EXHIBIT 10.58
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ASSET PURCHASE AGREEMENT
AMONG
▇▇▇▇.▇▇▇, LLC,
THE MEMBERS OF ▇▇▇▇.▇▇▇, LLC
AND
FIDELITY NATIONAL INFORMATION SOLUTIONS, INC.
Dated as of November 2, 2001
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is entered into as of November 2, 2001,
among ▇▇▇▇.▇▇▇, LLC, a Hawaii limited liability company (the "Company"); the
members of ▇▇▇▇.▇▇▇, LLC set forth on the signature page of this Agreement
(collectively, "Members"), and Fidelity National Information Solutions, Inc., a
Delaware corporation ("Buyer").
R E C I T A L S:
A. Company is engaged in the business of providing certain
technology products and services, including, without limitation, (i) outsourcing
services for the housing, maintenance and operation of a customer's data center
operations, and (ii) the development, marketing and sale of certain e-commerce
and software products, including PRISMS/IOS, eWebDesk, ValueYourHome and
eWebPhone (the "Business").
B. Members collectively own 4,000,000 Class A membership interests
of Company (the "Units"), which represents one hundred percent (100%) of the
issued and outstanding ownership interests in Company.
C. Pursuant to the terms and conditions of this Agreement, Buyer
wishes to acquire from Company, and Company wishes to sell, assign and transfer
to Buyer, substantially all of Company's tangible and intangible assets,
including cash, intellectual property and goodwill, all for the purchase price
and upon the terms and conditions hereinafter set forth.
D. Company and Members desire to provide certain representations
and warranties hereunder.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants, agreements and conditions contained
herein, the receipt and sufficiency of which hereby are acknowledged, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definition of Certain Terms. The terms defined in this
Section 1.1, whenever used in this Agreement, shall have the respective meanings
indicated below for all purposes of this Agreement. Such terms as well as any
other terms defined elsewhere in this Agreement shall be equally applicable to
both the singular and plural forms of the terms defined. Each accounting term
used herein that is not specifically defined herein shall have the meaning given
to it under GAAP.
"Accounts Receivable": has the meaning set forth in Section 2.1(a).
"Additional Demand Note": has the meaning set forth in Section 3.2(a).
"Adjusted Cash Consideration": has the meaning set forth in Section
3.2(a).
"Adjusted Tangible Net Worth": has the meaning set forth in Section 3.6.
"Affiliate": of a specified Person means, a Person that directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified Person or a member of such
specified Person's immediate family. "Control" (including the terms "controlled
by" and "under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
policies of a Person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"Agreement": means this Asset Purchase Agreement (including all
Schedules and Exhibits attached hereto), as the same from time to time may be
amended, supplemented or waived.
"Annual Determination": has the meaning set forth in Section 3.3.
"Assets": has the meaning set forth in Section 2.1.
"Assumed Liabilities": has the meaning set forth in Section 3.4.
"Books and Records": means all books and records, including manuals,
price lists, mailing lists, lists of customers, sales and promotional materials,
purchasing materials, personnel records, accounting records, tax records and
litigation files (regardless of the media in which stored), in each case
primarily related to or primarily used in the Business and related to the Assets
"Bridge Loan": means that certain Bridge Loan executed concurrently with
this Agreement, pursuant to which Buyer shall extend to Company up to $350,000
for certain specified working capital purposes during the period commencing
under the date of this Agreement and terminating on the earlier of December 31,
2001 or the Closing Date.
"Business Day": means any day other than a Sunday, a Saturday, or any
other day on which banks in the State of California are required or authorized
to be closed.
"Business Operating Profit": has the meaning set forth in Section 3.7.
"Buyer": has the meaning set forth at the head of this Agreement.
"Buyer Indemnitees": has the meaning set forth in Section 9.1.
"Cash": means any and all cash and cash equivalents and similar type
investments, such as certificates of deposit, treasury bills and other
marketable securities.
"Cash Consideration": has the meaning set forth in Section 2.2(a).
"Charter Documents": has the meaning set forth in Section 4.1.
"Closing": has the meaning set forth in Section 3.1.
"Closing Date": has the meaning set forth in Section 3.1.
"COBRA": has the meaning set forth in Section 4.20(a)(ii).
"Code": means the Internal Revenue Code of 1986, as amended or any
successor law, and the rules and regulations promulgated thereunder.
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"Commitment": means any contract, agreement, lease, promissory note or
other evidence of indebtedness, security agreement, deed of trust, commitment,
employee benefit or retirement scheme or other arrangement, whether written or
oral.
"Company": has the meaning set forth at the head of this Agreement.
"Company Note Obligations": means all obligations of Company under (i)
that certain Promissory Note dated April 25, 2001, in favor of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in
the principal amount of $100,000, (ii) that certain Promissory Note dated June
1, 2001, in favor of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. in the principal amount of $75,000,
(iii) that certain Promissory Note dated March 30, 2001, in favor of ▇▇▇▇▇▇▇▇
Realty, Ltd. in the principal amount of $88,000, (iv) that certain Promissory
Note dated April 30, 2001, in favor of ▇▇▇▇▇▇▇▇ Realty, Ltd. in the principal
amount of $80,000, (v) that certain Promissory Note dated July 9, 2001, in favor
of ▇▇▇▇▇▇▇▇ Realty, Ltd. in the principal amount of $38,500, (vi) that certain
Promissory Note dated July 30,2001, in favor of ▇▇▇▇▇▇▇▇ Realty, Ltd. in the
principal amount of $150,000, and (vii) that certain inter-company obligation
owed ISDI Technologies, Inc. in the amount of $131,200.
"Competitive Products and Services": has the meaning set forth in
Section 6.1(h).
"Confidential IP Information": has the meaning set forth in Section
4.9(l).
"Confidentiality Agreement": means that certain Mutual Confidentiality
and Non-Disclosure Agreement executed by Company and Buyer on August __, 2001.
"Consent": means any consent, approval, authorization, waiver, permit,
grant, franchise, concession, agreement, license, exemption or order of,
registration, certificate, declaration or filing with, or report or notice to,
any Person, including any Governmental Authority.
"Contracts": has the meaning set forth in Section 4.7.
"Convertible Note": means the Convertible Promissory Note delivered by
Company to Buyer, dated August 3, 2001, in the principal amount of $500,000.
"Demand Note": means the Promissory Note delivered by Company to Buyer,
dated October 12, 2001, in the principal amount of $95,000.
"Disclosing Party": has the meaning set forth in Section 6.1(j).
"Division": has the meaning set forth in Section 3.3.
"Earn-Out Consideration": has the meaning set forth in Section 2.2(b).
"Employment Agreements": means the employment agreement to be entered
into between Company and ▇▇▇▇ ▇▇▇▇▇▇, ▇▇., in the form attached hereto as
Exhibit A.
"ERISA": means the Employee Retirement Income Security Act of 1974, as
amended or any successor law, and the rules and regulations promulgated
thereunder.
"Employee Benefit Plan": has the meaning set forth in Section 4.20(a).
"Environmental Laws": means any and all Laws relating to the protection
of the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, holding,
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abatement, existence, Release, threatened Release, arranging for the disposal or
transportation of any Hazardous Material.
"Environmental Liabilities and Costs": means any and all Losses imposed
by, under or pursuant to Environmental Laws, based on, arising out of or
otherwise in respect of (i) the ownership or operation of the Business or any
real property owned, leased or operated by Company or its Subsidiaries, or (ii)
the environmental conditions existing on the Closing Date on, under, above, or
about any real property owned, leased or operated by Company or the Business.
"Excluded Assets": has the meaning set forth in Section 2.2.
"Excluded Data": means (i) all client and sales data owned by Company's
customers, including, without limitation, ▇▇▇▇▇▇▇▇ Realty, Ltd. and its
Affiliates, and (ii) all data provided Company under the DataQuick Agreement,
that is maintained by Company in its applications database.
"Excluded Liabilities": has the meaning set forth in Section 3.5.
"Expiration Date": has the meaning set forth in Section 9.4.
"FF&E": has the meaning set forth in Section 2.1(b).
"FNIS Common Stock": means the Common Stock of Buyer.
"GAAP": means United States generally accepted accounting principles as
in effect from time to time.
"Governmental Approval": means any Consent of, with or to any
Governmental Authority.
"Governmental Authority": means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government (including any government authority, agency, department, board,
commission or instrumentality of the United States, any State of the United
States or any political subdivision thereof, or any tribunal or arbitrator(s) of
competent jurisdiction, or any self-regulatory organization.
"Hazardous Material": has the meaning set forth in Section 4.19(c).
"Indemnified Party": has the meaning set forth in Section 9.3(a).
"Indemnifying Party": has the meaning set forth in Section 9.3(a).
"Independent Accounting Firm": shall mean one of the five largest United
States accounting firms in terms of gross revenues mutually acceptable to Buyer
and Company, which accounting firm shall not have performed substantial
accounting services for either Buyer or Company during the 1 year period
preceding the Closing Date.
"Intellectual Property": has the meaning set forth in Section 4.9(m).
"Knowledge": 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 member, manager, director, officer,
partner, executor, or trustee of such Person (or a Person acting in any similar
capacity) has, or at any time had, actual knowledge of such fact or other
matter, or should have
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had actual knowledge thereof given such individual's office and industry
standards. With respect to an individual, an individual will be deemed to have
"Knowledge" of a particular fact or other matter if such individual has, or at
any time had, actual knowledge of such fact or other matter, or should have had
actual knowledge thereof following due inquiry.
"Laws": has the meaning set forth in Section 4.4(a).
"Lien": means any mortgage, pledge, security interest, encumbrance, lien
or charge of any kind, including, without limitation, any conditional sale or
other title retention agreement, any lease in the nature thereof and the filing
of or agreement to give any financing statement or similar document under the
Uniform Commercial Code or similar law of any jurisdiction and including any
lien or charge arising by statute or other law.
"Logo": means any symbol or logo incorporating a Name.
"Losses": has the meaning set forth in Section 9.1.
"Material Adverse Effect": means, with respect to any specified Person,
a fact, event or circumstance which has had or could reasonably be expected to
have a material adverse effect on (i) the assets, business, liabilities,
prospects, operations or condition (financial or otherwise) of such Person; or
(ii) the ability of such Person to continue to operate its business as presently
conducted.
"Members": has the meaning set forth at the head of this Agreement.
"Members' Agent": shall have the meaning set forth in Article X.
"Name": means any name, ▇▇▇▇, trade name, trademark, service name or
service ▇▇▇▇.
"Option Agreement": means that certain Option Agreement executed
concurrently herewith providing Buyer with the right to acquire certain source
code and other assets of Company for the amount of the debt owed Buyer under the
Bridge Loan, the Convertible Note and the Demand Note in the event the Bridge
Loan, the Demand Note and the Convertible Note are not satisfied in full upon a
termination of this Agreement.
"Other Inventories": has the meaning set forth in Section 2.1(c).
"Per Share Value": means, on any date on which the Per Share Value is to
be determined, the average of the closing prices of the FNIS Common Stock on the
NASDAQ for the 20 trading days ending 2 trading days preceding the date of
determination.
"Person": means any natural person, corporation, partnership, limited
liability company, proprietorship, association, trust, joint venture or other
legal entity, including any governmental authority, body or agency.
"▇▇▇▇▇▇▇▇ Contribution": means all cash advances made by ▇▇▇▇▇▇▇▇
Realty, Ltd. under that certain Line of Credit dated November 30, 2000, in favor
of the Company in an aggregate principal amount not to exceed $600,000.
"Pre-Tax Profit": has the meaning set forth in Section 3.3.
"Premises": has the meaning set forth in Section 4.19(a).
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"Purchase Price": has the meaning set forth in Section 3.2.
"Release": means any releasing, disposing, discharging, injecting,
spilling, leaking, leaching, pumping, dumping, emitting, escaping, emptying,
seeping, dispersal, migration, transporting, placing and the like, including the
moving of any materials through, into or upon, any land, soil, surface water,
ground water or air, or otherwise entering into the environment.
"Relief": has the meaning set forth in Section 4.8.
"SEC": means the United States Securities and Exchange Commission.
"Securities": has the meaning set forth in Section 2.7.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Consideration": has the meaning set forth in Section 2.2(a).
"Subsidiaries": means each corporation or other Person in which a Person
owns or controls, directly or indirectly, capital stock or other equity
interests representing at least 50 percent of the outstanding voting stock or
other equity interests.
"Tangible Net Worth Statement": has the meaning set forth in Section
3.6.
"Taxes": has the meaning set forth in Section 4.8.
"Tax Returns": has the meaning set forth in Section 4.8.
"Technology": has the meaning set forth in Section 4.9(m).
"Transaction": has the meaning set forth in Section 6.1(k).
"Transaction Documents": means this Agreement and the Employment
Agreements.
"Transferred Employees": has the meaning set forth in Section 6.2(f).
"Units": has the meaning set forth in the recitals of this Agreement.
"Year 2000": has the meaning set forth in Section 4.13.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Assets. On the terms and subject to the conditions of this
Agreement, and on the basis of and in reliance upon the covenants, agreements,
representations and warranties set forth herein, at the Closing, Company shall
sell, transfer, set over, convey, assign and deliver to Buyer free and clear of
any and all Liens, and Buyer shall purchase and acquire from Company, all right
title and interest of Company in and to all of Company's assets and rights
relating to the Business other than the Excluded Assets, as the same may exist
on the Closing Date (collectively, the "Assets"), including, without limitation,
the following assets and rights:
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(a) All accounts receivable, notes and drafts owing to Company relating
to the conduct of the Business that arise on or after October 15, 2001
("Accounts Receivable");
(b) All furniture, fixtures, machinery, equipment and other tangible
personal property (including work stations and data processing equipment)
relating to or used in the Business (collectively, the "FF&E");
(c) All inventories of office and other supplies, spare parts and
replacement and component parts, whether on hand, in-transit or on order
(collectively, the "Other Inventories");
(d) All rights in Intellectual Property used in the Business and the
goodwill represented thereby and pertaining thereto;
(e) All rights under the Contracts listed on Schedule 2.1(a), including,
without limitation, the Outsource Agreements described in Section 7.2(n) below,
and no other agreement, Contract or Commitment (including without limitation,
the Prime License Agreement, the EULAs and the DataQuick Agreement described in
Sections 7.2(o) and (p) below);
(f) All Books and Records, except as provided in Section 2.2(iv);
(g) All Governmental Approvals, including all applications therefore,
to the extent transferable;
(h) All rights to causes of action, lawsuits, claims and demands of any
nature available to or being pursued by Company with respect to the Assets or
the Business;
(i) All guarantees, warranties, indemnities and similar rights in favor
of Company with respect to the Assets or the Business;
(j) All computer hardware and software used in the Business, including
all rights under licenses and other instruments or agreements relating thereto:
and
(k) All Cash of Company (including remaining Cash provided under the
Bridge Loan, the Demand Note, the Additional Demand Note and the Convertible
Note).
Section 2.2 Excluded Assets. Notwithstanding anything to the
contrary in Section 2.1 above, the Assets purchased by Buyer hereunder shall not
include (i) Company's Name and Logo, (ii) the Prime License Agreement, the EULAs
and the DataQuick Agreement described in Sections 7.2(o) and (p) below, (iii)
all assets of any Company Employee Benefit Plan, (iv) all Books and Records that
relate solely to Company's limited liability company records, such as minute
books, seals and similar items that relate to the Excluded Assets, such as Tax
Returns and financial statements, (v) the Excluded Data (collectively, the
"Excluded Assets"), and (vi) all Accounts Receivable that arose prior to October
15, 2001.
ARTICLE III
CLOSING
Section 3.1 Closing Place and Date. Subject to the fulfillment of
the conditions specified in Article VII, any or all of which may be waived by
the respective party or parties whose performance is conditioned upon
satisfaction of such conditions, the purchase and sale of the Assets shall be
consummated at a closing (the "Closing") to be held at the offices of Buyer
located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, on or around
January 2, 2002, at 10:00 a.m., or on or at such other
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date, time or location as Buyer, Company and Members shall mutually agree (such
date and time being herein referred to as the "Closing Date").
Section 3.2 Purchase Price. In full consideration for the purchase
of the Assets, Buyer shall pay the purchase price ("Purchase Price") to Company
in components in the manner set forth below:
(a) Closing Consideration. On the Closing Date, Buyer shall (i)
issue to Company 275,000 shares of FNIS Common Stock (the "Stock
Consideration"); and (ii) pay to Company cash in the amount of One Million One
Hundred Thousand Dollars ($1,100,000) (the "Cash Consideration"), subject to
adjustment as set forth below. The Stock Consideration shall be delivered to
Company on or promptly following the Closing Date in the form of a stock
certificate of FNIS Common Stock, duly issued in the name of Company and bearing
the appropriate restrictive legends as described in Section 3.8. The Cash
Consideration or the Adjusted Cash Consideration, as applicable, shall be sent
by wire transfer to a trust account designated and administered by ▇▇▇▇▇ ▇.
▇▇▇▇▇, Esq., counsel for Company, who shall certify to Buyer in writing on or
prior to the Closing (the "Certification") that he has the authority to and will
receive and distribute the Cash Consideration or the Adjusted Cash
Consideration, as applicable, from such trust account as follows: (i) first, to
satisfy all Excluded Liabilities (other than the Company Note Obligations), in
the amount and in the manner (including payment terms) agreed to by Company and
each such creditor, including, without limitation, DataQuick, (ii) second,
subject to the retention of a reasonable reserve for the Excluded Liabilities in
accordance with the above, to satisfy the Company Note Obligations, and (iii)
the balance, if any, to Company. Notwithstanding anything to the contrary above,
if all of the conditions to the Closing set forth in Section 7.1 and Section 7.2
have been satisfied or otherwise waived by Buyer prior to January 2, 2002, then
Buyer shall, within 3 business days, loan Company $356,500 (the "Additional
Demand Note") on terms substantially similar to those set forth in the Demand
Note. The proceeds from the Additional Demand Note shall be used to repay
amounts outstanding under the various ▇▇▇▇▇▇▇▇ Realty Company Note Obligations.
The Cash Consideration shall be reduced dollar for dollar by the amount advanced
by Buyer under the Additional Demand Note (as adjusted, the "Adjusted Cash
Consideration"). Buyer may, in its reasonable discretion, reduce the amount of
Stock Consideration and increase the Adjusted Cash Consideration by a
corresponding amount to ensure that the Adjusted Cash Consideration is
reasonably adequate to satisfy all Excluded Liabilities (other than the Company
Note Obligations).
(b) Earn-Out Consideration. Following the Closing Date, the Company
shall have the right to earn additional consideration (the "Earn-Out
Consideration") as follows:
(i) A sum equal to 15 percent of Pre-Tax Profit (as
hereinafter defined) for the calendar year 2002, as finally determined in
accordance with Section 3.3, payable within 30 days after such determination
shall have become binding on the parties as provided in Section 3.3;
(ii) A sum equal to 15 percent of Pre-Tax Profit for the
calendar year 2003, as finally determined in accordance with Section 3.3,
payable within 30 days after such determination shall have become binding on the
parties as provided in Section 3.3; and
(iii) A sum equal to 15 percent of Pre-Tax Profit for the
calendar year 2004, as finally determined in accordance with Section 3.3,
payable within 30 days after such determination shall have become binding on the
parties as provided in Section 3.3.
Buyer may, in its sole discretion, pay all or any portion of the Earn-Out
Consideration to Company either (a) in cash, or (b) in a number of shares of
FNIS Common Stock derived by dividing (i) the amount of the Earn-Out
Consideration in question, by (ii) the Per Share Value for December 31 of the
calendar year for which such Annual Determination (as defined below) relates.
Subject to the other terms and conditions of
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this Agreement, including, without limitation, Article IX, Members shall not be
liable to Buyer to the extent the Pre-Tax Profit for any of the periods set
forth in Sections 3.2(b)(i) through (iii) above is less than $0.00.
Notwithstanding anything to the contrary in this Agreement, Buyer may sell all
or substantially all of the Assets comprising the following business units of
the Division: PRISMS/IOS, eWebDesk, ValueYourHome and/or eWebPhone (each an
"Existing Business Unit" and, collectively, the "Existing Business Units"). In
the event of a sale of one or more of the Business Units, Company shall be
entitled to 15 percent of the difference between (a) the aggregate cash and
non-cash consideration paid to Buyer for the Business Unit, less (b) the amount
of the Purchase Price allocated to such Business Unit in accordance with Section
3.7 below. In addition, Buyer may sell all or substantially all of the assets
comprising the future products developed from the Assets by the Transferred
Employees and/or other future employees working for the Division (each a "Future
Business Unit" and, collectively, the "Future Business Units"). In the event of
a sale of one or more of the Future Business Units, Company shall be entitled to
15 percent of the profits from the sale of each such Future Business Unit
determined in accordance with GAAP.
Section 3.3 Determination of Earn Out Consideration. For each
calendar year during the period commencing January 1, 2002 through December 31,
2004, Buyer shall prepare a report containing a balance sheet and a related
statement of income of the division of Buyer or any of its Subsidiaries
comprised solely of the Assets, but specifically including any Future Business
Units (the "Division"), for the calendar year or period then ended, prepared in
accordance with GAAP, together with a statement based upon such report and
stating that it was prepared in accordance with this Agreement and setting forth
for the calendar year or period under examination and the calculation of the
Pre-Tax Profit (as hereinafter defined) for such calendar year (such yearly
statement of Buyer is hereinafter referred to as the "Annual Determination"). A
copy of each such Annual Determination shall be delivered to Company not later
than 120 days after the end of the calendar year or period to which such Annual
Determination relates.
For purposes of this Agreement, "Pre-Tax Profit" shall mean the operating profit
generated by the Division for the relevant period, as calculated on an accrual
basis and in accordance with GAAP, but before all provisions for federal, state
and local taxes, and any non-operating items which would include interest
expense and or interest income for such period. For purposes of determining
Pre-Tax Profit, the following shall be taken into account:
(i) Pre-Tax Profit shall be based upon the net income (loss)
from the operations of the Division, as adjusted, after deduction for all
expenses and charges of the Division (including without limitation, any
incentive compensation, profit sharing and bonus expense);
(ii) no income or expense shall be included in respect of any
extraordinary gains or losses (such as from the sale of real property,
securities or fixed assets); provided, however, that in no case shall the
write-off of bad debts be deemed an extraordinary loss;
(iii) commercially reasonable, justifiable and standard
allocations for costs and expenses related to management, payroll, employee
benefits, accounting and legal services and the Employment Agreements which
directly relate to the Division and are charged by Buyer or any of its
Affiliates to the Division shall be treated as an expense;
(iv) interest and investment expense shall be excluded as an
expense and interest and investment income shall be excluded from income;
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(v) any write-off or amortization or depreciation of
goodwill or other intangible assets or other charges and expenses arising out of
the purchase of the Assets hereunder shall not be treated as an expense;
(vi) any Losses of the Buyer Indemnitees which give rise to
an indemnity payment pursuant to the indemnification provisions of Section 8
below and which are assumed and paid by Company and/or Members shall not be
treated as an expense, and there shall be excluded from income any amount
received by the Buyer Indemnitees pursuant thereto; and
(vii) the fees and expenses of Buyer in preparing each Annual
Determination referred to in this Section 3.3 shall be paid by Buyer and such
costs shall not be included as an expense.
If Company does not agree that any Annual Determination correctly states Pre-Tax
Profit for the year under examination, Company shall promptly (but not later
than 30 days after the delivery of such Annual Determination) give written
notice to Buyer of any exceptions thereto (in reasonable detail describing the
nature of the disagreement asserted). If Buyer and Company reconcile their
differences, the Annual Determination shall be adjusted accordingly and shall
thereupon become final and conclusive upon all of the parties hereto. If Buyer
and Company are unable to reconcile their differences in writing within 30 days
after written notice of exceptions is delivered by Members, the items in dispute
shall be submitted to the Independent Accounting Firm for final determination,
and the Annual Determination shall be deemed adjusted in accordance with the
determination of the Independent Accounting Firm and shall become binding, final
and conclusive upon all of the parties hereto. The Independent Accounting Firm
shall consider only the items in dispute and shall be instructed to act within
30 days (or such longer period as Buyer and Members may agree) to resolve all
items in dispute. If Company does not give notice of any exception within 30
days after the delivery of an Annual Determination or if Company gives written
notification of its acceptance of an Annual Determination prior to the end of
such 30 day period, such Annual Determination shall thereupon become binding,
final and conclusive upon all the parties hereto.
The Independent Accounting Firm shall determine the party (i.e., Buyer or
Company, as the case may be) whose asserted position as to the amount of Pre-Tax
Profit, for the calendar year under examination by the Independent Accounting
Firm, is furthest from the determination of Pre-Tax Profit, by the Independent
Accounting Firm, which non-prevailing party shall pay the reasonable fees and
expenses of the Independent Accounting Firm.
In the event the Independent Accounting Firm is for any reason unable or
unwilling to perform the services required of them under this Section 3.3, then
Buyer and Company agree to select another accounting firm from among the five
largest accounting firms in the United States in terms of gross revenues to
perform the services to be performed under this Section 3.3 by the Independent
Accounting Firm. For purposes of this Section 3.3, the term "Independent
Accounting Firm" shall include such other accounting firm chosen in accordance
with this clause.
Each of Buyer and Company shall be responsible for its or their costs and
expenses in respect of any and all accounting and related reviews it or they may
conduct in connection with this Section 3.3.
Section 3.4 Assumption of Liabilities. Subject to the terms and
conditions set forth herein, at the Closing, Buyer shall assume and agree to
pay, honor and discharge when due the following obligations of Company
(collectively, the "Assumed Liabilities"):
(a) the trade accounts payable obligations of Company pre-approved
by Buyer and incurred by Company in the ordinary course of business consistent
with past practice during the period commencing on the date of this Agreement
and continuing through the Closing Date. The aggregate amount of trade
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accounts payable assumed by Buyer shall be listed on Schedule 3.4(a) and
delivered to Buyer immediately prior to Closing;
(b) all liabilities and obligations of Company arising under the
Bridge Loan, the Demand Note, the Additional Demand Note and the Convertible
Note, except for any liabilities resulting from a breach thereof by Company;
(c) all liabilities and obligations of Company arising on and after
the Closing Date under the Sublease between ISDI Technologies, Inc. and Company,
with respect to Company's principal office space located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇; and
(d) all liabilities and obligations of Company arising on and after
the Closing Date under the Contracts listed on Schedule 2.1(a).
Section 3.5 Excluded Liabilities. Other than the Assumed
Liabilities, Buyer shall not be responsible for any other debts, claims,
commitments, liabilities or obligations of Company, its Subsidiaries or the
Business (collectively, the "Excluded Liabilities"). Without limiting the
generality of the foregoing and notwithstanding anything herein that may be to
the contrary, Excluded Liabilities include any and all debts, claims,
commitments, liabilities or obligations of Company, its Subsidiaries or the
Business relating to or arising out of any of the following:
(a) All trade accounts payable not expressly assumed by Buyer in
accordance with Section 3.4(a) above;
(b) any indebtedness for borrowed money (including, without
limitation, the Company Note Obligations) or any guarantees or similar
obligations in respect of any indebtedness for borrowed money other than as
expressly set forth in Section 3.4(b);
(c) any liability, obligation or commitment relating to or arising
out of any Employee Benefit Plan, including any sponsorship, administration or
contribution obligation of any Person under any Employee Benefit Plan or
termination of any Employee Benefit Plan, or (ii) the employment or the
termination of employment by Company, prior to or following the Closing Date, of
any employee of Company;
(d) any cause of action or judicial or administrative action, suit,
proceeding or investigation, pending or threatened in writing as of the Closing
Date, relating to periods on or prior to the Closing Date;
(e) any failure or alleged failure by Company or any Member to
comply with, or any violation or alleged violation of, (i) any Law or
Governmental Approval applicable to the Business or the Assets, or (ii) any
Contract, which occurred or was alleged to have occurred prior to the Closing
Date;
(f) any infringement or alleged infringement of the rights of any
other Person arising out of the use of any Intellectual Property in connection
with the Business prior to the Closing Date;
(g) any and all contingent liabilities arising out of the Business
on or prior to the Closing Date; and any and all liabilities accruable under
GAAP for the Business as of the Closing Date;
(h) any liability for any Taxes imposed on Company or attributable
to Company or imposed or attributable to the Business on or before the Closing
Date;
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(i) any of the Excluded Assets;
(j) all Environmental Liabilities and Costs (whether or not
currently known, discoverable or regulated by applicable Law) arising from,
relating to, in respect of or incurred in connection with conditions existing or
events occurring prior to the Closing Date;
(k) any claim, litigation, action or proceeding, whether or not
pending or threatened, whether known or unknown, relating to the Business or the
Assets and arising prior to the Closing;
(l) any liability, obligation or commitment relating to or arising
out any Contract or Commitment not expressly assumed by Buyer pursuant to
Section 2.1(e) above, including, without limitation, the Prime License
Agreement, the EULAs and the DataQuick Agreement described in Sections 7.2(o)
and (p) below; or
(m) the ▇▇▇▇▇▇▇▇ Contribution.
Section 3.6 Access to Books and Records. During the periods in
which (i) the Annual Determination and/or the Tangible Net Worth Statement is
being prepared, or (ii) any dispute remains under any such statement, Buyer and
Company shall provide each other, including their authorized agents and
representatives, with reasonable access, during normal business hours and
without disruption to their normal business, to their respective books, records,
facilities, employees, accountants, counsel or other representatives pertaining
to Company and the transactions contemplated hereby to the extent affecting
Company, including any consolidated or combined returns, schedules, consolidated
or combined work papers and other related documents, and each party shall
promptly provide to the other copies of all books, records, contracts, reports
and other information which a party may reasonably request; provided, however,
that with respect to consolidated, combined, unitary or similar consolidated
returns, the parties shall only have access to portions of the other party's Tax
Returns relevant to Company.
Section 3.7 Allocation of Purchase Price. The parties agree to
allocate the Purchase Price among the Assets in accordance with Section 1060 of
the Code as mutually agreed to by the parties within 180 days following the
Closing Date; provided that the FF&E, the Other Inventories included in the
Assets shall be allocated an amount equal to Company's net book value for such
Assets. The parties agree that the allocation shall be based upon the Tangible
Net Worth Statement, with the balance of the Purchase Price allocated to good
will. All such mutually agreed to allocations shall be used by each party in
preparing any filings required pursuant to Section 1060 of the Code or any
similar provisions of state or local law and all relevant income and franchise
tax returns. Neither Buyer nor Company will take any position before any taxing
authority or in any judicial proceeding that is inconsistent with such mutually
agreed to allocations without the prior consent of the other party. The parties
shall in good faith exercise reasonable efforts to support such reported
allocations in any audit proceedings initiated by any taxing authority. In
connection with the above, the parties agree that, for purposes of the last
paragraph of Section 3.2 only, the allocation of the Purchase Price among the
Business Units shall be as follows: (a) 35 percent to PRISMS/IOS, (b) 7.5
percent to eWebDesk, (c) 15 percent to ValueYourHome, and (d) 7.5 percent to
eWebPhone.
Section 3.8 Restricted Stock and Legend. The shares of FNIS Common
Stock issued by Buyer as Stock Consideration (collectively, the "Securities")
will be "restricted stock", and will not be registered or listed for public
trading. Each certificate evidencing any Security will bear the following
legend:
"The securities evidenced by this certificate have not been
registered under the Securities Act of 1933 or the securities
laws of the various states and have been taken for investment
purposes only and not with a view to the distribution thereof,
and such
12
securities may not be sold or transferred unless there is an
effective registration statement under such Act covering such
securities and compliance with applicable state securities
laws or the issuer receives an opinion of counsel (which may
be counsel for the issuer) reasonably acceptable to the issuer
stating that such sale or transfer is exempt from the
registration and prospectus delivery requirements of such Act
and from similar requirements of applicable state securities
laws."
The certificates representing the Securities, and each certificate issued in
transfer thereof, will also bear any legend required under any applicable state
securities law. Buyer shall have the right to make a notation on its records or
give instructions to any transfer agent of the Securities in order to implement
the restrictions on transfer of the Securities described in this Section 3.8.
Section 3.9 Deliveries of Company and Members. At the Closing, in
addition to the other actions contemplated elsewhere herein, Company and/or
Members shall deliver to Buyer all the agreements, documents and instruments
required to be delivered by Company and/or Members under Section 7.2.
Section 3.10 Deliveries of Buyer. At the Closing, Buyer shall (i)
deliver to Company all the agreements, documents and instruments required to be
delivered by Buyer under Section 7.3, (ii) pay to Company the Cash Consideration
or the Adjusted Cash Consideration, as applicable, and (iii) issue to Company
the Stock Consideration. At or as soon as reasonably practicable following the
Closing, Buyer shall deliver to Members the certificates representing the
Securities comprising the Stock Consideration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF COMPANY AND MEMBERS
Subject to the penultimate exclusions of the last paragraph of Section
9.1 related to ▇▇▇▇▇▇▇▇ Realty, Ltd., each of Company and Members, jointly and
severally, represent and warrant to Buyer as of the date hereof and as of the
Closing Date as follows:
Section 4.1 Organization, Standing, etc. Company and its
Subsidiaries are limited liability companies duly organized, validly existing
and in good standing under the laws of the State of Hawaii and have all
requisite power and authority to carry on their respective businesses, to own,
lease, operate and hold their respective properties and assets, to enter into
the Transaction Documents and to carry out the provisions hereof. The copies of
the Articles of Organization, the Operating Agreement and all other documents
relating to the formation of Company and its Subsidiaries (the "Charter
Documents") which have been delivered to Buyer prior to the execution of this
Agreement are true and complete and have not been amended or repealed. Except as
set forth on Schedule 4.1(a), Company and its Subsidiaries do not directly or
indirectly have (or possess any options or other rights to acquire), nor have
they ever had, any direct or indirect ownership interests in any Person. Company
and its Subsidiaries do not carry on any activities (including maintaining
employees) or hold any property in any jurisdiction other than as listed on
Schedule 4.1(b) and, except as indicated on Schedule 4.1(b), are qualified to do
business and in good standing in each jurisdiction which would require Company
and its Subsidiaries to qualify as a foreign entity in such jurisdiction and in
which the failure to so qualify would have a Material Adverse Effect on Company
or its Subsidiaries. No other Person has any ownership interest in the
Subsidiaries other than Company.
Section 4.2 Capitalization. The authorized capitalization of Company
consists solely of 9,565,000 Class A membership interests and 435,000 Class B
distributional interests, of which the Units are the only units that are issued
and outstanding. There are no ownership interests (equity or otherwise), rights,
privileges or other interests in the Company that are issued and outstanding
other than as represented by, or included in the ownership of, the Units. The
Units are duly authorized, validly issued,
13
fully paid and non-assessable and were issued in compliance with all federal and
state securities laws and the Charter Documents. Except as provided in this
Agreement or on Schedule 4.2, Company and its Subsidiaries have no outstanding
subscriptions, options, warrants, calls, Commitments, convertible securities or
other instruments, of any character or nature whatsoever under which Company is
or may be obligated to issue any interest in Company, including without
limitation, units or other securities of any kind. The Units corresponding to
each Member on Schedule 4.2 hereof are held of record and beneficially and
solely by such Member, free and clear of all Liens, claims and options of any
nature, and constitute all of the units or other securities of Company owned
beneficially by such Member. Except as set forth on Schedule 4.2, (a) there are
no pre-emptive rights, rights of first refusal, put or call rights or
obligations or anti-dilution rights with respect to the issuance, sale or
redemption of any units, securities or interest in Company, and (b) there are no
rights, obligations or restrictions on the voting of any interest in the
Company.
Section 4.3 Acts and Proceedings. All acts and proceedings on the
part of Members and Company (including its managers and members) required for
the authorization, execution and delivery of the Transaction Documents, the sale
and transfer and delivery of the Assets and the performance of the Transaction
Documents have been taken, except as otherwise set forth on Schedule 4.3 and, to
the extent any acts or proceedings are identified on Schedule 4.3, the same
shall have been taken on or before the Closing Date.
Section 4.4 Compliance with Laws and Other Instruments.
(a) The Business, including, without limitation, the Assets, have
been and are being conducted in accordance with all applicable foreign and
domestic federal, state and local statutes, laws, ordinances, rules and
regulations ("Laws").
(b) Company is not in violation of, or in default under, nor has any
event or omission occurred which with notice or the lapse of time or both would
constitute a violation or default of, any term or provision of (i) the Charter
Documents or (ii) any Commitment to which Company is a party or by which any of
Company's properties, assets or rights is bound or affected. The execution,
delivery and performance by Members and Company of this Agreement and the other
documents and agreements contemplated hereby: (a) will not require from Company
or Members any consent or approval that has not been validly and lawfully
obtained; (b) will not require any authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality of government,
which is not set forth in Schedule 4.4; (c) will not cause Members or Company to
violate or contravene (i) any provision of applicable Law, or (ii) any judicial
order, writ, judgment, injunction, decree, determination or award applicable to
Members or Company or any of their properties or assets; (d) will not violate or
be in conflict with, result in a breach of, or constitute (with or without
notice or the lapse of time or both) a default under any Commitment to which
Members or Company is a party or by which Members or Company or any of their
properties, assets or rights is bound or affected; and (e) will not result in
the creation or imposition of any Lien on Company or Members, or any of their
properties, assets or rights, including, without limitation, the Assets. Company
is not subject to any restriction of any kind or character which materially and
adversely affects in any way its business, properties, assets or prospects and
neither Members nor Company is subject to any restriction of any kind or
character which prohibits Members or Company from entering into this Agreement
or would prevent the performance of or compliance with all or any part of this
Agreement by Members or Company or the consummation of the transactions
contemplated hereby.
Section 4.5 Binding Obligation. The Transaction Documents have been
duly executed and delivered by Company and each Member, constitute the legal,
valid and binding obligations of the Company and Members executing the same,
enforceable against each of Members and Company in
14
accordance with their respective terms, except as such enforceability is limited
by bankruptcy, insolvency and other similar Laws affecting the enforcement of
creditors' rights generally or by general equitable principles.
Section 4.6 Financial Statements. Attached hereto as Schedule 4.6
are Company's (a) unaudited statements of income, balance sheets and statements
of cash flows, as of and for the Company's initial fiscal year ended December
31, 2000, and (b) an unaudited statement of income, balance sheet and statement
of cash flow, as of and for the eight-months ended August 31, 2001. These
financial statements (i) are complete and accurate in all material respects and
have been derived from the books and records of Company, (ii) present fairly the
financial condition of Company as of the balance sheet dates and the results of
its operations and cash flows for the periods specified therein, and (iii) have
been prepared in accordance with GAAP, applied on a consistent basis throughout
the periods involved; except that in the case of the financial statements for
the eight-month period ended August 31, 2001, such statements are subject to
normal year-end adjustments and do not contain notes. There are no debts,
liabilities or obligations of any nature (whether absolute, accrued, contingent
or otherwise and whether due or to become due) of Company other than (A) as
reflected in Company's financial statements attached as Schedule 4.6, (B)
incurred in the ordinary course of business consistent with past practice
between August 31, 2001 to the Closing Date which would not have a Material
Adverse Effect, or (C) disclosed in Schedule 4.6
Section 4.7 Material Agreements of Company. Schedule 4.7 contains a
true and complete list of (a) all loan agreements or other agreements or
instruments pursuant to which the Company has incurred indebtedness for borrowed
money, promissory notes, capital leases or other financing documents entered
into or issued by Company, (b) all other Commitments to which Company is a party
or by which Company or any of its properties, assets or rights is otherwise
bound or affected, involving an obligation for payment by Company or payment to
Company of an amount in excess of $5,000 or providing for a term in excess of
one year (unless cancelable by Company without penalty on the part of Company on
not more than 60 days' notice), (c) all Commitments between Company and any of
its officers, directors, members or Affiliates, (d) all Commitments between or
among Members and Company, (e) all Commitments related to the Products and
Services, (f) all Commitments involving a license of or to the Intellectual
Property or Technology of Company (as defined in Section 4.9(m) below), (g) all
indemnification obligations of Company, (h) all agreements or covenants
restricting, or purporting to restrict, Company's ability to conduct any
business in any field of business or geographical area, (i) all other material
Commitments entered into by Company not in the ordinary course of business, and
(j) all agreements providing for employment or severance (the items in clause
(a) through (j) in this sentence shall be collectively referred to as the
"Contracts"). Company has delivered to Buyer true and complete copies of each
Contract, including all amendments thereto. All such Contracts are legally
binding and valid and in full force and effect with respect to Company and each
other party thereto, and, except as set forth on Schedule 4.7, Company is not in
material default nor has any event or omission occurred which with notice or
lapse of time or both would constitute a material default on the part of Company
under any of such Commitments or Contracts. To Members' and Company's Knowledge,
no third party under a Contract is in default thereunder and no event or
omission has occurred which with notice or lapse of time or both would
constitute a default on the part of a third party thereunder. Company has no
reason to believe or Knowledge that Company will not be able to fulfill its
obligations under the Contracts which remain to be performed after the date
hereof, and the Company has not been notified by any party to the Contracts that
it intends to cancel, terminate or modify any Contract and the Company does not
know of any valid grounds for any such cancellation, termination or
modification.
Section 4.8 Taxes. All required Tax Returns of Company have been
accurately prepared and duly and timely filed, and all Taxes required to be paid
with respect to the periods covered by such Tax Returns have been paid, except
as set forth on Schedule 4.8. Except as set forth on Schedule 4.8, (a) all
15
Taxes which Company is required to withhold or collect have been withheld and
collected and have been paid over to the proper governmental authorities, (b) no
governmental authority is now asserting or threatening to assert any deficiency
or claim for additional Taxes and there has been no act or omission whereby any
Relief shall not be available following Closing, (c) there has not been any
audit of any Tax Return filed by Company which includes Company's business or
operations therein, (d) no such audit is in progress, and neither Members nor
Company has been notified by any Tax authority that any such audit is
contemplated or pending, (e) Company has no liability for Taxes (accrued,
contingent or otherwise), known or unknown, whether or not required to be
provided for in accordance with GAAP, except as presented in the financial
statements of Company attached hereto as Schedule 4.6 or incurred in the
ordinary course of business between August 31, 2001 and the Closing Date, (f)
Company has no liability for Taxes of any third party, whether by agreement,
operation of law or otherwise, and (g) there are no Liens for Taxes on any
assets of Company. "Taxes" means (i) any and all taxes whatsoever, including,
without limitation, income, gross receipts, profits, sales, use, stamp,
registration, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, excise, or property taxes, together with any
interest, penalties or additions to tax imposed with respect thereto and (ii)
any obligations under any agreements or arrangements with respect to any taxes
described in clause (i) above. "Tax Returns" means returns, reports and forms,
and any schedules relating thereto, required to be filed with any governmental
authority, domestic or foreign, having jurisdiction over the assessment,
determination, collection or other imposition of any Tax. "Relief" includes any
relief, allowance, exemption, set-off or deduction in computing or against
profits, income or gains of any description or from any source, or credit
against Tax.
Section 4.9 Intellectual Property.
(a) Schedule 4.9 contains a true and complete list of all
Intellectual Property, including, without limitation, applications, filings and
registrations with or in any court, arbitral tribunal, administrative agency or
other governmental instrumentality (whether foreign, federal, state or local)
having jurisdiction over such subject matter. All such applications, filings and
registrations have been duly filed, and those registrations which have issued
are validly existing and in full force and effect and all required maintenance
and annuity fees have been paid in full. With respect to all U.S. registered
service and trademarks, Section 8 and 15 declarations, where applicable, have
been timely filed and accepted. No service or trademarks listed on Schedule 4.9
have been abandoned.
(b) Except as specifically set forth on Schedule 4.9(b), Company has
good and marketable title to all Intellectual Property and Technology, free and
clear of all Liens and without payment of any royalties, license fees or other
amounts.
(c) Except as specifically set forth on Schedule 4.9(c), (i) there
are no Commitments by which Company may be bound from or with third parties
under which Company uses, has the right to use or exercises any rights with
respect to any Intellectual Property or Technology and (ii) there are no
judicial orders, decrees, judgments or stipulations restricting Company's use or
right to use any Intellectual Property or Technology.
(d) Except as set forth on Schedule 4.9(d), Company has not received
(and Members and Company have no Knowledge of) any notice, claim or allegation
from any other party challenging the right of Company to use, possess, transfer,
convey or otherwise dispose of any Intellectual Property or Technology.
Company's use of Intellectual Property and Technology, past and present, has not
and does not violate or infringe upon the rights of any other party or
constitute a breach of any Commitment by which Company may be bound or
constitute a violation of any applicable Laws. Without limiting the generality
of the foregoing, Company has not used, transferred, conveyed or otherwise
disposed of any information gathered from visitors and users of Company's
website in such a manner that would be a violation of any terms or other use
conditions posted on Company's website.
16
(e) Except as set forth on Schedule 4.9(e), (i) no licenses or other
rights have been granted and Company has no obligation to grant licenses with
respect to any Intellectual Property or Technology and (ii) no claims have been
made by or against Company of any violation or infringement by others of any
rights with respect to any Intellectual Property or Technology. Neither Members
nor Company has Knowledge of any claim (for violation or infringement by others
of any Intellectual Property or Technology) which the Company may have the right
or a reasonable basis to make or assert.
(f) Except as set forth on Schedule 4.9(f), the Intellectual
Property and Technology include all rights and interests necessary to conduct
the Business as it is currently conducted, and such rights will not be adversely
affected by the Members' and/or Company's execution and delivery of this
Agreement or consummation of the transactions contemplated by this Agreement.
(g) All statements and representations made by Company in any
pending Intellectual Property applications, filings and registrations were true
in all material respects as of the time they were made.
(h) All documentation, specifications, designs and other
informational materials which describe the operation, functions and technical
characteristics applicable to the Intellectual Property and Technology are true
and complete in all material respects and faithfully and accurately reflect the
Intellectual Property and Technology to which same relates.
(i) Company has taken all actions reasonably necessary to ensure
that (i) there are no protections, encryption, security or lock-out devices,
whether triggered by the passage of time, or the use or operation of the
Intellectual Property and Technology, remotely or otherwise, which might in any
way interrupt, discontinue or otherwise adversely affect the Intellectual
Property and Technology or Company's use thereof; and (ii) there are no
so-called computer viruses, worms, trap or back doors, Trojan horses or any
other instructions, codes, programs, data or materials which could improperly,
wrongfully and/or without the authorization of Company, interfere with the
operation or use of the Intellectual Property and Technology.
(j) Except as set forth on Schedule 4.9(j), (i) all authorship in
the computer software, documentation, software design, and technical and
functional specifications created by Company and used in the Business (excluding
software owned by others that is part of hardware purchased by Company for use
in the Business) is the original product of the Company and (ii) all computer
software and related documentation manuals contained or used in the Business
(including, without limitation, documentation user manuals) or services provided
by Company are owned by or licensed to Company and such licenses provide Company
with the right to sublicense or otherwise authorize use of the licensed subject
matter to Company's customers and authorized third party users.
(k) Except as set forth on Schedule 4.9(k), (i) all computer
software created by employees of Company within the scope of their employment by
Company and used in the Business and all original copyrightable authorship
therein is owned by Company; (ii) all rights in all inventions and discoveries
made, written, developed or conceived by current or former employees,
independent contractors or consultants of Company during the course of their
employment (or other retention) by Company and material to the business of
Company or made, written, developed or conceived with the use or assistance of
Company's facilities or resources and which are the subject of one or more
patents or applications for patents have been assigned in writing to Company;
(iii) the policy of Company requires each employee of Company to sign documents
confirming that he or she assigns to Company all Intellectual Property and
Technology rights made, written, developed or conceived by him or her during the
course of his or her employment (or other retention) by Company and relating to
the Business or made, written, developed or conceived with the use or assistance
of Company's facilities or resources to the extent that ownership of any such
Intellectual Property or Technology rights does not vest in Company by operation
of law, and to
17
the extent that any employee of the Company has not executed such documents,
Company will require such employee to execute such documents at or before the
Effective Date; and (iv) all the Intellectual Property and Technology rights
made, written, developed or conceived by each employee, independent contractor
or consultant of Company during the course of his or her employment (or other
retention) by Company and material to the Business (as presently conducted or
contemplated) have been assigned or licensed to Company.
(l) Except as set forth on Schedule 4.9(l), Company has taken all
reasonable and practicable steps to protect and preserve the confidentiality of
all Intellectual Property and Technology not subject to a copyright or patent
(the "Confidential IP Information"). Company use of the Confidential IP
Information not owned by Company has been and is pursuant to the terms of a
written agreement between Company and the owner of such Confidential IP
Information, or is otherwise lawful.
(m) "Intellectual Property" shall mean all intellectual property
rights, common law, statutory or otherwise, domestic and foreign, including,
without limitation, patents (including all reissues, divisions, continuations
and extensions), service marks, trademarks, trade names, brand, product and
service names, and all logos and distinctive identifications of Company, the
Products and Services, copyrights and mask works as well as all applications for
any and all of the foregoing, licenses and other contractual rights and other
such property and intangible rights owned, used or held for use by Company,
together with the goodwill of the Business in connection with all of the
foregoing. "Technology" means all formulae, algorithms, processes, methods,
procedures, designs, ideas, strategic and other business plans, research
records, inventions and all records of the foregoing, test, engineering and
technical data, know-how, proprietary information and methodologies, trade
secrets, technology, communications and associated peripheral devices and
resources, computer software, programs and code, both object and source, in
whatever form and media, all databases (other than the Excluded Data),
specifications and other information processing tangible and intangible items,
owned, used or held for use by Company with respect to the Business, including
the Assets.
Section 4.10 Insurance Coverage. There is in full force and effect
one or more policies of insurance, issued by insurers of recognized
responsibility, insuring Company and its properties and business against such
losses and risks, and in such amounts, as are customarily maintained by other
companies operating similar businesses, which policies of insurance include, but
are not limited to, errors and omissions insurance and public liability
insurance. Such policies of insurance are set forth on Schedule 4.10 hereto and
shall remain in full force and effect through the Closing.
Section 4.11 Litigation. Except as disclosed on Schedule 4.11, there
are no legal actions, suits, arbitrations or other legal, administrative or
other governmental investigations or proceedings (whether federal, state, local
or foreign) pending or, to Members' and Company's Knowledge, threatened against
or affecting Company, the Business or the Assets. Except as disclosed on
Schedule 4.11, neither Members nor Company have Knowledge of any facts which
might reasonably be expected to result in or form the basis for any such action,
suit or other proceeding. Except as disclosed on Schedule 4.11, Company is not
in default with respect to any order, writ, judgment, injunction, decree,
determination or award of any court or of any government agency or
instrumentality (whether federal, state, local or foreign). Members and Company
have no Knowledge of any facts, circumstances or events that would be the basis
for any legal actions, suits or arbitration instituted by the Company against
any other Person.
Section 4.12 Licenses. Except as disclosed on Schedule 4.12, Company
possesses all governmental authorizations, licenses, franchises and permits
(whether state, local or federal), as are necessary for Company to engage in the
business and operations currently conducted by Company, including, without
limitation, the Business, and such authorizations, licenses, franchises and
permits are in full force and effect and will not be affected by the
transactions contemplated herein. Neither Members
18
nor Company have Knowledge of any act which could be a material violation of any
such authorization, license, franchise or permit, or could cause any agency,
commission, board or governmental authority to limit, revoke, or fail to renew
any such authorization, license, franchise or permit.
Section 4.13 Year 2000 Compliance. All of Company's computer-based
systems, including its information data bases, accounting systems and data
processing systems, were not adversely affected by Year 2000. None of the
Intellectual Property, Technology or other Assets were adversely affected by
Year 2000. Company's computer-based systems, including its information
databases, accounting systems and data processing systems, will continue to
operate in the same manner as they currently operate, notwithstanding Year 2000.
"Year 2000" means the occurrence of or calculation involving the Year 2000 A.D.,
or other calendar dates occurring after December 31, 1999.
Section 4.14 Brokers and Finders. Except for accountants and
attorneys acting as such (and not as brokers, finders or in other like
capacity), and except as set forth in Schedule 4.14, all negotiations on behalf
of Members and Company relating to this Agreement and the transactions
contemplated herein have been conducted without the assistance or involvement of
any broker, finder, investment banker or third party representing Members or
Company. Neither Members nor Company, nor any officer, director or agent of
Members or Company, has engaged or authorized any broker, finder, investment
banker or other third party whose fees Members or Company will pay, to act on
behalf of Members or Company, directly or indirectly, as a broker, finder,
investment banker or in any other like capacity in connection with this
Agreement or the transactions contemplated herein, or has consented to or
acquiesced in anyone so acting, and neither Members nor Company has Knowledge of
any claim for compensation from any such broker or finder for so acting or of
any basis for such a claim, except as set forth in Schedule 4.14.
Section 4.15 No Adverse Change. Except as disclosed on Schedule 4.15,
since December 31, 2000, there has been no change which (either by itself or in
conjunction with all such other changes, events and conditions) has had, or
which would reasonably be expected to have, a Material Adverse Effect on
Company, the Business or the Assets. Since December 31, 2000, none of the
following events has occurred, other than those expressly contemplated by this
Agreement or disclosed on Schedule 4.15: (a) incurrence of any debts,
obligations or liabilities, absolute, accrued, contingent or otherwise, whether
due or to become due, other than in the ordinary course of business consistent
with past practice; (b) discharge of or satisfaction of any Liens, other than in
the ordinary course of business and in accordance with terms of Company's
Commitments; (c) mortgage, pledge or subjection to Lien of any assets, tangible
or intangible; (d) sale, transfer or lease of any assets; (e) purchase of assets
other than in the ordinary course of business consistent with past practice; (f)
cancellation or compromise of any debt or claim, or waiver or release of any
right of material value; (g) sufferance of any physical damage, obstruction or
loss (whether or not covered by insurance); (h) entry into any transaction,
other than in the ordinary course of business consistent with past practice
(except for this Agreement); (i) encountering of any labor difficulties or labor
union organizing activities; (j) issuance or sale of any units or other
securities or any grant of any options with respect thereto; (k) declaration or
payment of any dividends, or any repurchase or redemption of, or distributions
with respect to, its outstanding units; (l) increases in compensation, benefits
or bonuses of any of its employees other than in the ordinary course of business
consistent with past practice, or in accordance with Commitments listed on
Schedule 4.7; (m) any action described in Section 6.1(b) that has not been
consented to by the Company as provided for therein; or (m) a decision of
Company to do any of the foregoing.
Section 4.16 Title to and Condition of Properties. Except as
indicated on Schedule 4.16, Company has good and marketable title to, and
sufficient right to use, all of the Assets, subject to no Liens, whether by
mortgage, pledge, lien, conditional sale agreement, encumbrance, charge or
otherwise, and the Assets constitute all assets and properties necessary for the
Company to conduct the Business as presently conducted or contemplated. All of
the Assets are in good operating condition and state of
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maintenance and repair. All Accounts Receivable reflected in the financial
statements for the eight month period ended August 31, 2001 and for the period
between August 31, 2001 and the Closing Date are good and collectible or, if
not, have been written down or adequate reserves have been made therefor.
Section 4.17 Transaction with Affiliates. Company is not a party to
or obligated under any contract or agreement with an Affiliate except as
disclosed on Schedule 4.17. Schedule 4.17 includes all contracts or agreements
between Company and any Member or any Affiliate of any Member. Except as
disclosed on Schedule 4.17, no member, manager or other officer of Company, is
or has been a party to, or has or in the past has had any interest, directly or
indirectly, in any Commitment. No Member has any claim or any nature whatsoever
against Company, its Subsidiaries, the Business or the Assets whether under any
Contract or Commitment or otherwise.
Section 4.18 Certain Payments. Company (a) has not used any Company
funds for any illegal contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) has not made at any time since its
inception any false or fictitious entries on its books and records, (c) has not
made or accepted any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature using Company funds or otherwise, or (d) made any
material favor or gift that is not deductible for federal income tax purposes.
Section 4.19 Environmental Matters.
(a) Neither Company nor, to Members' and Company's Knowledge, any
other Person has ever caused any Hazardous Material to be Released on, under,
from or about, any of the premises now or previously owned or occupied by
Company (the "Premises"), nor, to Members' and Company's Knowledge, does any
Hazardous Material exist on, under or about any Premises. The Premises have
never been used (whether by Company or, to the Knowledge of Members and Company,
by any other Person) as a treatment, storage or disposal (whether permanent or
temporary) site for any Hazardous Material. Members and Company have no
Knowledge of any notice of violation, Lien or other notice issued by any
governmental authority (whether federal, state or local) with respect to the
environmental condition of any Premises.
(b) To Members' and Company's Knowledge, Company is not in violation
of any Environmental Law. To Members' and Company's Knowledge, no material
expenditures are or will be required in order to comply with any Environmental
Law. Company, the Business and the Assets are not subject to any Environmental
Liabilities or Costs.
(c) "Hazardous Material" means any substance or material defined or
designated as a hazardous or toxic waste, hazardous or toxic material, hazardous
or toxic substance, or other similar term, by any United States federal, state
or local environmental statute, regulation or ordinance.
Section 4.20 Employee Benefit Programs.
(a) Schedule 4.20 lists each Employee Benefit Plan that Company
maintains or to which Company contributes, and which it has maintained or to
which Company has contributed in the last three years. "Employee Benefit Plan"
means an "employee benefit plan" as defined in Section 3(3) of ERISA, and
includes all "Employee Welfare Benefit Plans" as defined in ERISA Section 3(1)
and all "Employee Pension Benefit Plans" as defined in ERISA Section 3(2).
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all respects
with the applicable requirements of ERISA, the Code, and other applicable Laws.
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(ii) All required reports and descriptions (including Form
5500 annual reports, summary annual reports, Forms PBGC-1's, and summary plan
descriptions) have been filed or distributed appropriately with respect to each
such Employee Benefit Plan. The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Code Section 4980B ("COBRA"), and/or applicable state Laws
providing for health care continuation coverage, have been satisfied with
respect to each Employee Welfare Benefit Plan (as defined in ERISA Section 3(1))
subject to such requirements.
(iii) All contributions (including all employer contributions,
employee salary reduction contributions, and COBRA payments made to the Company)
which are due have been timely paid to each such Employee Benefit Plan. All
contributions and payments for any period ending on or before the Closing Date
which are not yet due have been paid to each such Employee Benefit Plan or
accrued on the books of the Company in accordance with GAAP and applicable
regulations of the U.S. Department of Labor. All premiums or other payments for
all periods ending on or before the Closing Date have been paid with respect to
each Employee Welfare Benefit Plan.
(iv) Each Employee Pension Benefit Plan (as defined in ERISA
Section 3(2)) which meets the requirements of a "qualified plan" under Code
Section 401(a) and is, or could be, the subject of a favorable determination
letter issued by the Internal Revenue Service, has received such favorable
determination, or an application for such determination has been filed or may be
filed within the applicable remedial amendment period.
(v) No Employee Pension Benefit Plan is subject to the
requirements of Title IV of ERISA.
(b) Company has delivered to Buyer correct and complete copies of
the plan documents and summary plan descriptions, the most recent determination
letters received from the Internal Revenue Service, the most recent three years
of Form 5500 Annual Report, all related trust agreements, insurance contracts,
and other funding agreements which implement each Employee Benefit Plan listed
on Schedule 4.20, and any and all correspondence or rulings from the U.S.
Department of Labor, Internal Revenue Service, Pension Benefit Guaranty
Corporation, and any state agency pertaining to any of Company's Employee
Benefit Plans.
(c) With respect to each Employee Benefit Plan that Company
maintains or ever has maintained or to which it contributes, ever has
contributed, or ever has been required to contribute, there have been no
Prohibited Transactions (as defined in ERISA Section 406 and Code Section 4975)
with respect to any such Employee Benefit Plan. Neither Company nor any
fiduciary of any such Employee Benefit Plan has, or may have, any liability for
breach of fiduciary duty or any other failure to act or comply in connection
with the sponsorship, management, administration, or investment of the assets,
of any such Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the sponsorship, management, administration, or
the investment of the assets, of any such Employee Benefit Plan (other than
routine claims for benefits) is pending or threatened. Neither Company nor
Members has any Knowledge of any basis for any such action, suit, proceeding,
hearing, or investigation.
(d) Company does not maintain and never has maintained or
contributed to, and never has been required to contribute to, any Employee
Welfare Benefit Plan providing medical, health, or life insurance or other
welfare-type benefits for current or future retired or terminated employees,
their spouses, or their dependents (other than in accordance with the COBRA
provisions of Code Section 4980B and applicable state Laws).
(e) Except as listed on Schedule 4.20(e), Company does not maintain
any non-qualified plans of deferred compensation (including without limitation
"top hat" or "excess benefit plans"), severance pay
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plans, split dollar life insurance agreements, salary continuation agreements,
stock option or warrant plans, phantom stock plans, stock appreciation rights
plans, or any other form of equity based compensation plan.
Section 4.21 Product and Services Claims. Except as set forth on
Schedule 4.21 to this Agreement, there are no pending or, to Members' and
Company's Knowledge, threatened claims with respect to any of the products and
services of the Business prior to the Closing Date nor, to Members' and
Company's Knowledge, are there any facts upon which a claim of such nature
should reasonably be anticipated to be based. No claims have been made against
Company for renegotiation or price redetermination of any business transaction
resulting from or relating to defective products and services of the Business
and, to Members' and Company's Knowledge, there are no facts upon which any such
claim should reasonably be anticipated to be based.
Section 4.22 Employees; Labor Matters. Company has no employment or
consulting agreements, compensation, bonus or deferred compensation agreement,
units or cash option plans, restricted securities plans, severance pay policies
or agreements, deferred compensation agreements, supplemental income
arrangements, vacation plans, incentive or profit sharing plans or arrangements
of any kind except as set forth on Schedule 4.22. As of the date of this
Agreement, Company employed a total of 19 full-time employees and no part-time
employees and Company generally enjoys good employer-employee relationships. All
such employees are terminable at will by the Company without penalty or
compensation by Company. Company is not delinquent in payments to any of its
employees for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed for it to the date hereof or amounts
required to be reimbursed to such employees. Company has no policy, practice,
plan or program of paying severance pay or any form of severance compensation in
connection with the termination of employment, except as set forth on Schedule
4.22. Company is not a party to any agreement or arrangement which would give
rise to a compensation obligation under Section 162(m) or 280G of the Code and
which is not deductible pursuant to relevant Tax Laws. All of Company's programs
and/or arrangements in connection with the payment of commissions are described
on Schedule 4.22. Except as set forth on Schedule 4.22, Company has not received
notice of any charges of employment discrimination, wrongful termination or
unfair labor practices, nor are there any strikes, slowdowns, stoppages of work,
or any other concerted interference with normal operations which are existing,
pending or, to Company's and Members' Knowledge, threatened against or involving
Company. Company has not received any notice indicating that any of its
employment policies or practices is currently being audited or investigated by
any governmental authority (whether state or federal). To Members' and Company's
Knowledge, Company is, and has at all times been, in compliance with the
requirements of the Immigration Reform Control Act of 1986. Schedule 4.22 sets
forth a complete list of each officer, employee, salesperson and consultant who
received total remuneration from Company in excess of $50,000 for the calendar
year ended December 31, 2000, or is scheduled to receive total remuneration from
Company in excess of $50,000 for the calendar year ending December 31, 2001.
Section 4.23 Customers and Suppliers. In Company's and Members'
opinion, the relationships of Company with its customers, vendors and
underwriters are good commercial working relationships except as disclosed on
Schedule 4.23. Except as set forth on Schedule 4.23, during the past twelve
months, no customer, vendor or underwriter has canceled, materially modified, or
otherwise terminated its relationship with Company, or materially decreased its
services, supplies, underwriting or materials to Company or its usage or
purchase of the services or products of Company, nor to Members' and Company's
Knowledge, has any customer, vendor or underwriter expressed any plan or
intention to do any of the foregoing, except for such cancellation and
modification by customers which are in the ordinary course of business, and
standard, for Company's industry.
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Section 4.24 LLC Records; Copies of Documents. The limited liability
company Books and Records of Company, as delivered to Buyer, accurately record
all action taken by Company's members and managers, and committees, which are
required to be recorded by applicable Law or the Charter Documents. Company
currently is not in default in the filing of any document required to be
delivered or made with any governmental authority. The copies of the books and
records of Company, as made available to Buyer for review, are true and complete
copies of the originals of such documents. Company has made available for
inspection by Buyer true and correct copies of all documents referred to in this
Section 4.24 or in the Schedules attached to this Agreement.
Section 4.25 Bank Accounts and Powers of Attorney. Set forth in
Schedule 4.25 is an accurate and complete list showing: (a) the name of each
bank or other financial institution in which Company has an account, credit
line, lockbox or safe deposit box, the relevant account or other identifying
number thereof, and the names of all Persons authorized to draw thereon or who
have access thereto; and (b) the names of all Persons, if any, holding powers of
attorney from Company and a summary statement of the terms thereof.
Section 4.26 Accounts Receivable. Schedule 4.26 contains (i) a
complete and accurate list of the Accounts Receivable in excess of $1,000 of
Company as of the date of this Agreement (which Schedule will be updated
immediately prior to Closing); and (ii) a complete and accurate schedule showing
the aging of such Accounts Receivable. Such Accounts Receivable arose in
bona-fide, arms length transactions in the normal course of Company's business
and, to the Knowledge of Company, such Accounts Receivable are valid and binding
obligations of the account debtors without counterclaims, set-offs or other
defenses thereto and are collectible in the ordinary course of business.
Section 4.27 Investment Representations.
(a) Reliance Upon Company's and Members' Representations. Company
and Members understand that the FNIS Common Stock is not registered under the
Securities Act on the ground that the issuance of the FNIS Common Stock provided
for in this Agreement is exempt from registration under the Securities Act, and
that Buyer's reliance on such exemption is predicated on the Company's and
Members' representations set forth in this Section 4.27.
(b) Purchase Entirely for Own Account. Company is acquiring the FNIS
Common Stock for investment for Company's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof
other than the distribution of the FNIS Common Stock to the Members upon
dissolution of Company, and that Company has no present intention of selling,
granting any participation in, or otherwise distributing the same and which do
not involve a public sale and is in full compliance with all applicable federal
and state securities laws. Neither Company nor any Member has a contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participation to such person or to any third person, with respect to any of the
FNIS Common Stock.
(c) Receipt of Information. Company and each Member has had an
opportunity to ask questions and receive answers from Buyer regarding the terms
and conditions of the offering of the FNIS Common Stock and the business,
properties, prospects, and financial condition of Buyer and to obtain additional
information (to the extent Buyer possessed such information or could acquire it
without unreasonable effort or expense) necessary to verify the accuracy of any
information furnished Company or such Member, or to which Company or such Member
had access.
(d) Investment Experience. Company and each Member represents that
it is experienced in evaluating and investing in private placement transactions
of securities of companies in a similar stage of development, can bear the
economic risk of Company's investment, and has such knowledge and
23
experience in financial and business matters that Company and such Member is
capable of evaluating the merits and risks of the investment in FNIS Common
Stock. Company and, if other than an individual, each Member also represents
that Company and such Member has not been organized for the purpose of acquiring
the FNIS Common Stock.
(e) Restricted Securities. Company and each Member understands that
the FNIS Common Stock may not be sold, transferred, or otherwise disposed of
without registration under the Securities Act or an exemption therefrom, and
that in the absence of an effective registration statement covering the FNIS
Common Stock or an available exemption from registration under the Securities
Act, the FNIS Common Stock must be held indefinitely. In particular, Company and
each Member is aware that FNIS Common Stock may not be sold pursuant to Rule 144
promulgated under the Securities Act unless all of the conditions of that Rule
are met. Among the conditions for use of Rule 144 may be the availability of
current information to the public about Buyer. Buyer does not undertake any
obligation to make such information available.
Section 4.28 Representations Complete. All documents and other papers
delivered by or on behalf of Company and Members in connection with the
transactions contemplated hereby are true, correct and complete in all material
respects and are authentic. None of the representations or warranties made by
Company or Members in this Agreement (including the Exhibits and the Schedules
hereto) or any of the other Transaction Documents, nor any statement made in any
Schedule, Exhibit, certificate, report, instrument, list or other document
furnished or to be furnished by or on behalf of either Company or Members
pursuant hereto or thereto or in connection with the transactions contemplated
hereby, contained, contains or will contain on the date delivered any untrue
statement of a material fact, or omitted, omits or will omit on such date to
state any material fact necessary in order to make the statements made, in light
of the circumstances under which made, not misleading. Company and Members have
disclosed to Buyer all facts of which they have Knowledge that would have a
Material Adverse Effect on Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Company as follows:
Section 5.1 Organization, Standing, etc. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite power and authority to enter into this Agreement
and to carry out the provisions hereof.
Section 5.2 Corporate Acts and Proceedings. All corporate acts and
proceedings required for the authorization, execution and delivery of this
Agreement by Buyer and the performance of this Agreement by Buyer have been
taken, except as otherwise set forth on Schedule 5.2 and, to the extent any acts
or proceedings are identified on Schedule 5.2, same shall have been taken on or
before the Closing Date.
Section 5.3 Compliance with Laws and Other Instruments.
The execution, delivery and performance by Buyer of this Agreement and the other
documents and agreements contemplated hereby: (a) will not require any
authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality of government, which has not been obtained or
filed, except as set forth on Schedule 5.3 or that will be obtained prior to the
Closing; (b) will not cause Buyer to violate or contravene (i) any provision of
applicable Law, (ii) any judicial order, writ, judgment, injunction, decree,
determination or award applicable to Buyer or its properties or assets, or (iii)
any provision of the Articles of Incorporation or By-laws of Buyer; (c) will not
violate or be in conflict with, result in a breach of, or constitute (with or
24
without notice or the lapse of time or both) a default under any Commitment to
which Buyer is a party or by which Buyer or any of its properties, assets or
rights is bound or affected; and (d) will not result in the creation or
imposition of any Lien on Buyer or any of its properties, assets or rights.
Section 5.4 Binding Obligation. This Agreement is enforceable
against Buyer in accordance with its terms, except as such enforceability is
limited by bankruptcy, insolvency and other similar Laws affecting the
enforcement of creditors' rights generally or by general equitable principles.
Section 5.5 Brokers and Finders. Except for accountants and
attorneys acting as such (and not as brokers, finders or in other like
capacity), all negotiations on behalf of Buyer relating to this Agreement and
the transactions contemplated herein have been conducted without the assistance
or involvement of any broker, finder, investment banker or third party
representing Buyer. Neither Buyer, nor any officer, director or agent of Buyer,
has engaged or authorized any broker, finder, investment banker or other third
party whose fees Buyer will pay, to act on behalf of Buyer, directly or
indirectly, as a broker, finder, investment banker or in any other like capacity
in connection with this Agreement or the transactions contemplated herein, or
has consented to or acquiesced in anyone so acting, and Buyer has no Knowledge
of any claim for compensation from any such broker or finder for so acting or of
any basis for such a claim.
ARTICLE VI
COVENANTS
Section 6.1 Covenants of Members and Company.
(a) Except as and to the extent required by applicable Law (in which
case the nature of the announcement shall be described to Buyer, and Buyer shall
be allowed reasonable time to comment prior to dissemination to the public),
prior to the Closing, neither Members nor Company shall make any public comment,
statement or communication nor shall Members nor Company make any announcement
to any of its customers, vendors or underwriters, with respect to, or otherwise
disclose or permit the disclosure of the existence or terms of the discussions
regarding, this Agreement, the other Transaction Documents or the transactions
contemplated hereby or thereby without Buyer's prior written consent.
(b) From the date hereof through the Closing Date, except as
otherwise expressly permitted by this Agreement or as otherwise consented to by
Buyer in writing, Company shall (and Members shall cause Company to) carry on
Company's business only in the ordinary course of business consistent with past
practice, and in substantially the same manner as heretofore conducted, and
shall take no action which would adversely affect its ability to consummate the
transactions contemplated hereunder. Without limiting the generality of the
foregoing, except as otherwise expressly provided in this Agreement, prior to
the Closing, Company will (and Members shall cause Company to):
(i) preserve intact its present limited liability company
existence and business organizations, pay and discharge all debts and
liabilities as they become due, and operate solely in the ordinary course of
business in a manner consistent with the provisions of this Agreement and in
compliance in all material respects with all applicable Laws, permits and
licenses of Company and Commitments of Company (including those identified in
the Schedules hereto);
(ii) use best efforts to maintain its relationships and
goodwill with customers, clients, suppliers, vendors, underwriters, employees,
agents and others with whom it has business dealings;
(iii) maintain its facilities, properties and assets in the
same state of repair, order and condition as they were on the date hereof,
normal wear and tear excepted;
25
(iv) keep proper books of record and account, in which full
and correct entries shall be made of all financial transactions and the Assets
and Business in accordance with GAAP consistently applied, and maintain its
books, accounts and records in the ordinary course of business consistent with
past practice;
(v) maintain in full force and effect all existing
governmental licenses, franchises and permits and insurance policies and
binders;
(vi) promptly advise Buyer in writing of the threat or
commencement against either Company or Members of any suit, claim or action of
which it has Knowledge and which could have a Material Adverse Effect on
Company, the Business or the Assets; and
(vii) promptly advise Buyer in writing of any event or the
existence of any fact which makes untrue, or will make untrue as of the Closing,
any representation or warranty of either Company or Members set forth in this
Agreement or in any other Transaction Document; provided, however, that no
disclosure by either Company or Members pursuant to this Section 6.1(b)(vii)
shall be deemed to amend or supplement this Agreement, to limit or otherwise
affect the remedies available to Buyer hereunder, or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant by either Company
or Members.
(c) Without limiting the provisions of Section 6.1(b), from the date
hereof through the Closing Date, except as otherwise expressly permitted by this
Agreement or as otherwise consented to by Buyer in writing, Company shall not
(and Members shall cause Company not to):
(i) amend its Articles of Organization or Operating
Agreement (or similar organizational documents);
(ii) authorize for issuance, issue, sell, deliver, grant,
accelerate, repurchase, redeem any options for, or otherwise agree or commit to
issue, sell or deliver any interests in Company, including, without limitation,
units or any other securities;
(iii) recapitalize, split, combine or reclassify any interests
in Company, including, without limitation, units or other securities; declare,
set aside, pay or make any dividend or other distribution or payment (whether in
cash, units or property or any combination thereof) in respect of, or purchase,
redeem or otherwise acquire any of its securities, or modify any of the terms of
any such securities;
(iv) other than the Bridge Loan and the Additional Demand
Note, (A) create, incur, assume, maintain or permit to exist any long-term debt
or any short-term debt for borrowed money; (B) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person; or (C) make any loans,
advances or capital contributions to, or investments in, any other Person;
(v) make any capital expenditure or capital expenditure
commitment;
(vi) grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of any of its employees
or institute, adopt or amend (or commit to institute, adopt or amend) any
compensation or benefit plan, policy, program or arrangement or collective
bargaining agreement applicable to any of its employees;
26
(vii) amend, terminate or enter into any employment,
consulting, severance, change in control or similar agreement or arrangement
(including any commitment to pay retirement or other benefits) to or with any of
its officers, directors or employees, or any collective bargaining agreement or
commitment;
(viii) (A) except as provided in Section 7.2(q) below, enter
into or terminate any lease of real estate; (B) create any Lien on any assets or
properties of the Company; (C) make any modifications of or changes in or
terminate any existing Commitment other than as may be required to consummate
the transactions contemplated hereby; or (D) enter into any material Commitment;
(ix) other than to Buyer or its Subsidiaries, or in
accordance with Section 7.2(n) below, make, give or grant any bid or proposal,
(A) involving an amount in excess of $5,000 (or amend, supplement or terminate
any existing bid or proposal); or (B) involving a loss to the Company;
(x) authorize, recommend, propose or announce an intention
to authorize, recommend or propose, or enter into any Commitment with respect
to, any (A) plan of liquidation or dissolution, (B) merger or consolidation, (C)
change in its capitalization; (D) sale, assignment, license, disposition of or
transfer any Asset, other than sales of Company's products and services to Buyer
or its Subsidiaries, or in accordance with Section 7.2(n) below; or (E)
incurrence of any liabilities or obligations (including liabilities with respect
to indebtedness, capital leases or guarantees thereof) other than under the
Bridge Loan, to Buyer or its Subsidiaries, or in accordance with Section 7.2(n)
below;
(xi) change any accounting methods, principles or practices
followed by Company, or any of the assumptions underlying, or methods of
calculating, any bad debt, contingency or other reserve;
(xii) change or revoke any election with respect to Taxes,
change any Tax procedure or practice, or enter into any settlement or compromise
of any dispute involving a Tax liability;
(xiii) commence, compromise, settle or otherwise modify any
material claim, lawsuit or judicial proceeding, or repay or prepay any
liability, obligation or indebtedness prior to its stated maturity;
(xiv) give or agree to give any discount of Company's products
and services, unless such discount is for Buyer or its Subsidiaries, or in
accordance with Section 7.2(n) below;
(xv) take any action or omit to take any action that would
cause any of the representations or warranties contained herein not to be true
and correct at any time between the date hereof and the Closing Date; or
(xvi) commit or agree to do any of the foregoing.
(d) From the date hereof through the Closing, Company and Members
shall: (i) provide to Buyer complete access at all reasonable times to the
Commitments, agreements between Company and any Member or any Affiliate of any
Member, Company's books and records, offices and other facilities and properties
(including physical inspections of any of the current Premises); (ii) furnish
Buyer with all financial, operating and other documents, records, data, work
papers and other information regarding the Business, the Assets, Commitments,
liabilities, personnel and properties of Company as Buyer may from time to time
reasonably request; and (iii) take all action necessary to enable Buyer to make
such inspections, reviews and audits thereof as Buyer may reasonably request,
and discuss the same with representatives of Company.
27
(e) From the date hereof to the Closing Date, as promptly as
practicable, Company and Members will (i) use commercially reasonable efforts to
take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated hereby on or before the Closing Date;
(ii) file or supply, or cause to be filed or supplied, all applications,
notifications and information required to be filed or supplied by Company or
Members pursuant to applicable Law in connection with this Agreement, the sale
and transfer of the Assets pursuant hereto and the consummation of the other
transactions contemplated hereby; (iii) use all reasonable efforts to obtain, or
cause to be obtained, all Consents (including any required under applicable Law
or any Commitment) necessary to be obtained by Company or Members in order to
consummate the transactions contemplated pursuant to this Agreement; (iv)
coordinate and cooperate with Buyer in exchanging such information and supplying
such assistance as may be reasonably requested by Buyer in connection with any
filings and other actions contemplated hereby.
(f) Prior to the Closing Date, Company, with the reasonable
cooperation of Buyer, shall cause the transfer of, and the making of all
applicable notifications with respect to, any Consents from any Governmental
Authority, including any environmental permits, authorizations and similar
instruments, that are required to be transferred or made in connection with the
transactions contemplated hereby.
(g) Following the Closing, Company and Members shall, from time to
time, execute and deliver such additional instruments, documents, conveyances or
assurances and take such other actions as shall be necessary, or otherwise
reasonably requested by Buyer, to confirm and assure the rights and obligations
provided for in this Agreement and in the other Transaction Documents and render
effective the consummation of the transactions contemplated hereby or thereby.
(h) (i) In connection with the purchase by Buyer of the Assets
and the other transactions contemplated hereby, Company and each Member will
not, and will cause his, her or its respective Affiliates not to, for a period
of 2 years following the termination of their employment with Buyer or its
Subsidiaries or, in the event such Member is not employed by Buyer or its
Subsidiaries following the Closing (provided such 2 year period shall be
extended for any period of time Company or such Member is in breach of this
subsection (h)), the Closing, anywhere in the world directly or indirectly,
design, create, market or sell software or other technology products (including,
but not limited to, software or other technology products related to listing
(multiple or otherwise) for sale or rent of real property on the internet and
the provision, over the internet, of services to facilitate the consummation of
sales and leases of real property) which are competitive to the Business at the
time of the Closing ("Competitive Products and Services"). Without limiting the
generality of the foregoing, neither Company nor any Member shall, directly or
indirectly, be a director, officer or employee of, or consultant to, or own any
interest in any Person that designs, creates, markets or sells Competitive
Products or Services. The provisions of this Section 6.1(h)(i) shall not be
construed to prohibit the ownership by Company or any Member of FNIS Common
Stock, or the rendering of services by any Company or any Member to Buyer or any
of Buyer's Affiliates, or the ownership by Company or any Member or their
respective Affiliates of an aggregate interest of less than 5% of any publicly
traded company with stock listed on a national exchange or Nasdaq that designs,
creates, manufactures, sells or provides any Competitive Products and Services.
Notwithstanding anything to the contrary above, this Section 6.1(h)(i) shall not
prohibit (i) ISDI Technologies, Inc. and/or ISDI, LLC from continuing its
existing technology consulting business described on Schedule 6.1(h), (ii) ▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇. from offering such consulting and similar services to clients of
ISDI Technologies, Inc., including, without limitation, ▇▇▇▇▇▇▇▇ Realty, Ltd. or
its Affiliates in his capacity as their Chief Technology Officer, following any
termination by Buyer of his employment with Buyer or its Subsidiaries that is
without "cause" (as defined in the Employment Agreement), or (iii) ▇▇▇▇▇▇▇▇
Realty, Ltd. and its Affiliates from conducting its existing or future
businesses utilizing the Internet and/or other electronic resources, so long as
such entities are not designing, creating, marketing or selling software or
other technology constituting Competitive Products and Services.
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(ii) In connection with the transactions contemplated hereby,
Company and Members agree that they will not, and will cause their Affiliates
not to, for a period of 2 years following the termination of their employment
with Buyer or its Subsidiaries or, in the event such Member is not employed by
Buyer or its Subsidiaries following the Closing, the Closing, directly or
indirectly induce or solicit, or aid or assist any Person to induce or solicit,
any employees or officers of Buyer or Buyer's Affiliates, to terminate, curtail
or otherwise limit his or her employment by or business relationship with Buyer
or any of Buyer's Affiliates. Nothing contained in this Section 6.1(h)(ii) shall
prohibit ISDI Technologies, Inc. from soliciting and/or retaining or employing
any employee of the Division following such employee's termination of employment
with Buyer or any of its Subsidiaries.
(iii) The parties hereto agree that the provisions of this
Section 6.1(h) are reasonable. If a court determines, however, that any
provision of this Section 6.1(h) is unreasonable, either in period of time,
geographical area or otherwise, then the parties hereto agree that the
provisions of this Section 6.1(h) should be interpreted and enforced to the
maximum extent which such court deems reasonable. The provisions of this Section
6.1(h) shall inure to the benefit of Buyer, its Affiliates, and their respective
successors and assigns.
(i) Prior to the Closing, all information received from Buyer prior
to the Closing shall be deemed received pursuant to the Confidentiality
Agreement, and Members and Company shall comply with the confidentiality
provisions of the Confidentiality Agreement with respect to such information.
The confidentiality provisions of the Confidentiality Agreement are hereby
incorporated herein by reference with the same effect as if fully set forth
herein.
(j) From and after the Closing, Company and Members will, and will
cause their respective Affiliates to, hold in strict confidence, and not use to
the detriment of Buyer or its Subsidiaries, any information with respect to
Buyer, its Subsidiaries, or their respective business assets or properties,
including, without limitation, the Business and the Assets. Without limiting the
generality of the foregoing, Company and Members agree, covenant and acknowledge
that, from and after the Closing Date, they will not, and will cause their
respective Affiliates not to, directly or indirectly, disclose, give, sell, use,
or otherwise divulge any confidential or secret information (including but not
limited to any technology, process, trade secrets, know-how, other intellectual
property rights, strategies, financial statements or other financial information
not otherwise publicly available, forecasts, operations, business plans, prices,
discounts, products, product specifications, designs, plans, data or ideas)
primarily used in or primarily related to Buyer, its Subsidiaries, or their
respective business, assets or properties, including, without limitation, the
Business and the Assets. Notwithstanding the foregoing, Company and Members may
disclose such information (i) if compelled to disclose the same by judicial or
administrative process or by other requirements of applicable Law (but subject
to the following provisions of this Section 6.1(j)); (ii) if the same hereafter
is in the public domain through no fault of Company or Members; or (iii) if the
same is later acquired by Company or Members from another source and such source
is not under an obligation to another Person, Buyer or its Subsidiaries to keep
such information confidential. If Company, Members or any of their respective
Affiliates (the "Disclosing Party") is requested or required (by oral questions,
interrogatories, requests for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process) to disclose any
such information, the Disclosing Party shall provide Buyer with prompt notice of
any such request or requirement so that Buyer may seek a protective order or
other appropriate remedy and/or waive compliance with the provisions of this
Section 6.1(j). If, in the absence of a protective order or other remedy or the
receipt of a waiver by Buyer, the Disclosing Party nonetheless, based on the
written advice of counsel, is required to disclose such information to any
tribunal or else stand liable for contempt or suffer other censure or penalty,
the Disclosing Party, without liability hereunder, may disclose that portion of
such information which such counsel advises the Disclosing Party it is legally
required to disclose.
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(k) From the date hereof through the Closing, Company, its
Subsidiaries and Members shall (and shall cause their respective Affiliates to)
immediately suspend any existing negotiations or discussions relating to any
direct or indirect merger, joint venture, sale of assets, sale of or tender
offer for units or other securities of, other transfer of actual or beneficial
ownership of or similar transaction involving Company, its operations or any
assets or properties of Company (other than sale of Company products and
services to Buyer and its Subsidiaries, or in accordance with Section 7.2(n)
below) (collectively, a "Transaction"), and Company and Members shall not, and
shall cause their respective Affiliates not to, directly or indirectly, (i)
encourage, solicit, participate in or continue or initiate discussions or
negotiations with, or provide any information to, otherwise cooperate with, or
take any other action to facilitate knowingly any inquiries or the making of any
proposal or offer, to any Person, which constitutes, or may reasonably be
expected to lead to, any Transaction, or (ii) negotiate or discuss with any
third party concerning any proposal or offer for a Transaction. Company and
Members shall promptly notify Buyer of any such proposal initiated by any third
party.
(l) Company and Members shall be responsible for filing any and all
Tax Returns and shall be responsible for any and all tax liability related to
the Business and the Assets for all periods prior to the Closing Date,
including, without limitation, the period commencing January 1, 2001 and ending
on the Closing Date.
(m) By executing this Agreement, Company and Members expressly
acknowledge and agree that the Company Note Obligations held by any party
executing this Agreement are subordinate to the Convertible Note, the Demand
Note and the Bridge Loan, and that Company shall make no payments on any Company
Note Obligations held by any party executing this Agreement until such time as
the Convertible Note, the Demand Note and the Bridge Loan are satisfied in full.
In the event any party executing this Agreement receives payment on a Company
Note Obligations in violation of this Section 6.1(m), then such party expressly
agrees to hold such payment in trust for the benefit of Buyer. Notwithstanding
anything to the contrary above, as a result of the assumption by Buyer of the
Convertible Note, the Demand Note and the Bridge Loan at the Closing, the
provisions of this Section 6.1(m) shall not survive the Closing.
Section 6.2 Covenants of Buyer.
(a) Except as and to the extent required by applicable Law (in which
case the nature of the announcement shall be described to Company and Members,
and Company and Members shall be allowed reasonable time to comment prior to
dissemination), prior to the Closing, Buyer shall not make any public comment,
statement or communication, nor shall Buyer make any announcement to any of its
customers, vendors or underwriters, with respect to, or otherwise disclose or
permit the disclosure of the existence or terms of the discussions regarding,
this Agreement or the other Transaction Documents or the transactions
contemplated hereby or thereby without the prior written consent of Company.
(b) From the date hereof to the Closing Date, as promptly as
practicable, Buyer will: (i) use commercially reasonable efforts to take all
actions and to do all things necessary, proper or advisable to consummate the
transactions contemplated hereby on or before the Closing Date; (ii) file or
supply, or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Buyer pursuant to applicable Law
in connection with this Agreement, the purchase and transfer of the Assets
pursuant hereto and the consummation of the other transactions contemplated
hereby; (iii) coordinate and cooperate with Company and Members in exchanging
such information and supplying such reasonable assistance as may be reasonably
requested by Company and Members in connection with any filings and other
actions contemplated by Section 6.1(e); and (iv) extend credit to Company in
accordance with the terms and conditions of the Bridge Loan. Notwithstanding the
30
foregoing, Buyer shall not be obligated to obtain or make any authorization,
consent, filing or approval if, in Buyer's reasonable judgment, doing so could
have a Material Adverse Effect on Buyer.
(c) Following the Closing, Buyer shall, from time to time, execute
and deliver such additional instruments, documents, conveyances or assurances
and take such other actions as shall be necessary, or otherwise reasonably
requested by Company, to confirm and assure the rights and obligations provided
for in this Agreement and in the other Transaction Documents and render
effective the consummation of the transactions contemplated hereby.
(d) Prior to the Closing, all information received from Members and
Company prior to the Closing shall be deemed received pursuant to the
confidentiality provisions of the Confidentiality Agreement, and Buyer shall
comply with the confidentiality provisions of the Confidentiality Agreement with
respect to such information.
(e) Subject to the last paragraph of Section 3.2(b), from the
Closing Date through December 31, 2004, Buyer shall:
(i) maintain records regarding the Business and the Assets
in a Division of Buyer or one of its Subsidiaries;
(ii) conduct the Business of Buyer in a commercially
reasonable manner (including discontinuing all or any portion of the Business if
it is commercially reasonable to do so);
(iii) not, in connection with the operation of the Business,
except in the ordinary course of business, waive any rights of any substantial
value (including, without limitation, in connection with any transaction between
the Division, on the one hand, and Buyer and its Subsidiaries on the other hand)
unless the full amount of such rights are credited toward the calculation of the
Earn-Out Consideration; and
(iv) exercise the same degree of diligence in collecting
accounts receivable relating to the Division that it employs in the collection
of its own accounts receivable.
(f) On or prior to the Closing Date, Buyer shall offer employment to
all employees listed on Schedule 6.2(f) on such terms and conditions as
determined by Buyer in its sole discretion. Those employees accepting such offer
from Buyer are referred to herein as "Transferred Employees." As of the Closing
Date, and without any interruption of coverage, Buyer shall provide to each
Transferred Employee (i) participation in Employee Benefit Plans of Buyer
consistent with that provided similarly situated employees of Buyer, and (ii)
credit for service with Company, determined on the Closing Date, for purposes of
such participation. Buyer shall waive all pre-existing condition exclusions and
actively-at-work requirements and provide that any expenses incurred on or
before the Closing Date by a Transferred Employee or a Transferred Employee's
covered dependent shall be taken into account for purposes of satisfying
applicable deductible, coinsurance and maximum out-of-pocket provisions.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Obligations of Each Party. The obligations
of the parties hereto to consummate the transactions contemplated hereby at the
Closing shall be subject to the fulfillment on or prior to the Closing Date of
the following conditions:
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(a) Consummation of the transactions contemplated hereby shall not
have been restrained, enjoined or otherwise prohibited by any Law, judicial
order or arbitral decision. No governmental authority or agency shall have
determined that any Law makes illegal the consummation of the transactions
contemplated hereby, and no proceeding with respect to the application of any
such Law to such effect shall be pending or threatened.
Section 7.2 Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the acquisition of the Units and the other transactions
contemplated hereby at the Closing shall be subject to the fulfillment (or
waiver by Buyer) on or prior to the Closing Date, of each of the following
additional conditions:
(a) Each of the representations and warranties of Company and
Members contained in this Agreement and the other Transaction Documents to which
either of them is a party that is qualified as to materiality shall be true and
correct and each such representation and warranty that is not so qualified shall
be true and correct in all material respects, in each case on the date hereof
and at and as of the Closing Date as though made on and as of the Closing Date.
Company and Members shall each have duly performed and complied in all material
respects with all agreements, covenants and conditions required by this
Agreement and the other Transaction Documents to which either of them is a party
to be performed or complied with by it prior to or on the Closing Date.
(b) Since the date hereof, there shall not have occurred any (i)
Material Adverse Effect (including any Material Adverse Effect due to any
pending or threatened litigation) on the Business or the Assets; or (ii)
material change in the Business, the Assets, any of Company's Commitments (other
than its actual completion or progress toward the same), or Company's financial
condition, prospects or operations.
(c) Company have delivered to Buyer a certificate, dated the Closing
Date and signed by a duly authorized officer, to the effect of Section 7.2(a)
and Section 7.2(b).
(d) Buyer shall have received from Company a certificate, dated the
Closing Date and signed by the secretary or equivalent officer of Company,
certifying to each of the following items of Company, which shall be attached
thereto: (i) copies of its Articles of Organization, and all amendments thereof
to date, certified as of a recent date by the Director of the Department of
Commerce and Consumer Affairs of the State of Hawaii; (ii) copies of its
Operating Agreement, and all amendments thereof to date; (iii) specimen
signatures of its incumbent officers; (iv) certificates of good standing (or
local law equivalent) of a recent date, certified by the Secretary of State or
other appropriate official of each other state in which it is qualified to do
business; and (vi) records of all action taken by Company's members and
managers, and committees, which are required to be recorded by applicable Law or
the Operating Agreement of the Company, approving the Transaction Documents and
the transactions contemplated therein.
(e) Company and Members shall have filed or supplied, or shall have
caused to be filed or supplied, all applications, notifications and information
required to be filed or supplied by Company and Members pursuant to applicable
Law in connection with this Agreement, the sale and transfer of the Assets
pursuant hereto and the consummation of the other transactions contemplated
hereby. Company and Members shall have obtained and shall have delivered to
Buyer copies of all governmental and non-governmental Consents required to be
obtained by Company and Members in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby. No
Consent so obtained shall: (i) have been conditioned upon the modification,
cancellation or termination of any Commitment, right, license or permit of
Company; (ii) impose on the Business or the Assets after the Closing any
condition, provision or requirement not presently imposed upon thereon, or any
condition that would be more restrictive after the Closing on the Business or
the Assets than the
32
conditions presently imposed thereon; (iii) necessitate the payment of premium
or penalty by, or loss of benefit to, Buyer as successor owner of the Business
and the Assets or necessitate an increase in tangible net worth of the Assets;
or (iv) impose a requirement on Buyer or its Subsidiaries that, in Buyer's
reasonable judgment, shall have a Material Adverse Effect on Buyer or its
Subsidiaries.
(f) All limited liability company and other proceedings of Company
and Members in connection with this Agreement and the other Transaction
Documents to which either of them is a party and the transactions contemplated
hereby and thereby, and all documents and instruments incident thereto, shall be
reasonably satisfactory in form and substance to Buyer, and Buyer shall have
received from Members and Company all such documents and instruments, or copies
thereof, certified if requested, as may be reasonably requested.
(g) Members shall have delivered to Buyer at the Closing all
documents, certificates and agreements necessary to transfer to Buyer title to
the Assets, free and clear of any and all Liens thereon, which documents,
certificates and agreements shall each be in form and substance reasonably
satisfactory to Buyer, including (i) a ▇▇▇▇ of sale, assignment and general
conveyance, dated the Closing Date, with respect to the Assets, and (ii)
assignment of all Contracts, Intellectual Property, and any other agreements and
instruments constituting Assets, dated the Closing Date, assigning all of
Company's right, title and interest therein and thereto.
(h) Company shall have delivered to Buyer certificates of its
managers and officers, in form and substance reasonably satisfactory to Buyer,
dated the Closing Date, certifying that (i) no claims have been brought or, to
such individual's Knowledge, threatened against such individual which would or
may give rise to a right to indemnification from Company, and (ii) such
individual has no claim against Company (other than for any accrued and unpaid
wages).
(i) Buyer shall have completed to its sole satisfaction its
business, financial and legal due diligence investigation of Company, the
Business and the Assets, and shall have found, in Buyer's sole discretion,
Company's prospects, Business, operations, Assets, Commitments, rights and
liabilities, including its liabilities with respect to, and compliance with,
Environmental Laws and legal and regulatory requirements, satisfactory;
provided, however, that this condition shall be deemed satisfied if this
Agreement is not terminated by Buyer prior to November 16, 2001. Without
limiting the generality of the foregoing, Buyer shall have received true,
complete and correct copies of each Commitment of Company or other document of
Company referred to in the Schedules and shall have reviewed and be satisfied
with the same.
(j) ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. and Company shall have delivered to Buyer
the fully executed Employment Agreement.
(k) Members Agent shall have delivered to Buyer the Certification.
(l) Company and ▇▇▇▇▇▇▇▇ Realty, Ltd. shall have delivered to Buyer
and Buyer shall have approved in its sole discretion written documentation
converting the ▇▇▇▇▇▇▇▇ Contribution from a debt obligation of Company to an
equity interest in Company effective as of the Closing.
(m) The Sublease shall have been amended to provide Buyer with the
right to terminate the Sublease without liability on not less than 120 days
prior written notice.
(n) Company and ▇▇▇▇▇▇▇▇ Realty, Ltd. and/or its Affiliates shall
have executed a Technology Outsourcing Agreement and/or other similar agreements
(the "Outsource Agreements"), which agreement will incorporate, and supersede
and replace, all prior rights and obligations, whether written or oral, of
33
Company and/or its subsidiaries and ▇▇▇▇▇▇▇▇ Realty, Ltd. and/or its Affiliates
to one another, and shall be fully enforceable in accordance with their terms.
The form, terms and conditions of the Outsource Agreements shall be approved by
Buyer in its sole discretion.
(o) Company shall have delivered to Buyer and Buyer shall have
approved in its sole discretion a written acknowledgement from Prudential Real
Estate Affiliates, Inc. or its successor in interest ("PREA") that (i) the Prime
License and Consulting Services Agreement, dated June 19, 1995, as amended (the
"Prime License Agreement") has been terminated, (ii) PREA has released Company
from any and all liability under the Prime License Agreement and/or any related
agreement, including, without limitation, any End User License Agreement
("▇▇▇▇") issued under the Prime License Agreement, (iii) Company has no
remaining obligations under the Prime License Agreement or any ▇▇▇▇, and (iv)
PREA has relinquished any and all right title and interest in and to the Prisms
software, both object and source code, including all current and prior versions,
other than to the extent required to satisfy PREA's existing obligations under
any ▇▇▇▇.
(p) Company shall have delivered to Buyer and Buyer shall have
approved in its sole discretion a written acknowledgement from DataQuick
Information Systems, Inc. ("DataQuick") releasing Buyer and the Assets from any
and all liability under that certain Data File License and Internet Distribution
Agreement, dated October 31, 2000, as amended (the "DataQuick Agreement").
(q) All of the Assets held in any Subsidiary or other Affiliate of
Company, including, without limitation, ISDI Technologies, Inc., ▇▇▇▇▇▇▇▇.▇▇▇,
LLC and ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, LLC, used in connection with the Business (including
certain servers and office equipment currently owned by ISDI Technologies,
Inc.), shall be transferred to Company in a manner approved by Buyer.
Section 7.3 Conditions to Obligations of the Company and Members.
The obligation of Company and Members to consummate the transactions
contemplated hereby at the Closing shall be subject to the fulfillment (or
waiver by Company and Members), on or prior to the Closing Date, of the
following additional conditions:
(a) Each of the representations and warranties of Buyer contained in
this Agreement that is qualified as to materiality shall be true and correct and
each such representation and warranty that is not so qualified shall be true and
correct in all material respects, in each case on the date hereof and at and as
of the Closing Date as though made on and as of the Closing Date. Buyer shall
have duly performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by it
prior to or on the Closing Date. Buyer shall have delivered to Company a
certificate, dated the Closing Date and signed by its duly authorized officer,
to the foregoing effect.
(b) Buyer shall have obtained and shall have delivered to Company
copies of all governmental and non-governmental Consents required to be obtained
by Buyer in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
(c) All corporate proceedings of Buyer in connection with this
Agreement and the transactions contemplated hereby, and all documents and
instruments incident thereto, shall be reasonably satisfactory in form and
substance to Company, and Company shall have received from Buyer all such
documents and instruments, or copies thereof, certified if requested, as may be
reasonably requested.
(d) Company shall have received from Buyer an assumption agreement,
in form and substance reasonably satisfactory to Company, under which Buyer
shall have assumed the Assumed Liabilities.
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ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date:
(a) by the written agreement of Buyer and Company;
(b) by Buyer, on the one hand, or Company, on the other hand, by
notice to the other party, if the Closing shall not have been consummated
pursuant hereto by 5:00 p.m. Pacific time on January 31, 2002, provided,
however, that the right to terminate this Agreement pursuant to this Section
8.1(b) shall not be available to any party in breach of this Agreement;
(c) by Buyer by notice to Company, if any of the conditions set
forth in Section 7.1 or Section 7.2 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by 5:00 p.m. Pacific
time on December 31, 2001, unless such failure shall be due to the failure of
Buyer to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing; or
(d) by Company by notice to Buyer, if any of the conditions set
forth in Section 7.1 or Section 7.3 shall not have been, or if it becomes
apparent that any of such conditions will not be, fulfilled by 5:00 p.m. Pacific
time on December 31, 2001, unless such failure shall be due to the failure of
Company or Members to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it prior to the Closing.
Section 8.2 Effect of Termination. If this Agreement is terminated
pursuant to the provisions of Section 8.1, then this Agreement shall become void
and have no effect, without any liability to any Person in respect hereof or of
the transactions contemplated hereby on the part of any party hereto, except for
any liability resulting from such party's breach of or default under this
Agreement.
ARTICLE IX
INDEMNIFICATION
Section 9.1 Indemnification By Company and Members. Subject to the
terms and conditions of this Article IX, Company and Members covenant and agree
jointly and severally to defend, indemnify and hold harmless Buyer and its
Affiliates (including, after the Closing, Company) and their respective
officers, directors, employees, agents, advisers and representatives
(collectively, the "Buyer Indemnitees"), from and against, and pay or reimburse
the Buyer Indemnitees for, any and all claims, liabilities (including Tax
liabilities), fines, costs, judgments, penalties or proceedings (whether
absolute, accrued, conditional or otherwise and whether or not resulting from
third party claims), including out-of-pocket expenses, court costs, consulting
fees, expert witness fees and reasonable attorneys' fees and expenses incurred
in the investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, "Losses"), resulting from or arising
out of:
(a) any inaccuracy or defect in any representation or warranty of
either the Company or Members contained in this Agreement; or
(b) any breach of any covenant or agreement of Company or Members
contained in this Agreement; or
(c) the Excluded Assets or the Excluded Liabilities; or
35
(d) the Business, the Assets or the Assumed Liabilities prior to the
Closing; or
(e) the business and/or operation (or dissolution) of the Company
following the Closing; or
(f) the employment of the Transferred Employees by Company, its
Subsidiaries or their respective Affiliates prior to the Closing and the
termination of the Transferred Employees by such entities pursuant to this
Agreement.
provided, however, that no claim for indemnification under Section 9.1(a) may be
made unless Losses incurred under Sections 9.1(a) shall aggregate $20,000, at
which time Company and Members shall indemnify the Buyer Indemnitees for Losses
under Section 9.1(a) that are in excess of such $20,000 threshold. There shall
be no threshold requirement for indemnification for Losses under Section 9.1(b)
through (f). Further, no claim for indemnification may be made after the
Expiration Date applicable to such claim. Other than as expressly set forth
herein, nothing in this Section 9 shall limit the liability of Company or
Members for any breach of any representation, warranty or covenant or any right
of Buyer to seek recourse for claims based on fraud. Notwithstanding anything to
the contrary in this Section 9.1 or in this Agreement, (i) ▇▇▇▇▇▇▇▇ Realty, Ltd.
shall not be liable to the Buyer Indemnitees for any Losses resulting from or
arising out of any inaccuracy or defect in any of the representations or
warranties of either the Company or Members set forth in Sections 4.4, 4.6, 4.8,
4.9, 4.10, 4.12, 4.13, 4.15, 4.16, 4.19, 4.20, 4.22, 4.24, 4.25 and 4.28 above,
and (ii) the maximum amount of Losses that any Member shall be liable to the
Buyer Indemnitees shall not exceed an amount equal to: (A) the aggregate dollar
value of the Purchase Price (including the Cash Consideration, the Stock
Consideration and the Earn-Out Consideration) received by Company, multiplied by
(B) the percentage ownership interest of Member in Company as of the Closing
Date. For purposes of clause (ii)(A) of the preceding sentence, value of the
Stock Consideration received by Members shall be based on a price of $7.35 per
share.
Section 9.2 Indemnification By Buyer. Subject to the terms and
conditions of this Article IX, Buyer covenants and agrees to defend, indemnify
and hold harmless Company from and against any and all Losses resulting from or
arising out of:
(a) any inaccuracy or defect in any representation or warranty of
Buyer contained in this Agreement; or
(b) any breach of any covenant or agreement of Buyer contained in
this Agreement; or
(c) the Assumed Liabilities following to the Closing; or
(d) the employment of the Transferred Employees by Buyer or its
Subsidiaries following the Closing.
provided, however, that no claim for indemnification under Section 9.2(a) may be
made unless Losses incurred under Sections 9.2(a) shall aggregate $20,000, at
which time Buyer shall indemnify Company for Losses under Section 9.2(a) that
are in excess of such $20,000 threshold. There shall be no threshold requirement
for indemnification for Losses under Section 9.2(b). Further, no claim for
indemnification may be made after the Expiration Date applicable to such claim.
Section 9.3 Indemnification Procedures.
(a) In the case of any claim asserted by a third party against a
party entitled to indemnification under this Agreement (each, an "Indemnified
Party"), notice shall be given by the Indemnified Party to the party required to
provide indemnification (the "Indemnifying Party") as soon as practicable after
such
36
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of any third party
claim or any litigation with a third party resulting therefrom; provided,
however, that (i) the counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be subject to the approval of the
Indemnified Party (which approval shall not be unreasonably withheld or
delayed); (ii) the Indemnified Party may participate in such defense at such
Indemnified Party's expense (which shall not be subject to reimbursement
hereunder except as provided below); and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except and only to the
extent that such Indemnifying Party is actually and materially damaged as a
result of such failure to give notice. Except with the prior consent of the
Indemnified Party, no Indemnifying Party, in the defense of any litigation,
shall consent to entry of any judgment or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a general release from
any and all liability with respect to such litigation. If the Indemnified Party
shall in good faith determine that the conduct of the defense of any claim
subject to indemnification hereunder or any proposed settlement of any such
claim by the Indemnifying Party might be expected to affect adversely the
Indemnified Party's Tax liability or the ability of the Indemnified Party to
conduct its business, or that the Indemnified Party may have available to it one
or more defenses or counterclaims that are inconsistent with one or more of
those that may be available to the Indemnifying Party in respect of such claim
or any litigation relating thereto, the Indemnified Party shall have the right
at all times to take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
Indemnifying Party; provided, however, that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not settle such claim
or litigation without the consent of the Indemnifying Party, such consent not to
be unreasonably withheld or delayed. If the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand at the sole cost of
the Indemnifying Party and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall reasonably cooperate in the defense of any third party claim or
litigation subject to this Article IX and the records of each shall be
reasonably available to the other with respect to such third party defense.
(b) With respect to any claim for indemnification hereunder which
does not involve a third party claim, the Indemnified Party will give the
Indemnifying Party notice of such claim. The Indemnifying Party may acknowledge
and agree by notice to the Indemnified Party to satisfy such claim within 20
days of receipt of notice of such claim from the Indemnified Party. If the
Indemnifying Party shall dispute such claim, the Indemnifying Party shall
provide notice of such dispute to the Indemnified Party within such 20-day
period, setting forth in reasonable detail the basis of such dispute. Upon
receipt of notice of any such dispute, the Indemnified Party and the
Indemnifying Party shall use reasonable efforts to resolve such dispute within
30 days of the date such notice of dispute is received. If the Indemnifying
Party shall fail to provide notice to the Indemnified Party within 20 days of
receipt of notice from the Indemnified Party that the Indemnifying Party either
acknowledges and agrees to pay such claim or disputes such claim, the
Indemnifying Party shall be deemed to have acknowledged and agreed to pay such
claim in full and to have waived any right to dispute such claim. Once (i) the
Indemnifying Party has acknowledged and agreed to pay any claim pursuant to this
Section 9.3(b); (ii) any dispute under this Section 9.3(b) has been resolved in
favor of indemnification by mutual agreement of the Indemnifying Party and the
Indemnified Party; or (iii) any dispute under this Section 9.3(b) has been
finally resolved in favor of indemnification by court order of any court having
jurisdiction over such dispute, then the Indemnifying Party shall pay the amount
of such claim to the Indemnified Party within 20 days of the date of
acknowledgement or resolution, as the case may be, to such account and in such
manner as is designated in writing by the Indemnified Party.
37
(c) If a claim for indemnification has been made prior to the
Expiration Date, the parties' rights and obligations under this Article IX in
respect of such claim shall continue even if the Expiration Date shall occur
prior to full resolution of such claim.
Section 9.4 Expiration of Representations and Warranties, etc. All
representations and warranties contained in this Agreement shall survive the
Closing; provided, however, that all representations and warranties shall expire
at 5:00 p.m. Pacific time on the second (2nd) anniversary of the Closing Date,
except with respect to the representations and warranties set forth in Sections
4.4(a), 4.8, 4.19 and 4.20, which shall expire upon the expiration of the
relevant statute of limitations (the "Expiration Date").
ARTICLE X
MEMBERS' AGENT
Section 10.1 Agent of Members; Power of Attorney. In the event of the
dissolution of Company following the Closing, and without further act of Company
or any Member, ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. shall be appointed as agent and
attorney-in-fact ("Members' Agent") for each Member, for and on behalf of the
Members, to take all actions otherwise applicable to Company under Sections 3.3
, 3.7 and 9 of this Agreement, including without limitation to give and receive
notices and communications, to consent to or object to the Annual Determinations
under Section 3.3, and to agree to, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to such claims under Section 9 and to take
all actions necessary or appropriate in the judgment of Members' Agent for the
accomplishment of the foregoing. Such agency may be changed by Members from time
to time upon not less than ten (10) days prior written notice to Buyer; provided
that Members' Agent may not be removed unless holders of a majority interest of
the Units as of the date hereof agree to such removal and to the identity of the
substituted agent. Any vacancy in the position of Members' Agent may be filled
by approval of the holders of a majority in interest of the Units as of the date
hereof. No bond shall be required of the Members Agent, and Members' Agent shall
not receive compensation for his, her or its services. Notices or communications
to or from the Members' Agent shall constitute notice to or from each of
Members. Notwithstanding anything to the contrary above, on or prior to the
Closing, and without any further act of Company or any Member, ▇▇▇▇▇ ▇. ▇▇▇▇▇,
Esq. shall be appointed as agent and attorney in fact for Company and Members
for the purpose of receiving and distributing the Cash Consideration in
accordance with the Certification and Section 3.2(a) of this Agreement, and such
agency may not be changed by Company or Members without the written consent of
Buyer, which consent shall not be unreasonably withheld.
Section 10.2 Liability of Members' Agent. Members' Agent shall not be
liable for any act done or omitted hereunder as Members Agent while acting in
good faith and pursuant to written instructions from Members representing a
majority in interest of all Members. Members shall severally indemnify Members'
Agent and hold Members' Agent harmless against any loss, liability or expense
incurred by Members' Agent for any act or failure to act by members' Agent
pursuant to written instructions from Members representing a majority in
interest of all Members and arising out of or in connection with the acceptance
or administration of Members' Agent's duties hereunder, including the reasonable
fees and expenses of any legal counsel retained by Members' Agent.
Section 10.3 Binding Effect of Actions of Members' Agent. A decision,
act, consent or instruction of Members' Agent shall constitute a decision of all
Members and shall be final, binding and conclusive upon each Member, and Buyer
may rely upon any such decision, act, consent or instruction of Members' Agent
as being the decision, act, consent or instruction of each and every Member.
Buyer is
38
hereby relieved from any liability to Members for any acts done by Buyer in
accordance with such decision, act, consent or instruction of Members' Agent.
ARTICLE XI
MISCELLANEOUS
Section 11.1 Expenses. Members shall be responsible for and bear all
expenses, costs and fees (including investment banking, attorneys' and auditors'
fees, any broker's or finder's fees, and any other expenses) incurred at any
time by Members or Company in connection with pursuing or consummating the
transactions contemplated hereby, including the preparation, execution and
delivery of this Agreement and the other Transaction Documents and compliance
herewith and therewith, whether or not the transactions contemplated hereby
shall be consummated. Buyer shall bear such expenses, costs and fees incurred by
it.
Section 11.2 Severability. If any provision of this Agreement,
including any phrase, sentence, clause, Section or subsection is inoperative or
unenforceable for any reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatsoever.
Section 11.3 Notices. All notices, requests, demands, approvals,
consents, waivers and other communications required or permitted to be given
under this Agreement shall be in writing and shall be (a) delivered personally;
(b) mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid; (c) sent by nationally recognized next-day or
overnight mail or delivery; or (d) sent by facsimile transmission, provided that
the original copy thereof also is sent by certified or registered mail.
(i) if to Buyer, to:
Fidelity National Information Solutions, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇, President
39
(ii) if to Members, to:
ISDI.Technologies, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
And to:
▇▇▇▇▇▇▇▇ Realty, Ltd.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇▇▇▇▇-Church
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
(iii) if to Company, to:
▇▇▇▇.▇▇▇, LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
or, in each case, at such other address as may be specified in a written notice
sent in accordance with the provisions of this Section 11.3 to the other parties
hereto. All notices shall be deemed effective and given upon receipt; provided,
however, that if any facsimile notice is received after 5:00 P.M. local time at
the place of receipt, it shall be deemed to have been given as of the next
following Business Day.
Section 11.4 Attorneys' Fees. If any party hereto initiates any legal
action arising out of or in connection with this Agreement, the prevailing party
shall be entitled to recover from the other party all reasonable attorneys'
fees, expert witness fees and expenses incurred by the prevailing party in
connection therewith (including fees and expenses incurred to prosecute any
appeal or to enforce any judgment). This Section 10.4 shall not be deemed merged
into any judgment rendered on this Agreement.
Section 11.5 Liability for Transfer Taxes. Company shall be
responsible for and pay in a timely manner all sales, use, value added,
documentary, stamp, gross receipts, registration, transfer, conveyance, excise,
recording, license and other similar taxes and fees, if any, arising out of or
in connection with or attributable to the transfer of the Assets effected
pursuant to this Agreement.
Section 11.6 Headings. The headings contained in this Agreement are
for purposes of convenience only and shall not affect the meaning or
interpretation of this Agreement.
Section 11.7 Entire Agreement. This Agreement (including the
Schedules and Exhibits attached hereto) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between or among the parties with respect to the subject matter hereof except
the confidentiality provisions set forth in the Confidentiality Agreement.
Section 11.8 Counterparts. This Agreement may be executed (including
by facsimile transmission) with counterpart signature pages or in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.
40
Section 11.9 Governing Law, Etc. This Agreement shall be governed in
all respects, including as to validity, interpretation and effect, by the
internal Laws of the State of Delaware giving effect to the conflict of laws
rules thereof.
Section 11.10 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and its respective heirs, successors
and permitted assigns.
Section 11.11 Assignment. This Agreement shall not be assignable or
otherwise transferable by any party hereto without the prior written consent of
the other parties hereto.
Section 11.12 No Third Party Beneficiaries. Except as provided in
Article IX with respect to indemnification of Indemnified Parties hereunder,
nothing in this Agreement shall confer any rights upon any Person other than the
parties hereto and its respective heirs, legal representatives, successors and
permitted assigns.
Section 11.13 Amendment; Waivers, etc. No discharge of this Agreement,
and no waiver hereunder, shall be valid or binding unless set forth in writing
and duly executed by the party against whom enforcement of the discharge or
waiver is sought. Any such waiver shall constitute a waiver only with respect to
the specific matter described in such writing and shall in no way impair the
rights of the party granting such waiver in any other respect or at any other
time. Neither the waiver by any of the parties hereto of a breach of or a
default under any of the provisions of this Agreement, nor the failure by any of
the parties, on one or more occasions, to enforce any of the provisions of this
Agreement or to exercise any right or privilege hereunder, shall be construed as
a waiver of any other breach or default of a similar nature, or as a waiver of
any of such provisions, rights or privileges hereunder. No amendment or
modification of this Agreement shall be effective unless in a writing executed
by all the parties hereto.
Section 11.14 Acknowledgment. Company and Members on one hand, and
Buyer, on the other hand, each acknowledges that the representations,
warranties, agreements and covenants contained in this Agreement and in any
document, instrument or certificate delivered pursuant hereto or in connection
herewith shall not be deemed waived or otherwise affected by or as a result of
any investigation by the other.
[SIGNATURES ON FOLLOWING PAGE]
41
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
"COMPANY"
▇▇▇▇.▇▇▇, LLC, a Hawaii limited liability ACCEPTED AND AGREED AS TO
company SECTION 6.1(h) AND (m) ONLY:
----------------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., an individual
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
"MEMBERS"
ISDI TECHNOLOGIES, INC., a Hawaii
corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
▇▇▇▇▇▇▇▇ REALTY, LTD., a California
limited partnership
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, an individual
"BUYER"
FIDELITY NATIONAL INFORMATION
SOLUTIONS, INC., a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
42
Schedules
2.1(a) List of Assumed Contracts
3.4(a) List of Assumed Trade Accounts Payable
2.8 Allocation of Purchase Price Among Members
4.1 Ownership and Foreign Jurisdictions
4.2 Capitalization
4.3 Acts & Proceedings
4.4 Compliance with Laws
4.6 Financial Statements
4.6(a) Liabilities not in Financial Statements
4.7 Material Agreements
4.8 Tax Returns
4.9 Intellectual Property
4.9(b) Intellectual Property Liens
4.9(c) Third Party Intellectual Property Commitments
4.9(d) Intellectual Property Litigation
4.9(e) Intellectual Property Licenses
4.9(f) Deficiencies in Intellectual Property
4.9(j) Computer Software
4.9(k) Assignment of Intellectual Property Rights
4.9(l) Confidential Intellectual Property Information
4.10 Insurance Policies
4.11 Litigation
4.12 Licenses and Permits
4.14 Brokers and Finders
4.15 No Adverse Change
4.16 Title to and Condition of Properties
4.17 Transactions with Affiliates
4.20 Employee Benefit Plans
4.20(e) Non-qualified Plans
4.21 Product and Services Claims
4.22 Labor Matters
4.23 Customers, Underwriters and Suppliers
4.25 Bank Accounts and Powers of Attorney
5.2 Buyer's Corporate Acts and Proceedings
5.3 Buyer's Compliance with Laws
6.1(h) Description of Existing Business of ISDI Technologies, Inc.
6.2(f) List of Transferred Employees
43
