EXHIBIT 10.8
Stock Purchase Agreement
Basic Provisions
THIS AGREEMENT (the "Agreement") made as of the 11th day of September, 1998
between Internet Ventures, Inc., a California corporation ("Buyer") and Anthony
Javoric, the sole shareholder ("Seller"), to purchase Oregon Wilderness Delivery
Service, Inc., an Oregon corporation, ("the Company") signing this Agreement,
Buyer and Seller agree as follows:
1. Exchange: Subject to the terms and conditions contained in this Agreement
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and in reliance upon the representations and warranties of the parties made in
the Standard Terms and Conditions attached, at the Closing, Buyer agrees to
acquire and Seller agrees to sell all of the outstanding shares of capital stock
the Company in exchange for cash and a convertible debenture in the form
promissory note (the "Note") as more particularly defined below.
2. Capitalization of the Company.
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a. The total number of the Shares of the Company authorized is ten
thousand (10,000) shares of common stock ("Authorized Shares of the
Company").
b. Of the Authorized Shares of the Company, there are outstanding as of
the date hereof two thousand two hundred (2,200) Shares of the Company
("Issued Shares of the Company").
c. Seller owns the number of Issued Shares of Company set forth opposite
Seller's name in the signature portion of this Agreement. Seller owns
all of the Issued Shares of the Company.
3. Valuation:
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a. The Valuation Date shall be May 27, 1998.
b. The net Valuation of the Company shall be four hundred and twenty five
($425,000) dollars.
4. Consideration:
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The total consideration, the sufficiency of which is noted specifically
herein, for the purchase of the Company which shall be paid or issued to Seller
at Closing shall be:
a. A cash payment in the amount of fifty thousand dollars ($50,000); and
b. A convertible debenture shall be issued in the form of a promissory
note (the "Note"), attached hereto as Exhibit A, in the amount of
three hundred and seventy-five thousand ($375,000) dollars. The note
shall carry a term of two (2) years and shall accrue interest at the
rate of eleven percent (11%) per annum. Seller shall have the option,
but not the obligation, to convert the Note to Shares of Buyer at any
time during the first twenty four (24) month period after issuance of
the Note. In addition to the foregoing, Buyer shall issue to Seller
warrants to purchase sixty eight thousand one hundred and eighty-two
(68,182) Shares of Buyer at the rate of five dollars and fifty cents
($5.50) per share (the "Warrants"). Said Warrants shall expire on the
second anniversary of the issuance date of the Note if not exercised
by Seller prior to such termination date unless, within the
aforementioned time period, the Seller has given notice to exercise.
The Warrants will be deemed to have been issued to Seller pursuant to
Seller's conversion rights of the debenture provisions of the Note.
c. Buyer shall provide a 128K DSL internet connection at no charge to
Anthony Javoric for a period of two (2) years from the date this
Agreement is executed. After the two year period has elapsed Anthony
Javoric may continue to receive --this connection at no charge for
another two (2) years by reimbursing the Company monthly for the U.S.
West charges incurred for this connection. The foregoing is expressly
conditional upon the Buyer maintaining the aforementioned type of
service. If the Buyer later discontinues the aforementioned service
and institutes a different, but comparable service (e.g.,
PeRKInet(R)), then the Buyer will provide Anthony Javoric with that
service for the aforementioned rates and time periods.
d. Buyer agrees to assume an additional twenty thousand dollars ($20,000)
in additional liabilities as more particularly defined in Exhibit C,
attached hereto.
5. Closing: The Closing Date shall be September 11, 1998.
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6. Non-Competition and Confidentiali1y: At the Closing the Seller shall
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execute a Non-Competition and Confidentiality Agreement in the form annexed as
Exhibit B.
7. Rights of Buyer: Buyer shall have all rights to any intellectual property
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(including without limitation patents or patentable inventions, copyrights or
copyrightable subject matter, trade secrets, technology or know-how, designs
protectable under any provision of United States or foreign law, or trademarks
or service marks which shall also include but are not limited to those rights to
the trade-name "Chatlink" and distribution rights to the ChatLink and NetACCESS
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software products currently held by Seller) created or developed by the Company
or by its past or present employees (whether in whole or in part) during the
term of their employment with the Company, which shall be the sole property of
the Buyer. Company and its principals agree to cooperate in good faith with the
Buyer in securing, protecting, and defending any resulting patent, copyright,
trademark, design or trade secret rights whether in the United States or in any
foreign country. Buyer shall also realize the benefits and revenues of those
certain wholesale accounts and assumption of Seller's rights under the Virtual
Internet Service Provider Agreement with ComputerPros, Inc. dated June 1, 1997.
8. Employment Agreements: Seller agrees to enter into an Employment Agreement
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with the Company which is attached hereto as Exhibit D.
The Company agrees to enter into a Consulting Agreement with Internet
Ventures, Inc. to provide advice regarding the operations of the Company. In
consideration for these services, Internet Ventures, Inc. shall receive
compensation for these services in the amount of five percent (5%) of the
Company's gross revenues payable on a monthly basis.
9. Standard Terms: This Agreement includes the Standard Terms and Conditions
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annexed hereto, which by this reference is hereby incorporated herein and made a
part hereof.
10. Pledge Agreement: Buyer and Seller shall enter into, and execute
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simultaneously with this Agreement, the Pledge Agreement, attached hereto as
Exhibit E, incorporated herein by reference, setting forth certain conditions of
Buyer and Seller relating to the capital stock of Seller.
INTENDING TO BE LEGALLY BOUND, the parties have executed this Agreement as of
the above date,
[signatures on the following page]
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Buyer: INTERNET VENTURES, INC.
By: /s/ Donald J. Janke
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Donald J. Janke
Title: President
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Seller: Anthony V. Javoric, as sole shareholder of
OREGON WILDERNESS DELIVERY SERVICE, INC.
Seller's Name Number of Shares
- ------------- ----------------
/s/ Anthony Javoric 9/14/98 2,200
- ------------------- ------- -----
Anthony Javoric
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STOCK PURCHASE AGREEMENT
STANDARD TERMS AND CONDITIONS
On the following terms and conditions, these Standard Terms and Conditions
together with the Basic Provisions to which this document is attached,
constitute the Stock Purchase Agreement between Buyer and Seller identified in
the Basic Provisions.
1. CERTAIN DEFINED TERMS.
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a. Certain Defined Terms. The following terms have the respective
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meanings set forth below:
"Agreement" means the Basic Provisions, these Standard Terms and
Conditions, and the Exhibits and Schedules referenced herein and
therein.
"Authorized Shares of the Company" means the number of Shares of
the Company set forth in Subparagraph 2.a. of the Basic
Provisions which are authorized as of the date of this Agreement
under the charter documents of the Company and its by-laws.
"Buyer" means Internet Ventures, Inc., a California corporation.
"Closing" means the consummation of the transactions contemplated
in this Agreement.
"Closing Date" means the date when the Closing occurs, determined
pursuant to Paragraph 5 of the Basic Provisions.
"Company" means the Company identified in Paragraph I of the
Basic Provisions.
"Disclosure Exhibit" means the schedule dated as of the date of
this Agreement delivered to Buyer and executed by Seller. The
Disclosure Exhibit shall be a part of this Agreement and
referenced hereinafter as Exhibit C.
"Issued Shares of the Company" means the total number of Shares
of the Company set forth in Subparagraph 2.b. of the Basic
Provisions which are issued and outstanding as of the date of
this Agreement
"Seller" means the person executing the Agreement and identified
as such.
"Shares of the Company" means the outstanding shares of capital
stock of the Company being sold and delivered to Buyer pursuant
to the Agreement.
"Shares of Buyer" means the shares of Common Stock of Buyer which
may be exchanged and delivered to Seller pursuant to the
Agreement and as specified under the terms of the Note.
"Valuation" means the method of calculating the value of the
Shares of the Company pursuant to Paragraph 4.b. of the Basic
Provisions.
"Valuation Date" means the date for the Valuation, as set forth
in Paragraph 3.a. of the Basic Provisions.
"Value" means the agreed upon value of each Share of Buyer for
purposes of the potential future exchange contemplated by the
Agreement.
b. Accounting Terms. Accounting terms used in the Agreement shall have
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the meanings ascribed to such terms under Generally Accepted
Accounting Practices, consistently applied by Company.
2. PURCHASE AND SALE OF SHARES
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a. Sale of Shares of the Company. Subject to the terms and conditions
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set forth in the Agreement and in reliance upon the representations
and warranties of Seller and Buyer herein, at the Closing Seller shall
sell and deliver to Buyer and Buyer shall purchase and accept from
Seller, all of the Shares of the Company owned by Seller, constituting
all of the Issued Shares of the Company.
b. Purchase and/or Exchange of Shares of Company. In consideration for
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the sale and delivery of the Issued Shares of the Company, at the
Closing Buyer shall issue and deliver to Seller such good and valuable
consideration as more particularly defined in the Basic Provisions
attached hereto.
c. Transfer Taxes. Seller shall be solely responsible for the payment of
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any and all taxes, fees, and similar charges incident to the sale and
transfer of the Shares of the Company.
3. CLOSING
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a. Time and Place. The Closing shall take place at the offices of Oregon
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Wilderness Delivery Service, Inc. at 10:00 a.m. local time, as soon as
possible after the execution of this Agreement but not later than the
Closing Date set forth in the Basic Provisions, or such other time or
place agreed upon by the parties in writing.
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b. Transactions at the Closing. At the Closing, the following shall
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occur:
(1) Seller shall deliver to Buyer certificates representing the
Issued Shares of the Company, which shall be duly endorsed for
transfer by Seller
(2) Buyer shall deliver to Seller the Note, duly executed by Buyer
and to be countersigned by Seller at Closing.
(3) Buyer, Company and the Seller shall enter into Non-Competition
and Confidentiality Agreements, dated as of the Closing Date, a
form of which is attached hereto as Exhibit B.
(4) Buyer and Seller, as applicable, shall deliver to the other party
hereto any and all other assignments, documents, instruments and
conveyances requested by such other party to effect the
consummation of the transactions contemplated by this Agreement
and to evidence Buyer's interest in and title to the Issued
Shares of the company.
4. GENERAL REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer represents and warrants to Seller, that:
a. Authority to Execute and Perform Agreements. Buyer has the full
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right, power and authority to enter into, execute and deliver this
Agreement
b. Due Authorization, Enforceability. Buyer has taken or will take all
---------------------------------
actions necessary to be authorized to enter into and perform its
obligations under this Agreement This Agreement is the legal, valid
and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms.
c. No Violation of Order or Law. Buyer is not a party to, subject to or
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bound by any law or order which would prevent the execution or
delivery of this Agreement by Buyer or the performance by it of its
obligations hereunder.
d. Consents. Neither the execution nor delivery by Buyer of this
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Agreement nor the consummation by Buyer of the transactions
contemplated herein or therein require the consent of any person.
e. Compliance with Laws. Buyer has obtained all necessary permits and
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other authorizations or orders of exemption as may be necessary or
appropriate under any and all applicable laws with respect to the
transactions contemplated herein.
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f. No Violation. Neither the execution or delivery by Buyer of Us
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Agreement nor the consummation of the transactions contemplated herein
or therein will: (a) violate any provision of the Articles of
Incorporation, Bylaws, or other charter documents of Buyer; (b)
violate, or constitute a default under, permit the termination or
acceleration of the maturity of, or cause the loss of any rights or
options under, any contract to which Buyer is a party; (c) require any
authorization, consent or approval of, exemption or other action by,
or notice to, any party to any contract; (d) result in the creation or
imposition of any lien or encumbrance upon any, properties or assets
of Buyer, or (e) violate any law or order to which Buyer or any of its
properties is subject.
g. No Adverse Litigation. Buyer is not a party to any pending litigation
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which seeks to enjoin or restrict Buyer's ability to consummate the
transactions contemplated hereunder, nor is any such litigation
threatened against Buyer.
h. No Broker. No broker or finder has acted for Buyer in connection with
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this Agreement or the transactions contemplated herein.
i. Limited Cooperation Between Buyer and Seller. Buyer agrees that until
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such time as Buyer retires fifty percent (501/6) of the balance of the
Note, Buyer, without first consulting with and obtaining written
approval of Seller, shall not, (1) initiate a change in the pricing of
the Company's Internet account rates of more than fifteen (15%)
percent; and (2) sell any equipment required for the ongoing operation
of the Company; and (3) implement a reduction in salary of personnel;
and (4) issue, sell or otherwise transfer new Shares of the Company;
and (5) incur new debt which may result in Seller's ongoing
obligation, guarantee or collateralization of such debt and (6) enter
into contracts where the aggregate cost to the Company is more am
twenty-thousand dollars ($20,000.00). Mr. Javoric hereby agrees to
duly cooperate with Buyer with any of the foregoing, as may be
reasonably requested or required by Buyer, and such consent not to be
unreasonably withheld.
5. REPRESENTATIONS AND WARRANTIES OF BUYER CONCERNING THE SHARES OF BUYER.
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Buyer represents and warrants to Seller that:
a. Securities Laws. The Shares of Buyer which may be delivered to
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Seller, pursuant to Seller's election to convert the Note and pursuant
to this Agreement, will be issued and delivered to Seller in
compliance with all applicable federal and state securities laws and
regulations.
b. Authorization to Issue Shares of Buyer. The transactions contemplated
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by the Agreement have been duly authorized by all requisite corporate
action of Buyer.
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c. Title to Shares of Buyer. Upon the consummation of a debenture
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conversion, as is potentially contemplated herein, Seller will acquire
from Buyer good and marketable title to the Shares of Buyer, free and
clear of all hens and encumbrances, except as otherwise noted herein.
6. GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller represents and warrants to Buyer that:
a. Organization and Good Standing. The Company is a corporation duly
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organized, validly existing and in good standing under the laws of the
state of its organization and has all requisite power to own its
assets and conduct its business.
b. Authority to Execute and Perform Agreements. Seller has the full
-------------------------------------------
right, power and authority to enter into, execute and deliver this
Agreement and to transfer, convey and sell at the Closing the Shares
of the Company to be sold by Seller hereunder.
c. Enforceability. This Agreement is, and as of the Closing Date, will
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be, the legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms.
d. No Violation of Order or Law. Neither the Company nor Seller is a
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party to, subject to or bound by any law or order which would prevent
the execution or delivery of this Agreement by the Company qr Seller,
or the performance by any of them of its and/or their respective
obligations hereunder.
e. Consents. Neither the execution or delivery by Seller of this
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Agreement nor the consummation by Seller of the transactions
contemplated herein require the consent of any entity, person, or
governmental agency, except for those consents as listed on Exhibit C.
f. No Violation. Neither the execution or delivery by Seller of this
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Agreement nor the consummation of the transactions contemplated herein
or therein will: (a) violate any provision of the Articles of
Incorporation, Bylaws, or other charter documents of the Company or of
Seller which is not a natural person; (b) violate, or constitute a
default under, permit the termination or acceleration of the maturity
of, or cause the loss of any rights or options under, any contract to
which Seller or the Company is a party; (c) require any authorization,
consent or approval of, exemption or other action by, or notice to,
any party to any contract; (d) result in the creation or imposition of
any lien or encumbrance upon any properties or assets of Seller or the
Company, or (e) violate any law or order to which any of Seller,
Company, or any of their respective properties is subject.
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g. No Adverse Litigation. Neither Seller nor the Company is a party to
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any pending litigation which seeks to enjoin or restrict Seller's
ability to sell or transfer the Shares of the Company hereunder, nor
is any such litigation threatened against Seller.
h. No Broker. No broker or finder has acted for Seller or the Company in
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connection with this Agreement or the transactions contemplated
herein.
7. REPRESENTATIONS AND WARRANTIES OF SHAREHOLDER REGARDING THE SHAMS
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Seller represents and warrants to Buyer that:
a. Title to the Shares of the Company. Seller has good and marketable
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title to the Shares of the Company to be transferred to Buyer, and
upon consummation of the purchase and exchange contemplated herein,
Buyer will acquire from Seller good and marketable title to all of the
Issued Shares of the Company, free and clear of all hens and
encumbrances, except as otherwise noted herein.
b. Securities Laws. Seller has obtained all necessary permits and other
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authorizations or orders of exemption as may be necessary or
appropriate under any and all applicable state and federal securities
laws and regulations with respect to the transactions contemplated
herein with respect to the Issued Shares of the Company.
c. Title to Shares of the Company. Upon the consummation of the purchase
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contemplated herein, Buyer will acquire from Seller good and
marketable title to all of the Issued Shares of the Company, free and
clear of all hens and encumbrances, except as otherwise noted herein.
8. REPRESENTATIONS AND WARRANTIES OF SELLER-REGARDING THE COMPANY
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Seller represents and wan-ants that:
a. Capitalization. The authorized capital stock of the Company consists
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solely of the Authorized Shares of the Company described in
Subparagraph 2.a. of the Basic Provisions. The Seller owns all of the
Issued Shares of the Company described in Subparagraph 2.b. of the
Basic Provisions. The Issued Shares of the Company have been duly
authorized, and validly issued, fully paid and are non-assessable, in
compliance with applicable securities and other federal and state
laws, and except for such Issued Shares of the Company, there are no
shares of capital stock or other securities or other equity interests
of the Company which have been issued by the Company. There are no
outstanding agreements, commitments, rights of
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any character entitling any person or entity to purchase or otherwise
acquire any such securities or other equity interests of any character
of the Company.
b. Corporate Records. The minute books and stock record book of the
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Company, made available or to be made available to Buyer for its
examination pursuant to the provisions of this Agreement are accurate
and complete in all respects.
c. Subsidiaries. The Company has no subsidiaries except as set forth in
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Paragraph (c) of Exhibit C.
d. No Undisclosed Liabilities. Except for (i) those liabilities
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specifically reflected or reserved against on the Financial
Statements, (ii) those current liabilities for trade or business
obligations incurred since the end of the period which the latest
Financial Statement delivered to Buyer covers in connection with the
purchase of goods or services in the ordinary course of business and
consistent with past practices, (none of which is, individually or in
the aggregate, material and none of which is for breach of contract,
breach of warranty, tort or infringement), or (iii) those liabilities
otherwise disclosed in Paragraph (d) of Exhibit C (none of which
liabilities is for breach of contract, breach of warranty, tort or
infringement), the Company has not as of the date hereof, any direct
or indirect indebtedness, liabilities, claims, losses, damages,
deficiencies, obligations or responsibilities, known or unknown,
liquidated or unliquidated, accrued, absolute, contingent or
otherwise, and whether or not of a kind required by generally accepted
accounting principles to be set forth on a financial statement, which
individually or in the aggregate are material to the condition
(financial or otherwise), assets, liabilities, business, operations or
prospects of the Company.
e. Contracts. Exhibit C, Paragraph (e) sets forth a true and correct
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list of all contracts over five thousand dollars ($5,000.00) to which
the Company is a party. Except as disclosed on Exhibit C, no
contracting party to any such contract is now in material breach
thereof or has breached the same in any material respect within the
12-month period prior to the date hereof and each contract is in full
force and effect.
f. Books and Records. The Company will furnish or make available to
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Buyer for its examination the following, each of which is, and will be
maintained as to remain until the Closing, accurate and complete in
all material respects:
(1) copies of the charter documents of the Company as in effect on
the date hereof,
(2) the minute books of the Company containing all proceedings,
consents, actions and meetings of its shareholders and Board of
Directors;
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(3) copies of all correspondence with governmental agencies relating
to the Company.
g. Officers, Directors and Shareholders of the Company. Exhibit C,
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Paragraph (g) contains an accurate list of all of the shareholders,
incumbent officers and directors of Seller which is not a natural
person.
h. Full Disclosure. All documents and other papers delivered to Buyer by
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or on behalf of Seller in connection with this Agreement and the
transactions contemplated herein are accurate, complete and authentic.
Furthermore, the information furnished to Buyer by or on behalf of
Seller or the Company in connection with this Agreement and the
transactions contemplated herein does not contain any untrue statement
of a material fact and does not omit to state any material fact
necessary to make the statements made, in the context in which they
are made, not false or misleading.
i. Subscribers. Except as set forth in Paragraph (i) of Exhibit C, all
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Subscribers are fully paid and in good standing subscribers of the
Company's Internet access services as of the applicable date, on the
terms and conditions of the Company's standard Subscription Agreement
which has been heretofore delivered to Buyer. Except as set forth
Paragraph (i) of Exhibit C, no Subscriber has made any claim against
Company on account of the services provided to such Subscriber or such
Subscription Agreement, except for claims which in the aggregate total
less than $5,000.
j. Absence of Certain Changes. Except as indicated on Exhibit C,
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Paragraph 0), since the end of the period covered by the most recent
Financial Statements delivered to Buyer, the Company has conducted its
business only in the ordinary course consistent with past practice an
has pd no event occurred which, in any case, or in the aggregate, has
had or could reasonably be expected to have a material adverse effect
upon the Company's financial or business condition, assets,
liabilities, operations or prospects, or its ability to consummate the
transactions contemplated herein. The Company has not taken or
omitted to take any action which would have the effect of making any
of the representations and warranties of Seller untrue if the likely
effect of such action or omission occurred as of on the date of this
Agreement.
k. Tax Matters. The Company has filed all tax returns which it is
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required to file in a timely manner and has paid or provided for the
payment of all taxes due and owing by it and has paid or provided for
the payment of all deficiencies or other assessments of taxes,
interest and penalties owed by it. There is no assertion by any
taxing authorities which, if true, would be inconsistent with this
representation or warranty. No tax audit is in progress or threatened.
All tax returns fully and
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accurately reflect the Company's liability for taxes. The provisions
for taxes in the Financial Statements are My adequate and correct. The
Company has not filed any consent or waiver with any taxing authority.
The Company has delivered to Buyer true and correct copies of all tax
returns for the last five fiscal years or such shorter period during
which the Company has been conducting business.
l. Compliance with Laws, Governmental Matters. The Company has complied
------------------------------------------
with all laws and regulations applicable to it and no material capital
expenditure will be required for continued compliance. The Company
has all licenses and permits required for the lawful conduct of its
business. The Company is and has been in compliance with the
conditions of all such licenses and permits and no proceeding or
litigation is pending with respect to the Company's compliance with
laws or regulations, including without limitation, with respect to any
such license or permit.
Neither the Company nor any of its properties has ever been or is now
in violation of an applicable environmental laws or regulations and
the Company has and is in compliance with all licenses and permits
required under applicable environmental laws and regulations. There
is no proceeding or litigation pending or threatened concerning the
Company's compliance with environmental laws or regulations. Neither
Company nor Seller has received any claim or demand nor are aware of
any facts or circumstances which would give rise to any present or
potential liability under any laws or regulations applicable to it,
including, without limitation, environmental laws or regulations.
m. Litigation. Except as set forth on Exhibit C, Paragraph (in), the
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Company is not a party to any proceeding or litigation of any nature,
nor is any proceeding or litigation threatened. Seller has delivered
to Buyer all relevant pleadings with respect to the litigation
described on Exhibit C. There is no unsatisfied judgment, restraining
order, injunction, or other order of any court affecting the Company,
its properties, or business. In the conduct of its business, the
Company is not violating the intellectual property or other legal
rights of any entity or person or committing or omitting any act which
would have the probable effect of causing litigation.
n. Properties. The Seller has delivered to Buyer a true and complete
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copy of the lease for all premises from which the Company conducts its
business, including all amendments thereof. Such leases are in full
force and effect in accordance with their terms. Except as set forth
on Paragraph (n) of Exhibit C, the Company does not own any real
property. The Company has good and marketable title to all real
property owned by it, free and clear of any liens or encumbrances
except mortgages and trust deeds of record w1iich are fully disclosed
in the Financial Statements. There are no disputes concerning such
real property. Except as listed
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on Paragraph (n) of Exhibit C, the Company has good and marketable
title to all of the tangible and intangible equipment, machinery and
other personal property used in its business ("Property"), free and
clear of any lien or encumbrance. All leases for Property listed on
Exhibit C are in full force and effect and no default has occurred
which is presently uncured under any such leases. There are no
disputes concerning any of the Property.
o. Compliance with Labor Laws. The Company is not a party to any
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employment or collective bargaining agreement. The Company is in
compliance with all applicable laws and regulations relating to the
employment of labor. The Company has neither presently nor in the
past any pension or other formal employee benefit plan or commitment
to adopt a plan except for the plans (the "Plans") described on
Exhibit C, Paragraph (o). The Company is in compliance with all
applicable laws and regulations relating to the Plans and the Company
has made all contributions required to be made pursuant to the Plans.
No union organizing effort has taken place with respect to the Company
and no strike is threatened. There is no claim, proceeding, or
lawsuit pending or threatened by any of the Company's employees. No
facts or circumstances exist which would be the basis for any claim or
dispute relating to the matters described in this Subparagraph.
p. Obligations Relating to Employment of Employees. Except as set forth
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on Paragraph (p) of Exhibit C, the Company is not a party to any
agreements with any of its employees or consultants, whether written
or oral The Company has heretofore delivered to Buyer a true and
complete copy of all employment or consulting agreements listed on
Exhibit C. All accrued obligations of the Company (including for
salaries, vacation and holiday pay, sick pay, bonuses and other forms
of compensation) to any of its employees or to any third party
relating to the employment d employees by the Company, including all
benefits due on account d such employment through the date hereof have
been paid or adequate accruals therefor have been made in the
Financial Statements. The Company had maintained and paid all
premiums due on all insurance policies required to be maintained by it
relating to the employment of employees, including workers
compensation and health and disability insurance, and no circumstances
exist which could cause any retroactive premium adjustments to any
insurance contract.
q. Insurance. Exhibit C, Paragraph (q), sets forth a true and correct
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list of all policies of insurance maintained by the Company. Such
policies are in full force and effect and in compliance with all
applicable laws and regulations. The Company is not in default under
any of the provisions of any of such policies of insurance. All
premiums due have been paid and the Company has not received a notice
of cancellation or non-renewal of any such policies.
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r. Potential Conflicts of Interest. Except as disclosed on Paragraph (r)
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of Exhibit C, neither Seller, nor any other officer, director or key
employee of the Company or any member of his/her family or other
affiliated person holds any financial or business interest in (i) any
of the Company's suppliers or customers, (ii) any agreement to which
the Company is a party, or (iii) any real property leased or owned in
whole or in party by the Company; or (iv) any Property of the Company.
s. Banking Relationships. Exhibit C, Paragraph (s), contains a true and
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complete list of each bank or other financial institution in which the
Company has an account or safety deposit box and the numbers of such
accounts and safety deposit boxes and the names of all authorized
signatories on such accounts and safety deposit boxes.
t. Contracts. Exhibit C, Paragraph (t), lists all of the contracts to
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which the Company is a party or by which it is bound except for
agreements which are terminable without penalty or premium within 30
days and which in the aggregate do not require payment by the Company
of more than $5,000. True and complete copies of all contracts listed
in Exhibit C have been heretofore delivered to the Buyer.
9. REPRESENTATIONS AND WARRANTIES ON CLOSING
-----------------------------------------
The representations and warranties contained in this Agreement shall be
true and complete in all material respects on the Closing Date with the same
force and effect as though such representations and warranties had been made on
the Closing Date, except as necessarily affected by the transactions
contemplated in this Agreement.
10. COVENANTS OF SELLER
-------------------
a. Corporate Examinations and Investigations. Prior to the Closing,
-----------------------------------------
Buyer shall be entitled to make such investigations and examination of
the books, records and financial condition of the Company as Buyer may
request. Seller shall furnish Buyer and its representatives during
such period with all such information concerning the affairs of the
Company as Buyer or its representatives may request and cause the
Company's officers, employees, consultants, agents, accountants and
attorneys to cooperate fully with Buyer' representatives in connection
with such review and examination and to make full disclosure of all
information and documents requested by such party and/or its
representatives. Any such investigations and examinations shall be
conducted at reasonable times and under reasonable circumstances. Any
facts discovered or which could be discovered during such examinations
and investigations shall not affect the liability of Seller for the
representations and warranties of Seller which are made in this
Agreement.
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b. Cooperation. The parties agree with each other that they will take
-----------
all actions necessary to effectuate and aid the others in effectuating
the intent and purpose of this Agreement.
c. Litigation. From the date hereof through the Closing, each party
----------
hereto shall promptly notify the other party of any lawsuits, claims,
proceedings or investigations which after the date hereof are
threatened or commenced against such party or any of its affiliates or
any officer, director, employee, consultant, agent or shareholder
thereof, in their capacities as such, which, if decided adversely,
could reasonably be expected to have a material adverse effect upon
the condition (financial or otherwise), assets, liabilities, business,
operations or prospects of such party.
d. Notice of Default. From the date hereof through the Closing, each
-----------------
party hereto shall give to the other party prompt written notice of
the occurrence or existence of any event, condition or circumstance
occurring which would constitute a violation or breach of this
Agreement by such party or which would render inaccurate in any
material respect any of the other party's representations or
warranties contained herein.
e. Operation of Business. From the date hereof through the Closing, the
---------------------
Company shall conduct its business only in the ordinary course
consistent with past practice.
f. Financial Statements. On or before the Closing Date, the Company
--------------------
shall deliver its financial statements for the period between the end
of its last fiscal year and a date within 30 days prior to the Closing
Date. If any of the prior Financial Statements of the Company have
been certified, such new Financial Statement (the "New Financials")
shall be certified by its independent certified public accountants.
The New Financials of the Company will (a) be prepared in accordance
with the books and records of the Company, (b) be prepared in
accordance with generally accepted accounting principles; (c) fairly
present the Company's financial condition and the results of its
operations as of the relevant date thereof and for the period covered
thereby; and (d) contain and reflect all necessary adjustments and
accruals for a fair presentation of the Company's consolidated
financial condition and the consolidated results of its operations for
the period covered by the New Financials.
11. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY TO CLOSE
--------------------------------------------------------------
The obligation of Buyer and Seller to consummate the transactions
contemplated herein shall be subject to the fulfillment, at or prior to the
Closing, of all of the conditions set forth below in this Section. Seller on
the one hand, and Buyer on the other hand, may waive any or all of such
conditions in whole or in part without prior notice; provided, however, that no
such waiver shall constitute a waiver by Seller or Buyer of any other right or
remedy if the other party shall be in
12
default of any of its respective representations, warranties or covenants
contained in this Agreement.
a. No Action or Proceeding. No action, suit or proceeding shall have
-----------------------
been instituted before any court or governmental body seeking to
challenge or restrain the transactions contemplated herein which
presents a substantial risk that such transactions will be restrained
or that either party hereto may suffer material damages or other
relief as a result of consummating such transactions.
b. Governmental Approvals. Any and all permits and approvals from any
----------------------
Authority required for the lawful consummation of the transactions
contemplated herein shall have been obtained.
c. Consent of Lenders. The parties shall receive the consent to the
------------------
transactions contemplated by this Agreement from their respective
banks or other institutional lenders.
d. Seller's Agreements. Seller, the Company and Buyer shall execute and
-------------------
deliver the Non-Competition and Confidentiality Agreements described
in Paragraph 6 of the Basic Provisions.
12. CONDITIONS PRECEDENT TO THE OBLIGATION OF SELLER TO CLOSE
---------------------------------------------------------
The obligation of Seller to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all of
the conditions set forth below in this Section. Seller may waive any or all of
such conditions in whole or in part without prior notice; provided, however,
that no such waiver shall constitute a waiver by Seller of any right or remedy
otherwise available to Seller if Buyer shall be in default of any of its
representations, warranties or covenants contained in this Agreement.
a. Representations and Warranties. The representations and warranties of
------------------------------
Buyer contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date, except to the extent of any changes therein
arising from Buyer's compliance with the provisions of this Agreement
b. Performance of Covenants. Each of the obligations of Buyer to be
------------------------
performed by it on or before the Closing Date pursuant to the terms of
this Agreement shall have been duly performed on or before the Closing
Date,
c. Third Party Consents. All consents, permits and approvals from
--------------------
authorities which may be required in connection with the consummation
of the transactions contemplated hereby shall have been obtained.
13
13. CONDITIONS PRECEDENT TO THE OBLIGATION OF BUYER TO CLOSE
--------------------------------------------------------
The obligation of Buyer to consummate the transactions contemplated herein
shall be subject to the fulfillment, at or before the Closing Date, of all the
conditions set forth below in this Section. Buyer may waive any or all of such
conditions in whole or in part without prior notice; provided, however, that no
such waiver shall constitute a waiver by Buyer of any right or remedy otherwise
available to Buyer, if Seller shall be in default of any of its representations,
warranties or covenants contained in this Agreement.
a. Representations and Warranties. The representations and warranties of
------------------------------
Seller contained in this Agreement shall be true on and as of the
Closing Date with the same force and effect as though made on and as
of the Closing Date except to the extent of any changes therein
arising from Seller's compliance with the provisions of this
Agreement.
b. Performance of Covenants. Each of the obligations of Seller to be
------------------------
performed by him/her on or before the Closing Date pursuant to the
terms of this Agreement shall have been duly performed on or before
the Closing Date.
c. No Adverse Change. There shall not have occurred between the date
-----------------
hereof and the Closing Date any material adverse change in the
condition (financial or otherwise), assets or liabilities (whether
absolute, accrued, contingent or otherwise) of the Company or in the
ability of Seller to consummate the transactions contemplated herein.
Further, no action, suit or proceeding shall have been instituted or
threatened by any governmental agency or body which has or may have,
in the opinion of Buyer a material adverse effect on the condition
(financial or otherwise), assets, properties, business or prospects of
the Company and in this regard, the entire risk of any such losses,
casualties and other material adverse changes shall be borne by
Seller.
d. Litigation. No action, suit or proceeding shall have been instituted
----------
before any court or governmental body or instituted or threatened by
any governmental agency or body which has or may have, in the opinion
of Buyer a material adverse effect on the assets, properties, business
or condition (financial or otherwise) of the Company.
e. Certain Agreements and Instruments. Buyer shall have received at the
----------------------------------
Closing the agreements, documents and instruments to be delivered to
Buyer by Seller at the Closing pursuant to this Agreement, and all
other obligations referred to in Section 3(b) that are required to be
performed by Seller shall have been performed.
f. Certificates. Seller shall deliver Certificates of Good Standing of
------------
the state of incorporation of either Seller or the Company who are not
natural persons dated as
14
of a date which is not more than thirty days prior to the Closing
Date. The Seller shall also deliver certificates stating that the
software and intellectual property licenses, which are held by the
Company, are owned free of any liens or encumbrances and are not the
subject of any infringement litigation. Such certificates shall
contain, as an exhibit attached thereto, a license from the owner of
the intellectual property to the Company if the owner is a person or
entity other than the Company, granting exclusive and perpetual rights
to the use of that intellectual property.
14. INDEMNIFICATION
---------------
a. Indemnification by Seller. Seller shall indemnify, defend and hold
-------------------------
Buyer, its shareholders, subsidiaries, officers, directors, employees
and representatives, and their respective successors and assigns
harmless from and against any and all liability and losses (including
attorneys' fees and other legal costs) which may be incurred or
suffered by any such party and which may arise out of or result from
any breach of any representation, warranty, covenant or agreement of
Seller contained in this Agreement or any agreement or document
referred to herein for a period of one (1) year after the Closing
date.
b. Indemnification by Buyer. Buyer shall indemnify, defend and hold
------------------------
Seller, and his/her respective spouse, heirs and successors and
assigns harmless from and against any and all liability and losses
(including attorneys' fees and other legal costs) which may be
incurred or suffered by any such party and which may arise out of or
result from any breach of any representation, warranty, covenant or
agreement of Buyer contained in this Agreement or any agreement or
document referred to herein for a period of one (1) year after the
Closing date.
15. TERMINATION REMEDIES; SURVIVAL
------------------------------
a. Termination Upon Default. Either party may terminate this Agreement
------------------------
by giving notice to the other on or prior to the Closing Date, without
prejudice to any rights or obligations it may have, if, after written
notice of the default and the passage of a five (5) day cure period
thereafter, the other party has failed in the due and timely
performance of any of its covenants or agreements herein contained or
there shall have been a breach of the other's warranties and
representations herein contained. In any such event the party who is
not guilty of the breach may pursue such remedies as are available to
it at law or in equity.
b. Specific Performance. The parties acknowledge that the subject matter
--------------------
of the transactions contemplated herein is unique and for that reason,
among others, the parties hereto will be irreparably damaged in the
absence of the consummation of this Agreement. Therefore, in the event
of any breach by a party of this
15
Agreement, the other party shall have the right, at its election, to
obtain an order for specific performance of this Agreement without the
need to post a bond or other security' to prove any actual damage or
to prove that money damages would not provide an adequate remedy.
c. Attorneys' Fees. If either Buyer or Seller shall bring an action
---------------
against the other by reason of any alleged breach of any covenant,
provision or condition hereof, or otherwise arising out of this
Agreement, each party shall pay their respective attorneys' fees and
court costs and actual expenses provided, however, that the prevailing
party shall still be entitled to punitive and compensatory damages as
may be awarded as well as any other relief to which it may be
entitled.
d. Survival of Indemnities, Representations and Covenants. The
------------------------------------------------------
indemnities, representations and warranties contained in this
Agreement shall survive the Closing and continue for the duration of
the applicable statute of limitations.
16. DISPUTE RESOLUTION BY ARBITRATION
---------------------------------
Any dispute among the parties arising out of or relating to this Agreement
or any of the documents executed pursuant to Us Agreement, including the
question of arbitrability, shall be resolved exclusively through binding
arbitration conducted under the Commercial, Arbitration Rules then in effect of
the American Arbitration Association. The situs of such arbitration shall be
held in Portland, Oregon. The award of the arbitrator in such arbitration shall
be enforceable in any court of competent jurisdiction.
17. MISCELLANEOUS
-------------
a. Modifications and Amendments: Waivers and Consents. At any time
---------------------------------------------------
prior to the Closing Date or termination of this Agreement, Seller on
the one hand, and Buyer, on the other hand, may, by written agreement:
(1) extend the time for the performance of any of the
obligations or other acts of the other parties hereto;
(2) waive any inaccuracies in the representations and wan-antics
made by the other party contained in this Agreement or any
other agreement or document delivered pursuant to this
Agreement; and
(3) waive compliance with any of the covenants or agreements of
the other parties contained in this Agreement. However, no
such waiver shall operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this
Agreement requires or
16
permits a waiver or consent by or on behalf of any party
hereto, such waiver or consent shall be given in writing.
b. Entire Agreement. This Agreement (including the Basic Provisions and
----------------
the exhibits and schedules hereto, including the Disclosure Schedule)
and the agreements, documents and instruments to be executed and
delivered pursuant hereto or thereto are intended to embody the final,
complete and exclusive agreement among the parties with respect to the
purchase of the Shares and related transactions; are intended to
supersede all prior agreements, understandings and representations
written or oral, with respect thereto; and may not be contradicted by
evidence of any such prior or contemporaneous agreement, understanding
or representation, whether written or oral.
c. Governing Law. This Agreement is to be governed by and construed in
-------------
accordance with the laws of the State of Oregon applicable to
contracts made and to be performed wholly within such State, without
regard to the conflicts of laws principles thereof.
d. Severability. In the event that any provision or any part of any
------------
provision of this Agreement shall be void or unenforceable for any
reason whatsoever, then such provision shall be stricken and of no
force and effect. However, unless such stricken provision goes to the
essence of the consideration bargained for by a party, the remaining
provisions of this Agreement shall continue in full force and effect,
and to the extent required, shall be modified to preserve their
validity.
e. No Third Party Rights. Nothing in this Agreement, whether express or
---------------------
implied, is "intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties to it
and their respective successors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability
of any third party to any party to this Agreement nor shall any
provision give any third party any right of subrogation or action over
against any party to this Agreement.
-END OF STANDARD TERMS-
17