ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 5th day of February 1998, by and among DATABASE
TECHNOLOGIES, INC., a Delaware corporation ("Database"), PALM DESERT ART
PUBLISHERS, LTD., a California corporation ("Palm Desert") and XXXXX XXXXX of
Bedford, New Hampshire ("Xxxxx") and,
WHEREAS, Database is presently controlled by Xxxxx and engaged in the
business of developing and marketing computer software and Palm Desert is
engaged in the business of selling art work;
WHEREAS, to avail itself of the existing public market for Database's
securities, Palm Desert has agreed to sell all of its assets to Database in
exchange for a controlling interest in the securities of Database
WHEREAS, Database is indebted to Xxxxx in the approximate amount of
$184,000 in respect of those debts, claims and liabilities identified on
Schedule A hereto (the "Indebtedness");
WHEREAS, Database desires to discharge its indebtedness to Xxxxx by (i)
issuing to Xxxxx its promissory note in the amount of $90,000 (the "Note") and
(ii) transferring to Xxxxx, or his nominee, all tangible and intangible assets
associated with Database's software business, including, without limitation, all
those assets listed on Schedule B hereto (the "Software Assets"), subject to
certain of Database's liabilities;
WHEREAS, to induce Xxxxx to accept Database's promissory note, Palm Desert
has agreed to execute and deliver to Xxxxx its guaranty (the "Guaranty") of the
Note and to pledge to Xxxxx all shares of the capital stock of Database that it
shall acquire (the "Shares") as security for the Guaranty;
NOW, THEREFORE, the parties hereto, in consideration of the premises set
forth herein and each intending to be legally bound hereby, do covenant and
agree as follows:
1. Agreement to Transfer. On the Closing Date (as defined below) Database
shall:
(i) sell, convey, transfer, assign, and deliver the Software Assets to
Xxxxx, subject to no mortgages, pledges, liens, encumbrances, title
retention or other security agreements or arrangements or charges of any
kind whatsoever; and
(ii) deliver the Note to Xxxxx.
2. Agreement to Acquire. On the Closing Date, Xxxxx shall accept the Assets
and the Note and execute and deliver to Database such instrument evidencing the
discharge of the Indebtedness as Database shall reasonably request.
3. Assumption of Liabilities. On the Closing Date, by an appropriate
written instrument or instruments satisfactory in form and substance to Database
and Palm Desert, Xxxxx shall assume and agree to pay, perform and discharge
those certain debts, obligations and liabilities of Database set forth on the
Schedule of Assumed Liabilities attached hereto as Exhibit C (the "Assumed
Liabilities"). The Assumed Liabilities shall include all liabilities of Database
existing on the Closing Date other than the obligations of Database arising
under this Agreement and that certain Asset Purchase and Subscription Agreement
of even date herewith and the transactions contemplated by such agreements.
Xxxxx shall not assume, pay or discharge any liability or obligation that is not
an Assumed Liability. Database's obligations to its transfer agent shall be
apportioned as of the Closing Date
4. The Closing. The consummation of the transactions contemplated hereby
shall constitute the Closing. The Closing shall take place on February 8, 1998
at the offices of Database immediately following the closing of Database's
purchase of Palm Desert's assets and the issuance to Palm Dessert of the Shares
or at such other time or place as shall be mutually agreed upon by the parties.
5. Documents to be Delivered at the Closing. At the Closing the following
documents or instruments shall be delivered, together with such other documents
as shall be necessary to consummate the transactions contemplated by this
Agreement.
(a) Database shall deliver, or cause to be delivered, to Xxxxx:
(i) such bills of sale with covenants of general warranty and such
other good and sufficient instruments of assignment, transfer or conveyance
as shall be necessary or appropriate to vest in or confirm to Xxxxx good
and marketable title to all properties and assets included in the Software
Assets;
(ii) actual possession and operating control of the Software Assets;
(iii) originals or, if unavailable, copies of all Database's books,
records, documents and files, together with all other data, relating to the
Software Assets and the business conducted in regard thereto (with the same
to remain in the custody of Xxxxx for not less than two years and
thereafter in accordance with his usual business practice, subject to
access thereto by Database at any reasonable time upon reasonable notice);
(iv) the Note;
(v) the Guaranty and Stock Pledge Agreement of Palm Desert, each of
which shall be acceptable in form and substance to Xxxxx and his counsel;
(vi) such other deeds, endorsements, assignments and other instruments
as are, in the opinion of Xxxxx'x counsel, reasonably necessary to give
effect to this Agreement.
(b) Xxxxx shall deliver to Database all such instruments as are, in the
opinion of Palm Desert's counsel reasonably necessary to evidence the discharge
of the Indebtedness, and otherwise give effect to the purposes and intent of
this Agreement.
6. Conditions Precedent to Buyer's Obligations. The obligations of the
parties under this Agreement are contingent upon the consummation of the sale of
Palm Desert's assets to Database.
7. Further Assurances. From time to time at the request of Xxxxx, whether
at or after the Closing and without further consideration, Database, at its
expense, shall execute and deliver to Xxxxx such other and further instruments
of sale, conveyance, transfer, assignment and confirmation and take such other
action as Xxxxx may reasonably request in order more effectively to sell,
convey, transfer, vest and confirm in Xxxxx any of the Software Assets.
After the Closing Xxxxx and his administrator, executor, or other personal
representative shall have reasonable access to Database's books and records to
assist him or them in preparing or filing of any tax return, and for any other
business purpose.
8. Affirmative Covenants. Palm Desert and Database, jointly and severally,
covenant that, until payment in full of the Note and unless otherwise consented
to in writing by Xxxxx, they will:
(a) Corporate Existence, etc. Maintain Database's corporate existence
and its qualification to do business and its good standing in each
jurisdiction in which such qualification is necessary for the proper
conduct of its business, and maintain in full force and effect all
licenses, permits and other authorizations necessary for the ownership and
operation by Database of the properties and business acquired from Palm
Desert.
(b) Insurance. Keep all insurable property owned by Database insured
at all times against fire and extended coverage risks and other hazards of
the kinds customarily insured against, and in amounts customarily carried,
by corporations engaged in comparable businesses and comparably situated;
keep Database adequately insured at all times against liability on account
of injury to persons or property
and comply with the insurance provisions of all applicable workmen's
compensation laws;
(c) Taxes. Pay or cause to be paid all taxes, fees, assessments and
governmental charges or levies upon any of the property or assets of
Database or upon Database or its income or profits before the same shall
become delinquent, and all lawful claims of whatsoever nature which, if
unpaid, might become a lien or charge upon any such property, assets,
income or profits; provided, however, that Database shall not be required
to pay and discharge any such tax, fee, assessment, charge, levy or claim
so long as the validity thereof shall be contested in good faith by
appropriate proceedings diligently conducted (unless and until foreclosure,
distraint, sale or other similar process shall have been commenced).
(d) Additional Information. Furnish promptly to Xxxxx such financial
and other information regarding Database and its business and affairs as
Xxxxx may from time to time reasonably request.
9. Negative Covenants. Palm Desert and Database covenant that until payment
in full of the Note, Database will not, without the prior written consent of
Xxxxx:
(a) Xxxxx. Take, or suffer to be taken, any action to remove Xxxxx as
a director of Database.
(b) Liens. Create, incur, issue, assume or suffer to exist any
mortgage, pledge, lien or other encumbrance on or security interest in any
of its assets, whether now owned or hereafter acquired, except:
(i) mortgages, pledges, liens, encumbrances or security interests
in favor of Xxxxx;
(ii) liens for taxes or other governmental charges which are not
due or remain payable without penalty or which are being contested in
good faith and by appropriate proceedings diligently conducted;
(iii) deposits or pledges to secure workmen's compensation,
unemployment insurance, old age benefits or other social security
obligations or in connection with or to secure the performance of
bids, tenders, trade contracts or leases or to secure statutory
obligations or surety or appeal bonds or other pledges or deposits of
like nature and all in the ordinary course of business; and
(iv) mechanics', carriers', workmen's, repairmen's or other like
liens arising in the ordinary course of business in respect of
obligations not yet due or which are being contested in good faith and
by appropriate
proceedings diligently conducted.
(c) Indebtedness. Database shall not at any time create, incur, assume
or suffer to exist any Indebtedness, except:
(i) Indebtedness existing under Note; or
(ii) Current accounts payable arising out of transactions (other
than borrowings) in the ordinary course of business, without Xxxxx'x
prior written approval, which approval will not be unreasonably
withheld or delayed so long as any such new Indebtedness is expressly
subordinate to the Note.
(d) Contingent Liabilities. Assume, guarantee, endorse or otherwise
become or remain directly or indirectly liable for the obligations of any
person, firm or corporation, except:
(i) guarantees in favor of Xxxxx; and
(ii) the endorsement of negotiable or other instruments for
deposit or collection or similar transactions in the ordinary course
of its business.
(e) Loans and Advances. Make or have outstanding any loans or advances
or extend credit to any person, firm or corporation, except:
(i) loans or advances in the ordinary course of business to
suppliers; and
(ii) trade credit extended under usual and customary terms in the
ordinary course of business;
(f) Disposition of Assets. Sell, lease, abandon or otherwise dispose
of all or any substantial portion of Database's properties or assets.
(g) Issuance of Securities. Issue any shares of the capital stock of
Database or any right instrument convertible into the capital stock of
Database.
(h) Dividends. Declare, make, pay, become or remain liable to make or
pay, any dividend or other distribution of any nature (whether in cash,
property, securities or otherwise) on account of or in respect of any
shares of the capital stock of Database or on account of the purchase,
redemption, retirement or acquisition of any shares of the capital stock of
Database.
10. Xxxxx'x Covenants. Upon Database's full payment of the Note, Xxxxx
shall tender to Database his written resignation as a
director Database and provide Database with a written discharge of Database's
obligations under the Note.
11. Merger Clause and Restrictions on Assignment. This Agreement and the
related Promissory Note, Guaranty and Stock Pledge Agreement and a certain Asset
Purchase and Subscription Agreement of even date herewith constitute the
complete agreement and understanding of the parties thereto as to the matters
provided for therein and all prior agreements, representations and
understandings of the parties are merged herein and therein. This Agreement may
only be amended or changed by a writing signed by all the parties to be charged.
The rights of any party under this Agreement may not be assigned without
the express written consent of all other parties, which consent shall be granted
or withheld in the sole discretion of any party.
12. Miscellaneous. This Agreement shall be enforced and interpreted in
accordance with the law of the State of Delaware. The captions and headings in
this Agreement have been included to purposes of convenience and shall not be
considered part of the Agreement. Notwithstanding the Closing, any part of this
Agreement which expressly, or by implication, requires performance by any party
after the Closing, shall survive the Closing, and where appropriate, may be
specifically enforced.
IN WITNESS WHEREOF, the parties hereto, by their duly authorized officers,
have caused this Agreement to be duly executed and delivered as of the day and
year first above written.
DATABASE TECHNOLOGIES, INC.
By: ss/Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: President
PALM DESERT ART PUBLISHERS, LTD.
By: ss/Xxxx X. Xxxx
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Name:
Title:
XXXXX XXXXX
ss/Xxxxx X. Xxxxx
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