ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated as of March 16,
2000, is made and entered into by and among between Marketplace Systems
Corporation, a Texas corporation ("Seller"), Jay Fisher, an individual (the
"Stockholder"), and SVI Holdings, Inc., a Nevada corporation ( "Buyer"), who
agree as follows:
RECITALS
Seller desires to sell, and Buyer desires to purchase, all of the
Assets (as defined below) of Seller's business, as a going concern, for a
consideration on the terms set forth in this Agreement.
AGREEMENT
1. DEFINITIONS. For the purposes of this Agreement capitalized terms
not otherwise defined shall have the following meanings:
1.1. "Affiliate" -- any person or entity controlled by,
controlling, or under common control with, directly or indirectly, the
referenced person or entity.
1.2. "Best Efforts" -- the efforts that a prudent Person
desirous of achieving a result would use in similar circumstances to promote the
result as expeditiously as possible.
1.3. "Breach" -- (a) any inaccuracy in or breach of, or any
failure to perform or comply with, such representation, warranty, covenant,
obligation, or other provision of this Agreement and the Schedules delivered
pursuant to this Agreement, or (b) any claim (by any Person) or other occurrence
or circumstance that is or was inconsistent with such representation, warranty,
covenant, obligation, or other provision of this Agreement and the Schedules
delivered pursuant to this Agreement.
1.4. "Business" -- the business owned and operated by Seller.
1.5. "Claims and Encumbrances" -- with respect to any person
or entity, (i) any lien, mortgage, pledge, encumbrance, charge (general or
specific) or conditional sale or other title retention agreement (including
without limitation the right of a lessor under a capital lease to the property
leased thereunder) or other security interest of any kind upon any property or
assets of any character of such person or entity, whether now owned or hereafter
acquired by such person or entity, or upon the income or profits thereof, (ii)
the transfer by such person or entity of any of its property or assets for the
purpose of subjecting the same to the payment of any indebtedness of such person
or others in priority to the payment by such person or entity of its general
creditors, (iii) any sale, assignment, pledge or other transfer by such person
or entity of its accounts receivable, contract rights, general intangibles or
chattel paper, with or without recourse, and (iv) any agreement to give or do or
claim of any of the foregoing.
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1.6. "Consideration Share Price" - the average closing price
of SVI common stock as quoted on the American Stock Exchange for the ten
consecutive trading days immediately preceding the Closing Date.
1.7. "Consideration Shares" - the shares of SVI common stock
issued to Seller in accordance with this Agreement.
1.8. "Contemplated Transactions" -- all of the transactions
contemplated by this Agreement, including:
1.8.1. the sale of the Assets by Seller to Buyer;
1.8.2. the execution, delivery, and performance of
the Employment Agreement, the Noncompetition Agreement and the
Lockup Agreement;
1.8.3. the performance by Buyer, Seller and the
Stockholder of their respective covenants and obligations
under this Agreement; and
1.8.4. Buyer's acquisition and ownership of the
Assets and exercise of control over the Business.
1.9. "Employment Agreement" - as defined in Section 3.2.4.
1.10. "Governmental Authorization" -- any approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
1.11. "Governmental Body" -- any:
1.11.1. nation, state, county, city, town, village,
district, or other jurisdiction of any nature;
1.11.2. federal, state, local, municipal, foreign, or
other government;
1.11.3. governmental or quasi-governmental authority
of any nature (including any governmental agency, branch,
department, official, or entity and any court or other
tribunal);
1.11.4. multi-national organization or body; or
1.11.5. body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
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1.12. "Legal Requirement" -- any federal, state, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
1.13. "Lockup Agreement" -- as defined in Section 3.8.1.
1.14. "Order" -- any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or rendered by any
court, administrative agency, or other Governmental Body or by any arbitrator.
1.15. "Ordinary Course of Business" -- an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of Business"
only if:
1.15.1. such action is consistent with the past
practices of such Person and is taken in the ordinary course
of the normal day-to-day operations of such Person;
1.15.2. such action is not required to be authorized
by the board of directors of such Person (or by any Person or
group of Persons exercising similar authority) and is not
required to be specifically authorized by the parent company
(if any) of such Person; and
1.15.3. such action is similar in nature and
magnitude to actions customarily taken, without any
authorization by the board of directors (or by any Person or
group of Persons exercising similar authority), in the
ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person
1.16. "Permitted Encumbrances" -- Claims and Encumbrances
disclosed in Seller's Financial Statements (including the notes thereto) and
those particular Claims and Encumbrances set forth on Schedule 1.16.
1.17. "Person" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
1.18. "Proceeding" -- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
1.19. "SVI Stock" -- the common stock of SVI Holdings, Inc.
1.20. "Technology" -- software programs, object and source
code, all associated products and know-how which together comprise packages
designed, developed, marketed, produced and provided by Seller including all
intellectual property rights of every kind in and to such programs, object and
source code, products and know-how.
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1.21. "Threatened" -- a claim, Proceeding, dispute, action, or
other matter will be deemed to have been "Threatened" if any demand or statement
has been made (orally or in writing to Seller) or any notice has been given
(orally or in writing to Seller), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to conclude that
such a claim, Proceeding, dispute, action, or other matter is likely to be
asserted, commenced, taken, or otherwise pursued in the future.
2. SALE AND TRANSFER OF ASSETS.
2.1. ASSETS TO BE SOLD. In reliance on the representations and
warranties contained in this Agreement and subject to the terms and conditions
of this Agreement, Seller will sell, assign and deliver, free and clear of all
Claims and Encumbrances (other than Permitted Encumbrances), to Buyer and Buyer
will purchase from Seller at the Closing (as such term is defined in Section
3.1) all of Seller's right, title and interest in and to all of Seller's assets
and business (excluding the Excluded Assets as defined in Section 2.2) as the
same may exist on the Closing Date (as defined in Section 3.1) (collectively,
the "Assets"). The Assets will include without limitation and with the exception
of the Excluded Assets, all of the assets (i) which are reflected in Seller's
Financial Statements (as defined in Section 4.7), and (ii) which have been
acquired by Seller after the date of such Financial Statements, subject, in each
case, to the use of raw materials and supplies, collection of accounts
receivable, realization of prepaid expenses, performance of contracts in full,
expenditure of cash and other dispositions of assets, all in the ordinary course
of business prior to the Closing, and subject to the provisions of this
Agreement. The Assets to be sold include, but are not limited to, the following:
2.1.1. all of Seller's rights to the Technology, the
right to market and distribute the Technology, and the good will associated
therewith;
2.1.2. all of Seller's rights in the trademarks,
trade names and logos (including registrations and applications for registration
of any of them) now or previously used by Seller in connection with its
business, the Technology or otherwise, together with the good will of the
business associated with those trademarks, trade names and logos;
2.1.3. all of Seller's copyrights (including, without
limitation, with respect to the Technology any registrations and applications
for registration of those copyrights), and all of Seller's rights of every kind
and nature in and relating to editorial materials, photos, art work, mechanicals
and files, together with the good will of the business associated with those
copyrights;
2.1.4. all of Seller's past and current mailing lists
and customer lists and all materials used for mailing list development, customer
promotion and fulfillment of orders;
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2.1.5. all of Seller's rights under license
agreements, orders, leases, commitments, contracts, arrangements and other
agreements (including, but not limited to, orders or agreements for the purchase
of supplies and for the receipt of services in connection with the operation of
Seller's business) which remain unperformed or unfulfilled on, or by their terms
continue in effect after the Closing Date, to the extent such orders, leases,
commitments, contracts, arrangements and other agreements are accepted by the
Buyer (other than those agreements listed as "Agreements not Assumed" on
Schedule 4.15.2), to receive goods and services pursuant to, and to assert
claims and take other rightful actions in respect of breaches, defaults and
other violations of, such contracts;
2.1.6. all of Seller's other books, records, files,
data and proprietary information relating to Seller's business and to its
mailing lists, customers and the operation of Seller's business, but excluding
account books of original entry and general ledgers (any such excluded records
and data to be retained at Seller's executive offices in Austin, Texas, or at
such other place in Texas or California as the Seller may notify the Buyer in
writing, and made available by Seller (or Seller's successor in interest) for
inspection by Buyer at any time during normal business hours for a period of
five (5) years after the Closing Date, and Buyer, at its own expense, may make
such copies and extracts as it may desire);
2.1.7. all of Seller's accounts receivable;
2.1.8. all of Seller's inventory of advertising,
sales and customer material, forms, labels, insert cards, envelopes, promotional
materials, and other supplies used in connection with Seller's business;
2.1.9. all computer and automatic machinery software
and programs, and all the tangible embodiments thereof (including, by way of
example and not limitation, all tapes, disks, cards and all copies stored on the
hard disks or other mass storage components of all such computers and automatic
machinery), and all the user and other documentation with respect to the
foregoing owned by Seller and copies of the foregoing which Seller has the right
to copy but does not own;
2.1.10. all machinery, equipment, furniture,
furnishings, tools and parts and similar property;
2.1.11. all inventories of paper and other raw
materials, work in process, finished products and supplies (collectively, the
"Inventories") including Inventories held at any location for or controlled by
Seller and Inventories previously purchased and in transit to Seller at such
locations;
2.1.12. all other tangible assets owned by Seller;
2.1.13. all products and any products under research
or development prior to or on the Closing Date;
2.1.14. all deposits paid on machinery and equipment
or other Assets;
2.1.15. all prepaid expenses of Seller;
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2.1.16. to the extent the same are transferable, all
federal, state or local governmental or regulatory permits, licenses, approvals
and franchises which are owned or have been received by Seller in connection
with the operation of its business or the ownership of the Assets;
2.1.17. all bank balances, cash on hand and cash
equivalents of Seller at the Closing Date; and
2.1.18. all other rights, properties and assets owned
by Seller not otherwise described in this Agreement of any character whatsoever,
wherever located, and not expressly excluded from the Assets by Section 2.2 and
all good will of Seller.
2.2. ASSETS RETAINED BY SELLER. The following assets of
Seller, together with those assets listed on Schedule 2.2 (collectively, the
"Excluded Assets"), are being retained by Seller (and excluded from the Assets
as described in Section 2.1):
2.2.1. all rights of insurance coverage relating to
the liabilities being retained by Seller after the Closing Date;
2.2.2. income tax records of Seller; PROVIDED that
Buyer shall have reasonable access to such records and shall have the right to
make copies or abstracts of such records for five (5) years after the Closing
Date to the extent Buyer shall reasonably require such access;
2.2.3. minute and stock books of Seller; PROVIDED
that Buyer shall have reasonable access to such records and shall have the right
to make copies or abstracts of such records for five (5) years after the Closing
Date to the extent Buyer shall reasonably require such access;
2.2.4. the agreements listed on Schedule 4.15.2 and
identified as "Agreements Not Assumed";
2.2.5. subject to Buyer's rights under this
Agreement, the rights of Seller under this Agreement and the proceeds payable to
Seller under this Agreement; and
2.2.6. all deposits with respect to income tax
liabilities of Seller or the Stockholder.
3. THE CLOSING.
3.1. PLACE AND DATE. The closing of the sale and purchase of
the Assets (the "Closing") shall take place at the offices of Solomon, Ward,
Seidenwurm & Smith, LLP, 401 B Street, Suite 1200, San Diego, California 92101
at 10:00 a.m., local time, on March ___ 2000, or at such other time or place as
agreed to by the parties. The date of the Closing in this Agreement is referred
to as the "Closing Date."
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3.2. CLOSING OBLIGATIONS OF SELLER.4 CLOSING OBLIGATIONS.4
CLOSING OBLIGATIONS. At the Closing, Seller and/or the Stockholder shall deliver
to Buyer the following, and simultaneously with such delivery, Seller and/or the
Stockholder shall take such action as may be necessary or reasonably requested
by Buyer to place Buyer in possession and control of the Assets:
3.2.1. such bills of sale, assignments or other
instruments of transfer and assignment as shall be necessary
to vest in Buyer title to the Assets to be sold and assigned
under this Agreement free and clear of all Claims and
Encumbrances (other than Permitted Encumbrances);
3.2.2. a copy of the resolutions of the board of
directors and the stockholders of Seller authorizing the
execution, delivery and performance of this Agreement by
Seller, and a certificate of its Secretary or Assistant
Secretary, dated the Closing Date, that such resolutions were
duly adopted and are in full force and effect;
3.2.3. a noncompetition agreement in the form of
Exhibit A, executed by Stockholder (the "Noncompetition
Agreement");
3.2.4. an employment agreement in the form of Exhibit
B, executed by Stockholder (the "Employment Agreement");
3.2.5. the Lockup Agreement executed by Seller;
3.2.6. a certificate executed by the President of
Seller representing and warranting to Buyer that each of
Seller's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made
on the Closing Date (giving full effect to any supplements to
the Disclosure Schedules that were delivered by Seller to
Buyer prior to the Closing Date in accordance with Section
6.5);
3.2.7. all such executed documents as may be required
to change Seller's corporate name on that date to a name
bearing no similarity to "Market Place Systems, Inc.",
including, but not limited to, a name change amendment with
the Secretary of State of Texas and an appropriate name change
notice in each state where Seller is qualified to do business;
and
3.2.8. such other certificates or other documents or
instruments as the Buyer or Buyer's counsel may reasonably
request.
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3.3. CLOSING OBLIGATIONS OF BUYER. At the Closing, Buyer shall
deliver to Seller the following:
3.3.1. the Initial Cash Consideration (as defined in
Section 3.4.1) payable by cashier's check or wire transfer;
3.3.2. the Consideration Shares (as defined in
Section 3.4.3);
3.3.3. instruments pursuant to which Buyer assumes
the obligations and liabilities to be assumed by it under
Section 3.6 in form and substance reasonably satisfactory to
Seller;
3.3.4. the Employment Agreement, executed by Buyer;
3.3.5. the Lockup Agreement, executed by Buyer;
3.3.6. a copy of resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement by Buyer, and a certificate of
its Secretary or Assistant Secretary, dated the Closing Date,
that such resolutions were duly adopted and are in full force
and effect;
3.3.7. a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made
on the Closing Date; and
3.3.8. such other certificates or other documents or
instruments as Seller's counsel may reasonably request.
3.4. PURCHASE PRICE; PAYMENT OF PURCHASE PRICE. In addition to
assuming the liabilities pursuant to Section 3.6, and subject to the terms and
conditions of this Agreement, Buyer shall deliver the following to Seller as
consideration on the sale of the Assets (collectively, the "Purchase Price"):
3.4.1. The sum of Two Hundred Fifty Thousand Dollars
($250,000) in immediately available funds payable at the
Closing (the "Initial Cash Consideration");
3.4.2. The sum of Five Hundred Thousand Dollars
($500,000), which shall become fully due 30 days after the
Closing Date;
3.4.3. Delivery of a number of shares of SVI Stock
equal to $1,000,000 divided by the Consideration Share Price
which SVI Stock shall be issued in accordance with and shall
be subject to provisions of Section 3.8 below (the
"Consideration Shares").
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3.5. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated as set forth on Schedule 3.5 and all tax returns filed by the parties
shall be consistent with such allocation. Seller and Buyer shall each prepare
IRS Form 8594 in accordance with such allocation and consistent with one another
and in accordance with applicable law and regulations. Such Forms shall be
delivered to one another for review prior to filing with the IRS.
3.6. ASSUMPTION OF SPECIFIC LIABILITIES. At the Closing, Buyer
shall assume and shall subsequently pay, honor and discharge when due and
payable and otherwise in accordance with the relevant governing agreements as
the same shall exist on the Closing Date:
3.6.1. any and all liabilities, obligations and
commitments of Seller for unfilled purchase orders entered into by Seller in the
ordinary course of business and listed on Schedule 3.6.1;
3.6.2. any and all liabilities, obligations and
commitments of Seller for unfilled sales orders for the Technology and any
products incorporating the Technology entered into by Seller in the ordinary
course of business and listed on Schedule 3.6.2;
3.6.3. any and all liabilities, obligations and
commitments of Seller under other contracts, leases, arrangements and agreements
to the extent listed on Schedule 4.15.1; PROVIDED that Buyer shall not assume
liabilities, obligations or commitments of Seller relating to (i) any tax
liabilities or similar assessments arising from the conduct of any business or
occurrences prior to the Closing Date; (ii) any liabilities for breach or
default by Seller under any contract, lease or agreement assigned to Buyer
hereunder; (iii) any liability with respect to any claim, suit, action or
judicial or arbitral proceeding (a) made or pending or commenced against Seller
on or prior to the Closing Date or (b) made or commenced after the Closing Date
in respect of any action, omission or condition to the extent existing or
occurring prior to the Closing Date; (iv) any pension or profit sharing plan
benefit, continuation, premium, withdrawal or other liability, severance
liability, funding deficiency, worker's compensation, employee life and health
insurance or similar liability to any employee or former employee of Seller,
including, without limitation, any such liability under any multi-employer or
single-employer plan, contract or arrangement (including, without limitation,
any plan or other instrument referred to in Schedule 4.21), or any other
liability in respect of any employee attributable to or in respect of any period
prior to the Closing Date, whether or not reflected on the Closing Balance
Sheet; (v) any consulting agreements or employment agreements except for the
employment agreements listed under the heading "Agreements Assumed" on Schedule
4.15.2; (vi) any liability or obligation of Seller not expressly assumed by
Buyer pursuant to this Section 3.6.
3.7. LIMITATION ON ASSUMPTION OF LIABILITIES. Except as
specifically provided in this Agreement, Buyer shall not assume or have any
liability for any liabilities or obligations of Seller, and Seller shall pay,
perform and discharge all its liabilities and obligations which are not so
assumed by Buyer (including, without limitation, liability for credits or
refunds for Technology or products incorporating the Technology sold by Seller
prior to the Closing Date).
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3.8. CONSIDERATION SHARES.
3.8.1. Seller and the Stockholder shall execute and
deliver to Buyer at Closing a Lockup Agreement in the form attached hereto as
Exhibit C (the "Lockup Agreement").
3.8.2. Seller shall not, without the prior written
consent of Buyer, directly or indirectly, sell, assign, transfer, pledge, engage
in any hedging transaction with respect to, or otherwise dispose of
(collectively "Transfer"), the Consideration Shares, except upon the conditions
specified in this Section 3.8.
3.8.3. Seller may Transfer the Consideration Shares
only in accordance with the terms of the Lockup Agreement; PROVIDED, that in no
event shall Seller Transfer more than 25% of the Consideration Shares in any
calendar quarter.
3.8.4. Notwithstanding anything in this Agreement to
the contrary, Seller may Transfer the Consideration Shares to Stockholder upon
dissolution of Seller. In the event Seller distributes the Consideration Shares
to Stockholder, the restrictions in this Section 3.8 will apply to Stockholder.
3.8.5. Seller shall cause any permitted transferee
hereunder to agree to take and hold the Consideration Shares subject to the
provisions and upon the conditions specified in this Section 3.8.
3.8.6. Each certificate representing any shares of
the Consideration Shares shall be stamped with a legend in the form set forth
below (in addition to any legend required under applicable state securities
laws). Similar stop-transfer notices shall be entered on the stock transfer
books of Buyer.
"The securities represented by this certificate have
been issued in reliance upon an exemption from
registration under the Securities Act of 1933. Such
securities may not be offered for sale, sold or
transferred in the absence of such registration or an
exemption therefrom evidenced by an opinion of
counsel satisfactory in form and substance to SVI
Holdings, Inc.
"The securities represented by this certificate are
subject to restrictions upon and obligations with
respect to transfer as set forth in an agreement
between SVI Holdings, Inc. and the registered holder,
a copy of which is on file at the principal office of
the corporation."
4. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE STOCKHOLDER. Seller
and the Stockholder jointly and severally represent and warrant to Buyer as
follows:
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4.1. ORGANIZATION AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and has all requisite power and authority to own, operate and lease its
properties and to carry on its business as now being conducted. Seller is duly
licensed or qualified to do business and is in good standing in each
jurisdiction where the failure to be so qualified or licensed would have a
material adverse effect on the business or financial condition of Seller. Seller
has no subsidiaries and no direct or indirect interest or interests by stock
ownership or otherwise in any firm, association, corporation or business
enterprise.
4.2. AUTHORIZATION OF AGREEMENT. Seller has the power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by Seller
has been duly authorized by all necessary corporate action on the part of Seller
and its shareholders. This Agreement has been and the Employment Agreement, the
Lockup Agreement and the Noncompetition Agreement will be duly executed and
delivered by Seller and/or the Stockholder and constitutes or will, when
executed and delivered, constitute the legal, valid and binding obligations of
Seller and/or the Stockholder enforceable against Seller and/or the Stockholder
in accordance with their respective terms, except as the same may be limited by
bankruptcy, insolvency, reorganization or other laws affecting the enforcement
of creditors' rights generally now or hereafter in effect and subject to the
application of equitable principles and the availability of equitable remedies.
4.3. CAPITAL STOCK. All of the outstanding capital stock of
Seller has been duly authorized and is validly issued, fully paid and
non-assessable and is registered to the Stockholder. Seller has not entered into
any contract or agreement or made any commitment to sell or otherwise transfer
or issue any shares of its capital stock and there are no outstanding options,
rights, subscriptions, warrants, conversion rights, agreements or commitments of
any kind to purchase or otherwise acquire from Seller or Stockholder any shares
of capital stock of Seller. Stockholder has not issued any proxy or entered into
any voting or voting trust agreement or other arrangement of any kind respecting
the right to vote the outstanding shares of capital stock of Seller.
4.4. NO CONSENTS.2 AUTHORITY; NO CONFLICT.2 AUTHORITY; NO
CONFLICT. Except as set forth in Schedule 4.4, Buyer will not be required to
give any notice to or obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
4.5. CONSIDERATION SHARES.2 AUTHORITY; NO CONFLICT.2
AUTHORITY; NO CONFLICT. Seller hereby represents and warrants as follows, all of
which representations and warranties are being relied upon by Buyer to establish
that the offer and sale of the Consideration Shares is exempt from the
registration and qualification requirements of federal and applicable state
registration and qualification requirements, and shall survive the acquisition
of the Consideration Shares by Seller:
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4.5.1. Seller is acquiring the Consideration Shares
for its own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act.
Seller is an "accredited investor" as such term is defined in
Rule 501(a) under the Securities Act.
4.5.2. Seller and Seller's advisors, have had an
opportunity to ask questions of and receive answers from
Buyer, or persons acting on Buyer's behalf, concerning the
subject offering of the Consideration Shares, and all such
questions have been answered to the full satisfaction of
Seller. Seller has requested and received such documents and
financial statements as Seller deems necessary in order to
fully evaluate the risks associated with investing in Buyer
and to make an informed investment decision.
4.5.3. Seller understands and acknowledges that all
documents, records and books pertaining to an investment in
the Consideration Shares have been made available for
inspection to Seller and its legal, tax, and business
advisors, and that the documents, records, and books of Buyer
will be available upon reasonable notice, for inspection by
Seller during reasonable business hours at Buyer's principal
place of business. No oral representations have been made, or
oral information furnished, to Seller or Seller's advisors in
connection with the offering of the Consideration Shares which
was in any way inconsistent with written materials, documents,
records, and books of Buyer furnished to or made available to
Seller.
4.5.4. Seller's financial condition is such that (a)
it has adequate means of providing for its current needs and
possible personal contingencies, (b) it has no need for
liquidity in this investment, (c) it is able to bear the
substantial economic risks of an investment in the
Consideration Shares for an indefinite period of time, and (d)
at the present time, it could afford a complete loss of its
investment in the Consideration Shares.
4.5.5. Seller has such knowledge and experience in
business and financial matters so as to be able to evaluate
the merits and risks of an investment in the Consideration
Shares.
4.5.6. Seller acknowledges and understands that the
Consideration Shares have not been registered under the
Securities Act (nor registered or qualified under the
securities laws of any state) in reliance upon an exemption
from registration for non-public offerings and certain related
factors. Seller understands that the Consideration Shares may
not be sold and must be held indefinitely unless they are
subsequently registered under the Securities Act or an
exemption from registration is available or may otherwise be
sold in accordance with applicable law.
4.5.7. Seller understands that Buyer is relying in
large part on Seller's representations and warranties as set
forth in this clause for purposes of claiming exemptions from
the above referenced securities registration requirements.
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4.5.8. Seller is authorized and otherwise duly
qualified to purchase and hold the Consideration Shares.
Seller has not been formed for the specific purpose of
acquiring the Consideration Shares.
4.5.9. All information which Seller has provided to
Buyer concerning Seller, Seller's financial condition, and/or
the knowledge of financial and business matters of the person
making the investment decision on behalf of Seller, is correct
and complete as of the date set forth at the end of this
Agreement, and if there should be any adverse change in such
information prior to Seller's investment being accepted by
Buyer, Seller will immediately provide Buyer with such
information. The information contained in this Agreement is
complete and accurate and may be relied upon by Buyer.
4.6. NO CONFLICTS. The execution, delivery and performance of
this Agreement and the consummation of all of the transactions contemplated
hereby: (i) do not and will not require the consent, waiver, approval, license,
designation or authorization of, or declaration with, any person or public
authority (except for the consents to the assignment of the Assigned Contracts
(as hereinafter defined) set forth on Schedule 4.15.1); (ii) do not and will not
with or without the giving of notice or the passage of time or both, violate or
conflict with or result in a breach or termination of any provision of, or
constitute a default under, or accelerate or permit the acceleration of the
performance required by the terms of, or result in the creation of any Claims or
Encumbrances upon any of the Assets pursuant to, or otherwise give rise to any
liability or obligation under, any agreement, mortgage, deed of trust,
indenture, license, permit or any other agreement or instrument or any order,
judgment, decree, statute, regulation or any other restriction of any kind or
description to which Seller or Stockholder is a party or by which Seller, the
Stockholder or any of the Assets may be bound; and (iii) will not terminate or
result in the termination of any such agreement or instrument, or in any way
affect or violate the terms and conditions of, or result in the cancellation,
modification, revocation or suspension of, any rights included in the Assets.
4.7. FINANCIAL STATEMENTS. Attached to this Agreement as
Schedule 4.7 is Seller's balance sheet as at December 31, 1999 and the related
statement of operations for the periods then ended, together with all notes
related thereto (collectively, the "Seller's Financial Statements"). Seller's
Financial Statements have been examined and reported upon by independent
auditors, whose report with respect to such year is included in Schedule 4.7.
4.7.1. For the relevant periods, Seller's Financial
Statements: (1) are complete and correct in all material respects; (2) present
fairly the financial position of Seller at such dates and the results of
operations for the respective periods ended on such dates; and (3) were prepared
in accordance with GAAP, consistently applied during the periods, except as
indicated in the report or notes thereto and are in accordance with the books
and records maintained by Seller, with no differences between such Seller's
Financial Statements and the financial records maintained and accounting methods
applied by Seller for tax purposes, except as disclosed in the notes to the
Financial Statements.
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4.7.2. The value at which any or all of the Assets
are carried on Seller's Financial Statements is not overstated and does not
exceed each asset's or group of assets' replacement cost and does not exceed
each asset's or group of assets' fair market value.
4.7.3. Schedule 4.7.3 is a true, correct and complete
list of all of Seller's accounts receivable (aged) as of January 31, 2000. All
such accounts receivable of Seller shown on and all accounts receivable existing
on the Closing Date are fully collectible in the aggregate recorded amounts
thereof. The aggregate amount of all such accounts receivable which have not
been paid for thirty (30) days or more does not exceed the amount reflected on
Schedule 4.7.3. All such accounts receivable have been (or will be) generated in
the ordinary course of business and reflect (or will reflect) a bona fide
obligation for the payment of goods or services provided by Seller. Any account
receivable not collected within one hundred eighty (180) days after the Closing
Date shall be repurchased by Seller as provided in Section 6.9.
4.7.4. Except as disclosed in the Schedules to this
Agreement, as at January 31, 2000, Seller had no liabilities, commitments or
obligations of any nature, whether absolute, accrued, contingent or otherwise
not shown and adequately provided for in Seller Financial Statements.
4.8. TAXES.
4.8.1. True and correct copies of Seller's federal
and state income tax returns for the calendar years ended December 31, 1996,
1997 and 1998 have been delivered to Buyer. All tax returns (including
information returns) required by any jurisdiction with respect to Seller have
been filed, except for returns with respect to which extensions have been
granted, and each such return is true and correct. There are no pending or
threatened tax examinations, claims (whether for taxes, interest or penalties),
liens, assessments, deficiencies or liabilities to which Seller or the Assets
may be subject; the tax returns for Seller for the years ended December 31,
1996, 1997 and 1998 have not been audited by any governmental body; and no
waiver of the statute of limitations or extension of time for assessment of
deficiencies has been granted by Seller. Seller has not filed any consent under
Section 341(f) of the Internal Revenue Code of 1986, as amended (the "Code") or
any prior federal income tax code.
4.8.2. All liabilities of Seller to any jurisdiction
for taxes (including, without limitation, all payroll withholding taxes and all
other employment related taxes) of Seller, including interest thereon and
penalties with respect thereto, relating to any period prior to the Closing Date
have been paid by Seller or will be paid by Seller when due.
4.9. NO ADVERSE CHANGES. Except as set forth on Schedule 4.9,
since December 31, 1999 (i) the business of Seller has been conducted only in
the ordinary course; (ii) there has been no change in the condition (financial
or otherwise), assets, liabilities, business, operations, prospects, or affairs
of Seller, other than changes in the ordinary course of business, none of which
singly and no combination of which in the aggregate has been materially adverse;
and (iii) there has been no damage, destruction or loss or other occurrence or
development, whether or not insured against, which either singly or in the
aggregate materially adversely affects, and Seller and the Stockholder have no
knowledge of any threatened occurrence or development which would materially
adversely affect, the condition (financial or otherwise), assets, liabilities,
business, operations, prospects or affairs of Seller.
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4.10. CONDUCT OF BUSINESS. Except as disclosed on Schedule
4.10, since December 31, 1999, Seller has not: (i) created or incurred any
liability (absolute, accrued, contingent or otherwise) except unsecured current
liabilities incurred in the ordinary course of business consistent with past
practice; (ii) mortgaged, pledged or subjected to any lien or otherwise
encumbered any of its assets, tangible or intangible; (iii) discharged or
satisfied any lien or encumbrance or paid any obligation or liability (absolute,
accrued, contingent or otherwise) other than current liabilities shown on
Seller's Financial Statements and taxes and current liabilities incurred since
the date of Seller's Financial Statements in the ordinary course of business or
under contracts or agreements entered into in the ordinary course of business
and listed on Schedule 4.15.1 (other than as a result of any default or breach
of, or penalty under, any such contracts or agreements); (iv) waived, released
or compromised any claims or rights of substantial value, or experienced any
labor trouble (including without limitation any actual or threatened strike or
lock-out) or lost, or been threatened with the loss of, any key employees or any
substantial number of employees; (v) entered into any settlement, compromise or
consent with respect to any claim, proceeding or investigation; (vi) made
capital expenditures or capital additions or betterments which in the aggregate
exceeded $7,500; (vii) sold, assigned, transferred, leased or otherwise disposed
of any of its assets, tangible or intangible, or canceled any debts or claims
except, in each case, for fair consideration in the ordinary course of business
(it being understood that the disposition of any asset, other than inventory
consisting of finished products, or cancellation of any debt or claim carried on
the books of Seller at more than $1,000 shall be deemed not to be a disposition
or cancellation in the ordinary course of business); (viii) declared or paid any
dividends, or made any other distribution on or in respect of, or directly or
indirectly purchased, retired, redeemed or otherwise acquired any shares of its
capital stock or paid any notes or open accounts, or paid any other amount to
either Stockholder for any purpose; (ix) made or become a party to, or become
bound by, any contract or commitment or renewed, extended, amended, modified or
terminated any contract or commitment which in any one case involving an amount
in excess of $5,000 (or in the aggregate an amount in excess of $25,000) or a
term in excess of thirty days (other than this Agreement); (x) issued or sold
any shares of its capital stock; (xi) paid or agreed to pay, other than in the
ordinary course of business, conditionally or otherwise, any bonus, extra
compensation, pension or severance pay to any of its officers or employees,
whether under any existing profit sharing, pension or other plan or otherwise,
or increased the rate or altered the form of compensation, including without
limitation, salaries, fees, commission rates, bonuses, profit sharing,
incentive, pension, retirement or other similar payments, from that being paid
at December 31, 1999 to any of its stockholders, directors, officers or
employees; (xii) entered into any transaction not in the ordinary course of
business (except for transactions contemplated by this Agreement); (xiii) made
or announced any change in the terms, including but not limited to price, of the
sale of any products of Seller or made or announced any change in the form or
manner of distribution of any of Seller's products; (xiv) changed any accounting
methods or principles used in recording transactions on Seller's books or
records or in preparing Seller's Financial Statements; (xv) paid any legal
expenses not in the ordinary course of business; or (xvi) entered into any
contract or commitment to do any of the foregoing.
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4.11. TITLE TO PURCHASED ASSETS. Seller has and on the Closing
Date will convey to Buyer valid title to all of the Assets, free and clear of
all Claims and Encumbrances, except Permitted Encumbrances. No instrument,
easement, license or grant of record, applicable zoning or building law,
ordinance or administrative regulation or other impediment of any kind prohibits
or interferes with, limits or impairs, or would, if not permitted by any prior
nonconforming use, prohibit or interfere with or limit or impair, the use,
operation, maintenance of, or access to, the Assets. All of the Assets are
located in Austin, Texas. The Assets taken as a whole constitute all of the
properties and assets used or held in conjunction with the business of Seller
and are sufficient and adequate to carry on the business of Seller as now
conducted.
4.12. REAL PROPERTY. Schedule 4.12 to this Agreement sets
forth a true and complete summary list and description of all of Seller's
interests in real property, including leasehold interests (the "Real Property").
Seller owns no fee interest in real property and leases all real property it
uses in its business. Seller has received no notice, and has no knowledge, of
any taking or proposed taking of such Real Property by any authority having the
power of eminent domain or condemnation with respect thereto. To Seller's and
Stockholder's knowledge, no portion of Seller's Real Property or plants,
structures, fixtures and improvement is subject to any proposal of any such
assessment. All plants, structures, fixtures and improvements on Seller's Real
Property are in a state of good working condition and repair, ordinary wear and
tear excepted, and are adequate and appropriate for Seller's business as now
conducted. No insurance company has ever required that Seller pay increased
insurance rates or take other precautions or actions (as a condition to, or in
connection with, obtaining insurance) because of any geological faults,
sinkhole, general subsidence, rising water or flood waters, muck or road slides,
erosion or any soil or geological condition or any contamination from toxic
waste affecting Seller's Real Property. Seller enjoys quiet possession under all
of its leases, each of which is enforceable in accordance with its terms against
the lessor thereunder, except as limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies. Seller is not in default
under the terms of any of its leases.
4.13. PERSONAL PROPERTY. Schedule 4.13 to this Agreement sets
forth a true and complete list of all items (or classes of items) of personal
property owned by Seller included in the Assets. Such items are in a state of
good working condition and repair, ordinary wear and tear excepted, and are
adequate and appropriate for Seller's business as now conducted. Seller does not
own or lease any automobiles, trucks or other vehicles except as described on
Schedule 4.13 Items of personal property, if any, in which another has any
interest and for which Seller is accountable to another are identified in
Schedule 4.13.
4.14. INVENTORY. Schedule 4.14 to this Agreement sets forth a
true and complete description of all of Seller's Inventory as at January 31,
2000. The items listed in Schedule 4.14 together with the assets listed in
Schedules 4.12 and 4.13 constitute all of the tangible assets used in Seller's
business. The Inventory included in Schedule 4.14 is in good condition, is of a
quantity and quality useable and saleable in the ordinary course of Seller's
business as now conducted. Finished goods in inventory conform to the
specifications of Seller and are free from defects and are marketable in their
current condition based upon Seller's past experience.
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4.15. CONTRACTS.
4.15.1. Except as disclosed in Schedule 4.15.1 to
this Agreement, Seller is not a party to or bound by any oral or written
contracts, obligations or commitments ("Contracts"), including without
limitation any:
4.15.1.1. contract, commitment or arrangement
involving in any one case, $1,000 or more;
4.15.1.2. contract, commitment or arrangement,
relating to creation, production, composing, printing, order
fulfillment or distribution of the Technology;
4.15.1.3. contract, commitment or arrangement
relating to new products;
4.15.1.4. contract, commitment or arrangement
relating to the sale or rental of customer or mailing lists;
4.15.1.5. contract with a term of, or requiring
performance, more than three (3) months from its date;
4.15.1.6. commitment, contract or undertaking which
is not terminable upon notice of thirty (30) days or less
without penalty, cost or liability to Seller or, after the
Closing Date to the Buyer;
4.15.1.7. lease or lease purchase agreement,
mortgage, conditional sale or title retention agreement,
indenture, security agreement, credit agreement, pledge or
option with respect to any interest in any property, real or
personal (tangible or intangible), in any capacity;
4.15.1.8. commitment, contract or undertaking for the
purchase or use of services, materials, supplies, inventory,
machinery or equipment;
4.15.1.9. commitment, contract or undertaking for the
sale or use (other than sales of inventory in the ordinary
course of business to customers who are individual customers)
of Seller's products;
4.15.1.10. employment contract, undertaking,
understanding or arrangement;
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4.15.1.11. contract or agreement with any labor union
or other collective bargaining group;
4.15.1.12. bonus, pension, savings, welfare, profit
sharing, stock option, retirement, commission, executive
compensation, hospitalization, insurance or similar plan
providing for employee benefits or any other arrangement
providing for benefits for any former or current employees or
for the remuneration, direct or indirect, of Seller's
directors, officers or employees;
4.15.1.13. note, loan, credit or financing agreement
or other contract for money borrowed, and all related security
agreements and collateral documents, including any agreement
for any commitment for future loans, credit or financing;
4.15.1.14. guarantee;
4.15.1.15. contract or understanding regarding any
capital expenditures;
4.15.1.16. agency (sales or otherwise), distribution,
brokerage (including, without limitation, any brokerage or
finder's agreement or arrangement with respect to any of the
transactions contemplated by this Agreement) or advertising
agreement;
4.15.1.17. contract with investment bankers,
accountants, attorneys, consultants or other independent
contractors;
4.15.1.18. contract with any director or officer of
Seller or any Affiliate of such person;
4.15.1.19. contract, commitment or arrangement which
would restrain the Buyer or any Affiliate of the Buyer from
engaging or competing in any business or to maintain the
confidentiality of any matter;
4.15.1.20. contract, commitment or arrangement not
made in the ordinary course of business of the business of
Seller;
4.15.1.21. license, permit, franchise or royalty
agreement.
4.15.2. Schedule 4.15.2 lists all of the Contracts
which are not to be assumed by Buyer (the "Agreements Not Assumed").
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4.15.3. Seller has delivered to the Buyer correct and
complete copies of all of the Contracts which are to be assigned to Buyer and
all amendments thereto and waivers granted thereunder (the "Assigned
Contracts"). The rights and interests of Seller in all Assigned Contracts may be
assigned to the Buyer without the consent of any other person, except as
otherwise disclosed on Schedule 4.15.1 and at the Closing the Buyer will acquire
all such rights and interests. Seller enjoys satisfactory working relationships
under all Assigned Contracts, and no unresolved disputes are pending or, to the
best of Seller's and the Stockholder's knowledge, threatened under or in respect
of any such Assigned Contracts. The prices to be received or paid by Seller
under all Assigned Contracts with its customers and others have been determined
in accordance with Seller's established pricing policies. Seller has no
contracts with the United States Government. Seller has no outstanding power of
attorney other than routine power of attorney relating to representation before
governmental agencies or given in connection with qualification to do business
in another jurisdiction.
4.15.4. Except as described in Schedule 4.15.1, all
Assigned Contracts are valid and enforceable in accordance with their respective
terms, except as the same may be limited by bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies, and there is not, under
any of such documents or agreements or any obligation, or covenant or condition
contained therein, any existing material default by Seller or, to Seller's and
the Stockholder's knowledge, any other party, or any event which with notice,
lapse of time, or both, would constitute a default and which would have a
material adverse effect on the continued operation of the business by Buyer.
4.16. INTELLECTUAL PROPERTY. Schedule 4.16 sets forth a true
and complete list of all of Seller's trademarks, trade names, copyrights,
patents and similar rights, and any applications in respect thereto, (the
"Intellectual Property") used by Seller in whole or in part for the conduct of
its business as now conducted. Except as disclosed on Schedule 4.16, all the
Intellectual Property is owned by Seller free and clear of any and all licenses,
liens, claims, security interests, charges or other encumbrances or restrictions
of any kind, and no licenses for the use of any of such rights have been granted
by Seller to any third parties. All of such rights are valid and in good
standing and are adequate and appropriate for Seller's business as now
conducted. All of such rights will be acquired by Buyer at the Closing, and the
transfer of such rights to, and use by Buyer will not require the consent of any
other person. Except as disclosed on Schedule 4.16, the operation of Seller's
business does not infringe in any way on or conflict with any registered or
unregistered patent, trademark, trade name, copyright, license or other right,
of any person and Seller does not license any such right from others except as
set forth on Schedule 4.16. No claim is pending, has been made within the past
five (5) years, or, to Seller's or Stockholder's knowledge, is threatened to the
effect that any such infringement or conflict has occurred.
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4.17. INSURANCE. Schedule 4.17 to this Agreement contains a
complete and correct list of all insurance policies maintained by Seller. Seller
has furnished to Buyer complete and correct copies of all such policies together
with all riders and amendments thereto. Such policies are in full force and
effect, and all premiums due thereon have been paid. Seller has complied in all
material respects with the provisions of such policies. All of such insurance
policies are transferable by Seller without the consents of any other person
except the insurer and except as disclosed on Schedule 4.17 and Seller has not
received any notice canceling or threatening to cancel or refusing to renew any
of such insurance. The rights of the insured under such policies will not be
terminated or adversely affected by this Agreement or the transactions
contemplated thereby and on the Closing Date Buyer will acquire all of Seller's
rights under such policies, if Buyer notifies Seller and the insurer prior
thereto of its desire to acquire such rights.
4.18. CUSTOMER AND SUPPLIER RELATIONSHIPS. Attached as
Schedule 4.18 is a complete and correct list of all suppliers whose sales to
Seller amounted to more than $10,000 during any calendar year since January 1,
1997, showing the sales of each. During such periods no single customer and no
group of related customers accounted for more than five percent (5%) by dollar
amount of the gross sales of Seller and no single supplier or group of related
suppliers accounts for more than five percent (5%) by dollar amount of the cost
of sales of Seller's business, except as disclosed in Schedule 4.18. With
respect to any such customer or supplier or group of related customers or
suppliers listed on Schedule 4.18, Seller has no knowledge that any customer,
supplier or group of related customers, suppliers has terminated or expects to
terminate a material portion of its normal business with Seller. Except as
disclosed in Schedule 4.18, no director or officer of Seller, nor to the best of
Seller's or Stockholder's knowledge any Affiliate of Seller, has any direct or
indirect interest, either by way of stock ownership or otherwise, in any firm,
corporation, association or business enterprise, which competes with, is a
supplier or customer of, or is a distributor or sales agent for, Seller.
4.19. EMPLOYEES. Attached as Schedule 4.19 is a list of all of
the employees and officers of Seller employed by Seller at any time from January
1, 1997 to the date of this Agreement (listing each such person individually by
name and indicating whether he or she is currently employed by Seller) with a
description of their job designations, compensation (including a designation of
those persons paid on an hourly or salaried basis and those persons paid
pursuant to a collective bargaining agreement), benefits (including termination
pay and bonuses), except that such listing need not include any employee hired
on a temporary basis subject to at will termination and to whom Seller owes no
severance or continuing obligation. Also set forth on Schedule 4.19 is a listing
of outstanding loans to officers or employees and all understandings relating to
terms and conditions of employment (including compensation, bonuses, commissions
and benefits) whether or not legally binding. All of the employees of Seller are
legal residents of the United States.
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4.20. LABOR RELATIONS. There is no work stoppage, strike,
slowdown, lockout, picketing or other material labor problem involving persons
employed in Seller's business pending or, to Seller's and Stockholder's
knowledge, threatened. Seller has had good labor relations with its employees
for the previous five (5) years. There are no labor union contracts relating to
Seller's business. No charges of unfair labor practices or employment
discrimination are pending or, to Seller's or Stockholder's knowledge,
threatened before any governmental authority as a result of employment in
connection with Seller's business.
4.21. BENEFIT PLANS.
4.21.1. Schedule 4.21 sets forth a true and complete
list of each "employee welfare benefit plan" (as defined in Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
maintained by Seller or to which Seller contributes or is required to
contribute, including any multiemployer employee welfare benefit plan (such
multiemployer and other employee welfare benefits plans being hereinafter
collective referred to as the "Welfare Benefit Plans").
4.21.2. Schedule 4.21 sets forth a true and complete
list of each "employee pension benefit plan" (as defined in Section 3(2) of
ERISA and not exempted under Section 4(b) or 201 of ERISA) maintained by Seller
to which Seller contributes or is required to contribute, including any
multiemployer employee pension benefit plan (such multiemployer and other
employee pension benefit plans being hereinafter collectively referred to as the
"Pension Benefit Plans"). With respect to each Pension Benefit Plan which is
subject to Title I, Subtitle B, Part 3 of ERISA the funding method used in
connection with such Pension Benefit Plan is acceptable under ERISA, the
actuarial assumptions used in connection with funding such Pension Benefit Plan,
in the aggregate, are reasonable (taking into account the experience of such
Pension Benefit Plan and reasonable expectations) and Schedule 4.21 accurately
sets forth the following information as of December 31, 1999: (i) the actuarial
present value (based upon the same actuarial assumptions as those heretofore
used for funding purposes) of all vested and nonvested (but without any
assumption that unvested accrued benefits have become nonforfeitable) accrued
benefits (whether on account of retirement, termination, death or disability)
under such Pension Benefit Plan; (ii) if such Pension Benefit Plan uses a
benefit accrual formula having reference to final earnings, the actuarial
present value of the benefits under such Pension Benefit Plan as calculated in
(i), but based upon projected earning increases of five percent (5%) per annum;
(iii) the actuarial present value (based upon the same actuarial assumptions,
other than turnover assumptions, as those heretofore used for funding purposes)
of vested benefits under such Pension Benefit Plan; (iv) the net fair market
value of the assets held to fund such Pension Benefit Plan; (v) the funding
method used in connection with such Pension Benefit Plan; and (vi) the amount
and plan year of any "accumulated funding deficiency" as defined in Section
302(a)(2) of ERISA (whether or not waived and whether arising on account of
inadequate contributions, improper amortization of charges or credits in any
funding standard account, improper determination of any such charge or credit,
or any other reason) which exists with respect to any play year of any Pension
Benefit Plan. With respect to each Pension Benefit Plan including an "individual
account plan" (as defined in Section 3(34) of ERISA), Schedule 4.21 sets forth
(A) the amount of any liability of Seller for contributions due with respect to
such Pension Benefit Plan as of December 31, 1999, and as of the end of any
subsequent plan year ending prior to the closing, and the date any such amounts
were paid, and (B) the amount of any contribution paid with respect to such
Pension Benefit Plan for the plan year in which the Closing occurs.
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4.21.3. All of the Pension Benefit Plans and any
related trust agreements or annuity contracts (or any other funding instruments)
comply currently, and have complied in the past, both as to form and operation,
with the provisions of (A) the Code (including Section 410(b) of the Code
relating to coverage) where required in order to be tax qualified under Section
401(a) or 403(a) of the Code, (B) ERISA; and (C) all other applicable laws,
rules and regulations; all necessary government approvals for the Pension
Benefit Plans have been obtained; and favorable determination letters, copies of
which have been provided to Buyer, as to the qualification under the Code of
each of the Pension Benefit Plans and each amendment thereto, have been received
from the Internal Revenue Service.
4.21.4. Each Welfare Benefit Plan and each Pension
Benefit Plan has been administered to date in compliance with the requirements
of the Code, ERISA and all other applicable laws and all reports required by any
government agency with respect to each Welfare Benefit Plan and each Pension
Benefit Plan have been timely filed. Future compliance with the requirements of
ERISA or any other applicable laws as in effect on the date of the Closing or
any collective bargaining agreements to which Seller is a party will not result
in any increase in the rate of benefit accrual under any Pension Benefit Plan
except as otherwise stated in Schedule 4.21.
4.21.5. On and after January 1, 1975, neither Seller
nor, to the knowledge of Seller or Stockholder, any plan fiduciary of any
Welfare Benefit Plan or Pension Benefit Plan has engaged in any transaction in
violation of Section 406(a) or (b) of ERISA (for which no exemption exists under
Section 4975(c)(1) of the Code) or any "prohibited transaction" (as defined in
Section 4975(c)(1) of the Code) for which no exemption exists under Section
4975(c)(2) or 4975(d) of the Code.
4.21.6. Schedule 4.21 lists each deferred
compensation plan, bonus plan, stock option plan, employee stock purchase plan
and any other employee benefit plan, agreement, arrangement or commitment not
required under a previous subsection to be listed on Schedule 4.21 (other than
normal policies concerning holidays, vacations and salary continuation during
short absences for illness or other reasons) maintained by Seller.
4.21.7. Seller has paid all premiums (and interest
charges and penalties for late payment, if applicable) due the Pension Benefit
Guaranty Corporation ("PBGC") with respect to each Pension Benefit Plan and each
plan year thereof for which such premiums are required. On and after September
2, 1974, there has been no "reportable event" (as defined in Section 4043(c) of
ERISA and the regulations of the PBGC under such Section) with respect to any
Pension Benefit Plan subject to Title IV of ERISA. No liability to the PBGC has
been incurred by Seller or any corporation or other trade or business under
common control with Seller (as determined under Section 414(c) of the Code)
("Common Control Entity") on account of any termination of an employee pension
benefit plan subject to Title IV of ERISA. Except as set forth on Schedule 4.21,
on and after September 2, 1974, no filing has been made by Seller (or any Common
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Control Entity) with the PBGC (and no proceeding has been commenced by the PBGC)
to terminate any employee pension benefit plan subject to Title IV of ERISA
maintained, or wholly or partially funded, by Seller (or any Common Control
Entity). Except as set forth on Schedule 4.21, neither Seller nor any Common
Control Entity has (i) ceased operations at a facility so as to become subject
to the provisions of Section 4062(e) of ERISA, (ii) withdrawn as a substantial
employer so as to become subject to the provisions of Section 4063 of ERISA,
(iii) ceased making contributions on or before the date of the Closing to any
employee pension benefit plan subject to Section 4064(a) of ERISA to which
Seller (or any Common Control Entity) made contributions during the five (5)
years prior to the date of the Closing, or (iv) made a complete or partial
withdrawal from a multiemployer plan (as defined in Section 3(37) of ERISA) so
as to incur withdrawal liability as defined in Section 4201 of ERISA (without
regard to subsequent reduction or waiver of such liability under Section 4207 or
4208 of ERISA).
4.21.8. True and complete copies of each Welfare
Benefit Plan and each Pension Benefit Plan, related trust agreements or annuity
contracts (or any other funding instruments, each plan, agreement, arrangement,
and commitment referred to in subsection (f) of this Section, the most recent
determination letter issued by the Internal Revenue Service with respect to each
Pension Benefit Plan, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Welfare Benefit Plan and each Pension
Benefit Plan for the three most recent plan years and all actuarial reports
prepared for the last three plan years of each Pension Benefit Plan, other than
an "individual account plan," have heretofore been delivered by Seller to Buyer.
4.21.9. All Welfare Benefit Plans, Pension Benefit
Plans, related trust agreements or annuity contracts (or any other funding
instruments), and all plans, agreements, arrangements and commitments referred
to in this Section are legally valid and binding and in full force and effect,
and will be terminated in accordance with applicable laws and regulations
effective as soon as practicable after the Closing Date.
4.22. LITIGATION, COMPLIANCE
4.22.1. Except as disclosed in Schedule 4.22, there
are no actions, suits, proceedings or arbitrations or governmental
investigations pending or, to Seller's and Stockholder's knowledge, threatened
against, by or affecting Seller (or, to the best of Seller's and the
Stockholder's knowledge, any basis therefor) in which, individually or in the
aggregate, an unfavorable determination could materially affect Seller's
business or Seller's earnings or condition (financial or otherwise) or any of
the Assets or result in any material liability on the part of Seller or impede
the execution and performance of this Agreement or any of the transactions or
events contemplated hereby or could declare this Agreement unlawful or cause the
rescission of any of the transactions hereunder or require Buyer to divest
itself of the Assets to be acquired pursuant hereto, nor has any such suit been
pending within the three (3) years prior to the Closing Date. Except as
disclosed on Schedule 4.22, Seller has received no notice that it has been
charged with or received notice of any violation of any applicable federal,
state, local or foreign law, rule, regulation, ordinance, order or decree
relating to the Assets, or the operation of Seller's business, and Seller and
the Stockholder are not aware of any threatened claim of such violation
(including any investigation or informal inquiry). Seller and the Stockholder
are not aware of any basis for any claim or charge of such violation.
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4.22.2. Except as set forth on Schedule 4.22, Seller
has complied and is in compliance with, all material respects, all laws, rules,
regulations, ordinances, orders, decrees, writs, injunctions, building codes,
safety, fire and health approvals, certificates of occupancy or other
governmental restrictions applicable to Seller and the Assets.
4.22.3. Except as set forth on Schedule 4.22, Seller
has all governmental licenses, permits, approvals or other authorizations
required for the conduct of its business as now conducted. All of such licenses,
permits or approvals are in full force and effect and all of which are listed on
Schedule 4.22; there is no action pending or, to the knowledge of Seller and the
Stockholder, threatened to terminate rights under any such governmental
licenses, permits or authorizations; and except as disclosed on Schedule 4.22 at
the Closing, Buyer will acquire all of the rights of Seller under such licenses,
permits, approvals and authorizations.
4.23. ENVIRONMENTAL COMPLIANCE. No toxic waste or by-product
has been or is being discharged on, or stored, processed, or treated at, any
Real Property or other facilities now or previously used by Seller by either
Seller, or to its knowledge, by any other person. No substance defined as
hazardous or toxic by any applicable federal, state, or local laws, rules or
regulations has been or is being used by, or has been or is being discharged on,
or stored, processed, or treated at, any Real Property or other facilities now
or previously owned, leased or used by Seller by either Seller or, to its and
Stockholder's knowledge by any other person. No employee or other person has
ever made a claim or demand against Seller based on alleged damage to health
caused by any such hazardous or toxic materials or by any waste or by-product.
Seller has never been charged with improperly using, handling, storing,
discharging, or disposing of any such hazardous or toxic substance, or with
causing or permitting any pollution of any ground water aquifer, surface waters,
or other lakes, streams, rivers, or bodies of water. Seller has not caused or
suffered to occur any discharge, spillage, uncontrolled loss, seepage, or
filtration of oil or petroleum or chemical liquids or solids, liquid or gaseous
products, or hazardous waste, or hazardous substance at, under, or within any
Real Property now or previously owned or leased by Seller. There is no asbestos
or PCB's on the Real Property.
4.24. CORPORATE RECORDS. The copy of the certificate of
incorporation of Seller, and all amendments thereof to date, and a long form
certificate as to the good standing of Seller in the State of Texas each
certified by the Secretary of State of the State of Texas, and of the by-laws of
Seller, as amended to date, certified by the Secretary or an Assistant Secretary
of Seller, all under a date not more than five (5) days prior to the Closing
Date which shall have been delivered to Buyer are complete and correct, and the
minute books of Seller correctly reflect all material corporate actions taken at
all meetings of directors (including committees thereof) and stockholders, and
correctly record all resolutions, correct and complete copies of which have been
delivered to Buyer. The stock transfer books (with all canceled and unused stock
certificates attached) and stock ledgers are complete and correct and correctly
reflect all transfers of the capital stock of Seller, correct and complete
copies of which have been delivered to Buyer.
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4.25. BROKERS, FINDERS, ETC. Neither Seller nor Stockholder
has employed any finder, broker, agent or other intermediary in connection with
the negotiation or consummation of this Agreement or any of the transactions
contemplated hereby. Seller and Stockholder hereby indemnify the Buyer and hold
the Buyer harmless against and from any and all liabilities, expenses, costs,
loss and claims arising from any employment by Seller or Stockholder of, or
services rendered to Seller or Stockholder by finder, broker, agent or other
intermediary in such connection.
4.26. SUFFICIENCY OF RIGHTS. Except as set forth in Schedule
4.26, and assuming the renewal or continuation of all business arrangements
currently in place (and, to the best of Seller's knowledge, no reason exists why
such renewal or continuation in favor of Buyer could be obstructed), the Assets
constitute all of the properties, rights, and privileges necessary for the
indefinite continuation of the conduct of the Business by Buyer in substantially
the same manner as it has been operated by Seller during the twelve (12)-month
period preceding the closing.
4.27. DISCLOSURE. No representation or warranty by Seller or
Stockholder and no statement or certificate furnished or to be furnished by or
on behalf of Seller or Stockholder to Buyer or its agents pursuant to this
Agreement or in connection with the transactions contemplated hereby contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained in this Agreement or therein
not misleading or necessary to provide a prospective purchaser of the Assets
with proper information as to Seller and its affairs. There is so far as is
known to Seller and Stockholder no fact which materially adversely affects the
business, condition (financial or otherwise), prospects, affairs or operations
of Seller which has not been set forth in this Agreement or on a Schedule
hereto.
4.28. TRUTH AT CLOSING. All of the representations,
warranties, and agreements of Seller and the Stockholder contained in this
Section 4 shall be true and correct and in full force and effect on and as of
the Closing Date.
5. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows:
5.1. CORPORATE STATUS. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of California
with full corporate power and authority to carry on its business as now
conducted.
5.2. AUTHORITY FOR AGREEMENTS. Buyer has the power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder. Buyer has the power and authority to execute and deliver the
Employment Agreement and to carry out is obligations thereunder. The execution,
delivery and performance by Buyer of this Agreement and by Buyer of Employment
Agreement and the consummation of the transactions contemplated hereby or
thereby have each been duly authorized by all necessary action on the party of
Buyer, as the case may be, and constitute or will, when executed and delivered,
constitute the valid and legally binding obligation of Buyer, as the case may
be, enforceable in accordance with their respective terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors' rights
generally now or hereafter in effect and subject to the application of equitable
principles and the availability of equitable remedies.
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5.3. NO CONSENTS. Except as set forth in Schedule 5.3, Buyer
is not and will not be required to obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
or performance of any of the Contemplated Transactions.
5.4. BROKERS, FINDERS, ETC. Buyer has employed no finder,
broker, agent or other intermediary in connection with the negotiation or
consummation of this Agreement or any of the transactions contemplated hereby.
Buyer hereby indemnifies Seller and holds Seller harmless against and from any
and all liabilities, expenses, costs, losses and claims arising from any
employment by Buyer of, or services rendered to Buyer by any finder, broker,
agent or other intermediary in such connection.
5.5. VALID ISSUANCE. Upon issuance in accordance with the
terms hereof, the Consideration Shares will be validly issued, fully paid and
non-assessable, free and clear of any Claims and Encumbrances other than as set
forth in the Lock-up Agreement.
6. COVENANTS OF SELLER.
6.1. ACCESS AND INVESTIGATION. Between the date of this
Agreement and the Closing Date, Seller will, and will cause its Representatives
to, (a) afford Buyer and its Representatives full and free access to Seller's
personnel, properties (including subsurface testing), contracts, books and
records, and other documents and data, (b) furnish Buyer and its Representative
with copies of all such contracts, books and records, and other existing
documents and data as Buyer may reasonably request, and (c) furnish Buyer and
its Representatives with such additional financial, operating, and other data
and information as Buyer may reasonably request.
6.2. OPERATION OF THE BUSINESS OF SELLER. Between the date of
this Agreement and the Closing Date, Seller will:
6.2.1. conduct the Business only in the Ordinary
Course of Business;
6.2.2. use its Best Efforts to preserve intact the
current business organization of Seller, keep available the
services of the current officers, employees, and agents of
Seller, and maintain the relations and good will with
suppliers, customers, landlords, creditors, employees, agents,
and others having business relationships with Seller;
6.2.3. confer with Buyer concerning operational
matters of a material nature; and
6.2.4. otherwise report periodically to Buyer
concerning the status of the business, operations, and
finances of Seller.
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6.3. NEGATIVE COVENANT. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement and the Closing
Date, Seller will not, without the prior consent of Buyer, take any affirmative
action, or fail to take any reasonable action within their or its control, as a
result of which any of the changes or events listed in Schedule 4.9 is likely to
occur.
6.4. REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, Seller will make all filings required by Legal
Requirements to be made by it in order to consummate the Contemplated
Transactions. Between the date of this Agreement and the Closing Date, Seller
will (a) cooperate with Buyer with respect to all filings that Buyer elects to
make or is required by Legal Requirements to make in connection with the
Contemplated Transactions, and (b) cooperate with Buyer in obtaining all
consents identified in Schedule 5.3.
6.5. NOTIFICATION. Between the date of this Agreement and the
Closing Date, Seller and the Stockholder will promptly notify Buyer in writing
if the Stockholder or Seller becomes aware of any fact or condition that causes
or constitutes a Breach of any of Seller's representations and warranties as of
the date of this Agreement, or if the Stockholder or Seller becomes aware of the
occurrence after the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or constitute a
Breach of any such representation or warranty had such representation or
warranty been made as of the time of occurrence or discovery of such fact or
condition. Should any such fact or condition require any change in any of the
Schedules if any of the Schedules were dated the date of the occurrence or
discovery of any such fact or condition, Seller will promptly deliver to Buyer a
supplement to the such Schedule specifying such change. During the same period,
Seller will promptly notify Buyer of the occurrence of any Breach of any
covenant of Seller in this Section 6 or of the occurrence of any event that may
make the satisfaction of the conditions in Section 7 impossible or unlikely.
Seller and Stockholder shall not be in breach of this Agreement if Seller and
Stockholder perform in accordance with this Section 6.5; providing that Buyer
shall have the option to cancel this Agreement upon written notice to Seller and
Stockholder to be given within 7 days of Buyer's receipt of the amended
Schedules.
6.6. PAYMENT OF INDEBTEDNESS BY AFFILIATES. Except as
expressly provided in this Agreement, the Stockholder will cause all
indebtedness owed to Seller by the Stockholder or any Affiliate of the
Stockholder to be paid in full prior to Closing.
6.7. NO NEGOTIATION. Until such time, if any, as this
Agreement is terminated pursuant to Section 11, Seller will not, and will cause
each of its Representatives not to, directly or indirectly solicit, initiate, or
encourage any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any Person (other than Buyer) relating to any
transaction involving the sale of the business or assets (other than in the
Ordinary Course of Business) of Seller, or any of the capital stock of Seller,
or any merger, consolidation, business combination, or similar transaction
involving Seller.
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6.8. BEST EFFORTS. Between the date of this Agreement and the
Closing Date, Seller will use its Best Efforts to cause the conditions in
Sections 8 and 9 to be satisfied.
6.9. ACCOUNTS RECEIVABLE COLLECTION. After the Closing Date,
Buyer shall be authorized in its name or in the name of Seller, or both, to
direct any and all of the account debtors with respect to the accounts
receivable of Seller to make all payments in satisfaction of the accounts
receivable to Buyer at such address as Buyer may designate and to assert and
maintain against such account debtors such claims and actions as Buyer may deem
necessary or appropriate to collect the same. All payments received by Seller in
satisfaction of the accounts receivable shall be received and held by it in
trust for the benefit of Buyer and immediately paid to Buyer without offset or
deduction. Seller shall, at the request of Buyer, endorse to the order of Buyer
all checks, drafts and other instruments payable to Seller and received by
Seller in satisfaction of the accounts receivable. If within one hundred eighty
(180) days after the Closing Date, any accounts receivable of the Business have
not been collected in full and if Buyer so wishes, Seller agrees to repurchase
from Buyer, at a price equal to the face amount of the uncollected accounts
receivable, any and all such uncollected accounts receivable, in cash.
6.10. SALES TAXES. Seller shall pay all state and local sales
or use taxes payable in connection with the sale of the Assets pursuant to this
Agreement.
6.11. EMPLOYEES. Subject to the conditions set forth in this
Section, Buyer will offer employment to the employees of Seller listed on
EXHIBIT D (the "Hired Employees") at their current compensation, and Seller
shall use its best efforts to assure the orderly transfer of the Hired Employees
to Buyer. Such offers of employment shall be contingent upon the execution by
the Hired Employee of Buyer's standard at-will employment agreement including a
provision that the Hired Employees have entered into employment with Buyer
freely and voluntary and without any warranties, representations or covenants
not expressly set forth in such employment agreement. Upon acceptance of
employment with Buyer, all existing employment contracts between Seller and any
Hired Employee will become void, and Buyer will not assume such agreements.
Buyer will employee the Hired Employees from the date following the Closing Date
and the earlier of (a) the date the completion of Seller's activities in the
Austin, Texas office and (b) August 31, 2000; provided that nothing in this
Section shall be construed as a guarantee of employment for any Hired Employee,
each of which will be an at-will employee of Buyer. Seller shall be responsible
for payment of all compensation (including accrued vacation, sick leave and
severance pay) payable to all of Seller's employees for the period through the
Closing Date.
Buyer may in its sole discretion offer employment in Buyer's Irvine,
California office to certain of the Hired Employees. Such offers of employment
shall be contingent upon the execution by the Hired Employee of Buyer's standard
at-will employment agreement including a provision that the Hired Employees have
entered into employment with Buyer freely and voluntary and without any
warranties, representations or covenants not expressly set forth in such
employment agreement. The compensation of the Hired Employees who are employed
by Buyer in Buyer's Irvine, California office will be adjusted to reflect
differences in the cost of living between Austin, Texas and Irvine, California;
provided that such adjustments will not be effective until (1) such retained
Employee(s) actually relocate to California and (2) such changes are approved in
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advance by the Chief Executive Officer or Chief Financial Officer of Buyer. Upon
commencement of employment in Buyer's Irvine office, the Hired Employees will be
eligible to participate in Buyer's existing employee benefit programs on the
same terms and conditions as all other employees. Buyer will use its best
efforts to preserve the seniority and vesting levels for Hired Employees as it
relates to vacation and retirement plans. Buyer will reimburse the Hired
Employees that relocate to California for actual reasonable moving expenses, up
to a maximum of $5,000 per household. Seller shall be responsible for payment of
all compensation (including accrued vacation, sick leave and severance pay)
payable to all of those employees for the period through the Closing Date.
6.12. FURTHER ASSURANCES. At any time and from time to time
after the Closing, each party shall, without further consideration, execute and
deliver to the other such other instruments of transfer and assumption and shall
take such other action as the other may reasonably request to carry out the
transfer of the Assets and assumption of the specific liabilities contemplated
by this Agreement.
7. COVENANTS OF BUYER.
7.1. REQUIRED APPROVALS. As promptly as practicable after the
date of this Agreement, Buyer will, and will cause each of its Affiliates to,
make all filings required by Legal Requirements to be made by them to consummate
the Contemplated Transactions. Between the date of this Agreement and the
Closing Date, Buyer will, and will cause each Affiliate to, cooperate with
Seller with respect to all filings that Seller is required by Legal Requirements
to make in connection with the Contemplated Transactions, and (ii) cooperate
with Seller in obtaining all consents identified in Schedule 4.4; provided that
this Agreement will not require Buyer to dispose of or make any change in any
portion of its business or to incur any other burden to obtain a Governmental
Authorization.
7.2. BEST EFFORTS. Except as set forth in the proviso to
Section 7.1, between the date of this Agreement and the Closing Date, Buyer will
use its Best Efforts to cause the conditions in Sections 8 and 9 to be
satisfied.
8. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE. Buyer's
obligation to purchase the Assets and to take the other actions required to be
taken by Buyer at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Buyer, in whole or in part):
8.1. ACCURACY OF REPRESENTATIONS. All of Seller's
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement,
and must be accurate in all material respects as of the Closing Date as if made
on the Closing Date, without giving effect to any supplement to Schedules.
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8.2. U.C.C. AND LIEN SEARCH. Buyer shall have received (at its
expense) copies of a report of a Uniform Commercial Code search and tax and
judgment lien search in the State of California or such other jurisdiction as
Buyer shall reasonably request, searching the relevant names of Seller and the
Stockholder, reasonably satisfactory in form and substance to Buyer.
8.3. CORPORATE PROCEEDINGS. All corporate and other
proceedings of Seller in connection with the transactions contemplated by this
Agreement, and all documents and instruments incident to such corporate
proceedings, shall be satisfactory in substance and form to Buyer and Buyer's
counsel, and Buyer and Buyer's counsel have received all such documents and
instruments, or copies thereof, certified if requested, as may be reasonably
requested.
8.4. SELLER'S PERFORMANCE.
8.4.1. All of the covenants and obligations that
Seller is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations
(considered individually), must have been duly performed and
complied with in all material respects.
8.4.2. Each document required to be delivered
pursuant to Section 3.2 must have been delivered.
8.5. CONSENTS. Each of the Consents identified in Schedules
4.4 and 5.3 must have been obtained and must be in full force and effect.
8.6. ADDITIONAL DOCUMENTS. Each of the following documents
must have been delivered to Buyer such other documents as Buyer may reasonably
request for the purpose of (i) evidencing the accuracy of any of Seller's
representations and warranties, (ii) evidencing the performance by either Buyer
of, or the compliance by either Buyer with, any covenant or obligation required
to be performed or complied with by such Buyer, (iii) evidencing the
satisfaction of any condition referred to in this Section 8, or (iv) otherwise
facilitating the consummation or performance of any of the Contemplated
Transactions.
8.7. NO PROCEEDINGS. Since the date of this Agreement, there
must not have been commenced or Threatened against Buyer, or against any Person
affiliated with Buyer, any Proceeding (a) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (b) that may have the effect of preventing, delaying, making
illegal, or otherwise interfering with any of the Contemplated Transactions.
8.8. NO CLAIM REGARDING OWNERSHIP OF THE ASSETS OR SALE
PROCEEDS. There must not have been made or Threatened by any Person any claim
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any of the Assets, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Assets.
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8.9. NO PROHIBITION. Neither the consummation nor the
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time), materially contravene, or conflict
with, or result in a material violation of, or cause Buyer or any Person
affiliated with Buyer to suffer any material adverse consequence under, (a) any
applicable Legal Requirement or Order, or (b) any Legal Requirement or Order
that has been published, introduced, or otherwise proposed by or before any
Governmental Body.
9. CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE. Seller's
obligation to sell the Assets and to take the other actions required to be taken
by Seller at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by
Seller, in whole or in part):
9.1. ACCURACY OF REPRESENTATIONS. All of Buyer's
representations and warranties in this Agreement (considered collectively), and
each of these representations and warranties (considered individually), must
have been accurate in all material respects as of the date of this Agreement and
must be accurate in all material respects as of the Closing Date as if made on
the Closing Date.
9.2. BUYER'S PERFORMANCE.
9.2.1. All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to
this Agreement at or prior to the Closing (considered
collectively), and each of these covenants and obligations
(considered individually), must have been performed and
complied with in all material respects.
9.2.2. Buyer must have delivered each of the
documents required to be delivered by Buyer pursuant to
Section 3.3 and must have delivered the Consideration Shares
required to be issued by Buyer pursuant to this Agreement.
9.3. CONSENTS. Each of the Consents identified in Schedules
4.4 and 5.3 must have been obtained and must be in full force and effect.
9.4. ADDITIONAL DOCUMENTS. Buyer must have caused the
following documents to be delivered to Seller such other documents as Seller may
reasonably request for the purpose of (i) evidencing the accuracy of any
representation or warranty of Buyer, (ii) evidencing the performance by Buyer
of, or the compliance by Buyer with, any covenant or obligation required to be
performed or complied with by Buyer, (iii) evidencing the satisfaction of any
condition referred to in this Section 9, or (iv) otherwise facilitating the
consummation of any of the Contemplated Transactions.
9.5. NO INJUNCTION. There must not be in effect any Legal
Requirement or any injunction or other Order that (a) prohibits the sale of the
Assets by Seller to Buyer, and (b) has been adopted or issued, or has otherwise
become effective, since the date of this Agreement.
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10. USE OF CORPORATE NAME.
10.1. CHANGE OF CORPORATE NAME. Seller and Stockholder each
agrees that Seller shall be caused to amend its Articles of Incorporation,
effective the Closing Date, to change its corporate name in connection with the
consummation of the transactions contemplated in this Agreement and that from
and after the Closing Date Seller shall not use the name Marketplace Systems, or
any similar name and the Buyer or its nominees shall be fully authorized to own
and use such names. Seller and Stockholder further covenant and agree that
Seller will conduct no business or operations after the Closing Date except to
protect or enforce its rights arising under this Agreement and effect a
liquidation and dissolution.
10.2. INJUNCTIONS. Seller and Stockholder acknowledge that the
covenant contained in this Section 10 is a material and necessary inducement for
Buyer to agree to the transactions contemplated hereby, that Seller and
Stockholder realized significant monetary benefit from these transactions, that
violation of the covenant contained in this Section 10 will cause irreparable
and continuing damage to Buyer, that Buyer shall be entitled to injunctive or
other equitable relief from any court of competent jurisdiction restraining any
further violation of such covenant and that such injunctive relief shall be
cumulative and in addition to any other rights or remedies to which Buyer may be
entitled.
11. TERMINATION.
11.1. TERMINATION EVENTS. This Agreement may, by notice given
prior to or at the Closing, be terminated:
11.1.1. by either Buyer or Seller if a material
Breach of any provision of this Agreement has been committed
by the other party and such Breach has not been waived;
11.1.2. (i) by Buyer if any of the conditions in
Section 8 has not been satisfied as of the Closing Date or if
satisfaction of such a condition is or becomes impossible
(other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived
such condition on or before the Closing Date; or (ii) by
Seller, if any of the conditions in Section 9 has not been
satisfied of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the
failure of Seller to comply with their obligations under this
Agreement) and Seller have not waived such condition on or
before the Closing Date;
11.1.3. by mutual consent of Buyer and Seller; or
11.1.4. by either Buyer or Seller if the Closing has
not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before March 31, 2000,
or such later date as the parties may agree upon.
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11.2. EFFECT OF TERMINATION. Each party's right of termination
under Section 11.1 is in addition to any other rights it may have under this
Agreement or otherwise, and the exercise of a right of termination will not be
an election of remedies. If this Agreement is terminated pursuant to Section
11.1, all further obligations of the parties under this Agreement will
terminate, except that the obligations in Sections 14.5 and 14.9 will survive;
provided, however, that if this Agreement is terminated by a party because of
the Breach of the Agreement by the other party or because one or more of the
conditions to the terminating party's obligations under this Agreement is not
satisfied as a result of the other party's failure to comply with its
obligations under this Agreement, the terminating party's right to pursue all
legal remedies will survive such termination unimpaired.
12. GUARANTEES AND COVENANT NOT TO COMPETE.
12.1. STOCKHOLDER'S GUARANTEE.
12.1.1. Stockholder hereby unconditionally guarantees
the truth and accuracy of all representations and warranties of Seller contained
in this Agreement and the full and timely performance by Seller of all of
Seller's duties and obligations under this Agreement, and Stockholder further
agrees to take all necessary corporate action to cause Seller to fully and
timely perform such obligations and duties.
12.1.2. The obligations of Stockholder under this
Section 12.1 constitute an absolute, unconditional, present and continuing
irrevocable guarantee of performance and not of collectibility, and if Seller
shall fail to perform any of its obligations of this Agreement, Stockholder
shall immediately so perform or cause such performance.
12.1.3. Stockholder, jointly and severally,
guarantees that the obligations of Seller under this Agreement and the
obligations of Stockholder hereunder will be discharged in favor of the Buyer
strictly in accordance with the terms of this Agreement and regardless of any
law, regulation or decree now or hereafter in effect which in any way affects
any such terms or the rights of the Buyer against Seller or Stockholder, or
which might cause or permit to be invoked any alteration of the time, amount or
manner of performance by Seller or Stockholder under such terms.
12.1.4. The obligations of Stockholder hereunder
shall be absolute and unconditional irrespective of the validity, legality or
enforceability of this Agreement, or any other document related hereto, and
shall not be affected by or contingent upon (i) any action taken under this
Agreement, or the exercise of any right or power hereby conferred, (ii) any
failure or omission to enforce any right hereby conferred, or any demand or
attempt to collect from, or failure to demand performance from, Seller under
this Agreement or from any other guarantor or any other person or any failure to
pursue any remedy in Buyer's power, (iii) the existence, nonexistence, validity
or value of any security or collateral securing the obligations of Seller under
this Agreement, (iv) the release or discharge for any reason of any security for
or any other person or entity liable on or in respect of the obligations of
Seller under this Agreement, or of Stockholder hereunder, (v) the giving of time
or any other forbearance by the Buyer with respect to any provision of this
Agreement, (vi) the liquidation or dissolution of, or the merger or
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consolidation of Seller into or with any corporation, or any sale or transfer by
Seller of all or any part of its property or assets, (vii) the bankruptcy,
receivership, insolvency, reorganization or similar proceedings involving or
affecting Seller, (viii) any modification, alteration, amendment or addition of
or to this Agreement, or (ix) any disability or other defense of Seller or any
other person and any other circumstance whatsoever (with or without notice to or
knowledge of Stockholder) which may or might in any manner or to any extent vary
the risks of the Stockholder or might otherwise constitute a legal or equitable
discharge of a surety or a guarantor or otherwise, IT BEING THE PURPOSE AND
INTENT of this Section 12.1 that the obligations of Stockholder hereunder shall
be absolute and unconditional, present and continuing under any and all
circumstances.
12.1.5. Stockholder hereby waives protest, notice of
protest, demand for performance, diligence, notice of any other action at any
time taken or omitted by the Buyer and, generally, all demands and notices of
every kind in connection with this Section 12.1 and the obligations hereby
guaranteed, and which Stockholder may otherwise assert against Seller or the
Buyer.
12.1.6. This Section 12.1 shall continue to be
effective or shall be reinstated, as the case may be, if at any time payment or
performance of any of the obligations of Seller under this Agreement or any
other document related hereto is rescinded or must otherwise be restored or
returned by the Buyer upon the insolvency, bankruptcy or reorganization of
Seller or otherwise, all as though such restoration or return had not been made.
12.1.7. Stockholder shall not be subrogated, in whole
or in part, to the rights of the Buyer against Seller under this Agreement or
any other document related hereto until the discharge in full of the obligations
of Seller under this Agreement. Stockholder waives any defense he may have based
on any election of remedies by Buyer which destroys his subrogation rights or
rights to proceed against Seller for reimbursement, including, without
limitation, any loss of rights either may suffer by reason of any rights, powers
or remedies of Seller in connection with any antideficiency laws or any other
laws limiting, qualifying or discharging Seller's obligations. Until all of
Seller's obligations to the Buyer shall have been paid in full, Stockholder
further waives any right to enforce any remedy which Seller now has or may
hereafter have against the Buyer.
12.1.8. Stockholder represents, warrants and agrees
that each of the waivers set forth above is made with full knowledge of its
significance and consequences and under the circumstances the waivers are
reasonable and not contrary to public policy. If any of said waivers is
determined to be contrary to any applicable law or public policy, such waivers
shall be effective only to the extent permitted by law.
12.2. COVENANT NOT TO COMPETE. To the extent permitted by
applicable law:
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12.2.1. Seller shall no directly or indirectly,
engage or invest in, own, manage, operate, finance, control, or participate in
the ownership, management, operation, or control of, be employed by, associated
with, or in any manner connected with, or render services or advice to, any
business whose products or activities compete in whole or in part with the
products or business of Seller within the United States of America.
12.2.2. Seller shall not directly or indirectly,
either for itself or any other person, (A) induce or attempt to induce any
employee of Buyer or any Affiliate of Buyer to leave the employ of such company,
(B) in any way interfere with the relationship between Buyer or any Affiliate of
Buyer and any employee of such company, (C) employ, or otherwise engage as an
employee, independent contractor, or otherwise, any employee of Buyer or any
Affiliate of Buyer, or (D) induce or attempt to induce any customer, supplier,
licensee, or business relation of Buyer or any Affiliate of Buyer to cease doing
business with such company, or in any way interfere with the relationship
between any customer, supplier, licensee, or business relation of such company.
12.2.3. Seller shall not directly or indirectly,
either for itself or any other person, solicit the business of any person known
to Seller or Stockholder to be a customer of Buyer or any Affiliate of Buyer,
whether or not Seller or Stockholder had business or personal contact with such
person, unless Seller's or Stockholder's solicitation of such person is done in
connection with a business that is not competitive with that of Buyer or any
Affiliate of Buyer.
12.2.4. The duration of the covenants set forth in
this Section 12.2 shall be for a period of three years after Closing. Seller and
Stockholder agree that this covenant is reasonable with respect to its duration,
geographical area, and scope.
12.2.5. In the event of a breach by Seller of any
covenant set forth in this Section 12.2, the term of such covenant will be
extended by the period of the duration of such breach. In addition to Buyer's
right to damages and any other rights it may have, to obtain injunctive or other
equitable relief to restrain any breach or threatened breach or otherwise to
specifically enforce the provisions of this Section, Seller agrees that money
damages alone would be inadequate to compensate Buyer and would be an inadequate
remedy for such breach. If a court of competent jurisdiction holds that the
obligations of Seller and Stockholder pursuant to this Section 12.2 are
unenforceable due to the duration, geographical area or scope of this covenant,
then such duration, geographical area or scope of this covenant shall be reduced
to the least degree necessary to render this covenant enforceable.
13. INDEMNIFICATION AND SURVIVAL.
13.1. INDEMNIFICATION.
13.1.1. From and after the Closing, Seller and
Stockholder, jointly and severally, will indemnify Buyer against, and hold Buyer
harmless from any and all liability, damage, deficiency, loss, cost or expense
(including reasonable attorneys' fees) that are based upon or that arise out of
(i) any misrepresentation or breach of any representation, warranty, covenant or
agreement made by Seller and/or Stockholder herein, (ii) any obligation, debt or
liability of Seller to the extent that the same is not expressly assumed in this
Agreement by Buyer, (iii) the ownership of the Assets and operation of Seller's
business on or prior to the Closing Date other than those liabilities
specifically assumed by Buyer pursuant to Section 3.6, or (iv) failure to comply
with any applicable bulk transfer laws.
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13.1.2. Buyer will indemnify Seller and Stockholder
against, and hold Seller and Stockholder harmless from, any and all liability,
damage, deficiency, loss, cost or expense (including reasonable attorneys' fees)
that are based upon or that arise out of (i) any misrepresentation or breach of
any representation, warranty, covenant or agreement made by Buyer in this
Agreement, (ii) the failure by Buyer to discharge any and all liabilities,
obligations and commitments of Seller to the extent that the same are assumed by
Buyer under Section 3.6 of this Agreement, or (iii) without limiting the
provisions of Section 3.6 (including the limitations and exclusions contained
therein), the ownership of the Assets and operation of Seller from and after the
Closing Date.
13.1.3. Each party entitled to an indemnification
under this Agreement (the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party") promptly after
such Indemnified Party receives notice of any claim, action or proceeding for
which indemnification may be requested hereunder. Such Indemnifying Party shall
have the right (at its expense) to assume the defense of any claim or any
litigation resulting therefrom, PROVIDED that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
reasonably satisfactory to the Indemnified Party, and the Indemnified Party may
participate in such defense, but only at such Indemnified Party's expense, and
PROVIDED, FURTHER, that the omission by any Indemnified Party to give notice as
provided in this Agreement shall not relieve the Indemnifying Party of its
indemnification obligations under this Agreement except to the extent that the
omission results in a failure of actual notice to the Indemnifying Party and
that such Indemnifying Party is damaged as a result of the failure to give
notice. No Indemnifying Party, in the defense of any such claim or litigation,
shall, except with the consent of each Indemnified Party, consent to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability with respect to such claim or
litigation. Notwithstanding the foregoing, the Indemnified Party shall have the
right at all times to take over and assume control of the defense, settlement,
negotiations or lawsuit relating to any claim or demand; PROVIDED, HOWEVER, that
if the Indemnified Party does so take over and assume control, the amount of the
indemnity by the Indemnifying Party shall be limited to the amount which the
Indemnifying Party has immediately prior to such time indicated it would be
willing to pay to adjust and settle such claim or demand. In the event that the
Indemnifying Party does not accept the defense of any matter as above provided
or if the counsel selected by the Indemnifying Party to defend such claim or
litigation has a conflict of interest in representing the Indemnified Party (in
the judgment of such counsel or counsel for the Indemnified Party), the
Indemnified Party shall have the full right to defend against any such claim or
demand at the expense of the Indemnifying Party (including reasonable attorney's
fees and costs of investigation), and shall be entitled to settle or agree to
pay in full such claim or demand, in its sole discretion. In any event, Seller,
the Stockholder, and Buyer shall cooperate in the defense of such action and the
records of each shall be available to the other with respect to such defense.
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13.2. TIME AND MANNER OF CLAIMS. Buyer or Seller and the
Stockholder shall be liable for damages arising from misrepresentations or
breaches of representations and warranties only to the extent notice of a claim
therefor is asserted in writing and delivered, in the case of representations
and warranties relating to payment of taxes, prior to the expiration of the
relevant statutes of limitation with respect to such taxes and, in the case of
all other representations and warranties, prior to the expiration of five (5)
years from the Closing Date. Any notice of a claim by reason of any of the
representations and warranties contained in this Agreement shall state
specifically the representation or warranty with respect to which the claim
arose, and the amount of liability asserted against the other party by reason of
the claim. Subject to the foregoing, the representations, warranties, agreements
and indemnities contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of such parties, and
the completion of the transactions contemplated in this Agreement.
13.3. OFFSET. In the event that Buyer has made a claim against
Seller or Stockholder for indemnification pursuant to this Section 13 or any
other applicable provision of this Agreement, and regardless of whether such
claim or any portion thereof is a Matured Claim or a Contingent Claim (as
defined below), the Buyer shall be entitled in addition to and without limiting
any other remedies available in law or equity to the Buyer, to offset the entire
amount of such claim against any amounts due to Seller under Section 3.4. Such
right of offset shall be exercised in the following manner:
13.3.1. Buyer shall send Seller a notice (the "Offset
Notice") specifying the amount of Buyer's claim under this Agreement, specifying
whether or the extent to which such claim is mature, non-contingent and fixed in
amount (a "Matured Claim") or not yet matured, contingent or not fixed in amount
(a "Contingent Claim"), identifying the provisions of this Agreement asserted to
give rise to the claim and briefly identify the facts which constitute the basis
of such claim.
13.3.2. Buyer shall be entitled, at its sole option,
to offset the amount or any part thereof of any Contingent Claim against
payments due from the Buyer to Seller under Section 3.4 by holding such amount
separate from its other assets in trust for and on account of Seller until the
Contingent Claim becomes a Matured Claim or such claim is otherwise resolved.
13.3.3. If within thirty (30) days after giving the
Offset Notice, the Buyer does not receive a written notice from Seller objecting
in good faith to the validity of any Matured Claim asserted therein, the Buyer
shall be entitled to offset the amount of any such Matured Claim against
payments due from Buyer to Seller under Section 3.4.
13.3.4. If within thirty (30) business days after
giving the Offset Notice, the Buyer receives a written notice from Seller
objecting in good faith to the validity of any Matured Claim or any part
thereof, then (i) with respect to any portion of a Matured Claim as to which no
such objection is received, the provisions of subsection (c) above shall apply,
and (ii) with respect to any portion of a Matured Claim as to which such an
objection is received, the Buyer shall be entitled to offset the amount thereof
against payments due from the Buyer to Seller under Section 3.4 by holding such
amount separate from its other assets.
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13.3.5. Any amounts held separate from its other
assets by the Buyer shall be separated from such other assets at the time such
amount is otherwise due Seller under this Agreement.
13.3.6. After delivery of an Offset Notice or Offset
Notices to Seller, the Buyer shall not be obligated to make any subsequent
payments of any amounts due to Seller under Section 3.4 up to the amount covered
by the Offset Notice or Offset Notices, but shall continue to pay any amounts
when due to Seller under this Agreement which are not covered by any Offset
Notice or Offset Notices.
13.3.7. The exercise by the Buyer of the right of
offset provided in this Section 13 on account of any liability of Seller to the
Buyer under this Agreement shall not, except only to the amount of such offset
(or in the case of monies held separate from the Buyer's other assets pursuant
hereto, only to the amount determined to be retained by the Buyer) constitute a
waiver or release of any of Seller's rights under this Agreement against Seller
or the Stockholder, their successors and assigns.
14. GENERAL.
14.1. CONSENT OF THIRD PARTIES. This Agreement shall not
constitute an agreement to assign any interest in any instrument, contract,
lease, permit or other agreement or arrangement of Seller or any claim, right or
benefit arising thereunder or resulting therefrom, if an assignment without the
consent of a third party would constitute a breach or violation thereof or
adversely affect the rights of the Buyer or Seller thereunder. If a consent of a
third party which is required in order to assign any instrument, contract,
lease, permit or other agreement or arrangement or any claim, right or benefit
arising thereunder or resulting therefrom, which consent Seller and Stockholder
shall use their respective best efforts to obtain prior to the Closing, is not
obtained prior to the Closing, or if an attempted assignment would be
ineffective or would adversely affect the ability of Seller to convey its
interest to the Buyer, Seller will cooperate with the Buyer in any lawful and
economically feasible arrangement to provide that the Buyer shall receive
Seller's interest in the benefits under any such instrument, contract, lease,
permit or other agreement or arrangement; and any transfer or assignment to the
Buyer by Seller of any interest under any such instrument, contract, lease,
permit or other agreement or arrangement that requires the consent of a third
party shall be made subject to such consent or approval being obtained.
14.2. NOTICES. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing. Notice
is duly given to another party upon: (a) hand delivery to the other party, (b)
receipt by the other party when sent by facsimile to the address and number for
such party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph), (c) three business days after the
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Notice has been deposited with the United States postal service as first class
certified mail, return receipt requested, postage prepaid, and addressed to the
party as set forth below, or (d) the next business day after the Notice has been
deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery-service-provider.
To: SVI Holdings, Inc.
12707 High Bluff Drive, Suite 335
San Diego, CA 92130
Attention: Barry Schechter
Tel. (858) 481-9703 (facsimile)
with a copy to: Solomon Ward Seidenwurm & Smith, LLP
401 B Street, Suite 1200
Diego, CA 92101
Attention: Norman L. Smith, Esq.
(619) 231-4755 (facsimile)
Seller: Marketplace Systems Corporation
1106 Clayton Lane, Suite 218E
Austin, Texas 78723
Attention: Jay Fisher
(512) 451-0123 (facsimile)
with a copy to: Kuperman, Orr, Mouer & Albers, P.C.
811 Barton, Springs Road, Suite 730
Austin, Texas 78704
Attention: Vince Mouer
(512) 322-8143 (facsimile)
Stockholder: ___________________________
___________________________
___________________________
(___) _____________ (facsimile)
with a copy to: Kuperman, Orr, Mouer & Albers, P.C.
811 Barton, Springs Road, Suite 730
Austin, Texas 78704
Attention: Vince Mouer
(512) 322-8143 (facsimile)
Each party shall make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
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14.3. ARBITRATION.
14.3.1. Except as specifically modified by this
paragraph, and excepting matters involving provisional
remedies as set forth below, any controversy or claim arising
out of or relating to this Agreement, or any breach thereof,
including without limitation, any claim that this Agreement,
or any part thereof, is invalid, illegal or otherwise voidable
or void, shall be submitted to arbitration to be held before a
single arbitrator in San Diego, California before and in
accordance with the commercial arbitration rules of the
American Arbitration Association ("AAA"). If the claims at
issue exceed $500,000.00, exclusive of interest and attorneys
fees, such commercial arbitration rules shall include the
supplementary procedures for large, complex cases and the
number of arbitrators shall be three. In all cases, the
arbitrators shall be members of the State Bar of California,
actively engaged in the practice of law for at least 10 years,
or a retired member of the state or federal judiciary.
14.3.2. The provisions of this paragraph shall be
construed as independent of any other covenant or provision of
this Agreement; provided that if a court of competent
jurisdiction determines that any such provisions are unlawful
in any way, such court shall modify or interpret such
provisions to the minimum extent necessary to have them comply
with the law.
14.3.3. The parties shall be entitled to conduct
discovery in accordance with the California Code of Civil
Procedure. Any dispute regarding discovery shall be submitted
for final and binding resolution to any court having competent
jurisdiction.
14.3.4. Judgment upon an arbitration award may be
entered in any court having competent jurisdiction and shall
be binding, final and non-appealable.
14.3.5. This arbitration provision shall be deemed to
be self-executing and shall remain in full force and effect
after expiration or termination of this Agreement. In the
event either party fails to appear at any properly noticed
arbitration proceeding, an award may be entered against such
party by default or otherwise notwithstanding said failure to
appear.
14.4. SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of this
Agreement for the applicable time period set forth in this Agreement. Any
Proceeding, regardless of form, arising out of or relating to this Agreement,
shall be commenced by the Parties, if at all, within three (3) years from the
Closing Date of this Agreement.
14.5. EXPENSES. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. In the event of termination
of this Agreement, the obligation of each party to pay its own expenses will be
subject to any rights of such party arising from a breach of this Agreement by
another party.
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14.6. AMENDMENT AND WAIVERS. Any term or provision of this
Agreement may be amended, and the observance of any term of this Agreement may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only by a writing signed by the party to be bound thereby. The
waiver by a party of a default in the performance hereof shall not be deemed to
constitute a waiver of any other default or any succeeding Breach or default.
14.7. PUBLIC ANNOUNCEMENTS. Any public announcement or similar
publicity with respect to this Agreement or the Contemplated Transactions will
be issued, if at all, at such time and in such manner as Buyer determines.
Unless consented to by Buyer in advance or required by Legal Requirements, prior
to the Closing Seller shall keep this Agreement strictly confidential and may
not make any disclosure of this Agreement to any Person. Seller and Buyer will
consult with each other concerning the means by which Seller's employees,
customers, and suppliers and others having dealings with Seller will be informed
of the Contemplated Transactions, and Buyer will have the right to be present
for any such communication.
14.8. ATTORNEYS' FEES. In the event any litigation,
arbitration, mediation, or other Proceeding is initiated by any party(ies)
against any other party(ies) to enforce, interpret or otherwise obtain judicial
or quasi-judicial relief in connection with this Agreement, the prevailing
party(ies) in such Proceeding shall be entitled to recover from the unsuccessful
party(ies) all costs, expenses, actual attorney's and expert witness fees,
relating to or arising out of (a) such Proceeding (whether or not such
Proceeding proceeds to judgment), and (b) any post-judgment or post-award
proceeding including without limitation one to enforce any judgment or award
resulting from any such Proceeding. Any such judgment or award shall contain a
specific provision for the recovery of all such subsequently incurred costs,
expenses, actual attorney's and expert witness fees.
14.9. CONFIDENTIALITY. Between the date of this Agreement and
the Closing Date, Buyer and Seller will maintain in confidence, and will cause
the directors, officers, employees, agents, and advisors of Buyer and Seller to
maintain in confidence, and not use to the detriment of another party any
written, oral, or other information obtained in confidence from another party in
connection with this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of
confidentiality or such information becomes publicly available through no fault
of such party, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by legal proceedings. If the Contemplated
Transactions are not consummated, each party will return or destroy as much of
such written information as the other party may reasonably request. Whether or
not the Closing takes place, Seller waives, any cause of action, right, or claim
arising out of the access of Buyer or its representatives to any trade secrets
or other confidential information of Seller except for the intentional
competitive misuse by Buyer of such trade secrets or confidential information.
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14.10. JURISDICTION; SERVICE OF PROCESS. Any action or
proceeding seeking to enforce any provision of, or based on any right arising
out of, this Agreement may be brought against any of the parties in the courts
of the State of California, County of San Diego, or, if it has or can acquire
jurisdiction, in the United States District Court for the Southern District of
California, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in the
world.
14.11. FURTHER ASSURANCES. The parties agree (a) to furnish
upon request to each other such further information, (b) to execute and deliver
to each other such other documents, and (c) to do such other acts and things,
all as the other party may reasonably request for the purpose of carrying out
the intent of this Agreement and the documents referred to in this Agreement.
14.12. WAIVER. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right arising
out of this Agreement or the documents referred to in this Agreement can be
discharged by one party, in whole or in part, by a waiver or renunciation of the
claim or right unless in writing signed by the other party; (b) no waiver that
may be given by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be deemed to
be a waiver of any obligation of such party or of the right of the party giving
such notice or demand to take further action without notice or demand as
provided in this Agreement or the documents referred to in this Agreement.
14.13. ENTIRE AGREEMENT AND MODIFICATION. This Agreement
supersedes all prior agreements between the parties with respect to its subject
matter and constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement between the
parties with respect to its subject matter. This Agreement may not be amended
except by a written agreement executed by the party to be charged with the
amendment.
14.14. ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.
Neither party may assign any of its rights under this Agreement without the
prior consent of the other parties, except that Buyer may assign any of its
rights under this Agreement to any Affiliate of Buyer. Subject to the preceding
sentence, this Agreement will apply to, be binding in all respects upon, and
inure to the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
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14.15. SEVERABILITY. If any provision of this Agreement is
held invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
14.16. SECTION HEADINGS, CONSTRUCTION. The headings of
Sections in this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words used
in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
14.17. TIME OF ESSENCE.13 TIME OF ESSENCE.13 TIME OF ESSENCE.
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
14.18. GOVERNING LAW. This Agreement will be governed by the
laws of the State of California without regard to conflicts of laws principles.
///
///
///
///
14.19. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
SELLER: MARKETPLACE SYSTEMS CORPORATION
a Texas corporation
By: /S/ Jay Fisher
-------------------------------------------
Jay Fisher, President
BUYER: SVI HOLDINGS, INC.
a Nevada corporation
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By:
-------------------------------------------
[Name]
[Title]
STOCKHOLDER: /s/ Jay Fisher
-------------------------------------------
JAY FISHER
44
