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EXHIBIT 2.1
STOCK ACQUISITION AND REORGANIZATION AGREEMENT
THIS STOCK ACQUISITION AND REORGANIZATION AGREEMENT (this "Agreement")
is made and entered into in duplicate effective the 4th day of April 2000
(the "Effective Date") by and among Security Asset Capital Corporation, a
Nevada corporation ("Security Asset"), on the one hand, and Universal View
Corporation, a Nevada corporation ("Universal"), Xxxxxx Xxxxxxxxxxx, an
individual, Xxxx Xxxxxx, an individual, and Xxxxxxx Xxxx Xxxxxx, an individual,
(the "Shareholders"), on the other hand.
RECITALS
A. The Shareholders own all of the issued and outstanding shares of
$.001 par value common stock of Universal ("Shares").
B. The Shareholders desire to exchange all of the Shares for $125,000
and 400,000 shares of $.001 par value common stock of Security Asset, on the
terms and subject to the conditions specified by the provisions of this
Agreement.
C. The Boards of Directors of Universal and Security Asset have
determined that it is advisable and appropriate and in the best interests of
those corporations and their respective shareholders that the exchange
contemplated by the provisions of recital B specified above occur, on the terms
and subject to the conditions specified by the provisions of this Agreement.
D. The parties to this Agreement desire that the transaction
contemplated by the provisions of this Agreement satisfy the requirements of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as amended, and the
regulations promulgated pursuant thereto.
AGREEMENT
NOW, THEREFORE, in consideration of the recitals specified above that
shall be deemed to be a substantive part of this agreement, and the mutual
covenants, promises, undertakings, agreements, representations and warranties
specified in this agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, with the intent to be
obligated legally and equitably, the parties do hereby covenant, promise, agree,
represent and warrant as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified
or referred to in this Article 1:
"Applicable Contract" - any Contract (a) pursuant to which Universal has
or may acquire any rights, (b) pursuant to which Universal has or may become
subject to any obligation or liability, or (c) by which Universal or any of the
assets owned or used by Universal is or may become obligated.
"Best Efforts" - the efforts that a prudent Person desiring to achieve a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible.
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"Breach" - a "Breach" of a representation, warranty, covenant,
obligation, or other provision of this Agreement or any instrument delivered
pursuant to this Agreement will be deemed to have occurred if there is or has
been (a) any inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other provision,
or (b) any claim (by any Person) or other occurrence or circumstance that is or
was inconsistent with such representation, warranty, covenant, obligation, or
other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Consent" - any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" - all of the transactions contemplated by
this Agreement, including; but not limited to:
(a) the transfer of the Shares by Shareholders to Security Asset in
exchange for 400,000 shares of $.001 par value common stock of Security Asset;
(b) the execution, delivery, and performance of the Shareholders'
Release;
(c) the performance by Security Asset and Shareholders of their
respective covenants and obligations pursuant to this Agreement; and
(d) Security Asset's acquisition and ownership of the Shares and
assumption of control of Universal.
"Contract" - any agreement, contract, obligation, promise, or
undertaking (whether written or oral and whether express or implied) that is
legally obligating.
"Effective Date" - the date set forth in the preamble of this Agreement.
"Employee Benefit Plan" - any "Employee Pension Benefit Plan" (as
defined in Section 3(2) of ERISA), "Employee Welfare Benefit Plan" (as defined
in Section 3(l) of ERISA), "Multiemployer Plan" (as defined in Section 3(37) of
ERISA), plan of deferred compensation, medical plan, life insurance plan,
long-term disability plan, dental plan or other plan providing for the welfare
of any of employees or former employees of Universal or beneficiaries thereof
(as applicable), personnel policy (including, but not limited to, vacation time,
holiday pay, bonus programs, moving expense reimbursement programs and sick
leave), excess benefit plan, bonus or incentive plan (including, but not limited
to, stock options, restricted stock, stock bonus and deferred bonus plans),
salary reduction agreement, change-of-control agreement, employment agreement,
consulting agreement or any other benefit, program, agreement or contract.
"Encumbrance" - any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, Security Asset interest,
right of first refusal, or restriction of any nature whatsoever, including any
restriction on use, voting, transfer, receipt of income, or exercise of any
other attribute of ownership.
"Environment" - soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water
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supply, stream sediments, ambient air (including indoor air), plant and animal
life, and any other environmental medium or natural resource.
"Environmental, Health, and Safety Liabilities" - any cost, damages,
expense, liability, obligation, or other responsibility arising from or pursuant
to Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising pursuant to
Environmental Law or Occupational Safety and Health Law, including consultant
and attorney fees;
(c) financial responsibility pursuant to Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental Law or
Occupational Safety and Health Law (whether or not such Cleanup has been
required or requested by any Governmental Body or any other Person) and for any
natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required pursuant to Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the
types of activities specified by the United States Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Sections 9601 et seq., as
amended ("CERCLA").
"Environmental Law" - any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of Hazardous Materials, violations of discharge
limits, or other prohibitions and of the commencements of activities, such as
resource extraction or construction, that could have significant impact on the
Environment;
(b) preventing or reducing to acceptable amounts the release of
Hazardous Materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing
the hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that these products do not present unreasonable risks to human health or
the Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
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(f) reducing to acceptable amounts the risks inherent in the
transportation of Hazardous Materials;
(g) cleaning up Hazardous Materials that have been released,
preventing the threat of release, or paying the costs of such clean up or
prevention; or
(h) making responsible parties pay private parties, or groups of
them, for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ERISA" - the Employee Retirement Income Security Asset Act of 1974, or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities" - any real property, leaseholds, or other interests
currently or formerly owned or operated by Universal and any buildings, plants,
structures, or equipment (including motor vehicles, aircraft, and rolling stock)
currently or formerly owned or operated by Universal.
"GAAP" - generally accepted United States accounting principles, applied
on a basis consistent with the basis on which the Universal Balance Sheet and
the other financial statements referred to in Section 3.4 were prepared.
"Governmental Authorization" - any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or pursuant to the authority of any Governmental Body or pursuant
to any Legal Requirement.
"Governmental Body" - any:
(a) nation, state, commonwealth, county, city, town, village,
district, xxxx, or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
whatsoever (including any governmental agency, branch, department, official, or
entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature whatsoever.
"Hazardous Activity" - the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, disposal or use
(including any withdrawal or other use of groundwater) of Hazardous Materials
in, on, under, about, or from the Facilities or any part thereof into the
Environment, and any other act, omission, business, operation, or thing that
increases the danger, or risk of danger, or poses an unreasonable risk of harm
to persons or property on or off the Facilities, or that may affect the value of
the Facilities or Universal.
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"Hazardous Materials" - any waste or other substance that is regulated,
listed, defined, designated, or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor, polychlorinated biphenyls (TCBs") and asbestos or asbestos-containing
materials.
"IRC" - the Internal Revenue Code of 1986, or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" - the United States Internal Revenue Service, or any successor
agency, and, to the extent relevant, the United States Department of the
Treasury.
"Knowledge" - an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual should have been aware of
such fact or other matter, after reasonable investigation thereof.
A Person (other than an individual) will be deemed to have "Knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, manager, executor, or
trustee of such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
"Legal Requirement" - any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution,
ordinance, principle of common law, regulation, statute, or treaty.
"Occupational Safety and Health Law" - any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"Order" - any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
"Ordinary Course of Business" - an action taken by a Person will be
deemed to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the Board of
Directors of such Person (or by any Person or group of Persons having similar
authority): and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the Board of Directors of such
Person (or by any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other Persons that
are in the same business as such Person.
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"Organizational Documents" - (a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) the partnership agreement and
any statement of partnership of a general partnership: (c) the limited
partnership agreement and the certificate of limited partnership of a limited
partnership; (d) the articles of organization and the operating agreement of a
limited liability company: (e) any charter or similar document adopted or filed
in connection with the creation, formation, or organization of a Person; and (f)
any amendment to any of the foregoing.
"Person" - any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
fraternal organization, group, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.
"Plan Affiliate" - with respect to any Person, any other person or
entity with whom the Person constitutes all or part of a controlled group, or
which would be treated with the Person as under common control or whose
employees would be treated as employed by the Person, pursuant to Section 414 of
the IRC and any regulations, administrative rulings and case law interpreting
the foregoing.
"Proceeding" - any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Related Person"
a) with respect to a particular individual:
(i) each other member of such individual's Family;
(ii) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(iii) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(iv) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
(b) With respect to a specified Person other than an individual:
(i) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person:
(ii) any Person that holds a Material Interest in such specified
Person;
(iii) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
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(iv) any Person in which such specified Person holds a Material
Interest:
(v) any Person with respect to which such specified Person serves
as a general partner, manager or a trustee (or in a similar capacity); and
(vi) any Related Person of any individual described in clause
(ii) or (iii) of this Subsection (b).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (H) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 pursuant to the Securities Exchange Act of
1934) of voting securities or other voting interests representing at least 10%
of the outstanding voting power of a Person or equity securities or other equity
interests representing at least 10% of the outstanding equity securities or
equity interests in a Person.
"Release" - any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"Reorganization" - The exchange of Security Asset Common Stock for all
of the Shares, pursuant to Section 368(a)(1)(B) of the Code.
"Representative" - with respect to a particular Person, any director,
officer, manager, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"Securities Act" - the Securities Act of 1933, or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Security Asset" - Security Asset Capital Corporation, a Nevada
corporation, as defined in the preamble of this Agreement.
"Security Asset Common Stock" - common stock, $.001 par value per share,
of Security Asset.
"Shareholders" - the persons specified in Exhibit "A" of this Agreement.
"Shares" - as defined in recital A of this Agreement.
"Subsidiary" - with respect to any Person (the "Owner"), any corporation
or other Person of which securities or other interests having the power to elect
a majority of that corporation's or other Person's Board of Directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries.
"Tax" - Any tax, charge, fee, levy, interest, penalty, addition to tax
or other assessment, including, but not limited to, income, provincial, excise,
property "real, tangible personal or intangible
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personal", sales, use, gross receipts, business and occupation, value added and
franchise tax, license, recording, documentation and registration fee and
customs duty, imposed by any Governmental Body and any payment with respect
there to required pursuant to any tax sharing agreement.
"Tax Return" - any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release" - a substantial probability of a Release that may
require action in order to prevent or mitigate damage to the Environment that
may result from such Release.
"Threatened" - a claim, Proceeding, dispute, action, or other matter
will be deemed to have been "Threatened" if any demand or statement has been
made (orally or in writing) or any notice has been given (orally or in writing),
or if any other event has occurred or any other circumstances exist, that would
cause a prudent Person to conclude that such a claim, Proceeding, dispute,
action, or other matter probably will be asserted, commenced, taken, or
otherwise pursued in the future.
"Universal" - Universal View Corporation, a Nevada corporation, as
defined in the preamble of this Agreement.
"Universal Disclosure Letter" - the disclosure letter delivered by
Shareholders to Security Asset concurrently with the execution and delivery of
this Agreement.
ARTICLE II
REORGANIZATION AND REGISTRATION
2.1 Qualifying "B" Reorganization. Pursuant to the requirements of
Section 368(a)(1)(B) of the IRC and the regulations promulgated pursuant
thereto, Security Asset will issue and deliver to Shareholders 400,000 shares of
Security Asset Common Stock in exchange for the Shares. Immediately after that
exchange, Security Asset shall have control (as defined in Section 368(c) of the
IRC) of Universal.
2.2 Implementation of Reorganization. Shareholders shall cause Universal
to (i) take all corporate actions and obtain all approvals and consents
necessary to complete the Reorganization: (ii) secure the consent of any Person
(if such consent is necessary) to the consummation of such Reorganization; (iii)
file all necessary documents, returns, notices and applications with all
Governmental Bodies necessary or appropriate to complete the Reorganization;
(iv) deliver the Universal Disclosure Letter; and (v) deliver and transfer the
certificates representing and evidencing the Shares, together with stock powers
duly endorsed in blank with signatures guaranteed by Universal's transfer agent.
2.3 Obligations upon Execution. Upon the execution of this Agreement:
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(a) Shareholders will deliver to Security Asset:
(i) certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers), for transfer to Security Asset;
(ii) releases in the form of Exhibit "B" executed by the
Shareholders ("Shareholders' Release"); and
(iii) the Universal Disclosure Letter in the form of Exhibit "C"
executed by the Shareholders;
(b) Security Asset will deliver to Shareholders:
(i) one or more certificates evidencing and representing 400,000
shares of Security Asset Common Stock: and
(ii) a check in the amount of $125,000 made payable to a
designee of the Shareholders.
2.4 Shareholders Representative. The Shareholders hereby irrevocably,
unconditionally and forever designate and appoint Xxxxxx Xxxxxxxxxxx, 0000
Xxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, as their agent and
attorney in fact (the "Shareholders' Representative") with full and complete
power and authority to execute, deliver, and receive on their behalf all
notices, requests, and other communications pursuant to this Agreement; to
waive, amend, or modify any provisions of this Agreement, and to take such other
action on their behalf in connection with this Agreement and the Contemplated
Transactions as such agent deems appropriate; provided, however, that no such
waiver, amendment, or modification may be made if it would decrease the number
of shares of Security Asset Common Stock to be issued to the Shareholders
pursuant to this Agreement or increase the extent of their obligation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF SHAREHOLDERS AND UNIVERSAL
Universal and Shareholders jointly and severally represent and warrant
to Security Asset as follows:
3.1 Organization and Good Standing.
(a) Part 3.1 of the Universal Disclosure Letter contains a complete
and accurate list for Universal, of its name, its jurisdiction of incorporation,
other jurisdictions in which it is authorized to do business, and its
capitalization (including the identity of each stockholder and the number of
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shares held by each). Universal is a corporation duly organized, validly
existing, and in good standing pursuant to the laws of its jurisdiction of
incorporation, with fill and complete corporate power and authority to conduct
its business as it is now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all its obligations
pursuant to Applicable Contracts. Universal is duly qualified to do business as
a foreign corporation and is in good standing pursuant to the laws of each state
or other jurisdiction in which either the ownership or use of the properties
owned or used by it, or the nature of the activities conducted by it, requires
such qualification.
(b) Universal has delivered to Security Asset true and correct
copies of the Organizational Documents of Universal, as currently in effect.
3.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Shareholders, enforceable against Shareholders in accordance with
its terms. Upon the execution and delivery by Shareholders and Universal of the
Shareholders' Release ("Shareholders' Closing Documents"), the
Shareholders' Closing Documents will constitute the legal, valid and
binding obligations of Shareholder and Universal, enforceable against
Shareholders and Universal in accordance with their respective terms.
Shareholders have the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and to perform their obligations
pursuant to this Agreement, and Shareholders and Universal have the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement and to perform their obligations pursuant to the Shareholder' Closing
Documents.
(b) Except as set forth in Part 3.2 of the Universal Disclosure
Letter, neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of Universal, or (B) any
resolution adopted by the Board of Directors or the stockholders of Universal;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief under,
any Legal Requirement or any Order to which Universal or any Shareholder, or any
of the assets owned or used by Universal, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Universal or that otherwise relates to the
business of, or any of the assets owned or used by, any Universal;
(iv) cause Security Asset or Universal to become subject to,
or to become liable for the payment of, any Tax;
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(v) cause any of the assets owned by Universal to be
reassessed or revalued by any taxing authority or other Governmental Body;
(vi) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Applicable Contract; or
(vii) result in the imposition or creation of any Encumbrance
upon or with respect to any of the assets owned or used by Universal.
Except as set forth in Part 3.2 of the Universal Disclosure Letter,
neither Universal nor any Shareholder is or will be required to give any notice
to or obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
(c) Shareholders are acquiring the Security Asset Common Stock for
their own accounts and not with an intention of distribution within the meaning
of Section 2 of the Securities Act.
3.3 Capitalization. The authorized equity securities of Universal
consist of 25,000,000 shares of $.001 par value Common Stock, of which 2,930,000
shares are issued and outstanding, all of which issued and outstanding shares
constitute the "Shares." Shareholders are the record and beneficial owners and
holders of the Shares, free and clear of all Encumbrances. Part 3.3 of the
Universal Disclosure Letter sets forth the ownership of the Shares. No legend or
other reference to any purported Encumbrance appears upon any certificate
representing the Shares. All of the Shares have been duly authorized and validly
issued and are fully paid and nonassessable. Except for this Agreement, there
are no Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of Universal. None of the Shares were issued in
violation of the Securities Act or any other Legal Requirement - Universal does
not own, or has any Contract to acquire, any equity securities or other
securities of any Person or any direct or indirect equity or ownership interest
in any other business.
3.4 Financial Statements. Universal has delivered to Security Asset (a)
audited balance sheets of Universal as at December 31 in each of the years 1997
through 1998, inclusive, and the related audited statement of income for each of
the fiscal years then ended, (b) an unaudited balance sheet of Universal as at
September 30, 1999 (the "Universal Balance Sheet"), and the related unaudited
statement of income for the nine (9) months then ended, and (c) an unaudited
balance sheet of Universal as at the date of this Agreement (the "Universal
Interim Balance Sheet") and the related unaudited statements of income, changes
in stockholders' equity, and cash flow for the nine (9) months then ended,
including in each case the notes thereto. Such financial statements and notes
fairly present the financial condition and the results of operations, changes in
stockholders' equity, and cash flow of Universal as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject, in the case of interim financial statements, to normal
recurring year-end adjustments (the effect of which will not, individually or in
the aggregate, be materially adverse) and the absence of notes: the financial
statements referred to in this Section 3.4 present the consistent application of
such accounting principles throughout the
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periods involved. No financial statements of any Person other than Universal are
required by GAAP to be included in the financial statements of Universal.
3.5 Books and Records. The books of account, minute books, stock record
books, and other records of Universal, all of which have been delivered to
Security Asset, are complete and correct and have been maintained in accordance
with competent business practices, including the maintenance of an adequate
system of internal controls. The minute book of Universal contain accurate and
complete records of all meetings held of, and corporate actions taken by, the
stockholders, the Boards of Directors, and committees of the Boards of Directors
of Universal, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. Upon the execution of this Agreement, all of
those books and records will be in the possession of Universal.
3.6 Title to Properties; Encumbrances. Universal owns no real property
or any interest therein. Part 3.6 of the Universal Disclosure Letter contains a
complete and accurate list of all leaseholds of Universal. Universal owns all
the properties and assets (whether real, personal, or mixed and whether tangible
or intangible) that Universal purports to own, including all of the properties
and assets specified in the Universal Balance Sheet and the Universal Interim
Balance Sheet (except for assets held pursuant to capitalized leases disclosed
or not required to be disclosed in Part 3.6 of the Universal Disclosure Letter
and personal property sold since the date of the Universal Balance Sheet and the
Universal Interim Balance Sheet, as the case may be, in the Ordinary Course of
Business), and all of the properties and assets purchased or otherwise acquired
by Universal since the date of the Universal Balance Sheet (except for personal
property acquired and sold since the date of the Universal Balance Sheet in the
Ordinary Course of Business and consistent with past practice). All material
properties and assets specified in the Universal Balance Sheet and the Universal
Interim Balance Sheet are free and clear of all Encumbrances. Neither the whole
nor any portion of any property held by Universal is subject to any governmental
decree or Order to be sold or is being condemned, expropriated or otherwise
taken by any Governmental Body or any Person with or without payment
compensation therefor, nor, if any such condemnation, expropriation or taking
being proposed.
3.7 Condition and Sufficiency of Assets. The buildings, plants,
structures, and equipment of Universal are structurally sound, are in good
operating condition and repair, and are adequate for the uses to which they are
being put, and none of such buildings, plants, structures, or equipment is in
need of maintenance or repairs except for ordinary, routine maintenance and
repairs that are not material in nature or cost. The buildings, plants,
structures, and equipment of Universal are sufficient for the continued conduct
of Universal business after the Effective Date in substantially the same manner
as conducted prior to the Effective Date.
3.8 Accounts Receivable. All accounts receivable of Universal that are
specified on the Universal Balance Sheet or the Universal Interim Balance Sheet
or on the accounting records of Universal as of the Effective Date
(collectively, the "Universal Accounts Receivable") represent or will represent
valid obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business. The Universal Accounts Receivable
are current and collectible net of the respective reserves shown on the
Universal Balance Sheet or the Universal Interim Balance Sheet or on the
accounting records of Universal as of the Effective Date (which reserves are
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adequate and calculated consistent with past practice and, in the case of the
reserve as of the Effective Date, will not represent a greater percentage of the
Universal Accounts Receivable as of the Effective Date than the reserve
specified in the Universal Balance Sheet represented of the Universal Accounts
Receivable specified therein and will not represent a material adverse change in
the composition of such Universal Accounts Receivable in terms of aging).
Subject to such reserves, each of the Universal Accounts Receivable either has
been or will be collected in full, without any set-off, within 90 days after the
day on which it first becomes due and payable. There is no contest, claim, or
right of set-off, other than returns in the Ordinary Course of Business,
pursuant to any Contract with any obligor of an Universal Accounts Receivable
relating to the amount or validity of such Universal Accounts Receivable. Part
3.8 of the Universal Disclosure Letter specifies a complete and accurate list of
all Universal Accounts Receivable as of the date of the Universal Interim
Balance Sheet sets and the aging of each Universal Accounts Receivable.
3.9 Inventory. All inventory of Universal, whether or not specified in
the Universal Balance Sheet or the Universal Interim Balance Sheet, consists of
a quality and quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have
been written off or written down to net realizable value in the Universal
Balance Sheet or the Universal Interim Balance Sheet or on the accounting
records of Universal as of the Effective Date, as the case may be. All
inventories not written off have been priced at the lower of cost or market on a
first in, first out basis. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of Universal.
3.10 No Undisclosed Liabilities. Except as set forth in Part 3.10 of the
Universal Disclosure Letter, Universal has no liabilities or obligations of any
nature (whether known or unknown and whether absolute, accrued, contingent, or
otherwise) except for liabilities or obligations specified or reserved against
in the Universal Balance Sheet or the Universal Interim Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since the
respective dates thereof.
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3.11 Taxes.
(a) Universal has filed or caused to be filed on a timely basis
all Tax Returns that are or were required to be filed by or with respect to any
of them, either separately or as a member of a group of corporations, pursuant
to applicable Legal Requirements Universal has delivered to Security Asset
copies of all such Tax Returns filed since January 1, 1997. Universal has paid,
or made provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise, or pursuant to any assessment
received by Shareholders or Universal, except such Taxes, if any, as are listed
in Part 3.11 of the Universal Disclosure Letter and are being contested in good
faith and as to which adequate reserves (determined in accordance with GAAP)
have been provided in the Universal Balance Sheet and the Universal Interim
Balance Sheet.
(b) Part 3.11 of the Universal Disclosure Letter contains a
complete and accurate list of all audits of all such Tax Returns, including a
reasonably detailed description of the nature and outcome of each audit. All
deficiencies proposed as a result of such audits have been paid, reserved
against, settled, or, as described in Part 3.11 of the Universal Disclosure
Letter, are being contested in good faith by appropriate proceedings. Part 3.11
of the Universal Disclosure Letter describes all adjustments to the United
States federal income Tax Returns filed by Universal for all taxable years since
1997, and the resulting deficiencies proposed by the IRS. Except as described in
Part 3.11 of the Universal Disclosure Letter, neither Universal nor any
Shareholder has given or been requested to give waivers or extensions (or is or
would be subject to a waiver or extension given by any other Person) of any
statute of limitations relating to the payment of Taxes of Universal or for
which Universal may be liable
(c) The charges, accruals and reserves with respect to Taxes on the
books of Universal are adequate (determined in accordance with GAAP) and are at
least equal to Universal's liability for Taxes. There exists no proposed tax
assessment against Universal, except as disclosed in the Universal Balance Sheet
or in Part 3.11 of the Universal Disclosure Letter. No consent to the
application of Section 341(f)(2) of the IRC has been filed with respect to any
property or assets held, acquired, or to be acquired by Universal. All Taxes
that Universal is or was required by Legal Requirements to withhold or collect
have been duly withheld or collected and, to the extent required, have been paid
to the proper Governmental Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) Universal are true, correct, and complete. There is no tax sharing
agreement that will require any payment by Universal after the date of this
Agreement. Universal is not, nor during the 5 year period preceding the
Effective Date has been, an "S" corporation. During the consistency period (as
defined in Section 338(h)(4) of the IRC with respect to the sale of the Shares
to Security Asset), neither Universal nor target affiliate (as defined in
Section 338(h)(6) of the IRC with respect to the sale of the Shares to Security
Asset) has sold or will sell any property or assets to Security Asset or to any
member of the affiliated group (as defined in Section 338(h)(5) of the IRC) that
includes Security Asset. Part 3.11 of the Universal Disclosure Letter lists all
such target affiliates.
3.12 No Material Adverse Change. Since the date of the Universal Balance
Sheet, there has not been any material adverse change in the business,
operations, properties, prospects, assets, or condition of Universal, and no
event has occurred or circumstance exists that may result in such a material
adverse change.
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3.13 Employee Benefits. Except as set forth in Part 3.13 of the
Universal Disclosure Letter, neither Universal nor any Plan Affiliate of
Universal has maintained, sponsored, adopted, made contributions to or obligated
itself to make contributions to or to pay any benefits or grant rights pursuant
to or with respect to any Employee Benefit Plan, whether or not written, which
could give rise to or result in Universal or such Plan Affiliate having any
material debt, liability, claim or obligation of any kind or nature whatsoever,
whether accrued, absolute, contingent, direct, indirect, known or unknown,
perfected or inchoate or otherwise and whether or not due or to become due.
Correct and complete copies of all Employee Benefit Plans previously have been
furnished to Security Asset. The Employee Benefit Plans are in compliance in all
material respects with governing documents and agreements and with applicable
laws. There has not been any act or omission by Universal pursuant to ERISA or
the terms of the Employee Benefit Plans, or any other applicable law or
agreement which could give rise to any liability of Universal, whether pursuant
to ERISA, the IRC or other laws or agreements.
3.14 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth in Part 3.14 of the Universal Disclosure
Letter:
(i) Universal is and has been in full compliance with each
Legal Requirement that is or was applicable to it or to the conduct or operation
of its business or the ownership or use of any of its assets,
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
by Universal of, or a failure on the part of Universal to comply with, any Legal
Requirement, or (B) may give result in any obligation on the part of Universal
to undertake, or to pay all or any portion of the cost of, any remedial action
of any nature, including pursuant to any Environmental, Health, and Safety
Liability; and
(iii) Universal has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of,
or failure to comply with, any Legal Requirement, or (B) any actual, alleged,
possible, or potential obligation on the part of Universal to undertake, or to
pay all or any portion of the cost of, any remedial action of any nature,
including pursuant to any Environmental, Health, and Safety Liability.
(b) Part 3.14 of the Universal Disclosure Letter contains a
complete and accurate list of each Governmental Authorization that is held by
Universal or that otherwise relates to the business of, or to any of the assets
owned or used by, Universal. Each Governmental Authorization listed or required
to be listed in Part 3.14 of the Universal Disclosure Letter is valid and in
full force and effect. Except as set forth in Part 3.14 of the Universal
Disclosure Letter:
(i) Universal is and has been in full compliance with all of
the terms and requirements of each Governmental Authorization identified or
required to be identified in Part 3.14 of the Universal Disclosure Letter;
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(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a violation of or a failure to comply with any term or requirement
of any Governmental Authorization listed or required to be listed in Part 3.14
of the Universal Disclosure Letter, or (B) result directly or indirectly in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be listed
in Part 3.14 of the Universal Disclosure Letter;
(iii) Universal has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding (A) any actual, alleged, possible, or potential violation of or
failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
Governmental Authorization; and
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Universal Disclosure Letter have been duly filed on a timely
basis with the appropriate Governmental Bodies, and all other filings required
to have been made with respect to such Governmental Authorizations have been
duly made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Universal
Disclosure Letter collectively constitute all of the Governmental Authorizations
necessary to permit Universal to conduct and operate its business lawfully in
the manner Universal currently conducts and operates such business and to permit
Universal to own and use its assets in the manner in which Universal currently
owns and uses such assets.
3.15 Legal Proceedings: Orders.
(a) Except as set forth in Part 3.15 of the Universal Disclosure
Letter, there is no pending Proceeding:
(i) that has been commenced by or against Universal or that
otherwise relates to or may affect the business of, or any of the assets owned
or used by, Universal; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions.
To the Knowledge of Shareholders and Universal, (1) no such Proceeding
has been Threatened, and (2) no event has occurred or circumstance exists that
may give result in or serve as a basis for the commencement of any such
Proceeding. Universal has delivered to Security Asset copies of all pleadings,
correspondence, and other documents relating to each Proceeding listed in Part
3.15 of the Universal Disclosure Letter. The Proceedings listed in Part 3-15 of
the Universal Disclosure Letter will not have a material adverse effect on the
business, operations, assets, condition, or prospects of Universal.
(b) Except as set forth in Part 3.15 of the Universal Disclosure
Letter:
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(i) there is no Order to which Universal, or any of the assets
owned or used by Universal, is subject;
(ii) no Universal Shareholder is subject to any Order that
relates to the business of, or any of the assets owned or used by, Universal;
and
(iii) no officer, director, agent, or employee of Universal is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of Universal.
(c) Except as set forth in Part 3.15 of the Universal Disclosure
Letter:
(i) Universal is and has been in full compliance with all of
the terms and requirements of each Order to which it, or any of the assets owned
or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a violation of
or failure to comply with any term or requirement of any Order to which
Universal, or any of the assets owned or used by Universal, is subject; and
(iii) Universal has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding any actual, alleged, possible, or potential violation of, or
failure to comply with, any term or requirement of any Order to which Universal,
or any of the assets owned or used by Universal, is or has been subject.
3.16 Absence of Certain Changes and Events. Except as set forth in Part
3.16 of the Universal Disclosure Letter, since the date of the Universal Balance
Sheet, Universal has conducted Universal's business only in the Ordinary Course
of Business and there has not been any:
(a) change in Universal's authorized or issued capital stock; grant
of any stock option or right to purchase shares of capital stock of Universal;
issuance of any Security Asset convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other acquisition by
Universal of any shares of any such capital stock; or declaration or payment of
any dividend or other distribution or payment in respect of shares of capital
stock;
(b) amendment to the Organizational Documents of Universal;
(c) payment or increase by Universal of any bonuses, salaries, or
other compensation to any stockholder, director, officer, or (except in the
Ordinary Course of Business) employee or entry into any employment, severance,
or similar Contract with any director, officer, or employee;
(d) adoption of, or increase in the payments to or benefits
pursuant to, any profit sharing, bonus, deferred compensation, savings,
insurance, pension, retirement, or other employee benefit plan for or with any
employees of Universal;
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(e) damage to or destruction or loss of any asset or property of
Universal, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
Universal, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any Contract or transaction
involving a total remaining commitment by or to Universal of at least
$10,000.00;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any asset or property of Universal or
mortgage, pledge, or imposition of any lien or other encumbrance on any material
asset or property of Universal, including the sale, lease, or other disposition
of any of the Universal Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
Universal in excess of $10,000.00;
(i) material change in the accounting methods used by Universal; or
(j) agreement, whether oral or written, by Universal to do any of
the foregoing.
3.17 Contracts; No Defaults.
(a) Part 3.17(a) of the Universal Disclosure Letter contains a
complete and accurate list, and Universal has delivered to Security Asset true
and complete copies, of all the Contracts with a value of at least $10,000.00 of
Universal. Part 3.17(a) of the Universal Disclosure Letter sets forth reasonably
complete details concerning such Contracts, including the parties to the
Contracts, the amount of the remaining commitment of Universal pursuant to the
Contracts, and Universal's office where details relating to the Contracts are
located.
(b) Except as set forth in Part 3.17(b) of the Universal Disclosure
Letter:
(i) no Shareholder (and no Related Person of any Shareholder)
has or may acquire any rights pursuant to, and no Shareholder has or may become
subject to any obligation or liability pursuant to, any Contract that relates to
the business of, or any of the assets owned or used by, Universal: and
(ii) no officer, director, agent, employee, consultant, or
contractor of Universal is obligated by any Contract that purports to limit the
ability of such officer, director, agent, employee, consultant, or contractor to
(A) engage in or continue any conduct, activity, or practice relating to the
business of Universal, or (B) assign to Universal or to any other Person any
rights to any invention, improvement, or discovery.
(c) Except as set forth in Part 3.17(c) of the Universal Disclosure
Letter, each Contract identified or required to be identified in Part 3.17(a) of
the Universal Disclosure Letter is in full force and effect and is valid and
enforceable in accordance with its terms.
(d) Except as set forth in Part 3.17(d) of the Universal Disclosure
Letter:
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(i) Universal is and has been in full compliance with all
applicable terms and requirements of each Contract pursuant to which Universal
has or had any obligation or liability or by which Universal or any of the
assets owned or used by Universal is or was obligated;
(ii) each other Person that has or had any obligation or
liability pursuant to any Contract pursuant to which Universal has or had any
rights is and has been in full compliance with all applicable terms and
requirements of such Contract;
(iii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) may contravene, conflict with, or result in
a violation or breach of, or give Universal or other Person the right to declare
a default or exercise any remedy pursuant to, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract; and
(iv) Universal has not given to or received from any other
Person any notice or other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of, or default
pursuant to, any Contract.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
Universal pursuant to current or completed Contracts with any Person and no such
Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, design, manufacture, or
provision of products or services by Universal have been entered into in the
Ordinary Course of Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any consideration having
been paid or promised, that is or would be in violation of any Legal
Requirement.
3.18 Insurance.
(a) Universal has delivered to Security Asset:
(i) true and complete copies of all policies of insurance to
which Universal is a party, or any director of Universal, is or has been covered
at any time within the three (3) years preceding the date of this Agreement;
(ii) true and complete copies of all pending applications for
policies of insurance; and
(iii) any statement by the auditor of Universal's financial
statements with regard to the adequacy of such entity's coverage or of the
reserves for claims.
(b) Part 3.18(b) of the Universal Disclosure Letter describes:
(i) any self insurance arrangement by or affecting Universal,
including any reserves established pursuant thereto;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by Universal; and
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(iii) all obligations of Universal to third parties with
respect to insurance (including such obligations under leases and service
agreements) and identifies the policy pursuant to which such coverage is
provided.
(c) Part 3.18(c) of the Universal Disclosure Letter sets forth, by
year, for the current policy year and each of the three (3) preceding policy
years:
(i) a summary of the loss experience pursuant to each policy;
(ii) a statement describing each claim pursuant to an
insurance policy for an amount in excess of $10,000.00, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim: and
(iii) a statement describing the loss experience for all
claims that were self insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Part 3.18(d) of the Universal Disclosure
Letter:
(i) All policies to which Universal is a party or that provide
coverage to Shareholder, Universal, or any director or officer of Universal:
(A) are valid, outstanding, and enforceable;
(B) are issued by an insurer that is financially sound and
reputable;
(C) taken together, provide adequate insurance coverage
for the assets and the operations of Universal for all risks normally insured
against by a Person carrying on the same business or businesses as Universal;
(D) are sufficient for compliance with all Legal
Requirements, Governmental Authorizations and Contracts to which Universal is a
party or by which Universal is obligated:
(E) will continue in full force and effect following the
consummation of the Contemplated Transactions; and
(F) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of Universal.
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(ii) Neither Universal nor any Shareholder has received (A)
any refusal of coverage or any notice that a defense will be afforded with
reservation of rights, or (B) any notice of cancellation or any other indication
that any insurance policy is not now in full force or effect or will not be
renewed or that the issuer of any policy is not willing or able to perform its
obligations pursuant thereto.
(iii) Universal has paid all premiums due, and have otherwise
performed all of its obligations, pursuant to each policy to which Universal is
a party or that provides coverage to Universal or director or officer thereof.
(iv) Universal has given notice to the insurer of all claims
that may be insured thereby.
3.19 Environmental Matters. Except as set forth in Part 3.19 of the
Universal Disclosure Letter.
(a) Universal is, and at all times has been, in full compliance
with, and has not been and is not in violation of or liable for Environmental,
Health, and Safety Liabilities pursuant to, any Environmental Law. Neither
Universal nor any Shareholder has any basis to expect, nor has any of them or
any other Person for whose conduct they are or may be held to be responsible
received, any actual or Threatened Order, notice, or other communication from
(i) any Governmental Body or private citizen, or (ii) the current or prior owner
or operator of any Facilities, of any actual or potential Release of Hazardous
Materials from any Facilities, or any violation or failure to comply with any
Environmental Law, or of any actual or Threatened obligation to undertake or pay
the cost of any Environmental, Health, and Safety Liabilities with respect to
any of the Facilities or any other properties or assets (whether real, personal,
or mixed) in which any Shareholder or Universal has had an interest, or with
respect to any property or Facility (A) at or to which Hazardous Materials were
generated, manufactured, refined, transferred, transported, disposed, imported,
used, or processed by or from any Shareholder, Universal, or any other Person
for whose conduct they are or may be held responsible, or (B) to or from which
Hazardous Materials from any Shareholder, Universal, or any other Person for
whose conduct they are or may be held responsible have been transported,
treated, stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Shareholders and
Universal, Threatened claims, Encumbrances, or other restrictions of any nature,
resulting from any Environmental, Health, and Safety Liabilities or arising
under or pursuant to any Environmental Law, with respect to or affecting any of
the Facilities or any other properties and assets (whether real, personal, or
mixed) in which any Shareholder or Universal has or had an interest
(c) Neither Universal nor any Shareholder has any basis to expect,
nor has any of them or any other Person for whose conduct they are or may be
held responsible, received, any citation, directive, inquiry, notice, Order,
summons, warning, or other communication that relates to Hazardous Activity,
Hazardous Materials, or any alleged, actual, or potential violation or failure
to comply with any Environmental Law, or of any alleged, actual, or potential
obligation to undertake or pay the cost of any Environmental, Health, and Safety
Liabilities with respect to any of the Facilities or any other properties or
assets (whether real, personal, or mixed) in which any Shareholder or Universal
had an interest, or with respect to any property or facility to which Hazardous
Materials generated, manufactured, refined, transferred, imported, treated,
used, or processed by any
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Shareholder, Universal, or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(d) Neither Universal nor any Shareholder, nor any other Person for
whose conduct they are or may be held responsible, has any Environmental,
Health, and Safety Liabilities with respect to the Facilities or with respect to
any other properties and assets (whether real, personal, or mixed) in which any
Shareholder or Universal (or any predecessor), has or had an interest, or at any
property geologically or hydrologically adjoining the Facilities or any such
other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically adjoining
property, including any Hazardous Materials contained in barrels, above or
underground storage tanks, landfills, land deposits, dumps, buildings, equipment
(whether moveable or fixed) or other containers, either temporary or permanent,
and deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any structure
therein or thereon. Neither Universal nor any Shareholder, nor any other Person
for whose conduct they are or may be held responsible, or any other Person, has
permitted or conducted, or is aware of, any Hazardous Activity conducted with
respect to the Facilities or any other properties or assets (whether real,
personal, or mixed) in which any Shareholder or Universal has or had an
interest.
(f) There has been no Release or, to the Knowledge of any
Shareholder and Universal, Threat of Release, of any Hazardous Materials at or
from the Facilities or at any other locations where any Hazardous Materials were
generated, manufactured, refined, transferred, produced, imported, used, or
processed from or by the Facilities, or from or by any other properties and
assets (whether real, personal, or mixed) in which any Shareholder or Universal
has or had an interest, or any geologically or hydrologically adjoining
property, whether by any Shareholder, Universal, or any other Person, or with
respect to any property or facility to which Hazardous Materials generated,
manufactured, refined, transferred, imported, treated, used, or processed by any
Shareholder, Universal, or any other Person for whose conduct they are or may be
held responsible, have been transported, treated, stored, handled, transferred,
disposed, recycled, or received.
(g) Universal has delivered to Security Asset true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by any Shareholder or Universal pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by any Shareholder, Universal, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
3.20 Employees.
(a) Part 3.20 of the Universal Disclosure Letter contains a
complete and accurate list of the following information for each employee or
director of Universal, including each employee on leave of absence or layoff
status: employer; name: job title; current compensation paid or payable and any
change in compensation since January 1, 1997; vacation accrued: and service
credited for purposes of vesting and eligibility to participate pursuant to
Universal's pension, retirement, profit-sharing, thriftsavings, deferred
compensation, stock bonus, stock option, cash bonus, employee stock ownership
(including investment credit or payroll stock ownership), severance pay,
insurance, medical, welfare, or vacation plan, other Employee Pension Benefit
Plan or Employee Welfare Benefit Plan, or any other employee benefit plan or any
director plan.
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(b) No employee or director of Universal is a party to, or is
otherwise obligated by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee or director and any other Person ("Universal Proprietary Rights
Agreement") that in any way adversely affects or will affect (i) the performance
of his or her duties as an employee or director of Universal, or (ii) the
ability of Universal to conduct its business, including any Universal
Proprietary Rights Agreement with any Shareholder or Universal by any such
employee or director. To Shareholders' Knowledge, no director, officer, or other
key employee of Universal intends to terminate his or her employment with
Universal.
(c) Part 3.20 of the Universal Disclosure Letter also contains a
complete and accurate list of the following information for each retired
employee or director of Universal, or their dependents, receiving benefits or
scheduled to receive benefits in the future: name, pension benefit, pension
option election, retiree medical insurance coverage, retiree life insurance
coverage, and other benefits.
3.21 Labor Relations: Compliance. Universal has not been or is a party
to any collective bargaining or other labor Contract. There has not been, there
is not presently pending or existing, and there is not Threatened, (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any Proceeding against or affecting Universal relating to the alleged violation
of any Legal Requirement pertaining to labor relations or employment matters,
including any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body, organizational activity, or other labor or
employment dispute against or affecting Universal or its premises, or (c) any
application for certification of a collective bargaining agent. No event has
occurred or circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any employees by
Universal, and no such action is contemplated by Universal. Universal has
complied in all respects with all Legal Requirements relating to employment,
equal employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social Security Asset and
similar taxes, occupational safety and health, and plant closing. Universal is
not liable for the payment of any compensation, damages, taxes, fines,
penalties, or other amounts, however designated, for failure to comply with any
of the foregoing Legal Requirements.
3.22 Intellectual Property.
(a) Universal (i) owns all the licenses, trademarks, tradenames,
copyrights, marks, patents and applications for patents listed and attributed to
it on Part 3.22(a) of the Universal Disclosure Letter (the "Universal
Intellectual Property Assets"), (ii) neither owns nor uses any such items which
are not listed in the Universal Disclosure Letter, (iii) pays no royalties to
any Person with respect to any such items, and (iv) has full, complete,
unfettered and lawful right to bring actions for the infringement thereof.
Universal owns, or possesses adequate and enforceable rights to use without
payment of royalties, all licenses, trademarks, tradenames, copyrights, patents,
trade secrets and processes necessary for the conduct of, or use in, its
business as the same is presently being conducted.
(b) Except as set forth on Part 3.22(b) of the Universal Disclosure
Letter, Universal has no Knowledge nor has received any notice to the effect
that any service or product it provides or sells, or any process, method, part
or material it employees in its business for the use by it or another
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of any such service, may infringe, or is in conflict with, any asserted right of
another Person. There is no pending or Threatened claim or litigation action
against Universal contesting its right to use or the validity of any of the
trademarks or tradenames listed on Part 3.22(a) of the Universal Disclosure
Letter or asserting its misuse of any of the foregoing, which would deprive it
of the right to assert its rights pursuant thereto or which would prevent the
sale of any service provided or sold by it.
3.23 Certain Payments. Neither Universal nor any director, officer,
agent, or employee of Universal, or to Shareholders' Knowledge any other Person
associated with or acting for or on behalf of Universal, has directly or
indirectly (a) made any contribution, gift, bribe, rebate, payoff, influence
payment, kickback, or other payment to any Person, private or public, regardless
of form, whether in money, property, or services (i) to obtain favorable
treatment in securing business, (ii) to pay for favorable treatment for business
secured, (iii) to obtain special concessions or for special concessions already
obtained, for or in respect of Universal or any Affiliate of Universal, or (iv)
in violation of any Legal Requirement, or (b) established or maintained any fund
or asset that has not been recorded in the books and records of Universal.
3.24 Disclosure.
(a) No representation or warranty of Shareholders in this Agreement
and no information specified in the Universal Disclosure Letter omits to specify
a material fact necessary to make the information specified herein or therein,
considering the circumstances in which that information was furnished, not
misleading.
(b) There is no fact known to any Shareholder that has specific
application to any Shareholder or Universal (other than general economic or
industry conditions) and that materially adversely affects or, as far as any
Shareholder can reasonably foresee, materially threatens, the assets, business,
prospects, financial condition, or results of operations of Universal that has
not been set forth in this Agreement or the Universal Disclosure Letter.
3.25 Relationships with Related Persons. Except as set forth on Part
3.25 of the Universal Disclosure Letter, no Shareholder or any Related Person of
Shareholders or of Universal has or has had any interest in any property
(whether real, personal, or mixed and whether tangible or intangible), used in
or pertaining to Universal's business. Except as set forth in Part 3.25 of the
Universal Disclosure Letter, no Shareholder or any Related Person of
Shareholders or of Universal is or has owned (of record or as a beneficial
owner) an equity interest or any other financial or profit interest in, a Person
that has (i) had business dealings or a material financial interest in any
transaction with Universal, or (ii) engaged in competition with Universal with
respect to any line of the products or services of Universal (a "Universal
Competing Business") in any market presently served by Universal. Except as set
forth in Part 3.25 of the Universal Disclosure Letter, no Shareholder or any
Related Person of Shareholders or of Universal is a party to any Contract with,
or has any claim or right against, Universal.
3.26 Brokers or Finders. Shareholders and their agents have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other similar payment in connection with this
Agreement.
3.27 Corporate Resolutions. Universal has delivered to Security Asset a
certified copy of the resolutions adopted by the Board of Directors of Universal
authorizing execution, delivery and performance of this Agreement and the
consummation of the Reorganization and a certificate of the
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Secretary of Universal, dated the Effective Date, to the effect that those
resolutions were duly adopted and are in full force and effect and with respect
to the authority and incumbency of the officers of Universal executing this
Agreement.
3.28 Take or Pay Contracts. Part 3.28 of the Universal Disclosure Letter
specifies all Contracts pursuant to which Universal is required to purchase a
minimum quantity of utilities, products or services or to make payment therefor.
Universal has utilized the minimum quantity of utilities, products or services
that Universal is required to utilize pursuant to such Contracts and Universal
has made no prepayments for utilities, products or services that Universal has
not utilized.
3.29 Banking Relationships. Part 3.29 of the Universal Disclosure Letter
specifies the names and locations of all banks, trust companies, savings and
loans associations and other financial institutions at which Universal maintains
its safe deposit boxes or accounts of any nature and the names of all persons
authorized to have access there to, draw thereon or make withdrawals therefrom.
Upon request, Universal and Shareholders will deliver to Security Asset copies
of all records, including all signatures or authorization cards and the keys
pertaining to safe deposit boxes.
3.30 Further Assurances. Each Shareholder shall cooperate with Security
Asset and provide such Shareholder's best efforts to assist Security Asset in
connection with the continuity and smooth transition of the Universal
businesses. At any time or from time to time, each Shareholder shall, at the
request of Security Asset, take any and all action necessary or appropriate to
put Security Asset in actual possession and control of Universal and shall
execute and deliver such further instruments of sale, conveyance, transfer,
assignment and consent and take such other action as Security Asset may request
in order to sale, convey, transfer, deliver, assign, and set over to Security
Asset all of the Shares and to confirm the title and possession thereto or to
assist Security Asset in exercising its rights with respect thereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to Universal and Shareholders, and each of
them, as follows:
4.1 Organization and Good Standing.
(a) Security Asset is a corporation duly organized, validly
existing, and in good standing pursuant to the laws of its jurisdiction of
incorporation, with full and complete corporate power and authority to conduct
its business as it is now being conducted, to own or use the properties and
assets that it purports to own or use, and to perform all its obligations
pursuant to Applicable Contracts. Security Asset is duly qualified to do
business as a foreign corporation and is in good standing pursuant to the laws
of each state or other jurisdiction in which either the ownership or use of the
properties owned or used by it, or the nature of the activities conducted by it,
requires such qualification.
(b) Security Asset has delivered to Universal true and correct
copies of the Organizational Documents of Security Asset, as currently in
effect.
4.2 Authority; No Conflict.
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(a) This Agreement constitutes the legal, valid, and binding obligation
of Security Asset, enforceable against Security Asset in accordance with its
terms. Security Asset has the absolute and unrestricted right, power, authority,
and capacity to execute and deliver this Agreement and to perform its
obligations pursuant to this Agreement, and Security Asset has the absolute and
unrestricted right, power, authority, and capacity to execute and deliver this
Agreement.
(b) Neither the execution and delivery of this Agreement nor the
consummation or performance of any of the Contemplated Transactions will,
directly or indirectly (with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of Security Asset, or (B) any
resolution adopted by the Board of Directors or the stockholders of Security
Asset;
(ii) contravene, conflict with, or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Contemplated Transactions or to exercise any remedy or obtain any relief
pursuant to, any Legal Requirement or any Order to which Security Asset, or any
of the assets owned or used by Security Asset, may be subject;
(iii) contravene, conflict with, or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Security Asset or that otherwise relates to the
business of, or any of the assets owned or used by, Security Asset;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy pursuant to, or to accelerate the maturity or performance
of, or to cancel, terminate, or modify, any Applicable Contract; or
Security Asset is not or will not be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions,
(c) Security Asset is acquiring the Shares for Security Asset's own
account and not with an intention of distribution within the meaning of Section
2(11) of the Securities Act. Security Asset is an "accredited investor" as such
term is defined in Rule 501(a) of Regulation D promulgated pursuant to the
Securities Act.
4.3 Capitalization. The authorized equity securities of Security Asset
consist of 25,000,000 shares of common stock, $.001 par value, of which
approximately 10,861,000 shares are issued and outstanding. No legend or other
reference to any purported Encumbrance appears upon any certificate representing
equity securities of Security Asset. All of the outstanding equity securities of
Security Asset have been duly authorized and validly issued and are fully paid
and nonassessable. There are no Contracts relating to the issuance, sale, or
transfer of any equity securities or other securities of Security Asset. None of
the outstanding equity securities or other securities of Security Asset was
issued in violation of the Securities Act or any other Legal Requirement.
Security Xxxxx
00
00
does not own, and except for this Agreement, Security Asset has no Contract to
acquire, any equity securities or other securities of any Person or any direct
or indirect equity or ownership interest in any other business.
4.4 Books and Records. The books of account, minute books, stock record
books, and other records of Security Asset, all of which have been delivered to
Universal, are complete and correct and have been maintained in accordance with
sound business practices, including the maintenance of an adequate system of
internal controls. The minute book of Security Asset contains accurate and
complete records of all meetings held of, and corporate actions taken by, the
stockholders, the Boards of Directors, and committees of the Boards of Directors
of Security Asset, and no meeting of any such stockholders, Board of Directors,
or committee has been held for which minutes have not been prepared and are not
contained in such minute book. Upon the execution of this Agreement, all of
those books and records will be in the possession of Security Asset.
4.5 Corporate Resolutions. Security Asset has delivered to Universal a
certified copy of the resolutions adopted by the Board Directors of Security
Asset authorizing execution, delivery and performance of this Agreement and the
consummation of the Reorganization and a certificate of the Secretary of
Security Asset, dated the Effective Date, to the effect that those resolutions
were duly adopted and are in full force and effect and with respect to the
authority and incumbency of the officers of Security Asset executing this
Agreement.
ARTICLE V
INDEMNIFICATION; REMEDIES
5.1 Survival; Right to Indemnification Not Affected by Knowledge. All
representations, warranties, covenants, and obligations in this Agreement, the
Disclosure Letter, the certificates delivered pursuant to Sections 2.3(a)(i) and
2.3(b)(i), and any other certificate or document delivered pursuant to this
Agreement will survive this Agreement. The right to indemnification, payment of
Damages or other remedy based on such representations, warranties, covenants,
and obligations will not be affected by any investigation conducted with respect
to, or any Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement, with
respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
5.2 Indemnification and Payment of Damages by Majority Shareholders.
Majority Shareholders, jointly and severally, will indemnify and hold harmless
Security Asset, and Security Asset's respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Security Asset
Indemnified Persons") for, and will pay to the Indemnified Persons the amount
of, any loss, liability, claim, damage (including incidental and consequential
damages), expense (including reasonable costs of investigation and defense and
reasonable attorneys' fees) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
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(a) any Breach of any representation or warranty made by Shareholders
or Universal in this Agreement, the Universal Disclosure Letter, or any other
certificate or document delivered by Shareholders or Universal pursuant to this
Agreement;
(b) any Breach by any Shareholder or Universal of any covenant or
obligation of such Shareholder or Universal in this Agreement; or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with any Shareholder or Universal
(or any Person acting on their behalf) in connection with any of the
Contemplated Transactions.
The remedies provided in this Section 5.2 will not be exclusive of or
limit any other remedies that may be available to Security Asset or the Security
Asset Indemnified Persons.
5.3 Indemnification and Payment of Damages by Majority Shareholders and
Universal Environmental Matters. In addition to the provisions of Section 5.2,
Majority Shareholders and Universal, jointly and severally, will indemnify and
hold harmless Security Asset, and the Security Asset Indemnified Persons for,
and will pay to Security Asset, and the Security Asset Indemnified Persons the
amount of, any Damages (including response costs, costs of indemnification,
cleanup, containment, or other remediation) arising, directly or indirectly,
from or in connection with:
(a) any Environmental, Health, and Safety Liabilities arising out of
or relating to: (i) (A) the ownership, operation, or condition at any time on or
prior to the Effective Date of the Facilities or any other properties and assets
(whether real, personal, or mixed and whether tangible or intangible) in which
Majority Shareholders or Universal has or had an interest, or (B) any Hazardous
Materials or other contaminants that were present on the Facilities or such
other properties and assets at any time on or prior to the Effective Date; or
(ii) (A) any Hazardous Materials or other contaminants, wherever located, that
were, or were allegedly, generated, transported, stored, treated, Released,
dispersed or otherwise handled by Shareholders or Universal or by any other
Person for whose conduct they are or may be held responsible at any time on or
prior to the Effective Date, or (B) any Hazardous Activities that were, or were
allegedly, conducted by Shareholders or Universal or by any other Person for
whose conduct they are or may be held responsible; or
(b) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real property), or other damage
of or to any Person, including any employee or former employee of Shareholders
or Universal or any other Person for whose conduct they are or may be held
responsible, in any way arising from or allegedly arising from any Hazardous
Activity conducted or allegedly conducted with respect to the Facilities or the
operation of Universal prior to the Effective Date, or from Hazardous Material
that was (i) present or suspected to be present on or before the Effective Date
on or at the Facilities (or present or suspected to be present on any other
property, if such Hazardous Material emanated or allegedly emanated from any of
the Facilities and was present or suspected to be present on any of the
Facilities on or prior to the Effective Date) or (ii) Released or allegedly
Released by Shareholders or Universal or any other Person for whose conduct they
are or may be held responsible, at any time on or prior to the Effective Date,
whether or not from the Facilities.
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Security Asset will be entitled to direct or control any Cleanup, any
related Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought pursuant to this
Section 5.3. The procedure described in Section 5.5 will apply to any claim
solely for monetary damages relating to a matter contemplated by this Section
5.3.
5.4 Indemnification and Payment of Damages by Security Asset. Security
Asset will indemnify and hold harmless Shareholders and Universal, and
Shareholders and Universal's respective Representatives, stockholders,
controlling persons, and affiliates (collectively, the "Shareholders and
Universal Indemnified Persons") for, and will pay to the Shareholders and
Universal Indemnified Persons the amount of, any loss, liability, claim, damage
(including incidental and consequential damages), expense (including reasonable
costs of investigation and defense and reasonable attorneys' fees) or diminution
of value, whether or not involving a third-party claim (collectively,
"Damages"), arising, directly or indirectly, from or in connection with:
(a) any Breach of any representation or warranty made by Security
Asset in this Agreement, the Disclosure Letter, or any other certificate or
document delivered by Security Asset pursuant to this Agreement;
(b) any Breach by Security Asset or Universal of any covenant or
obligation of Security Asset in this Agreement; or
(c) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Security Asset (or any Person
acting on their behalf) in connection with any of the Contemplated Transactions.
The remedies provided in this Section 5.4 will not be exclusive of or
limit any other remedies that may be available to Shareholders and Universal or
the Shareholders and Universal Indemnified Persons.
5.5 Procedure for Indemnification - Third Party Claims.
(a) Promptly after receipt by a Person indemnified pursuant to this
Article V of notice of the commencement of any Proceeding against it, such
indemnified Person will, if a claim is to be made against an indemnifying Person
pursuant to this Article V, give notice to the indemnifying Person of the
commencement of such claim, but the failure to notify the indemnifying Person
will not relieve the indemnifying Person of any liability that it may have to
any indemnified Person, except to the extent that the indemnifying Person
demonstrates that the defense of such claim is prejudiced by the indemnifying
Person's failure to give such notice.
(b) If any Proceeding referred to in Section 5.5(a) is brought
against an indemnified Person and it gives notice to the indemnifying Person of
the commencement of such Proceeding, the indemnifying Person will, unless the
claim involves Taxes, be entitled to participate in such Proceeding and, to the
extent that it desires (unless (1) the indemnifying Person is also a party to
such Proceeding and the indemnified Person determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying Person fails to
provide reasonable assurance to the indemnified Person of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified Person and, after notice from the indemnifying Person to the
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indemnified Person of its election to assume the defense of such Proceeding, the
indemnifying Person will not, as long as it diligently conducts such defense, be
liable to the indemnified Person pursuant to this Article V for any fees of
other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified Person in
connection with the defense of such Proceeding, other than reasonable costs of
investigation. If an indemnifying Person assumes the defense of a Proceeding,
(I) it will be conclusively established for purposes of this Agreement that the
claims made in that Proceeding are within the scope of and subject to
indemnification; (ii) no compromise or settlement of such claims may be effected
by the indemnifying Person without the indemnified Person's consent, unless (A)
there is no finding or admission of any violation of Legal Requirements or any
violation of the rights of any Person and no effect on any other claims that may
be made against the indemnified Person, and (B) the sole relief provided is
monetary damages that are paid in full by the indemnifying Person; and (iii) the
indemnified Person will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If notice is given to an
indemnifying Person of the commencement of any Proceeding and the indemnifying
Person does not, within 10 days after the indemnified Person's notice is given,
give notice to the indemnified Person of its election to assume the defense of
such Proceeding, the indemnifying Person will be obligated by any determination
made in such Proceeding or any compromise or settlement effected by the
indemnified Person.
(c) Notwithstanding the foregoing, if an indemnified Person
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified Person may, by notice to the indemnifying Person,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying Person will not be obligated by any determination of a
Proceeding so defended or any compromise or settlement effected without its
consent (which shall not be unreasonably withheld).
(d) Shareholders hereby consent to the non-exclusive jurisdiction of
any court in which a Proceeding is brought against any Security Asset
Indemnified Person for purposes of any claim that a Security Asset Indemnified
Person may have pursuant to this Agreement with respect to such Proceeding or
the matters alleged therein, and agree that process may be served on
Shareholders with respect to such a claim anywhere in the world.
5.6 Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
ARTICLE VI
GENERAL PROVISIONS
6.1 Expenses. Except as otherwise expressly provided in this Agreement,
each party shall pay all expenses, costs and fees (including attorneys' fees)
incurred by that party in connection with the Contemplated Transactions,
including the preparation, execution and delivery of this Agreement and the
ancillary agreements, schedules and documents related to the Contemplated
Transactions.
6.2 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such
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manner as Security Asset and Shareholders shall mutually determine. Shareholders
and Security Asset will consult with each other concerning the communication by
which Universal's employees, customers, and suppliers and other Persons having
dealings with Universal will be informed of the Contemplated Transactions, and
Security Asset will have the right to be present for any such communication.
6.3 Notices. All notices, consents, waivers, and other communications
pursuant to this Agreement must be in writing and will be deemed to have been
duly given when (a) delivered by hand (with written confirmation of receipt),
(b) sent by facsimile machine (with written confirmation of receipt), provided
that a copy is mailed by registered mail, return receipt requested, or (c) when
received by the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate addresses and
facsimile machine numbers set forth below (or to such other addresses and
facsimile machine numbers as a party may designate by notice to the other
parties):
Shareholders:
Xxxxxx Xxxxxxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Universal:
Universal View Corporation
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Security Asset:
Xxxxx X. Xxxxxx
Security Asset Capital Corporation
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
6.4 Jurisdiction: Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right resulting from, this
Agreement may be brought against any of the parties in the courts of the State
of California, County of San Diego, or, if it has or can acquire jurisdiction,
in the United States District Court for the Central District of California, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
6.5 Further Assurances. The parties agree (a) to furnish upon request to
each other such additional information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
parties may reasonably request for the purpose of carrying out the intent of
this Agreement and the documents referred to in this Agreement.
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6.6 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure nor any delay by any party
in exercising any right, power, or privilege pursuant to this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right resulting from
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
6.7 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the Agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written Agreement executed by the party to be charged with any such amendment.
6.8 Universal Disclosure Letter.
(a) The disclosures in the Universal Disclosure Letter must relate
only to the representations and warranties in the section of the Agreement to
which it expressly relates and not to any other representation or warranty in
this Agreement.
(b) In the event of any inconsistency between the statements in this
Agreement and those in the Universal Disclosure Letter (other than an exception
expressly set forth as such in such Disclosure Letter with respect to a
specifically identified representation or warranty), the provisions of this
Agreement will prevail and control.
6.9 Assignments, Successors, and No Third-party Rights. No party may
assign any of its rights pursuant to this Agreement without the prior written
consent of the other parties, and any such assignment shall be null and void ab
initio; provided, however, that Security Asset may assign any of its rights
pursuant to this Agreement to any Subsidiary of Security Asset. Subject to the
preceding sentence, this Agreement will apply to, obligate in all respects, and
inure to the benefit of, the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person, other than the parties to this Agreement, any legal or equitable right,
remedy, or claim pursuant to or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
6.10 Severability. If any provision of this Agreement is determined to
be invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will
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remain in full force and effect. Any provision of this Agreement determined to
be invalid or unenforceable only in part or degree will remain in full force and
effect to the extent not determined to be invalid or unenforceable.
6.11 Section Headings, Construction. The headings of sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "section" or "sections" refer to the
corresponding section or sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
6.12 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
6.13 Governing Law. This Agreement will be governed by the laws of the
State of California, without regard to conflicts of laws principles.
6.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same Agreement.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the Effective Date.
Security Asset Capital Corporation,
a Nevada corporation
------------------------------------------
Xxxxx X. Xxxxxx, President
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------------------------------------------
Xxxxx X. Xxxxxx, Secretary
Universal View Corporation,
a Nevada corporation
------------------------------------------
Xxxxxx Xxxxxxxxxxx, President
and Secretary
"Shareholders"
of Universal View Corporation
------------------------------------------
Xxxxxx Xxxxxxxxxxx, an Individual
------------------------------------------
Xxxxxxx Xxxx Xxxxxx, an Individual
------------------------------------------
Xxxx Xxxxxx, an Individual
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EXHIBIT "A"
SHAREHOLDERS OF UNIVERSAL VIEW CORPORATION
Number of
Title of Class Beneficial Owner Shares
-------------- ---------------- ---------
Common Xxxxxx Xxxxxxxxxxx 1,810,000
Common Xxxxxxx Xxxx Xxxxxx 1,000,000
Common Xxxx Xxxxxx 120,000
---------
Total 2,930,000
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Exhibit "B"
SHAREHOLDERS' RELEASE
THIS SHAREHOLDERS' RELEASE (this "Release") is executed and delivered in
accordance with Section 2.3(a)(ii) of that certain Stock Acquisition and
Reorganization Agreement which is effective the 22nd day of February, 2000
("Effective Date") (the "Agreement"), by and among Security Asset Capital
Corporation, a Nevada corporation ("Security Asset"), on the one hand, and
Universal View Corporation, a Nevada corporation ("Universal"), Xxxxxx
Xxxxxxxxxxx, an individual, Xxxx Xxxxxx, an individual, and Xxxxxxx Xxxx Xxxxxx,
an individual (each individually referred to as "Shareholder" and collectively
referred to as the "Shareholders"), on the other hand. Capitalized terms used in
this Release without definitions have the respective meanings given to them in
the Agreement.
Each Shareholder acknowledges that execution and delivery of this
Release is a condition to Security Asset's obligation to acquire the
Shareholders' shares of $.001 par common stock of Universal pursuant to the
Agreement and that Security Asset is relying on this Release in consummating the
Reorganization.
Each Shareholder, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and with the intent to be
obligated legally and equitably, in order to induce Security Asset to consummate
the Reorganization pursuant to the Agreement, hereby agrees as follows:
Each Shareholder, on behalf of himself and each of his Related Persons,
hereby unconditionally, irrevocably and forever releases, acquits and discharges
Security Asset and Universal, and each of them, and each of their respective
individual, joint or mutual, past, present and future Representatives,
affiliates, stockholders, controlling persons, Subsidiaries, successors and
assigns (individually, a "Releasee" and, collectively, "Releasees") from any and
all claims, demands, Proceedings, causes of action, Orders, obligations,
contracts, agreements, debts and liabilities whatsoever, whether known or
unknown, suspected or unsuspected, both at law and in equity, which such
Shareholder or any of such Shareholder's respective Related Persons now has,
have ever had or may hereafter have against the Releasees resulting
contemporaneously from or prior to the Effective Date or on account of or
resulting from any matter, cause or event occurring contemporaneously with or
prior to the Effective Date, including, but not limited to, any rights to
indemnification or reimbursement from Universal, whether pursuant to its
Organizational Documents, contract or otherwise and whether or not relating to
claims pending on, or asserted after, the Effective Date; provided, however,
that nothing specified in this Release shall operate to release any obligations
of (i) Security Asset or Universal resulting from the Agreement.
Each Shareholder hereby irrevocably shall refrain from, directly or
indirectly, asserting any claim or demand, or commencing, instituting or causing
to be commenced, any Proceeding against any Releasee, based upon any matter
released or purported to be released hereby.
37
Without in any way limiting any of the rights and remedies otherwise
available to any Releasee, each Shareholder, jointly and severally, shall
indemnify and hold harmless each Releasee from and against all loss, liability,
claim, damage (including incidental and consequential damages) or expense
(including costs of investigation and defense and reasonable attorney's fees)
whether or not involving third party claims, resulting directly or indirectly
from or in connection with (i) the assertion by or on behalf of such Shareholder
or any of such Shareholder's Related Persons of any claim or other matter
purported to be released pursuant to this Release and (ii) the assertion by any
third party of any claim or demand against any Releasee resulting directly or
indirectly from, or in connection with, any assertion by or on behalf of such
Shareholder or any of such Shareholder's Related Persons against such third
party of any claims or other matters purported to be released pursuant to this
Release.
Each Shareholder, on behalf of himself and each of his Related Persons,
agrees that there is a risk that, subsequent to the execution and delivery of
this Release, losses, damages or injuries might be incurred by such Shareholder
which are unknown or unanticipated, for whatever reason, at the time of the
execution and delivery of this Release. It is none the less specifically agreed
that the releases specified in this Release are fully and completely effective
regardless of any present lack of knowledge on the part of any party as to any
claims, charges, complaints, liabilities, obligations, debts, suits, demands,
grievances, losses, damages, injuries costs, expenses, rights, actions or causes
of action, or as to any possible fact or circumstance relating in any manner to
the matters for which the releases specified in this Release are made. Each
Shareholder voluntarily, intentionally and expressly waives the benefits and
provisions of Section 1542 of the Civil Code of the State of California, and any
similar law of any state or territory of the United States of America or other
jurisdiction. Specifically, that Section 1542 specifies as follow:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE
TIME OF EXECUTING THE RELEASE WHICH IF KNOW BY HIM MUST HAVE
MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR."
If any provision of this Release is determined to invalid or unenforceable by
any court of competent jurisdiction, the other provisions of this Release will
remain in full force and effect. Any provision of this Release determined to be
invalid or unenforceable only in part will remain in full force and effect to
the extent not determined to be invalid or unenforceable.
This Release may not be amended except in a writing signed by the person
against whose interest such amendment shall operate. This Release shall be
governed by and construed pursuant to the laws of the State of California,
without regard to principles of conflicts of law.
38
All words used in this Release will be construed to be of such gender or
number as the circumstances require.
IN WITNESS WHEREOF, each of the undersigned have executed and delivered
this Release which shall be effective as of this 4th day of April, 2000.
Universal View Corporation,
a Nevada corporation
/s/ XXXXXX XXXXXXXXXXX
-----------------------------------------------
Xxxxxx Xxxxxxxxxxx, President and Secretary
"Shareholders" of Universal View Corporation
/s/ XXXXXX XXXXXXXXXXX
-----------------------------------------------
Xxxxxx Xxxxxxxxxxx, an Individual
/s/ XXXX XXXXXX
-----------------------------------------------
Xxxx Xxxxxx, an Individual
/s/ XXXXXXX XXXX XXXXXX
-----------------------------------------------
Xxxxxxx Xxxx Xxxxxx, an Individual
39
Exhibit "C"
FORM OF UNIVERSAL DISCLOSURE LETTER
February 22, 2000
Security Asset Capital Corporation
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, XX 00000
Gentlemen:
We refer to the Stock Acquisition and Reorganization Agreement (the
"Agreement") to be entered into effective today between myself ("Shareholders");
Universal View Corporation, a Nevada corporation ("Company"); and Security Asset
Capital Corporation, a Nevada corporation ("Security Asset"), pursuant to which
Shareholders exchanged with Security Asset and Security Asset acquired from
Shareholders 2,930,000 shares of $.001 par value common stock of the Company,
which is 100% of the issued and outstanding shares $.001 par value common stock
of the Company, on the terms and subject to the conditions specified in the
Agreement.
This letter constitutes the Universal Disclosure Letter referred to in
the Agreement. The representations and warranties of Universal and Shareholders
in the Agreement are made and given subject to the disclosures in this Universal
Disclosure Letter. The disclosures in this Universal Disclosure Letter are to be
taken as relating to the representations and warranties in the section of the
Agreement to which they expressly relate and to no other representation or
warranty in the Agreement.
Terms defined in the Agreement are used with the same meanings in this
Universal Disclosure Letter. By reference to Article 3 of the Agreement, the
Shareholders represent that all statements made in Universal's Form 10-SB filed
January 21, 2000.
Very truly yours,
Universal View Corporation,
a Nevada corporation
/s/ XXXXXX XXXXXXXXXXX
------------------------------------------
Xxxxxx Xxxxxxxxxxx, President
and Secretary
/s/ XXXXXXX XXXX XXXXXX
------------------------------------------
Xxxxxxx Xxxx Xxxxxx, an individual
/s/ XXXX XXXXXX
------------------------------------------
Xxxx Xxxxxx, an individual