EXHIBIT 10.1
EXECUTION COPY
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SKYE MULTIMEDIA, INC.
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SELLER
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To
SKYE ACQUISITION COMPANY, INC.
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PURCHASER
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ASSET PURCHASE AGREEMENT
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Assets of
Skye Multimedia, Inc.
0000 Xxxxx 00 Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
AGREEMENT
Agreement made this 14th day of February, 2006, by and between Skye
Multimedia, Inc., (hereinafter referred to as "Seller"), having an address and
principal place of business at 0000 Xxxxx 00 Xxxx, Xxxxx 000, Xxxxxxxxxxx, Xxx
Xxxxxx 00000 (the "Business Space"), and Skye Acquisition Company, Inc., a New
Jersey Corporation, (hereinafter referred to as "Purchaser") having an address
of 00 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxx Xxxx 00000.
WITNESSETH
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
certain assets of Seller, including the assets more particularly described
herein, all upon the terms and subject to the conditions herein set forth:
NOW, THEREFORE, on the basis of the representations, and agreements
contained herein, it is hereby agreed as follows:
1. DEFINITIONS. As used herein the following terms shall, unless the
context clearly indicates otherwise, have the following meanings:
(a) "ASSUMED CONTRACTS" shall mean the Business Space Lease, Sales
Contracts, Purchase Orders and such other contracts and agreements listed on
Exhibit A hereto.
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(b) "ASSUMED LIABILITIES" shall mean all obligations and liabilities of
Seller pursuant to the terms of any Assumed Contract and the accounts payable
listed on Exhibit B.
(c) "ACQUIRED ASSETS" shall mean all of the assets of Seller as of the
Purchase Date, which include, without limitation, the following, other than the
Excluded Assets:
(i) all office equipment, computer equipment, signage,
supplies and furniture and fixtures;
(ii) all accounts receivable, the "Purchased Receivables",
shall include, but not be limited to all work in progress or completed by Seller
but not yet billed to the customer;
(iii) to the extent transferable, all intellectual property
and related assets, including, without limitation, software owned or licensed,
programs, domain names, trademarks, trade names, including its corporate name,
manuals, product brochures, business methods and business procedures,
inventions, patent applications, patents, trademark registrations and
applications, copyrights, know-how, formulae and trade secrets;
(iv) customer and supplier lists, including contact
information for all consultants used in the last two years;
(v) all of Seller's rights under the "Assumed Contracts", as
defined herein, including all contracts wherein Seller has agreed to provide
services or goods to any third party or under which any third party provides
products or services to Seller, including the
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leases of equipment and offices in Bridgewater, New Jersey, all described in
Exhibit A, but no other leases;
(vi) all deposits or other cash received by Seller in
connection with the "Assumed Contracts", and;
(vii) all of the machinery, equipment, furniture, fixtures and
improvements, spare parts, supplies and motor vehicles used by the Seller in
connection with the operation of its business and located on the Business Space
or elsewhere on the Purchase Date and all of the replacement parts for any of
the foregoing, in which the Seller has on the Purchase Date any right, title or
interest, together with any rights of the Seller to the warranties and licenses,
if any, received from manufacturers and sellers of the aforesaid items and any
related claims, credits and rights of recovery with respect to such machinery
and equipment; and,
(viii) all cash, including deposits, advances or other cash
received in connection with work not yet completed under the Assumed Contracts.
(d) "Capital" shall consist of any funds advanced by Purchaser's
parent, SmartPros Ltd., ("Purchaser's parent"), for the Initial Purchase Price
and for future working capital and asset requirements, in each case, without the
charging of interest. Such advances will be reflected on Purchaser's financial
statements as either capital, loans, or advances, or a combination thereof.
Capital may increase or decrease over the life of the Earnout Period
(e) "CLOSING DATE" OR "CLOSING" shall mean 10:00 A.M. Eastern Standard
Time on February 28, 2006.
(f) "INVENTORY" shall mean all of the raw materials, work-in-process
and
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finished goods and other inventory and all other supplies used in the operation
of its business in which the Seller shall have any right, title and interest on
the Purchase Date (a list of which has previously been provided by Seller to
Purchaser), together will any rights of the Seller to the warranties received
from its suppliers with respect to such inventory and any related claims,
credits, rights of recovery and set-off with respect thereto.
(g) "EMPLOYMENT AGREEMENT" shall mean the Employment Agreement to be
entered into between Xxxx Xxxxxxx and Purchaser, in substantially the form
attached hereto as Exhibit C.
(h) "EXCLUDED ASSETS" shall mean:
(i) any books and records that Seller is required to retain
pursuant to any statute, rule, regulation or ordinance, or which do not
relate to the Purchased Assets;
(ii) all payments and consideration to be received by Seller
from Purchaser, and all rights and remedies of Seller, under this
Agreement or any agreement, instrument or other document delivered by
or on behalf of any Purchaser pursuant hereto;
(iii) Seller's corporate franchise (other than the name "Skye
Multimedia"), stock record books, corporate minute books, books of
account and ledgers, and such other records having to do with Seller's
organization or stock capitalization, and the assets set forth in
Exhibit D.
(i) "PURCHASE DATE" shall mean February 28, 2006.
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(j) "SALES CONTRACTS" shall mean those unfilled sales contracts,
customer orders and commitments between Seller and its customers listed in
Exhibit E annexed hereto.
(k) "EBIT" shall mean Earnings Before Interest, Taxes,
(l) "BALANCE SHEET" The balance sheet of Seller, as included in Exhibit
H hereto, shall mean the balance sheet of Seller at December 31, 2005.
2. PURCHASE AND SALE OF THE ACQUIRED ASSETS.
(a) PURCHASE. Subject to the terms and conditions herein set forth, on
the Closing Date, Seller shall sell and Purchaser shall purchase all of the
Acquired Assets as of the Purchase Date, free and clear of all mortgages, liens,
charges, encumbrances or defects of any nature whatsoever.
(b) SALE AT CLOSING DATE. The sale, transfer, assignment and delivery
by Seller of the Acquired Assets to Purchaser, as herein provided, shall be
effected on the Closing Date by full warranty deeds, bills of sale,
endorsements, assignments and such other instruments of transfer and conveyance
satisfactory in form and substance to counsel for Purchaser.
(c) SUBSEQUENT DOCUMENTATION. Seller shall, at any time and from time
to time after the Closing date, upon the request of Purchaser and at the expense
of Seller, execute, acknowledge and deliver or will cause to be done, executed,
acknowledged and delivered all such further acts, deeds, assignments, transfers,
conveyances and assurances as may be reasonably required for the better
assigning, transferring, granting, conveying, assuring and confirming to
Purchaser, or to its successors and assigns, or for aiding and
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assisting in collecting and reducing to possession any or all of the Acquired
Assets to be purchased by Purchaser as provided herein.
(d) ASSIGNMENT OF CONTRACTS. On the Closing Date, Seller shall assign
to Purchaser, and Purchaser shall assume, as of the Purchase Date all of the
Assumed Liabilities by means of an Assignment and Assumption Agreement in the
form of Exhibit F annexed hereto and made a part hereof or such other
instruments of assignment upon which the parties agree. To the extent that the
assignment of any Assumed Contract shall require the consent of the other party
thereto, this Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof. Seller will use
reasonable commercial efforts to obtain the consent of the other parties to such
contracts for the assignment thereof to Purchaser. If such consent is not
obtained in respect of any such Assumed Contract, Seller will cooperate with
Purchaser in any reasonable arrangement requested by Purchaser to provide for
Purchaser the benefits under any such Assumed Contract, including enforcement at
the cost of and for the benefit of Purchaser, of any and all rights of Seller
against the other party thereto with respect to such Assumed Contract.
(e) ASSUMPTION OF LIABILITIES. At the Closing Purchaser shall assume,
and agree to pay, perform or discharge, all obligations and liabilities of
Seller under the Assumed Contracts.
(f) COLLECTION OF RECEIVABLES. Subject to Paragraph 6(a) Seller agrees
that, from and after the Closing Date, Purchaser shall have the right and
authority to collect, for the account of Purchaser, all Purchased Receivables
and other items which shall be transferred to Purchaser as provided herein, and
to endorse with the name of Seller any
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checks received on account of any such Purchased Receivables or other items.
Seller agrees that it will transfer and deliver to Purchaser or its designee any
cash or other property that Seller may receive in respect of such Purchased
Receivables or other items. A list of all receivables of Seller as of the date
hereof, which shall be updated at the time of Closing Date shall be broken down
by name of customer, date incurred and amount is contained in Exhibit G attached
hereto. All payments made by a customer of the Seller's business or the Business
Unit (as defined below) shall be applied first to any Purchased Receivable(s)
outstanding of such customer, on the basis of older Purchased Receivables to
newer Purchased Receivables, unless the customer directs payment to be applied
in a particular manner arising out of a bona fide dispute concerning such
Purchased Receivables.
Further, at Closing, Seller and its principal, Xxxx Xxxxxxx,
individually, shall guarantee to Purchaser the collection of all Purchased
Receivables. Should Purchaser not collect the full amount of Purchased
Receivables transferred to Purchaser, Purchaser shall be entitled to a credit in
the amount of the deficit of receivables actually collected against the
guarantee set forth above, in which case, said uncollected Purchased Receivable
shall be assigned to Seller. The collection by Seller or Xxxx Xxxxxxx of any
such assigned Purchased Receivable shall not violate the non-competition or
non-solicitation provisions of this Agreement or the Employment Agreement,
notwithstanding anything herein or therein to the contrary. If a dispute arises
in the collection of such Purchased Receivables, Purchaser agrees to make
reasonable efforts to cooperate and assist in the collection of such Purchased
Receivables, which efforts shall be subject to Purchaser's relationship with the
account, if any. Such credit shall be used to reduce the payments
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due to Seller under Paragraph 4 herein providing for the "Additional Earnout
Payment". Should Seller not be entitled to an Additional Earnout Payment as
provided for in Paragraph 4, then and in that event, Seller and its principals
shall be obligated to remit said amounts due for such uncollectible Purchased
Receivables to Purchaser. Notwithstanding the aforesaid, if a Purchased
Receivable is uncollected as a result of the conduct of Purchaser occurring
after the Closing Date, and not attributable to either work performed by Seller
prior to the Closing Date or the conduct of Seller, or its former employees
subsequently employed by Purchaser, after the closing date, then and in that
event, Purchaser shall not receive a credit for the amount of the uncollected
Purchased Receivable against the Earnout Payment as provided herein nor shall
the guarantee of Seller and Xxxx Xxxxxxx apply to that uncollected Purchased
Receivable.
(g) CONDUCT OF BUSINESS. All operations of Seller between the Purchase
Date and the Closing Date shall be conducted in the ordinary course of business
consistent with prior business practice of Seller for the account and benefit,
and the expense, of the Purchaser as if this Agreement had been consummated on
the Purchase Date, provided that if for any reason the Closing shall not occur
hereunder, Purchaser shall have no rights or liabilities with respect to such
operations and in such event the business of Seller from and after the Purchase
Date shall be conducted at the expense and for the account and benefit of
Seller. For purposes of the foregoing sentence, all income received or
receivable from and after the Purchase Date, and all expenses incurred, accrued
or paid in the ordinary course of business from and after the Purchase Date
shall, as to such income, be the property of, and as to such expenses, be the
obligations of, Purchaser if the Closing hereunder shall occur or of Seller if
the Closing hereunder shall not occur. Seller has
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not taken from and after the Purchase Date, and shall not take from and after
the date hereof through the Closing Date, any action in connection with the
conduct of the business of Seller other than in the ordinary course of business
without the written consent of Purchaser, and, except as approved by Purchaser,
has not from and after the Purchase Date sold, leased, disposed of or encumbered
or entered into any commitment to sell, lease, dispose of or encumber and shall
not from and after the date hereof through the Closing Date, sell, lease,
dispose of or encumber, any item of the Acquired Assets, except items sold only
in the ordinary course of business.
3. INITIAL PURCHASE PRICE. At Closing, as partial payment for the
transfer of the Acquired Assets by Seller, Purchaser shall pay to Seller as an
initial purchase price the sum of Five Hundred Twenty Thousand Dollars and no
cents, ($520,000.00), in immediately available funds by wire transfer to an
account designated by Seller prior to Closing, provided, however, that the
preceding Initial Purchase Price shall be adjusted, on a dollar for dollar
basis, on the Closing Date, in the event that the total sum of the Acquired
Assets less the total sum of Assumed Liabilities on the Closing Date is not
within Ten Thousand Dollars ($10,000.00) of the same calculation as of December
31, 2005. In the event that the Purchase Price is adjusted below $500,000.00 or
above $540,000.00, either party may terminate this Agreement and this Agreement
shall be null and void.
4. ADDITIONAL EARNOUT PAYMENT. In addition to the Initial Purchase
Price in Paragraph 3 above, Purchaser shall pay to Seller, within 90 days of
December 31, 2008, an Additional Earnout Payment. The Additional Earnout Payment
shall be calculated as follows:
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o The total EBIT for the 34 month period beginning March 1, 2006 and
ending December 31, 2008, shall be divided by 34, which sum shall then be
multiplied by 36, which sum shall be reduced by a 5% annualized return on
Capital for the amount of time during the 34 month period such Capital is
invested in Purchaser.. In regard to this calculation all work performed by
Purchaser's parent, or any subsidiary or division of such parent for the
Business Unit or by the Business Unit for Purchaser's parent or any subsidiary
or division shall be performed at cost. Where costs are not directly borne by
the Business Unit, such costs shall be allocated by Purchaser's parent among the
Business Unit, Purchaser's parent and any of its other subsidiaries or divisions
based upon the total amounts expended for such services and how such services
are allocated and utilized by the Business Unit, Purchaser's parent and its
other subsidiaries and or divisions. Such costs shall include, but not be
limited to, insurance, accounting, marketing, computer services, legal and
professional services. Business Unit will have the choice to use services other
than those allocated services where such services are available at a lower cost.
Any salary increases or bonuses not approved by Xxxx Xxxxxxx and provided to the
employees of Business Unit will be in line with standard practices of Purchaser
with its other employees and business units.
In no event, however, shall the Additional Earnout Payment exceed One
Million Four Hundred Thousand Dollars ($1,400,000.00), with Purchaser to receive
a credit against said Earnout Payment of the sum of $200,000.00, plus the amount
of any uncollected Purchased Receivables, in accordance with Paragraph 2 (f)
above The aforesaid Additional Earnout Payment calculation, less the $200,000.00
credit, shall not be less than zero, i.e. Seller shall not be obligated to remit
said amount back to Purchaser.
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The only circumstance wherein Seller would be obligated to remit monies back to
Purchaser is in the event that uncollected Purchased Receivables, exceed
Seller's Additional Earnout Payment, as calculated above, if any. In such event,
Seller shall be obligated to remit the difference between the uncollected
Purchased Receivable and the Additional Earnout Payment as calculated above.
Legal or accounting fees or expenses arising out of the preparation of this
Agreement or the Employment Agreement will not be included in the calculation of
the Earnout.
5. TERMS OF ADDITIONAL EARNOUT PAYMENT. The Additional Earnout
Payment described above in paragraph 4 shall be made from Purchaser to Seller as
follows:
(i) At least 50% of the Additional Earnout Payment shall be in
cash or cash equivalent, and;
(ii) The amount of the Additional Earnout Payment remaining
after payment is made
pursuant to (i) above, may be paid in the form of SmartPros Ltd. common stock or
cash, at Purchaser's sole option, provided that the common stock of SmartPros
Ltd. is listed on the New York Stock Exchange (or its successor), the American
Stock Exchange or the Nasdaq National Market, and Purchaser has timely filed all
periodic reports required to be filed under the Securities Exchange Act of 1934,
amended (the "EXCHANGE ACT"), for the two consecutive years immediately prior to
issuance of the stock pursuant to this Paragraph.
(iii) Any payment given by Purchaser in the form of .
SmartPros Ltd. common stock, as set forth in subparagraph 6(ii), shall be valued
at the average market
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closing price of SmartPros Ltd. common stock for the twenty business days after
December 31, 2008.
6. OPERATION OF THE BUSINESS UNIT: AUDIT AND INSPECTION RIGHTS.
(a) Purchaser shall continue the operation of Seller's business in, a
separate division or subsidiary (the "Business Unit") of Purchaser's parent, as
hereinbefore defined. The Business Unit shall account for its revenues, expenses
and operations separately and apart from Purchaser's parent and other
subsidiaries or divisions of Purchaser's parent, and in a manner consistent with
GAAP. At the request of the Business Unit, Purchaser's parent agrees to use
reasonable commercial efforts to provide marketing and administrative support to
the Business Unit which costs shall be allocated by the Purchaser's parent among
the Business Unit, Purchaser's parent and any of its other subsidiaries or
divisions, based upon the total amounts expended for such services and how such
services are allocated and utilized by the Business Unit, Purchaser's parent and
its other subsidiaries and or divisions.
(b) Within forty-five (45) days following the end of each calendar
quarter, Purchaser shall provide Seller with a statement of the Assumed EBIT for
the Business Unit for the preceding quarter. Seller shall be entitled to a
reasonable inspection of the books and records of the Business Unit pertaining
to the calculation of the Assumed EBIT and the Additional Earnout Payment upon
prior reasonable notice to Purchaser.
(c) Seller shall have 30 days after the payment of the Additional
Earnout Payment to notify Purchaser that Seller disagrees with the determination
of the amount of the Additional Earnout Payment and objects to the calculation
of the additional
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consideration set forth therein by giving Purchaser written notice of any such
disagreement and objection (the "Disapproval Notice") within such time frame. If
a Disapproval Notice is not timely given, such Additional Earnout Payment shall
be deemed final, conclusive and binding and not subject to further objection or
review by Seller. If the Disapproval Notice is given by seller, such notice
shall state with specificity the particular items with which Seller does not
agree and contain reasonable supporting materials therefore. Purchaser and
Seller agree to endeavor in good faith to resolve any disputes in the
determination of the Additional Earnout Payment. In the absence of a resolution
of the disputed items within 10 business days after Purchaser's receipt of the
Disapproval Notice and if the parties are unable to agree upon an Independent
CPA (as defined below), Seller and Purchaser each shall promptly select an
independent certified public accountant from a nationally recognized public
accounting firm, excluding any accounting firm that has a significant
relationship with Seller, Purchaser or their respective Affiliates, (the
"Independent CPA" and such Independent CPA's shall select a third Independent
CPA within 10 business days. The third Independent CPA shall act as an
arbitrator and decide upon the disputed items within 30 days after such
appointment. The decision of such Independent CPA as to the disputed items shall
be final, conclusive and binding upon Purchaser and Seller. If, as a result of
the decision of such Independent CPA, the Additional Earnout Payment is adjusted
upward by more than $50,000, the fees and expenses of all of the Independent
CPAs shall be borne by Purchaser;, otherwise the fees and expenses of all of the
Independent CPAs and all costs incurred by Purchaser with regard to the
Disapproval Notice shall be borne by Seller.
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7. ADJUSTMENTS AT CLOSING. Adjustments shall be made as of the Closing
Date for all operating expenses including rents, insurance premiums, taxes,
fuel, utilities and prepaid utility charges, water, electric, and advertising,
if any. The annual contracts for service contracts, phone directory and the like
shall be prorated.
8. TIME OF CLOSING. The closing shall take place at the Office of
Purchaser's attorneys, Xxxxx & Van Xxxxx, 00 Xxxxx Xxxx Xxxxxx, Xxxxxxxxx, Xxx
Xxxxxx 00000, on February 28, 2006, at 10:00 A.M, or such later date as the
parties may mutually agree in writing. Upon payment of the portion of the
purchase price then due to Seller as well as the execution of any and all
related documents, Seller shall deliver to Purchaser such instruments of
transfer as are necessary to transfer to Purchaser the Acquired Assets and
property referred to in Paragraph 1(b). Such instruments of transfer shall
effectively transfer to Purchaser full title to the assets and property referred
to in Paragraph 1(b).
9. COVENANT NOT TO COMPETE. Skye Multimedia, Inc., Seller, and any and
all of its subsidiaries, affiliates, parents, as well as its shareholders,
directors and officers, for a period of two (2) years from the Closing Date,
shall not directly or indirectly, engage in competition with Purchaser or its
parent, subsidiaries or affiliated companies or own or control any interest in,
or act as director, officer or employee of, or consultant to, any firm,
corporation or institution directly engaged in competition with Purchaser or its
parent, subsidiaries or affiliated companies; provided that the Purchaser or any
parent, subsidiaries or affiliated companies is actively engaged in such
business on the Closing Date; and provided that the foregoing shall not prevent
such persons set forth above from holding shares as a passive investor in a
publicly held company which do not constitute more than 5% of the outstanding
shares of such company. In the event that
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any of such persons set forth above shall become employed by Purchaser or any
parent, subsidiaries or affiliated companies after the Closing Date, then and in
that event, he or she shall agree to the non-competition provisions set forth
above for a two (2) year period from the date such employment is terminated.
Engaging in Competition with the Purchaser or its parent, subsidiaries or
affiliated companies shall be defined as either (a) providing, or working for an
entity that provides, educational learning thru any type of media for sale to
other clients but not for its own internal use or (b) working for a customer of
the Purchaser or its parent or other subsidiaries of parent and providing
educational learning services for their internal use causing the customer to
reduce the business they do with Purchaser or its parent or other subsidiaries
of parent, provided that the customer did at least $50,000 worth of such
business with the Purchaser or its parent or other subsidiaries of parent, in
either of the last 2 years. Seller acknowledges and agrees that this Covenant
Not to Compete is commercially reasonable in scope, limit, and duration and,
therefore, is acknowledged by Seller as fully enforceable and not
unconscionable.
10. CREDITORS. If not contained herein, Seller agrees to furnish
Purchaser a list of Seller's existing creditors, containing the names and
business addresses of all such creditors, with the amounts owed to each and also
the names and addresses of all persons who are known to Seller to assert claims
against Seller, whether disputed or not. Such list shall be signed and sworn to
or affirmed by Seller or his agent and shall be delivered to Purchaser at least
15 days before the date scheduled for closing. Purchaser covenants that he will
preserve the list and schedule for a period of six months following the date of
closing and shall permit inspection of either or both and copying thereof at all
reasonable
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hours by any creditor of Seller; or in the alternative shall file such list and
schedule in the office of the Secretary of State of New Jersey within 15 days
after the date of closing.
11. NOTICE TO CREDITORS. Purchaser further covenants that he will give
such notice to the Creditors of Seller as required by and in the form and manner
and within the time provided by New Jersey law.
12. ASSIGNMENT OF THIS AGREEMENT. This Agreement may not be assigned by
Purchaser without the prior written consent of Seller, which may be given or
denied at Seller's sole discretion. Any attempted assignment in violation of
this Paragraph 12 shall be void.
13. REMEDIES FOR DEFAULT. Both Seller and Purchaser shall have such
remedies as are provided in law and equity for breach of this Agreement by the
other party.
14. REPRESENTATIONS OF SELLER. Seller represents and warrants that
Seller at the date hereof and at the Closing:
(a) Seller has operated its business in all material respects in
accordance with all laws, ordinances, and rules relating to the business, that
it has received no notice of any material violation of any of the foregoing, and
that it has duly authorized the transactions contemplated by this Agreement, and
that this Agreement is enforceable and binding upon it.
(b) There are no proceedings, judgments or liens now pending or, to
Seller's knowledge, threatened against Seller or against its business.
(c) It will, up to the date of closing, operate its business in the
usual
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and ordinary manner and will not enter into any contract except as may be
required in the regular course of business.
(d) It will duly comply with the provisions of the New Jersey
Uniform Commercial Code dealing with bulk transfers, if applicable.
(e) It has not used any other business name within the past three
years.
(f) It has not entered into any Collective Bargaining Agreements.
(g) There are no executory contracts and no contracts that are not
terminable at will that Seller is a party to except as reflected in Exhibit A.
(h) All fixtures and equipment included in the sale will be in
working order as of the Closing Date. This representation shall not survive the
Closing.
(i) It retains exclusive obligation and liability for all sales and
employment taxes for the business up to the Closing Date.
(j) It has filed all required Federal, State and local tax returns
and that there is no material liability for past taxes.
(k) On the Closing Date there will not be any benefits due and
owing to any employees of Seller. All vacation pay accrued by employees through
the Closing Date will be paid by Seller or credited to Purchaser at closing.
(l) It is duly qualified and licensed to carry on the business now
owned and conducted and has obtained all necessary licenses and permits, which
will be available to Purchaser upon the consummation of the transaction.
(m) Except as set forth on Schedule 14(l), it is the owner of and
has good and marketable title to the Acquired Assets to be sold free of all
restrictions on transfer or assignment and of all liens or encumbrances unless
otherwise set forth in this Agreement.
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(n) It has not dealt with any broker with regard to this Agreement.
It agrees to indemnify Purchaser against and from any and all costs or expenses
(including reasonable attorney's fees) incurred as a result of any claims raised
by or damages awarded to any broker, by reason of acts arising out of or in
connection with this transaction.
(o) There are no violations of any law or governmental rule or
regulation pending or threatened and Seller will be responsible for any such
violations threatened or filed before closing. This representation shall survive
the closing.
(p) At the close of the business day before Closing, the premises
shall be in such sanitary condition as if Seller would be opening for business
the following morning.
(q) It has delivered to Purchaser unaudited financial statements
for the year ended December 31, 2004 and the year ended December 31, 2005, which
fairly present the results of operation of its business and the financial
position of Seller at and for the periods therein presented.
15. REPRESENTATIONS OF PURCHASER. Purchaser represents and warrants
that at the date hereof and at the Closing Date:
(a) It has the funds or committed financial resources necessary to
consummate the transaction contemplated by this Agreement.
(b) There is no material litigation, judgments, or insolvency
proceedings pending or, to the Purchaser's knowledge, threatened against
Purchaser which would impair Purchaser's right to purchase the subject assets,
or which would have a material adverse effect upon Purchaser or its business
(c) They will duly comply with the provisions of New Jersey
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law dealing with bulk transfers, if applicable, and will pay the Bulk Sales tax
due, if any, at the time of closing as well as any additional amounts billed by
the State of New York in connection with the purchase of assets as provided for
herein.
(d) It has adequate opportunity to observe and monitor Seller's
business prior to execution of this Agreement, and Purchaser represents and
acknowledges that no representations of any kind have been made to Purchaser or
their representative other than as set forth in this Agreement.
(e) Purchaser has examined the Acquired Assets agreed to be sold
and is familiar with the physical condition thereof. Seller has not made and
does not make any representations as to the physical condition thereof, except
as herein specifically set forth, and Purchaser expressly acknowledges that no
such representations have been made, other than that same shall be in working
order, and Purchaser further acknowledges that they have inspected the fixtures
and equipment, and agree to take the fixtures and equipment "AS IS".
(f) Purchaser has not dealt with any broker with regard to this
Agreement and Purchaser agrees to indemnify Seller against and from any and all
costs or expenses (including reasonable attorney's fees) incurred as a result of
any claims raised by or damages awarded to any broker, by reason of acts arising
out of or in connection with this transaction.
(g) Purchaser has operated its business in all material respects in
accordance with all laws, ordinances, and rules relating to the business, that
it has received no notice of any material violation of any of the foregoing,
that it has duly authorized the
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transactions contemplated by this Agreement, and that this Agreement is
enforceable and binding upon it.
(h) There are no material proceedings, judgments or liens now
pending, or, to Purchaser's knowledge, threatened against Purchaser or against
its business.
16. MUTUAL CONDITIONS. The obligations of each party at Closing shall
be subject to:
(a) The receipt of all third party consents required to transfer
assets, assign leases or otherwise consummate the transactions.
(b) The performance by the other party of all obligations to be
performed at or prior to Closing.
17. INDEMNIFICATIONS.
(a) Seller and Xxxx Xxxxxxx individually, will indemnify and hold
Purchaser harmless with respect to any and all sales, payroll, income or any
other taxes that were incurred, or that may be due and owing to the Federal or
State taxing authorities, arising out of the operation of Seller.
(b) Further, and except as otherwise set forth herein, Purchaser
shall not be liable for any obligations or liabilities of Seller of any kind and
nature, or any claims against Seller of any kind and nature. Seller and Xxxx
Xxxxxxx agree to indemnify and hold Purchaser and its parent harmless from and
of any payment of any obligation, liability, loss, damage, claim, assessment,
cost and expense of any kind, including reasonable attorneys fees ("Damages"),
incurred, suffered, sustained or required to be paid to any extent, resulting
from any breach of covenants, agreements, representations
21
and warranties made by Seller in or pursuant to this Agreement; or pertaining to
any obligation or liability of Seller of any kind and nature not assumed by
Purchaser in accordance with the terms of this Agreement. The aforesaid
indemnification shall be remain in full force and effect for a period commencing
on the Closing Date and ending on the third anniversary of the Closing Date and
shall be limited to the amount of Two Hundred Thousand ($200,000) Dollars, in
the aggregate.
Likewise, and except as otherwise set forth herein, Seller shall
not be liable for any obligations or liabilities of Purchaser of any kind and
nature, or any claims against Purchaser of any kind and nature. Purchaser agrees
to indemnify and hold Seller and Xxxx Xxxxxxx harmless from and of any payment
of any "Damages" , incurred, suffered, sustained or required to be paid to any
extent, resulting from any breach of covenants, agreements, representations and
warranties made by Purchaser in or pursuant to this Agreement; or pertaining to
any obligation or liability of Purchaser of any kind and nature in accordance
with the terms of this Agreement, including the liabilities of Seller assumed
hereunder.
(c) PROCEDURES FOR THIRD PARTY CLAIMS: In the case of any claim for
indemnification arising from a claim of a third party (a "Third Party Claim"),
an Indemnified Party shall give prompt written notice to the Indemnifying Party
of any claim or demand which such Indemnified Party has knowledge and as to
which it may request indemnification hereunder. The Indemnifying Party shall
have the right to defend and to direct the defense against any such Third Party
Claim, in its name or in the name of the Indemnified Party, as the case may be,
at the expense of the Indemnifying Party, and with counsel selected by the
Indemnifying Party unless (i) such Third Party Claim
22
seeks an order, injunction or other equitable relief against the Indemnified
Party, or (ii) the Indemnified Party shall have reasonably concluded that (x)
there is a conflict of interest between the Indemnified Party and the
Indemnifying Party in the conduct of the defense of such Third Party Claim or
(y) the Indemnified Party has one or more defenses not available to the
Indemnifying Party. Notwithstanding anything in this Agreement to the contrary,
the Indemnified Party shall, at the expense of the Indemnifying Party, cooperate
with the Indemnifying Party, and keep the Indemnifying Party fully informed, in
the defense of such Third Party Claim. The Indemnified Party shall have the
right to participate in the defense of any Third Party Claim with counsel
employed at its own expense; provided, however, that, in the case of any Third
Party Claim or demand described in clause (i) or (ii) of the second preceding
sentence or as to which the Indemnifying Party shall not in fact have employed
counsel to assume the defense of such Third Party Claim, the reasonable fees and
disbursements of such counsel shall be at the expense of the Indemnifying Party.
The Indemnifying Party shall have no indemnification obligations with respect to
any such Third Party Claim or demand which shall be settled by the Indemnified
Party without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. Any settlement of any such Third
Party Claim or demand made by the Indemnifying Party shall include a complete
release and discharge of each Indemnified Party or if not so included, shall
require the prior written consent of the Indemnified Party.
(d) PROCEDURES FOR INTER-PARTY CLAIMS: In the event that an
Indemnified Party determines that it has a claim for Damages against an
Indemnifying Party hereunder (other than as a result of a Third Party Claim),
the Indemnified Party shall give prompt written notice thereof to the
Indemnifying Party, specifying the amount of such claim and any relevant facts
and circumstances relating thereto. The Indemnified Party
23
shall provide the Indemnifying Party with reasonable access to its books and
records for the purpose of allowing the Indemnifying Party a reasonable
opportunity to verify any such claim for Damages. The Indemnified Party and the
Indemnifying Party shall negotiate in good faith regarding the resolution of any
disputed claims for Damages. In the event that the Indemnified Party and the
Indemnifying Party did not resolve the dispute by negotiation and legal
proceedings are instituted seeking to recover Damages hereunder, the prevailing
party in such litigation shall be entitled to recover its cost and expenses in
connection with such proceedings (including costs of investigation and
reasonable attorneys' fees and disbursements).
(e) EXCLUSIVE REMEDY: The rights and remedies of the Purchaser and
all other Indemnified Parties under this Section 17 shall constitute the sole
and exclusive remedy of the Purchaser and any such other Indemnified Parties
arising out of, resulting from or incurred in connection with the breach by
Seller or of any covenant or agreement to be performed by it under this
Agreement or any instrument of transfer or other agreement delivered pursuant
hereto and for any inaccuracy in or breach of any representation or warranty;
provided that the limitations set forth in this Section 17 shall not apply with
respect to Damages resulting from the fraud of Seller with respect to any
Purchaser in connection with this Agreement or the transactions contemplated
hereunder.
18. PURCHASER'S OBLIGATIONS CONTINGENT. Purchaser's obligations under
this agreement shall be subject to:
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(a) review of Seller's business and prospects confirming that there
has been no material adverse changes to Seller's business or business prospects;
(b) the execution by Xxxx Xxxxxxx of the Employment Agreement;
(c) the payment by Seller of all compensation, fees, commissions,
bonuses and other amounts due to its employees for periods prior to the Closing
including the cost of any applicable employee benefit plans; for those
compensation items that are earned but not yet payable at Closing an appropriate
liability will be recorded on the balance sheet reflecting those amounts.
(d) Seller changing its corporate name to one which does not
include the words "Skye Multimedia", whether together or utilized separately;
(e) compliance with bulk sales laws or other assurance that
Purchaser has no liability for Seller's obligations other than those
specifically assumed hereunder, and;
(f) at closing, the delivery by Seller of copies of current
financial books and records.
19. SELLER'S OBLIGATIONS CONTINGENT. Seller's obligations under this
Agreement shall be subject to the execution by Purchaser of the Employment
Agreement.
20. TAXES.
(a) Seller shall be fully responsible for any Federal or State
taxes relating to any gain to be realized on the sale of its assets as provided
for herein. Purchaser shall be fully responsible for any New Jersey bulk sales
tax, which shall be paid at closing. Seller shall provide Purchaser with the
requisite information to report the Bulk Sale Transfer to the State of New
Jersey. Xxxxx & Van Xxxxx, Esqs., attorneys for Purchaser, shall hold a sum to
be determined by the State of New Jersey, Division of
25
Taxation in escrow pending Purchaser receiving clearance from the New Jersey
Division of Taxation.
(b) The Purchase Price shall be allocated as set forth on Schedule
20 hereto. Purchaser and Seller agree that such allocation will be binding on
all parties for federal income tax purposes in connection with this purchase and
sale of the Acquired Assets, and will be consistently reflected by each party on
its respective tax returns. Purchaser and Seller agree to prepare and timely
file all applicable Internal Revenue Service forms, including Form 8594 (Asset
Acquisition Statement), and other governmental forms, to cooperate with each
other in the preparation of such forms and to furnish each other with a copy of
such forms prepared in draft, within a reasonable period prior to the filing due
date thereof.
21. ASSUMPTION OF LIABILITIES. Purchaser agrees to assume the Assumed
Liabilities and liabilities incurred by Purchaser that arise in the ordinary
course of its operation of the Business Unit after the Closing. Purchaser shall
not be liable for any of the obligations or liabilities of Seller of any kind
and nature other than those specifically assumed under this Agreement.
22. CONFIDENTIALITY. Each party agrees that it shall not make any
announcement of the proposed transaction to any third party except as required
by law or upon the written consent of the other party.
23. NOTICES. All notices to be given hereunder shall be given in
writing and shall be delivered by confirmed fax, personally, by Federal Express
or other overnight courier that obtains a receipt for delivery, or by registered
or certified mail, postage
26
prepaid, as follows, or to such other address as any party hereto shall notify
the other parties hereto (as provided below) from time to time:
(a) If to Purchaser, addressed to:
Xxxxx X. Xxxxxx
Skye Acquisition Company Inc. Ltd.
00 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
With a copy to:
Xxxx X. Xxx Xxxxx III, Esq.
Xxxxx & Van Xxxxx
00 Xxxxx Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxxxx, XX 00000
(000) 000-0000 Telephone
(000) 000-0000 Fax
(b) If to Seller, addressed to:
Xxxx Xxxxxxx
Skye Multimedia, Inc.
0000 Xxxxx 00 Xxxx, Xxxxx 000
Xxxxxxxxxxx, Xxx Xxxxxx 00000
With a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Xxxxxxxxxx Xxxxxxx PC
00 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
(000) 000-0000 Telephone
(000) 000-0000 Fax
27
Whenever such notice is personally delivered or sent by such courier it shall
become effective on the date of delivery, and whenever such notice is sent by
registered or certified mail it shall be effective three (3) days after the date
it is mailed.
Notices can be sent from attorney to attorney via fax, subject to facsimile
transmittal verification.
24. SKYE EMPLOYEES. All employees of Seller that are retained by Purchaser
will be given credit for the time they have worked at Seller towards eligibility
to participate in the 401k plan and any other benefits provided to employees of
Purchaser. All such employees of Seller that are retained by Purchaser will be
required to sign a non-competition/non-solicitation agreement required of all
Purchaser's employees.
25. ADDITIONAL MISCELLANEOUS PROVISIONS. The parties further agree as
follows:
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective legal representatives, successors (by
operation of law or otherwise) and assigns, if, and as permitted herein.
(b) All understandings and agreements heretofore had between the
parties hereto are merged into this Agreement, which alone fully and completely
expresses their agreement, and the same is entered into after full
investigation, neither party relying upon any statement or representation not
embodied in this Agreement made by the other. Seller shall not be liable or
bound for any verbal or written statements or representations of any agent,
employee, servant or any other person, unless the same are specifically set
forth herein.
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(c) The headings herein are for convenience and reference only and in
no way define, limit or describe the scope or intent of this Agreement or affect
any of the terms or provisions hereof.
(d) No delay or failure on the part of any party in exercising any
right hereunder shall be construed as a waiver of any subsequent default of the
same or similar nature.
(e) This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without giving effect to principals of
conflicts of law.
(f) The parties shall execute any and all further documents necessary
and/or appropriate to effectuate the intent and purpose of the provisions of
this Agreement. Each party shall use its reasonable commercial efforts to obtain
all material third-party consents. The parties agree that at any time and from
time to time at or after the Closing upon request of any party hereto, any other
party hereto shall do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, such other or further instruments as may
be required by law or reasonably requested by such party to carry out and
implement the intent and purpose of this Agreement. The same shall be done
promptly and without charge to the requesting party.
(g) No waiver, change, modification, amendment, or discharge of any of
the provisions of this Agreement shall be valid unless affected by an agreement
in writing signed by both parties hereto.
(h) Submission by either party of this Agreement for execution by the
other shall confer no rights nor impose any obligations on either party unless
29
and until both Seller and Purchaser shall have executed this Agreement and
duplicate originals thereof have been delivered to Seller and Purchaser.
(i) Seller shall provide a copy of all contracts of Seller currently in
effect
(j) Faxed copies of signatures shall serve as originals, with the
originals to be provided later.
(k) Any material financial changes or material changes in operation
occurring between the signing of this Agreement and the Closing must be reported
in writing by Seller to Purchaser.
(l) The risk of loss to the assets of the business sold hereunder until
the Closing shall be borne by Seller. If a fire or other casualty shall cause
loss or damage in excess of $50,000.00, Purchaser may terminate this Agreement,
receive the return of the deposit, if any, and this Agreement shall be null and
void. In such event, neither party shall have any rights against or obligations
to the other.
(m) Seller's President/operator will sign or allow a reproduction of
his signature on a letter of introduction to customers, upon review and approval
of the letter. Seller's approval shall not be unreasonably withheld.
30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of this 14th day of February, 2006.
SKYE MULTIMEDIA, INC. Seller
By: /s/ XXXX XXXXXXX
-------------------------------- --------------------------------
XXXX XXXXXXX, President
Skye Acquisition Company Inc, Purchaser
By: /s/ XXXXX X. XXXXXX
-------------------------------- --------------------------------
XXXXX X. XXXXXX, CEO
31
EXHIBIT C
EMPLOYMENT AGREEMENT BETWEEN
SMARTPROS LTD.
AND
XXXX XXXXXXX
This employment agreement (the "Agreement") dated as of March 1, 2006 is by and
between SmartPros Ltd., a Delaware corporation (the "Company"), and Xxxx
Xxxxxxx, an individual residing at XXXXXXXXXXXXXX , Flemington, NJ XXXXX (the
"Executive").
1. EMPLOYMENT. The Company shall employ the Executive, and the Executive
agrees to serve the Company, on the terms and conditions set forth herein.
The Executive shall serve as President of the Skye Multi Media product
group or subsidiary. The Executive hereby accepts such employment
hereunder, except for absences occasioned by illness and reasonable
vacation periods, and agrees to undertake the duties and responsibilities
inherent in such position and such other duties and responsibilities as
the Company shall from time to time reasonably assign to him. The
Executive shall report to and be supervised by the Board of Directors of
the Company (the "Board") and the Chief Executive Officer of the Company
or such other person as the Board or Chief Executive Officer indicates..
The Executive shall use his best efforts, including the highest standards
of professional competence and integrity, and shall devote his full
business time and effort to the performance of his duties hereunder. The
Executive shall not engage in any other business activity that interferes
with his day to day responsibilities to the Company.
2. COMPENSATION AND BENEFITS.
2.1 SALARY. During the Term (as defined below) of this Agreement, the
Executive shall be paid a salary at the rate of $120,000 per annum
("the Base Salary"), payable as customarily paid by the Company.
During the Term of this Agreement, executive's base salary shall be
reviewed at least annually by the Board. The first such review will
be made no later than January 31, 2007 and thereafter the Base
Salary shall be reviewed on or before January 31st of each
succeeding year. The Board, in its sole discretion, may increase,
but not decrease the Base Salary.
2.2 BONUS. In addition to his Base Salary, the Executive may be entitled
to bonuses at times and in amounts determined in the discretion of
the Board.
2.3 BENEFITS. The Executive shall be entitled to participate in all
employee benefit programs or plans maintained by the Company from
time to time on the same basis as other similarly situated executive
employees of the Company. The Executive will be entitled to family
medical at the Company's sole cost and expense. The Company will pay
the Executive a $950 per month car allowance.. The Executive will be
entitled to 3 weeks paid vacation per year.
2.4 REIMBURSEMENT OF EXPENSES. The Company shall reimburse the Executive
in accordance with its general reimbursement policies for all
ordinary and necessary expenses incurred by the Executive on behalf
of the Company upon the presentation of appropriate supporting
documentation.
3. TERM; TERMINATION; RIGHTS UPON TERMINATION.
3.1 TERM. The Company agrees to employ the Executive, and the Executive
agrees to serve the Company for a period commencing on March 1, 2006
and continuing until January 31, 2009 (the "End Date") unless
otherwise amended or terminated pursuant to the terms hereof (the
"Term").
3.2 TERMINATION. The Company may at any time, terminate the employment
of the Executive under this Agreement for Cause (as defined below),
or without Cause, and the Executive may resign if the Executive's
principal place of employment is moved more than 50 miles away from
the current location or is moved to New York City, immediately and
without any requirement of notice. The rights and obligations of the
parties upon any termination of the Executive's employment shall be
as set forth in Section 3.3. For purposes of this Agreement the term
"Cause" shall mean (i) any act of dishonesty or gross and willful
misconduct with respect to the Company, including without
limitation, fraud or theft, on the part of the Executive, (ii)
conviction of the Executive of a felony.
3.3 RIGHTS UPON TERMINATION. In the event that:
(a) The employment of the Executive is terminated by the Company
without Cause 1, or if the Executive resigns because the
Executive's principal place of employment is moved more than
50 miles away from the current location or is moved to New
York City then, for the remainder of the then current Term of
employment hereunder, (i) the Company shall pay to the
Executive, at the time otherwise due under Section 2, all Base
Salary at the rate in effect at the time of termination plus
all Base Salary earned but yet paid up the date of
termination. The obligations of the Company pursuant to this
Section 3.3(a) shall be in lieu of any other rights of the
Executive hereunder to compensation or benefits in respect of
any period before or after the date of such termination. In no
event
2
shall the Executive be obligated to seek other employment or
take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this
Agreement and such amounts shall not be reduced whether or not
the Executive obtains other employment.
(b) The Executive's employment terminates by reason of death or
disability, then the Company shall pay and provide to the
Executive or Executive's estate or other successor in interest
at the time otherwise due under Section 2 all Base Salary and
benefits due to the Executive under Section 2 through the end
of month in which the termination occurs, but reduced in the
case of disability by any payments received under any
disability plan, program or policy paid for by the Company.
The obligations of the Company pursuant to this Section 3.3(b)
shall be in lieu of any other rights of the Executive
hereunder to compensation or benefits in respect of any period
before or after the date of such termination and in lieu of
any severance payment, and no other compensation of any kind
or any other amounts shall be due to the Executive by the
Company under this Agreement. For purposes of this Agreement,
the term "disability" shall mean the Executive's failure to
perform the services contemplated by this Agreement as a
result of his physical or mental illness or incapacity for a
period of 2 months, or a total of 90 days in any 365 day
period.
(c) The employment of the Executive is terminated by the Company
for Cause, or by the Executive other than under circumstances
described in Section 3.3(a) or (b) above, the Executive shall
not be entitled to compensation or benefits granted hereunder
beyond the date of the termination of the Executive's
employment.
(d) At the end of the original Term the Company shall have the
right, but not the obligation, to extend the Term of the
Agreement for an additional (1) year period of time under the
same terms and conditions currently in effect at the time of
notice to the Executive. If the Company desires to avail
itself of this option it will notify the Executive at least 90
days prior to the original End Date.
4. PROPRIETARY INFORMATION.
4.1 The Executive agrees that all information and know how, whether or
not in writing, of a private, secret or confidential nature
concerning the business or financial affairs of the Company and its
subsidiaries (collectively, for purposes
3
of this Section 4, the "Company") and not within Executive's
possession or knowledge prior to his employment with the Company
(collectively, "Proprietary Information"), is and shall be the
exclusive property of the Company. By way of illustration, but not
limitation, Proprietary Information may include inventions,
products, processes, methods, techniques, projects, developments,
plans, research data, financial data, and personnel data. The
Executive will not disclose any Proprietary Information to others
outside of the Company or use the same for any unauthorized purposes
without the written consent of the Company, either during or after
his employment, unless and until such Proprietary Information has
become public knowledge without fault of the Executive.
4.2 The Executive agrees that all files, letters, memoranda, reports,
records, data, sketches, drawings, or other written, photographic,
or other tangible material containing Proprietary Information,
whether created by the Executive or others, which shall come into
his custody or possession, shall be and are the exclusive property
of the Company to be used by the Executive only in the performance
of his duties for the Company.
4.3 The Executive agrees that his obligation not to disclose or use
Proprietary Information and records of the type set forth herein
also extends to such types of Proprietary Information, records and
tangible property of other third parties who may have disclosed or
entrusted the same to the Company or to the Executive in the course
of the Company's business.
5. OTHER AGREEMENTS. The Executive hereby represents that his performance of
all the terms of this Agreement and as an employee of the Company does not
and will not breach any agreement to keep in confidence proprietary
information, knowledge or data acquired by him in confidence or in trust
prior to his employment with the Company.
6. NON-COMPETITION, NON-SOLICITATION.
6.1 NON-SOLICITATION OF EMPLOYEES AND CUSTOMERS. The Executive agrees
that during the Term of the Executive's employment with the Company
and for a period of two years thereafter, the Executive shall not
directly or indirectly (i) recruit, solicit or otherwise induce or
attempt to induce any employees of the Company or any of its
subsidiaries to leave their employment or (ii) call upon, solicit,
divert or take away, or attempt to divert or take away, the business
or patronage of any customer licensee, vendor, collaborator or
corporate partner of the Company or any of its subsidiaries that had
a business relationship with the Company or any of its subsidiaries
at the time of termination of Executive's employment with the
Company and that did not have a business or personal relationship
with or was not known to Executive prior to his employment with the
Company.
4
6.2 NON-COMPETITION. The Executive agrees that during the Term of the
Executive's employment with the Company and for 2 year thereafter,
the Executive shall not directly or indirectly, engage in
competition with the Company or any subsidiaries, or own or control
any interest in, or act as director, officer or employee of, or
consultant to, any firm, corporation or institution directly engaged
in competition with the Company or any of its subsidiaries; provided
that the Company or one of its subsidiaries is actively engaged in
such business at the time the Executive's employment by the Company
is terminated; and provided that the foregoing shall not prevent the
Executive from holding shares as a passive investor in a publicly
held company which do not constitute more than 5% of the outstanding
shares of such company. The Executive will be considered to be in
Competition with the Company or any parent, subsidiaries or
affiliated companies only if (a) he works for an entity that
provides educational learning thru any type of media for sale to
other clients but not for its own internal use or (b) he works for a
customer of the Company and provides educational learning services
for their internal use causing the customer to reduce the business
they do with Company, provided that the customer did at least
$50,000 worth of such business with the Company in either of the
last 2 years. In the event that the Executive (i) voluntarily
terminates his employment, (including at any time on or after the
End Date) other than as provided for in this agreement, or (ii) is
terminated by the Company for Cause, the Executive agrees to not be
in Competition with the Company or any parent, subsidiaries or
affiliated companies until the earlier of Feb 28, 2008 or two years
from the date of such termination.
7. MISCELLANEOUS.
7.1 NOTICES. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the United States Post Office, by registered or certified mail,
postage prepaid, addressed if to the Executive, at the address shown above
and if to the Company, at its principal place of business at 00 Xxxxxxx
Xxxxx, Xxxxxxxxx, Xxx Xxxx, or at such other address or addresses as
either party shall designate to the other in accordance with this Section
8.1.
7.2 PRONOUNS. Wherever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
5
7.3 ENTIRE AGREEMENTS. This Agreement constitutes the entire agreement
between the parties and supercedes all prior agreements and
understandings, whether written or oral, relating to the subject matter of
this Agreement.
7.4 AMENDMENT. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.
7.5 GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New York.
7.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and
assigns, including any corporation with which or into which the Company
may be merged or which may succeed to its assets or business, provided,
however, that the obligations of the Executive are personal and shall not
be assigned by him.
7.7 WAIVERS. No delay or omission by the Company in exercising any right
under this Agreement shall operate as a waiver of that or any other right.
A waiver or consent given by the Company on any one occasion shall be
effective only in this instance and shall not be construed as a bar or
waiver of any right on any other occasion.
7.8 CAPTIONS. The captions of the sections of this Agreement are for
convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
7.9 SEVERABILITY. In case any provision of this Agreement shall be
invalid, illegal or otherwise unenforceable, the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
7.10 SPECIFIC ENFORCEMENT. The parties acknowledge that the Executive's
breach of the provisions of Section 4 and 6 of this Agreement will cause
irreparable harm to the Company. It is agreed and acknowledged that the
remedy of damages will not be adequate for the enforcement of such
provisions and that such provisions may be enforced by equitable relief,
including injunctive relief, which relief shall be cumulative and in
addition to any other relief to which the Company may be entitled.
8. ARBITRATION. Any claims, controversies, demands, disputes or differences
between or among the parties hereto or any persons bound hereby arising out of,
or by virtue of, or in connection with, or otherwise relating to this Agreement
shall be submitted to and settled by arbitration conducted in New York, New York
before one or three arbitrators each of which shall be knowledgeable in
employment law. Such arbitration shall otherwise be conducted in accordance with
the rules then obtaining of the American Arbitration Association. The parties
hereto agree to share equally the
6
responsibility for all fees of the arbitrators, abide by any decision rendered
as final and binding, and waive the right to appeal the decision or otherwise
submit the dispute to a court of law for a jury or non-jury trial. The parties
hereto specifically agree that neither party may appeal or subject the award or
decision of any such arbitrator(s) to appeal or review in any court of law or in
equity or by any other tribunal, arbitration system or otherwise. Judgment upon
any award granted by such an arbitrator(s) may be enforced in any court having
jurisdiction thereof. If the arbitration decision holds that the Company is at
fault, the Executive shall be entitled to reimbursement of fees and expenses
from the Company in an amount not to exceed $50,000. If the arbitration decision
holds that the Company is not at fault, the Company shall be entitled to
reimbursement of fees and expenses from the Executive in an amount not to exceed
$25,000.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year set forth above
SmartPros Ltd.
By: __________________________
Title: __________________________
___________________________
Xxxx Xxxxxxx
