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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made as of December 19, 1997 between Educorp Direct,
Inc., a California corporation ("Seller"), Arch Publishers Group, Inc., a New
York corporation ("Parent") and Educorp, LLC, a New York limited liability
company ("Purchaser").
R E C I T A L S
A. Seller engages in the business of distributing interactive
multimedia software with an emphasis on adult-learning titles and operating a
multimedia software catalog business (collectively, the "Business").
B. Seller desires to sell to Purchaser substantially all of Seller's
assets, properties and rights, other than the Excluded Assets, as herein defined
(the "Purchased Assets"), and Purchaser desires to purchase the Purchased
Assets, all on the terms and subject to the conditions contained in this
Agreement.
A G R E E M E N T S
Therefore, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I.
Purchase and Sale of Assets
1.1 Agreement to Purchase and Sell. On the terms and subject to the
conditions contained in this Agreement, Purchaser hereby purchases from Seller,
and Seller hereby sells to Purchaser, Seller's right, title and interest in the
Purchased Assets.
1.2 Enumeration of Purchased Assets. The Purchased Assets shall
include the following assets owned by Seller:
(a) all inventory, including raw materials, work in process,
finished goods, and supplies, including substantially the inventory
listed in Schedule 1.2(a) (subject to any changes since November 29,
1997) (collectively, the "Inventory");
(b) all trade accounts receivable (including substantially the
trade accounts receivable listed in Schedule 1.2(b), subject to
adjustments requested by vendors and any changes since November 29,
1997), notes receivable, negotiable instruments and chattel paper
(collectively, the "Accounts Receivable"); provided however that,
notwithstanding the foregoing, the Accounts Receivable being purchased
hereunder shall not include any amounts owed to Seller by HighText
Interactive, Inc., Educorp Multimedia, Inc., or Xxxxxxxx Corporation;
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(c) Web site name "xxx.xxxxxxx.xxx";
(d) all furniture, equipment, computer hardware, and all other
tangible personal property (other than the Inventory), including the
items presently located at 0000 Xxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx
00000, but excluding in all events the assets of HighText Interactive,
Inc. and Educorp Multimedia, Inc. which are located at such address;
(e) current catalog in electronic format;
(f) all contracts, including sales orders and sales contracts,
purchase orders and purchase contracts, quotations and bids, license
agreements, distribution agreements, co-op agreements, sales
representative agreements, service agreements, supply agreements,
franchise agreements, computer software agreements and technical service
agreements;
(g) all customer lists, customer records and information
(including the mailing address database for Seller's distribution
network);
(h) all intellectual property (including the name "Educorp
Direct" but excluding Seller's corporate name), and all goodwill
associated with the intellectual property;
(i) all computer software, including all documentation and
source codes with respect to such software and licenses and leases of
software to the extent they are legally transferable by Seller;
(j) all cash, cash equivalents and investments, including the
cash in the bank accounts listed in Schedule 1.2(j).; and
(k) refunds due with respect to insurance premium payments.
1.3 Excluded Assets. The Excluded Assets shall consist of the
following items:
(a) Seller's bank accounts (other than the cash, cash
equivalents and investments therein), checkbooks and canceled checks;
(b) claims (and benefits to the extent they arise therefrom)
that relate to liabilities other than the Assumed Liabilities (as herein
defined) and assets other than the Purchased Assets;
(c) insurance policies of Seller and rights in connection
therewith;
(d) rights arising from prepaid expenses, if any, with respect
to assets not being sold hereunder;
(e) tax refunds due from federal, state and local taxing
authorities;
(f) all rights of indemnification and claims which relate to
the conduct of the Business prior to the Closing Date;
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(g) Seller's rights under this Agreement; and
(h) Seller's corporate name (provided that Seller will change
its corporate name if it actively engages in business after the date
hereof), Seller's corporate charter, minute and stock record books,
corporate seal, general ledger and other books of original entry,
employee records, payroll and employee benefit records, and tax returns.
ARTICLE II.
Assumption of Liabilities
2.1 Assumed Liabilities. Purchaser hereby assumes and agrees to
discharge and perform when due the following (and only the following)
liabilities and obligations of Seller (collectively, the "Assumed Liabilities"):
(i) the liabilities listed in Schedule 2.1 hereto (subject to changes since
November 29, 1997), (ii) any and all liabilities and obligations incurred on or
after November 29, 1997, (iii) without limitation of clause (i), the executory
portion of contracts (including royalty agreements, computer leases, any other
equipment leases, and the real estate lease) solely with respect to the period
after the date hereof, and (iv) up to an additional $50,000 of liabilities and
obligations.
2.2 Excluded Liabilities. Seller shall remain solely responsible for
all liabilities and obligations of Seller other than the Assumed Liabilities
(the "Excluded Liabilities"). Without limitation of the foregoing, the following
shall in all events be deemed to be Excluded Liabilities:
(a) any liabilities for legal, accounting, audit and investment
banking fees, brokerage commissions, and any other expenses incurred by
Seller in connection with the negotiation and preparation of this
Agreement and the sale of the Purchased Assets to Purchaser;
(b) any liabilities of Seller for income taxes, or for any of
the following taxes incurred prior to November 1, 1997: sales taxes, use
taxes, gross receipts taxes, personal property taxes; and any other
federal, state or local government taxes;
(c) any liability of Seller to banks or financial institutions
with respect to borrowed money;
(d) all severance amounts and other accrued expenses (including
without limitation, accrued compensation, vacation benefits, or sick pay)
with respect to Seller's employees (except Xxx Xxxxx, Xxxx Xxxxxx, Xxxx
Xxxxx, Xxxx Xxxxxxxx, and Xxxxxxxx Xxxxxxx); and
(e) all amounts owed by Seller to HighText Interactive, Inc.,
Educorp Multimedia, Inc., or Xxxxxxxx Corporation.
2.3 No Expansion of Third Party Rights. The assumption by Purchaser of
the Assumed Liabilities shall not expand the rights or remedies of any third
party against the Purchaser or the Seller as compared to the rights and remedies
which such third party would have had against the Seller had the Purchaser not
assumed the Assumed Liabilities.
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ARTICLE III.
Purchase Price and Manner of Payment
3.1 Purchase Price. The "Purchase Price" of the Purchased Assets is
(i) 3.5294 shares (the "Shares") of common stock, no par value, of Parent (which
Shares upon issuance shall constitute 15% of the issued and outstanding shares
of capital stock of Parent), plus (ii) the Assumed Liabilities.
3.2 Manner of Payment of the Purchase Price. Purchaser hereby assumes
the Assumed Liabilities. Contemporaneously herewith, Purchaser shall deliver to
Seller a stock certificate issued in the name of Seller evidencing the Shares.
3.3 Cash Infusion. Xxxxxxxx Corporation, Inc., a Canadian corporation
and the indirect parent of Seller ("Xxxxxxxx"), shall make a cash capital
contribution to Seller on the date hereof in the amount of US $74,625.00 (the
"Cash Infusion").
3.4 Allocation of Purchase Price. The parties agree that the portion
of the Purchase Price allocable to Seller's fixed assets is $10,000.
ARTICLE IV
Representations and Warranties
4.1 Representations and Warranties of Parent and Purchaser. Parent and
Purchaser jointly and severally represent and warrant to Seller that:
(a) Parent is a corporation duly organized, existing and in
good standing, under the laws of the State of New York. Purchaser is a
limited liability company duly organized, existing and in good standing,
under the laws of the State of New York.
(b) Parent has full corporate power and authority to enter into
and perform (x) this Agreement and (y) all documents and instruments to
be executed by Parent pursuant to this Agreement (collectively, "Parent's
Ancillary Documents"). This Agreement and Parent's Ancillary Documents
have been duly executed and delivered by a duly authorized officer of
Parent.
Purchaser has full limited liability company power and authority
to enter into and perform (x) this Agreement and (y) all documents and
instruments to be executed by Purchaser pursuant to this Agreement
(collectively, "Purchaser's Ancillary Documents"). This Agreement and
Purchaser's Ancillary Documents have been duly executed and delivered by
the manager of Purchaser.
(c) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority or other person is
required for the execution and delivery by Purchaser of this Agreement
and Purchaser's Ancillary Agreements, and the consummation by Purchaser
of the transactions contemplated by this Agreement and Purchaser's
Ancillary Documents.
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(d) Neither the execution and delivery of this Agreement and
Purchaser's Ancillary Documents by Purchaser, nor the execution and
delivery of this Agreement and Parent's Ancillary Documents by Parent,
nor the consummation by Purchaser and Parent of the transactions
contemplated hereby, will conflict with or result in a breach of any of
the terms, conditions or provisions of Parent's Certificate of
Incorporation or By-laws, or Purchaser's articles of organization or
operating agreement, or of any statute or administrative regulation, or
of any order, writ, injunction, judgment or decree of any court or
governmental authority or of any arbitration award.
(e) Neither Purchaser nor Parent is a party to any unexpired,
undischarged or unsatisfied written or oral contract, agreement,
indenture, mortgage, debenture, note or other instrument under the terms
of which performance by Purchaser or Parent according to the terms of
this Agreement will be a default, or whereby timely performance by
Purchaser or Parent according to the terms of this Agreement may be
prohibited, prevented or delayed.
(f) Neither Purchaser nor Parent , nor any of their respective
Affiliates has dealt with any person or entity who is or may be entitled
to a broker's commission, finder's fee, investment banker's fee or
similar payment for arranging the transactions contemplated hereby or
introducing the parties to each other. As used herein, an "Affiliate" is
any person or entity which controls a party to this Agreement, which that
party controls, or which is under common control with that party.
"Control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a person or entity through
voting securities, contract or otherwise.
(g) This Agreement and each of Purchaser's Ancillary Documents
constitutes the legal, valid and binding obligation of Purchaser
enforceable against Purchaser in accordance with their respective terms.
This Agreement and each of Parent's Ancillary Documents constitutes the
legal, valid and binding obligation of Parent enforceable against Parent
in accordance with their respective terms.
(h) The authorized capital stock of Parent consists of a single
class of 200 shares of common stock, no par value ("Common Stock"), of
which 20 shares are issued and outstanding. There are no shares of
capital stock of Parent of any other class authorized, issued or
outstanding. All of the issued and outstanding shares of Common Stock
have been validly issued and are fully paid and nonassessable. The
Shares, when issued to Seller pursuant hereto, shall be validly issued,
fully paid and nonassessable. As of the date hereof, after giving effect
to the issuance of the Shares to the Seller, the only issued and
outstanding capital stock of Seller consists of (i) 20 shares of Common
Stock owned of record and beneficially by Xxxxxx Xxxxxxxxx and (ii)
3.5294 shares of Common Stock owned of record and beneficially by Seller.
There are no outstanding subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued capital stock or other securities of the Parent obligating the
Parent to issue any securities of any kind. As of the date hereof (after
giving effect to the issuance of the Shares to Seller), Seller owns
fifteen percent (15%) of the issued and outstanding shares of Common
Stock of the Parent. Purchaser is a wholly-owned subsidiary of Parent.
There are no outstanding subscriptions, options, warrants, rights
(including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or
unissued limited liability company interests in Purchaser obligating the
Purchaser to issue any securities of any kind.
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4.2 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser that:
(a) Seller is a corporation duly organized, existing and in
good standing, under the laws of the State of California. Seller has all
necessary corporate power and authority to conduct the Business as the
Business is now being conducted.
(b) Seller has qualified as a foreign corporation, and is in
good standing, under the laws of all jurisdictions where the nature of
the Business or the nature or location of its assets requires such
qualification and where the failure to so qualify would have a "Material
Adverse Effect" (as herein defined). For the purposes of this Agreement,
"Material Adverse Effect" means a material adverse effect on the assets,
liabilities, financial condition or results of operations of the
Business, taken as a whole.
(c) Seller has full corporate power and authority to enter into
and perform (x) this Agreement and (y) all documents and instruments to
be executed by Seller pursuant to this Agreement (collectively, "Seller's
Ancillary Documents"). This Agreement and Seller's Ancillary Documents
have been duly executed and delivered by duly authorized officers of
Seller.
(d) No consent, authorization, order or approval of, or filing
or registration with, any governmental authority is required for the
execution and delivery of this Agreement and Seller's Ancillary Documents
and the consummation by Seller of the transactions contemplated by this
Agreement and Seller's Ancillary Documents.
(e) Neither the execution and delivery of this Agreement and
Seller's Ancillary Documents by Seller, nor the consummation by Seller of
the transactions contemplated hereby, will conflict with or result in a
breach of any of the terms, conditions or provisions of Seller's
Certificate of Incorporation or By-laws, or of any statute or
administrative regulation, or of any order, writ, injunction, judgment or
decree of any court or any governmental authority or of any arbitration
award.
(f) Copies of the unaudited financial statements of Seller, as
of and for the year ended December 31, 1996 have previously been provided
to Purchaser. Said financial statements present fairly, in all material
respects, the financial position of Seller as of the dates thereof, and
the statement of operations and deficit of Seller for the periods covered
by said statements, in accordance with generally accepted accounting
principles, consistently applied, except as disclosed therein.
(g) With respect to employees of Seller, Seller does not
maintain, administer or contribute to any employee pension benefit plan
(as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not excluded from coverage
under specific Titles or Subtitles of ERISA) for the benefit of employees
of the Seller (a "Pension Plan").
(h) To Seller's Knowledge (as defined herein), except for
threatened litigation by creditors, there is no litigation or proceeding,
in law or in equity, and there are no proceedings or governmental
investigations before any commission or other administrative authority,
pending or overtly threatened, against Seller, or with respect to the
consummation of the transactions
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contemplated hereby, or the use of the Purchased Assets (whether used by
Purchaser after the Closing or by Seller prior thereto) which if decided
adversely to Seller would have a Material Adverse Effect.
(i) Seller owns no real estate.
(j) Neither Seller, nor any of its Affiliates, has dealt with
any person or entity who is or may be entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment from Seller for
arranging the transactions contemplated hereby or introducing the parties
to each other.
(k) Seller is acquiring the Shares for its own account for
investment and with no present intention of distributing or reselling
such shares or any part thereof in any transaction which would constitute
a "distribution" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"). Purchaser understands that the Shares
have not been registered under the Securities Act or any state securities
laws.
4.3 Limitation on Warranties.
(a) Except as expressly set forth in Section 4.2, Seller makes
no express or implied warranty of any kind whatsoever, including any
representation as to physical condition or value of any of the Purchased
Assets or the future profitability or future earnings performance of the
Business. ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED. Except as expressly set forth
in Section 4.2, the Purchased Assets are being sold "AS IS, WHERE IS."
(b) Notwithstanding the foregoing, the Purchaser acknowledges
that the shareholders of Xxxxxxxx have not approved the transaction
contemplated hereby, and agrees that each of Seller's representations and
warranties in Section 4.2 is qualified by that fact.
4.4 Definition of Knowledge. For the purposes of this Agreement, the
knowledge of Seller shall be deemed to be limited to the actual knowledge as of
the date hereof of L. Xxxxx Xxxxxx, without giving effect to imputed knowledge.
ARTICLE V.
Deliveries
5.1 Purchaser's Deliveries. Concurrently with the execution and
delivery of this Agreement, Purchaser shall execute and/or deliver to Seller all
of the following:
(a) the stock certificate for the Shares, issued in the name of
Seller;
(b) a copy of Parent's Certificate of Incorporation and
By-laws, certified by Purchaser's secretary;
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(c) a copy of Purchaser's Articles of Organization, certified
by Purchaser's manager;
(d) certificates of good standing of Parent, issued not earlier
than twenty days prior to the date hereof by the Secretary of State of
New York;
(e) a certified copy of resolutions of Purchaser's board of
directors, authorizing the execution, delivery and performance of this
Agreement and Purchaser's Ancillary Documents;
(f) a resale certificate with respect to Purchaser's purchase
of the Inventory;
(g) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Purchaser to
consummate the transactions contemplated hereby.
5.2 Seller's Deliveries. Concurrently with the execution and delivery
of this Agreement, Seller shall deliver to Purchaser physical possession of all
tangible Purchased Assets, and shall execute (where applicable in recordable
form) and/or deliver to Purchaser all of the following:
(a) certified copies of Seller's Certificate of Incorporation
and By-laws;
(b) certificates of good standing of Seller, issued not earlier
than twenty days prior to the date hereof by the Secretary of State of
California;
(c) a certified copy of resolutions of Seller's board of
directors and sole stockholder, authorizing the execution, delivery and
performance of this Agreement and Seller's Ancillary Documents;
(d) assignments of registered trademarks and copyrights, if
any;
(e) UCC, federal and state tax lien, bankruptcy and judgment
searches with respect to Seller; and
(f) without limitation by the specific enumeration of the
foregoing, all other documents reasonably required from Seller to
consummate the transactions contemplated hereby.
5.3 Joint Deliveries. Concurrently with the execution and delivery
hereof, the parties shall execute and deliver, or cause to be executed and
delivered, to each other:
(a) all legally required transfer tax declarations, if any,
concerning the Purchased Assets; and
(b) a shareholder's agreement.
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ARTICLE VII
Post-Closing Agreements
7.1 Post-Closing Agreements. From and after the Closing, the parties
shall have the respective rights and obligations which are set forth in the
remainder of this Article VII.
7.2 Inspection of Records. Seller and Purchaser shall each retain and
make their respective books and records (including work papers in the possession
of their respective accountants) available for inspection by the other party, or
by its duly accredited representatives, for reasonable business purposes at all
reasonable times during normal business hours, for a five (5) year period after
the date hereof, with respect to all transactions occurring prior to the date
hereof or relating to the consummation of the transactions contemplated hereby,
and the historical financial condition, assets, liabilities, operations and cash
flows of Seller, or the Assumed Liabilities. As used in this Section 7.2, the
right of inspection includes the right to make extracts or copies. The
representatives of a party inspecting the records of the other party shall be
reasonably satisfactory to the other party.
7.3 Use of Trademarks; References to Seller. Seller shall cease to use
and shall not license or permit any third party to use the name "Educorp
Direct", or any name, slogan, logo or trademark which is similar or deceptively
similar to any of the Trademarks or the name "Educorp Direct". Purchaser may
refer to its Business as formerly being Seller's. Seller shall have no
obligation to change its corporate name; provided that it must do so before
actively engaging in business after the date hereof.
7.4 Payments of Accounts Receivable. In the event Seller shall receive
any instrument of payment of any of the Accounts Receivable, Seller shall
forthwith deliver it to Purchaser, endorsed where necessary, without recourse,
in favor of Purchaser.
7.5 Non-Assignment. Notwithstanding any provision to the contrary
contained herein, Seller shall not be obligated to assign to Purchaser any
contract, purchase order, sales order, lease or other instrument which provides
that it may not be assigned without the consent of the other party thereto and
for which such consent is not obtained, but in any such event, Seller shall
cooperate with Purchaser in any reasonable arrangement designed to provide the
benefits thereof to Purchaser.
7.6 Further Assurances. The parties shall execute such further
documents, and perform such further acts, as may be necessary to transfer and
convey the Purchased Assets to Purchaser, on the terms herein contained, and to
otherwise comply with the terms of this Agreement and consummate the
transactions contemplated hereby.
7.7 Xxxxxxxxx Loan. During the first twelve (12) months after the date
hereof, Purchaser shall not issue any capital stock (or options, warrants or
other rights to acquire capital stock) in order to raise funds unless Purchaser
on or prior to the date of such issuance has borrowed at least US $150,000.00
from Xxxxxx Xxxxxxxxx, which loan shall provide for straight line amortization
of principal and interest over a three year period and shall bear interest at no
more than the Prime Rate plus three percent (3%) per annum. As used herein,
"Prime Rate" means the rate announced by Bank of America from time to time as
its prime or reference rate.
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7.8 Amendments to Certificate of Incorporation and By-Laws of Parent.
No later than five (5) business days after the date hereof, Parent shall, if it
has not already done so, amend its Certificate of Incorporation and Bylaws as
provided in Exhibit A hereto. Parent shall promptly provide to Seller copies of
such amendments (which, in the case of the amendment to the Certificate of
Incorporation, shall be a copy or an original of the amendment as certified by
the New York Secretary of State).
ARTICLE VIII.
Indemnification
8.1 General. From and after the Closing, the parties shall indemnify
each other as provided in this Article VIII. As used in this Agreement, the term
"Damages" shall mean all liabilities, demands, claims, actions or causes of
action, regulatory, legislative or judicial proceedings or investigations,
assessments, levies, losses, fines, penalties, damages, costs and expenses,
including reasonable attorneys' fees and expenses.
8.2 Indemnification Obligations of Seller. Subject to the provisions
of Section 8.3, Seller shall indemnify, save and keep harmless Purchaser and its
successors and permitted assigns ("Purchaser Indemnitees") against and from all
Damages sustained or incurred by any of them resulting from or arising out of or
by virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Seller in this Agreement or in any closing document
delivered to Purchaser in connection with this Agreement;
(b) any breach by Seller of, or failure by Seller to comply
with, any of its covenants or obligations under this Agreement (including
its obligations under this Article VIII); and
(c) the failure to discharge any liability or obligation of
Seller other than the Assumed Liabilities.
8.3 Limitation on Seller's Indemnification Obligations. Seller's
obligations pursuant to the provisions of Section 8.2 are subject to the
following limitations:
(a) the Purchaser Indemnitees shall not be entitled to recover
under Section 8.2(a): (i) until the total amount which Purchaser would
recover under Section 8.2(a), but for this Section 8.3(a), exceeds
$25,000, and then only for the excess over $25,000; (ii) unless a claim
for Damages has been asserted by written notice, specifying the details
of the alleged misrepresentation or breach of warranty, delivered to
Seller on or prior to April 30, 1999; or (iii) if on or before the date
hereof Purchaser had actual knowledge of the misrepresentation or breach
of warranty;
(b) the Purchaser Indemnitees shall not be entitled to recover
under Section 8.2(b) or (c) hereof if indemnification is also available
under Section 8.2(a) hereof;
(c) the Purchaser Indemnitees shall not be entitled to recover
under Section 8.2:
(i) with respect to title to the Leased Premises;
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(ii) WITH RESPECT TO CONSEQUENTIAL DAMAGES, INCLUDING
CONSEQUENTIAL DAMAGES CONSISTING OF BUSINESS INTERRUPTION OR LOST
PROFITS, OR WITH RESPECT TO PUNITIVE DAMAGES;
(iii) to the extent aggregate Damages under Section 8.3(a)
exceed the then value of the Shares;
(iv) to the extent the Damages are covered by insurance
(including title insurance) held by Purchaser;
(v) with respect to the nonassignability or
nontransferability of any of the Purchased Assets or Assumed
Liabilities or the failure to obtain any consent, or conditions
imposed incident to the giving of any consent, required in
connection with, or as a consequence of, the transfer of any of
the Purchased Assets to, or the assumption of the Assumed
Liabilities by, Purchaser;
(d) the amount of any recovery pursuant to Section 8.2 shall be
net of any income tax benefits inuring to the Purchaser Indemnitees as a
result of the state of facts which entitled the Purchaser Indemnitees to
recover from Seller pursuant to Section 8.2.
(e) this paragraph 8.3 shall not apply to and does not limit
Seller's representations and warranties regarding corporate power and
authority to enter into and fully perform this agreement.
(f) this paragraph 8.3 shall not apply to Seller's obligations
pursuant to Section 2.2 and 9.1 of this agreement and there shall be no
limitation as to Seller's obligation to indemnify Purchaser with regard
to all liabilities, if any, that may arise pursuant to 2.2 of this
Agreement.
8.4 Limited Recourse. Notwithstanding any provision to the contrary
contained in this Agreement, Purchaser's sole recourse with respect to Seller's
obligations under this Article VIII (including any judgment with respect
thereto) shall be against the Shares, and Purchaser shall no recourse with
respect to such obligations against any other assets of Seller or any assets of
any other person or entity. Seller shall continue to hold the Shares until the
later of (i) April 30, 1999 or (ii) the date that all timely claims by Purchaser
for indemnification hereunder have been finally determined and satisfied.
8.5 Purchaser's Indemnification Covenants. Purchaser shall indemnify,
save and keep harmless Seller and its successors and permitted assigns against
and from all Damages sustained or incurred by any of them resulting from or
arising out of or by virtue of:
(a) any inaccuracy in or breach of any representation and
warranty made by Purchaser in this Agreement or in any closing document
delivered to Seller in connection with this Agreement;
(b) any breach by Purchaser of, or failure by Purchaser to
comply with, any of its covenants or obligations under this Agreement
(including its obligations under this Article VIII); or
(c) Purchaser's failure to pay, discharge and perform any of
the Assumed Liabilities.
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8.6 Indemnification Exclusive Remedy. Indemnification pursuant to the
provisions of this Article VIII shall be the exclusive remedy of the parties for
any misrepresentation or breach of any warranty or covenant contained herein or
in any closing document executed and delivered pursuant to the provisions hereof
with respect to any matter which is the subject of this Article VIII. Without
limiting the generality of the preceding sentence, no legal action sounding in
tort or strict liability may be maintained by any party.
ARTICLE IX.
Miscellaneous
9.1 Sales and Transfer Taxes. Seller shall pay all sales, use,
transfer and conveyance taxes arising in connection with the sale and transfer
of the Purchased Assets to Purchaser pursuant to this Agreement.; provided,
however, that Purchaser shall pay all such taxes to the extent (and only to the
extent) that the resale certificate provided by it is inadequate.
9.2 Notices. All notices required or permitted to be given hereunder
shall be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three (3) business days after being deposited in the
United States mail, postage prepaid, registered or certified mail. Notices
delivered by hand by facsimile, or by nationally recognized private carrier
shall be deemed given on the first business day following receipt; provided,
however, that a notice delivered by facsimile shall only be effective if such
notice is also delivered by hand, or deposited in the United States mail,
postage prepaid, registered or certified mail, on or before two (2) business
days after its delivery by facsimile. All notices shall be addressed as follows:
If to Seller
Addressed to
Hariston Corporation
0000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, X.X. X0X 0X0
Attention: L. Xxxxx Xxxxxx, Chief Financial Officer
Telecopier: (000) 000-0000
with a copy to
Altheimer & Xxxx
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxx, Esq. and Xxxxxxx Xxxx, Esq.
Telecopier: (000) 000-0000
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If to Purchaser or Parent,
Addressed to
Arch Publishers Group, Inc.
000 Xxx Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx, President
Telecopier: (000) 000-0000
with a copy to
Xxxxxxx X. Xxxxx & Associates, P.C.
0000 Xxxxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopier: 000-000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 9.2.
9.3 Expenses. Subject to Article VIII, each party hereto shall bear
all fees and expenses incurred by such party in connection with, relating to or
arising out of the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including attorneys',
accountants' and other professional fees and expenses.
9.4 Entire Agreement. This Agreement and the instruments to be
delivered by the parties pursuant hereto constitute the entire agreement between
the parties. Each exhibit, schedule and the Disclosure Schedule shall be
considered incorporated into this Agreement. Any matter which is disclosed in
any portion of the Disclosure Schedule is deemed to have been disclosed for the
purposes of all relevant provisions of this Agreement. The inclusion of any item
in the Disclosure Schedule is not evidence of the materiality of such item for
the purposes of this Agreement and Seller's Ancillary Documents. The parties
make no representations or warranties to each other, except as contained in this
Agreement. Purchaser acknowledges that it has conducted an independent
investigation of the financial condition, assets, liabilities, properties and
projected operations of the Business in making its determination as to the
propriety of the transactions contemplated by this Agreement, and in entering
into this Agreement has relied solely on the results of said investigation and
on the representations and warranties of Seller expressly contained in this
Agreement.
9.5 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
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9.6 Applicable Law. This Agreement shall be governed and controlled as
to validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York applicable to contracts
made in that State.
9.7 Binding Effect; Benefit. This Agreement shall inure to the benefit
of and be binding upon the parties hereto, and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any person or entity other than the parties hereto, and their respective
successors and permitted assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, including third party
beneficiary rights.
9.8 Assignability. This Agreement shall not be assignable by either
party without the prior written consent of the other party.
9.9 Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.
9.10 Headings. The headings contained in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
9.11 Construction. As used herein, (i) "including" and "include" means
including without limitation, and (ii) "hereof", "herein" and "hereunder" each
refer to this Agreement, not just to the section or provision in which such term
appears.
[Remainder of page intentionally blank]
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IN WITNESS WHEREOF, the parties have executed this Asset Purchase
Agreement as of the date first above written.
SELLER:
EDUCORP DIRECT, INC.
By: /s/ L. XXXXX XXXXXX
-------------------------------------
Its: Secretary, Chief Financial Officer
-----------------------------------
PURCHASER:
EDUCORP, L.L.C.
By: /s/ XXXXXX XXXXXXXXX
-------------------------------------
Xxxxxx Xxxxxxxxx
Its: Manager
PARENT:
ARCH PUBLISHERS GROUP, INC.
By: /s/ XXXXXX XXXXXXXXX
-------------------------------------
Xxxxxx Xxxxxxxxx
Its: President
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EXHIBIT A
1. Certificate of Incorporation. The Certificate of Incorporation of Parent
shall be amended by adding a new Article SEVENTH as follows:'
"The Corporation shall not issue any shares of its capital stock (or any
options, warrants or other rights directly or indirectly to acquire such
shares) ("Offered Securities") unless it first offers in writing to each
of the then stockholders of the Corporation the right to buy a pro-rata
portion (based on such stockholder's percentage ownership of the common
stock of the Corporation) of the Offered Securities at a specified cash
price. Each stockholder may elect (by written notice to the Corporation
and the other stockholder(s) within thirty days after receipt of such
offer) to accept such offer as to some or all of the Offered Securities.
To the extent that the stockholders do not so elect to accept such offer
within such 30 day period, then the Corporation shall have the right (but
not the obligation) to sell the Offered Securities during the six month
period following the expiration of said 30 day period at a cash price
that is no lower than that specified in the offer notice. After the
expiration of said six month period, any subsequent offering by the
Corporation must comply with the above pre-emptive rights provisions.
Notwithstanding the foregoing, this Article SEVENTH does not apply to:
(i) to the issuance of 3.5294 shares to Educorp Direct, Inc. on or about
December 19, 1997; (ii) a public offering; or (iii) any offering after
the Corporation becomes a public company. The Corporation shall not
authorize or permit the issuance or transfer to any person or entity
(except itself) of any shares of capital stock or other ownership
interests (or options, warrants or other rights to acquire same) in any
of its direct or indirect subsidiaries (including without limitation
Educorp LLC), unless it has first offered such stock or ownership
interests to the stockholders of the Corporation in a similar manner as
set forth above and designated in this Article as preemptive rights. This
Article SEVENTH shall not be amended without the consent of holders of
ninety-five percent (95%) of the issued and outstanding share of each
class of capital stock of the Corporation."
2. By-Laws: The By-Laws of Parent shall be amended (if they have not already
been so amended) as follows:
(a) amend Article III, Section 1 to permit directors to be designees
of shareholders;
(b) amend Article III, Section 2 in its entirety, so that it reads
"The number of directors shall be four."; and
(c) add a new Article XII, entitled as follows:
"ARTICLE XII - INDEMNIFICATION
"The corporation shall indemnify each of its directors to the
maximum extent permitted under applicable law with respect to any
and all claims, actions, lawsuits, damages, expenses (including
reasonably attorney's fees) and liabilities in connection with his
actions or omissions as a director (a "Claim"). In addition, the
corporation shall advance to such director the expenses (including
reasonable attorney's fees) of defending against any and all such
Claims to the maximum extent and at the earliest time permitted
under applicable law.
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This provision shall be directly enforceable by the directors of
the Corporation as a contract right."
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