a) If to Buyer:
Nucleus, Inc.
150 North Michigan Avenue
Suite 3610
Chicago, Illinois 60601
Attention: John C.Paulsen
Facsimile: (312) 683-9001
with a copy (which shall not constitute notice) to:
McBreen, McBreen & Kopko
20 North Wacker Drive
Suite 2520
Chicago, Illinois 60606
Attention: James R. Stern
Facsimile: (312) 332-2657
(b) If to Seller's:
Rafiq Kiswani
Yahya Daoud
12323 S. Harlem Avenue
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Palos Heights, IL 60463
with a copy to:
Law Offices of John Z. Toscas
12616 S. Harlem Avenue
Palos Heights, IL 60463
Attn: John Toscas
Fax: 708/448-0033
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
10.5 Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of Illinois,
without giving effect to the principles of conflicts of laws thereof. Each party
hereby submits to the personal jurisdiction of the United States District Court
for the Northern District of Illinois or any court of the State of Illinois, and
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such court. In
addition, each party hereby irrevocably and unconditionally waives, to the
fullest extent permitted by law, (i) any objection which it may now have or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any related matter in such court, (ii)
the defense of an inconvenient forum to the maintenance of any suit, action or
proceeding in any such court, and (iii) trial by jury in any such suit, action
or proceeding.
10.6 Counterparts; Execution. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required, and each such
counterpart hereof shall be deemed to be an original instrument, but all such
counterparts together shall constitute but a single agreement.
10.7 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
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10.8 No Third Parties Benefited. This Agreement is made and entered into
for the sole protection and benefit of the parties hereto, their successors and
assigns, and no other person or persons shall have any right of action under
this Agreement.
10.9 Recitals, Schedules and Exhibits. The recitals, schedules, and
exhibits to this Agreement are incorporated herein and, by this reference, made
a part hereof as if fully set forth at length herein.
10.10 Section Headings. The section headings used herein are inserted for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, or
caused this Agreement to be executed on its behalf, as of the date first above
written.
BUYER:
Nucleus, Inc.
By:________________________________
Its:_______________________________
SELLER'S :
___________________________________
Rafiq Kiswani
___________________________________
Yahya Daoud
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[LOGO]
NUCLEUS, INC. ANNOUNCES ACQUISITION
-----------------------------------
CHICAGO, IL (April 29, 1999) Nucleus, Inc. (NASDAQ OTC-BB: NCLS), today
announced the acquisition of Chicago based Comp Pro Computer, Inc. Terms of the
agreement were not disclosed.
"This acquisition launches our initiative to strategically acquire information
technology and communication companies. The addition of Comp Pro complements
our existing core competencies to deliver Convergent Solutions to high growth
small and medium sized businesses," said Nucleus' President and CEO, John C.
Paulsen.
Headquartered in Chicago, Nucleus is a Convergent Solution Provider ("CSP"),
leveraging the Internet as the platform to deliver information technology and
communications.
The information contained in this press release, including any "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 contained herein, should be
reviewed in conjunction with the Company's annual report on form 10-KSB and
other publicly available information regarding the Company, copies of which are
available from the Company upon request. Such publicly available information
sets forth many risks and uncertainties related to the Company's business and
such statements, including risks and uncertainties related to that are
unpredictable and outside of the influence and/or control of the Company.
Contact: Ted Hartley 312-683-9000 Nucleus, Inc.
