Exhibit 2.3
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
REALTY INFORMATION GROUP, INC.
AND
JAMISON RESEARCH, INC.
AND
THE STOCKHOLDERS OF JAMISON RESEARCH, INC.
DATED JANUARY 6, 1999
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into this 6th day of January, 1999, by and among Realty Information Group, Inc.
a Delaware corporation ("RIGINC") and Jamison Research, Inc., a Georgia
corporation (the "Company"), Henry D. Jamison IV and Leslie Lees Jamison (each a
"Stockholder" and collectively, the "Stockholders"and, together with the
Company, the "Jamison Parties").
BACKGROUND
A. The Stockholders are the owners of ninety percent (90%) of the
issued and outstanding shares of the capital stock of the Company and The Church
of the Apostles of Atlanta (the "Church") is the owner of the remaining ten
percent (10%) of the issued and outstanding shares of the capital stock of the
Company (all of the issued and outstanding shares of the capital stock of the
Company are hereinafter referred to as the "Shares");
B. RIGINC, THE CHURCH AND THE STOCKHOLDERS DEEM IT ADVISABLE AND IN
THEIR RESPECTIVE BEST INTERESTS TO EFFECT THE MERGER OF THE COMPANY WITH AND
INTO A CORPORATION HEREAFTER TO BE FORMED AND WHOLLY OWNED BY RIGINC ("MERGER
SUB"), WHICH SHALL BECOME A PARTY TO THIS AGREEMENT AND TO THE PLAN OF
REORGANIZATION DESCRIBED BELOW, ALL SUBJECT TO THE TERMS AND CONDITIONS SET
FORTH HEREIN;
C. THE CHURCH HAS CONSENTED TO THE MERGER OF THE COMPANY WITH AND INTO
MERGER SUB AND THE ACQUISITION OF ITS TEN PERCENT (10%) INTEREST IN THE COMPANY
IN EXCHANGE FOR the portion of the Consideration that it is to receive in
accordance herewith, a copy of which consent (the "Church Consent") is attached
hereto as Exhibit A, and made a part hereof; and
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D. RIGINC has paid Five Hundred Thousand Dollars ($500,000.00) in
earnest money (the "Deposit") to Cushing, Morris, Armbruster & Jones, LLP
("CMAJ") to be held and distributed in accordance herewith;
NOW, THEREFORE, in consideration of the premises and of the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I.
MERGER
1.1 THE MERGER.
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(a) At the Effective Time, as defined in Section 2.1, upon the
terms and subject to the conditions set forth herein, and in accordance with the
Georgia Business Corporation Code (the "Georgia Code"), the Company shall be
merged with and into Merger Sub, the separate existence of the Company shall
cease, and Merger Sub shall continue as the surviving corporation (the
"Merger"). Merger Sub after the Merger is sometimes hereafter referred to as
the "Surviving Corporation."
(b) At the Effective Time, the Surviving Corporation shall
continue its corporate existence under the Georgia Code and shall succeed to all
rights, privileges, immunities, franchises and powers, and be subject to all
duties, liabilities, debts and obligations of the Company in accordance with the
provisions of the Georgia Code.
(c) The articles of incorporation of Merger Sub as in effect
immediately prior to the Effective Date, shall be the articles of incorporation
of the Surviving Corporation. The bylaws of Merger Sub as in effect immediately
prior to the Effective Time shall be the bylaws of the Surviving Corporation.
The directors of Merger Sub immediately prior to the Effective Time shall be the
initial board of directors of the Surviving Corporation, each of such persons to
serve until his or her successor is duly elected and qualified. The officers of
Merger Sub immediately prior to the Effective Time shall be the initial officers
of the Surviving Corporation, each of such officers to serve until his or her
successor is duly qualified.
1.2 CONSIDERATION; CONVERSION.
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(a) At the Effective Time, by virtue of the Merger, and without any
action on the part of the Stockholders, all of the Shares issued and outstanding
immediately prior to the Closing Date shall be canceled, retired and converted
into and become the right to receive the Consideration described in Section
1.2(b). At the Closing (as defined in Section 2.1), the Stockholders and the
Church shall surrender the certificates representing the Shares, accompanied by
blank stock powers and all necessary transfer taxes and other revenue stamps, to
Merger Sub, and Merger Sub shall deliver the Consideration to the Stockholders
and the Church, allocated in accordance with Section 1.2(c) hereof. Shares of
the Company delivered by the Stockholders and the Church shall be free and clear
of all "Liens," which for purposes of this Agreement, include any mortgage,
security interest, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or otherwise), charge, preference, priority or
other security agreement, option, warrant, attachment, right of first refusal,
preemptive, conversion, put, call or other claim or right, restriction on
transfer (other than restrictions imposed by federal and state securities laws),
or preferential arrangement of any kind or nature whatsoever (including any
conditional sale or other title retention agreement, any financing lease
involving substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction).
(b) The "Consideration" shall be (i) Five Million Two Hundred
Eighty-Four Thousand Twenty-Seven Dollars ($5,284,027.00) in cash, and (ii) the
number of shares of RIGINC's common stock, par value $.01 per share (the "RIGINC
Stock"), equal to Five Million Four Hundred Sixty-Five Thousand Nine Hundred
Seventy-Three Dollars ($5,465,973.00) divided by one of the following: (A) if
the average closing sale price as adjusted for any stock splits or other
reclassifications on or before the Closing Date for shares of RIGINC common
stock on the five (5) trading days immediately preceding the Closing Date as
reported by The Wall Street Journal (the "RIGINC Closing Stock Price") is $12.20
or higher, then by $12.20; (B) if the RIGINC Closing Stock Price is less than
$12.20 but is equal to or greater than $10.20, then by the RIGINC Closing Stock
Price; (C) if the RIGINC Closing Stock Price is less than $10.20 and RIGINC so
elects by written notice to the Stockholders immediately prior to the Closing,
by the RIGINC Closing Stock Price; or (D) if the RIGINC Closing Stock Price is
less than $10.20 and RIGINC does not elect to use a RIGINC Closing Stock Price
that is less than $10.20, then by $10.20, in which event the Stockholders shall
be entitled to terminate this Agreement in accordance with Section 10.1(b)
hereof. No fractional shares shall be issued, and if the RIGINC Stock would
include a fractional share by application of the applicable formula above, then
the RIGINC Stock shall be increased to the next whole number of shares (rounding
up).
(c) The Consideration payable at the Closing shall be allocated among
the Stockholders and the Church in proportion to their share ownership of the
Company as set forth in Schedule 3.4 or as otherwise indicated by the
Stockholders before Closing.
(d) Each share of common stock of the Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation. If the allocation of RIGINC
Stock results in fractional shares, then the number of shares that the
Stockholders or the Church would have received shall be increased to the next
whole number (rounding up).
(e) The Consideration has been calculated based upon several factors,
including the Company having a Net Worth (defined below) as of Closing (the
"Actual Net Worth") no less than $(89,774) (the "Net Worth Target"). For
purposes of this Agreement, "Net Worth" shall mean the total Shareholders'
equity (deficit) as shown on the Company's balance sheet in conformity with GAAP
(defined below).
1.3 POST-CLOSING ADJUSTMENT. The Consideration shall be subject to
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adjustment after the Closing Date as specified in this Section 1.3:
(a) Within ninety (90) days following the Closing, RIGINC shall cause
Ernst & Young LLP (the "RIGINC's Independent Auditors") to audit the Company's
books to determine the Net Worth of the Company as of the Closing and the
accuracy of the information set forth in Section 3.8 (the "Post-Closing Audit").
The parties acknowledge and agree that for purposes of determining the financial
performance of the Company, all financial calculations shall be done, except
with the prior written consent of RIGINC, as provided in Section 3.8. The
Stockholders shall cooperate and shall use their reasonable efforts to cause the
officers and employees of the Company to cooperate with RIGINC and RIGINC's
Independent Auditors after the Closing Date in furnishing information,
documents, evidence and other assistance to RIGINC's Independent Auditors to
facilitate the completion of the Post-Closing Audit within the aforementioned
time period. In the event that RIGINC's Independent Auditors determine that the
Net Worth of the Company as of Closing was less than the Net Worth Target,
RIGINC shall promptly deliver a written notice (the "Financial Adjustment
Notice") to the Stockholders' Representative, as defined in Section 1.5, setting
forth (i) the determination made by RIGINC's Independent Auditors of the Net
Worth of the Company, (ii) the amount by which the Net Worth Target exceeds the
Net Worth determined by RIGINC's Independent Auditors (the "Proposed
Consideration Adjustment") and (iii) the amount by which the Consideration would
have been reduced at Closing had the Consideration been reduced at Closing by
the Proposed Consideration Adjustment.
(b) The Stockholders' Representative shall have fifteen (15) days from
the receipt of the Financial Adjustment Notice to notify RIGINC if the
Stockholders dispute such Financial Adjustment Notice. If RIGINC has not
received notice of such a dispute within such 15-day period, the Proposed
Consideration Adjustment shall be the Final Consideration Adjustment and RIGINC
shall be entitled to receive from the Stockholders the Final Consideration
Adjustment, subject to the provisions of Section 8.7 hereof. If, however, the
Stockholders' Representative has delivered notice of such a dispute to RIGINC
within such 15-day period (which such notice shall state the Stockholders'
calculation of Net Worth), then RIGINC's Independent Auditors shall select an
independent accounting firm that has not represented any of the parties hereto
within the preceding two (2) years to review the Company's books, the Financial
Adjustment Notice and the notice of dispute (and related information) to
determine the amount, if any, of the Final Consideration Adjustment (defined
below). Such independent accounting firm shall be confirmed by the
Stockholders' Representative and RIGINC within three (3) days of its selection,
unless there is an actual conflict of interest. The independent accounting firm
shall be directed to consider only those agreements, contracts, commitments or
other documents (or summaries thereof) that were either (i) delivered or made
available to RIGINC's Independent Auditors in connection with the transactions
contemplated hereby, (ii) reviewed by RIGINC's Independent Auditors during the
course of the Post-Closing Audit or (iii) supplemental information supplied by
either party to the independent accounting firm. The independent accounting
firm shall make its determination of the Actual Net Worth and the amount by
which the Net Worth Target exceeds the Actual Net Worth (the "Final
Consideration Adjustment"), if any, within thirty (30) days of its selection.
The determination of the independent accounting firm shall be final and binding
on the parties hereto, and upon such determination, RIGINC shall be entitled to
receive from the Stockholders the Final Consideration Adjustment, subject to the
provisions of Section 8.7 hereof. The costs of the independent accounting firm
shall be borne by the party (either the RIG Parties or the Stockholders as a
group) whose determination of the Net Worth as of the Closing was further from
the determination of the Actual Net Worth by the independent accounting firm, or
equally by RIGINC and the Stockholders in the event that the determination by
the independent accounting firm is equidistant between the determination of the
Net Worth by RIGINC on one hand, and the Stockholders' calculation of Net Worth,
on the other.
1.4 PLEDGED ASSETS.
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(a) As collateral security for the payment of any post-Closing
adjustment to the Final Consideration Adjustment under Section 1.3, or any
indemnification obligations of the Stockholders pursuant to Article VIII, the
Stockholders shall, and by execution hereof do hereby, transfer, pledge and
assign to RIGINC, for the benefit of RIGINC, a security interest in the
following assets (the "Pledged Assets"):
(i) a number of shares of RIGINC Stock that has a value of
$200,000.00 based on the RIGINC Closing Stock Price (provided that no fractional
shares shall be transferred, pledged or assigned hereunder, and the amount of
the Pledged Assets shall be increased to the next whole share (rounding up)) and
the certificates and instruments, if any, representing or evidencing each such
Stockholder's Pledged Assets;
(ii) all securities hereafter delivered to the Stockholders
with respect to or in substitution for such Stockholder's pledged shares of
RIGINC Stock, all certificates and instruments representing or evidencing such
securities, and all non-cash dividends and other property (other than cash
dividends) at any time received, receivable or otherwise distributed in respect
of or in exchange for any or all thereof; and if either Stockholder receives any
such property, such Stockholder shall hold such property in trust for RIGINC and
shall immediately deliver such property to RIGINC to be held hereunder as
Pledged Assets; and
(iii) all non-cash proceeds of all of the foregoing property
and all rights, titles, interests, privileges and preferences appertaining or
incident to the foregoing property.
(b) Each certificate evidencing a Stockholder's Pledged Assets
issued in his or her name in the transactions contemplated hereby, shall be
delivered to RIGINC directly by the transfer agent, such certificate bearing no
restrictive or cautionary legend other than those provided for by this Agreement
or imprinted by the transfer agent at RIGINC's request. Each Stockholder shall,
at the Closing, deliver to RIGINC, for each such certificate, a stock power duly
signed in blank by him or her.
(c) The Stockholders shall be entitled to retain cash proceeds
from, and exercise any voting powers incident to, the Pledged Assets that are
not applied to satisfy any Final Consideration Adjustment pursuant to Section
1.3 and any indemnification obligations of the Stockholders pursuant to Article
VIII.
(d) The Pledged Assets shall be available to satisfy any Final
Consideration Adjustment pursuant to Section 1.3 and any indemnification
obligations of the Stockholders pursuant to Article VIII until the date that is
one hundred eighty-three (183) days after the Closing (the "Release Date"). On
the Release Date or the first business day thereafter, RIGINC shall return or
cause to be returned to the Stockholders the Pledged Assets not previously
released by RIGINC less Pledged Assets having an aggregate value equal to the
amount of (i) any pending claim for a post-Closing adjustment to the
Consideration under Section 1.3 or any settled or finally-determined claim for a
post-Closing adjustment to the Consideration under Section 1.3, and (ii) any
pending claim for indemnification made by any RIGINC Indemnified Party (as
defined in Article VIII), or any settled or finally-determined claim for
indemnification made by any RIGINC Indemnified Party (as defined in Article
VIII), which such Pledged Assets shall be transferred to RIGINC. For purposes
of clause (i) of the preceding sentence, the RIGINC Stock held as Pledged Assets
shall be valued at the RIGINC Closing Stock Price; and for purposes of clause
(ii) of the preceding sentence, the RIGINC Stock held as Pledged Assets shall be
valued at the average Closing Price of RIGINC common stock on the twenty (20)
trading days immediately preceding the date of settlement or final determination
of such claim. Should the Stockholders' tax advisor advise them accordingly,
the Stockholders may pay an amount in cash to satisfy any claim for a
post-Closing adjustment to Consideration under Section 1.3 that would equal the
value of RIGINC Stock that would otherwise be transferred hereunder, and upon
receipt of the cash, RIGINC shall release the Pledged Assets that would
otherwise be transferred to it to the Stockholders. "Closing Price" on any
trading day shall mean the closing sale price of RIGINC common stock on NASDAQ.
If RIGINC common stock is de-listed from NASDAQ, then on such other principal
quotation system or national securities exchange on which the RIGINC common
stock is admitted to trading or quoted or listed, or if not admitted to trading
or quoted or listed on any quotation system or national securities exchange, the
average of the closing bid and asked prices of the RIGINC common stock on the
over-the-counter market on the day in question as reported by the National
Quotation Bureau Incorporated, or a similarly generally accepted reporting
service, or if not so available in such manner, as reasonably determined by an
independent accounting firm designated by the parties that has not represented
any of the parties hereto, their affiliates, successors or assigns at any time
during the two-year period immediately preceding the day in question.
1.5 STOCKHOLDERS' REPRESENTATIVE.
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(a) The Stockholders, by signing this Agreement, designate Leslie
Lees Jamison, or, in the event that Leslie Lees Jamison is unable or unwilling
to serve, Henry D. Jamison IV to be the Stockholders' Representative for
purposes of this Agreement. The Stockholders shall be bound by any and all
actions taken by the Stockholders' Representative on their behalf.
(b) RIGINC shall be entitled to rely upon any communication or
writings given or executed by the Stockholders' Representative. All notices to
be sent to Stockholders pursuant to this Agreement may be addressed to the
Stockholders' Representative and any notice so sent shall be deemed notice to
all of the Stockholders hereunder. The Stockholders hereby consent and agree
that the Stockholders' Representative is authorized to accept notice on behalf
of the Stockholders pursuant hereto.
(c) The Stockholders' Representative is hereby appointed and
constituted the true and lawful attorney-in-fact of each Stockholder, with full
power in his or her name and on his or her behalf to act according to the terms
of this Agreement in the absolute discretion of the Stockholders'Representative;
and in general to do all things and to perform all acts including, without
limitation, executing and delivering all agreements, certificates, receipts,
instructions and other instruments contemplated by or deemed advisable in
connection with this Agreement. This power of attorney and all authority hereby
conferred is granted subject to the interest of the other Stockholder hereunder
and in consideration of the mutual covenants and agreements made herein, and
shall be irrevocable and shall not be terminated by any act of any Stockholder,
by operation of law, whether by such Stockholder's death or any other event.
1.6 ACCOUNTING TERMS. Except as otherwise expressly provided herein or
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in the Schedules, all accounting terms used in this Agreement shall be
interpreted, and all financial statements, Schedules, certificates and reports
as to financial matters required to be delivered hereunder shall be prepared, in
accordance with generally accepted accounting principles ("GAAP") consistently
applied.
ARTICLE II
CLOSING
2.1 LOCATION AND DATE. The consummation of the transactions
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contemplated by this Agreement (the "Closing") shall take place at 10:00 a.m. at
the offices of RIGINC on the first business day after all the conditions set
forth in Articles VI and VII have been satisfied or waived, or at such other
time and date as RIGINC, the Company and the Stockholders may mutually agree,
which date shall be no later than twenty (20) days after the date hereof and
shall be referred to as the "Closing Date." The Merger shall become effective
as of the close of business on the Closing Date (the "Effective Time").
2.2 DELIVERIES. The Stockholders shall deliver to RIGINC the following
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at the Closing: (a) stock certificates representing (i) the Shares, accompanied
by stock powers duly executed in blank or duly executed instruments of transfer,
in each case with signatures guaranteed by a national bank or member firm of the
New York Stock Exchange, and with all necessary stock transfer and other
documentary stamps attached, and any other documents that are necessary to
transfer to RIGINC good and marketable title to the Shares free and clear of all
Liens, and (ii) all the issued and then outstanding shares of capital stock of
the Company's subsidiaries, if any, free and clear of all Liens; and (b) all
other documents, certificates, instruments or writings required to be delivered
by the Stockholders or the Company at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith. Against delivery of the
Shares, RIGINC shall deliver to the Stockholders at the Closing the
Consideration free and clear of all Liens (other than Liens specifically
contemplated herein) and all documents, certificates, instruments or writings
required to be delivered by RIGINC at or prior to the Closing pursuant to this
Agreement or otherwise required in connection herewith; provided, however, that
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the cash Consideration delivered by RIGINC will be decreased in an amount equal
to the Deposit, and CMAJ shall disburse the Deposit to the Stockholders. At the
request of the Stockholders and upon receipt from David P. Evemy ("Evemy") of a
document agreeing to the restrictions set forth in Section 5.9, an affiliate
agreement described in Section 6.7(b) and a full release of obligations of the
Company and the Stockholders under the "Evemy Agreement" (as defined below),
RIGINC shall deliver that number of shares of the RIGINC stock (as specified by
the Stockholders) otherwise deliverable hereunder to the Stockholders to Evemy
to satisfy some or all of the obligations of the Company under that certain
deferred compensation letter agreement between the Company and Evemy dated
December 17, 1997 (the "Evemy Agreement").
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE
COMPANY AND THE STOCKHOLDERS
To induce RIGINC to enter into this Agreement and consummate the
transactions contemplated hereby, each of the Company and the Stockholders,
jointly and severally, represents and warrants to RIGINC as follows (for
purposes of this Agreement, the phrases "knowledge of the Stockholders" or the
"Stockholders' knowledge," or words of similar import, mean the knowledge of
Henry D. Jamison IV and Leslie Lees Jamison, including facts of which either, in
the reasonably prudent exercise of his or her duties as an officer, director
and/or stockholder of the Company, should be aware):
3.1 DUE ORGANIZATION.
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(a) The Company is a corporation duly organized, validly existing
and is in good standing under the laws of the jurisdiction of its incorporation
and is duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities to own, operate and
lease its properties and to carry on its business in the places and in the
manner as now conducted. Schedule 3.l(a) hereto contains a list of all
jurisdictions in which the Company is authorized or qualified to do business.
The Company is in good standing as a foreign corporation in each jurisdiction in
which it does business.
(b) The Company has delivered to RIGINC true, complete and correct
copies of the Articles of Incorporation and Bylaws of the Company. Such
Articles of Incorporation and Bylaws are collectively referred to as the
"Company Charter Documents." The Company is not in violation of any Company
Charter Document. The minute books of the Company have been made available to
RIGINC (and at Closing shall be delivered, along with the Company's original
stock ledger and corporate seal, to RIGINC) and are correct and, except as set
forth in Schedule 3.1(b), complete in all material respects.
(c) Schedule 3.1(c) contains a complete and accurate list of the
directors and officers of the Company.
3.2 AUTHORIZATION; VALIDITY. The Company has all requisite corporate
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power and authority to enter into and perform its obligations pursuant to the
terms of this Agreement. The Company has the full legal right, corporate power
and authority to enter into this Agreement and the transactions contemplated
hereby. Each Stockholder has the full legal right and authority to enter into
this Agreement and perform the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the performance by the Company
of the transactions contemplated herein have been duly and validly authorized by
the Board of Directors of the Company and the Stockholders and this Agreement
has been duly and validly authorized by all necessary corporate action. This
Agreement is a legal, valid and binding obligation of the Company and each
Stockholder, enforceable in accordance with its terms.
3.3 NO CONFLICTS. Except as set forth on Schedule 3.3, the execution,
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delivery and performance of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of, any of
the Company Charter Documents;
(b) conflict with, or result in a default (or would constitute a
default but for any requirement of notice or lapse of time or both) under, any
document, agreement or other instrument to which the Company or any Stockholder
is a party or by which the Company or any Stockholder is bound, or result in the
creation or imposition of any lien, charge or encumbrance on any of the
Company's properties pursuant to (i) any law or regulation to which the Company
or any Stockholder or any of their respective property is subject, or (ii) any
judgment, order or decree to which the Company or any Stockholder is bound or
any of their respective property is subject;
(c) result in termination or any impairment of any permit,
license, franchise, contractual right or other authorization of the Company; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which the Company or any Stockholder is subject or by which the
Company or any Stockholder is bound.
3.4 CAPITAL STOCK OF THE COMPANY. The authorized capital stock of the
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Company consists of 500,000 shares of common stock, $0.10 par value, of which
9,000 shares are issued and outstanding and no shares of preferred stock. All
of the issued and outstanding shares of the capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are owned of record and beneficially by the Stockholders and the Church in the
amounts set forth in Schedule 3.4 free and clear of all Liens. All of the
issued and outstanding shares of the capital stock of the Company were offered,
issued, sold and delivered by the Company in compliance with all applicable
state and federal laws concerning the issuance of securities. Further, none of
such shares was issued in violation of any preemptive rights. There are no
voting agreements or voting trusts with respect to any of the outstanding shares
of the capital stock of the Company.
3.5 TRANSACTIONS IN CAPITAL STOCK; ACCOUNTING TREATMENT . Except as
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set forth on Schedule 3.5, no option, warrant, call, subscription right,
conversion right or other contract or commitment of any kind exists of any
character, written or oral, which may obligate the Company to issue, sell or
otherwise become outstanding any shares of capital stock. The Company has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its equity securities or any interests therein or to pay any dividend or
make any distribution in respect thereof.
3.6 SUBSIDIARIES STOCK
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(a) Except as set forth on Schedule 3.6(a), the Company has no
subsidiaries.
(b) Except as set forth on Schedule 3.6(b), the Company does not
presently own, of record or beneficially, or control, directly or indirectly,
any capital stock, securities convertible into capital stock or any other equity
interest in any corporation, association or business entity, nor is the Company,
directly or indirectly, a participant in any joint venture, partnership or other
noncorporate entity.
3.7 COMPLETE COPIES OF MATERIALS. The Company has delivered to RIGINC
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true and complete copies of each agreement, contract, commitment or other
document (or summaries thereof) that is referred to in the Schedules or that has
been requested by RIGINC, except for certain contracts for which representative
samples only have been provided to RIGINC.
3.8 COMPANY FINANCIAL CONDITIONS.
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(a) The Net Worth (deficit) as of June 30, 1998 was $(47,774).
(b) The Company's revenues for the fiscal year ended December 31,
1998 were not less than $4,400,000.
(c) The Company's earnings before interest and taxes for the
fiscal year ended December 31, 1997 were not less than $20,000.
(d) The Company's Working Capital (Deficit) as of December 31,
1997 is not less than $(327,000).
(e) The sum of the Company's total outstanding long-term and
short-term indebtedness to banks, the Stockholders, and other financial
institutions and creditors as of December 31, 1997 (in each case including the
current portions of such indebtedness, but excluding trade payables and other
ordinary course accounts payable) is no greater than $178,000.
(f) The parties acknowledge and agree that for purposes of
determining the amounts in Sections 1.3 and 3.8: (i) the amount of any material
decrease or increase in intangible assets (including without limitation
goodwill, franchises and intellectual property) accounted for after the end of
Company's most recent fiscal year preceding the date hereof, shall be excluded,
and (ii) the effect of changes to GAAP on or after January 1, 1999 shall also be
excluded.
3.9 FINANCIAL STATEMENTS. Schedule 3.9 includes true, complete and
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correct copies of the Company's audited balance sheet as of and the income
statement for the year ended December 31, 1997 (collectively, the "Audited
Financials"), and also includes the Company's unaudited balance sheet as of
November 30, 1998 (the "Balance Sheet Date"), and income statement for the
eleven-month period ended November 30, 1998 (collectively, the "November
Financials"). As noted on the auditors' report accompanying the Audited
Financials, the Audited Financials have been prepared in accordance with GAAP
consistently applied; and the November Financials have been prepared in
accordance with GAAP consistently applied. The balance sheets included in the
Audited Financials and the November Financials present fairly the financial
condition of the Company as of the dates indicated thereon, and the income
statements included in the Audited Financials and the November Financials
present fairly the results of its operations for the periods indicated thereon.
Since the date of the Audited Financials, there have been no material changes in
the Company's accounting policies other than as requested by RIGINC to conform
the Company's accounting policies to GAAP.
3.10 LIABILITIES AND OBLIGATIONS.
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(a) To the Stockholders' knowledge, the Company is not liable for
or subject to any liabilities except for:
(i) those liabilities reflected on the November Financials
and Schedule 3.10(a) and not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of its
business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise; and
(iii) those liabilities incurred since the Balance Sheet Date
in the ordinary course of business consistent with past practice, which
liabilities are not, individually or in the aggregate, material.
(b) Where so requested by RIGINC, the Company has delivered to
RIGINC, in the case of those liabilities which are not fixed or are contested, a
reasonable estimate of the maximum amount which may be payable.
(c) Schedule 3.10(c) includes a summary description of all plans
or projects presently in effect or contemplated by the Stockholders involving
the opening of new operations, expansion of any existing operations or the
acquisition of any real property or existing business, to which management of
the Company has made any material expenditure in the two-year period prior to
the date of this Agreement, which if pursued by the Company would require
additional material expenditures of capital.
(d) For purposes of this Section 3.10, the term "liabilities"
shall include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent, mature,
unmature or otherwise and whether known or unknown, fixed or unfixed, choate or
inchoate, liquidated or unliquidated, secured or unsecured.
3.11 BOOKS AND RECORDS. The Company has made and kept books and
-------------------
records and accounts, which, in reasonable detail, accurately and fairly reflect
the activities of the Company (except for omissions that are not, individually
or in aggregate, material). The Company has not engaged in any transaction,
maintained any bank account, or used any corporate funds except for
transactions, bank accounts, and funds which have been and are reflected in its
normally maintained books and records.
3.12 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 3.12 sets forth a
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complete and accurate list as of the date of this Agreement, of:
(a) the name of each financial institution in which the Company
has any account or safe deposit box;
(b) the names in which the accounts or boxes are held;
(c) the type of account;
(d) the name of each person authorized to draw thereon or have
access thereto; and
(e) the name of each person, corporation, firm or other entity
holding a general or special power of attorney from the Company and a
description of the terms of such power.
3.13 ACCOUNTS AND NOTES RECEIVABLE. Schedule 3.13 sets forth a
--------------------------------
complete and accurate list, as of a date not more than forty-five (45) days
prior to the date hereof, of the accounts and notes receivable of the Company
(including without limitation receivables from and advances to employees and the
Stockholders), which includes an aging of all accounts and notes receivable
showing amounts due in 30-day aging categories (collectively, the "Accounts
Receivable"). All Accounts Receivable represent valid obligations arising from
sales actually made or services actually performed in the ordinary course of
business. Subject to reserves shown on the Company's books and records (which
reserves are adequate and calculated consistent with past practice) each of the
Accounts Receivable is expected to be collected in full, without any set-off,
within one hundred twenty (120) days after the day on which it first became due
and payable. Except as set forth on Schedule 3.13, there is no material
contest, claim, or right of set-off, other than rebates and returns in the
ordinary course of business, under any contract with any obligor of a material
Account Receivable relating to the amount or validity of such Account
Receivable.
3.14 PERMITS. To the Stockholders' knowledge, the Company owns or
-------
holds all licenses, franchises, permits and other governmental authorizations,
including without limitation permits, titles (including without limitation motor
vehicle titles and current registrations), fuel permits, licenses and franchises
necessary for the continued operation of its business as it is currently being
conducted (the "Company Permits"). To the Stockholders' knowledge, the Company
Permits are valid, and the Company has not received any notice that any
governmental authority intends to modify, cancel, terminate or fail to renew any
Company Permit. No present or former officer, manager, member or employee of the
Company or any affiliate thereof, or any other person, firm, corporation or
other entity, owns or has any proprietary, financial or other interest (direct
or indirect) in any Company Permits. To the Stockholders' knowledge, the Company
has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the Company
Permits and other applicable orders, approvals, variances, rules and regulations
and is not in violation of any of the foregoing, and the transactions
contemplated by this Agreement will not result in a default under, or a breach
or violation of, or adversely affect the rights and benefits afforded to the
Company, by any Company Permit.
3.15 REAL PROPERTY.
--------------
(a) For purposes of this Agreement, "Real Property" means all
interests in real property including, without limitation, fee estates,
leaseholds and subleaseholds, purchase options, easements, licenses, rights to
access, and rights of way, and all buildings and other improvements thereon,
owned or used by the Company, together with any additions thereto or
replacements thereof.
(b) Schedule 3.15(b) contains a complete and accurate description
of all Real Property (including street address, legal description (where known),
owner, and Company's use thereof) and, to the Stockholder's knowledge, any
claims, liabilities, security interests, mortgages, liens, pledges, conditions,
charges, covenants, easements, restrictions, encroachments, leases, or
encumbrances of any nature thereon ("Encumbrances"). The Company does not now
own, nor has it ever owned, Real Property. The Real Property listed on Schedule
3.15 includes all interests in real property necessary to conduct the business
and operations of the Company.
(c) All oral or written leases, subleases, licenses, concession
agreements or other use or occupancy agreements pursuant to which the Company
leases from any other party any real property, including all material
amendments, renewals, extensions, modifications or supplements to any of the
foregoing or substitutions for any of the foregoing (collectively, the "Leases")
are valid and in full force and effect. The Company has provided RIGINC with
true and complete copies of all of the Leases, all amendments, renewals,
extensions, modifications or supplements thereto, and all material
correspondence received or sent by the Company related thereto, including all
correspondence pursuant to which any party to any of the Leases declared a
default thereunder or provided notice of the exercise of any operation granted
to such party under such Lease. The Leases and the Company's interests
thereunder are free of all Liens. Except as set forth on Schedule 3.15(c), none
of the Leases requires the consent or approval of any party thereto in
connection with the consummation of the transactions contemplated hereby.
3.15 PERSONAL PROPERTY.
------------------
(a) Schedule 3.16(a) sets forth a complete and accurate list of
all personal property included on the November Financials and all other personal
property owned or leased by the Company with a current book value in excess of
$2,500 both (i) as of the Balance Sheet Date and (ii) acquired since the Balance
Sheet Date, including in each case true, complete and correct copies of leases
for material equipment which have not already been provided to RIGINC and an
indication as to which assets are currently owned, or were formerly owned, by
any Stockholder or business or personal affiliates of any Stockholder or of the
Company.
(b) The Company currently owns or leases all personal property
necessary to conduct the business and operations of the Company as they are
currently being conducted.
(c) Except as set forth in Schedule 3.16(a), to the Stockholders'
knowledge, all of the property listed on Schedule 3.16(a) is in good working
order and condition, ordinary wear and tear excepted. All leases set forth on
Schedule 3.16(a) are in full force and effect and constitute valid and binding
agreements of the Company. The Company is not in material breach of any of the
leases set forth on Schedule 3.16(a). All fixed assets used by the Company that
are material to the operation of its business are either owned by the Company or
leased under an agreement listed on Schedule 3.16(a).
3.17 INTELLECTUAL PROPERTY.
----------------------
(a) The Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, the registered and
unregistered Marks listed on Schedule 3.17(a). Such schedule lists (i) all of
the Marks registered in the United States Patent and Trademark Office ("PTO") or
the equivalent thereof in any state of the United States or in any foreign
country by the Company or any affiliate thereof, and (ii) all of the
unregistered Marks, that the Company now owns or uses in connection with its
business (collectively, the "Company Marks"). Except with respect to those
Marks shown as licensed on Schedule 3.17(a), the Company owns all of the
registered and unregistered trademarks, service marks, and trade names that it
uses. The Marks listed on Schedule 3.17(a) will not cease to be valid rights of
the Company by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby. For
purposes of this Section 3.17 and Section 4.8, the term "Marks" shall mean all
right, title and interest in and to any United States or foreign trademarks,
service marks and trade names now held by a party hereto, including any
registration or application for registration of any trademarks and services
marks in the PTO or the equivalent thereof in any state of the United States or
in any foreign country, as well as any unregistered marks used by a party
hereto, and any trade dress (including logos, designs, company names, business
names, fictitious names and other business identifiers) used by a party hereto
in the United States or any foreign country.
(b) Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, all rights in the Patents
listed on Schedule 3.17(b)(i) (the "Company Patents") and in the Copyright
registrations listed on Schedule 3.17(b)(ii) (the "Company Copyrights"). Such
Patents and Copyrights constitute all of the Company Patents and Company
Copyrights that the Company now owns or is licensed to use. The Company owns or
is licensed to practice under all Company Patents and Company Copyrights that
the Company now owns or uses in connection with its business. For purposes of
this Section 3.17 and Section 4.8, the term "Patent"shall mean any United States
or foreign patent to which a party hereto has title as of the date of this
Agreement, as well as any application for a United States or foreign patent made
by a party hereto; the term "Copyright" shall mean any United States or foreign
copyright owned by a party hereto as of the date of this Agreement, including
any registration of copyrights, in the United States Copyright Office or the
equivalent thereof in any foreign county, as well as any application for a
United States or foreign copyright registration made by a party hereto.
(c) The Company is the true and lawful owner of, or is licensed or
otherwise possesses legally enforceable rights to use, all rights in the
databases, analytical reports, trade secrets, franchises, or similar rights
(collectively, "Company Other Rights") listed on Schedule 3.17(c) along with a
brief description of the interest. Those Company Other Rights constitute all of
the Company Other Rights that the Company now owns or is licensed to use. The
Company owns or is licensed to practice under all trade secrets, franchises or
similar rights that it owns, uses or practices under.
(d) For purposes of this Section 3.17, the Company Marks, Company
Patents, Company Copyrights, and Company Other Rights are referred to
collectively herein as the "Company Intellectual Property." The Company
Intellectual Property owned by the Company is referred to herein collectively as
the "Company Owned Intellectual Property." All other Company Intellectual
Property used by the Company is referred to herein collectively as the "Company
Third Party Intellectual Property." Except as indicated on Schedule 3.17(d),
the Company has no obligations to compensate any person for the use of any
Company Intellectual Property. Except as indicated on Schedule 3.17(d) or
except in the ordinary course of business, the Company has not granted to any
person any license, option or other rights to use in any manner any Company
Intellectual Property, whether requiring the payment of royalties or not.
(e) The Company is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any Company Third Party Intellectual Property
license, sublicense or agreement described in Schedule 3.17. No claims with
respect to the Company Owned Intellectual Property or Company Third Party
Intellectual Property are currently pending or, to the knowledge of the
Stockholders are threatened by any person, nor, to the Stockholder's knowledge,
do any grounds for any claims exist: (i) to the effect that the manufacture,
sale, licensing or use of any product as now used, sold or licensed or proposed
for use, sale or license by the
Company infringes on any copyright, patent, trademark, service mark or trade
secret; (ii) against the use by the Company of any trademarks, trade names,
trade secrets, copyrights, patents, technology, know-how or computer software
programs and applications used in the Company's business as currently conducted
by the Company; (iii) challenging the ownership, validity or effectiveness of
any of the Company Owned Intellectual Property or other trade secret material to
the Company; or (iv) challenging the Company's license or legally enforceable
right to use of the Company Third Party Intellectual Property. To the
Stockholders' knowledge, there is no unauthorized use, infringement or
misappropriation of any of the Company Owned Intellectual Property by any third
party. Except as set forth in Schedule 3.17(e), neither the Company nor any of
its subsidiaries (x) has been sued or charged in writing as a defendant in any
claim, suit, action or proceeding which involves a claim or infringement of
trade secrets, any patents, trademarks, service marks, or copyrights and which
has not been finally terminated or been informed or notified by any third party
that the Company may be engaged in such infringement or (y) has knowledge of any
infringement liability with respect to, or infringement by, the Company or any
of its subsidiaries of any trade secret, patent, trademark, service mark, or
copyright of another.
3.18 SIGNIFICANT CUSTOMERS; MATERIAL CONTRACTS AND COMMITMENTS.
--------------------------------------------------------------
(a) To the Stockholders' knowledge, Schedule 3.18(a) contains a
complete and accurate list of all contracts, commitments, leases, instruments,
agreements, licenses or permits, written or oral, to which the Company is a
party or by which it or its properties are bound (including without limitation
joint venture or partnership agreements, contracts with any labor organizations,
employment agreements, consulting agreements, loan agreements, indemnity or
guaranty agreements, bonds, mortgages, options to purchase land, liens, pledges
or other security agreements) (i) to which the Company and any affiliate of the
Company or any officer, director or stockholder of the Company are parties
("Related Party Agreements"); (ii) that may give rise to obligations or
liabilities exceeding, during the current term thereof, $5,000, or (iii) that
may generate revenues or income exceeding, during the current term thereof,
$5,000 (collectively with the Related Party Agreements, the "Material
Contracts"). The Company has delivered to RIGINC true, complete and correct
copies of the Material Contracts, except for certain contracts for which
representative samples only have been provided to RIGINC.
(b) Except to the extent set forth on Schedule 3.18(b), since the
Balance Sheet Date, to the Stockholders' knowledge, (i) none of the Company's
customers has canceled or substantially reduced or, to the knowledge of the
Stockholders, is currently attempting or threatening to cancel or substantially
reduce, any purchases from the Company, (ii) none of the Company's suppliers has
canceled or substantially reduced or, to the knowledge of the Stockholders, is
currently attempting to cancel or substantially reduce, the supply of products
or services to the Company, (iii) the Company has complied with all of its
commitments and obligations and is not in default under any of the Material
Contracts, and no notice of default has been received with respect to any
thereof, and (iv) other than the Related Party Agreements, there are no Material
Contracts that were not negotiated at arm's length. The Company has not received
any material customer complaints concerning its products and/or services, nor
has it had any of its products returned by a purchaser thereof except for normal
warranty returns consistent with past history and those returns that would not
result in a reversal of any material revenue.
(c) To the Stockholders' knowledge, each Material Contract, except
those terminated pursuant to Section 5.6, is valid and binding on the Company
and is in full force and effect and is not subject to any default thereunder by
any party obligated to the Company pursuant thereto. The Company will obtain
prior to the Closing Date all necessary consents, waivers and approvals of
parties to any Material Contracts that are required in connection with any of
the transactions contemplated hereby, or are required by any governmental agency
or other third party in order that any such Material Contract remain in effect
without modification after the transactions contemplated hereby and without
giving rise to any right to termination, cancellation or acceleration or loss of
any right or benefit ("Third Party Consents"). All Third Party Consents are
listed on Schedule 3.18(c).
(d) The outstanding balance on all loans or credit agreements
either (i) between the Company and any person in which any of the Stockholders
owns a material interest, or (ii) guaranteed by the Company for the benefit of
any Person in which any of the Stockholders owns a material interest, are set
forth in Schedule 3.18(d).
3.19 PREDECESSOR STATUS; ETC. Schedule 3.19 sets forth a listing of
--------------------------
all legal names, trade names, fictitious names or other names (including,
without limitation, any names of divisions or operations) of the Company and all
of its predecessor companies during the five-year period immediately preceding
the date hereof, including without limitation the names of any entities from
whom the Company has acquired material assets. During the five-year period
immediately preceding the date hereof, the Company has operated only under the
names set forth on Schedule 3.19 in the jurisdiction or jurisdictions set forth
on Schedule 3.19 and has not been a subsidiary or division of another
corporation or a part of an acquisition which was later rescinded.
3.20 INSURANCE. Schedule 3.20 sets forth a complete and accurate list,
---------
as of November 30, 1998, of all insurance policies carried by the Company and
all insurance loss runs or workmen's compensation claims received for the past
two (2) policy years. The Company has delivered to RIGINC true, complete and
correct copies of all current insurance policies, all of which are in full force
and effect. All premiums payable under all such policies have been paid and the
Company is otherwise in full compliance with the terms of such policies. Such
policies of insurance are of the type and in amounts customarily carried by
persons conducting businesses similar to that of the Company. To the knowledge
of the Stockholders, there have been no threatened terminations of, or material
premium increases with respect to, any of such policies.
3.21 ENVIRONMENTAL MATTERS.
----------------------
(a) Hazardous Material. To the Stockholders' knowledge, other
-------------------
than as set forth on Schedule 3.21(a), no underground storage tanks and no
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state, local or other applicable law to be radioactive,
toxic, hazardous or otherwise a danger to health or the environment, including,
without limitation, PCBs, asbestos, petroleum, urea-formaldehyde and all
substances listed as hazardous substances pursuant to the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended, or
defined as a hazardous waste pursuant to the United States Resource Conservation
and Recovery Act of 1976, as amended, and the regulations promulgated pursuant
to said laws, but excluding office and janitorial supplies properly and safely
maintained (a "Hazardous Material"), are present in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that the Company has at any time owned, operated, occupied or leased. Schedule
3.21(a) identifies, to the knowledge of the Stockholders, all underground and
aboveground storage tanks, and the capacity, age, and contents of such tanks,
located on Real Property owned or leased by the Company.
(b) Hazardous Materials Activities. The Company has not
--------------------------------
transported, stored, used, manufactured, disposed of or released, or exposed its
employees or others to, Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the Company disposed of, transported, sold,
or manufactured any product containing a Hazardous Material (collectively,
"Company Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Environmental Liabilities. No action, proceeding, revocation
--------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge of the Stockholders, threatened concerning any Hazardous Material or
any Company Hazardous Materials Activity. There are no past or present actions,
activities, circumstances, conditions, events, or incidents that could involve
the Company (or any person or entity whose liability the Company has retained or
assumed, either by contract or operation of law) in any environmental
litigation, or impose upon the Company (or any person or entity whose liability
the Company has retained or assumed, either by contract or operation of law) any
environmental liability including, without limitation, common law tort
liability.
3.22 LABOR AND EMPLOYMENT MATTERS. With respect to employees of and
-------------------------------
service providers to the Company:
(a) the Company is and has been in compliance in all material
respects with all applicable laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, including
without limitation any such laws respecting employment discrimination, workers'
compensation, family and medical leave, the Immigration Reform and Control Act,
and occupational safety and health requirements, and has not and is not engaged
in any unfair labor practice;
(b) there is not now, nor within the past three (3) years has
there been, any unfair labor practice complaint against the Company pending or,
to the Stockholders' knowledge, threatened, before the National Labor Relations
Board or any other comparable authority;
(c) there is not now, nor within the past three (3) years has
there been, any labor strike, slowdown or stoppage actually pending or, to the
Stockholders' knowledge, threatened, against or directly affecting the Company;
(d) to the Stockholders' knowledge, no labor representation
organization effort exists nor has there been any such activity within the past
three (3) years;
(e) no grievance or arbitration proceeding arising out of or under
collective bargaining agreements is pending and, to the Stockholder's knowledge,
no claims therefor exist or have been threatened;
(f) the employees of the Company are not and have never been
represented by any labor union, and no collective bargaining agreement is
binding and in force against the Company or currently being negotiated by the
Company; and
(g) the Company and the Stockholders have a reasonable basis for
believing that all persons classified by the Company as independent contractors
do satisfy and have satisfied the requirements of law to be so classified, and
the Company has fully and accurately reported their compensation on IRS Forms
1099 when required to do so.
3.23 EMPLOYEE BENEFIT PLANS.
------------------------
(a) Definitions.
(i) "Benefit Arrangement" means any benefit arrangement,
obligation, custom, or practice, whether or not legally enforceable, to provide
benefits, other than salary, as compensation for services rendered, to present
or former directors, employees, agents, or independent contractors, other than
any obligation, arrangement, custom or practice that is an Employee Benefit
Plan, including, without limitation, employment agreements, severance
agreements, executive compensation arrangements, incentive programs or
arrangements, sick leave, vacation pay, severance pay policies, plant closing
benefits, salary continuation for disability, consulting, or other compensation
arrangements, workers' compensation, retirement, deferred compensation, bonus,
stock option or purchase, hospitalization, medical insurance, life insurance,
tuition reimbursement or scholarship programs, any plans subject to Section 125
of the Code, and any plans providing benefits or payments in the event of a
change of control, change in ownership, or sale of a substantial portion
(including all or substantially all) of the assets of any business or portion
thereof, in each case with respect to any present or former employees,
directors, or agents.
(ii) Company Benefit Arrangement" means any Benefit
Arrangement sponsored or maintained by the Company or with respect to which the
Company has or may have any liability (whether actual, contingent, with respect
to any of its assets or otherwise) as of the Closing Date, in each case with
respect to any present or former directors, employees, or agents of the Company.
(iii) "Company Plan" means, as of the Closing Date, any
Employee Benefit Plan for which the Company is the "plan sponsor" (as defined in
Section 3(16)(B) of ERISA) or any Employee Benefit Plan maintained by the
Company or to which the Company is obligated to make payments, in each case with
respect to any present or former employees of the Company.
(iv) "Employee Benefit Plan" has the meaning given in Section
3(3) of ERISA.
(v) "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, and all regulations and rules issued thereunder, or any
successor law.
(vi) "ERISA Affiliate" means any person that, together with
the Company, would be or was at any time treated as a single employer under
Section 414 of the Code or Section 4001 of ERISA and any general partnership of
which the Company is or has been a general partner.
(b) Schedule 3.23(b) contains a complete and accurate list of all
Company Benefit Arrangements. The Company does not now maintain, nor has it
ever maintained, any Company Plan.
(c) Schedule 3.23(c) hereto contains the most recent quarterly
listing of workers' compensation claims and a schedule of workers' compensation
claims of the Company for the last three (3) fiscal years.
(d) Schedule 3.23(d) hereto sets forth an accurate list, as of the
date hereof, of all employees of the Company who earned in 1998, or are likely
to earn in 1999, more than $75,000, all officers and all directors, and lists
all employment agreements with such employees, officers and directors and the
rate of compensation (and the portions thereof attributable to salary, bonus,
and other compensation respectively) of each such person as of (a) the Balance
Sheet Date and (b) the date hereof.
3.24 TAXES.
-----
(a) (i) Except as set forth on Schedule 3.24, the Company has
timely filed all Tax Returns due on or before the date hereof, and all such Tax
Returns are true, correct, and complete in all respects.
(ii) Except as set forth on Schedule 3.24, the Company has
paid in full on a timely basis all Taxes owed by it, whether or not shown on any
Tax Return.
(iii) The amount of the Company's liability for unpaid Taxes
as of the Balance Sheet Date did not exceed the amount of the current liability
accruals for Taxes (excluding reserves for deferred Taxes) included in the
amounts shown on the balance sheet comprising the Audited Financials, and the
amount of the Company's liability for unpaid Taxes for all periods or portions
thereof ending on or before the Closing Date will not exceed the amount of the
current liability accruals for Taxes (excluding reserves for deferred Taxes) as
such accruals are reflected on the books and records of the Company on the
Closing Date.
(iv) Except as set forth on Schedule 3.24, there are no
ongoing examinations or claims against the Company for Taxes, and no notice of
any audit, examination, or claim for Taxes, whether pending or threatened, has
been received.
(v) The Company has a taxable year ended on December 31, in
each year commencing 1984.
(vi) The Company currently utilizes the cash method of
accounting for income Tax purposes and such method of accounting has not changed
in the past 13 years. The Company has not agreed to, and is not and will not be
required to, make any adjustments under Code Section 481(a) as a result of a
change in accounting methods.
(vii) The Company has withheld and paid over to the proper
governmental authorities all Taxes required to have been withheld and paid over,
and complied with all information reporting and backup withholding requirements,
including maintenance of required records with respect thereto, in connection
with amounts paid to any employee, independent contractor, creditor, or other
third party.
(viii) Copies of (A) any Tax examinations, (B) extensions of
statutory limitations for the collection or assessment of Taxes and (C) the Tax
Returns of the Company for the last fiscal year have been delivered to RIGINC.
(ix) There are (and as of immediately following the Closing
there will be) no Liens on the assets of the Company relating to or attributable
to Taxes.
(x) To the Stockholder's knowledge, there is no basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the Company or otherwise
have an adverse effect on the Company or its business.
(xi) None of the Company's assets are treated as "tax exempt
use property"within the meaning of Section 168(h) of the Code.
(xii) There are no contracts, agreements, plans or
arrangements, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company that, individually or
collectively, could give rise to the payment of any amount (or portion thereof)
that would not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
(xiii) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(xiv) The Company is not, and has not been at any time, a
party to a tax sharing, tax indemnity or tax allocation agreement, and the
Company has not assumed the tax liability of any other person under contract.
(xv) The Company is not, and has not been at any time, a
"United States real property holding corporation" within the meaning of Section
897(c)(2) of the Code.
(xvi) The Company's tax basis in its assets for purposes of
determining its future amortization, depreciation and other federal income tax
deductions is accurately reflected on the Company's tax books and records.
(xvii) The Company has not been a member of an affiliated
group filing a consolidated federal income Tax Return and does not have any
liability for the Taxes of another person under Treas. Reg. 1.1502-6 (or any
similar provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(b) The Company has always been a C corporation.
(c) For purposes of this Agreement:
(i) the term "Tax" shall include any tax or similar governmental
charge, impost or levy (including without limitation income taxes, franchise
taxes, transfer taxes or fees, sales taxes, use taxes, gross receipts taxes,
value added taxes, employment taxes, excise taxes, ad valorem taxes, property
taxes, withholding taxes, payroll taxes, minimum taxes or windfall profit taxes)
together with any related penalties, fines, additions to tax or interest imposed
by the United States or any state, county, local or foreign government or
subdivision or agency thereof; and
(ii) the term "Tax Return" shall mean any return (including any
information return), report, statement, schedule, notice, form, estimate, or
declaration of estimated tax relating to or required to be filed with any
governmental authority in connection with the determination, assessment,
collection or payment of any Tax.
3.25 CONFORMITY WITH LAW; LITIGATION.
----------------------------------
(a) To the Stockholders' knowledge, the Company has not violated any
law or regulation or any order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it.
(b) Except as set forth on Schedule 3.24, there are no claims, actions,
suits or proceedings, pending or, to the knowledge of the Stockholders,
threatened against or affecting the Company at law or in equity, or before or by
any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received. There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration) against the Company or against any of its properties or
business.
3.26 ABSENCE OF CLAIMS AGAINST COMPANY. No Stockholder has any claims
----------------------------------
against the Company.
3.27 ABSENCE OF CHANGES. Since the Balance Sheet Date, the Company has
------------------
conducted its business in the ordinary course and, except as contemplated herein
(including, without limitation, as contemplated in Sections 5.12 and 7.5) or as
set forth on Schedule 3.27, there has not been:
(a) any change, by itself or together with other changes, that has
affected adversely, or is likely to affect adversely, the business, operations,
affairs, prospects, properties, assets, profits or condition (financial or
otherwise) of the Company;
(b) any damage, destruction or loss (whether or not covered by
insurance) adversely affecting the properties or business of the Company;
(c) any change in the authorized capital of the Company or in its
outstanding securities or any change in its ownership interests or any grant of
any options, warrants, calls, conversion rights or commitments;
(d) any declaration or payment of any dividend or distribution in
respect of the capital stock, or any direct or indirect redemption, purchase or
other acquisition of any of the capital stock of the Company;
(e) any increase in the compensation, bonus, sales commissions or
fee arrangements payable or to become payable by the Company to any of its
officers directors, Stockholders, employees, consultants or agents, except for
ordinary and customary bonuses and salary increases for employees in accordance
with past practice, nor has the Company entered into or amended any Company
Benefit Arrangement, Company Plan, employment, severance or other agreement
relating to compensation or fringe benefits;
(f) any work interruptions, labor grievances or claims filed, or
any similar event or condition of any character, materially adversely affecting
the business or future prospects of the Company;
(g) any sale or transfer, or any agreement to sell or transfer,
any material assets, property or rights of the Company to any person, including
without limitation the Stockholders and their affiliates;
(h) any cancellation, or agreement to cancel, any indebtedness or
other obligation owing to the Company, including without limitation any
indebtedness or obligation of the Stockholders and their affiliates, provided
--------
that the Company may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(i) any plan, agreement or arrangement granting any preferential
rights to purchase or acquire any interest in any of the assets, property or
rights of the Company or requiring consent of any party to the transfer and
assignment of any such assets, property or rights;
(j) any purchase or acquisition of, or agreement, plan or
arrangement to purchase or acquire, any property, rights or assets outside of
the ordinary course of business of the Company;
(k) any waiver of any material rights or claims of the Company;
(l) any breach, amendment or termination of any material contract,
agreement, license, permit or other right to which the Company is a party (x) by
the Company or (y) to the knowledge of the Stockholders, by any other party;
(m) any transaction by the Company outside the ordinary course of
business;
(n) any capital commitment by the Company, either individually or
in the aggregate, exceeding $25,000;
(o) any change in accounting methods or practices (including any
change in depreciation or amortization policies or rates) by the Company or the
revaluation by the Company of any of its assets;
(p) any creation or assumption by the Company of any mortgage,
pledge, security interest or lien or other encumbrance on any asset (other than
liens arising under existing lease financing arrangements which are not material
and liens for Taxes not yet due and payable);
(q) any entry into, amendment of, relinquishment, termination or
non- renewal by the Company of any contract, lease transaction, commitment or
other right or obligation requiring aggregate payments by the Company in excess
of $25,000;
(r) any loan by the Company to any person or entity, incurring by
the Company, of any indebtedness, guaranteeing by the Company of any
indebtedness, issuance or sale of any debt securities of the Company or
guaranteeing of any debt securities of others;
(s) the commencement or notice or, to the knowledge of the
Stockholders, threat of commencement, of any lawsuit or proceeding against, or
investigation of, the Company or any of its affairs;
(t) any introduction of any promotional offer, including, without
limitation, discounted and free products or services or reduction of standard
pricing levels for the Company's goods or services with pricing that is less
than 20% below the average pricing for comparable clients; or
(u) negotiation or agreement by the Company or any officer or
employee thereof to do any of the things described in the preceding clauses (a)
through (t) (other than negotiations with RIGINC and its representatives
regarding the transactions contemplated by this Agreement).
3.28 DISCLOSURE. All written agreements, lists, schedules,
----------
instruments, exhibits, documents, certificates, reports, statements and other
writings furnished to RIGINC pursuant hereto or in connection with this
Agreement or the transactions contemplated hereby, are and will be complete and
accurate in all material respects. No representation or warranty by the
Stockholders or the Company contained in this Agreement, in the Schedules
attached hereto or in any certificate furnished or to be furnished by the
Stockholders or the Company to RIGINC in connection herewith or pursuant hereto
contains or will contain any untrue statement of a material fact or omits or
will omit to state any material fact necessary in order to make any statement
contained herein or therein not misleading. There is no fact known to any
Stockholder that has specific application to such Stockholder or the Company
(other than general economic or industry conditions) and that materially
adversely affects or, as far as such Stockholder can reasonably foresee,
materially threatens, the assets, business, prospects, financial condition, or
results of operations of the Company that has not been set forth in this
Agreement or any Schedule hereto.
3.29 SECURITIES REPRESENTATIONS. Each Stockholder and the Church is
---------------------------
an "Accredited Investor" within the meaning of the federal securities laws.
Each Stockholder and the Church has either directly, and/or through the Company,
obtained sufficient information concerning RIGINC and its business, present and
proposed, to have made an informed investment decision concerning this Agreement
and the transactions contemplated hereby, and has had an adequate opportunity to
ask questions and receive answers to his, her or its satisfaction from the
officers of RIGINC concerning the business, operations and financial condition
of RIGINC. Each Stock-holder and the Church has such knowledge and experience in
business and financial matters as to be capable of evaluating the merits and
risks of an investment in an option to acquire shares of RIGINC common stock and
protecting its own interest in connection with the investment in such shares.
3.30 NO KNOWLEDGE OF RIG PARTY BREACHES. As of the date of this
---------------------------------------
Agreement, the Jamison Parties have no knowledge that RIGINC is in material
breach of its representations or warranties under this Agreement.
ARTICLE IV.
REPRESENTATIONS OF THE RIG PARTIES
For purposes of this Article IV, "the RIG Business" shall mean the business
of RIGINC. To induce the Company and the Stockholders to enter into this
Agreement and consummate the transactions contemplated hereby, RIGINC represents
and warrants to the Company and the Stockholders as follows (for purposes of
this Agreement the phrases "knowledge of RIGINC" or "RIGINC's knowledge," or
words of similar import, mean the knowledge of Andrew C. Florance and Michael R.
Klein, including facts of which either, in the reasonably prudent exercise of
his duties as an officer, director and/or beneficial owner of an interest in
RIGINC, should be aware); for purposes of this Article IV, where reference is
made to the RIG Parties or to one of the RIG Parties, such reference shall be
deemed to be to RIGINC:
4.1 DUE ORGANIZATION. RIGINC is a corporation duly organized, validly
----------------
existing and in good standing under the laws of the State of Delaware, and is
duly authorized and qualified to do business under all applicable laws,
regulations, ordinances and orders of public authorities and to own, operate and
lease its properties and to carry on its business in the places and in the
manner as now conducted. True, complete and correct copies of the Certificate
of Incorporation and the Bylaws, as amended, of RIGINC (collectively, the "RIG
Charter Documents") have been made available to the Company. No RIG Party is in
violation of any of the RIG Charter Documents.
4.2 AUTHORIZATION; VALIDITY OF OBLIGATIONS. The representatives of
-----------------------------------------
each of the RIG Parties executing this Agreement have all requisite power and
authority to enter into and bind such party to the terms of this Agreement.
Each of the RIG Parties has the full legal right, power and authority to enter
into this Agreement and perform the transactions contemplated hereby. The
execution and delivery of this Agreement by each of the RIG Parties and the
performance by each of the RIG Parties of the transactions contemplated herein
have been duly and validly authorized by the Board of Directors or the General
Partner of each such party, and this Agreement has been duly and validly
authorized by all necessary action. This Agreement is a legal, valid and
binding obligation of each of the RIG Parties, as the case may be, enforceable
in accordance with its terms.
4.3 NO CONFLICTS. The execution, delivery and performance of this
-------------
Agreement, the consummation of the transactions herein contemplated hereby and
the fulfillment of the terms hereof will not:
(a) conflict with, or result in a breach or violation of the RIG
Charter Documents;
(b) subject to compliance with any agreements between any RIG
Party and its lenders and as indicated in Schedule 4.3(b), conflict with, or
result in a default (or would constitute a default but for a requirement of
notice or lapse of time or both) under any document, agreement or other
instrument to which a RIG Party is a party, or result in the creation or
imposition of any lien, charge or encumbrance on any properties of the RIG
Parties pursuant to (i) any law or regulation to which any RIG Party or any of
its property is subject, or (ii) any judgment, order or decree to which any RIG
Party is bound or any of its property is subject;
(c) result in termination or any impairment of any material
permit, license, franchise, contractual right or other authorization of any RIG
Party; or
(d) violate any law, order, judgment, rule, regulation, decree or
ordinance to which any RIG Party is subject, or by which any RIG Party is bound.
4.4 CAPITALIZATION OF RIGINC AND OWNERSHIP OF RIGINC STOCK. As of the
------------------------------------------------------
date of this Agreement: (a) the authorized capital stock of RIGINC consists of
30,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock; (b)
8,771,027 shares of RIGINC Common Stock and no shares of Preferred Stock were
outstanding. The option to acquire shares of RIGINC Common Stock to be issued
to the Stockholders in accordance herewith will be offered, issued, sold and
delivered by RIGINC in compliance with all applicable state and federal laws
concerning the issuance of securities and none of such shares was or will be
issued in violation of the preemptive rights of any stockholder of RIGINC.
4.5 FINANCIAL STATEMENTS.
---------------------
(a) The SEC Documents (as defined in Section 5.10) include true,
complete and correct copies of the audited balance sheets of predecessor
operating entities of RIGINC as of December 31, 1996 and 1997, and income
statements of RIGINC for the years ended December 31, 1996 and 1997
(collectively, the "RIGINC Audited Financials"). Except as noted in the
auditor's report accompanying the RIGINC Audited Financials, the RIGINC Audited
Financials have been prepared in accordance with GAAP consistently applied.
Each balance sheet included in the RIGINC Audited Financials presents fairly the
financial condition of predecessor operating entities of RIGINC as of the date
indicated thereon, and each of the income statements included in the RIGINC
Audited Financials presents fairly the results of their operations for the
periods indicated thereon. Since the date of the most recent RIGINC Audited
Financials, there has been no material changes in RIGINC's accounting policies.
(b) The SEC Documents include true, complete and correct copies of
RIGINC's unaudited balance sheets and unaudited income statements for all
quarterly periods subsequent to March 31, 1998 (the "RIGINC Unaudited
Financials"). RIGINC Unaudited Financials have been prepared in accordance with
GAAP consistently applied subject (i) to normal period-end audit adjustments,
which individually or in the aggregate will not be material and (ii) to the
omission of footnote information. Each balance sheet included in the RIGINC
Unaudited Financials presents fairly the financial condition of RIGINC as of the
date indicated thereon, and each of the income statements included in the RIGINC
Unaudited Financials presents fairly the results of its operations for the
periods indicated thereon. Since the date of the most recent RIGINC Unaudited
Financials, there has been no material changes in RIGINC's accounting policies.
4.6 LIABILITIES AND OBLIGATIONS.
-----------------------------
(a) To the knowledge of the RIG Parties, the RIG Parties are not
liable for or subject to any liabilities except for:
(i) those liabilities reflected on financial statements and
not previously paid or discharged;
(ii) those liabilities arising in the ordinary course of
their business consistent with past practice under any contract, commitment or
agreement specifically disclosed on any Schedule to this Agreement or not
required to be disclosed thereon because of the term or amount involved or
otherwise; and
(iii) those liabilities incurred since the December 31, 1997
in the ordinary course of business consistent with past practice, which
liabilities are not, individually or in the aggregate, material.
(b) For purposes of this Section 4.6, the term "liabilities" shall
include without limitation any direct or indirect liability, indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, either accrued, absolute, contingent, mature,
unmature or otherwise and whether known or unknown, fixed or unfixed, choate or
inchoate, liquidated or unliquidated, secured or unsecured.
4.7 PERMITS. To the knowledge of the RIG Parties, the RIG Parties own
-------
or hold all licenses, franchises, permits and other governmental authorizations,
including without limitation permits, titles (including without limitation motor
vehicle titles and current registrations), fuel permits, licenses and franchises
necessary for the continued operation of the RIG Business as it is currently
being conducted ( "RIG Permits"). To the knowledge of the RIG Parties, the RIG
Permits are valid, and the RIG Parties have not received any notice that any
governmental authority intends to modify, cancel, terminate or fail to renew any
RIG Permit. No present or former officer, manager, member or employee of any RIG
Party or any affiliate thereof, or any other person, firm, corporation or other
entity, owns or has any proprietary, financial or other interest (direct or
indirect) in any RIG Permit. To the knowledge of the RIG Parties, the RIG
Business has conducted and is conducting its business in compliance with the
requirements, standards, criteria and conditions set forth in the RIG Permits
and other applicable orders, approvals, variances, rules and regulations and is
not in violation of any of the foregoing, and the transactions contemplated by
this Agreement will not result in a default under, or a breach or violation of,
or adversely affect the rights and benefits afforded to the RIG Business, by any
RIG Permit.
4.8 INTELLECTUAL PROPERTY.
----------------------
(a) One of the RIG Parties is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, the
registered and unregistered Marks (the "RIG Marks") necessary for the RIG
Business as currently conducted. Except with respect to those RIG Marks which
are licensed by one of the RIG Parties from a third party, the RIG Parties own
all of the registered and unregistered trademarks, service marks, and trade
names used by the RIG Business. The RIG Marks will not cease to be valid rights
of one of the RIG Parties by reason of the execution, delivery and performance
of this Agreement or the consummation of the transactions contemplated hereby.
(b) One of the RIG Parties is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, all rights in
the Patents (the "RIG Patents") and Copyrights (the "RIG Copyrights") necessary
for the RIG Business as currently conducted.
(c) One of the RIG Parties is the true and lawful owner of, or is
licensed or otherwise possesses legally enforceable rights to use, all other
rights in trade secrets, franchises or similar rights that are necessary for the
RIG Business as currently conducted (the "RIG Other Rights").
(d) For purposes of this Section 4.8, the RIG Marks, RIG Patents,
RIG Copyrights, and RIG Other Rights are referred to herein collectively as the
"RIG Intellectual Property." The RIG Intellectual Property owned by the RIG
Parties is referred to as the "RIG Owned Intellectual Property". All other RIG
Intellectual Property used by the RIG Parties is referred to herein collectively
as the "RIG Third Party Intellectual Property." Except as indicated on Schedule
4.8(d), the RIG Parties have no obligations to compensate any person for the use
of any RIG Intellectual Property. Except as indicated on Schedule 4.8(d) or
except in the ordinary course of business, the RIG Parties have not granted to
any person any license, option or other rights to use in any manner any RIG
Intellectual Property, whether requiring the payment of royalties or not.
(e) No RIG Party is, nor will any RIG Party be, as a result of the
execution and delivery of this Agreement or the performance of its obligations
hereunder, in violation of any material RIG Third Party Intellectual Property
license, sublicense or agreement. No claims with respect to the RIG Owned
Intellectual Property or RIG Third Party Intellectual Property are currently
pending or, to the knowledge of the RIG Parties are threatened by any person,
nor, to the knowledge of the RIG Parties, do any grounds for any claims exist:
(i) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by any RIG Party
infringes on any copyright, patent, trademark, service mark or trade secret;
(ii) against the use by any RIG Party of any trademarks, trade names, trade
secrets, copyrights, patents, technology, know-how or computer software programs
and applications used in the RIG Business as currently conducted by the RIG
Parties; (iii) challenging the ownership, validity or effectiveness of any of
the RIG Owned Intellectual Property or other trade secret material to the RIG
Business; or (iv) challenging the license or legally enforceable right of the
RIG Parties to use of the RIG Third Party Intellectual Property. No RIG Party
(x) has been sued or charged in writing as a defendant in any claim, suit,
action or proceeding which involves a claim or infringement of trade secrets,
any patents, trademarks, service marks, or copyrights and which has not been
finally terminated or been informed or notified by any third party that any RIG
Party may be engaged in such infringement or (y) has knowledge of any
infringement liability with respect to, or infringement by, any RIG Party of any
trade secret, patent, trademark, service mark, or copyright of another.
4.9 ENVIRONMENTAL MATTERS.
----------------------
(a) Hazardous Material. Other than as set forth on Schedule
-------------------
4.9(a), no Hazardous Materials are present in, on or under any property,
including the land and the improvements, ground water and surface water thereof,
that any RIG Party has at any time owned, operated, occupied or leased.
Schedule 4.9(a) identifies, to the knowledge of the RIG Parties, all underground
and aboveground storage tanks, and the capacity, age, and contents of such
tanks, located on real property owned or leased by any RIG Party.
(b) Hazardous Materials Activities. The RIG Business has not
--------------------------------
transported, stored, used, manufactured, disposed of or released, or exposed its
employees or others to, Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the RIG Business disposed of, transported,
sold, or manufactured any product containing a Hazardous Material (collectively,
"RIG Hazardous Materials Activities") in violation of any rule, regulation,
treaty or statute promulgated by any Governmental Entity in effect prior to or
as of the date hereof to prohibit, regulate or control Hazardous Materials or
any Hazardous Material Activity.
(c) Environmental Liabilities. No action, proceeding, revocation
--------------------------
proceeding, amendment procedure, writ, injunction or claim is pending, or to the
knowledge of the RIG Parties, threatened concerning any Hazardous Material or
any RIG Hazardous Materials Activity. There are no past or present actions,
activities, circumstances, conditions, events, or incidents that could involve
the RIG Business (or any person or entity whose liability any RIG Party has
retained or assumed, either by contract or operation of law) in any
environmental litigation, or impose upon the RIG Business (or any person or
entity whose liability the RIG Business has retained or assumed, either by
contract or operation of law) any environmental liability including, without
limitation, common law tort liability.
4.10 INSURANCE. The RIG Business is the beneficiary of insurance
---------
policies of the type and in amounts customarily carried by persons conducting
businesses similar to that of the RIG Business. To the knowledge of the RIG
Parties, there have been no threatened terminations of, or material premium
increases with respect to, any of such policies. All premiums payable under all
such policies have been paid and the RIG Business is otherwise in full
compliance with the terms of such policies.
4.11 TAXES.
-----
(a) The RIG Parties have timely filed all Tax Returns due on or
before the Closing Date, and all such Tax Returns are true, correct, and
complete in all respects.
(b) The RIG Parties have paid in full on a timely basis all Taxes
owed by such Parties whether or not shown on any Tax Return.
(c) The amount of RIGLP's liability for unpaid Taxes as of the
Balance Sheet Date did not exceed the amount of the current liability accruals
for Taxes (excluding reserves for deferred Taxes) shown on the RIGLP Audited
Financials, and the amount of RIGLP's liability for unpaid Taxes for all periods
or portions thereof ending on or before the Closing Date will not exceed the
amount of the current liability accruals for Taxes (excluding reserves for
deferred Taxes) as such accruals are reflected on the books and records of RIGLP
on the Closing Date.
(d) RIGLP has withheld and paid over to the proper governmental
authorities all Taxes required to have been withheld and paid over, and complied
with all information reporting and backup withholding requirements, including
maintenance of required records with respect thereto, in connection with amounts
paid to any employee, independent contractor, creditor, or other third party.
(e) There are (and as of immediately following the Closing there
will be) no Liens on the assets of RIGLP relating to or attributable to Taxes.
(f) Except as set forth on Schedule 4.11, there are no ongoing
examinations or claims against any of the RIG Parties for Taxes, and no notice
of any audit, examination, or claim for Taxes, whether pending or threatened,
has been received.
(g) To the knowledge of the RIG Parties, there is no basis for the
assertion of any claim relating or attributable to Taxes which, if adversely
determined, would result in any Lien on the assets of the RIG Business or
otherwise have an adverse effect on the RIG Business.
4.12 CONFORMITY WITH LAW; LITIGATION.
----------------------------------
(a) To the knowledge of the RIG Parties, no RIG Party has violated
any law or regulation or any order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality having jurisdiction over it.
(b) Except as set forth on Schedule 4.12(b), there are no claims,
actions, suits or proceedings, pending or, to the knowledge of the RIG Parties,
threatened against or affecting any RIG Party at law or in equity, or before or
by any federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality having jurisdiction over it and no
notice of any claim, action, suit or proceeding, whether pending or threatened,
has been received. There are no judgments, orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency or
by arbitration) against any RIG Party or against any of their properties or
business.
4.13 ABSENCE OF CHANGES . Since the date of the latest RIGINC Unaudited
------------------
Financials, the RIG Business has been conducted in the ordinary course and,
except as contemplated herein or as set forth on Schedule 4.13, there has not
been any change, by itself or together with other changes, that has affected
adversely, or is likely to affect adversely, the business, operations, affairs,
prospects, properties, assets, profits or condition (financial or otherwise) of
the RIG Business.
4.14 NO KNOWLEDGE OF JAMISON BREACHES. As of the date of this
------------------------------------
Agreement, the RIG Parties have no knowledge that any Jamison Party is in
material breach of his, her or its representations or warranties under this
Agreement.
ARTICLE V.
COVENANTS
5.1 TAX MATTERS.
------------
The following provisions shall govern the allocation of responsibility as
between the Company, on the one hand, and the Stockholders, on the other, for
certain tax matters following the Closing Date:
(a) Stockholders shall prepare or cause to be prepared and file or
cause to be filed, within the time and in the manner provided by law, all Tax
Returns of the Company (i) for all periods ending on or before the Closing Date
that are due after the Closing Date and (ii) for all state and Federal Tax
Returns, Tax Returns covering the stub period from January 1, 1999 until the
date of Closing Date. Stockholders shall pay to the Company on or before the
due date of such Tax Returns the amount of all Taxes shown as due on such Tax
Returns to the extent that such Taxes are not reflected in the current liability
accruals for Taxes (excluding reserves for deferred Taxes) shown on the
Company's books and records as of the Closing Date. Such Returns shall be
prepared and filed in accordance with applicable law and in a manner consistent
with past practices and shall be subject to review and approval by RIGINC. To
the extent reasonably requested by the Stockholders or required by law, RIGINC
and the Company shall participate in the filing of any Tax Returns filed
pursuant to this paragraph.
(b) The Company shall prepare or cause to be prepared and file or
cause to be filed any Tax Returns for Tax periods which begin before the Closing
Date and end after the Closing Date (except as provided in Section 5.1(a)(ii)).
The Stockholders shall pay to the Company within fifteen (15) days after the
date on which Taxes are paid with respect to such periods an amount equal to the
portion of such Taxes which relates to the portion of such taxable period ending
on the Closing Date to the extent such Taxes are not reflected in the current
liability accruals for Taxes (excluding reserves for deferred Taxes) shown on
the Company's books and records as of the Closing Date. For purposes of this
Section 5.1, in the case of any Taxes that are imposed on a periodic basis and
are payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall (x) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period, and
(y) in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Company.
(c) RIGINC and the Company on one hand and Stockholders on the
other hand shall (A) cooperate fully, as reasonably requested, in connection
with the preparation and filing of Tax Returns pursuant to this Section 5.1 and
any audit, litigation or other proceeding with respect to Taxes; (B) make
available to the other, as reasonably requested, all information, records or
documents with respect to Tax matters pertinent to the Company for all periods
ending prior to or including the Closing Date; and (C) preserve information,
records or documents relating Tax matters pertinent to the Company that is in
their possession or under their control until the expiration of any applicable
statute of limitations or extensions thereof.
(d) The Stockholders shall timely pay all transfer, documentary,
sales, use, stamp, registration and other Taxes and fees arising from or
relating to the transactions contemplated by this Agreement, and the
Stockholders shall, at their own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration, and other Taxes and fees. If required by applicable law,
RIGINC and the Company will join in the execution of any such Tax Returns and
other documentation.
5.2 EMPLOYEE BENEFIT PLANS. If reasonably requested by RIGINC, the
------------------------
Company shall terminate any Company Plan or Company Benefit Arrangement
substantially contemporaneously with the Closing. Notwithstanding the
foregoing, with respect to any Company Plan or Company Benefit Arrangement that
is not terminated or merged into an existing RIGINC plan or benefit arrangement
substantially contemporaneously with the Closing, the Stockholders shall
cooperate (and shall use their reasonable efforts to cause the officers and
employees of the Company that are responsible to administering any such Company
Plan or Company Benefit Arrangement to cooperate) with RIGINC on and after the
Closing Date in continuing to administer and maintain such Company Plan or
Company Benefit Arrangement in accordance with its constituent documents and
with all applicable provisions of the Code, ERISA and other laws, including
applicable federal and state securities laws, until such time as the Company
Plan or Company Benefit Arrangement are terminated or merged into a RIGINC plan
or benefit arrangement.
5.3 RELATED PARTY AGREEMENTS. The Company and/or the Stockholders, as
-------------------------
the case may be, shall terminate any Related Party Agreements which RIGINC
requests the Company or Stockholders to terminate.
5.4 COOPERATION.
-----------
(a) The parties shall each deliver or cause to be delivered to the
other on the Closing Date, and at such other times and places as shall be
reasonably agreed to, such instruments as the other may reasonably request for
the purpose of carrying out this Agreement. In connection therewith, if
required, the chairman and vice president of the Company shall execute any
documentation reasonably required by RIGINC's Independent Auditors (in
connection with such accountant's audit of the Company) or the Nasdaq National
Market.
(b) The parties shall cooperate and use their reasonable efforts
to have the present officers, directors and employees of the Company cooperate
with RIGINC and Merger Sub on and after the Closing Date in furnishing
information, evidence, testimony and other assistance in connection with any
filing obligations, actions, proceedings, arrangements or disputes of any nature
with respect to matters pertaining to all periods prior to the Closing Date.
(c) Each party hereto shall cooperate in obtaining all consents
and approvals required under this Agreement to effect the transactions
contemplated hereby.
5.5 ACCESS TO INFORMATION; PUBLIC DISCLOSURE.
--------------------------------------------
(a) Between the date of this Agreement and the Closing Date, the
Company will provide to the officers and authorized representatives of RIGINC
(i) access to all of the sites, properties, books and records of the Company,
(ii), a copy of the Company's unaudited balance sheet and income statements for
each month starting with June 1998 on a cash basis and a statement of Accounts
Receivable with the detail set forth in Section 3.13, (iii) a copy of the
Company's most recent unaudited balance sheet and income statements on an
accrual basis, and (iv) such additional financial and operating data and other
information as to the business and properties of the Company as RIGINC may
reasonably request, including without limitation, access upon reasonable request
to the Company's employees, customers, vendors, suppliers and creditors for due
diligence inquiry. No information or knowledge obtained in any investigation
pursuant to this Section 5.5 shall affect or be deemed to modify any
representation or warranty contained in this Agreement or the conditions to the
obligations of the parties to consummate the transactions contemplated hereby.
RIGINC shall bear the cost of the preparation of accrual basis statements
pursuant to clause (iii) of this Section 5.5(a).
(b) The Company and the Stockholders understand that RIGINC will
be required by the federal securities laws to make prompt disclosure of this
Agreement, and subject to their reasonable review and approval, hereby authorize
and approve such disclosure by RIGINC. Otherwise, that certain Agreement for
the Exchange of Confidential Information under Stated Conditions, dated as of
January 22, 1998 (as modified by that certain Termination Agreement among OLD
RIG, Inc., RIGINC, Realty Information Group, L.P. ("RIG LP"), the Company and
the Stockholders dated June 11, 1998) remains in full force and effect and
applies to information exchanged in connection with and under this Agreement.
5.6 CONDUCT OF BUSINESS PENDING CLOSING. Between the date hereof and
-------------------------------------
the Closing, the Company will (except to the extent approved in writing by
RIGINC, or except as requested or agreed by RIGINC in writing):
(a) carry on its business in substantially the same manner as it
has heretofore and not introduce any material new method of management,
operation or accounting (except for the conversion of the Company from the cash
to accrual method of accounting);
(b) maintain its properties and facilities, including those held
under leases, in as good working order and condition as at present, ordinary
wear and tear excepted;
(c) perform all of its obligations under agreements relating to or
affecting its respective assets, properties or rights;
(d) keep in full force and effect present insurance policies or
other comparable insurance coverage;
(e) use all commercially reasonable efforts to maintain and
preserve its business organization intact, retain its present officers and key
employees and maintain its relationships with suppliers, vendors, customers,
creditors and others having business relations with it;
(f) maintain compliance with all permits, laws, rules and
regulations, consent orders, and all other orders of applicable courts,
regulatory agencies and similar governmental authorities;
(g) maintain present debt and lease instruments and not enter into
new or amended debt or lease instruments (except as may be permitted in
connection with the performance of the provisions of Section 7.5); and
(h) maintain present salaries and commission levels for all
officers, directors, employees, agents, representatives and independent
contractors, except for ordinary and customary bonuses and salary increases for
employees (other than employees who are also Stockholders) in accordance with
past practice.
5.7 PROHIBITED ACTIVITIES. Between the date hereof and the Closing,
----------------------
except as provided in Section 5.12, the Company will not, without the prior
written consent of RIGINC:
(a) make any change in its Articles of Incorporation or Bylaws, or
authorize or propose the same;
(b) issue, deliver or sell, authorize or propose the issuance,
delivery or sale of any securities, options, warrants, calls, conversion rights
or commitments relating to its securities of any kind, or authorize or propose
any change in its equity capitalization, or issue or authorize the issuance of
any debt securities;
(c) declare or pay any dividend, or make any distribution (whether
in cash, stock or property) in respect of its stock whether now or hereafter
outstanding, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase, redeem or
otherwise acquire or retire for value any shares of its stock;
(d) enter into any contract or commitment or incur or agree to
incur any liability or make any capital expenditures, or guarantee any
indebtedness, except in the ordinary course of business and consistent with past
practice in an amount not to exceed, in aggregate, $50,000 (or except as may be
permitted in connection with the performance of the provisions of Section 7.5),
including contracts to provide services to customers;
(e) increase the compensation payable or to become payable to any
officer, director, Stockholder, employee, agent, representative or independent
contractor; make any bonus or management fee payment to any such person; make
any loans or advances; adopt or amend any Company Plan or Company Benefit
Arrangement; grant any severance or termination pay; or hire any employees other
than clerical or secretarial employees who have annual salaries exceeding, in
aggregate, $50,000;
(f) create or assume any mortgage, pledge or other lien or
encumbrance upon any assets or properties whether now owned or hereafter
acquired (except as may be permitted in connection with the performance of the
provisions of Section 7.5);
(g) sell, assign, lease, pledge or otherwise transfer or dispose
of any property or equipment except in the ordinary course of business
consistent with past practice in an amount not to exceed, in aggregate, $10,000
(or except as may be permitted in connection with the performance of the
provisions of Section 7.5);
(h) except as permitted by Section 5.7(d), acquire or negotiate
for the acquisition of (by merger, consolidation, purchase of a substantial
portion of assets or otherwise) any business or the start-up of any new
business, or otherwise acquire or agree to acquire any assets;
(i) merge or consolidate or negotiate or agree to merge or
consolidate with or into any other corporation;
(j) waive any material rights or claims of the Company, provided
that the Company may negotiate and adjust bills in the course of good faith
disputes with customers in a manner consistent with past practice;
(k) commit a breach of or amend or terminate any material
agreement, permit, license or other right;
(l) enter into any transaction (i) that is not negotiated at arm's
length with a third party not affiliated with the Company or any officer,
director or Stockholder of the Company or (ii) outside the ordinary course of
business consistent with past practice or (iii) prohibited hereunder;
(m) commence a lawsuit other than for routine collection of bills;
(n) revalue any of its assets, including without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past practice;
(o) make any tax election other than in the ordinary course of
business and consistent with past practice, change any tax election, adopt any
tax accounting method other than in the ordinary course of business and
consistent with past practice, change any tax accounting method, file any Tax
Return (other than any estimated tax returns, payroll tax returns or sales tax
returns) or any amendment to a Tax Return, enter into any closing agreement,
settle any tax claim or assessment, or consent to any tax claim or assessment,
without the prior written consent of RIGINC;
(p) change the name of the Company, or operate under or use any
legal name, trade name, fictitious name or other name, other than the names
listed on Schedule 3.19 in the jurisdictions indicated;
(q) introduce any promotional offer, including, without
limitation, discounted and free products or services or reduce standard pricing
levels for the Company's goods or services with pricing that is less than 20%
below the average pricing for comparable clients; or
(r) take, or agree (in writing or otherwise) to take, any of the
actions described in Sections 5.7(a) through (q) above, or any action which
would make any of the representations and warranties of the Company and the
Stockholders contained in this Agreement untrue or result in any of the
conditions set forth in Articles VI and VII not being satisfied.
5.8 NOTIFICATION OF CERTAIN MATTERS. Each party hereto shall give
----------------------------------
prompt notice to the other parties hereto of (a) the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which would be
likely to cause any representation or warranty of it contained herein to be
untrue or inaccurate in any material respect at or prior to the Closing and (b)
any material failure of such party to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by such party hereunder.
The delivery of any notice pursuant to this Section 5.8 shall not, without the
express written consent of the other parties be deemed to (x) modify the
representations or warranties hereunder of the party delivering such notice, (y)
modify the conditions set forth in Articles VI and VII, or (z) limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
5.9 SALES OF RIGINC STOCK; REGISTRATION .
---------------------------------------
(a) For eighteen (18) months after the Closing Date neither
Stockholder, Evemy nor the Church will directly or indirectly, offer, sell,
contract to sell, pledge (except in accordance herewith) or otherwise dispose of
any RIGINC Stock received hereunder. Upon the expiration of eighteen (18)
months from the Closing Date, the Stockholders, the Church and Evemy may offer,
sell, contract to sell, pledge or otherwise dispose of no more than fifty
percent (50%) of the RIGINC Stock received hereunder. Upon the earlier to
occur of the "Conversion" and the "Delayed Release Date," the Stockholders may
sell, pledge or otherwise dispose of the remaining fifty percent (50%) of the
RIGINC Stock received by the Stockholders at the Closing. "Conversion" shall be
deemed to occur on that day (but in no case sooner than eighteen months after
the Closing Date) on which RIGINC has completed the conversion of clients of the
Company to the use of the CoStar software for accessing the Company's databases,
whose annual contracted revenue (as indicated in the applicable written
agreements) is not (or cannot reasonably be expected to be) less than
seventy-five percent (75%) of the Company's total contracted database revenues
during 1998. RIGINC agrees to use its best efforts to initiate and begin to
make significant progress in the conversion of the Company's clients to the use
of the CoStar software as soon as possible following the Closing Date, and the
parties agree that this process shall begin on or before the expiration of
ninety (90) days from the Closing Date. The "Delayed Release Date" shall be the
second anniversary of the Closing Date, unless RIGINC should fail to initiate
and begin to make significant progress in the conversion of the Company's
clients to CoStar software on or before one hundred twenty (120) days after the
Closing Date, in which case the "Delayed Release Date" shall occur eighteen (18)
months after the Closing Date.
(b) Upon the expiration of eighteen (18) months from the Closing
Date, RIGINC shall register for resale fifty percent (50%) (or such lesser
portion as indicated in writing by the Stockholders not less than thirty (30)
days before such registration date) of the RIGINC Stock received by the
Stockholders, the Church and Evemy at the Closing (as the same may have been
adjusted by stock splits and reclassifications) with the United States
Securities and Exchange Commission (the "SEC") in accordance with Rule 415 under
the Securities Act of 1933 and under comparable laws and regulations promulgated
by such blue sky authorities as the Stockholders, Evemy or the Church reasonably
designate (a "415 Registration"), and shall cause such registration to remain
effective for a period of four (4) months. Upon the earlier to occur of the
Conversion and the Delayed Release Date, RIGINC shall register (the "Final
Registration") for resale such RIGINC Stock received by the Stockholders, the
Church and Evemy at the Closing (as the same may have been adjusted by stock
splits and reclassifications) as has not previously been registered in
accordance with this Section 5.9(b) (or such lesser portion as indicated in
writing by the Stockholders prior to the Final Registration) in a 415
Registration, and shall cause such registration to remain effective for a period
of three (3) months.
(c) Excepting only brokers' fees and commissions incurred by the
selling stockholder which shall be borne by the selling stockholder, RIGINC
shall bear all fees and expenses relating to 415 Registration hereunder,
including, without limitation, all registration and filing fees, fees and
expenses of compliance with securities or blue sky laws, printing expenses and
fees and disbursement of counsel for RIGINC and the Merger Sub and all
independent certified public accountants, underwriters (if any).
(d) The certificates evidencing the RIGINC Stock will be subject
to appropriate stop transfer instructions and bear restrictive legends in
substantially the following form:
PURSUANT TO THAT CERTAIN AGREEMENT AND PLAN OF MERGER (THE "AGREEMENT"), DATED
JANUARY 6, 1999, BY AND AMONG REALTY INFORMATION GROUP, INC., A DELAWARE
CORPORATION ("RIGINC"), ____________, A GEORGIA CORPORATION [MERGER SUB],
JAMISON RESEARCH, INC., A GEORGIA CORPORATION, HENRY D. JAMISON IV AND LESLIE
LEES JAMISON, THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, EXCHANGED, ENCUMBERED, PLEDGED, DISTRIBUTED, APPOINTED,
OR OTHERWISE DISPOSED OF, AND RIGINC SHALL NOT BE REQUIRED TO GIVE EFFECT TO ANY
ATTEMPTED SALE, TRANSFER, ASSIGNMENT, EXCHANGE, ENCUMBRANCE, PLEDGE,
DISTRIBUTION, APPOINTMENT, OR OTHER DISPOSITION EXCEPT IN ACCORDANCE WITH THE
AGREEMENT.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
(e) With a view to making available to the Stockholders, the
Church and Evemy the benefits of certain rules and regulations of the SEC which
may permit the sale of the RIGINC Stock to the public without registration,
RIGINC agrees to use its best efforts to:
(i) make and keep current public information available at all
times, within the meaning of Rule 144 or any similar or analogous rule
promulgated under the Securities Act of 1933;
(ii) file with the SEC, in a timely manner, all reports and
other documents required of RIGINC under the Securities Act of 1933 and the
Securities Exchange Act of 1934; and
(iii) so long as the Stockholders, Evemy or the Church own
any RIGINC Stock, furnish to such person upon request a written statement by
RIGINC as to its compliance with the reporting requirements of said Rule 144,
the Securities Act of 1933 and the Securities Exchange Act of 1934, a copy of
the most recent annual or quarterly report of RIGINC, and such other reports and
documents as such person may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration.
5.10 RIGINC'S PUBLIC DOCUMENTS AND ACCESS TO INFORMATION . RIGINC has
----------------------------------------------------
delivered or otherwise made available to the Company, the Stockholders, Evemy
and the Church a true and complete copy of the documents filed with the
Securities and Exchange Commission (the "SEC") from July 1, 1998 to the date
hereof (collectively, the "SEC Documents"). RIGINC agrees to provide the
Company, the Stockholders, Evemy and the Church a true and complete copy of each
other document filed with the SEC between the date hereof and the date of the
Closing (other than preliminary material) ("Current SEC Documents"). In
addition to the SEC Documents and the Current SEC Documents, RIGINC will
provide, through its chief financial officer, the Company, each Stockholder,
Evemy and the Church with opportunities to become familiar with the business,
financial condition, management, prospects and operations of RIGINC, including
reasonable opportunities to ask questions of, receive answers from and obtain
information regarding RIGINC and its business which is material to their
investment decision.
5.11 TRADING IN RIGINC COMMON STOCK . From the date hereof until the
--------------------------------
Closing Date, neither the Company nor the Stockholders (nor any affiliates
thereof) will directly or indirectly purchase or sell (including short sales)
any shares (or options or other rights with respect to shares) of RIGINC common
stock in any transactions effected on the NASDAQ or otherwise.
5.12 OTHER OBLIGATIONS . Notwithstanding any other provision of this
------------------
Agreement and except as provided in the following sentence, the Jamison Parties
agree to assume responsibility for, and indemnify and hold RIGINC harmless from,
any and all liabilities arising from or relating to the recent negotiations
involving the Company and the Jamison Parties regarding the possible sale and/or
combination of the Company with others than RIGINC. The Company may take
actions described in clauses (c), (d) or (e) of Section 5.7 and pay fees and
expenses arising in connection with the transactions described in this
Agreement, provided that the amounts so expended and liabilities so incurred do
not cause the Actual Net Worth as of the Closing Date to be less than the Net
Worth Target. At the Closing, RIGINC will assume all obligations of the Company
under that certain Employment Severance Agreement between Robert Wingfield
Branham ("Branham"), the Company and the Stockholders dated as of November 15,
1991 (which is attached hereto as Schedule 5.12, and made a part hereof) to pay
$25,000.00 to Branham at the Closing, and RIGINC will perform such obligation at
the Closing, and upon the performance of such obligation will obtain a release
and receipt from Branham in a form reasonably acceptable to the Stockholders.
5.13 GUARANTEED LOAN . Promptly after the Closing RIGINC will use
----------------
commercially reasonable efforts to obtain the release of any agreements of the
Stockholders guaranteeing amounts borrowed by and for the benefit of the Company
from Wachovia Bank, N.A (the "Guaranteed Loans"), or failing that RIGINC will
retire such liability in full. RIGINC shall indemnify and hold the Stockholders
harmless from any and all Damages (defined below) they may incur in connection
with the Guaranteed Loans (and no Indemnification Threshold (defined below)
shall apply to such indemnity).
5.14 JAMISON WEBSITE . Notwithstanding any other provision of this
----------------
Agreement, the Company shall be permitted to convey to one or both of the
Stockholders all of the Company's right, title and interest in and to the
"jamison.com" Internet Website; provided, however, that such conveyance shall be
-------- -------
subject to the Company's and, following the Closing, RIGINC's, royalty-free
exclusive worldwide right to use the "jamison.com" Internet Website address for
a period of two years following the Closing; provided further, however, that
-------- ------- -------
following the expiration of the Company's and the RIG Parties' rights pursuant
to the preceding proviso, the Stockholders shall have exclusive rights to the
"jamison.com" Internet Website address but shall use such address solely for
personal (and not commercial) use. The parties agree that the rights to the
"jamison.com" Internet Website described in this Section 5.14 are of nominal
value; but if used in the commercial real estate business in violation of the
terms hereof, such use could be damaging to the business RIGINC.
5.15 ESCROW OF DEPOSIT .
-------------------
(a) The parties hereto acknowledge that RIGINC has paid the
Deposit in immediately available funds to CMAJ to be held and disbursed in
accordance herewith, and the parties hereto hereby designate and appoint CMAJ to
serve and CMAJ agrees to act as escrow agent and to hold, safeguard and disburse
the Deposit pursuant to the terms, conditions and provisions hereof. The
Deposit will be held in accordance herewith in CMAJ's non-interest bearing Trust
Account.
(b) At the Closing, CMAJ shall disburse the Deposit to the
Stockholders in accordance with Section 2.2 hereof, or, should no Closing occur,
then CMAJ shall disburse the Deposit to the Company or to RIGINC, as the case
may be, in accordance with Article X hereof.
(c) RIGINC and the Stockholders hereby agree that CMAJ does not
assume any responsibility for any loss of the Deposit occasioned by the acts,
omissions or financial condition of the financial institution (or its employees
or agents) in which the Deposit is deposited. CMAJ shall be protected in acting
upon any written notice, affidavit, request, waiver, consent, receipt or other
paper or document furnished to it, not only in assuming its due execution and
the validity and the effectiveness of its provisions, but also as to the truth
and acceptability of any information therein contained, which it in good faith
believes to be genuine and what it purports to be. CMAJ shall be protected in
acting upon any written notice, affidavit, request, waiver, consent, receipt or
other paper or document furnished to it by any of the parties hereto or its
representative and signed by its representative to the same extent as if such
writing or document were actually signed by such party. CMAJ shall not be
liable for any act or failure to act under the provisions hereof, except where
such action or failure to act shall constitute gross negligence or intentional
misconduct. CMAJ shall have no duties except those that are expressly set forth
herein, and its shall not be bound by any Notice of Termination or demand with
respect thereto or any waiver, modification, amendment, termination or
rescission of this Agreement unless set forth in a writing received by it, and
if its duties herein are herein affected, unless it shall have given its prior
written consent thereto.
(d) The parties hereto hereby jointly and severally indemnify CMAJ
against any Damages (defined below) arising from or in connection with the
performance of its duties hereunder.
ARTICLE VI.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE RIG PARTIES
The obligation of the RIG Parties to effect the transactions contemplated
hereby is subject to the satisfaction or waiver, at or before the Closing, of
the following conditions and deliveries:
6.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of
----------------------------------------------------------
the representations and warranties of the Stockholders and the Company contained
in this Agreement shall be true, correct and complete on and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date unless changes in the matters represented and
warranted herein are expressly permitted or provided herein, all of the terms,
covenants, agreements and conditions of this Agreement to be complied with,
performed or satisfied by the Company and the Stockholders on or before the
Closing Date shall have been duly complied with, performed or satisfied; and a
certificate to the foregoing effects dated the Closing Date and signed on behalf
of the Company and by each of the Stockholders shall have been delivered to
RIGINC.
6.2 NO LITIGATION. No temporary restraining order, preliminary or
--------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
RIGINC's proposed acquisition of the Company, or limiting or restricting
RIGINC's conduct or operation of the business of the Company (or its own
business) following the transactions contemplated hereby shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending. There shall be no action, suit claim or proceeding of
any nature pending or threatened against RIGINC or the Company, their respective
properties or any of their officers or directors, that could materially and
adversely affect the business, assets, liabilities, financial condition, results
of operations or prospects of the Company.
6.3 NO MATERIAL ADVERSE CHANGE. There shall have been no material
-----------------------------
adverse changes in the business, operations, affairs, prospects, properties,
assets, existing and potential liabilities, obligations, profits or condition
(financial or otherwise) of the Company, taken as a whole, since the Balance
Sheet Date; and RIGINC shall have received a certificate signed by each
Stockholder dated the Closing Date to such effect.
6.4 CONSENTS AND APPROVALS. All necessary consents of, and filings
------------------------
with, any governmental authority or agency or third party, relating to the
consummation by the Company and the Stockholders of the transactions
contemplated hereby, shall have been obtained and made.
6.5 OPINION OF COUNSEL. RIGINC shall have received an opinion from
--------------------
counsel to the Company and the Stockholders, dated the Closing Date, in a form
reasonably satisfactory to RIGINC.
6.6 COMPANY CHARTER DOCUMENTS. RIGINC shall have received (a) a copy
---------------------------
of the Articles of Incorporation of the Company certified by an appropriate
authority in the state of its incorporation and (b) a copy of the Bylaws of the
Company certified by the Secretary of the Company, and such documents shall be
in form and substance reasonably acceptable to RIGINC.
6.7 OTHER AGREEMENTS.
-----------------
(a) Henry D. Jamison, IV shall have entered into an employment
agreement with the Company substantially in the form attached hereto as Exhibit
6.7(a), which employment agreement shall provide for a salary of $135,000 per
year, a bonus not to exceed two hundred percent (200%) of the base salary, and
the grant of the option to purchase 60,000 shares of RIGINC common stock, which
shall be issued pursuant to the Realty Information Group, Inc. 1998 Stock
Incentive Plan. The options shall become exercisable according to the following
schedule: (i) 15,000 shares at Closing, (ii) an additional 15,000 shares
(causing exercisable options to equal a total of 30,000 shares) upon the first
anniversary of the Closing Date, (iii) an additional 15,000 shares (causing
exercisable options to equal a total of 45,000 shares) upon the second
anniversary of the Closing Date, (iv) an additional 15,000 shares (causing
exercisable options to equal a total of 60,000 shares) upon the third
anniversary of the Closing Date. The exercise price shall be the closing sale
price for RIGINC common stock as reported on the NASDAQ as of the date hereof.
(b) Henry D. Jamison IV, Leslie Lees Jamison and the Church shall
each have entered into an Affiliate Agreement acknowledging delivery to them of
the SEC Documents, any Current SEC Documents, and, if applicable, compliance
with the restrictions of Rule 145 under the Securities Act of 1933, in form and
substance reasonably satisfactory to RIGINC.
6.8 DUE DILIGENCE REVIEW. The Company shall have made such deliveries
--------------------
as are called for hereby or reasonably requested by RIGINC. RIGINC shall be
fully satisfied in its sole discretion with the results of its review of all of
the Schedules, whether delivered before or after the execution hereof, and such
deliveries, and its review of, and other due diligence investigations with
respect to, the business, operations, affairs, prospects, properties, assets,
existing and potential liabilities, obligations, profits and condition
(financial or otherwise) of the Company.
6.9 DELIVERY OF CHURCH SHARES. In connection with the Merger, the
----------------------------
Church shall have delivered all of the Shares held by it to RIGINC free and
clear of all Liens, and the Church shall have delivered a certificate issued to
RIGINC, certifying that the Church Consent remains in full force and effect,
that as of the Closing Date the Church Consent has not been modified, amended or
rescinded and such other matters as RIGINC may reasonably request.
ARTICLE VII.
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE STOCKHOLDERS
AND THE COMPANY
The obligation of the Stockholders and the Company to effect the
transactions contemplated hereby is subject to the satisfaction or waiver, at
or before the Closing, of the following conditions and deliveries:
7.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF OBLIGATIONS. All of
----------------------------------------------------------
the representations and warranties of RIGINC contained in this Agreement shall
be true, correct and complete on and as of the Closing Date with the same effect
as though such representations and warranties had been made as of such date; all
of the terms, covenants, agreements and conditions of this Agreement to be
complied with, performed or satisfied by RIGINC on or before the Closing Date
shall have been duly complied with, performed or satisfied; and a certificate to
the foregoing effects dated the Closing Date and signed by the President or any
Vice President of RIGINC shall have been delivered to the Company and the
Stockholders.
7.2 NO LITIGATION. No temporary restraining order, preliminary or
--------------
permanent injunction or other order issued by any court of competent
jurisdiction or other legal or regulatory restraint or provision challenging
RIGINC's proposed acquisition of the Company, or limiting or restricting
RIGINC's conduct or operation of the business of the Company (or its own
business) following the transactions contemplated hereby shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending. There shall be no action, suit, claim or proceeding of
any nature pending or threatened, against RIGINC or the Company, their
respective properties or any of their officers or directors, that could
materially and adversely affect the business, assets, liabilities, financial
condition, results of operations or prospects of the RIGINC and its subsidiaries
taken as a whole.
7.3 CONSENTS AND APPROVALS. All necessary consents of, and filings
------------------------
with, any governmental authority or agency or third party relating to the
consummation by RIGINC of the transactions contemplated herein, shall have been
obtained and made.
7.4 OTHER AGREEMENTS. The Company shall have afforded Henry D.
-----------------
Jamison IV an opportunity to enter into an employment agreement with the Company
substantially in the form attached hereto as Exhibit 6.7(a).
7.5 LOAN ASSUMPTION . RIGINC shall have obtained the release of the
----------------
Stockholders from all obligations, duties and liabilities under that certain
loan by Wachovia Bank, N.A. to the Company and various computer loan notes;
provided, however, that the liabilities for which RIGINC has obtained the
- -------- -------
release of the Stockholders shall not exceed $207,000; provided further,
-------- -------
however, that the Jamison Parties shall have cooperated fully with RIGINC in
- ------
obtaining such release.
ARTICLE VIII.
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE STOCKHOLDERS AND THE COMPANY. Each
---------------------------------------------------------
Stockholder and, if no Closing occurs, the Company, jointly and severally,
covenants and agrees to indemnify, defend, protect and hold harmless RIGINC and
its officers, directors, employees, stockholders, assigns, successors and
affiliates (individually, a "RIGINC Indemified Party" and ollectively, RIGINC
Indemnified Parties") from, against and in respect of all liabilities, losses,
claims, damages, punitive damages, causes of action, lawsuits, administrative
proceedings (including informal proceedings), investigations, audits, demands,
assessments, adjustments, judgments, settlement payments, deficiencies,
penalties, fines, interest (including interest from the date of such damages)
and costs and expenses (including without limitation reasonable attorneys' fees
and disbursements of every kind, nature and description) (collectively,
"Damages") suffered, sustained, incurred or paid by the RIGINC Indemnified
Parties in connection with, resulting from or arising out of, directly or
indirectly:
(a) any breach of any representation or warranty of the
Stockholders or the Company set forth in this Agreement or any schedule or
certificate, delivered by or on behalf of any Stockholder or the Company in
connection herewith; or
(b) any nonfulfillment of any covenant or agreement by the
Stockholders or, prior to the Closing, the Company, under this Agreement.
8.2 INDEMNIFICATION BY RIGINC. RIGINC covenants and agrees to
---------------------------
indemnify, defend, protect and hold harmless the Stockholders and, prior to the
Closing (if any), the Company, and their respective assigns, successors and
af-filiates (individually, a "Stockholder Indemnified Party" and collectively,
"Stockholder Indem-ni-fied Parties") from, against and in
respect of all Damages suffered, sustained, incurred or paid by the Stockholder
Indemnified Parties in connection with, resulting from or arising out of,
directly or indirectly:
(a) any breach of any representation or warranty of the RIGINC set
forth in this Agreement or any schedule or certificate, delivered by or on
behalf of the RIGINC in connection herewith; or
(b) any nonfulfillment of any covenant or agreement by RIGINC
under this Agreement.
8.3 LIMITATION AND EXPIRATION. Notwithstanding anything herein to the
-------------------------
contrary:
(a) there shall be no liability for indemnification
(i) under Section 8.1 unless, and solely to the extent that,
the aggregate amount of Damages suffered by the RIGINC Indemnified Parties under
the applicable provisions exceeds $150,000.00 (an "Indemnification Threshold");
or
(ii) under Section 8.2 unless, and solely to the extent that,
the aggregate amount of Damages suffered by the Jamison Indemnified Parties
under the applicable provisions exceeds $150,000.00 (an "Indemnification
Threshold");
provided, however, that neither Indemnification Threshold shall apply to (i)
- -------- -------
Damages arising out of any breaches of the covenants of any Jamison Party or
RIGINC, as the case may be, set forth in Article V of this Agreement, or
representations and warranties made in Sections 3.4 (capital stock of the
Company), 3.5 (transactions in capital stock of the Company), 3.24 (but solely
matters relating to the payment of past due sales taxes to the State of Texas by
the Company), and 4.4 (capital stock of RIGINC);
(b) (i) the aggregate amount of the Stockholders' and the
Company's (if any) liability under this Article VIII shall not exceed ten
percent (10%) of the Consideration (the "Stockholders' Cap"), provided, however,
-------- -------
that any liability arising from or in connection with any Final Consideration
Adjustment or the representations and warranties contained in Section 3.24
(taxes) and the covenants and agreements contained herein with respect to Taxes
shall not apply towards, nor be limited by, the Stockholders' Cap; and
(ii) the aggregate amount of RIGINC's liability under this
Article VIII shall not exceed ten percent (10%) of the Consideration (the "RIG
Cap"), provided, however, that any liability arising from or in connection with
-------- -------
the representations and warranties contained in Section 4.11 (taxes) and the
covenants and agreements contained herein with respect to Taxes shall not apply
towards, nor be limited by, the RIG Cap; and
(c) the indemnification obligations under this Section 8 or in any
certificate or writing furnished in connection herewith shall terminate on the
later of clause (i) or (ii) below:
(i) (1) except as to representations, warranties, and
covenants specified in clause (i)(2) of this Section 8.3(c), one hundred
eighty-three (183) days after the Closing Date, or
(2) with respect to representations and warranties
contained in Sections 3.21 (environmental matters), 3.23 (employee benefit
plans), 3.17 (intellectual property), 3.24 (taxes) and 4.9 (taxes), on (A) the
date that is six (6) months after the expiration of the longest applicable
federal or state statute of limitation (including extensions thereof), or (B) if
there is no applicable statute of limitation, five (5) years after the Closing;
or
(ii) the final resolution of claims or demands (a "Claim")
pending as of the relevant dates described in clause (i) of this Section 8.3(c)
(such claims referred to as "Pending Claims").
8.4 INDEMNIFICATION PROCEDURES. All claims or demands for
---------------------------
indemnification under this Article VIII ("Claims") shall be asserted and
resolved as follows:
(a) In the event that any RIGINC Indemnified Party or Stockholder
Indemnified Party (an "Indemnified Party") has a Claim against any party
obligated to provide indemnification pursuant to Section 8.1 or 8.2 hereof (the
"Indemnifying Party") which does not involve a Claim being asserted against or
sought to be collected by a third party, the Indemnified Party shall with
reasonable promptness notify the Indemnifying Party of such Claim, specifying
the nature of such Claim and the amount or the estimated amount thereof to the
extent then feasible (the "Claim Notice"). If the Indemnifying Party does not
notify the Indemnified Party within thirty (30) days after the date of delivery
of the Claim Notice that the Indemnifying Party disputes such Claim, with a
detailed statement of the basis of such position, the amount of such Claim shall
be conclusively deemed a liability of the Indemnifying Party hereunder. In case
an objection is made in writing in accordance with this Section 8.4(a), the
Indemnified Party shall respond in a written statement to the objection within
fifteen (15) days and, for sixty (60) days thereafter, attempt in good faith to
agree upon the rights of the respective parties with respect to each of such
Claims (and, if the parties should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties).
(b) (i) In the event that any Claim for which the Indemnifying
Party would be liable to an Indemnified Party hereunder is asserted against an
Indemnified Party by a third party (a "Third Party Claim"), the Indemnified
Party shall deliver a Claim Notice to the Indemnifying Party . The Indemnifying
Party shall have fifteen (15) days from date of delivery of the Claim Notice to
notify the Indemnified Party (A) whether the Indemnifying Party disputes
liability to the Indemnified Party hereunder with respect to the Third Party
Claim, and, if so, the basis for such a dispute, and (B) if such party does not
dispute liability, whether or not the Indemnifying Party desires, at the sole
cost and expense of the Indemnifying Party, to defend against the Third Party
Claim, provided that the Indemnified Party is hereby authorized (but not
obligated), prior to and during the Notice Period, to file any motion, answer or
other pleading and to take any other action which the Indemnified Party shall
deem necessary or appropriate to protect the Indemnified Party's interests.
(ii) In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that the Indemnifying Party does not
dispute the Indemnifying Party's obligation to indemnify with respect to the
Third Party Claim, the Indemnifying Party shall defend the Indemnified Party
against such Third Party Claim by appropriate proceedings, provided that, unless
--------
the Indemnified Party otherwise agrees in writing, the Indemnifying Party may
not settle any Third Party Claim (in whole or in part) if such settlement does
not include a complete and unconditional release of the Indemnified Party. If
the Indemnified Party desires to participate in, but not control, any such
defense or settlement the Indemnified Party may do so at its sole cost and
expense. If the Indemnifying Party elects not to defend the Indemnified Party
against a Third Party Claim, whether by failure of such party to give the
Indemnified Party timely notice as provided herein or otherwise, then the
Indemnified Party, without waiving any rights against such party, may settle or
defend against such Third Party Claim in the Indemnified Party's sole discretion
and the Indemnified Party shall be entitled to recover from the Indemnifying
Party the amount of any settlement or judgment and, on an ongoing basis, all
indemnifiable costs and expenses of the Indemnified Party with respect thereto,
including interest from the date such costs and expenses were incurred.
(iii) If at any time, in the reasonable opinion of the
Indemnified Party, notice of which shall be given in writing to the Indemnifying
Party, any Third Party Claim seeks material prospective relief which could have
an adverse effect on any Indemnified Party or the Company or any subsidiary, the
Indemnified Party shall have the right to control or assume (as the case may be)
the defense of any such Third Party Claim and the amount of any judgment or
settlement and the reasonable costs and expenses of defense shall be included as
part of the indemnification obligations of the Indemnifying Party hereunder. If
the Indemnified Party elects to exercise such right, the Indemnifying Party
shall have the right to participate in, but not control, the defense of such
Third Party Claim at the sole cost and expense of the Indemnifying Party.
(iv) If the Indemnifying Party is a Stockholder, then any
notice required to be given under this Section 8.4 shall be given to the
Stockholders' Representative.
(c) Nothing herein shall be deemed to prevent the Indemnified
Party from making a Claim, and an Indemnified Party may make a Claim hereunder,
for potential or contingent Damages provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or demand to the
extent then feasible and the Indemnified Party has reasonable grounds to believe
that such Claim may be made.
(d) Subject to the provisions of Section 8.3, the Indemnified
Party's failure to give reasonably prompt notice as required by this Section 8.4
of any actual, threatened or possible claim or demand which may give rise to a
right of indemnification hereunder shall not relieve the Indemnifying Party of
any liability which the Indemnifying Party may have to the Indemnified Party
except to the extent that failure to give such notice materially and adversely
prejudiced the Indemnifying Party.
8.5 EFFECTIVENESS OF REPRESENTATIONS WARRANTIES. All representations
---------------------------------------------
and warranties made by the Company, the Stockholders, and each of the RIG
Parties in or pursuant to this Agreement or in any document delivered pursuant
hereto shall be deemed to have been made on the date of this Agreement (except
as otherwise provided herein) and, if a Closing occurs, as of the Closing Date.
8.6 REMEDIES. Except for any liability based on a finding of fraud,
---------
the exclusive remedy of any party hereto arising by reason of the breach of any
representation or warranty set forth herein or the default in or breach of any
covenant, condition, agreement or undertaking by any other party hereto shall be
limited to the indemnification rights set forth in this Article VIII.
8.7 SET OFF. Subject only to the limitations of this Article VIII,
--------
and without limitation of any right of the RIGINC Indemnified Parties to
indemnification or payment under this Agreement or applicable law, the RIGINC
Indemnified Parties shall have the obligation to seek recovery of (a) any Final
Consideration Adjustment under Section 1.3 (but such obligation to seek set off
shall not exceed the value of the then existing Pledged Assets) or (b) any
Damages under Section 8.4, first by set-off against the Pledged Assets.
8.8 SPECIAL TAX PROVISION. If the Company or RIGINC receives any Tax
----------------------
refund attributable to the period prior to the Closing, then the amount of such
refund shall reduce the amount of claims, if any, of RIGINC against the
Stockholders for breach of the representations and warranties in Section 3.24 or
of the covenants in Section 5.1.
ARTICLE IX.
NONCOMPETITION
9.1 PROHIBITED ACTIVITIES. No Stockholder will, for a period of two
----------------------
(2) years following the Closing Date, for any reason whatsoever, directly or
indirectly, for himself, herself or on behalf of or in conjunction with any
other person, persons, company, partnership, corporation or business of whatever
nature:
(a) engage, as an officer, director, shareholder, owner, partner,
member, joint venturer, or in a managerial capacity, whether as an employee,
independent contractor, consultant or adviser, or as a sales representative, in
any business selling any products or services in direct competition with RIGINC,
in the United States, Canada, or the United Kingdom, (the "Territory");
(b) call upon any person who is, at that time, within the
Territory, an employee of RIGINC in a managerial capacity for the purpose or
with the intent of enticing such employee away from or out of the employ of
RIGINC;
(c) call upon any person who is or entity that is, at that time,
or that has been, within one year prior to that time, a customer of RIGINC
within the Territory for the purpose of soliciting or selling products or
services in competition with RIGINC within the Territory; or
(d) call upon any prospective acquisition candidate that was, to
the knowledge of such Stockholder, either called upon by RIGINC as a prospective
acquisition candidate or was the subject of an acquisition analysis by RIGINC.
Each Stockholder, to the extent lacking the knowledge described in the preceding
sentence, shall immediately cease all contact with such prospective acquisition
candidate upon being informed that RIGINC had called upon such candidate or made
an acquisition analysis thereof.
For purposes of this Article IX, the term "RIGINC" includes all subsidiaries of
RIGINC (including without limitation the Company and any companies RIGINC has
resolved to acquire).
9.2 CONFIDENTIALITY.
---------------
(a) Each Stockholder recognizes that by reason of his or her
ownership of the Company and his or her employment by the Company, he or she has
acquired confidential information and trade secrets concerning the operation of
the Company, the use or disclosure of which could cause the Company or its
affiliates or subsidiaries substantial loss and damages that could not be
readily calculated and for which no remedy at law would be adequate.
Accordingly, each Stockholder covenants and agrees with the Company and RIGINC
that he or she will not for a period of two (2) years following the Closing Date
(or in the case of trade secrets (as defined under applicable law) for so long
as the information remains a trade secret) except in performance of
Stockholder's obligations to the Company or with the prior written consent of
the Company pursuant to authority granted by a resolution of the Board, directly
or indirectly, disclose any secret or confidential information that he or she
may learn or has learned by reason of his or her ownership of the Company or his
or her employment by the Company, or any of its subsidiaries and affiliates, or
use any such information in a manner detrimental to the interests of the Company
or RIGINC, unless (i) such information becomes known to the public generally
through no fault of any Stockholder, (ii) disclosure is required by law or the
order of any governmental authority under color of law, or (iii) the disclosing
party reasonably believes that such disclosure is required in connection with
the defense of a lawsuit against the disclosing party, provided, that prior to
--------
disclosing any information pursuant to clause (i), (ii) or (iii) above, the
Stockholder (as applicable) shall give prior written notice thereof to RIGINC
and provide RIGINC with the opportunity to contest such disclosure and shall
cooperate with efforts to prevent such disclosure. The term "confidential
information" includes, without limitation, information not previously disclosed
to the public or to the trade by the Company's or RIGINC's management with
respect to the Company's or RIGINC's, or any of their affiliates' or
subsidiaries', products, facilities, and methods, trade secrets and other
intellectual property, software, source code, systems, procedures, manuals,
confidential reports, product price lists, customer lists, financial information
(including the revenues, costs, or profits associated with any of the Company's
products), business plans, prospects, or opportunities but shall exclude any
information already in the public domain.
(b) INTENTIONALLY OMITTED
9.3 DAMAGES . Because of the difficulty of measuring economic losses
-------
to RIGINC as a result of a breach of the foregoing covenant, and because of the
immediate and irreparable damage that could be caused to RIGINC for which it
would have no other adequate remedy, each Stockholder agrees that the foregoing
covenant may be enforced by RIGINC in the event of breach by such Stockholder,
by injunctions and restraining orders.
9.4 REASONABLE RESTRAINT. The parties agree that the foregoing
---------------------
covenants in this Article IX impose a reasonable restraint on each Stockholder
in light of the activities and business of RIGINC on the date of the execution
of this Agreement, assuming the completion of the transactions contemplated
hereby, and the current plans of RIGINC; but it is also the intent of RIGINC and
each Stockholder that such covenants be construed and enforced in accordance
with the changing activities and business of RIGINC throughout the term of this
covenant. The parties further agree that so long as a Stockholder is not an
employee of the Company, in the event a Stockholder shall enter into a business
or pursue other activities not in competition with RIGINC or similar activities
or business in locations the operation of which, under such circumstances, does
not violate Section 9.1(a) or the terms of any employment agreement with RIGINC,
such Stockholder shall not be chargeable with a violation of this Article IX if
RIGINC shall thereafter enter the same, similar or a competitive (a) business,
(b) course of activities or (c) location, as applicable.
9.5 SEVERABILITY; REFORMATION. The covenants in this Article IX are
--------------------------
severable and separate, and the unenforceability of any specific covenant shall
not affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the intention of
the parties that such restrictions be enforced to the fullest extent which the
court deems reasonable, and the Agreement shall thereby be reformed.
9.6 INDEPENDENT COVENANT. All of the covenants in this Article IX
---------------------
shall be construed as an agreement independent of any other provision in this
Agreement, and the existence of any claim or cause of action of any Stockholder
against RIGINC, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by RIGINC of such covenants. The parties
expressly acknowledge that the terms and conditions of this Article IX are
independent of the terms and conditions of any other agreements including, but
not limited to, any employment agreements entered into in connection with this
Agreement. It is specifically agreed that the period of two (2) years
stated at the beginning of this Article IX during which the agreements and
covenants of the Stockholder made in this Article IX shall be effective, shall
be computed by excluding from such computation any time during which the
Stockholder is found by a court of competent jurisdiction to have been in
violation of any provision of this Article IX. The covenants contained in
Article IX shall not be affected by any breach of any other provision hereof by
any party hereto and shall have no effect if the transactions contemplated by
this Agreement are not consummated.
9.7 MATERIALITY. The Company and each Stockholder hereby agree that
-----------
the covenants set forth in this Article IX are a material and substantial part
of the transactions contemplated by this Agreement, supported by adequate
consideration.
ARTICLE X.
GENERAL
10.1 TERMINATION. This Agreement may be terminated at any time
-----------
prior to the Closing Date solely:
(a) by mutual consent of the boards of directors of RIGINC
and the Company;
(b) by the Stockholders or the Company if the RIGINC Closing
Stock Price is less than $10.20, and RIGINC does not elect to use the stock
price that is less than $10.20 for purposes of determining the number of shares
of RIGINC Stock to be received at the Closing;
(c) by the Stockholders and the Company as a group, on the
one hand, or by RIGINC, on the other hand, if there is or has been a material
breach, failure to fulfill or default on the part of the other party (with the
Stockholders and the Company deemed to be a single party for this purpose) of
any of the representations and warranties contained herein or in the due and
timely performance and satisfaction of any of the covenants, agreements or
conditions contained herein, and the curing of such default shall not have been
made or shall not reasonably be expected to occur before the Closing Date; or
(d) by the Stockholders and the Company as a group, on the
one hand, or by RIGINC, on the other hand, if there shall be a final
nonappealable order of a federal or state court in effect preventing
consummation of the transactions contemplated hereby; or there shall be any
action taken, or any statute, rule regulation or order enacted, promulgated or
issued or deemed applicable to the transactions contemplated hereby by any
governmental entity which would make the consummation of the transactions
contemplated hereby illegal.
10.2 EFFECT OF TERMINATION.
-----------------------
(a) In the event of the termination of this Agreement pursuant to
Section 10.1 (including, without limitation, termination by any party for the
failure by the other party to close the transaction described herein), then this
Agreement shall become ineffective except that: (i) the provisions of Articles
VIII and X and Section 9.2 shall remain in full force and effect and survive any
termination of this Agreement and (ii) each party shall remain liable to the
other for such breach of this Agreement prior to its termination.
(b) Notwithstanding anything in this Section 10.2 or this
Agreement to the contrary, should this Agreement be terminated prior to the
Closing Date by RIGINC for a "Non-Material Breach" of the Jamison Parties or by
any or all of the Jamison Parties for a "Material Breach" by RIGINC, then CMAJ
shall pay the Deposit to the Company. Should this Agreement be terminated by
RIGINC for a Material Breach of the Jamison Parties or by any or all of the
Jamison Parties for a Non-Material Breach of RIGINC, then CMAJ shall immediately
return the Deposit to RIGINC. A "Non-Material Breach" means any breach of the
representations, warranties, covenants or agreements set forth herein that could
not reasonably be expected, individually or in aggregate, to be likely to lead
to the loss by RIGINC, on the one hand, or the Jamison Parties, on the other, of
greater than $150,000. A "Material Breach" means any breach of the
representations, warranties, covenants or agreements set forth herein that could
reasonably be expected, individually or in aggregate, to be likely to lead to
the loss by RIGINC, on the one hand, or the Jamison Parties, on the other, of
greater than $150,000. Notwithstanding anything herein to the contrary, it is
hereby expressly agreed that failure to close without a material reason therefor
is a "Material Breach." Termination by the Stockholders or the Company pursuant
to Section 10.1(b) shall be deemed to be a termination for a Non-Material
Breach.
(c) Upon any unilateral termination by the Stockholders or the
Company on the one hand, or by RIGINC on the other hand, the terminating party
(the "Terminating Party") shall give written notice to CMAJ of such termination
(such notice is hereinafter referred to as the "Notice of Termination"). The
Notice of Termination shall be a sworn statement and, at a minimum: (i) be
labeled "Notice of Termination," (ii) identify this Agreement, (iii) specify
whether such termination was for a Non-Material Breach or for a Material Breach,
and (iv) indicate the party who is to receive the Deposit. Upon receipt of the
Notice of Termination, CMAJ shall send a copy thereof to whichever of RIGINC or
the Stockholders and the Company is not the Terminating Party (the
"Non-Terminating Party"), in accordance with the notice provisions of Section
10.8 hereof. If the Non-Terminating Party desires to dispute the Notice of
Termination, such party shall, within fifteen (15) days after the date of
mailing the copy of the Notice of Termination from CMAJ, deliver to CMAJ a sworn
statement (the "Affidavit") saying that the Notice of Termination is incorrect,
whereupon the provisions of Section 10.9 hereof will become applicable. If CMAJ
receives the Affidavit within fifteen (15) days, CMAJ shall send a copy thereof
to the Terminating Party in accordance with the notice provisions of Section
10.9 hereof, and CMAJ shall continue to hold the Deposit, and shall not release
the Deposit except in accordance with (x) a final decisions of the Arbitrator as
hereinafter provided, or receipt of a written agreement with authorized and
notarized signatures of the Terminating and Non-Terminating Parties, authorizing
the release of the Deposit, or any portion thereof to specified persons. The
parties hereto agree that CMAJ must give prompt effect to any authenticated
arbitration award. If CMAJ does not receive the Affidavit within said fifteen
(15) days, CMAJ is authorized and directed to deliver the Deposit in accordance
with the instructions in the Notice of Termination.
10.3 SUCCESSORS AND ASSIGNS . This Agreement and the rights of the
------------------------
parties hereunder may not be assigned (except by operation of law) and shall be
binding upon and shall inure to the benefit of the parties hereto, the
successors of RIGINC, and the heirs and legal representatives of the
Stockholders.
10.4 ENTIRE AGREEMENT; AMENDMENT; WAIVER. This Agreement sets forth
--------------------------------------
the entire understanding of the parties hereto with respect to the transactions
contemplated hereby. Each of the Schedules to this Agreement is incorporated
herein by this reference and expressly made a part hereof. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement. This
Agreement shall not be amended or modified except by a written instrument duly
executed by each of the parties hereto, or in accordance with Section 9.5. Any
extension or waiver by any party of any provision hereto shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
10.5 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original, and all of
which counterparts taken together shall constitute but one and the same
instrument.
10.6 BROKERS AND AGENTS. RIGINC on the one hand, and the Jamison
--------------------
Parties on the other, each represent and warrant to the other that it has not
employed any broker or agent in connection with the transactions contemplated by
this Agreement and agrees to indemnify the other against all losses, damages or
expenses relating to or arising out of claims for fees or commission of any
broker or agent employed or alleged to have been employed by such party.
10.7 EXPENSES. RIGINC has and will pay the fees, expenses and
--------
disbursements of its agents, representatives, accountants and counsel and, to
the extent of $45,000.00, the fees, expenses and disbursements of the Company's
and the Stockholders' accountants and counsel incurred in connection with the
subject matter of this Agreement and any previous agreements among the parties.
The Stockholders (and not the Company) have and will pay all other fees,
expenses and disbursements of the Stockholders, the Company, and their agents,
representatives, financial advisers, accountants and counsel incurred in
connection with the subject matter of this Agreement. RIGINC shall bear the
expense of the cost of the audits of the Company incurred in connection
herewith, including, without limitation, the Post-Closing Audit.
10.8 NOTICES. Any notice, request, claim, demand, waiver, consent,
-------
approval or other communication which is required or permitted hereunder shall
be in writing and shall be deemed given if delivered personally or sent by
telefax (with confirmation of receipt), by registered or certified mail, postage
prepaid, or by recognized courier service, as follows:
If to RIGINC to:
Mr. Andrew Florance, President
Realty Information Group
7475 Wisconsin Avenue
Sixth Floor
Bethesda, Maryland 20814
(Telefax: (301) 718-2444)
with required copies to:
Shea & Gardner
1800 Massachusetts Avenue, N.W.
Washington, D.C. 20036
Attn: Michael Isenman
(Telefax: (202) 828-2195)
Brown, Parker & Leahy, L.L.P.
3600 Two Allen Center
1200 Smith Street
Houston, Texas 77002-4595
Attn: Dallas Parker
(Telefax: (713) 654-1871)
If to any Stockholder to:
Leslie Lees Jamison
725 Tanglewood Trail, N.W.
Atlanta, Georgia 30327
(Telefax: (404) 256-3486)
with a required copy to:
Cushing, Morris, Armbruster & Jones, LLP
2110 Peachtree Center International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jeffrey F. Montgomery
(Telefax: (404) 658-9865)
If to CMAJ to:
Cushing, Morris, Armbruster & Jones, LLP
2110 Peachtree Center International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Jeffrey F. Montgomery
(Telefax: (404) 658-9865)
or to such other address as the person to whom notice is to be given may have
specified in a notice duly given to the sender as provided herein. Such notice,
request, claim, demand, waiver, consent, approval or other communication shall
be deemed to have been given as of the date so delivered, telefaxed, mailed or
dispatched and, if given by any other means, shall be deemed given only when
actually received by the addressees.
10.9 GOVERNING LAW.
--------------
(a) This Agreement shall be governed by and construed, interpreted
and enforced in accordance with the laws of Delaware
(b) Any disputes arising out of, in connection with or with
respect to this Agreement, the subject matter hereof, the performance or
non-performance of any obligation hereunder, or any of the transactions
contemplated hereby ("Disputes") that seek specific performance of any
obligations hereunder or injunctive relief may be adjudicated in any court of
competent civil jurisdiction.
(c) Except as provided in Section 10.9(b), all Disputes shall be
resolved by binding arbitration administered by the American Arbitration
Association ("AAA") and, except as expressly provided in this Agreement, shall
be conducted in accordance with the Expedited Procedures under the Commercial
Arbitration Rules of the AAA, as such rules may be amended from time to time
(the "Rules").
(i) The hearing locale shall be determined in accordance with
the Rules. A single, neutral arbitrator (the "Arbitrator") shall be appointed
by the AAA, within thirty (30) days after an Arbitrated Dispute is submitted for
arbitration under this Section 10.9(c), to preside over the arbitration and
resolve the Dispute. The Arbitrator shall be selected from the AAA's Commercial
Panel, and shall be qualified to practice law in at least one jurisdiction in
the United States and have expertise in the interpretation of commercial
contracts. The parties shall have ten (10) days to object in writing to the
appointment of the Arbitrator, the sole basis for such objection being an actual
conflict of interest. The AAA, in its sole discretion, shall determine within
ten (10) days the validity of any objection to the appointment of the Arbitrator
based on an actual conflict of interest.
(ii) The Arbitrator's decision (the "Decision") shall be
binding, and the prevailing party may enforce the Decision in any court of
competent jurisdiction.
(iii) The parties shall use their best efforts to cooperate
with each other in causing the arbitration to be held in as efficient and
expeditious a manner as practicable, including but not limited to, providing
such documents and making available such of their personnel as the Arbitrator
may request, so that the Decision may be reached timely. The Arbitrator shall
take into account the parties' stated goal of expedited proceedings in
determining whether to authorize discovery and, if so, the scope of permissible
discovery and other hearing and pre-hearing procedures.
(iv) The authority of the Arbitrator shall be limited to
deciding liability for, and the proper amount of, a Claim, and the Arbitrator
shall have no authority to award punitive damages. The Arbitrator shall have
such powers and establish such procedures as are provided for in the Rules, so
long as such powers and procedures are consistent with this Section 10.9(c) and
are necessary to resolve the Dispute within the time periods specified in this
Agreement. The Arbitrator shall render a Decision within sixty (60) days after
being appointed to serve as Arbitrator, unless the parties otherwise agree in
writing or the Arbitrator makes a finding that a party has carried the burden of
showing good cause for a longer period.
10.10 SEVERABILITY. If any provision of this Agreement or the
------------
application thereof to any person or circumstances is held invalid or
unenforceable in any jurisdiction, the remainder hereof, and the application of
such provision to such person or circumstances in any other jurisdiction, shall
not be affected thereby, and to this end the provisions of this Agreement shall
be severable. The preceding sentence is in addition to and not in place of the
severability provisions in Section 9.5.
10.11 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No provision of this
------------------------------------------
Agreement is intended, nor will any provision be interpreted, to provide or to
create any third party beneficiary rights or any other rights of any kind in any
client, customer, affiliate, shareholder, employee or partner of any party
hereto or any other person or entity.
10.12 MUTUAL DRAFTING. This Agreement is the mutual product of the
----------------
parties hereto, and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of each of the parties, and shall not be
construed for or against any party hereto.
10.13 FURTHER REPRESENTATIONS. Each party to this Agreement
------------------------
acknowledges and represents that it has been represented by its own legal
counsel in connection with the transactions contemplated by this Agreement, with
the opportunity to seek advice as to its legal rights from such counsel. Each
party further represents that it is being independently
advised as to the tax consequences of the transactions contemplated by this
Agreement and is not relying on any representation or statements made by the
other party as to such tax consequences.
[EXECUTION PAGE FOLLOWING]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
REALTY INFORMATION GROUP, INC.
By: /s/ Andrew C. Florance
---------------------------
Andrew C. Florance
Chief Executive Officer
JAMISON RESEARCH, INC.
By: /s/ Henry D. Jamison IV
---------------------------
Henry D. Jamison IV
Chairman and Vice President
CUSHING, MORRIS, ARMBRUSTER & JONES, LLP
(Solely for purposes of the escrow provisions herein)
By: /s/ Jeffrey F. Montgomery
-----------------------------------------
Jeffrey F. Montgomery, a Partner
STOCKHOLDERS:
/s/ Henry D. Jamison IV
----------------------------
Henry D. Jamison IV
/s/ Leslie Lees Jamison
----------------------------
Leslie Lees Jamison
LIST OF EXHIBITS AND SCHEDULES TO
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
REALTY INFORMATION GROUP, INC.,
JAMISON RESEARCH, INC.,
HENRY D. JAMISON IV
AND
LESLIE LEES JAMISON
DATED JANUARY 6, 1999
Schedule 3.1(a) Company Business Authorization
Schedule 3.1(b) Exceptions to Company Articles, Bylaws and Minutes
Schedule 3.1(c) Company Directors and Officers
Schedule 3.3 Company Conflicts
Schedule 3.4 Company Ownership of Capital Stock (*
Schedule 3.5 Company Options; Restrictions on Capital Stock
Schedule 3.6(a) Company Corporate Ownership Interests
Schedule 3.6(b) Company Non-Corporate Ownership Interests
Schedule 3.9 Company Financials
Schedule 3.10(a) Company Liabilities
Schedule 3.10(c) Company New Expenditures
Schedule 3.12 Company Company Accounts
Schedule 3.13 Company Accounts Receivable
Schedule 3.15(b) Company Real Property
Schedule 3.15(c) Company Leases Requiring Consent
Schedule 3.16(a) Company Personal Property
Schedule 3.17(a) Company Trademarks
Schedule 3.17(b)(i) Company Patents
Schedule 3.17(b)(ii) Company Copyrights
Schedule 3.17(c) Company Trade Secrets
Schedule 3.17(d) Company Intellectual Property Obligations
Schedule 3.17(e) Company Intellectual Property Claims
Schedule 3.18(a) Company Contracts
Schedule 3.18(b) Company Contract Impairment
Schedule 3.18(c) Company Third-Party Consents
Schedule 3.18(d) Company Loans and Credit Agreements
Schedule 3.19 Company Company Names
Schedule 3.20 Company Insurance
Schedule 3.21(a) Company Environmental
Schedule 3.23(b) Company Benefits
Schedule 3.23(c) Company Worker's Compensation
Schedule 3.23(d) Company Highly Compensated Employees
Schedule 3.24 Company Taxes
Schedule 3.25 Company Litigation
Schedule 3.27 Company Changes
Schedule 4.3(b) RIG Conflicts
Schedule 4.8(d) RIG Intellectual Property Obligations
Schedule 4.9(a) RIG Environmental
Schedule 4.11 RIG Taxes
Schedule 4.12(b) RIG Litigation
Schedule 4.13 RIG Changes
Schedule 5.12 Branham Agreement
Exhibit A Church Consent
Exhibit 6.7(a) Employment Agreement for Henry D. Jamison IV
The above-listed Schedules and Exhibits have been omitted pursuant to Item
601(b)(2) of Regulation S-K. The Registrant hereby agrees to furnish
supplementally a copy of any omitted schedule to the Securities and
Exchange Commission upon request.