UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 1999
CFI ProServices, Inc.
(Exact name of registrant as specified in its charter)
Oregon 0-21980 93-0704365
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 S.W. Sixth Avenue, Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 274-7280
This Form 8-K consists of 39 pages. Exhibits are indexed on page 4.
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Item 2. Acquisition or Disposition of Assets.
Effective as of May 17, 1999, CFI ProServices, Inc. (the "Company"),
acquired substantially all of the equity interests of MECA Software, L.L.C., a
Delaware limited liability company ("MECA"). MECA, whose principal executive
offices are located in Trumbull, Connecticut, is a developer of personal
financial management software and Internet solutions for financial service
providers. MECA also provides custom software development, consulting services,
manufacturing and fulfillment, technical support, training and marketing.
In accordance with the terms of a Purchase and Sale Agreement (the
"Agreement") executed on May 17, 1999 by and among MECA, each of the individual
members of MECA (the "Members"), the Company, and MoneyScape Holdings, Inc., an
Oregon corporation and wholly owned subsidiary of CFI ("MSHI"), the Company
agreed to assume approximately $10 million of net liabilities of MECA, and the
Company and MSHI agreed to provide 50,000 shares of CFI stock to the Members
(the "CFI Stock").
The terms of the acquisition were determined by negotiations between
the Company, MECA and the Members. Prior to entering into the Agreement, there
was no relationship between the Company and MECA or any of the Members.
MECA does not own a significant amount of assets categorized as
property and equipment and MECA leases the facilities out of which it currently
operates. The Company intends that it will continue to utilize these facilities
and equipment (primarily computer equipment) in the same manner MECA utilized
them prior to the Company's acquisition.
The Company's acquisition of MECA was financed through the Company's
credit facility with its primary lender.
In connection with this acquisition, the Company believes it will
likely take a pre-tax charge in the second quarter of 1999 representing the
value, to be determined by independent appraisal, of acquired in-process
research and development.
The Agreement is being filed as Exhibit 2.1, and is incorporated
into this Current Report on Form 8-K by this reference.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired. Financial
statements will be filed with the Commission within 60 days of this report, in
accordance with Item 7 of this Form 8-K.
(b) Pro forma financial information. Pro forma financial information
will be filed with the Commission within 60 days of this report, in accordance
with Item 7 of this Form 8-K.
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(c) Exhibits.
Exhibit No. Description
2.1 Purchase and Sale Agreement, dated May 17,
1999, among MECA Software, L.L.C., the
members of MECA Software, L.L.C, CFI
ProServices, Inc., and MoneyScape Holdings,
Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CFI PROSERVICES, INC.
Date: June 1, 1999 By: /s/ Jeffrey P.
-----------------------------
Strickler
Jeffrey P. Strickler,
Vice President and
General Counsel
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INDEX TO EXHIBITS
Sequentially
Numbered
Exhibit Number Description
Page
2.1 Purchase and Sale Agreement, dated May 17, 1999, -5-
among MECA Software, L.L.C., the
members of MECA Software, L.L.C, CFI
ProServices, Inc., and MoneyScape
Holdings, Inc.
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into,
by and among MECA Software, L.L.C., a Delaware limited liability company
("MECA"); those entities set forth on Exhibit A which hold equity interests in
MECA (individually, a "Member" and collectively, the "Members"); CFI
ProServices, Inc., an Oregon corporation ("CFI"); and MoneyScape Holdings, Inc,
an Oregon corporation and wholly owned subsidiary of CFI ("MSH"). All
capitalized terms used herein and not previously defined shall have the meaning
ascribed thereto as subsequently defined in this Agreement (including Section
10.14).
RECITALS
WHEREAS, the Members are the owners of equity interests (the "Membership
Interests") of MECA (in the respective percentages, and identified as Class A
Members or Class B Members on Exhibit A); and
WHEREAS, MECA is in the business of marketing, selling and/or licensing,
and providing certain software products and related services to financial
institutions and other customers (the "Business"); and
WHEREAS, CFI and MSH between them desire to purchase all of the Membership
Interests of all of the Members in MECA and through this purchase own and
operate the Business of MECA, all as described, and upon the terms and subject
to the conditions, set forth herein;
WHEREAS, MECA desires to enter into the transactions contemplated
herein; and
WHEREAS, the Members each desire to enter into the transactions
contemplated herein.
NOW, THEREFORE, in consideration of the foregoing premises and of the
respective representations, warranties, covenants, agreements, and conditions
contained herein, the parties hereto agree as follows:
AGREEMENT
ARTICLE I: PURCHASE AND SALE OF MEMBERSHIP INTERESTS.
Section 1.1 Purchase of Membership Interests.
On the terms and subject to the conditions herein stated, each of the
Members hereby sells, assigns, transfers, conveys, and delivers, (i) to CFI,
99.0% of such Member's respective Membership Interest in MECA and (ii) to MSH,
1.0% of such Member's respective Membership Interest in MECA, and CFI and MSH
hereby purchase these respective percentages of Membership Interests from each
of the Members, causing CFI and MSH to own all of the issued and outstanding
Membership Interests in MECA.
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Section 1.2 Closing.
The Closing of the purchase of the Membership Interests shall be deemed to
take place at 10:00 a.m. at the offices of CFI on the date hereof or at such
other time, date, and location as the parties hereto mutually agree. Such time
and date of the closing are herein referred to as the "Closing Date."
ARTICLE II: PURCHASE PRICE AND PAYMENT TERMS.
Section 2.1 Purchase Price.
(a) CFI and MSH Stock. At the Closing, CFI shall issue and deliver
49,500 shares of CFI common stock, and MSH shall deliver 500 shares of CFI
common stock (hereafter, collectively, the "Shares") to the Members (or to their
parent company designees). The Shares will be "restricted shares" within the
meaning of the Securities Act of 1933, as amended. The number of Shares
delivered to each Member shall be determined by multiplying the respective
Member's percentage Membership Interest in MECA on the Effective Date as set
forth on Exhibit A by the total number of CFI shares, issued and delivered
pursuant to the foregoing sentence.
Section 2.2 Taxes.
The Class A Members shall be jointly and severally responsible for any and
all Taxes (as hereinafter defined) which have accrued or which may accrue in the
future as a result of any such Member's possession, ownership, or use of any of
the Assets or its Membership Interest prior to the Closing Date, other than
Taxes accrued on the MECA Balance Sheet. Insofar as reasonably possible, all
such payments of Taxes, due on or before the Closing Date, shall be made and
paid on or before the Closing Date, with settlement of any remaining items to be
made within thirty (30) days following the Closing Date. CFI and MSH shall be
solely responsible for any and all Taxes which accrue as a result of CFI or
MSH's respective possession, ownership or use of the Membership Interests on and
after the Closing Date. The Members have determined that no sales Taxes are
payable as a result of the transactions contemplated herein.
Section 2.3 No Additional Shares.
The Shares shall constitute all of the shares of CFI common stock (whether
delivered by CFI or by MSH) issuable to the Members in exchange for the
Membership Interests. No contingent payments shall be made to the Members in
exchange for such Membership Interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE MEMBERS
Except as set forth in the attached Schedule of Exceptions, any Exhibits
or other applicable schedule, appendix or exhibit hereto, each of the Class A
Members, jointly and
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severally, on behalf of themselves and their respective parent companies, hereby
represents and warrants to CFI and MSH as of the Closing Date as follows.
Section 3.1 Corporate Formalities; Enforceability.
(a) Legal Entity Status. MECA is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. MECA is not, and the execution and delivery of this Agreement and each
document contemplated hereby, and the consummation of the transactions
contemplated herein, will not cause it to be, in violation of any provision of
its Certificate of Formation or Amended and Restated Limited Liability Company
Agreement as currently in effect (respectively, the "Charter Documents").
(b) Power and Authority. MECA has all requisite limited liability company
power and authority to own, lease, possess, and operate its assets, and to
engage in its Business. MECA has all requisite limited liability company power
and authority to execute, deliver, and carry out the terms and provisions of
this Agreement and each document contemplated hereby to which it is a party, and
to consummate the transactions contemplated herein and therein. Each of the
Members has all requisite corporate power and authority to execute, deliver, and
carry out the terms and provisions of this Agreement and each document
contemplated hereby to which it is a party, and to consummate the transactions
contemplated herein and therein. Each of the Members has taken or caused to be
taken all other proper and necessary action to authorize the execution,
delivery, and performance of this Agreement and each document contemplated
hereby. MECA is duly qualified to do business as a foreign limited liability
company and is in good standing in each jurisdiction where the character of the
property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect on MECA.
(c) Enforceability of Acquisition Agreement and Related Documents. Each
Member has duly executed and delivered this Agreement, and this Agreement
constitutes the legal, valid, and binding obligation of each such Member,
enforceable against such Member in accordance with its terms. Each document
contemplated hereby and executed by a Member, when executed and delivered by
such Member in accordance with the provisions hereof and thereof, shall be a
legal, valid and binding obligation of such Member, enforceable against such
Member in accordance with its terms.
(d) Ownership of MECA. The Membership Interests set forth in Exhibit A
constitute one hundred percent (100%) of the outstanding equity interests in
MECA. Each Member owns the Membership Interests in MECA set forth opposite its
name on Exhibit A, free and clear of all Liens and such Membership Interests,
when transferred to CFI and MSH pursuant to this Agreement shall be free and
clear of all Liens arising from any actions of such Member.
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Section 3.2 Non-Contravention.
The execution and delivery by the Members of this Agreement and of the
documents contemplated hereby and the performance by the Members of the terms
and provisions hereof and thereof; the consummation of the transactions
contemplated herein and therein, does not (with the passage of time or the
giving of notice or both):
(a) Conflict with any Law or require any Approval on the part of any
Member.
(b) Conflict with, contravene, result in a breach of or constitute a
default under, MECA's Charter Documents or under the applicable organizational
document of any Member.
(c) Result in a breach of, constitute a default under, or give rise to any
right of termination, cancellation, acceleration or loss of right under any
Contract (as defined in Section 3.5 below), except for any such breach, default
or right which would not, individually or in the aggregate, have a Material
Adverse Effect on MECA.
(d) Result in the creation or imposition of any Lien, restriction or
encumbrance of any kind upon MECA, or MECA's Assets, as a result of the action
or inaction of MECA or any Member.
(e) Require any Approval (except as set forth in Exhibit 3.2).
Section 3.3 Financial Condition.
(a) Financial Statements. The Members have delivered to CFI and MSH
unaudited balance sheets of MECA (the "MECA Balance Sheet"), dated as of April
30, 1999 (the "MECA Balance Sheet Date"), and the related unaudited statements
of income and cash flows for the periods ended April 30, 1999, together with any
notes thereto and/or reports thereon (collectively, the "MECA Financial Data").
The MECA Balance Sheet: (i) has not been audited; (ii) is in accordance with the
Records of MECA; has been prepared in accordance with GAAP consistently applied
with historical practices of MECA (subject to the absence of footnotes and
year-end adjustments not in the aggregate material); and (iii) to the best
knowledge of the Members and MECA, fairly presents the financial condition of
MECA as of the MECA Balance Sheet Date.
(b) No Material Adverse Effect. Except as expressly allowed or
contemplated by this Agreement, since the MECA Balance Sheet Date, MECA has
conducted its business in the ordinary course and there has not occurred:
(i) Any Material Adverse Effect;
(ii) Any amendments or changes in MECA's Charter Documents.
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(iii) Any redemption, repurchase or other acquisition of Membership
Interests by MECA, or any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to the
Membership Interests;
(iv) Any increase in or modification of the compensation or benefits
payable or to become payable by MECA to any of its employees;
(v) Any acquisition or sale of property or assets by or of MECA,
except in the ordinary course of business;
(vi) Any entry into, amendment of, relinquishment, termination or
non-renewal by MECA, of any Contracts, or material lease transaction, commitment
or other right or obligation, other than in the ordinary course of business;
(vii) Any labor dispute, other than routine individual grievances,
or, to the best knowledge of the Members and MECA, any activity or proceeding by
a labor union or representative thereof to organize any employees of MECA; or
(viii) Any relinquishment, termination, or non-renewal by any
Member, of any Contract between MECA and any such Member, or any agreement or
formal determination made by any such Member to take any action after the date
hereof which, if taken prior to the date hereof, would have made any
representation or warranty untrue or incorrect as of the date hereof.
(c) Receivables. The receivables reflected on the MECA Balance Sheet arose
in the ordinary course of business and are valid receivables reflecting sums due
for the provision of goods and services by MECA. To the best knowledge of the
Members and MECA, such receivables are collectible in the book amounts thereof,
less an amount not in excess of the reserves provided for in such balance sheet.
The receivables of MECA arising after the date of the MECA Balance Sheet and
prior to the Closing Date arose in the ordinary course of business, are valid
receivables reflecting sums due for the provision of goods and services by MECA,
and have been collected or, to the best knowledge of MECA, are collectible in
the book amounts thereof, less an amount not in excess of the reserves provided
for in such balance sheet.
(d) Allocated Payment Amounts. The amounts reflected in the MECA Balance
Sheet as obligations of licensees of the Products arose in the ordinary course
of business and are valid obligations reflecting sums due for the provision of
goods and services by MECA prior to the Closing Date.
(e) Undisclosed Liabilities. MECA has no liabilities or obligations of any
nature due or to become due, determined or determinable, absolute, accrued,
contingent, or otherwise, except, (i) as, and to the extent, set forth or
specifically reserved against in the MECA Financial Data, (ii) liabilities
arising in the ordinary course of business that are not required by generally
accepted accounting principals to be set forth on the MECA Balance Sheet, (iii)
liabilities incurred after the MECA Balance Sheet Date and before the Closing
Date arising in the ordinary and usual course of business consistent with past
practice (none of which is a material uninsured
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liability for breach of contract, breach of warranty, tort or infringement
claim, violation of law or lawsuit) and (iv) liabilities incurred in connection
with or contemplated by this Agreement. No Lien exists with respect to any of
MECA's Assets by virtue of any pledge or agreement of any Member.
(f) Records. The Records contain, in all material respects, true,
complete, and accurate entries of all dealings or transactions of or in relation
to the Business and have been maintained in accordance with good accounting and
business practices. There have been no transactions involving MECA, the Assets
or the Business that will have, or that have had a Material Adverse Effect
thereon, other than as has been accurately set forth in the Records.
Section 3.4 Tax Returns and Payments.
(a) MECA has duly and timely filed when due, or will have timely filed on
or before the Closing Date, all material returns, reports, declarations and
applications, relating to all Taxes required to be filed by MECA prior to the
Closing Date, including, without limitation, with respect to estimated Taxes,
excise Taxes and informational returns (in each case, a "Return") due from MECA.
All such Returns are true, accurate, and complete in all material respects and
reflect all Taxes payable. MECA has paid or reserved for all Taxes due from MECA
with respect to MECA and the Business.
(b) No Return has been audited by any taxing authority. There is no
action, suit, proceeding, audit, investigation, or claim pending or threatened
in respect of any Taxes for which MECA is or may become liable, nor has any
deficiency or claim for any such Taxes been imposed or assessed. There are no
outstanding notices of Deficiencies, adjustments, or changes in assessments with
respect to any Taxes due from MECA. There is no agreement, waiver, or consent
providing for an extension of time with respect to the assessment of any Taxes
against MECA.
(c) MECA has timely paid, withheld or otherwise collected, or made
provision on its books for all Taxes due and payable by MECA with respect to all
taxable periods ending on or prior to the Closing Date and for the relevant
portion (ending on the Closing Date) of any taxable period beginning prior to
the Closing Date and ending after the Closing Date. There are no Liens for Taxes
upon the assets of MECA, except Liens for current Taxes not yet due.
(d) To the best knowledge of the Members, MECA will not be required to
include any adjustment in taxable income for any Tax period (or portion thereof)
ending after the ClosingDate pursuant to Section 481(c) of the Internal Revenue
Code (or any similar provision of the Tax laws of any jurisdiction) as a result
of a change in method of accounting for any Tax period (or portion thereof)
ending on or before the Closing Date or pursuant to the provisions of any
agreement entered into with any Taxing Authority with regard to the Tax
liability of MECA for any Tax period (or portion thereof) ending on or before
the Closing Date.
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Section 3.5 Agreements.
(a) Agreements. The following agreements, commitments, contracts,
arrangements, mortgages, deeds of trust, instruments, leases, licenses or any
other understandings, oral or written, that presently are in effect, including
all amendments, modifications, and waivers with respect thereto to which MECA is
a party or is otherwise bound (collectively, "Contracts"), are listed in Exhibit
3.5:
(i) Any plan, contract or arrangement with any officer, a member of
the board of managers, director, consultant or employee of any Member or MECA,
providing for the payment by MECA of future compensation (including, without
limitation, bonuses, pensions, deferred compensation, severance pay or benefits,
retirement payments, profit sharing, or the like), whether written or oral;
(ii) Any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of profits with
other persons;
(iii) Any distribution agreement, sales agreement, volume purchase
agreement, or other similar agreement;
(iv) Any lease for real or personal property used by the Members or
MECA in connection with the Business;
(v) Any agreement, license, permit, concession, arrangement,
commitment or authorization which may be, by its terms, terminated or breached
by reason of the execution of this Agreement, or the consummation of the
transactions contemplated hereby where such termination or breach would have a
Material Adverse Effect on MECA;
(vi) Any instrument evidencing or related in any way to indebtedness
by way of direct loan, sale of debt securities, purchase money obligation,
conditional sale, guarantee, or otherwise and which would be affected by, or
would have an effect on, the execution of this Agreement or the consummation of
the transactions contemplated hereby;
(vii) Any material license, either as licensor or licensee, of the
Products or the Intellectual Property;
(viii) Any contract for the future purchase, sale, license,
provision or manufacture of products or services requiring payment to or from
MECA in an amount in excess of $20,000 per annum which is not terminable on
ninety (90) or fewer days' notice without cost or other liability to MECA;
(ix) Any contract or commitment in which MECA has granted or
received most favored customer pricing provisions or exclusive marketing or
distribution rights relating to any product or service, group of products or
services, market or geographic territory;
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(x) Any lease or other agreement under which MECA is lessee of
tangible personal property or real property owned by any third party and under
which payments to such third party exceed $20,000 per annum;
(xi) Any agreement or arrangement for the sale, licensing or leasing
of any assets, properties, products, services or rights having a value in excess
of $20,000; and
(xii) Any agreement that restricts MECA from engaging in any aspect
of its business, from participating or competing in any line of business or
market or that restricts MECA from engaging in any business in any market or
geographic area.
(b) No Defaults. With respect to each of the Contracts (i) a true and
correct copy has previously been delivered or made available to CFI and MSH,
(ii) it is valid and binding on MECA and any Member that is a party thereto and,
to the knowledge of MECA, any third party and is in full force and effect, (iii)
neither MECA nor any Member a party thereto is in violation of the terms of or
in default thereunder, and, to the best knowledge of the Members and MECA, no
other party thereto is in violation of the terms thereof or in default
thereunder, (iv) neither MECA nor any Member has received a notice of
termination with respect thereto, and, (v) to the knowledge of the Members and
MECA no condition exists or event has occurred (including, without limitation,
the consummation of the transactions contemplated hereunder) that, with the
giving of notice, the lapse of time, or both, would become a default or permit
early termination thereunder by a party other than MECA. Neither MECA nor any
Member has received any notice that the other party to any contract will, or has
threatened to declare any default or seek to exercise any termination right
under such Contract as a result of the consummation of the transactions
contemplated hereunder.
Section 3.6 Property.
(a) Assets. Exhibit 3.6(a) represents (in all material respects) a
complete and accurate list of all owned and leased property used by MECA in the
conduct of the Business, which had a purchase price in excess of $1000.00 and
which is not yet been fully depreciated (the "Assets") and includes any such
owned property reflected in the MECA Balance Sheet. MECA has good and marketable
title to the Assets, free and clear of all Liens, except as set forth on Exhibit
3.6(a). With respect to tangible Assets, (i) there is no condition, restriction,
or reservation affecting the title to or utility of any such Assets which as a
result of the consummation of the transactions contemplated hereunder would
prevent MECA from occupying, utilizing, or enjoying any such Assets (or any part
thereof) on the Closing Date to the same extent that MECA is entitled on the
date hereof; (ii) MECA does not hold such tangible personal property on
consignment, nor does MECA have title to such tangible Assets in the possession
of others; and (iii) all such Assets material to the Business are all in good
operating condition and repair, ordinary wear and tear excepted, and are
suitable for the purposes used.
(b) Real Property. MECA has no title to or ownership interest (other than
a leasehold estate) in any real property. Exhibit 3.6(b) includes a description
of the lease currently in effect
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to which MECA is a party (the "Real Property Lease"). MECA has previously
delivered to CFI and MSH a true and complete copy of the Real Property Lease,
including all material amendments, modifications, and waivers with respect
thereto. The Real Property Lease is valid and binding on MECA, and to the
knowledge of MECA, each other party thereto and is in full force and effect, and
all rents and additional rents due as of the Closing Date on such lease have
been paid. MECA has been in peaceable possession since the commencement of the
original term of such lease and is not in material default thereunder and no
waiver, indulgence, or postponement of MECA's obligations thereunder has been
granted by the lessor; and there exists no event of default or event,
occurrence, condition, or act that, with the giving of notice, the lapse of
time, or both, would become a default by MECA under such lease. To the knowledge
of the Members and MECA, all of the material covenants to be performed by any
other party under any such lease have been fully performed.
(c) Products.
The products that MECA has currently under development are identified on
Exhibit 3.6(c) (the "Products"). MECA has provided to CFI a summary description
of each product as contemplated by MECA, its development code name or project
identifier, a summary of its stage of development indicating major milestones
completed and those remaining to be completed, and for each major milestone the
most recent estimate of the resource commitments in terms of man hours and in
terms of money and other resources. No representation or warranty is made as to
the ability to complete the development of any such products as set forth in
such materials or otherwise.
(d) Intellectual Property.
(i) MECA owns or has the right to use all of the Intellectual
Property which is used, or may be necessary to conduct the Business as currently
conducted. Exhibit 3.6(d) sets forth a list of all trademarks, service marks,
trade names and copyrights registered in the name of MECA (the "Marks").
(ii) Neither MECA nor any Member has assigned or licensed rights to
the Marks to any third party except pursuant to the terms of the Contracts.
(iii) The execution, delivery and performance of this Agreement and
the documents contemplated hereby, and the consummation of the transactions
contemplated hereby and thereby, will not breach or violate or constitute a
default under any Contract relating to the ownership or use of the Intellectual
Property by MECA, and will not cause the forfeiture or termination or materially
impair the rights held in such Intellectual Property by MECA, whether before or
after the Closing Date.
(iv) To the knowledge of the Members and MECA, the use of the
Intellectual Property by MECA, as currently used, does not infringe on any
patents, trademarks, copyrights, trade secrets or any other intellectual
property right of any third party.
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(v) There is no pending or, to the best knowledge of the Members and
MECA, threatened Claim contesting the validity, ownership or right to use, sell,
license, dispose of, or to bring actions for the misappropriation of, any
Intellectual Property (other than for licensed Intellectual Property) used by
MECA in the conduct of the Business as currently conducted. Neither MECA nor any
Member has received any notice asserting that any Intellectual Property (or the
proposed use, sale, license, or disposition thereof) conflicts with or will
conflict with the rights of any other party, nor, to the best knowledge of the
Members and MECA, is there any reasonable basis for any such assertion.
(vi) MECA has taken commercially reasonable steps to safeguard and
maintain the secrecy and confidentiality of the Intellectual Property
(including, without limitation, entering into appropriate confidentiality and
nondisclosure agreements with all employees and other parties with access to or
knowledge of the Intellectual Property). To the best knowledge of the Members
and MECA, no MECA employees are obligated under any Contract or subject to any
judgment, decree or order of any court or administrative agency that would
conflict with MECA's ownership and use of the Intellectual Property from and
after the Closing Date. MECA has provided or made available to CFI and MSH a
copy of each confidentiality or other agreement which MECA has entered into with
any of its employees regarding any of the Intellectual Property.
(vii) To the best knowledge of the Members and MECA, none of their
employees or MECA employees or any third party to a confidentiality agreement
with MECA with respect to the Intellectual Property, has published or disclosed
any confidential aspect of any Intellectual Property to any other party except
in accordance with and as permitted by such confidentiality agreement.
Section 3.7 Compliance With Laws; Governmental Authorizations and
Licenses.
(a) Compliance with Law. MECA is in compliance in all material respects
with and has conducted its Business so as to comply in all material respects
with all laws, rules and regulations, judgments, decrees or orders of any court,
administrative agency, commission, regulatory authority or other governmental
authority or instrumentality, domestic or foreign (a "Governmental Authority")
applicable to its operations and with respect to which compliance is a condition
of engaging in the Business. There are no judgments or orders, injunctions,
decrees, stipulations or awards (whether rendered by a court or administrative
agency or by arbitration), including any such actions relating to affirmative
action claims or claims of discrimination, against MECA, or against any of
MECA's properties or activities related to the Business, which are continuing in
effect and could reasonably be expected to have a Material Adverse Effect on
MECA, the Business or the Assets. The ownership of the Membership Interests by
each Member is in compliance in all material respects with all laws, rules and
regulations, judgments, decrees or orders of any Governmental Authority
applicable to such Member's operations. There are no judgments or orders,
injunctions, decrees, stipulations or awards (whether rendered by a court or
administrative agency or by arbitration) against any Member which could
reasonably be expected to have a Material Adverse Effect on MECA, the Business
or the Assets.
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(b) Governmental Authorizations and Licenses. MECA possesses all material
governmental licenses, franchises, certificates, consents, permits and other
governmental authorizations legally required to enable it to carry on the
Business as now conducted or to own and use the Assets (in any event, free from
restrictions materially burdensome to the operation of the Business)
(collectively, "Licenses"), all of which Licenses are described in Exhibit
3.7(b). All such Licenses are valid and existing and no proceeding is pending
or, to the knowledge of the Members and MECA, threatened looking toward the
revocation or material limitation of, any such License. MECA is in material
compliance with the terms and conditions of such Licenses.
Section 3.8 Environmental Compliance.
(a) Neither MECA nor any of the Members has ever received any written
notice, demand, citation, summons, complaint or order or any notice of any
penalty, Lien or assessment, and to the best of their knowledge, no
investigation or review is pending by any Governmental Authority, with respect
to any material (i) alleged violation by MECA of any Environmental Law, or (ii)
alleged failure by MECA to have any environmental permit, certificate, license,
approval, registration or authorization required in connection with the conduct
of its Business or (iii) to the best knowledge of the Members and MECA, MECA has
not violated, or is it in violation of, any Environmental Law.
(b) MECA has delivered to CFI and MSH copies of all environmental audits
and other similar reports which have been prepared by or for MECA with respect
to any property owned or leased by MECA.
Section 3.9 Employees.
(a) Employees. Exhibit 3.9 lists all persons employed by MECA as of the
Closing Date. Those employees that are covered by employment or similar
agreements (i.e., employed other than "at will") are identified on Exhibit 3.9.
No other MECA employee is a party to any employment or similar agreement with
MECA relating to such employment (other than "at will" employment agreements or
agreements with MECA for the purpose of providing for the confidentiality of the
Intellectual Property and the prosecution of patent claims and similar matters).
Except as identified on Exhibit 3.9, no Member is a party to any effective
consulting agreement (either utilizing employees of such Member or third
parties) with respect to the Business. As of the Closing Date, MECA has fully
paid to each of the employees or accrued for the payment of all compensation
then owed by MECA to such employees, and has paid or performed all other
obligations to such employees required to be paid or performed on or before the
Closing Date.
(b) Legal Matters. MECA is in compliance with all currently applicable
laws and regulations respecting employment, discrimination in employment,
verification of immigration status, terms and conditions of employment and wages
and hours and occupational safety and health and employment practices except
where such non-compliance would not have a Material Adverse Effect on MECA, and
is not engaged in any unfair labor practice. There is neither
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pending nor, to the best knowledge of the Members and MECA, threatened, any
investigation or hearing arising out of or based upon any such laws, regulations
or practices.
Section 3.10 Litigation.
There are no Claims pending, or, to the best knowledge of the Members and
MECA, threatened against MECA, or against the Members as to the ownership of the
Membership Interests, or any officers, or employees of MECA, the Business or the
Assets, or of the consummation of the transactions contemplated by this
Agreement. To the best knowledge of the Members and MECA, there exists no set of
facts or conditions that would reasonably be expected to give rise to any such
Claims.
Section 3.11 Customers.
Exhibit 3.11 lists all existing active customers of MECA party to any
Contract with MECA. Except as set forth in Exhibit 3.11, to the best knowledge
of the Members and MECA, no customers during the two (2) years prior to the
Closing Date has terminated its contract with MECA indicating as a reason
dissatisfaction with MECA's products or services.
Exhibit 3.11 separately segregates and lists all contracts between MECA
and any Member that will continue after the Closing. Each such contract is, and
immediately after the Closing Date shall remain, in full force and effect and
the Member party to such contract represents that it has no material dispute,
dissatisfaction or intention to terminate such contract.
Section 3.12 Brokers.
Except for fees payable to Hambrecht & Quist LLP, none of MECA or any
Member has incurred, directly or indirectly, any liability for brokerage or
finders' fees in connection with the consummation of the transactions
contemplated hereunder. Any amounts payable to Hambrecht & Quist LLP in
connection with the consummation of the transactions contemplated hereunder
shall be paid by the Members.
Section 3.13 Year 2000.
Products and services presently offered by MECA are Year 2000 compliant.
With respect to MECA's Assets (excluding the Products) including MECA's
internally used software, hardware, firmware, equipment, goods, or systems that
are material to the Business, MECA has taken reasonable steps to reduce the
risks to the Business, the Assets and its customers in connection with a
potential Year 2000 compliance problem. "Year 2000 compliant" means that the
Product, service, software, hardware, firmware, equipment, goods, or systems
will reflect and accept proper dates, operate properly with correct dates
provided it, properly perform date sensitive functions before, during, and after
the year 2000 as well as spanning the change in century, and either not accept
insufficient date information or correctly interpret the correct date from such
information. MECA has provided test results and vendor responses that evidence
its efforts within the terms of this Section 3.13.
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Section 3.14 Accuracy and Completeness of Information.
The representations and warranties, written data, documents, reports,
written statements, financial statements, and other written information
furnished by MECA or the Members to CFI and MSH or its representatives in
connection with this Agreement or any of the transactions contemplated herein
are complete and correct in all material respects, do not contain any material
misstatement of fact and do not omit to state any material fact necessary to
make the statements herein and therein not misleading.
ARTICLE IV
REPRESENTATIONS and WARRANTIES OF CFI and MSH
Except as set forth in the attached Exhibits, CFI and MSH hereby represent
and warrant to the Members that the following statements are true and correct as
of the date hereof.
Section 4.1 Corporate Formalities; Enforceability.
(a) Corporate Status. CFI and MSH are each a corporation, duly organized,
validly existing, and in good standing under the laws of the State of Oregon.
MSH is a wholly owned subsidiary of CFI. Neither CFI nor MSH is in violation,
and the execution and delivery of this Agreement and each document contemplated
hereby, and the consummation of the transactions contemplated herein, will not
cause either of them to be in violation, of any provision of its Articles of
Incorporation or bylaws as currently in effect (CFI and MSH's "Charter
Documents")
(b) Corporate Power and Authority. CFI and MSH have all requisite
corporate power and authority to execute, deliver and carry out the terms and
provisions of this Agreement and each document contemplated hereby; and to
consummate the transactions contemplated herein and therein. The Board of
Directors of CFI and MSH have duly approved, and CFI and MSH have each taken or
caused to be taken all other proper and necessary action to authorize the
execution, delivery, and performance of this Agreement and each document
contemplated hereby.
(c) Enforceability of Acquisition Documents. CFI and MSH have duly
executed and delivered this Agreement, and this Agreement constitutes a legal,
valid, and binding obligation of CFI and MSH, enforceable in accordance with its
terms. Each document contemplated hereby, when executed and delivered by CFI and
MSH in accordance with the provisions hereof and thereof, shall be a legal,
valid and binding obligation of CFI and MSH, enforceable in accordance with its
terms.
Section 4.2 Non-Contravention.
The execution and delivery by CFI and MSH of this Agreement and of the
documents contemplated hereby; the performance by CFI and MSH of the terms and
provisions hereof and
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thereof; and the consummation of the transactions contemplated herein and
therein, does not and will not (with the passage of time or the giving of notice
or both):
(a) Conflict with any Law or any Approval (notwithstanding that compliance
with any such Law or Approval is not required until a future date) or, to the
best knowledge of CFI and MSH, any proposed or pending change in any Law or
Approval;
(b) Conflict with, contravene, result in a breach of, constitute a default
under, or give rise to any right of termination, cancellation, acceleration, or
loss of right under CFI and MSH's respective corporate charters or bylaws or
under any agreement, commitment, contract, arrangement, mortgage, deed of trust,
instrument, lease, license, or any other understanding, oral or written, to
which either CFI and MSH is a party or by which either CFI and MSH may be bound
or affected;
(c) To the best knowledge of CFI and MSH, require any Approval on the part
of CFI or MSH.
Section 4.3 Capitalization.
(a) CFI Capitalization.
(i) The authorized capital stock of CFI consists of 10,000,000
shares of CFI Common Stock, no par value, 10,300 shares of Class A
Preferred Stock, no par value ("CFI Class A Preferred Stock"), and
5,000,000 shares of Series Preferred Stock, no par value ("CFI Series
Preferred Stock"). As of March 31, 1999, there were outstanding:
(A) 4,995,552 shares of CFI Common Stock;
(B) 7311.96 shares of CFI Class A Preferred Stock; and
(C) no shares of CFI Series Preferred Stock.
(ii) All outstanding shares of CFI Common Stock have been duly
authorized and validly issued and are fully paid and nonassessable. Except
as set forth in Section 4.3(a)(i), above, and Section 4.3(a)(iii), below,
and as otherwise contemplated by this Agreement, there are no outstanding:
(A) shares of capital stock or other voting securities of CFI;
(B) securities, subscriptions, options, warrants, rights,
securities, contracts, commitments, understandings or other
arrangements (herein, "CFI Securities") pursuant to which CFI is
bound to issue any additional shares of its capital stock or other
voting securities, or rights to purchase such shares;
(C) obligations of CFI to repurchase, redeem or otherwise
acquire any CFI Securities; or
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(D) agreements between CFI, on the one hand, and any other
person or entity, on the other hand, regarding the capital stock or
other voting securities of CFI, other than as contemplated by this
Agreement.
(iii) Notwithstanding the representations contained in subsection
(ii), above:
(A) CFI is obligated to redeem a certain percentage of the
Class A Preferred Stock, rounded to the nearest whole number of
shares, each year through the year 2018 at a fixed redemption price
of $262.14 per share. As of March 31, 1999, 2988.04 shares of a
total of 10,300 shares of Class A Preferred Stock had been redeemed.
CFI may redeem all or part of the Series A Preferred Stock at any
time. Upon the occurrence of: (1) the voluntary or involuntary
dissolution, liquidation, or winding up of CFI; (2) a sale of
substantially all of its assets; or (3) a merger or exchange of
shares with another corporation in which CFI is not the survivor,
holders of Class A Preferred Stock are entitled to receive out of
the assets of CFI, prior to any payment or distribution to holders
of common stock, an amount equal to $262.14 per Class A share.
(B) CFI currently has in effect a 1999 Consolidated Restated
Stock Option Plan, an Amended and Restated Outside Director
Restricted Stock Plan, a Restated Outside Director Compensation and
Stock Option Plan, Nonqualified Option Agreements dated January 21,
1999, , and an Employee Stock Purchase Plan (collectively, for
purposes of this subsection, the "Plans"). All of the securities
underlying these Plans have been registered (except for the January
21, 1999 Option Agreements) pursuant to a Form S-8 filed with the
SEC on October 19, 1993, a Post-Effective Amendment No. 1 to Form
S-8, filed with the SEC on May 26, 1994, a Post-Effective Amendment
No. 2 to Form S-8, filed with the SEC on March 1, 1995, and a Form
S-8 filed with the SEC on September 4, 1996. The Plans have been
summarized in the 1999 Amended Information Statement, dated January
31, 1999, a copy of which is attached hereto as Exhibit 4.3(a) and
in the 1999 Proxy Statement attached hereto as Exhibit 4.3(a)1. As
of January 31, 1999, the Plans together permitted future issuances
of up to 1,065,689 shares of common stock. (Assuming approval by
shareholders at the 1999 annual meeting of an additional 500,000
share reserve under the Consolidated Plan and an additional 100,000
share reserve under the Outside Director Plan, this figure increases
to 1,665,689 option shares in reserve).,. Since January 1, 1999,
options to purchase 175,000 shares have been granted pursuant to the
Plans (however, of these, options representing 35,633 shares are
contingent upon approval by the CFI shareholders at the annual
shareholders' meeting in May 1999).
(C) CFI intends to issue, on or before the Closing Date,
90,000 shares of common stock or stock equivalents to a qualified
investor.
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(iv) All shares of CFI Common Stock to be issued in connection with
the transactions contemplated hereby shall, upon issuance, be duly
authorized, fully paid, validly issued and nonassessable. CFI has reserved
sufficient shares of CFI Common Stock for issuance in connection with the
transactions contemplated hereby.
Section 4.4 SEC Filings.
(a) CFI has delivered to MECA:
(i) its annual report on Form 10-K for its fiscal years ended
December 31, 1997 and 1998.
(ii) its quarterly report on Form 10-Q for its fiscal quarter ending
March 31, 1999 (to be filed 5/15/99 and will be delivered at such time).
(iii) its proxy statement relating to a meeting of the shareholders
of CFI to be held on May 14, 1999.
(iv) all of its other reports, statements, schedules and
registration statements filed with the SEC since December 31, 1998.
The documents described in subparagraphs (i) through (iv) above are hereinafter
collectively referred to as the "Filed SEC Documents."
(b) MSH has delivered to MECA copies of its Charter Documents.
(c) As of its filing date, no report or statement filed by CFI pursuant to
the Securities Exchange Act of 1934 (the "Exchange Act") contained any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading.
(d) For the past twelve months, CFI has filed with the SEC in a timely
manner all reports, schedules, forms and other documents required under the
Securities Act or the Exchange Act.
Section 4.5 Financial Statements.
The audited consolidated financial statements and unaudited interim
financial statements of CFI included in its annual reports on Form 10-K and
quarterly reports on Form 10-Q referred to in Section 4.4 present fairly, in
conformity with GAAP (except as may be indicated in the notes thereto), the
consolidated financial position of CFI and its consolidated subsidiaries as of
the dates thereof and their consolidated results of operations and cash flows
for the periods then ended (subject to normal year-end adjustments in the case
of any interim financial statements).
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(a) No Material Adverse Effects. Except as expressly allowed or contemplated by
this Agreement, since the date of the last above-mentioned financial statement
or report, CFI has conducted its business in the ordinary course and there has
not occurred:
(i) Any Material Adverse Effect;
(ii) Any amendments or changes in CFI's Charter Documents.
(iii) Any extraordinary redemption, repurchase or other acquisition
of CFI shares, or any declaration, setting aside or payment of any dividend or
other distribution (whether in cash, stock or property) with respect to the CFI
shares;
(iv) Any increase in or modification of the compensation or benefits
payable or to become payable by CFI to any of its employees other than in the
ordinary course of business;
(v) Any acquisition or sale of property or assets by or of CFI,
except in the ordinary course of business;
(vi) Any entry into, amendment of, relinquishment, termination or
non-renewal by CFI with respect to CFI, of any contracts, lease transaction,
commitment or other right or obligation, other than in the ordinary course of
business;
(vii) Any labor dispute, other than routine individual grievances,
or, to the best knowledge of CFI, any activity or proceeding by a labor union or
representative thereof to organize any employees of CFI; or
(viii) Any agreement or arrangement made by CFI to take any action
after the date hereof which, if taken prior to the date hereof, would have made
any representation or warranty set forth in this Section 4.5 untrue or incorrect
as of the date hereof.
(b) Undisclosed Liabilities. There are no liabilities or obligations of any
nature of CFI, due or to become due, determined or determinable, absolute,
accrued, contingent, or otherwise, and there are no conditions, situations, or
circumstances that have existed, are existing, or that could reasonably be
expected to result in any such liabilities or obligations, except (i) to the
extent set forth or specifically reserved against in the CFI books of account or
(ii) in the ordinary and usual course of business consistent with past practice
(none of which is a material uninsured liability for breach of contract, breach
of warranty, tort or infringement claim, violation of law or lawsuit) and (iii)
liabilities incurred in connection with or contemplated by this Agreement.
Section 4.6 Compliance With Laws.
CFI and MSH are in compliance in all material respects with and have
conducted their respective business so as to comply in all material respects
with all laws, rules and regulations,
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judgments, decrees or orders of any Governmental Authority applicable to its
operations and with respect to which compliance is a condition of engaging in
the business thereof. There are no judgments or orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration), including any such actions relating to affirmative action
claims or claims of discrimination, against CFI or MSH or against any of their
respective properties or businesses, which are continuing in effect and could
reasonably be expected to have a Material Adverse Effect on CFI.
Section 4.7 No Brokers.
CFI and MSH have not employed or retained any broker or similar agent or
become in any way obligated for any such person's fee in connection with the
transactions contemplated herein.
Section 4.8 Payment of Obligations
CFI and MSH have sufficient cash, or access to funding, to pay all
liabilities of MECA set forth on the MECA balance sheet or identified in the
Schedule of Exceptions hereto at the Closing Date or as such identified amounts
may otherwise become due.
Section 4.9 Accuracy and Completeness of Information.
The representations and warranties, written data, documents, reports,
written statements, financial statements, and other written information
furnished by CFI and MSH to the Members, or their representatives, in connection
with this Agreement or any of the transactions contemplated herein are complete
and correct in all material respects, do not contain any material misstatement
of fact and do not omit to state any material fact necessary to make the
statements herein and therein not misleading.
ARTICLE V
COVENANTS OF THE PARTIES
Section 5.1 Approvals.
MECA, and as appropriate the Members, shall take all commercially
reasonable steps to obtain all Approvals and Licenses necessary to consummate
the transactions contemplated by this Agreement, if any. In the event that any
such Approval or Licenses (including, without limitation, those related to the
Contracts and the Real Property Facilities Lease) has not been obtained on or
before the Closing Date, MECA, the Members, CFI and MSH shall work together and
cooperate in good faith in attempting to expeditiously obtain such Approvals and
Licenses.
Section 5.2 Taxes.
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(a) For any taxable period of MECA that ends on or before the Closing
Date, the Members shall timely cause to be prepared and filed with the
appropriate authorities all income Tax Returns and applicable federal and state
partnership information returns required to be filed by MECA. CFI and MSH shall
timely cause to be prepared and filed with the appropriate authorities all other
Tax Returns required to be filed by MECA, except that the Members shall timely
cause to be prepared and filed with the appropriate authorities all Tax Returns
to the extent that they are due on or prior to the Closing Date. Any Tax Return
to be prepared and filed by CFI and MSH for taxable periods beginning before the
Closing Date shall be prepared on a basis consistent with the last previous
similar Tax Return, and CFI and MSH shall consult with the Members concerning
each such Tax Return and report all items with respect to the portion of the
period ending on the Closing Date in accordance with the instructions of the
Members to the extent such reporting is allowable without significant risk of
the imposition of penalties or additions to Tax as determined by CFI and MSH in
consultation with its Tax advisors. CFI and MSH shall cause the Company to
provide the Members with a copy of each such proposed Tax Return (and such
additional information regarding such Tax Return as may reasonably be requested
by the Members) at least 25 days prior to the filing of such Tax Return, except
that (i) in the case of a Tax Return relating to a monthly taxable period, the
copy shall be provided to the Members at least 10 days prior to the filing of
such Tax Return, and (ii) in the case of a Tax Return due within 90 days
following the Closing Date, the copy shall be provided to the Members in such
shorter period of time prior to filing as CFI and MSH shall reasonably determine
to be practicable.
(b) MECA, the Members, CFI and MSH shall reasonably cooperate, and shall
cause their respective affiliates, officers, employees, agents, auditors and
representatives reasonably to cooperate, in preparing and filing all Tax
Returns, including maintaining and promptly making available to each other all
records necessary in connection with Taxes and in resolving all disputes and
audits with respect to all taxable periods relating to Taxes. CFI and MSH
recognize that the Members will need access, from time to time, after the
Closing Date, to certain accounting and Tax records and information held by
MECA, CFI and MSH to the extent such records and information pertain to events
occurring prior to the Closing Date; therefore, CFI and MSH agree, and agree to
cause MECA, (i) to use their reasonable efforts to properly retain and maintain
such records until such time as the Members agree that such retention and
maintenance is no longer reasonably necessary, and (ii) to allow the Members and
their agents and representatives, at times and dates mutually acceptable to the
parties, to inspect, review and make copies of such records as the Members may
reasonably deem necessary or appropriate from time to time, such activities to
be conducted during normal business hours and at the Members' expense.
(c) Any refunds or credits of Taxes for which the Members are liable
pursuant to this Agreement shall be for the account of the Members who are so
liable. Any refunds or credits of any other Taxes shall be for the account of
MECA or, with respect to the Membership Interests, CFI and MSH. CFI and MSH
shall, if the Members so request and at the Members' expense, cause MECA or its
successor to file for and obtain any refunds or credits to which the Members may
be entitled under this Section 5.2(c). The Members shall control the prosecution
of any such claim (at the expense of the Members) but shall permit CFI and MSH
to participate in such
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prosecution. CFI and MSH shall cause MECA or its successor to forward to the
Members any such refund within 10 days after the refund is received (or
reimburse the Members for any such credit within 10 days after the credit is
allowed or applied against other Tax liabilities). The Members, CFI and MSH
shall treat any payments under the preceding sentence as an adjustment to
purchase price.
(d) Notwithstanding any other provision in this Agreement, the Members
shall have the right at their own expense to control any audit or examination by
any taxing authority ("Tax Audit"), and to contest, resolve and defend against
any assessment, notice of deficiency, or other adjustment or proposed adjustment
relating to any and all Taxes for which they may be liable pursuant to this
Agreement relating to their Membership Interests. CFI and MSH shall have the
right, at their own expense, to control any other Tax Audit, and to contest,
resolve and defend against any other assessment, notice of deficiency, or other
adjustment or proposed adjustment relating to Taxes with respect to MECA.
(e) The provisions of this Section 5.2 shall survive the Closing and shall
not terminate except in accordance with applicable law.
Section 5.3 Employment.
(a) MECA will terminate the MECA 401(k) plan prior to the Closing.
After Closing, CFI, in CFI's sole discretion, will either (i) establish a 401(k)
plan specific to MECA and allow each MECA employee the opportunity to
participate in the MECA 401(k) plan or (ii) allow each MECA employee the
opportunity to participate in CFI's existing 401(k) plan with credit for time
served with MECA.
(b) In furtherance of Section 3.9(a) hereof, in the event that any
employee of MECA shall make a claim for any unpaid obligations arising during
such employee's employment with MECA (including, without limitation, unpaid
salary, commissions, PTO, ERISA plan contribution, etc.), MECA shall indemnify
CFI and MSH against any Loss resulting therefrom in accordance with the terms of
Section 9.2 hereof; provided, however, that any such indemnification obligation
shall not be subject to the provisions of clause (ii) of Section 9.2(d).
Section 5.4 Additional Deliveries.
At or immediately prior to the Closing, MECA shall promptly take, or cause
to be taken, all necessary action to obtain and deliver to CFI a UCC-3
Termination Statement with respect to any liens on the Assets held by
NationsBank and/or Bank of America (or their subsidiaries or affiliates; e.g.,
MYM Holdings Corporation) with respect to the Bank Debt. Any claim made by CFI
and MSH as a result of MECA's failure to satisfy the covenants in this Section
5.4(b) shall not be subject to the limitations of clause (ii) of Section 9.2(d)
or the penultimate sentence of Section 9.2(d).
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Section 5.5 Assumption of Lease and Employment Agreements
CFI and MSH hereby assume all obligations under the Facilities Lease and
Employment or Compensation Agreements of Paul Harrison and Kathleen Bromage set
forth in Exhibit 3.5(a) (hereafter defined as the "Executive Agreements) and
shall use commercially reasonable efforts to remove the Members as guarantors
under such Facilities Lease.
ARTICLE VI
NONSOLICITATION; NONDISCLOSURE
Section 6.1 Nonsolicitation.
During the Restrictive Period, no Member will solicit for employment,
directly or indirectly, or cause to be employed by another, any person who is at
any time during the Restrictive Period, an employee or officer of MECA, nor form
any partnership with or establish any business venture in cooperation with such
person, without the express written consent of MECA. The Restrictive Period
shall be one (1) year beginning on the Closing Date. This Section shall not
prohibit any general solicitation included in any publication of general
circulation or on any Internet site, not specifically directed towards employees
of MECA.
Section 6.2 Nondisclosure of Confidential Information.
(a) Any information furnished to or obtained by any Member or, if
applicable, any of such Member's officers, attorneys, accountants, consultants,
representatives or agents (collectively, "Member's Representatives"), as a
result of pursuing the transactions contemplated by this Agreement, shall be
treated as confidential information. The Members each shall not disclose such
information and shall use their respective best commercial efforts to keep the
Member's Representatives from disclosing such information, except that a Member
may disclose the confidential information or portions thereof (i) to Member's
Representatives who need to know such information for the purpose of advising
such Member in connection with the transactions contemplated by this Agreement;
(ii) if, at the time of the disclosure or thereafter, the confidential
information is generally available to and known by the public (other than as a
result of disclosure directly or indirectly in violation of any duty of
confidentiality); or (iii) if the information has been independently acquired or
developed by such Member without violating a duty of confidentiality. To the
extent that a Member or one of such Member's Representatives may become legally
compelled to disclose any confidential information not encompassed by (i), (ii),
or (iii) above, such Member shall notify CFI and MSH and CFI and MSH may seek an
appropriate protective order or other satisfactory assurance of confidential
treatment for the information required to be disclosed. In the event that the
transactions contemplated by this Agreement are not consummated, the Members and
all of such Member's Representatives shall return to CFI and MSH all written
information furnished by CFI and MSH.
(b) After the Closing Date, each Member shall not, and shall use
commercially reasonable efforts to cause their Member Representatives to not,
use or disclose to third parties, any trade or business secrets, confidential
information, knowledge, data or other information that
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is the property of MECA, except in accordance with the terms of agreements
listed in Exhibit 3.5 between such Member and MECA relating to the Business or
the Assets.
Section 6.3 Remedies; Consent to Injunction.
Each of the Members hereby agrees that CFI and MSH will or would suffer
immediate and irreparable injury if any of the Members were to solicit MECA
employees or disclose Confidential Information in violation of this Article VI,
and it is and will be impossible to estimate and determine the damage that will
be suffered by CFI and MSH or its successors and assigns in the event of a
breach by a Member of any such covenant. Therefore, each of the Members hereby
further agrees that CFI and MSH shall be entitled to injunctive relief in a
court of appropriate jurisdiction restraining any further violation of such
covenant or covenants by a Member, its employers, employees, partners, agents or
other associates or any of them, and each of the Members hereby stipulates to
the entering of such injunctive relief. CFI and MSH's right to injunctive relief
is cumulative and in addition to whatever other remedies it, including its
successors or assigns, may have at law or in equity.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE MEMBERS TO CLOSE
The obligations of each Member under this Agreement are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions
(any one or more of which may be waived in whole or in part by all of the
Members in writing):
Section 7.1 Representations and Warranties True and Correct.
All representations and warranties of CFI and MSH contained herein or in
any certificate or other instrument delivered pursuant to the provisions hereof
shall be true and correct in all material respects.
Section 7.2 Compliance with Covenants.
All of the terms, covenants, agreements and conditions of this Agreement
to be complied with and performed by CFI and MSH on or prior to the Closing Date
shall have been complied with and performed in all material respects.
Section 7.3 No Litigation.
No suit, action, investigation, claim, or legal, administrative,
arbitration or other proceeding, at law or in equity, shall have been instituted
or threatened which (individually or in the aggregate) would materially
adversely affect CFI and MSH's assets, the title or interest of CFI and MSH in
any of such assets, CFI and MSH's business, or the consummation of the
transactions contemplated hereby.
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Section 7.4 Delivery of Documents, Etc.
CFI and MSH shall have delivered to the Members (or their parent company
designees) on or immediately after the Closing Date, stock certificates
representing the Shares, properly endorsed by the authorized officers or agent
of CFI and MSH.
Section 7.5 Proceedings.
All proceedings to be taken in connection with the transactions
contemplated by this Agreement and all documents incidental thereto, shall be
reasonably satisfactory in form and substance to MECA, the Members and their
respective counsel.
Section 7.6 Payment of Bank Debt
CFI shall pay the Bank Debt of MECA at Closing up to a maximum amount of
$8,344,064.43, including principal and accrued but unpaid interest thereon.
Section 7.7 Treatment of 401(k) Plan Participants
MECA shall terminate its 401(k) plan prior to the Closing. After Closing,
CFI shall allow each person employed by MECA on the Closing Date the opportunity
to participate in CFI's existing 401(k) plan with credit for time served with
MECA.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF CFI and MSH TO CLOSE
The obligations of CFI and MSH under this Agreement are subject to the
fulfillment at or prior to the Closing Date of each of the following conditions
(any one or more of which may be waived in whole or in part by CFI and MSH in
writing):
Section 8.1 Representations and Warranties True and Correct.
All representations and warranties of MECA or the Members contained herein
or in any certificate or other instrument delivered pursuant to the provisions
hereof shall be true and correct on the Closing Date in all material respects.
Section 8.2 Compliance With Covenants.
All of the terms, covenants agreements, and conditions of this Agreement
to be complied with and performed by the Members on or prior to the Closing Date
shall have been complied with and performed in all material respects.
Section 8.3 No Material Adverse Effect; No Litigation.
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This section is intentionally left blank, its purpose being covered by the
warranties and representations provided elsewhere.
Section 8.4 Delivery of Documents, Etc.
MECA shall deliver to CFI and MSH all of the following:
(a) Consents. On or immediately after the Closing Date, the consent of the
landlord (or landlord's agent) under the Real Property Lease.
(b) Termination Statement. On or immediately after the Closing Date UCC-3
Termination Statements with respect to the Bank Debt. (c) Investment Agreement.
Each of the Members shall have executed and
delivered an Investment Agreement substantially in the form
attached hereto as Exhibit 8.4(c).
(d) Evidence of 401(k) Termination. On the Closing Date, MECA shall
present evidence that it has properly terminated its 401(k) plan.
8.5 Proceedings.
All proceedings to be taken in connection with the transactions
contemplated by this Agreement and all documents incidental thereto, shall be
reasonably satisfactory in form and substance to CFI and MSH and its counsel.
ARTICLE IX
SURVIVAL; INDEMNITY
Section 9.1 Survival.
The respective representations and warranties, covenants and agreements of
the Members, and of CFI and MSH contained herein or in any other document
contemplated hereby, shall survive the Closing upon the terms and subject to the
limitations set forth herein.
Section 9.2 Indemnification.
(a) From the Closing Date through December 31, 2000, subject to the
conditions hereinafter set forth, the Class A Members, jointly and severally,
shall defend, indemnify and hold harmless CFI and MSH and its successors and
assigns (collectively, "CFI and MSH's Indemnified Persons"), and shall reimburse
CFI and MSH's Indemnified Persons, for, from, and against each and every Loss,
imposed on or incurred by CFI and MSH's Indemnified Persons, directly or
indirectly, relating to, resulting from or arising out of (i) any breach of any
representation or warranty made by MECA or the Members in any respect, whether
or not CFI
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and MSH's Indemnified Persons relied thereon or had knowledge thereof, or (ii)
nonfulfillment of any covenant, agreement or other obligation of the Members
made as of the date hereof or as of the Closing Date under this Agreement, or
(iii) any fee payable to Hambrecht and Quist L.L.P. in connection with the
consummation of the transaction contemplated hereby. Each Member shall be
entitled to offset against such indemnification liability amounts paid by such
Member (or its affiliates) pursuant to any guarantee of obligations (or
agreement to contribute to such obligations) arising under the Facilities Lease
or Executive Agreements.
(b) Subject to the conditions hereinafter set forth, CFI and MSH shall
defend, indemnify and hold harmless the Members, and their successors and
assigns (herein, "MECA Indemnified Persons"), and shall reimburse the MECA
Indemnified Persons, for, from, and against each and every Loss imposed on or
incurred by a MECA Indemnified Person, directly or indirectly, relating to,
resulting from or arising out of (i) the operation of the Business or the
ownership or use of the Assets after the Closing Date including without
limitation any obligation of MECA (except for those obligations for which the
Members shall be obligated to reimburse CFI and MSH pursuant to Section 9.2(a)),
or (ii) any breach of any representation or warranty made by CFI or MSH ,
whether or not any MECA Indemnified Person relied thereon or had knowledge
thereof, or nonfulfillment of any covenant, agreement or other obligation of CFI
and MSH under this Agreement.
(c) Promptly after receipt by a party (the "Indemnified Party") of notice
of any complaint or the commencement of any action or proceeding by a party
which is the subject of indemnification hereunder, the Indemnified Party will
notify each party required to indemnify the Indemnified Party (the "Indemnifying
Party") in writing of such complaint or with the commencement of such action or
proceeding and furnish such Indemnifying Party with copies of all claims,
demands, documents, pleadings, and other writings in connection therewith and,
if such Indemnifying Party so elects or is requested in writing by the
Indemnified Party, such Indemnifying Party may assume the defense of such
complaint, claim, action or proceeding, including the employment of counsel
satisfactory to the Indemnified Party (such consent not to be unreasonably
withheld, and to be deemed given if no response is made by the Indemnified Party
with three (3) days of notice thereof) and the payment of all expenses and
costs, as such expenses and costs are incurred, with respect thereto.
Notification by the Indemnified Party to the Indemnifying Party must be made
orally within three business days following receipt by the Indemnified Party of
knowledge of such claim and in writing within five business days following
receipt by the Indemnified Party of knowledge of such claim. In the event that
notification to the Indemnifying Party is not made within the time periods
required by the immediately preceding sentence, recovery by the Indemnified
Party shall be reduced to the extent that such delay has prejudiced the
Indemnifying Party or hampered in any way its ability to remedy such situation.
The Indemnified Party shall have the right to employ its own separate counsel,
but the fees and expenses of such separate counsel shall be at its expense
unless: (i) the employment of such counsel shall have been authorized in writing
by the Indemnifying Party in connection with the defense of such complaint,
claim, action or proceeding; (ii) the Indemnified Party shall have reasonably
concluded that there are defenses available to him, her or it which are
materially different from or additional to those available to the Indemnifying
Party; or (iii) the Indemnified Party's legal counsel shall advise the
Indemnified Party in writing, with a copy to the
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Indemnifying Party, that there is a conflict of interest that would make it
inappropriate under applicable standards of professional conduct to have common
counsel. If clause (i), (ii), or (iii) in the immediately preceding sentence is
applicable, then the Indemnified Party may employ separate counsel at the
expense of the Indemnifying Party to represent or defend him, her or it, but in
no event shall such Indemnifying Party be obligated to pay the costs and
expenses of more than one such separate counsel for any one such complaint,
claim, action, or proceeding in any one jurisdiction.
(d) Notwithstanding anything to the contrary, Class A Members shall not be
obligated to indemnify, defend or hold harmless CFI and MSH's Indemnified
Persons under Section 9.2(a) hereof against a breach of any representation,
warranty or covenant to be made or performed by such Members or any of them
before the Closing Date (a "Covered Breach") unless (i) CFI and MSH delivers to
a Class A Member by December 31, 2000 (the "Claims Period"), a written claim for
indemnification for Losses actually incurred by CFI and MSH's Indemnified
Persons within such Claims Period ("Indemnification Claim"); provided that if
CFI and MSH's Indemnified Persons deliver an Indemnification Claim within the
Claims Period, the Class A Members shall indemnify, defend and hold harmless CFI
and MSH's Indemnified Persons against any Losses with respect to such Claim
through and after the date of the Indemnification Claim if such Indemnification
Claim relates to a third party claim that is reasonably likely to result in
actual Loss to CFI and MSH's Indemnified Persons, which Loss is reasonably
determinable by the parties as qualifying for indemnification pursuant to this
Article 9 at the conclusion of the Claims Period, and (ii) the aggregate Losses
suffered by CFI and MSH's Indemnified Persons in connection with all such
Covered Breaches exceed a One Hundred Thousand and No/100 Dollars ($100,000.00)
aggregate deductible, after which the Members shall be obligated to indemnify
and hold harmless CFI and MSH's Indemnified Persons from and against only those
Losses in excess of the deductible amount. Notwithstanding anything to the
contrary contained in this Agreement, in the event that, notwithstanding the
limitations contained in this Section 9.2(d) or elsewhere in this Agreement, the
Class A Members nevertheless become liable to CFI and MSH's Indemnified Persons
for any reason other than as a result of fraud, or intentional misconduct, in no
event shall the aggregate amount of such liability of the Class A Members
(including all costs, expenses and attorneys' fees paid or incurred by CFI and
MSH's Indemnified Persons in connection therewith or the curing of any and all
misrepresentations or breaches of warranties or covenants under this Agreement)
exceed the sum of $10 Million. Claims brought pursuant to Section 9.2(a) shall
be the exclusive remedy for the breach of any representation, warranty or
covenant made by a Member hereunder. In the event of fraud, or intentional
misconduct, liability under this Section 9.2(d) shall not be limited by the two
immediately preceding sentences.
(e) Notwithstanding anything else to the contrary contained herein and in
addition to the other limitations set forth herein, the Class A Members shall
not be required to indemnify the CFI and MSH Indemnified Persons, and the CFI
and MSH Indemnified Persons shall not seek indemnity from the Class A Members,
for any of the following:
(i) Losses which arise from or in connection with any claim made by
CFI and MSH against any of the Members for consequential damages, including,
without limitation, lost
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profits, lost investment or business opportunity, damages to reputation,
exemplary damages, treble damages, nominal damages and operating Losses, unless
in the event of fraud, or intentional misconduct as excepted under Section
9.2(d);
(ii) Losses attributable to or arising from overhead allocations,
internal costs (including employee expenses and general and administrative
costs) and the internal costs of administering the requirements imposed by or
under this Agreement;
(iii) Losses with respect to which, after the Closing Date, CFI and
MSH fail in any material respect to comply with their obligations under this
Agreement, provided, however, that CFI and MSH's noncompliance with such
obligations after the Closing Date shall not limit CFI and MSH's ability to
recover Losses otherwise indemnifiable by the Class A Members pursuant to
Section 9.2(a) hereunder unless such noncompliance (A) adversely affects the
Class A Members' ability to administer a claim made by CFI and MSH against the
Members, in which case the Members may withhold payment on that portion, if any,
of the claims for which CFI and MSH seeks reimbursement until CFI and MSH
complies with its obligations hereunder, or (B) adversely affects the ability to
cure a breach, mitigate a Loss or defend a claim, or (C) otherwise results in or
increases the amount of a Loss, in which case the Members shall not be obligated
to indemnify CFI and MSH with respect to any such increase in the amount of a
Loss;
(iv) Losses to the extent resulting from the acts or omissions of
CFI and MSH, including, without limitation, defects generated, embellished or
increased by any new release of or any modification to the Products.
(g) Each of the parties shall use commercially reasonable efforts at all
times to minimize the Losses for which the other party may be liable under this
Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices.
All notices required or permitted to be given under this Agreement shall
be in writing, mailed or delivered to the parties set forth below:
If to any Member: To the address set forth opposite such
Member's
Name on Exhibit A hereto.
If to MECA: MECA SOFTWARE L.L.C.
115 Corporate Drive
Trumbull, Connecticut 06611
Attn: President
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With copy to: Jay E. Bothwick, Esq.
Hale and Dorr L.L.P.
60 State Street
Boston, Massachusetts 02109
If to CFI or CFI and MSH ProServices, Inc.
MSH: 400 S.W. Sixth Avenue
Portland, OR 97204
Attention: Jeffrey P. Strickler
Vice President and General
Counsel
Telephone: (503) 274-7280
Facsimile: (503) 790-9229
Notices may be served by certified or registered mail, postage paid with return
receipt requested; by private courier, prepaid; by telex, facsimile, or other
telecommunication device capable of transmitting or creating a written record;
or personally. Mailed notices shall be deemed delivered five (5) days after
mailing, properly addressed. Couriered notices shall be deemed delivered on the
date that the courier warrants that delivery will occur. Telex or
telecommunicated notices shall be deemed delivered when receipt is either
confirmed by confirming transmission equipment or acknowledged by the addressee
or its office. Personal delivery shall be effective when accomplished. Unless a
party changes its address by giving notice to the other party as provided
herein, notices shall be delivered to the parties at the addresses set forth on
the signature pages hereof.
Section 10.2 Interpretation.
(a) Incorporation of Exhibits and Schedules. All schedules and exhibits
referenced in and attached hereto are by this reference incorporated into and
made a part of this Agreement.
(b) Governing Law. THE PARTIES INTEND THAT THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON
APPLICABLE TO CONTRACTS MADE and WHOLLY PERFORMED WITHIN OREGON BY PERSONS
DOMICILED IN OREGON.
(c) Inconsistencies; Collateral Documents. In the event of any
inconsistency or of any conflict between the terms of this Agreement and any of
the terms of any other document contemplated hereby, the terms of this Agreement
shall absolutely govern and control. No provision of this Agreement shall be
construed against any party on the ground that such party or its counsel drafted
the provision.
(d) Headings and Captions. All headings and captions have been inserted
for convenience only and shall not affect the interpretation of this Agreement.
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Section 10.3 Integration; Amendment.
This Agreement, together with the other documents contemplated hereby,
constitutes the entire agreement of the parties relating to the subject matter
hereof. There are no promises, terms, conditions, obligations, or warranties
other than those contained in this Agreement or in the other documents
contemplated hereby. This Agreement, and the other documents contemplated
hereby, supersede all prior communications, representations, or agreements,
verbal or written, among the parties relating to the subject matter hereof. This
Agreement may not be amended except in a writing executed by the parties.
Section 10.4 Waiver.
No provision of this Agreement shall be deemed to have been waived unless
such waiver is in writing signed by the waiving party. No failure by any party
to insist upon the strict performance of any provision of this Agreement, or to
exercise any right or remedy consequent upon a breach thereof, shall constitute
a waiver of any such breach, of such provision or of any other provision. No
waiver of any provision of this Agreement shall be deemed a waiver of any other
provision of this Agreement or a waiver of such provision with respect to any
subsequent breach, unless expressly provided in writing.
Section 10.5 Attorneys' Fees.
If any suit, arbitration or action arising out of or related to this
Agreement is brought by any party, the arbitrator adjudicating such matter shall
be entitled to award the prevailing party or parties the reasonable costs and
fees (including, without limitation, the fees and costs of experts and
consultants, copying, courier and telecommunication costs, deposition costs, and
all other costs of discovery) incurred by such party or parties in such
arbitration.
Section 10.6 Continuing Agreement; Assignment; Binding Effect.
This Agreement is a continuing agreement and shall remain in full force
and effect until all obligations of the parties hereunder have been fully
performed or otherwise discharged. Neither party may assign this Agreement, in
whole or in part, without the prior written consent of the other party except in
connection with any merger, consolidation or acquisition of all or substantially
all of its business. Notwithstanding the foregoing, this Agreement shall bind
and inure to the benefit of, and be enforceable by, the parties hereto and their
respective successors, heirs, and permitted assigns.
Section 10.7 Costs and Expenses.
Except as otherwise set forth herein, each of the parties hereto shall
bear its own fees, costs, charges, and expenses incurred by such party in
connection with the transactions contemplated hereby, including, but not limited
to fees of their respective counsel, accountants, and other advisors.
Nevertheless, the parties agree that the Members shall bear all the fees or
costs of Hambrecht & Quist LLC.
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Section 10.8 No Third-Party Beneficiary Rights.
No person not a party to this Agreement is an intended beneficiary of this
Agreement, and no person not a party to this Agreement shall have any right to
enforce any term of this Agreement; provided, however, that each of CFI and
MSH's Indemnified Persons and each of the Members' Indemnified Persons shall
have the benefits expressly set forth for such persons in this Agreement, and
Paul Harrison and Kathleen Bromage shall be entitled to rely upon the
undertaking of CFI and MHS in Section 5.5.
Section 10.9 Counterparts.
This Agreement may be executed in any number of counterparts, all of which
when taken together shall constitute one agreement binding on all parties,
notwithstanding that all parties are not signatories to the same counterpart.
Section 10.10 Arbitration.
All controversies, claims and disputes arising out of or relating to this
Agreement, or the breach of such Agreement, except as otherwise provided herein,
shall be decided by arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association then in effect; provided, however,
this agreement to arbitrate shall not apply to any disputes if either party is a
debtor in a proceeding under the Federal bankruptcy laws. The parties agree that
the location of all arbitration hearings or other court appearances related to
this Agreement shall be in Denver, Colorado, and the parties submit to the
jurisdiction of the Colorado courts for entry of judgment on the arbitration
award. Nothing in this Agreement shall prevent any party from seeking and
obtaining preliminary injunctive relief pending the entry of a judgment or
arbitration award against any other party provided such relief is sought and
obtained in a United States District Court located in Denver, Colorado.
Section 10.11 No Publicity.
No party shall make any public disclosure or publicity release pertaining
to the existence of this Agreement or of the subject matter contained herein
without the consent of the other parties hereto (which consent may be
unreasonably withheld by CFI and MSH with respect to the Purchase Price and all
other confidential terms and information pertaining to the transactions
contemplated herein, but which consent shall not be unreasonably withheld in all
other circumstances). Notwithstanding the foregoing, each party shall be
permitted to issue a press release announcing the consummation of the
transaction or respond to inquiries concerning the consummation of the
transaction (subject in each case to the limitations as to Purchase Price and
other confidential terms) and make such specific disclosures to the public or to
governmental agencies as its counsel shall deem necessary to maintain compliance
with and to prevent violation of applicable federal or state laws.
Section 10.12 Further Assurances.
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Each party agrees, at the request of any other party hereto, at any time
and from time to time after the date hereof, whether before or after the Closing
Date, promptly to execute and deliver all such further documents, and promptly
to take and forbear from all such action as may be reasonably necessary or
appropriate in order to more effectively to confirm or carry out the provisions
of this Agreement and the intent of the parties hereto.
Section 10.13 Knowledge of Parties.
Where any representation or warranty contained in this Agreement is
expressly qualified by reference to the best knowledge of or known by MECA, it
is intended to mean that, the existence or absence of such facts is within the
conscious awareness of any officer or director level employee of MECA, following
reasonable inquiry by such person. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the best
knowledge of a Member, it is intended to mean that the existence or absence of
such facts is within the conscious awareness of any executive officer of such
member or any designee of such Member that sits on the Board of Managers of
MECA, following reasonable inquiry by such person. Where any representation or
warranty contained in this Agreement is expressly qualified by reference to the
best knowledge of CFI or MSH, it is intended to mean that it is within the
conscious awareness of any officer of CFI or MSH, respectively, following
reasonable inquiry by such person.
Section 10.14 Definitions.
As used herein, the following defined terms shall have the meanings
ascribed below:
"Approval" shall mean any approval or consent required by any
person or governmental authority.
"Bank Debt" shall mean those certain promissory notes dated August 28,
1996 and issued in favor of BA Interactive Services Holding Company, Inc. and in
favor of MYM Holdings Corporation, including a principal amount of $3,750,000
each and all accrued but unpaid interest thereon.
"Business" shall mean the businesses of MECA, as MECA was operated
immediately prior to the Closing Date.
"Charter Documents" shall be as defined in Section 3.1(a).
"Claims" shall mean, collectively, any claim, action or suit; any
investigation, inquiry or other proceeding by any administrative, governmental,
arbitration or judicial body; or any order, decree, or judgment issued or
rendered by any such body.
"Contracts" shall be as defined in Section 3.5(a).
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"Environmental Laws" shall mean any and all foreign and domestic federal,
state and local laws (including case law), regulations, ordinances, rules,
judgments, orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restrictions relating
to human health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the environment or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
"Environmental Liabilities" shall mean all liabilities, whether vested or
unvested, contingent or fixed, which (i) arise under or relate to Environmental
Laws and (ii) relate to actions occurring or conditions existing on or prior to
the Closing Date.
"Hazardous Substances" shall mean any toxic, radioactive, caustic or
otherwise hazardous substance regulated by any Environmental Law, including
petroleum, its derivatives, by-products and other hydrocarbons, or any substance
having any material constituent elements displaying any of the foregoing
characteristics.
"Intellectual Property" shall mean all intellectual property rights
directly related to the Products or the Business, and owned or licensed by MECA
. Intellectual Property shall include, without limitation, all trademarks,
service marks, trade names, copyrights (or any applications for any of the
foregoing); patents, industrial models, processes, designs, formulas or
applications for patents; inventions (whether or not patentable); designs,
drawings, mask works, algorithms, specifications or test information; computer
programs or other software (including the human-readable source code and the
machine-executable object code of any such software); engineering and associated
design data; know-how; manufacturing and marketing information; user
documentation and other product literature; and other similar information.
"Law" shall mean, collectively, any statute, rule, common law, ordinance,
regulation, order, writ, judgment, injunction, decree, determination, or award
enacted or promulgated by any governmental authority of any nature whatsoever
"Licenses" shall be as defined in Section 3.7(b).
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Loss" or "Losses" shall mean any demand, claim, loss, liability, damage,
obligation, cost and expense, actually incurred by the affected party (including
interest, penalties, costs of preparation and investigation, attorney fees, fees
and costs of experts and consultants, copying, courier and telecommunication
costs, deposition costs and all other costs of discovery incurred
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by such party or parties in connection therewith including, in any post-trial or
appellate proceeding).
"Marks" shall be as defined in Section 3.6(d)(i).
"Material Adverse Effect" shall mean any change, effect or occurrence that
has, or would reasonably be likely to have, individually or in the aggregate, a
material adverse impact on (i) the condition (financial or otherwise) of MECA,
the Business or the Assets; except that the operating losses incurred to date by
MECA shall not constitute a Material Adverse Effect.
"MECA Financial Data" shall be as defined in Section 3.3(a).
"Person" means, as the context may require, an individual, partnership,
joint venture, corporation, association or any other entity.
"Assets" shall be as defined in Section 3.6(a).
"Real Property Lease" shall be as defined in Section 3.6(b).
"Records" shall mean all books of account, forms, records, files,
invoices, customers lists, suppliers lists, business records and plans,
catalogs, brochures, other selling material, manuals, correspondence, memoranda,
and other data (in all mediums) used by MECA in connection with the Business or
otherwise pertaining to the Assets.
"Regulated Activity" shall mean any generation, treatment, storage,
recycling, transportation, disposal or release of any Hazardous Substances.
"Restrictive Period" shall be as defined in Section 6.1.
"Taxes" shall mean any and all federal, state, local, foreign, or other
taxes (including all those related to income, gross receipts, franchise, excise,
sales and use, social security, unemployment, workers' compensation, ad valorem,
and property taxes).
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on May __, 1999.
"MECA" MYM Holdings Corporation
MECA Software L.L.C.
By:_____________________________
By:_____________________________ Name:
Name: Title:
Title:
BA Interactive Services U.S.BANCORP ONLINE SERVICES, INC.
Holding Company, Inc.
By:_____________________________ By:_____________________________
Name: Name:
Title: Title:
Fleet Investment Funding New England Life Insurance
Corp. Company
By:_____________________________ By: _____________________________
Name: Name:
Title: Title:
Royal Bank of Canada Royal Bank of Canada
By:______________________________
Name: By:_______________________________
Title: Name:_____________________________
Title:______________________________
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CitiBank Strategic Technology, Inc.
By:__________________________
Name:________________________
Title:_________________________
"CFI" "MSH"
CFI ProServices, Inc. MoneyScape Holdings, Inc.
By:______________________________
By:_______________________________
Name: Jeffrey P. Strickler Name:
Jeffrey P. Strickler
Title: Vice President and Title: Vice President
and
General Counsel General Counsel
MECCA.11Agmt 5/14/99
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