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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "AGREEMENT") dated as of November 8, 2000,
by, between and among CALIFORNIA SOFTWARE CORPORATION, a Nevada corporation
("BUYER"), UNIBOL, LTD, a United Kingdom corporation ("Company") ICS COMPUTING
GROUP LTD, a United Kingdom corporation ("Shareholder"), and UNICOMP, INC., a
Colorado corporation ("Parent").
R E C I T A L S
A. Company is engaged in the business of IBM Midrange migration software
product development, marketing and sales (the "BUSINESS"). Parent owns or
controls all the issued and outstanding shares of capital stock of Shareholder
and Shareholder owns all the issued and outstanding share capital of Company
("Shares") through its ownership of [1 ordinary share of L1 each] ("COMMON
Shares").
C. Buyer desires to purchase the Shares from Shareholder and Shareholder
desires to sell the Shares to Buyer, upon the terms and conditions herein set
forth.
NOW THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree as
follows.
1. PURCHASE AND SALE OF SHARES.
Subject to the terms and conditions of this Agreement, on the Closing
Date (as hereinafter defined) Parent shall cause Shareholder to sell to Buyer
and Buyer shall purchase from Shareholder all the Shares.
2. PURCHASE PRICE - PAYMENT.
2.1 PURCHASE PRICE. The purchase price for the Shares is Three Million
Dollars (the "Purchase Price") and shall be payable as follows:
(a) $1,000,000, cash payable on the Closing Date;
(b) $500,000, cash payable in equal monthly installments over
four (4) months; each installment payment shall be due on or before the
first of each month beginning with the second month after that in which
the Closing Date falls (e.g., if the Closing Date is November 8, 2000,
then the first installment is due on or before December 1, 2000); and
(c) $1,500,000, payable in Buyer's common stock valued as of
the date this final payment is due on the six (6) month anniversary of
the Closing Date which payment shall be expressly conditioned upon the
execution, delivery and closing of the Merger Agreement between Parent
and Buyer.
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2.2 PAYMENT. All cash payments under this SECTION 2 shall be made in
the form of Buyer's check payable to the order of the recipient. At Parent's
election, the payment required by SECTION 2.1(a) shall be made by wire transfer
pursuant to instructions from Parent reasonably in advance of the Closing Date
(as hereinafter defined).
3. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF PARENT, SHAREHOLDER
AND COMPANY.
Parent, Shareholder and Company, jointly and severally, make the
following representations and warranties to Buyer, each of which, except as
disclosed in the Disclosure Schedule, is true and correct on the date hereof,
shall remain true and correct to and including the Closing Date, and shall
survive the Closing of the transactions provided for herein as set forth in
SECTION 8.5.
3.1 CORPORATE.
(a) ORGANIZATION. Company is a private company limited by
shares and duly incorporated under the Companies Act under the laws of
the United Kingdom.
(b) CORPORATE POWER. Company has all requisite corporate power
and authority to own, operate and use its properties and to carry on its
business as and where such is now being conducted.
(c) QUALIFICATION. Company is duly licensed or qualified to do
business as a foreign corporation, and is in good standing, in each
jurisdiction wherein the character of the properties owned or leased by
it, or the nature of its business, makes such licensing or qualification
necessary. The countries and states in which Company is licensed or
qualified to do business are listed in SCHEDULE 3.1(c).
(d) SUBSIDIARIES. Company does not own any interest in any
corporation, partnership or other entity.
(e) CORPORATE DOCUMENTS, ETC. The certified copies of the
Articles of Association and Memorandum of Association of the Company,
including any amendments thereto, have been delivered by Shareholder to
Buyer, and are true, correct and complete copies of such instruments as
presently in effect. The corporate minute book and statutory records of
the Company have been furnished to Buyer for inspection, and are true,
correct and complete and accurately reflect all material corporate action
taken by the Company. The directors and officers of the Company are
listed in SCHEDULE 3.1(e).
(f) CAPITALIZATION OF THE COMPANY. As of the Closing Date, the
authorized share capital of the Company consists entirely of 1 ordinary
share of L1 each fully paid. The Shares constitute the whole of the
allotted and issued share capital of the Company. All such shares of the
Company are validly issued, fully paid and nonassessable. There are no
(a) securities convertible into or exchangeable for any of the Company's
share capital or other securities, (b) options, warrants or other rights
to purchase or subscribe to share capital or other securities of the
Company or securities which are convertible into
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or exchangeable for capital stock or other securities of the Company, or
(c) contracts, commitments, agreements, understandings or arrangements of
any kind relating to the issuance, sale or transfer of any share capital
or other equity securities of the Company, any such convertible or
exchangeable securities or any such options, warrants or other rights.
3.2 SHAREHOLDER; PARENT.
(a) POWER. (i) Shareholder has full power, legal right and
authority to enter into, execute and deliver this Agreement and the other
agreements, instruments and documents contemplated hereby (such other
documents sometimes referred to herein as "ANCILLARY INSTRUMENTS"), and
to carry out the transactions contemplated hereby; (ii) Parent has full
power, legal right and authority to enter into, execute and deliver this
Agreement and the other agreements, instruments and documents
contemplated hereby (such other documents sometimes referred to herein as
"ANCILLARY INSTRUMENTS"), and to carry out the transactions contemplated
hereby.
(b) VALIDITY. (i) This Agreement has been duly and validly
executed and delivered by Shareholder and is, and when executed and
delivered each Ancillary Instrument will be, the legal, valid and binding
obligation of Shareholder, enforceable in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization
or other laws affecting creditors' rights generally, and by general
equitable principles; (ii) This Agreement has been duly and validly
executed and delivered by Parent and is, and when executed and delivered
each Ancillary Instrument will be, the legal, valid and binding
obligation of Parent, enforceable in accordance with its terms, except as
such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable
principles.
(c) TITLE. Shareholder has, and at Closing Buyer will receive,
good and marketable title to the Shares to be sold by Shareholder
hereunder, free and clear of all liens, security interests, pledges,
assessments, levies, restrictions, options, voting trusts or agreements,
proxies, encumbrances, marital or community property interests or other
claims or charges of any nature whatsoever.
3.3 NO VIOLATION. Except as set forth on SCHEDULE 3.3, neither the
execution and delivery of this Agreement or the Ancillary Instruments nor the
consummation by Parent, Company and Shareholder of the transactions contemplated
hereby and thereby (a) will violate any statute or law or any rule, regulation,
order, writ, injunction or decree of any court or governmental authority of the
United States, Ireland, the United Kingdom or any other jurisdiction or country
in which the Company may be domiciled or doing business, (b) will require any
authorization, consent, approval, exemption or other action by or notice to any
court, administrative or governmental agency, instrumentality, commission,
authority, board or body (including, without limitation, under any
"plant-closing" or similar law) of the United States, Ireland, the United
Kingdom or any other jurisdiction or country in which the Company may be
domiciled or doing business, or (c) subject to obtaining the consents referred
to in SCHEDULE 3.3, will violate or conflict with, or constitute a material
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
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accelerate the performance required by, or result in the creation of any Lien
(as defined in SECTION 3.12) upon any of the assets of Company (or the Shares)
under, any term or provision of the Articles of Association and Memorandum of
Association of the Company or of any contract, commitment, understanding,
arrangement, agreement or restriction of any kind or character to which Parent,
Company or Shareholder is a party or by which Parent, Company or Shareholder or
any of its or their assets or properties may be bound or affected which would
result in a material adverse affect on the Company's business operations.
3.4 FINANCIAL STATEMENTS. Included as SCHEDULE 3.4 are true and
complete copies of (i) an unaudited balance sheet of Company as of October 31,
2000, and the related unaudited statements of income for the months then ended
(if applicable, including the notes and schedules contained therein or annexed
thereto if applicable) (the "RECENT FINANCIAL STATEMENTS"), and, (ii) an
unaudited balance sheet of Company as of October 31, 2000, and related unaudited
statements of income for the year then ended (if applicable, including the notes
contained therein or annexed thereto if applicable) (the "FINANCIAL
STATEMENTS"). The Recent Financial Statements have been prepared from, and are
consistent with, the books and records of the Company and are in compliance with
appropriate governing standards. Except as set forth on SCHEDULE 3.4, the Recent
Financial Statements and the Financial Statements have been prepared in
accordance with the books and records of Company, and consistently present, the
assets, liabilities and financial position, the results of operations and cash
flows of the Company as of the date indicated and for the periods indicated. All
of such financial statements (if applicable, including all notes and schedules
contained therein or annexed thereto if applicable) are true, complete and
accurate.
3.5 TAX MATTERS.
(a) PROVISION FOR TAXES. The provision made for taxes on the
Recent Financial Statements is sufficient for the current and deferred
payment of all federal (concerning the country in which Company is
domiciled), state, foreign, county, local and other income, ad valorem,
excise, profits, franchise, occupation, property, payroll, sales, use,
gross receipts and other taxes (and any interest and penalties) and
assessments, whether or not disputed, at the date of the Recent Financial
Statements and for all years and periods prior thereto. Since the date of
the Recent Financial Statements, Company has not incurred any taxes other
than taxes incurred in the ordinary course of business consistent in type
and amount with past practices of Company.
(b) TAX RETURNS FILED. All federal (concerning the country in
which Company is domiciled), state, foreign, county, local and other tax
returns required to be filed by or on behalf of Company have been timely
filed and when filed were true and correct in all material respects, and
the taxes shown as due thereon were paid or adequately accrued. True and
complete copies of all tax returns or reports filed by Company for each
of its three (3) most recent fiscal years have been delivered to Buyer.
Company has duly withheld and paid all taxes which it is required to
withhold and pay relating to salaries and other compensation heretofore
paid to the employees of Company.
(c) TAX AUDITS. The income tax returns of Company have been
audited by the appropriate governmental taxing authorities for the
periods and the extent set forth in SCHEDULE 3.5(c), and Parent,
Shareholder and Company have not received from any such
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tax authorities at any level, any notice of underpayment of taxes or
other deficiency which has not been paid nor any objection to any return
or report filed by Company. There are outstanding no agreements or
waivers extending the statutory period of limitations applicable to any
tax return or report.
3.6 ACCOUNTS RECEIVABLE AND COSTS IN EXCESS OF BILLINGS. Except as
disclosed in SCHEDULE 3.6-1, all accounts receivable of Company reflected on the
Recent Financial Statements ("CLOSING RECEIVABLES"), represent arm's length
sales actually made in the ordinary course of business; are collectible (net of
the reserve shown on the Recent Financial Statements for doubtful accounts
("CLOSING RESERVE")) in the ordinary course of business without the necessity of
commencing legal proceedings; are subject to no counterclaim or set-off; and are
not in dispute. SCHEDULE 3.6-1 contains an aged schedule of accounts receivable
included in the Recent Financial Statements. The amount of Closing Receivables
which exceed the Closing Reserve, as of the 90th day after the Closing Date,
shall be conclusively deemed to be uncollectible and shall provide Buyer a right
of set-off in such amount against the Purchase Price.
3.7 WORK-IN-PROCESS. Except as disclosed in SCHEDULE 3.7, (i) all
work-in-process and contracts underway ("WORK-IN-PROCESS") constitute work
performed pursuant to fully executed written contracts or sales orders taken in
the ordinary course of business, from customers of Company with no recent
history of credit problems with respect to Company; (ii) neither Company nor any
such customer is in material breach of the terms of any obligation to the other,
and no valid grounds exist for any set-off of amounts billable to such customers
on the completion of orders to which Work-In-Process relates; (iii) all
Work-In-Process is of a quality ordinarily produced in accordance with the
requirements of the orders to which such Work-In-Process is identified, and will
require no rework with respect to services performed prior to Closing; (iv) all
Work-In-Process is being conducted pursuant to fully executed written contracts,
orders and change orders issued within the terms of the relationship pursuant to
which such Work-In-Process is being conducted; and (v) all Work-In-Process set
forth on SCHEDULE 3.7 (which as of the date hereof reflects Work-In-Process as
of the date of the Recent Financials, shall be updated to include the schedules
supporting the Disclosure Schedule) could be completed in compliance with the
contracts to which each such Work-In-Process relates if managed consistently
with the past practices of the Company (and in compliance with industry
standards and good practices) without having a material adverse affect, in the
aggregate when complete, the profitability of the Company.
3.8 ABSENCE OF CERTAIN CHANGES. Except as and to the extent set forth
in SCHEDULE 3.8, since the date of the Recent Financial Statements there has not
been:
(a) NO ADVERSE CHANGE. Any adverse change in the financial
condition, assets, liabilities, business, prospects or operations of
Company;
(b) NO DAMAGE. Any loss, damage or destruction, whether covered
by insurance or not, affecting Company's business or properties;
(c) NO INCREASE IN COMPENSATION. Any increase in the
compensation, salaries or wages payable or to become payable to any
employee or agent of Company (including, without limitation, any increase
or change pursuant to any bonus, pension,
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profit sharing, retirement or other plan or commitment), or any bonus or
other employee benefit granted, made or accrued;
(d) NO LABOR DISPUTES OR LOSS OF KEY EMPLOYEES. Any labor
dispute, disturbance or organizing activity, other than routine
individual grievances which are not material to the business, financial
condition or results of operations of Company or any loss of any employee
deemed "key" or "material" to the operation of the Company;
(e) NO COMMITMENTS. Any commitment or transaction by Company
(including, without limitation, any borrowing or capital expenditure)
other than in the ordinary course of business consistent with past
practice;
(f) NO DIVIDENDS. Any declaration, setting aside, or payment of
any dividend or any other distribution in respect of Company's capital
stock; any redemption, purchase or other acquisition by Parent,
Shareholder or Company of any capital stock of Company, or any security
relating thereto; or any other payment to any shareholder of Company as
such a shareholder;
(g) NO DISPOSITION OF PROPERTY. Any sale, lease or other
transfer or disposition of any properties or assets of Company, except
for the sale of inventory items in the ordinary course of business;
(h) NO INDEBTEDNESS. Any indebtedness for borrowed money
incurred, assumed or guaranteed by Company;
(i) NO LIENS. Any mortgage, pledge, lien or encumbrance made on
any of the properties or assets of Company;
(j) NO AMENDMENT OF CONTRACTS. Any entering into, amendment or
termination by Company of any contract, or any waiver of material rights
thereunder, other than in the ordinary course of business;
(k) LOANS AND ADVANCES. Any loan or advance (other than
advances to employees in the ordinary course of business) to or from any
person including, but not limited to, any Affiliate (for purposes of this
Agreement, the term "AFFILIATE" shall mean and include Parent,
Shareholder, directors and officers of Parent, Company and Shareholder;
the spouse of any such person; any person who would be the heir or
descendant of any such person if he or she were not living; and any
entity in which any of the foregoing has a direct or indirect interest,
except through ownership of less than 5% of the outstanding shares of any
entity whose securities are listed on a national securities exchange or
traded in the national over-the-counter market);
(l) CREDIT. Any grant of credit to any customer or distributor
on terms or in amounts more favorable than those which have been extended
to such customer or distributor in the past, any other change in the
terms of any credit heretofore extended, or any other change of Company's
policies or practices with respect to the granting of credit; or
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(m) NO UNUSUAL EVENTS. Any other event or condition not in the
ordinary course of business of Company.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as and to the extent
specifically disclosed in the Recent Financial Statements, Company has no
liabilities, commitments or obligations (secured or unsecured, and whether
accrued, absolute, contingent, direct, indirect or otherwise), other than
commercial liabilities and obligations incurred since the date of the Recent
Financial Statements in the ordinary course of business and consistent with past
practice and none of which has or will have a material adverse effect on the
business, financial condition or results of operations of Company. There is no
basis for the assertion against Parent, Shareholder, or Company of any liability
or of any circumstances, conditions, happenings, events or arrangements,
contractual or otherwise, which may give rise to liabilities, except commercial
liabilities and obligations incurred in the ordinary course of Company's
business and consistent with past practice.
3.10 NO LITIGATION. There is no action, suit, arbitration proceeding,
investigation or inquiry pending or threatened against Company, its directors
(in such capacity), its business or any of its assets, nor is there any basis
for any such proceedings, investigations or inquiries. SCHEDULE 3.10 identifies
all such actions, suits, proceedings, investigations and inquiries to which
Company or any of its directors have been parties within the last three (3)
years. Except as set forth in SCHEDULE 3.10, neither Company nor its business or
assets is subject to any judgment, order, writ or injunction of any court,
arbitrator or federal (concerning the country in which the Company is
domiciled), state, foreign, municipal or other governmental department,
commission, board, bureau, agency or instrumentality of any country in which it
is domiciled or doing business.
3.11 COMPLIANCE WITH LAWS.
(a) COMPLIANCE. The Company (including each and all of its
operations, practices, properties and assets) is in compliance with all
federal (concerning the country in which Company is domiciled), state,
local and foreign laws, ordinances, orders, rules and regulations of any
country in which it is domiciled or doing business for which it is
required to be in compliance in order to conduct its business as is
currently being conducted (collectively, "LAWS"), including without
limitation, those applicable to discrimination in employment, sexual
harassment, occupational safety and health, trade practices, competition
and pricing, product warranties, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and laws
relating to pollution or protection of the environment, including Laws
relating to emissions, discharges, generation, storage, releases or
threatened releases of pollutants, contaminants, chemicals or industrial,
toxic, hazardous or petroleum or petroleum-based substances or wastes
into the environment. Parent, Shareholder and Company have not received
notice of any Company violation or alleged violation of, and is subject
to no liability (whether accrued, absolute, contingent, direct or
indirect) for past or continuing violation of, any Laws. Shareholder and
Parent have no actual knowledge of any reports and returns (i) required
to be filed by Company with any governmental authority not having been
filed, and (ii) being other than accurate and complete when filed.
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(b) LICENSES AND PERMITS. Company has all licenses, permits,
approvals, authorizations and consents of all governmental and regulatory
authorities and all certification organizations required for the conduct
of the Company's business (as presently conducted and as proposed to be
conducted) and operation of the facilities (as presently operated) in any
country in which it is domiciled or doing business. All such licenses,
permits, approvals, authorizations and consents are described in SCHEDULE
3.11(b), are in full force and effect and will not be affected or made
subject to loss, limitation or any obligation to reapply as a result of
the transactions contemplated hereby. Company (including its operations,
properties and assets) is and has been in material compliance with all
such permits and licenses, approvals, authorizations and consents.
3.12 TITLE TO AND CONDITION OF PROPERTIES.
(a) MARKETABLE TITLE. Company has good and marketable title to
all of Company's assets, business and properties necessary in conducting
the Business (as is currently conducted), including, without limitation,
all such properties (tangible and intangible) reflected in the Recent
Financial Statements and all assets which are fully depreciated or used
under license, including but not limited to, software, databases,
reference materials and other intellectual property, in all cases free
and clear of all mortgages, liens, (statutory or otherwise) security
interests, claims, pledges, licenses, equities, options, conditional
sales contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "LIENS") except
those described in SCHEDULE 3.12(a). None of the Company's assets,
business or properties are subject to any restrictions with respect to
the transferability thereof; and the Company's title thereto will not be
affected in any way by the transactions contemplated hereby.
[CONDITION. All property and assets owned or utilized by Company are in
good operating condition and repair, free from any defects (except such
minor defects as do not interfere with the use thereof in the conduct of
the normal operations of Company), have been maintained consistent with
the standards generally followed in the industry and are sufficient to
carry on the business of Company as conducted during the preceding twelve
(12) months.
(b) REAL PROPERTY. SCHEDULE 3.12(c) sets forth all real
property owned, used or occupied by Company (the "REAL PROPERTY"),
including a description of all land, and all encumbrances, easements or
rights of way of record (or, if not of record, of which Company has
notice or knowledge) granted on or appurtenant to or otherwise affecting
such Real Property, the zoning classification thereof, and all plants,
buildings or other structures located thereon. SCHEDULE 3.12(c) also sets
forth, with respect to each parcel of Real Property which is leased, the
material terms of such lease. All buildings, plants and other structures
owned or otherwise utilized by Company are in good condition and repair
and have no structural defects or defects affecting the plumbing,
electrical, sewerage, or heating, ventilating or air conditioning
systems. There are now in full force and effect duly issued certificates
of occupancy permitting the Real Property and improvements located
thereon to be legally used and occupied as the same are now constituted.
Shareholder and Parent have no actual knowledge of any fact or condition
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exists which would prohibit or adversely affect the ordinary rights of
use by the Company of the Real Property. Neither Parent, Company nor
Shareholder has notice or knowledge of any (i) planned or proposed
increase in assessed valuations of any Real Property, (ii) governmental
agency or court order requiring repair, alteration, or correction of any
existing condition affecting any Real Property or the systems or
improvements thereat, (iii) condition or defect which could give rise to
an order of the sort referred to in "(ii)" above, (iv) underground
storage tanks, or any structural, mechanical, or other defects of
material significance affecting any Real Property or the systems or
improvements thereat (including, but not limited to, inadequacy for
normal use of mechanical systems or disposal or water systems at or
serving the Real Property), or (v) work that has been done or labor or
materials that has or have been furnished to any Real Property during the
period of six (6) months immediately preceding the date of this Agreement
for which liens could be filed against any of the Real Property.
(c) NO CONDEMNATION OR EXPROPRIATION. Neither the whole nor any
portion of the property or any other assets of Company is subject to any
governmental decree or order to be sold or is being condemned,
expropriated or otherwise taken by any public authority with or without
payment of compensation therefor, nor has any such condemnation,
expropriation or taking been proposed.
3.13 INSURANCE. Set forth in SCHEDULE 3.13 is a complete and accurate
list and description of all policies of fire, liability, errors and omissions,
workers compensation, health and other forms of insurance presently in effect
with respect to the business and properties of Company, true and correct copies
of which have heretofore been delivered to Buyer. SCHEDULE 3.13 includes,
without limitation, the carrier, the description of coverage, the limits of
coverage, retention or deductible amounts, amount of annual premiums, date of
expiration and the date through which premiums have been paid with respect to
each such policy, and any pending claims in excess of $10,000. All such policies
are valid, outstanding and enforceable policies and provide insurance coverage
for the properties, assets and operations of Company, and are of the kinds, and
in amounts and against the risks customarily maintained by organizations
similarly situated; and no such policy (nor any previous policy) provides for or
is subject to any currently enforceable retroactive rate or premium adjustment,
loss sharing arrangement or other actual or contingent liability arising wholly
or partially out of events arising prior to the date hereof. SCHEDULE 3.13
indicates each policy as to which (a) the coverage limit has been reached or (b)
the total incurred losses to date equal 50% or more of the coverage limit. No
notice of cancellation or termination has been received with respect to any such
policy, and neither Parent, Company nor Shareholder has knowledge of any act or
omission of Company which could result in cancellation of any such policy prior
to its scheduled expiration date. Company has not been refused any insurance
with respect to any aspect of the operations of the business nor has its
coverage been limited by any insurance carrier (other than the initial policy
limit) to which it has applied for insurance or with which it has carried
insurance during the last three (3) years. Company has duly and timely made all
material claims it has been entitled to make under each policy of insurance. At
all times during the last three (3) years, all errors and omissions and general
liability policies maintained by or for the benefit of Company have been
"occurrence" policies and not "claims made" policies. There is no claim by
Company pending under any such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies, and neither
Parent, Company nor Shareholder knows of any basis for denial of any
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claim under any such policy. Company has not received any written notice from or
on behalf of any insurance carrier issuing any such policy that insurance rates
therefor will hereafter be substantially increased (except to the extent that
insurance rates may be increased for all similarly situated risks) or that there
will hereafter be a cancellation or an increase in a deductible (or an increase
in premiums in order to maintain an existing deductible) or nonrenewal of any
such policy. Such policies are sufficient in all material respects for
compliance by Company with all requirements of applicable law and with the
requirements of all material contracts to which Company is a party.
3.14 CONTRACTS AND COMMITMENTS.
(a) REAL PROPERTY LEASES. Except as set forth in SCHEDULE
3.12(c), Company has no leases of real property.
(b) PERSONAL PROPERTY LEASES. Except as set forth in SCHEDULE
3.14(b), Company has no leases of personal property involving
consideration or other expenditure in excess of $5,000, individually, or
involving performance over a period of more than twelve (12) months.
(c) PURCHASE COMMITMENTS. Except as set forth in SCHEDULE
3.14(c), Company has no purchase commitments for inventory, equipment
items or supplies that, together with amounts on hand, constitute in
excess of two (2) months normal usage.
(d) SALES COMMITMENTS. Except as set forth on SCHEDULE 3.14(d),
Company has no sales contracts or commitments to customers or
distributors which aggregate in excess of $10,000 to any one customer or
distributor (or group of affiliated customers or distributors). Company
has no sales contracts or commitments except those made in the ordinary
course of business, at arm's length, and no such contracts or commitments
are for a sales price which would result in a loss to the Company.
(e) CONTRACTS WITH AFFILIATES AND CERTAIN OTHERS. Except as set
forth in SCHEDULE 3.14(e), Company has no agreement, understanding,
contract or commitment (written or oral) with any Affiliate or any
employee, agent, consultant, distributor, dealer or franchisee that is
not cancelable by Company on notice of not longer than thirty (30) days
without liability, penalty or premium of any nature or kind whatsoever.
(f) POWERS OF ATTORNEY. The Company has not given a power of
attorney, which is currently in effect, to any person, firm, corporation
or any other entity for any purpose whatsoever.
(g) COLLECTIVE BARGAINING AGREEMENTS. Company is not a party to
or in negotiations concerning any collective bargaining agreements with
any unions, guilds, shop committees or other collective bargaining
groups.
(h) LOAN AGREEMENTS. Except as set forth in SCHEDULE 3.14(h),
Company is not obligated under any loan agreement, promissory note,
letter of credit, or other evidence of indebtedness as a signatory,
guarantor or otherwise.
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(i) GUARANTEES. Except as disclosed on SCHEDULE 3.14(i),
Company has not guaranteed the payment or performance of any person,
firm, corporation or any other entity, agreed to indemnify any person or
act as a surety, or otherwise agreed to be contingently or secondarily
liable for the obligations of any person.
(j) CONTRACTS SUBJECT TO RENEGOTIATION. Company is not a party
to any contract with any governmental body which is subject to
renegotiation.
(k) BURDENSOME OR RESTRICTIVE AGREEMENTS. Company is not a
party to nor is it bound by agreement, deed, lease or other instrument
which is so burdensome as to materially affect or impair the business
operations of Company or which results in a material adverse affect to
the Company. Without limiting the generality of the foregoing, Company is
not a party to nor is it bound by any agreement which requires the
Company to assign any interest in any trade secret or proprietary
information, nor is the Company party to any non-compete agreement or
non-solicitation agreement which would serve to restrict the current
operations of the Company.
(l) OTHER MATERIAL CONTRACTS. Company has no lease, contract or
commitment of any nature involving consideration or other expenditure in
excess of $10,000, or involving performance over a period of more than
twelve (12) months, or which is otherwise individually material to the
operations of Company, except as explicitly described in SCHEDULE 3.14(1)
or in any other Schedule.
(m) NO DEFAULT. Company is not in default under any lease,
contract or commitment, nor has any event or omission occurred which
through the passage of time or the giving of notice, or both, would
constitute a default thereunder or cause the acceleration of any of
Company's obligations or result in the creation of any Lien on any of the
assets owned, used or occupied by Company. No third party is in default
under any lease, contract or commitment to which Company is a party, nor
has any event or omission occurred which, through the passage of time or
the giving of notice, or both, would constitute a default thereunder or
give rise to an automatic termination, or the right of discretionary
termination, thereof.
3.15 LABOR MATTERS. Within the last five (5) years Parent, Shareholder
and Company have not experienced any labor disputes, union organization attempts
or any work stoppage due to labor disagreements in connection with its business.
Except to the extent set forth in SCHEDULE 3.15, (a) Company is in compliance
with all applicable laws respecting employment and employment practices, sexual
harassment, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice; (b) there is no unfair labor practice
charge or complaint against Company pending or threatened; (c) there is no labor
strike, dispute, request for representation, slowdown or stoppage actually
pending or threatened against or affecting Company nor any secondary boycott
with respect to products of Company; (d) no question concerning representation
has been raised or is threatened respecting the employees of Company; (e) no
grievance which might have a material adverse effect on Company, nor any
arbitration proceeding arising out of or under collective bargaining agreements,
is pending and no such claim therefor exists; and (f) there are no
administrative charges or court complaints against Company concerning alleged
employment discrimination or other employment related matters
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pending or threatened before the U.S. Equal Employment Opportunity commission or
any state or federal court or agency or any similar governmental body, agency or
entity in any country in which Company is domiciled or doing business.
3.16 EMPLOYEE BENEFIT PLANS.
(a) DISCLOSURE. SCHEDULE 3.16(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option, stock
appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, , all employee manuals, and all written or
binding oral statements of policies, practices or understandings relating
to employment, which are provided to, for the benefit of, or relate to,
any persons ("COMPANY EMPLOYEES") employed by Company. The items
described in the foregoing sentence are hereinafter sometimes referred to
collectively as "EMPLOYEE PLANS/AGREEMENTS," and each individually as an
"EMPLOYEE PLAN/AGREEMENT." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore been
provided to Buyer. Each of the Employee Plans/Agreements is identified on
SCHEDULE 3.16(a), to the extent applicable, as one or more of the
following: an "employee pension benefit plan" (as defined in Section 3(2)
of ERISA), a "defined benefit plan" (as defined in Section 414 of the
Code), an "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), and/or as a plan intended to be qualified under Section 401 of
the Code. No Employee Plan/Agreement is a "multiemployer plan" (as
defined in Section 4001 of ERISA), and Company has never contributed nor
been obligated to contribute to any such multiemployer plan.
(b) TERMINATIONS, PROCEEDINGS, PENALTIES, ETC. With respect to
each employee benefit plan (including, without limitation, the Employee
Plans/Agreements) that is subject to the provisions of Title IV of ERISA
and with respect to which the Company or any of its assets may, directly
or indirectly, be subject to any liability, contingent or otherwise, or
the imposition of any lien (whether by reason of the complete or partial
termination of any such plan, the funded status of any such plan, any
"complete withdrawal" (as defined in Section 4203 of ERISA) or "partial
withdrawal" (as defined in Section 4205 of ERISA) by any person from any
such plan, or otherwise):
(i) no such plan has been terminated so as to subject,
directly or indirectly, any assets of Company to any liability,
contingent or otherwise, or the imposition of any lien under Title
IV of ERISA;
(ii) no proceeding has been initiated or threatened by
any person (including the Pension Benefit Guaranty Corporation
("PBGC") to terminate any such plan;
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(iii) no condition or event currently exists or currently
is expected to occur that could subject, directly or indirectly,
any assets of Company to any liability, contingent or otherwise,
or the imposition of any lien under Title IV of ERISA, whether to
the PBGC or to any other person or otherwise on account of the
termination of any such plan;
(iv) if any such plan were to be terminated as of or
prior to the Closing Date, no assets of Company would be subject,
directly or indirectly, to any liability, contingent or otherwise,
or the imposition of any lien under Title IV of ERISA;
(v) no "reportable event" (as defined in Section 4043 of
ERISA) has occurred with respect to any such plan;
(vi) no such plan which is subject to Section 302 of
ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code, respectively), whether or not waived; and
(vii) no such plan is a multiemployer plan or a plan
described in Section 4064 of ERISA.
(c) PROHIBITED TRANSACTIONS, ETC. There have been no
"prohibited transactions" within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code for which a statutory or administrative
exemption does not exist with respect to any Employee Plan/Agreement, and
no event or omission has occurred in connection with which the Company or
any of its assets or any Employee Plan/Agreement, directly or indirectly,
could be subject to any liability under ERISA, the Code or any other law,
regulation or governmental order applicable to any Employee
Plan/Agreement, or under any agreement, instrument, statute, rule of law
or regulation pursuant to or under which Company has agreed to indemnify
or is required to indemnify any person against liability incurred under,
or for a violation or failure to satisfy the requirements of, any such
statute, regulation or order.
(d) FULL FUNDING. The funds available under each Employee
Plan/Agreement which is intended to be a funded plan exceed the amounts
required to be paid, or which would be required to be paid if such
Employee Plan/Agreement were terminated, on account of rights vested or
accrued as of the Closing Date (using the actuarial methods and
assumptions then used by Company's actuaries in connection with the
funding of such Employee Plan/Agreement).
(e) CONTROLLED GROUP; AFFILIATED SERVICE GROUP; LEASED
EMPLOYEES. Company is not and never has been a member of a controlled
group of corporations as defined in Section 414(b) of the Code or in
common control with any unincorporated trade or business as determined
under Section 414(c) of the Code. Company is not and never has been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code. There are not and never have been any leased
employees within the
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meaning of Section 414(n) of the Code who perform services for Company,
and no individuals are expected to become leased employees with the
passage of time.
(f) PAYMENTS AND COMPLIANCE. With respect to each Employee
Plan/Agreement, (i) all payments due from Company to date have been made
and all amounts properly accrued to date as liabilities of Company which
have not been paid have been properly recorded on the books of Company
and are reflected in the Recent Financial Statements; (ii) Company has
complied with, and each such Employee Plan/Agreement conforms in form and
operation to, all applicable laws and regulations, including but not
limited to ERISA and the Code, in all respects and all reports and
information relating to such Employee Plan/Agreement required to be filed
with any governmental entity have been timely filed; (iii) all reports
and information relating to each such Employee Plan/Agreement required to
be disclosed or provided to participants or their beneficiaries have been
timely disclosed or provided; (iv) each such Employee Plan/Agreement
which is intended to qualify under Section 401 of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to such qualification, its related trust has been determined to
be exempt from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of such letter that has or is likely to adversely
affect such qualification or exemption; (v) there are no actions, suits
or claims pending (other than routine claims for benefits) or threatened
with respect to such Employee Plan/Agreement or against the assets of
such Employee Plan/Agreement; and (vi) no Employee Plan/Agreement is a
plan which is established and maintained outside the United States
primarily for the benefit of individuals substantially all of whom are
nonresident aliens.
(g) POST-RETIREMENT BENEFITS. No Employee Plan/Agreement
provides benefits, including, without limitation, death or medical
benefits (whether or not insured) with respect to current or former
Company employees beyond their retirement or other termination of service
other than (i) coverage mandated by applicable law, (ii) death or
retirement benefits under any Employee Plan/Agreement that is an employee
pension benefit plan, (iii) deferred compensation benefits accrued as
liabilities on the books of Company (including the Recent Financial
Statements), (iv) disability benefits under any Employee Plan/ Agreement
that is an employee welfare benefit plan and which have been fully
provided for by insurance or otherwise or (v) benefits in the nature of
severance pay.
(h) NO TRIGGERING OF OBLIGATIONS. The consummation of the
transactions contemplated by this Agreement will not (i) entitle any
current or former employee of Company to severance pay, unemployment
compensation or any other payment, except as expressly provided in this
Agreement, (ii) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee or former employee or
(iii) result in any prohibited transaction described in Section 406 of
ERISA or Section 4975 of the Code for which an exemption is not
available.
(i) DELIVERY OF DOCUMENTS. There has been delivered to Buyer,
with respect to each Employee Plan/Agreement:
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(i) a copy of the annual report, if required under
ERISA, with respect to each such Employee Plan/Agreement for the
last two (2) years;
(ii) a copy of the summary plan description, together
with each summary of material modifications, required under ERISA
with respect to such Employee Plan/Agreement, all material
employee communications relating to such Employee Plan/Agreement,
and, unless the Employee Plan/Agreement is embodied entirely in an
insurance policy to which Company is a party, a true and complete
copy of such Employee Plan/Agreement;
(iii) if the Employee Plan/Agreement is funded through a
trust or any third party funding vehicle (other than an insurance
policy), a copy of the trust or other funding agreement and the
latest financial statements thereof; and
(iv) the most recent determination letter received from
the Internal Revenue Service with respect to each Employee
Plan/Agreement that is intended to be a "qualified plan" under
Section 401 of the Code.
(v) With respect to each Employee Plan/Agreement for
which an annual report has been filed and delivered to Buyer
pursuant to clause (i) of this SECTION 3.16(i), no material
adverse change has occurred with respect to the matters covered by
the latest such annual report since the date thereof.
(j) FUTURE COMMITMENTS. Company has no announced plan or
legally binding commitment to create any additional Employee
Plans/Agreements or to amend or modify any existing Employee
Plan/Agreement.
3.17 EMPLOYMENT COMPENSATION. SCHEDULE 3.17 contains a true and correct
list of all employees to whom Company is paying compensation and the
compensation paid thereto during the twelve month period ending as of the date
of the Recent Financial Statements, including bonuses and incentives (such as
auto allowances, company supplied autos, life insurance and other benefits), and
listing the current annual rate of compensation for each employee.
3.18 TRADE RIGHTS. SCHEDULE 3.18 lists all Trade Rights (as defined
below) in which Company now has any interest, specifying whether such Trade
Rights are owned, controlled, used or held (under license or otherwise) by
Company, and also indicating which of such Trade Rights are registered. All
Trade Rights shown as registered in SCHEDULE 3.18 have been properly registered,
all pending registrations and applications have been properly made and filed and
all maintenance, renewal and other fees relating to registrations or
applications are current. In order to conduct the business of Company, as such
is currently being conducted or proposed to be conducted, Company does not
require any Trade Rights that it does not already have. Company is not
infringing and has not infringed any Trade Rights of another in the operation of
the business of Company, nor is any other person infringing the Trade Rights of
Company. Company has not granted any license or made any assignment of any Trade
Right listed on SCHEDULE 3.18, nor does Company pay any royalties or other
consideration for the right to use any Trade Rights of others. There are no
inquiries, investigations or claims or litigation challenging or threatening to
challenge Company's right, title and interest with respect to its
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continued use and right to preclude others from using any Trade Rights of
Company. All Trade Rights of Company are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any act or
omission of Company. The consummation of the transactions contemplated hereby
will not alter or impair any Trade Rights owned or used by Company. As used
herein, the term "TRADE RIGHTS" shall mean and include: (i) all trademark
rights, business identifiers, trade dress, service marks, trade names and brand
names, all registrations thereof and applications therefor and all goodwill
associated with the foregoing; (ii) all copyrights, copyright registrations and
copyright applications, and all other rights associated with the foregoing and
the underlying works of authorship; (iii) all patents and patent applications,
and all international proprietary rights associated therewith; (iv) all
contracts or agreements granting any right, title, license or privilege under
the intellectual property rights of any third party; (v) all inventions, mask
works and mask work registrations, know-how, discoveries, improvements, designs,
trade secrets, shop and royalty rights, employee covenants and agreements
respecting intellectual property and non-competition and all other types of
intellectual property; and (vi) all claims for infringement or breach of any of
the foregoing.
3.19 MAJOR CUSTOMERS AND SUPPLIERS.
(a) MAJOR CUSTOMERS. SCHEDULE 3.19(a) contains a list of the 10
largest customers of Company for each of the two (2) most recent fiscal
years (determined on the basis of the total dollar amount of net sales)
showing the total dollar amount of net sales to each such customer during
each such year. Company, Parent and Shareholder have no knowledge or
information of any facts indicating, or have any other reason to believe,
(i) that the Company's relationship with any of the customers listed on
SCHEDULE 3.19(a) is other than that which is likely to give rise to a
positive recommendation by such customer of the Company to others, or
(ii) that to the extent any Customer listed on SCHEDULE 3.19(a) would
have recurring projects, that such Customer would be other than likely to
retain the Company to perform such project.
(b) MAJOR SUPPLIERS. SCHEDULE 3.19(b) contains a list of the 10
largest suppliers of services and goods (including major subcontractors)
to Company for each of the two (2) most recent fiscal years (determined
on the basis of the total dollar amount of purchases) showing the
total dollar amount of purchases from each such supplier during each
such year. Company, Parent and Shareholder have no knowledge or
information of any facts indicating, or have any other reason to
believe, that any of the suppliers listed on SCHEDULE 3.19(b) will not
continue to be suppliers to the business of Company after the Closing and
will not continue to supply the business with substantially the same
quantity and quality of goods at competitive prices. There are no
agreements between the Company and any subcontractor or supplier
requiring Company to use the services or goods of such subcontractor or
supplier with respect to any further Company business.
3.20 WARRANTY AND PRODUCT LIABILITY. SCHEDULE 3.20 contains a true,
correct and complete copy of Company's standard warranty or warranties and,
except as stated therein, there are no warranties, commitments or obligations
with respect to the Company's products and services. SCHEDULE 3.20 sets forth
the estimated aggregate annual cost to Company of performing warranty
obligations for customers for each of the five (5) preceding fiscal years and
the current fiscal year to the date of the Recent Financial Statements. SCHEDULE
3.20 contains a
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description of all product liability claims and/or errors and omission claims
and similar claims, actions, litigation and other proceedings relating to
services rendered, which are presently pending or which to Parent's, Company's
or Shareholder's knowledge are threatened, or which have been asserted or
commenced against Company within the last five (5) years, in which a party
thereto either requests injunctive relief or alleges damages (whether or not
covered by insurance).
3.21 BANK ACCOUNTS. SCHEDULE 3.21 sets forth the names and locations of
all banks, trust companies, savings and loan associations and other financial
institutions at which the Company maintains a safe deposit box, lock box or
checking, savings, custodial or other account of any nature, the type and number
of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
3.22 AFFILIATES, RELATIONSHIPS TO COMPANY.
(a) CONTRACTS WITH AFFILIATES. All leases, contracts,
agreements or other arrangements between Company and any Affiliate,
Parent or Shareholder are described on SCHEDULE 3.22(a).
(b) NO ADVERSE INTERESTS. Parent, Shareholder and any Affiliate
have no direct or indirect interest in (i) any entity which does business
with Company or is competitive with Company's business, or (ii) any
property, asset or right which is used by Company in the conduct of its
business.
(c) OBLIGATIONS. All obligations of Parent, Shareholder or any
Affiliate to Company, and all obligations of Company to Parent,
Shareholder or any Affiliate, are listed on SCHEDULE 3.22(c).
3.23 NO BROKERS OR FINDERS. Except as set forth in SCHEDULE 3.23,
neither Company, Parent, Shareholder, nor any of its directors, officers,
employees, shareholders or agents have retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
3.24 DISCLOSURE. No representation or warranty by Parent or Shareholder
in this Agreement, nor any statement, certificate, schedule, document or exhibit
hereto furnished or to be furnished by or on behalf of Parent or Shareholder
pursuant to this Agreement or in connection with transactions contemplated
hereby, contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained therein
not misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer makes the following representations and warranties to Parent and
Shareholder, each of which is true and correct on the date hereof, shall remain
true and correct to and including the Closing Date, shall be unaffected by any
investigation heretofore or hereafter made by Shareholder or any notice to
Shareholder, and shall survive the Closing of the transactions provided for
herein.
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4.1 CORPORATE.
(a) ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Nevada.
(b) CORPORATE POWER. Buyer has all requisite corporate power to
enter into this Agreement and the other documents and instruments to be
executed and delivered by Buyer and to carry out the transactions
contemplated hereby and thereby.
4.2 AUTHORITY. The execution and delivery of this Agreement and the
other documents and instruments to be executed and delivered by Buyer pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Buyer. No other corporate
act or proceeding on the part of Buyer or its shareholders is necessary to
authorize this Agreement or the other documents and instruments to be executed
and delivered by Buyer pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by Buyer pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
4.3 NO BROKERS OR FINDERS. Except as set forth on SCHEDULE 4.3,
neither Buyer nor any of its directors, officers, employees or agents have
retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation thereof.
4.4 DISCLOSURE. No representation or warranty by Buyer in this
Agreement, nor any statement, certificate, schedule, document or exhibit hereto
furnished or to be furnished by or on behalf of Buyer pursuant to this Agreement
or in connection with transactions contemplated hereby, contains or shall
contain any untrue statement of material fact or omits or shall omit a material
fact necessary to make the statements contained therein not misleading.
4.5 INVESTMENT INTENT. The Shares are being acquired by Buyer for
investment only and not with the view to resale or other distribution.
5. COVENANTS.
5.1 DISCLOSURE SCHEDULE. Parent, Shareholder and Company shall have a
continuing obligation to promptly notify Buyer in writing with respect to any
matter hereafter arising or discovered which, if existing or known at the date
of this Agreement, would have been required to be set forth or described in the
Disclosure Schedule, but no such disclosure shall cure any breach of any
representation or warranty which is inaccurate.
5.2 NONCOMPETITION. Subject to the Closing, and as an inducement to
Buyer to execute this Agreement and complete the transactions contemplated
hereby, and in order to preserve the goodwill associated with the business of
Company being acquired pursuant to this Agreement, Parent and Shareholder hereby
covenants and agrees that for a period of two (2)
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years from the Closing Date, Parent and Shareholder will not directly or
indirectly through any employee, agent or otherwise:
(a) engage in, continue in or carry on any business which
competes with the Business or is substantially similar thereto, including
owning or controlling any financial interest in any corporation,
partnership, firm or other form of business organization which is so
engaged;
(b) consult with, advise or assist in any way, whether or not
for consideration, any corporation, partnership, firm or other business
organization which is now or becomes a competitor of company or Buyer in
any aspect with respect to the Business, including, but not limited to,
advertising or otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary for any such
competitor; loaning money or rendering any other form of financial
assistance to or engaging in any form of business transaction on other
than an arm's length basis with any such competitor;
(c) offer employment to an employee of Company, without the
prior written consent of Buyer; or
(d) engage in any practice the purpose of which is to evade the
provisions of this covenant not to compete or to commit any act which
adversely affects the Business; provided, however, that the foregoing
shall not prohibit the ownership of securities of corporations which are
listed on a national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of the
outstanding shares of any such corporation, nor shall any of the
foregoing prohibit Parent from conducting any business, whether planned
or existing, which is not currently being conducted exclusively by
Company. The parties agree that the geographic scope of this covenant not
to compete shall extend to the United States, Mexico, Europe and Canada.
The parties agree that Buyer may sell, assign or otherwise transfer this
covenant not to compete, in whole or in part, to any person, corporation,
firm or entity that purchases all or part of the business of the Company.
In the event a court of competent jurisdiction determines that the
provisions of this covenant not to compete are excessively broad as to
duration, geographical scope or activity, it is expressly agreed that
this covenant not to compete shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such over broad provisions shall be deemed, without
further action on the part of any person, to be modified, amended and/or
limited, but only to the extent necessary to render the same valid and
enforceable in such jurisdiction.
5.3 CONFIDENTIALITY. As an inducement to Buyer to execute this
Agreement and complete the transactions contemplated hereby, and in order to
preserve the goodwill associated with the business of the Company, Parent and
Shareholder hereby covenants and agrees as follows:
(a) COVENANT OF CONFIDENTIALITY. Parent and Shareholder shall
not at any time subsequent to the Closing, except as explicitly requested
by Buyer, (i) use for any
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purpose, (ii) disclose to any person, or (iii) keep or make copies of
documents, tapes, discs or programs containing, any confidential
information concerning Company. For purposes hereof, "CONFIDENTIAL
INFORMATION" shall mean and include, without limitation, all Trade Rights
in which Company has an interest, all customer lists and customer
information, and all other information concerning Company's processes,
apparatus, equipment, packaging, products, marketing and distribution
methods, not previously disclosed to the public directly by Company.
(b) EQUITABLE RELIEF FOR VIOLATIONS. Parent and Shareholder
agree that the provisions and restrictions contained in SECTION 5.2 and
this SECTION 5.3 are necessary to protect the legitimate continuing
interests of Buyer in acquiring the Shares, and that any violation or
breach of these provisions will result in irreparable injury to Buyer for
which a remedy at law would be inadequate and that, in addition to any
relief at law which may be available to Buyer for such violation or
breach and regardless of any other provision contained in this Agreement,
Buyer shall be entitled to injunctive and other equitable relief as a
court may grant after considering the intent of SECTION 5.2 and this
SECTION 5.3.
5.4 GENERAL RELEASES. At the Closing, Parent and Shareholder shall
deliver, or cause to be delivered, general releases to Buyer, in form and
substance satisfactory to Buyer and its counsel, releasing Company and the
directors, officers, agents and employees of Company from all claims to the
Closing Date, except (i) as may be described in written contracts disclosed in
the Disclosure Schedule (as that term is defined in SECTION 11.1 herein) and
expressly described and excepted from such releases, and (ii) in the case of
persons who are employees of the Company, compensation for current periods
expressly described and excepted from such releases.
5.5 NONSOLICITATION. In order to protect the trade secrets and
propriety know-how of Parent and Shareholder, Buyer agrees for a period of two
(2) years from the Closing Date, that Buyer will not directly or indirectly
through any employee, agent, or otherwise, offer, solicit, or accept any
employment from an employee of Parent and Shareholder.
5.6 ACCESS TO INFORMATION AND RECORDS. During the period prior to the
Closing, Parent shall cause Company to give Buyer, its counsel, accountants and
other representatives (i) access during normal business hours to all of the
properties, books, records, contracts and documents of Company for the purpose
of such inspection, investigation and testing as Buyer deems appropriate (and
Company shall furnish or cause to be furnished to Buyer and its representatives
all information with respect to the business and affairs of Company as Buyer may
request); (ii) access to employees, agents and representatives for the purposes
of such meetings and communications as Buyer reasonably desires; and (iii) with
the prior consent of Company in each instance (which consent shall not be
unreasonably withheld), access to vendors, customers, manufacturers of its
machinery and equipment, and others having business dealings with Company.
5.7 CONDUCT OF BUSINESS PENDING THE CLOSING. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer, Company
covenants as follows, and Parent shall cause each of the following to occur:
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(a) NO CHANGES. Company will carry on its business diligently
and in the same manner as heretofore and will not make or institute any
changes in its methods of purchase, sale, management, accounting or
operation which would have a material adverse affect on the Business of
the Company.
(b) MAINTAIN ORGANIZATION. Company will take such action as may
be necessary to maintain, preserve, renew and keep in favor and effect
the existence, rights and franchises of Company and will use its best
efforts to preserve the business organization of Company intact, to keep
available to Company the present officers and employees, and to preserve
for Company its present relationships with suppliers and customers and
others having business relationships with Company.
(c) NO BREACH. Company, Parent and Shareholder will not do or
omit any act, or permit any omission to act, which may cause a breach of
any material contract, commitment or obligation, or any breach of any
representation, warranty, covenant or agreement made by Shareholder,
Parent or Company herein, or which would have required disclosure on
SCHEDULE 3.8 had it occurred after the date of the Recent Financial
Statements and prior to the date of this Agreement.
(d) NO MATERIAL CONTRACTS. Without the prior written consent of
Buyer, no contract or commitment will be entered into, and no purchase of
supplies, equipment and no sale of goods or services (real, personal, or
mixed, tangible or intangible) will be made, by or on behalf of Company,
except contracts, commitments, purchases or sales which are in the
ordinary course of business and consistent with past practice, are not
material to the Company (individually or in the aggregate) and would not
have been required to be disclosed in the Disclosure Schedule had they
been in existence on the date of this Agreement.
(e) NO CORPORATE CHANGES. Company shall not amend its Articles
of Association and Memorandum of Association or make any changes in
authorized or issued capital stock.
(f) MAINTENANCE OF INSURANCE. Company shall maintain all of the
insurance in effect as of the date hereof.
(g) MAINTENANCE OF PROPERTY. Company shall use, operate,
maintain and repair all property of Company in a normal business manner.
(h) INTERIM FINANCIALS. Company will provide Buyer with interim
monthly financial statements (as of calendar month-end) and other
management reports as and when they are available.
(i) NO NEGOTIATIONS. Neither Company, Shareholder, nor Parent
will directly or indirectly (through a representative or otherwise)
solicit or furnish any information to any prospective buyer, commence, or
conduct presently ongoing, negotiations with any other party or enter
into any agreement with any other party concerning the sale of Company,
Company's assets or business or any part thereof or any equity securities
of
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Company (an "ACQUISITION PROPOSAL"), and Company, Shareholder, and Parent
shall immediately advise Buyer of the receipt of any acquisition
proposal.
(j) NO TRANSFER OF SHARES. Shareholder shall not transfer or
attempt to transfer any of the Shares except to Buyer pursuant hereto;
and Company shall refuse to accept any certificates for Shares to be
transferred or otherwise to allow such transfers to occur upon its books.
5.8 CONSENTS. Parent will cause Company and Shareholder to obtain all
consents necessary for the consummation of the transactions contemplated hereby
(including, but not limited to, any and all consents or approvals from any
governmental entities, agencies or bodies or any other entity of any kind
(whether governmental or not) of or from the United States, Ireland, the United
Kingdom or any other country in which Company is domiciled or doing business).
5.9 MERGER AGREEMENT. Buyer and Parent shall execute an agreement and
plan of merger and reorganization (the "Merger Agreement") simultaneously with
this Agreement.
5.10 OTHER ACTION. Company, Shareholder, Parent, and Buyer shall
fulfill all of the conditions to the parties' obligations to consummate the
transactions contemplated in this Agreement.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the reasonable satisfaction or waiver prior to or at the
Closing of each of the following conditions:
6.1 REPRESENTATIONS AND WARRANTIES TRUE AS OF THE CLOSING DATE. Each
of the representations and warranties made by Parent and Shareholder in this
Agreement, and the statements contained in the Disclosure Schedule or in any
instrument, list, certificate or writing delivered by Parent, Shareholder or
Company pursuant to this Agreement, shall be true and correct when made and
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing Date,
except for any changes permitted by the terms of this Agreement, consented to in
writing by Buyer, or which would not have a material adverse affect on the
Business of the Company.
6.2 COMPLIANCE WITH AGREEMENT. Parent, Shareholder and Company shall
have in all material respects performed and complied with all of their
agreements and obligations under this Agreement which are to be performed or
complied with by them prior to or on the Closing Date, including the delivery of
the closing documents specified in SECTION 9.1.
6.3 ABSENCE OF SUIT. No action, suit or proceeding before any court or
any governmental authority shall have been commenced or threatened, and no
investigation by any governmental or regulating authority shall have been
commenced, against Buyer, Parent, Shareholder, Company or any of the Affiliates,
subsidiaries, officers or directors of any of them, with respect to the
transactions contemplated hereby.
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6.4 CONSENTS AND APPROVALS. All approvals, consents and waivers that
are required to effect the transactions contemplated hereby shall have been
received, and executed counterparts thereof shall have been delivered to Buyer
prior to the Closing.
6.5 THIRD PARTY CONSENTS. Parent, Shareholder, or Company shall have
delivered to Buyer on or prior to the Closing Date, consents from landlords
under each lease of Real Property to the transactions contemplated by this
Agreement. Buyer shall have obtained all approvals, consents and waivers from
its banks and other third parties (including, but not limited to, those third
parties in a country other than the United States) from whom such consents,
approvals or waivers are required.
6.6 TERMINATION OF QUALIFIED PLANS. The Board of Directors of the
Company shall have executed a unanimous written consent substantially in the
form of EXHIBIT 6.6-1 hereto terminating its 401(k) plan sufficiently prior to
the Closing to cause, to the reasonable satisfaction of Buyer and its counsel,
Buyer's qualified plans not to be deemed to be successor plans, and the Company
shall amend its 401(k) plan by adopting the amendment substantially in the form
of EXHIBIT 6.6-2 hereto.
6.7 SATISFACTORY DUE DILIGENCE AND DISCLOSURE. Buyer shall have been
provided with all reasonably requested due diligence materials and the schedules
attached hereto and shall have completed, to its reasonable satisfaction, a "due
diligence" review of the assets, liabilities, operations, financial condition,
and proprietary rights of the Company.
6.8 SATISFACTORY EVIDENCE OF AUTHORITY TO EXECUTE. Parent and
Shareholder shall have provided such documents or instruments as are necessary,
in the reasonable judgment of Buyer's counsel, to establish the authority of the
person or persons executing this Agreement on behalf of Parent and Shareholder.
7. CONDITIONS PRECEDENT TO PARENT'S AND SHAREHOLDER'S OBLIGATIONS.
Each and every obligation of Parent and Shareholder to be performed on
the Closing Date shall be subject to the reasonable satisfaction or waiver prior
to or at the Closing of the following conditions:
7.1 REPRESENTATIONS AND WARRANTIES TRUE ON THE CLOSING DATE. Each of
the representations and warranties made by Buyer in this Agreement shall be true
and correct in all material respects when made and shall be true and correct at
and as of the Closing Date as though such representations and warranties were
made or given on and as of the Closing Date.
7.2 COMPLIANCE WITH AGREEMENT. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and obligations
under this Agreement which are to be performed or complied with by Buyer prior
to or on the Closing Date, including the delivery of the closing documents
specified in SECTION 9.2.
7.3 ABSENCE OF SUIT. No action, suit or proceeding before any court or
any governmental authority shall have been commenced or threatened, and no
investigation by any governmental or regulating authority shall have been
commenced, against Buyer, Parent,
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Shareholder, Company or any of the Affiliates, officers or directors of any of
them, with respect to the transactions contemplated hereby.
8. INDEMNIFICATION.
8.1 BY PARENT. Subject to the terms and conditions of this SECTION 8,
Parent hereby agrees to indemnify, defend and hold harmless Buyer, its
directors, officers, employees and controlled and controlling persons
(hereinafter "BUYER'S AFFILIATES") and the Company from and against all Claims
asserted against, resulting to, imposed upon, or incurred by Buyer, Buyer's
Affiliates or the Company, directly or indirectly, by reason of, arising out of,
resulting from or not otherwise disclosed as a result of (a) the inaccuracy or
breach of any representation or warranty of Shareholder or Company contained in
or made pursuant to this Agreement, or (b) the breach of any covenant of
Shareholder or the Company contained in this Agreement. As used in this SECTION
8, the term "CLAIM" shall include (i) all debts, liabilities and obligations;
(ii) all losses, damages (including, without limitation, consequential damages),
judgments, awards, settlements, costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated matter),
penalties, court costs and attorneys fees and expenses); and (iii) all demands,
claims, suits, actions, costs of investigation, causes of action, proceedings
and assessments, whether or not ultimately determined to be valid. Buyer may, at
its sole and absolute discretion, elect to set-off the amount or value or any
such Claim against any payments otherwise due to Parent or Shareholder hereunder
as described in SECTION 8.4.
8.2 BY BUYER. Subject to the terms and conditions of this SECTION 8,
Buyer hereby agrees to indemnify, defend and hold harmless Parent and
Shareholder from and against all Claims asserted against, resulting to, imposed
upon or incurred by any such person, directly or indirectly, by reason of or
resulting from (a) the inaccuracy or breach of any representation or warranty of
Buyer contained in or made pursuant to this Agreement, or (b) the breach of any
covenant of Buyer contained in this Agreement, including any claim accruing
after the Closing Date and for which Shareholder and/or Parent is not otherwise
liable hereunder.
8.3 INDEMNIFICATION OF THIRD-PARTY CLAIMS. The obligations and
liabilities of any party to indemnify any other under this SECTION 8 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
(a) NOTICE AND DEFENSE. The party or parties to be indemnified
(whether one or more, the "INDEMNIFIED PARTY") will give the party from
whom indemnification is sought (the "INDEMNIFYING PARTY") prompt written
notice of any such Claim, and the Indemnifying Party will undertake the
defense thereof by representatives chosen by it. Failure to give such
notice shall not affect the Indemnifying Party's duty or obligations
under this SECTION 8, except to the extent the Indemnifying Party is
prejudiced thereby. So long as the Indemnifying Party is defending any
such Claim actively and in good faith, the Indemnified Party shall not
settle such Claim. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other materials
required by them and in the possession or under the control of the
Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other respects
give reasonable cooperation in such defense.
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(b) FAILURE TO DEFEND. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party (upon further
notice) has the right to undertake the defense, compromise or settlement
of such Claim or consent to the entry of a judgment with respect to such
Claim, on behalf of and for the account and risk of the Indemnifying
Party, and the Indemnifying Party shall thereafter have no right to
challenge the Indemnified Party's defense, compromise, settlement or
consent to judgment therein.
(c) INDEMNIFIED PARTY'S RIGHTS. Anything in this SECTION 8.3 to
the contrary notwithstanding, (i) if there is a reasonable probability
that a Claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments, the
Indemnified Party shall have the right to defend, compromise or settle
such Claim, and (ii) the Indemnifying Party shall not, without the
written consent of the Indemnified Party, settle or compromise any Claim
or consent to the 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.
8.4 PAYMENT. The Indemnifying Party shall promptly pay the Indemnified
Party any amount due under this SECTION 8, which payment may be accomplished in
whole or in part, at the option of the Indemnified Party, by the Indemnified
Party setting off any amount owed to the Indemnifying Party by the Indemnified
Party under this Agreement. To the extent set-off is made by an Indemnified
Party in satisfaction or partial satisfaction of an indemnity obligation under
this SECTION 8 that is disputed by the Indemnifying Party, upon a subsequent
determination by final judgment not subject to appeal that all or a portion of
such indemnity obligation was not owed to the Indemnified Party, the Indemnified
Party shall pay the Indemnifying Party the amount which was set off and not owed
plus fifteen percent (15%) simply interest calculated on an annual basis,
pro-forma for the time such payment was owed and not paid. Upon judgment,
determination, settlement or compromise of any third party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party, and/or
to the Indemnified Party in reimbursement of any amount theretofore required to
be paid by it, the amount so determined by judgment, determination, settlement
or compromise and all other Claims of the Indemnified Party with respect
thereto, unless in the case of a judgment an appeal is made from the judgment.
If the Indemnifying Party desires to appeal from an adverse judgment, then the
Indemnifying Party shall post and pay the cost of the security or bond to stay
execution of the judgment pending appeal. Upon the payment in full by the
Indemnifying Party of such amounts, the Indemnifying Party shall succeed to the
rights of such Indemnified Party, to the extent not waived in settlement,
against the third party who made such third party Claim.
8.5 LIMITATIONS ON INDEMNIFICATION. Except for any willful or knowing
breach or misrepresentation, as to which claims may be brought without
limitation as to time or amount:
(a) TIME LIMITATION. Except as provided below, no claim or
action shall be brought under this SECTION 8 for breach of a
representation or warranty after the lapse of two (2) years following the
Closing:
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(i) There shall be no time limitation on claims on
actions brought for breach of any representation or warranty made
by Parent and Shareholder in or pursuant to SECTIONS 3.1 AND 3.2,
and Parent and Shareholder hereby waive all applicable statutory
limitation periods with respect thereto.
(ii) Any claim or action brought for breach of any
representation or warranty made by Parent and Shareholder in or
pursuant to SECTION 3.5 may be brought at any time until the
underlying tax obligation is barred by the applicable period of
limitation under federal, state and foreign laws relating thereto
(as such period may be extended by waiver).
(iii) Any claim or action brought for breach of any
representation or warranty made by Parent and Shareholder in or
pursuant to SECTION 3.11 may be brought at any time until the
underlying claim is barred by the applicable period of limitation
under federal, state and foreign laws relating thereto (as such
period may be extended by waiver).
(iv) Any claim made by a party hereunder by filing a suit
or action in a court of competent jurisdiction or a court
reasonably believed to be of competent jurisdiction for breach of
a representation or warranty prior to the termination of the
survival period for such claim shall be preserved despite the
subsequent termination of such survival period.
(v) If any act, omission, disclosure or failure to
disclose shall form the basis for a claim for breach of more than
one representation or warranty, and such claims have different
periods of survival hereunder, the termination of the survival
period of one claim shall not affect a party's right to make a
claim based on the breach of representation or warranty still
surviving.
(b) THRESHOLD; CEILING.
(i) Except for claims related to ownership of the
Shares, no indemnification payment shall be required to be made
pursuant to this Section 8 until such time as the total amount of
all claims exceeds $30,000 in the aggregate. (If the total amount
of such claims exceed $30,000, then the Indemnified Party shall be
entitled to be indemnified against and compensated and reimbursed
for the total amount of such claims and not only for the portion
of such claims exceeding $30,000.)
(ii) The maximum liability for any party under this Section
8 shall be equal to $2,000,000.
8.6 NO WAIVER. The Closing of the transactions contemplated by this
Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of condition
constituting the basis of the Claim at or before the Closing, and regardless of
whether such breach, violation or failure is deemed to be "material" for
purposes of SECTION 10.2.
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9. CLOSING.
The closing of this transaction (the "CLOSING") shall take place at the
offices of Rutan & Tucker, 611 Anton Boulevard, Suite 1400, Costa Mesa,
California 92626, at 10:00 A.M. on Thursday, November 9, or at such other time
and place as the parties hereto shall agree upon. Such date is referred to in
this Agreement as the "CLOSING DATE."
9.1 DOCUMENTS TO BE DELIVERED BY COMPANY AND SHAREHOLDER. At the
Closing, Parent shall cause Company and Shareholder to deliver to Buyer the
following documents, in each case duly executed or otherwise in proper form:
(a) SHARE CERTIFICATE(S). A share certificate or certificates
representing the Shares, together with duly executed and signed transfers
in respect of the shares in favor of the purchaser .
(b) COMPLIANCE CERTIFICATE. A certificate signed by Parent and
Shareholder that each of the representations and warranties made by
Parent and Shareholder in this Agreement is true and correct in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on and
as of the Closing Date (except for any changes permitted by the terms of
this Agreement or consented to in writing by Buyer), and that Parent,
Company, and Shareholder have performed and complied with all of
Parent's, Company's, and Shareholder's obligations under this Agreement
which are to be performed or complied with on or prior to the Closing
Date.
(c) CERTIFIED RESOLUTIONS. Certified copies of the resolutions
of the Board of Directors and the shareholders of Company, authorizing
and approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
(d) ARTICLES OF ASSOCIATION; MEMORANDUM OF ASSOCIATION. A copy
of the Memorandum of Association of Company certified by the secretary of
Company, and a copy of the Articles of Association of Company certified
by the Secretary of State (or its equivalent) of the state or country of
incorporation of Company.
(e) INCUMBENCY CERTIFICATE. Incumbency certificates relating to
each person executing (as a corporate officer or otherwise on behalf of
another person) any document executed and delivered to Buyer pursuant to
the terms hereof.
(f) GENERAL RELEASES. The General Releases referred to in
SECTION 5.4, duly executed by the persons referred to in such section.
(g) RESIGNATIONS. The resignations of _______________ and
_______________ as officers and directors of the Company, effective as of
the Closing Date and in form satisfactory to Buyer's counsel. Stephan
Hafer is to be named Chairman of Unibol upon closing.
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(h) OPINION OF COUNSEL. Parent or Company shall deliver an
opinion of _______________, counsel to the Company substantially in the
form of EXHIBIT 9.1(h) hereto
(i) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as Buyer may reasonably request.
9.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Parent and/or Shareholder the following documents, in each
case duly executed or otherwise in proper form:
(a) CASH. To Shareholder, Buyer's check (or confirmation of
wire transfer) as required by SECTION 2.1(a) hereof.
(b) COMPLIANCE CERTIFICATE. A certificate signed by the chief
financial officer of Buyer that the representations and warranties made
by Buyer in this Agreement are true and correct on and as of the Closing
Date with the same effect as though such representations and warranties
had been made or given on and as of the Closing Date (except for any
changes permitted by the terms of this Agreement or consented to in
writing by Shareholder and/or Parent), and that Buyer has performed and
complied with all of Buyer's obligations under this Agreement which are
to be performed or complied with on or prior to the Closing Date.
(c) CERTIFIED RESOLUTIONS. A certified copy of the resolutions
of the Board of Directors of Buyer authorizing and approving this
Agreement and the consummation of the transactions contemplated by this
Agreement.
(d) INCUMBENCY CERTIFICATE. Incumbency certificates relating to
each person executing any document executed and delivered to Parent or
Shareholder by Buyer pursuant to the terms hereof.
(e) OTHER DOCUMENTS. All other documents, instruments or
writings required to be delivered to Company or Parent at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Parent may reasonably request.
10. TERMINATION.
10.1 RIGHT OF TERMINATION WITHOUT BREACH. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
(a) by mutual written agreement of Buyer and Parent, or
(b) by either Buyer or Parent if the Closing shall not have
occurred on or before November 8, 2000, provided the terminating party
has not, through breach of a representation, warranty or covenant,
prevented the Closing from occurring on or before such date.
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10.2 TERMINATION FOR BREACH.
(a) TERMINATION BY BUYER. If (i) there has been a material
violation or breach by Parent, Company, or Shareholder of any of the
agreements, representations or warranties contained in this Agreement
which has not been waived in writing by Buyer, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer which
has not been so waived, or (iii) Parent, Company, or Shareholder shall
have attempted to terminate this Agreement under this SECTION 10 or
otherwise without grounds to do so, then Buyer may, by written notice to
Parent at any time prior to the Closing that such violation, breach,
failure or wrongful termination attempt is continuing, terminate this
Agreement with the effect set forth in SECTION 10.2(c) hereof.
(b) TERMINATION BY PARENT. If (i) there has been a material
violation or breach by Buyer of any of the agreements, representations or
warranties contained in this Agreement which has not been waived in
writing by Parent, or (ii) there has been a failure of satisfaction of a
condition to the obligations of Parent which has not been so waived, or
(iii) Buyer shall have attempted to terminate this Agreement under this
SECTION 10 or otherwise without grounds to do so, then Parent may, by
written notice to Buyer at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in SECTION 10.2(c)
hereof.
(c) EFFECT OF TERMINATION. Termination of this Agreement
pursuant to this SECTION 10.2 shall not in any way terminate, limit or
restrict the rights and remedies of any party hereto against any other
party which has violated, breached or failed to satisfy any of the
representations, warranties, covenants, agreements, conditions or other
provisions of this Agreement prior to termination hereof. In addition to
the right of any party under common law to redress for any such breach or
violation, each party whose breach or violation has occurred prior to
termination shall jointly and severally indemnify each other party for
whose benefit such representation, warranty, covenant, agreement or other
provision was made ("INDEMNIFIED PARTY") from and against all losses,
damages (including, without limitation, consequential damages), costs and
expenses (including, without limitation, interest (including prejudgment
interest in any litigated matter), penalties, court costs, and attorneys
fees and expenses) asserted against, resulting to, imposed upon, or
incurred by the indemnified party, directly or indirectly, by reason of,
arising out of or resulting from such breach or violation. Subject to the
foregoing, the parties' obligations under SECTIONS 10.3 AND 11.8(a) of
this Agreement shall survive termination.
10.3 RESTRICTIONS ON BUYER. In the event of a termination of this
Agreement, for any reason whatsoever, in order to protect the trade
secrets and proprietary know-how of Parent, Company, and Shareholder,
Buyer agrees as follows:
(a) COVENANT OF CONFIDENTIALITY. Buyer shall not at any time
subsequent to such termination, except as explicitly permitted by Parent,
(i) use for any purpose, (ii) disclose to any person, or (iii) keep or
make copies of documents, tapes, discs or programs containing, any
confidential information concerning Parent or Company. For
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purposes hereof, "confidential information" shall mean and include,
without limitation, all Trade Rights in which Parent and/or Company has
an interest, all customer lists and customer information of Parent and/or
Company, and all other information concerning Company's processes,
apparatus, equipment, packaging, products, marking and distribution
methods, not previously disclosed to the public directly by Company.
(b) EQUITABLE RELIEF FOR VIOLATIONS. Buyer agrees that the
provisions and restrictions contained in Section 10.3 are necessary to
protect the legitimate continuing interests of Parent, Company, and
Shareholder, and that any violation or breach of these provisions will
result in irreparable injury to Parent, Company, and/or Shareholder for
which a remedy at law would be inadequate and that, in addition to any
relief at law which may be available to Parent, Company, or Shareholder
for such violation or breach and regardless of any other provision
contained in this Agreement, Parent, Company, and Shareholder shall be
entitled to injunctive and other equitable relief as a court may grant
after considering the intent of this Section 10.3
11. MISCELLANEOUS.
11.1 DISCLOSURE SCHEDULE. The Schedules have been compiled in a bound
volume (the "DISCLOSURE SCHEDULE"), executed by Parent and dated and delivered
to Buyer on the date of this Agreement. Information set forth in the Disclosure
Schedule specifically refers to the article and section of this Agreement to
which such information is responsive and such information shall not be deemed to
have been disclosed with respect to any other article or section of this
Agreement or for any other purpose. The Disclosure Schedule shall not vary,
change or alter the language of the representations and warranties contained in
this Agreement and, to the extent the language in the Disclosure Schedule does
not conform in every respect to the language of such representations and
warranties, such language in the Disclosure Schedule shall be disregarded and be
of no force or effect.
11.2 FURTHER ASSURANCE. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and
shall take such other actions, as such other party may reasonably request (prior
to, at, or after the Closing) for the purpose of carrying out or evidencing the
transactions contemplated hereby.
11.3 DISCLOSURES AND ANNOUNCEMENTS. Announcements concerning the
transactions provided for in this Agreement by Buyer, Parent, Company, or
Shareholder shall be subject to the mutual agreement of the other parties in all
essential respects.
11.4 ASSIGNMENT; PARTIES IN INTEREST.
(a) ASSIGNMENT. Except as expressly provided herein, the rights
and obligations of a party hereunder may not be assigned, transferred or
encumbered without the prior written consent of the other parties.
Notwithstanding the foregoing, Buyer may, without consent of any other
party, cause one or more subsidiaries or affiliates of Buyer to carry out
all or part of the transactions contemplated hereby; provided, however,
that Buyer shall, nevertheless, remain liable for all of its obligations,
and those of any such subsidiary, to Parent and/or Shareholder hereunder.
Any permitted assignee shall be
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required to execute an agreement which shall obligate such assignee to be
bound by all terms under this Agreement.
(b) PARTIES IN INTEREST. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successors
and permitted assigns of the parties hereto. Nothing contained herein
shall be deemed to confer upon any other person any right or remedy under
or by reason of this Agreement.
11.5 LAW GOVERNING AGREEMENT; VENUE. This Agreement may not be modified
or terminated orally, and shall be construed and interpreted according to the
internal laws of the State of California, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction. Any dispute,
controversy or legal action concerning this Agreement shall be heard in the
state and federal courts located in Orange County, California.
11.6 AMENDMENT AND MODIFICATION. Buyer and Parent may amend, modify and
supplement this Agreement in such manner as may be agreed upon in writing
between Buyer and Parent.
11.7 NOTICE. All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents if followed by certified mail; or (c) sent to the
parties at their respective addresses indicated herein by registered or
certified U.S. mail, return receipt requested and postage prepaid, or by private
overnight mail courier service. The respective addresses to be used for all such
notices, demands or requests are as follows:
If to Buyer, to: California Software Corporation
2485 McCabe Way, 2nd Floor
Irvine, CA 92614
Attention: Chief Executive Officer
Facsimile: (949) 553-8901
or to such other person or address as Buyer shall furnish to Shareholder in
writing.
If to Parent, to: c/o___________________
______________________
______________________
______________________
Facsimile:____________
with a copy to: Womble Carlyle Sandridge & Rice, PLLC
One Atlantic Center
1201 West Peachtree Street, Suite 3500
Atlanta, Georgia 30309
Attn: G. Donald Johnson, Esq.
Facsimile: (404) 870-________
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If to Shareholder, to: c/o_____________________
________________________
________________________
________________________
Facsimile:______________
or to such other person or address as Parent shall designate in accordance with
this Agreement. In addition, any notice required to be sent to Company or
Shareholder shall be sent to Parent (together with a copy to G. Donald Johnson,
Esq. at the address set forth above), which such notice shall be deemed legally
sufficient..
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission; if sent by overnight courier pursuant to this paragraph, such
communication shall be deemed delivered upon receipt; and if sent by U.S. mail
pursuant to this paragraph, such communication shall be deemed delivered as of
the date of delivery indicated on the receipt issued by the relevant postal
service, or, if the addressee fails or refuses to accept delivery, as of the
date of such failure or refusal. Any party to this Agreement may change its
address for the purposes of this Agreement by giving notice thereof in
accordance with this section.
11.8 EXPENSES. Regardless of whether or not the transactions
contemplated hereby are consummated:
(a) EXPENSES TO BE PAID BY PARENT. Parent shall pay, and shall
indemnify, defend and hold Buyer, Company, and Shareholder harmless from and
against, each of the following:
(i) TRANSFER TAXES. Any sales, use, excise, transfer or
other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
(ii) PROFESSIONAL FEES. All fees and expenses of their
own and Company's legal, accounting, tax, investment banking and
other professional counsel in connection with the transactions
contemplated hereby.
(iii) BROKER'S AND FINDER'S FEES. All fees and expenses of
their own and Company's brokers and finders in connection with the
transactions contemplated hereby.
(b) OTHER. Except as otherwise provided herein, each of the
parties shall bear its own expenses and the expenses of its counsel and
other agents in connection with the transactions contemplated hereby.
(c) COSTS OF LITIGATION. The parties agree that the prevailing
party in any action brought with respect to or to enforce or interpret
any right or remedy under this Agreement shall be entitled to recover
from the other party or parties all reasonable costs and expenses of any
nature whatsoever incurred by the prevailing party in connection
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<PAGE>
with such action, including without limitation attorneys', accountants',
expert witness' and consultants' fees and prejudgment interest.
11.9 ENTIRE AGREEMENT. This instrument embodies the entire agreement
between the parties hereto with respect to the transactions contemplated herein,
and there have been and are no agreements, representations or warranties between
the parties other than those set forth or provided for herein.
11.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.11 HEADINGS. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
11.12 FORM 8-K AND SECURITIES LAW FILINGS. Parent shall cooperate, and
shall cause Company and Shareholder to cooperate, with and assist the Buyer to
the extent reasonably requested by the Buyer, in providing information for the
preparation of the Report on Form 8-K which may be filed by Buyer in connection
with the transactions contemplated by this Agreement.
11.13 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
BUYER: CALIFORNIA SOFTWARE CORPORATION,
a Nevada corporation
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
PARENT: UNICOMP, INC.,
a Colorado corporation
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
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<PAGE>
COMPANY: UNIBOL, LTD,
a United Kingdom corporation
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
SHAREHOLDER: ICS COMPUTING GROUP LTD,
a United Kingdom corporation
By:
---------------------------------
Printed Name:
-----------------------
Title:
------------------------------
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